Rubin v Rubin [2014] EWHC 611 (Fam) – the key principles applicable to an application for a Legal Services Provision Order
With effect from 1 April 2013, two important sections were inserted into the Matrimonial Causes Act 2013 under The Legal Aid, Sentencing and Punishment of Offenders Act 2012 (Commencement No.7) Order 2013. The main purpose of the provisions is to introduce a new statutory regime which enables the financially weaker party to a marriage to obtain funding from the financially stronger party in order to obtain legal services for the purpose of the proceedings.
The principle of ‘costs allowance’ has long developed through case law in the context of applications for maintenance pending suit. The overarching test, as defined by the decision of Currey v Currey [2007] 1 FLR 946, was whether the applicant could demonstrate that he or she could not reasonably procure legal advice and representation by any other means. The new section 22ZA(3) now imports that test from Currey into legislation, providing as follows:
“The court must not make an order under this section unless it is satisfied that, without that amount, the applicant would not reasonably be able to obtain appropriate legal services for the purposes of the proceedings or part of the proceedings.”
Together with section 22ZB, which sets out the matters the court must consider in deciding how to exercise its power under section 22ZA, the new statutory costs provisions seek to provide greater clarity for those applying for legal services provision orders (‘LSPO’s). However, until recently, it remained to be seen whether the principles previously outlined in case law would also continue to be applicable.
In the case of Rubin v Rubin, heard in the High Court of Justice Family Division on 5 March 2014, Mostyn J identified that since their implementation there had been only three decisions referring to these new provisions, none of which had attempted any kind of deep analysis thereof. His Lordship therefore helpfully set out in detail the principles, both substantive and procedural, that are applicable to an application for a LSPO, summarised as follows:
i) The court is required to have regard to all the matters mentioned in s22ZB(1) – (3). Of particular note is s22ZB(2), which provides that when considering the “earning capacity”, of either the applicant or the paying party, account must be taken of any increase in earning capacity which, in the opinion of the court, it would be reasonable to expect the applicant or the paying party to take steps to acquire.
ii) The ability of the respondent to pay should be judged by reference to the principles summarised in TL v ML [2005] EWHC 2860 (Fam) [2006] 1 FCR 465 [2006] 1 FLR 1263 at para 124 where it was stated that an obviously deficient Form E/affidavit from the payer could allow the court to make robust assumptions about that party’s ability to pay.
iii) Where the claim for substantive relief appears doubtful, the court should judge the application with caution.
iv) The exercise of applying the test under section 22ZA(3) above essentially looks to the future. Mostyn J emphasised that “it is important that the jurisdiction is not used to outflank or supplant the powers and principles governing an award of costs in CPR Part 44. It is not a surrogate inter partes costs jurisdiction.” Thus a LSPO should only be awarded to cover historic unpaid costs where the court is satisfied that without such a payment the applicant will not reasonably be able to obtain in the future appropriate legal services for the proceedings.
v) Although highly fact-specific, in determining whether the applicant can reasonably obtain funding from another source the court would be unlikely to expect him/her to sell or charge his/her home (unless it appears likely that it will be sold at the conclusion of the proceedings, in which case it may well be reasonable).
vi) Evidence of refusals by two commercial lenders of repute will normally dispose of any issue as to whether a litigation loan is or is not available and, in determining whether a Sears Tooth arrangement can be entered into, a statement of refusal by the applicant’s solicitors should normally answer the question.
vii) The applicant would not typically be required to take a litigation loan offered at a very high rate of interest, unless the respondent offered an undertaking to meet that interest.
viii) The applicant would normally be required to give an undertaking to the court to repay any amount granted under a LSPO that the court subsequently decided ought to be repaid when considering costs at the conclusion of the proceedings.
ix) The court should not order a sum for the whole financial proceedings, but should instead grant a hearing date shortly after a failed FDR if further funding is to be required. At this stage, the court will be better placed to assess accurately the true costs of taking the matter to trial as the issues to be tried will be more clearly defined.
x) When ordering costs funding for a specified period, monthly instalments are to be preferred to a single lump sum payment as this more accurately reflects what would happen if the applicant were paying his/her lawyers from his/her own resources, and ensures the parties are on an equal footing both in the conduct of the case and in any dialogue about settlement.
xi) A LSPO is designated as an interim order and is to be made under the Part 18 procedure, i.e. 14 days’ notice must be given and the application must be supported by written evidence. That evidence must include a detailed estimate of the costs both incurred and to be incurred.
The wife’s case in Rubin ultimately failed under principle (iv) above, as the wife was seeking to recover costs which had already been incurred, in circumstances where there would be no further substantive litigation in the UK. Mostyn J remarked further that allowing her application would represent “a very dangerous subversion of the exclusivity” of the standard costs powers and principles applicable to proceedings under Part 44 of the Civil Procedure Rules.
If you would like to read the full judgment, go to http://www.bailii.org/ew/cases/EWHC/Fam/2014/611.html.
If you have any queries about this article please contact jonesnickolds on 0203 405 2300 or contact@jonesnickolds.co.uk