Malialis v Malialis

On an appeal from a discretionary financial order, the Court of Appeal should intervene where the judge misdirected herself in law or acted outside the generous ambit of her discretion. It may correct drafting provisions that confer an unjustified windfall or extend an indemnity beyond the liability properly intended to be covered. A costs order may stand where the judge has applied the relevant costs regime in substance, even without expressly citing the governing rule, provided the parties’ submissions drew the rule and its exceptions to her attention. The costs jurisdiction in ancillary relief proceedings is wide, particularly where litigation misconduct is found.

The appellant, acting in person, sought permission to appeal orders made by Barker J in ancillary relief proceedings between him and his former wife. The proceedings involved a lengthy delay between trial and judgment, followed by several further judgments and revisions. The appellant challenged the substantive financial division, provisions concerning liabilities under Laiki bank guarantees, and an order requiring him to pay £50,000 towards the respondent’s costs.

The Court of Appeal heard the permission application and, deciding that the points could be dealt with immediately, proceeded to determine the appeal. The central issues were whether the judge had erred in exercising her discretion, whether the drafting of the guarantee-related provisions was too favourable to the respondent, and whether the costs order was permissible under the Family Procedure Rules 2010.

Permission granted; appeal allowed subject to revisions.

1. The Court of Appeal was not persuaded that the judge’s fundamental division of the assets involved a misdirection in law or exceeded the generous ambit of her discretion. That aspect of the order therefore stood.

2. The guarantee-related drafting did require correction. The provisions were too favourable to the respondent because they could give her an indemnity against potential future liability and a windfall. The order was redrafted so that the respondent was protected only against residual liability. That meant the amount of any liability or potential liability under a Laiki bank guarantee, less the amount reasonably expected to be recovered from the principal debtor whose debt was guaranteed.

3. The £50,000 costs order was upheld. Although the judge had not expressly directed herself to rule 28.3 of the Family Procedure Rules 2010, the parties’ written submissions had drawn the rule and the circumstances justifying departure from the no-order principle fully to her attention. The judge had therefore followed the relevant regime in substance. Her assessment of the parties’ conduct and the proportion of costs to be paid fell within her particularly wide discretion.

4. Since the necessary appeal points could be resolved at the hearing of the permission application, it was unnecessary and wasteful to adjourn the matter for a separate appeal hearing. The order was amended by deleting the specified subparagraphs, inserting the residual-liability definition, and recasting the indemnity undertaking accordingly.

1. Court of Appeal (Civil Division) — Permission granted. Appeal allowed subject to revisions to the order.
2. Family Division — Barker J made ancillary relief orders concerning the parties’ financial liabilities, guarantee-related indemnities and costs.