Litigation funder stymied as divorcing couple drop proceedings

Peel: Level not without potential remedies

Financial remedy proceedings to which the Court of Appeal said a litigation funder could be a party so as to protect the £1m it was owed by the wife have now been dropped with the money still owing.

Mr Justice Peel said funder Level was nonetheless “not without potential remedies”, as it was pursuing a civil claim.

In what the Court of Appeal last year called a “bitter and extortionately expensive” divorce battle, the wife in Simon v Simon had to rely on loans of nearly £1m from Level (the trading name of Integro Funding).

But at a private financial dispute resolution hearing in February 2021, her solicitors and leading counsel became conflicted and withdrew. The wife continued unrepresented.

She then entered into an agreement with the husband, under which she surrendered a lump sum in return for the right to reside in a property owned by the husband’s trust for the rest of her life. This meant she would not have any money to repay the loan.

Level sought to be joined as a party to the financial remedy proceedings to challenge this. Mr Justice Newton agreed on a without-notice basis, a decision upheld by Nicholas Cusworth KC, sitting as a deputy High Court judge.

The husband appealed unsuccessfully to the Court of Appeal, with Lady Justice King saying funders were “entitled to expect some measure of protection from the improper manipulation of the outcome of the proceedings by the parties” to avoid repaying them.

Following the decision, the case was remitted to Peel J, who said that, while there had been no direct factual findings based on tested evidence, it was “not difficult to reach a number of provisional conclusions” – first that one of the agreement’s objectives had been to avoid repaying Level.

Further, it appeared that the husband “sought the making of a consent order without notifying Mr Cusworth QC of the involvement of Level, and the order of Newton J”.

He continued: “Thereafter H fought tooth and nail to (a) retain the consent order, until he had no realistic option but to agree to it being set aside and (b) resist any involvement by Level in the proceedings enabling them to take steps to protect their interests.”

In autumn 2021, the wife was provided with a property to occupy, in which she has no beneficial interest, and no other financial provision has been made. “W appears to have no resources against which Level can enforce the litigation loan agreements,” Peel J observed.

At the hearing last month, the wife made clear that she wanted the proceedings to come to an end and sought no order for financial provision.

“She was crystal clear in not wanting any further litigation which she said had destroyed her and her family. H again pressed for no order to be made.

“Level… realistically accepted that they could not seek any substantive relief and all that remained (other than costs) was to bring the proceedings to an end as appropriate.”

Peel J concluded that, in default of any application for a financial remedies order being pursued, he would make no order and allow the wife to withdraw her application.

He said that, should either the husband or wife decide to apply for financial provision in the future, it would have to be issued afresh, with Level automatically joined as intervener and the application served on it.

“The court will consider at the first available opportunity thereafter whether Level should remain as Interveners, and, if so, the scope of the intervention.

“For the avoidance of doubt, neither this order nor judgment are in any sense a substantive determination on the merits of the financial remedies application issued all those years ago by W. The financial remedies claims of both W and H remain open to them to pursue.”

He added: “Level is not without potential remedies, as its civil claim remains pending. I make no observation on the merits, or otherwise, of its claim for a sum which now stands at about £1.2m (including interest but excluding costs).”

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