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KSO v MJO & Anor [2009] EWHC 2152 (Fam)

Application for discharge of a freezing order arising from costs in ancillary relief proceedings. Application dismissed.

The background to the ancillary relief proceedings and the costs incurred is set out in a previous judgment of Munby J (KSO v MJO and JMO (PSO Intervening) [2008] EWHC 3031 (Fam). Following that judgment the wife sought permission to appeal the costs orders in the Court of Appeal but that was refused and when the matrimonial home was sold the father-in-law, who had been involved in the ancillary relief proceedings sought undertakings that the wife would pay his costs (of c£50,000) with those proceeds. The wife, through her solicitors, failed to give such an undertaking and so the father-in-law applied for a freezing injunction which was granted.

In dismissing this application, Munby J concluded that i) there was a real risk that the wife might frustrate the judgment and that Singer J, who granted the injunction, was justified in doing so; ii) there was no merit in the complaint that the application to Singer J was without notice; and iii) the wife’s complaints of non-disclosure failed as she had not challenged the sums before so Singer J had not been misled.

Neutral Citation Number: [2009] EWHC 2152 (Fam)
Case No: HG07D00256
(In Private)

The Law Courts
Newcastle Upon Tyne NE1 3LA

Date: 10 August 2009

Before :

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Between :

KSO (Petitioner)

- and - 

(1) MJO, (2) JMO (Respondents)

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Mr Mark Halliwell (instructed by Stowe Family Law LLP) for the Petitioner (wife)
Mr James Richardson (instructed by Dickinson Dees) for the Second Respondent (husband’s father)
The First Respondent (husband) was neither present nor represented

Hearing date: 22 July 2009
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Mr Justice Munby :
1. This is a further unhappy episode in ancillary relief litigation in which I gave a judgment on 8 December 2008: KSO v MJO and JMO (PSO Intervening) [2008] EWHC 3031 (Fam), [2009] 1 FLR 1036. I need not repeat what is in that judgment. I shall take it as read.

2. It will be recalled that, for the reasons set out in that judgment, I ordered the father-in-law to pay the wife’s costs of what I referred to as the appeal and the application for an injunction, such costs to be assessed if not agreed (paragraph [56]). At the same time I ordered the wife to pay the father-in-law’s costs of his intervention in the proceedings (other than his costs of the appeal and the application for an injunction), to include his costs of the inspection appointment order made against him on 28 December 2007, such costs also to be assessed if not agreed (paragraph [72]). The order was dated 18 November 2008 and sealed on 3 December 2008. It was common ground that the amount payable by the wife to the father-in-law exceeded the amount payable by the father-in-law to the wife. On the basis of the information I had been given I indicated that the net amount payable by the wife to the father-in-law was of the order of £40,000 (paragraph [36], footnote [1]).

3. In the course of my judgment I made some pungent observations about the way in which the litigation as a whole had been conducted at what I called “ruinous expense to the parties” (paragraph [76]). Recording the fact that in the interval between the hearing before me and the handing down of judgment the husband had been declared bankrupt on his own petition, I observed (paragraph [75]) that:

“The litigation simply collapsed under the unsustainable burden of paying costs which had long since become wholly disproportionate to anything at stake and which, by the time the parties arrived at the FDR, had swallowed up a grotesquely large proportion of the never very substantial assets.”

4. What was left to the family at that point, after the lawyers had taken costs which amounted to some £553,000, was something of the order of a mere £245,000 (paragraph [36]).

5. The March 2009 issue of Family Law contained a case-note on my judgment by Professor Gillian Douglas, who questioned whether the father-in-law would want to obtain his costs “thus depriving his own grandchildren of the benefit of the parties’ limited remaining assets”: [2009] Fam Law 185. The June 2009 issue of Family Law contained a letter from the wife’s solicitors complaining that the facts of the case had been “incorrectly reported in your comments”, stating that my judgment was “currently under the appeal process at the Court of Appeal” and expressing the hope that “the Court of Appeal will take the opportunity to give advice to the legal profession as to joinder in this area of the law”: [2009] Fam Law 550.

6. By then that hope had in fact been dashed. The wife had sought permission from the Court of Appeal to appeal against the order I had made in favour of the father-in-law. Her application came before Wilson LJ on 18 May 2009. He dismissed it in robust terms, as being so “totally without merit” as to justify an order under CPR 52.3(4A) that the wife might not request that the decision be reconsidered at an oral hearing. Wilson LJ was scathing in his reasons, referring (paragraph [3]) to “the ruination of the family already wrought by legal costs of £553,000” and questioning both (paragraph [3]) the proportionality of an appeal at all and (paragraph [5]) the proportionality of the way in which the application for permission to appeal had been conducted. (I am told, however, that the application for permission to appeal was carried out without cost to the wife.)  It is also to be noted that he recorded (paragraph [2]) the wife’s case before the Court of Appeal as being that her net liability for costs might be up to £80,000 rather than the £40,000 I had suggested. 

7. The most recent costs schedules I have seen show that the wife estimates the costs payable to her by the father-in-law to be £40,461 (schedule dated 17 November 2008), whilst he estimates the costs payable by her to him to be £96,881 (undated schedules sent under cover of a letter dated 2 June 2009), leaving a net sum payable by the wife to the father-in-law of £56,420.

8. Wilson LJ had dismissed the wife’s application on 18 May 2009. On 28 May 2009, His Honour Judge Kaye QC, sitting as a Judge of the High Court in the Chancery Division and, simultaneously, the Family Division, had before him both the bankruptcy proceedings in relation to the husband and the ancillary relief proceedings. In relation to the remaining monies in the joint account (see paragraphs [11]-[12] of my previous judgment) Judge Kaye sanctioned a compromise providing for the sum of £46,980 to be paid to the husband’s trustees in bankruptcy and the balance to be paid to the wife’s solicitors. I understand that the wife received a little over £100,000, all of which has gone in discharging what I am told was a substantial part of her outstanding legal costs, the payment of outstanding school fees (see paragraph [37] of my previous judgment), and payment of some of her outstanding debts. 

9. In relation to the former matrimonial home (see paragraphs [5] and [33] of my previous judgment) the compromise sanctioned by Judge Kaye provided for its sale and the distribution of the proceeds of sale. After discharge of the costs of the sale, the outstanding mortgage and the sum of £52,000 payable to the mother-in-law (see paragraph [44] of my previous judgment), the balance was to be divided equally between the husband’s trustees in bankruptcy and the wife. The compromise further provided that out of the wife’s half share there were to be paid the amount required to discharge a liability to a bank, the details of which do not matter for present purposes, and the amount required to discharge the wife’s indebtedness to her solicitors pursuant to a deferred payment agreement dated 28 November 2008. The balance was to be paid to the wife.

10. Following Wilson LJ’s order there was correspondence between the parties’ solicitors. For present purposes it starts with a letter from the father-in-law’s solicitors dated 2 June 2009 which in material part read as follows:

“We instructed by our client JO, that your client has or is about to receive £120,000, from the monies held on deposit to the joint credit of herself and her husband. The net result of the said Costs Orders, is likely to be that your client owes our client JO a sum in excess of £50,000.

We therefore seek by return an undertaking from your client that the sum of £50,000 will be paid to yourselves to be held pending agreement or final taxation, in respect of the net result of the said Orders for Costs made by Munby J.

As you are aware, your client and her husband are jointly and severally liable to pay to our client PSO the sum of £52,500, upon the sale of their property … Could you please provide to us an update in respect of the progress of the sale of that property and when, if it is known, a sale is likely to complete.”

11. The wife’s solicitors replied on 3 June 2009:

“In relation to the sum due to Mrs PSO our client has agreed with the Trustees in Bankruptcy that the sum will be deducted from the proceeds of sale … in advance of the balance of the funds being distributed between our client and the Trustee in Bankruptcy.

In respect to your client JO’s potential enforcement of the Costs Order against our client we would draw your attention to the article in the March 2009 Family Law in which Professor Gillian Douglas, commenting upon your client obtaining his cost, remarks, “and would he have wanted to do so thus depriving his own grandchildren of the benefit of the parties’ limited remaining assets?” We therefore ask again for your client to reconsider his position in relation to those costs.”

12. The father-in-law’s solicitors responded on 9 June 2009:

“Whilst some may have applied ex-parte, we are seeking to proceed in a less contentious manner by requesting an undertaking from your client. As the effect of the costs generated by her to date have clearly had an adverse affect upon her (and as per your letter, risk depriving her children) we rather hoped that you would welcome an approach which did not involve your client incurring additional legal costs or in the alternative, your firm having to continue to act pro bono.

May we invite you by return to now obtain your client’s specific instructions in respect of the terms of any undertaking which she is prepared to offer. We shall then advise our client and consider how to proceed.

It follows from the foregoing, that our client JO, does instruct us to proceed to enforce the relevant order for costs. Our client does not subscribe to Family Law and if he did, the opinion of Professor Gillian Douglas in respect of his family affairs would no doubt be deemed utterly irrelevant. You may remember that our client did not wish to become a party to the proceeding and it was your client, no doubt acting on legal advice, that caused him to incur such costs.

Accordingly, we now invite you to provide us with a Schedule of your client’s own costs in respect of the appeal and injunction applications and to respond to our client’s Schedule of Costs sent to you under cover of our said letter to you of 2 June 2009. It will clearly be in the best interests of both parties if this matter can be resolved swiftly and amicably, without the requirement of further Court involvement.

… So far as the sale … is concerned, could you please advise us:

(a) as to the sale price and the estimated net equity and
(b) as to whether contracts have been exchanged and if not, when this is due to occur and what date has been agreed for completion.

We look forward to hearing from you further in respect of these matters.”

13. The wife’s solicitors replied on 18 June 2009:

“We refer to recent communications between ourselves and enclose herewith copy fax that we have sent to TBI this morning which you will see we are dealing with matters in relation to the sale …

Insofar as your client’s Schedule of Costs is concerned we are arranging for our Law Costs Draftsman [to] look at that against our own client’s file papers as clearly a bill of costs will need to be drawn up in respects of our client’s Appeal costs also. On that issue therefore we shall be in touch with you as soon as possible.”

The enclosed copy letter to TBI, also dated 18 June 2009, asked if they could confirm the current position in relation to the sale of the former matrimonial home.

14. The father-in-law’s solicitors responded on 22 June 2009, complaining that the letter of 18 June 2009 “ignores (either deliberately or otherwise) the two main issues raised in our letter of 9 June 2009.” So far as material for present purposes the letter continued:

“In your letter of 4 June 2009, you state that you would take your client’s instructions in relation to the issue of providing an undertaking, so it cannot be stated that you had not had sufficient time in order to address this matter. Accordingly, unless we hear from you by return, we shall proceed upon the basis your client is unwilling to provide the undertaking that is being sought and invite the Court to conclude that the reason she so refuses is that she intends to defeat any attempt to enforce the judgement of Munby J.

As stated in our letter of 9 June 2009, we do not wish to embroil the parties in yet further litigation, but your failure to address the issue and respond in a timely manner to our correspondence leaves our client at risk and leaves us with little option.”

15. The wife’s solicitors replied on 23 June 2009:

“We have spoken with our client who is in agreement to us retaining the sum of £50,000 out of her entire share of the net proceeds of sale that we are due to receive. TBI have instructions to send our client’s share of the net proceeds of sale to us. If you require an undertaking from our client, please provide us with a written undertaking that you require our client to sign.”

16. The father-in-law’s solicitors responded on 25 June 2009:

“Further to our letter dated 23 June 2009, we enclose a draft undertaking which we would invite your client to sign forthwith. May we please have the original for our file?

We also require your firm to undertake that you will, from your client’s share of the proceeds of sale … , hold the sum of £50,000 to the Order of both firms of solicitors pending agreement or taxation regarding the payment of costs pursuant to the Order of Munby J dated 18 November 2008.

We look forward to hearing from you.”

I need not set out the terms of the proposed undertaking; it was, on the face of it, unexceptionable and seemingly apt to give effect to what was proposed by the father-in-law’s solicitors in their letter.

17. The wife’s solicitors responded by a letter dated 26 June 2009, which I have not seen but whose contents sufficiently appear from the response which it drew from the father-in-law’s solicitors in their letter dated 29 June 2009. Marked ‘Urgent’ and sent by fax it read as follows:

“We thank you for your letter of 26 June 2009.

We must say that we are somewhat surprised by the contents. The undertaking which we are seeking merely seeks to put into formal terms the matter which your client already agreed to, as per paragraph 2 of your letter of 23 June 2009.

We therefore cannot understand why it is necessary for you to consider your client’s “position in this matter with Counsel”. That will only serve to cause delay and increase the costs for your client.

The issue is straightforward and appears to have been resolved after several weeks of correspondence. We request that by return either your client signs the undertaking which we have provided or you set out the reasons why she is seeking to depart from the agreement hitherto reached in correspondence.

If we do not have a response, then we can only but assume that your client intends to dispose of or otherwise deal with the net proceeds of sale … in a manner other than set out in your letter of 23 June 2009.”

18. It will be noted that the wife’s solicitors had not given the father-in-law’s solicitors any information as to when contracts might be exchanged for the sale of the former matrimonial home. In particular, they had never supplied the information requested by the father-in-law’s solicitors in their letters of 2 and 9 June 2009.

19. On 3 July 2009 the father-in-law applied for a freezing order to restrain the wife dealing with her share of the proceeds of sale of the former matrimonial home “limited to the sum of £50,000”. His application was supported by an affidavit sworn on 3 July 2009 by his solicitor. Having rehearsed the correspondence the affidavit set out how the day before, on 2 July 2009, the father-in-law had discovered that a legal document relating to the sale of the former matrimonial home was to be signed the following day (3 July 2009). Inquiries which his solicitor then made of TBI, the conveyancing solicitors, elicited the information that the wife and the husband were due to sign the contract on 3 July 2009, completion being anticipated to take place on 10 July 2009. The affidavit observed, correctly, that despite the agreed completion date completion could theoretically take place immediately upon exchange of contracts on 3 July 2009. The affidavit continued:

“It is of immense concern to [the father-in-law] that despite requesting that the [wife] agree to give an undertaking on several occasions, (the [wife] indicating through her solicitors on 23 June 2009 that she was agreeable to her solicitors retaining the sun of £50,000), she has not indicated any willingness to enter into a written undertaking when presented with the opportunity of doing so.

Further, [the wife’s solicitors] have failed to [the father-in-law’s solicitors] of the date of exchange of contracts and completion of the sale … , despite having confirmed that they would do so.

The [the father-in-law] only discovered though a third party that contracts for the sale … were to be signed on 3 July 2009, yet that fact was certainly known to the [wife], whom Ms D at TBI has confirmed is due to attend their office on 3 July 2009 in order to sign the contract for sale with a view to exchange the same day.”

20. Two telephone calls which the father-in-law’s solicitor had made on 2 July 2009 to the wife’s solicitors had, he said, failed to shed any light on whether the wife had signed the undertaking as requested. The affidavit continued:

“Consequently, the Court is invited to conclude that, as a result of her failure to provide an undertaking in order to provide security for the sum of £50,000 which she has previously agreed could be withheld, coupled with the failure to ensure [the father-in-law’s solicitors] were notified of the date of exchange of contracts and completion of the sale … , there is clear evidence of an intention on her part to defeat the [the father-in-law’s] claims to enforce the Order for costs made by the Honourable Mr Justice Munby.

This application is made without notice to the [wife], as the matter is one of great urgency, given that the contract for the sale … are [sic] due to be signed by the [wife] and [the husband].”

21. There being no judge of the Family Division available on the North Eastern Circuit, the application was made to Singer J, the urgent applications judge in London, who agreed to hear the application by telephone. He had the papers in front of him, as appears from the note of the hearing taken by the father-in-law’s solicitor. He was taken through the affidavit and its exhibits by the father-in-law’s counsel, Mr James Richardson, and then through the draft order which had been put before him. He made the order, essentially as sought. It was sealed the same day, 3 July 2009.

22. The draft order put before Singer J was, as Mr Richardson says, in entirely conventional terms. The draft had provided for the wife’s share of the proceeds of sale to be injuncted, with the qualification that the order would cease to have effect if she provided security in the sum of £50,000 either by paying that sum into court or by another method agreed with the father-in-law’s legal representatives. The order made by Singer J was in the same terms. The draft order had also provided in the usual way for a return date (paragraph 3) and for costs to be reserved (paragraph 7) to the judge hearing the matter on the return date. At the suggestion of Singer J the provision for a return date was deleted and paragraph 7 was amended to provide that the wife was to pay the father-in-law’s costs of the application, to be assessed if not agreed. As the note of the hearing records, Singer J was of the view that it would be “unfortunate” if there was to be a return date. As Mr Richardson told me, Singer J explained that his concern was to minimise costs – and in particular to avoid committing the parties to the further costs of a return hearing, when it could potentially be avoided by making a preliminary determination as to costs in what in the light of the correspondence between the parties appeared to be a fairly clear-cut case – while emphasising that the wife could of course apply to vary the order.

23. Exchange of contracts for the sale of the former matrimonial home took place on 7 July 2009 and completion followed on 10 July 2009. I understand that the amount of the wife’s half share frozen in accordance with Singer J’s order is fractionally less than £194,000.

24. On 10 July 2009 the wife applied for an order that Singer J’s order be discharged and that the father-in-law pay her costs. Her application was supported by affidavits sworn on 9 July 2009 by her solicitor, on 10 July 2009 by the conveyancing solicitor at TBI and on 15 July 2009 by the wife herself.

25. On 17 July 2009 the father-in-law’s solicitor swore an affidavit in response.

26. While all this had been going on, the husband had applied ex parte on 13 July 2009, in circumstances which I confess I have some difficulty understanding (he remains, after all, an undischarged bankrupt), for an order freezing the proceeds of sale. It was granted the same day by the District Judge. I have not seen that order but it was in any event set aside on 17 July 2009, so I need say no more about it.

27. The same day, 17 July 2009, the wife’s application was listed for hearing at Leeds on 21 July 2009. In the event there was no suitably qualified judge available at Leeds to hear the case. It so happened that I was again sitting on the Circuit, at Newcastle Upon Tyne, and I agreed that the case could be put in my list for hearing there on 22 July 2009.

28. The wife was represented by Mr Mark Halliwell, the father-in-law, as I have said by Mr James Richardson. (Neither, I might add, had had any involvement with the earlier phases of the litigation.) Both had prepared clear and helpful skeleton arguments for which I was and am very grateful.

29. The day before the hearing, on 21 July 2009, the wife’s solicitors wrote to the father-in-law’s solicitors in an effort, as they put it, of making some constructive progress in relation to her application. Saying that they had taken counsel’s advice, they said they were satisfied that the wife had “every prospect” of having Singer J’s order set aside with costs. They suggested that the father-in-law’s solicitors themselves might “face a certain amount of difficulty given the fact that that you must now accept that you misled Mr Justice Singer as to certain key facts”, an allegation that was then amplified together with the related allegation that the father-in-law’s solicitors had failed to provide Singer J with all the relevant information. Furthermore, it was said, there was no evidence to justify any alleged likelihood of dissipation. All in all, it was said, the father-in-law should agree to withdraw his application for a freezing order. The letter continued:

“However our client is thoroughly weary of the warfare being waged on her by your client and his son. Costs in this case have already been the subject of criticism and our client is anxious to see an end to the constant drain on her scant resources in legal costs.

… Although your client has no entitlement to require an injunction or undertaking, she is prepared to agree the following:-

1 She will irrevocably instruct us to hold the sum of £40,000 on client account and will undertake to give 14 days notice to you in writing of any intention by her to draw upon these funds;
2 This undertaking will continue until the latest of the following events:-

a Agreement between the parties as to the costs liability each bears to the other;
b Determination by a Court as to the costs liability each party bears to the other;
c The final distribution by JO’s Trustee in Bankruptcy of funds available to his creditors, including any payment to be made to our client in relation to his costs liability to her arising under Mr Justice Munby’s order.

3 The freezing order and costs order of 3 July 2009 be set aside.
4 Each party bear their own costs of the respective applications for the freezing order and for its setting aside.”

30. Perhaps unsurprisingly, given all the further costs which by then had been incurred in the disputes between the wife and the father-in-law (I say nothing about any other costs that may have been incurred), this plea fell on stony ground.

31. Both parties’ solicitors had prepared schedules of costs, each dated 21 July 2009. The wife’s schedule showed that she had incurred costs since 6 July 2009 amounting (inclusive of VAT) to £8,177.65. The father-in-law’s schedule shows his costs in relation to the wife’s application as amounting (inclusive of VAT) to £5,117.50. (There is no costs schedule in relation to the hearing before Singer J and I am not invited to make any order in relation to those costs. As Mr Richardson points out, Singer J has already ordered those costs to be assessed if not agreed.) The difference is perhaps explained in part by the fact that the wife’s solicitor had to travel to the hearing on 22 July 2009 from Harrogate, and her counsel from Leeds, whereas both the father-in-law’s solicitor and his counsel had to walk only a matter of yards. In part there is a difference in the solicitor’s charging rates, the wife’s Grade A solicitor charging £265 per hour plus VAT and the father-in-law’s Grade A solicitor who had done most of the work charging £220 per hour plus VAT. (This needs to be put in context: some of the work done on behalf of the father-in-law was undertaken by a Grade A solicitor with a charging rate of £280 per hour plus VAT.)   

32. Mr Halliwell has come into the case at short notice. The case put forward on behalf of the wife, in part in the affidavits sworn by her and by her solicitor (there is nothing of any importance, as it seems to me, in the affidavit from the conveyancing solicitor) and in part in Mr Halliwell’s skeleton argument, can be summarised as follows.

33. First, it is said that there is no evidence of any risk, let alone a real risk, that, absent an injunction, the judgment in the father-in-law’s favour will go unsatisfied owing to the disposal by the wife of her assets. Real risk, says Mr Halliwell, is the essential pre-requisite to the grant of a freezing order: see, for example, Thane Investments Ltd v Tomlinson [2003] EWCA Civ 1272 at paras [21], [26]. In elaboration of this point it is further submitted that:

i) Neither the failure or omission of the wife to provide an undertaking, nor her failure or omission to notify the dates of exchange and completion, constitutes any evidence of an intention on her part to defeat the father-in-law’s claim. It is, says Mr Halliwell, a glaring non-sequitur; there is, he says, no logical connection between the one and the other.

ii) Moreover, at the relevant time the husband was residing with the father-in-law so the father-in-law, according to Mr Halliwell, was obviously aware of the arrangements for the sale of the property – it is, he says, almost inconceivable that the husband would not have kept his own father informed of what was going on.

iii) If the basis for the application to Singer J was indeed, as asserted by the father-in-law’s solicitor in his affidavit in response, “the concern that the [wife] would seek to ‘roll over’ her share of the equity in the former matrimonial home into another property or otherwise deal with it so as to frustrate the [father-in-law’s] ultimate enforcement of the judgment”, the whole application was entirely misconceived unless, Mr Halliwell says, there was reason to believe that the wife intended to purchase property at a gross over-value so as to dissipate the assets against which the father-in-law can enforce judgment. 

iv) Moreover, the wife has gone on oath in her affidavit saying that “I desperately need access to these funds, not because I wish to put them beyond the Court’s reach but because I need to re-house myself and the children.” There is, says Mr Halliwell, no reason to believe that this is false.

v) Finally, it is said that the father-in-law’s application to Singer J has to be seen in the context of the similar application made by the husband to the District Judge only ten days later. The wife, it is said, “is entitled to a legitimate concern that [the two] are acting in concert with a view to applying pressure for purposes that are collateral to the litigation.”

34. Secondly, complaint is made of the fact that the application to Singer J was made without notice. If the justification for this was urgency (as indeed was asserted in the affidavit from which I have already quoted), then, says Mr Halliwell, the evidence and explanation for this was wholly inadequate.

35. Thirdly, it is said that the father-in-law failed to make the full and frank disclosure which is essential in every such application: see, for example, Bank Mellat v Nikpour [1985] FSR 87. In elaboration of this it is said by Mr Halliwell that:

i) Contrary to what Singer J was told, the father-in-law’s costs schedules had not been filed at court, whether for the hearing on 18 November 2008 or otherwise. They were in fact first supplied on 2 June 2009 and, according to the wife’s solicitor, are in any event not in proper form.

ii) The costs on both sides remain unassessed and unquantified, neither party having yet produced a detailed bill of costs such as would be required for the purposes of a detailed assessment. Singer J was told that the net amount of the costs recoverable from the wife was some £56,000, without his attention being drawn either to the figure of £40,000 which I had referred to in my judgment or to the fact that the charging rates being claimed on behalf of the father-in-law greatly exceed the guideline rate of a maximum £203 applicable in Newcastle during the relevant period.

iii) Moreover, it is said that there is “very substantial duplication of work” between the father-in-law’s solicitors and their predecessors and that the wife cannot be required to pay for work which was carried out twice. Furthermore, it is alleged that the predecessor solicitors were negligent, with the consequence that they cannot charge their client. And, it is said, the wife cannot be required to pay for the work which was negligently preformed for otherwise the costs ‘indemnity principle’ would be offended. (In response it is said by the father-in-law’s solicitor that any claim for negligence against his predecessor – and none has been commenced; in fact there has not even been a letter before action – would likely relate primarily to the part of the litigation in relation to which the father-in-law has been ordered to pay the wife’s costs and not to the issues with which I am currently concerned.) 

iv) Singer J was not told that the husband, who was a party to the contract which was one of the foundations of the application, was living with the father-in-law, who must therefore have been well aware of what was going on without needing to be informed by the wife.

36. Finally, it is said that it is wrong in principle for the freezing order to apply to the whole of the wife’s half share of the net proceeds of sale, for so long as the order stands she is in an impossible position, unable to have any recourse at all to her share, whether to pay her debts or her continuing expenses. Inappropriately, it is said, the order made no proper provision for the wife’s daily living expenses and legal fees. Mr Halliwell referred in this context to the observations of Kerr LJ in Z Ltd v A-Z and AA-LL [1982] QB 558 at pages 588-9 and to TDK Tape Distributor (UK) Ltd v Videochoice Ltd [1986] 1 WLR 141 at page 146.

37. Mr Richardson’s response to all this is brief and to the point.

38. He points out that the proposal that £50,000 should be retained from the net proceeds of sale of the former matrimonial home emanated from the wife herself. But, he says, she then prevaricated and ultimately failed to sign the proffered undertaking. In the circumstances it was – and, he says, is – reasonable to construe her prevarication, and specifically (1) her failure to provide a written undertaking so as to formalise the undertaking which she herself proposed, (2) her failure to respond to the father-in-law’s request for information about the dates of exchange and completion, and (3) what he calls her pointed failure to notify him that exchange was due to take place on 3 July 2009, as a clear indication that her intention was and is to dispose of or otherwise deal with her share of the net proceeds so as to defeat his entitlement to costs. The application for a freezing order, he says, was made without notice because of the concern that, if put on notice, the wife would seek to accelerate the date of completion and the receipt of purchase monies with a view to disposing of them.   

39. Despite the clarity of his argument and the care with which it had been prepared and was presented, I cannot accept Mr Halliwell’s submissions. I can set out my reasons fairly shortly.

40. In the first place, I agree with Mr Richardson that the father-in-law was entitled to fear, and Singer J was entitled to infer, that unless the wife was injuncted there was indeed a real risk that she would dispose of her share of the proceeds of sale in such a way as to thwart or frustrate the judgment in favour of the father-in-law. In their letter of 9 June 2009 the father-in-law’s solicitors clearly hinted that, failing satisfaction, they might have to apply to the court; in their letter of 22 June 2009 they said that absent a satisfactory response “we shall proceed upon the basis your client is unwilling to provide the undertaking that is being sought and invite the Court to conclude that the reason she so refuses is that she intends to defeat any attempt to enforce the judgement”, adding that the failure of the wife’s solicitors thus far to respond adequately “leaves our client at risk and leaves us with little option” – which in context could mean only ‘little option but to go to court’; in their letter of 29 June 2009, faced with the fact that, for whatever reason, the undertaking seemingly proffered in the letter of 23 June 2009 had not been produced, they spelt matters out very clearly: “If we do not have a response, then we can only but assume that your client intends to dispose of or otherwise deal with the net proceeds of sale”. And what was the response? Silence. And, moreover, a silence made all the more worrying because the perfectly reasonable requests for information in their letters of 2 and 9 June 2009 had likewise been met with silence. Is it really surprising that in those circumstances the father-in-law’s solicitors feared – and reasonably feared – the worst? Hardly. And is it to be wondered at that Singer J granted the order? Certainly not.

41. And matters, of course, do not stop there. If the father-in-law’s solicitors were simply barking up the wrong tree, then why on earth did the wife’s solicitors not immediately respond on 29 June 2009 – the letter after all was sent to them by fax – with a telephone call or a faxed letter saying ‘you have got the wrong end of the stick, there is no need to worry, the undertaking is on its way’? And why, more particularly, when they received notice of the injunction did they not immediately contact the father-in-law’s solicitors saying ‘this is all getting out of hand, whatever you may have thought there is nothing to worry about, here are our proposals for sorting it out’? But again, there was merely silence, a silence broken only when on 10 July 2009 the wife applied to have Singer J’s order set aside – not on the basis that the father-in-law’s judgment would be protected in some appropriate way but simply set aside.

42. Not until 21 July 2009, with a hearing listed before me the following day, was any attempt made by the wife’s solicitors to put forward proposals to resolve the matter. And even then, not merely were the proposals put forward far too late; they did not adequately address the father-in-law’s reasonable requirements (see below).

43. In my judgment, given the wife’s stance both before the application was made to Singer J and, indeed, in the letter of 21 July 2009, Singer J was perfectly justified in making the order he did and no proper grounds have even now been put before me for concluding that the order should not continue.

44. The speculations – and that is all they are – that the father-in-law had been told by his son what was going on, is neither here nor there, given what, in my judgement, was the pointed and repeated failure of the wife’s solicitors to supply the requested information. The suggestion that the father-in-law and his son were coordinating their litigation strategies in order to put pressure on the wife is simply devoid of any evidential foundation. And the suggestion that if the monies are ‘rolled over’ into the purchase of a new house the father-in-law will have no cause to complain, because the monies will not have dissipated, seems to me more attractive in theory than realistic in practice. Is it really to be said that the father-in-law should be put in a position where the only way he can enforce his judgment is by obtaining and enforcing, by order for possession and sale, a charging order on the house in which his grandchildren are living? Surely not.

45. I see no merit in the complaint that the application to Singer J was made without notice. Time was pressing and on the basis of what they knew, not least when assessed in the light of what they knew they had not been told – an example of Secretary Rumsfeld’s famous ‘known unknowns’ – the father-in-law’s solicitors were entitled to fear that unless they moved swiftly the horse might have bolted before the stable door could be shut. And in any event, the point, even if otherwise good, cannot avail the wife given that I have in any event decided that there are no other grounds for discharging Singer J’s order and that it should in fact continue.

46. As to the alleged non-disclosures, the key point is that although the figure of £50,000 had first been mentioned by the father-in-law’s solicitors in their letter of 2 June 2009 (in the context, it may be noted, of the disposal not of the proceeds of sale of the former matrimonial home but of the balance of the joint account), it was the wife’s solicitors in their letter of 23 June 2009 who first proffered an undertaking to hold £50,000 of the proceeds of sale. And they never resiled from that figure. So how can it be said that Singer J was misled? Suppose he had been told, or had spotted, that I had referred in my judgment to the lower figure of £40,000, what then? The simple answer, to which it is impossible to see any effective rejoinder, would have been ‘well that may be what Munby J thought last November, but their letter of 23 June 2009 is what matters now, and it shows the wife and her solicitors treating the relevant figure as being £50,000’. That disposes, in my judgment, of most of the wife’s complaints. The others seem to me to be neither here nor there. I reject the contention that there was any material non-disclosure before Singer J.

47. And in any event, whatever may have been the case when Singer J was dealing with the case on 3 July 2009, there is no suggestion that I do not now have the full picture – a picture which satisfies me that the father-in-law was and is entitled to the injunction. So how does any non-disclosure there may have been before Singer J affect matters? Mr Halliwell very properly accepted that the non-disclosure of which he complained was not so egregious as to justify refusing the father-in-law continuing relief if I was otherwise persuaded – as I am – that he is entitled to it.            

48. The final complaint, about the form of the order, seems to me to be lacking in substance given the fact that the order itself provides for it to cease to have effect if the wife provides security in the sum of £50,000 either by paying that sum into court or by another method agreed with the father-in-law’s legal representatives. So the wife could immediately escape from its toils by securing the agreed sum of £50,000. The consequences of which Mr Halliwell complains are, in truth, nothing more the consequences of the wife’s failure to take the appropriate steps indicated by the order itself.

49. Accordingly, the wife’s application fails and must be dismissed. The injunction granted by Singer J will remain in force. The block in relation to that part of the proceeds of sale in excess of the sum of £50,000 will, of course, fall away as soon as the wife agrees some suitable form of security as contemplated by Singer J’s order.

50. The obvious solution – and, to speak plainly, the solution which should have been obvious from the moment that Singer J’s order was received by the wife’s solicitors, though even as late as when they were writing their letter of 21 July 2009 it seems to have eluded them and their client – is for the wife to agree that the sum of £50,000 be paid into a joint account in the names of her solicitors and the father-in-law’s solicitors, or alternatively be retained by her solicitors in their client account on a suitable professional undertaking, in either case to abide the determination (whether by agreement between the parties or order of the court) as to the net amount of the costs payable by the wife to the father-in-law.

51. I should add that this is a matter which, as between the wife and the father-in-law, concerns only them. It has nothing whatever to do with the husband, albeit that the wife, subject to his bankruptcy, may have a claim over as against him. But, as between her and the father-in-law, it is the wife who, in accordance with the terms of my order, has to bear the consequences of the husband’s insolvency. Her liability to the father-in-law is not capped in the amount (if any) which she recovers from the husband’s trustees in bankruptcy. And, contrary to what seems to be suggested by the terms of the proposed agreement set out by her solicitors in their letter of 21 June 2009, there is no reason at all why any security she provides in substitution for the injunction granted by Singer J should cease upon a future event – the final distribution by the trustees in bankruptcy of what may be a sum which is inadequate to meet the wife’s liability to the father-in-law – which so far as concerns her liability to him is completely irrelevant.

52. In order to avoid yet further costs, the question of the costs since Singer J made his order was argued out before me at the end of the hearing, even though I had not at that stage announced my decision.

53. In my judgment this is quite plainly a case where costs should follow the event, with the consequence that the wife must pay the father-in-law’s costs of (successfully) resisting her application, including his costs of the hearing before me on 22 July 2009. Mr Halliwell agreed that I should summarily assess the costs, and I proceed to do so.

54. As I have said, the father-in-law’s costs are said to amount to £5,117.50. Not least because, as I have mentioned, the wife’s costs appear to be higher and, more significantly, because the hourly charging rate of the father-in-law’s solicitor is somewhat less than that of the wife’s solicitor, Mr Halliwell, being entirely realistic, was in some difficulties mounting any very significant challenge to the quantum of the father-in-law’s claim. He confined his attack to two items. First, he suggested that it had not been necessary for the father-in-law’s solicitor to spend 1 hour and 48 minutes considering the wife’s application and the affidavit in support – with the consequence, he said, that the sum of £504 (charged at £280 per hour) should be reduced accordingly. Secondly, he queried whether it was necessary for the father-in-law’s solicitor to charge for 2 hours ‘waiting and conference’ at court on 22 July 2009 in addition to the hearing itself – with the consequence, he said, that the sum of £440 (charged at £220 per hour) should be reduced accordingly.

55. Without necessarily accepting that there is any real substance in either of these objections, I propose to assess the costs summarily in the figure of £5,000 (inclusive of VAT).