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‘Out of control' case squeezing out 'needy litigants’: Holman J

£1.6 million expended in costs in financial remedy proceedings

Mr Justice Holman has criticised litigation between a couple married in Malaysia which has expended £1.6m in costs even though the matter has not proceeded beyond the preliminary stage.

In Chai v Peng [2014] EWHC 750 (Fam) Holman J noted that neither party was a British citizen and neither paid taxes in England, yet they had spent around 6 days in court in England; paying only £2,355 in court fees. The judge referred to the overriding objective to deal with cases fairly, expeditiously and proportionately (considering the allocation of resources to other cases). He stated that the costs of litigation in this matter were out of control and the matter was 'squeezing out the many needy litigants who need precious court time to recover their children from abduction or seek their return from care, and other such issues'. He noted that there had been no negotiations and that a 10 day hearing was listed in October 2014 to determine whether the divorce should take place in England or Malaysia. Mr Justice Holman encouraged the parties to negotiate and stated that, regardless of jurisdiction, the husband would have to make a fair payment to the wife.

The case concerned a marriage of over 40 years with five adult children. The husband, now aged 74, is very wealthy and appears to live in Malaysia. The wife, aged 68, lives in England without independent assets, and relies upon earlier payments from the husband. Proceedings were brought about a year ago in England and Malaysia and there was some litigation in Canada.

In 2013, the husband had agreed to make two upfront payments totalling about £1,850,000 (paid in Malaysian currency), 'on account of the wife's claims in any jurisdiction for financial provision from the breakdown of the marriage'. Mr Justice Holman found that it was unclear how long that payment was intended to last.

The wife's case was that the money was now spent, and she asked for further funding of £125,000 monthly plus funding of £245,000 in respect of her legal costs.

The husband argued that a judge in Malaysia had decided that Malaysia was the correct forum for the divorce proceedings; that judgment is now subject to appeal. The husband said that a further award of maintenance pending suit would interfere improperly with the process of the foreign court. The judge did not accept that argument and noted that there was significant legal activity in both countries.

Further, the husband asked the judge to consider 'the inherent merits of the wife's case in England'. The judge noted that she had been living for at least 18 months in one of the family homes. However, he was unable to say that her case lacked the merit necessary to consider her application.

The judge noted the husband's claim that his wife had spent 'a phenomenal amount of money' since the two upfront payments had been made. However, Mr Justice Holman said the wife had made a series of one-off payments which it would be unnecessary to repeat before the next hearing.

The husband also indicated that the wife's legal costs were £230,000 greater than his own and that the hours devoted to the matter by her solicitors were excessive. The judge stated that he did not have time to conduct something akin to a detailed assessment of the bill, and noted that the costs for both parties were 'eye-watering'.

Mr Justice Holman considered the wife's needs on the basis of what was reasonable, and made a 'short, interim and impressionistic' order for payments on account of any substantial award made anywhere in the world. He ordered the husband to pay general maintenance of £35,000 per month for the period of two months up to the next hearing, and £100,000 on account towards the wife's costs.

This item is derived from the case summary by Sara Hunton of Field Court Chambers. The judgment itself is here.

23/3/14