BC v DE

Factual and Procedural Background

By application dated 1 July 2015, the Plaintiff (the mother) sought financial provision orders from the Defendant (the father) under Schedule 1 of the Children Act 1989 concerning their child, who was soon to be 8 years old. The Plaintiff also applied for lump sums to cover outstanding and prospective legal costs incurred in proceedings related to the child under Schedule 1 and section 8 of the 1989 Act. The Defendant cross-applied for an order to make an agreement reached between the parties in 2009 regarding financial provision an order of the court. The substantive issues were scheduled for trial in February 2017.

The immediate issue was whether the Defendant should be ordered to fund the Plaintiff's legal costs, specifically for outstanding costs amounting to £141,269.18 and prospective costs claimed at £154,245. The Defendant opposed the outstanding costs in principle but offered a global contribution of £163,000 for the Plaintiff to allocate between outstanding and prospective costs.

The parties had a prior relationship beginning in 2006, with the child born in 2008. The Defendant is extraordinarily wealthy, while the Plaintiff has no financial resources. The parties had entered into a comprehensive financial provision agreement in 2008-2009, covering housing, income needs, education, and childcare for the child. Despite this, the Defendant had provided significantly more financial support until 2014, when relations soured and financial support was reduced to the agreed level. The Plaintiff then made the Schedule 1 application. Parallel proceedings concerning child arrangements under section 8 of the 1989 Act were ongoing.

The Schedule 1 and ancillary applications were transferred to the Family Court in August 2015, with initial hearings addressing legal costs funding. Roberts J made interim orders in the Plaintiff's favour for a portion of outstanding and prospective costs, emphasizing the need for the Plaintiff to obtain appropriate legal services. Subsequent hearings considered further interim relief and adjustments to the legal costs funding awards. The case involved detailed consideration of precedent and principles relating to legal costs funding orders, particularly distinguishing between historic and ongoing legal costs.

Legal Issues Presented

1. Whether the Defendant should be ordered to fund the Plaintiff's outstanding legal costs incurred up to the date of the application.
2. Whether the Defendant should be ordered to fund the Plaintiff's prospective legal costs up to the final hearing.
3. The proper application of legal principles concerning legal costs funding orders, especially the distinction between historic (outstanding) and prospective costs in ongoing proceedings.
4. The extent to which the court should ensure equality of arms between the parties in family proceedings involving substantial financial disparity.

Arguments of the Parties

Appellant's Arguments (Plaintiff)

• The Plaintiff contended that the legal costs funding order should cover both outstanding and prospective costs incurred in ongoing proceedings.
• It was argued that the principle in Rubin v Rubin concerning irrecoverability of historic costs should not apply rigidly where costs are incurred in ongoing proceedings.
• The Plaintiff emphasized the prejudice caused by requiring solicitors to provide unsecured credit and the impact of outstanding costs on the solicitor-client relationship and litigation strategy.
• The Plaintiff submitted that it is not reasonable to expect solicitors to continue acting without payment, and that the court should ensure a level playing field reflecting the Defendant's substantial means.

Respondent's Arguments (Defendant)

• The Defendant relied on the authority of Rubin v Rubin, arguing that legal costs funding orders are not intended to cover historic unpaid costs but only prospective costs.
• He maintained that the jurisdiction to award legal costs funding is narrow and intended to ensure equality of arms, not to act as a commercial safety valve for solicitors' credit risks.
• The Defendant submitted that outstanding costs should be treated as debts to be considered in substantive financial provision awards rather than through legal costs funding orders.
• The Defendant challenged the reasonableness of some claimed prospective costs, particularly the use of two counsel.

Table of Precedents Cited

Court's Reasoning and Analysis

The court focused on ensuring equality of arms between the parties in ongoing family proceedings involving significant disparity in financial means. It acknowledged the Defendant's wealth and the Plaintiff's lack of resources, emphasizing the need for the Plaintiff to have appropriate legal representation without undue financial pressure.

The court analyzed the distinction drawn in Rubin v Rubin between historic and prospective costs, concluding that Rubin concerned concluded proceedings and was not directly applicable to ongoing litigation where costs are being reasonably and legitimately incurred prior to determination. The court found persuasive earlier authorities permitting legal costs funding orders to include outstanding costs in ongoing proceedings.

It rejected the rigid application of the principle that historic costs cannot be funded, recognizing the practical difficulties for solicitors continuing to act without payment and the potential prejudice to the client if solicitors "down tools." The court emphasized that legal service providers are not charities and should not be expected to provide unsecured, interest-free credit.

The court applied a judicious balance of caution and realism, discounting the claimed costs by 15% to reflect a standard basis of assessment and ensuring that costs were reasonable, proportionate, and necessary. It accepted that the Plaintiff's legal costs were broadly comparable to those of the Defendant and that the Plaintiff could not reasonably obtain funding elsewhere.

The court made a detailed assessment of the various heads of claimed costs, including section 8 proceedings, Schedule 1 work, and prospective costs, allowing a global award to cover past and future legal bills payable in installments.

Holding and Implications

The court GRANTED the Plaintiff's application for legal costs funding, awarding a total sum of £212,438.78 to cover both outstanding and prospective legal costs related to the ongoing family proceedings.

This award was made to ensure the Plaintiff's equality of arms and access to justice in the litigation, acknowledging the Defendant's substantial means and the Plaintiff's inability to fund her legal costs independently. The decision clarifies that legal costs funding orders in ongoing proceedings may include outstanding costs reasonably incurred before the order, distinguishing such cases from those involving concluded litigation as in Rubin v Rubin.

No new legal precedent was established beyond the application of existing principles to the facts; the ruling primarily affects the parties by securing funding for the Plaintiff's legal representation through to the final hearing.