Ezair v Ezair

In financial remedy proceedings, assets may be allocated unequally in kind to achieve equal net worth where the allocation is supported by agreed expert evidence. Business assets are not automatically risk-laden where their value principally rests on property assets and realistic realisation assumptions. Under Rule 28.3 of the Family Procedure Rules 2010, litigation misconduct may justify a costs order notwithstanding the general rule against costs orders in ancillary relief trials. The lump sum should first be assessed by reference to the s.25 criteria. Any compensation for wasted costs should then be imposed by a separate, reasoned costs order, avoiding double penalty.

The husband appealed from an ancillary relief order made by His Honour Judge Booth in the Manchester County Court. The parties, who had been married for more than 30 years, agreed that their financial relationship should end with equal net worth. Their assets comprised business interests, valued at £2.637 million, and privately owned assets, valued at £2.04 million.

The judge awarded the wife the privately owned properties and ordered the husband to pay a lump sum. Although £322,000 was mathematically required to achieve equality, the judge ordered £500,000, reflecting the husband’s misconduct in the proceedings. The appeal concerned the allocation of risk and liquid assets, a bank guarantee issue, and the additional £178,000.

1. Appeal allowed in part. The challenges to the allocation of assets and the bank guarantee issue failed. The judge was entitled to rely on the agreed evidence of the two forensic accountants and to conclude that the distinction between copper-bottomed and risk-laden assets was inappropriate. The business assets were principally property investments, and their agreed valuation already allowed for realistic realisation and discounting assumptions.
2. The judge was entitled to take account of the husband’s litigation misconduct. Under Rule 28.3 of the Family Procedure Rules 2010, the court could depart from the general rule that there should be no order for costs at the conclusion of an ancillary relief trial. Within the codified exceptions, it could penalise the husband and compensate the wife for wasted costs.
3. However, it was unorthodox and unsustainable in principle to inflate the lump sum from £322,000 to £500,000. The lump sum had to be assessed having regard to all the s.25 criteria. A distinct costs order should then identify and quantify, with reasons, the costs unnecessarily incurred through the husband’s misconduct.
4. The lump sum order was therefore rewritten as £322,000. The quantification of the separate costs order was remitted to His Honour Judge Booth. He was directed to consider the husband’s status as a litigant in person, costs already ordered at interlocutory stages, the need to avoid double penalty, and the fact that the wife’s bill had not undergone summary or detailed assessment.

1. Court of Appeal (Civil Division) allowed the appeal in part, substituted a lump sum of £322,000, and remitted quantification of a separate costs order to His Honour Judge Booth.
2. Manchester County Court, before His Honour Judge Booth, made the ancillary relief order under appeal, including the £500,000 lump sum.