Paul Mark Simon v Lauren Belinda Simon & Anor

Commercial litigation lenders are not necessarily equivalent to ordinary unsecured creditors in financial remedy proceedings. Where a loan funded the recipient’s litigation and a proposed settlement appears designed to defeat repayment, the lender may be heard under the Family Procedure Rules 2010 rule 9.26B, but intervention will ordinarily be rare and limited. The court should generally hold an inter partes hearing on the proposed consent order before directing a full rehearing. If the applicant withdraws the financial remedy application, the court cannot compel her to litigate. A consent order set aside by consent is no longer a transaction for Insolvency Act 1986 section 423 purposes.

Financial remedy proceedings concerned a settlement reached at a private FDR between the husband and wife. The wife’s litigation lender, Level, was not informed before the consent order was approved and sealed, and the settlement left the loan unpaid. Level was joined and the consent order was later set aside by consent. The deputy judge continued Level as a party, refused to remake the order summarily, directed a full financial remedy rehearing and transferred Level’s civil claim to the Family Court. The husband appealed, challenging Level’s status, the proposed rehearing, the lender’s role and the transfer of the civil claim.

1. Disposition. The appeal was allowed only to the extent that the deputy judge had directed a new full financial remedy hearing with Level participating as a party and had transferred Level’s civil proceedings to the Family Court. The appeal was otherwise dismissed.
2. The husband accepted that Level’s initial joinder to make representations about approval of the proposed consent order was correct. The court therefore did not decide whether Family Procedure Rules 2010 rule 9.26B(1)(a) or (b) was the appropriate route. Level should remain an intervener for the outstanding application to make an order in the agreed terms.
3. Commercial litigation lenders are not in the same position as ordinary unsecured creditors. The public interest in litigation funding, and the requirement under Matrimonial Causes Act 1973 section 22ZA that an applicant first consider securing a loan, justify protection against improper manipulation of proceedings to avoid repayment. Such intervention will usually be limited to the consent-order stage or a preliminary fact-finding issue. Full participation in the financial remedy proceedings would generally be unjustified, although collusion and unusual procedural circumstances could make it appropriate.
4. Under section 33A of the Matrimonial Causes Act 1973, the court may act on prescribed information alone only where it has no reason to inquire into other circumstances. The history of the original order and the materially deficient and misleading D81 meant that summary approval was inappropriate. The court had to scrutinise the proposal independently with the section 25 criteria in mind. After declining to remake the order summarily, the judge should first have held an inter partes hearing, with disclosure limited to what was necessary. If the wife and husband no longer sought continuation, the court could not compel the wife to litigate.
5. Following Hill v Haines [2007] EWCA Civ 1284, [2008] 1 FLR 1192, the court held that setting aside the consent order removed the transaction on which Level’s section 423 Insolvency Act 1986 claim depended. The civil claim therefore could not be transferred on the basis that section 423 continued to apply.
6. The matter was remitted to Peel J to give directions for an inter partes hearing of the application for a consent order under section 33A.

• Court of Appeal (Civil Division): In [2023] EWCA Civ 1048, the appeal was allowed in part. The directions for a full rehearing and the transfer of the civil claim were set aside, and the case was remitted for directions for an inter partes hearing.
• Family Court sitting in the Royal Courts of Justice: Mr Nicholas Cusworth KC, sitting as a Deputy High Court Judge, continued Level as a party, refused to remake the consent order summarily, directed a full financial remedy hearing and transferred Level’s civil claim. No separate citation is stated in the judgment.