Grainne Fahy, partner and IAFL fellow and Head of Family Law at BLM law firm talks about cost orders in family law, how compliance and failure to negotiate sensibly are causing issues where they didn't in the past and the cost consequences for unnecessary litigation.

There always seemed to be much less jeopardy in family law cases, than perhaps their civil cousin. Though, I must admit that the expected conformity of the CPR versus the FPR always appealed to me much more.

You see, I'm a stickler for a timetable and family law has always had an air of being a bit too lax in that respect... until now. We, and our clients, would work towards filing dates only to be told at the last minute that for no particular reason the solicitor acting for the other party needed an extension or that evidence would be filed with no direction or court order to do so. This has always been difficult to explain to our clients, especially those who have fastidiously adhered to the letter of any court order.

Costs in Family Law

FPR 2010 part 28.3(5) provides the general rule in financial remedy proceedings of no order as to costs, but FPR 2010 28.3(6) provides that the court may make an order requiring one party to pay the costs of the other at any stage in the proceedings where it considers it appropriate to do so because of conduct. That, in my experience, rarely happened.

We are all aware of the sorts of interim applications that the general rule does not apply, such as interim maintenance, applications to strike out, notice to show cause to name a few: the "clean sheet" category. The starting point in these applications is that costs follow the event, but that presumption may be displaced more easily in a family case rather than a civil case. These "clean sheet" applications is where I have been most wary of costs in family law proceedings.

FPR 2010 28.3(7) sets out the criteria which the court needs to consider when asked to make a costs order in proceedings to which the general rule applies:

  1. Any failure by a party to comply with these rules, any order of the court or any practice direction which the court considers relevant;
  2. Any open offers 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 proceedings which the court considers relevant; and
  6. The financial impact on the parties of any costs order.

Of the criteria listed above, b) is of most interest to me as this is where the jeopardy has finally raised its head in the context of financial remedy proceedings. The actual obligation to make open offers to settle falls late in terms of the timetable of a case but given the recent case law in this area, we must adjust our thinking here.

There has undoubtedly been an increase of cost orders in financial remedy proceedings and so compliance and the failure to negotiate sensibly are causing more issues than they did previously. Whilst these proceedings can be dominated by ill feeling between separating spouses, they must be extremely careful not to litigate out of spite or for the sake of it and the costs should be proportionate to the complexity of the case.

Parties should consider making offers to settle as soon as possible, so as to provide maximum cost protection. And they should certainly comply with the new FPR 9.27A which came into force on 6 July 2020 and requires parties to make open offers within 21 days of an FDR or 42 days before the final hearing, where there has been no FDR. What's more the old tactic of making the open offer more aspirational than realistic carries significant cost risk as well.

Cost Protection of Offers

  • Only open offers can be shown to the court during a costs argument in which the general rule applies.
  • Calderbank offers provide costs protection in the interim applications where the general rule does not apply.
  • Without Prejudice offers offer no protection at all.

So, the once rare beast of the cost order in financial remedy proceedings is rearing its ugly head more and more and our usual safe negotiation under the cloak of Without Prejudice offers give us, and more importantly our clients, no protection.

Case law is showing that even needs don't trump the obligation to litigate sensibly and within the rules and as we know needs usually trump everything... until now.

So beware!

Originally Published by Today's Family Lawyer

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