Williams J
IN THE GRAND COURT OF THE CAYMAN ISLANDS 2 FAMILY DIVISION 3 CAUSE NO. FAM 139 OF 2011 4 5 P v P 6 7 8 Appearances: Mr. Graham Hampson of Hampson & Company for the Petitioner 9 Mr. Shaun McCann of Campbells for the Respondent 10 Before: The Honourable Justice Richard Williams 11 Heard: 19th March 2012 12 13 Court Reporter: M.W. Newell, C.S.R. 14 15 EX TEMPORE RULING 16 17 18 WILLIAMS J.: 19 1. This is an ex tempore ruling, as the parties need an immediate decision. It will not read as neatly as a written ruling, but, importantly, it will enable the parties to know immediately at the close of this hearing the reasons behind my decision. You will see that this ruling is being transcribed. 1 Procedural Background 2 2. This is an application brought within the Petition of divorce filed by the husband on the 3 16th June 2011. The undefended Petition was proved on 9th December 2011. 4 5 3. On 16th September 011, the Respondent wife issued a Summons for Directions. Amongst 6 a number of standard directions sought in relation to the final ancillary relief proceedings, 7 she also sought an order for interim periodical payments for both herself and the four 8 children of the marriage. These relevant children are LRP (DOB 26 August 1996), MAP 9 (DOB 15 March 1999), NPP (DOB 25 October 2000) and MAP2 (DOB 9 August 2005). 10 Since the parties separation the children have primarily resided in the former matrimonial 11 home with the mother, but they enjoy regular staying access with their father. 12 13 4. On 10th January 2012, the parties filed a Consent Order in which agreed directions were 14 set out. The order also contained provision concerning the mechanics of the father 15 collecting and returning the said children for access. The parties did not make any 16 provision in the consent order for interim spousal or child support from the husband. The 17 order reflects at paragraph four that the father, by consent, submitted to a non-molestation 18 non-use of violence injunction against the wife or her property and an injunction 19 restraining him from entering the former matrimonial home at DTW, George Town, save 20 in the case of an emergency or necessity and in either case, in the interests of the 21 children. I note that this provision is termed as being an order, but the wording in 22 paragraph five of the said Order makes it appear to be an undertaking as it provides “the 23 Petitioner will be bound by these promises until further order of this Court.” It has been 24 agreed today that paragraphs four and five of that Order will be discharged and be replaced with a “without prejudice” written undertaking that will last until 30th September 2012. It is also agreed that cross undertakings will be given to reflect the parties’ promise that they will not discuss the case with the children.
By a Summons dated 1st February 2012, the primary Summons put before me today, the wife seeks a number of orders:
• Firstly, an Order on the first day of each month that the Petitioner pay a global sum of CI$6,000 maintenance for her and the four children of the marriage.
• Secondly, that the pay a lump sum of CI$20,000 in respect of her legal fees.
6. For Completeness sake, I note that the Respondent has also filed a Summons on 12th March 2012 seeking Orders in relation to care and control of and access to the children. I am not dealing with this latter Summons today. I am also not dealing, save by the giving of directions, with a Summons containing the Respondent’s application to remove the children from the jurisdiction for their education.
7. The Respondent has to date filed three relevant affidavits, one sworn by her on 7th February 2012, another on 10th February 2012, and finally, one on 12th March 2012. 21. 8. The Petitioner has filed two relevant affidavits, one on 10th February 2012 and the second on 12th March 2012. 1 9. I have carefully considered the contents of all of these affidavits, as well as the exhibits attached thereto. This disclosure affidavit technically is not before me. 4 General Background 5 10. For the purpose of this ruling, unlike the position at the final ancillary relief hearing, I need not delve too deeply into the background. 7 11. That said, the parties, after a courtship that lasted approximately four years, were married on 23rd July 1994. The parties have been married for almost 18 years. It is a marriage of some length and could not be termed a short marriage. 12 12. At the time of the celebration of the marriage the Respondent was only 22 years of age and the Petitioner 30. 15 13. It is contended by the Respondent that the Petitioner commenced a relationship in 2007 with Ms. U, his current girlfriend with whom he cohabits at their jointly recently acquired property in Snug Harbour, George Town. 19 14. It is agreed by the parties that the two properties on DTW, one of which is the former matrimonial home (valued at CI$625,000 in October 2011) and the other which is an income generating rental property (valued at CI$365,000 in October 2011) are matrimonial assets. There is an issue as to whether the property purchased for US$120,000 in 2001, (which is valued by the Respondent as being approximately 300,000 Euros) which is in the Petitioner’s sole name in Padova, Italy, and the 1 aforementioned property registered in the husband and Ms. U’s names should be 2 considered as matrimonial assets in these proceedings. The wife contends that the 3 purchase funds for the Snug Harbour property could have originated from matrimonial 4 assets. 5 6 15. It appears that Snug Harbour was purchased in September of last year for around 7 US$730,000. The Petitioner states that his girlfriend provided CI$164,000 and he put in 8 CI$434,600 towards the purchase. The Petitioner states that he provided some cash and 9 that he intended to borrow US$325,000 from CZ, a wealthy friend of his, but in the end 10 borrowed US$225,000. 11 12 16. The wife is unemployed and it appears that her contribution to the marriage, although not 13 particularly in the workplace, has been a substantial one caring for the children of the 14 family, thus enabling the father to be freed up to concentrate on progressing his career in 15 businesses. 16 17 17. The Petitioner is a successful restaurateur holding a significant interest in two well- 18 known and respected restaurants in Grand Cayman. He is to be commended, as he 19 started out in Cayman as a waiter and through hard work and enterprise advanced his 20 career with the “behind the scenes” support of his wife. The first is RR which was 21 acquired in July, 1999 by the ordinarily resident company NSL, a company in which the 22 Petitioner, who has Caymanian Status, holds 60% of the shares and Mr. AM the 23 remaining 40%. This business became up and running at a time when the mother was at 24 home caring for LRP who was two years of age and MAP who was only four months old. 18. In 2008, the Petitioner and Mr. M opened LR, apparently with funds derived from the financial success of RR. The ordinarily resident company, SES, does business as LR and all of the shares of the company are held by NSL. Although the Register of Members reflects the 60/40% divide, it appears to be accepted that all profits have historically been share equally between the Petitioner and Mr. M.
The Respondent contends that at different times of the marriage she assisted by performing different roles in the restaurant. The nature and degree of this assistance is not agreed between the parties. This is not an issue that I need to determine today and, in any event, I reiterate that it is accepted in the husband’s affidavit that she contributed to the marriage by the work she undertook as a housewife and mother.
As early as June 2009, the Petitioner had been put on notice by Campbells, Attorneys-at-Law, that they had been retained by Mrs. P concerning possible discussions surrounding the dissolution of their marriage and suggesting that attempts should be made to resolve the same without recourse to contentious litigation. It does not appear that this offer, which would have required Campbells’ involvement, was taken up at that time.
However, it seems that there were negotiations between the parties themselves it is contended by the Petitioner that this culminated in a final Consent Order being reached between the parties.
On studying the fee note provided by Hampson & Co., it appears that firm became first involved in or around 3rd May 2011, after the initial draft of the purported agreement had been reached. It is clear that the original draft of Consent Order was amended more than once after Hampson’s retention. From the entry on 31st May 2011, Hampson’s was notified by the husband, their client, who appeared to have concerns about the order and Campbells’ involvement. It appears that even after being aware of the possible retention of Campbells that Hampson’s, who were at the time preparing their client’s divorce Petition and supporting documentation, again amended the purported Consent Order. This was done without any reference to Campbells. The first time there seems to have been a communication between the two firms was when Campbells filed the Acknowledgment of Service in August 2011. Regrettably, this was after the date of the final draft of the purported Consent Order. Although this Court is anxious that settlement should be reached between the parties, to minimize cost of litigation there should be parity of arms. Both parties, before consenting to a substantial ancillary relief order, particularly in a case like this where there are potential issues in relation to the identifying of matrimonial assets, should only do so after there has been full and frank disclosure from the other party and preferably upon receipt of some legal advice. The unrepresented party, especially if it is the one who does not have control of the family finances and thus day-to-day knowledge of them and has limited funds to enable her to seek legal advice, should be encouraged by the party that has legal advice to seek legal advice before a draft Consent Order is finalized. What Mr. P refers to as being a final Consent Order, he says was not signed until June 2011, a date after he had received advice upon the Consent Order and made resultant amendments, a date after he and Hampson were aware that Campbells may have been retained, or at the very least were assisting Mrs. P. It is not clear, but it appears that Mrs. P did not meet with Hampsons herself and that the firm acted solely on the instructions of their client and this may well be why they did not recommend to her to seek legal advice concerning the proposed Order.
It appears that Mr. P felt that there was a final Consent Order and did not expect once that he had issued the Petition that ancillaries would again become an issue. It is for this reason, he says, that he started to reorganize his financial affairs, in particular, purchasing the property in Snug Harbour with his cohabitee. I have been informed that under the Consent Order Mrs. P was to retain the former matrimonial home and the neighbouring income generating property on DTR in return for relinquishing any claim that she said she may have had in relation to the two restaurant businesses. Mr. Hampson stated at paragraph 11 of his Skeleton Argument that in the purported Consent Order his client had offered periodical payments for the children at $1,000 per child per month, a total of $4,000. That would be over and above the income that the wife would be receiving from the rental property. However, he would, of course, no longer be responsible for the outgoings on that property. Mr. Hampson indicated that the terms of the Consent Order would still and are being offered by his client.
It appears that there were some negotiations between the attorneys concerning the possibility of the parties attending mediation. However, it is unclear whether this mediation is aimed at resolving the parties’ financial differences as well as child related matters. Even at this stage of the proceedings, I would encourage both parties to seek mediation and that mediation be of a comprehensive nature concerning all the outstanding issues between the parties. However, it requires the consent of both parties.
In a letter sent to Campbells dated 30th December 2011, Hampson stated that their client’s position in relation to interim maintenance as follows: “Whilst we have advised our client to make provision for his family, and he is fully prepared to do so, the request that your client receive CI$7900 from family assets for maintenance of a house that has no mortgage is excessive and unrealistic. Our client’s monthly salary is CI$5700 and the fortunes of the restaurant have been greatly struggling of late. There have been no dividends. Our client, nevertheless, had to pay the school fees, the activities and all other expenses including his own home, which he only committed himself to when you client agreed to the Consent Order. The family is joined, a fixed monthly income is thus CI$7600. We would suggest that, bearing in mind the fact that our client is paying the bulk of the children’s expenses, that the fixed income is shared at this time. Therefore, this produces a pro rata income of CI$3950 per party and, as your client is receiving the rental income direct, our client will agree to pay an additional per month CI$2050 on 3rd January 2012, this should be adequate whilst matters are resolved. Your client’s expenses are not admitted. In order to help defray the costs, our client is more than happy to have the children for two weeks of every month so that the load is not borne solely by your client. This is sensible and fair. This letter represents the current position of the Petitioner husband on the application before me. The Law The final ancillary relief matters are not yet in a position to move on to a final hearing. Further disclosure is required and answers to requests for further and better particulars similarly, as well as joining evaluation of the two businesses and of the husband’s/parties’ interests therein. I am told that the parties are soon to agree a letter of instruction for Mr. B who will undertake that task. Having regard to the fact that the Respondent has limited financial resources, there is a need for maintenance orders to be made in the interim. The Respondent is in financial difficulties as a result of the breakdown of the marriage and is not able to wait for money until the final hearing. In the order I make today, I am to bridge the gap up until the final determination of ancillary relief and it is a temporary measure. Both parties should understand that the order I make today is not a final order and the Court in such circumstances, on the more limited evidence supplied and available at this stage, endeavours to put in place a fair holding order. 1 31. The parties should not see the order I make today as indicative of the final level of 2 periodical payments, and the attorneys or the parties should not use it as a yardstick. 3 4 32. As set out in s.19 of the Matrimonial Causes Law (2005 Revision), the Court shall have 5 regard first of all to the best interest of the four children and then move on to consider the 6 responsibilities, needs, financial and other resources and actual and potential earning 7 powers and the desserts of the parties. What I have to do is take into account the income, 8 outgoings and needs of each party as they appear at this time and make an order that will 9 guide the Respondent over until the final hearing without causing undue hardship to the 10 Petitioner. As is the normal course, the hearing has involved consideration of the budgets 11 of the parties as set out in their written evidence without oral evidence. This is not a 12 hearing for the Court to make findings about either party’s credibility. In Campbell v 13 Campbell (1998) 1 FLR 828, CA the approach commended was not to look in detail at 14 the payer’s budget but to see whether the maintenance was a fair proportion of his overall 15 net income. The Court will not critically accept what either party says is their financial 16 position if there is reason to believe that something has been hidden. The duty of full and 17 frank disclosure arises from the outset of the case G v G (Maintenance Pending Suit: 18 Costs) [2003] 2 FLR 71, Charles J. 19 20 33. The approach of the Court when considering a maintenance pending suit, or interim 21 periodical payments, is succinctly stated in T v T (Financial Provision) [1990] FCR 22 169, [1989] Fam Law 438. and is set out at paragraph 4A, [711], issue 90 Butterworth 23 Family Law, one of the primary family law texts: 1 "The primary aim of the court will be to make such an order, if possible, 2 which will give a spouse certainly sufficient money to discharge the day- 3 to-day outgoing and to feed, clothe and keep a roof over their head of that 4 spouse until the final adjustments and orders are made in relation to the 5 matrimonial asset and the finances after decree nisi. 6 ...Where there are sufficient assets revealed by the parties, the usual 7 exercise for the court is to balance needs against resources and thus come 8 to a temporary figure until the whole question of the division of the 9 matrimonial property can be decided." 10 11 34. Nicholas Mostyn QC sitting as a Deputy High Court Judge in TL v ML [2005] EWHC 12 2860 (Fam) gave the following guidelines: 13 "1. The sole criterion to be applied is 'reasonableness' in accordance 14 with section 22, which is synonymous with fairness. 15 2. A very important factor in determining fairness is the marital 16 standard of living, although that is not to say that the exercise on a 17 maintenance pending suit application is mainly to replicate that 18 standard. 19 3. In every maintenance pending suit application there should be a 20 specific budget for that application which excludes capital or long- 21 term expenditure which should be considered at a final ancillary 22 relief hearing. The budget should examine critically in every case 23 so as to exclude frenzied exaggeration.
4. Where the affidavit or form E disclosed by the paying party is deficient, the court should not hesitate to make any robust assumptions about the ability to pay. The court is not confined to the mere say-so of the payer as to the extent of any income or resources. In such circumstances, the court should err in favour of the payee. 8. The Financial Position of the Respondent Wife
35. The Respondent, as I said is unemployed and will be so for the foreseeable future, at least it appears until the final ancillary relief hearing. Therefore she has no income capacity from an employment source at this time. She is, therefore, reliant upon monies received from the Petitioner and from any matrimonial assets that may generate income.
36. She has no disposable capital in her disclosed bank accounts. She does have just over $3,000 in her savings account. This amount cannot be utilised as it is a cash secured credit card with a minimum balance of $3,000. There is an issue as to whether a credit card in her name had been cancelled by the Petitioner. Again, for the purpose of this hearing, I need not go into that as it has been agreed that Mr. P will put $3,000 into her current credit card upon the Respondent’s written undertaking that the $3,000 place on the said card will only be used in the case of an emergency and not for day-to-day expenses.
37. Exhibited at “Tab 5” of the Respondent Affidavit sworn on 7th February 2012, she exhibits a schedule of her outgoings as of 8th February 2012, which total CI$7,293.82. Exhibited at “P4” of the Petitioner’s Affidavit sworn on 12th March 2012, is a schedule of the Respondent’s outgoing totaling $6,668. The same schedule had been provided to him around 6th December 2011. At “P5” of the same affidavit is a Scott Schedule prepared by the Petitioner setting out in one column the Respondent’s claimed outgoings in December 2011; in the next column her claimed outgoings as of 8th February 2012, and in the final column is his assessment of the appropriate figure for each head of expense. On considering the same, I have the following observations: 9 - Groceries at $1,000 is appropriate. 10 - Gardening should be reduced to $175. 11 - Pool maintenance and chemicals. Upon looking at the monthly fee set out on the statement dated 31st December 2011 that should be reduced to $195. You will note I said pool maintenance and chemicals. 14 - CUC $700 is appropriate. 15 - A/C maintenance and repairs. In the absence of any evidence that there is a need for this to be done at this time means it should be treated as long-term expenditure and should not be covered at this stage. Therefore, the amount will be $0. However, if repairs become necessary, the Petitioner will be expected to contribute to this matrimonial asset in the future. 20 - Water. In a household with one adult and four children, it will be assessed at $150, although I note that the December bill had a charge of $86.77. 1 - Video Associates. I am unclear what this is for and it seems to be a new expense since December. For the purpose of this hearing it will not be allowed in the amount and it will be $0. 4 - Weststar Cable. $85 is an appropriate figure. 5 - Landline and mobile phone. In the absence of any bills this will be reduced to $200 a month to be a reasonable figure. 7 - Internet will be assessed at $100. 8 - Although the amount for gas appears to be for two cars, I assess gas for one car at $200 a month to be a reasonable figure. 10 - The requirement for a helper is agreed by the parties in the interim, so I assess $1,000 as being reasonable. 12 - General maintenance. This is unspecific and may be termed a long-term expenditure. It is inappropriate to set a figure today. Again, if this matrimonial asset in which the children of the marriage reside requires maintenance prior to determination of the suit, then the Petitioner, in a case in which he is the only one of the parties with an independent income, would be expected to assist with any repairs that are required. 18 - Social will remain at $200 per month. 19 - Hair and beauty treatments will revert to December figure of $85 per month. 21 - Children clothing will be $166.66. I note that the father puts his name as the only person buying clothing, however both parties should be in a position to do this. 1 - Haircuts for the children. Will be assessed at $30. Again, both parties should be in a position to do this. 2 - Birthday gifts will remain at $25. It is not clear if this is for the children or for third parties, so I will treat it as the latter. 5 - Christmas gift, celebrations. Christmas gifts is a long-term expenditure not suitable for this hearing in March. However, I note that MAP’s birthday has just taken place in March and that LRP and MAP2 celebrate their’s in August. This will be before the end of the ancillary relief proceedings and therefore I assess the figure as $300 divided by 6 months, March – August = $50 per month. 11 - Pet maintenance and bills will be assessed at the December figure of $50. 13 - School uniforms are not due until September. If the proceedings are still ongoing when they have to be purchased and the Petitioner fails as he promises or indicates to provide uniforms, then that would be a significant change of circumstances enabling the Respondent to apply for a variation. 17 The Court expects the Petitioner to fully meet the needs of the children as it relates to the replacement of school uniforms for the remainder of this school year as indicated in his schedule. 20 - House insurance. The L House – upon the indication that the Petitioner will continue to pay, no sum will be allocated. Failure by the husband to do so will amount to a change of circumstances and enable the Respondent to apply to the Court for a variation. 1 - Both parties should be able to provide pocket money and therefore the amount will be reduced to $60 per month; in other words, $60 if they wish from each parent. 4 - There is no need for provision for unexpected emergencies or contingencies as the Petitioner is now to provide $3,000 on a credit card for such use by the mother. 8 39. Having regard to these deductions, the total of outgoings suitable for consideration at this interim hearing are $4,545.49. I find that this is the global figure that the Respondent requires to enable her to support herself and the children in the interim. Neither party has sought to place before the Court or sought the Court to make a separate order or figure for spousal maintenance and child support. Having regard to this, I will for this interim order adopt their approach and give a global figure. However, if ongoing spousal maintenance is ordered at the final ancillary hearing, then the Court will at that time need to make a separate order for the spouse, as well as a separate order for each of the children setting out any relevant expiry dates. 18 The Financial Position of the Petitioner Husband 19 40. The Petitioner’s evidence is that his monthly salary is $5,700. In support of this contention, I am told he has exhibited a statement of his wages from both restaurants to his affidavit file on 10th January 20912. He states that he receives $500 per month, I believe, from a Mr. Z for looking after his properties in Cayman. In relation to his outgoings, he says that he is totally responsible for paying all the school fees and other child related expenses. At paragraph 15 of this second affidavit, which I have considered, he sets out his outgoings which total $962.50. His outgoings seem very reasonable. Of course, he is fortunate that he can eat for free at the restaurants and have his phone and insurance paid by the restaurants. He says in his affidavit that Ms. U pays the mortgage, however it is contended that he does not have a mortgage, but instead, it is a loan from Mr. Z, a wealthy friend. This will need to be clarified at the final hearing as it is not accepted by Mrs. P that this property is encumbered by any loan. The husband also indicates that to enable the L House to be in a condition to be rented out, he has had to pay $2,105.67 in recent repairs. As I mentioned earlier, this is not the hearing for making findings of fact that may affect the credibility of each party. This is not the hearing nor the stage of proceedings to carry out an in-depth forensic analysis of the parties’ accounts and bank statements. However, although likely not to the extent that the Respondent contends, it is evident that the husband has, to a degree, access to some funds from the company’s accounts over and above his salary. However, the money is the business’s money and he has a partner, so he cannot simply take sums whenever he wishes without consultation with the partner and possibly the company’s accountants. It appears that monies that have been taken out primarily came from annual profit sharing. In addition, he has in the past taken considerable sums from LRP’s and MAP2’s now depleted student accounts. I accept that some of the sums may have been used towards the purchase of the Snug Harbour property and school fees. In May 2011, I am told he was able to obtain monies in the region of $10,000 to buy the Respondent a car, and in the summer take the whole family, including Mrs. P, on a vacation to Italy. I do not want Mr. P to feel that I am criticising for those last two acts.
I am aware of the approach commended by Mostyn QC in TLL v ML, namely that the Court should not hesitate to make any robust assumptions about the ability to pay. I am note confined to the mere say-so of the Petitioner as to the extent of any income or resources. As I said, in such circumstances, Mostyn QC’s guidance was that the Court should err in favour of the payee. I wish to make it clear that on the information before me, I do not seek to make any findings concerning Mr. P’s credibility. I do not find that he has sought to hide assets, but do feel on the information provided that there is access to sums, although he may not be comfortable doing so.
In his affidavit the Petitioner has painted a picture of his business struggling, or at the very least suffering from the downturn in the global economy. Although Mr. McCann’s analysis of the receipts of the companies, which in itself is, of course, not evidence, paints only half the picture and fails to take into account the apparently significant day-to-day running costs of such businesses. It does appear on the limited information before me that the businesses are running to a profit and although there may have been a downturn in recent times, it is not as dire a position as the Petitioner contends in his affidavit.
Of course at the final hearing, when there is full and frank disclosure by both parties and, importantly, a valuation of the worth of the businesses, I will be in a position to make a better informed finding. Any indications I give today do not fetter me in that way. 1 45. However, on the limited information before me, I am satisfied that the Petitioner is in a position to pay slightly more than what he offers to reflect the global sum I have found to be necessary to support the wife and his children in the interim. 5 Conclusion – Interim Maintenance for Spouse/Children 6 46. Thankfully, the L House on DTR has recently been rented out for a monthly rent of CI$1,950. The rental deposit has been brought to Court today by Mr. P and I believe that it will be secured by on of the parties’ attorneys. The parties have agreed that the monthly rent should be retained by the Respondent. It is right that this amount is deducted from the total amount that I have found is required by the wife for herself and the children in the interim. Therefore, the balance is $2,595 per month. I am satisfied that this is the appropriate global interim amount for the Petitioner to pay for the Respondent and the children. This amount is required although the children do enjoy staying access with their father who is responsible for them at that time. It will give the Respondent sufficient money to discharge the day-to-day outgoings and to fee, clothe and keep a roof over the head of herself and the children until the final adjustments and orders are made in relation to the matrimonial assets and the finances. This figure is set having regard to the indications that Mr. P has given in his schedule about payments that he says he will be responsible for. I make this order having regard to the children’s interest first and then going on to consider the other factors set out in s.19 of the Matrimonial Causes Law. 23 47. I find that this is the appropriate amount, $545 more than he was offering, after considering both parties’ financial positions. 1 Payment of a Lump Sum for Legal Fees 2 48. The Respondent seeks in paragraph 4 of the Summons dated 1st December 2011, pursuant to s.20(c) Matrimonial Causes Law, an order of the Court that the Respondent pay 4 CI$20,000 towards meeting her legal fees. Paragraph 10 of her affidavit sworn on 8th March 2012, puts the Respondent’s fees to date in the region of US$30,324.19. She estimates that legal costs will increase due to the analysis of financial disclosure to around US$40,000 even before preparations for trial. If all of the child related issues require determination, including the application for removal from jurisdiction, their legal fees, it is contended, could exceed US$75,000. 10 11 49. The Petitioner opposes the payment as he contends that he does not have the sum of money available in his bank accounts or at all. He confirms that he has paid US$14,932.78 to his attorneys already. He states that he has further fees of US$15,080.49 which he has not paid due to insufficient funds. 15 16 50. Mr. Hampson expresses concern about Campbells’ fee notes exhibited at “Tab 4” of the Respondent’s affidavit sworn on 8th March 2012. I understand this concern and if a greater sum than CI$20,000 was being sought, if there clearly were no additional costs incurred to date and especially if there was a significant difference between the amounts owed by the parties to their respective attorney, I would have required a fully detailed itemized bill to have been provided before make a decision today. If there are to be any further claims for legal fees to be paid by the husband, such an itemized bill will be required, especially having regard to the Practice Direction No. 1/2011 which sets out the hourly rates to be applied at a taxation on the standard basis. 1 51. Mr. Hampson further contends that a taxing officer may well not allow charges incurred 2 before the date of the written retention retainer agreement between Campbells and the 3 Respondent dated 10th February 2012. Campbells do not agree and no specific authority 4 has been shown to the Court to verify this approach in this jurisdiction. I understand that 5 taxing officers here do not give detailed reasons for their decision. I go no higher than 6 this, but say that the Petitioner may be contending that the retainer agreement is, in effect, 7 a sham as the intention all along was that the Respondent would not be charged fees by 8 Campbells as her father had been a corporate manager there for over 20 years. Again, 9 this is not agreed by Mr. McCann. There is no such rigid rule, it appears, in relation to 10 written retainer agreements, but any taxing officer would have a discretion to take such 11 matters in mind when exploring the background and thereafter setting any levels to be 12 paid. It would be a matter for the taxing officer. 13 14 52. The Respondent contends that she has no assets and no security for borrowing by way of 15 a litigation loan. It was raised the first time during Mr. Hampson’s submissions today 16 that a charge could be placed against the L House and the money borrowed be used to 17 pay fees. This has not been greatly explored and at this stage I am unable to determine 18 its viability, especially as it would likely fall to Mr. P to make any repayments or increase 19 the level of maintenance to allow Mrs. P to do so. There would also be costs associated 20 with setting up such a charged loan. That said, it may still be an appropriate avenue to 21 consider if any future applications are made. 22 23 53. In a letter dated 6th March 2012 the Respondent’s attorneys made it clear that they were 24 not prepared to enter into an agreement whereby their client offered a charge upon the ultimate capital recovery in this matter in respect of her legal fees. That letter has been sent to their client. They went on to say that they could not agree to await payment until after the final ancillary relief hearing in this matter. 5 The Law in Relation to the Payment of Legal Fees 6 54. In the case of B v B FAM 80/2011, I stated in a similar application: 7 "On 18th August 2011, Quin J made an order for the payment of legal fees in the sum of $10,000 after considering the ruling of Hollman J in the English case of A v A Maintenance Pending Suit: Provision for Legal Fees [2001] 1 FLR 377 and the ruling of Graham J in the Caymanian case of Huig Zuiderent v Patricia Layne Zuiderent D122/2000 where interestingly, Mr. McCann, who appears before me, persuaded the Court that it had jurisdiction in Cayman to make such an Order." 15 55. I went on to say in B v B: 16 "I am similarly satisfied having reviewed the cases, and it is accepted by the parties, that this Court may make such order. I also endorse Graham J's sentiments about the nature of the interim orders and the fact that as at the final ancillary relief during the interim orders will be reviewed and the final orders will take into account sums already paid out, including payments towards legal fees." 23 56. I went on to say in B v B: "1 "As stated in Sears Tooth (A Firm) Payne Hicks Beach (A Firm) 2 FLR 2 116 at 118H-119A by Wilson J when he referred to: 3 " ...a grave widespread problem encountered increasingly in the 4 Family Division: namely, how can a spouse, usually a wife, who is 5 ineligible for legal aid but who has negligible capital, secure legal 6 advice and representation in order to pursue her right against the 7 husband, particularly one that is rich, litigious or obstructive or 8 show financial sources are complex or unclear." 9 10 57. I continued: 11 "This concern is at least equally applicable to the Cayman Islands where 12 legal aid, at least before the recent restrictive legal aid reforms in 13 England, was more difficult to obtain in such cases. In addition, in the 14 absence of direct taxation in the form of income tax, the benefit that one 15 would have in England after reviewing such accounts, even after an 16 ingenious accountant who has had an opportunity to work on them is not 17 present here, thus potentially making a party's financial circumstance less 18 clear." 19 20 58. I went on to say: 21 "In this case the Petitioner finds herself in such a position and although at 22 this stage of the proceedings I will not say that the father is litigious or 23 obstructive or particularly rich, (something I would again say in the case 24 before me today), there is some complexity to his financial affairs. (Again, something I would say in the case before me today). The mother may be described in similar terms expressed by Hollman J and commenting about the wife at page 387 of A v A when he said: “...always be dependent on a husband. She is locked into a bitter struggle with him, whose outcome is of intense importance to her. She had acute need for good legal representation and in which her lawyers do not have always to be desperately economizing relative to the husband.” Hollman J went on to say at page 382 that the cost of the suit are: “...Up to the provision of a roof over her head and food in her mouth, the wife’s most urgent pressing need and expense...She simply cannot make any progress with a dominating issue in her life if she cannot pay her lawyers, and to which the state will not provide...” Again in B v B I further stated: “I accept that in both A v A and Huig Zuiderent v Patricia Layne Zuiderent it appears there is no doubt that the husband’s and the matrimonial assets were well in excess of the levels claimed for legal fees at the time of the hearing.” I went on to say: “I also accept that in A v A, unlike the matter before me, the Court found that the husband was paying huge sums on litigation.”
So, unlike the matter before me, I am not saying the husband is paying huge sums, so I am distinguishing A v A to that degree.
My general observations in B v B about cases which have been referred to me by the parties at this hearing apply to the matter before me. I say that because I accept that Mr. Hampson hasn’t had a chance to see the case of B v B, but I refer them to cases which the parties have put before me and I do so to show it is an approach that I have taken, at least in part, in these Courts.
It appears to me that both of the parties’ legal fees to date are at a similar level, around about $30,000. The Petitioner, unlike the Respondent, has already been able to pay approximately half of those fees. Although there may be assets of some significance, this is not what is often termed “a big-money case”. This is why I had asked the parties’ attorneys to submit their fee notes.
It seems to me though that it is not unreasonable for either attorney to have $20,000 of their fees to be paid at this stage if it is feasible. The Summons does not seek a greater sum. If any further sums are sought in the future, the court will have to look at the circumstance as they exist at that time, hopefully with a clearer and more informed picture about the valuation of any interest that the husband may have in the businesses. The order made today should not be seen as an indication that future requests will necessarily be made as a matter of course.
However, the parties should carefully consider the merits of mediation and/or informed negotiations before the costs really escalate and eat into any assets that may be available. It would be a great pity that even if the wife were found to have an interest in the businesses, that upon the conclusion of the valuation of the businesses it was found not to amount to an unduly considerable sum. I say this because if that was the situation after the valuation was obtained and the costs then escalated further, the parties other assets, for example, the two DTR properties, possibly the Italian property (if it were found to be a matrimonial asset) and any matrimonial interest found to be in the Snug Harbour property would likely be greatly diminished. Of course, either party upon full and frank disclosure would be entitled to seek to protect their position as it relates to costs pursuant to Calderbank. I echo the concern that significant matrimonial assets that would be best retained for their and their children’s lives after the divorce after these proceedings are conclude may be well swallowed up in legal fees. To keep costs down, again I say they should both endeavour to voluntarily give full and frank disclosure and answer questions or requests for further particulars which are made in proportion to the size of the assets thus enabling timely, sensible and informed negotiations to take place. I return to the question of legal fees. The issue in this case is whether there is a source on which any payment can be made by the Petitioner of CI$20,000. The Court must, of course, have regard to the requirement of equality of arms affording each party a reasonable opportunity to present their case. As I said, the husband, unlike the wife, has already had the opportunity to pay, rounding it up, around US$15,000 in fees.
It is clear that the Respondent wife does not have any readily available source from which she could pay the fees. As I have already said, the husband’s position is less clear. However, for reasons already stated in the maintenance or interim maintenance considerations, it does appear that he has been able in the past to source money over and above his salary from the businesses, as well as from the accounts of the children and other sources. He has been able to take a vacation to Italy with the children and his partner, however, I accept that he had one of the boy’s flights and his flight paid for by health insurance. I note that he says that the hotel and ancillary expenses were kindly met by his family in Italy. I also note that he is able to accompany the boys on a school skiing trip at the end of this month to the United States. The mother, of course, is not in a position to take such trips at this time and it puts her in a rather precarious position in relation to the children for her to insist that trip doesn’t take place, although at this late stage any deposits would likely be lost. I accept that Thorpe LJ in the English Court of Appeal’s decision in Moses-Taiga v Taiga [2005] EWCA Civ 1013 expressed the view that such orders should only be made in exceptional circumstances. He commented on the exercise of the power to award such maintenance in a suit which might be struck down for some fundamental reasons that: “there is manifestly a risk of unjustified irrecoverable payments, but that has to be balanced against the risk of denial of access to justice for the Petitioner, if she has not the means to sustain herself and the litigation pending determination.” In relation to legal costs, he further observed: 1 "So if the applicant has no assets, can give no security for borrowings, 2 cannot guarantee an outcome that will enable her to enter into an 3 arrangement such as that which was upheld in Sears Tooth v Payne Hicks 4 Beach, then there is no source of funding of the litigation other than the 5 approach to the court for maintenance pending suit that will include a 6 substantial element to fund the cost of litigation. Obviously in all cases 7 the dominant safeguard against injustice is the discretion of the trial judge 8 and it will be in cases that are demonstrated to be exceptional that the 9 court will consider exercising the jurisdiction. But I am in no doubt that 10 in such exceptional circumstances section 22 can in modern times be 11 construed to extend that far. 12 13 71. The test for exceptional circumstances as endorsed by Mostyn QC in TL v ML was that 14 the Applicant needed to prove the following: 15 a. She had no assets – but that is the positioning the case before me 16 today. When I say assets, readily available. 17 b. She could not raise a litigation loan. Well, on the information 18 before me today, I believe that to be the position in the case before 19 me. However, at any later hearing an expiration as to a charge 20 against the joint property is something that the Court could 21 consider. 22 c. She could not persuade her attorneys to enter a Sears Tooth 23 agreement. Well, it has been held that a simple statement from her 24 solicitors or attorneys stating that they were not prepared to enter into a Sears Tooth v Payne Hicks Beach charge would ordinarily deal with this requirement. Again, that is the position in the case before me.
It is right to say that the rigidity of that test was considered by Hedley J in C v C (Maintenance Pending Suit: Legal Costs) [2006] 2 FLR 1207 and Wilson LG in the Court of Appeal in Currey v Currey [2006] EWCA Civ 1338, [2006] All ER (D) 218 (Oct). The following principles after those cases appear to have been established: 1. The test laid down in Moses-Taiga and TL v ML was illustrative as opposed to definitive. In C v C, the case was viewed as “exceptional” as the husband was a wealthy man – not necessarily the position of the case before me – who owned the bulk of the assets needed investigation.
Apart from having no facility to fund the litigation, the applicant did not otherwise need to show that his or her case was exceptional.
The initial inquiry of the court was whether the applicant could demonstrate that he or she could not reasonably procure legal advice and representation by any other means.
The word “exceptional” was obstructing the proper exercise of the court’s jurisdiction. 5. There is no public funding available to the applicant as would provide him or her with legal advice or representation at a level of expertise up to the proceedings. 1 73. Although accepting that orders for legal fees should not be the norm, I am satisfied that 2 this case may be considered to fall under the exceptional test at this stage. The wife has a 3 need to meet costs liabilities if she is to be able to bring her case before the Court. 4 However, I firmly reiterate that I am only content at this stage to make an order up to 5 CI$20,000. The husband could not be criticized if he felt able and in a position to bring 6 up his total payments to his attorney to a similar level. 7 8 74. As I am of the view that the Respondent will need time to arrange his affairs, which may 9 involve making arrangements with third parties, I will give the Respondent 28 days to 10 make this payment. The parties will have liberty to apply in relation to this order. 11 12 75. In relation to the removal jurisdiction Summons, Mr. McCann has requested 21 days in 13 which to file and serve his affidavit. That will take us to 9th April 2012. The Petitioner’s 14 affidavit should be filed and served by 7th May 2012. That Summons can thereafter be 15 listed for a 30 minute direction before me at 9:00 a.m. on 22nd May 2012. However, I 16 will discuss with counsel further at the end of this ruling if that date is convenient. 17 18 76. Lastly, as I have already mentioned, the parties are willing to give undertakings on a 19 “without prejudice” basis and once I see the forms which I believe counsel has assisted 20 completing, I will explain those undertakings and if I am satisfied that the parties 21 understand them and the consequences of breach, I will ask them to sign the same and 22 accept the undertaking. They will of course each be given copies to take away. 23 ******************************************************* 1 WILLIAMS J.: 2 77. Is there anything I have missed? 3 4 MR. HAMPSON: 5 78. My Lord, the only thing I have, there is paragraph 3 of the Summons at Tab 4 of the bundle in relation to the Petitioner paying the cost of the valuer. 6 7 8 WILLIAMS J.: 9 79. Hasn’t there already been a discussion about that? I thought that all the issues in relation to Mr. B were going to be left to a discussion between the parties. 10 11 12 MR. McCANN: 13 80. That was my understanding. 14 15 MR. HAMPSON: 16 81. I’m grateful. 17 18 WILLIAMS J.: 19 82. I should say for the record though that if it transpires that the Petitioner, who I accept as a result of my order, although he may not be content with it, would have to pay $3,000 for the credit card which he’s volunteered, CI$20,000 will, on top of that, if he is the only person who can, pay Mr. Bullmore. Of course, those types of expenditure are all matters which will be in the melting pot and for consideration at the end of the case when it comes to divide whatever assets are in place. I think I mentioned that during the hearing or words to that effect, although of course at this stage I would not be so bold as to say it will be discounted by that amount particularly. It will be a matter that the court will take into account when considering the assets of the parties at that time. MR. McCANN: My Lord, the only thing I would ask, we do have a lot of the information already from the affidavit in support of the Summons and we were suggesting 30th March, two weeks. ********Discussion re timetable******** WILLIAMS J.: Mr. and Mrs. P, you are going to give undertakings. Mr. P, yours are going to replace the terms of the Order in relation to not using violence, not harassing, pestering or molesting and not entering or attempting to enter the property, and also the clause which has been agreed between the parties in relation to not discussing the case with the children. As I said at the outset, that is given without prejudice. It is given without findings of any fact. It is simply a promise from you to me or to the Court as to the future, okay? It has the same effect though as a Court Order. Some Judges view a breach of undertakings as more serious than of an Order because it is actually a voluntary given promise. I have to tell you though, you can see the statement on the back of the form which I will ask you to sign once it has been typed, which says, words to the effect that you understand what an undertaking is, you have the consequences of breach explained to you and that you could be sent to prison if it is found beyond reasonable doubt at a later hearing that a term or terms of the undertakings have been breached. So, as I say, a consequence of breach my result in a custodial sentence. Mrs. P, you have heard what I said to Mr. P. Exactly the same applies to your undertakings which you are going to be given without prejudice, and I understand that you are willing to give an undertaking in the same terms about discussing the case with the children and, as I said to you before, I think that is a useful provision having regard to what was expressed to me about the children or the children being upset about getting involved. Secondly, that as I understand it is it going to be an undertaking not to use the credit card so, likewise, in the utilisation of the $3,000 that will be placed into the account, that will be used only for expenses. My advice to you is if you do use that card just keep the slips and keep the statements. MR. HAMPSON: Mr Lord, the only thing that occurred to me in terms of the maintenance... JUSTICE WILLIAMS: Do you mind if I say one more thing about the undertaking? You should each be given a copy of the undertaking that you’ve given and copy of the other party’s undertaking that you should keep yourselves. 1 MR. McCANN: 2 91. I would seek an order in terms of maintenance, the order today, that I would have thought 3 the payment of $2,050 on or about the 1st of this month, that we should have an additional 4 $500 to be paid by the end of this week. 5 6 JUSTICE WILLIAMS: 7 92. You mean backdated? I’m minded to do it from the 1st of April. The reason why is 8 because Mrs. P will no doubt understand that Mr. P has been tasked with finding quite 9 considerable capital to meet the order that I have made today and I have to say I believe 10 he can, but I don’t think it will be an overnight task and, therefore, I believe a bit of 11 leeway in relation to that maintenance payment is entitled. So that will be from 1st April 12 into Court please. And could I ask both counsel to put their heads together in terms of 13 the Order. I would ask that the preamble reflect that there are undertakings --- upon the 14 parties giving undertakings as set out in the undertaking forms. You don’t need to spell 15 out what the undertakings are in a preamble. One of the paragraphs in the Order should 16 express the discharge of paragraphs four and five of that earlier Order. The Consent 17 Order should be replaced by the undertaking. 18 19 93. If, of course, you can’t agree the wording of the Order, which I hope you can, just submit 20 to me what you have got with your comments and I will come up with an Order. 21 22 MR. McCANN: 23 94. The payment of the monthly maintenance via the Court can sometimes be a bit difficult. 24 Do you mind if the payment is made directly, cheque or however or into the spouse’s bank account. They should be able to sort this out themselves. I hate going via the Court Office because of the administration, no disrespect. You ordered it a few minutes ago, My Lord, paid into Court. JUSTICE WILLIAMS: That is the usual order. MR. HAMPSON: We are quite happy to pay it not into Court. JUSTICE WILLIAMS: Upon the basis that both parties agree that they wish the payment not to be made into Court, I would allow it in this case, although it goes against my normal better judgment, and having regard to the fact that these are two intelligent persons who no doubt will make the appropriate records each time a payment is made and received. Protect yourselves by doing that. MR. P: That is fine. JUSTICE WILLIAMS: Everyone says that to me in Court, but you’d be surprised when one party says it was paid and not paid. 101. I would like to thank both counsel for their assistance and able submissions in this case. MR. HAMPSON: 102. I'm obliged, My Lord. JUSTICE WILLIAMS: 103. Mr. and Mrs. P, I know it is sensitive, please take on board some of my comments I made about trying to see if there are any avenues to negotiation. In the end it will be in your best interests, I promise you, but there has to be give and take on both your parts. The money is yours, not the lawyers. *********Court stands adjourned at 4:15 p.m. ********* DATED this 19th day of March 2012. Richard N. Williams JUDGE OF THE GRAND COURT