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(Queen's Bench Division, Administrative Court; Charles J; 6 June 2008)
The husband had been convicted of tax evasion and fraud and sentenced to 3 years' in prison. His litigation costs were paid out of his own funds even after those funds were restrained in anticipation of a confiscation order against him. The confiscation order eventually crystallised at £900,000. The wife began divorce proceedings; there were also Children Act proceedings in relation to the couple's 10-year-old child, currently living with an elder sibling because the wife's ability to care for the child was in doubt. The wife had been awarded maintenance pending suit from the restrained funds, with the result that her legal aid funding had come to an end. The question arose whether either the husband or the wife was entitled to have litigation costs paid for from the restrained funds following crystallisation of the confiscation order.
The court had a discretion to allow restrained funds to be used for third party claims. Notwithstanding important factors in favour of preserving the restrained funds to satisfy the confiscation order, the need to prevent delay, and the need to conclude all the claims, which included proceedings involving a child in which the husband had an arguable case, meant that the husband's costs were to be paid from restrained funds. The wife had a reasonably arguable case that she would receive a lump sum from the assets, even if that had the result that the confiscation order would not be met in full, and in the interests of fairness an element for costs would be added to the wife's maintenance pending suit.
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