Court and Legal fees : Whose responsibility is it to keep them Proportionate?
Michelle Young has today been awarded a £20m lump sum at the conclusion of seven years of litigation against her former husband, the businessman Scot Young. Her legal fees amounted to £6.5 million. The judge indicated it is unlikely Mrs Young will ever see all of her award, yet she still has to discharge her legal fees from somewhere. No wonder she’s not happy!
In Young v Young  EWHC 3637 (Fam), which Mr Justice Moor described as “as complicated a Financial Remedies case as has been dealt with before these courts”, the judge concluded after a painstaking review of the evidence that the husband’s assets amounted to £45m and his debts £5m. The award therefore equated to 50% of his net assets.
The judge determined that the original maintenance pending suit order was justified and accordingly dismissed the application to vary the order and remit the arrears.
Mr Young claimed to have lost his multimillion pound fortune leaving him bankrupt and with debts of £28 million. However, the judge found that whilst it was impossible to estimate Mr Young’s assets with any precision, nevertheless:
“Doing the best I can, I find that he still has £45 million hidden from this court. As against that, I must deduct £5 million for his debts, making a net total of £40 million.”
Moor J concluded:
“I realise that the Wife will have difficulties in enforcing my order. I only have two things to say. First, this debt will exist for all time. The Husband will never be free of it. It is very much in his interests to discharge it so he can move on. Second, I have rejected all the more fanciful allegations made against him. I cannot see how he would have complied with an order for a lump sum of £300 million let alone £400 million. I hope that he will take the view that he is better off paying the lower sum of £20 million so that he can then concentrate on rebuilding his life.”
In the course of his judgment, which runs to 188 paragraphs, Mr Justice Moor criticised the ‘eye watering’ costs incurred in the case.
Mrs Young was represented by leading and junior counsel, instructed by solicitors. The solicitors, Vardags, did so on the basis that they would get paid only if Mrs Young succeeded in obtaining a significant lump sum from Mr Young. Moreover, there would be no uplift on their normal fees if there was full recovery.
Her previous advisers have been paid by a number of different litigation funders. Moor J said:
“In one sense, the Wife did amazingly well to be able to obtain as much litigation funding as she did, given that she had no security to offer. The amounts spent, however, are truly eye watering. She has had three separate arrangements. The first was with an organisation called Harbour who provided her with funding of £400,000. The arrangement was terminated on 4th December 2009. She then obtained funding from Bracewell Law who provided £1,000,000 before terminating the arrangement in July 2012. Finally, she reached an agreement with ASCL and others. Pursuant to this arrangement, the sum of £2,733,712 was advanced, which included a loan of £626,000 from Ideas Workshop.”
Having set out in detail the difficulties Ms Young faced, Moor J noted:
“She had therefore spent around £5 million without getting to the final hearing or having produced a final forensic accountant’s report. …. In total, it means the Wife’s costs of this litigation have been around £6.4 million. Whilst I accept that this has been exacerbated by repeated changes of solicitors, in part as a result of the litigation funding issues, and that this case has been as complex as any I have dealt with, I consider the total amount spent to be completely unacceptable.
“I remind myself of the overriding objective in Rule 1.1 of the 2010 Family Procedure Rules that cases must be dealt with justly. This case has fallen foul of just about every part of this rule. So far as practicable, cases must be dealt with expeditiously and fairly yet this case has taken nearly seven years. They must be dealt with proportionality. Even though this Husband’s affairs were exceptionally complicated, the case has not been dealt with proportionally at any stage. Parties are to be on an equal footing. The Wife has been able to spend around £6.5 million in funding whilst the Husband has been in person virtually throughout. I entirely accept that, if I find that he has hidden substantial assets, it will follow that his decision to act in person was a deliberate tactical one. The Rule goes on to say that expense has to be saved. There has been absolutely no saving of expense in this case. Finally, the court has to allot to each case an appropriate share of the court’s resources. It is difficult to see how 65 preliminary hearings followed by a final hearing lasting 20 days can possibly be a fair allocation of this court’s limited resources on one case.”
Mr Justice Moor said that he would deal with costs at a later date.
“This case has been amongst the most complex in English divorce law history, in which a number of high profile witnesses were called, including Sir Philip Green and Richard Caring.
“There were 10,000 pages of court documents, 24 witnesses and assets spanning three continents, which really gives a sense of the scale and magnitude of the case.
“The verdict sends a strong message to those across the world seeking to hide their true wealth from their spouse – even the most intricate of financial arrangements can be exposed by specialist law firms.”