Court of Appeal Judgement in Xanthopoulos v Rakshina 2024

 

Divorce involving a “truly international family”

The Court of Appeal has handed down judgement in a long-running case concerning financial provision after an overseas divorce involving a “truly international family” in which FLiP represented the former wife throughout.

This was the former husband’s appeal against the decision of Mr Justice Cohen reported as Xanthopoulos v Rakshina [2023] EWFC 50.

Background to the Appeal

The original claim was for a financial award after an overseas divorce, in this case in Russia. Key points of law and practice emerged from this original judgement, summarised here, including:

  • The conduct of former husband in pursuing his financial claim led his former wife to incur “excessive and unnecessary expense.” The former husband’s failure to comply with court directions and repeated LSPO applications consequent upon the various change of solicitors was a “grossly exorbitant use of the court’s time and W’s money.”
  • The consideration of orders for legal costs funding under the Legal Aid, Sentencing & Punishment of Offenders Act (LSPO). Sir Jonathan Cohen said: “It is not the job of the court to act as the insurers of solicitors who overshoot, let alone dramatically overshoot, the sum provided by way of LSPO.” Orders for legal costs funding should be “firmly tied to compliance with court orders.”
  • The impact of a Post-Nuptial Agreement “freely entered into” in Russia by the former husband.
  • The degree of connection of the parties with England and Wales under an application under Part III of MFPA 1984.

The judge awarded the former husband a housing fund of €600,000 for a property in Greece, where the judge found he was likely to live. The housing fund would be provided on the Greek equivalent of a trust with the beneficial ownership reverting to FLiP’s client when the former husband no longer needed it. He was also awarded spousal maintenance of £60,000pa for 4 years. The former husband’s litigation conduct was a significant factor in the determination of the award.

The Appeal

The Court of Appeal declined to increase the award to the very substantial sums the former husband sought on an outright basis. His housing fund was increased to £1m and his 4-year term maintenance order was increased to £115,000pa. The Court of Appeal said that the former husband had attempted to use the Appeal to effectively re-argue his case, which was impermissible. His “persistent litigation misconduct” and “egregious” behaviour had also continued throughout the Appeal hearing.

The Court of Appeal process also saw the former husband being granted a further £175,000 for his legal costs prior to the Appeal hearing under yet another LSPO (the former husband had already benefited from 11 such orders).  Mr Justice Peel, who heard the LSPO application and who required FLiP’s client to advance the £175,000 to her former husband, said in his judgement:

“It is suggested that if the LSPO application is granted, the husband carries no risk. I do not agree.

If he succeeds on the appeal, and the Court of Appeal makes a costs order in his favour, the sums received under a LSPO would likely be netted off against such an order. No prejudice to the wife would flow.

If, by contrast, he loses on appeal, he may have to repay the LSPO award to the wife, as well as make a costs award in respect of the wife’s own legal fees. The LSPO would operate as in effect of a loan by the wife to the husband, and would be fully capable of readjustment once the appeal has been determined; see the decision of Sir Andrew McFarlane P in Al M [2021] EWHC 303 (Fam) at para 9. Although it will be a matter for reconsideration at that stage, I see no reason in principle why the husband should not, if unsuccessful, be required to repay the sums advanced, and (if applicable) the wife’s costs out of the sum of £252,500 which he is due to receive under the term periodical payments order, and perhaps also out of the €60,000 furnishings lump sum. He may say that to do so would be to interfere with the carefully calculated sums deemed by Sir Jonathan Cohen as appropriate for his needs, but the courts have repeatedly said that a party who is guilty of misconduct (including litigation misconduct) cannot be immune from the consequences of that misconduct, even if that means invading a needs based award

Cross-applications were made for costs with FLiP’s client seeking reimbursement of the £175,000 she had been required to pay to her former husband under the LSPO and her costs of the Appeal. The former husband sought his costs, less the £175,000 that he had received.

The Court of Appeal decided that FLiP’s client should pay her former husband’s costs of £175,000 and his costs of the application for funding.  The rationale was that he succeeded on the Appeal (albeit on only 3 of his 9 grounds of Appeal) but that his misconduct on the Appeal, including his failure to make any realistic offer, should be marked by a reduction in the costs order.

It is disappointing that the Court of Appeal treated success on only 3 of the former husband’s 9 grounds of Appeal as a win.  This can only underscore the former husband’s ability to litigate without any concern about cost, secure in the knowledge that it will be funded by his former wife, FLiP’s client.

The Court of Appeal refused permission for the former husband to appeal to the Supreme Court but, if he chooses to do so and if he gets permission to appeal, FLiP’s client is likely to face yet another application for legal costs funding.  This is a bad message to serial litigants.

If your divorce has international aspects, our exceptional team of family lawyers will guide and protect you whilst navigating the complexities of your case. Contact FLiP to find out more.