Barclay case: no money left?

Barclay case: no money left?

And so, the case of the Sir and Lady Barclay goes on. In cases involving high net worth assets it can be said that these are easier cases to settle. However, given the sums involved there can be a cost/benefit in arguing legal principles if the trade-off is saving or receiving tens of millions of pounds.

But how has the case of Sir and Lady Barclay got to a stage where a settlement has not been paid and contempt proceedings are being considered for one of Britain’s wealthiest men? Without trying to unpick the original settlement, this article will look at proactive steps that can be considered as a means to ensuring your fees are paid and assets are preserved, as well as some options if circumstances change.

Legal Services Provision

It is said that Lady Barclay has amassed legal fees in excess of £300,000 which she cannot pay as Sir Fredrick has not complied with the terms of the financial settlement. Typically, lawyers will ask for money on account to ensure that fees can be paid, however litigation can be an expensive exercise and, in cases where there are limited liquid capital assets or no surplus income, legal costs simply cannot be paid up front regardless of the urgency or merits of a case.

To ensure legal advice can be given and costs can be paid there are litigation loan companies that offer funding for the payment of legal fees on an ongoing basis, with the loan being settled at the end of the case. Whilst litigation loans are a good source of immediate funding, the trade-off is that they come with high rates of interest, expensive insurance premiums, and the client must give an assurance that priority is given to the repayment of the loan over the retention of property. In circumstances where lenders are not satisfied as to the merits of the case, or that there will be liquid funds available when it concludes, loan applications can be refused.

Sears Tooth Agreements are offered by some solicitors where the payment of costs is deferred to the end of the case. Most solicitors are not keen on offering this service as it has an impact on their internal finances and they carry a risk that property capital could take time to sell.

Where loans and agreements with solicitors to help meet legal costs are not options, applications can be made for a Legal Services Provision Order, where a party’s legal costs are met on a monthly basis by their spouse/civil partner in circumstances where they have exhausted all other means and there is an ability to pay. Where Lady Barclay has unpaid legal fees of £300,000 consideration is no doubt being given to enforcement to cover what is owed and how to fund future costs.

S37 Freezing Injunction

When the case of the Barclays started out, few commentators would have expected that a final order would have gone unpaid by Sir Frederick. In circumstances where there is a concern that one party intentionally looks to dissipate assets to frustrate financial claims an application for freezing injunction can be made. If Sir Frederick’s assets had been frozen would Lady Barclay have her award?

Whilst a freezing injunction can be an effective tool to preserve assets, if they are found to have been incorrectly made and to cause the defending party loss, the applicant may be liable for these – the exposure to costs and damages can be enough to put parties off from applying for orders notwithstanding the risk of dissipation.

Joining of Companies

In cases where a party’s assets are held in companies and structures, consideration should be given to companies being joined as parties to proceedings. Joining a company to proceedings can expose parties to another layer of legal costs, though it may overcome issues in respect of enforcement when, for example, dealing with the transfer of shares.

Barder Events and Variation

It is interesting to note that Sir Frederick’s legal team say that he does not have funds. Questions will no doubt be raised in respect to where his assets are now, or explanations sought for the fall in values. If party’s circumstances have significantly altered, there may be options where they seek legal redress.

If a final order included periodical payments for the benefit of the children or other party, or a lump sum payable by instalments, then there is a statutory right to apply to vary the order. Upon such application, the court will have regard to all the circumstances of the case – including any change in any of the matters to which the court was required to have regard when making the order to which the application relates.  Where a lump sum or transfer of property order has been made, these cannot be varied and so Barder Events have to be considered. Generally and in broad terms for this article, orders are only set aside where:

  • A new event which invalidates the basis, or fundamental assumption, upon which the final order was made occurs
  • The supervening event happened shortly after the making of the order (within a few months)
  • The application to set aside the order is made promptly
  • Set aside will cause no prejudice to third parties who have acquired interests in property in good faith for valuable consideration.

Time will tell if Sir Frederick claims a Barder Event.

Kiran Beeharry is a partner in the family law team at SA Law.

Kiran Beeharry, partner, family law team, SA Law

Kiran Beeharry, partner in the family law team at SA Law

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