Financial remedies case: Back in July last year I wrote here about the High Court case MB v EB, in which Mr Justice Cohen was being asked to determine three preliminary issues in connection with the husband’s financial remedies case: the length of the marriage, the impact of a separation agreement entered into by the parties in 2011, and whether there was any ‘marital acquest’, i.e. assets acquired by the couple during the marriage. As I explained, those three issues were essentially determined in favour of the wife.
The importance of properly negotiating
I ended that post with the following:
“Of course, the big question is: what will be the consequences of these findings upon the final outcome of the case? That, as Mr Justice Cohen said, is a matter for another day.”
Well, another day arrived in December. And it proved to be another salutary lesson in the importance of properly negotiating in a financial remedies case.
By ‘properly negotiating’ I am referring to two things that the court will expect from a party involved in a financial remedy claim: that they should respond in a timely fashion to any reasonable settlement proposal made by the other party, and that their own proposal should be reasonably pitched. Sadly, in this case, Mr Justice Cohen found that the husband had failed on both counts, and the result was catastrophic for him, wiping out the lump sum that he had been awarded.
I don’t really need to spend much time explaining the background of the case. Suffice to say that the wife was fabulously wealthy (she accepted at the hearing referred to in my previous post that she had resources available to her of not less than £50 million and could meet with ease any order that Mr Justice Cohen might reasonably make for the meeting of the husband’s needs), and that the husband, a 59-year-old ‘struggling artist’, had no realistic prospect of meaningful employment. It was a short childless marriage.
As I explained in my previous post, a separation agreement was entered into in 2011, under which the wife would provide a sum of up to £245,000 for the husband to purchase a property of his choice, and would pay him a further lump sum of £35,000.
The husband’s needs
The question that remained to be determined was how much, if anything, should the wife pay to the husband to meet his needs? To cut a long story short, the husband claimed that he needed £25,000 a year to live on, and the wife argued that the husband was not entitled to anything more than he had received under the separation agreement.
Crucially, however, the wife put forward a settlement proposal in June 2018, offering the sum of £300,000. The husband failed to respond to that proposal. The wife put forward an increased proposal of £236,000 in September 2019, and the husband only responded to that a week before the hearing, putting forward a proposal that the wife pay him about £1.3 million, a proposal that Mr Justice Cohen described as “about as far wide of the mark as can be imagined.”
Mr Justice Cohen found that the husband was entitled to a lump sum to cover his needs, and awarded him £325,000 (the amount needed to provide him with £25,000 per annum for life, according to the Duxbury tables), plus £10,000 for a car.
The issue of costs
But then came the issue of costs. The total costs of both parties were the staggering sum of £1.25 million, of which the husband had spent £650,000. The husband, having ‘won’ the case, sought an order that the wife pays all of his costs.
However, Mr Justice Cohen found that the case should have been very easy to settle, and the reason that it had not settled was the way that the husband has chosen to run his case, which he found to be “be irresponsible and unreasonable.” In particular, if the husband had responded in a timely fashion to the wife’s settlement proposal with a reasonable proposal of his own then Mr Justice Cohen had no doubt that the matter would have been settled by agreement.
He, therefore, capped the wife’s liability for the husband’s costs at £150,000, which was “almost identical” to what his costs were when the wife made her offer in June 2018.
So the total that the husband received was £485,000, which obviously left him in substantial debt to his solicitors, effectively wiping out the sum required to meet his needs. As I say, a salutary lesson in the importance of properly negotiating in a financial remedies case.
You can read the full judgment here.
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