13. Costs in Family Proceedings

13.1 Introduction

There are three aspects to costs:

1. The award of costs, i.e. the principles on which costs are awarded by the trial judge.
2. Procedure, i.e. the procedure for detailed assessment (formerly taxation) of costs.
3. The amount of costs, i.e. how the amount of costs to be paid by the paying party to the receiving party is actually determined.

13.2 Object of this chapter

The object of this chapter is to explain and illustrate those aspects of costs which are peculiar to, or of special importance in, family proceedings, in order to assist you in making interlocutory and final orders for the payment of costs by one party to the other, and orders for the detailed assessment of the costs of funded proceedings (see paragraph 13.3 below). This chapter does not deal with procedure generally (this is dealt with in Chapter 8 of the Bench Book), or with the amount of costs; for a detailed treatment of these subjects see Butterworths Costs Service or Greenslade on Costs.

13.3 Legal Aid Generally

As from 1 April 2000 the Legal Aid Board has been replaced by the Legal Services Commission, and the legal aid fund has been replaced by the community legal service fund.

Although the provisions relating to legal aid remain substantially the same, the terminology has changed, and throughout this chapter assisted persons are referred to as 'funded persons', and legal aid proceedings are referred to as 'funded proceedings'.

Sections 17 and 18 of the Legal Aid Act 1988 (limit on costs against assisted party, and costs of successful unassisted parties) have been replaced by the broadly similar provisions of section 11 of the Access to Justice Act 1999 (costs in funded cases), with consequential amendments and additions to the Civil Legal Aid (General) Regulations 1989 effected by the Community Legal Service (Costs) Regulations 2000, SI 2000/441, the Access to Justice Act 1999 (Commencement No. 3, Transitional Provisions and Savings) Order 2000, SI 2000/774 and the Community Legal Service (Costs Protection) Regulations 2000, SI 2000/824. The 1989 Regulations otherwise remain in force, and are set out in the Legal Aid Handbook 1998/99, although the Handbook (which you should retain) has been replaced by the three volume, loose leaf Legal Services Commission Manual.

13.4 Civil Procedure Rules 1998

The Civil Procedure Rules 1998 (CPR) came into force on 26 April 1999, and replace the Rules of the Supreme Court and the County Court Rules. Parts 43, 44, 47 and 48, which deal with costs, are applied to family proceedings (except for rr 44.9 to 44.12, which deal with costs on the small claims track and the fast track, costs following allocation and re-allocation, and deemed costs orders) and proceedings in the Family Division by the Family Proceedings (Miscellaneous Amendments) Rules 1999, SI 1999/1012, which revoke the Family Proceedings (Costs) Rules 1991 and the Matrimonial Causes (Costs) Rules 1988.

All bills, including family proceedings bills (except for counsel's fees where the length of the main hearing does not exceed 10 days, see 13.34) are now decided by detailed (or summary) assessment under the CPR 1998 but, in the case of funded proceedings, the amount of costs is governed by regulations, currently the Legal Aid in Family Proceedings (Remuneration) Regulations 1991 (LAFP(R)R) and the Legal Aid in Civil Proceedings (Remuneration) Regulations 1994 (LACP(R)R).

13.5 The Practice Direction

The CPR 1998 are not self-contained, but are supplemented by comprehensive and detailed Practice Directions made pursuant to section 5 of the Civil Procedure Act 1997. The CPR must always be read in conjunction with the current Practice Direction, 'the Costs Practice Direction' (CPD)1. The latest CPD came into force on 3 July 2000. References in CPD to 'claimant' and 'defendant' are to be read as references to the equivalent terms used in family proceedings, and other terms and expressions used in CPD shall be similarly treated, and references to procedural steps and to other Parts of the CPR 1998 which have not yet been applied to family proceedings are to be read as referring to equivalent or similar procedures under the rules applicable to family proceedings, as the context may permit. The previous practice in relation to 'costs reserved'2 will no longer be followed, and such an order will have the effect specified in CPD3.

13.6 Taxation before 26 April 1999

Before this date, some family proceedings, which were matrimonial proceedings within the meaning of the Matrimonial Causes (Costs) Rules 1988 (for example, divorce), were taxed under the Family Proceedings (Costs) Rules 1991 (which incorporated the 1988 Rules), and other family proceedings, which were not matrimonial proceedings within the meaning of the 1988 Rules (for example, adoption), were taxed under the Rules of the Supreme Court or the County Court Rules.

(1) For the effect of the Practice Direction upon Regulations, see A Local Authority v A Mother and Child (Family Proceedings: Legal Aid Assessment) CA 20 December 2000 unreported, in which it was held that there is no need to consider whether or not the Costs Practice Direction is inconsistent with LAFP(R)R, because the Practice Direction has no power to override LAFP(R)R.

(2) The previous practice in proceedings in the Family Division was that costs which had been reserved had to be dealt with specifically at the substantive (or, with leave, a later) hearing, otherwise there was no order in relation to such costs; now, by CPD, section 8.5, when costs are reserved the decision about such costs is deferred to a later occasion, but if no later order is made those costs will be costs in the case.

(3) President's Direction [1999] 1 FLR 1295, [1999] 3 All ER 192, [1999] 2 FCR 1, and see Practice Direction (Family Proceedings: Costs) [2000] 1 WLR 1781, sub nom Practice Direction (Costs: Civil Procedure Rules 1998) [2000] 2 FCR 767.

13.7 Detailed assessment from 26 April 1999

From 26 April 1999 the procedure for the detailed (and summary) assessment of the costs of all family and family type proceedings, whether in the High Court or county court, non- funded or funded, is governed by the CPR.

Only in so far as the amount of costs is concerned, is there still a distinction between different categories of funded proceedings, i.e. those which are governed by the LAFP(R)R and those which are governed by the LACP(R)R, see 13.9 below.

Note that by CPR, r 44.17, Part 44 (General Rules about Costs) and Part 47 (Procedure for Detailed Assessment of Costs) do not apply to the assessment of costs in proceedings to the extent that (a) section 11 of the Access to Justice Act 1999 and provisions made under that Act, or (b) regulations made under the Legal Aid 1988 (i.e. LAFP(R)R and LACP(R)R) make different provision.

13.8 Summary assessment

1. Increasingly often, you will be asked to make a summary assessment of costs.
2. Summary assessment of costs, i.e. as an alternative to taxation, used to be the exception rather than the rule; the practice was contained in RSC Ord 62, r 7(4).
3. The former practice has been replaced by CPR, r 44.7(a) and CPD, ss 13 and 14, which form a complete code.
4. CPD, s 13.1 provides that whenever a court makes an order as to costs which does not provide for fixed costs to be paid, the court should consider whether to make a summary assessment of the amount of costs.
5. By CPD, s 13.9 the court must not make a summary assessment of the costs of a funded receiving party, but it may make a summary assessment of costs payable by a funded party, see CPD, s 13.10 (but see paragraph 13.10 below).
6. By CPD, s 13.2 the general rule is that the court will make a summary assessment at the conclusion of any hearing which has lasted not more than one day, in which case:

   "the order will deal with the costs of the application or matter to which the hearing related unless there is good reason not to do so, e.g. where the paying party shows substantial grounds, that cannot be dealt with summarily, for disputing the sum claimed for costs, or where there is insufficient time to carry out a summary assessment."

7. It follows that the court may make a summary assessment at the conclusion of any hearing, and it is probable that you will be asked to make a summary assessment not only at the conclusion of an interlocutory application or a short trial, but also at the conclusion of a lengthy trial.
8. The Court of Appeal has held1 that the purpose of the former RSC Ord 62, r 7(4) was to avoid the expense, delay and aggravation involved in a protracted taxation, and that the unlimited discretion given by the rule had to be exercised in a judicial manner unless there was good reason not to do so, and it is suggested that, as well as applying CPD, s 13.2(3) (i.e. where the paying party shows substantial grounds for disputing the sum claimed for costs that cannot be dealt with summarily or there is insufficient time to carry out a summary assessment), the court will exercise its discretion under the CPR broadly in accordance with the previous authorities. Even the unlimited discretion given by the former rule had to be exercised in a judicial manner1. Where a successful party's costs are likely to be substantial, summary assessment may not be appropriate2.
9. Note the practice: by CPD, s 13.5, each party who intends to claim costs must prepare, and file and serve not less than 24 hours before the date fixed for the hearing, a written statement, signed by him or his legal representative, of the costs he intends to claim, showing separately, in the form of a schedule which should follow as closely as possible Form N 260:

   a) the number of hours to be claimed;
   b) the hourly rate to be claimed;
   c) the grade of the fee earner;
   d) the amount and nature of any disbursement to be claimed, other than counsel's fee for appearing at the hearing;
   e) the amount of solicitors' costs to be claimed for attending or appearing at the hearing;
   f) the fees of counsel to be claimed in respect of the hearing (but see 13.34); and
   g) any VAT to be claimed on these amounts.

10. It remains to be seen how well the profession will observe this rule; it is probable that schedules will vary from detailed bills of costs on the one hand to unhelpful summaries on the other. By CPD, s 13.6 the failure by a party, without reasonable excuse, to comply with the rule will be taken into account by the court in deciding what order to make about costs, including the costs of any further hearing or detailed assessment that may be necessary as a result of that failure. Note that by CPD, s 13.8 the trial judge cannot delegate the making of the summary assessment to a costs officer, and that if a summary assessment is appropriate, but the trial judge is unable to make a summary assessment on the day, he must give directions as to a further hearing before the same judge. 1 Leary v Leary [1987] 1 All ER 261, [1987] 1 WLR 72. 2 C v C (Financial Provision: Non-disclosure) [1995] 1 FCR 75, Thorpe J.
11. It is suggested that trial judges should take a robust view, otherwise summary assessment will degenerate into an expensive, time wasting substitute for detailed assessment Ð detailed assessment by the back door. If you have enough information in the schedule to decide, in accordance with CPR, r 44.5(1) and (3), after brief submissions from each party, whether the costs were proportionately and reasonably incurred and were proportionate and reasonable in amount, then make the summary assessment but if, for whatever reason, you do not have this information, then it is suggested that you should think long and hard before fixing a further summary assessment hearing; you may think that a summary assessment is not appropriate, in which case you would order a detailed assessment. See also the very helpful Guide to the Summary Assessment of Costs published by the Supreme Court Costs Office.

13.9 Funded Proceedings (see 13.3 above)

The LAFP(R)R and LACP(R)R prescribe fixed amounts for most of the items in the bill, and give the costs officer a limited discretion. The regulations are updated from time to time as the prescribed rates are increased. The most recent increase took effect from 2 April 2001. LAFP(R)R govern the following proceedings -

1. care proceedings, i.e. proceedings for an order under Parts IV or V of the Children Act 1989, including proceedings under s. 25 of that Act (secure accommodation orders);

2. prescribed family proceedings, i.e.:

a) proceedings under the Children Act 1989 excluding care proceedings;
b) proceedings for divorce, nullity, judicial separation, and presumption of death and dissolution of marriage;
c) proceedings for financial relief for the parties to the marriage and the children of the family - including applications for avoidance of transactions, and injunctions, under MCA, s. 37;
d) proceedings in the High Court under MWPA, s. 17;
e) proceedings in the principal registry under MWPA, section 17 to which the Family Proceedings Rules 1991 (FPR), r 3.7(1) applies (applications by a party to pending or intended proceedings in the principal registry for divorce, nullity or judicial separation);
f) proceedings under Part IV of the Family Law Act 1996;
g) proceedings for financial relief after an overseas divorce, under Part II of the Matrimonial and Family Proceedings Act 1984;
h) proceedings under sections 20 or 27 of the Child Support Act 1991;
i) proceedings under section 30 of the Human Fertilisation and Embryology Act 1990.

The LACP(R)R govern the following quasi-family proceedings:

1. adoption proceedings;
2. proceedings under the Inheritance (Provision for Family and Dependants) Act 1975;
3. proceedings under the Child Abduction and Custody Act 1985;
4. wardship proceedings.

13.10 Costs against funded persons

A common form of order against impecunious and/or funded persons is an order for costs 'not to be enforced without leave of the court'. This form of order does not discriminate between an impecunious, non-funded person, who does not enjoy the protection of section 11 of the Access to Justice Act 19991, and a funded person, who does. In the case of the latter, this is an unsatisfactory form of order, as has been pointed out by the Court of Appeal2, because it is neither a determination of the funded person's liability, nor a reference for such determination, and the better order is an order for costs 'subject to assessment under section 11 of the Access to Justice Act 1999', which brings into operation the detailed assessment provisions of the Community Legal Service (Costs) Regulations 2000, SI 2000/441, which the trial judge in an ancillary relief application is particularly well placed to apply, having usually made findings as to the parties' financial resources and their conduct in connection with the dispute.

Note that by CPD, s 13.9 the court must not make a summary assessment (see paragraph 13.8 above) of the costs of a funded receiving party, but that by CPD, s 13.10, a summary assessment of the costs payable by a funded person is not by itself a determination of his liability under section 11.

13.11 Avoid multiple detailed assessments in funded proceedings

You will often be asked, at the conclusion of an interlocutory application, to make an order for a detailed assessment of a funded person's costs, because the legal representative wrongly thinks that such an order is necessary at that stage. If you make such an order, he is tempted to lodge his bill and papers, for detailed assessment, before the conclusion of the proceedings, which creates unnecessary work for the costs officer, and may cause delay.

If asked to make such an order, it is suggested that you point out that an order for detailed assessment in funded proceedings will, if appropriate, be made at the conclusion of the proceedings.

(1) This provides that, except in certain circumstances, the costs ordered against a funded person shall not exceed the amount (if any) which is a reasonable one for him to pay having regard to all the circumstances including the financial resources of all the parties to the proceedings and their conduct in connection with the dispute.

(2) See Parr v Smith [1995] 2 All ER 1031, CA; see also Chaggar v Chaggar [1997] 1 All ER 104, CA; Re R (A Minor)(Legal Aid: Costs) [1997] 1 FCR 613, CA; and Wraith v Wraith [1997] 2 All ER 526, CA; see also Burridge and Another v Stafford and Another [2000] 1 WLR 927, CA.

13.12 Special procedure

The majority of divorce and judicial separation petitions proceed undefended by way of the special procedure, in which the question of costs is dealt with by the district judge under the Family Proceedings Rules 1991 (FPR), r 2.36(3) which provides that where a petition contains a prayer for costs the district judge may:

1. if satisfied that the petitioner is entitled to such costs, include in his certificate a statement to that effect;
2. if not so satisfied, give to any party who objects to paying such costs notice that, if he wishes to proceed with his objection, he must attend before the court on the day fixed for pronouncement of decree.

A sensible practice has developed in special procedure cases of claiming costs in the prayer of the petition 'if the suit is defended', or (usually by prior agreement with the respondent) half the costs, thereby avoiding an unnecessary attendance on the date fixed for pronouncement of the decree.

13.13 Should costs of the suit follow the event?

There is no general practice in family proceedings that the costs of the suit should follow the event, because there will be many cases in which such an order will be inappropriate1. CPR Pt 44, r 44.3(2)(a), which provides that the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party, does not apply to family proceedings2. In petitions based on two years' separation and consent, the petitioner often claims half the costs, which the respondent often agrees to pay. In petitions based on five years' separation, costs are not often claimed. For special procedure cases, see paragraph 13.12 above. Whether or not an order for costs is made in a defended suit will depend upon all the circumstances of the case, including the real cause of the breakdown of the marriage and, in an adultery case, whether the co-respondent knew at the time of the adultery that the respondent was married. It is, however, no longer necessary to make the person with whom it is alleged that adultery has been committed a co-respondent3. Costs of the suit include the application for decree absolute, but not any subsequent application, and note that in proceedings after a decree nisi of divorce or a decree of judicial separation no order, the effect of which would be to make a co-respondent or party cited liable for costs which are not directly referrable to the decree, shall be made unless the co-respondent or party cited is a party to such proceedings or has been given notice of the intention to apply for such an order4.

(1) Povey v Povey [1972] Fam 40, [1970] 3 All ER 612, [1971] 2 WLR 381, CA.
(2) Family Proceedings (Miscellaneous Amendments) Rules 1999, SI 1999/1012, r 4(1)(b).
(3) FPR, r 2.7(1).
(4) FPR, r 2.37(3).

13.14 Family Proceedings Rules 1991 (as amended)

The FPR have been amended with effect from 5 June 2000 by the Family Proceedings (Amendment No 2) Rules 1999, SI 1999/3491. The effect of the amendment is to apply the ancillary relief pilot scheme, which has been in force in some courts since 1996, to all courts, and to make further provision for the application to ancillary relief proceedings of the costs provisions of the CPR.

There is nothing in the FPR as amended which appears to be inconsistent with the previous law and practice, and the existing principles may well be applied, although new case law will develop (but see 13.15.4 (Calderbank offer) below).

By Family Proceedings (Amendment No 2) Rules 1999, r 1(3), where proceedings were commenced before 5 June 2000 the court may, if it considers it just to do so, direct that the FPR as amended shall apply to those proceedings, otherwise the FPR shall apply as if the FPR had not been amended.

By FPR r 2.51B the overriding objective is applied to ancillary relief proceedings. You will be familiar with it in the context of the CPR, and it is not therefore set out here. The relevant costs provisions of the FPR as amended are rule 2.61F (which provides that at every court hearing or appointment each party must produce to the court an estimate in Form H of the costs incurred by him up to the date of that hearing or appointment), and rules 2.69 to 2.69E, which are in effect a statutory code based on Calderbank v Calderbank [1975] 3 All ER 333, [1975] 3 WLR 586, and are therefore dealt with in 13.15.4 (Calderbank offer) below.

13.15 Should costs of ancillary proceedings follow the event?

13.15.1 General principles

In Gojkovic v Gojkovic (No 2)(1), Butler-Sloss LJ set out the general principles as follows:

1. Although RSC Ord 62 r 3(3) (now CPR, r 44.3(2)) provides that if the court, in the exercise of its discretion, sees fit to make any order as to the costs of any proceedings it shall order the costs to follow the event, except when it appears that in the circumstances of the case some other order should be made, rule 3(5) (now Family Proceedings (Miscellaneous Amendments) Rules 1999, SI 1999/1012, r 4(1)(b)) disapplies the general rule to proceedings in the Family Division.
2. In the Family Division there still remains the necessity for some starting point, and the starting point is that costs prima facie follow the event, but this starting point may be displaced much more easily than, and in circumstances which would not apply, in other Divisions of the High Court. The ambit and extent of the discretion of the court is consequently far wider than in other civil proceedings. 1 Gojkovic v Gojkovic (No 2) [1991] 2 FLR 233, [1991] FCR 913, [1992] 1 All ER 267, [1992] 3 WLR 621, [1992] Fam 40, CA.
3. There is, however, a minority of cases where the assets are substantial, and an order for costs can (if appropriate) be made.

13.15.2 Costs do not necessarily follow the event

The question usually arises in connection with applications for financial relief. Inter partes costs orders are seldom made in applications relating to children1. There may not be an 'event', i.e. it may be impossible to show that either of the parties has won in the conventional sense2. In Gojkovic (No 2) an attempt by Ward J to establish the principle that, where both parties have behaved reasonably, there should be no inter partes costs order, regardless of the fact that a Calderbank letter had beaten the award, was foiled by the Court of Appeal, which held that there is no rule of practice in the Family Division to this effect3.

13.15.3 Court's discretion

As indicated above, the court has a wide discretion and will take into account all the circumstances of the case including conduct4 (see paragraph 13.9 below), the means of the parties, the effect upon the ancillary relief order of the order for costs (see paragraph 13.22 below), the Legal Services Commission's charge in legal aid cases5 (now of less importance because it may be postponed, although it attracts interest6 ) and any Calderbank offer (see below).

13.15.4 Calderbank offer

This is a written offer made without prejudice to the issues before the court, with the right expressly reserved to refer to it on the question of costs. Calderbank v Calderbank7 was an application for ancillary relief, and a Calderbank offer is peculiarly suited to such an application, in which a payment into court cannot be made. But what began as an alternative to payment into court became a very sophisticated system of offers and counter-offers, with the result that the court, at the end of the substantive hearing, often had to hear lengthy argument, based on a substantial file of correspondence, as to which of the parties was more reasonable than the other.

(1) See Hillingdon London Borough Council v H [1992] 2 FLR 372, Keller v Keller and Legal Aid Board [1995] 1 FLR 259, CA, reported sub nom K v K (Legal Aid: Costs) [1995] 2 FCR 189, CA; and M v H (Costs: Residence Proceedings) [2000] 1 FLR 394, Mr. Harrison QC sitting as a deputy judge of the High Court.

(2) See Martin v Martin [1976] Fam 335, [1976] 3 All ER 625, CA.

(3) See also Chrulew v Borm-Reid & Co [1992] 1 All ER 953, [1992] 1 WLR 176, [1991] NLJR 774 (judgment set out at N[136]), and Platt v GKN Kwikform Ltd [1992] 1 WLR 465.

(4) See T v T (Financial Relief)(Behaviour Relating to Disclosure) [1995] 2 FCR 745, Wilson J; M v M (Financial Provision: Party Incurring Excessive Costs) [1995] 3 FCR 321, Thorpe J; H v H (Financial Relief: Non-Disclosure) [1994] 2 FLR 94, sub nom H v H (Financial Provision) [1994] 2 FCR 301, Thorpe J; H v H (Clean Break: Non-Disclosure: Costs) [1994] 2 FLR 309, Mr Hayward Smith QC sitting as a deputy judge of the High Court; and P v P (Financial Relief: Non-Disclosure) [1994] 2FLR 381, Thorpe J; see also, as to the effect of conduct upon the amount of costs, CPR, r 44.5(3)(a).

(5) Wells v Wells [1992] 2 FCR 368, [1992] 2 FLR 66, CA.

(6) See Civil Legal Aid (General) Regulations, regs 96 and 97. Scallon v Scallon [1990] 1 FLR 194, [1990] Fam Law 92, CA.

(7) Calderbank v Calderbank [1975] 3 All ER 333, [1975] 3 WLR 586, [1976] Fam Law 93, CA; see also S v S [1989] FCR 570, E v E [1990] 2 FLR 233, and Thompson v Thompson [1994] 1 FCR 97, CA.

13.16 Calderbank - new procedure

Now, by the relevant costs provisions of the FPR as amended (see 13.14 above), i.e. rules 2.69 to 2.69E, there is in effect a statutory code based on Calderbank. The new rules are as follows:

"Offers to settle"

2.69 (1) Either party to the application may at any time make a written offer to the other party which is expressed to be 'without prejudice except as to costs' and which relates to any issue in the proceedings relating to the application.

(2) Where an offer is made under paragraph (1), the fact that such an offer has been made shall not be communicated to the court, except in accordance with rule 2.61E(3) (which provides that not later than 7 days before the Financial Dispute Resolution appointment the applicant must file with the court details of all offers and proposals, and responses to them), until the question of costs falls to be decided.

Judgment or order more advantageous than an offer made by the other party

2.69B (1) This rule applies where the judgment or order in favour of the applicant or respondent is more advantageous to him than an offer made under rule 2.69(1) by the other party.

(2) The court must, unless it considers it unjust to do so, order that other party to pay any costs incurred after the date beginning 28 days after the offer was made.'

Rules 2.69 and 2.69B are simply the existing Calderbank procedure in statutory form, with a specific provision for making such an offer in relation to a particular issue or particular issues.

'Judgment or order more advantageous than offers made by both parties'

2.69C (1) This rule applies where:

a) both the applicant and the respondent have made offers under rule 2.69(1); and
b) the judgment or order in favour of the applicant or the respondent, as the case may be, is more advantageous to him than both of the offers referred to in paragraph (a).

(2) The court may, where it considers it just, order interest in accordance with paragraph
(3) on the whole or part of any sum of money (excluding interest and periodical payments) to be awarded to the applicant or respondent, as the case may be.

(3) Interest under paragraph (2) may be at a rate not exceeding 10 per cent above base rate for some or all of the period beginning 28 days after the offer was made.

(4) The court may also order that the applicant or respondent, as the case may be, is entitled to:

a) his costs on the indemnity basis beginning 28 days after the offer was made; and
b) interest on those costs at a rate not exceeding 10 per cent above base rate.

(5) The court's powers under this rule are in addition to its powers under rule 2.69B.'

These provisions are new, and the writer's view is that they are over complicated and unnecessary. If interpreted too strictly, they would require the parties to make repeated offers and counter-offers, getting closer and closer to the actual award, in an effort to anticipate the court's order, in a discretionary jurisdiction where it is impossible to say that there is only one correct order. This, in the writer's view, would be tantamount to making them place bets on which of them could more accurately predict the result of the case which, it is suggested, would place an unfair burden on them.

The power to order interest and indemnity basis costs is, in any event, discretionary (see the guidelines set out in rule 2.69D(1) below), and the court's approach to Calderbank offers was very broad and flexible Ð see below and, in particular, Markham v Markham (3 March 1999, unreported) in which Charles J said that the parties should not engage in what would be little more than market stall haggling simply to achieve the ordinary consequences of beating an offer shown to be inadequate, and that the crucial question is whether the wife has adopted an unreasonable negotiating position.

"Factors for court's consideration under rules 2.69B and 2.69C"

2.69D (1) In considering whether it would be unjust, or whether it would be just, to make the orders referred to in rules 2.69B and 2.69C, the court must take into account all the circumstances of the case, including:

a) the terms of any offers made under rule 2.69(1);
b) the stage in the proceedings when any offer was made;
c) the information available to the parties at the time when the offer was made;
d) the conduct of the parties with regard to the giving or refusing to give information for the purposes of enabling the offer to be made or evaluated; and
e) the respective means of the parties.

(2) The power of the court to award interest under rule 2.69C(2) and (4)(b) is in addition to any other power it may have to award interest.

'Open proposals

2.69E (1) Not less than 14 days before the date fixed for the final hearing of an application for ancillary relief, the applicant must (unless the court directs otherwise) file with the court and serve on the respondent an open statement which sets out concise details, including the amounts involved, of the orders which he proposes to ask the court to make.

(2) Not more than 7 days after service of a statement under paragraph (1), the respondent must file with the court and serve on the applicant an open statement which sets out concise details, including the amounts involved, of the orders which he proposes to ask the court to make.'

These provisions are new, and it remains to be seen how the court will apply them. They are sophisticated, and the writer's view is that very great care will have to be taken to avoid costs hearings becoming as acrimonious, lengthy and expensive as the substantive hearing. The court already has guidelines for the exercise of its discretion as to costs in CPR r 44.3, which provides as follows:

'(4) In deciding what order (if any) to make about costs, the court must have regard to all the circumstances, including:

a) the conduct of all the parties;
b) whether a party has succeeded on part of his case, even if he has not been wholly successful; and
c) any payment into court or admissible offer to settle made by a party which is drawn to the court's attention.

(5) The conduct of the parties includes:

a) conduct before, as well as during, the proceedings, and in particular the extent to which the parties followed any relevant pre-action protocol;
b) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;
c) the manner in which a party has pursued or defended his case or a particular allegation or issue;
d) whether a claimant who has succeeded in his claim, in whole or in part, exaggerated his claim.

(6) The orders which the court may make under this rule include an order that a party must pay:

a) a proportion of another party's costs;
b) a stated amount in respect of another party's costs;
c) costs from or until a certain date only;
d) costs incurred before proceedings have begun;
e) costs relating to particular steps taken in the proceedings;
f) costs relating only to a distinct part of the proceedings; and
g) interest on costs from or until a certain date, including a date before judgment.'

So far as r 2.69E is concerned, it may well be that, with the increasing importance attached to open proposals, and to full and frank disclosure of what the parties really want, the Calderbank procedure, and argument as to the extent to which the judge should depart from his provisional view, will become of less importance than they are now, and that the question of costs will form part of the argument before, rather than after, judgment.

N.B. Obtain and carefully consider the President's Direction (Ancillary Relief Procedure) 25 May 2000 and the Pre-Application Protocol annexed thereto.

13.17 Calderbank - current procedure

The existing common law is set out, on the basis that much of it will be of assistance in the early days of applying the new statutory code to the facts of particular cases, but the Court of Appeal has not hesitated to abandon long cherished case law on the former rules, even where there is a superficial resemblance between the CPR and the former rules, wherever it seems likely that a new approach, free from the constraints of the past, is necessary to achieve the overriding objective. Bear this in mind when considering the following case law.

The most recent judicial guidance on Calderbank offers was, in fact, given not in an ancillary relief case, but in a partnership case1, in which Mummery LJ summarised the relevant law in nine short propositions:

1. The general principle is that a successful party is entitled to his costs.

2. A party may at any time make a written offer to any other party which is expressed to be 'without prejudice save as to costs' and which relates to any issue in the proceedings.

3. A Calderbank offer is not an open offer. Its existence must not be disclosed to the court until the issue of costs falls to be determined.

(1) Butcher v Wolfe and Wolfe [1999] 1 FLR 334, CA. 4.

4. As with a payment into court, a Calderbank offer is a matter which the court must take into account in the exercise of its discretion as to costs.

5. It is appropriate to adopt the Calderbank procedure where the defendant cannot protect his position by a payment into court.

6. The court has an overall broad judicial discretion as to costs. As Ormrod LJ said in McDonnell v McDonnell [1977] 1 All ER 766, [1977] 1 WLR 34, CA: 'A Calderbank offer should influence but not govern the exercise of the discretion'.

7. A Calderbank offer is made for the same reason as a payment into court is made: to encourage a settlement and, failing a settlement, to protect the position on costs of the person making the Calderbank offer. But a Calderbank offer is not to be treated as, or to be regarded as a substitute for, or to be equated for all purposes with, a payment into court. As a Calderbank offer is appropriate in a case other than a claim for debt or damages, it requires a greater degree of flexibility. The proper approach to a Calderbank offer, where it is taken into account on a later argument on costs, is to ask whether the party to whom the offer was made 'ought reasonably to have accepted the proposal in the letter?'. Or, to put it another way, account must be taken of the reasonableness or otherwise of the refusal to accept the offer: see Cutts v Head and Anor [1984] Ch 290, 302 per Oliver J, and Chrulew v Borm-Reid & Co1. This approach is to be compared with the payment into court where, in the absence of a special reason for depriving the offering party of his post-offer costs, the simple question is whether the payment in is beaten at trial.

8. A Calderbank offer must be made in clear terms so that the party against whom it may be used on the issue of costs knows what he is offered: see C & H Engineering v F Klucznic & Sons Ltd 2. It may well be reasonable for a party to whom an offer is made to refuse an offer made in ambiguous terms.

9. The Court of Appeal will not interfere with the trial judge's discretion on costs, unless he erred by disregard of legal principle or reached a conclusion which is plainly wrong, e.g. as a result of a misunderstanding of relevant facts.

In the same case, Simon Brown LJ referred to the following valuable guidance 'for a case like the present' given by Sir Thomas Bingham MR in an unreported Court of Appeal case3 in which the Master of the Rolls said:

'The upshot of these cases is in my judgment clear. The judge must look closely at the facts of the particular case before him and ask: who, as a matter of substance and reality, has won? Has the plaintiff won anything of value which he could not have won without fighting the action through to a finish? Has the defendant substantially denied the plaintiff the prize which the plaintiff fought the action to win?'

(1) [1992] 1 All ER 953, [1992] 1 WLR 176, and see also Platt v GKN Kwikform Ltd [1992] 1 WLR 465.
(2) [1992] FSR 667
(3) Roache v News Group Newspapers Ltd (19 November 1992, unreported).

and in which Simon Brown LJ himself said:

"For the plaintiff to be entitled to recover his costs, in this or in any other litigation, he must show at least that he has obtained at the hearing something of value which he could not otherwise have expected to get. Only that justifies his proceeding with the action to trial."

Note the following points, arising out of the way in which, in earlier cases, Family Division judges have dealt with Calderbank offers.

1. After both parties have made full and frank disclosure of all relevant assets, and put their cards on the table, the respondent to an application must make a serious offer worthy of consideration. If he does so, then it is incumbent on the applicant to accept or reject the offer and, if the latter, to make her/his position clear and indicate in figures what she/he is asking for (a counter- offer)(1).

2. Neither Gojkovic (No 2) (1) nor the decision of Singer J in A v A (2) means that it is incumbent upon the parties to engage in what would be little more than market stall haggling simply to achieve the ordinary consequences of beating an offer shown to be inadequate; the crucial question is whether the wife has adopted an unreasonable negotiating position (3).

3. The court, if it makes even a relatively small financial order, and a Calderbank offer has not been made, may decide, following the ordinary principles relating to the judicial discretion as to costs, that the order will carry with it the whole burden of paying the costs (4).

4. Other factors have also to be considered. The need to use all available money to house the spouse and children may affect the exercise of the court's discretion, and in some cases costs are specifically allowed for in the substantive award. The incidence of funding (formerly legal aid), and the inadequacy of the financial assets available to house both parties, or even one spouse and the children, are major circumstances which may affect or even distort an order for costs that would otherwise have been expected to be made. In many cases the incidence of costs has a marked impact upon the availability of sufficient funds for the needs of the family. It may substantially diminish the cake which has to be cut. In the vast majority of cases, where one party is, or both parties are, funded, and where the assets are insubstantial or at least inadequate for the needs of the family, the question of who pays the costs may be academic (1).

(1) Gojkovic v Gojkovic (No 2) [1991] 2 FLR 233, [1991] FCR 913, [1992] 1 All ER 267, [1992] 3 WLR 621, [1992] Fam 40, CA.
(2) A v A (Costs Appeal) [1996] 1 FLR 14, Singer J; and see F v F (Duxbury Calculation) [1996] 1 FLR 833, Holman J
(3) Markham v Markham (3 March 1999, unreported), Charles J.
(4) Singer v Sharegin [1984] FLR 114, [1984] Fam Law 214, CA.

5. For an interesting analysis of litigation conduct and Calderbank correspondence, and their effect upon costs and whether costs should be on the standard or the indemnity basis, see F v F (Duxbury Calculation) [1996] 1 FLR 833, Holman J.

13.18 Costs estimates

The court has emphasised1 the importance of lodging estimates of costs (both inter partes, and solicitor and client or legal aid) in accordance with Practice Directions in force from time to time. The current practice is set out at CPD, s 6, and see Family Proceedings Rules 1991, rule 2.61F above.

13.19 Litigation misconduct - marital misconduct

It is important to distinguish between litigation misconduct and marital mis-conduct. While marital misconduct is one of the factors to be taken into account in the determination of the substantive award2, litigation misconduct normally sounds only in costs, and will affect the substantive award only in the most exceptional cases3. Culpability in the conduct of litigation has to be considered, and a spouse who does not respond constructively to an offer stymies any chance of settlement, and cannot expect immunity from responsibility for that4. Note that CPR, r 44.5(3)(a) provides that the court, in deciding the amount of costs, must have regard, inter alia, to the conduct of all the parties, including in particular conduct before, as well as during, the proceedings; and the efforts made, if any, before and during the proceedings in order to try to resolve the dispute.

13.20 Effect of funding (formerly legal aid)

In addition to the effect of the statutory charge, there should be borne in mind the fact that there are restrictions against making orders for costs against assisted persons; see Access to Justice Act, section 11, and Community Legal Service (Costs) Regulations 2000, SI 2000/441.

13.21 Neither party funded

In dealing with the incidence of costs on the parties' assets and liabilities, when neither party was funded, it was held5 that sums paid by each party on account of costs should be added back into the assets of that party, less only such part of that figure that would never in any event be recoverable, in particular the difference between a figure for solicitor and client costs and what might be recovered on detailed assessment by way of an order for inter partes costs, subject to the further gloss that there should be deducted any part of that element that might have been incurred unreasonably, and that any future liability for costs should be omitted from a party's liabilities, except such part of that future liability as might properly never be recoverable (except perhaps in cases where the available assets of the applicant spouse were very small), for the reason that if, in estimating a party's capital position, money already spent on account of costs were to be left out of account and that party's future liability for costs deducted, the court would be anticipating an order for costs not yet made, having heard no argument on costs, which would be wrong.

(1) In Singer v Sharegin (above); see also Thompson v Thompson (Costs) [1993] 2 FLR 464, CA.
(2) Matrimonial Causes Act 1973 s. 25(2)(g).
(3) Young v Young [1998] 2 FLR 1131; [1999] 3 FCR 36, CA.
(4) A v A (Costs Appeal) [1996] 1 FLR 14, Singer J; and see F v F (Duxbury Calculation) [1996] 1 FLR 833, Holman J.
(5) Leadbeater v Leadbeater [1985] FLR 789.

13.22 Effect of costs on substantive order

As Butler-Sloss LJ pointed out in Gojkovic (No 2) (1), in many cases the incidence of costs has a marked impact upon the availability of sufficient funds for the needs of the family. It may substantially diminish the cake which has to be cut. In some cases costs are specifically allowed for in the substantive award.

Thus, in applications for financial relief there may have to be argument on possible orders for costs before final judgment on the substantive issues2. It has been held that in order to arrive at a lump sum which would be fair to both parties, it is essential to know the amount of costs to be paid (3), and that when fixing the amount of a lump sum, a judge can include the estimated costs (4).

However, in a recent case (5) in which a fair result would have been easy to achieve if the costs had not become out of all proportion to the available assets, Holman J held that the proper course was to make an order for costs in the light of the evidence, undeflected by costs considerations. He said:

"Under our present system, the court cannot normally effectively consider the impact of costs when determining the substantive award."

It is not easy to reconcile this decision with other cases cited above, particularly Singer v Sharegin (6), in which May LJ said:

"In my judgment, it is essential that the court should have in mind the effect that any ultimate order in respect to costs will have on the court's substantive order and on the ultimate financial result for both parties which the court is seeking to achieve. To this end, counsel should obtain from their instructing solicitors, and in the course of argument offer to the court, estimates of the costs on both sides to enable the court properly to take into account their impact ... I fully appreciate that this may raise practical difficulties at hearings of applications such as these, and may involve argument on possible orders for costs before final judgment on the substantive financial issues. I appreciate also the additional practical difficulties which may arise in connection with any Calderbank offer that may have been made ... it is, I think, impossible to lay down any guidelines which can be applied to all cases ..."

(1) Gojkovic v Gojkovic (No 2) [1991] 2 FLR 233, [1991] FCR 913, [1992] 1 All ER 267, [1992] 3 WLR 621, [1992] Fam 40, CA.
(2) Singer v Sharegin (above). See also Prow (formerly Brown) v Brown (1983) 4 FLR 352, 12 Fam Law 214, CA, where Ormrod LJ, taking into account a legally aided wife's failure to disclose her intention to re-marry, made no order for costs against her, but increased the husband's lump sum to compensate him, inter alia, for his costs.
(3) Wagstaff v Wagstaff [1992] 1 FLR 333, [1992] 1 FCR 305, CA.
(4) Vicary v Vicary [1993] 1 FCR 533, CA.
(5) H v H (Financial Relief: Costs) [1997] 2 FLR 57, Holman J.
(6) Singer v Sharegin [1984] FLR 114, [1984] Fam Law 214, CA.

and Wagstaff v Wagstaff (1), in which Butler-Sloss LJ said at 339:

" In order to arrive at a lump sum award which would be just to both parties, it is essential to know the amount of costs to be paid, sometimes called the slice from the cake. In this case, the size of the costs to be paid has had an effect upon my mind in deciding that it would not be just to order a lump sum greater than £32,000. That would appear to be the purpose of the [current] Practice Direction. If that be the case, a subsequent argument upon costs [the learned LJ did not refer to the possible effect of a Calderbank offer] and where they should lie, a possible re-cutting of the cake, might destroy the basis upon which the award has been made."

It is submitted that there is no decisive authority, except that it is impossible to lay down any guidelines which can be applied to all cases, and the writer's view is that the trial judge, having decided provisionally what order to make, may thereafter, taking all the circumstances of the case, including the parties' means, and any Calderbank offer, into consideration, make a different order, in order to do justice between the parties. This is, of course, as Butler-Sloss LJ pointed out in Gojkovic (No 2) (2), more likely to occur when the parties' assets are barely sufficient to re-house the applicant and the children, than in big money cases; as Balcombe J said in Leadbeater v Leadbeater (3): 'It may well be that there are some cases where the figures are such that, without taking the question of costs into account, a person in the position of the wife would be so near the breadline that one could not deal with them in this way; but where, as here, the figures are such that, even if costs are taken into account in the way that I have stated, there would be enough for the wife to live on (although not to the same standard as if the costs had not been taken into account), then it does seem to me right and proper that I should [make an order for costs].'

13.23 Examples of particular situations

1. A wife prolonged litigation unnecessarily by refusing an open offer that substantially exceeded the award, and caused the case to be conducted in an extravagant way. She was ordered by the judge to pay the husband's costs, and the order was upheld on appeal4.

2. A wife assigned to her former solicitors, in payment of their charges, her rights in any financial provision (other than periodical payments) and costs orders granted to her in the ancillary relief proceedings. It was held that the assignment was a valid assignment of the lump sum order which was in fact granted to her5.

3. A wife appealed against the dismissal of her claim for periodical payments, and the husband appealed against the continuation of an order for their daughter, and against an

(1) Wagstaff v Wagstaff [1992] 1 FLR 333, [1992] 1 FCR 305, CA.
(2) Gojkovic v Gojkovic (No 2) [1991] 2 FLR 233, [1991] FCR 913, [1992] 1 All ER 267, [1992] 3 WLR 621, [1992] Fam 40, CA.
(3) Leadbeater v Leadbeater [1985] FLR 789.
(4) Dart v Dart [1996] 2 FLR 286, [1997] 1 FCR 21, CA.
(5) Sears Tooth (a firm) v Payne Hicks Beach (a firm) [1997] 2 FLR 116, Wilson J.

order for costs in the wife's favour. The Court of Appeal held that the judge was entitled to take the view that the greater victory had been obtained by the wife, and that the costs order was within the bounds of the proper exercise of his discretion (1).

4. In ancillary relief proceedings, no substantive order was made in favour of an intervener (the wife's mother), and there was accordingly no 'event' for costs to follow. It was held that costs were nevertheless in the discretion of the court, which was entitled to take all the circumstances into consideration, including whether the intervention had been reasonable, whether the intervener's conduct of the proceedings had been reasonable, and whether the intervener had achieved the preservation of her beneficial interest in the house (she had). The district judge's order, that the husband should pay the intervener's costs, was restored (2).

13.24 Matrimonial Causes Act 1973, s 37 asset freezing (formerly Mareva) injunction

While the purpose of such an injunction is to protect the applicant against the dissipation of the respondent's assets, payment by the respondent of his legal costs is not prima facie dissipation; the respondent ought to be at liberty to defend himself, notwithstanding the grant of the injunction, and should be free to make such arrangements with his solicitors as they think appropriate, unless that would cause positive and significant prejudice to the applicant (3).

13.25 Ancillary proceedings - costs against non-parties

There is power to make such an order under the Supreme Court Act 1981, section 51, but orders for costs against non-parties are exceptional, and are to be treated with caution4. The practice is now set out in CPR, r 48.2, which provides that the person against whom costs are sought must be added as a party to the proceedings for the purposes of costs only, and must be given a reasonable opportunity to attend a hearing at which the court will consider the matter further. It is submitted that the previous law and practice will continue to govern the exercise of the court's discretion.

Where a petitioner sought to join as a party to ancillary relief proceedings an accountant who had given expert evidence in those proceedings on behalf of the respondent, for the purpose of applying for costs against the accountant, and further sought to serve points of claim on the

(1) G v G (Periodical Payments: Jurisdiction to Vary) [1997] 1 FCR 441, CA.
(2) H v H (Financial Relief: Costs) [1997] 2 FLR 57.
(3) Cala Cristal SA v Emran Al-Borno (Mubarak Abdulaziz al Hassawi, Third Party) (1994) The Times, 6 May, Ferris J.
(4) Sarra v Sarra [1994] 2 FLR 880, Thorpe J, applying Symphony Group PLC v Hodgson [1994] QB 179, CA (see B[112]), which sets out principles for guidance of judges when asked to make orders for costs against non-parties. And see Globe Equities Ltd v Globe Legal Services Ltd and Others, (1999) Times, 14 April, CA; in determining whether a costs order should be made against a non-party pursuant to s 51, the test is whether in all the circumstances it is just to exercise the power; while it would be unjust in the vast majority of cases to make such an order, it is not pre-condition of the exercise of the power that the circumstances be exceptional.

accountant, with a view to a trial on pleadings, it was held1 that the determination of an application for costs against a stranger, should ordinarily be by summary procedure. Sufficient notice and formality was achieved by arranging a hearing convenient to the non-party (now a party for the purposes of costs only), and by giving him full particulars by letter of how the application would be put. An expert accountant in ancillary relief proceedings may be driven by the client to a level of investigation which the accountant himself would not have thought necessary. Expert accountants make a very important contribution in the field of ancillary relief, both in guiding the preparation of the case and in giving expert evidence in the event of a hearing. Their readiness to continue to make this contribution should not be shaken by the risk that, if their evidence is critically received, they may be ordered to pay part of the litigation costs1. See now CPR r 35.8(4)(a) which provides that the court may limit the amount that can be paid by way of fees and expenses to the expert.

13.26 Ancillary proceedings - costs of working out order

Where one party is ordered to pay the other party's costs of an application for financial relief, these costs will include the costs of working out the order; eg if a husband is ordered to transfer a house to a wife, her costs of the application will include the costs of the necessary conveyancing work2. All the costs should be included in one bill; if the working out of the order is likely to take longer than the 3 months within which detailed assessment proceedings must be commenced (see CPR, r 47.7), application should be made for an extension of time, or it should be made clear to the paying party that the bill does not include the costs of working out the order, and that a second notice of commencement will be served3. A funding code certificate (formerly legal aid certificate) covers the costs of implementing a consent order, as well as any unexpected costs arising from such implementation4. For an example of the costs of conveyancing work arising out of family litigation, see C v C (Costs: Non-Contentious Business)5.

Note that the rates of remuneration in LAFP(R)R 1991 do not apply to non-contentious work undertaken on behalf of a funded person as a direct result of a court order. The rates allowed should be those which are reasonable in all the circumstances of the case for privately funded non-contentious work (Legal Aid Board reference CLA 10).

(1) Sarra v Sarra [1994] 2 FLR 880, Thorpe J.
(2) Trusts affecting 26 Clarendon Villas, Hove, Re, Copeland v Houlton [1955] 3 All ER 178, [1955] 1 WLR 1072, Wynn-Parry J.
(3) Segalov's Estates, Re, Hyman and Teff v Segalov [1952] P 241, [1952] 2 All ER 107, [1952] 1 TLR 1540, 96 Sol Jo 362, Wallington J.
(4) S v S (Legal Aid Taxation) [1991] Fam Law 271.
(5) [1997] 2 FLR 22, Judge King sitting with assessors.

13.27 Reserved Costs

The former practice in the Family Division was that costs which had been reserved had to be expressly dealt with at the substantive hearing, otherwise there was no order in relation to such costs; now, by CPD, s 8.5, where costs are reserved the decision about such costs is deferred to a later occasion, but if no later order is made those costs will be costs in the cause.

It is the legal representative's responsibility, at the conclusion of the proceedings, to draw the court's attention to any reserved costs, but they often forget to do this, and it suggested that, when dealing with costs at the conclusion of the proceedings, you look at the court file to see, or ask the legal representatives, whether any costs have been reserved.

13.28 Inaccurate time estimate - effect upon costs

Where a time estimate of one and a half days was given for what had always been a five day case, it was held1 that where lawyers provide the court with a wholly unrealistic time estimate of a case's duration, a possible sanction in the armoury of the court is to limit the recovery of costs to the estimated duration of the case.

13.29 Costs in favour of intervener

Where no substantive order was made in favour of an intervener (the wife's mother) in ancillary relief proceedings, and there was accordingly no 'event' for costs to follow, costs were nevertheless in the discretion of the court, which was entitled to take all the circumstances into consideration, including whether the intervention had been reasonable, whether the intervener's conduct of the proceedings had been reasonable, and whether the intervener had achieved the preservation of her beneficial interest in the house (she had); the district judge's order, that the husband should pay the intervener's costs, was restored (2).

13.30 Security for costs (3)

A wife, who had obtained an order for the costs of ancillary relief proceedings against her husband, applied for security in respect of those costs, but it was held that the purpose of security for costs was to provide protection against costs to be incurred in the future, and that it should not be used as a means of enforcing a costs order already obtained (4).

(1) In re Sasea Finance Ltd (in liquidation) (1997) The Times, 29 December, Sir Richard Scott V-C.
(2) Hurley v Hurley (Davey Intervening) [1998] 1 FLR 213, [1998] 2 FCR 14, CA.
(3) The former provisions relating to security for costs (RSC Ord 23) were (but are no longer) expressly retained by CPR, Sch 1, but have now been replaced by CPR Part 25 II, which have not been applied to family proceedings. CPR, r 2.1(2) provides that the CPR do not apply to family proceedings 'for which rules may be made under the enactments specified in the second column' of CPR, r 2.1(2), i.e. under s. 40 of the Matrimonial and Family Proceedings Act 1984 (which gives power to make rules of court) under which the Family Proceedings Rules 1991 were made, r 1.3 of which provides that the Rules of the Supreme Court 1965 shall continue to apply, with the necessary modifications, to family proceedings, and the writer can do no more than suggest that, although RSC Ord 23 is no longer contained in CPR, Sch 1, its provisions continue to apply to family proceedings.
(4) Penny v Penny [1996] 1 FLR 646, [1997] 1 FCR 126, CA.

13.31 Proceedings relating to children

The general practice is to make no order as to costs in children's cases, but there are exceptions, eg where a party has behaved unreasonably in relation to the litigation (1), or in relation to the costs of interlocutory hearings (2).

Where a local authority appealed against a costs order made against it in contact proceedings, it was held (3) that although in civil litigation costs normally follow the event, in child cases it is unusual to make an order for costs where the conduct of the party has not been reprehensible, or the party's stance has not been beyond the band of what is reasonable. It is a matter for the discretion of the court in the light of these criteria as to what, if any, order for costs should be made. In refusing to make an order for costs against a father whose application was hopeless the CA held (4) that, although there would come a point at which pursuing a hopeless application became unreasonable, hopelessness and unreasonableness were not necessarily the same thing, and in ruling on the question whether pursuit of an application had become unreasonable, a greater degree of generosity might be appropriate where the litigant was acting in person than where he was legally aided with the benefit of advice from counsel and solicitors. If a parent went beyond the limit of what was reasonable to pursue the application, and it was appropriate to take the unusual step of ordering costs against him, it ought to be clear on the face of the transcript, either in the judgment or preferably in the order for costs, why the court was departing from the normal practice.

In deciding whether to make an order for costs at the conclusion of proceedings relating to children, it is impractical and often unnecessary for the court, in a case where resources are slender, to conduct a survey of finances and of likely needs with a view to alighting upon an order which will do the least overall damage to the family and particularly to the children. That is the province of the court in exercising its jurisdiction to make orders for ancillary relief. In proceedings relating to children, the welfare of the children will always be the court's first consideration (5).

In private law Children Act 1989 proceedings, where a local authority had not instituted care proceedings, but could well have applied for a care order, and the Official Solicitor had undertaken extensive enquiries both in England and abroad, which had saved the local authority a considerable sum of money, because otherwise those matters would have devolved to the local authority, the local authority was ordered to pay one half of the Official Solicitor's costs (6).

(1) R v R (Children Cases: Costs) [1997] 2 FLR 95, CA. See also Re R (A minor)(Legal Aid: Costs) [1997] 1 FCR 613, CA; and Re O (Costs: Liability of Legal Aid Board) [1997] 1 FLR 465, CA.
(2) Re B (Costs) [1999] 2 FLR 221, CA.
(3) In Re M (Local Authority's Costs) [1995] 1 FLR 535, Cazalet J.
(4) Re G (Costs: Child Case) [1999]2 FLR 250, CA.
(5) Keller v Keller and Legal Aid Board [1995] 1 FLR 259, CA; reported sub nom K v K (Legal Aid: Costs) [1995] 2 FCR 189.
(6) Re M (a minor)(Immigration: Residence Order) [1995] 2 FCR 793, Bracewell J. See also Re P (Minors)(Official Solicitor's Costs) [1993] 2 FCR 550, Booth J.

Where an applicant succeeded in her appeal against the refusal of a local authority to register her as a child minder, it was held that the proceedings were adversarial and that costs should follow the event (1).

Where a wife applied for an order for costs against the Legal Aid Board the Court of Appeal, notwithstanding that it upheld the judge's finding that she would suffer severe financial hardship unless an order were made, held2 that such an order could not be made because, although in conventional litigation costs prima facie follow the event, in proceedings relating to children it is unusual to make an order for costs, and there would not therefore have been an order for costs against the husband. Compare this with a case decided earlier the same year by Wilson J, in which it was held (3) that although it is unusual to order costs in proceedings relating to children, such proceedings are nevertheless adversarial, and the principle that costs should follow the event may be applied.

It is submitted that, where the court considers that a non-legally aided party to proceedings relating to children has suffered severe financial hardship, it would be a proper exercise of the court's discretion as to costs first to make an order for costs against the legally aided party, and then to assess as nil that party's liability under section 11 of the Access to Justice Act 1999.

In cases involving children, it is vital in their interests that the court should have the best up-to-date information available, and it would be wrong to prevent a party from filing evidence, but the court is not powerless when a party causes delay by failing to file evidence in accordance with directions, because the sanction of an order for costs against the defaulting party is available (4). The court may not make a summary assessment of the costs of a receiving party who is a child unless the solicitor acting for the child has waived the right to further costs (5), but the court may make a summary assessment of costs payable by a child6. For further, recent, examples, see cases cited below (7).

13.32 Expert witnesses

There is an increasing tendency to rely upon expert witnesses in family proceedings: accountants, actuaries, valuers, psychiatrists, psychologists, paediatricians, and experts on

(1) Sutton London Borough Council v Davis (No 2) [1994] 2 FLR 569, [1994] 2 FCR 1199, Wilson J.
(2) Re G (Costs: Child Case) [1999]2 FLR 250, CA.
(3) In Sutton London Borough Council v Davis (No 2) [1994] 2 FLR 569, [1994] 2 FCR 1199, Wilson J.
(4) R v Nottinghamshire County Council [1993] 1 FCR 576, Douglas Brown J.
(5) CPD, s 13.11(1); and see CPR, r 48.5.
(6) CPD, s 13.11(2); and see CPR, r 48.5.
(7) Re G (Costs: Child Case) [1999] 2 FLR 250, [1999] 3 FCR 463, CA; Re B (Costs) [1999] 2 FLR 221, [1999] 3 FCR 586, CA; R v Legal Aid Board, ex parte W [2000] 1 FCR 165, QBD; Davies v Davies [2000] 1 FLR 39, CA; and M v H (Costs: Residence Proceedings) [2000] 1 FLR 394, Mr. Harrison QC sitting as a deputy judge of the High Court.

foreign law (but note CPR r 35.4(1), which provides that no party may call an expert or put in evidence an expert's report without the court's permission). The fees charged by such experts for preparing reports and opinions, and appearing in court, are often (quite properly) higher than the rates chargeable by the solicitors instructing them. Although arguments about the amount of experts' fees are more likely to be addressed to the costs officer on detailed assessment, than to the trial judge, you may nevertheless, at the conclusion of a hearing, have to deal with disputes about liability for such fees.

For the desirability of a solicitor's obtaining the prior authority of the Legal Services Commission, before instructing an expert, see regulation 61 of the Civil Legal Aid (General) Regulations 1989.

For the importance of keeping expert witnesses up to date, and ensuring that they have seen all relevant material before giving oral evidence, and the consequences of failure to do so (in this case a wasted costs order against Counsel) see Re G, S and M (Wasted Costs) [2000] 1 FLR 52, Wall J.

By CPR, r 35.7 the court has power to direct that evidence be given by a single joint expert, and para 4.1 of President's Direction of 25 May 2000 provides as follows:

'The introduction of expert evidence in proceedings is likely to increase costs substantially and consequently the court will use its powers to restrict the unnecessary use of experts. Accordingly, where expert evidence is sought to be relied upon, parties should if possible agree upon a single expert whom they can jointly instruct. Where parties are unable to agree upon the expert to be instructed, the court will consider using its powers under CPR Part 35 to direct that evidence be given by one expert only. In such cases parties must be in a position at the first appointment or when the matter comes to be considered by the court to provide the court with a list of suitable experts or to make submissions as to the method by which the expert is to be selected.'

In deciding what order (if any) to make as to costs, you will bear in mind the guidelines set out in CPR, r 44.3, and consider the effect of any unreasonable1 failure to take advantage of CPR, r 35.7. It may be that a single joint expert is more appropriate in proceedings relating to children (2) than in ancillary relief proceedings, but it is the writers' view that the evidence of a single joint expert at the hearing of ancillary relief proceedings, even if, for example, each party has employed his own forensic accountant to investigate the affairs of a company, or advise on disclosure, is likely to save time, and reduce expense and acrimony. See now CPR, r 35.8(4)(a) which provides that the court may limit the amount that can be paid by way of fees and expenses to the expert.

(1) If a party does not accept the single joint expert's report, and has reasonable (not fanciful or speculative) grounds for challenging it, it may be impossible to avoid allowing him to instruct his own expert, but bear in mind CPR r 35.3: 'It is the duty of an expert to help the court on the matters within his expertise [and] this duty overrides any obligation to the person from whom he has received instructions or by whom he is paid', and rule 35.12(1): 'The court may at any stage direct a discussion between experts for the purpose of requiring them to (a) identify the issues in the proceedings, and (b) where possible, reach agreement' and see Daniels v Walker Practice Note [2000] 1 WLR 1382, CA.
(2) See Re B(sexual abuse: expert's report) [2000] 2 FCR 8, CA.

13.33 Appeals from detailed assessments in family proceedings

The CPR Section VIII (as amended with effect from 2 May 2000 by r 11 of the Civil Procedure (Amendment No 2) Rules 2000, SI 2000/940) provides as follows:

Right to appeal
47.20 Any party to detailed assessment proceedings may appeal against a decision of an authorised court officer in those proceedings (Pt 52 sets out general rules about appeals).

Court to hear appeal
47.21 An appeal against a decision of an authorised court officer is to a costs judge or a district judge of the High Court.

Appeal procedure
47.22 (1) The appellant must file an appeal notice within 14 days after the date of the decision he wishes to appeal against.

(2) On receipt of the appeal notice, the court will:

a) serve a copy of the notice on the parties to the detailed assessment proceedings; and
b) give notice of the appeal to those parties.

Powers of the court on appeal
47.23 On an appeal from an authorised court officer the court will:

a) re-hear the proceedings which gave rise to the decision appealed against; and
b) make any order and give any directions as it considers appropriate.

The general rules as to appeals, including appeals against the decision of a district judge, are set out in Pt 52 of the CPR, but Pt 52 has not yet been applied to family proceedings. Thus, in family proceedings there is no appeal under the CPR from the decision of a district judge either in the county court or in the High Court.

However, Pt VIII of the FPR makes provision for appeals from a district judge in the county court, and it is suggested that, at any rate unless and until Pt 52 of the CPR is applied to family proceedings, an appeal against the decision of a district judge in detailed assessment proceedings, in family proceedings, may be made pursuant to Pt VIII, which provides that any party may appeal from an order or decision made or given by the district judge in family proceedings in a county court to a judge on notice. No permission is required.

So far as concerns appeals from a district judge in detailed assessment proceedings, in family proceedings in the High Court, FPR, r 1.3 provides that the RSC shall continue to apply, with the necessary modifications, to family proceedings in the High Court, and it is suggested that, for the time being at any rate, such appeals may be made under RSC Ord 58, which in the writer's view is preferable to, and more in the spirit of Pt 52 of the CPR than, the former practice under RSC Ord 62 of bringing in objections, followed by a review.

13.34 Graduated fees - Counsel - family proceedings

From 1 May 2001, when the Community Legal Service (Funding) (Counsel in Family Proceedings) Order 2001, SI 2001/1077, comes into force, counsel's fees in funded family proceedings in the High Court, county courts and magistrates' courts, under a public funding certificate granted on or after 1 May 2001, where the length of the main hearing does not exceed ten days, will no longer be governed by the LAFP(R) R 1991, or decided by detailed assessment, but decided by a Regional Director of the Legal Services Commission, with a right of appeal to the Costs Committee, and a further right of appeal to the Cost Appeal Committee.

The court will, however, still have a function to perform, because the order provides that the judge hearing the case shall, at the conclusion of the hearing certify, on a form1 provided for that purpose, that there are 'special issues' where the proceedings involve -

a) a litigant in person;
b) more than two parties;
c) representation of more than one child by counsel submitting a claim for payment under this order;

or where the proceedings involve or are alleged to involve any of the following which were of substance and relevant to any of the issues before the court, i.e.
d) more than one expert;
e) a relevant foreign element;
f) relevant assets which are not or may not be under the exclusive control of any of the parties;
g) a party who has or may have been involved in the following:

i) conduct by virtue of which a child who is the subject of the proceedings has, may have or might suffer very significant harm;
ii) intentional conduct which has, could have or might significantly reduce the assets available for distribution by the court. 1 See Appendix A to this chapter.

You thus have a discretion in respect of (d) to (g), whereas (a) to (c) are a matter of record. Your decision as to whether or not there are any special issues is final, save on a point of law.

Those of you who have never taxed or assessed bills will therefore be treading on ground which used to be the sole preserve of costs officers, whereas those of you who assess bills will be familiar with the discretionary, enhancement provisions of the LAFP(R)1991, i.e. reg 3(4) and (5).

There should not be any difficulty in deciding whether any of the special issues mentioned in paragraph (1) (d) to (g) were of substance and relevant to any of the issues before the court1, except perhaps for (1) (g) (i). 'Significant harm' 2 is a concept with which family courts are now familiar, but what is 'very significant harm'? This has yet to be decided.

If you should certify a special issue or issues, you complete the form, hand a copy to Counsel at the conclusion of the hearing, and retain a sealed copy on the court file.

'Family proceedings', for the purposes of the Order, are defined as proceedings, other than proceedings for judicial review, which arise out of family relationships, including proceedings in which the welfare of children is determined, and including all proceedings under one or more of the following:

a) the Matrimonial Causes Act 1973;
b) the Inheritance (Provision for Family and Dependants) Act 1975;
c) the Adoption Act 1976;
d) the Domestic Proceedings and Magistrates' Courts Act 1978;
e) Part III of the Matrimonial and Family Proceedings Act 1984;
f) Parts I to V of the Children Act 1989;
g) Part IV of the Family Law Act 1996;
h) the inherent jurisdiction of the High Court in relation to children.

(1) For guidance as to the approach to enhanced fees generally, see Butterworths Costs, Div C, paras [54] to [57], and Re Children Act (Taxation of Costs) [1994] 2 FLR 934, [1995] 1 FCR 688, Cazalet J.

(2) By s. 31(9) of the Children Act 1989 'harm' is defined as 'ill-treatment or the impairment of health and development', and s.31(10) provides that where the question of whether harm suffered by a child is significant turns on the child's health or development, his health or development shall be compared with that which could reasonably be expected of a similar child.