As wife's divorce costs hit £920,000, judge attacks 'out of control' foreign divorce cases 'squeezing out needy litigants'

'Neither of them currently pays any English taxes whatsoever' complains Mr Justice Holman

A High Court judge has launched an extraordinary attack on "out of control" foreign divorce cases being fought in England by wealthy couples who are "squeezing out needy litigants".

Mr Justice Holman spoke out during a one-day hearing in the ongoing battle between former Miss Malaysia Pauline Chai and her estranged tycoon husband Khoo Kay Peng, 74, who owns a 40 per cent stake in Laura Ashley. He referred to the "phenomenal costs" incurred and said the cases meant parents were being forced to wait for "precious court time to recover their children from abduction" among other issues.

Ms Chai, 66, was seeking £125,000 per month until a two-day hearing beginning on 30 April. Neither are British citizens and pay no taxes here yet Ms Chai, who owns a £30m property in Hertfordshire, has so far incurred £920,000 costs in this country alone. Together they have spent £1.6m to date on what Mr Justice Holman described as "preliminary skirmishes" with a decision yet to be reached on whether the full divorce hearing takes place in England or Malaysia. The judge said "a mere £2,355" was all that the pair had contributed towards six days court fees to date.

Mr Justice Holman said: "The legal costs which have been incurred already (by the couple) can only be described as eye-watering. Neither of them are British citizens. Neither of them currently pays any English taxes whatsoever. Very serious issues ought to arise as to just how much time of an English court these parties should be able to take up on these preliminary skirmishes, whilst squeezing out the many needy litigants who need precious court time to recover their children from abduction or seek their return from care, and other such issues."

The judge said it "borders on the fantastic" that "10 days of precious court time" have been set aside in October for the High Court to consider whether the divorce should take place in England or Malaysia. The one-day hearing last week for an application for further maintenance cost Ms Chai £55,000.

Mr Justice Holman said: "So if that is the level of fees for a one-day hearing… the thought of the cost of the projected 10-day hearing in October is little short of mind-boggling… At the moment it appears to me that this worldwide litigation is completely out of control."

Marilyn Stowe, Senior Partner at Stowe Family Law, said an increase in the number of divorce cases involving wealthy couples have been heard in England following the landmark White v White decision, when the concept of equal sharing became the accepted starting point for financial settlements.

She said: "Since then a less wealthy spouse has felt they might get a better hearing in England than abroad and the English justice system is very well respected around the world. I would caution that (the Chai v Peng) case is not typical - the courts are not awash with these kind of cases so it's important to keep it in proportion.

"It does make you wonder however whether there should not be a different structure or court system for high net worth individuals to litigate in appropriate cases."

Ms Chai is represented by 'Diva of Divorce" Ayesha Vardag who recently hit the headlines herself after her former mentor Raymond Tooth, known as "Jaws" because of his reputation as a formidable divorce lawyer, accused Miss Vardag of trying to pinch his clients. Her law firm Vardags settled the case out of court by agreeing to pay £5,000 in damages and another £38,000 in costs. They also had to promise not to repeat the offending ad, although they denied liability.

Miss Vardag told the Independent the legal fees in Chai v Peng were "small beer" to the "ultra rich". She said: "When you have a couple trying to divide up billions or hundreds of millions, the legal costs are generally high, because there's enough at stake to make it worth it. It's the biggest financial transaction most people will ever undergo. You can be required to pay half your total wealth to your ex. The legal fees are small beer in the big picture in cases for the ultra-rich. Of course, those too are taxed and pay the salaries for the judges and the infrastructure of the courts. Big cases are what make English justice affordable for the needy."

Miss Vardag agreed that the courts were "clogged up" and that wealthier couples should move into arbitration. She said: "deserving cases really are delayed… We've proposed in open court for Pauline Chai that we do the whole thing by way of arbitration. We're huge fans of arbitration - quicker, cheaper, joint choice of expert judges and completely private. And it frees up the public courts for the needier cases. Arbitration is the solution to this problem."

Dr Khoo's solicitor is Baroness Shackleton of Belgravia, whose previous clients have included members of the Royal Family and Sir Paul McCartney. Her firm Payne Hicks Beach declined to comment.

Mr Justice Holman said in his judgement: "This case is not about the divorce. They both agree that they seek a divorce. It makes not a row of beans difference whether their marriage is dissolved here or in Malaysia. It is only about one thing - money. Sooner or later they need to sit down and discuss money. I implore them to do so before this appalling litigation gets yet further out of control."

How the other half lives

Pauline Chai is seeking £500m from her husband Khoo Kay Peng. Besides his Laura Ashley stake, the 75-year-old multimillionaire is also a director of Corus Hotels Limited in the UK.

The couple, who married in 1970 and have five grown-up children, bought a £30m 1000-acre Hertfordshire estate in 1998. It is said to include a menagerie of animals and two custom-built lakes costing £60,000 each. The question of how much Dr Khoo is worth is expected to dominate proceedings as much of his assets are technically owned by his companies. Forbes reports his wealth at $310m (£186.5m).

In his maintenance application judgement, published on Monday, Mr Justice Holman said that in January Ms Chai had £37,000 in a bank and £45,000 in a share portfolio. He said: "(Ms Chai) says she requires £22,000 per month for her chauffeur and Rolls Royce Phantom and nearly £38,000 per month for her personal security."

In her £125,000 a month maintenance application Ms Chai also claimed she needed money for "re-laying driveway", "shipping of possessions from Canada" and "redecoration and replacement furniture".

The judge said these were not exercises "which she needs to undertake in the short period between now and the next hearing". Mr Justice Holman urged both parties to negotiate and ordered maintenance payments to Ms Chai of £70,000 until the next hearing on 30 April with a £100,000 limit on her legal costs.

The £2,355 fees that have been paid are court administration fees, such as the divorce petition, which have almost all been paid by Ms Chai as she is the applicant.

* See the maintenance application judgement in full here: http://www.familylawhub.co.uk/default.aspx?i=ce3859

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