Costs News

03 September 2015
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Court makes £344,000 indemnity costs order in divorce case

A High Court judge has said his order for indemnity costs of £344,000 against the husband in a divorce case should act as a “stern warning” against bad conduct.

Ruling in Joy v Joy-Morancho & Ors (No 3) [2015] EWHC 2507 (Fam), Sir Peter Singer found that the husband had gone to great lengths to conceal his assets so that they could not be claimed by the wife.

He said the case “collusively advanced by [the husband and a trustee of a trust he had settled] was a rotten edifice founded on concealment and misrepresentation and therefore a sham, a charade, bogus, spurious and contrived. I do not shrink from applying to it the description fraud, a deliberate design to deceive, inflicted on [the wife] and on the court, and found by the court so to be”.

This meant that it was not appropriate to make no order for costs, but the judge was faced by different costs regimes for different aspects of the case.

He said: “I ventured for consideration during the course of the hearing, and received no adverse response, the suggestion that it would be impracticable (and though I did not then articulate the thought, productive more of expense than clarity) to attempt an application-by-application or issue-by-issue analysis and assessment of the costs of this hydra-headed litigation.

“And so I have considered carefully all the propositions advanced to me during a full day of submissions on costs issues and propose, having weighed them, to stand back and address the global perspective with a broad brush.”

Sir Peter said: “Where one party hatches a wholly deceptive presentation, pursues it persistently to the conclusion and is found to have done precisely all of that, then he or she should expect no quarter from the court when it comes to costs. Such conduct unravels all and can and should in an extreme case where the conclusions are clear have clear costs condemnation meted out as the court's response.

“Such cases are relatively few in number but this is such a case. Such cases should be fewer in number, and may become so if the costs outcome for such reprehensible conduct is clearly in prospective focus from the off.

“Thus I conclude, when I stand back and address the global perspective of this litigation with a broad brush, that H should in principle take responsibility for W's costs ‘at large’, that is to say those in relation to which there has not already been ‘no order’. I do not believe that such an approach contains any punitive element: it is no less an outcome than such aberrant conduct deserves.

“I impose it in this case because it is what I believe to be the fair, just and deserved order. I do not as part of the process of arriving at it add in anything extra for deterrent effect on other cases which will come before the court, although it will be good if it does sound a stern warning.”

He said he had not had the opportunity of considering a full and detailed breakdown of the costs incurred by the wife, “and therefore feel obliged to leave open the option of what no doubt would be a lengthy, complicated and fully contested assessment”.

He continued: “But I can, I believe fairly, diminish the prospects that time (not least court time) and expense will be taken up in such a venture by adopting the following approach. Having regard to the very considerable disparity between the costs liability incurred by H with his lawyers in the English finance-related proceedings (and recognising that they his team were more numerous than those employed by W) of about £870,000 overall, I will take the £588,500 estimate for the bill run up by W, and within it Mr Bates' sum of £417,829 for the ‘costs at large’, as fair figures upon which to base my order.

“I take the view (which can only be impressionistic, but then in many ways that is of the essence of the broad and entirely fact-sensitive discretionary exercise which costs awards in this sort of situation must be) that H would be unlikely to achieve as much as a 20% reduction on detailed assessment, bearing in mind that the onus will be on him to establish unreasonableness rather than for W to surmount the test of proportionality.

“I will therefore adopt 80% of £417,829 as the measure of the on account award I will make. This comes out as £334,263.”

Sir Peter ordered payment within 14 days but said he was “not blind to the fact that compliance with the order by the due date will not happen, and that compliance whether in whole or in part may be significantly delayed if ever performed”. But, he said, that was “no reason” not to make the order.

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