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Tarama-TOLATA

 

I don’t normally write on financial cases, but this one is rather significant (and one can see that it might end up bleeding into other areas)

 

http://www.bailii.org/ew/cases/EWHC/Fam/2014/4110.html

 

Seagrove v Sullivan (Practice Directions re bundles and citations of authorities) 2014

 

This was a case in which Mr Sullivan had lived with Ms Seagrove for over twenty years and they had had children together, but never married. The youngest child was ten. Mr Sullivan owned a house, valued at around £2,300,000.

 

The equity in that property amounted to about £1 million.

 

Ms Seagrove had made a claim under TOLATA Trusts of Land and Appointment of Trustees Act 1996, and under Schedule 1 of the Children Act 1989 to seek a financial interest in that property and its 14 acres of land, as there was no marriage ancillary relief was not an option.

 

The case came before Holman J.

 

He was, well aghast doesn’t seem to overstate it. This former couple were litigating about whether Ms Seagrove was entitled to a half share in a property whose equity is worth a million, so the sum of money in dispute is £500,000.

 

For reasons that are unintelligible (unless you do cases involving financial disputes between former lovers where things have gone sour), they’ve spent £1,300,000 so far, arguing about £500,000.

 

Since she first instructed solicitors following the breakdown of their relationship, Sandra has incurred (including her estimated costs to the end of a fully contested current hearing) costs of about £800,000 inclusive of VAT. She, indeed, currently appears to be heavily in debt as a result. Larry has incurred costs of about £506,000, inclusive of VAT. So, between them, these two parties, who lived together for over 20 years and bore three children, to whom I am sure they are each devoted, have now incurred, or anticipate incurring, expenditure of about £1,300,000 on legal costs.

 

 

What are they arguing about? They are arguing about a claimed half share in an asset that may be worth around £1 million. So they are arguing about £500,000. What they have incurred in costs is not far short of three times the amount in dispute. Others might use other words of description, but as this is a judgment in a courtroom, I will merely say that the costs, and also the scale and intensity of this litigation, have been, and are, completely disproportionate.

 

 

Holman J was also considerably irritated at the volume of papers lodged in the case.

 

Having referred to the completely disproportionate costs that have been incurred, I turn now to the documentation which underlines the scale and intensity of this dispute. There were delivered to the court yesterday, or the day before, five large lever arch bundles of documents, which comprise over 2,000 pages, inclusive of the respective skeleton arguments, which are each just under 25 pages. There were also delivered to the court two large bundles and one more slender bundle containing no less than 32 authorities. As if that were not bad enough (as I will later describe), I was, frankly, flabbergasted this morning when the solicitors arrived at the court at about 10.10 am with another large cardboard box containing an additional five large lever arch files of additional documents (these are the ones with lavender coloured card on their spines). I have been told that those additional five bundles contain around a further 1,500 pages of documents. So, in aggregate, at the outset of this hearing, these parties are expecting consideration of all or part of 3,500 pages of documents as well as all or part of the 32 authorities. This needs to be considered within the framework that rule makers and the most senior judiciary have endeavoured to establish in order to ensure the proportionality of litigation.

 

 

It has been many years since I did a TOLATA claim, but a quick look at the Court fees schedule suggests that the fee is probably £255 (treating it as a family financial application), but no higher than £2,000 (treating it as a money claim).

 

I don’t know Holman J’s hourly rate, but to read 3000 pages is a considerable expense to the taxpayer, which is in no way covered by that standard fee.

 

I can imagine the baleful look that the solicitor got when he or she came in with a box of five further lever arch files.

 

 

Building on Mostyn J’s recent decision in Re J, Holman J reminded everyone about the Rules on bundles

 

 

In order to try to exert some control over documentation, which always has a considerable knock-on effect on the length and complexity of hearings, numerous practice directions have been made over the years by Presidents of the Family Division and other heads of divisions. The current practice direction in relation to bundles and documents is Practice Direction 27A, which is itself part of Part 27 of the Family Procedure Rules. This practice direction was issued by the President of the Family Division in April 2014. It was issued after a process of consultation with the well known professional organisations and associations of both the solicitors’ and barristers’ branches of the profession. It did not come out of the blue, and its existence has patently been well known now for an appreciable period of time by all the lawyers engaged in this case.

 

 

Of most relevance to the present situation is paragraph 5.1. That was specified by paragraph 13.2 to “have effect from 31 July 2014”. We are now four months on from 31 July 2014. Paragraph 5.1 provides as follows:

 

 

“Unless the court has specifically directed otherwise, being satisfied that such direction is necessary to enable the proceedings to be disposed of justly, the bundle shall be contained in one [I emphasise the word, one]A4 size ring binder or lever arch file limited to no more than 350 sheets of A4 paper and 350 sides of text.”

 

A later “statement”, to which I will shortly refer, makes plain that the 350 sides of text must be inclusive, not exclusive, of the sides of paper in counsel’s skeleton arguments

 

 

That’s right – unless the Court has specifically directed so, there is to be ONE bundle, of no more than 350 pages (including skeletons)

 

Holman J noted what Mostyn J had said when deprecating the practice which has sprung up of the parties agreeing the contents of that one bundle between themselves, but then lodging loads of supplementary bundles on the basis that the Court would be bounced into allowing all of that material, and agreed.

 

 

Mostyn J continued in a very important passage:

 

 

‘I also deprecate a practice of circumvention of which I have become aware. That is for the lawyers for both sides to agree a single “core” bundle and, in addition, an archive of many volumes of expensively prepared secondary or background material. This archive is then brought to trial in the confident belief and expectation that the trial judge will grant permission pursuant to PD27A para 5.1 at the final hearing itself to use documents from the archive. This is no better than the old regime which the new prescription was designed to stamp out … It is possible, of course, that, unexpectedly, further documents may be need to be deployed at the final hearing; but the starting point, and the usual finishing point must be that all the relevant documents should be in the single bundle …”

 

 

The advocates attempted to argue that a previous direction given in the proceedings that

 

Bundles are to be agreed between the solicitors (in consultation with counsel) and prepared by no later than 14 days before the final hearing.

 

Was in effect a direction that the parties could lodge such documents as they agreed amongst themselves.

 

“I thought we had Cate Blanchett?”

 

https://www.youtube.com/watch?v=JDUoTHj8AJ4

 

Holman J manifestly disagreed

 

The argument was that, by saying that “bundles are to be agreed between solicitors”, Moor J was giving some apparent carte blanche to the parties, through their solicitors, to include in the bundles anything that they wished to do so. Mr Wagstaffe denied that he was advancing such an argument, but, frankly, that is what his argument amounts to. He submits that the use of the words “bundles are to be agreed between solicitors” amounted to a “specific direction otherwise” and authorised bundles to exceed a total of 350 sides of text. Logically, his argument does mean that all and any documents that the solicitors “agreed” could go into the bundles could indeed be included, no matter how many or how long.

 

 

To my mind, that argument is spurious. It is inconceivable that, at the same time as ruling, by paragraph 10 of his order, that skeleton arguments were not permitted to exceed 25 pages, Moor J could have intended, or for a moment contemplated, that he was giving carte blanche * to these solicitors and parties to put in whatever documents they liked, no matter how many pages. In my view, there is no “specific direction” otherwise in this case and, as castigated by Mostyn J at paragraph 47 of J v J, the lawyers in this case have approached the case as if the terms of the practice direction “just did not apply to them”.

 

 

The courts have to exert discipline in relation to this. I stress, as Mostyn J did in J v J at paragraph 53, that if parties wish, at their own expense, to litigate to their hearts’ content, with thousands and thousands of pages of documents, there is a mechanism available to them known as private arbitration. But litigation within the courts has to be the subject of much more rigorous discipline and structure, precisely because the courts have a duty to ensure that an appropriate, but only an appropriate, share of the court’s resources are allocated to any one case. The same judges have to deal also with an enormous number of very difficult cases involving the future of vulnerable children, and the care and treatment of sick people, including mentally incapacitated people. It is simply not tolerable that we go on and on affording to people like Sandra and Larry an estimated eight days of court time on a dispute that ultimately is measured in something not exceeding about £500,000.

 

 

The cost of running these courts is not inconsiderable. I cannot specify what the daily cost is, for I do not know, but the state has to provide and pay for the judge, the court staff, the “back office” staff, the provision of the courtroom, the maintenance of the courtroom and all the other associated costs. It is obvious that the daily running costs of a court and courtroom such as this run into several thousands of pounds. Multiply that by eight and one can see at once that there is an expectation that this state, which as we all know is struggling still to rein in the deficit following the recession, should expend completely disproportionate amounts on resolving issues and disputes of this kind.

 

 

[* the Judge clearly meant “Cate Blanchett” here]

 

https://www.youtube.com/watch?v=JDUoTHj8AJ4

 

 

The Judge also looked at the timescales for the final hearing

 

 

 

A large part of the ridiculous time estimates in this and other financial cases is referable to the sort of volume of documents, including authorities, that parties still assemble and marshal. This case was given an estimate of eight days, with a detailed trial template. That template contemplates that, after one day of reading and six days of evidence and argument, the judge should be able to give an ex tempore judgment on the afternoon of the eighth day, after merely the morning of the eighth day for consideration. It is fair to the parties and their lawyers to say that that “trial template” was annexed to the order made by Moor J on 11 June 2014. It may be that that particular judge has the mental capacity to listen to seven days of evidence and argument, to absorb up to 3,500 pages of documents and 32 authorities, and still give an ex tempore judgment in what, on that scenario, would be a very detailed case, after merely one morning of consideration. Frankly, I doubt it.

 

 

Currently, this estimate is an unrealistic estimate for a case on the scale that the parties or their lawyers contemplate. If this case were to run, including all the evidence and submissions, to the end of day seven, it would manifestly require at least two days for preparation of a detailed, considered judgment, and then a day for delivery of the judgment and working out the aftermath. In other words, frankly, as things stand, the estimate that the parties are putting forward is one not of eight, but of ten days.

 

 

If you think that Holman J was about to take ten days of litigation over £500,000 when the parties had already blown £1,300,000 arguing about it, then I have a bridge that I am interested in selling you.

 

I am absolutely determined, in this case, not to allow that to happen. There has been wholesale breach of the practice direction and of Mostyn J’s statement with regard to documents, and total disregard of the Lord Chief Justice’s direction with regard to the citation of authorities. I propose to deal with it, in this case, as follows. Except for the two skeleton arguments and the chronology, every single piece of paper that has so far been lodged will be taken away from this courtroom now. All the bundles of authorities will be taken away from this courtroom now.

              

 

I will adjourn this case now until 10.30 tomorrow morning. At 10.30 tomorrow morning, unless by then the parties have reached an overall settlement of this case, they must attend with one, single, composite bundle, containing not more than 300 pages as the President’s direction requires. I say 300, for I am excluding and retaining the two existing skeleton arguments, which, as I have said, extend to about 50 pages. There must be only one bundle of not more than five authorities.

 

 

If the parties cannot agree as to the contents of the documents bundle, then each side can select 150 pages of their own choosing, thereby making the total of 300. If they cannot agree on authorities, then they must at least agree on one essential authority (probably Jones v Kernott) and they may each include two further authorities of their own choosing.

 

 

On the skeleton authorities, Holman J was perplexed to see a bundle of 32 authorities, given that the two leading authorities are from the Supreme Court and that those authorities marshall and draw together all of the previous jurisprudence.

 

This morning, Mr Christopher Wagstaffe QC, on behalf of Sandra, and Mr Richard Todd QC, on behalf of Larry, have endeavoured to address these matters and, to some extent, to justify their positions. It is fair to say that, on behalf of Larry, Mr Todd immediately said that it was “absolutely right that the costs are disproportionate” and indicated that he and his side share my concern about the scale of the documentation. But even Mr Todd, in relation to the assembly of the 32 authorities in apparent disregard of the Lord Chief Justice’s practice direction, sought to justify his position. He fastened on the words “unless the scale of the appeal warrants more extensive citation”. He suggested in a general way that the law in relation to the topic of beneficial interests is complex, so that, somehow, the scale of this case warrants the citation of no less than 32 authorities.

 

 

I completely reject that suggestion. When the Lord Chief Justice referred to “the scale of the appeal”, which may be paraphrased as meaning, in this context, “the scale of the case”, that does not simply refer to legal complexity, but to the actual scale of the underlying litigation. This is not litigation about tens of millions of pounds. It is litigation about a half share in the former home in which these parties lived with their three children, having an equity of around £1 million and a half share, therefore, of around £500,000. In the context of family financial litigation, this is, in fact, a relatively small scale case these days.

 

 

The whole topic of beneficial interests following cohabitation has been the subject of recent consideration by the Supreme Court, in particular in the well known cases of Stack v Dowden [2007] UKHL 17 and Jones v Kernott [2011] UKSC 53. It would be surprising, frankly, if it was necessary to look beyond those two authorities; but most certainly, when the Supreme Court has, on more than one recent occasion, traversed all the historic law in relation to this topic, it is quite ridiculous and completely disproportionate to produce bundles of no less than 32 authorities. I know that some of Mr Todd’s authorities relate to some separate argument that he wishes to run with regard to “laches” and limitation, but that does not provisionally strike me as a very promising line of argument in this case.

 

 

Mr Wagstaffe began by referring to the undoubted fact that, in the recent authorities to which I have just referred, the Supreme Court have said one has to have regard to the whole course of dealing between the parties; and of course I accept that. In a general way, one does indeed have to begin at the start of the relationship between Sandra and Larry in 1989 and look at their financial dealings since then. That is why, provisionally, it does not seem to me that Mr Todd’s argument based on laches and limitation is on very fertile ground.

 

 

The Supreme Court, by what they said in those authorities, cannot have intended courts to disregard the overriding objective in both the Civil Procedure Rules and the Family Procedure Rules; nor to disregard such an integral part of the Family Procedure Rules as the practice direction with regard to court bundles. The court must, from first to last, have regard to proportionality and all the other non-exhaustive matters listed in rule 1.1(2). So I do not accept for one moment that there is something about the facts or legal context of this case which enables or requires proportionality and the practice direction to be disregarded.

 

 

The Judge invited the parties in very strong terms to stop throwing their money at lawyers and come to a sensible agreement, which they duly managed the next day.

 

If you have a Court hearing next week before Holman J and you have ten bundles, I’d get on the phone to the other side and get 300 pages agreed, pronto.

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About suesspiciousminds

Law geek, local authority care hack, fascinated by words and quirky information; deeply committed to cheesecake and beer.

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