McTaggart v McTaggart

• Jurisdiction: Cayman Islands
• Judge: (Chadwick, P., Mottley and Campbell, JJ.A.)
• Judgment Date: 12 February 2015
• Court: Court of Appeal (Cayman Islands)
• Date: 12 February 2015

Court of Appeal

(Chadwick, P., Mottley and Campbell, JJ.A.)

McTAGGART

and

McTAGGART

D. Murray for the appellant;

D. McGrath for the respondent.

Cases cited:

(1) Calderbank v. Calderbank, [1976] Fam. 93; [1975] 3 W.L.R. 586; [1975] 3 All E.R. 333, referred to.

(2) G v. G, 2010 (1) CILR 365, dicta of Henderson J. applied.

(3) GW v. RW, [2003] 2 FLR 108; [2003] 2 F.C.R. 289; [2003] EWHC 611 (Fam), not followed.

(4) Gojkovic v. Gojkovic (No. 2), [1992] Fam. 40; [1991] 3 W.L.R. 621; [1992] 1 All E.R. 267; [1991] 2 FLR 233; [1991] F.C.R. 913, applied.

(5) Lhasa Invs. Ltd. v. International Credit & Invs. Co. (Overseas) Ltd., 1994–95 CILR 293, referred to.

(6) Norris v. Norris, [2003] 1 W.L.R. 2960; [2003] 2 FLR 1124; [2003] 3 F.C.R. 136; [2003] 4 Costs L.R. 591; [2003] EWCA Civ 1084, applied.

(7) White v. White, [2001] 1 A.C. 596; [2000] 3 W.L.R. 1571; [2001] 1 All E.R. 1; [2000] 2 FLR 981; [2000] 3 F.C.R. 555, referred to.

Legislation construed:

Grand Court Rules 1995 (Revised), O.62, r.4: The relevant terms of this rule are set out at para. 19.

Matrimonial Causes Law (2005 Revision), s.21: The relevant terms of this section are set out at para. 18.

Family Law-financial provision-costs-costs ordered under Matrimonial Causes Law, s.21 ordinarily follow event even in ‘big money’ cases, though court has discretion to make alternative provision-preferable to use discretion to alter allocation of matrimonial property to provide for costs rather than make separate costs order involving additional litigation-parties to assist court by providing schedule of costs in advance of allocation of property

The appellant husband petitioned for divorce in the Grand Court and the respondent wife sought financial provision.

The Grand Court (Foster, J.) made an order granting ancillary relief, amounting to CI$6.9m., to the wife. The husband appealed against that decision on the basis that some of the assets included by the court in its calculations were non-matrimonial property. The wife cross-appealed, claiming that the court had not accorded her an appropriate share of the appellant”s retirement benefits. The Court of Appeal varied the terms of the financial provision order, increasing the amount to be awarded to the wife to CI$7.65m. (in proceedings reported at 2011 (2) CILR 366). In the course of the proceedings, a number of Calderbank offers were exchanged between the parties. In his second offer, the appellant had offered the respondent CI$6.8m., and the wife had offered to accept CI$7.6m.

The Grand Court had made no order as to costs, leaving each party to bear his or her own. In order to allow the wife a fair opportunity to participate in the proceedings, the husband had given her CI$82,000 as a contribution towards the costs of her legal representation. Taking this sum into account, the wife”s net costs, after the appeal, amounted to CI$334,840.

Both parties appealed against the Grand Court”s order as to costs. The husband sought to recover the CI$82,000 advanced to the wife. He submitted (a) that, in ancillary relief cases involving ‘big money,’ the law should reflect developments in the English case law which suggested that costs should not follow the event but be borne by each party; (b) that it had been open to the Grand Court to decide, as a matter of discretion, that no order should be made as to costs; and (c) that no proper basis had been established for interfering with Grand Court”s exercise of its discretion.

By way of cross-appeal, the wife submitted (a) that the court should continue to apply the Grand Court Rules 1995 (Revised)-which provided that costs ought to be awarded to the successful party-in ‘big money’ divorce cases; (b) that the ordinary rule was that costs should follow the event and, as the respondent had been successful in the ancillary relief proceedings (having been awarded a larger sum than the husband had offered in his Calderbank letter), she should be able to recover her costs; and (c) that paying costs would reduce the capital sum awarded to her, and as a result the court”s calculation of the settlement needed to provide her with an appropriate income was inaccurate.

Held, dismissing the appeal and allowing the cross-appeal:

(1) The wife was entitled to have her costs met by the husband. The starting point in ‘big money’ cases, when making a costs order under the Matrimonial Causes Law (2005 Revision), s.21, was that costs should follow the event, and not lie where they fell. The court retained a discretion to depart from this position, and in exercising that discretion it was required by s.19 to consider the parties” resources, including their liability for costs. If an otherwise fair allocation of resources would be rendered unfair by a party”s need to meet costs, then the court had discretion to alter the allocation of matrimonial property under s.21(b), order a payment to be made to the party under s.21(e), or make a costs order under s.21(g). In deciding which approach to adopt, the court should have in mind the desirability of avoiding additional litigation to determine costs, and give serious consideration to adjusting orders under s.21(b) or (e). The parties should assist the court in making orders by providing schedules of their costs in advance of a substantive order being made, and inform the court of any Calderbank letters exchanged between the parties (paras. 21–29).

(2) Provision ought to have been made for the payment of the wife”s costs, given that the award made by the Court of Appeal exceeded the Calderbank offers made by the husband. The most appropriate way to provide for her costs would be to adjust the capital sum awarded to her. The costs of proceedings in the Grand Court were adequately covered by the revised capital sum awarded by the Court of Appeal in 2011; however, the costs of the appeal were not reflected in that sum, and an additional CI$70,000 would be awarded to the respondent. This addition to the capital sum, if invested to produce a return of 3.75% per annum, would adequately compensate for the adiditional costs incurred (paras. 31–35).

1 CHADWICK, P.: On November 29th, 2011, this court handed down judgment in an appeal against an order made on June 28th, 2010 by Foster, J. in ancillary relief proceedings between Roy Michael McTaggart and his former wife, Mary Elizabeth McTaggart. On November 19th, 2012, the matter came back before the court for a ruling on costs. Although the parties are no longer married to each other, it is convenient to refer to them in this ruling, as the court did in its judgment, as ‘the husband’ and ‘the wife.’

The issue for determination

2 The judge made no order in respect of the costs of the ancillary relief proceedings in the Grand Court. In his judgment, he had said that his inclination was ‘to make no further order as to the costs of and incidental to this matter and to leave matters pertaining to the parties” respective costs and contributions thereto as they currently lie’; but that, if agreement as to costs could not be reached, he would hear further argument. In the event, there was a further hearing as to costs at which (it seems) each party advanced arguments as to the proper approach in a ‘big money’ case. This court was told that the judge gave no reasoned judgment in response to those arguments, but the terms of his order suggest that (on the question of principle) he preferred those advanced on behalf of the husband, who was contending for ‘no order.’

3 Paragraph 9 of the judge”s order of June 28th, 2010 was in these terms:

‘No order in respect of the costs of and incidental to these ancillary proceedings, the contribution to account of [the wife”s] costs totaling

CI$82,000 paid by [the husband] shall not be refunded to him and matters in relation to costs shall be left as they currently lie.’

As the paragraph indicates, the husband had advanced moneys (US$100,000, equivalent to CI$82,000) to the wife during the course of the proceedings to pay for her legal representation. There was some dispute between the parties as to whether that sum was advanced on account against the final award that the judge could be expected to make in favour of the wife, or against whatever award of costs the judge might make in her favour. In the circumstances, the judge made no order for costs (so that there was no costs order against which the advance could be set off), and he must be taken to have intended to make it clear that the wife was not to repay the advance to the husband, nor to give credit for CI$82,000 against the lump sum payment that he was awarding to her in respect of her ancillary relief claim.

4 Each party appealed against that paragraph of the judge”s order. The husband, by his notice of appeal filed on July 27th, 2010, sought an order that para. 9 be set aside-

‘to the extent necessary to provide that [the wife] shall be indebted to [the husband] in the sum of CI$82,000.00 and/or shall give credit to [the husband] in this sum in respect of his liability to pay [the wife] any lump sum or sums.’

The wife, in her notice of cross-appeal, filed on August 11th, 2010, sought an order that the husband pay her costs ‘both of the appeal and at first instance.’

5 In the judgment which I handed down on November 29th, 2011 (with which the other members of the court agreed), I observed (2011 (2) CILR 366, at para. 105) that it was clear from the very comprehensive analysis advanced on behalf of the parties in their respective skeleton arguments that the proper approach to costs in ‘big-money’ cases in this jurisdiction was contentious and needed to be resolved. I went on to say this (ibid., at paras. 106–108):

‘106 Put shortly, the position here is that costs in matrimonial proceedings-as in other proceedings-are governed by the Grand Court Rules 1995 and, in particular, by GCR, O.62, r.4 which requires (at sub-para. (5)) that:

“If the Court in the exercise of...