TY v XA (No 3) [2025] EWFC 350

[2025] EWFC 350Case No ZC23F04022
IN THE FAMILY COURT
Venue SITTING AT THE ROYAL COURTS OF JUSTICE, Royal Courts of Justice, Strand, London, WC2A 2LLDate 29 September 2025
Before
MR JUSTICE CUSWORTH
Between
TYApplicantXARespondent
Rebecca Carew Pole KC (instructed by Vardags) for ApplicantMichael Horton KC (instructed by Helen Pidgeon Solicitors) for RespondentHearing Hearing date: 29 July 2025

Mr. Justice Cusworth:

[1]This is a further judgment in these proceedings under Part III of the Matrimonial and Family Proceedings Act 1984, and Schedule 1 to the Children Act 1989,in relation to which I initially heard evidence and submissions from both parties between the 9th and 16th May 2025. The parties are TY(now aged 41) and XA(aged 42), whom I shall continue to refer to in this judgment, conventionally, as the husband and wife.[2]I handed down a substantive judgment in the principal applications on 1 July 2025, after a draft had been circulated to the parties on 6 June. At the adjourned hearing on 29 July 2025 I have had to deal with a number of sequential issues such as timing and security, and the important issue of how the wife’s costs are to be provided for – whether by a further lump sum to discharge them as a debt, together with other outstanding liabilities which she has, as she is seeking; or by way of a costs order, which the husband argues should require no more than the payment of the significant sums already paid under the various legal services orders.[3]As at the trial, the wife has been represented by Mrs Carew Pole KC and Vardags, and the husband by Mr Horton KC and Helen Pidgeon. The wife has attended court today, but the husband is absent on holiday – I have excused his non-attendance.

RELEVANT BACKGROUND AND CONCLUSIONS

[4]This case concerned a 9-year marital relationship where two agreements had been reached, one being an Austrian pre-nuptial agreement and the other a later German Separation Deed, both of which were very clearly needs-oriented and determined the underlying basis upon which provision should be made to the wife. As set out in my substantive decision, this matter has an unfortunate history of protracted litigation both in Germany and in this jurisdiction. Here, there have been two set aside applications brought by the husband against the initial grant of permission under Part III, both heard by Moor J, as well as an FDR before Peel J, multiple directions hearings and a 6-day final hearing in May 2025 before me.[5]The parties ultimately agreed with the German Law Expert, Dr Cornelia Maetschke-Biersack, that the German Separation Deed is a “valid and binding instrument and an authentic instrument for the purposes of Art 17 of the EU Maintenance Regulation” at the 18 October 2024 directions hearing. I accepted in my substantive decision that for the purpose of this case, to which the EU Maintenance Regulation applies, I was bound to act in a way which was not clearly contrary to its terms. By Art.21 of the Maintenance Regulation, I determined that a variation of the provisions contained in the German Deed would be permissible in the event of a sufficient change of circumstances, but that a consideration of the fairness of the original provision would not be.I was satisfied that the wife’s current, and likely future, inability to work did constitute a sufficient change of circumstances to justify a reconsideration of the terms of the maintenance provision in the German Deed.[6]On the basis that the changed circumstances of the wife undermined the assumptions upon which the German Deed was calculated, I was clear that both an extension of the term for the provision of housing for the wife, and of spousal support for her, were warranted, as well as a reconsideration of quantum. I made the following provision:a. A capitalised rental fund of £2,550,000 to meet the wife’s housing needs, reflecting rent at the current level for the next 15 years, then reducing by a third for the rest of her life;b. Maintenance payments for the children at a rate of £3,500pcm, or £42,000 per year per child, until the end of secondary education, with a remaining third then being payable to the wife whilst the children continue in tertiary education, such payments to be CPI linked. The husband was to be responsible for the children’s educational costs, including extras, until the end of tertiary education;c. Maintenance payments of £5,000pcm (£60,000pa) and additional payments of £3,000pcm (£36,000pa) for the wife’s medical costs until she attains the age of 55 and thereafter reduced to a nominal level until further order. The total annual periodical payments for the wife (including medical costs) therefore amounted to £96,000pa, also to be CPI linked.[7]This outcome did not reflect the open position adopted by either party at the trial. At that point:a. The husband offered to purchase a property, in his name, for the wife and children with a purchase price of up to £2.6m. This property would have a mortgage, for which he would be responsible, and the wife would have been permitted to remain in occupation of the property until 6 months after their younger daughter PA’s 18th birthday (1 February 2035), or when the children’s full-time secondary education ceased, if later. The husband offered child periodical payments at £5,000pcm per child, or £120,000pa in total for both children (expanded along the lines of a Home Expenses Child Support Allowance or ‘HECSA’), plus school fees and extras to the end of secondary education by way of provision for them. No further provision of any sort was offered for the wife.b. The wife sought a housing fund of £4.2m to enable her to purchase a property of £3.5m. The wife also sought a lump sum of capitalised maintenance of £2.3m, which she said would provide for c.£80,000pa for her for the rest of her life, with a nominal order for herself to avoid CMS problems; a further lump sum of £992,955 to clear her current debts (over £900,000 of which consisted of legal fees); a returnable lifetime fund of £755,607 to be made available to meet her future medical costs; and £50,000 for a car. The wife sought lower child periodical payments of £3,500pcm, but educational provision to the conclusion of tertiary education. The wife also sought to receive some contents from the parties’ former homes in Europe.

The Issues at this Hearing

[8]Reconsideration. I will begin with the argument which Mr Horton KC advances for the husband that I should now reconsider the substance of the orders which I determined to make at the May hearing. At that hearing, the husband’s open position, which he had articulated in an open offer made as recently as March 2025, was as explained to purchase a property for occupation by the wife and the children during their minority, and in lieu of any continuing spousal maintenance, a higher level of child maintenance. He did not offer any further lump sum. This offer was said to be ‘subject to his ability to obtain a mortgage’, and he made reference to the impact on his finances and liquidity of the fall in the value of his Company E stock. His position at trial was that his net worth was now in the order of £16m. I finally took the figure of £17.3m for his net worth at that time.[9]Mr Horton now says that the husband’s own proposals then ‘were simply not feasible, even on the known position in May’. By the time of trial, he makes the point that he was inviting the court to order maintenance to cover rent instead of a lump sum, given the husband’s liquidity issues. He also asserted that his property, in prime West London, which was valued for that hearing at £11.5m, has been on the market for sale but has only so far had one offer at £9m. He blames this on the state of the high end London property market and the reported exodus from the UK in recent months of wealthy non-domiciled families. He also says that his property in Paris, valued for the trial at €10.5m, has also been marketed but has had only one offer at €6m. He states that his Company E stock has now gone, owing to the drop in prices and some collar hedge arrangements he has assertedly made earlier this year. Also down-valuing a number of other properties which he owns, he says that his net worth can today be counted as no more than £6m. He therefore suggests that a lump sum of £2.55m for lifetime rent, as ordered, now looks ‘wholly excessive’. He also cites a series of obligations and future financial commitments.[10]Since the handing down of my substantive decision, the wife was informed on 7 July 2025 by the children’s school that the husband has not paid the school fees for the summer term, in breach of the order of Moor J dated 4 July 2023. The husband also remains in breach of the LSPO order made by me on 18 October 2024, having failed to pay the final instalment of £28,000 due on 1 May 2025. The husband has further openly sought advice on the enforceability of the final proposed order made by this court in France, in breach of the embargo on the draft judgment. Mr Horton KC has provided written submissions in which he acknowledged and apologised for the embargo breach, and I have decided that no further action would be taken in relation to this.[11]The husband has not sought to adduce any sufficient fresh evidence at this hearing in support of his arguments, other than an updated spreadsheet produced by his accountants, and some updating bank balances. He has made no formal application to set aside determinations within the judgment which I have handed down and to reconsider, ab initio, the appropriate order in light of what he says is this dramatic collapse in his financial position. Indeed, he has chosen not even to attend court for this hearing. The wife does not accept his financial presentation today. As I will explain, the costs in this matter are already out of control. What he is proposing would effectively require the complete relisting of the final hearing, save in relation to the underlying legal issues already determined. The order which I have determined should be made was clearly affordable for him on the basis of his own financial presentation at trial.[12]In those circumstances, I have declined Mr Horton’s oral request to relist the final hearing for further reconsideration. Such an application, if properly made, would require very clear evidence in support in circumstances where the capital figure was in fact slightly less than that which the husband has proposed in his open offer, albeit on very different terms, and the income levels ordered commensurate with the totality of the interim provision being made. His position would also presuppose that the husband was in a position to make further significant provision to fund the wife’s legal costs whilst any further consideration was being given. There is no evidential basis before me today to allow me to accede to such a fundamental and far-reaching request.[13]Finally, Mr Horton also seeks to argue that the wife’s rental payments should not be capitalised, because of the consequent impact on her finances of the significant debt to her solicitors. He is inviting the court to leave her unable to settle that debt, deliberately. I am not prepared to reconsider that element for a number of reasons: firstly, the debt to Vardags was already known and understood when I handed down my original judgment; secondly, I am satisfied that the overall impact of the provision which I am making, including the costs provision that I will consider in this judgment, will meet the wife’s needs to a sufficient extent as I will explain below; thirdly, whilst declining to capitalise an order for the provision of housing, so as to avoid creating a situation where lawyers are able to enforce any outstanding costs bills owed by reason of the proceedings, might be permissible in certain very limited circumstances, I am not satisfied here that such a course would be reasonable, or fair to the wife. I observe that, given the interest provisions which will continue to run until the bill owed is discharged, not being in a position to pay that bill foreseeably would leave the wife in an unhappy and indefinitely precarious position, to say the least.[14]Costs and debts. I now turn to the other principal issue between the parties at this hearing, which relates to the treatment of the wife’s costs. In this case, the costs position is both unfortunate, and stark. At this point the wife’s total costs of the application amount to some £1,448,593. Those of the husband are significantly less, at £533,210. There are some reasons advanced on the wife’s behalf for that discrepancy, which I will address below. However, this means that the total spent by both parties in the litigation comes to some £1,981,803. Whilst there have been some legal issues to be considered, addressed in my earlier judgment, it is the case that the eventual order which I have made is for the wife to receive a capitalised sum of maintenance for her rent at £2,550,000, and ongoing periodical payments for herself and the two children at the combined rate of £15,000pcm. As I indicated in my earlier judgment, the maintenance sum for the wife, if capitalised, would have added a further £1,200,000 to the husband’s obligation. On the basis then of an award in total quantifiable at £3,750,000, the parties have between them spent 53% of that amount on the costs of this application. The wife’s costs alone amount to 57% of the value of her capitalised receipt, excluding her maintenance, and 39% of her whole award. Absent some quite extraordinary circumstances, that amount appears grossly disproportionate.[15]Here, for the reasons which I set out at some length in the substantive judgment, the wife does not have a sharing claim available to her. The award which I determined was appropriate for her was one based upon her needs. That this was a likely outcome had been flagged to her and to her representatives throughout the litigation, and eloquently by Moor J as long ago as 27 March 2024 when at an interim funding hearing I am told that he made clear that:
‘this case is not a case where money can be spent on costs regardless of considerations of the available resources in the case, the issues involved, and, perhaps most importantly, the financial position of the client who, as I have already indicated, essentially has nothing… this is a case that really has to be done on a strict budget. It has to be very carefully managed and it has to be within the bounds that I set. In other words, I have come to the conclusion that this case requires preparation on the basis of a Ford Mondeo, not a Rolls Royce.’
[16]He then described the likely outcome at the end of the proceedings as ‘needs light’, a phrase which he then repeated in his judgment reconfirming permission on 9 May 2024. The wife’s solicitors have provided for today a detailed breakdown of how her costs were incurred, throughout the proceedings, with the intention of demonstrating their reasonableness. I accept that there are in this case some valid reasons why the wife’s costs might legitimately have exceeded those of the husband, as advanced eloquently by Mrs Carew Pole KC. They include:a. The husband’s fairly relentless conduct of the litigation, and his taking of occasionally misconceived steps which had to be reversed;b. That the husband has acted in person for some periods in the case, and when instructing solicitors has chosen a firm with significantly lesser charging rates;c. That the wife has been the applicant;d. That the husband’s disclosure has been haphazard and not infrequently late;e. That the wife has had health issues which have increased her needs and so the demands that this has placed on her solicitors in taking instructions from her.[17]I accept that all of those reasons might account for the wife’s costs coming in at a higher level than those of the husband. If they had been half as much again as those on the other side of the case, so overall a 40/60 split, or even twice as much (33/67), that might have been striking, but not necessarily exceptionable. However, in this case, the husband’s costs amount to just 26.9% of the total expenditure.[18]Of course, in a case where the assets are to be shared, and each party can expect a substantial receipt, then this sort of apparent overspend might make little odds, and can easily be left at the door of the party who has allowed their costs to spiral out of control. However, this has always been a needs case, and acknowledged to be such by the wife. Following the remarks made by Moor J, I am satisfied that there did need on the part of the wife and her advisers to be serious consideration given to the proportionality of the amounts that they were spending, and the significant risk that they would not recover the fully capitalised sums that they were seeking on her behalf, and further that they might not recover on top all of the costs which were being incurred. Even if her solicitors had protected themselves by an agreement with her, they should have made very clear to the wife the very significant risk that she was running by spending so freely in pursuit of an outcome which was ultimately beyond what might have been possible on the best of days. I must assume that they did so, and that she entered into her agreement with them fully aware of the risks that she was running.[19]At paragraphs 103-04 of my earlier judgment I had said this:103. The wife’s debts from outstanding costs are significant, as explained. Set against an interest in property in Germany worth £240,000 on her figures – her only capital aside from the value of disputed chattels - she has a debt to Vardags, her solicitors in these proceedings, of c.£848,450, and a further sum of £70,966 owing to her German solicitor – a total of c.£920,000. If she were left to meet such a sum from her own resources, then the value of the housing fund which I have determined as required to meet her and the children’s needs would be significantly undermined. If she has to sell her property, then her ability to contribute to her own future support is significantly undermined.104. In those circumstances, Mrs. Carew Pole KC asks for an additional lump sum for her client to clear her debts, or essentially to provide for the husband to pay for the entirety of the costs incurred by her in these proceedings, in addition to his own, in circumstances where neither party’s open position has been close to the outcome of these proceedings that I have arrived at. I have decided on balance not to make such an award on the basis of an outright lump sum, but rather to hear argument from the parties about the fair incidence of the costs incurred in this case – whilst it seems inevitable that the wife will need some significant further provision if she is going to be able to meet her needs going forward, it is very hard at present to see how she can justify a payment of 100% of the substantial bill which she has run up – not far off three times that incurred by the husband. FPR 2010 r.28 and PD28A apply to these proceedings.[20]That remains the position today. In addition to her costs of these proceedings, the wife also has a number of other liabilities, including that to her German lawyer, as well as a further £63,609 in other historic medical and legal costs, and including £46,937 owed to her parents. I should say that I have taken the slightly different figures provided for this hearing by Mrs Carew Pole in her note, rather than those calculated in the final ES2 as at the date of trial, which in part may be down to moving exchange rates. Some additional liabilities are now included, and some may be down to the husband’s failure to comply with his ongoing obligations to the wife and children since the conclusion of the final hearing. The most striking difference is that the interest which the wife’s solicitors are now claiming on their fees has already increased from £90,721 at trial to some £114,774 now - a further £24,000 in some 2 ½ months. It is also noticeable that the delay between the two hearings is due in large part to the unavailability of the parties’ legal teams during this period.[21]The further reality, as Mrs Carew Pole frankly acknowledged, is that none of the wife’s other outstanding liabilities can or will be capable of being met until 100% of the amount owing to her solicitors has been paid. Their position was made very clear in a letter to the court sent by Dr Bence, the CEO of Vardags, on 8 May 2025. He stated the Firm’s position to be that:
‘…the monies… represent a hard debt owed to the Firm by Ms TY , which the Firm is entitled to and will seek payment of in full in accordance with our Terms of Business. The decision(s) to extend credit… in specific situations should not be seen as any waiver, implied or otherwise, of the Firm’s intention to recover the outstanding costs now or at any point in the future… [They represent such a hard debt] irrespective of whether they have already been incurred or will be incurred…’
[22]The inevitable consequence of this I am assured is that, unless the husband is ordered to pay 100% of the amount which is currently owed to them, any receipt by the wife for any other purpose will be taken first to satisfy their debt and its accruing interest. Thus any repayment of the debt to her German lawyer, or to her parents, or to the German tax authorities, will only be possible once all of the sums owed the solicitors have been discharged. And further, on receipt of the capitalised maintenance provision calculated by me at the conclusion of the final hearing, that sum too will be vulnerable to the solicitors. That is the commercial arrangement into which the wife entered, and which remains in place.[23]In those circumstances, should the husband then be required to pay all of the wife’s costs of these proceedings, even though they are apparently so disproportionate, simply because her award has been calculated on a needs basis? I remind myself that in this case the wife’s open position at trial was for a lump sum of £7 million, and a further figure of £1,400,000 to discharge that costs bill. She has received significantly less than that. It is also right, in fairness, that the award, especially as it was capitalised in part, is pitched at a greater level and in much more favourable terms than any amount volunteered by the husband, so that in pre-FPR Gojkovic consideration, this wife has ‘had to come to court’ to get her award. That is no longer of course the court’s starting point.[24]The law. The law that I have to consider in relation to this issue is not in substantive dispute. In Azarmi-Movafagh v Bassiri-Dezfouli [2021] EWCA Civ 1184, to which I have been referred by both parties, King LJ said, under the heading ‘Costs in Financial Remedy Cases’:47. The current rule is found in the Family Procedure Rules 2010, r.28.3(5) ('FPR') which provides save in certain specified exceptions, that 'the general rule in financial remedy proceedings is that the court will not make an order requiring one party to pay the costs of another party'.48. Whilst the 'no order' principle is the starting, and usually the end, point, the court does retain the jurisdiction to make costs orders in financial remedy proceedings pursuant to FPR r 28.3(6) 'because of the conduct of a party in relation to the proceedings (whether before or during them)'. The court is given assistance as to the proper approach to the making of such an order for costs in FPR 28.3(7) which provides:
"7) In deciding what order (if any) to make under paragraph (6), the court must have regard to – (a) any failure by a party to comply with these rules, any order of the court or any practice direction which the court considers relevant; (b) any open offer to settle made by a party; (c) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue; (d) the manner in which a party has pursued or responded to the application or a particular allegation or issue; (e) any other aspect of a party's conduct in relation to proceedings which the court considers relevant; and (f) the financial effect on the parties of any costs order." 49. Of importance is the Practice Direction FPR PD 28A which applies to costs in financial remedy cases and has particular resonance in the present case. FPR PD 28A para.4.4 provides that: "
In considering the conduct of the parties for the purposes of rule 28.3(6) and (7) (including any open offers to settle), the court will have regard to the obligation of the parties to help the court to further the overriding objective (see rules 1.1 and 1.3) and will take into account the nature, importance and complexity of the issues in the case. This may be of particular significance in applications for variation orders and interim variation orders or other cases where there is a risk of the costs becoming disproportionate to the amounts in dispute. The court will take a broad view of conduct for the purposes of this rule and will generally conclude that to refuse openly to negotiate reasonably and responsibly will amount to conduct in respect of which the court will consider making an order for costs. This includes in a 'needs' case where the applicant litigates unreasonably resulting in the costs incurred by each party becoming disproportionate to the award made by the court. Where an order for costs is made at an interim stage the court will not usually allow any resulting liability to be reckoned as a debt in the computation of the assets." 50. If a costs order is made against one of the parties as a consequence of their conduct, the court will need then to decide upon which basis those costs should be determined; standard costs or indemnity costs. It is not necessary for the purposes of this judgment to set out the relevant considerations which determine which of those assessments apply other than to note that the difference as between standard and indemnity costs is set out at CPR 44.3(2) and (3) as: "2) Where the amount of costs is to be assessed on the standard basis, the court will – (a) only allow costs which are proportionate to the matters in issue. Costs which are disproportionate in amount may be disallowed or reduced even if they were reasonably or necessarily incurred; and (b) resolve any doubt which it may have as to whether costs were reasonably and proportionately incurred or were reasonable and proportionate in amount in favour of the paying party. 3) Where the amount of costs is to be assessed on the indemnity basis, the court will resolve any doubt which it may have as to whether costs were reasonably incurred or were reasonable in amount in favour of the receiving party." 51. In JM v CZ (Costs: ex parte order) [2014] EWHC 1125 Fam; [2015] 1 FLR 559 at [26] Mostyn J worked upon the basis that the 'standard' basis which is by far the more usual form of order made, is commonly assumed to equate to approximately 70% of the overall costs bill.[25]The court then went on to deal with three first instance decisions ‘where the court has grappled with the problem of how to treat the costs of the recipient of a needs award’. The cases cited were Francis J in WG v HG [2018] EWFC (Fam) 84; [2019] 2 FCR 124; Holman J in Daga v Bangur [2019] 1 FLR 1340 and Cohen J in MB v EB (No 2) [2019] EWHC 3676 (Fam) 3676; [2020] 1 FLR 1086, from which King LJ went on to conclude (at [53]) that:
‘the most significant principle to be drawn from them, either individually or collectively, is that the judge at first instance has a wide discretion as to the extent to which it is appropriate to order an enhanced lump sum to a party in receipt of a needs award designed wholly or in part to satisfy their outstanding costs bills.’
[26]I entirely accept that proposition. Mrs Carew Pole however also places reliance on what King LJ went on to say at [59], namely: 59. Significantly, in none of these cases would the recipients' security of accommodation have been jeopardised as a result of the order made by the court… In my judgment, of more assistance in considering the approach taken to this issue in the few reported cases is the fact that in WG v HG and MB v EB, notwithstanding the fact that the recipient had acted unreasonably and run up wholly unjustified costs, the court nevertheless awarded an additional sum in order to ameliorate the impact of costs on their needs award and in neither case were the housing needs of the receiving party put at risk.[27]Then at [63], she continued: 63. It is undoubtedly the case that there is no specific rule requiring the first instance judge to carry out an analysis by reference to the principles applicable to costs orders and in my judgment to do so would not be compatible with the wide discretion of the judge to determine the extent of a party's needs and the extent to which they should be met. Having said that, in my judgment in cases where it is argued that an order substantially in excess of the sum required to meet a party's assessed needs is sought in order to settle the outstanding costs (or debts referrable to costs) of that party, the judge should: i) Consider whether in any event the case is one in which consideration should be given as to the making of an order for costs under FPR 28(6) and (7) in particular by reference to FPR PD 28 para 4.4; ii) Whilst not carrying out a full costs analysis, the judge should have firmly in mind what the order which they propose to make by way of additional lump sum to meet a party's costs would represent if expressed in terms of an order for costs. To do this would act as a cross check of the fairness of the proposed order.[28]In MB v EB (above), Cohen J in fact made an order which left the applicant husband with a Duxbury sum of £325,000 (£25,000pa for life) to meet his needs which included health difficulties, an additional sum of £150,000 for his costs, a car and a modest flat worth less than £500,000. He also had an outstanding debt to his solicitors inclusive of interest (he had instructed the same firm as the wife in this case) of around £380,000, after the wife had already funded an additional £236,000 under a legal services order. The judge described the husband’s costs in that case at [16] as having been ‘wholly disproportionate to what has been in issue’. So, in order to meet his solicitors’ bill after the judgment he would either have had to forgo over 70% of his modest income fund, or to have sold or charged his home. However achieved, his living standards were therefore left significantly affected by the debt to his solicitors, his modestly assessed needs notwithstanding.[29]In WG v HG (above), where the judge had also held that the wife had incurred a substantial part of the costs unreasonably, she had otherwise received a property mortgage free worth £1.65m and a Duxbury fund of £2m to produce an income for life of £90,000 pa, and she was left to find some £500,000 (just over half of the total owing) in order to fund that part of the costs which Francis J did not order the husband to pay. Again, she was left with a choice between a reduced income and more modest property fund to pay what she was left owing.[30]Daga v Bangur (above) was a different and unusual case, where the husband had failed absolutely to satisfy the court that he was entitled to any award on a needs basis.[31]Therefore, whilst of course I acknowledge that in any needs-based assessment one of the most important elements will be security of accommodation at an appropriate level, it cannot be said that in no circumstances will the court make orders which risk affecting the level at which a party will be able to live or house going forward, in the right case. There is clearly a difference of degree between those cases, such as MB v EB, where the respondent’s award is quantified on what might be termed ‘bare needs’, and those like WG v HG, and this case, where the basis of assessment is considered in accordance with the parties’ lifestyle in the marriage, and so, even if debts remain, needs at a lower level can still be properly met. Also as in this case, in WG v HG there were minor children whose needs had to be given first consideration. Nonetheless, whether after a bare needs assessment (MB v EB), or where there are minor children (WG v HG), the court can still leave a party with a significant debt of costs to be found from their needs-based award if the circumstances merit it.[32]Where King LJ speaks of the housing needs of the recipient party, at [59] of her judgment in Azarmi-Movafagh v Bassiri-Dezfouli (above), I am therefore clear that she is not suggesting that a party can never be left with a hard choice as to how to meet their outstanding debt, which may include housing at a lesser level than that assessed by the court, as an alternative to a reduced available income. That is especially so where the fund made available for housing is in excess of £2.5m. Leaving a party needing to relocate to a less exclusive neighbourhood is not in my judgment necessarily leaving them ‘unable to meet their housing need’. Further, I remind myself that the award in this case was quantified on the basis that the wife would be paying a rent at the current level (in fact above that assessed on an interim basis by Moor J), and only reducing when the children had ceased to be the court’s first consideration. There is thus scope for the wife either to move earlier, or to defer the impact of any costs liability on her available housing fund until the children have grown, if in fact she chooses to continue to rent, as I had provided. In any case where their needs assessed are on the basis of lifestyle, as opposed to ‘bare’ needs, a party would be unwise to assume that their unreasonably incurred costs are bound to be laid at the door of the other party in any circumstances.[33]Mrs Carew Pole as explained addresses the factors in FPR 2010 r.28.3 in turn on the wife’s behalf, highlighting as follows:a. Under r28.3(7)(a) - The husband’s breaches of substantive financial orders, including:(a) his failure to pay the last LSPO instalment due on 1 May 2025 of £28,000 due under the order of 18 October 2025,(b) his failure to pay the children’s school fees in breach of Moor J’s order of 4 July 2023 leaving £22,706.60 outstanding as at 10 July 2025, and(c) his repeated late payments of maintenance to the wife and the children, driving up legal costs. She cites procedural breaches including: the late filing of statements, failure to provide a questionnaire in line with the court’s directions until after the hearing on 27 March 2024 (i.e. some 5 months late), failure to serve Replies to W’s questionnaire on time, and failure to make his application pursuant to para 12 of the PTR order on time. She also complains about his approach to disclosure, including: not informing the court of his surveillance of the wife and children at the PTR, instead providing it in the run up to the final hearing, not disclosing to the court he was in breach of the school fees order in advance of or during the final hearing, failing to provide updates on the progress of property sales despite there being an order for him to do so, and providing incomplete disclosure relating to his Julius Baer portfolios.b. Under r28.3(7)(b), she says that the husband’s open offers failed to recognise the wife and children’s needs and both of which the court’s award outstrips. The husband’s first proposal dated 22 April 2024 dealt solely with the wife’s Schedule 1 claims, ignoring the Part III proceedings; he offered no outright capital for housing; the rent fell short of the court’s eventual determination; and the husband offered no capital at all, save for a sum of £100,000 towards her debts. The husband’s later open proposal dated 27 March 2025 was in the character of Schedule 1 provision, and offered no capital outright, no spousal maintenance, but only child maintenance. Mrs Carew Pole fairly says that at no point did the husband recognise that the wife has independent needs or make a reasonable offer capable of acceptance, leaving her in a position with no viable alternative but to pursue her claims to final hearing. She accepts that the wife has not achieved her open position, but says that the financial landscape has been built on ‘shifting sands’ due to the way the husband has presented his assets and the sharp diminution between October 2024 and the time of the trial. She refers to paragraph [98] of my judgment where it was recognised that the wife’s open position “becomes proportionate to the financial position of the husband two years ago.”c. Under r28.3(7)(d), Mrs Carew Pole says that much of the trial was taken up with the husband’s challenge to the wife’s medical needs and state of health at the time of the separation agreement, now, and in the future. It is said that the way the husband challenged the wife, in the face of clear medical evidence from a range of highly distinguished medics was distasteful, disproportionate and ultimately unsuccessful. She also maintains that the wife’s costs have been driven up by the husband’s approach to the litigation, with the husband’s litigation conduct having fallen short not only by his repeated breaches of the practice directions and orders but also the lack of cohesion between himself and his team. Mrs Carew Pole identifies that there was a flurry of evidence produced during the final hearing by the husband, this included bundles of WhatsApp relied on by him in the witness box which at [32] of my judgment I observed “did not really shift the dial in relation to the impression that I otherwise received from the parties’ evidence to me.”d. Mrs Carew Pole invites me to reject the inevitable criticism of the overall level of the wife’s costs by the husband on the basis that an applicant in financial remedies proceedings tends to bear more of the costs compared to the respondent. She points out amongst other things that that (a) the wife has been the investigator, seeking to understand the husband’s disclosure (b) there have been eight hearings to date, with the wife’s legal team preparing the bundles for seven of these hearings, and (c) the wife incurred the costs of the Part III permission application (including preparation of a statement in support), which the husband did not incur. Further, MPS and/or legal funding has been considered at three hearings, and the wife (as applicant) has been required to produce evidence in support of her various applications. This has resulted in the preparation of six statements, with the husband filing no statements in response.[34]For the husband, Mr Horton makes the following points:(i) that the wife has always exceeded her costs allowance, in the belief that she could simply ask the husband to pick up the tab at the end of the case;(ii) that she has pursued some points unsuccessfully (he cites a failed application under s.37 MCA 1973 to set aside the transfer of the husband’s London home into joint names with his subsequent partner) and he says, that she has run up costs unnecessarily;(iii) he says that that no costs order is warranted applying the principles in FPR 2010 r.28.3. He points out that the court’s decision falls squarely between the parties’ open offers (albeit he suggests nearer to the husband’s position than that of the wife); and(iv) he says that even if the court were to consider some costs order were warranted, it could not possibly exceed the amount that the husband has already been ordered to pay by way of costs allowance (£633,000).[35]I do accept that there has been a proliferation of applications in this case due to the manner in which the husband chose to litigate. As well as MPS and three legal funding applications by the wife, there were two unsuccessful set aside applications by the husband, one unsuccessful application for permission to appeal to the Court of Appeal by him, and various other interlocutory applications (including for disclosure, SJE valuations of properties, to admit surveillance evidence, for a Notice to Admit Facts, and for participation directions). As a result, the final hearing bundles contained in excess of 2,500 pages. These include SJE reports on German law, as well as other documents produced from German lawyers acting for the parties, as well as extensive medical reports and material relating to the wife’s ill health, which has only been necessary as a result of the husband’s unsuccessful challenge to the truth of her evidence about her health.[36]Is this then a case where a costs order against the husband is warranted, applying the criteria in r.2.83(7), and so taking the case beyond the no order principle in 2.83(6)? Taking those criteria in turn:(a) any failure by a party to comply with these rules, any order of the court or any practice direction which the court considers relevant; I am satisfied that the husband’s late disclosure on a number of occasions has necessitated some significant extra work on the wife’s behalf.(b) any open offer to settle made by a party; As indicated, neither party’s open offer was as favourable to them as my eventual determination in these proceedings. Whilst it is the case that the husband’s position may appear superficially closer, it was undermined by the fact that, as Mr Horton accepts, he sought to resile from important elements of it during the course of the final hearing. Further, and crucially, he never acknowledged that the wife needed, and as I found was properly entitled to, security of accommodation and ongoing income provision independently of the children. Whilst the wife’s aspirations were unrealistic, she could not have accepted any offer by the husband that did not embrace that critical element.(c) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue; The wife withdrew her application under s.37 (to set aside of the transfer of the husband’s London home into joint names with his current wife) once the husband had disclosed his agreement with his new wife. Her position in this regard was not therefore unreasonable. During the proceedings it is evident that the husband contested at every stage the court’s jurisdiction and the propriety of the court making any order. Whilst he was successful in arguing that theseparation deed was valid and binding under German law and that it is therefore an authentic instrument within the meaning of Art 2(1) of the EU Maintenance Regulation (‘EUMR’), this was a point which the wife to some extent conceded after the receipt of expert evidence. The appropriate extent to which the provision made by the Deed required reconsideration in the circumstances now prevailing, and the needs which the wife and children now required to be met, were areas where I have found his position to have been wholly misjudged.(d) the manner in which a party has pursued or responded to the application or a particular allegation or issue; Overall, whilst the wife has allowed her lawyers to spend too much time and effort in pursuing her application, it is also the case that the husband has by his somewhat obdurate approach, no doubt conditioned by his unwillingness to concede that this court should be entertaining at all this litigation, led the wife’s team to spend more than should otherwise have been required. I accept the criticisms made by Mrs Carew Pole in paragraphs 21 and 23-25 of her skeleton argument for this hearing, amongst the most concerning being the current arrears in Legal Services and school fees payments due from the husband, and the repeated late provision of payments and documentation.(e) any other aspect of a party's conduct in relation to proceedings which the court considers relevant; Whilst I made certain findings about the circumstances in which the Deed came to signed in my original judgment, this was in the context of the wife’s case about how the court should treat the deed, and not with a view to affecting either the quantum of the provision ordered, or in respect of any application for costs. I make it clear that this is not a case where s.25(2)(g) conduct (as imported into the 1984 Act by s.18(3) of that statute) has any application. and(f) the financial effect on the parties of any costs order. Mr Horton argues that given the impact of the EUMR, this court is not able to make fresh orders for capital provision for the wife. I accept that that is certainly the case in respect of any sharing entitlement which might have been claimed. It is less clear where the provision is required as maintenance to meet the wife’s needs, and where in the absence of the sum sought, the provision which has been made would be diverted from meeting the essential housing and income requirements to which it has been directed. However, as I will explain below, the issue will not need to be determined in this case. The wife has, in addition to any costs provision made, further debts to various others, principally to her parents and to her former German lawyer. However, as explained above, any payments intended to meet those liabilities will be diverted first to the wife’s English solicitors until the liability to them is met in full. No provision for those sums can therefore practically be made unless an order is first made providing for the husband to pay to the wife 100% of the costs owing to her solicitors. This apparently includes both interest on the debt and the costs of further Children Act proceedings between the parties. I do however bear in mind that, if not discharged separately, those debts will remain to be funded by the wife from her settlement. If no further order is made, nearly £1,000,000 of legal costs, interest and those other debts will be left to the wife to pay from her receipt. In those circumstances, the needs which the court found that she and the children have would be very far from being met at a realistic level, and interest will continue to run on the amounts owed to her solicitor. I also bear in mind here the husband’s case (albeit insufficiently evidenced), that his financial position has recently collapsed and that his liquidity is currently severely restricted.[37]I appreciate that in Azarmi-Movafagh, King LJ at [53] spoke of a ‘wide discretion’ in the context of the court making a lump sum award to a party ‘designed wholly or in part to satisfy their outstanding costs bills’. Here, I do propose to make a costs order against the husband, as opposed to awarding a lump sum to provide for the wife’s costs. In part, this is because of the uncertain jurisdiction to make any further capital award in this case, even if meeting need as opposed to addressing entitlement. It is also, and importantly, because here the wife’s costs have been incurred at what I am satisfied is a wholly disproportionate rate, and in consequence it is fairest to both parties if the amount of those costs which I am going to require the husband to pay is assessed on the basis of costs principles, rather than simply packaged as meeting a need. I will however later cross-check the outcome of my costs determination against the wife’s needs in all the circumstances.[38]To make a costs order against the husband, I must first be satisfied that the criteria under r.2.83(7) have been fully taken into account and justify making such an order, and I do also have in mind PD28 para.4.4. Having considered all of factors identified above, I am satisfied that the husband should pay the wife’s costs of the application, but as I shall explain, I am not satisfied that he should do so on any other than a standard basis. Were I to break down the different issues in the case and consider the costs position separately in relation to each one, I am broadly satisfied that I would arrive at a similar conclusion. Although the wife has not achieved the orders that she was seeking, the husband has never acknowledged that in circumstances where the evidence demonstrated that she could not expect to resume paid work substantively in future, she had needs which required to be met through the medium of these proceedings, over and above the discharging of their joint obligations to their children.[39]I have considered whether an indemnity award is merited in this case. The test for such an award was considered (in a different context) by Joanna Smith J in Cabo Concepts Ltd v MGA Entertainment (UK) Ltd & Anor [2022] EWHC 2024 (Pat), where she said:16. Subject to one caveat, the principles to be applied by the court on an application for indemnity costs are not in dispute. They were clearly articulated in the leading authority of Excelsior Commercial & Industrial Holdings Ltd v Salisbury Hammer Aspden & Johnson [2002] EWCA Civ 879 by Lord Woolf CJ at [31]-[32] and by Waller LJ at [39]. In summary, the court has a "wide and generous discretion" in making orders about costs. An order for indemnity costs will be justified where either the conduct of the parties or "other particular circumstances" of the litigation (or both) are such as to take the situation "out of the norm". As Lord Woolf observed, "that is the critical requirement". In Esure Services Ltd v Quarcoo [2009] EWCA Civ 595, at [25], Waller LJ explained that the word "norm" was not intended to reflect whether what occurred was something that happened often so that in one sense it might be seen as "normal", but was "intended to reflect something outside the ordinary and reasonable conduct of proceedings".17. As Lord Woolf CJ made clear in Excelsior, there are an infinite variety of situations which may justify the making of an indemnity order. It is not necessary for some sort of moral lack of probity or conduct deserving moral condemnation on the part of the paying party to be established. An award of indemnity costs is not penal but compensatory, the question in all cases being, what is fair and reasonable in all the circumstances of the case (see Catalyst Investment Group Ltd v Lewinsohn [2009] EWHC 3501 (Ch) per Barling J, citing Reid Minty (A Firm) v Taylor [2001] EWCA Civ 1723, at [20]-[28]).18. The caveat to which I referred above arises because [counsel] on behalf of MGA, submits that if conduct is to justify an award of indemnity costs, it must be "unreasonable to a high degree"… 21. …In [Suez Fortune Investments Ltd v Talbot Underwriting Ltd [2019] Costs LR 2019]…, Teare J pointed out at [7] that there was a long line of authority to the effect that where it was said that conduct was unreasonable, it must be unreasonable to a high degree to justify an order for indemnity costs. At [8] he said this:
"It was suggested that the requirement that conduct must be unreasonable to a high degree was not stated in the CPR and that this gloss on the CPR was therefore wrong in principle. However, the requirement is, I think, a necessary corollary of the scheme of the CPR. Having regard to the importance ascribed to the principle of proportionality in the CPR, where unreasonable conduct is relied upon as justifying costs on the indemnity basis, and hence removing the need for the costs to be proportionate, the conduct must be unreasonable to a high degree. Otherwise due regard would not be had to the importance of proportionality in the scheme of the CPR". 22. However, he went on to observe, having regard to the broad test in Excelsior, which requires the court to have regard to "all the circumstances", that it would be wrong to say that indemnity costs are only appropriate where there is unreasonable conduct to a high degree, but (at [10]) that "where conduct is relied upon as justifying an order for indemnity costs it must be unreasonable to a high degree"
. At [11] he concluded his analysis of the competing arguments in these terms: "In the light of the wide nature of the discretion to order costs on the indemnity basis I accept the submission made by counsel for the Underwriters that there may be an "aggregation of factors" which justify an order for costs on the indemnity basis, one of which may be unreasonable conduct though not to a high degree. What matters is whether, looking at all the circumstances of the case as a whole, the case is out of the norm in such a way as to make it just to order costs on the indemnity basis. That is the approach in Excelsior; see also ABCI v Banque Franco-Tunisienne [2003] EWCA Civ 205 at para 70 per Mance LJ". 23. With respect, I agree. I shall adopt the same approach in considering the submissions made in this case.[40]I also will apply this formulation. Whilst I have found that the husband’s litigation conduct has been deficient, and his open position has not been sufficient to meet the needs which I have found the wife and the children required, I must also bear in mind that the wife has not beaten her own offer, and a significant proportion of the costs incurred will have been toward issues on which he did ultimately succeed, principally in relation to the legal status of the deed. Whilst I also bear in mind the husband’s current defaults under existing orders, these may be remedied swiftly if caused by temporary illiquidity, and if enforcement measures become necessary, then the husband may incur further separate costs liabilities. I am clear, notwithstanding the general rule, that the criticisms of the husband’s litigation conduct, especially when considered alongside the eventual outcome of the application and the financial effect on the wife if no order is made, are such as justify an order being made against him that he should bear the costs of these proceedings, but they do not satisfy me in all of the circumstances that his conduct has been sufficiently ‘out of the norm’ as to warrant an indemnity order being made against him. The overall outcome works in his favour in this regard.[41]I will assess the wife’s costs summarily, to avoid the need for any further time or money to be spent on the process. For the purpose of assessing the amount of the costs order that I will make on the standard basis, I propose to adopt the figure of 70% referred to by King LJ at [51] of Azarmi-Movafagh, derived from the judgment of Mostyn J in JM v CZ (Costs: ex parte order) (above). In all of the circumstances, I consider this to be a fair and reasonable overall proportion of the wife’s costs of this litigation for the husband to have to bear, in addition to all of his own costs. In this regard I have firmly in mind CPR 44.3(2): "2) Where the amount of costs is to be assessed on the standard basis, the court will –(a) only allow costs which are proportionate to the matters in issue. Costs which are disproportionate in amount may be disallowed or reduced even if they were reasonably or necessarily incurred; and(b) resolve any doubt which it may have as to whether costs were reasonably and proportionately incurred or were reasonable and proportionate in amount in favour of the paying party.[42]The result of such an order will be that the husband’s total costs liability to the wife will be in the sum of £1,014,015.10 (70% of her total bill), of which he has already paid £605,000, as indicated. This is very nearly double his own total costs of these proceedings (£533,210). The balance owing to the wife is therefore £409,015.10 (including sums already ordered but as yet unpaid), and she will be left with £434,537.90 still owing to her solicitors, as well (unavoidably) with her other debts of £177,360, about which I make no further order in the circumstances identified above. Even after discharging all of these, she will still left very nearly £2m as a housing fund, and I am satisfied that the needs of the children and of the wife will still be appropriately met from that sum, together with the ordered income provision. This will be so whether she chooses to buy or rent. I am satisfied that this will also be so, even if they are not met the same level in relation to both housing and lifestyle as would have been the case had the wife’s costs bill been more reasonable and proportionate.[43]As in those other cases referred to above, the wife will have choices to make. Such a situation for her is the very avoidable consequence of the extent of the costs liability which the wife has incurred in pursuing this application, which I am satisfied has been disproportionately incurred, given the quantum of recovery which was always likely. However, in the event that she chooses to rent, she will be able to supplement the ordered capitalised fund from the monthly periodical payments due, and any impact on the children’s housing as minors can therefore be suitably ameliorated. I do not consider given what she will have available that reasonable accommodation for her and the children can properly be said to be under threat.[44]Time to pay. I propose, given the husband’s currently asserted liquidity issues, to give him an extended time within which to make the capitalised payment due under this order, on the basis that the current interim arrangements shall continue until then, including the payment of school fees. Having considered both parties’ contentions on this issue, I consider that an extended period is appropriate for that payment, but not inordinately so. The payment (not including the costs payment) should be made by 31 May 2026, with interest to run after that date. I leave it to the wife’s solicitors to decide whether, in all of the circumstances, it is appropriate for interest to continue to run against the wife during this period on their outstanding costs bill. I am satisfied that the husband should be in a position to make his further costs contribution within a shorter period – that is by 30 November 2025.[45]Security. The husband offers security against the equity in the West London property which is currently for sale. I agree that this is sensible and appropriate. I will not order further security at this point in circumstances where there appears to be a fresh significant issue over both the extent of the current decline in the husband’s financial position, and what other practical or effective mechanisms might be capable of being put in place. There has also not been time for these issues to be fully explored at this hearing. However, if there is ongoing default, I will reconsider any further targeted applications by the wife in relation to additional security if it becomes necessary.[46]Chattels. I set out at [106] of my previous judgment that I accepted the husband’s position that any issues relating to chattels had been determined under the auspices of the German Deed and could not now be reopened. This was especially so given the passage of time that had since elapsed. The wife now asks me to deal with certain furniture which in 2019 was held in the parties’ property in Vienna that was then let, which the Deed (at Clause 3.4) recorded as belonging to her and to her mother. By the Deed the husband was to give her notice of the end of the tenancy, so as to enable her to arrange for the removal of the furniture. This did not happen, and the furniture has now either been sold with the property or otherwise disposed of. I have no means of accurately determining the value of this furniture (the wife post-hearing has estimated a value of £154,000), nor am I clear that there would be jurisdiction to substitute a capital sum for chattels whose collection was provided for under the deed. Ostensibly, this is a claim based on entitlement, rather than need. Insofar as the wife’s needs have been increased by her requiring to replace the items lost, I am satisfied that she will have the means to do so from the level of maintenance which I have ordered that the husband should pay her going forward. I am satisfied that this is at a much greater level than she would be likely to have received had the German Court still had jurisdiction in relation to the variation of this Deed. I will therefore make no further order in that regard.[47]Extras. The wife also seeks the payment of various additional items for the children, over and above those provided for on the school bill and so included as regular educational expenses, and the child maintenance figure already provided for at £42,000pa per child. If such items are not agreed between the parents, and are not on the school bill, then they should be the responsibility of the wife to pay for from the child maintenance provision. If they are on the school bill, then they should be included within the school fees and extras provision. The wife adds to this list private health insurance premiums for the children. Whatever the position has been in relation to private health insurance for the children or the past six years (since 2019) should be continued, and the premiums paid by the parent who has previously had that responsibility.[48]Finally, since the hearing on 29 July, I have been sent correspondence by both sides relating the husband’s failure to pay the school fees for the newly started September term. There remains in place an order made by Moor J on 4 July 2023 that the husband should pay those fees, which I confirmed in my earlier judgment would continue. The husband did not then contest that provision. If the husband wishes to be released from that obligation, then he must make a formal application for that to happen, and in the meantime, he should continue to ensure that the fees are paid. The wife may disclose a copy of the 2023 order, suitably redacted, to the school if required.[49]That is my judgment.

Cited in 2 later judgments