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Home > Judgments > 2006 archive

Currey v Currey [2006] EWCA Civ 1338

Application for permission to appeal, with appeal to follow, by wife against an order in ancillary relief proceedings which provided the husband with maintenance pending suit containing an element for continuing legal advice. Permission granted but appeal dismissed.

Counsel for the wife contended that the judge had been wrong to find that the husband lacked resources to obtain legal advice and he had been wrong to follow TL v ML [2005] EWHC 2860. Before dismissing the appeal, Wilson LJ reviews the case law relating to the issue, including the case of Moses-Taiga v Taiga.

__________

No: B4/2006/1290

Neutral Citation Number: [2006] EWCA Civ 1338

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT, FAMILY DIVISION
(H.H. JUDGE WILCOX, sitting as a deputy judge of the court)
Lower court No. FD01D005337
Royal Courts of Justice
Strand, London, WC2A 2LL

Wednesday 18th October 2006
Before :

LORD JUSTICE CHADWICK
LORD JUSTICE WILSON
and
MR JUSTICE LINDSAY
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Between :

CURREY Appellant
- and -
CURREY Respondent

(Transcript of the Handed Down Judgment of
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Mr Valentine Le Grice Q.C. (instructed by Miles Preston & Co) appeared for the Appellant
Mr Nicholas Cusworth (instructed by Harcus Sinclair) appeared for the Respondent

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Judgment
As Approved by the Court

Crown Copyright ©

Lord Justice Wilson:
1. In these proceedings the court is asked further to consider the circumstances in which an award of maintenance pending suit (or in this case of periodical payments) should be increased in order to enable the payee spouse (or ex-spouse) to procure legal services referable to litigation with the payer spouse (or ex-spouse), usually in relation to ancillary relief. In the majority of applications for ancillary relief which proceed in the courts of England and Wales the problem does not arise. For in relation to applications of normal size and complexity a cohort of admirably dedicated solicitors and barristers still remain prepared upon a publicly funded basis to represent such litigants as cannot afford to pay them out of their own resources and as are entitled to public funding. But, as Thorpe L.J. said in Moses-Taiga v Taiga [2005] EWCA Civ 1013, [2006] 1 FLR 1074, at [25], "the modern reality is that the highly specialist solicitors and counsel necessary for the conduct of big money cases will no longer do publicly-funded work". Metropolitan overheads preclude their doing so other than at a substantial loss. It is thus to the "big money" cases that this developing area of the law is relevant. And, were our judgments to be reported, they would, I fear, contribute to the growing unease, which I share, that the current development in this court – and in the House of Lords – of the law in relation to ancillary relief betrays an unbalanced concentration upon forensic conflict within only a few rich families.

2. In this case it is the "wife" (as I will call her notwithstanding decree absolute) who is rich and the "husband" who is at least relatively impoverished. In making the substantive award of ancillary relief to the husband in July 2003 Charles J. had included an order that the wife should make periodical payments to him at the rate of £48,000 p.a., index-linked. The order still subsists and thus now provides for payment of just over £50,000 p.a. The present application for permission to appeal, upon which we have heard argument together with full argument on the proposed appeal, is brought by the wife against a further order, made by H.H. Judge Wilcox on 29 March 2006, for such interim variation of that order as would oblige her to increase the periodical payments by £10,000 p.m. for the four months beginning on 1 March 2006. For further proceedings between the parties in relation to the substantive award of periodical payments are continuing. The judge was aware that in those proceedings a Financial Dispute Resolution ("FDR") appointment had been fixed to take place on 5 July 2006, albeit now adjourned to December 2006 as a result of this proposed appeal. His interim variation was designed to provide the husband with £40,000 with which to procure continued legal advice and representation until the end of the FDR appointment. Thus he accepted the husband's undertaking to pay the four extra instalments to his solicitors on account of costs to be incurred until then. Execution of the order against the wife has however been stayed pending determination of the wife's application to this court.

3. There are two further, incidental features of the order under proposed appeal. First, the judge accepted the husband's undertaking "to repay to the [wife] all or such part of the periodical payments relating to legal fees as he may hereafter be ordered to repay". Second, he directed that "the issue of the continuation of those increased payments be considered at a hearing subsequent to the FDR (and for the avoidance of doubt before a judge other than the FDR Judge)". In the event that the parties were to fail to achieve settlement at, or in the immediate aftermath of, the FDR appointment, the husband could not in any event be precluded from applying for further interim variation referable to further anticipated costs up to the end of the substantive hearing. Nevertheless I am surprised that the judge's order unnecessarily included a specific direction for the hearing of such an application: for in his judgment he had stated that "[the fact] that [the husband] will have to find the costs himself post-FDR may fetter his appetite for unnecessary litigation". That was an attempt on the part of the judge, in surprisingly categorical terms to which I will return in [30] below, to discourage expectation of any further provision for the husband's costs. Mr Le Grice QC on behalf of the wife, tells us that, in drafting the judge's order, he and counsel who represented the husband before the judge in effect insinuated into the order what they would thought would be a sensible direction in this regard. In doing so, they arguably lost sight of the clear intention which underlies the judge's statement.

4. In the substantive award in July 2003 Charles J. had included capital provision for the husband, of which I need to take note. In that the husband brought an unsuccessful appeal to this court against the nature and level of that provision and in that the judgments of this court upon it are reported as Currey v Currey [2004] EWCA Civ 1799, [2005] 1 FLR 952, a full exposition of the provisions made by Charles J. will conveniently there be found. I need say only that the judge:

(a) decided that it should be the wife, rather than the husband, who should, with the parties' five children who were its majority owners, enjoy exclusive occupation of the principal family home in Sussex;
(b) ordered the wife to pay £640,000 to trustees as a fund for housing the husband, to be held as to one half for him absolutely and as to the other half for him for life and thereafter for the children absolutely;
(c) by consent, ordered the wife to transfer to the husband her half interest, estimated to be worth £310,000, in their home in London in which he already held the other half interest; and
(d) partly by consent, ordered the wife to make further outright provision for the husband to a value of £120,000.

Thus the overall capital provision to be made by the wife for the benefit of the husband amounted to £1,070,000. But the husband was – and remains – a Name at Lloyd's, by virtue of which he had incurred substantial liabilities to Lloyd's itself, to bankers and to his mother; and the provision of the housing fund seems to have been born of the expectation that he would sell the home in London in order to discharge them.

5. The wife is a member of a well-known family which holds a portfolio of valuable real property in the centre of London. She has shares in family companies and is an object of benefit under discretionary trusts. At the time of the hearing before Charles J. her income from dividends and the trusts was £190,000 p.a. net. Prior to the hearing of the husband's appeal, however, she disclosed that, following the hearing at first instance, family rearrangements had led to an increase in her income to £340,000 p.a. net. In his judgment in this court Thorpe L.J. noted at [8] that leading counsel then appearing for the husband did not argue that the increase represented a later event which would justify setting aside the raft of provision made by Charles J. pursuant to the principles set out in Barder v Caluori [1988] AC 20. Counsel no doubt took the view, to which I would subscribe, that it is the jurisdiction of the court of trial to vary an order for periodical payments, rather than the jurisdiction of this court to set aside an order for ancillary relief pursuant to the principles in Barder, which is apt for invocation in the case of any substantial later increase in a party's income. No doubt counsel was also influenced by the fear that the wife's increased financial resources might be considered to enable her, in any overall reopening of the raft of provisions, to raise a capital sum with which to make a clean break payment to the husband in lieu of periodical payments. This is a result to which the husband was and is opposed on the basis – which will need the most critical scrutiny in the current proceedings – that a capital payment would be the subject of a vulturine swoop by his creditors and that such clearance of his debts by recourse to a fund intended for his maintenance would be gravely prejudicial to him.

6. In the event it was Thorpe L.J. himself who, by way of postscript to his judgment upon the husband's appeal at [30], observed that "manifestly there is an opportunity and a need to achieve a clean break by capitalising the husband's entitlement to periodical payments". On 10 December 2004, namely 16 days after delivery of the judgments of this court, the wife duly applied in the Family Division for the court to make an order against herself for the payment of one further, final capital sum in lieu of the discharge of the order for periodical payments. Six weeks later the husband cross-applied for an increase in the order for periodical payments. Such are the currently pending applications.

7. Pursuant to the order of Charles J. the wife had in August 2003 paid the sum of £640,000 referable to the husband's housing fund. But it has not yet been invested in a home; instead it remains on deposit. The wife says that, in this as well as certainly in other respects, the husband, who was acting in person for a year after the decision in this court, has behaved unreasonably and obstinately. Initially the plan was for the trustees of the housing fund to buy a home for the husband in Sussex. In September 2005 however Charles J gave directions for the trustees to be able to buy the home in London from the husband, so that he could repay debts charged thereon and live there securely. The purchase has not taken place; but, as I will explain in [25] below, at least one legitimate complication remains. On any view, however, a number of bizarre applications were made by the husband to the court in 2005, including claims for damages against the solicitors who have been representing the wife in the proceedings and claims, purportedly on behalf of the children, for damages against the solicitors who had been representing them. On 10 February 2006 Charles J. struck out those claims and, finding by reference to them and otherwise that he had persistently issued claims or made applications which were totally without merit, made, albeit in limited terms which did not preclude his making applications in relation to the issues raised in the present proceedings, a civil restraint order against the husband.

8. In his judgment Judge Wilcox, who did not hear oral evidence, summarised the husband's position as being in effect as follows:

(a) the husband's home in London might have a value in excess of £800,000;
(b) there were three mortgages on that home totalling £770,500, two being in favour of commercial lenders (partly to secure a guarantee and other facilities referable to his membership of Lloyd's) and the third, for £175,000, being in favour of the husband's mother referable to loans advanced by her;
(c) the husband asserted a liability to CGT of £253,000 but had failed to comply with an order of the court to provide details of it;
(d) subject to a counterclaim against them, the husband had a liability of £180,000 to his former solicitors;
(e) in respect of orders for costs against him in favour of the wife, the husband owed her £46,000 already assessed (indeed Mr Le Grice tells us that a further bill of £31,000 still awaits assessment); and, in general,
(f) the fears which Charles J. had expressed as the reasons for placing the husband's housing fund in trust, namely that he would act irrationally and that his indebtedness would escalate, had to a significant degree been fulfilled.

9. The husband's case before the judge was that, whatever the reasons for his plight, the fact was that he could not secure continued legal advice and representation in the absence of an interim increase in the periodical payments. The wife did not dispute his assertion that he would be unable to persuade competent lawyers to act for him on the basis of the type of charge upon ultimate capital recovery held valid in Sears Tooth v Payne Hicks Beach [1997] 2 FLR 116. In that his case is one of opposition to capitalisation, such a charge would be self-contradictory. She did however dispute his assertion that he lacked the funds, or the ability to raise the funds, necessary for continued representation. The judge rejected this part of the wife's case in the following terms:

" I am satisfied that [the husband] is unable to fund his part in this litigation, either directly or by raising a loan… This is not a case where recourse to his mother would be reasonable for a loan, given his existing indebtedness to her, neither could he look to his bankers."

10. Mr Le Grice, however, also urged upon the judge that a costs allowance was in any event wholly unsuitable in circumstances in which the husband:

(a) had impoverished himself by engaging in ill-directed litigation;
(b) indeed was the subject of a civil restraint order;
(c) owed the wife at least £46,000 in respect of costs; and
(d) had made unsatisfactory disclosure of his financial arrangements.

11. Although it is unclear to me whether the judge accepted that the husband had made unsatisfactory disclosure other than in respect of the CGT liability, he definitely accepted the thrust of Mr Le Grice's points. He said that they were well-founded and that in the discretionary exercise he should place them in the balance. In the end, however, he concluded that, unattractive though it had been, the husband's conduct did not render a limited costs allowance unreasonable. From the foot of his conclusion that the husband had no other means of paying future costs, the judge noted in particular that the pending proceedings had been initiated by the wife; that, for the husband, the consequences of capitalisation could be drastic; and that his cross-application had reasonably been prompted by the significant increase in the wife's income.

12. Although in these proceedings Mr Le Grice primarily challenges the judge's inferential or secondary findings of fact that the husband lacked funds or the ability to raise funds with which to pay costs, he also presents an argument, which it is convenient to address at the outset, that the judge misunderstood the law referable to the inclusion of a costs allowance within an order for maintenance pending suit or for periodical payments. According to Mr Le Grice,

(a) the judge was right to hold that such inclusion should be "exceptional";
(b) the judge was wrong to follow the gloss arguably put on that word by Mr Mostyn QC, sitting as a deputy High Court Judge, in TL v. ML (Ancillary Relief: Claim Against Assets of Extended Family) [2005] EWHC 2860, [2006] 1 FLR 1263, at [128]; and
(c) it was not even open to the judge to make a costs allowance in the circumstances set out at [10] above.

13. What, then, is the law in this area? The founding jurisdiction is, in the case of an initial order for maintenance pending suit, s. 22 of the Matrimonial Causes Act 1973 and, in the case of variation of an order for maintenance pending suit or, as in this case, of an order for periodical payments, s. 31 of the Act. It has not been suggested that in this regard the principles applicable to those separate sources of jurisdiction are different; and, although by virtue of the conjunction of s. 31(7) and s. 25(2) of the Act which applies only to periodical payments, a technical case for difference might be mounted, it would be unattractive.

14. The seminal decision, which I have re-read with admiration, is that of Holman J. in A v A (Maintenance Pending Suit: Provision for Legal Fees) [2001] 1 FLR 377. Within an order for the "wife's" maintenance pending suit the judge included a costs allowance of £4000 p.m.; and it should be noted that the costs for which provision was thus made were costs to be incurred by the "wife" in prosecuting not financial claims but a suit for divorce in which the "husband" was contending that there had never been a marriage valid under English law and alternatively that any such marriage had been dissolved. So the order was expressed to continue until determination of the suit or further order in the interim.

15. The reasoning of Holman J. in favour of a jurisdiction to include a costs allowance was comprehensively endorsed by Charles J. in G v G (Maintenance Pending Suit: Costs) [2003] 2 FLR 71. There the allowance was to fund the wife's prosecution of claims for ancillary relief.

16. In Moses-Taiga, cited above, this court upheld the correctness of the decisions in A and G that a costs allowance can be included in an award of maintenance; and it dismissed an appeal against a costs allowance designed to enable the "wife" to prosecute a suit for divorce in which, as in A, the "husband" was denying that there was a marriage capable of dissolution. In my view, despite the occasional murmur to the contrary among family lawyers, the existence of the jurisdiction to include such an allowance thereby became res iudicata at the level of this court. After referring to the lack of availability of public funding in the terms quoted in [1] above, Thorpe L.J., in a judgment with which Dyson L.J. agreed, continued as follows at [25]:

"[If] the applicant has no assets, can give no security for borrowings, cannot guarantee an outcome that would enable her to enter into an arrangement such as that which was upheld in Sears Tooth … then there is no source of funding of the litigation other than the approach to the court for a maintenance pending suit that will include a substantial element to fund the cost of the litigation. Obviously, in all these cases the dominant safeguard against injustice is the discretion of the trial judge and it will only be in cases that are demonstrated to be exceptional that the court will consider exercising the jurisdiction. But, I am in no doubt that in such exceptional cases, s. 22 of the Matrimonial Causes Act 1973 can in modern times be construed to extend that far."

17. The repeated use by Thorpe L.J. of the word "exceptional" has become controversial. Did he mean that, apart from establishing that she (or, as here but less typically, he) had no facility to fund the litigation in any of the three specified respects, an applicant for a costs allowance needed to show that the case was exceptional? In TL, cited above, Mr Mostyn thought not. At [128] he said:

"Thorpe L.J. speaks of the power only being exercised in 'exceptional cases'. I would be surprised if he intended by that remark to impose the need to demonstrate anything beyond the requirements that he had previously mentioned, namely, that the applicant: (1) had no assets; and (2) could not raise a litigation loan; and (3) could not persuade her solicitors to enter into a Sears Tooth … charge. The combination of those three factors would, to my mind, make the case exceptional."

18. I should also refer to the decision of Hedley J. in C v C (Maintenance Pending Suit: Legal Costs), as yet noted only in [2006] Family Law 739. The judge so varied an order for a wife's maintenance pending suit as to include a costs allowance of £10,000 per month for ten months until the hearing of her claims for ancillary relief. The primary focus of the argument was upon the suggestion of Thorpe L.J. that an applicant needed to demonstrate that "she has no assets [and] can give no security for borrowings". For the wife had an unencumbered half share, worth in excess of £500,000, in the matrimonial home in which she continued to live with the children; and so it was the husband's simple assertion that she did have assets and could give security for borrowings. Hedley J. held that it would be "wholly unfair" to expect her to jeopardise the family's occupation of the home by raising a loan on the security of her share. He accepted the submission on behalf of the wife that the reference by Thorpe L.J. to having no assets and being unable to raise a loan was illustrative of one "exceptional scenario" rather than definitive. And he suggested that in one sense all "big money" cases were exceptional but that the need in the case before him for an investigation into the scale and liquidity of substantial assets under the husband's control certainly made it exceptional.

19. I consider that the word "exceptional" is obstructing the proper exercise of the jurisdiction to include a costs allowance; and I am convinced that Thorpe L.J. never intended that it should do so. To that extent I agree with Mr Mostyn. There is a recognised syndrome in which, in order to illumine his exposition of the proper approach, a judge uses a word; and then, to his astonishment, finds that the word of intended illumination is mistaken for the proper approach itself. But I would go further than Mr Mostyn, just as Hedley J. has gone in C. For it is clear that the reference by Thorpe L.J. to an applicant's need to demonstrate that she "has no assets [and] can give no security for borrowings" should not be taken literally. Mrs C did have assets and could give security for borrowings; the point was, however, that it was unreasonable to expect her to do so.

20. In my view the initial, overarching enquiry is into whether the applicant for a costs allowance can demonstrate that she cannot reasonably procure legal advice and representation by any other means. Thus, to the extent that she has assets, the applicant has to demonstrate that they cannot reasonably be deployed, whether directly or as the means of raising a loan, in funding legal services. Furthermore, not to forget the third of Thorpe L.J.'s three features, she has also to demonstrate that she cannot reasonably procure legal services by the offer of a charge upon ultimate capital recovery. I would add, fourthly, that the court needs also to be satisfied that there is no such public funding available to the applicant as would furnish her with legal advice and representation at a level of expertise apt to the proceedings, i.e. that the applicant does indeed in that regard fall within the unserved constituency referred to by Thorpe L.J. in the statement quoted at [1] above.

21. Although in making a costs allowance the court has a discretion, I cannot imagine that it would be reasonable to exercise it unless the applicant had thus duly demonstrated that she could not reasonably procure legal advice and representation by any other means. That, I venture to suggest, is, in effect and as a matter of common sense, a necessary condition of making an allowance. But I certainly do not consider that it will always be a sufficient condition; and, insofar as in the passage in TL which I have quoted at [17] above Mr Mostyn implied otherwise, I respectfully disagree with him. No doubt the applicant's due demonstration will incline, often very strongly, towards the making of an allowance. But at this stage other factors may well come into play which will no doubt on occasions lead the court to decline to make it notwithstanding the demonstration. The subject-matter of the proceedings will surely always be relevant; and, insofar as it can safely be assessed at so early a juncture, the reasonableness of the applicant's stance in the proceedings will also be relevant. So also will a variety of other features, including of the type which exist in the present case, in particular the arresting fact that the husband already owes £46,000 to the wife in respect of costs.

22. It is clear that my attempt in [13] to [21] above to analyse the relevant principles is at odds with each of Mr Le Grice's three submissions set out at [12] above. In my view the judge's approach to the application was essentially correct. He posed to himself the central question whether the husband could reasonably procure legal advice and representation otherwise than by a costs allowance. Having answered the question negatively, he proceeded to weigh Mr Le Grice's other points and indeed held that they carried significant force; yet in the end he favoured making the allowance.

23. I turn to Mr Le Grice's challenge to the judge's central conclusion of fact, namely that the husband could not reasonably pay for the necessary legal services, whether directly or, by raising a loan, indirectly. The judge did not hear oral evidence and so in one sense we in this court are in as good a position to reach a conclusion on this issue as was he. Nevertheless the system requires that the conclusion should in principle be made by him; and it enables us to set his conclusion aside only if we are satisfied that it was wrong.

24. In this regard the primary argument of Mr Le Grice surrounds the housing fund of £640,000 currently on deposit. The argument is that:

(a) one half of the fund is to be held for the husband absolutely;
(b) although, in providing for the fund, Charles J had directed that "unless the court otherwise directs, the whole of, or nearly the whole of, the said sum of £640,000 shall be applied in, and in respect of, the purchase of a home for the husband", the husband has shown no appetite for its application in the purchase of a home and he should therefore use the facility to apply for a contrary direction, namely that a significant part of his half of the fund should be paid to him in cash; or, alternatively to (b),
(c) the husband should cease to continue to obstruct the sale to the trustees of the home in London, which, in the light of the admitted willingness of the husband's mother to release her charge over it, should yield some capital to him.

25. There is no doubt that this argument was clearly placed by Mr Le Grice before the judge; that the judge referred to it only very briefly; and that, while his overall conclusion shows that he rejected it, he did not explain why he rejected it. Inevitably these circumstances give rise to some anxiety that in this regard the judge may not adequately have conducted the exercise required of him. In the end, however, I, for my part, do not subscribe to such a criticism. The husband's case before the judge was that he did indeed intend to sell the home in London to the trustees but that complications continued to beset the proposal. One complication, which the judge expressly and in my view correctly recognised as valid, was that the housing fund amounts only to £640,000; that, if the home in London is worth in excess of £800,000, a sale to the trustees for only £640,000 would be at a significant undervalue; and, that if, as he claims, the husband is heavily insolvent and if he were to be made bankrupt, the sale would therefore be open to attack on behalf of his creditors. There may well be ways of overcoming the complication. But I consider that the judge must have taken the view – and was entitled to take the view – that neither of Mr Le Grice's suggestions for deployment of the housing fund represented a realistic solution to an immediate problem referable to the husband's need for funds during the following four months.

26. The other main argument of Mr Le Grice referable to the husband's alleged access to funds relates to the fact that, as his disclosure revealed, he had between December 2004 and September 2005, i.e. during the pendency of the current proceedings, deployed £100,000 paid to him by his agents at Lloyd's in reduction, by instalments, of one of the commercial mortgages on the home in London. Mr Le Grice argues that this deployment of capital betrays an election on the husband's part not to deploy it in meeting his costs, incurred and likely to be incurred, in these proceedings and that the election should not enure to the prejudice of the wife. Mr Le Grice proceeds to complain that the judge did not even recite, still less address, this argument. In my view, however, this was not an argument of sufficient substance to necessitate his express consideration, desirable though it would have been. Mr Le Grice stresses that he does not contend that, in reducing the mortgage, the husband wantonly misapplied the capital. And, in the absence of clear evidence as to the severity or otherwise of the consequences which would have flowed from any election by the husband, if such he had, not to deploy it in reduction of the mortgage, I do not consider that it would have been open to the judge to take the severe step, which would be the logical consequence of Mr Le Grice's argument, of notionally returning it into the husband's pocket.

27. Granted, therefore, the inviolability in this court of the judge's answer to the central question, I consider also that his exercise of discretion cannot be faulted. There is, in particular, one most unusual feature of the pending proceedings. It is that the primary application is brought by the rich spouse against the relatively poor spouse. The husband seeks funds with which not primarily to pursue the wife but to defend himself against an application of profound importance to him which she brings against him; and, insofar as he cross-applies, it is prima facie reasonable for him to do so. It seems to me that, by virtue of this feature, the significance of his past forensic misbehaviour, including its legacy in terms of his liabilities for costs to her, to some extent recedes. In my view the presence of this feature, when added to the judge's answer to the central question, makes it impossible even for Mr Le Grice to persuade us to set the order aside.

28. The judge so crafted his order as to carry the husband's representation up only until the end of the FDR appointment. I think that there was a lot of sense in his setting that terminus ad quem. I am sure that, whenever a court decides to make a costs allowance, it ought to proceed with a judicious mixture of realism and caution as to both its amount and its duration. I feel sure that, in so providing, the judge had in mind the observation of Mr Mostyn in TL, cited above, at [130] that "in practice, I would expect that if the application is made before the FDR the costs allowance should fund the applicant up to the FDR". The FDR appointment is a watershed and all reasonable inducements to both parties there to negotiate positively in the light of informal judicial indications should be in place. The knowledge of a spouse in receipt of a costs allowance that, absent settlement at or in the immediate aftermath of the FDR, she will have to apply for a further allowance, which may or may not be granted, seems to me to amount only to a reasonable inducement, as opposed to improper pressure, to reach settlement. Indeed in this regard it seems to me to be of relevance that, pursuant to revisions made in the arrangements for public funding of a spouse in an application for ancillary relief with effect from 3 October 2005, it is following the FDR appointment that the funding is ordinarily reviewed and, in particular, that the Legal Services Commission then considers whether to amend a certificate for "General Family Help" to cover "Legal Representation": see s. 20.37.4 of Children and Family Guidance, New Focus for Civil Legal Aid, 2005.

29. Following the helpful observation in TL to which I have just referred, Mr Mostyn however proceeded to suggest the following:

"If the FDR fails, then the judge in the subsequent directions phase can consider whether to extend the allowance up to trial and, if so, in what amount."

With respect to Mr Mostyn, this latter dictum is misconceived. Once an FDR appointment has been concluded and has failed to result in an invitation to him to make a consent order, the judge who has presided over it "must give directions for the future course of the proceedings" and may "make … a further directions order" but otherwise "must have no further involvement with the application": see Rules 2.61E(2) and (8) of the Family Proceedings Rules 1991 ("the Rules of 1991"). To extend a costs allowance by further variation of an order for maintenance pending suit or periodical payments would be otherwise than to give a direction for the future course of the proceedings. No doubt Mr Mostyn considered that the judge who had presided over the FDR appointment would be well placed to judge the reasonableness of the stance adopted in the proceedings by the applicant for a further costs allowance. But Mr Mostyn may momentarily have forgotten that the foundation of the FDR procedure, now demonstrated as extraordinarily successful, is that, in the words of Rule 2.61E(1), the appointment is to be "treated as a meeting held for the purposes of discussion and negotiation", to which the judge may bring none of his coercive powers and in which accordingly there is no room for the forensic postures which parties strike when his exercise of them is in prospect. Neither counsel on this appeal considers himself able to support Mr Mostyn's dictum; and indeed, as I have explained, the order under proposed appeal included express provision that any application by the husband for a further costs allowance following the FDR appointment should be heard by a judge other than the one who had presided over it. To any such fresh judge the reasonableness of the stance adopted by the applicant at the FDR appointment will not be directly exposed. Therein, says Mr Le Grice, lies a significant difference from the position of the L.S.C., who will receive a full report upon events at the appointment before deciding whether to amend the certificate to cover "Legal Representation". At least, however, the fresh judge will have access to the rival open offers which one would expect to have been made by that stage.

30. In regard to the terminus I should revert to the judge's statement, set out in [3] above, that the husband would " have to find the costs himself post –FDR". Mr Le Grice complains that the judge there seems to have forgotten the existence of the jurisdiction to award the husband a further costs allowance following the FDR appointment and that he thereby fell into an error which infects his entire award. How, asks Mr Le Grice rhetorically, would he be able on behalf of the wife to resist the husband's application for a further allowance? Insofar as the judge considered that the ambit of his decision was limited to £40,000, he fell – so the argument runs – into appealable error. I reject this argument. It is hard for Mr Le Grice to complain that the judge forgot about a jurisdiction to which, in drafting the judge's order, he and his opponent chose to include specific reference. No doubt the judge expressed himself too strongly. But he was entitled to venture a firm indication that he did not envisage circumstances in which it would be apt for the allowance to be extended. And, in the event of further such application, Mr Le Grice would no doubt be able to mount the most vigorous opposition to it. Scrutiny would need to be given not only to the open offers – or their absence – but to the husband's progress or otherwise towards deployment of the housing fund in one way or the other during the months since the judge's order.

31. I have referred to the fact that the judge extracted from the husband an undertaking to repay to the wife all or such part of the costs allowance as he might hereafter be ordered to repay. In Moses-Taiga, cited above, Thorpe L.J. observed at [4] that an analogous undertaking to comply with an order seemed pointless in that it added nothing to the effect of the order itself. Mr Le Grice complains that, whatever the value of the undertaking, the chance that the wife will be reimbursed for the costs allowance is remote, even if the court were in principle to regard reimbursement to be fair. I disagree. Mr Cusworth, who now represents the husband, correctly concedes that, even though any sum awarded to him, whether by way of capital or of periodical payments, would be payable by the wife in respect of his maintenance, it would be open to the court to provide for a deduction, or in the case of periodical payments for regular deductions, in order to reflect any conclusion that in the circumstances the costs allowance should be reimbursed to the wife in whole or in part.

32. In that the pending applications were made prior to 3 April 2006, the amendments to the Rules of 1991 referable to costs made by the Family Proceedings (Amendment) Rules 2006 (S1 2006/352) do not apply to them. In particular, therefore, the new Rule 2.71(4)(a), which sets a general rule in proceedings for ancillary relief that the court will not make an order requiring one party to pay another's costs, does not apply to them. Nevertheless it may be helpful to state that I entirely agree with Mr Mostyn in TL, cited above, at [127] that a costs allowance within a maintenance order is not an order for costs and so would not fall foul of the new general rule; and perhaps helpful also to observe that, insofar as the objection in principle to a costs allowance has previously been cast in part upon an argument that it pre-empts the normal despatch of issues as to costs at the conclusion of the proceedings, such an argument will largely fall away by virtue of the new rules. The proper treatment of liabilities for costs thereunder will generally be that they are debts to which the judge should have regard in making his substantive award; and so in my view an allowance for costs within an award of maintenance in the circumstances which I have sought to outline would be consonant with the movement under the new rules to cater for costs at an earlier stage than hitherto.

33. I would grant permission to the wife to bring her appeal but would thereupon dismiss it.

Mr Justice Lindsay:
34. I agree with Wilson L.J.'s conclusions and his reasons for them. I have nothing to add.

Lord Justice Chadwick:
35. As Lord Justice Wilson has pointed out, the central question which the judge needed to address was whether the husband could reasonably be expected to procure the legal advice and representation which he needed if he were to make an adequate response to the wife's pending application for a "clean break" order from his own resources; or otherwise than by seeking a costs allowance by way of addition to the periodic payments order made by Mr Justice Charles in July 2003. In my view it was arguable that, in addressing that issue, the judge had failed to give sufficient consideration to the question whether – in the circumstances that there now seems little prospect of the £640,000 housing fund being used for the purposes for which it was established under Mr Justice Charles' order - it would have been reasonable to expect the husband to take the steps open to him to make his own one half share of that fund available to pay litigation costs. It is for that reason that it has seemed to me appropriate to recognise that the wife's appeal had a real prospect of success by granting her the permission to appeal which she seeks.
36. In the event – whatever my earlier doubts – I have been persuaded that the judge must have taken the view that recourse to the housing fund did not provide a solution to the immediate funding problem which faced the husband in March 2006. At that stage the need was for the husband to receive advice in connection with, and to be represented at, the FDR fixed to take place in July. If, as it now seems to me, that was a view which the judge must have taken, I do not think that his decision on the central question can be challenged. In those circumstances I agree that the wife's appeal must be dismissed.

37. Lord Justice Wilson has observed that, if a further application for an additional costs allowance were made by the husband following the FDR – now fixed for December 2006 – scrutiny would need to be given to the husband's progress (or lack of progress) towards the deployment of the housing fund for the purposes for which it was established in the months since March 2006. I respectfully endorse that observation. In my view the husband has failed to demonstrate that there is any real prospect that that fund can be used to purchase his existing London home; has failed to demonstrate any commitment to carrying out Mr Justice Charles' intention that the fund should be used to purchase an house (other than the existing London home) at which the children can enjoy staying access; and, in those circumstances, has failed to explain why his own share of the fund should not be realised in order to meet his existing and future liabilities for costs. There is no reason to think that time constraints similar to those which must have led the judge to take the view that he did in March 2006 will carry weight if this question has to be looked at again in or after December 2006.