Costs within Financial Remedy Proceedings

How will the costs be divided between me and my spouse/ ex-spouse during our financial remedy proceedings?

The starting point under the Family Procedure Rules is not always that the parties must each pay their own costs. It varies depending upon the circumstances.

The court can make a costs order at any time during the proceedings, requiring one party to pay the others costs, if it considers it just to do so.

The court will consider the following things-

1.     Any failure to comply with the rules, practice directions, or order of the court.

2.     Any open offer to settle made by a party.

3.     Whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue.

4.     The manner in which a party has pursued or responded to the application or a particular allegation or issue.

5.     Any other aspect of a party’s conduct in relation to the proceedings which the court considers relevant.

6.     The financial effect that a costs order would have on the parties.

The following cases have clarified the position of the law-

In OG v AG [2020] EWFC 52, Mostyn J stated:

“It is important that I enunciate this principle loud and clear: if, once the financial landscape is clear, you do not openly negotiate reasonably, then you will likely suffer a penalty in costs. This applies whether the case is big or small, or whether it is being decided by reference to needs or sharing.”

MS v FS (No.2 costs and ancillary issues) [2020] Lexis Citation 223:

In May 2019, PD 28A 4.4 was amended when considering the conduct of the parties for the purposes of paragraphs 28.6 and 28.7.

Parties must help the court further the overriding objective. This is particularly relevant in cases where there is a risk of the costs becoming disproportionate to the amounts in dispute.

The change means that the court will now take a broad view of the conduct of the parties.  If a party refuses to openly negotiate reasonably and responsibly, this will most likely amount to conduct in respect of which the court will consider making an order for costs.

In needs cases, the same applies if a party unreasonably resulting in the disproportionate costs being incurred by each party.

These cases emphasise the importance of parties trying their best to resolve financial issues.

Are cost estimates required?

Before every hearing, the parties will have to provide a cost estimate to the date of the hearing (PD 9.27). This encourages the parties to be more aware of costs throughout the proceedings and to keep them in consideration.

Each party will now be under a duty to make open offers under PD 9.27A either-

(a) at a date that the court directs,

(b) if no date is specified then 21 days after the FDR, or

(c) where there has been no FDR, and no court direction, not less than 42 days before the date of the Final Hearing.

PD 9.28 still requires parties to give open offers before the final hearing.

Calderbank offers (those marked “without prejudice save as to costs”) were used when deciding costs previously, although, they can still be applied where PD 28.3 does not apply.

If you would like to find out more information about the issues raised above, please contact Susan Taylor. 0161 883 0460 or email st@taylorking.co.uk