Crowther divorce case, legal costs and disclosure: Where did all the money go?
When Paul and Caroline Crowther filed for divorce in 2019, it was just the start of a legal marathon that would eventually lead to the pair spending an eye-watering £2.3million in legal costs.
The legal battle involved:
- Injunction, preliminary issue hearings and allied admiralty proceedings
- 4 trial bundles, a core bundle, a library bundle and two supplemental bundles exceeding 6,000 pages (i.e. a LOT of paperwork)
- 34 court hearings
From the outset, the total amount of assets for division was, at most, £1.3million.
So, how did the couple end up spending far more on legal fees that they could actually afford?
A lavish lifestyle
In 2010 the couple started a business, operating ships that serviced the construction of offshore wind farms and oil and gas rigs. Initially successful, the business helped fund an expensive lifestyle for the couple and their children. Re-mortgages of various properties also helped fund the illusion of that lifestyle including horses, a Rolls Royce car, a private plane and a yacht.
In 2019, the couple filed for divorce, with Mr Crowther alleging an affair between Mrs Crowther and a local builder.
Accusations of fraud and non-disclosure
The company’s main assets, the boats, became the subject of wrangles as to their legal ownership. Mrs Crowther applied for a freezing injunction to prevent her husband disposing of the boats, worth around £8million.
Mrs Crowther then accused Mr Crowther of perpetuating a fraud and that he had
“Entered into a conspiracy, initially to defraud HMRC of tax revenue, and then to defraud her in relation to the matrimonial proceedings”.
Despite substantial disclosure documentation provided by Mr Crowther, Mrs Crowther believed Mr Crowther was not disclosing all of his wealth and assets (non-disclosure).
The case was due to go to trial on 10 December 2020, but just five working days before that date, Mrs Crowther informed the court she had settled. As a result:
“All her claims of beneficial interest against (Mr Crowther) would also have to be discontinued, as would any allegations of sham, fraud or conspiracy.”
Since she cancelled the proceedings, Mr Crowther then sought his legal costs for that preliminary hearing from Mrs Crowther, a sum of £322,000.
At this point, the judge calculated that the couple’s net assets were just £738,375.
Straight split or unequal division?
As in most financial settlement hearings, the judge looked at the earning potential of both Mr and Mrs Crowther. He concluded that Mrs Crowther’s earning potential was “modest”, and that Mr Crowther could earn at least £180,000 per year.
“The judge decided to clear the parties' debts and then divide the remainder unequally to reflect Mrs Crowther’s lower earning capacity and greater childcare responsibilities.
The net effect was that Mr Crowther should have c. £77,000 and Mrs Crowther should have c. £660,000.
The judge then considered costs, noting that Mrs Crowther’s debt to Mr Crowther of £322,000 referable to costs from the preliminary issue hearing would have the effect of equalising the net effect outcome.
The judge then took into account Mr Crowther’s litigation conduct and decided to equalise their debts - effectively neutralising them by having Mr Crowther pay 25% of Mrs Crowther’s costs of the financial remedy proceedings.”
In short, they both got around £350,000. They had spent £2.3million.
Proportionality is key for legal costs
Specialist, professional level advice in any field carries a reassuringly higher price tag. At LGFL, our legal advice rates may not be the cheapest in the Thames Valley area, but they reflect our Directors’ considerable expertise and a high level of personal, boutique service.
Our Directors also believe it’s crucial to keep legal costs proportionate. We use three ‘checks’ to ensure that your costs don’t spiral out of control in cases that are financially complex and when emotions run high, such as high worth divorce cases involving children.
These checks include:
- Transparent fees
- Proportionality checks throughout
- Regular billing
Equally, we help our clients realise that they do have to be proportionate in their responses, and not get consumed by suspicion or point scoring. As with any litigation, you have to consider how things actually advance your case, and what may hinder or weaken it and leave less in the pot to divide.
“Nihilistic litigation” and your children
As Judge Peel said in his summing up:
“The only beneficiaries of this nihilistic litigation have been the specialist and high-quality lawyers. The main losers are probably the children who, quite apart from the emotional pain of seeing their parents involved in such bitter proceedings, will be deprived of monies which I am sure their parents would otherwise have wanted them to benefit from in due course.”
Watch out for our future article on how emotions dictate the path and outcome in family law cases.
Need advice on a complex financial settlement?
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