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(Family Division, Mostyn J, 10 March 2014)
Costs - Legal services payment order - Stay of proceedings
The English wife and American husband were married in California after signing a pre-marital agreement. They had two children and lived in the USA. The family travelled to England in 2012 and the mother wrongfully retained the children here. Four months later a return order was made and the whole family returned to the USA.
The wife thereafter issued divorce proceedings in England seeking financial relief. She also applied for orders under s 8 of the Children Act 1989. The husband meanwhile issued proceedings in California. In England the husband's application for a stay of the wife's proceedings was granted pursuant to Sch 1 para 9 of the Domicile and Matrimonial Proceedings Act 1973 but the district judge excepted from his order the wife's application for a legal services payment order pursuant to s 22ZA of the Matrimonial Causes Act 1973. The husband now sought permission to appeal that decision.
The wife sought a legal services payment order pursuant to s 22ZA of the Matrimonial Causes Act 1973 of £7,263 to cover costs in financial remedy proceedings and a lump sum of £15,700 to cover costs of Hague Convention proceedings.
Mostyn J summarised the principles to be applied when determining a legal services payment order.
In this instance the wife was attempting to recover costs which had already been incurred in circumstances where there would be no further litigation. Therefore, her application fell foul of the principle that the court could not make a LSPO unless it was satisfied that without one the applicant would not reasonably be able to obtain appropriate legal funding. A LSPO could only be awarded in respect of historic costs where the court was satisfied that without such payment the applicant could not obtain future legal services. It would be a very dangerous subversion of the exclusivity of the inter partes costs powers and principles in CPR Part 44 if such funding were permitted and a shadow or surrogate jurisdiction would emerge.
The district judge had no power to except the wife's application for a LSPO from the general stay. If the main suit was stayed then all subsidiary ancillary applications for financial relief including a LSPO were all stayed too. The wife's application was dismissed and the husband's appeal allowed.
Neutral Citation Number:  EWHC 611 (Fam)
Case No: FD13P00896
IN THE HIGH COURT OF JUSTICE
Royal Courts of Justice
Strand, London, WC2A 2LL
MR JUSTICE MOSTYN
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Marie Louise Rubin
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Jeffrey Jacques Rubin
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Miss Katherine Kelsey (instructed by Bishop and Sewell) for the Applicant
Mr Christopher Hames (instructed by Brethertons Solicitors) for the Respondent
Hearing dates: 5 March 2014
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This judgment is being handed down in private on 10 March 2014. It consists of 25 paragraphs and has been signed and dated by the judge.
The judge hereby gives leave for it to be reported.
Mr Justice Mostyn:
 The following applications are before the court for adjudication:
i) An application by the applicant ("the wife") for a legal services payment order ("LSPO") pursuant to s22ZA Matrimonial Causes Act 1973 in the sum of £7,268 to cover costs incurred in financial remedy proceedings.
ii) An application by the wife for an order for a lump sum pursuant to s15 and Schedule 1 para 1(2)(c) Children Act 1989 of £15,700 to cover costs incurred in proceedings under the 1980 Hague Convention on the Civil Aspects of Child Abduction (as incorporated into our law by the Child Abduction and Custody Act 1985).
iii) An application by the respondent ("the husband") for an order granting permission to appeal the order of Deputy District Judge Elliot dated 28 February 2014 whereby he excepted from a stay which he granted of the wife's divorce proceedings her application for the LSPO. If permission is granted the husband would wish the appeal to be dealt with immediately and allowed.
 I shall set out the background in short form.
 The husband and wife met in 2005 and started living together in April 2009. He is American having been born in Los Angeles; she is English having been born in London. Their daughter was born in London on 21 June 2008. The husband and wife married in California on 20 August 2011 following the making of a premarital agreement on 18 August 2011. On 21 January 2014 Hogg J found that by February 2012, at the latest, the family was living in California. Their son was born in California on 21 August 2012.
 On 14 October 2012 all four members of the family came to England. Hogg J in proceedings under the Hague Convention found that when the wife refused to let the children return on return tickets on 30 October 2012 the children were wrongfully retained in England and Wales. She ordered that they be returned to California on 17 February 2014. On that day the wife, the husband and the children duly returned to California. No member of this family is now present in England.
 Meanwhile on 10 May 2013 the wife issued divorce proceedings in London. She filed a Form A seeking financial remedies on the same day. She also issued an application for orders under s8 Children Act 1989. On 3 June 2013 the husband filed for divorce in the Superior Court of California, County of Los Angeles. The parties attempted mediation about all issues here in September and October 2013, but without success. They filed voluntary Forms E setting out their then respective financial positions prior and for the purposes of that mediation. In the financial proceedings the wife incurred costs, some of which were paid by the husband but of which £7,268 is unpaid. On 10 January 2014 she applied for a LSPO to seek this sum.
 On 23 January 2014 the husband applied for a stay of the wife's divorce proceedings pursuant to Schedule 1 para 9 of the Domicile and Matrimonial Proceedings Act 1973. This application came before Deputy District Judge Elliot on 28 February 2014 for directions. He decided to deal with the substantive application, which was perhaps an unusual course as, at any rate in my experience, applications for a stay on the ground of forum non conveniens are usually, and should be, heard by a High Court Judge. He granted the stay but excepted from his order the wife's application under s22ZA for a LSPO. He made no order as to costs. It is the exception order which the husband seeks to appeal. He argues that the Deputy District Judge had no power when ordering a stay of the main suit to except a subsidiary interim financial application from its application.
 On 18 February 2014 (the day after her return) the wife filed a response to the husband's divorce petition in California, seeking dissolution of 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 on 28 March 2014. There is a case management conference at court in Los Angeles on 11 June 2014.
 I revert to the Hague Convention proceedings here. These were issued by the husband on 31 July 2013. The final hearing date was fixed for 21 January 2014. On 14 January 2014 the wife applied under s15 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 the wife's lawyers appeared and she was represented. At the hearing the husband agreed to make a gratuitous payment of £6,000 to cover counsel's brief fee. The wife's overall costs were however £21,700. Therefore after payment of £6,000 the sum of £15,700 remained owing. The wife seeks to recover this amount by means of a lump sum under s15 and Schedule 1 para 1(2)(c) Children Act 1989.
 As I have said, Hogg J found that there had been an unlawful retention and ordered the return of the children to California on 17 February 2014. Her order made no order as to costs. However in a separate order made in the Schedule 1 application she recorded the husband's payment of £6,000 and gave directions for the application to be heard by me.
 If the husband's appeal succeeds then that will dispose in limine of the wife's claim for a LSPO. However I propose to examine that claim on its merits.
Legal Services Payment Order
 Sections 49 to 54 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 put the powers of the court to award a costs allowance on a statutory footing in relation to divorce and civil partnership dissolution proceedings. These provisions came into force on 1 April 2013 by virtue of The Legal Aid, Sentencing and Punishment of Offenders Act 2012 (Commencement No. 7) Order 2013 (S.I. 2013/773). These sections introduced new sections 22ZA and 22ZB into the Matrimonial Causes Act 1973 and amended section 24A to permit an order for sale of property to be made on or following the making of an order for a payment in respect of legal services under section 22ZA. Corresponding amendments are made to Schedule 5 to the Civil Partnership Act 2004.
 In the 11 months since the implementation of these powers there have been only three decisions referring to them namely Makarskaya v Korchagin  EWHC 4393 (Fam) (21 June 2013); BN v MA  EWHC 4250 (Fam) (10 December 2013); and MET v HAT  EWHC 4247 (Fam) (16 December 2013). It is fair to say that none attempted any kind of deep analysis of the new provisions. In the second case I stated at para 36:
"The statutory provision, in my judgment, does no more than to codify the principles to be collected in this regard in the authorities, most recently in Currey v Currey  1 FLR 946. Under s. 22ZA(3) the court cannot make a costs allowance unless it is satisfied that without the amount of the allowance, the applicant would not reasonably be able to obtain appropriate legal services for the purposes of the proceedings or any part of the proceedings, and for the purposes of this provision the court must be satisfied in particular that the applicant is not reasonably able to secure a loan to pay for the services (see s. 22ZA(4)(b))."
 I have recently had to deal with a flurry of such applications and there is no reason to suppose that courts up and down the country are not doing likewise. Therefore it may be helpful and convenient if I were to set out my attempt to summarise the applicable principles both substantive and procedural.
i) When considering the overall merits of the application for a LSPO the court is required to have regard to all the matters mentioned in s22ZB(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  EWHC 2860 (Fam)  1 FCR 465  1 FLR 1263 at para 124 (iv) and (v), 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.
v) 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.
Other orders for legal costs funding
 Curiously, the new statutory provisions do not extend to proceedings under Schedule 1 of the Children Act 1989, the Inheritance (Provision for Family and Dependants) Act 1975 or Part III of the Matrimonial and Family Proceedings Act 1984. In such proceedings the application will continue to be for an interim order for this purpose (see, in relation to Schedule 1 proceedings, M-T v T  2 FLR 925, G v G (Child Maintenance: Interim Costs Provision)  EWHC 2080 (Fam),  2 FLR 1264 and CF v KM  1 FLR 208), and the principles in Currey v Currey (No 2)  EWCA Civ 1338,  1 FLR 946 will continue to apply. In that case Wilson LJ stated at para 21 that the applicant must show that he or she cannot reasonably procure legal advice and representation by any other means. Moreover, the subject matter of the application will always be relevant as will be the reasonableness of the applicant's stance in the proceedings.
 In my opinion the principles set out in para 13 ought to apply, with the necessary modifications, where an order is sought for costs funding in proceedings under Schedule 1 of the Children Act 1989, the Inheritance (Provision for Family and Dependants) Act 1975 or Part III of the Matrimonial and Family Proceedings Act 1984. Obviously, the first sentence of principle (x) will not apply. Whether in these proceedings there is power to make an award for costs funding for ADR is an open question on which I do not venture an opinion here. As regards principle (xii) while there is power under Schedule 1 of the Children Act 1989 and under s5 of the Inheritance (Provision for Family and Dependants) Act 1975 to award a lump sum for costs funding the usual and traditional order is for monthly payments. Under Part III of the Matrimonial and Family Proceedings Act 1984 monthly payments is the only permissible order. Under each statute there is little scope for a single payment, whether or not deferred in part.
Application of the principles to this case
 In both applications the wife seeks to recover costs which have already been incurred in circumstances where there will be no further substantive litigation here whether about the children or about money. In my judgment in both applications she falls foul of principle (iv). 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 I have shown there are full-blown financial remedy proceedings in California. It is there that the question of these debts owed by the wife to her lawyers should be raised and adjudicated. But even if there were not an alternative more convenient forum it would be wholly unprincipled to allow this claim to succeed where there are no further proceedings here in prospect.
 The fact is that by virtue of the gratuitous payment of £6,000 the wife was enabled to be represented in the proceedings. This court cannot rewrite history by retrospectively making an order to recover costs on the footing that if the payment were not paid she would not have been able to be represented. This is a counter-factual absurdity.
 In his skeleton argument Mr Hames raises an important point. He argues as follows:
"While there are no special rules for applications for orders for costs brought at the conclusion of Hague Convention proceedings (EC-L v DM [2005 2 FLR 772, there are special considerations why applications should not be entertained pending that conclusion: prospective applicants should not be deterred and discouraged from seeking return orders; such applicants are placed in a privileged position in having the automatic right to non-means tested non-merit based public funding; it would usually be difficult re-balance any costs payments made at the conclusion of the proceedings when findings will have been made; the summary nature of the proceedings could very well be jeopardised if the court had, first, to set up and then adjudicate upon applications for costs payments prior to any work even being commenced on behalf of a respondent; there would probably have to be extensive financial disclosure from applicant's living abroad which would be inimical to the purpose of the Hague Convention of seeking the swift return of abducted children."
 These are powerful arguments. But as against them I remind myself of the acute observations of Holman J in Kinderis v Kineriene  EWHC 4139 (Fam) (18 December 2013). He began his public judgment by stating that he intended to highlight a now chronic problem with regard to the provision of legal aid in cases of alleged international child abduction by a parent to this country. At paras 17 and 18 he stated:
"17. The case has accordingly come on for final hearing before me here, today, with one clear court day allowed. The father himself remains, as he is entitled to do under the convention, in Lithuania. But, he is very well represented by his non-means-tested, fully publicly funded lawyers. The mother appears in person. She speaks negligible English. An interpreter has been provided by the court at the expense of public funds. The adult daughter, who speaks much more fluent English, is kindly here to assist her mother, but does not need to be. The father's solicitors have also necessarily engaged their own Lithuanian interpreter, also at the expense of public funds, so that they can communicate from the court here with their client in Lithuania, who I infer speaks no English. The CAFCASS officer attended and I heard some very brief, but helpful oral evidence from him at the outset of the hearing this morning.
18. I wish to make crystal clear that I give no steer whatsoever as to the likely outcome of this case. On the one hand, this is a blatant case of wrongful retention after an agreed short holiday here. On the other hand, on the alleged facts as I have summarised them, there is clearly a properly arguable case, with at least a realistic prospect of success, that there is a grave risk that the return of the child forthwith to Lithuania would expose her to physical or psychological harm or otherwise place her in an intolerable situation; and, separately, that she does object to being returned (having identified 10 on the scale given to her) and that she has attained an age and degree of maturity at which it is appropriate to take account of her views. The mother is simply incapable of presenting and developing her case properly. She does not know the complex law. She has to communicate through the interpreter. The father has all the resources of state-funded lawyers. This is not equality of arms, as the fair trial provisions of Article 6 of the European Convention on Human Rights require. The father's own very experienced barrister in this field, Mr Nicholas O'Brien, said that he did not resist an adjournment "since there is a considerable risk of unfairness to the mother and the child if the case proceeds today".
 There is therefore a clear tension between the policy imperatives identified by Mr Hames and the need for equality of arms identified by Holman J This is very difficult territory where the merits of each side of the argument can be clearly seen. Mr Hames was not able to tell me of any case where a costs allowance had been sought, let alone awarded, in Hague Convention proceedings whether under Schedule 1 of the Children Act 1989 or s5 of the Child Abduction and Custody Act 1985. I am sure that one will arise, probably in the near future. How the tension will be resolved will have to left for decision when such an issue actually arises.
The husband's appeal
 In AB v CB (Divorce and Maintenance: Discretion to Stay)  2 FLR 29 (upheld sub nom Mittal v Mittal  EWCA Civ 1255 (18 October 2013)), Bodey J stated at para 32:-
"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  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."
 I completely agree and particularly with Bodey J's description of this proposition as "trite law". It is almost one that requires no authority to support it.
 By the terms of FPR 2010 rule 9.7(1) an application for a LSPO is for an interim order, just as is an application for an order for maintenance pending suit. Such an application is dependent for its existence and validity on the continuance of the main suit. This is why in the Matrimonial Causes Act 1973 financial relief is described as being "ancillary" to the main suit. If the main suit is stayed then all subsidiary ancillary applications for financial relief are stayed, and a fortiori all applications and orders for interim relief, whether for maintenance pending suit or a LSPO.
 I conclude that Deputy District Judge Elliot had no power to except the application for a LSPO from the stay that he ordered of the wife's divorce suit. Accordingly I grant the husband permission to appeal from that order and allow the appeal. That ought to lead to the LSPO application being stayed and therefore technically capable of revival. But for the reasons I have given the application is fatally flawed and meritless. It will therefore be dismissed. I reach the same conclusion in relation to the wife's application for a lump sum pursuant to s15 and Schedule 1 para 1(2)(c) Children Act 1989.
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