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5.01.22

When lawyers are the only winners: how not to handle your divorce

In Crowther v Crowther & Others (Financial Remedies) (Rev1) [2021] EWFC 88, Mr Justice Peel, sitting in the Family Division of the High Court, commented on the futility of litigation which saw the warring parties spend everything they were fighting over - and more.

The Court found the couple’s total net assets to amount to just under £740,000 and yet the parties’ combined legal fees came to an astronomical £2.3million. The parties were in their fifties, had been married for over 20 years and had three children together, one of whom was still a minor. During the relationship they had run a maritime-focused business together and had renovated and sold multiple houses for profit. They were able to live a luxurious lifestyle, but relied heavily on debt to finance this. Shortly after the separation, the husband closed the jointly-owned business and transferred all its operations, resources and staff into a new company held in his sole name. During the course of proceedings, the wife obtained an injunction to prevent the husband (and relevant interested third parties) from disposing of various vessels which were said to underpin the business.  The injunction was later overturned and then reinstated by the Court of Appeal, at great cost. At the final hearing, the husband called a friend and neighbour as a witness and the judge was critical of the fact that the evidence she wished to give pertained more to the children and to the wife’s general behaviour than to anything which was relevant to the financial decisions he was being asked to make. In his judgment, Peel J observed that in the end The only beneficiaries of this nihilistic litigation have been the specialist and high-quality lawyers’ and that his job was mostly to work out how to divide the debts; a highly unsatisfactory result for all concerned.

What can we learn from this?

When consulting with your matrimonial solicitor, you should both be considering the following:-

  1. Can the issues between the parties be narrowed early? In this case, Peel J was critical of the fact that by the point of trial there were still over thirty individual issues before him. Even if you can’t reach an agreement on everything without going to court, it is highly beneficial to see if you can narrow down the issues. This significantly cuts legal costs and helps the judge devote more in-depth thought to the issues which really matter.  Moreover, limiting the number of matters in dispute will mean that a settlement will feel closer and may in fact be achievable.  In order to succeed, it is important to create an environment in which the other party feels they can make concessions, as opposed to the tone used by the solicitors in this case which the judge described as creating an ‘almost complete breakdown of constructive communication’.
  2. Is there a financial benefit to taking legal action? In his judgment, the judge described costs which were ‘…utterly disproportionate. My task is far more difficult than it should be precisely because the visible assets are now so limited.’ It is always important to perform an ongoing cost-benefit analysis exercise throughout proceedings resulting from relationship breakdowns, just as in more commercial settings. Although there are obviously more emotional and principled aspects to take into account in matrimonial disputes, you and your team shouldn’t lose sight of the practical and financial aspects as well. Satellite litigation (such as injunction applications and protracted costs claims) has the potential to increase your fees and slow things down without having a corresponding benefit, and should always be considered carefully. There is a golden line which will deliver you the largest benefit whilst minimising legal fees, and striving for this might mean making some compromises. You should always be advised on the relative risks and benefits of a proposed course of action.
  3. What’s best for the children? Peel J drew attention to the fact that in these proceedings ‘...the main losers are probably the children who, quite apart from the emotional pain of seeing their parents involved in such bitter proceedings, will be deprived of monies which I am sure their parents would otherwise have wanted them to benefit from in due course.  When deciding how to conduct a claim against your spouse, it is important to think not just about how any children will be co-parented (see useful further information here) but also about how a financial dispute will impact their day-to-day lives and their financial futures.
  4. Who should you call as a witness in a final hearing? In this case, the judge said ‘...if parties start calling friends and neighbours, financial remedy proceedings will turn into a battlefield between those who support each side. I strongly deprecate the way in which this unhelpful evidence, which added nothing to my understanding of this case, was placed before me’.  Any witness evidence (other than your own) which you wish to put forward increases your legal costs (in the preparation of their written statement and elongating the time needed for oral evidence at trial) and should only be resorted to if it will positively assist the judge. Generally speaking, third parties who have been joined to the proceedings may give evidence on salient points, and you might wish to consider calling an expert, or someone like an accountant or other professional advisor who can attest to whether your spouse fully understood/agreed to certain financial arrangements or similar. Lay witnesses who will merely comment on the overall conduct of the relationship (however important that might seem to the parties themselves) will make the other party feel threatened and/or angry and reduce the chances of a last minute agreement, and will not normally be appreciated by the court in any event.
  5. Will your spouse’s ‘conduct’ be taken into account when the court makes its award? In this case Mr Justice Peel said ‘To have closed the family business, of which W was a joint owner, and simply transferred all assets, staff and operational activities to a new business owned by him, was egregious conduct which was so extreme that it cannot be ignored.’. He felt that ‘…to use the words of the statute, it would be inequitable to disregard [the husband’s behaviour]’. He took this behaviour into account when making an award which was substantially in the wife’s favour. Unreasonable behaviour which is something that fairly often occurs during the court of a relationship breakdown will generally not be factored into the court’s financial decision, but actions which deliberately make a serious dent in the other parties’ finances such as this may well become a prominent feature of a case.

 

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Articles are intended as an introduction to the topic and do not constitute legal advice.


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