Costs vs awards: was it worth it?

Divorce|July 21st 2016

How far would you be willing to go in order to get what you believed was a fair deal following a divorce? How much would you be willing to pay?

One case caught my eye recently which made me wonder if the final award really was worth all the effort, the stress and cost to get it.

We’ve covered this case before, in considering the principles involved in making an application to the English court following an overseas divorce. In this case, the wife literally squeaked home, being allowed to proceed despite the fact she had entered into what was expressed to be a full and final financial settlement in a divorce in Russia in 2009.

Dissatisfied with the outcome, several years passed during which she moved to England and established herself in Central London, thus bringing herself within the jurisdiction of the English court and seeking an additional pay-out of nearly £10 million from her ex-husband who was worth some £33 million when the case finally came to court. Nice work if you can get it you might think, but it was tough enough to convince Mrs Justice Roberts that she should be entitled to proceed with her claim at all, let alone obtain an additional £10 million.

Having given her permission to proceed, the Judge did her best to suggest the parties should settle on the basis that her needs had not been fully met in Russia but warned the wife to substantially lower her expectations. The parties didn’t settle. So the case came to a final hearing to determine the extent of her needs within the context of a consensual previous agreement and all the assets in the case were non-matrimonial and derived from the husband’s father.

Similarly there was the very real issue of delay. In the Supreme Court, in the case of Vince v Wyatt Lord Wilson had stated:

“[T]here is a prominent strain of public policy hostile to forensic delay.  The court will look critically at explanations for it; and, even irrespective of its effect upon the respondent, will be likely, by reason of it and subject to the potency of other factors, to reduce or even eliminate its provision for the applicant.  Nevertheless it remains important to address its effect upon the respondent.  In some cases … a respondent can show that he has assumed financial obligations or otherwise arranged his financial affairs in the belief that the applicant would make no claim against him and that he has done so in a way which, even if it were possible, it would not be reasonable for him to put into reverse.”

All of the above were taken into account by the Judge in arriving at her decision.

By the time of the hearing, the husband had paid all the rent on her current home until 2022, when the children’s housing needs would be met on completion of higher education.

So what did the wife receive?

The Judge found the wife’s housing needs of around £5 million were excessive and allowed her £2.5 million from 2022 onwards. She also found the wife’s income requirements to be excessive and allowed her £140,000 per annum. Then, using a Duxbury Calculation to work out the wife’s income requirements for life, and taking into account the wife’s own capital of £4.8 million (including some properties which the Judge treated as liquid capital), it all meant a balancing payment due from the husband of £1.1 million.

Legal costs for both parties totalled around £1 million each side. So it has cost the wife £1 million to get an extra £1 million and rent paid for 6 years.

Was it worth it?

Hindsight is a wonderful thing, but given the starkest of warnings from the Judge who was going to decide the case, this wife still pressed on to the final hearing wanting a huge pay-out. And the husband too, never offered enough.

Both of them knew this case was never going to be settled on the same basis as an English divorce. There were very compelling factors in the husband’s favour that were not going to be ignored. Yet the husband never offered as much as the Judge ordered him to pay. He paid the rent up front, but offered nothing for her income needs. Had he kicked in the extra £1 million, he would have been home and saved himself the extra legal costs. Had the wife taken on board what the Judge said, rather than changing Counsel for the final hearing – it would have saved her money in costs too.

So I’m back to my argument about costs risks at least in the High Court. Husbands can and do play hard ball and know that paying the cost of a hearing and forcing their wife to go to court might save money in the long run. As was the case here. Wives can run a case to trial because they too might as well take the risk. After a pugnacious bitter battle, she has come away with an extra £1 million, not £10 million.

Under the old costs system, both parties would have had to concentrate their minds much harder, beat the Judge’s order or risk paying the thick end of a £2 million bill.

Read Z v Z here.

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  1. Andrew says:

    So remind me: why was Calderbank abolished?

  2. Elena says:

    It would have been probably “worth it” if her demands were not as excessive!

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