Litigation funding in divorce – Tracey Rodford featured in eprivateclient

With divorce costs becoming increasingly expensive, one of the biggest issues facing the separating parties will be finding the funding for legal fees. The financially stronger spouse is expected – but not obliged – to pay both parties’ fees. With many divorces taking months or even years, refusing to pay the fees may be used as a tactic to force the weaker party into accepting a poor settlement. In order to ensure parity, the financially weaker spouse can either seek funding or apply for a Legal Services Order, which is also expensive and difficult to obtain.

A high-profile law firm created headlines recently when it launched a fund aimed at the financially weaker spouse in high-net-worth divorces, allowing them to borrow money to fund their divorces, with repayment deferred until the settlement is received. These types of loan may be very desirable for the provider, with high interest rates ensuring they will receive a good return, but are they ever a good idea for the client?

In an exclusive feature for eprivateclient, a leading website and news service for private client practitioners, Grosvenor Law Managing Associate Tracey Rodford explores this issue, considering the commercial reasons for why law firms would want to loan money to a divorcing client and examining whether this would constitute a conflict of interest or, in fact, be unethical. The piece also discusses the downsides of such loans, and outlines the alternatives.

Read the full article

Unexplained Wealth Orders – only for the ultra-wealthy? What to do if the unthinkable happens to you

In the second blog on Unexplained Wealth Orders, Andrew Gilmore and Andre Yeghiazarian explore what steps to take should you be affected by an UWO.

UWOs – only billionaires at risk?

The media attention that UWOs have attracted has provided seemingly endless sensationalist headlines and tales of extravagant spending in the press. The case of Zamira Hajiyeva, the first recipient of such an order, has perhaps given the perception to the public that UWOs are being targeted solely at the ultra-wealthy, and exclusively being used to combat the flow of criminal money from Eastern Europe, as highlighted in stylised television shows such as McMafia.

It should be remembered, however, that the criteria for granting an UWO sets a relatively low threshold. The Court needs to be satisfied that:

– the respondent holds the property which will be the subject of the order;

– that the property is over £50,000 in value; and

– that the respondent is either a politically exposed person or there are reasonable grounds to suspect that the respondent (or someone connected to them) is involved in serious crime.

Clearly this is a tool in the arsenal of the enforcement agencies that is not limited simply to targeting the riches of Russian oligarchs, their families and associates. Further, it should be borne in mind that UWOs can apply to any property co-owned with other individuals or companies, as well as property held in trust. Therefore, it is perfectly possible to become entangled in UWOs as a third party.

Response – speed and accuracy are key

As the application is made by the authorities without notice and will almost always be accompanied by an interim freezing order on the target property, an UWO could well come as a nasty surprise to many unsuspecting people, requiring an immediate response.

So, what should you do if the unthinkable happens and an UWO drops through your letterbox?

The first and most obvious answer is to seek expert legal advice as a matter of urgency. The UWO itself will usually have a time limit for a response attached to the order. Failure to respond in a timely manner without good reasons could result in the property specified in the UWO becoming recoverable by the authorities.

Any response provided to the court should be measured and tailored to the specific circumstances of any given case, but accuracy within such a response is paramount. S362E of the Proceeds of Crime Act (POCA) makes it an offence in itself, punishable with up to two years’ imprisonment, if a respondent not only knowingly provides misleading or false information to the court but also if they recklessly make a statement that is misleading.

In addition, any UWO is likely to trigger or already be part of a wider investigation by the authorities – any information proffered by a respondent under an UWO should be carefully considered in the wider context of the case.

These issues will become a stark reality for many more people if the enforcement agencies look to widen the use of UWOs after their early high-profile successes.

Do you or someone you know require advice in relation to an UWO? Grosvenor Law has an expert team on hand to provide bespoke professional assistance in relation to freezing orders and any anti-money laundering and ‘proceeds of crime’ legislation.    

 

Andrew Gilmore is Head of Grosvenor Justice, specialising in money laundering, fraud, asset recovery and all aspects of criminal law.

Andre Yeghiazarian is an Associate in the Commercial Litigation team specialising in all aspects of commercial litigation as well as financial crime matters.   

Worldwide Freezing Orders: disarming a nuclear weapon

A “nuclear weapon”

Described by the Courts as a litigant’s “nuclear weapon”, Worldwide Freezing Orders or freezing injunctions are extremely powerful remedies that a party can use to prevent their opponent from disposing of or dealing with assets or putting them out of reach of enforcement of a Judgment. These injunctions can apply to assets in England and Wales or worldwide and are usually granted only in circumstances of particular urgency and secrecy, without the other party knowing an application is being made, so no opportunity is given to hide assets. They can substantially alter the risks involved in and the costs/benefit analysis of litigation, enabling a claimant to proceed in the knowledge that assets have been frozen and protected by the Court and will be available for the enforcement of any judgment in the proceedings.

Fair presentation

When a freezing order is granted without notice (with only the applying party present), the applicant must give a fair presentation of both sides of the argument. This includes setting out the arguments the absent party would make so that the Judge can make a decision on a properly informed basis. The Judge must be able to rely on a party which appears alone to not present the evidence in a biased or partial manner or to gloss over unhelpful details. This is described by the Court as the duty of full and frank disclosure of all material facts  such as are necessary for the Judge to know when dealing with the applicants. This includes a duty to make all reasonable enquiries to establish the correct position to be put before the Court. In cases which are particularly complex, the Judge hearing the application will often be under time constraints and, as such, an application must be fair in all material respects and not misleading or unfairly one sided.

Effect on the respondent

A freezing injunction takes immediate effect on the respondent and their assets, both within the jurisdiction and worldwide, subject to any necessary supportive enforcement procedures by foreign Courts. For the defendant, the effect can be immediate and devastating.  The initial one-party hearing is followed by a hearing which both sides attend. At this second hearing, the respondent can ask the Judge to discharge the freezing order if the applicant did not fairly present both sides of the case when the respondent was not present. Inevitably, given the urgency of the position, matters proceed very quickly from a respondent’s point of view. While a claimant may have had many weeks or months to prepare the freezing injunction, assisted by an experienced legal team, the respondent will have to react very quickly so as to protect their position. It is essential in these circumstances that a respondent has the right lawyers. One of the first matters which the defendant’s legal team will wish to analyse is whether the claimant made a fair presentation at the original hearing.

Court’s approach

Recent cases have served as a stark reminder of the rigour the Court will apply in assessing the fairness of the original presentation, on an application to discharge a freezing injunction granted in secret. Discharge of the freezing injunction is a real (and expensive) risk for an applicant who has not fairly presented his opponent’s side of the argument. For applicants this emphasises the care that needs to be taken to present an application and to maintain an analytical approach, carefully considering all potentially unhelpful material and drawing that to the Court’s attention as part of a forceful and credible application. For respondents, these recent cases demonstrate the opportunity to obtain discharge of a freezing injunction through cogent demonstration to the Court of the unfairness of the applicant’s presentation at the original hearing.

Grosvenor Law recently acted for the respondent to a US$3bn Worldwide Freezing Order which was obtained without notice to our client. The Order was subsequently discharged by the Court at the inter partes hearing because the applicants had not presented the case fairly at the original hearing. The Judge made severe criticism of the applicants’ unfair presentation, which he described as “serious and culpable” and found that there had been a breach of the duty to make a fair presentation of the case in eight material respects.

Joshua Jefferies is a managing associate at Grosvenor Law and regularly acts in freezing injunction cases.

Unexplained Wealth Orders: The good, the bad and the unexplained

In the first of a series of blogs scrutinising Unexplained Wealth Orders, Andrew Gilmore and Andre Yeghiazarian explore exactly what these orders are.

Unexplained Wealth Orders (‘UWOs’) came into force on 31 January 2018 (with some fanfare in legal circles and parts of the media), via the Criminal Finances Act 2018, which substantially amended Part 8 of the Proceeds of Crime Act 2002 (POCA).

The aim of the legislation is to provide an anti-money laundering tool to the National Crime Agency (NCA), the Crown Prosecution Service, the Financial Conduct Authority, and HM Revenue & Customs.

It took only a month for the first UWOs to be issued and the case of ‘Mrs A’ (now revealed as Zamira Hajiyeva, following the lifting of an anonymity injunction), the initial recipient of such an order, has received much press interest.

What exactly is an UWO?

The legislation (s362A POCA) defines an UWO as a High Court Order, made upon application by an enforcement agency, that requires the respondent to provide a statement setting out:

– the nature and extent of the respondent’s interest in any property specified in the order (this refers to any assets such as buildings, cars, yachts, wine, art, etc); and

– how the respondent obtained the property (in particular, specifying how any costs incurred in obtaining the property were paid for and where those funds came from).

This statement has to be provided to the court within a set deadline. Failure to do so means that the property specified within the UWO is deemed to be ‘recoverable’ by the Crown under part 5 POCA. The application may be made to the court without notifying the respondent in advance.

In essence, if the respondent cannot answer these questions to the full satisfaction of the court, then the property in question may be considered to be the ‘proceeds of crime’ and may be forfeit.

Who can receive an UWO?

The respondent for an UWO is defined under s362B (4) POCA as someone who (a) is a ‘politically exposed person’ (PEP), or (b) is someone that the court reasonably believes to be involved in ‘serious crime’, or that the respondent is ‘connected’ to somebody who is.

A ‘politically exposed person’ is defined as somebody who is or has been “entrusted with prominent public functions by an international organisation or by a State other than the United Kingdom or another EEA State” (s362B (7) POCA and further defined in EU directives). Additionally, any family member, ‘close associate’ or anyone ‘connected’ with a PEP may also find themselves on the receiving end of a UWO.

What amounts to a ‘Serious Crime’?

‘Serious Crimes’ cover a wide range of offences and under Part 1, Schedule 1 of the Serious Crime Act 2017 includes: blackmail, drug offences, money laundering, fraud, computer misuse and some tax offences.

The UWO is likely to be a popular tool for authorities. With such wide-reaching power that places the burden of proof on the respondent to an order, the authorities have to do much less investigation when establishing whether assets are the Proceeds of Crime. It would appear that the UWO is here to stay.

Indeed, the NCA has announced in the press that it intends to use UWOs in as many as 140 possible subjects. We would expect this figure to rise as the NCA and other enforcement agencies push the boundaries of this new anti-money laundering mechanism.

 

Andrew Gilmore is Head of Grosvenor Justice, specialising in money laundering, fraud, asset recovery and all aspects of criminal law.

Andre Yeghiazarian is an Associate in the Commercial Litigation team specialising in all aspects of commercial litigation as well as financial crime matters.   

It’s only banter …until someone sues

As the Christmas party season fast approaches and spirited ‘banter’ at work is plenty, the recent case of David Evans v Xactly Corporation Limited (2018) in the Employment Tribunal reminds us that context is king.

Mr Evans was employed by Xactly as a Sales Representative, for less than a year, until his dismissal for poor work performance on 16 December 2016. Following Mr Evan’s dismissal, he brought a number of claims against Xactly in the Employment Tribunal, including a claim for harassment on the basis that he was called a “fat ginger pikey” by his colleagues at least once. The Employment Tribunal held that the comments did not amount to harassment (as defined in section 26 of the Equality Act 2010).

Culture shock

To most this decision may seem odd, and that there can be little debate that “fat ginger pikey” is offensive. However, in reaching their decision, the Employment Tribunal considered Xactly’s office culture and the relationships between Mr Evans and his co-workers:

The office culture was of jibing and teasing; a way of operating which appears not to be unusual for competitive sales people working under stress to achieve their targets. Mr Castley [Mr Evans’ boss] called it ‘banter’ in that, as he explained, no one was seeking to offend and the receiver was not offended.

The Employment Tribunal found that Mr Evans was “an active participant in inappropriate comments and behaviour in the workplace and seemingly comfortable with the office culture and environment”. The Employment Tribunal also noted that Mr Evans did not complain at the time he was called a “fat ginger pikey”, which he would have done had he been offended.

Time and place

Mr Evans struggled to prove that he had been harassed, and other employees who engage in ‘banter’ and are quite content to use insensitive language with colleagues may find that they have similar difficulty. Nevertheless, it is worth remembering that this is a fairly unusual harassment case, and employers who ignore inappropriate behaviour because it is seen as ‘banter’ should pay careful heed to the finding that “harassment claims are highly fact sensitive and context specific”. Offensive comments which are traded voluntarily in the competitive environment of a sales floor may have no place in another workplace, or directed to another employee, who, for example does not engage in ‘banter’.

James Clark is an associate at Grosvenor Law

Has parliamentary privilege gone too far?

Everyone now knows that Sir Philip Green obtained an injunction on 23 October 2018 prohibiting the press from naming him in connection with a number of non-disclosure agreements entered into in respect of alleged misconduct.

Lord Hain’s actions in naming Sir Philip Green during a debate in the House of Lords on 25 October have driven a bus through the protections provided by the injunction, rendering it worthless. So the question is, has parliamentary privilege gone too far?

What is parliamentary privilege?

Parliamentary privilege is a law designed to protect freedom of speech in the Houses of Parliament but how is it right that this law can be used to undermine a decision of our independent judiciary?

Lord Hain (unlike the rest of us) is protected from the contempt of court proceedings which would ordinarily follow the breach of such an injunction due to Article 9 of the Bill Rights 1689 which states:

‘That the freedom of speech and debates or proceedings in Parliament ought not to be impeached or questioned in any court or place out of Parliament.’

The media could then publish Lord Hain’s comments under “qualified privilege rules” which allow for the protected reporting on the debates in Parliament. The practical effect of these rules was such that, once Sir Philip’s name was uttered in Parliament, it could be published around the world, injunction or not (the injunction remains in place, but reporting on Lord Hain’s comments is permissible).

Revealing injunctions in Parliament – is this a first?

In 2011, following the naming of Ryan Giggs in Parliament as an individual protected by a “super injunction”, a report was commissioned. In short, it confirmed that parliamentary privilege was of constitutional importance and that no order of the court could bind Parliament. However, it did state that it would be open to Parliament to choose voluntarily to limit the scope of debate but such a choice would be made on the basis that Parliament had determined that it was in the public interest not to insist on its privileges.

The Parliamentary Joint Committee on Privacy and Injunctions reported in 2012 that if revelations of injuncted material became more commonplace and, in particular, if there was a concern that information was being “fed” to parliamentarians in order to breach injunctions (which is the allegation levied against Lord Hain, albeit strongly denied) then Parliament should consider restricting itself through its internal rules.

Whatever your views on the underlying subject matter, Sir Philip Green lawfully obtained an injunction and the next stage in the process would have been for the Telegraph to appeal the decision to the Supreme Court. It should not have been for a politician to simply decide that he did not like the decision and decide to render it useless.

What next?

Unfortunately, it will be for the politicians to decide whether or not to strengthen the rules against parliamentary privilege in circumstances where it interferes with the administration of justice. We have a separation of powers for a reason and the interference by elected politicians in judicial matters should be resisted.  In the meantime, it is some comfort to those who obtain injunctions (at great expense) that the cases which are likely to attract this kind of attention from politicians are few and far between.

Michelle Quinn is Counsel and Edward Smith is an associate at Grosvenor Law.

Entrepreneurs think differently about litigation. We fight to win.

After winning a very significant case for a US businessman and his family, he told me about his frustration at the different attitudes to entrepreneurship here and in the USA. In America, he said, success and wealth are admired, whereas in the UK there is a more hostile attitude to achievement, especially where it results in wealth. He felt that there was a perception problem with having ‘too much money’, and that high-profile businessmen frequently drew criticism for this, including in the media.

Many of our clients at Grosvenor Law are entrepreneurs; they did not inherit their wealth, they earned it and they fight to keep it. Their businesses are more than their job; they enjoy the work they do, and it defines not only their commercial outlook, but the way they see their personal and business environments. They rely on their good judgement, common sense and people skills to achieve their success.

Successful business is ultimately about making a profit and taking calculated risks. The essential difference between the entrepreneurs I represent and those who settle for a quieter business life is often the appetite to take those risks, and the incredible judgement they exercise in doing so.

In practice, however, business is not a science and despite their best efforts, occasionally things go wrong; clients are human and make mistakes, some of which in hindsight were avoidable. When disputes arise, entrepreneurs feel the pain more than others; it is their baby on the line. They have a deep personal need to win, to protect all that they have nurtured. The line between what is business and what is personal becomes blurred. They take it personally.

This is where Grosvenor Law excels. We understand the emotion that drives their desire to succeed and this spurs us to fight to win for our clients. We believe our entrepreneurial clients are entitled to the protection of the law as much as anyone else. My firm’s lawyers think like our clients and we will put ourselves right in the firing line to protect our clients’ interests; that is our USP. The same desire to succeed in obtaining the legal outcomes is what defines me and the team at Grosvenor Law; the same way as business success defines my clients.

I started from nothing, selling carpets with my dad from market stalls around the country. Sure, not everyone I met in those days would be a role model for my kids, but they all worked incredibly hard and many went on to build huge companies and private wealth. They are as much entitled to the best legal advice as any FTSE company.

That’s what Grosvenor Law is about. Fighting to win for our clients, with our clients.

Dan Morrison is the senior partner at Grosvenor Law