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Maughan v Wilmot [2014] EWHC 1288 (Fam)

High Court applications for the appointment of a receiver, an extended civil restraint order and an extension to a freezing injunction. Cross-application to strike out freezing order and suspend all other orders made.

The applications before the court arose in respect of unpaid orders for child maintenance. The parties had been long divorced.

The "wife" sought:

- appointment of a receiver under s.37 of the Senior Courts Act 1981 to recover arrears of over £74,000 and previously ordered costs not yet assessed but estimated  to be in excess of £66,000.

- an extension to an existing freezing order to ensure the efficacy of the receivership and

- an extended civil restraint order under rule 4.8 FPR 2010 to prevent the husband from engaging in vexatious litigation .

The "husband" (who did not appear) sought to have the freezing order struck out and all other applications suspended/stayed.

Mostyn J dealt first with the husband's applications. Refusing an adjournment, he observed that the husband had "undoubtedly" been served and had had ample notice of the hearing. A letter from him to the effect that neither he nor new counsel could attend on the relevant date was not a valid application for an adjournment. The rules (with which he should have complied) applied to litigants in person as they did to represented parties.

As to the substance of the husband's application, none of the three grounds upon which it was based were made out.  The first allegation (that the order was wider than the judgment and was somehow not bona fide) misunderstood the judicial process; the order was valid and the allegation "totally meritless". The second ground (that monies paid for maintenance had gone to the wife's solicitors) was not supported by any evidence and even had it been true, it was not for the court to act as a "policing official" over the use of child maintenance. As for the third allegation (that the wife's representatives were corrupt) not only was this baseless, it had been repeatedly rejected by the court on previous occasions. The application was wholly without merit.

Turning to the wife's applications, Mostyn J noted that although the cost of appointing a receiver made it a "last resort", in this case the default had been "extreme" and it was obvious that the husband had been, and would continue to be, obstructive. Defiance of the order was defiance not of the wife but of the court. The appointment of a receiver was required not only in respect of the arrears and costs already incurred but to capture costs amounting to £47,185  for which the wife was about to apply.

Having granted the order for a receiver, it was only logical to grant the extension of the freezing order to preserve the assets to enable the judgments made to be satisfied. Accordingly, the freezing order would continue for 12 months.

In respect of the civil restraint order, the purpose of the relevant rule was to prevent abuse of process by vexatious litigation. Mostyn J identified eight separate wholly unmeritorious applications made by the husband over the course of the preceding two and a third years and, in such circumstances, considered the criteria for making the order to be satisfied. The decision whether or not to make an order was therefore an issue of his discretion, which, finding the behaviour "egregious", he exercised in favour of the wife, making the order sought.

Finally, in respect of costs, to which, having "prevailed" in all her applications, the wife was entitled; the only issue was on what basis these should be awarded.

Mostyn J considered the tests set out in Three Rivers District Council & Ors [2006]); namely, that for costs to be awarded on an indemnity basis there must be conduct "out of the norm", such as the prolonged pursuit of allegations of impropriety or dishonesty, advanced and maintained to the "bitter end" in the absence of evidence or apology or, the pursuit of a claim that was "thin" or "far fetched". 

In this case, the husband was guilty of precisely such conduct in relation to both his wife's and his own applications. The order for costs would therefore be on an indemnity basis.

CPR 44.2(8) allowed the court to order an interim quantified payment in advance of detailed assessment. Accordingly, there would be an order for payment of £45,000 payable within 14 days.

Case summary by Katy Rensten, barrister, Coram Chambers



[2014] EWHC 1288 (Fam)

Royal Courts of Justice
Tuesday, 15th April 2014


B E T W E E N :

(Formerly Wilmot) 
-  and  -

Transcribed by BEVERLEY F. NUNNERY & CO.
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MR. J. SWIFT  (instructed by Thomson Snell & Passmore)  appeared on behalf of the Applicant.
did not attend and was not represented.

(As approved by the Judge) 

1 Today, listed before me are three applications by Viki Maughan, whom I shall refer to as "the wife" even though she and the respondent were divorced many years ago, and one application by the respondent, whom I shall refer to as "the husband" for the same reason.

2 The wife's applications are:

(i)   for the appointment of a Receiver under s.37 of the Senior Courts Act; that application is dated 18th February 2014. 

(ii) for an extended civil restraint order pursuant to Rule 4.8 of the Family Procedure Rules 2010; that application was made on 11th December 2013. 

(iii)  for an extension of a freezing injunction that was made on 18th December 2013 and which, by my order dated 20th March, is due to expire today.

3 The husband applied on 28th March 2014 for orders to strike out the freezing order and to suspend or stay all orders in this case, including the material orders for child maintenance. His application (which had been received in draft on 21 February 2014) was, by notice issued by the court dated 18th March 2014, listed to be heard today.

4 The wife's three applications are listed to be heard today by virtue of my order dated 20th March 2014.

5 The husband has been duly served by email, as the orders have provided for, with my order of 20th March 2014, and he has unquestionably received the notice dated 18th March 2014 in relation to his own application 2014 as the copy of that within the bundle at section A, p.50 has his own writing on it with these words:

"Alternative date when counsel available applied for at the court under EU HR6."

There can be no doubt that the husband has since had, in relation to his own application - 18th March, in relation to the wife's three applications - 20th March, very ample notice of this hearing. 

6 This morning I received a letter from the husband dated 10th April 2014. That same letter, but bearing a different date, namely 11th April 2014, has been sent by email to the wife's solicitors and is in the bundle.  The letter reads:

"Your Lordship,

I apologise for writing to you direct, but I understand from the Listing Office there is a hearing in this case before you on April 15th? 

I informed the listing officer that neither I, nor new counsel would be able to attend on this date on notified dates to avoid, and suggested alternative date(s). 

I do not know whether the listing office has arranged this. 

I have not received service of Notice of Hearing from the opponents under court rules in any event."

This letter is of a piece of the many communications that the respondent husband makes to the court, which normally he does not trouble to copy to the wife's solicitors.  He should understand that the court does not operate as some kind of advisory bureau.  If he wishes to make an application to the court to adjourn a hearing which has been regularly fixed then he must comply with the rules.  The fact that he is a litigant in person does not mean that any further latitude in relation to compliance with the rules is afforded to him than to a represented litigant.  There is, in this court, not one rule for the rich and one rule for the poor.

7 If the husband wished to apply for an adjournment of the four matters which are listed before me today then it was incumbent on him to apply under Part 18 for an adjournment.  An application under Part 18 requires at least seven days' notice to be given and must be supported by evidence or verified by a statement of truth.  There is no evidence at all in the husband's letter which I could treat as satisfying the requirements of Rule 18, which explains to me why neither he nor counsel can attend the hearing today. 

8 In these circumstances I decline to treat his letter of 10th April 2014 as a valid application for an adjournment.  I am satisfied that he has had ample notice of this hearing and I direct that it shall proceed.  I refuse his application for an adjournment.

L A T E R:
9 I now turn, first, to the husband's application dated 28th March 2014, which had been accepted by the court on 18th March and has been listed for today as I have previously explained.

10 The application has three grounds to it.  It says, first, that the freezing order of 6th December 2013 should be struck out because the order made by Ryder J (section F, p.22) which is dated 27th February 2013 but which is sealed on 14th March 2013, because, in the words of Captain Wilmot: "The Judgment orders no such thing as alleged by the solicitors for the petitioner."

11 The basis of Captain Wilmot's first allegation is that the order goes wider than the terms of the relatively short Judgment issued by the Judge.  However, that is to misunderstand the judicial process.  An order will very often go wider than the terms of a Judgment and will reflect Rulings made in the proceedings along the way.  In this case the Judge made a number of Rulings along the way which were not then reiterated in his Judgment.  However, it was, of course, appropriate and necessary that those Rulings were reflected in the Judge's order.  I have been given a clip of correspondence between Ryder J's clerk and Mr. Swift in relation to the drawing up and perfection of the order.  For these purposes I need only refer to the email from the Judge's temporary clerk dated 6th March 2013, which reads:

"Thank you for your message.  The Judge accepts your amendments as indicated in a telex.  Additionally, he has made further amendments of his own.  It is now returned in its amended and approved form.  The Judge asks that you redraft it in its final form and send a copy to me, please.  He asks how you intend to serve the order on Mr. Wilmot.  The Judge would like your final draft in response to his above comment this morning, please, as he wishes to contact Mr. Wilmot and respond to various correspondence that Mr. Wilmot has sent to the Judge."

The form of order sent back by the Judge, which, in fact, became version four, is the version that was ultimately sealed and which, no doubt, the Judge explained in his communication to Captain Wilmot.  

12 Having explained these elementary facts it is completely plain that the allegation made by Captain Wilmot is totally meritless.  The suggestion that the order is, in some way, a forgery, not authentic or bona fide, has no basis whatsoever.  Accordingly, I proceed on the basis, inevitably, that the order made by Ryder J, dated 27th February 2013 and sealed on 14th March 2013, is a valid order and that all the matters which are ordered in it were validly made.  In those circumstances the first basis of Captain Wilmot's application is denied by me.

13 The second is this: in his statement in support of his application he says in paras. 19 and 20 that he has discovered that the entirety of the sum paid in maintenance, which includes child maintenance over the last 15 years, which he says is £330,000, has not gone to his former wife and children but, in fact, has gone to the wife's solicitors, Thomson Snell & Passmore.  Even if this were true, that would not be a basis for setting aside any orders.  It might be a basis for variation of future liability, but no such application has been made.  It is, in my view, a completely misconceived basis on which to mount a challenge to the validity of the existing orders to suggest that the wife, who acts in the form of a de facto trustee for child maintenance, has, in fact, used the maintenance for other purposes.  The court does not stand as some kind of policing official as to how child maintenance is deployed.  But, beyond those statements of principle is the fact that there is no evidence to support Captain Wilmot's allegation.  Mere assertion in paras. 19 and 20 do not come anywhere near establishing the veracity of his allegation.  For these reasons I reject as meritless his second basis of challenge as expressed in the application notice.

14 The third is this: from paras. 21 to the conclusion of the statement he reiterates complaints that he has made repeatedly to various Judges that the wife's solicitor, Miss Judd, and her counsel, Mr. Swift, are corrupt.  He alleges that they have acted contrary to their professional duties.  He alleges that they have acted fraudulently.  He alleges they have been guilty of forging documents and corrupting the process of justice.  These are not new allegations, but are allegations that have been made repeatedly in the past by Captain Wilmot and which have been repeatedly rejected by the court. 

15 The most recent example of the rejection of these allegations is to be found in the very clear Judgment of Lloyd LJ dated as recently as 25th July 2013 when Captain Wilmot was represented by counsel on his three applications for permission to appeal various orders.   The learned Lord Justice goes through in some considerable detail the nature of the allegations made by Captain Wilmot which have included, as I say, allegations of corruption against the wife's legal team.  There had been earlier rejections made by Ryder J of similar allegations.

16 In my judgment, having looked at the papers carefully, it is clear to me that these allegations are completely baseless. However, I would go further and say that in circumstances where they have already been categorically rejected by the court, they are now the subject of the principle of res judicata and it is an abuse for Captain Wilmot to try to reiterate them before me.  Therefore, for these reasons his third basis of challenge, as expressed in his application notice, is denied by me and accordingly his application is rejected and I certify it to have been, from first to last, totally without merit.

L A T E R:
17 Of the three applications made by the wife I now deal with the application for receivership, and the application to extend the freezing order.  An application for a receiver is an ancient remedy available to the court when deploying powers of enforcement, and although it was original an equitable remedy it was put on a statutory footing at the time of the great fusion of law and equity in the late 19th century and it is now to be found in s.37 of the re-named Senior Courts Act 1981. 

18 Generally speaking, a party would only apply for a receiver to be appointed as a course of last resort for reasons that hardly need to be spelt out.  Receivership, as a process, is inevitably expensive because the receiver is usually an accountant charging hourly rates of some size.  However, in this case, the default of the husband, in relation to what is child maintenance largely, has been extreme and it is obvious that he has put in the past, and will put in the future, every conceivable obstacle in the way to frustrate implementation of the court's order.  It is worth him reflecting, however, that when the court makes an order the owner of that order is not the wife, it is the court.  When you defy the order you are not defying your former spouse, you are defying the court.

19 In this case the appointment of the receiver is sought in order to recover arrears of child maintenance pursuant to orders made on 27th June 2007 and 27th February 2013, which have been calculated according the schedule in the bundle, which I am satisfied that the husband has received, at £74,617 (rounded up to the nearest pound) to which, since that schedule was prepared, a further month of arrears in the sum of £1,816 has accrued.  In addition, Ryder J ordered the husband to pay the costs on 27th February 2013 and the costs draftsman estimates that the costs which are captured by that order come to £66,209; that will need to be assessed, but the fact that the assessment process has not been completed is not a reason for not awarding the grant of a receiver, it being reasonably apprehended that when the allocator is issued that the respondent will, in like manner, defy his obligations under that also.   The third reason is to capture costs orders for which Mr. Swift will shortly be applying, which are the costs that have been expended by the wife since the autumn of 2013 in trying to enforce the orders which I have mentioned.  Those costs, including the costs of the attendance of Mr. Swift and Miss Judd today, come to £47,185.  I will later entertain an application by Mr. Swift for an order to cover those costs.

20 I am satisfied on the facts of this case that this is a husband who has been guilty of extreme defiance of orders principally for child maintenance, which cannot be described as anything other than banal and ordinary. His reason for not paying is inexcusable.  Indeed, inasmuch as the wife has been paid in the past to some extent that is only due to successful application by the court of its powers under the Attachment of Earnings Act.  In these circumstances I have no hesitation in granting the order to appoint a receiver over the husband's assets.  Two candidates have been put up and, for reasons which have been explained to me, the preference of the wife is, in fact, for the slightly more experienced, but concomitantly slightly more expensive, CCW Recovery Solutions LLP of Tunbridge Wells, of which the receiver would be Mr. Newman.  In those circumstances, having read the affidavit in support of the application, I am satisfied that Mr. Newman would be an appropriate person to exercise the powers of receivership in this case.  I therefore grant that application.

21 The second aspect is to extend the freezing order, which is due to expire at 4 pm today, until the conclusion of the receivership and in aid of the receivership.  If I did not make that order I would have thought it almost inevitable that Mr. Newman's first act would be to apply to reinstate the freezing order so that the assets, which he has to gather in in order to satisfy the Judgments in this case, could be preserved.  It would be a wholly inappropriate act for the court not to extend the freezing order to cover the period of the receivership so I therefore extend the freezing order for a further 12 months.  If Mr. Newman needs more time towards the expiry of that period he will have to apply for it.

L A T E R:
22 In this case the wife's second application was pursuant to Rule 4.8 of the Family Procedure Rules, and Practice Direction 4B, which accompanies it, for an extended civil restraint order to be made against Captain Wilmot. 

23 In Financial Remedies Practice 2013 - 2014, para. 4.6(1) it is said that these rules specify the power of the court to make a civil restraint order.  It is a direct counterpart of CPR Rule 3.11 which, since 1st October 2004, has placed on a statutory footing the inherent jurisdiction of the court to prevent abuse of its process by vexatious litigants by making a Grepe v Loam [1887] 37 Ch 168 order.  These powers are by no means unfamiliar and have been with us for generations and, indeed, in the sphere of family law since the advent of the Children Act 1989, s.91(14), they have been made in that field very often.

24 The power to make an extended civil restraint order may only be made by a High Court Judge.  An extended order, which is applied for here, may only be sought where a party has persistently made applications which are totally without merit.  If the order is made the party against whom it is made:

"is restrained from making applications in any court concerning any matter involving or relating to or touching upon, or leading to the proceedings in which the order is made without first obtaining the permission of a judge identified in the order."

The judge identified in the order is asked to be me or, if I am not available, another Judge of the High Court.

25 Here, on 24th January 2012, Ryder J dismissed two appeals by the husband as being totally without merit.  It is true that the order, unaccountably, does not record that finding but the words of the Judgment are perfectly clear and I believe it is appropriate for me to proceed on the footing that this is in effect an order recording two applications dismissed as totally without merit.  I do not read Rule 4.3(7)(a) in a technical and literal way as requiring that the order must record the declaration if the Judgment makes it plain on its face that such a declaration has been made.

26 On 25th July 2013 Lloyd LJ dismissed three applications for permission to appeal as each being totally without merit and the order duly recorded that they were totally without merit. The order in para. 5 states:

"The court does not think fit to make a civil restraint order in relation to the applicant despite the finding mentioned at para. 4 above and previous findings to the same effect but the respondent may apply to the court on notice to the applicant for such an order to be made."

Today, as I have explained in my earlier Ruling, I have dismissed the husband's application, which is dated 21st February 2014, but which was ultimately issued on 28th March 2014.  That had three, in effect, sub-applications but for the purposes of the application that I entertain I shall treat them as three separate applications, each of which I have dismissed as being totally without merit.  Therefore, since January  2012, in other words in the last two and a third years, there have been eight applications which have been found expressly by the court to be totally without merit.  In those circumstances I am satisfied that Captain Wilmot can be categorised as a party who has persistently made applications which are totally without merit; the threshold criterion is therefore established.  It is therefore a question for my discretion as to whether I should prevent Captain Wilmot from making any application - in the phraseology I have previously described:  "concerning any matter involving or relating to or touching upon or leading to" these proceedings without first obtaining my permission.
27 This is, in my view, an egregious case where Captain Wilmot has behaved vexatiously and I am satisfied, having taken all matters into account, that it is appropriate for me to exercise my discretion to make the order.  The nominated Judge for these purposes will be myself unless I am not available, in which case it may be only a serving puisne High Court Judge.

L A T E R:
28 The wife applies for an order for costs, to be assessed on the indemnity basis, in relation to the four applications in which she has been successful, namely her three applications for the appointment of a receiver, extension of the freezing injunction, the making of an extended civil restraint order, and in successfully resisting the application made by the husband, which I have categorised and certified to be totally meritless. 

29 In Three Rivers District Council & Ors. v Governor and Company of the Bank of England [2006] EWHC 816 (Comm) Tomlinson J (as he then was) summarised at para. 25 the relevant principles in determining whether an order for an indemnity costs should be made.  Before I turn to those I deal first with the question of basic entitlement.  The four applications that have been made in this case do not fall within the exception in Family Procedure Rules 28.3 where the general rule is no order as to costs.   In such circumstances the court starts, as has been said in authority, with a blank sheet, although it is a blank sheet where there is a strong steer, following the decision of the Court of Appeal in Gojkovic v Gojkovic, in favour of costs following the event. 

30 I have no hesitation in concluding that the wife has prevailed on each of her applications and, having successfully resisted an unmeritorious application made by the husband, is entitled to an order for costs.  The question is on what basis that should be ordered.  In the case to which I have referred, Three Rivers District Council in principle (2) Tomlinson J said: 

"The critical requirement before an indemnity order can be made in the successful [party's] favour is that there must be some conduct or some circumstance which takes the case out of the norm."

The test, he says in principle (3) is "unreasonableness".    Then in para. (8) he says this, which is relevant for my purposes:

"The following circumstances take a case out of the norm and justify an order for indemnity costs, particularly when taken in combination with the fact that a defendant has discontinued only at a very late stage in proceedings;

(a)  Where the claimant advances and aggressively pursues serious and wide ranging allegations of dishonesty or impropriety over an extended period of time;

(b)   Where the claimant advances and aggressively pursues such allegations, despite the lack of any foundation in the documentary evidence for those allegations, and maintains the allegations, without apology, to the bitter end;"

I pass over the next two:

"(e) Where the claimant pursues a claim which is, to put it most charitably, thin and, in some respects, far-fetched;"

 It seems to me that in relation to the applications the wife has made the respondent husband is guilty of precisely the conduct to which Tomlinson J refers.  In relation to his own application the situation is a fortiori. 

31 I therefore make an order for costs in the wife's favour to be assessed on the indemnity basis.

32 The next matter I turn to is whether I should order a quantified payment to be made on an interim basis as I am required to consider by virtue of CPR 44.2(8) which says:

"Where the court orders a party to pay costs subject to detailed assessment, it will order that party to pay a reasonable sum on account of costs, unless there is good reason not to do so."

In circumstances where I have made an order of indemnity costs it is appropriate, in my judgment, for me to make an award on account of costs in the sum of £45,000 to be paid within 14 days of today.