Financial remedies

Financial remedies: A battle royale

Where jurisdiction is in dispute, this does not prevent the court from making an interim order, but in MG v GM Peel J accepted that the court should be cautious, both as to whether to make an order and as to quantum, in circumstances where the order may turn out to be based on a false premise.

In MG v GM (MPS LSPO) [2022], Peel J made interim maintenance and legal services payment orders. Notwithstanding the lack of financial disclosure by the husband, the judge was critical of the wife’s level of interim spending, something which was reflected in the ultimate interim maintenance order. The judgment is a reminder of how critical it can be to apply for interim maintenance at an early stage, with the judge declining to order maintenance to cover the period before the wife applied for interim provision, in circumstances where she had elected to borrow funds (rather than apply for maintenance pending suit) and spend at an excessive level.

Interim maintenance

In reaching his decision on interim maintenance, Peel J applied the familiar principles set out by Nicholas Mostyn QC, sitting as a deputy High Court judge (as he then was) in TL v ML [2005] (at para 124), including the principle that:

“Where the affidavit or Form E disclosure by the payer is obviously deficient the court should not hesitate to make robust assumptions about [their] ability to pay. The court is not confined to the mere say-so of the payer as to the extent of [their] income or resources… In such a situation the court should err in favour of the payee.”

Peel J acknowledged that an interim maintenance application is almost invariably tried on the basis of submissions only, as was the case here. This led to difficulty in this case because he was “hampered by the fact that each party denies holding any liquid assets, yet is accused by the other of having access to a great deal of wealth” and that each party said that the other was “a barefaced liar”. Peel J added (at para 40):

“I am very conscious of the difficulties this presents at an interim hearing. I cannot be completely sure of the ground on which I stand where the positions are so polarised.”

In the certificate of complexity justifying allocation to a High Court judge, signed by both parties, the wife had asserted net assets in excess of £50m, while the husband asserted net assets of £25-£50m.

Where jurisdiction is in dispute, this does not prevent the court from making an interim order, but in MG v GM Peel J accepted that the court should be cautious, both as to whether to make an order and as to quantum, in circumstances where the order may turn out to be based on a false premise.

In this case, habitual residence in the wife’s favour had been found by the English court, albeit within concluded proceedings under the Hague Convention on the Civil Aspects of International Child Abduction 1980 (the 1980 Hague Convention). In addition, the country where the husband had issued divorce proceedings had recently concluded that it had no jurisdiction on the basis of its finding that the parties were habitually resident in England (the husband’s position being that he would appeal that finding).

Peel J found that while the fact of the jurisdictional dispute was relevant, it did not weigh too heavily and he did not regard the wife’s prospects of success as so remote that her application should be limited by a pessimistic prognosis of the outcome of her suit (para 39).

Financial disclosure

When assessing the parties’ financial situation, Peel J found it was directly relevant that the wife had provided a full run of bank and credit card statements, whereas in contrast, the husband had provided none save for a summary balance and one bank statement. He acknowledged (at para 42) that while it was true that Forms E were not required (as the financial remedy proceedings were stayed pending determination of jurisdiction issues) and the husband had not been ordered to provide such statements, it:

“… must have been obvious that in a case where everything is disputed, including the extent of his wealth and accessibility of funds, such documents would be necessary. Given the nature of his case, that he is unable to pay anything for [the wife] and the children, I find it extraordinary that he has not produced bank and credit card statements. It is, accordingly, more difficult for me to accept what he says at face value.”

It was also significant for the judge that the husband had financially cut off the wife and children in mid 2021, at a time when the marriage was in terminal breakdown, and had not paid for anything for them since then. Until then, the husband had provided large sums of money whenever the wife had asked for them. Peel J found that it was likely that the husband stopped paying “because he chose to”, perhaps out of “anger and frustration” with the wife (para 43).

He also stated (at para 44) that it was “telling” that during 2021 the husband had invested millions of pounds into his business interests from the sale of two London properties, including £4.3m from the sale of a property that took place after separation and without the wife’s knowledge or agreement. The judge added:

“Put simply, [the husband] during 2021 elected to prioritise his own interests over those of his family, and his actions in selling the… property deprived [the wife] of the opportunity to seek a share of the proceeds to meet her interim needs. He cannot complain if she now brings an interim application. Further, it seems to me to be highly unlikely, even on an interim evaluation, that [the husband] parted with millions of pounds into his businesses, knowing that (on his case) he would not have any monies left even for his own personal needs.”

The husband’s case was that while he had put the family assets at £25-50m on the certificate of complexity, this was because in his view his wife had at least as much wealth as him. This was dismissed by Peel J as “pure speculation” and it was noted that the husband, in his own narrative statement, had put his worth at £14.5m.

Husband’s claims of illiquidity

Peel J also noted that while the husband’s case was built around illiquidity, this was nothing new and in the husband’s own statement he had said that he had “almost constant problems with liquidity” since the collapse of the hedge fund he ran at the end of 2018. The judge noted (at para 46) that:

“To my mind, it is more than just coincidence that the liquidity problems, according to him, were so acute at the time of separation that the tap was turned off, yet there had been no previous reduction in an undiluted ability to spend money.”

Peel J said that he was sceptical about the husband’s stated liquidity issues and added (at para 48) that it was for the husband to find a way to “unlock liquidity”, particularly as he invested so much family wealth in his business during 2021. He cited Wilson LJ (as he then was) in Behzadi v Behzadi [2008], when he said:

“… it is for the owner of property to establish, if such be the case and unless it is self-evident, that its value cannot be realised… or, if realised, that its proceeds cannot be transferred to the place at which it is suggested that they can be deployed.”

Peel J concluded that:

“I am not satisfied that [the husband] has discharged that burden. Overall, it seems to me that [the husband] is likely to be able to arrange his wealth in such a way as to ensure that funds can be made available; the history of this case points clearly in that direction. I am therefore satisfied, in broad terms, that [the husband] is able to meet an award.”

Wife’s resources

The wife’s case was that she had no assets or income but a debt of £453,000 to friends who had supported her since separation, including £365,000 from a “Mr ML”. The husband argued that the wife had ample resources of her own via a company (referred to as the A Ltd Group), the business of which was the provision of personal protective equipment (PPE) during the Covid-19 pandemic. Mr ML was the apparent owner and principal of A Ltd. The wife and husband had been introduced to Mr ML in 2020. In September 2020, Mr ML told the husband and wife about a business opportunity providing PPE. The wife had approached a potential investor, a “Mr SH”, who invested $25m, while the husband invested $1.2m and €600,000.

Mr ML and Mr SH had both provided statements that said that the wife had no interest in or control over A Ltd and had never received any remuneration. They said that the business was about to be terminated and would do no better than break even.

Peel J found that on an interim evaluation, the wife had not had and did not have access to large sums from A Ltd. He set out a variety of reasons leading to this conclusion, including that there was no evidence (for example in the wife’s bank statements) that she had ever received any monies from the PPE business, no documents evidencing any contractual arrangements between the wife and A Ltd and no evidence that A Ltd had made any profits, let alone the vast profits claimed by the husband.

Wife’s spending and budget

The wife’s spending was substantial – a spending analysis showed that she spent about £43,000 per month between June 2020 and June 2021 (the marriage broke down in the summer of 2021). It was not disputed that the husband had ceased all financial support of the wife and two children in June/July 2021. On the wife’s case, she had been able to continue spending at £72,900 per month on average (including rent of £12,000 per month) since then, having secured personal loans from friends totalling nearly £500,000 to fund her ongoing lifestyle.

The wife sought a new rental property at £25,000 per month (together with £68,250 to secure it), £510,000 pa in general maintenance, the cost of two nannies at £126,000 pa, £448,846 in backdated sums, and legal fees totalling about £900,000 (covering the 1980 Hague Convention proceedings, Children Act 1989 (ChA 1989) proceedings, a divorce jurisdiction dispute and the interim application itself).

In relation to the wife’s budget, Peel J stated that on an interim basis it was “grossly exaggerated” and that her expenditure since separation, when she did not have support from the husband and no resources of her own, had been “irresponsibly excessive” and she had “shown no restraint” (para 52).

The amount of interim maintenance awarded was:

  • £250,000 pa, backdated to the date of the application to include expenditure on nanny costs and to cover all the personal expenses of the wife and children;
  • £144,000 pa for rent (the current rent being paid by the wife), backdated to the date of the application; and
  • school and nursery fees as and when they became payable.

Peel J declined to order a sum of £448,846 to cover the wife’s expenditure between July and December 2021, ie before she had applied for interim provision (para 53):

“… in circumstances where she elected to borrow funds (rather than apply for [maintenance pending suit]) and spend at an excessive level.”

Legal fees

The wife’s costs referable to the 1980 Hague Convention proceedings, concerning the husband’s application for the return of the children from the UK, were completely discounted on the basis that they were entirely distinct historic costs, incurred before the issue of the legal fees funding application and therefore irrecoverable.

In respect of the non-Hague Convention unpaid costs, Peel J applied a discount (para 54):

“… which is frequently (but not invariably) applied to the sums sought in order to reflect a notional standard of assessment…”

and highlighted the decision of Cobb J in BC v DE [2016], where a discount between 15% and 30% had been applied. Here, Peel J applied a 30% deduction.

In relation to future costs, the wife sought between £381,000 and £423,000, but the judge found that this was too high and ordered £250,000 inclusive of VAT and disbursements. In respect of future ChA 1989 proceedings, the wife sought between £222,000 and £246,000. The husband estimated his own costs at £49,590 excluding VAT. Peel J awarded the wife £100,000 inclusive of VAT and disbursements, of which £90,000 was to be stayed until the mediation process was completed.


In summarising the case at the start of his judgment, Peel J highlighted that the court bundle was over 1,000 pages and that the forensic endeavours by both parties had been exhaustive, saying (at para 2):

“Unless the parties can resolve some or all of their issues, the litigation (possibly in two jurisdictions) will be prolonged and ruinously expensive. It seemed to me, as I was invited to delve into the bowels of the bundles, that neither party is willing or able to approach their disputes in a proportionate way, nor seek a pragmatic solution; rather, they choose to litigate on all fronts.”

and adding (at para 2) that:

“This is a battle royale. Despite the protestations of impecuniosity by each of them, they have each been able to secure the services of the finest legal teams.”

The case has been timetabled to the final hearing.

In Xanthopoulos v Rakshina [2022], where the total cost of litigation was between £7-8m, Mostyn J said that such figures were “hard to accept even in a conflict between the uberrich”, “beyond nihilistic” and “apocalyptic”, concluding that it was “difficult to know what to say or do when confronted with such extraordinary, self-harming conduct” (paras 12-13). He added (at para 14):

“In my opinion the Lord Chancellor should consider whether statutory measures could be introduced which limit the scale and rate of costs run up in these cases. Alternatively, the matter should be considered further by the Family Procedure Rule Committee. Either way, steps must be taken.”

A further point of interest is that in MG v GM, there was no reference to any submissions made by counsel with regard to anonymity and a version of the judgment could be published on condition that the anonymity of the children and members of their family were strictly preserved, as was also the case in Peel J’s decision in WC v HC [2022] around the same time. This is in contrast with the approach taken by Mostyn J in his two November 2021 decisions in BT v CU [2021] and A v M [2021], which were anonymised on the basis that counsel had requested anonymity and the parties had a reasonable expectation that the hearing would preserve their anonymity. Mostyn J stated that it would have been unfair to have sprung such a change of practice on the parties in those cases without forewarning and in A v M he said (at para 104) that approach was in step with “the modern recognition of the vital public importance of transparency”. His default position in future would be to publish financial remedy judgments in full without anonymisation, save as to the identity of children, with any derogations from that default position having to be “distinctly justified”.

The outcome of the Financial Remedies Court consultation on the proposal to introduce a standard reporting permission order, to enhance transparency and improve public understanding of the basis and rationale for decisions made in the financial remedy courts, is currently awaited.

Cases Referenced

  • A v M [2021] EWFC 89
  • BC v DE [2016] EWHC 1806 (Fam)
  • Behzadi v Behzadi [2008] EWCA Civ 1070
  • BT v CU [2021] EWFC 87
  • MG v GM (MPS LSPO) [2022] EWFC 8
  • TL v ML & ors [2005] EWHC 2860 (Fam)
  • WC v HC [2022] EWFC 22
  • Xanthopoulos v Rakshina [2022] EWFC 30

This article was first published by Family Law Journal (Legalease) and can be found here.

Sophia Leeder – Charles Speechlys

Want to have your say? Leave a comment

Your email address will not be published. Required fields are marked *

Read more stories

Join nearly 3,000 other family practitioners - Check back daily for all the latest news, views, insights and best practice and sign up to our e-newsletter to receive our weekly round up every Thursday morning. 

You’ll receive the latest updates, analysis, and best practice straight to your inbox.