The tragedy of heavily contested litigation
By:0 commentsFebruary 22, 2017
Sometimes when you set out to write about a case it has so many aspects to it that you wonder quite where to start. AF v MF & Others is one such case.
AF v MF & Others was a financial remedies case heard by Mr Justice Moor over ten days last October. That hearing length will give an indication of its complexity. It involved a wide cast of characters spread across various countries, numerous businesses, complex trust arrangements, interests of other family members (including the husband’s 90 year old father, described by Mr Justice Moor as still “the patriarch of the family, with his fingers well and truly on the financial pulse”), various properties, and disparate assets, including valuable works of art and a boat. In fact, reading the report brought to mind those 1980s soap operas, such as Dallas, or Dynasty, that my late mother used to watch.
I couldn’t possibly do justice to the intricacies of AF v MF in one short post. Instead, I will concentrate on the aspect that I find most disturbing, and that crops up so often in financial remedy cases: the way in which the parties conducted the litigation, running up enormous costs, and thereby using up a substantial proportion of the very assets over which they were arguing. The case is another salutary warning to those intent upon arguing everything in court.
And it wasn’t just those last ten days that they spent arguing in court. Far from it. In the course of the proceedings there were various contested applications, leading Mr Justice Moor to comment:
“I regularly warned both parties about the horrific costs of this case as contested application after contested application was heard by me and other judges over the past year.”
Those applications included an application by the wife for maintenance pending suit, applications by the wife for orders preventing the husband from dealing with assets, and an application by the husband to reduce the maintenance pending suit. There was also an issue relating to ‘Imerman’ documents, after the wife found a large number of documents belonging to the husband in the matrimonial home, and passed them to her solicitors.
Of course, the way to reduce costs is to agree matters. Sadly, there was little that the husband and the wife could agree here. In fact, Mr Justice Moor, who has sat as a judge since 2002, said of the parties’ efforts to reach a settlement that the settlement proposals the parties put forward were as far apart as in any case he could remember dealing with. The primary reason for the discrepancy was the failure of the parties to agree what assets were available to the parties, as against belonging to some other family member, company or trust. The wife claimed that there were some £98 million of available assets, whereas the husband claimed that the assets were worth at most £2.7 million. The husband basically proposed that the former matrimonial home be sold and the net proceeds divided equally, whereas the wife sought, amongst other things, the outright transfer of the matrimonial home to her, plus a lump sum of some £18 million. As we shall see, it fell to Mr Justice Moor to make findings as to the assets of the parties.
Before I come to that, however, there was another issue that will have had a serious adverse effect upon the possibility of settlement, and therefore the costs, and that is the veracity of the witnesses. I will not go into the details of this, but after hearing from the three main witnesses (the husband, the wife and the husband’s father) Mr Justice Moor sadly concluded:
“Very regrettably, I am unable to accept the evidence of all three of the main witnesses in a number of important and significant areas.”
And so what were Mr Justice Moor’s findings? Again, this is too complex to go into detail here, but the bottom line was that he found that the total assets of both parties came to £2,771,806, although he also found that up to £6.1 million could be made available to the husband from a trust. Of the £2.7 million assets, £1.6 million were liquid and £1.1 million were illiquid. Mr Justice Moor’s award left the wife with just over a million pounds of the liquid assets and some £200,000 of illiquid assets.
And what of the costs? Mr Justice Moor set out the position thus:
“It is a tragedy of this case, as with so many, that the heavily contested litigation has destroyed a high part of the assets set out above. The Wife has incurred costs of £551,596 of which she has paid £510,441, largely by liquidating her inherited assets. The Husband has had costs of £671,114 of which he has paid £566,253 by cashing in the remainder of his pension funds (which comes with a heavy tax burden) and taking a … loan of (£206,000).”
Ouch. He concluded:
“I do not believe that this judgment has really got close to describing accurately the truly terrible level of acrimony in this case. Huge amounts of costs have been wasted. It seems to me, having heard the evidence that I have, that both parties are equally to blame. I have taken the costs into account in coming to my decision. In particular, I have permitted the Husband to discharge his outstanding costs from the proceeds of sale of the matrimonial home as well as his … loan. As to the main applications for financial remedies, there will be no order as to costs.”
I will make no further comment.
If you are so inclined you can read all 119 paragraphs of AF v MF & Others, here.
Photo by Horia Varlan via Flickr under a Creative Commons licence.
February 22, 2017
Categories: Family Law