Ouch! That hurt.

A case called F v. F has just been reported in the High Court before Mrs. Justice Macur.  It starts with the following:

" This ancillary relief dispute has been the subject of 3 substantive directions hearings and conducted at final hearing by specialist matrimonial leading and junior counsel on each side, instructed by specialist matrimonial solicitors and costing the husband and wife £2.4 million between them. Both the husband and wife have been surrounded by a legal entourage of at least 5 personnel throughout the 8 days of proceedings in court. I regret that these statistics have not ensured compliance with rules of evidence, the Pre-action Protocol and Family Proceedings Rules 2010 or the spirit of Practice Direction 25A effective for proceedings commenced post 6 April 2011."  (my emphasis throughout)

There's no way of avoiding it - that is, to say the least, highly embarrassing for any professional involved in the case.  Then it gets worse:

" In these circumstances the raised emotions, distrust, entrenched positions and consequent waste of court time were entirely predictable. The position has not been ameliorated by the apparent disinclination of Counsel to communicate throughout the hearing save in the Court room itself culminating in the necessity for me to direct the exchange of written closing submissions before I was addressed on the same since otherwise "the usual practice" of providing them just at the moment when the address began would have been followed.  It is difficult to conceive that either party can have their expectations realistically managed in such a scenario."

So it continues throughout a truly biting judgment, much of it entirely predictable, some of it specific to the case:

" The wife's budget for the purpose of establishing her maintenance needs was opened as "aspirational". It is entirely unrealistic and without historical basis or reasonable future projection."  Nothing terribly new there, then. 

" I refused permission to admit as evidence in the case that part of the wife's sole expert addendum report which dealt with his opinion of "indexation" of the 1993 value of Franklin. It was not sanctioned by Court order nor considered in the pre-trial review, nor consented to by those representing the husband. It was triggered by the invitation of the wife's leading Counsel to re-consider a concession made in the first expert meeting. Its inclusion within Mr Mathew-Jones addendum report was tantamount to ambush reminiscent of the approach taken to the valuation of the life interests in Peyton Place. The husband was not in a position to gainsay the opinion expressed by seeking his own expert in the time frame imposed by receipt of the report and the date of the final hearing."  So, ambushed by an expert report for which permission had not been sought or given - not really a matter of unusual complexity, surely?

" I make clear, as I did on several occasions during the hearing, that I dismiss any hearsay evidence from my mind.  The contents of solicitors' notes, the parties' accountant's notes or the memory of the managing director as to what the husband said to them at the time of making the agreement are inadmissible as evidence of the truth of the contents of the husband's conversations/instructions. The maker of the statements, the husband, was always known to be available and has been called to give evidence. The fact of the conversation is only relevant to rebut any allegation of recent fabrication, which is not alleged here. It is therefore inadmissible. Regard to these rules of evidence would have obviated the need to produce the voluminous documents or associated witnesses." 

"The fact that I have determined the issue in favour of the husband does not deflect my criticism of the husband's solicitors for failure to consider the need to make on-going "full and frank disclosure" of documents relevant to issues in the case.  It is not for Leading Counsel for the husband to pronounce the issue "closed" or to rely upon the lack of specific direction for disclosure of such documents at the pre-hearing review."

" No doubt in support of this proposal the wife attempted to adduce evidence of Dr Simon Turner, a "strategic consultant". I requested Mr Pointer QC to reconsider his expressed intention to call this witness. He did so. I make clear that I would have refused to admit the evidence on a number of bases:

(i) no permission was sought/granted for it to be admitted as an expert report; (ii) it expresses opinion whilst expressly acknowledging lack of expertise;
(iii) it expresses opinion upon company issues which are irrelevant to my consideration and, I may say inherently offensive in the context of a very successfully run company and likely to engender resentment between present board members and the wife who has sought to introduce it. My decision on the outcome of the share agreement is not influenced by the business experience/acumen of the wife nor her ideas for the future of the company. In short a pointless, costly and counter-productive exercise."

And then perhaps worst of all....

" Mr Pointer QC in his closing submissions is dismissive of the exercise conducted by Mr Adams-Cairns. For the reasons outlined in paragraph 57 above I agree there is no question but that this expensive exercise was futile. This may have explained why no steps were taken by those representing the wife to seek clarification of the joint expert report but for the fact that the wife attempted to produce a sole "expert" report on this issue into evidence on the first day of the hearing without any notice to the husband and subsequently dispatched that report to Mr Adams-Cairns when I had refused to admit it. This behaviour, whether in ignorance, neglect or disobedience of civil/family rules of procedure amounts to malpractice and has the effect of conflating raised emotions and suspicion. There is absolutely no mitigation for the wife's solicitor sending to Mr Adams-Cairns the report that was ruled inadmissible. Its only purpose, objectively viewed, would be to seek to influence the opinion of Mr Adams-Cairns."

So here's my question - what exactly did the husband and wife get for their £2.4m legal fees?

One of the solicitors in this case has on its website not one but two articles headed "What makes a top divorce lawyer?"

Well, according to Macur J, perhaps the following?

1.  Disregard for basic rules of evidence - i.e. the hearsay rule;

2.  Disregard for the correct procedure for using expert evidence;

3.  A failure to comply with the pre-action protocol for finances on divorce;

4.  A failure to ensure the provision of full and frank disclosure;

5.  A failure to generate realistic expectations;

6.  Malpractice;

7.  Pointless, costly and counterproductive exercises.

I know very well from first hand experience just how demanding some wealthy clients can be.  It is often unfair to impute to the professional representatives the unrealistic or obstinate stances adopted by their clients.  However, when you spend six and even seven figures on your lawyers, listening to a judgment like this one must be an enormously dispiriting and even shattering experience.  As for how the lawyers felt......

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The worst possible outcome? NG v. SG

Some judges seem to specialise in judgments which are easy to read and especially useful to practitioners. Mostyn J is one of those. His latest publication (NG v. SG [2011] EWHC 3270 (Fam)) is all about a husband who allegedly failed to tell the truth about his assets. As a result, the District Judge who heard his application to reduce the maintenance he had to pay for his former wife and children, dealt with it in a way which led to an expensive appeal to the high court. The DJ had to decide whether the Husband had indeed suffered the radical reduction in his wealth which he claimed and Mostyn comments, "There can be no doubt that the course of the case was made difficult by a combination of bloody-mindedness and incompetence by H in the presentation of his financial affairs."  It seems, though, that his bloody-mindedness led to a poor judgment by the Court.

What the DJ did was order a capitalisation of maintenance at just short of £1m, which the Husband said amounted to all his remaining wealth. He found that "H was a serious and serial non-discloser" and drew adverse inferences about the true level of his wealth, as opposed to what he said that it now was. From having sold his business in 2002 for £6.7m, the Husband reckoned that he was now entirely out of money, having made an ill judged loan to a company and otherwise having spent the rest. Not bad going in just seven years! The DJ simply didn't believe him and ordered him to pay the balance of the maintenance in a single lump sum instead of over the rest of expected term.

It's an interesting tale in itself but for the family lawyer it contains a wealth of helpful material. It turns out to be a case study in how not to deal with a complicated case. Mostyn J explains just how the judge should have approached the exercise and why it went wrong. The sting in the tail is that the order was set aside and the case sent back to the lower court for the whole thing to be done again!

• A case which started life in February 2010 has to go back almost to its start and will have taken doubtless more than two years to conclude.
  
• The Husband stopped paying maintenance in February 2009, so his former wife has had to foot two years of legal bills without contribution from him.
  
• The Husband says that he has now run out of money and has had to conduct his own appeal hearing, albeit successfully.
  
• Both parties now face another contentious court hearing before they know where they stand.
  

So how has Mostyn helped lawyers? Well, by summarising the process that a court should follow. If you know how the court should set about its task, you should be able to structure your client's evidence and arguments. And how should a court do its job where one party says the other has hidden assets? Mostyn sets out an 8 stage system.

1. First it decides whether there are actually hidden assets, if necessary by drawing adverse inferences. If a party's life style simply cannot be financed from the declared means and there isn't a corresponding debt, the only sensible inference is that there's other money somewhere else, for example.
   
2. But any inferences must be reasonable. There has to be a reason to believe that there is other money. Simply not believing one party is not enough on its own.
   
3. If the court reasonably decides that there are hidden assets, the court must then do its best to quantify just how much is hidden away.
   
4. First of all, the court will look at any direct evidence, such as documents or things which the other party has been able to observe.
   
5. Next, the court will look at the non disclosing party's life style and business activities.
   
6. Vague rumours of someone having more money than he claims is just not enough.
   
7. It is possible to use a rule of thumb that someone who has failed to disclose has at least twice as much as the other party is asking for but this should not be the only measure of what he/she has.
   
8. Where the court has decided that one party has failed to disclose assets, it is better for the court to risk being unfair to that person than the other. In other words, the court will be generous to the innocent party at the risk of ordering the non discloser to pay more than is justified.
   

The unpleasant reality in this case is that if one party is foolishly extravagant in his lifestyle, as seems may well have been the case here, or takes bad investment decisions, it's both of the parties who will suffer as a result.