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	England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Sayers & Anor v Dixon & Anor [2025] EWHC 681 (Ch) (20 January 2025) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2025/681.html Cite as: [2025] EWHC 681 (Ch)

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IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES

		7 Rolls Buildings Fetter Lane London
		20th January 2025

WARNING: Reporting restrictions may apply to the contents transcribed in this document, particularly if the case concerned a sexual offence or involved a child. Reporting restrictions prohibit the publication of the applicable information to the public or any section of the public, in writing, in a broadcast or by means of the internet, including social media. Anyone who receives a copy of this transcript is responsible in law for making sure that applicable restrictions are not breached. A person who breaches a reporting restriction is liable to a fine and/or imprisonment. For guidance on whether reporting restrictions apply, and to what information, ask at the court office or take legal advice.

MR JUSTICE RICHARD SMITH:

Background

1. Today, I heard in the interim applications list an application dated 13 December 2024 made by the second defendant, Mrs Janet Dixon, to discharge or vary the injunction order made by Roth J on 12 December 2023 against Mrs Dixon, as was continued by the further order of Fancourt J made on 20 December 2023.
2. Those injunction orders were made upon the application of the claimants, the trustees in bankruptcy of the first defendant, Mr John Dixon (Trustees). There are two relevant substantive claims: the first is an insolvency application within Mr Dixon's bankruptcy, claiming that Mrs Dixon's 2014 purchase of a property in Barbados was a transaction at an undervalue and that the property vested in the Trustees and a declaration that the sale of a property in Cambridge in the Dixons' joint names was a void disposition; the second seeks declarations that six declarations of trust in Mrs Dixon's favour made in 2010 were shams, preferences or transactions defrauding creditors and further others setting them aside.
3. As to the substantive claims, Fancourt J accepted that both sides have an arguable claim or defence. Although he saw the cogency of the Trustees' claims and the need for the defendants to explain themselves, he did not have enough information to form a firmer view on the merits. Having considered the papers and the submissions for this application, I am in a similar position.
4. Following the issue of the claim, the Barbados property was, in fact, sold and it was that sale which apparently led to the Trustees to seek proprietary and more conventional asset freezing injunctive relief over all Mrs Dixon's assets.
5. The disclosure required under the injunction order revealed the existence of some £203,555 in cash, together with Mrs Dixon's interest in the family home said to be worth some £738,000, albeit that was said to include debt of some £200,000 or so due from the bankrupt, Mr Dixon, to his wife. Mr Dixon's only income was apparently his state pension, then at the level of some £160 or so per week.
6. The terms of the original injunction granted on both the proprietary and more conventional bases for asset freezing relief allowed expenditure of £25,000 plus VAT on legal advice and representation and £750 a week living expenses, Roth J conscious that these were being allowed out of what might well turn out to be the Trustees' property held for the benefit of the creditors of Mr Dixon. He therefore recognised that careful thought needed to be given to making any such allowance, particularly in relation to legal costs since, in principle, creditors' money should not be used to fight and lose the case against them. Nevertheless, he did consider that some allowance should be made.

The return date injunction

7. When the matter came back before Fancourt J, he gave further consideration to the issue of legal and living expenses. Given the limited amount of the frozen funds and assets significantly below the maximum amount of the Trustees' claims, he considered it essential that costs were not wasted on preparing for unnecessary hearings. He did, however, consider it important that Mrs Dixon had the opportunity to take full legal advice and decide on the strategy to be pursued to resolve the disputed issues.
8. As for expenditure in what he described to be the short-term - mainly for the following month or two – Fancourt J was satisfied that Mrs Dixon had sufficiently shown that she could not pay living expenses or fund lawyers without recourse to the disputed funds although, given time, he thought that the Dixons may well be able to make different arrangements involving loans or other funding arrangements for their case and, if necessary, retain different lawyers. He said that any application for funding beyond the interim injunction applications would require full and complete disclosure in that regard.
9. Fancourt J considered the most important requirement at this stage was for Mrs Dixon to be able to continue to live in what he described as a dignified manner while this litigation was pending and that some money was available to ensure that she was adequately and well advised at that stage. That was most likely to ensure that further legal costs were not wasted. He also indicated that it would be wrong in those circumstances for Mrs Dixon to be handed an open or blank cheque to fund the legal representation of her choice for the rest of the claim.
10. According to the Judge, Mrs Dixon had to accept that, in the changed circumstances in which she found herself, she and Mr Dixon had no significant income with which to fund counsel of their choice. Difficult choices about representation might well have to be made and it was appropriate to explore alternative funding arrangements for the litigation. Fancourt J's main considerations in determining the amount of the allowance for living expenses and legal funding were set out in his judgment in the following terms, namely:-

(i) the need to avoid wasting costs when, with the benefit of time and some good advice, they may be avoided;

(ii) the maintenance of a basic level of dignity for Mrs Dixon in her living arrangements until trial;

(iii) the size of the proprietary claim, exceeding some £1.2 million, and the significant extent to which that exceeded the disputed funds;

(iv) the fact that the cash assets claimed by the Trustees were also needed to fund living expenses;

(v) that overly generous provision for legal funding and living expenses would rapidly eat into the disputed funds; and

(vi) the availability in general in this jurisdiction of alternative funding regimes for litigation where litigants cannot pay upfront for legal representation.

11. In relation to legal costs, Fancourt J decided that, in addition to the £25,000 already allowed by Roth J, a further sum of £40,000 should be allowed for payment for further advice on the litigation, for the preparation of the witness statements in answer to these claims (then due on 22 January 2024) and for any further application contesting or seeking the variation of the terms of the injunction, albeit Roth J had regarded the £25,000 he had allowed as suitable for any challenge to the without notice injunction. Fancourt J was not willing on the evidence before him to make any further allowance for the further conduct of the litigation beyond the stages he had indicated, it not having been shown to him that Mrs Dixon could not effectively defend the claim thereafter without the release of funds.
12. As for living expenses, Fancourt J considered a figure of £3,250 per month a just allowance to be funded out of the disputed funds which was coincidentally the equivalent of the amount that Roth J had allowed. Mr Dixon's state pension entitlement was deemed to have been used to fund in part that monthly allowance.
13. In concluding, Fancourt J made clear that he was not finding or deciding that no further legal fees allowance would be permitted for further conduct of the litigation. However, the allowance granted covered legal advice and representation up to and including any application to vary or set aside the injunction, including any further variation of the allowances. Equally, he was not encouraging Mrs Dixon to think it likely that further allowances for legal fees would be made in future given the potential shortfall in creditors' funds.

Mrs Dixon's further application

14. In support of the application before me today, Mrs Dixon has submitted a second witness statement dated 12 December 2024 and a reply statement dated 17 January 2025. In the former, she explains the 20 December 2024 deadline for service of witness statements in the underlying claims, with the Trustees being required to serve their responsive evidence by 17 January 2025, deadlines extended on a number of occasions by consent with an agreed stay to facilitate the Trustees' investigations and the parties' settlement discussions. Those settlement discussions having broken down, she now makes this application with the assistance of direct access counsel. A case management conference is apparently scheduled for 29 January 2025.
15. Given that no settlement has been reached, Mrs Dixon says that she has no more allowance for legal fees for the future steps that will be required or for further settlement discussions.
16. Moreover, in terms of living expenses, she says that she has not been allowed to live in the dignified fashion contemplated by Fancourt J and she points to various aspects of her domestic arrangements for which the Trustees have declined to allow her any additional allowance. In addition, she says that she cannot afford dental or chiropody treatment and she is restricted from, for example, travelling to see her children generally and her husband has not been able to buy any clothes in over a year. She now seeks further funds to allow herself and her husband to live a modest lifestyle and to pay for the next stages of the litigation.
17. She also says that, from the end of December 2023 to June 2024, she has expended more than £91,000 on legal costs, meaning that all the £40,000 allowed by Fancourt J has been paid over, with previous advisors claiming more than £14,000, albeit those earlier fees are apparently disputed. Given the delays, it is said that work has been carried out over a much longer period than envisaged, including that envisaged by Fancourt J himself. Having assisted in the formulation of a settlement offer, the Dixons have now reluctantly decided to part with Forsters' help and to run the litigation themselves with the assistance of direct access counsel. To that end they have agreed fees for (i) this hearing (ii) litigation advice and assistance generally (iii) the directions hearing (iv) witness statements (v) the brief for trial (vi) refreshers for trial and (vii) settlement. Some of those costs as have been agreed are based on a minimum fee and an hourly rate charge (£400) thereafter. Mrs Dixon recognises that the allowance already ordered was intended to cover any further variation application and the witness statements but she says that this is not possible given the work already undertaken over an unexpectedly extended period due to the litigation delays.
18. As for living expenses, Mrs Dixon explains that she is effectively allowed £3,000 per month net of her husband's state pension of £740 per month. Although it was recognised that there was a slight error in her maths, it was said that she is left with a limited cash allowance per month which, after payment of loans and credit cards, leaves her an amount of about £40 per day. She says she budgets to keep within these limits but problems occur in particular when there are unexpected household repairs or other expenditure on which she says she has turned to the Trustees for assistance but they have not been helpful. She seeks an increase to her living expenses by £1,500, now to exclude her husband's pension.
19. In addition to the points in Mr Currie's skeleton which I have read carefully, he also emphasised orally a number of overarching points on behalf of Mrs Dixon were I not minded to discharge the injunctions. First, he referred me to paragraph 37 of Fancourt J's judgment and the expectation that alternative means of funding would be explored, as to which, Mrs Dixon has explained in her evidence why it has not been possible to secure such third party support such that direct access counsel is the only viable option. The Trustees say that this evidence is thin, noting how Mrs Dixon says that she cannot obtain the financing of the magnitude required. She is not saying there what can be afforded such that there has not been full disclosure as Fancourt J said would be required on an application such as this.
20. Mr Currie also submitted that, although the trustees emphasise that the Dixons, particularly Mr Dixon, are sophisticated parties, and it is acknowledged that there are some things which they, or at least one of them, can obviously do and that they have done, they are neither professional nor experienced litigants.
21. Relatedly, and contrary to how the Trustees put matters in their skeleton, Mr Currie says that this will not be a case in which Mrs Dixon will necessarily simply go along with what Mr Dixon says because he is present at trial as well. Mrs Dixon will wish and need to consider closely her own position on the significant factual allegations, including, for example, in the cross-examination of Mr Dixon, a position which can be presented most fairly if she is represented by counsel. The Trustees say that the position adopted by Mrs Dixon in her substantive witness statement confirms that she is completely aligned with Mr Dixon's position. However, Mr Currie says that rather misses the point. For example, she may wish to make independent points of her own or not make points if they are made badly by Mr Dixon, and she needs to be represented for that purpose whatever alignment there may be in the underlying claim and defences.
22. Mr Currie also says, again relatedly, that the defence to the claim against her not being a straightforward matter, and Mrs Dixon not being a sophisticated litigant, and this not being a matter which will occupy a few days of court time in a simple claim, the balance of justice firmly favours her being properly represented for that purpose. The Trustees, in turn, say that this claim will in fact only occupy three days of court time at a maximum and that the court is perfectly well equipped to ensure fairness to all the parties.

The Trustees' position

23. As to the basis for the Trustees' opposition more generally, their position is set out in the fourth witness statement of Ms Emma Sayers, one of the Trustees. It is fair to say that the Trustees take exception to a number of the criticisms of their conduct made by Mrs Dixon and, insofar as any delay is concerned, they say that this was largely due to the extended period of time it took for Mrs Dixon to provide the information enabling the Trustees to assess her settlement proposal. According to Ms Sayers, the provision of bank statements was, through no fault of their own, unnecessarily protracted, taking a period of some seven months or so, and the settlement discussions delayed thereafter until September 2024, again through no fault of their own. Discussions then continued and they say that there has been no delay on their part.
24. As to the requested allowance for further legal costs, the Trustees say that, although it appears that Mrs Dixon has expended the full amount of the £65,000 total allowance originally granted, given the stay that was agreed, there was no need for any legal expenses to be incurred at all while the settlement discussions took place or in preparation for them. It therefore seems to the Trustees that money has been expended with Forsters on items to which Fancourt J did not intend the allowance to be earmarked.
25. As to the specific items for which the allowance is now sought in respect of legal costs, the Trustees say that the allowance already granted was intended to cover any variation which might be sought to the injunction. As for general legal advice and assistance, the Trustees consider that this too was covered by the allowance already granted and that the use of an hourly rate for any further assistance is too open-ended given the obvious concerns about further depletion of assets. As for the directions hearing, the costs sought are too high and directions should be capable of agreement in any event. As for finalising witness statements, this item was covered by Fancourt J's allowance. The brief and refresher fees are said to be too high and inconsistent with what Fancourt J said about tough choices having to be made about her representation. As to settlement, it again appears that Mrs Dixon is seeking an open-ended allowance.
26. It seems that future fees are estimated at a figure measured in the tens of thousands but the figure does not include expenditure on those items for which there is no cap. Based on their own analysis, the Trustees anticipate that the cash funds available to Mrs Dixon (estimated at £66,000) will be wiped out and she would not be able to afford those fees in full in any event. Although that £66,000 figure is not explicitly agreed, Mrs Dixon does not argue today with the maths.
27. Turning to living expenses, as for the criticism of lack of cooperation concerning certain one-off expenses, Ms Sayers says that the Trustees have, in fact, been accommodating, and they have agreed a number of these, some for significant sums. The living allowance already ordered exceeds the UK median gross annual income for full-time employees. Moreover, Mrs Dixon does not have any rent or mortgage costs.
28. That is the background to the matter and a summary of the parties' arguments which were obviously articulated more fully in their respective skeletons and before me today and to which I have paid close regard.

Legal principles

29. Turning to the relevant legal principles, these are helpfully set out in Fancourt J's judgment as was referred to repeatedly during the course of submissions today. Where, as here, there is a proprietary claim to the funds in dispute, the right approach is to ask sequentially the following central questions:-

(i) does the claimant have an arguable proprietary claim to the funds? If so:-

(ii) does the defendant have an arguable defence to the claim? If so:-

(iii) has the defendant demonstrated that, without release of the funds, she cannot effectively defend the proceedings? If so:-

(iv) where does the balance of justice lie as between the defendant spending the claimant's money and the claimant preventing the defendant from spending her own money?

(See in that regard Independent Trustees Services Limited v GP Noble Trustees Limited & Ors [2009] EWHC 161 at [6], approved by the Court of Appeal in Frederick Marino v FM Capital Partners Limited [2016] EWCA Civ 1301 at [23].) The same test applies in principle in relation to living expenses. Like Fancourt J, I proceed on the basis that the first two questions are answered in the affirmative.

Discussion

30. Considering the position with Mrs Dixon's living expenses in this case first, I am satisfied that the living allowance that she has already been granted was and remains sufficient for what Fancourt J described as maintaining a basic level of dignity in her living arrangements until trial. The allowance of £3,250, partly funded by her husband's state pension, is in my view adequate for that purpose, not least when the Dixons do not have any mortgage or rent payments of their own.
31. If anything, it seemed to me that this was somewhat confirmed by her own evidence in which she explains how, after paying each month towards certain financial liabilities, she is still able to budget for her and her husband's living expenses. Where it does appear that she encounters difficulty is when an unexpected or one-off event occurs such as the breakdown of a household appliance or the need to travel to see members of her wider family or the need to attend a medical appointment for which a fee might be levied. However, I am satisfied that, in those circumstances, and notwithstanding the considerable sound and fury on both sides as to the attitude of the other, the Trustees have fairly considered her requests and, where reasonable, agreed them or indicated sensible ways to address the difficulty. Whilst Mrs Dixon may well feel it an indignity to have to go cap in hand to the Trustees for that purpose and that she should be enjoying a higher standard of living more generally, that is the consequence of the position in which she and her husband find themselves as defendants to these proceedings concerning assets held in her name which may, in due course, be found to belong to the Trustees and to be available to Mr Dixon's creditors, not to Mrs Dixon at all.
32. I therefore decline a variation to living expenses on this account. Mrs Dixon's lifestyle may well not be what she enjoyed when her husband was in paid employment but I am satisfied that the basic dignified standard of living contemplated by Fancourt J continues to meet the justice of the case and the existing allowance for living expenses continues to meet that standard. I am also reinforced in my view by the absence of meaningful information in the evidence explaining more precisely what Mrs Dixon says the additional funds are needed for.
33. Turning to the question of legal expenses, I am again far from persuaded that the allowance already made should be increased. First, given what Fancourt J said when he set the £40,000 allowance about the importance of obtaining legal advice with a view to ensuring that costs were not wasted, it is, in my view, very surprising that Mrs Dixon has managed to incur the sum of at least £91,000 between the end of 2023 and June 2024. Mrs Dixon does point to significant delay in the proceedings, but that delay reflects the parties' agreement to engage with a view to exploring the possibility of litigation being avoided. The proceedings were stayed for that purpose. Quite why, for example, Forsters were engaged in what seemed to be the important but nevertheless largely administrative and seemingly protracted process of providing bank statements to the Trustees is not clear to me and it is not really properly explained by Mrs Dixon. Likewise, although one can perhaps understand Mrs Dixon obtaining limited advice about the formulation of a settlement proposal, one would again expect the Dixons in the position in which they find themselves, to be driving the settlement process, with Forsters having minimal impact. Again, that does not appear to have occurred, albeit the position is not entirely clear as to what did happen before June 2024 at least.
34. It is also relevant, in my view, that since the return date order made by Fancourt J, the frozen assets have been depleted further and not insignificantly by the living expenses which she has drawn down. Although again it could be said, well, that is a consequence of the unwelcome delay in these proceedings, that is delay which was agreed to by both parties with a view to seeking settlement.
35. Turning to the individual items sought, I am satisfied that those relating to legal advice and assistance and the preparation of witness statements were all intended to be met from the increased allowance permitted by Fancourt J. Mrs Dixon was well aware of that, as were Forsters. In my view, they should have tailored their related expenditure accordingly. As I have indicated, I am not persuaded that the delay that occurred following the interim injunction application led to further legal costs being incurred. The whole point of the stay of the proceedings was to allow for the provision of information and settlement discussions to take place and to avoid further litigation. As such, I am not persuaded that further allowance should be made for these items for which sufficient funds had in my view already been allocated. In that regard, Mr Dixon has, in fact, filed his substantive witness statement, albeit he apparently hopes to be able to amplify this or undertake further work to complete it.
36. At the conclusion of the hearing, there was some debate as to whether the costs of the application today fell within the £65,000 allowance granted by Fancourt J. Mr Currie took me to the terms of the order itself and explained that it was not clear from those terms that costs of applications to vary were, in fact, covered. I have to say that, coming into this hearing, I had understood the position to be that Mrs Dixon did accept that the £65,000 covered the costs of a variation application such as this but I see the force of the argument made by Mr Currie. However, there is no need for me to reach a final view on that particular question of construction of the injunction or to decide its precise meaning in that regard. It seems to me that I can consider the question of whether any allowance should be made on that account as part of the entirety of the application before me.
37. As for the directions hearing, I am satisfied that both parties should and will endeavour to agree directions for that and, in a sense, there was I think some recognition on the part of Mrs Dixon today that that was the likely outcome. Although the case, and I do not wish to understate it by any means, is a serious one, I do not believe that it will be a particularly complex one procedurally to trial. Even if directions cannot be agreed, I am satisfied that this aspect can be dealt with effectively by Mrs Dixon without the need for legal advice or representation.
38. Likewise, as I have already indicated in relation to the past settlement discussions, I am satisfied that the Dixons themselves can take forward any settlement discussions that might take place in the future.
39. As for the brief fee and the refresher, although the proposed instruction of direct access counsel appears to reflect a more realistic approach to legal costs on Mrs Dixon's part and, although it has apparently not been possible to secure third party funding, if the allowance is increased on account of what is perhaps the largest item in the schedule of costs put forward, it will eat significantly into the remaining liquid assets held in Mrs Dixon's name. Although it would clearly be of benefit to Mrs Dixon and, indeed the court, for her to be represented at trial, and that is amply demonstrated by Mr Currie's representations here today, and although I cannot say now that the costs indicated are not reasonable for what they envisage, and indeed they may very well be reasonable, that does not mean that Mrs Dixon cannot effectively defend these proceedings without that representation. Indeed, day in day out in this Division, the court does encounter litigation brought by or against litigants who represent themselves in cases often involving, as is very common in this Division, very serious allegations indeed. As such, I am not persuaded that Mrs Dixon cannot effectively defend herself without incurring this or indeed the other items of expenditure I have mentioned. In the types of case I have mentioned, the court can and will tailor its processes to ensure that cases are dealt with justly, consistent not only with the overriding objective but also with the relevant party's Article 6 rights.
40. Moreover, given the amount of the claim, with limited assets available to meet it and that those assets may currently belong to the Trustees, but also fully recognising the fact that they may not, I am also satisfied that the justice of the case firmly favours the assets held by Mrs Dixon not being depleted further by any one or more of the items of costs that has been canvassed. I should also say in this regard that I am not entirely persuaded on the evidence that some arrangements could not still be made with the assistance of others, perhaps more modest still, to assist Mrs Dixon at trial. In my view, there is insufficient information before the court about that as well.
41. All those matters said, I am also of the view that, if settlement is not achieved and the trial does proceed and third party assistance cannot be obtained, it may be appropriate to allow Mrs Dixon a further limited allowance of up to £5,000 plus VAT to obtain limited legal advice on the merits and on the conduct of the trial including, for example, guidance on the preparation of submissions and cross-examination and, in particular, to allow Mrs Dixon to reflect on the issue highlighted by Mr Currie today, namely, her own independent position even if in asserting this, she is closely aligned with her husband on the substance. I consider that this limited further allowance might be appropriate better to equip Mrs Dixon to represent herself at trial and it might lead, indirectly, to some cost savings overall even, if permitted, it directly reduces further her available liquid assets. However that trial is apparently still some way off even if expedition might be granted at the case management conference later this month and, at least on Mrs Dixon's side, further settlement discussions are apparently contemplated. As such, I consider the appropriate way forward is this: if the parties cannot agree the payment of this limited allowance at the relevant time, Mrs Dixon has liberty to apply in writing to me for that purpose, supported by witness evidence. Such an application should, in my view, not be made until 12 weeks before the start of the trial, with the Trustees having the opportunity to respond in writing, if so advised. The matter can then be decided on the papers. I should make it clear that I am not saying the allowance will be permitted but it seems to me that it might, and I consider it best to make some streamlined provision for it now given that costs are today being expended arguing about funding for costs.
42. Finally, I make clear that I see no basis for the injunction to be discharged. That prospect was raised in the application and it was mentioned faintly in the evidence. It was argued more forcefully in Mrs Dixon's skeleton argument and orally today, principally on the equitable basis underpinning injunctive relief, the delay that has occurred and the unexpected length of time that this freezing relief has lasted with its wide ranging effect hanging over Mrs Dixon's head for such a long period. Although I do fully recognise the far-reaching consequences for anyone subject to asset freezing relief, the delay that has occurred was agreed by both parties with a view to seeking a settlement. It is very far removed, in my view, from the situation cited to me by Mrs Dixon in Lloyds Bowmaker Ltd v Britannia Holdings plc [1998] 1 WLR 1337 on its very different facts. In this case, the delay and the court's endorsement of that delay was the consequence of both parties seeking to settle the case in furtherance of the overriding objective even though the injunction may well turn out to have been of longer duration, perhaps by some distance, than originally anticipated. In the circumstances described, I am not persuaded that the court should exercise its discretion to discharge the injunction.
43. That concludes my ruling.
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