Deputy High Court Judge Richard Todd KC. Application by W for maintenance pending suit (MPS) and a legal services payment order (LSPO) in protracted financial remedy proceedings.

Background

W, aged 40 and born in Russia, had been a British citizen since 2011. H, aged 66 and a Kenyan national since 2017, had been domiciled in England since 2017.

The parties married in 2009 and had two children, aged 15 and 13, who split their time equally between both parents and attend fee-paying schools. Prior to the marriage, the parties signed a PNA having received independent legal advice. The agreement made provisions for a housing fund, maintenance and child maintenance for W, with a stop-loss clause capping W’s entitlement at 50% of the total assets. At the time, H disclosed assets of approximately £61 million. Disputes subsequently arose as to the enforceability of the PNA due to H’s alleged financial decline.

The parties separated in August 2020 and W issued divorce proceedings in May 2022. Lengthy disagreements regarding H’s disclosure had significantly increased legal costs, compounded by the changes in both parties’ legal representation.

Current hearing

MPS

W sought an MPS order for £20,500 per month, which had been her interim allowance to this point. This included an ‘unless’ provision requiring H to maintain the status quo or else face an MPS order. W argued her financial position was significantly weaker than H’s, whom she alleged had a net worth of at least £23 million. She also suggested that liquidity events or business loans could increase the assets H had available to him.

W highlighted that she had already adjusted her monthly spending to £16,000, a significant cut from her previous monthly allowance of £96,000. Nonetheless, her mounting legal costs had rendered her financial situation untenable. However, W had failed to provide a detailed interim budget, forcing the court to rely on her Form E to assess her interim needs. This indicated a monthly income need of £140k, which included non-interim expenses.

H contended that his financial position had significantly weakened since signing the PNA, claiming his assets amounted to c.£14.9 million (±15%). He argued that maintenance payments of £20,500 pcm would be unsustainable, and instead proposed they be reduced to £9,000 pcm.

The court exercised its discretion under s 22 MCA 1973 and ordered H to pay W MPS at a rate of £12,000 pcm, in addition to covering child and household expenses. In doing so, the court cited Rattan v Kuwad [2021] EWCA Civ 1, F v F [1995] 2 FLR 45 and TL v ML [2006] 1 FLR 1263, emphasising the necessity of a clear and realistic budgets to outline an applicant’s interim needs. The absence of a detailed interim budget inhibited the court’s ability to scrutinise W’s claim. As a result, a ‘broad-brush’ approach was adopted, with the court metaphorically wielding ‘part paint roller and part meat-cleaver’. Although the MPS order represented a substantial reduction for W, the court emphasised its temporary nature and encouraged W to economise in the interim period.

LSPO

W also applied for an LSPO to cover her mounting legal costs. She owed her former solicitors Starck Uberoi (SU) c.£75,000 and her current solicitors, Harbottle and Lewis, were owed c.£97,000 plus c.£36,000 work in progress costs. SU was asserting a lien over W’s case files until their fees were paid, preventing HL from accessing them. Further, HL had warned that they would ‘down tools’ unless the arrears were paid and further invoices met promptly. W’s attempts to secure litigation funding from Level and Rhea Group had been unsuccessful. Thus, W submitted that an LSPO was necessary to enable her to obtain legal services going forward. She invited the court to make ‘robust assumptions’ regarding H’s undisclosed assets, relying on TL v ML & Ors [2005] EWHC 2860 (Fam), and maintained that H had sufficient resources to meet her legal costs.

The court, guided by Rubin v Rubin [2014] EWHC 611, considered the financial resources and conduct of both parties to ensure that an LSPO, if made, was fair and reasonable. Ultimately, the court was not convinced that H’s disclosure was ‘obviously deficient’. On the evidence before it, there did not appear to be a ‘smoking gun’ or conclusive evidence of undisclosed funds. As a result, the court accepted H’s explanation of his reduced wealth for the purposes of the interim hearing, subject to findings at the final hearing.

Nevertheless, the court considered that an LSPO was necessary to ensure equality of arms, as otherwise W would be unable to secure effective legal representation. The court broke it down as follows:

Historical costs

• SU’s unpaid costs – the court deemed these unnecessary for W’s future representation, relying on DH v RH [2023] EWFC 111 and Xanthopoulos v Rakshina [2022] EWFC 30, which indicated that the release of case papers is not necessary for the purposes of s 22ZA.
• HL’s unpaid costs – the court awarded this on a standard basis to ensure HL could continue to represent W. It did so provided HL maintained that downing tools on non-payment is commercially necessary (R v R [2021] EWHC 195).

Future costs

• The court limited the award to what was necessary and reasonable, again adopting a broad-brush approach. It emphasised that not all of it had to be found immediately.

The court ordered H to pay £150,000 to W for future legal services and authorised HL to secure a charge over the FMH for an additional £476,585 under s 73 Solicitors Act 1974, allowing them to apply for an abridged charging order. H’s legal representatives were to receive £90,600 under the same charge.

In reaching its decision, the court distinguished Simon v Simon (Level Intervening) [2023] EWCA Civ 1048, where solicitors were in effect treated as unsecured lenders, by highlighting that in this case, HL had secured a charge to protect the funds. The court also relied on Wyatt v Vince [2015] UKSC 14, emphasising the importance that LSPO funds are applied exclusively for legal services.

Finally, the court clarified that in the event of a successful appeal against the LSPO, legal representatives would not be required to repay the funds. Instead, as per Lord Millett in Twinsectra Ltd v Yardley [2002] UKHL 12, the funds would ultimately ‘result’ back to the paying spouse via the recipient spouse.