Taking Care When Appointing Valuation Experts During Divorce
Loggie v Loggie: An Unhappy Tale with Lessons to be Learnt
In Loggie v Loggie [2022] EWFC 2 Mr Justice Mostyn had to determine who should pay the costs of an expert whose final costs were much higher than the original quotation.
In this matter Justice Mostyn considered an application by the wife during financial remedy proceedings for an interim order that the husband compensate her for the sum of £65,603.65 owed to her former solicitors.
At the time of this hearing the parties were in their ninth year of litigation. Back in 2014, Justice Mostyn had given permission for a Single Joint Expert accountant (“SJE”) to value the former Husband’s business, with the costs being split equally between the parties. The order however did not limit the level of fees which were to be incurred by the SJE.
Valuation expert’s costs exceed quoted fee
The SJE had initially quoted his fee at £60,000 plus VAT prior to starting the work, but the eventual costs were substantially higher.
In 2016, Justice Mostyn ordered that the SJE’s fees be suspended until the conclusion of the wife’s application for financial orders. The Final Order dated 1 February 2017 provided at paragraph 4 that there be an order for sale of four properties and that the proceeds thereof be used amongst other things to pay any unpaid fees of the expert.
The Order however was not complied with and the fees of the expert were not discharged.
The former wife therefore applied to enforce the order and the enforcement application was compromised by written agreement between the parties, followed by a further variation order made by Justice Mostyn in March 2019.
The total invoices raised by the SJE were £212,407.20. Out of those fees the husband said he had paid approximately £147,000. The balance remained outstanding until the wife’s solicitors cleared the bill on the wife’s behalf in August 2021. The wife’s solicitors however wanted to be paid back for the sum they paid to clear the debt owing to the SJE which had led the wife to make the application. The wife accepted that she had the funds to pay the solicitors herself through the sale of a car, a Ferrari California T, In November 2021 for £85,000 if she was required to do so.
Justice Mostyn was satisfied that he could order the indemnity for the reasons he gave in a previous case he presided over in the matter of CH v EWH (Power to Order Indemnity) [2018] 1 FLR 495.
Here, the written agreement reached in March 2019 had included provision for the Husband to pay the outstanding sum due to the accountant and to fully indemnify Wife against it. The subsequent variation order made by Justice Mostyn did not include such a provision but the judge now considered that to be an oversight by himself. There was no good reason why he should not make the order sought by the Wife to give effect to that agreed provision. He was effectively correcting the March 2019 order under the Slip Rule (The purpose of the slip rule is to amend an order or judgment to give effect to the intention of the court. The slip rule cannot however be used to allow the court to have second or additional thoughts, and an appeal needs to be made to correct substantive errors.)
The Husband would need to identify a cogent reason why he should not be held to the terms of the March 2019 agreement and he had failed to provide one. Vague assertions about the pandemic were not enough. He was therefore ordered to pay the requested sum directly to the Wife, with the expectation that she would then repay her solicitors. The husband would also be responsible for any further interest sought by the SJE.
Place a cap on valuation expert’s costs during a divorce
Justice Mostyn adds that the moral of this unhappy tale is that parties must ask the court to place a cap on the expert’s costs prior to their instruction, pursuant to FPR 25(12)(5). If circumstances change, it will then be open to the expert to apply for the order imposing the cap to be varied so higher costs can be sought and such a costly situation such as this can be avoided. This case proves the importance of taking care when appointing valuation experts during a divorce.
For advice on Finances and Divorce please contact Helen Davies by calling 01244 354835 or email her at helen.davies@dtmlegal.com.
