Xydhias v Xhdhias, Court of Appeal - Civil Division, December 21, 1998, [1999] 2 AER 386,[1999] 2 All ER 386,[1999] Fam Law 301,[1999] 1 FLR 683,[1998] EWCA Civ 1966,[1999] 1 FCR 289

Issuing Organization:Civil Division
Actores:Xydhias v Xhdhias
Resolution Date:December 21, 1998
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CCFMI 98/0529/2

IN THE SUPREME COURT OF JUDICATURE

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM BIRMINGHAM COUNTY COURT

(HIS HONOUR JUDGE HAMILTON)

Royal Courts of Justice

Strand, London WC2A 2LL

Monday, 21st December 1998

B e f o r e:

LORD JUSTICE STUART-SMITH

LORD JUSTICE THORPE

and

LORD JUSTICE MUMMERY

____________

HARRY COSTAS XYDHIAS Appellant

v

CHRISTALLA XHDHIAS Respondent

------------

(Handed down transcript of

Smith Bernal Reporting Limited

180 Fleet Street, London EC4A 2HD

Tel: 0171 421 4040 Fax: 404 1424

Official Shorthand Writers to the Court)

---------------

PATRICK ECCLES QC & EDWARD HESS (instructed by Messrs Blakemores of Leamington Spa, CV32 5QL) appeared on behalf of the appellant.

MICHAEL HOROWITZ QC & TIMOTHY BISHOP (instructed by Messrs Mercy Messenger of Solihull, B93 0LL) appeared on behalf of the respondent.

____________

J U D G M E N T

(As approved by the court)

©Crown Copyright

LORD JUSTICE THORPE:

The History

Mr and Mrs Xydhias married in 1977 and have three children, only two of whom are now minors. In June 1994 Mrs Xydhias, the wife, petitioned for divorce and in April 1995 filed her application for ancillary relief. The subsequent progress of that application towards final hearing was bedevilled by the husband's breach of his duty to make full and frank disclosure. A penal notice was necessary to compel his affidavit of July 1995. The document itself was incomplete and misleading. The inevitable result was a string of questionnaires, directions hearings and production appointments. By those means sufficient information materialised to enable the wife's solicitors to obtain a three day fixture for trial commencing 2nd September 1996. In August each side filed a report from a forensic accountant. The wife's expert assessed the husband's worth at £2.25M. The husband's expert assessed his worth at about £1.1M. The experts broadly agreed that he had a net income of about £70K a year.

Obviously unless the husband compromised the case, or protected his position by a realistic Calderbank offer, he was in danger of paying the costs on both sides, possibly even on an indemnity basis in the light of his misconduct. Between March and July 1996 negotiations proceeded on a Calderbank basis. By a letter of 5th July the husband's solicitors offered the wife the former matrimonial home plus a lump sum of £100K in full and final settlement of her claims, with maintenance for the children but with no order as to costs. The wife's response of 13th August sought an additional £150K plus an order for costs.

Six days later Miss Brown, the wife's counsel telephoned Mr Keehan to explore the possibility of settlement. Matters did not advance, probably because Mr Keehan had a conference fixed for the following day. At the conclusion of that conference with his client Mr Keehan telephoned Miss Brown and on his client's instructions sought a minimal reduction: either a lump sum of £250K with no order for costs alternatively, if the petitioner were to have her taxed costs, then the lump sum would reduce to £225K. There were ancillary proposals for dates of transfer and payment together with proposals for child maintenance and for indemnifying the wife in respect of debts arising out of their business partnership.

It transpired that both sides had fixed further conferences with the clients for 22nd August. Clearly there was little between the parties and Mr Keehan sensibly re-arranged the venue of his conference to ensure that counsel, solicitors, and clients would all be beneath the same roof but in separate rooms on the afternoon of 22nd August. Mr Keehan offered to put his proposals in writing prior to the commencement of the joint conference. The document that Mr Keehan produced prior to the commencement of the joint conference was a great elaboration of the simple terms proposed on 20th August. It was in the form of a draft order and extended to eight pages. It was later labelled Draft 1. He might have prepared a simple heads of agreement to record what one was prepared to provide and the other prepared to receive. However he leapfrogged that stage and attempted to go to the end position, namely the extension of the simple agreement into the language of the court, replete with recitals and undertakings and schedules. No doubt he was mindful of the imminent fixture and the desirability of presenting the district judge with a completely crafted draft order. An unusual feature of Mr Keehan's draft was that it contained an undertaking by the husband to execute legal charges in respect of ten separate properties specified in the first schedule to secure the payment to the petitioner of the lump sum. Although now rare, arrangements to secure the performance of continuing periodical payments orders were once commonplace. But in my experience the provision of security for the payment of a lump sum is unknown. Of course its justification was that the husband required a period of 36 months in which to complete the payment of the capital sum. The telephone offer made on 20th August had made no mention of security although it accepted that interest on outstanding instalments would accrue at 2% over base. It appears that it was Mr Keehan who first introduced the concept of securing payment of future instalments in addition to compensating the wife for the delay by payment of either interest or periodical payments. Whilst it is possible to see the sense of security for the payment of a lump sum by instalments long deferred it is harder to understand the development that emerged in Draft 2 whereby the husband undertook to charge shares and properties to secure not just the payment of the lump sum in full but also the performance of the full range of his obligations extending to the transfer of his share in the matrimonial home and the division of chattels.

The negotiations on 22nd August, despite the fact that the parties were so close, lasted from 2.30pm to 8.00pm. But the time was productively spent and Mr Keehan pressed for a document signed by the parties that evening. Miss Brown refused on instructions, saying that until she could consider a full and fair copy of all that had been agreed she would not bind her client although her client would not seek to renege. On that basis the parties separated. Mr Keehan remained in chambers and at about 10.00pm faxed the full and fair copy to Miss Brown's home. The reason he finished the work that day was that he planned to start a holiday in the west country on the following morning. The document which he faxed has been labelled Draft 2.

Over the course of the next few days negotiations continued, partly through counsel and partly through solicitors. Perhaps this was the result of Mr Keehan's absence from chambers, although he had a fax at his holiday address and continued to communicate with Miss Brown both by fax and telephone. This industry led to the production of further drafts which have been labelled 3, 4 and 5. For the purposes of this judgment it is unnecessary to record the variations thereby advanced. Partly they consisted of drafting points, partly the correction of errors and partly variations in the proposals for securing payment of the lump sum. What is abundantly plain to me is that during the course of these exchanges Miss Brown was fully committed to the search for compromise. If not expressly then impliedly she withdrew the caveat which she had entered on 20th August. Manifestly the pressure that induced the caveat had evaporated.

The solicitors were also communicating with the court. On 27th August the wife's solicitor wrote to the district judge's listing officer. I quote four paragraphs from the letter:

"Heads of terms have been agreed between the parties and subject to agreement as to the terms of the proposed consent order and the giving of security by Mr Xydhias, the respondent, to underpin his proposals, matters are agreed.

The three days will not now be required and, subject to Mr Xydhias' counsel approving the final version of the order we will only need a short appointment next week to place the order before the court for consideration.

However as the matter is complex this short appointment should, ideally,...

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