B v B

This is an appeal by a respondent husband against the judgment of District Judge Bradley given on 9 November 2006 in ancillary relief proceedings brought by the petitioner wife. The wife applies for the decision to be affirmed on additional grounds, in connection with which she seeks the admission of further evidence.

By subsequent order, the District Judge, upon certain undertakings of the parties, ordered that the husband should forthwith transfer to the wife all his legal and beneficial interests in the Wembley property, the former matrimonial home, which was subject to a mortgage in favour of the Bank of Scotland. She further ordered that a number of other properties in London comprising the husband’s property portfolio in the United Kingdom be sold forthwith at the best price obtainable, the net proceeds to be held by the husband’s solicitors and applied (a) in paying the remainder of those solicitors legal fees permitted pursuant to an earlier order of the court; (b) in paying the outstanding balance of the husband’s UK tax liability of £115,000.00 together with accrued interest; (c) such interim liabilities as the party’s solicitors might agree; (d) certain valuation costs; (e) the remainder to be paid to the wife, subject to a stay of any sum up to £220,000 until 9 February 2007. The order provided for nominal periodical payments in favour of each child of the marriage until the age of seventeen or completion of their full-time secondary education and otherwise dismissed all forms of financial provision, pension sharing and property adjustment orders as between the parties. The order further provided, inter alia, that the husband pay the wife’s costs to a maximum of £100,000 inclusive of VAT, to be assessed if not agreed, with provision also for a detailed assessment of the wife’s publicly funded costs.

The bare facts are these. The parties were married in 1990 and separated in early 2004. They have three children: J, aged 12, R, aged 8, and S, aged 4, all in the care of the mother. Each party has an adult child by a former relationship. The mother does no formal work. She ceased working when S was born and plaited the hair of family friends for £25.00 a head as pin money until the husband stopped her from doing it. She is currently in receipt of benefits. The husband was described by the judge as “fully capable of earning without constraint”. Since 2003 he has been pursuing a career as a businessman and property investor in the US. However his income and profits are obscure as a result of the judge’s total rejection of his frankness on this topic.

When the parties met, the husband was a builder. From 1997 he started to purchase properties and build up a portfolio in that respect. Initial deposits came from family loans and properties were purchased by means of mortgages. With the rise in property values the husband would raise further money by re-mortgage and purchase additional properties. Some were resold and others were rented out by way of investment, often in multiple occupation. By 2003, there were difficulties in the marriage. The husband decided he would move to the United States and start to build up a property portfolio there. He began to do so, using UK funds for that purpose. He is now resident in Florida running a property and child day-care business.

In the course of his business over a number of years in the United Kingdom, the husband made little provision for tax and, by the time of the hearing, had an outstanding amount of £115,500 under a judgment obtained against him by HM Revenue and Customs.

By the time of the hearing, the stated values of his properties in the UK and the US (sold and unsold) were: UK – £564, 846; US – £133,984. Total: £698, 830.

The jointly instructed accountant had calculated the husband’s potential liability for US capital gains tax on the sale of the properties not yet taxed as: £229,573. It has been agreed by the parties that this figure should now be £225,000.

The essence of the District Judge’s order was that the wife should receive all the UK properties in the form of a transfer of the former matrimonial home and the net proceeds of sale of the remaining properties, from which was to be deducted the £115, 500 owed by the husband to the revenue.

The result, of the District Judge’s decision on the basis of the estimated equity in the properties was that the wife would receive a lump sum payment of £449,346 leaving the husband with the equity in the US properties of £133, 984 but with a potential tax liability calculated at £229, 573, ignoring other debts, stated by the husband (though not accepted by the judge) to be as high as £260, 000.

In the course of her judgment, the District Judge made clear her strongly adverse views upon the credit of the husband, whose evidence as to the build up of his business, lack of frankness in relation to the detail of his dealings and liabilities, and determination to reduce the availability of his assets to his wife in respect of her admitted needs, were all roundly condemned by the judge.

Upon this appeal, Mr Sanders for the husband does not seek to disturb any of those findings. However, he relies upon the fact that the District Judge stated in the course of her judgment that the many criticisms she had made of the husband did not lead her to infer that he had assets in the US or elsewhere which he had not disclosed. Based on that finding, it is the essence of the appeal that, however adverse the view formed by the District Judge of the husband’s conduct and, whatever her view as to his lack of frankness in relation to his income, the District Judge was in error in disregarding and/or failing to deduct the husband’s liability to capital gains tax when assessing the value of the properties available for distribution. In his skeleton argument the husband seeks an order on this appeal that he pay the wife a lump sum of £240,000 only i.e. in round terms he seeks to deduct from the sum awarded to the wife his potential liability to Capital Gains Tax.

Before turning to the detailed argument of the husband, I shall turn briefly to the structure of the judgment of the District Judge, pausing only to observe that no criticism is made of that structure, nor is any mistake or misapplication of principle identified save for the submission that, on the figures available, the award was manifestly excessive, it being submitted that the District Judge allowed her extensive criticisms of the husband (not in themselves challenged) to lead her to make an order which was manifestly unfair.

Having set out the litigation history, the family asset position which faced the judge was as follows:

“11.

On the face of it, there is very little left in this family after debts have been taken into account. The combined total of property unsold in the UK, property sold here and property in the US is just under £700,000. It appears that £115,500.00 is still to be paid to the Inland Revenue in UK tax and that £230,000.00 odd may be due under US CGT law. That is a total of about £345,000.00 which would reduce the net level available to £355,000.00. About £134,000.00 of that is in US property, £221,000.00 in the UK, of which £132,000.00 is said to be the equity in the family home.

12.

The husband then states that he has debts (including £107,000.00 due to his family for loans which enabled him to start his property business) of nearly £260,000.00. The wife has £10,000 due to her from litigation. Other than that she has debts of about £17,000.00 and legal costs on public funding rates of about £52,000.00.”

In paragraph 20 of her judgment, the judge briefly reviewed the husband’s business activities and the build up of his property portfolio in the UK as follows:

“20.

What does emerge in the evidence is the rapid build up in the size of the portfolio which coincided with applications for mortgages and further advances by way of mortgage. Properties were sold, more properties were bought and they were let out as rooms or flats. The husband used his business entity as a building firm whenever convenient. His evidence to me was that he had a £3 million credit line from the Bank of Scotland to build up the business so that mortgage applications forms for particular loans were merely a tiresome formality”

The judge commented:

“On the one hand, he said he received no income from his self-employment as a builder between 2003 and 2005 and in 2001 had a net profit of only £7,000.00 – odd. On the other hand, he described himself in mortgage application forms dated between 2002 and 2004 as a self-employed builder earning up to £250,000.00 per annum.”

At paragraph 21 the judge stated:

“Whatever the truth, the husband certainly seems to have no difficulty in borrowing large amounts of money to build up his business. Increases in property values enabled him to borrow further sums against his properties. The rental provided a good source of income. His experiences as a builder made it easy for him to carry out any necessary work to the properties.”

At paragraph 22 the judge turned to the husband’s activities since he had gone to the United States. She said:

“What he’s done there is to begin a similar operation of buying properties, but at this time also to run a child day care business in those properties. ”

She then described the build-up of his interests and assets in the US by a process of mortgage and re-mortgage. In relation to his latest purchase, the house in Florida in which he was living, she observed:

“His mortgage application stated that his monthly income was $19,400.00. Mr B’s evidence is that he bought the property to live in it. It is a five bedroom detached property with three bathrooms, set in over an acre of land….. It seems he lives there on his own. The mortgage on the property is up to date. In fact the mortgages on all the US properties are up to date. There are mortgage arrears on all the UK properties including the family home.”

By way of contrast with the statement in his mortgage application, the judge referred to the husband’s evidence that he was not drawing a salary from his business. She commented that, however, he was clearly spending money. At paragraph 27 of her judgment she observed:

“I am sorry to say that my assessment of Mr B is that he is entirely unscrupulous, and unwilling or unable to accept responsibility for his own actions and a man who lies as a matter of course. In the absence therefore of any independent corroboration of any part of his evidence it is difficult for me to accept it.”

At paragraph 28 she stated that, so far as his business activities in America were concerned,

“… what he appears to have done is to use any money in any account as if it were his own, spending on business or personal expenses indiscriminately, he states that he hopes the day care business will move into a small profit this year, but he has no idea how much it is likely to be. I am satisfied he expects the business to be very lucrative in a short time. That is why he has gone into it.” (emphasis added)

The judge then turned to the question of any income which the husband might be drawing from his properties and business activities in England. She commented that the schedules produced for the years 2003-4 and 2004-5 showed losses of £112,000.00 odd and £41,000.00 respectively. She said:

“Unfortunately for Mr B, his figures are meaningless. Even if the detail is correct and there is no reason to believe it is, the arithmetic produces losses of £33,539.00 and £7,147.00. The fact is that I cannot rely on either figure as being accurate. Mr B left behind debts in the United Kingdom when he moved to the United States. They include tax debts, parking fines, council tax, school fees, service charges, solicitors’ fees relating to the business, credit card bills and so on. The tax bill now seems to be agreed at £233,000.00 of which £115,500.00 remains unpaid.”

Having pointed to a plethora of further examples of non-disclosure and lack of satisfactory explanations, including the unexplained fate of three sums he had realised by way of profit on the disposal of properties of £116,000.000, £18,000.00 and £122,000.00, the judge stated at paragraph 37:

“In my judgment, Mr B has failed to give full and frank disclosure of his income. That is because he regards all money that passes through his account as his. His has no satisfactory records or systems distinguishing between business and personal expenditure or income nor accurately recording either. He has failed to give a full, frank, clear and comprehensible account of his property business, partly, because he has no desire to do so, but I do not feel able to infer that he has hidden away documents or assets. He has dealt with the business as if it were a game of Monopoly played at speed and he has dealt with loans, mortgages and profit as if they were Monopoly money. Income and expenditure have been largely in cash. Capital sums have been used as deposit or for living expenses or anything else that the respondent has wanted.”

The judge went on to say that she was satisfied that on the breakdown of the marriage the husband was determined to deal with his assets in such a way as to reduce what might be available to the wife. She also stated:

“He has, as I find, deliberately allowed debts to go unpaid here and to be increased by his failure to pay the mortgage repayments and bills relating to the properties. He has ensured that the wife and his children have insufficient to live, and what there is is provided by the state, and not by him.”

The judge then moved to consider the housing needs of the wife, observing that, in his Form E, the husband had stated his acceptance that the children would need a home of about £400,000.00 value free of mortgage without at that stage suggesting that he lacked the means to provide it.

“The matrimonial home is worth £450,000.00, the most recent figure of the outstanding mortgage is about £326,000.00 leaving and equity of £124,000.00 before costs of sale are taken into account. Now the husband says that the wife and the three children should move to a three bedroom semi in a cheaper area of London paying £200,000.00 - £250,000.00 for such a property, £240,000.00 of which he will find and provide with some difficulty. He, of course, will continue to live on his own in his five bedroom, three bathroom desirable property in over an acre of land at the property in Florida. That is worth £390,000.00 with £100,000.00 equity and the mortgage repayments, as I have said, are up to date.”

There then followed the key passages in the judgment:

“41.

The criticisms I have made of the husband do not, as I say, lead me to infer that he has assets in the United States or elsewhere that he has not disclosed. They do, on the other hand, lead me to infer that he will have no difficulty raising money to pay the sum that I will require him to pay. He has raised large amounts of money every year for the last nine years. He has contrived to do so despite the attentions of the tax authorities. As the wife rightly points out, he could get a job. I believe he will not. He will continue instead to dress and to drive as if he is a man of wealth; to buy, sell and expand his business or business to ensure that he has the wealth he desires.”

“42.

As to the tax liabilities on his properties, I keep in mind the fact that the husband chose to transfer out of this jurisdiction £300,000.00 that could have been used to pay the whole of £233,000.00 UK tax debt and a fair proportion of the United States CGT. As it is, the assets remaining in the UK have been further depleted already by £120,000.00 paid to the revenue, £7,000.00 paid in council tax arrears on the matrimonial home and nearly £30,000.00 on the husband’s legal costs of these proceedings, so that there is even less available in the UK. That is a further reduction of £157,000.00 bringing the total to £457,000.00 taken out of reach already. Now there is a proposal by the husband that another £345,000.00 should be deducted from what is left. It would, in my judgment, be wholly inequitable to disregard this conduct by the husband, but I am satisfied that it is appropriate to take it into account in the way I have indicated rather than to draw an inference as to the existence of hidden wealth.”

“45.

What then is to be done? I have already made reference to the husband’s open position. The wife seeks transfer to her the matrimonial home mortgage free, or alternatively sufficient to purchase a suitable property mortgage free that is adequate for herself and the children in an area of London that will not place the children in the way of undesirable influences. If she remains in the matrimonial home she is likely to need at least £350,000.00 from her husband by the way of a lump sum. If she moves, she may purchase a lower price property but will have to find the removal costs, purchase costs, refurbishment costs and so on. In the light of my findings against her husband, I am satisfied that she should be able to remain in the matrimonial home, or, if she moves, that she should be able to spend in the region of £400,000.00 for a property. It will be the home of the parties’ children for many years.” (emphasis added)

The judge went on to state that she was satisfied that the appropriate order was one which enabled the wife to retain the proceeds of all the English properties after the deduction of any remaining costs of sale and the balance of the UK tax of £115,500.00. With regard to the husband’s debt position she said:

“I fully realise that leaves the husband with £134,000.00 in property and debts that may, whenever payable, amount to nearly £500,000.00. The reality is, of course, that repayment of his family’s loans have not been demanded, although the husband says that he repaid £10,000.00 on the sale of Waldrow Road. That ought to reduce his outstanding loans to £97,000.00 I regard the excess of debt over value of the Range Rover as a fact of life rather than a debt. The husband’s £75,000.00 schedule of debts is largely a matter he could and should have dealt with long ago, but chose not to.” (para 46)

So far as the liability to United States Capital Gains Tax was concerned, the judge observed that it was based on the assumption that all his properties were sold on 31 March 2006 and she stated that, assuming he remained resident in the US, she anticipated that he would negotiate with the US tax authorities in due course as to how much tax he should pay and over what period. She went on to state at paragraph 48 that she had

“… no doubt that Mr B will continue to juggle his finances in the future as successfully as he has done in the past. The order I intend to make should provide some security for the minor children of this marriage. It is clear that neither they or the wife are likely to receive a penny by way of financial support from the husband any more than they have since the separation.”

As found by the judge, this case is not one of that line of cases where, on the basis of general and deliberate failure to give full and frank disclosure in the course of the case, the court has inferred the existence of assets denied by a husband to exist: see for instance Baker v Baker [1995] 2 FLR 829 in which the existence of undisclosed assets was inferred from a combination of deliberate concealment on the part of the husband and the prosperous nature of his lifestyle. In this case the judge expressed herself not satisfied that, by the time of the trial, there had been any substantial assets undisclosed or unidentified.

This is a case where the husband has abandoned his wife and family for a comfortable home and lifestyle in the United States, but has left identified assets within the jurisdiction which are more or less sufficient to meet the family’s housing needs. The judge has denied credit to the husband for liabilities acknowledged by the judge to exist, on the ground that he has the ability to raise the necessary funds to meet those liabilities i.e. to “trade out” of his difficulties. That is the inference which she has drawn, based on the previous lifestyle and activities of the husband, and his ability to defer his debts, and to find or raise funds when required. The inference which the judge drew was one, not of the existence of additional assets, but of an available line of credit and a business acumen which has plainly been used by the husband in the past to sustain a substantial lifestyle quite unsustainable on the means of support or former level of income disclosed to the court or revealed in evidence, but which must have been available to sustain it.

The question is not whether, as in Baker v Baker, the conduct of the husband and the circumstances of non-disclosure are such that the court may properly infer the existence of assets, but rather whether the husband’s earning potential and fund-raising capacity is such that, in order to make fair and proper provision for the wife, she ought fairly to be awarded those assets which undoubtedly exist and remain within the jurisdiction to satisfy her needs. In the light of the history and the husband’s apparent prosperity in the US, the judge has inferred an ability of the husband to earn or raise money to sustain his new business and provide for his needs there, as well as to discharge his debts over time. In that respect, the position is as stated by Charles J in Rye v Rye [2002] 2FLR 981 at para [164]:

“Having regard to these cases I accept the submission made on behalf of the husband that there must be sufficient material upon which the court can properly make a finding based on inferences and thus the findings should not be based upon suspicion. But, the cases show that if a party has not given full and frank disclosure and has been found to have lied, that can be a sufficient bases for drawing inferences that are adverse to that party. The cases also make it clear that in drawing an inference and thus making a finding as to the assets, or prospects, of a party, the court does not have to be in a position to quantify those assets or prospects with any precision. Indeed this is a natural consequence of drawing on inferences for the reasons referred to. The nature and extent of the inferences drawn will naturally depend on the circumstances of the individual case.” (emphasis added).

The approach which Charles J adopted to the husband’s ability to raise money through irons in the fire and in the course of his future activity is one which, by analogy, the judge applied in this case.

In relation to the husband’s business prospects, Charles J stated under the heading “Business Prospects”

“This is a different issue to evaluation of the present companies and relates to the ability of the husband to trade out of his present difficulties and to maintain a standard of living for himself and his family equivalent to, or approaching, that which they have enjoyed in the past. The wife asked me to infer that the husband has a number of ideas, prospects, opportunities, and connections over and above those he has told the court about…for the reasons listed below I make that inference and therefore that finding... ” (para [193]).

Having set out the reasons for his finding, Charles J went on:

“[194] In my judgement correctly, inviting me to make findings as to the husband’s business prospects, counsel for the wife did not submit: (i) that there was evidence that there was any new ventures had already been started and … not disclosed; or (ii) that there was evidence from which I could find that the husband had substantial undisclosed capital or income presently available to him. In my judgment, for the reasons set out above the husband has “irons in the fire” and other ideas and prospects as to his future business activities that he has not disclosed.

[195] I am not in a position to quantify the profits or likely profits or returns of these prospects or ventures, or to form a view as to what, if any, profits or returns have been received therefrom or when they are likely to be received. However I am quite satisfied that the husband has such prospects or ventures… In my judgment the general nature of the husband’s business prospects are that they will enable the husband to make substantial, or reasonably substantial, trading profits from existing and new ventures from which he could draw properly voted remuneration to enable him to continue to support himself and his family.”

In this case, it is clear from the judge’s reference to authority and the general structure of her judgment that she adopted a similar approach to that of Charles J in Rye v Rye. She was of course concerned with dissimilar facts, but, as it seems to me, there was ample material upon which she was entitled to conclude as she did, on her assessment of the husband’s history, ability and modus operandi in the past, as well as what appeared to be the nature of his activities in the United States, that he was a survivor, capable of so organising his affairs and juggling his finances that he would “ trade out” his debt situation and continue, by his own dealing (or wheeler-dealing) activities to continue to enjoy a lifestyle, and the security of a good home, both superior to that of the wife and children of whom he had effectively washed his hands after transferring to the United States substantial assets which he had been able to realise in order to finance his own needs.

The grounds of appeal in a nutshell are these. Mr Sanders points out that, since the equity in the husband’s United States property was only £135,000.00, the United States tax bill for Capital Gains Tax will exceed that by £90,500.00 if the properties are sold, or £80,500.00 if the whole of the equity could be realised by way of re-mortgage. That is the position before any consideration is given to the debts advanced by the husband which were said to total £260,000. Of that sum, the husband stated that he borrowed £107,000.00 from his family to start his business and the judge plainly did not regard that debt as established, repayment never having been demanded. She also held that

“The schedule of debt consists largely of matters he could and should have dealt with long ago, but chose not to” (para 46)

Mr Sanders acknowledges his difficulty in relation to establishing the true extent of the debt position, bearing in mind the judges’ findings. However he relies upon the fact that there were established bank and credit card debts of £37,000 and £28,000 respectively, i.e. a total of at least £55,000. Adding that figure to the £80,500 deficit above referred to, the overall position is reached in which the husband has a total asset deficit of £145,000, plus his liability for costs of £100,000 ordered by the judge. Mr Sanders submits for the husband that such a situation is manifestly unfair as between the parties.

In relation to the question of fairness, the position was such that the district judge was essentially having to address herself to the question as to where the burden of the husband’s debt should fall. The husband’s only proposal was that his liabilities should be paid out of the sum of approximately £400,000, including the equity in the matrimonial home which the District Judge considered the wife should have to satisfy the family’s housing need. So far as fairness is concerned, the judge attached great importance, as she was entitled to do, to the fact that, since the break-up of the marriage the husband had transferred out of the jurisdiction £300,000 which could have been used to pay the whole of the UK tax debt and a fair proportion of the United States liability to CGT (see para 42 of the judgment, quoted at paragraph 23 above).

At the end of the day, as I made clear at the outset of this judgment, Mr Sanders does not seek to challenge any of the judges’ findings of fact. Nor does he suggest that there was any mistake made or material matter omitted in the course of her review of the position or in reaching her conclusion; he simply attacks the fairness of that conclusion to the extent that it failed to allow for the burden of the husband’s debt to be shared by the wife. Nor does Mr Sanders suggest that the judge was not entitled to take into account the husband’s ability to borrow and survive.

Given the judge’s assessment of the husband, and of his propensity and abilities as a businessman and income-earner, I do not regard the judge’s order as manifestly unfair. It is evident that she carefully weighed and considered every aspect of the parties’ position so far as she was able to do so in the light of the husband’s history of evasion and the glaring insufficiencies in his evidence. So far as fairness was concerned, she was faced with a history of studied indifference by the husband to his family obligations and a situation where he had transferred assets to the United States for his own benefit, leaving behind mounting arrears of mortgage debt and nothing but diminishing equity to secure the housing needs of his wife and family in this country. To have permitted the husband to raid his diminishing UK assets further for his own benefit at a time when he appeared successfully to have established a home, business and lifestyle for himself in the United States, would in my view itself have been manifestly unfair. Given the circumstances, it was legitimate for the judge to follow the line of reasoning adopted by Charles J in Rye v Rye and in my view the main appeal should fail.

I have felt able to reach that conclusion without the necessity to rule upon the admissibility of certain further evidence sought to be advanced by the wife and made the subject of her application to admit further evidence referred to at the beginning of this judgment. It was agreed between the parties at the outset that I should consider such evidence de bene esse and rule upon the application when delivering judgment on the appeal. Without going into detail, that evidence appeared to demonstrate the existence of a previously undisclosed Abbey bank account in the name of the husband into which rents of at least one of the husband’s properties are being paid. If that is correct, it is hardly a surprise, bearing in mind the judge’s findings and her approach to the new evidence of the husband. However, not only is the application made very late, the evidence is insufficient to show the existence of any substantial undeclared assets; it would thus have been unlikely to have any material effect on the overall conclusion of the judge. I therefore make no order upon the application to admit further evidence and I have taken no account of it in coming to my decision.

I now turn to the appeal against the order of the judge that the husband pay the sum of £100,000 towards the costs of the wife.

Mr Sanders for the husband puts his point quite shortly. He submits that there is nothing, or at any rate insufficient, in the nature or conduct of the proceedings to justify an order for costs against the husband, particularly in a case where the effect of such order was to add to the burden of the husband’s debts. He submits that, since the level of the wife’s publicly funded costs as estimated below was some £52,000.00 only, that was not an inordinate amount for the wife to sustain as the amount of his recovery subject to the charge in favour of the Legal Services Commission. Alternatively, Mr Sanders submits that the judge should have capped the costs payable by the husband in a sum sufficient to cover the wife’s publicly funded costs but no more, rather than the substantially higher figure of £100,000.

Ms Miscampbell for the wife, on the other hand, makes three broad points in resistance to those submissions. First, she relies upon the discretionary nature of the judge’s decision in relation to costs and the consequent need for Mr Sanders to point to some plain error underlying, or manifest unfairness resulting from, the judge’s order for costs. Second, she relies on to the terms of the judgment itself, in which the judge made clear her disapproval of the husband’s history of evasion and non-co-operation in the conduct of the proceedings, including his evidence at trial. The fact that the judge was not prepared to infer that, by the time of trial, the husband was in possession of assets which he had not disclosed, did not amount to an exoneration of his earlier evasion and misconduct which had greatly added to the costs and complication of the proceedings. Third, Ms Miscampbell stresses the adverse effect of the LSC charge upon the proceeds of sale of those properties ordered to be transferred to the wife, the impact of which will in any event serve to reduce the award in her hands to a point where her ability to purchase a new home will be imperilled.

In my view this is a case in which the judge was fully entitled to make the order which she did. She plainly regarded the husband’s conduct of the litigation as an extension of his determined campaign, which had started well before the litigation, to collar the family assets for his own benefit and evade his financial obligations towards his wife. Indeed, the judge set out his lack of frankness and failure to co-operate in the proceedings in some detail at paragraphs 33-40 of her judgment. While it is of course true that the costs order added to the husband’s burden of debt, there is no reason to think that the judge overlooked that effect, or that she intended otherwise.

I turn to the suggestion that the judge should have capped the husband’s costs liability in a sum equal to the wife’s publicly funded costs. Whereas in family cases the overall effect of a costs order upon the means of the parties is an element which may be taken into account on a division of the assets, the effect of the costs order suggested is inevitably to defeat the right of the successful assisted party’s solicitors under Regulation 107B of the Civil Legal Aid (General)Regulations 1989 to recover a sum in respects of costs from the paying party greater than that which he is entitled to receive on the basis only of an LSC assessment. While the effect of Regulation 107B involves a notional dis-application of the indemnity principle in relation to inter partes costs orders (see Rayden & Jackson (18^th Ed) para 54.53) it nonetheless gives effect to the broad principle underlying the Legal Aid scheme that the rights conferred on a person receiving legal aid do not affect the rights or liabilities of other parties to the proceedings or the principles on which the discretion of the court is normally exercised: see s.22 of the Access to Justice Act 1999. Thus the normal rules and principles governing the award of costs apply as between an assisted and an unassisted party. I am not aware whether or not a submission was ever made to the judge that the yardstick for the cap upon the husband’s liability to pay the wife’s costs should be the estimated amount of her publicly funded costs; however, whether or not that was the case, I am satisfied that the judge made no error of principle in making the order which she did.

The appeal of the husband will be dismissed.