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Golubovich v Golubovich [2011] EWCA Civ 528

Application by wife in respect of security for costs in proceedings pending husband’s application for permission to appeal in ancillary relief proceedings. Rules and case law considered. Application granted in part.

 H sought permission to appeal against orders made under the Matrimonial and Family Proceedings Act 1984: i) giving W leave to apply for financial relief despite the parties' divorce having been granted in Russia, and ii) ordering H to make a lump sum payment to W of £2,485,000, periodical payments of £60,000 per annum, and costs.

Shortly after the listing of the permission hearing, W applied for a) security for costs of the permission and appeal proceedings, b) payment of, or at least security for, the costs previously ordered against H, which she estimated at £260,000, and, on a later amendment to her application, c) security for the balance of the lump sum and periodical payments previously ordered (£970,000 had already been paid via one of H's debtors). This matter came before the court at a time when the permission hearing was pending, and had been listed with, if successful, the appeal to follow forthwith.

Wilson LJ noted that, for various reasons of delay, the permission hearing was by that time less than 28 days away, and that he could not sensibly ignore the fact that if he made any substantial order for security, this might result in the adjournment of the permission hearing, which would suit nobody.

He considered the various applications, reviewed case law and decided that he did have jurisdiction under Rule 3.1(3)(a) CPR 1998 in relation to category a) and that it was fair to make an order to stay the proceedings until H had paid £30,000 into court in respect of W's costs of those proceedings.

He then considered category c), and concluded that, despite his view that there was jurisdiction to make such an order (by way of attaching a condition of payment into court to a summary grant of permission to appeal), he should not order H to pay the sum into court since part of the appeal which H wished to put was based upon an assertion that the trial judge had been wrong to find that H had the means to pay the sums ordered, and such matter should not be prejudiced.

Finally, the judge considered the request for payment under category b) for costs previously ordered. These costs had been ordered as part of one of the orders which H was appealing. Since it usually followed that if a substantive order was set aside on appeal, the collateral order for costs would fall or need to be adjusted, the judge considered that the correct course was to await the pending appeal. The judge also considered that H's ability to pay, though not usually relevant to a costs order, was relevant where such order might stifle a proposed appeal. No order for security in respect of this category was made, therefore, subject to an order for the payment of £10,000, which was outstanding in relation to the permission application.

Case summary by Gillon Cameron, Barrister, 14 Gray's Inn Square


Case No: B4/2010/2149 (A)
Neutral Citation Number: [2011] EWCA Civ 528

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: Thursday 3rd March 2011

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Elena Golubovich 

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Ilya Golubovich 

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(DAR Transcript of
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Miss Deborah Bangay QC and Miss Amber Sheridan (instructed by Hughes Fowler Carruthers Limited) appeared on behalf of the Applicant "wife".

Miss Justine Johnston (instructed by Elena Jacobson) appeared on behalf of the Respondent "husband".
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(As Approved by the Court)

Crown Copyright ©

Lord Justice Wilson:
1. The wife (as it will be convenient to describe her notwithstanding the grant in Russia of a decree or other order of divorce) makes an application in proceedings brought by the husband (as it will be convenient to describe him) which are pending in this court. The proceedings are proposed appeals against two orders made by Mr Justice Moylan in the High Court, Family Division. One of his orders was made under s.13 of the Matrimonial and Family Proceedings Act 1984 and the other was made under s.17 thereof.  The former order, dated 14 July, was to grant leave to the wife to apply for an order for financial relief under Part III of the Act of 1984 notwithstanding, of course, that the divorce was not granted in England and Wales. The latter order, dated 16 August, was principally to order the husband to make a lump sum payment to the wife on a clean break basis in the sum of £2,485,000. The judge then also made orders for the husband to make periodical payments to the wife for the benefit of their daughter, now aged two, in the sum of £60,000 per annum and for the husband to pay the wife's costs of the application under Part III, and of her preceding costs of an intended application for ancillary relief pursuant to an anticipated English divorce, in the total sum of £350,000.

2. Proposed appeals against those two orders are pending in this court by virtue of an order made by the Master of the Rolls and Thorpe LJ on 8 December 2010. On that date the court had in particular been concerned with other issues between the parties. But, when Miss Johnston, on behalf of the husband, reminded the court that he had issued an appellant's notice dated 3 September 2010 by way of appeal against those orders and when she there and then sought permission to appeal in respect of them, the court directed that, rather than it should then be considered, the issue of permission should be adjourned to be listed on a date to be fixed, on formal notice to the wife and on the basis that, were permission to appeal to be granted against either or both of the orders, the substantive appeal or appeals should follow forthwith.  The rolled-up hearing of the husband's applications for permission (and, in respect of the earlier order, for an extension of time) and, were the relevant orders to be made, of the substantive appeal or appeals has been listed to take place before three judges of this court on 24 March 2011, i.e. only three weeks from today.

3. Just prior to my embarkation upon delivery of this judgment, Miss Bangay QC, who represents the wife, has told me that in fact there has been discussion with the listing officer about a possible slight postponement of that date, in particular to suit the convenience of Miss Bangay herself, namely from 24 March to 30 March. In the light of the recent news that that date would be convenient to Miss Johnston, who represents the husband, so long as there was no question of the appeal continuing until 2 April when she is due to fly to Australia, it may be that this court will refix the substantive hearing for 30, rather than for 24, March.

4. At the hearing on 8 December 2010 Miss Bangay made clear that, in the light of the court's adjournment of the issues of permission upon the basis to which I have referred, she would be seeking an order for security for the wife's costs and, as I read the transcribed exchanges, perhaps also security for the outstanding balance of the lump sum order made by Moylan J even though such was the subject of the second proposed appeal.   Thus it was that, on 23 December 2010, the wife did indeed issue an application for security for costs. Her application at that time did not seek security for any part of the outstanding lump sum.  As originally issued, the application sought security, by way of the husband's payment into court, of the sum of £290,000, being as to £30,000 the wife's estimated costs of the proposed applications for permission and appeals pending in this court and as to £260,000, an estimate by the wife's solicitors of the net effect of numerous past orders for costs, including one adverse to the wife, made in the proceedings in the Family Division and in this court up to and including 8 December 2010.  It was only by amendment of her application, sanctioned by Master Hendy subject to re-service, that the wife has, very recently, i.e. by amendment made only on 23 February and served only on 25 February 2011, sought to add to her application for hearing today a claim that the balance outstanding of the lump sum order and of the other substantive orders (i.e. the orders other than in respect of costs) made on 16 August 2010 should also be brought by the husband into court as a condition of the continuation of the proceedings on 24 or 30 March.

5. I regard it as unfortunate that the wife's application for security, issued in this court on 23 December 2010, was fixed for hearing on a date as late as today. Whether that is entirely or even partly the fault of this court, in the light of the other pressures of its work, is doubtful. For example I have seen a letter from the wife's solicitors to the husband's solicitor dated as long ago as 1 February 2011 in which they suggested that the application should be listed either today or yesterday or tomorrow.  I wonder whether, just as in relation to the possible move of the substantive date from 24 to 30 March, the late listing of today's application is related to the possibly frenetic professional commitments of Miss Bangay, who seems to have represented the wife in effect throughout the proceedings and whose grasp of the convoluted history it would surely be difficult for other counsel to acquire.  At all events I feel that, as a family judge of practical disposition, I cannot ignore the fact that, even if I take the later date of 30 March, less than four weeks will elapse between today and the date of the final determination of the proceedings in this court and that, were I to make any substantial order for security, I would probably have to direct the vacation of the date, be it 24 or 30 March, set or to be set for the determination.  I note, for example, that when on 23 February 2011 the wife amended her application in the manner indicated, she felt obliged to amend the number of days which she suggested should be afforded to the husband for compliance with her proposed orders from 14 days to 28 days.  Were that fairly elementary concession to be adopted, the result would obviously be the need for an adjournment of the hearing, whether to have taken place on 24 or on 30 March.  When I look at the matter neutrally, from the point of view of all three members of the family, I find myself very opposed to the prospect of a postponement beyond March of the final determination of these proceedings.

6. The wife's claim for the husband to pay money to her, or into court, as a condition of the continuation of the proceedings, and in particular of the due occurrence of the hearing on 24 or 30 March, falls into three categories:

(a) security for the wife's costs of these proceedings in this court, namely, as originally estimated by the wife's solicitors, £30,000, which appears to have been the estimate from, but not including, 8 December 2010 until the conclusion of the hearing later this month and which clearly excludes the cost of the present application; in fact a detailed estimate placed before me today sets the figure at almost £34,000;

(b) payment to the wife of, or at least security for, costs already ordered to be paid by the husband to the wife in prior proceedings in the Family Division and in this court, namely, when netted off against costs ordered to be paid by her to him, as first estimated £260,000 and, as estimated today in the light of a recent further order, £264,200;

(c) security in the sum of £1,675,000, being first the balance of the lump sum ordered to be paid on 16 August, namely £1,515,000, together with, second, the net sum of £130,000 due under that order in respect of arrears of periodical payments then already accrued and, third, the sum of £30,000 due by way of periodical payments for the child under the order in respect of the period of six months from 1 August 2010 to 1 February 2011.

7. The first question – not actually in dispute - is whether I have jurisdiction to order the husband to make each of the three categories of payment to which I have referred.

8. The first category is security for costs of the present proceedings in the strict sense. Left to myself, I would have considered that I had jurisdiction to order such security for the costs of these proceedings in this court under Rule 25.15(1) of the CPR 1998 albeit, of course, that such would require the existence of the grounds for ordering security for costs of a claim set out in Rule 25.13. Nevertheless, although the point was not argued and might technically be regarded as not having been decided in a way which is binding upon me, I consider that I should follow the decision of this court in Great Future International Limited v Sealand Housing Corporation [2003] EWCA Civ 682, to the effect that, in the unusual circumstances such as there obtained and here obtain, in which permission has not yet been granted but has been directed to be considered at a hearing at which, if granted, the substantive appeal should follow forthwith, security cannot, at this stage, be granted under Rule 25.15.  In that case, however, the court went on to hold that the court's case management powers under Rule 3.1(2)(f) to stay proceedings and its power under Rule 3.1(3)(a) to make any order subject to conditions, including a condition to pay a sum of money into court, gave this court an analogous power. Indeed in that case the court went on to order the prospective appellants to provide security in the sum not only of £80,000 in relation to the estimated cost of the proceedings in this court but also of £1,000,000 in respect of a past order for costs made against them at first instance.  It can therefore be seen that the powers under Part 3, exercisable in a situation such as the present, are just as wide as, may even be wider than, the power under Rule 25.15. I therefore have no doubt that, as a matter of jurisdiction, I have power to make the orders in relation not only to the sum of £30,000 but also to the sum in the second category to which I have referred, namely £264,200. 

9. I am clear that, as a cold matter of jurisdiction, I also have the power to order the husband to provide security for the sum in the third category, namely in the sum of £1,675,000 being the balance estimated as owing under the substantive orders dated 16 August 2010 up to 1 February 2011, albeit perhaps ignoring interest.  Whence does that jurisdiction arise? There is no doubt that, were permission to have been granted to the husband to appeal against the orders dated 16 August, a condition could have been attached to that permission to the effect that the outstanding sum in dispute under the appeal should be brought into court.  The attachment to this court's permission to appeal of a condition that the sum in dispute in the appeal be brought into court is exemplified in its ordinary civil jurisdiction by Hammond Suddard Solicitors v Agrichem International Holdings Ltd [2001] EWCA Civ 2065, and, more particularly, in its family jurisdiction, by Radmacher v Granatino [2008] EWCA Civ 1304, [2009] 1 FLR 1566.  I note from the transcript of proceedings on 8 December that, clearly alive to such mechanics, Miss Bangay sought to interest this court in the idea of its grappling then with permission to appeal so that a condition of such a character might be attached. This court, however, was having none of it.  It swept all issues of permission, together with any substantive appeals which might follow from permission, into the hearing presently fixed to take place on 24 March. In such circumstances it might be that, today, not being a day in which I am due to consider questions of permission, I cannot attach to a permission any such condition for bringing the large outstanding sum into court. I disagree.  The husband needs permission and has from the outset been asking for permission and could not seriously complain if, suddenly, I was now to grant him permission and thereby to confer upon myself the jurisdiction to attach the condition.  That is a course which I could take. Nevertheless it would be paradoxical if an applicant, such as this husband, who has not even yet persuaded this court that he has a real prospect of succeeding in an appeal against either of the orders under proposed appeal was in a stronger position to object to an order for security of this character than an appellant who had crossed that preliminary hurdle.  I regard my case management powers under paragraphs (2)(f) and (3)(a) of Rule 3.1 as affording me an analogous jurisdiction.

10. The live questions are whether, in my discretion, it is appropriate for me to exercise the jurisdiction which I have identified. 

11. In the event I do not find much difficulty in relation to the first and third categories. 

12. In relation to the first category, namely provision by the husband of security for the wife's costs of the proposed appeal, it seems to me clear that I should exercise my discretion in her favour.  Although, in the light of the Great Future case, Rule 25.15, and therefore Rule 25.13, are not directly in point, I am clear that they are required to be considered in the exercise of the discretion under Rule 3.1.  I am clear that I should not provide for security for the wife's costs of the present proceedings unless one or more of the conditions set in Rule 25.13(2) is or are satisfied and also that, pursuant to paragraph (1)(a), I regard it as just to make an order for security. Clearly the proposed appellant is resident out of the jurisdiction.  He has not set foot in the jurisdiction, so far as is known, since July 2010 and he claims a current residence in Moscow. Thus the condition set by paragraph (2)(a) of Rule 25.13 is satisfied.   There are also strong prima facie grounds for considering that the condition set by paragraph (2)(g) of the Rule is also satisfied but it is unnecessary to consider whether any second condition is also satisfied; and it would be wise for me to refrain from so doing so. That it is just to make an order for security against the husband in respect of the costs of the proceedings in this court is to my mind clear in the light of the apparent absence of any remaining assets belonging to the husband in this jurisdiction and of the incontrovertible evidence of his determination, throughout the proceedings in these courts in England during the last two years, to thwart the wife's assertion of financial claims in this jurisdiction, even to the extent, unknown in my experience, of forging evidence of a foreign, in this case a Muscovite, decree or other order of divorce. 

13. Of course, in exercising my discretion whether to order security for the costs of these proceedings, I have to refrain from making any order objectively likely to stifle the proposed appeal and to infringe the rights of the husband under Article 6 of the ECHR 1950.  In this respect, at any rate, the relevant figures are modest. The wife is, by her solicitors, contending that security should be ordered in the sum of £30,000.  The husband by contrast is contending that, were I to be against him, as I am, on the question of principle referable to the first category, the sum to be provided by way of security should be only £15,000, being a sum which, in order to obviate the costs of today's hearing, he recently offered.  The fact is that, when push has come to shove, the husband, notwithstanding his repeatedly asserted absence of resources, has found it possible to be represented, no doubt at considerable expense, on a successful appeal to this court in May/July 2010, at the hearing on 8 December 2010 and indeed again today. In all, since 2009, he has spent no less than £720,000 in costs relating to the proceedings in England.  In the light of evidence which I cannot consider that he could conceivably dislodge in the proposed appeal, he is living at a rate which renders a sum of £30,000 to be of relative insignificance for him. The sum of £30,000, in particular in circumstances in which it is clearly reasonable for the wife to wish to continue to be represented by Miss Bangay, seems to me to be an entirely reasonable estimate.  Thus, in relation to the first category, I propose to stay the present proceedings in this court until, on a date no later than say 17 March 2011, the husband shall have paid into court the sum of £30,000 by way of security for the wife's costs thereof.  I do not at this stage direct vacation of the date for the hearing of these proceedings, be it 24 or 30 March, because I anticipate that the husband will wish to effect that payment into court by 17 March in order to preserve his proposed appeals. 

14. Equally easy for my determination, but in the opposite direction, is the amended application for the husband to bring into court the entire sum said to be outstanding under the substantive order dated 16 August 2010.  In this regard I should hasten to note that, apparently by garnishee proceedings, the wife has already secured payment to herself  of £970,000 from a debtor of the husband in England towards satisfaction of the lump sum order dated 16 August.  The wife has also been enabled to extract payment to her of £20,000 as against the arrears of periodical payments fixed by the order dated 16 August in the sum of £150,000.  Thus it is that, by virtue of the payment of £970,000, it is proper to consider the outstanding lump sum order payable by that order as amounting to £1,515,000; and to quantify the outstanding arrears of periodical payments then ordered to be paid as £130,000.  Those two net sums, together with the arrears of child periodical payments to which I have referred, make up the sum of £1,675,000 which is the target of the amended application. 

15. Notwithstanding the existence of my jurisdiction to order the husband to bring that sum into court as a condition of his continuation of the proposed appeals, I find it easy to conclude that I should not exercise it. I believe that, were I to do so, I would be prejudging the proposed appeals in a highly objectionable way; indeed I consider, to be specific, that, as submitted by Miss Johnston, I would be infringing the husband's rights under Article 6 of the ECHR.  It is unusual to make it a condition of an appeal or proposed appeal to this court that the appellant or applicant should, even if he is outside the jurisdiction and even if the ability to enforce the order under appeal or proposed appeal is highly questionable, bring the sum thus ordered into court. In the family jurisdiction the best example of such an order is of course the case of Radmacher. But in that case the appeal for which permission was granted did not involve an issue as to whether the appellant had the means to make payment of the lump sum of £5,560,000 ordered in the court below.  The issues raised were quite otherwise.  In her efficient tour of the other authorities Miss Johnston has demonstrated to my satisfaction that in the other, civil, examples of orders of this court for payment into court of the substantive sum in dispute, there was no doubt about the appellant's ability to make it. In this case, by contrast, the appeal which the husband wishes to put before this court is based, at any rate in part, upon an assertion that Moylan J was wrong to find, indeed to find only by inference, that the husband had the means with which to pay the sums ordered.  For me today to order him to pay those sums, or rather, in the light of the substantial part payment already collected, the balance thereof, would, in my view, be for this court to prejudge the issues which will, at any rate in terms of arguability and perhaps beyond that realm, be considered by the court on 24 or 30 March. I decline to accede to the application made by way of amendment. 

16. In the middle, therefore, comes the second category, namely a request for security in the sum of £264,200 referable to the suggested net effect of past orders for costs in the Division and in this court.  One problem for the wife in this area is indeed that the total is estimated. I note that the calculation put forward by Miss Bangay attached to her skeleton argument suggests that, within the total of £264,200, no less than four of the component figures are estimated.  Such is not the terra firma upon which this court is happy to tread. More important, however, is that the overarching figure in Miss Bangay's calculation is the figure for costs of £350,000 ordered on a summary basis to be paid by the husband to the wife within the order dated 16 August 2010, i.e. within the second order under proposed appeal.  If a substantive order is set aside on appeal, it usually follows that the collateral order for costs will fall or will need at any rate to be adjusted.  Thus the major component of Miss Bangay's costs calculation is subject to the question-mark presented by the pending proceedings. Furthermore, even though an order for costs is not in principle made by reference to an ability to pay, the prospective stifling of a proposed appeal to this court cannot be put aside by reference to any analogous suggestion that ability to pay is irrelevant. I therefore hold (and, to be fair, Miss Bangay has not suggested otherwise) that, in the pending proceedings in this court, an issue of whether the applicant has the ability to pay £264,200 cannot be parked on the simple basis that impecuniosity is irrelevant to costs.

17. Thus, with one small exception, I have decided not to make any order for security in respect of the second category. The exception relates to this court's own order dated 8 December 2010.  It was at that hearing, when the pending proceedings were permitted to go forward to the hearing presently fixed for 24 March, that this court directed that the costs then principally before it should be paid by the husband to the wife on the standard basis pursuant to assessment and that the husband should, by 29 December 2010, make an interim payment of £10,000 on account thereof.  The husband, by Miss Johnston, today concedes that that interim payment has not been made.  The husband is in breach of this court's own order by which the proceedings in this court were allowed to remain pending.  That is not a situation which I am prepared to countenance.  The husband cannot take the benefit of that order of this court without its corresponding burden. The husband must put it right before the wife incurs the extra expenditure referable to the hearing presently fixed for 24 March.   I therefore order, as an addition to the stay order already identified, that the husband should pay, and in this case pay not into court but rather directly to the wife by her solicitors, the sum of £10,000 by, say, 17 March 2011. 

Order:  Application allowed