Divorce: Funder says couple are trying avoid paying back loan
A litigation funder owed up to £1m by the wife in what was described by a judge as a “bitterly contested” divorce, can be joined as a party to the financial remedy proceedings, the High Court has ruled.
Nicholas Cusworth QC, sitting as a deputy High Court judge, said this would enable “clearly connected issues” between funder Level and the wife, and between the wife and husband, to be fairly resolved.
The judge said the words “bitterly contested”, used by the QC for husband Paul Mark Simon, was “evidently an accurate description” of the divorce proceedings.
Financial remedy proceedings had been ongoing since 2016 and had already been the subject of a fully contested hearing before Mrs Justice Parker, alongside fully contested children’s proceedings and a successful appeal to the Court of Appeal of the financial remedy order.
Noting that both parties were represented by QCs, Judge Cusworth said Lauren Belinda Simon “had very little in her own name”, and to fund the proceedings she had relied on external legal funding.
A Sears Tooth agreement she had made with her original solicitors was replaced by a series of loans from litigation funder Level, a trading name of Integro Funding.
By February 2021, the total value of her loans from Level had reached £865,828, which, with interest, was now “nearer to £1m”.
Judge Cusworth said that under an order made by Mrs Justice Parker in July 2018, successfully appealed in December 2019, Ms Simon would have received around £3m from the divorce.
Now, because of an agreement entered into at a private financial dispute resolution hearing in February 2021, she had received only the right to reside in a property owned by Mr Simon’s trust for the rest of her life, with “no additional liquid capital” to meet her claim.
Level responded to the agreement by writing to the court, saying it had been made aware that Mrs Simon “might be attempting to enter into an agreement with the husband whereby she surrenders the entirety of her lump sum which would prevent her from being able to discharge her obligations under the loan agreement” and urgently requesting to be joined to the financial remedy proceedings.
Mr Justice Newton responded by agreeing to a joinder on a without-notice basis, which Mr Simon was now challenging.
In January this year, Mrs Justice Roberts ruled that Level could not use privileged material to overturn the private financial remedies agreement, but the funder had enough information without it to argue its case.
Delivering judgment in Simon v Simon & Level (Joinder) [2022] EWFC 29, Judge Cusworth said that, under FPR 9.26B, a party could be joined if there was “an issue involving the new party and an existing party which is connected to the matters in dispute in the proceedings” and it was desirable to add the new party so the issue could be resolved.
Counsel for Mr Simon argued that Level was “trying to move from being an unsecured creditor of the wife to being a secured creditor of both wife and husband”.
He submitted that, since there were now no matters in dispute between the husband and the wife, the intervention “must fail”.
Counsel for Level insisted that the couple had arranged their financial affairs in a way that the wife’s debt of £1m had been “left with her but unenforceable against her”.
Judge Cusworth ruled that he was satisfied that Level’s joinder by Newton J in February last year was “entirely appropriate” and it was “desirable that they should remain a party so that the clearly connected issues between Level and the wife, and between the wife and the husband, can be fairly and expeditiously resolved”.
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