MB v EB

Party autonomy in a separation agreement is an important consideration, but it does not prevent a later needs-based award where the agreement fails to meet reasonable income and capital needs. The court must assess the agreement and the parties’ circumstances as a whole, including known health difficulties, accommodation, continuing interdependence and the scale of the payer’s resources.

In financial remedy proceedings, unreasonable conduct and disproportionate costs may justify a costs order under the Family Procedure Rules. Open offers, the reasonableness of pursuing issues, compliance with procedural obligations and the financial effect of an order are relevant. A party should not ordinarily recover costs unreasonably incurred through disproportionate litigation.

The judgment concerned the outstanding needs claim following an earlier determination of issues concerning the end of the marital partnership, a 2011 agreement and marital acquest. The wife had substantial resources. The husband, aged 59, had limited earning prospects, health difficulties and unsuitable accommodation in a converted garage, while receiving rental income from a flat.

The 2011 separation agreement had provided a flat and studio but no further income provision. The court had to determine whether the agreement should prevent further provision, the amount required for the husband’s needs, and the appropriate contribution to his costs. The court also considered the parties’ conduct and settlement offers.

1. Needs award. The court declined to treat the parties’ autonomy as determinative. The agreement could meet either the husband’s income needs or his capital and accommodation needs, but not both. It was therefore inadequate in the circumstances identified by the court, including the wife’s knowledge of his limited earning capacity and health difficulties, the unsuitable nature of the studio accommodation, the parties’ continuing co-dependence after the marital partnership ended, and the modest burden of an award on the wife’s wealth.
2. The court emphasised that the assessment was fact-specific. The award was not retrospective insurance against ordinary misfortune, but provision for a need which had existed when the agreement was made and remained unmet. The husband’s reasonable income need was assessed at £25,000 per annum. Applying the Duxbury tables, £325,000 was awarded to meet that need, with a further £10,000 for car replacement. The court refused to provide the additional flat merely for convenience.
3. Costs. Under rule 28.3(7) of the Family Procedure Rules, the court considered non-compliance, open offers, the reasonableness of pursuing issues, the manner in which the case was conducted and the financial effect of a costs order. The amended paragraph 4.4 of Practice Direction 28A reinforced that refusal to negotiate reasonably and responsibly may amount to conduct relevant to costs, including in a needs case where unreasonable litigation makes costs disproportionate to the award.
4. The husband had conducted the litigation irresponsibly and unreasonably. His costs were grossly disproportionate to the issues and the wife’s offers could have facilitated settlement. The wife’s liability for his costs was therefore capped at £150,000. The total award to the husband, including costs, was £485,000. The wife was not required to fund costs unreasonably incurred.

The judgment followed an earlier hearing on 25 June 2019, at which the court determined the marital partnership, the validity of the 2011 agreement and marital acquest. The present judgment dealt with the outstanding needs and costs issues. No appellate decision is stated.