Claimants should not be ‘forced’ to continue legal proceedings, the Court of Appeal has been told, in a case centred on a litigation lender’s loans to a wife involved in a divorce dispute.

Paul Simon and Lauren Simon were involved in family court proceedings. Mrs Simon used Integro Funding Limited, trading as Level, as a litigation lender.

A consent order, which was set aside, would have seen the wife receive a lump sum. A private financial dispute resolution hearing took place to which Level was not party. At the FDR, the pair reached an agreement in which the wife would be provided with a home during her lifetime through the husband’s trust. She would not recieve anything which would enable her to pay Level.

Level applied to join proceedings to object to the agreement being made into an order. The Court of Appeal must now decide if a new order should be made.

The court heard the wife’s debt to Level had been around £810,000. It is now understood to exceed £1m with interest.

Mrs Simon did not appear in court and was unrepresented during the day-long hearing.

Richard Todd KC, for Mr Simon, told judges Mrs Simon had sent an email stating she did ‘not want any part in proceedings’. He said both parties had described proceedings as ‘damaging’ and ‘expensive’.

RCJ

He added: ‘Claimants should not be forced to be claimants if they do not want to be. There is no dispute in the proceedings, Mr and Mrs Simon completely agree.

‘The court is not a rubber stamp and both [Mr and Mrs Simon] have said they will in these circumstances just walk away. There is no dispute.’

He said: ‘What this case really is about is a poor commercial decision. [Level] made a decision thinking there was £3m going to be made available and there was not.

He told the court Level’s skeleton argument established a ‘prima facie case of fraud’ and the company was ‘free to pursue that in civil court’.

Todd said: ‘Mr Simon puts forward a proposal and the wife accepts it; an unsecured creditor says “looks like we are not getting paid” but do not actually proceed against her. They do not make her bankrupt.’

Jonathan Southgate KC, for Level, told the court the purpose of an intervener was to help with ‘a balance between parties’ as a ‘supervisory role’ he described as ‘critical’.

He said: ‘The right of a creditor is one to be paid and two, not to be a victim of a statutory fraud.’

‘The fact there is a supervisory role changes everything. The status of that intervening party is that they have a right to be heard but not a power to veto. Level are not seeking orders in its favour.’ He said Level was not equal to parties but that this case was ‘unusual and does pass through the filter, at least for now’.

He added: ‘The court retains the power to remove us as a party at any point if it felt our role was no longer valued or needed.

‘In this case it is more complicated because of the failure to give disclosure and the way in which the order was obtained the first time around [without the awareness of the involvement of a litigation funder].’

He told the court if the litigation funding market were not to exist, the knock-on effect would mean more litigants in person.

Addressing submissions that the couple were ‘walking away’, Southgate said: ‘I do wonder why the appeal is being pursued if the aim is to walk away. The wife can at anytime withdraw her claim, there is nothing stopping her from doing that. There is nothing stopping the husband and wife to apply for a consent order.’

He said the suggestion that parties were to walk away from proceedings was a ‘new idea’. He added: ‘Never was it suggested that as a consequence of that, [the judge] should adjourn proceedings or not make an order.’

Todd disputed the point. He told the court: ‘The order [Level] obtained without any notice which orders her not to do exactly what my learned friend said she can do. The wife’s understanding in respect of what she is entitled to do or not to do is then one which is not at all clear. I do not act for the wife but it does look like she is prevented from doing anything.’

‘When my learned friend was to ask what status Level would have…whether it would be equal to the husband and wife, he said it would be inferior. In fact, it would be superior, it is Level running this disclosure. Their position however was to run the whole financial remedy point.’

He said Level’s ‘huge interest in the case’ meant it was ‘unlikely to make them helpful in assisting the court'.

Judgment in Simon v Integro Funding Limited trading as Level and another was reserved.

 

This article is now closed for comment.