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Maughan v Wilmot [2020] EWHC 885 (Fam)

After Mostyn J gave judgment on this matter in October 2019, it transpired that he had been misled and that the majority of the money which had been frozen in 2019 was not easily accessible. Mostyn J therefore made a further freezing order and made further costs orders in favour of the wife and the receiver, to cover the costs of their investigations and of the implementation of the costs orders.

These proceedings had been running for a long time, and after giving judgment in October 2019 (neutral citation: [2019] EWHC 2765 (Fam)), Mostyn J hoped they would come to an end. However, investigations revealed that the factual footings on which he had given his 2019 judgment were faulty. He therefore conducted another hearing, by Zoom, in April 2020 to try to get to the bottom of matters.

The history of the litigation was as follows:

• In December 2013 an initial freezing order against the husband was made by Bodey J. It froze £400,000, unencumbered, and extended to funds at Aegon. It was implicit in the order that if the husband made a disposition of his assets, he would have to give notice of that fact and explain how his remaining unencumbered assets exceeded £400,000. (The figure was later reduced by Mostyn J to £300,000.)

• In June 2015 the husband moved £740,980 from Aegon to Curtis Banks (which offered a flexible drawdown facility). This was not notified by the husband to the wife and the funds left behind were largely inaccessible.

• In September 2015 there was a hearing before Mostyn J, who was informed that the husband had moved £700,000 from Aegon to Curtis Banks.

• In October 2015 the husband wrote to Curtis Banks informing them that the monies transferred to Curtis Banks were not subject to any freezing order. This was not true as the inaccessible funds left at Aegon would not qualify as unencumbered because they were incumbered by their inaccessibility.

• Substantial sums were then withdrawn from Curtis Banks in the husband's favour. This was not known to either the wife or to the receiver.

• In March 2016, Mostyn J made an order prohibiting Curtis Banks from paying any funds received from Aegon to the husband or any other party, apart from in accordance with the order.

• The husband continued to make withdrawals from Curtis Banks after Mostyn J's order of March 2016. The sums removed from Curtis Banks by the husband were in breach of the original freezing order inasmuch as he had not demonstrated that he had left the sum frozen unencumbered. In addition, the removals after March 2016 were in breach of the March 2016 order.

In October 2019 Mostyn J made costs orders in favour of the wife and the receiver totalling £68,307. He froze £100,000 to allow some headroom for inevitable future litigation. He did not specify over which assets the freezing order should range, but intended that it would be directed first and foremost to the funds held by Aegon. This was based on an assurance given by Stephen Meachem, the solicitor-advocate representing the husband, that the pension funds held in both Curtis Banks and Aegon/Hargreaves Lansdown were worth in excess of £350,000 and that the orders therefore only needed to be directed to Aegon/Hargreaves Lansdown and to Curtis Banks. It was implicit in the assurance that there were substantial funds in both places.

However, subsequent investigations revealed that although there were funds in Aegon/Hargreaves Lansdown worth £370,000, these were not easily realisable and only £25,369 could be easily extracted. The balance could not be accessed unless it was transferred to a flexible drawdown product offered by another provider, which would require the consent and cooperation of the husband. This would plainly not be given. Further, the funds in Curtis Banks would have been easily accessible, but had fallen to only £93.

It was therefore clear that Mostyn J had been misled about the scale and liquidity of the funds held by both Aegon/Hargreaves Lansdown and Curtis Banks. Had Mostyn J known the truth, he would have made a freezing order in a materially larger amount to allow for the inevitable costs in achieving access to the remaining funds held in Aegon/Hargreaves Lansdown.

In the course of the investigations by the wife and the receiver to try to establish the true facts, substantial costs had been incurred. Since October 2019, the wife had incurred £43,529, the husband £9,737, and the receiver £27,944 (less £1,443 on client account). The receiver estimated that a further £25,620 would be incurred in implementing the costs orders against the Aegon funds, on the basis that the husband would refuse to cooperate in their transfer to a flexible drawdown product. A total of £95,648 had therefore been incurred or was likely to be incurred in costs as a direct result of misrepresentations made to Mostyn J in October 2019.

Mostyn J was of the opinion that the costs incurred by the wife and the receiver since October 2019 had all been reasonably incurred and should be paid by the husband, in addition to the costs it was ordered he should pay in October 2019. This came to a total of £137,746, and did not include the costs of the receiver's own work, which he was also entitled to charge and recover under the receivership order.

Further headroom was required in anticipation of more vexatious litigation misconduct by the husband. Mostyn J therefore froze £200,000, and directed the order primarily at Aegon.

Just 37 minutes before the hearing was scheduled to begin on Zoom, Mr Meachem produced a witness statement made by him. This sought to argue that the husband was not in breach of the original freezing order because at all times his total 'unencumbered' funds remained above the capped limit, and that because the freezing order did not distinguish between liquid and illiquid assets, the existence of the inaccessible Aegon funds satisfied the terms of the freezing orders. Mostyn J rejected these arguments. It was clear that the husband had been in breach of the original freezing order and of his order of March 2016.

Mr Meachem also made three claims for positive relief. Given that the husband was the subject of a Civil Restraint Order and needed permission to make any application to the court, Mostyn J refused to hear any arguments in respect of these claims.

Following the distribution of his judgment in draft form, Mostyn J received an email from Mr Meachem challenging the quantum of costs claimed by the wife and the receiver. Mostyn J rejected this challenge. 

Given the misconduct of the husband, Mostyn J considered that any assessment of costs must be on the indemnity basis. On a summary assessment this meant that any doubts as to any sum claimed should be resolved in favour of the payee, i.e. the wife and the receiver.

Case summary by Henrietta Boyle, Pupil at 1 Hare Court

Read the full judgment of Maughan v Wilmot [2020] EWHC 885 (Fam) on BAILII