How to calculate interim maintenance during lockdown: R v R [2021] EWHC 195 (Fam)

Although the parties’ marriage only came to an end in September 2020, they had already incurred costs of nearly £1.3m as a result of their litigation in this jurisdiction (in addition to litigation in ‘State A’). There were five matters formally listed before Nicholas Cusworth QC (“the judge”), sitting as a Deputy High Court Judge, although he was only in a position to determine applications made by the husband (“H”) against the wife (“W”) for interim maintenance and for a Legal Services Provision Order (“LSPO”).

Interim maintenance

W’s means did not play a central part in determining H’s applications. However, a schedule of assets disclosed on W’s behalf disclosed cash and property assets in her name worth over £29.2m, although it was asserted that some of this was held on trust for others and that W’s resources were worth £9.6m. W said her salary was £109,000 net in 2019 and £124,000 net in 2020. W accepted that spending from the family’s joint account during the marriage topped £20,000 pcm. Her offer of interim provision for H provided for him at the rate of £170,000 pa, to include H’s housing costs.

The judge took into account the jurisdictional dispute between the parties, including the fact that there was a dispute in relation to forum and that there was a post-nuptial agreement executed in State A, under which H was disentitled to any provision. However, the judge considered that until the determination as to jurisdiction was made, it was important that a fair and proportionate financial balance was maintained between the parties.

Housing needs

The parties did not agree the cost of the marital status quo. H produced a letter from a local estate agent (which had not been produced in a way that complied with any of the requirements in FPR Part 25) purporting to identify the rental value of the former family home in London as £5,500 pw, whereas W said the rental value of flats in the area was not much more than £2,000 pw. Given the limited weight which could be attached to H’s letter, the judge placed more reliance on the property particulars he received from each party.

Although H had previously asserted that he was homeless, he disclosed at the hearing that he was paying rent ‘somewhere in England’. In the absence of any actual evidence, the judge could make no assumptions, and simply sought ‘to provide a sufficient amount to enable him to rent somewhere reasonable in the same area as the family home whilst the various different strands of this litigation are gradually teased out’ [15].

Both sides produced property particulars in West London. W had identified properties with rent between £1,600-£2,000 pw, and H between £4,500-£6,000 pw (although he also produced particulars with rent between £3,500-£3,600 pw, to try to show the range of the market, but he did not accept that those properties were sufficient for his needs). H rejected all the properties put forward by W as being, in various ways, less commodious than the former family home.

The judge considered that the properties H had put forward were ‘well in excess of what is reasonable in these circumstances’ [19]. He noted that he ‘need not strive to replicate exactly the standard of living enjoyed in the marriage, but rather I should provide the husband with a reasonable amount, in all of the circumstances of this case, which will enable him to house close enough to the former family home to facilitate such direct contact with his children as the court in due course determines is in their best interests, and in a property of such condition that there will not be a significant perceivable gulf between the standard of his accommodation, and the home where the children live with their mother’ [18]. Even H’s cheaper properties ‘have the potential to represent an upgrade on the family home’ [19].

Ultimately, therefore, the judge concluded that reasonable provision was somewhere between the less expensive properties provided by H, and the range provided by W. With a budget of £2,500 pw, or £11,000 pcm, the judge was satisfied that H ‘can find entirely appropriate accommodation in the area of London where all of the parties’ particulars are to be found’ [20].

Income provision

H sought, in addition to his £23,500 pcm claim in respect of rent, £21,703.50 pcm to meet his living expenses. W had offered him £5,500 pcm.

One of the reasons for the gulf between the parties was H’s initial presentation of spending from the family’s joint account in the two years up to the parties’ separation. H said an analysis showed outgoings of £1,415,187 during the period, or £60,000 pcm (increasing to £73,000 pcm if the period after the national lockdown from April 2020 was excluded). However, W’s team identified that around half the transactions on the account were internal transfers, so the true figure was £29,237 pcm over the whole period (or £33,460 pcm excluding the period of lockdown). Once school fees, professional fees, tutoring and fixed property costs were excluded, the figure was c. £21,000 pcm (and £500 more or less depending on whether the lockdown period was included). The judge accepted W’s figures.

H also argued that there was additional spending not directed through the joint account, e.g. in cash, through W’s company, or on credit cards. However, the judge was satisfied that he had ‘a sufficient picture of the level at which the parties lived during the marriage from the evidence before me fairly to assess the husband’s interim budget in the way that the authorities require’ [22].

The judge excluded or reduced several of the figures H had claimed he needed in order to pay for, among other things, a live-in nanny (despite the fact he did not work and there was no order in place for any arrangements for him to see the children), and restaurant, theatre, cinema and concert visits and holidays (despite the Covid-19 lockdown). The judge considered that none of those figures could currently be justified at the levels claimed, but accepted that they were ‘likely to become more important in coming months’ [24].

H also sought additional capital provision as part of his interim award, which was ‘unusual’, and ‘only usually justified in circumstances where an urgent need can be demonstrated that cannot wait until final determination of capital issues between the parties’ [25]. In the circumstances, the judge proposed to deal with the need for criminal legal costs as part of H’s claimed LSPO provision, since he was not satisfied that the other interim capital provision sought was of sufficient urgency to merit any additional award, save for £1,000 which was needed for dental treatment and which would be factored into the judge’s overall assessment (as would H’s set-up costs in any newly rented property).

The judge queried how to deal with H’s interim application ‘at a time when due to an indefinite national lockdown, current expenditure is curtailed, but where costs will foreseeably be increasing by later in the Spring as measures will likely ease’ [26]. He decided to allow the sum of £9,000 pcm by way of interim provision for H, which initially would allow him to spend any short-term surplus on other items, but ‘should not require further adjustment pending final determination of the various issues in this case’ [28]. This was ‘only slightly less than one half of the discretionary spend that I have seen for the family of four during the marriage, and less than one third of the total spend including school fees which the mother will be continuing to pay’ [28]. It would allow H to have available ‘sufficient to provide for leisure time with his children insofar as this becomes possible and is determined to be in their best interests’ [28].

The total amount of interim provision was therefore £20,000 pcm, in addition to which W was ordered to provide as required for H’s rental deposit (which would be on account of H’s eventual entitlement in these proceedings). The judge was satisfied that this was affordable for W.

Legal Services Provision

The parties agreed that a LSPO should be made under section 22ZA of the Matrimonial Causes Act 1973. In addition to the quantum of such an award, there was a separate issue about whether or not it was appropriate to order some provision to meet some or all of the costs in the proceedings which H had already incurred. At the beginning of the hearing, H had claimed both costs incurred with his current solicitors, and also with the previous firm which had acted for him. However, by the end of the hearing H did not press the position in relation to his previous firm’s costs.

The judge noted that the question for the court was ‘one of reasonableness’ [36], and that there is ‘a balance of reasonableness to be struck in each case, on its own facts’ [43]. The judge considered the statement of Holman J in LKH v TQA AL Z (Interim maintenance and costs funding) [2018] EWHC 1214 (Fam) at [23] that s.22ZA ‘is looking forward to the obtaining of legal services, not backwards to legal services which have already been obtained’. He agreed that that must always be borne in mind, although he also noted that ‘the reasonable availability of future provision may well be affected by the degree to which existing outstanding bills to the firm then instructed have been cleared or reduced’ [43].

The judge stated that ‘each case must be determined on its own facts, applying the criterion of reasonableness to what is a question of funding, and not any determination of ultimate costs liability’ [43], and that another factor to be considered must be that ‘significant costs may be run up between the issuing of the application for an order and the hearing when the appropriate provision is determined’ [44]. In this case, those costs were around 25% of the outstanding bill H owed to his current solicitors.

The judge further bore in mind that the costs H sought were to fund the substantive jurisdictional arguments between the parties in relation to the suit and to jurisdiction under the Children Act 1989, as well as interim issues in relation to the children. It was agreed between the parties that the costs of any subsequent financial proceedings could not fairly be awarded before the questions of jurisdiction had been determined.

The judge also reminded himself that one of the issues within the financial proceedings was that W asserted the existence and validity of the post-nuptial agreement effected in State A. Although the judge could not assess the force of W’s arguments, he bore in mind that ‘if the husband in the event receives only an attenuated award, full recovery of the amount of any LSO provision may not be practicable if the basis of the award is predicated only upon need, however assessed’ [48].

W had run up a total of £705,944 since mid-October 2020, while H claimed that the full amount of the historic costs he owed to his solicitors was £589,672. The judge stated that ‘it is clear that the husband’s costs expenditure has not been by any measure disproportionate when compared to that by the wife’ [50].

W proposed paying H £560,000 plus VAT, i.e. a total of £672,000, plus £10,000 per mediation session. This offer was put forward on the basis that a loan would be taken against the security of the family home in the sum of £1.5m, which could be extended and from which each party would take their costs on a pound for pound basis.

Although the judge was satisfied that it was reasonable to charge the matrimonial home to raise the funds to be provided for H, he did ‘not have sufficient information about the wife’s financial circumstances to accept that it is appropriate for her to be able to reduce the available liquidity in this jurisdiction to meet her own costs by the same amount at the same time’ [52]. The pound for pound element of the charge was therefore not accepted.

In relation to the historic costs, the judge did not consider it reasonable for W to make no contribution to the outstanding amount H owed to his current solicitors (a little over £394,000). However, neither was the judge persuaded that all or even the majority of the costs of £291,781 which H had run up with his current solicitors by the time he made this application needed to be discharged to achieve a fair balance between the parties. On the other hand, the £103,000 incurred by H after the application was made, but before the date of the hearing, which could be seen as incurred in light of the application, could be taken as being more fully within the potential ambit of the application.

No award was made in relation to the costs outstanding to H’s former solicitors, since the judge was not satisfied that the discharge of those costs was reasonably required to enable H to obtain appropriate legal services.

Overall, the judge ordered W to pay £200,000 towards H’s outstanding costs (just over half the current bill owed by H to his solicitors). He was satisfied that that amount, coupled with adequate provision going forward, would ‘be sufficient to enable [H’s solicitors’] continued representation of their client without undue tension in the relationship, and would therefore be reasonable, and appropriate to procure legal services for the husband’ [55].

W was ordered to make ongoing payments at the rate of £150,000 pcm (a further £750,000), paid from February until June 2021, on the basis that the jurisdiction hearings would take place in June 2021. The judge was satisfied that this was ‘a reasonable amount having regard to the rate at which both parties have been spending in the litigation to date, and the issues between them and their complexity, which of themselves justify the top level representation currently being employed by both husband and wife’ [57].

Henrietta Boyle, Barrister at 1 Hare Court