The ‘long, bitter and extortionately expensive’ case of Simon v Simon & Level involved Housewives of Cheshire star Lauren Simon and her ex-husband, Paul. The litigation funder Level wanted to join the proceedings because it had agreed loans with Lauren, amounting to £1m. It accused the Simons of entering a ‘collusive agreement’ to avoid paying them. Last year, the High Court ruled that Level could be joined as a party, which Mr Simon disputed.
That was a central issue in the appeal. During a private financial dispute resolution hearing, the couple had secretly agreed that Mrs Simon would receive a lifetime interest in a £1m house purchased by her husband’s trust, which would own the property, but would receive no capital or income. She would therefore be unable to repay the Level loans since her annual income was only £31k. Upon discovering this, Level applied to join the proceedings – an application which the Court of Appeal upheld.
The recent Court of Appeal decision in the case was therefore potentially significant for matrimonial litigation funders and for divorcing parties who depend on them. If it had found that Level was unable to intervene, the future funding of divorce cases affecting economically weaker parties, mostly women, could have been severely affected.
But the Court of Appeal decided that litigation funders are different from normal credit providers because they deliver a fundamental service within divorce proceedings. So, they can be joined to proceedings if there is a possibility of being defrauded by the parties.
Matrimonial litigation funders do not operate the “non-recourse” model; instead, they typically borrow funds that are onwards-lent on “full-recourse” terms. Women more often rely on such funders. Our experience, and that of 15 other leading family firms, is supported by data relating to applications made on behalf of clients: 164 applications for litigation funding over the year to May 2023 with female applicants comprising 85% of the total.
Where litigation loans are unavailable, a party may need to make a Legal Services Payment Orders (LSPO) application. Of the 164 funding applications made by our firms, 68 were rejected leading to 29 applications for LSPOs, requiring one party to finance the other’s legal costs.
Some judges are reluctant to order LSPO costs prior to the hearing of the application. Of the 29 original LSPO applications, ten later required a further LSPO application for additional funding, four required enforcement proceedings to enforce the LSPO award while funds remain unpaid in six orders made.
Hopefully, the Level decision will mean that funders will remain in the market, preserving this essential aid. If the court had gone the other way, there would have been a real danger of the power dynamics in divorce proceedings shifting even further towards the husband.
Alex’s article was published in The Times, here.