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Wife liable to pay large legal bill due to incurring “woefully excessive” costs in financial remedy proceedings

Date:23 JUN 2022
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Fiona Porter and Shannon Maude consider recent financial remedy proceedings involving a post-nuptial agreement, which confirm the importance of adopting a sensible approach to litigation.

Traharne v Limb [2022] EWFC 27 highlights the fact that parties must take a sensible approach to court proceedings or risk facing cost consequences, as the wife did in this case.

Background

The parties met and entered into a relationship in 2008. Both had children from previous relationships. They commenced cohabitation in the summer of 2012 and married on 6 January 2013. The parties had a tempestuous marriage and spent periods of time living in separate properties.

In 2018, the parties separated, and the wife petitioned for judicial separation. Negotiations took place in May 2018, but the parties subsequently reconciled and executed a post-nuptial agreement (“PNA”) in November 2018. The parties separated again in February/March 2020 and, in July 2020, the wife issued divorce proceedings.

At the time of the trial, the parties’ total assets were a little over £4m, although they had been severely depleted by expenditure on legal fees totalling in excess of £650,000.

The issues

The dispute before the court was in relation to the division of the parties’ finances, namely the wife’s application for a financial remedy order. The husband had initially made a notice to show cause application, seeking the wife to show why she should receive an award in excess of the terms of the PNA. However, he subsequently altered his case to argue that the PNA was a “magnetic factor” in determining the financial provision which should be made for the wife.

The wife’s case was that the PNA should be afforded no effect. Her main argument was that she was subjected to coercive and controlling behaviour by her husband and, as a consequence, was unable to enter freely into the PNA. The husband denied these allegations.

If coercive and controlling behaviour was not found, the wife’s secondary arguments were that the PNA did not meet her needs, and that she had a sharing claim (i.e. she was entitled to a share of the marital assets) in the same value as her needs claim so that if the judge were to assess her needs at lower than the sum she claims, her sharing claim would prevail.

The main issues for the judge to determine regarding the PNA were:

  1. Whether the husband’s behaviour fit within the definition of coercive and controlling behaviour and deprived the wife of her ability to enter into the PNA of her own free will;
  2. The weight, if any, to be applied to the PNA; and
  3. Whether the PNA met the wife’s financial needs.
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Judgment

The judge concluded that coercive and controlling behaviour could vitiate a nuptial agreement, but that the wife failed to evidence any such behaviour. She also failed to establish that such behaviour had led her to enter into the PNA against her will. The judge found the wife’s evidence on this to be lacking, and was critical of her having run this argument at all.

As a result, the key questions to be answered were whether the parties should be held to the terms of the PNA and whether the provisions of the PNA met the wife’s needs. Important considerations in favour were that the wife proposed the terms of the PNA and was satisfied at the time of signing that it met her needs. However, the wife’s desire to keep the marriage going clearly impaired her judgment, and the judge found both the fact that the parties had reconciled, and that they had intentionally left pension provisions open, detracted from the weight to be accorded to the PNA.

The judge found the wife’s case for a sharing claim to be unsustainable, and insofar as she did have a claim for her award to be made on a sharing basis, it was clear that it would be outweighed in value by her needs-based claim. The judge, therefore, assessed the wife’s financial award on a needs basis.

The judge found the PNA met the wife’s short-term needs, but did not meet her long-term needs. The judge further concluded that the parties were unlikely to have intended that the PNA should result, in the event of their marriage breaking down, in “one partner being left in a predicament of real need while the other partner enjoyed a sufficiency of wealth”. If that were the result, it would be unfair to hold the parties to their agreement.

The judge ordered the husband to pay the wife £293,261 plus a 12.1% share of the benefits in the husband’s pension accrued during the marriage to meet her financial needs. To place that in the context of the parties’ positions, before trial, the husband was openly offering £305,685, and the wife was asking for just over £1m.

Costs

The judge criticised the wife for her unreasonable negotiating stance and misconceived approach to the litigation and for the “woefully excessive” and disproportionate legal costs she incurred.

The judge considered the obligation of the parties to negotiate reasonably and concluded that the wife had “set her sights far too high”. She had increased her claim rather than seeking to mitigate it. The husband’s offer was more realistic, and the wife should have responded constructively.

The wife’s legal costs totalled £403,150, which was £145,895 more than the husband’s total costs, despite him paying almost all the experts’ fees.

The judge reiterated that the court has the power to depart from the no order as to costs principle in relation to financial remedy proceedings. The court can and will take a broad view of conduct and will generally conclude that to refuse to negotiate openly, reasonably and responsibly will amount to conduct in respect of which the court will consider making an order for costs.

The husband was ordered to pay a further £80,000 on account of the wife’s legal costs, having already paid £211,000 towards her costs ahead of trial. The judge deliberately left the wife with a liability of around £70,000 to £80,000 to her solicitors, which she would need to meet herself. The judge concluded that the wife being “left with a costs bill to pay is entirely the result of her prodigal expenditure on costs and her approach to this litigation”.

Conclusion

Partner Sophie Chapman comments:

“This decision highlights the increasing willingness of judges in the Family Court to make costs orders against a party who fails to negotiate reasonably, constructively and openly, even if those costs have to be met from the party’s financial award intended to meet their income and housing needs.”

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