Family Brief

RM v TM [2020] EWFC 41, Robert Peel QC (DHCJ)

There’s nothing the Daily Mail likes quite as much as reporting a divorce case with judicial condemnations of costs which are “eye-watering”, “astonishing” or “absolutely barmy”.

The ideal Daily Mail Law Report (‘DMLR’) involves divorcing parties who have litigated themselves into penury, preferably illustrated by an urbane (and classically inspired) quote from the judge, e.g. Kavanagh v Kavanagh (unreported, save at DMLR [2012] 19 September), where DJ Million described the parties’:

“…wrecking the ship of their marriage then turning their attention to the lifeboats”. … The ship of marriage may founder but this couple have driven theirs full tilt onto the rocks.”

On 5 June 2020, the DMLR once again struck gold.

Under the headline “The couple who spent £600,000 squabbling for two years over their divorce are left with just £5,000 each after legal costs“, the case of RM v TM was “reported”, with several juicy quotes from the trial judge, Robert Peel QC (sitting as a Deputy High Court judge), including that:

“There may be worse examples of disproportionate and ill-judged litigation – but none spring readily to mind.”

“It is hard to express what a calamitous waste of resources this has been.”

Unusually, the Daily Mail’s version was published at the same time as a Bailii report of the actual judgment, at [2020] EWFC 41, so it is possible to cross-reference the two, to provide some legal analysis to this extremely sad case, and to understand how intelligent people instructing specialist legal teams can end up with an outcome like this.

The judgment is not an especially long one, but for the purpose of this blog (and with apologies for numbering each point), it is possible to extract the following relevant background:

1. At the heart of this case was a dispute over two family companies in which W held a minority 24% shareholding, but otherwise had no involvement (‘…a sleeping partner… uninvolved at strategic and operational level’ (§ 7));
2. From 2005 until the July 2018, H was employed as Managing Director of one of the companies. He resigned amid allegations about his conduct as MD which led at one stage to his arrest for alleged malfeasance: “…the dispute between the company (and thereby W’s family) and H rapidly spilled over into the divorce and became a proxy war in the Family Court” (§ 12);
3. The financial proceedings began in September 2018. From the outset, this was high octane litigation: H applied (unsuccessfully) for an interim order for sale of the family home, interim maintenance (“maintenance pending suit”) and a legal services payment order. When the parties exchanged their financial statements (“Forms E”) H contended W’s business interests (i.e. 24% of the two family companies) were worth £2m; W asserted they were worthless;
4. H applied for an expert to value W’s shares. Fatefully, this application was refused (per “§ 19 With the benefit of hindsight, in my view an expert report should have been directed. The parties were at least £2m apart as to the value of W’s shareholding. Liquidity was an issue. Even if non-marital (which was disputed), the illiquid capital was potentially a resource to take into account. The court must consider the whole picture; it is hard to see how the case could have been fairly determined without this evidence.).
5. H appealed the decision not to allow expert evidence (which was refused on paper) and then appealed again.
6. Meanwhile the parties locked horns on whether these shares were in any event marital (W contended that, as they had been gifted to her by her parents, they were non-matrimonial; H asserted they were marital and shareable; W said in which case she could (“as a shield not a sword”) raise allegations of H’s misconduct); they also engaged in issues relating to alleged misappropriation of monies due to the children;
7. At a pre-trial review, the court belatedly ordered an expert to value the shares, and purported to restrict the specific issues of misconduct (excluding allegations of H’s alleged malfeasance)
8. The final hearing (2-6 September 2019) overran. Indeed only W’s case was heard in those five days. The court directed a further hearing in November 2019 and controversially allowed further inquiry into H’s alleged financial misconduct (this went beyond the PTR recital of the ‘conduct’ issues). H invited the judge to recuse himself (refused), and then appealed this non-recusal and the direction for further inquiry;
9. Mr Justice Mostyn granted H permission to appeal, which was listed before Mr Justice Moor on 24 January 2020 (causing a postponement to the November hearing). Moor J allowed H’s appeal against the judge’s handling of the hearing but refused the recusal appeal: the hearing was remitted back for final hearing before a different judge. Moor J directed that if W intended to rely on conduct it must be specifically pleaded.
10. H was dissatisfied by Moor J’s direction that allowed W to enlarge her ‘conduct’ argument, or the recusal decision, and appealed to the Court of Appeal (who refused permission). An FDR took place before Cohen J and a fresh 5-day final hearing was listed before Robert Peel QC (DHCJ).

At this point, it is worthwhile drawing breath and noting how litigation can get out hand. This was not a case where one party was always in the wrong. H’s application to instruct an expert was initially refused but ultimately succeeded. His appeal against the original trial judge’s handling of the September final hearing was successful (albeit not on every ground). Against that, there were numerous applications and hearings – 13 in total – where H was not successful.

However the parties’ costs, funded by litigation loans, rose inexorably so that by the final hearing in May 2020 the “only asset of significance is the proceeds of the FMH [former matrimonial home] of which £630,000 remains” and the parties costs amounted to £214k and £251k (H) – excluding other liabilities. In addition, W held her shares (which the court valued on a ‘quasi-partnership’ basis, i.e. without discount, at £320k), H had pensions worth £500,000 and W had pensions worth £229,000.

Outcome and two legal points

The court’s decision was that the proceeds of sale of the FMH should be divided £337k to H and £220k to W. Net of costs, this would leave H with £5,423 and W with £5,368. This would enable H to rehouse for £250k using his mortgage capacity of £128k and £125k he could commute from his pension (§ 80). W had a mortgage capacity of £132k but the court was satisfied that her family would assist to buy suitable accommodation, and proceeded on the judicious encouragement/ Thomas v Thomas basis (§ 81).

Two points of legal interest may be noted:

(a) Stretching resources

Firstly, the court cited with approval the time honoured guidance of Thorpe LJ in M v B [1998] 1 FLR 53 (paramount consideration of ‘stretching resources’ to meet both parties housing needs where possible’) but commented:

[76] In Piglowska v. Piglowski [1999] UKHL 27Lord Hoffmann, commenting on M v B, said: “This is a useful guideline to judges dealing with cases of a similar kind. But to cite the case as if it laid down some rule that both spouses invariably have a right to purchased accommodation is a misuse of authority.” Although not an iron rule, to my mind the dicta in M v B apply self-evidently in the majority of cases, and certainly in this one.

(b) Judicious encouragement

The court reviewed the law on judicious encouragement (i.e. seeking to persuade W’s family to provide financial support) and applied the following principles:

(i) The starting point is that there is absolutely no obligation on a third-party family member to provide funds from his or her personal resources. As Holman J vividly said in Luckwell v Limata [2014] EWHC 502 at para 6: “I wish to stress with the utmost clarity that neither the wife’s father nor her mother are under the slightest legal obligation whatsoever to pay a single penny to, or for, their daughter, nor their grandchildren, nor, still less, their son-in-law.” This statement is wholly consistent with law and fairness. The court’s function is to distribute the parties’ resources, not the resources of wider families; see paras 66 and 67 of Alireza v Radwan [2017] EWCA Civ 1545.

(ii) That said, on occasions wider family members may show themselves prepared to assist, willingly and under no pressure from the court to do so. Two distinct scenarios spring to mind;

(a) Whether a spouse’s family will be likely, if requested, to come to his or her aid in meeting specific needs personal to the spouse in question and;

(b) Whether a spouse’s family will be likely, if requested, to come to his or her aid in making a payment to the other spouse to assist in bringing financial remedy proceedings to a conclusion.

(iii) The first scenario is not uncommon. If means are available, the wider family, although under no legal obligation to do so, may willingly help with buying a house or meeting income needs if the alternative is homelessness and penury. But the evidence of willingness to do so must be clear. Mere speculation, or optimistic assumption, is insufficient.

(iv) The second scenario is rarer, for obvious reasons, although it can unlock cases and bring about settlement. For example, the family of a spouse may offer to pay the receiving spouse a lump sum to avoid sale of the marital home. Again, in my judgment, there must be clear evidence to justify such a finding. Speculation and optimistic assumption will not suffice.

(v) The court should not place pressure on the third party who is perfectly entitled to decline to provide support. As Deputy High Court Judge Nicholas Mostyn QC (as he was then) said in TL v ML [2005] EWHC 2860 at para 101:

“The correct view must be this. If the court is satisfied on the balance of probabilities that an outsider will provide money to meet an award that a party cannot meet from his absolute property then the court can, if it is fair to do so, make an award on that footing. But if it is clear that the outsider, being a person who has only historically supplied bounty, will not, reasonably or unreasonably, come to the aid of the payer then there is precious little the court can do about it.”

The judge was there addressing the second of my suggested two scenarios, but in my view his remarks apply with equal force to the first scenario.

(vi) In either scenario, where the evidence shows, to the requisite standard of proof, that third party family members will likely provide financial support to one or other of the spouses, that, in my judgment, constitutes a resource that a court is entitled to take into account. To do otherwise would be artificial. As to the sort of evidence which the court will evaluate when deciding upon the likelihood of future assistance:

(a) Usually the court will look to see whether bounty has been provided in the past, in what quantity and over what amounts of time, as evidence of a pattern.

(b) Additionally, the court can look at specific offers of long-term future financial support made to a spouse before or after marital breakdown.

(c) Offers of interim provision to tide the spouse over with assistance towards legal fees and income needs during the period of litigation will be of very limited evidential relevance to the question of whether long-term future support will be forthcoming. Usually such payments are transitory in nature, designed to assist the recipient spouse with the demands of the litigation.

(d) Absent clear evidence establishing (i) a track record of historic payment and/or (ii) reliable representations of future subvention, the court will be hard pressed to be satisfied of this class of resource.

Ultimately, however, the judgment resounds with the quotation that appears in the DMLR:

§98 This self-defeating litigation is now over. It is scarcely credible that at the end of it all, they emerge with about £5,000 each of liquid assets, having incurred nearly £600,000 of costs, but such is the reality. There may be worse examples of disproportionate and ill-judged litigation, but none spring readily to mind.

Alexander Chandler, 7 June 2020

A Day In The Life… (August 2016)

What is your position and what you do on a day-to-day basis?

I am a barrister and arbitrator at 1 King’s Bench Walk, specialising in financial remedies and TOLATA claims. I sit part-time as a Deputy District Judge in London in civil and family work, and as a panel member on the Bar Disciplinary Tribunal.

How long have you been in this role and what brought you here?

I’ve been a barrister for 20 years and have been sitting for 4 years. The thought of being called to the Bar didn’t occur until after graduation: up until then I vaguely imagined that I’d be a historian, or possibly a critically acclaimed singer-songwriter. I did my 12-month pupillage at 1 King’s Bench Walk, before joining 1 Garden Court as a tenant in 1997. Sixteen years later, in 2013, I rejoined 1KBW.

What are the people you work for/with like? Any memorable stories?

I’m lucky to have worked with, and been instructed by, intelligent and interesting people throughout my career, many of whom have become friends. In the early years of my career at 1 Garden Court – a time of plentiful and decently paid legal aid work – the junior end would go on holiday together, causing unappreciated havoc in a clerks room denuded of barristers under 10 years call. I am now happily settled as a member of 1KBW which, as well as being a leading set for financial and children work, has to be one of the most sociable chambers in the country.

In terms of lay clients, I don’t think I’ve ever acted in a dull TOLATA claim or an uninteresting ancillary relief. It is easy to take for granted the privileged position we are in as solicitors and barristers in family law. All human life is here, including the Russian wife of an oligarch who (after I had attempted to be gallant by hailing her a taxi on the Strand) said in a deadpan voice, ‘Is not necessary’, as her chauffeured Bentley drew up.

What is the best and worst part of the day for you? 

As a barrister, it helps if you like early mornings. I travel less than I used to, but I still enjoy getting to the train station at 7am, dosing up on coffee and boarding a train that was crammed with commuters on the way in, but is now almost empty as it goes out. Equally, it’s a pleasure to come back from court and have time to read on the way back home and to check my Twitter feed (@familybrief).

Without wishing to sound sappy, I don’t have a worst part of the day. Having said that, I doubt I’ll look back on being regularly woken up by a child kicking me forcefully in the jaw, with great fondness.

What adjectives best describe you?

My middle daughter was recently asked this question at school. Her reply was ‘strict, playful and tall’. To which I would only add: ‘… and committed to tirelessly achieving the best possible outcome for my client, regardless of the personal sacrifices involved’ (if any prospective instructing solicitors are reading).

What keeps you motivated?

Doing a professional job, broadening my understanding of the law, and pushing myself towards greater clarity and precision. I believe the applicable term is ‘kaizen’, according to my studies of Japanese philosophy (ie reading the blurb on the menu at Wagamama). 

I also keep in mind a story Matthew Brunsdon-Tully relates about how Lord Wilson used to tell his pupils: ‘you’ve got to make the papers sweat!’. That really is the key: being on top of your brief. 

Tea or coffee?

Coffee before 11am, tea afterwards. 

In fact, that’s a rule more honoured in the breach. My eldest daughter (now six) recently drew a cartoon called ‘The man who drank too much coffee’. In it, a woman who is possibly my wife says ‘No more coffee!’, to which I, sitting with my head in my hands, cry: ‘NO! I must have coffee’. The story ends happily. 

What would you say to anyone thinking of a career in your field?

It isn’t easy to come up with original advice. The two clichés that always apply are (1) the profession is more difficult to break into than it used to be, so don’t bother unless you are determined but (2) keep at it if you are. 

To which I would only add, keep humble. Don’t approach the law as if you’re a contestant from X-Factor. 


What song do you listen to the most?

According to iTunes, my most listened song is ‘War on War’ by Wilco. Followed by ‘For a Spanish Guitar’ by Gene Clark. (Full list available on request. I can, quite literally, bore for England when it comes to music.) 


How do you enjoy your time outside of work?

The first casualty of having children (I have three) is your social life, followed by newspapers, relaxing holidays and a car that is smaller than a tank. 

In their place (the activities, not the children), my weekend rituals involve taking the children to Kew Gardens, running the Tamsin Trail around Richmond Park, reading and cooking. Thus far, my midlife crisis has involved me entering half- and now full marathons in day-glo colours. 


If you could change one thing about the family justice system what would it be and why?

While I enjoy TOLATA work, it is simply ridiculous that the financial claims of unmarried couples are determined by reference to trust law, where the court’s objective view of a fair outcome has such a limited role. I would favour a change in the law towards the Scottish model of cohabitee rights.