Legal Services Payment Orders and
Maintenance Pending Suit
1.
Section 22 ZA Matrimonial Causes Act 1973 – Legal Services Payment
Orders (or how to get paid)
1.1 The Legal Aid, Sentencing and Punishment of Offenders Act 2012 added
sections 22 ZA and ZB into the Matrimonial Causes Act 1973 from 1 April 2013.
This coincided with the withdrawal of public funding for most private family
proceedings.
Clearly, these new provisions in no way compensate for the
removal of legal aid, but they can provide an answer to the funding problem in
some cases.
1.2 The new provisions abolish the old maintenance pending suit “costs allowance”
(see A v A [2001] 1 FLR 377) and create a new regime for the payment of
funds “to obtain legal services for the purpose of the proceedings”. At first
glance, it might be thought that not much has changed, but there are some
subtle changes in the new provisions and already there are some reported
cases providing guidance on them.
2.
The “Old” Regime
2.1 The leading authorities were
A-v-A (above) and Currey-v-Currey (No. 2)
[2006] EWCA Civ 1338 [2007] 1 FLR 946. In Currey, Wilson LJ (as he then
was) confirmed that provision for legal costs as part of maintenance pending
suit was not the same as a costs order. He set out the main questions to be
considered when deciding whether an applicant should obtain a costs
allowance:
1 • The initial, overarching inquiry is into whether the applicant could
demonstrate that he or she could not reasonably procure legal advice by
any other means.
• To the extent that the applicant had assets, it had to be shown that they
could not reasonably be deployed, whether directly or as the means of
raising a loan, in funding legal services. (In C-v-C (Maintenance Pending
Suit: Legal Costs) [2006] 2 FLR 1207, Hedley J decided that it was not
reasonable to require a wife to mortgage her share of the former matrimonial
home)
• The applicant also had to demonstrate that he or she could not reasonably
procure legal services by the provision by her solicitor of a charge upon
ultimate capital recovery (a Sears Tooth agreement)
• And that there was no public funding available which would furnish the
applicant with advice and representation at a level of expertise apt to the
proceedings (see para 20).
• (One could add a further requirement not mentioned by Wilson LJ at this
stage of the judgment which is that the Applicant cannot secure a litigation
funding loan).
2.2 Although lack of alternative funding for legal proceedings was a necessary
condition of making an allowance, it would not always be sufficient on its own.
The suggested implication in the judgment of Nicholas Mostyn QC in TL-v-ML
[2005] EWHC 2860 (Fam) [2006] 1 FLR 1263 that if the conditions were met,
an order for a costs allowance should follow, would be wrong. The subjectmatter of the proceedings would always be relevant, as would the
reasonableness of the applicant’s stance in the proceedings. Other features
might also be relevant such as the fact (in Currey) that H owed W £46,000 in
costs (see para 21), but in spite of that fact H still succeeded in securing a
costs allowance.
2.3 An applicant was required to provide a budget with the costs being set out in
detail. The court also had to be satisfied that the respondent could afford to
meet the order for her legal costs, taking into account his need to fund his own
costs.
2 3.
The new regime - sections 22 ZA and ZB
3.1 A costs order may no longer be made as part of an order for maintenance
pending suit by virtue of s.22 (2) MCA 1973 which provides;
“An order under this section may not require a party to a marriage to pay to the
other party any amount in respect of legal services for the purposes of the
proceedings.”
3.2 The new power enabling a legal services funding order to be made is section
22 ZA, which provides;
(1) In proceedings for divorce, nullity of marriage or judicial separation,
the court may make an order or orders requiring one party to the
marriage to pay to the other (“the applicant”) an amount for the
purpose of enabling the applicant to obtain legal services for the
purposes of the proceedings.
(2) The court may also make such an order or orders in proceedings
under this Part for financial relief in connection with proceedings for
divorce, nullity of marriage or judicial separation.
(3) The court must not make an order under this section unless it is
satisfied that, without the amount, the applicant would not reasonably
be able to obtain appropriate legal services for the purposes of the
proceedings or any part of the proceedings.
(4) For the purposes of subsection (3), the court must be satisfied, in
particular, that –
(a) the applicant is not reasonably able to secure a loan to pay
for the services, and
(b) the applicant is unlikely to be able to obtain the services by
granting a charge over any assets recovered in the
proceedings.
(5)
An order under this section may be made for the purpose of
enabling the applicant to obtain legal services of a specified
3 description, including legal services provided in a specified period or
for the purposes of a specified part of the proceedings.
(6)
An order under this section may –
(a) provide for the payment of all or part of the amount by
instalments of specified amounts, and
(b) require the instalments to be secured to the satisfaction of
the court.
(7)
An order under this section may direct that payment of all or part
of the amount is to be deferred.
(8)
The court may at any time in the proceedings vary an order
made under this section if it considers that there has been a material
change of circumstances since the order was made.
(9)
For the purposes of the assessment of costs in the proceedings,
the applicant's costs are to be treated as reduced by any amount paid
to the applicant pursuant to an order under this section for the
purposes of those proceedings.
(10) In this section “legal services”, in relation to proceedings, means the
following types of services –
(a) providing advice as to how the law applies in the particular
circumstances,
(b) providing
advice
and
assistance
in
relation
to
the
proceedings,
(c) providing other advice and assistance in relation to the
settlement or other resolution of the dispute that is the
subject of the proceedings, and
(d) providing
advice
and
assistance
in
relation
to
the
enforcement of decisions in the proceedings or as part of the
settlement or resolution of the dispute,
and they include, in particular, advice and assistance in the form of
representation and any form of dispute resolution, including mediation.
(11) In subsections (5) and (6) “specified” means specified in the order
concerned.]
4 3.3 Some points to note;
•
The power may be used to make an order to fund legal services for “the
proceedings”, so it is not available to fund other proceedings, such as
parallel proceedings under the Children Act. In that case, it is suggested
that Schedule 1 of the 1989 Act should be used, and the jurisprudence
relating to those provisions continues to apply.
•
The test under subsection (3), that the applicant otherwise “would not
reasonably be able to obtain appropriate legal services” is familiar from the
authorities under the old regime, as are the requirements in sub-section (4)
that the applicant should satisfy the court that a loan or a Sears Tooth
agreement (see Sears Tooth (a Firm)-v-Payne Hicks Beach (a Firm) and
others [1997] 2 FLR 116) cannot be obtained.
•
The court has the ability under sub-section (5) to specify the nature of the
services to be funded, or the duration enables the court to exercise casemanagement powers through an order of this nature. As well as limiting
orders in the first place up to the FDR, a judge may also require the funds
to be used, for example, solely to meet the costs of solicitors, counsel and
a court appointed expert, but not a shadow expert. Or other apparently
excessive or speculative inquiries may be excluded.
•
Under the old regime, the costs allowance had to be framed as an order for
maintenance pending suit, but now the court may also make what amounts
to a single lump sum order for costs, a series of lump sums or a monthly
instalment arrangement. And the liability can be secured. But an order for
a single payment is not an interim lump sum, and the applicant is still able
to secure an order under s.23 (1) (c) MCA 1973 at the final hearing.
•
If the applicant later obtains a costs order, then her costs will be reduced by
an amount paid to her under a s 22 ZA order (subsection (9)).
•
The order is to provide “Legal services” for the purposes of the
proceedings, as defined in sub-section (10) and specific reference is made
in (10)(d) to it covering any form of dispute resolution, including mediation.
However, if it is necessary to go to court for an order to fund mediation or
5 some other form of dispute resolution, it is doubted whether ADR will
succeed.
•
There is an amendment to s.24A MCA 1973 enabling the court to make an
order for sale of such property as may be specified in the order.
4.
The Matters to which the Court must have regard – section 22 ZB
4.1 When considering whether to make or vary an order under section 22ZA, the
court must have regard to –
(a) the income, earning capacity, property and other financial resources
which each of the applicant and the paying party has or is likely to
have in the foreseeable future,
(b) the financial needs, obligations and responsibilities which each of the
applicant and the paying party has or is likely to have in the
foreseeable future,
(c) the subject matter of the proceedings, including the matters in issue
in them,
(d) whether the paying party is legally represented in the proceedings,
(e) any steps taken by the applicant to avoid all or part of the
proceedings, whether by proposing or considering mediation or
otherwise,
(f) the applicant's conduct in relation to the proceedings,
(g) any amount owed by the applicant to the paying party in respect of
costs in the proceedings or other proceedings to which both the
applicant and the paying party are or were party, and
(h) the effect of the order or variation on the paying party.
4.2 These criteria are generally familiar, either from section 25 or from the
authorities such as A-v-A and Currey. But again, some matters to note;
•
Subsection (d) clearly has the issue of equality of arms in mind. But will
respondents dispense with their representation once they have warning of
a s.22 ZA application?
6 No doubt many respondents will argue that the applicant should be denied
•
relief under s.22 ZA because they refused to engage in mediation, but it is
doubted that judges will be swayed by that argument.
Overall the factors require the court to carry out a balancing exercise taking
•
into account all of the factors numbered (a) to (h) to determine the principle
test of whether “without the amount, the applicant would not reasonably be
able to obtain appropriate legal services”, and that making the order would
not cause undue hardship to the respondent or prevent him from obtaining
legal services.
5.
Judicial Guidance – Mostyn J in Rubin-v-Rubin [2014] EWHC 611 (Fam)
5.1 At paragraph [13] of his judgment, Mostyn J set out a summary of the
applicable principles both substantive and procedural. These are: i)
s22 ZB (1) – (3) guides the court in determining the merits.
ii)
The judge referred to his earlier decision in TL-v-ML (paragraphs 124 (iv)
and (v)), and the respondent’s ability to pay should also involve
• robust assumptions where his evidence is obviously deficient and
• where there has been historical support from an outsider which the
respondent says will end, but the position is ambiguous or unclear,
the court will be justified in assuming it’s continuation.
iii)
The court should exercise caution over doubtful claims for substantive
relief, and the more doubtful it is, the more cautious the court should be.
iv)
The exercise looks to the future. The power must not be used to supplant
or outflank the principles governing an award of costs in CPR Pt 44. It is
not a surrogate inter-partes costs jurisdiction. Past costs should only be
awarded if non-payment means that future legal services could not be
obtained as a result.
v)
A court would be unlikely to expect an applicant to sell or charge her
home or deplete a modest fund of savings. But if a home is likely to be
sold at the end of the proceedings, it may be reasonable for the applicant
to charge her interest.
vi)
Evidence of the refusal of a litigation loan by two commercial lenders will
normally dispose of the s.22 ZA (4) (a) issue.
7 vii)
A statement of the refusal by the applicant’s solicitors of a Sears Tooth
agreement will normally answer s.22 ZA (4) (b).
viii)
If the interest on litigation loan is at a very high rate, it may not be
reasonable unless the respondent gave an undertaking to meet it.
ix)
The applicant should normally give an undertaking to repay the sum
ordered if the court later considered such repayment just. The court would
think twice about making an order if such undertaking is refused.
x)
The court should make it clear in the judgment which legal services the
payment is for but it is unnecessary to spell this out in the order.
xi)
Generally speaking the court should not fund the applicant beyond the
FDR, but should fix a date shortly after the FDR for further funding. At that
stage, the issues will be more clearly defined to enable the court to
assess the true costs.
xii)
Monthly instalments are preferable to a lump sum since that probably
mirrors what the applicant would do if paying her lawyers, and also what
the respondent will be doing, and makes the payments more readily
susceptible to variation.
xiii)
If an order is made to include the anticipated costs of that very application,
then an order for the costs of the application will not bite save to the
extent of any surplus.
xiv)
The Part 18 FPR 2010 procedure should be used. 14 days’ notice must
be given and the application must be supported by written evidence
addressing the matters mentioned in s 22 ZB (1)-(3) and including
detailed estimates of the costs both incurred and to be incurred. If the 14
day notice is to be abridged, the evidence must explain why it is fair and
just to do so.
5.2 Mostyn J noted at paragraphs [14 & 15] that, curiously, the jurisdiction did not
apply to proceedings under Schedule I of the Children Act 1989 or the
Inheritance Act 1975, and therefore an applicant would still have to apply for an
interim order (see M-T v T [2007] 2 FLR 925, G-v-G (Child Maintenance:
Interim Costs Provision) [2009] EWHC 2080 (Fam), [2010] 2 FLR 1264
and CF-v-KM [2011] 1 FLR 208), and that the principles in Currey will continue
8 to apply.
However the principles he set out at paragraph [13] should also
apply, with necessary modifications, particularly to (x) and (xii).
Note in
Schedule 1 claims that the most frequent method of securing a costs allowance
is by way of a lump sum, or series of lump sums, since it will frequently be
impossible to obtain a periodical payments order because the Child
Maintenance Service alone will have jurisdiction. It is possible to make more
than one lump sum order in Schedule 1 cases.
5.3 AM-v-SS [2013] EWHC 4380, Moylan J
Moylan J heard an application for an order for a legal services order in complex
litigation where there were substantial issues over whether a number of
properties were owned by H, and the level of financial support he received from
his father, but he contended that there were no resources against which the
order could bite. H’s costs were being met by his father.
However the judge was concerned about the potentially disproportionate
manner in which the case was being litigated, but the strongest factor was the
obligation, so far as practicable, to ensure that the parties were on an equal
footing in this complex case (para [35]).
The judge concluded that the only asset against which he could safely make an
order was the equity of at least £200,000 in the Maida Vale property (para [36]),
and he made an order that the wife should have a charge over the property
limited to £150,000, broken down as to £50,000 for costs already incurred and
£100,000 for future costs, together with an order that H should not increase the
amount owed on the existing mortgage (para [39]).
6.
MAINTENANCE PENDING SUIT
6.1 The Statutory Power;
(1)
On a petition for divorce, nullity of marriage or judicial separation, the
court may make an order for maintenance pending suit, that is to say, an
9 order requiring either party to the marriage to make to the other such
periodical payments for his or her maintenance and for such term, being a
term beginning not earlier than the date of the presentation of the petition
and ending with the date of the determination of the suit, as the court thinks
reasonable.
6.2 Points to Note;
•
Payments may be backdated to the date of the petition.
•
The procedure is governed by Part 9.7 FPR 2010. The Part 18 procedure
is required and, unless a Form E has been filed, written evidence must be
supplied setting out why an order is necessary, and giving details of that
party’s circumstances. For practical reasons, a party may choose to file a
statement dealing specifically with the MPS issues in addition to Form E.
•
The respondent to the application must file a statement of means unless he
or she has filed Form E.
•
Generally the court will determine the application on the written material,
supplemented by oral submissions. Oral evidence is very rarely heard.
Therefore no facts will be found, although judges are entitled to be
appropriately sceptical where inadequate evidence has been supplied.
•
While the section 25 factors are stated in that section to apply to the
exercise of the court’s powers under ss 23, 24, 24A, 24B and 24E, but not
s.22, in practice the courts do have regard to those factors in determining
what is “reasonable”.
•
Judges often refer to the power existing in order to provide emergency first
aid to the family budget.
•
The order for MPS does not set a precedent for the final hearing when the
court should have much fuller material in order to determine the appropriate
level of maintenance.
Accordingly, where an order for MPS has either
over-provided or under-provided for the applicant, the court at a final
hearing is able to redress the balance (see F-v-F (Ancillary Relief:
Substantial Assets [1995] 2 FLR 45).
•
Where there is a challenge over jurisdiction, a court still has power to make
an order for maintenance pending suit (Moses-Taiga-v-Taiga [2005]
10 EWCA Civ 1013, [2006] 1 FLR 1074), but in such cases the court should
act cautiously (see MET-v-HAT [2013] EWHC 4247 (Fam)). In MET-vHAT, Mostyn J observed that H had a strong case to say that W had no
right to make her claim under Part III MFPA 1984 as there were real doubts
over the foreign “divorce” which founded her claim. But, if an MPS order is
made and the suit is later dismissed for want of jurisdiction, the sums paid
are irrecoverable as of right and arrears can still be enforced (see Moore-vMoore [2009] EWCA Civ 1427, [2010] 1 FLR 1413, subject to doubts
expressed by Charles J in M-T-v-T (Marriage: Strike Out) [2013] EWHC
2061 (Fam) [2014] 1 FLR 1352 to the effect that there could be recovery
by a fresh action that the original order was obtained by fraud).
6.2 Judicial Guidance – TL-v-ML and others (Ancillary Relief: Claim against
Assets of Extended Family) [2006] 1 FLR 1263
Nicholas Mostyn QC sitting as a deputy High Court judge (as he then was)
heard an appeal against an order for maintenance pending suit at the same
time as the final hearing of the claim. The following principles derived from the
cases of F-v-F (Ancillary Relief: Substantial Assets) [1995] 2 FLR 45, G-vG (Maintenance Pending Suit: Costs) [2002] EWHC 306 (Fam), [2003] 2
FLR
71 and M-v-M
(Maintenance
Pending
Suit) [2002]
EWHC
317
(Fam), [2002] 2 FLR 123 are set out in the judgment at paragraph [124];
“(i) The sole criterion to be applied in determining the application is
‘reasonableness’ (s. 22 of the Matrimonial Causes Act 1973), which, to
my mind, is synonymous with ‘fairness’.
(ii) A very important factor in determining fairness is the marital standard of
living (F v F). This is not to say that the exercise is merely to replicate
that standard (M v M).
(iii) In every maintenance pending suit application there should be a specific
maintenance pending suit budget which excludes capital or long-term
expenditure, more aptly to be considered on a final hearing (F v F). That
budget should be examined critically in every case to exclude forensic
exaggeration (F v F).
11 (iv) Where the affidavit or Form E disclosure by the payer is obviously
deficient, the court should not hesitate to make robust assumptions
about his ability to pay. The court is not confined to the mere say-so of
the payer as to the extent of his income or resources (G v G, M v M). In
such a situation, the court should err in favour of the payee.
(v) Where the paying party has historically been supported through the
bounty of an outsider, and where the payer is asserting that the bounty
had been curtailed, but where the position of the outsider is ambiguous
or unclear, then the court is justified in assuming that the third party will
continue to supply the bounty, at least until final trial (M v M).”
6.3 For any case involving a nuptial agreement, see BN-v-MA (Maintenance
Pending Suit: Prenuptial Agreement) [2013] EWHC 4250 (Fam). Mostyn J
heard a case where the parties had signed a pre-nuptial agreement in May
2012, one month before the marriage.
It included provision, inter alia, for
maintenance at £96,000 pa plus £24,000 per child in the event of termination of
the marriage within 2 years. The judge made his award in the sum specified in
the agreement, and said at [33];
“In my judgment, when adjudicating a question of interim maintenance,
where there has been a prenuptial agreement, the court should seek to
apply the terms of the prenuptial agreement as closely and as practically as
it can, unless the evidence of the wife in support of her application
demonstrates, to a convincing standard, that she has a likely prospect of
satisfying the court that this agreement should not be upheld.”
7.
Costs
7.1 Note that both applications for maintenance pending suit and for a legal
services order are excluded from the “no order as to costs” principle as this is
not included with the definition of financial remedy proceedings (see FPR 2010,
Part 28.3 (4)). Accordingly a party can still protect their position by making a
“Calderbank” offer, and an applicant will usually wish to secure an order for
costs at the conclusion of the hearing so statements of costs for summary
assessment should be filed and served at least a day before the hearing.
12 Anne Smallwood
No5 Chambers
+ 44 (0) 845 210 5555
[email protected]
13