Experts, capping of fees, indemnities and the slip rule: Loggie v Loggie [2022] EWFC 2

On 27 January 2022 Mostyn J published his decision in the 'very unfortunate case' of Loggie v Loggie [2022] EWFC 2 (in its ninth year of litigation). The decision is must read for FR practitioners. There are lessons to be learned.

The 'Indemnity' Application

By D11 dated 4 December 2021 the applicant sought for the respondent to indemnify her in respect of £65,603.60, a sum she owes to her former solicitors.

The debt arose as the applicant's former solicitor, on her behalf, paid the same sum to Saffrey Champness in or around August 2021 in satisfaction of outstanding fees in the same sum incurred by Mr Jason Lane of Saffrey Champness ('the SJE') pursuant to his instruction as a single joint expert in the financial remedy proceedings.

The Chronology (in brief)

• 2013 – The divorce petition was issued.
• The wife issued financial remedy proceedings which were fully contested.
• 16 June 2014 – Permission was granted for the parties to instruct the SJE to prepare a report on the husband's business interests:
  • The SJE's costs were to be met equally by the parties in the first instance.
  • That order did not limit the amount that could be paid by way of fees and expenses to the SJE.
  • Before the SJE commenced work, the parties were provided with a quotation for the preparation of the report in the sum of £60,000 plus VAT.
  • The SJE ultimately raised an invoice of almost twice the amount the parties had anticipated: £126,000 (inc VAT)
  • The quantum of that invoice has now been in issue for more than six years.
  • The parties, through their now former solicitors, challenged the quantum of the invoice following its receipt, however no claim had been instituted by the parties in relation to that invoice.
• 25 July 2016 – Mostyn J ordered that payment of the SJE's fees should be suspended until the conclusion of the final hearing of the wife's application for financial remedies.
• 1 February 2017 – Mostyn J presided at the final hearing. The 'final order' provided at paragraph 4 that there be an order for sale of four properties and that the proceeds thereof be used inter alia to pay any unpaid fees of the SJE (plus any interest due and payable thereon). The order was not complied with.
• Post final order – The wife issued enforcement proceedings in respect of the final order, which was ultimately compromised by agreement ('the agreement').
• 13 March 2019 – The agreement was reduced to writing by the parties and lodged with the court. Mostyn J approved the agreement and made various technical variations to the final order to give effect to the agreement. The 'March 2019 order' was made.

Decision

Impropriety?

Allegation's by the husband that the wife had improperly interfered with his negotiations with the SJE by which he intended to reduce, if not extinguish, the amount of £65,603.60 said to be owing, and allegations that the wife was involved in 'a ring of deceit' and 'a vindictive alliance' to 'create' this debt with her solicitors and those instructed on behalf of the SJE were rejected as 'outlandish.'

Jurisdiction?

Mostyn J was satisfied that there is jurisdiction for the indemnity sought to be ordered for the same reasons he gave in CH v WH (Power to Order Indemnity) [2018] 1 FLR 495.

As a reminder:

'The Family Court has all the powers of the High Court. The High Court unquestionably has the power, as part of its equitable jurisdiction, to order an indemnity. If awarded, that represents a legal right in favour of the person so indemnified. The court can award an injunction in support of a legal right. To order someone who has been ordered to indemnify the other party in respect of a mortgage to use his or her best endeavours to keep up the payments on that mortgage is of the nature of an injunction in support of a legal right. In my opinion, this provision is squarely within the power of the High Court to order, and is therefore within the power of the Family Court.'

Discretion – to order the indemnity or not?

The agreement (which compromised the enforcement application) provided for there to be variations to the timing of the payment of the lump sums contained in the final order. Further. as Mostyn J noted, the final page of the agreement crucially provided for the following:

'Saffrey Champness – Jason Lane [The husband] to take full responsibility for the outstanding amount payable to Jason Lane of Saffrey Champness and shall agree to fully indemnify [the wife] against it.'

Whilst paragraph 6 of the March 2019 order recorded that Mostyn J approved the agreement, the body of the March 2019 order did not contain an explicit indemnity in favour of the wife in the terms contained in the agreement.

Mostyn J considered that this was an oversight by him when he formulated the March 2019 Order.

What, in effect, Mostyn J was being asked to do was correct the March 2019 order pursuant to the slip rule.

Reminding us…

(1) Of FPR 29.16…

'The court may at any time correct an accidental slip or omission in a judgment or order.'

(2) And, the recent(ish) decision of IC v RC (Slip Rule) [2020] EWHC 2997 (Fam) (a decision of Mrs Justice Gwynneth Knowles), which confirms that even major errors can be corrected under this rule…

Mostyn J found that the absence of a formal clause in the March 2019 Order containing an explicit indemnity was an 'obvious error' given that he had approved the agreement which contained just such an indemnity.

To avoid the discretion being exercised against him the husband needed to identify a cogent reason why he should not be held to his bargain. Did he do so? No. The parties had reached a compromise of the enforcement application brought by the wife, which including a term to ensure that the wife was indemnified against the outstanding fees of the SJE. That term was approved by the court. The accidental omission from the March 2019 order of a formal clause containing an explicit indemnity 'cannot mean the husband can now seek escape responsibility to indemnify the wife' as 'that is what he freely agreed to do, and he should be held to his agreement.'

The moral of this unhappy story…

… is that parties must ensure that the court is asked, prior to the instruction of a SJE, to place a cap on the expert's costs pursuant to FPR 25(12)(5).

FPR 25(12)(5) provides:

'The court may, before an expert is instructed, limit the amount that can be paid by way of fees and expenses to the expert.'

Mostyn J points out that:

• Prior to the court making an order for the instruction of an SJE, there will have been preliminary enquiries raised with the proposed expert and responses given thereto; and
• By virtue of PD 25D para 3.4, incorporating PD 25B para 8.1(e), the expert will have stated his/her costs, including hourly or other charging rates, and the likely hours to be spent conducting interviews, writing the report and attending court.

Therefore, the court will be 'fully equipped to be in a position fairly to consider these figures and to impose a cap on the expert's costs.'

What to take away from this 'unfortunate case'?

(1) Ask the Court to impose a cap on SJE fees pursuant to FPR 25(12)(5).

(2) Should circumstances unexpectedly change causing far more work to be done by the expert, then remember that it is open for the expert to apply for the order imposing the cap to be varied under FPR 4.1(6).

(3) Check – and double check – orders. Even the best of us can miss things out in error.

(4) If things are missed, consider whether the slip rule can assist (remember: FPR 29.16 and IC v RC).