Disregard for court process could cost you a fortune.
Facts:
This is one of the judgements in the legal sage involving children litigation, jurisdiction and financial remedy. The most well-known is Xanthopoulos v Rakshina [2022] EWFC 30, now considered a leading authority on the privacy of family proceedings. This judgement relates to the husband’s application for financial remedy under Part III of the Matrimonial and Family Proceedings Act 1984.
The husband was born in Russia but later acquired Greek nationality after moving to Greece. The wife was a Russian national. The parties met at university, had two children and were married in 2006. In 2013, the parties entered into a post-nuptial agreement and separated in 2020. While the wife worked in her family’s business, her salary was modest, though she received important dividends and donations from her father and brother. The husband worked also in the business for a short period but stopped working in 2008.
The wife owned four properties, three in Russia and one in the UK, collectively worth £6.77 million and had £7.7 million in bank accounts while the husband had no assets of significance.
Decision:
One of the issues in the case was the extent of the wife’s interest in the family business. Sir Jonathan Cohen concluded that her brother and father were the beneficial owners of the company but the wife had approximately 25% of shares in the business.
Although the wife had substantial capital, the Judge accepted her description of the standard of living as ‘very comfortable but not profligate’. This was significant in the ruling, as the husband, discovered around £8.5 million in housing comprising a secondary house in Greece, a property in London, and £500k for the furnishing and redecoration of the London property. The Judge found this claim to be ‘ridiculously inflated’ and based on the assumption that all assets in the wife's name were beneficially hers. Sir Jonathan Cohen, based on the evidence, ruled that it was unlikely that the husband would settle in the UK. Additionally, the wife produced evidence that the estate the husband had chosen in the Athens suburbs was valued at around €0.5-0.56 million rather than £3 million, as claimed by the husband. The Judge awarded a housing fund of €600,000 and a further €60,000 to furnish the property which would revert to the children upon the expiration of the husband’s life interest.
The lack of willingness of the husband to build a career earlier was also an additional aggravating factor. While Mr Justice Cohen recognised he might have some difficulties finding a job due to being unemployed for a long time, he considered that the husband had the capacity to find a means to maintain himself. As a result, he was only awarded £75,000 for the first year and then £60,000 for a further three years. Another factor was the impact of a Post-Nuptial Agreement freely entered into in Russia by the former husband.
Mr Justice, when analysing the husband’s conduct during the various trials, found that his failure to comply with court directions and frequent change of solicitors was a “grossly exorbitant use of the court’s time and W’s money”.
It also became clear that the husband was indebted to five of his previous solicitors to the amount of £900,000. When considering the orders for legal costs funding under the Legal Aid, Sentencing & Punishment of Offenders Act (LSPO), Sir Jonathan Cohen said in this case: “It is not the job of the court to act as the insurers of solicitors who overshoot, let alone dramatically overshoot, the sum provided by way of LSPO”. Orders for legal costs funding should be “firmly tied to compliance with court orders”.
Implications:
The significance of this judgement is noteworthy for both clients and practitioners, as misconduct and disregard of the court process can be a factor influencing the determination of financial matters in relation to divorce. Improper behaviour could result in the party getting less than they might have otherwise been awarded. The fact that the wife funded all the proceedings for both the husband and elder daughter in both Russia and England, while the husband changed solicitors seven times also influenced the financial decision.
Regarding the LSPO, the comment that the court is not the insurer of solicitors will have a significant impact, as it demonstrates that it is the duty of the solicitors to apply to the court for a further order. Solicitors who decide to carry on without being paid and incur further fees do so at their own risk.
Regarding the post-nuptial agreement, this judgement highlights the notion that procedural shortcomings will not always provide protection.