Paul Mark Simon v Lauren Belinda Simon & Anor

The Court of Appeal considered whether a commercial litigation lender (Integro Funding Limited trading as Level) should have party status in financial remedy proceedings and the proper procedural steps after a consent order was set aside by consent. The court held that a litigation lender who has funded one party may, in rare and particular circumstances, be entitled to limited party status so as to make representations when the court is asked to approve a proposed consent order, and that Family Procedure Rules (in particular rule 9.26B) and the court's inquisitorial role under s25 and s33A of the Matrimonial Causes Act 1973 inform that decision.

The appeal identified two principal errors by the judge: (i) directing that the matter proceed immediately to a full five-day financial remedy trial with full participation by Level; and (ii) transferring Level's parallel civil claim (including reliance on s423 Insolvency Act 1986) to the Family Court to follow the financial remedy proceedings. The Court of Appeal allowed the appeal in part, remitted the case for an inter partes hearing limited to whether the consent order should be made, and left Level as a party for that limited purpose.

Background and parties:

• The appellant is Paul Mark Simon (the husband). The first respondent is Lauren Belinda Simon (the wife). The intervenor/second respondent is Integro Funding Limited ('Level'), a litigation lender who advanced loans to the wife to fund her matrimonial litigation.
• Financial remedy proceedings were long-running. Parker J originally ordered a lump sum, that decision was appealed, and the parties reached a settlement at an FDR in February 2021. A draft consent order reflecting that FDR agreement was approved by a deputy High Court judge and sealed, but Level successfully applied to set aside the consent order because it neutralised their prospects of recovering the loans they had advanced.

Nature of the application / relief sought: The husband appealed the case management orders made after the consent order was set aside. He challenged (inter alia) Level's continued party status, the judge's refusal to summarily remake the consent order under s33A Matrimonial Causes Act 1973 on the basis of the D81, the direction to proceed to a full five-day financial remedy trial with Level as a full party, and the transfer of Level's parallel civil claim (including a claim under s423 Insolvency Act 1986) to the Family Court.

Issues framed by the Court:

1. Should Level have party status for the purposes of representations as to approval of a consent order and should that status continue after the order was set aside?
2. Was the judge correct to refuse to summarily remake the consent order under s33A MCA 1973?
3. Having refused summary approval, was it appropriate to order a full financial remedy trial with full participation by Level?
4. Was the transfer of the civil proceedings (including the s423 claim) to the Family Court appropriate?
5. Are litigation lenders to be treated differently from ordinary unsecured third-party creditors in matrimonial proceedings?

Court's reasoning and decision:

• The court accepted that Level had been properly joined to make representations about whether the draft consent order should be approved and that it should remain a party at least for further argument limited to whether the same order should be remade. The Court of Appeal did not decide whether the joinder was under r.9.26B(1)(a) or (b) but accepted intervention for the approval stage was appropriate in the circumstances.
• The judge was right to decline to make the consent order summarily under s33A MCA 1973 given the procedural irregularities, deficiencies and misleading information in the D81, and the surrounding circumstances of the original approval.
• It was wrong, however, for the judge to move directly to orders for a full five-day financial remedy hearing with Level participating as a full party. The correct intermediate procedural step was an inter partes hearing limited to whether the consent order should be made, with proportionate disclosure to inform that decision rather than full trial directions imposing burdens of full Form E disclosure and trial participation.
• Once the consent order had been set aside by consent there was no longer a completed transaction for the purposes of s423 Insolvency Act 1986. The judge therefore erred in transferring Level's civil claim (with heavy emphasis on s423) to the Family Court to follow the financial remedy hearing.
• On the public policy point, the court recognised litigation lending as an accepted means of enabling access to justice in family proceedings. While a litigation lender is not routinely entitled to full party participation, in rare cases where there is an appearance of collusion or a settlement that would defeat the lender's contractual recovery, limited intervention at the consent-order approval stage is appropriate. Full participation by a lender in general would be unusual and only justified in exceptional circumstances.

Disposition: The appeal was allowed in part. The judge's orders directing a full financial remedy trial with full participation by Level and transferring the civil proceedings to the Family Court were set aside. Level remains a party for the limited purpose of an inter partes hearing to determine whether the consent order under s33A MCA 1973 should be made; the matter is remitted for directions to Peel J for that hearing.

Appeal allowed in part. The Court of Appeal held that (i) Level was properly entitled to be heard about approval of the proposed consent order and should remain a party for that limited purpose; (ii) the judge was correct to refuse summarily to remake the consent order under s33A Matrimonial Causes Act 1973 given the misleading D81 and surrounding circumstances; but (iii) the judge erred in directing an immediate full financial remedy trial with full participation by Level and in transferring Level's civil claim (notably the s423 Insolvency Act 1986 aspect) to the Family Court. The appropriate next step is an inter partes hearing limited to approval of the consent order, to be directed by Peel J.

Appeal to the Court of Appeal (Civil Division) from the Family Court / Royal Courts of Justice (Deputy High Court Judge Nicholas Cusworth KC). Earlier proceedings included a financial remedy hearing before Parker J (July 2018), subsequent interlocutory steps, an FDR on 12 February 2021, approval and sealing of a consent order in March 2021, intervention and set-aside applications by Level, hearings before Holman J and Roberts J (see LS v PS [2021] EWFC 108), and interlocutory litigation leading to the judgment under appeal. The present judgment is [2023] EWCA Civ 1048.