Fortunately the London office is air-conditioned, and it also has a great terrace where I like to step outside and catch the early morning breeze. There is a lovely view of Gray’s Inn Gardens and I smile when remember that as a student I joined Gray’s Inn, while toying with the idea of becoming a barrister. The Fulwood Place office is very modern and couldn’t be more different from the firm’s offices in Hale and in Harrogate, the latter of which is located in the town’s old courthouse. But I like the differences: whenever I go to any of them, it’s like a new beginning and really perks me up.

Last night, there was the most unexpected treat in store. For a birthday surprise for my husband, our son Ben had arranged seats for us in the box nearest to the stage at the Royal Festival Hall for a very special concert. Ben knows that his dad loves Vladimir Ashkenazy, and discovered that the great pianist and conductor was in town for a one-night concert.

We all have happy memories of the time when we travelled on the same flight as the pianist, and I remember my husband wondering whether or not he should ask for an autograph for Ben. Unable to contain himself, he went over. Vladimir Ashkenazy’s response? “Delighted but in which language?” He was very pleasant and I noticed that he wanted no fuss at all when he arrived at Heathrow, even though his world-class status could have sped him through the formalities in an instant.

Yesterday evening’s concert was suitably international, both in performance and audience. Hosted by our very own fantastic Philharmonic Orchestra, 23-year-old blind Japanese pianist Nobuyuki Tsujii, conducted by Vladimir Ashkenazy, played in the first half. The music, composed by Sergey Prokofiev, was a powerful and dramatic piece. A triumph with the audience, the pianist received a well-deserved standing ovation. He returned to the stage for an encore to play a complex piece he had composed himself.

This morning, I read some more about the amazingly talented Nobuyuki Tsujii. Born blind, the musician believes that “there are no barriers in the field of music”. He enjoys rock star status in Japan, and plays in concerts all over the world. The great Vladimir Ashkenazy clearly loved conducting him.

It was a brilliant concert in a world-class venue. A lady sitting near us had come from Switzerland to attend and another gentleman all the way from Sierra Leone. Everyone was marvelling at the array of talent on show. The second half was Babi Yar by Dmitry Shostakovich: Yevgeny Yevtushenko’s poetry set to music, with the words sung in Russian.

I was left amazed by the musicians I had seen and heard on stage. Their talent, their love of music and their ability to communicate with the audience was stunning. A young man whose life could have been so very different has had his gift of music harnessed and lives life to the fullest. Nobuyuki Tsujii is an inspiration to us all.

I would also like to say a huge thank you to another modest young man we know very well, who is currently away working in Hamburg. Thank you Ben – you made our night perfect.

Marilyn writes: Sometimes in divorce, a desperate spouse chooses to claim bankruptcy. This might be a genuine claim, when the debts are piled too high and there is no hope for any other possible outcome. Alternatively it might be a cynical manoeuvre, a ploy. It could be a last ditch attempt to avoid paying what the other spouse is properly due under a court order in the divorce, or even what is owed in child support. Whatever the reasoning, bankruptcy usually increases the anger and the bitterness that can be involved in a divorce.

Nowadays, going bankrupt is not the social and financial nightmare it once was. Most bankrupts face no social approbation, nor many unpleasant financial consequences. Bankrupts will usually be discharged from bankruptcy after one year, after which time they will continue to live their lives more or less as before.

Does bankruptcy make a difference to a divorce settlement or a child support calculation?

In law, even if the paying party does go bankrupt, the obligations to the other spouse or partner will survive. Therefore, once out of bankruptcy, the whole process might turn out to have been a waste of time.

The sting in the tail is that this is not always the end of the story.  A savvy and former bankrupt may have one last ace to play. Notwithstanding the remains of the order, it is still possible to apply to the court to be released from the debt. Many throw themself at the mercy of the court in this way. They then get on with their life – free from the obligations that others in different situations face and fulfil.

What will a court do if faced with such an application?

A recent case in the Chancery Court, Hayes v Hayes [2012] Ch. D gives us a flavour of what might happen in these circumstances. I must say I’m pleased with the outcome.

Here Danielle Day, a trainee solicitor at Stowe Family Law, further explains the case…

The recent case of Hayes v Hayes concerned a bankrupt husband who sought to be released from a debt that had arisen from a costs order made in family proceedings. The relevant statute in bankruptcy cases is the Insolvency Act 1986.

Mr and Mrs Hayes had been through divorce and ancillary relief proceedings. A costs order had been made against the husband, which remained unpaid. The wife subsequently petitioned for the husband’s bankruptcy.

Mrs Hayes petitioned for bankruptcy under rule 12.3 of the Insolvency Act, which expressly excludes a petition in circumstances where there has been an obligation to pay a lump sum or costs order in family proceedings.  Despite this, the husband did not oppose the petition and it was successful.

As it happens, rule 12.3 of the Insolvency Act was amended shortly afterwards by the Insolvency (Amendment) Rules 2005 at rule 44, which permits a petition in such circumstances.

The husband later tried to annul the application on the grounds that costs orders in family proceedings were excluded under rule 12.3. However, his application to annul was dismissed as rule 44 had recently come into force and the wife would have been entitled to place a fresh and valid petition under the new rule.

After 12 months had passed from the date of the husband’s bankruptcy, he was discharged from it in accordance with Section 279 (1) of the Insolvency Act.  This meant that he was automatically released from his debts and free from the restrictions of bankruptcy.

However certain debts are not automatically released when a bankrupt is discharged. These include any orders made in family proceedings –  and as you may recall, a costs order had been made against the husband. The wife went on to serve several statutory demands because the costs order remained unpaid. However the husband asked the registrar to release him from the debt under Section 281 (5) of the Insolvency Act, which states:

Discharge does not, except to such extent and on such conditions as the court may direct, release the bankrupt from any bankruptcy debt which -

(a) consists in a liability to pay damages for negligence, nuisance or breach of a statutory, contractual or other duty, or to pay damages by virtue of Part I of the Consumer Protection Act 1987, being in either case damages in respect of personal injuries to any person, or

(b) arises under any order made in family proceedings or under a maintenance calculation made under the Child Support Act 1991

This provides the court with the discretion to discharge liability arising from a family proceedings order.

The registrar in Hayes v Hayes considered the consequences of Section 281 (5) – noting that there was a lack of authority concerning the level of court discretion under it. The registrar therefore rejected the husband’s application to be released from the debt.

The husband appealed…

The appeal was heard by Mr Mark Pelling QC, who agreed with the registrar that there was a lack of authority under  . As a result, the judge ruled that the court had an unfettered discretion to discharge debts arising from a family proceedings order under the Insolvency Act.

Interestingly, Mr Mark Pelling QC also noted that the general default provision was that family orders were to survive the discharge of bankruptcy. He claimed that this would ensure that individuals could not avoid these types of liabilities when involved, or having been involved, in the bankruptcy process.

The judge considered the consequences of allowing the husband to be released from the costs order. Since the order would be forever unenforceable, he went on to state that excluding future enforceability would create disproportionality between the husband and the wife. If for example there happened to be a future change of circumstances, i.e. the financial position of the husband significantly increased, the wife would be prevented from taking advantage of this.

Mr Mark Pelling QC also added that while earning capacity could be an argument put forward by the husband in his application to be released from the debt, present earning capability should not be used as a springboard to discharge what he owed. The judge did not rule out that there might be a time where it could be appropriate to discharge the husband’s debt. In However he was not satisfied that the husband would never be in a position to pay back his debts. The decision of the registrar was therefore upheld.

To date there has been no reported cases where the court has granted a discharge of a family proceedings order.

The judge in Hayes v Hayes did not rule out the possibility of such an order being capable of being discharged in the future. However, neither did he expand on what would need to be demonstrated to show a lack of future earning capacity to justify departing from the default position.

The position therefore remains unclear. Parties involved in divorce and financial proceedings need to be made aware of section 281 (5) of the Insolvency Act and the possibility that the court could grant a discharge from a family proceedings order in the case of bankruptcy.

In my opinion, Mr Mark Pelling QC made the correct decision in dismissing the husband’s application for a discharge from the costs order. Divorce and financial proceedings can be extremely lengthy and costly to both parties, and people are usually relieved when the process is over and they can move on with their lives. With this in mind, to have part of an order discharged under the Insolvency Act after months or even years of litigation would seem extremely unfair – especially since a discharge would render the debt forever unenforceable.

While there is uncertainty with this particular section of the Insolvency Act in family proceedings orders, spouses should feel comforted that there has been not one case in which the default provision has been departed from. Only time will tell what will be required before a court will do so.

Danielle Day read Law at Bradford University and went on to complete her Legal Practice Certificate at the College of Law in York, where she gained a Distinction.Danielle joined the firm as a trainee in October 2011, and looks forward to specialising in ancillary relief matters.

Earlier today I appeared on ITV’s This Morning, sitting alongside Holly Willoughby and Philip Schofield answering viewers’ questions about child maintenance. The volume of calls, emails and tweets was high, and many of the questions about child maintenance followed the same theme.  There was a lot of confusion over the process that governs the obtaining of child support, and many problems with non-payment or under-payment of maintenance, whether spousal support or for children.

Unfortunately that is hardly surprising, given the CSA’s history. This began in the early 1990s, when the government of the day decided to remove child support from the courts. The new process was going to be computerised, straightforward and much cheaper.

Until then, child maintenance could be obtained through the courts. The fastest and cheapest way of obtaining such an order was to hotfoot it to the local magistrates’ court accompanied by a solicitor, who was usually acting on legal aid. The magistrates – a legally unqualified bench who nevertheless had plenty of experience of the cost of living and the tricks people played to appear far less wealthy than they were – would make an order. Usually it would take no longer than one or two hearings to settle the whole case.

Back then, arrears could be enforced by the same court’s bailiffs or the various other ways that still exist, such as an order for payment to be made directly out of income or a charging order over property and, in some extreme cases, imprisonment.  I followed this procedure many years ago with one household name who paid by return, not daring to take his chances with the judge. These enforcement methods, along with others, still exist today.

What no longer exists is the court route solely for basic child support. Magistrates’ talents are now probably underused, with regards to family work. That said, I do suspect that when the Family Court is finally consolidated following David Norgrove’s report and Mr Justice Ryder’s implementation work, the magistrates will be dealing with many of the unrepresented litigants involving straightforward work that is currently clogging up  the higher courts.

The history of the CSA and its 8,000 employees, failed formulae and almost £4 billion of uncollected child support has been well documented over the years. It is now estimated that a child maintenance case can cost between £20,000 and £40,000 to resolve. Multiply those figures by the number of “difficult” cases dealt with by the CSA, and is it any wonder the process has stultified?

And is it any wonder that many of This Morning’s callers expressed their frustration and anxiety because they had either been unable to secure the correct level of child maintenance, or having got it, had seen neither hide nor hair of it?

Even today, almost twenty years after the CSA was founded, many people are clearly confused by the amount of child maintenance to which their household is entitled. When they believe that the amount awarded is incorrect, they are confused about best to challenge the decision. Of course, if the non-resident parents fails to pay the sum awarded, these problems are compounded.

If any of this applies to you:

As I mentioned on the programme, there are various courses of action that you can take.

The Child Maintenance and Enforcement Commission website has two functions. It will assist you to reach an agreement and… it will administer the CSA.  Certainly, you have nothing to lose if you try the parenting agreement recommended on the site, calculating your own entitlement in agreement with your former partner.

You will get plenty of encouragement from CMEC to reach such an amicable solution. Of course, such a solution will relieve the CSA of any further liability, but it will also mean that you must have absolute confidence in your former partner’s honesty and integrity. You must be confident that he or she is indeed earning what you are being told, because there is no court-ordered process to ensure verification, and only the CSA has its own special powers to check in ways that citizens do not.

And your agreement will have no teeth. If your former partner decides to stop paying, you won’t be able to enforce the agreement and in many cases, you will have to start all over again with the CSA because you can’t obtain a court order as you would have done 20 years ago.

Crazy? I think so. Family financial settlements are dealt with by the court, so why exclude basic child support? But as I’m an Officer of the Court by virtue of being a solicitor, I do think access to justice should be through the court. I suppose my view is predictable!

You could also visit the Gingerbread website, which I mentioned on the programme. Gingerbread has already contributed a great guest post on this blog, on the topic of child maintenance. Do pay the site a visit: it gives excellent advice about dealing with the CSA and in particular, about what you should do if you have a low order yet believe your former partner has capital in excess of £65,000 (excluding their home), or has undisclosed income, or has diverted income, or is simply living above his or her “means”.

So what other questions were asked on the programme?

This Morning viewers also asked questions about the non-payment of spousal support, which is also commonly called maintenance. That is income payable by one spouse to the other on divorce, to meet income needs. One caller wished to vary the order. Again, I suggested using the magistrates’ court as a quicker, cheaper and less complex option. This was because in her particular case there was no complex law involved, and it was simply a decision that needed to be made on the facts.

Another caller, who I answered privately after the programme because we ran out of time on-air, queried what happens if the person making payments goes into prison. The answer is straightforward: the payments stop.

Finally, one question would have been perfect for a family law practice and procedure exam. Can arrears under a maintenance order be enforced more than  ten years later?

The answer: consider section 32 of the Matrimonial Causes Act 1973, which requires permission of the court to enforce any arrears more than 12 months old, alongside section 24 of the Limitation Act 1980, which bars fresh actions on a judgment over 6 years old. Read Rayden and Jackson 18^th Edition, together with the recent case of O’Farrell v O’Farrell.

Personally, I believe that even if enforcement proceedings (excluding bankruptcy) aren’t statute barred, section 32 is, on the face of it, too much of a hurdle. Would you have imagined that such complexity would have arisen on a morning television show? I didn’t – but still, I dealt with it!

On another note…

It’s good to be back in London, now the shoulder problem is under control. At the ITV studios I bumped into Sir John Major, Freddie Flintoff, Lionel Blair and Sir David Attenborough in the space of an hour!

What’s more, the city is looking fab. I have never seen so many brand new taxi cabs on the streets or London looking so pristine. I wonder….is there a celebration or two scheduled over the next few days and weeks?

From my latest

It is vital that we maintain the public’s faith in the independence of the justice system, says Marilyn Stowe.

Will Gardner is a senior partner at the Chicago law firm Lockhart Gardner. Every week he plays basketball with three judges. His well-known friendships with those members of the judiciary have come under scrutiny from his opponents, all the more so since his firm won a number of spectacular outcomes from those same three judges. Nothing improper has taken place, and the three judges don’t seem to think there is anything wrong with playing basketball with a trial lawyer. But Gardner’s opponents, one of whom is the State Attorney, are convinced otherwise. How else did Lockhart Gardner’s brilliant results come about?

As some of you have no doubt recognised, this is a storyline from the latest season of the American legal drama, The Good Wife. The glossy, high-budget series makes for compulsive viewing and, needless to say, its high-octane plotlines do not always match the day-to-day working reality for solicitors here in England and Wales. However the judges and their basketball games with a single trial attorney have given me pause for thought. In fact they have struck a chord, prompting a question that is not often asked: how close can members of the judiciary be in their relationships with solicitors?

Of course it should be clear cut because the Guide to Judicial Conduct, which applies to the judiciary in England and Wales, most certainly is. It covers a number of lofty themes including Independence, Impartiality, Propriety, Competence and Diligence. It also considers personal relationships and perceived bias, as well as activities conducted outside of court.

One of the most significant points outlined in the Guide falls under the category of Propriety: “A judge shall, in his or her personal relations with individual members of the legal profession who practise regularly in the judge’s court, avoid situations which might reasonably give rise to the suspicion or appearance of favouritism or partiality.”

The Supreme Court also has its own Guide to Judicial Conduct, published in 2009, and the United Nations introduced the Bangalore Principles of Judicial Conduct in 2002 to establish standards for the ethical conduct of judges worldwide. Both highlight in near identical terms that judges should avoid situations involving other members of the legal profession that might lead to a charge of bias.

In short, there is plenty of guidance as to how the judiciary should conduct itself in relation to other members of the profession. I this country it is not always easy to sever all ties as judges are appointed from within the ranks of practicing lawyers, so it is inevitable that close professional relations will have been formed over many years between solicitors and individual members of the judiciary.  But by acquiring the substantial perks of their role, judges also accept weighty obligations too, and in particular, judges are specifically mandated to do all they can to avoid accusations of bias.

Why is it so fundamentally important to our Justice system, that judges strictly maintain their isolation? For me there are a number of compelling reasons that go far beyond any code of conduct. Much as in the fictional situation Will Gardner found himself, such close relationships can only ever leave doubt in the mind of other legal practitioners and the public as a whole – regardless of how innocuous they are considered to be by those who conduct them.

In the past few years there has been no end to the damaging stories concerning the close relationships politicians, the media and the police have shared. And we should be constantly vigilant if we are to also avoid falling foul of what is commonly seen as a crisis of trust in public life.

In fact, we should differentiate ourselves for this very reason and maintain the strong and proud reputation that the legal profession has, while maintaining the public’s faith in the independence of the justice system – something that is so important at a time when budget cuts seem to be eroding its very foundations.

This was in marked contrast to how I felt over the weekend when my shoulder “malfunctioned”. In addition to the spinning classes in our local gym I’ve also started to learn pilates and yoga. It’s all been part of a new learning curve which began at Yeotown, and as I like the idea of toning I’ve decided to keep it up. However, as I am discovering, my body most definitely isn’t made of elastic!

Pilates lessons are also led by the very strict spinning instructor, who seeing me sitting at the back of the pilates class, said laughing: “Don’t worry Marilyn, I don’t shout in this class!” I was less than convinced, and as I’m not the best contortionist in the world I decided to stay right at the back of the room. Some in the class did find it very easy to lie on one side and then pull both legs up in a continuous straight line, but I’m afraid I didn’t on either side. I kept rolling over and collapsing.  Neither could I do the “lie down on your stomach, rest on your forearms and tip toes, then lift and keep your back straight in the air. And while doing so set your arms straight, one at a time, hold your breath, keep your back straight and then go back down the same way”. Sorry but that’s just not me either.

By the evening my shoulder was aching in deadly earnest. It has been coming on for a while and the pain was terrible. So I took a strong Ibuprofen and hoped it wouldn’t play havoc with my trip to London on Monday. It did. I should have been taking the minutes of the newly formed Family Arbitrators Panel. As its secretary, I was going to turn up in my very smart “secretary’s outfit” of a black and white striped shirt, pencil skirt and sky high heels with note pad in hand. But the reality was unfortunately the prospect of an eight-hour round trip while in agony, something that was unappealing to say the least. So I regretfully cancelled and instead sought the help of the “sportsman’s go-to”, an Australian chiropractor called Mark Butterworth.

I met Mark through one of our gym pals, ex-Castleford and Great Britain rugby league player Ian Orum. As tough as they come, Ian swears by Mark for sports injuries. So, I got his number and Mark agreed to see me straight away.

I do like an Aussie accent!  Mark has also got a great smile and sense of humour. I had various forms to complete first, one of which I noted through the pain was a waiver of liability. “Jast in case of accidental injury” said Mark in his Aussie drawl. “Maybe a fracture, couple-a-broken bones, thit sort of thing”. Was he joking?  Frankly, I was in such a lot of pain, I couldn’t have cared less. At that point I’d have signed anything, which thinking about it afterwards, perhaps I did.

Within a few minutes I realised that, despite the pain, I certainly had quite a few problems.

First I had to stand flat on a mat. “Yip, I can see why you git the injuries, you’ve got very strainge feet”.

My feet roll outwards at the heel and inwards at the middle. This is apparently very rare, so rare in fact, that I had no idea that this was my problem. I made a mental note to tick off my parents for this genetic quirk. This was clearly their fault and not mine.

While I was feeling extremely embarrassed about my feet, that was only the beginning. There followed an analysis of every other quirk from the neck down, and let’s say I now no longer feel like a car in need of a service – just a one way trip to the wrecker’s yard.

“We mite find one or two problem areas” said Mark grinning, as like a magnet he soon found every single one up and down my spine and wielded a little silver hammer to get rid of them. At some point I nearly jumped off the table. “Yip, feels tender there” he said with that impish Aussie grin.

Then the fighting British spirit took over, I told myself to stop grabbing the table and reminded myself that I am not a wimp and should fight back. Especially against an Aussie! Easier said than done, and I gave it a half-hearted go until the silver hammer banged me once again.

Torture over, Mark told me I might feel a little sore that evening but was kind enough to call and make sure I was ok. I’m due back again shortly for which he has kindly prepared me by saying: “That was jist a gentle start, the raff stuff is still to come”

I can’t wait.

Sarcasm aside, I’m feeling amazing. The pain has gone and I’m even debating whether to cancel my next appointment.  Although I don’t think I will. I don’t think you mess with an Aussie. Although I did happen to casually mention to Mark that my team, the Leeds Rhinos, whupped the Australian Manly Sea Eagles to become Rugby League’s World Champions!

Right now, I’m enjoying the sensation of my newly invigorated, fabulously pain-free physique and the beautiful month of May – my favourite, flower-filled month and the best of them all. I hope you all have a great month as well, now that it seems spring has finally sprung.

Lilleyman v Lilleyman

Mrs Lilleyman was awarded £600,000 – but after the judgment had been delivered, there was a further hearing on 4 April 2012 to deal with the issue of costs in the case.

The husband’s two sons argued that the wife should pay their costs from 17 August 2011. They had made her an offer to settle, known as The July Part 36 Offer, which had expired on this date. This offer had been higher than the final sum awarded to the wife by the court.

The sons’ costs were approximately £68,000 and the wife’s costs stood at around £114,500, giving a total of £182,500. It was agreed that £30,000 should be deducted for detailed assessment; giving the wife a costs burden of £152,000.

Notwithstanding the fact that the parties had made various without prejudice offers throughout proceedings, the fact that the Part 36 offer was not beaten at trial meant that the losing party (in this case, the wife) would be liable for the costs of the other party. As Mr Justice Briggs stated:

Since the claimant has failed to obtain a judgment more advantageous than the defendants’ July Part 36 Offer, I must, unless I consider it unjust to do so, order that the defendants are entitled to their costs from 17 August 2011, and interest on those costs.

Mr Justice Briggs carefully examined how much the wife would be left with if she had to pay the costs burden. He stated that it would leave her with a net sum of £197,500, which was to be added to her £77,500 share in her mother’s house, realisable upon her mother’s death. The £125,000 value of Lea Court – the property in which her son lived, which had been transferred to her by order of the court – would be realisable in 2014 when the agreement with her son came to an end. So this property’s value was also considered.

It was calculated that after costs, Mrs Lilleyman would be left with approximately £380,000. The judge worked out that she would need £235,000 to meet the shortfall in her own income, in comparison to her income needs. This would leave her with a “cushion” of £145,000.

He described this as:

A modest amount in the context of providing financial security for the rest of Mrs Lilleyman’s life, but not obviously inadequate … The unfortunate reality is that Mrs Lilleyman was, from August 2011, engaged in a high risk venture in which she played for high stakes and, in substance, lost … Nonetheless, there is to my mind an injustice in allowing for a full recovery for either party of costs incurred in pursuing this litigation in the no holds barred way that it has  been pursued rather than making sensible early concessions … While it may be that a ‘no holds barred’ approach to certain types of litigation is entirely appropriate, it is not in my judgment at all appropriate in the context of claims under the Inheritance Act.

Mr Justice Briggs therefore ordered that the wife’s costs incurred up to 17 August 2011 be paid out of the estate, and that she pay 80% of the son’s costs incurred after that date, 20% representing an appropriate deduction. He concluded his judgment by expressing his concern about the different ways in which costs are dealt with in financial relief proceedings arising from divorce, and the way in which they are dealt with in Inheritance Act claims:

I must in concluding express a real sense of unease at the remarkable disparity between the costs regimes enforced, on the one hand for Inheritance Act cases (whether in the Chancery or Family Divisions) and, on the other hand, in financial relief proceedings arising from divorce. In the latter, my understanding is that the emphasis is all on the making of open offers, and that there is limited scope for costs shifting, so that the court is enabled to make financial provision which properly takes into account the parties’ costs liabilities. In sharp contrast, the modern emphasis in Inheritance Act claims, like other ordinary civil litigation, is to encourage without prejudice negotiation and to provide for very substantial costs shifting in favour of the successful party. Yet at their root, both types of proceedings (at least where the claimant is a surviving spouse under the Inheritance Act) are directed towards the same fundamental goal, albeit that the relevant considerations are different, and that there is the important difference that one of the spouses has died, so that his estate stands in his (or her) shoes.

I express no view on which of those fundamentally divergent approaches to costs is better calculated to serve the ends of justice, and in particular to promote compromise. I merely observe that the potential for undisclosed negotiations to undermine a judge’s attempt under the Inheritance Act to make appropriate provision for a surviving spouse is a possible disadvantage of the civil litigation costs regime currently applied to such claims, by comparison with the regime applicable to financial provision on divorce. I consider that those fundamental differences in approach to proceedings having the same underlying objective deserve careful and anxious thought.

While inheritance and divorce claims inherently share the same objective, they have different approaches to costs. As noted in the previous post, financial proceedings arising from divorce generally have a presumption that there will be no order as to costs, unless one party is guilty of litigation misconduct – but even then, it is not a guarantee. The idea of having to pay the other party’s costs for failing to beat an offer is unheard of in financial proceedings arising from divorce.

Mr Justice Briggs’ comment above that the approach to costs in Inheritance Act claims as a possible disadvantage is understandable. Of course, it can make it difficult for a judge to provide appropriately for a surviving spouse without knowing how much they may be liable for in terms of costs.

Thanks Laura.

But here’s a final thought. The ‘no order’ principle in divorce costs has been widely criticised as encouraging litigation by the wealthier party with little to lose except their own costs of the litigation. Here we have the application of the ‘costs follow the event’ rule that used to apply and was considered to assist the poorer party.

Which is the more advantageous in divorce proceedings? The parties involved might wish to make sensible offers from an early stage, rather than incur a significant costs risk. However, my own view is for more discretion. The ‘no order’ principle should be departed from in wider circumstances than is currently the case. Where a party is hell bent on going to court, thereby forcing the poorer spouse to settle on either less favourable terms or incur the additional costs of litigation, should such a strategy be more routinely condemned in costs if it ultimately proves unsuccessful?

Laura Guillon is the principal trainee solicitor at Stowe Family Law, assisting the Senior Partner. Laura is half French and speaks French fluently. Her interest is in ancillary relief, particularly cases that have an international element.

This blog receives many queries from people who are left stranded after the death of a family member, particularly a partner or spouse. People generally try to brush off thinking about what would happen if they were to die and their affairs have not been left in order. However problems arising from just such a scenario could mean that survivors are left with taxes to pay and debts to meet. The people they would have provided for are left with less than they would otherwise have received, or nothing at all.

Laura Guillon a trainee at SFL whom I first met as a tiny tot at the kindergarten she attended with my son Ben, and is now almost a qualified solicitor and I have been considering the latest case law on this topic. The Inheritance (Provision for Family and Dependants) Act 1975 gives the court power to override a will or override the effect of the intestacy laws, if it deems it necessary. The recent case of Lilleyman v Lilleyman [2012] EWHC 1056 provides a working example of what can happen when a claim is made, and we will look at it in more detail over the next two posts. In that case, the deceased husband had bequeathed almost the entirety of his estate to his sons from a previous marriage. His widow had been left chattels, gifts, conditional rights of occupation of the former matrimonial home and a holiday home, and an annuity of £378 per month. She made an application to the Chancery Court for financial provision, claiming her reasonable needs had not been met in his will.

There are many and varied circumstances by which an application can be made to the court. Sometimes a person making maintenance payments to a divorced spouse and children omits to take out life insurance. On death, without a lump sum to cover future payments, there can be costly legal arguments about how the estate should be distributed. Other beneficiaries, such as a second partner or spouse and children of a second family, can lose out. Arguments ensue and, as in the case of Lilleyman v Lilleyman, the parties turn to law.

Where there’s a will…

When a person dies testate, having left a will, there are usually two named executors who will deal with the deceased’s affairs. They must apply to the local probate registry with a statement of the deceased’s financial affairs, in order to obtain a grant of probate. This is a legal document, which confirms that the executors have the power to deal with the deceased’s estate and distribute it in accordance with the will.

If a person dies intestate, there is no will. In such cases a close relative will usually apply to the probate registry for a grant of letters of administration. This is similar to the grant of probate in that it gives the administrator authority to deal with the deceased’s estate.

It is not always a straightforward matter to administer and distribute someone’s estate, even if there is a will. There may be inheritance tax to pay and a grant will not be issued before some or all of the tax has been paid. For this reason, it is always advisable to contact a solicitor when dealing with an estate.

The Inheritance Act is the relevant legislation in such cases is. It allows the following people to make a claim to the executors or administrators of a deceased’s estate if they have not been reasonably provided for by a will or under intestacy laws:

• The wife or husband of the deceased.
• A former wife or former husband of the deceased who has not remarried.
• A child of the deceased.
• Any person (not being a person included in either of the two points above) whom was living a) in the same household as the deceased, and b) as the husband or wife of the deceased, during the whole of the period of two years ending immediately after the deceased died. This only applies to a person if the deceased died on or after 1^st January 1996.
• Any person (not being a child of the deceased) who, in the case of any marriage to which the deceased was at any time a party, was treated by the deceased as a child of the family in relation to that marriage.
• Any person (not being a person included in the foregoing paragraphs of this subsection) who immediately before the death of the deceased was being maintained, either wholly or partly, by the deceased.

A claim under the Inheritance Act should be brought within six months of the grant of probate being obtained. If it is left any longer, it is still possible to make a claim but permission of the court will be needed and will only be given with good reason.

Under the Inheritance Act the court has the power to make the following orders:

• That the applicant receive periodical payments from the net estate.
• That the applicant receive a lump sum from the net estate.
• That property be transferred to the applicant.
• That the applicant benefit from the settlement of property from the net estate.
• That the applicant benefit from both the acquisition and transfer of property from the net estate.
• To vary an ante-nuptial or post-nuptial settlement if the deceased was a party to the marriage, provided that the variation is for the benefit of the surviving party to the marriage, any children of the marriage or any person who was treated by the deceased as a child of the family in relation to that marriage.

As a result of its power to make the above orders, the court is able to adequately provide for a family member or dependent that it finds has not been reasonably provided for upon the death of the deceased.

“The Divorce Cross-Check”

Section 3(2) of the Inheritance Act states that the following factors should be considered by the court when a spouse is making a claim:

(a) the age of the applicant and the duration of the marriage;

(b) the contribution made by the applicant to the welfare of the family of the deceased, including any contribution made by looking after the home or caring for the family;

and in the case of an application by the wife or husband of the deceased, the court shall also, unless at the date of death a decree of judicial separation was in force and the separation was continuing, have regard to the provision which the applicant might reasonably have expected to receive if on the day on which the deceased died the marriage, instead of being terminated by death, had been terminated by a degree of divorce.

This last factor is known as the divorce cross-check, and was referred to in Lilleyman v Lilleyman. It can cause difficulties: the court must consider the needs of two living parties in divorce proceedings, but only one in inheritance cases. In reaching his decision in the case, Mr Justice Briggs recognised the difficulty faced by chancery judges in dealing with this process:

To a chancery judge, for whom the jurisprudence about financial relief on divorce is not the bread and butter of his daily fare, the divorce cross-check introduces a range of additional legal complications, arising from the still developing principles originating in the epoch-making decision in the House of Lords of White v White [2001] 1AC 596.

Along with the divorce cross-check, the court must also consider the following factors listed in section 3(1) of the Inheritance Act:

(a) the financial resources and financial needs which the applicant has or is likely to have in the foreseeable future;

(b) the financial resources and financial needs which any other applicant for an order under section 2 of this Act has or is likely to have in the foreseeable future;

(c) the financial resources and financial needs which any beneficiary of the estate of the deceased has or is likely to have in the foreseeable future;

(d) any obligations and responsibilities which the deceased had towards any applicant for an order under the said section 2 or towards any beneficiary of the estate of the deceased;

(e) the size and nature of the net estate of the deceased;

(f) any physical or mental disability of any applicant for an order under the said section 2 or any beneficiary of the estate of the deceased;

(g) any other matter, including the conduct of the applicant or any other person, which in the circumstances of the case the court may consider relevant.

There is no hierarchy imposed with these factors and each one can be given as much or as little weight as is deemed necessary depending on the facts of the case.

“Reasonable Provision”

In Lilleyman v Lilleyman, the relationship of the wife and the deceased husband totalled four years: they had been married for more than two years and had cohabited prior to their marriage. However, since the net estate of the deceased husband was worth approximately £6 million, this was deemed a big money – short marriage case.

It was the second marriage for both the husband and the wife and each had children from previous marriages. The husband’s two sons from his first marriage were both executors and principal beneficiaries of their father’s will. The wife was therefore the claimant and the two sons from the husband’s previous marriage were the defendants.

When making a decision in inheritance claims, a judge must consider two separate questions: was the provision unreasonable and if so, what provision would be reasonable?

In Lilleyman v Lilleyman, the husband’s sons argued that reasonable provision for the wife should be determined in relation to her reasonable needs. The wife, on the other hand, stated that reasonable provision was not limited to her needs, but meant a substantial share of the matrimonial property.

With this in mind, let’s consider Section 1(2)(a) of the Inheritance Act, which states that:

In this Act, “reasonable financial provision”…means…such financial provision as it would be reasonable in all circumstances of the case for a husband or wife to receive, whether or not that provision is required for his or her maintenance.

When taking his decision in the case, Mr Justice Briggs recognised that equality is the starting point in financial matrimonial proceedings. But he went on to state that there is reason to depart from equality in short marriage cases, especially if needs can be met and there is a mixture of matrimonial and non-matrimonial assets. He referred to the cases of both White v White and Miller v Miller in his judgment. The latter is the leading case on big money – short marriage cases within matrimonial proceedings, in which the judgment states:

In the case of a short marriage fairness may well require that the claimant should not be entitled to a share of the other’s non-matrimonial property. The source of the asset may be a good reason for departing from equality.

In Lilleyman v Lilleyman, there was a mixture of both matrimonial and non-matrimonial assets. Assets of note in the non-matrimonial pot included the husband’s three companies, which were worth in excess of £5 million. His sons worked in these companies, which provided their source of income. Mr Justice Briggs highlighted that the distinction between matrimonial and non-matrimonial assets was of undoubted importance in this case, and summarised the legal principles that have emerged from and after Miller v Miller as follows:

First, the onus lies upon a person asserting that the property of one or other of the spouses is non-matrimonial to prove it.

Secondly, a matrimonial home is usually to be regarded as matrimonial and family property, even if contributed solely by one of the spouses.

Thirdly, property acquired during the marriage, otherwise than by inheritance or gift, is usually matrimonial property, but part of it may not be family property if it has not been acquired for family use.

Fourthly, property pre-owned by one of the spouses is, usually, not so regarded, unless it is then committed to long-term family use.

Fifthly, where one spouse brings to the marriage an existing business, and develops it during the marriage, then its value at the beginning of the marriage may usefully be regarded as non-matrimonial, whereas its increase in value thereafter may be part of the fruits of the partnership, even if wholly derived from the activities of one of the spouses.

Sixthly, where one spouse brings a pre-existing family business to the marriage, it may be positively unfair to have recourse to it for the purposes of equal sharing, in particular if to do so might cripple the business or deprive it of much of its value.

Therefore, emphasis is placed on the divorce cross-check in such cases. However, as Mr Justice Briggs pointed out:

The divorce cross-check is just that, a cross-check, no more and no less. It is, like all the other matters to be taken into account under Section 3, of infinitely variable weight on the facts of each particular case.

Cunliffe v Fielden

The leading authority on big money – short marriage cases in Inheritance Act claims is Fielden & Graham v Cunliffe [2005] EWCA Civ 1508.This case centred upon a marriage that lasted for little more than one year at the time of the husband’s death. Mr Cunliffe’s will divided the estate between discretionary trusts for a number of beneficiaries including Mrs Cunliffe. She launched proceedings under the Inheritance (Provision for Family and Dependants) Act 1975, claiming that his will had not made reasonable financial provision for her. She won an award of £800,000, later reduced to £600,000 on appeal.

The award, which was calculated using the Duxbury Tables, suggests that the courts will be more generous to a spouse when the reason for the short duration of the marriage is due to the death of one of the spouses rather than divorce. As Lord Justice Wall noted:

The first point to make is that although this is a short marriage, Mrs Cunliffe entered into it on the basis that her obligations to her husband were of indefinite duration, and could take all manner of forms. He was considerably older than she was. She might well have been expected to spend a number of years nursing an invalid. In short, I think it right to approach the case on the basis that in marrying the deceased, Mrs Cunliffe, like Mrs Miller was entitled to have what Sir Peter Singer described in the latter case as “a reasonable expectation that her life as once again a single woman need not revert to what it was before her marriage” and that she could look forward to financial security for the rest of her life.

Outcome of Lilleyman v Lilleyman

The late Mr Lilleyman’s estate was worth approximately £6 million. There were three companies and a number of properties. The first, Water Meadows, was the matrimonial home and was worth £330,000. The husband also owned Dunhome Manor (again worth £330,000), which he had bought as a second home for the couple.

The matrimonial home was owned in joint names, therefore only 50% of the property was included in the estate, with a value of £165,000. A third property, Lea Court, had been purchased for the wife’s son to live in and pay rent on, which he did. Mr Justice Briggs decided that Lea Court did not form part of the estate, as the wife had repaid the husband during his lifetime as per an agreement between them. This property was therefore deemed to be owned solely by the wife, even though it had never been transferred from the husband’s name.

There were also a number of bank accounts totalling a sum of £316,348, along with £296,000 in investments in quoted shares and unit trusts. Chattels including the husband’s Dinky Toys, which were worth £17,000, were also taken into account. All told, these gave a total just short of £1 million. Despite this, the husband’s will had left the wife with only certain belongings including the Dinky Toys and limited occupation rights in the properties. This led to her application for financial provision as she felt that her husband’s will failed to reasonably provide for her.

Mr Justice Briggs decided to transfer a value in the region of £500,000 from the estate to the wife, stating that this would “both provide reasonable financial security (including as to the accommodation) for the rest of Mrs Lilleyman’s life and substantially reflect a fair application of the divorce cross-check, in which the relative shortness of the marriage is appropriately recognised in this particular case by excluding from sharing almost the whole of the family business”.

The judge also came down in favour of a transfer of the estate’s share in the matrimonial home, Water Meadows, along with an outright transfer of Dunhome Manor – or an equivalent lump sum of £330,000 – to the wife. She was to retain the chattels. The estate’s apparent interest in the third property, Lea Court, was to be transferred to her. This resulted in the wife receiving little more than 8% of the husband’s net estate and roughly 50% of what could be considered matrimonial property.

This wasn’t the end of the case, however. In the next post, we’ll look at the issue of costs in the case. Financial proceedings arising from divorce generally have a presumption that there will be no order as to costs, unless one party is guilty of litigation misconduct – but even then it is not a guarantee. But this wasn’t a divorce case.

So what happened when lawyers representing the sons from Mr Lilleyman’s first marriage returned to court, to argue that their costs should be met by the wife?  

Laura Guillon is the principal trainee solicitor at Stowe Family Law assisting the Senior Partner. Laura is half French and speaks French fluently. Her interest is in ancillary relief, particularly cases that have an international element.

Parents, particularly the one who is separated from the family, find that following divorce they simply hit a brick wall. All that counts is the welfare of the child, and they have no legal rights (even qualified rights) at all. Yes they have “parental responsibility” but as I have pointed out in the past, what that means isn’t actually defined anywhere.

The Law Society today states in its response to the Queen’s speech: “it is not true that the courts are biased towards mothers: there is and can only be one bias – the welfare of the child”. And then adds: “shared parenting or shared parental responsibility is too easily misinterpreted as meaning equal time with each parent and can lead to a focus on the rights of parents over the rights of children…what is really needed is a more thoughtful approach to what parental responsibility means post separation”.

With all due respect to the child specialists at the Law Society, what is really needed is a change in the law to define what parental responsibility means. What is wrong with legislation that tells parents what rights they have in law – as exists in Scotland? I’ve written extensively about this in the past, and it seems like a logical step.

Parents discover on marital breakdown, and usually to their horror, that parental responsibility gives them no statutory rights post-separation in relation to their children. I believe this is wrong, and the slavish adherence only to the welfare of the child shows both a lack of respect and downgrades the role of a parent in law. And these are not simply views I have dreamed up out of the ether; I hear these same concerns from parents time and time again.

This point came up recently during a discussion at Oxford I recently attended alongside a selection of the country’s top family law academics and judges. And yet again there seemed to be no-one at all in a position of authority who was prepared to agree that parents should have any legal rights to parent their children post-separation, even when subject to the welfare principle. The consensus seemed to be that cases are difficult enough and should not become more complicated. It struck me then that there is a wholly entrenched, unmoveable mindset. And I wondered if the actions of the more extreme father’s groups haven’t actually made the situation worse?

My own view remains that those bitter cases that concern judges at the highest levels, and help make the political case for legislators, do not form the majority. Legal rights should make things easier for couples, many of whom at the moment often only grudgingly sort out their arrangements, dissatisfied with the state of the law and in the knowledge that going to court won’t help much either. The government’s forthcoming legislative statement is no doubt intended to give that steer and so should be welcomed. But I doubt most parents will be fully satisfied, given that the law itself is not going to change to specifically define what parental responsibility actually means.

Then there is the adoption process and care proceedings, which we are told are going to be speeded up. There are currently 15,000 children in care, costing the country a small fortune. And an ever decreasing number, some 3000 last year, are adopted. This week the extent of delays in the system was also highlighted by the government itself, with hundreds of children forced to wait an average of 20 months from entering care to moving in with their adoptive parents.

Speeding the process up may seem a good idea, but I have my concerns. Adoption means a child’s links with the past are legally and irrevocably broken. I believe adoption should be treated with the greatest of care for the future benefit of all involved, especially where the children concerned are not babies. Children growing up in care are from the most deeply damaged of backgrounds. It is not their fault, but they may be deeply damaged too by what they have experienced in their young, tragic lives. Speeding up the adoption process to shift them from further burdening the State could well create as many problems as they solve for those children and their adoptive families, who despite their best efforts may find they are unable to cope long-term.

Ironically however, the legislative programme was announced at the same time as not only the savage decimation of legal aid, but of the court service itself. Today’s Law Gazette reports that: “HM Courts & Tribunals Service (HMCTS) wrote to civil and family court users earlier this year to say that it was to replace face-to-face services with online, telephone, post and drop-box facilities and to cut counter hours by two-thirds to 11am–1pm.” Yes, the court counters are intended to be open hereafter for just two hours a day. Imagine the pandemonium.

The announcement has been met with uproar across the country. The Law Society’s civil justice committee said that cutting counter hours to just two hours a day would be in breach of the Court Charter 1994, which states that 10am-4pm is the “national minimum standard”. Reductions in face-to-face services would also cause “delay, confusion and frustration for users and court staff” commented Keith Etherington, Law Society council member for civil litigation. He also said that: “Court users have been unanimous in their opposition to the changes. The civil court system is fast approaching meltdown. This HMCTS (Her Majesty’s Courts and Tribunals Service) letter is a declaration of intent, not a consultation, and we fear that the proposals are going to be pushed through without a thought for access to justice”. A HMCTS spokesman said that it will consider court users’ responses before implementing any changes.

So how then I wonder, is it going to be possible to deliver the government’s promises at all?

Fundamentally though, has anything really changed? Has Her Majesty announced anything that is actually new? I don’t think she has. Although the Centre for Separated Families has stated that:

“We believe that the government’s intention to introduce a legislative statement into the Children Act (1989) is by far the most appropriate way to support children’s ongoing relationships with both parents after divorce or separation”.

But isn’t this what happens in all cases anyhow? In the final analysis, you would have to ask whether any of what the government is proposing will have a real impact. What is very real is the erosion of the courts system in England and Wales, and the perilous state it leaves many families in.

Image credit: Parliamentary copyright/Roger Harris

When you instruct a solicitor in your matrimonial case you receive a costs estimate which gives an estimate of likely costs. If the figure mentioned is acceptable and you agree, a retainer letter is signed.

Then the unexpected happens, the case takes a sudden and unexpected turn, there is a change of course, the legal costs increase, you receive the bill and …you feel aggrieved.

In almost all cases the costs estimate can be reviewed, communicated to and then agreed by you before the costs are incurred. But if the work is part of an urgent matter in court, it just may not be possible.

Tensions with the increased bill rise between you and your solicitor as you complain of the unexpected hike and he or she explains the costs are justifiable and seeks payment. You, perhaps cash-strapped at the time, suggest the solicitor should wait to be paid, or paid out of an order for costs you hope will be obtained against the other party. But the solicitor, who has the expenses and outgoings of an office to meet each month, flatly refuses – as is his right.

If the bill still isn’t paid, the solicitor then refuses to take any further action until it is and he receives some more money on account for future costs. Tensions heighten even further, and you believe the solicitor is holding you to ransom and that he has effectively “sacked” you. Worse still the inaction is prejudicing your case; the solicitor believes you are being wholly unreasonable. He has done the work in good faith, it wasn’t his fault the costs increased and he wishes to be paid. He isn’t prepared to run the case any further while awaiting payment at some point in the future.

If such a dispute isn’t resolved swiftly, commercially and amicably, the solicitor-client relationship will be irrevocably fractured, and the resulting costs of that dispute will be out of all proportion to the original bill. So, should the client have paid the solicitor? What do you think?

Here Ellie Webster of our Hale office, looks in greater detail at one recent case and a dramatic outcome that in many ways provides the answer…

The subject of costs has long been a thorny issue in law and a recent case perfectly illustrates the complexities involved, highlighting both the proper recourse open to disgruntled clients and the often fragile interplay between measuring actual service provided by a solicitor against the initial estimate provided at the outset.

Cawdery Kaye Fireman & Taylor v Minkin [2012] EWCA Civ 546 concerned disputed costs between firm Cawdery Kaye Fireman & Taylor (CKFT) and its client Mr Minkin and was heard before the High Court and then Appeal Court this spring. The firm of solicitors was originally instructed to act for Minkin in matters relating to the former matrimonial home. Due to unforeseen complications, increased fees were incurred that the client referred to a costs judge.

Solicitors are obliged to provide a costs estimate that gives parameters for the likely costs to be incurred in pursuing the case to its conclusion. Yet even with the benefit of experience, such estimates are exactly that: a projection of likely costs. Marilyn recently touched on some of the complexities involved, in her blog on the Legal Ombudsman’s suggestion that solicitors should move towards a “more commercial” system of detailing costs. The reality is that, even with the best will in the world, cases frequently follow imperceptible twists and turns. Myriad problems can mean that costs often mount unintentionally.

A costs estimate is agreed

Mr Minkin first instructed CKFT to act at a hearing in relation to Mrs Minkin’s application for an occupation order of the former matrimonial home, and a non-molestation order. They provided Mr Minkin with a costs estimate of up to £3,500 plus VAT, although the solicitor with conduct of the file added that he would “try to keep the costs down as much as possible, hopefully to £3,000 plus VAT”. CKFT’s terms made clear that the estimate was only a guide, and that there could be no guarantee that the final charge would not exceed the estimate. Further, that there are “many factors outside our control which may affect the level of costs”.

The terms also provided an explanation of the conditions for payment of invoices and payment on account. It was also made clear that it was open to the client to terminate the retainer in writing at any time, but that the firm could only stop acting “on reasonable grounds and on giving [you] reasonable prior written notice”.

An initial payment on account of £2,000 was made by Mr Minkin, with a promise that further monies would follow.

Complications arise

The day before the hearing, it was discovered that Mrs Minkin had in fact left the family home and let it to tenants. As a result the occupation order was dismissed and her application for a non-molestation order was adjourned. Not unreasonably perhaps, Mr Minkin wanted his share of the forthcoming rent and, in the longer term, the tenants out of the home so that he might take possession of a property he jointly owned. Crucially, this shifted the goal posts and led to an increased workload for the solicitor.

When the CKFT’s bill was issued, it came to £3,490.00 plus VAT, along with disbursements (including counsel’s fees) of £1,271.50. The bill was payable on presentation and included notes as to the options available to Mr Minkin to have the costs reviewed should he be dissatisfied. Mr Minkin was shocked and made it clear to the solicitor that he would not be able to pay the excess costs and that he required a costs order against his wife at the eventual hearing in order to pay the outstanding fees.

An exchange of several emails followed over the next few days as the solicitor explained that the complication of tenants now residing in the home had increased costs. In these emails, Mr Minkin repeatedly instructed the solicitor to obtain the rental income and proceed with an application for possession, yet at the same time refusing to make any further payment towards the outstanding fees. The solicitor made clear that he could not launch possession proceedings without the invoice being settled and without there being monies on account to deal with the new application.

Challenging a solicitor’s bill

If he was dissatisfied with the costs, Mr Minkin should have taken stock at this point and pursued one of the avenues open to him to formally challenge the invoice. There is already a thorough procedure to deal with reducing a bill: the assessment procedure of a solicitor’s bill of costs through court. A judge considers a solicitor’s bill, scrutinising it against the files and hears detailed arguments, deciding if the bill is fair and deducting any costs they believe should not be paid by the client. If more than 20 per cent of the bill is deducted, the solicitor pays all the costs of the court proceedings. If the deduction is less, the client pays. Instead, Mr Minkin refused to pay while insisting that further substantive work be undertaken.

Severing the contract

Mr Minkin proceeded to attend the property in person and apparently conduct threatening conversations with the 15-year-old daughter of the tenants. Mrs Minkin immediately sought an emergency occupation order without notice. When Mr Minkin called CKFT to instruct that an urgent fax be sent to the court on his behalf to vacate the property without a notice hearing, he was advised by the solicitor’s secretary that such a course of action would be fruitless, and that in any event CKFT could not continue to act until the invoice had been settled and further payment on account had been made.

The response was a number of written criticisms of the level of service and costs provided by the solicitors, with Mr Minkin expressing a lack of confidence in the firm. A further email stated that: “I would have liked to continue to work with you but I feel we have got nowhere since the hearing”. The solicitor therefore arranged for a final invoice to be issued, and confirmed that the firm would come off the court record.

Referral to a costs judge

Mr Minkin sought that both invoices be assessed by a costs judge. Master O’Hare came to the view that CKFT had wrongfully terminated their retainer and had not completed the entire contract. He ruled that the solicitors should not receive any sum for the work done and should repay any sums received. On his assessment, the bills were reduced in part, and he awarded the costs of the detailed assessment to Mr Minkin. It was held that Mr Minkin had reasonable justification in not paying the bills due to CKFT exceeding its estimate, and the work not having reached its conclusion. CKFT therefore had no right to suspend work.

On appeal to the High Court, Mr Justice Cranston upheld the decision of Master O’Hare, stating that the firm did not have the right to terminate the retainer, and that accordingly it was in breach of contract when it “downed tools”.

The Court of Appeal

Despite the very small sums involved at the root of the application, the case then came before the Court of Appeal. Lord Justice Ward examined the wording of the emails between solicitor and client and considered that CKFT had rightfully suspended the retainer. He found that:

• Mr Minkin had no reasonable justification for withholding payment. The terms had made clear that the estimate was only a guide.
• Although he had the right to formally challenge his bill or to have the charges reviewed by the court, he did neither. Further, Mr Minkin “could not reasonably expect his solicitors to wait for payment until they had an order for costs made against Mrs Minkin. That is not the way the world works and Mr Minkin was well aware of that fact”.
• CKFT was entitled to suspend the retainer. That suspension was never lifted on the firm’s part and it was Mr Minkin who in fact terminated the retainer, when he made clear that he had no confidence left in CKFT, and that he would have liked to continue to work with them but felt he had “got nowhere since the hearing”.

Lessons learned

It is absolutely vital that clients always read a retainer letter carefully. If dissatisfied with an invoice, they should take prompt action in line with the firm’s formal procedures. It is counterproductive to let matters drift, and in the words of Lord Justice Ward: “how absurd that such a lot of money has now been spent litigating over such a small sum”.

Similarly, solicitors must ensure that, as a matter of good practice, costs estimates are well thought-out and frequently reviewed, revised if necessary and with clear explanations given.  There should be clear rights within the firm’s terms of business to stop work for a client who refuses to pay. Both solicitors and clients need clear and frank discussions when concerns arise over invoices issued to avoid, if possible, the stalemate and great expense which arose in Mr Minkin’s case.

Eleanor Webster graduated from the University of Bristol with a first class degree in Law and French in 2005. She went on to complete her Legal Practice Course at Nottingham Law School, achieving a distinction and the Resolution prize for the Family Law Elective.

After completing her training contract with a large law firm in Manchester, Eleanor Webster joined Stowe Family Law LLP upon qualifying in 2009.

Geary v Rankine is of interest to cohabiting couples, or those whose cohabiting relationships have broken down, because it demonstrates (once again) the complexities involved in trying to establish an interest in property – which would be a far easier task had the parties been married.

Readers will recall the tortuous exercise that was involved in the recent Supreme Court case of Jones v Kernott. There, the court had to establish the couple’s intentions for the sharing of the beneficial interest and decide whether that interest had altered and if so, on what basis. The court found that it was possible to impute an intention to the parties based on the facts, even though the parties had never formally agreed such a change.

But what about the situation where a business and the property it trades from is not jointly owned, but owned just by one party? When the other party has worked hard in the business over many years, while cohabiting with the owner? If they had been married and the marriage had broken down, the value of the business and the property would be taken into account in determining her settlement. But in a cohabitation case, things are very, very, different – as Mrs Geary found. Did she have a beneficial interest in the property? Was she a partner in the business? She argued yes to both, and the burden of proof fell squarely upon her. She failed to impress the circuit judge and appealed to the Court of Appeal.

Castle View

Mr Rankine’s case was based upon his having received a redundancy payment prior to the commencement of the relationship and owned his own businesses.  In 1996 he purchased a guest house called Castle View (‘the property’) for £61,000.  He purchased this property outright with his own money and held it in his sole name.  He did not intend to reside at the property or to run the business himself – it was viewed purely as an investment.  The couple remained in London while a manager was employed to run the business.

Things went awry with regard to the running of the business.  Mr Rankine moved to the property to run the business himself.  When he was unable to cope, Mrs Geary left her job in London to assist him.  She did not receive a salary from Mr Rankine and she admitted she considered Mr Rankine to be very controlling with regard to her expenditure.

Mr Rankine refused his partner and their son any security by way of provision in his will or making her a partner in the business.  He felt that he should not do so until such time at least as Mrs Geary obtained a divorce.  Even when she did so, Mr Rankine remained non-committal regarding her requests for security.

Only Mr Rankine made drawings from the business and received the profits.  The business accounts and bank accounts were in his name alone.

Mrs Geary’s position

Mrs Geary, on the other hand, claimed a beneficial interest in the business and the property from which the business was run.  She argued that she had acquired a beneficial interest in the property because a ‘resulting trust’ had arisen, based upon the actual intention of the parties.  She maintained that there was objective evidence as to this intention. By leaving her job and London to work jointly in the business, argued Mrs Geary, she had altered her position to her detriment.  She agreed that while initially there was no common intention for the beneficial interest in the property to be shared, it having been acquired as an investment by Mr Rankine,  their common intention in relation to the property altered at a later stage, and that Mr Rankine had intended her to have a share in the property. A major plank of her argument rested on the fact that she had given up and moved.

Secondly, Mrs Geary claimed that she had also been a partner in the business with Mr Rankine.  She argued that such a partnership should be inferred from the parties’ course of dealing in relation to the business.  Mrs Geary was heavily involved in the running of the business but was not paid a wage which, she claimed, pointed to the fact that she was not an employee and was therefore a factor in favour of there being a partnership.  The property was asserted to be a partnership asset and, as such, available for distribution between the parties.

It was also submitted that because Mrs Geary and Mr Rankine lived on the proceeds of business, they shared the profits of the business.  Counsel for Mrs Geary submitted that this was sufficient to indicate that a partnership could be inferred.

Lord Justice Lewison’s findings

A resulting trust?

Lord Justice Lewison  found against Mrs Geary.  In relation to the property and her argument there was a resulting trust, he found that the property was only ever intended as an investment and was never intended to be shared jointly.

In reaching this decision. Lord Justice Lewison separated the business from the property from which the business was run, stating that:

“In my judgment it is an impermissible leap to go from a common intention that the parties would run a business together to a conclusion that it was their common intention that the property in which the business was run, and which was bought entirely with money provided by one of them, would belong to both of them.”

The judge further stated that Mr Rankine’s intention had been clear.  Mr Rankine had clearly stated that he did not intend to give Mrs Geary an interest in the property and he never did so. There was never any type of trust created, even one of common intention constructive trust, since there was no express statement or conduct by which a trust could be inferred. In fact, Mr Rankine’s fear, that while Mrs Geary remained married her ex-husband could claim an interest in her part of the property, was a rational one.

A business partnership?

The judge also found that there was no business partnership.  His reasons for this were as follows:

 i.            The business accounts were drawn on the basis that Mr Rankine was a sole trader;

ii.            There were no  joint bank accounts;

iii.            The drawings were all made by Mr Rankine;

iv.            There was no sharing of the business profits;

v.            Mrs Geary was protected from all liabilities relating to the business;

vi.            There was no evidence that Mrs Geary had been held out as a partner to the outside world;

vii.            The couple had separated for a period of many months and the business had continued to run in her absence.

The outcome: cohabitation v marriage

Mr Rankine and Mrs Geary lived as husband and wife for 19 years.  This was a lengthy relationship, during which the couple seemed to have shared most aspects of their lives.  In relation to their income, both parties would seem to have played relatively equal parts in sustaining their lifestyle.  If these circumstances had arisen in the context of a marriage, Mrs Geary would have been entitled to a share of the guest house in an exercise that would have considered her reasonable needs for the rest of her life, irrespective that the business and property had not been bought by her. That is the safety net that a marriage certificate offers.

So: once again we must make the point that readers should always, however difficult it may be, seek to legally regulate the nature of their cohabitation relationship and not simply rely on hopes or aspirations for the future.

Relationships can and do change. Anyone who enters a cohabitation relationship without fully appreciating the dangers of failing to protect themselves, would be well advised to give the most serious consideration to the facts of this case. It is not easy taking legal advice and entering into the necessary legally binding agreements, but may ultimately prove well worth it. Had Mrs Geary insisted on a partnership agreement for the business or even a salary and become a regulated employee, the outcome may have been different. Had she insisted that the property was transferred into joint names, or if not, she would have refused to move and give up her job, she would no doubt have been in a very different position today.

As it is, Mrs Geary seems to have left a 19-year relationship, having worked very hard throughout and had a child, with nothing.