In a judgment considering legal services payment and freezing orders, the court was asked to consider whether an applicant is entitled to financial support to fund their legal expenses to ensure an ‘equality of arms’ between the parties.

Paralegal Yasmin Ghadamian and senior associate Ellie Hampson-Jones examine the judge’s decision in JK v LM [2024] EWHC.

Background

The parents are Czech nationals. They met in 2015, lived together until 2019, and have one child (N), who is six. The mother has lived in England for most of the past four years. The father lives in the Czech Republic with his partner and two daughters from a previous relationship. The father financially supported the mother and N following the breakdown of the relationship, but since July 2022, reduced that support to £400 a month. He claimed this was because the mother moving back to England with N constituted unlawful “removal and retention” of the child, despite not taking any legal action against this.

The father provided no proper financial disclosure. The judge found that the mother was of modest means and receiving universal credit and child benefit. It was the mother’s case that the father was an extremely wealthy and shrewd businessman who was easily able to fund the costs of litigation, while she was unable to afford legal representation. She sought a legal services payment order (LSPO) to meet her legal fees. The proceedings involved complex financial claims, which required significant legal work. The mother argued that without the LSPO, her representation would be unable to properly engage in the litigation process against the father, who had the financial means to fund his representation.

This backdrop set the stage for the court’s consideration of the mother’s LSPO application. Her application aimed to level the playing field by ensuring both parties had adequate resources for legal representation in contested financial and Children Act proceedings.

The case concerned four applications brought by the mother:

• An LSPO to cover the costs of her legal representation in ongoing proceedings for financial provision for N under Schedule 1 and Section 8 of the Children Act 1989. This was granted on the basis that the judge was satisfied that without such payment the mother would not reasonably be able to obtain future legal services for the proceedings and is entitled to representation at the level she proposed. However, a 15% reduction was applied to the support she sought. This was to avoid the mother’s solicitor benefiting from what the judge regarded as being “essentially an indemnity against all their costs incurred, which would be an unusual outcome”.
• A freezing order in relation to the father’s assets in this jurisdiction, considered to be worth at least £5m, and an order in relation to a Richmond property, which was not owned by the father but in which it was said he held an interest. This was granted as the judge was satisfied there was evidence of the father dealing with his assets in such a way that there was reason to believe he may dissipate those assets to the mother’s disadvantage. An order was made in relation to the Richmond property under section 46(2) of the Land Registry Act 2002, enabling the mother to enter a restriction against the title to that property.
• Directions in relation to the Schedule 1 claim. The judge granted the directions order sought by the mother to enable her to progress her financial claims for N under Schedule 1 of the Children Act 1989. In keeping with current trends, the judge considered that mediation and other forms of non-court dispute resolution should be attempted in an effort to resolve disputes before extensive emotional and financial costs are incurred.

Points of interest

1. Importance of LSPOs in financial disputes

The case underscores the significance of LSPOs as a key tool to ensure access to justice for financially weaker parties in proceedings. When one party cannot afford legal representation due to significant financial disparity, an LSPO enables them to seek legal advice by compelling the wealthier party to contribute to their legal costs. This highlights the court’s commitment to fairness in litigation, especially in cases where complex financial matters require representation, but the disparity in resources would otherwise prevent one party from having equal participation.

2. Assessment of reasonable legal costs

The court carefully considered what constituted “reasonable” legal costs for the mother. This reflects the balance courts must strike between providing sufficient funds for adequate legal representation and ensuring the amount ordered does not place undue hardship on the paying party. It also illustrates the court’s scrutiny of the legal costs incurred and the need to justify these expenses based on the case’s complexity.

3. Proportionality and fairness

The case highlights the principle of proportionality. The court must ensure the LSPO awarded is not excessive and is commensurate with the wealthier party’s financial capacity. The father’s ability to fund both his own legal fees and contribute to the mother’s fees was a key consideration. This approach shows the court’s effort to ensure fairness, not only for the applicant but also for the respondent. This ensured that the financial burden placed on the father was reasonable, given his means.

Comment

Partner Carly Kinch comments: ”Inequality between two parties’ respective negotiating positions can dissuade practitioners from encouraging clients to explore alternative dispute resolution. In this case, the judge felt persuaded that the weaker financial party should have a fair opportunity to obtain legal advice to progress both a child arrangements and financial dispute, including through alternative dispute resolution (ADR). However, the judge was clear that this is not a costs order via the back door or a blank cheque for the mother’s team to incur fees without restriction. The goal was to achieve fairness to both parties”.

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