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Simon v Simon & Level (Joinder) (Rev1) [2022] EWFC 29

Financial remedy proceedings, in which the wife agreed a consent order that prevented her from discharging loans of £1 million owed to a litigation loan funder, and the funder was joined to proceedings. Inconsistent communications between the parties, the intervenor, the allocated judge, and the Court complicated matters significantly.

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Background

Financial remedy proceedings had been ongoing since 2016. The wife had funded the later part of proceedings through loans from a litigation lender Integro Funding Limited ('Level').

A private FDR on 12 February 2021 took place. By that time, the wife's loans from Level totalled almost £1 million including interest and there was a mechanism for obtaining a further £3 million. At the FDR, the wife entered into an agreement with the husband, in effect compromising all of her financial claims: obtaining the right to reside in a property owned by the husband's trust for the rest of her life but receiving no capital.

After the FDR, the wife's position was apparently communicated to Level. On 15 February 2021, Level wrote to the Court, copying in the wife and the husband's solicitor. Level argued that by agreeing to compromise her claim, the wife was surrendering the entirety of her lump sum, which would prevent her from being able to discharge her obligations under the loan agreement. Level asked to be joined and requested that no order be sealed.

On 17 February 2021, the husband's solicitor wrote to the clerk for the allocated judge Mr Nicholas Cusworth QC sitting as a Deputy High Court Judge, copying the wife but not the Court or Level. The communication attached a consent order reflecting the parties' agreement at the FDR. An accompanying Schedule of Assets included the loan to Level. But the husband's solicitor said nothing to the Court about the letter from Level received two days before. Additionally, Level was not notified that a consent order had been lodged, in spite of its request, sent to the husband's solicitor amongst others, not to seal any orders.

Then, unbeknownst to the parties and Mr Cusworth QC, on 18 February 2021, Level's solicitor wrote to the Court with an ex parte application notice seeking to be joined to the proceedings. The application was put before Mr Justice Newton, who granted permission without notice and without any provision for liberty to apply or a return date.

The wife, the husband and his solicitor were promptly notified of Mr Justice Newton's decision, and on 19 February 2021, the husband's solicitor asked the Court to stay that order while an application was made to set it aside. But the husband's solicitor did not inform Mr Cusworth QC or Mr Cusworth QC's clerk of any of the developments or communications. The husband's solicitor copied only the wife and Level's solicitor on the communication to the Court. Additionally, the husband's solicitor did not mention to the Court or to Level's solicitor the fact that the consent order had been lodged on 17 February 2021.

On 22 February 2021, Mr Justice Newton amended his order, providing liberty to apply and an on notice hearing on the first open date after 11 March 2021. The husband's counsel replied that he was apparently not available until the week of 26 July 2021.

There were further communications from Level's solicitor on 22 and 26 February 2021, with Level asking the parties expressly whether a consent order had been lodged and whether there had been communications with the Court since the FDR on 12 February 2021. The husband's solicitor and the wife both remained silent on these questions. No one updated Mr Cusworth QC or his clerk of anything relating to Level.

On 2 March 2021, the husband's solicitor chased Mr Cusworth QC (through his clerk) on the approval of the draft consent order lodged 17 February 2021. The husband's solicitor did not inform Level this was being done and said nothing to Mr Cusworth QC about Level's involvement. Mr Cusworth QC, unaware of Level's party status or of any of the communications from 19, 22, and 26 February 2021, approved the final consent order that same day.

On 5 March 2021, having received no response to its communications of 22 and 26 February 2021 and not aware of the events of 2 March 2021, Level's solicitor issued a further application notice. On 10 March 2021, that application was put before Mr Justice Holman, who offered an urgent oral hearing. Level's solicitor invited the husband's solicitor and the wife to agree to such a hearing. The husband's solicitor responded, seeking a later hearing, and did not copy the wife on that communication.

On 11 March 2021, the husband's solicitor wrote again, once more not copying in the wife, but indicating to Level for the first time that "the matter has now concluded". Level replied on Friday 12 March 2021, asking whether the husband had "succeeded in attaining an approved consent order". On Monday 15 March 2021, the husband's solicitor responded that it was his understanding that the consent order had already been sealed. The consent order from the FDR on 12 February 2021, lodged on 17 February 2021, was in fact sealed on 16 March 2021.

On 17 March 2021, for the first time, the Court and Level became aware of the full chain of events, after Mr Cusworth QC sent to Mr Justice Holman the communications Mr Cusworth QC had received from the husband's solicitors. Mr Justice Holman ordered a stay of the consent order.

On 23 December 2021, Mrs Justice Roberts handed down a judgment refusing permission to Level to access Without Prejudice material and material from the private FDR hearing in support of their case. It was reported as LS v PS [2021] EWFC 108. Level appealed that order (which was made on 9 February 2022). Permission to appeal is still awaited but the content of Roberts J's judgment was later endorsed by Mr Cusworth QC in his decision about joinder below.

This hearing

The wife, despite having the actual agreement with Level, appears to have had little to no involvement since the FDR in February 2021, more than a year before this hearing. She wrote very briefly to Mr Cusworth QC in March 2022, to explain that she did not want any part in the proceedings and wished for the consent order to be made. She indicated that she would not pursue financial remedy proceedings if the consent order was set aside and would only ask the court to re-approve the consent order.

This hearing, in March 2022, was originally listed for the on notice application for joinder and for Level's application to set aside the final consent order sealed and stayed in March 2021. Level's application to have the consent order set aside had been staunchly opposed by the husband since March 2021 but was eventually conceded by the husband's counsel in the run-up to this hearing a year later. The hearing was therefore limited to joinder, which remained contentious. 

The law

Joinder in financial proceedings is governed by FPR Rule 9.26B "Adding or Removing Parties". The test is whether it is desirable to add the new party either to resolve all matters in dispute or to resolve a single issue involving the new party and an existing party, which is connected to the matters in dispute.

CPR Rule 19.2 (2) is effectively the same as FPR Rule 9.26B (1). Sir Terence Etherton MR in Price v Registrar of Companies ('In re Pablo Star Ltd') [2017] EWCA Civ 1768, at [51] stated that:

"The provisions of CPR r 19.2(2) ought… to be given a wide interpretation. The words 'in dispute' ought to be read as 'in issue'. That is consistent with authority that the court's powers to add a party under CPR r19.2 can exist after judgment even though, on a literal approach, there is no longer a matter in dispute: Dunwoody Sports Marketing v Prescott (Practice Note) [2007] 1 WLR 2343."

The Decision

Mr Cusworth QC decided that the wife's debt was not entirely independent of these proceedings. He considered that the question was whether it is desirable to resolve the issue between Level and the wife, at the same time that the financial remedy proceedings are concluded.

He ultimately agreed with and quoted from the judgment of Roberts J in these proceedings, handed down on 23 December 2021 and reported as LS v PS [2021] EWFC 108. In particular, he repeated Roberts J's conclusions at her paras 70-74 that:

- Level does not stand in the same position as a third-party unsecured creditor (para 70)

- different policy considerations are engaged for a professional corporate lender like Level, which offers bespoke services designed for the specific purposes of enabling a litigant to participate fully and effectively in litigation (para 71)

- the principle of access to litigation funding has been recognised for many years (para 72)

- in family law proceedings, the court has always been astute to ensure that both parties should have access to resources from which they can meet legal fees to ensure equality of arms and a level playing field (para 73)

- the availability of litigation funders such as Level is now recognised specifically by the court in the context of the provisions of s.22ZA of the Matrimonial Causes Act 1973 (para 74)

Mr Cusworth QC therefore endorsed Level's joinder to these proceedings by Mr Justice Newton on 18 February 2021 and concluded that it is desirable that Level they should remain a party so that the clearly connected issues between Level and the wife, and between the wife and the husband, can be fairly and expeditiously resolved.

Case summary by Lauren Suding, Barrister, Field Court Chambers.

For full case, please see BAILII