LKH v TQA AL Z (Interim maintenance and pound for pound costs funding)

A court may support an unpaid maintenance and litigation-funding order with a pound for pound injunction where the payer funds his own lawyers while leaving the other party’s ordered payments substantially unpaid. The purpose is to maintain an equal or level playing field. The injunction may require an equal payment to the other party’s solicitors whenever the payer funds solicitors or counsel in England and Wales, subject to the existing ceiling on the underlying funding order.

That remedy does not replace or reduce the substantive liability. A court should not ordinarily debar a party altogether from being heard in defence of an application. Preventing a litigant from being heard is an especially strong and extreme step, distinct from restraining a party in contumacious breach from making a further application.

The applicant sought interim maintenance and litigation funding under Part III of the Matrimonial and Family Proceedings Act 1984. The respondent had failed to comply with earlier orders, leaving substantial arrears of maintenance, costs allowance and costs payments, while paying at least £95,000 to his own solicitors. He asserted that his substantial assets were illiquid and unrealisable.

The applicant sought a pound for pound order requiring a much larger payment to her solicitors for every pound paid to the respondent’s lawyers. The central issues were the proper scope of that jurisdiction and whether the respondent should be debarred from being heard.

1. Non-compliance and underlying liability. The respondent remained bound by the earlier maintenance and costs orders. No appeal or variation application had been made, so the arrears remained due. The proposed order did not derogate from that substantive liability.
2. Pound-for-pound jurisdiction. The court considered Mubarak v Mubarik [2007] 1 FLR 722. The rationale was an equal or level playing field. The jurisdiction could properly require the respondent to pay an equal sum to the applicant’s solicitors for every pound paid to his own lawyers, up to the ceiling in the earlier order. It could cover payments to solicitors in England and Wales and counsel instructed on a direct-access basis.
3. Legal advice. The injunction did not deny the respondent access to legal advice. He remained free to spend any amount on his own lawyers, provided that he made the equal payment required by the injunction.
4. Debarring order rejected. The court declined to debar the respondent from being heard in the financial or Children Act proceedings. A court should encourage both parties to engage fully so that it can reach a fair and informed result. Debarring a litigant from defending an application is materially different from preventing a party in contumacious breach from making a further application under the Hadkinson jurisdiction.
5. Order. The respondent was injuncted from paying further sums to solicitors or direct-access counsel unless an equal sum was paid to the applicant’s solicitors towards the arrears and current instalments of legal-services funding. The precise terms were to be drafted by counsel.

The judgment was a continuation of an earlier judgment and order of the same court, reported as [2018] EWHC 1214 (Fam). No appeal from that earlier order had been made. The present judgment determined the further application arising from subsequent non-compliance.