JV v MV (No 2)

SIR JONATHAN COHEN: I am now going to deal with the issue of costs in this very expensive case. The wife has spent some £1.6 million and the husband some £1.2 million and what I say needs to be considered in light of the judgment which I have formally handed down today. I will not set out the background again.

Mr Yates KC on behalf of W has set out in detail all the many reasons which he puts forward as to why W should receive her costs or a sum towards her costs, and Mr Ewins KC on behalf of H has rebutted everything or attempted to rebut everything that Mr Yates has said.

In looking at this, there was one issue which overwhelmingly was hanging over this case and that was whether or not there was to be an exit event under which W would know that at a specific time (she says it should have been as short as possible) she would be able to exit from the business and receive her share of what I have decided she is entitled to. That was resisted by H who said no, equalise the shares and when it is sold, which will be a matter for me and Z, then you will receive your share.

In my judgment, that was not a reasonable argument to run because it would have kept her locked in indefinitely. I think the first offer made on 28 May 2024 was, Mr Yates used the phrase “bang on the nail”; if not, it was close to the nail certainly in its suggestion that the company – and I am quite sure it meant the 70 per cent of the company not owned by Z – should be sold and the proceedings divided equally after the tax debts had been met.

Mr Ewins is right to say that was only open for 3 weeks. It was briefly replaced but then just before trial W substituted an offer, which required the payment of a lump sum of some £1.6 million and only in the event of a voluntary sale in 2 years’ time by 1 September 2027 would she receive something other than the lump sum, that being a 50 per cent share of the proceeds. Mr Ewins is right that I have not made a lump sum order although I have given H the option of H exiting his wife from the business by paying a lump sum.

I do not intend to run through all the little points that Mr Yates set out at paragraph 8 but I do think that W surpasses the test that appears at FPR 28.3(7)I, namely whether it was reasonable for a party to raise, pursue or contest a particular allegation. I think that the argument that W should be locked into the company without any clear exit route available to her, was an important and significant deficiency and an act of unreasonableness on H’s part.

Just to put one argument to bed, when at paragraph 90 of the main judgment I said that I had not found one side had behaved in a reprehensible manner on the big issues so as to lead to a significant increase in costs. I was referring there and then to the disparity in costs between the two sides, then thought to be even higher than it now is, and I was referring to the sort of conduct one finds too frequently in litigation but not in this litigation, namely non-disclosure, dishonesty or other forms of misbehaviour.

In my judgment, it is right that I should make an order for costs but it is going to be a limited order. In considering what order I make, I think it is also important to bear in mind one point that neither side has mentioned, which is H’s vulnerability. I do have in mind the psychiatric report that I read and his attachment to the company, which whilst may be unreasonable reflects the state in which he is in emotionally. This is a family court and I am not going to put that out of my mind. What I am saying has an echo of Moor J in the case of MAP v MFP [2015] EWHC 627 (Fam) where you take the parties as you find them and I do not think it is right that I should overlook that.

What I have done by way of approach is this. I have decided to start by taking £1.2 million which is the lower figure of costs and I think that I should reflect what I regard the unreasonableness of H’s position by making an order (and this is an initial step only) of 25 per cent of costs, which would produce a figure of £300,000. I then subject it to an assessment on a standard basis which would reduce the figure to 75 per cent of £300,000, that is knocking off a notional 25 per cent by way of a standard basis assessment and I shall make an order that the husband pay £225,000 towards the costs of the wife. That I think reflects the degree of unreasonableness in his approach to what I regard as the big issue that I have had to determine. That is my judgment.