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Rubin v Rubin [2014] EWHC 611 (Fam)

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An application by the husband for an order granting permission to appeal the order of a Deputy District Judge whereby he stayed the wife's divorce proceedings but excepted from that stay her application for a Legal Services Payment Order.

  • In a tweet: Mostyn J takes the opportunity to impart some words of advice on s.22ZA orders

    The wife ("W") had made two costs application against her former husband ("H"): 

    H cross-applied, seeking a stay imposed on W's English divorce proceedings to be extended to her ability to apply for a legal services payment order.  

    H and W had met in 2005, started cohabiting in April 2009 and had married in California in August 2011. They had two children who were both still very young. H was American and W was English. Although the couple had started family together in London, by February 2012, the family were living in California.  

    In October 2012, the family had come to England. In subsequent Hague Convention 1980 proceedings, it was found that W had refused to let the children return to America as planned and had wrongfully retained them in this jurisdiction. Eventually, a return order was made and W and the children returned to California; none of the family were living in England by the time of this hearing.  

    W had issued divorce, financial and children proceedings in London on 10 May 2013. On 3 June 2013, H had filed for divorce in California. They attempted mediation in London in the autumn of 2013 and filed voluntary Forms E as part of that process. In the limited financial proceedings W incurred costs, some of which were paid by H but of which £7,268 remained unpaid; in early January 2014, she applied for a legal services payment order to seek this sum. 

    In late January 2014, H applied to stay the English divorce proceedings (Schedule 1 para 9 Domicile and Matrimonial Proceedings Act 1973). The stay was granted by a Deputy District Judge (which is unusual as normally these applications are dealt with by a High Court judge) but excepted from the stay was W's application for the legal services payment order.  

    On 18 February 2014 (the day after her return to California) W filed a response to H's Californian divorce petition, seeking dissolution of the marriage, a determination of the enforceability of the parties' pre-marital agreement and an order allowing relocation of the children back to England. She also issued interrogatories and demands for production of documents at her attorney's office. A case management conference had been listed for 11 June 2014.

    In the Hague proceedings, which had been issued by H, a hearing had been listed for 21 January 2014. W applied under s.15 and Schedule 1 para 1(2)(c) Children Act 1989 for a lump sum to cover her costs of the final hearing. Although no payment was ordered or voluntarily made prior to the hearing. W's lawyers appeared and she was represented. At the hearing, H agreed to make a gratuitous payment of £6,000 to cover counsel's brief fee. However, W's overall costs were £21,700 and so £15,700 remained owing.  

    Held: Both of W's applications were dismissed and the s.22ZA exception to W's stay was overturned.  

    s.22ZA orders
    As we have come to know and love, Mr Justice Mostyn clearly set out the applicable law at the start of his judgment and distilled 14 key principles (both substantive and procedural) that he consider apply when the court is dealing with legal services payment order applications. These are:  

    (i) "When considering the overall merits of the application for a LSPO [legal services payment order] the court is required to have regard to all the matters mentioned in s.22ZB(1) – (3). 

    (ii) Without derogating from that requirement, the ability of the respondent to pay should be judged by reference to the principles summarised in TL v ML [2005] EWHC 2860 (Fam) where it was stated: 

    "iv) Where the affidavit or Form E disclosure by the payer is obviously deficient the court should not hesitate to make robust assumptions about his ability to pay. The court is not confined to the mere say-so of the payer as to the extent of his income or resources. In such a situation the court should err in favour of the payee. 

    Where the paying party has historically been supported through the bounty of an outsider, and where the payer is asserting that the bounty had been curtailed but where the position of the outsider is ambiguous or unclear, then the court is justified in assuming that the third party will continue to supply the bounty, at least until final trial."

    (iii) Where the claim for substantive relief appears doubtful, whether by virtue of a challenge to the jurisdiction, or otherwise having regard to its subject matter, the court should judge the application with caution. The more doubtful it is, the more cautious it should be. 

    (iv) The court cannot make an order unless it is satisfied that without the payment the applicant would not reasonably be able to obtain appropriate legal services for the proceedings. Therefore, the exercise essentially looks to the future. It is important that the jurisdiction is not used to outflank or supplant the powers and principles governing an award of costs in CPR Part 44. It is not a surrogate inter partes costs jurisdiction. Thus a LSPO should only be awarded to cover historic unpaid costs where the court is satisfied that without such a payment the applicant will not reasonably be able to obtain in the future appropriate legal services for the proceedings.

    (v) In determining whether the applicant can reasonably obtain funding from another source the court would be unlikely to expect her to sell or charge her home or to deplete a modest fund of savings. This aspect is however highly fact-specific. If the home is of such a value that it appears likely that it will be sold at the conclusion of the proceedings then it may well be reasonable to expect the applicant to charge her interest in it. 

    (vi) Evidence of refusals by two commercial lenders of repute will normally dispose of any issue under s22ZA(4)(a) whether a litigation loan is or is not available. 

    (vii) In determining under s22ZA(4)(b) whether a Sears Tooth arrangement can be entered into a statement of refusal by the applicant's solicitors should normally answer the question. 

    (viii) If a litigation loan is offered at a very high rate of interest it would be unlikely to be reasonable to expect the applicant to take it unless the respondent offered an undertaking to meet that interest, if the court later considered it just so to order. 

    (ix) The order should normally contain an undertaking by the applicant that she will repay to the respondent such part of the amount ordered if, and to the extent that, the court is of the opinion, when considering costs at the conclusion of the proceedings, that she ought to do so. If such an undertaking is refused the court will want to think twice before making the order. 

    (x) The court should make clear in its ruling or judgment which of the legal services mentioned in s22ZA(10) the payment is for; it is not however necessary to spell  this out in the order. A LSPO may be made for the purposes, in particular, of advice and assistance in the form of representation and any form of dispute resolution, including mediation. Thus the power may be exercised before any financial remedy proceedings have been commenced in order to finance any form of alternative dispute resolution, which plainly would include arbitration proceedings. 

    (xi) Generally speaking, the court should not fund the applicant beyond the FDR, but the court should readily grant a hearing date for further funding to be fixed shortly after the FDR. This is a better course than ordering a sum for the whole proceedings of which part is deferred under s22ZA(7). The court will be better placed to assess accurately the true costs of taking the matter to trial after a failed FDR when the final hearing is relatively imminent, and the issues to be tried are more clearly defined.  

    (xii) When ordering costs funding for a specified period, monthly instalments are to be preferred to a single lump sum payment. It is true that a single payment avoids anxiety on the part of the applicant as to whether the monthly sums will actually be paid as well as the annoyance inflicted on the respondent in having to make monthly payments.  However, monthly payments more accurately reflects what would happen if the applicant were paying her lawyers from her own resources, and very likely will mirror the position of the respondent.  If both sets of lawyers are having their fees met monthly this puts them on an equal footing both in the conduct of the case and in any dialogue about settlement. Further, monthly payments are more readily susceptible to variation under s22ZA(8) should circumstances change. 

    (xiii) If the application for a LSPO seeks an award including the costs of that very application the court should bear in mind s22ZA(9) whereby a party's bill of costs in assessment proceedings is treated as reduced by the amount of any LSPO made in his or her favour. Thus, if an LSPO is made in an amount which includes the anticipated costs of that very application for the LSPO, then an order for the costs of that application will not bite save to the extent that the actual costs of the application may exceed such part of the LSPO as is referable thereto.

    (xiv) A LSPO is designated as an interim order and is to be made under the Part 18 procedure (see FPR rule 9.7(1)(da) and (2)). 14 days' notice must be given (see FPR rule 18.8(b)(i) and PD9A para 12.1). The application must be supported by written evidence (see FPR rule 18.8(2) and PD9A para 12.2). That evidence must not only address the matters in s22ZB(1)-(3) but must include a detailed estimate of the costs both incurred and to be incurred. If the application seeks a hearing sooner than 14 days from the date of issue of the application pursuant to FPR rule 18.8(4) then the written evidence in support must explain why it is fair and just that the time should be abridged."

    He highlighted that s.22ZA orders are "designated as an interim order" and that "the court cannot make an order unless it is satisfied that without the payment the applicant would not reasonably be able to obtain appropriate legal services for the proceedings.": 

    "it is important that the jurisdiction is not used to outflank or supplant the powers and principles governing an award of costs in CPR Part 44. It is not a surrogate inter-partes costs jurisdiction.  Thus a LSPO should only be awarded to cover historic unpaid costs where the court is satisfied that without such a payment the applicant will not reasonably be able to obtain in the future appropriate legal services for the proceedings." 

    Here, Mostyn J concluded, W was seeking to recover costs already incurred; therefore, she fell foul of the principle that such orders look to the future. He said: 

    "This is not a case where her lawyers are saying that they will down tools unless they are paid outstanding costs as well as being funded for the future. Were her application to be granted it would represent a very dangerous subversion of the exclusivity of the inter partes costs powers and principles in CPR Part 44. A shadow or surrogate jurisdiction would emerge. Such a development must be stopped in its tracks." 

    As there were no proceedings in prospect in this jurisdiction it would be unprincipled to allow W to succeed in her applications for costs here. Further, as W was now participating in the American divorce proceedings, it was within those proceedings that the issue of her legal debts should be aired and adjudicated. 

    Hague Convention 1980 costs
    Considering W's application for a lump sum under Schedule 1, Mostyn J noted that it was curious that the statutory costs provision did not extend to such applications nor applications, for example, under the Inheritance Act. In such proceedings, he advised, the application would continue to be for an interim order for this purpose (M-T v T [2007] 2 FLR 925, G v G (Child Maintenance: Interim Costs Provision) [2009] EWHC 2080 (Fam) and CF v KM [2011] 1 FLR 208), and the principles in Currey v Currey (No 2) [2006] EWCA Civ 1338 would  continue to apply (i.e. the applicant must show that he or she cannot reasonably procure legal advice and representation by any other means). The subject matter of the application would always be relevant as would the reasonableness of the applicant's stance in the proceedings.

    But again, W fell foul of the "look to the future" principle and so her application necessarily failed.  

    Finally, he turned to H's appeal. Mostyn J held that the application for a legal services payment order was dependent for its existence and validity on the continuance of the main suit. Once the main suit was stayed the application for a s.22ZA order, as an interim order for costs, had to be stayed. He quoted Bodey J in AB v CB (Divorce and Maintenance: Discretion to Stay) [2013] 2 FLR 29: 

    "It is trite law and practice that financial applications ancillary to a divorce depend on the continuation of the petition. S22 states that the term of an order made under it shall be [for] "…such term, being a term beginning not earlier than the date of the presentation of the petition and ending with the date of the determination of the suit, as the court thinks reasonable".  

    So if a petition is dismissed, maintenance pending suit comes to an end (although any arrears remain: Moore v Moore [2010] 1 FLR 1413). If the petition is stayed, it follows in my view that any application for maintenance pending suit is stayed with it, as the latter has no independent life. This is a matter of substantive English family law / practice / procedure, not one of jurisdiction, nor of failing to accept jurisdiction."

    Where the main suit is stayed then all subsidiary ancillary applications for financial relief are also stayed. H's appeal was therefore successful.  


    A point to note is that this case also provides some interesting commentary about the costs funding for Hague Convention proceedings.

Published: 28/04/2014

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