HA v EN

THE HONOURABLE DEPUTY HIGH COURT JUDGE RICHARD TODD KC: This is a hearing to determine outstanding issues which arise from the parties' ongoing applications for financial remedy.

I am going to direct that this case should be anonymised for the same reasons of commercial sensitivity that I set out in the earlier report of this case, HA v EN [2025] EWHC 48 (Fam). Similarly, because of the background having been fully stated in that earlier report of this case, I do not propose to set out the background at any greater length here.

A final hearing had been listed for this matter to commence on 22 April 2025 with a time estimate of 9 days. The parties required more time in order to continue their negotiations with a view to achieving a compromise. I am pleased to report that with the assistance of expert legal representation on both sides, they have very largely been able to achieve a compromise. As is sometimes the case, there remain various issues between them which are subject to this court's ability to resolve because on 21 April 2025 the parties were agreed that the negotiations had reached the stage of a Xydhias agreement.

A Xydhias agreement is named after the well known case of Xydhias v Xydhias [1999] 2 All ER 386. I will return to a discussion of the law in respect of this later in this judgment.

The court gave considerable time to the parties to enable the negotiations to take place but, as already indicated, those negotiations were successful in agreeing the vast majority of issues.

I have seen a draft consent order which sets out the disagreements and agreements of the parties. This morning I was sent a further note by Mr Brazil on behalf of the husband in which he referred to additional matters being in dispute. They arise from the husband's concern as to the enormity of the liabilities that might fall on him as a consequence of inter alia the size of the legal costs incurred on the wife's behalf.

Continuing with the issues today, they really divide into two parts. There are those which arise from the agreement itself and there are those that arise from the issues that have been raised by Mr Brazil.

I will set out the contested points shortly, but by way of background to the agreement itself, the distribution of the vast majority of the parties' wealth has been resolved by agreement. The wealth itself consists primarily of the family home which I understand is being marketed for £19.95 million. The parties have received an offer of £15 million which they have both agreed to reject. The husband's particular concern is that should they achieve a good deal less than the asking price of £19.95 million, then his share is progressively reduced. It is plain that if the final price was to be as low as near the £15 million mark, then that would result in both parties receiving nothing after the schedule of liabilities, which has been provided by Mr Yates KC on behalf of the wife.

The other main group of assets is the husband's investments of which the vast majority are illiquid. These have been valued by the well-known expert Mr Tom Rodwell and he has valued them at £10.7 million. The wife cannot currently be paid out her capital claims because these assets need to be liquidated.

By way of further background there was a pre-nuptial agreement. It has been the foundation of the parties' discussions. The difficulty being, as was set out in the earlier judgment in this case, that there is simply insufficient assets to meet the Wife’s entitlement under that agreement. However that agreement anticipated that and provided for a “stop-loss” clause. This operated so that if the Husband had insufficient resources then there would be a maximum claim by the Wife. The Wife has accepted that her claims are limited by this. As such this has been reflected in the draft consent order which has been put before me.

Even whenever the illiquid assets are realised, the vast majority of the capital is still going to have to be deployed in meeting the parties' respective needs. This case has moved from being an obvious sharing case on the original assets as alleged by the wife, to much closer to a needs case as now it is.

It is said on behalf of the wife that the husband's needs are less pressing than those of hers because she is the primary carer. I do not accept this. They both have needs and there is no hierarchy between them as to needs; first consideration can still be given to the welfare of any children without prioritising one adult’s needs over the other’s. It may well be that for quantum, that one party's needs is higher than the other's but they are to be treated with equity and equality when they come before this court, when it comes to their question of needs.

I note that there is a dispute between the parties as to the extent to which the husband is seeing the children. He says that is currently restricted because of the inappropriateness of his one-bedroom flat for there to be any staying contact. I need not explore that any further because, as already indicated, it seems to me that there is a high similarity between the parties in respect of their needs and indeed the court order does seem to achieve this.

The settlement is achieved in the first instance, by the setting up a family fund. This deals not just with the longer-term but also the interim expenditure whilst they await liquidity events such as the sale of the matrimonial home and also the realisation of the liquid assets. It is agreed that all of the liquid assets, including the unusually liquid pension that the husband has, his income and the various other assets are to be placed into that family fund.

It is also agreed that one parking space separate from the family home will now be sold, if possible, in order to achieve some more liquidity. Mr Brazil has alerted me to the difficulties with selling that, but it makes no difference to the actual terms which the parties have agreed – it will either sell and the proceeds join the fund or it will not.

The family fund will meet both parties' ongoing expenditure until the later of either the family home being sold or the wife receiving £3.5 million in capital. £3.5 million is the figure which the parties agree she is going to need to rehouse herself and the children. After that is liquidated, which is referred to within the order as the "trigger day," the family fund will be liquidated and the remaining funds are divided equally less certain agreed payments which are not to be taken into account. There is then a rebalancing exercise whereby the party who has spent less is reimbursed by the other. There is a small dispute, which I will resolve, as to when that occurs.

The headlines of the agreement can be summarised as this:

Once the wife has received £3.5 million and the FMH has been sold, the family fund is liquidated, as already indicated, and the funds divided as set out above.

The husband is going to pay the school fees, university fees and related living costs of the children at university. He has also proposed to pay child maintenance of £25,000 per annum per child and then additional costs for the children, including a holiday top up allowance of up to £20,000 per annum per child. (This is one of those items that the husband has said this morning is going to prove to be too oppressive for him in the changed circumstances of either the increased calls on the family fund or alternatively should the property sell for a great deal less.) On the basis of this, it is proposed that the capital claim should be dismissed and there should be a nominal maintenance order until the wife receives £10.5 million; that figure again being retail price indexed linked. There will, in any event, be a full life and death clean break of the husband's claims.

The basis of the order is no order as to costs, save that it is agreed, and this needs to be reflected in the order, that the costs of Harbottle & Lewis are to be subject to a party and own client assessment in order to see whether that figure can be reduced. That is very much at the behest of the husband. The husband quite rightly agrees that he should incur, in the first instance, the costs of obtaining that assessment. If he were to be successful in that assessment, he should be able to recoup those costs ahead of any other division between the parties and recoup those from the reduction that there would be in the costs that would otherwise be payable in respect of Harbottle & Lewis. There is then the conventional “liberty to apply” in the order in terms of implementation and timing.

The two interim charging orders made over the FMH to secure the sums due to the parties are to be made final and I do make that order.

First, I am going to set out the law which arises from the case of Xydhias and upon which this Court’s jurisdiction today is founded. The case of Xydhias emphasises that this court is not just a rubber-stamp approving the agreement between the parties. This court has to exercise its discretion under section 25 of the Matrimonial Causes Act 1973 ("the 1973 Act"). In approving the parties' agreement and resolving the other issues of today, I have taken into account all of the clauses within that section of the 1973 Act. I have scrutinised the agreement and I am persuaded that the agreement achieves fairness in this case.

The Xydhias jurisprudence exists to deal with where there are either small disputes as to the exact terms of an agreement reached or its implementation (and whether they should be sanctioned by the Court) and also whether an agreement has been reached at all. I mentioned “whether an agreement has been reached at all”, because if it were the case that I find the parties had not reached a level of accord which constitutes a Xydhias agreement but in the process I had seen some without prejudice correspondence, I would not be able to continue with this matter. The matter would have to be sent to another Judge who had not seen that material. Both parties invites me to accept that they have reached a Xydhias level of accord and that the small issues between them should be resolved summarily by me.

The recent judgment of Moor J in Pierburg v Pierburg (No.2) [2022] EWHC 2701 sets out the current orthodoxy surrounding Xydhias. He said at paragraph 43:

This goes back to the original decision of Xydhias and in particular the judgment of Thorpe LJ who held that:

Mr Yates KC suggests that this is a case of the husband seeking to resile from an agreement and to justify his shift by reliance on some point which was open for him to raise within the course of the negotiations.

Before I return to the arguments which have been put before the court, it is helpful to note that the decision of Xydhias must also be considered in the light of the case of Soulsbury v Soulsbury [2007] EWCA Civ 969. In that case, Longmore LJ questioned whether Thorpe LJ was correct in saying that the passing of consideration did not apply in respect of these agreements. The factual matrix of the Soulsbury case was that there had been a consent order. Pursuant to that order, the husband had to pay periodical payments to the wife. They subsequently agreed that if the wife were to waive her entitlement to periodical payments, the husband would leave her a lump sum in his will. Although the husband changed his will in consequence, he subsequently remarried which had the effect of revoking his will. The question then was whether or not the original agreement was of no validity; it being without consideration on a Xydhias interpretation.

The two issues for the Court of Appeal were (a) whether this was a contract that purported to oust the jurisdiction of the court and was therefore invalid and (b) the application of the principles enunciated in Xydhias itself. The first observations of Longmore LJ in that case were compelling. He held at paragraph 49:

This kind of unilateral contract is quite different from an agreement for the compromise of the ancillary relief application to which Thorpe LJ was referring to as being unenforceable in law in Xydhias v Xydhias. In Soulsbury there was already the existing obligation (because of the Court order) whereas in a Xydhias situation the Court is considering the creation of the obligation.

Ward LJ reviewed the authorities and observed at paragraph 40:

The Court of Appeal go on to say that they thought there could be a valid consideration in the Soulsbury case. The conclusion of Ward LJ is found at paragraph 45:

The overall position it seems to me is that as summarised by Thorpe LJ in Haines v Hill [2007] EWCA Civ 1284 at [56]:

This proposition was established by the Court of Appeal in Edgar v Edgar as Ormerod LJ put it at 14, 17 and 25 respectively:

But what of the Soulsbury argument that because there has been in effect mutual unilateral contracts in this case that the agreement is even more binding on the parties? It seems to me that I get some guidance from two more recent cases. The first decision of King J (as she then was) in S v S [2008] EWHC 2038 where she drew together at paragraph 23 a number of propositions including that the existence of a concluded agreement is a matter of great weight. She considered the argument about consideration and how:

That is plainly right and that is going to be my guiding start for this judgment.

The second case is Independent Trustees Services Limited v GP Noble Trustees Limited & Ors [2012] EWCA Civ 195 where Patten LJ observed at paragraph 36:

The position seems to be this: in the lead up to the making of a financial remedy order, the parties are simply seeking to achieve an accord. That accord will not become binding until it has the approval of the Court. The Court will usually make it into an order. The parties’ accord is always going to be imperfect without the Court’s approval. The Court might refuse the bargain and having done so, neither party will have recourse against the other for breach of either of the two alleged unilateral contracts. There would be no contract as a condition precedent in all such negotiations (approval of the Court) would not have been met. Once the order has been made (and is effective – for example a final decree of divorce would be needed) the condition precedent has been met. There is an obligation created by the order of the Court. That usually supersedes any contractual obligation but I can see no good reason as to why after that point the parties are not also contractually bound. Mr Soulsbury was thus able to enter into a contract after the consent order on this basis.

With that considerable body of law behind me, I turn to the facts of this case. It seems to me that Mr Yates KC's argument that all these matters were known to EN at the time of those negotiations is very compelling.

Dealing with the particular matters which he raises, first of all the quantum of the costs which have been incurred on behalf of the wife by her solicitors and her legal team. The costs figures themselves have departed from the original indication which was an estimated budget of £592,468 to a current figure which is approximately £816,000. It may well be that EN sees these costs as exorbitant because he has had the assistance of expert very senior and very proficient counsel in the form of Mr Brazil. Mr Brazil has acted in this case at rates which are only marginally above that which one would expect to see incurred in a pro bono representative. By pro bono of course I mean free. It is very much to Mr Brazil’s credit that he was not prepared to see his lay client go unrepresented and agreed such a modest fee in order that his lay client was not condemned to all the difficulties that a litigant in person especially when confronted by a team of the excellence of Mr Yates KC and Mr Benson.

The total costs which Mr EN has incurred, which include Mr Brazil adopting the role of solicitor as well as advocate, within these proceedings are in the extremely modest sum of £34,200. Previously the husband had retained other legal representatives whose costs were in total approximately £200,000 but appear not to have been for anything like the quantity of work that Mr Brazil has undertaken. EN has been extremely fortunate to find Mr Brazil to act for him and to act for that very modest fee.

The agreement between the parties which is reduced to a heads of agreement is without a figure as to what the Wife’s costs might be. It simply says that the wife's costs are to be paid and they are to be paid from the family fund. I have no real doubt that the figure which is now put forward which has been broken down and explained to me by Mr Yates KC is well within what a reasonable definition of the wife's legal costs could have been expected to be. This is an immensely complicated case and the fees are commensurate with both the difficulties of the case and the sums in issue. Mr Yates KC says, “if it really had been the case that this was going to be so fundamental to the husband, he might have asked before the parties concluded their agreement for a figure or a cap to be inserted”. He could have done this on either the 15 April or 21 April during the negotiations. As it is, the husband's complaint comes in very late in the day albeit he explains this by saying that he has only recently learned that the costs are actually a good deal higher.

As it stands, what the agreement provided in schedule 1 was the debts to be discharged from the sale proceeds including the legal fees owed to Messrs Vardags and whilst other items are challenged, that item was not challenged, although Mr Brazil is right in observe that that liability was not reduced to a number. The figure is to be interpreted on a Xydhias basis of what would have been the reasonable figure to incur and I do hold that it was of the order of the figure which has been sought by Mr Yates KC today.

The secondary matter is in respect of the costs of a lady, Ms C. She has been assisting in the negotiations. She put forward her figures as being needed to be repaid and again the husband did not challenge that she should be paid. Instead what he said was he needed to see her contract. Mr Yates KC tells me there is no difficulty in the contract being produced. At the time of the pre-trial review her costs were £83,000. I am told they are now £120,000. It seems to me, again, reasonable within the scheme of the negotiation, that the figure of the £120,000 is reasonable. When I say that, both in respect of Vardags' costs and also in respect of the person who is assisting in the negotiations, I am not conducting an assessment. The parties rights in respect of any assessment are reserved to them. What I am trying to do is interpret what the parties intended within their agreement and resolve the dispute that they have agreed I should determine. The reasonable sum that was going to be paid by the wife was what the parties agreed. The reasonable sum that can be called upon for the wife to pay is as has been set out and so I do not see that as a good reason for departing from that as part of the parties' Xydhias agreement.

However, the matter does not end there because Mr Brazil has a second string to his proverbial bow. He says, if I am wrong about this about the Xydhias agreement, I would say that the agreement should be varied. He is able to say that by taking advantage of the very little used provisions which are found within the 1973 Act in sections 34 and 35. Wilson LJ (as he then was) famously said in the Court of Appeal in Radmacher v Granatino [2009] EWCA Civ 649 that he had never come across an incidence of these two sections being used at all, such is their rarity. That said, post the Supreme Court's decision in Radmacher v Granatino [2010] UKSC 427, they became more utilised.

Section 34 provides for the validity of maintenance agreements and it provides in terms:

The Xydhias agreement falls within Sections 34 and 35. Section 35 gives me power then to vary such an agreement.

Mr Yates KC says very powerfully on behalf of the wife, that this is a “no evidence application”. He complains that it has been put together very much at the last moment and it might be unfair for the wife for this to be taken into account. I have sympathy for Mr Yates KC's position but by the same token, what Mr Yates KC is really asking for is an opportunity to adduce evidence and to have the matter looked at again. That would involve another hearing. I am in no doubt at all that the last thing that both HA and EN want is another hearing and that I should if I possibly can, anticipate such changes that might result in a variation of this order. I propose to do so. To adopt such a summary approach is fully in accord with the summary Xydhias approach which both parties have embraced.

However, in doing so, I do recognise the very limited time that the wife's legal team have had to formulate their arguments and the fact they have had no time at all to produce evidence. I make it clear that what I am proposing to do. There has been no application for an adjournment to adduce further evidence.

It seems to me that there are two matters which represent the changes of circumstances which are advertised in section 35(2)(a) as being valid bases for there to be a variation in a maintenance agreement. The first is, whether rightly or wrongly, the liability which is going to incurred by those additional items, including the properly incurred legal costs is higher than EN expected it to be. The second much more substantial point is the fear that both parties have that the property is going to sell for a good deal less than they hoped it will sell for when concluding their agreement. When I come to deal with the individual parts of the order, I am going to put in contingent variations which I will explain as I deal with those parts of the order itself.

What I propose to do is take the consent order as it is. I approve it in terms, only subject to the changes which I am about to make.

The first issue I have to deal with appears in paragraph 19 and it is the loan from TP. My direction is that the loan from TP shall mean the loans owed by the applicant to TP in the sum of £300,000 plus interest. But there is also a further £5,000 which should not include any interest. This is provided that within 28 days of today TP executes a statutory declaration which is then disclosed to the husband confirming that she did lend that additional £5,000 to the wife in this case.

The next issue is in respect of the instruction of agents who are going to hold money in escrow and also dealing with the question of conveyancing. This shall be the solicitors instructed on the sale of the family home (I assume that they will be the solicitors for the sale of the car parking space but if not it shall be the solicitors for the family home sale). Paragraph 25 will now read:

The next matter which I deal with is in respect of paragraph 29.2. 29.2 is on the basis that what the parties have now agreed and I agree to its recital as an order within the order itself, it now says:

The fourth matter is in respect of the undertaking to set up a family fund. This is paragraph 30(b) and the second part which (i) is agreed that that will be included. In respect of (g) which is for an allowance for the applicant's holidays with the children in the sum of up to either £20,000 or £40,000 per annum, that should also go in, that was part of the agreement.

I now come to paragraph 32(g) which is an allowance which is made for the applicant's holidays with the children. What I am going to direct there is a reflection of the current agreement that already exists between the parties and also the Xydhias agreement. (g) will say:

The next item I am asked to deal with is in paragraph 34(c) which is where the husband is required to reimburse various items which will have been incurred during the course of the existence of the family fund. I agree with Mr Yates KC that this is in the nature of a capital provision and therefore not susceptible to maintenance variation. Even though it does refer back to “maintenance sums”, it does seem to me it is more in the nature of the capital provision. But in any event it seems that in accordance with the continuity of what has been agreed in the Xydhias agreement that provision ought to stand.

The next matter is the undertaking in respect of the children's family's costs which is dealt with at paragraph 40. In 40.2 I think it is now agreed that the reasonable paid expenses, will have inserted, "in line with the costs currently incurred." There is then a figure which is:

The next matter is in respect of the medical insurance which the husband has generously agreed to cover. Under paragraph 42 my ruling is that the wording will now provide:

The next matter which I am asked to deal with is in respect of the order for sale of the family home in paragraph 44(b)(vii). To give its context, paragraph 44 reads:

The final matter is in respect of the child periodical payments. What is sought on behalf of the husband is that instead of there being £25,000 net per annum, there should be a CMS assessment. I am told and Mr Brazil has not contradicted this, that EN for jurisdictional reasons would not qualify for a CMS assessment. However, I am not content to leave the matter there. What the order will say in paragraph 48 is:

I have considered whether or not there should be a sliding scale in respect of the price for FMH. I have come to the conclusion that what is already a necessarily complex order, would be over complicated by this further inclusion. I am fortified in that view by the fact that the sale price is almost certainly going to be driven by a third party, i.e. the purchaser, rather than the parties themselves and so the opportunity to manipulate the price to above or below £17.5 million is very much reduced. If there is any attempt to manipulate that price then that would merit an application back to court and such manipulation is bound to be visited with penal costs orders.