Jersey Unreported Judgments

Matrimonial - costs.

[2014]JRC111

Royal Court

(Family)

13 May 2014

Before     :		J. A. Clyde-Smith, Esq; Commissioner, sitting alone.
Between	I (the mother)		Applicant
And	J (the father)		Respondent
And	J (the father)		Applicant
And	I (the mother)		Respondent

Advocate A. T. H. English for the Mother.

The Father appeared on his own behalf.

Advocate C. G. Hillier as amicus curiae.

judgment

the commissioner:

1.        It stands to me to determine the issue of costs in relation to the above matters which culminated in the Court's judgments of 5^th August, 2013, (JRC 156), 5^th August, 2013 (JRC 157) 13^th May, 2014, (JRC 109) and 13^th May, 2014, (JRC 110). 

2.        Consistent with those judgments I will refer to I as the mother and J as the father.  In these actions, the mother applied for financial provision in relation to their daughter B, who lives with the mother and the father applied for a shared residence order in respect of B.  I am not going to summarise the previous findings of the Court, as they are set out in those four judgments, on the basis that those judgments are taken as read, but in very broad terms, the mother's application for financial provision for B was successful, but only in part, and the father's application for a shared residence order was unsuccessful.  Restrictions were placed upon him bringing any further applications within the next three years. 

3.        The mother applies for her costs in respect of both actions on the indemnity basis.  The father resists those applications, submitting instead that no order for costs should be made but that if an order was to be made, then it should be the mother who should contribute to his costs, not the other way round. 

4.        The father was unrepresented (in the main) up until the mother's financial application was referred up to the Royal Court on 4^th November, 2012.  He was then represented by Advocate Heath until shortly after the close of the substantive hearings in August 2013.  Thereafter, he again represented himself, but following the Court's judgment of 23^rd January, 2014, (JRC 021) with the assistance of Advocate Hillier as amicus curiae. 

5.        Advocate Heath's fees had been capped by agreement at £22,522.50 including disbursements, although her total time exceeded some £90,000.  The father estimates his own time on both matters at 1,200 hours. 

6.        The mother was represented by Advocate English on Legal Aid.  His firm's fees at the 100% of the Legal Aid rate (to which she had been assessed) were in the region of £146,148.60.  At private client rates, this would equate to approximately £231,531.80.  These costs can be apportioned as to approximately 68% to the financial proceedings and the balance to the shared residence proceedings. 

The law

7.        The Court's wide power to award costs derives from Article 2 of the Civil Proceedings (Jersey) Law 1956 but it would appear to be well established that the general practice is to make no order as to costs in children's cases.  In In the matter of B [2011] JRC 045, the Court cited with approval and applied the principles set out in the English Court of Appeal decision in R v R (Costs: Child Case) [1997] 2 FLR where Hale J said at page 96:-

"There is no doubt that a practice has arisen of making no order as to costs in children's cases.  This is summarised very conveniently in the judgment of Neil LJ in the case of Keller v Keller and Legal Aid Board [1995] 1 FLR 259, 267-268 where he says:

'In the last decade, however, it has become the general practice in proceedings relating to the custody and care and control of children to make no order as to the costs of the proceedings except in exceptional circumstances.'

In London Borough of Sutton v Davis (Costs)(No 2) [1994] 2 FLR 569, 570H-571B Wilson J threw some light on the reasons for the present practice, the existence of which was recognised by Butler -Sloss LJ in Gojkovic v Gojkovic (No 2) [1992] Fam 40, [1991] 2 FLR 233.

Neil LJ goes on to say

'The court .... Retains the jurisdiction and a discretion to award costs in suitable cases.  It is unnecessary and undesirable to try to limit or place into rigid categories the cases which a court might regard as suitable for such an award, but examples would be likely to include cases where one of the parties had been guilty of unreasonable conduct or where there was such a disparity between the means of the parties that a special order was justified.'

The reasons why this practice has developed perhaps fall into three categories.  The first is general to all family proceedings and was pointed out by Butler-Sloss LJ in Gojkovic v Gojkovic at 57 and 237 respectively, that orders for costs between the parties will diminish the funds available to meet the needs of the family.  Thus it is suggested in this case, that if the father is ordered to pay the mother's costs that will reduce the sums immediately available for the housing and other support of the parties and R.  That may indeed sometimes be the case, but on the other hand if the costs of a legally aided party are not recovered in some way, they become a charge on property recovered as a result of the proceedings.  Although that charge may be postponed it does, in due course, reduce the size of the cake.  Furthermore, of course, it is well established that the incidence of costs as between the parties is one of the things that will be taken into account in ancillary relief proceedings in any event.  It is certainly by no means inappropriate for orders for costs to be made along the way in ancillary relief proceedings.

The second reason which is given for there being no costs orders in general in children cases, is that the court's concern is to discover what will be best for the child.  People who have a reasonable case to put forward as to what will be in the best interests of the child should not be deterred from doing so by the threat of a costs order against them if they are unsuccessful.  That is indeed the major reason in children cases why the court is reluctant to add to the existing deterrents which all litigants face in coming to court.

The third reason is suggested by Wilson J in the case of London Borough of Sutton v Davis (Costs) (No 32) at 570-571, when he points to the possibility that in effect a costs order will add insult to the injury of having lost in the debate as to what it to happen to the child in future; it is likely therefore to exacerbate rather than to calm down the existing tensions; and this will not be in the best interests of the child.

Nevertheless, there clearly are, as Neil LJ pointed out, cases in which it is appropriate to make costs orders in proceedings relating to children.  He pointed to one of those sorts of situation: cases where one of the parties has been guilty of unreasonable conduct."

8.        Hale J also went on to say this at page 98 which is relevant to the issues before me:-

"Of course, the parties should not be deterred, by the prospect of having to pay costs, from putting before the court that which they genuinely think to be in the best interests of the child, but there have to be limits.  Children should not be put through the strain of being subject to claims that have very little prospect of success, still less should they be put through a quite unreasonable involvement in their parents' disputes ...."

9.        More recently, the English Court of Appeal in Re T (Order for Costs) [2005] 2 FLR 681 reiterated that general practice and approved a summary of the principles given at first instance, which included the following:-

"2.5    The conduct of the parties is in reality the major consideration when deciding whether or not an exceptional order for costs should be made.  It should only be made if the penalised party has been unreasonable in his or her conduct.  Moreover the "unreasonableness" must relate to the conduct of the litigation rather than the welfare of the child (R v R (Costs: child case) [1997] 2 FLR 95.

2.6      One has to be very careful in this distinction when, as in the case of (the mother), the apparent unreasonableness is as a result of the personality of the relevant party.  In such circumstances, there is often an overlap of that party's conduct of the litigation and the conduct relating to the welfare of the child."

10.      In the case of In the matter of CC [2011] JRC 114A, the Deputy Registrar in applying these principles also referred to paragraph 17 of her judgment to the case of In re N (a child) v A and others [2010] 1 FLR 454, a case involving acrimonious and confrontational residence and contact proceedings, where Munby J said this:-

"The fact that a parent has litigated in an unreasonable fashion may open the door to the making of an adverse costs order; but it does not, of itself, necessitate the making of such an order.  There is, at the end of the day, a broad discretion to be exercised having regard to all the circumstances of the case.  And a judge must be careful not to fall into the trap of simply assuming that because there has been unreasonable behaviour in the conduct of the litigation an order is, therefore, to be made without more ado."

11.      In the case before me, any costs order made in favour of the mother, who is legally aided, would benefit her lawyers rather than herself and in R v G [2006] JRC 112, the Court observed at paragraph 17 that this could be a relevant factor to take into account. 

12.      The Jersey Court of Appeal has recently considered this in Flynn v Reid [2012] JLR 226, a civil case concerning a dispute over property, where the Royal Court had capped split costs orders because both parties were legally aided.  The Court of Appeal found that the Royal Court had erred in capping costs on this account.  On the relevance of a party's lawyers benefiting, Beloff J A said this at paragraph 39:-

"Secondly, the court in making an award of costs is concerned with the interests of the parties only and not with those of their legal representatives.  The fact that, because of the operation of the legal aid scheme, a particular award of costs to one party may benefit only that party's advocate (but without, I should add, disadvantaging that party) is no reason for not making an order which is otherwise justified.  Certain obiter dicta in cases in the Royal Court to apparent contrary effect (R v G [2006] JRC112, at para. 17) especially when extended to non-matrimonial cases, see Benest v Syvret (3) ([2012] JRC 079A, at para. 23)) can in my view be disregarded, insofar as they were said to represent an independent relevant factor."

13.      Beloff J went on to say at paragraph 40:-

"In my view, costs awards should be based on two major considerations: the merits of the case (as adjudicated upon by the court) and the conduct of the parties in the litigation (as appraised by the court).  These are not the only considerations.  A court may, for example, properly decline to make a costs order which might aggravate the relationship between the parties and for that reason be undesirable in the public interest or one which would be futile because the party against whom it would otherwise be made is impecunious.  But, save it may be in exceptional cases (whose existence or extent we do not need to consider in these proceedings), the means of the parties are, in our view, outwith the matrimonial field, not relevant."

14.      It is clear that "the matrimonial field" in this context includes cases involving children.  Beloff J says at paragraph 39 that cost capping may be appropriate in matrimonial cases where the allocation of costs can affect the balance that the Court seeks to achieve between the parties, but it is equally appropriate in cases involving children for the reasons summarised by Hale J in R v R which I have set out above. 

15.      Thus in children's cases if, exceptionally, the Court is minded to order one party to pay the costs of the other party, the means of the paying party are relevant for these good reasons and cost capping may be appropriate.  The fact, however, that the receiving party's lawyers may benefit from such an order is irrelevant. 

Decision

16.      In my view, there can be no question of an order for costs being made against the mother in respect of the way she conducted her application for financial provision for B or resisted the father's application for a shared residence order in respect of B.  It is true that in the financial proceedings the mother sought, amongst other things, £15,600 payable by way of annual periodical payments and a lump sum of £350,000 towards the purchase of a home.  She was awarded £9,024 by way of annual periodical payments (a substantial increase over the maintenance previously being paid by the father of £3,000 per annum) but was not awarded a lump sum for the purchase of a house.  This has to be set against the persistent failure of the father to comply with his disclosure obligations over the whole period that the matter was before the Registrar and the fact that when disclosure was eventually made it showed very substantial profits being made by his company and very substantial drawings by him (see paragraphs 14 - 31 of the judgment of 5^th August JRC 156). 

17.      One of the consequences of the failure by one party to make disclosure to the other party in proceedings of this kind is that it fuels suspicion in the mind of the other party.  Mostyn J referred in KS v ND [2013] EWHC 464 to the reticence of the father in that case to make full disclosure as pushing the "index of suspicion.... to the sky".  That is precisely what occurred in this case.  I can understand why the mother made the claims she did and I do not find her conduct of those claims to be unreasonable. 

18.      Turning to the father, the Court concluded in its judgment of 13^th May, 2014, (JRC 110) that the father's application for a shared residence order was unreasonable (paragraph 23) and an order was made restricting further such applications by the father for three years.  A shared residence order, even if granted, would have made no practical difference to B at all, but the father pressed on in the face of the strongest advice that B desperately needed this fighting between the parents to stop.  The position was exacerbated by the father quite improperly involving both children in that fighting (see paragraphs 68-70 of the judgment of 5^th August, 2013, JRC 156). 

19.      I further take the view that the issuing of the shared residence application was at least in part tactical, following as it did the referral to the Royal Court of the mother's financial application at a time when B's residence and contact regime was essentially settled.  I note that such a tactic was employed by the father in the case of E v F [2013] JRC 185A, leading to a costs order being made against him by the Deputy Registrar.  The use of an application involving a child as a tactic is to be deprecated. 

20.      I therefore conclude that there should be a costs order against the father in relation to the shared residence application. 

21.      In respect of the mother's financial application, it is not in dispute that the father failed to comply with his disclosure obligations when the matter was before the Deputy Registrar - see paragraph 6 of the judgment of 5^th August, 2013, JRC 156. 

22.      After the matter had been referred to the Royal Court, the father did then instruct a lawyer, but the whole process had to start again.  In effect, all of the costs incurred by the mother before that referral had been wasted.  Although the father did then comply with the orders of the Royal Court, it went on to find that it did not accept the explanations he had put forward as to substantial sums that he had drawn from his company (see paragraph 32-49 of the judgment of 5^th August, 2013, JRC 156).  

23.      As Birt, then Deputy Bailiff, said in R v G [2006] JRC 112 at paragraphs 25 and 26:-

"25.    However, I agree entirely with the Deputy Registrar that an award of costs against the husband is appropriate in order to reflect his failure to give proper disclosure.  In my judgment there is an important public interest in ensuring that full and prompt disclosure of assets is made by parties involved in matrimonial proceedings.  Injustice may result if a party is able to conceal assets or forces the other party to run up substantial legal costs in obtaining proper disclosure.  It is important therefore that any award of costs to reflect a failure to make proper disclosure is sufficient to bring home not only to that party but also to future parties who may be tempted to act in the same manner, that there is a price to be paid for such conduct.  Given the Deputy Registrar's finding that she was not satisfied that all his assets had been disclosed, I consider that an award of £4,500 was insufficient to achieve this objective.  I was advised that the wife's total costs amounted to approximately £50,000, although this amount would no doubt be reduced quite substantially on taxation. 

26.      Had the appeal proceeded in the ordinary way, I would not have interfered with the Deputy Registrar's decision, even though I would myself have awarded a greater sum.  But, given that, for the reasons mentioned earlier, I am exercising my own discretion afresh, I consider that a sum of £10,000 is more appropriate to reflect not only the extra time and expense incurred on behalf of the wife as a result of the litigation misconduct, but also the importance of making disclosure which is both timely and full and frank.  I therefore order the husband to pay £10,000 towards the wife's costs."

24.      The father must, in my view, pay a price for his conduct in this case by way of a costs order. 

25.      The ability of the father to meet any costs order is relevant in that an order may diminish the funds available to meet the needs of the family.  Advocate English, for the mother, understandably points to the finding of the Royal Court that the father had undisclosed assets of £283,500 (see paragraph 48 of the judgment of 5^th August, 2013, JRC 156) and can therefore afford to discharge orders for costs without prejudicing his ability to continue maintaining A and B. 

26.      The father's main asset is his property which comprises both his home (and that of A) and his business.  Whilst valuable, it is entirely illiquid and the father did file evidence that obtaining a mortgage might now be difficult as a consequence of contamination from one of the fuel tanks.  I take the view that no costs order should be made which requires the sale of the father's property which is both a home for one of the children and provides the family's financial security. 

27.      As to the father's ability to pay a substantial costs order outwith his property, there is a difference, it seems to me, between the Court inferring, as it did, that the father had undisclosed assets available to him and the Court making an order to be enforced against those inferred assets.  The Court drew that inference on the basis of the evidence before it at the time which for the reasons set out in paragraphs 39-43 of the judgment of 5^th August, 2013, JRC 156 did not include the tested evidence of L, to whom the father had purportedly paid £200,000 for a lease. 

28.      Bearing in mind the personality of the father and the state of the relations between both parents, enforcement of any substantial costs order against assets inferred by the Court to exist would in my view exacerbate existing tensions, which is not in the interests of A and B.  Instead of bringing the litigation to an end, the fighting between the parties would continue through the whole process of enforcement.  The Court would be setting in train another round of acrimonious proceedings.  At the same time making no order for costs against the father would lead to him paying no price for his conduct.  

29.      I must also take into account the position of the mother.  Because the income and assets of her partner are taken into account for the purposes of Legal Aid, she has been assessed as being responsible for 100% of Viberts' legal fees charged at the Legal Aid rates (paragraph 2.11.2 of the Legal Aid Guidelines).  Paragraph 2.12.4.1 of those guidelines provides that ordinarily no client will be asked to pay by instalments over more than three years.  That would entail the mother paying some £4,000 per month; in fact, she is, by agreement, paying Viberts £50 per month, although it was indicated to me that this might have to increase. 

30.      Accordingly, under the Legal Aid scheme, the mother is liable in law for 100% of the fees of Viberts at the legal aid rate, namely the sum of £146,000 when she has an annual income of only £19,200 and no capital assets to speak of.  Her partner has an income of £33,000 per annum and an interest in a modest house in Plymouth which he inherited and where he would like to go and live.  However, he has no legal liability for the fees of Viberts and it is difficult to envisage circumstances where the Bâtonnier would sanction enforcement against the mother, who has been acting for the most part in a representative capacity for B.  The reality must be that Vibert's fees, or the greater part of those fees, are irrecoverable as against the mother. 

31.      I did give consideration to the making of an uncapped costs order against the father, but with the proviso that it would not be enforced against him without leave of the Court (see paragraph 43 of Flynn v Reid), on the basis that leave would not be given until B is at least eighteen, barring some earlier event justifying enforcement.  As B is only eleven, this would mean the matter of enforcement of a substantial sum would be left hanging for some seven years.  I do not regard this as a satisfactory solution.  

32.      I have concluded that I will mark the father's conduct by an order for costs but in the interests of A and B, I am going to cap his liability at a level which I feel confident he can pay, and this by ordering him to pay £30,000 towards the legal costs of the mother to be divided as to £20,000 for the financial proceedings and £10,000 for the shared residence proceedings.  I appreciate that this is a very substantial reduction from the amount of costs the mother is liable in law to pay Viberts, but as I said earlier, I take the view that those costs are in reality irrecoverable.  These are proceedings involving children and I am not prepared to go further. 

Authorities

I v J (Family) [2013] JRC 156.

J v I (Famiy) [2013] JRC 157.

I v J (Family) [2014] JRC 109.

J v I (Family) [2014] JRC 110.

I v J (Family) [2014] JRC 021.

Civil Proceedings (Jersey) Law 1956.

In the matter of B [2011] JRC 045.

R v R (Costs: Child Case) [1997] 2 FLR.

Re T (Order for Costs) [2005] 2 FLR 681.

In the matter of CC [2011] JRC 114A.

In re N (a child) v A and others [2010] 1 FLR 454.

R v G [2006] JRC 112.

Flynn v Reid [2012] JLR 226.

KS v ND [2013] EWHC 464.

E v F [2013] JRC 185A.