Costs (family)

J v J: Family Division: Mr Justice Mostyn

Wife making application for financial provision – Parties costs by time of final hearing being £920,000 – Whether court should impose costs penalty

The parties separated in 2011 after 15 years of marriage. They had two children. At the time of the marriage the husband was an established market gardener. At the time of the present proceedings there were two market gardening businesses as well as a portfolio of properties held by the husband. In July 2012, the wife commenced her claim for financial provision.

In November, at the first appointment, the judge permitted each party to have their own expert value the husband’s business interests notwithstanding the terms of part 25 of the Family Procedure Rules 2010, SI 2010/2955 (FPR), which stated that a single joint expert should be appointed ‘wherever possible’. By the time of the Financial Dispute Resolution hearing the parties had spent £226,000 on costs.

Forensic accountants filed six expert reports and prepared a joint statement setting out their extensive disagreements. They charged a total of £154,000 in fees. The matter came before the High Court for a final hearing by which point the total costs were £920,000.

In addition to dealing with the wife’s claim consideration was given to whether there should be a costs penalty under rule 28.3(6) and (7) of the FPR. Before making an order under sub-para (6), the court had to have regard to, amongst other things: (7)(e) any other aspect of a party’s conduct in relation to proceedings which the court considered relevant; and (7)(f) the financial effect on the parties of any costs order (see [54] of the judgment).

The court ruled: on the evidence, the true net asset position was £2,885,000. There was a gross disparity between the costs incurred by the parties. Accordingly, it would be fair to divide the net assets so that the wife received £182,000 more than the husband so that the costs disparity was equalised. Further, in certain aspects the husband had been guilty of litigation misconduct which the court should, in principle, take into account under rule 28.3(7)(e) of the FPR. Having regard to sub-para (f), the husband’s misconduct could not be reflected other than symbolically. The husband’s delinquency should be reflected by a costs order of £50,000 (inclusive of VAT) (see [27], [28], [56]-[58] of the judgment).

From the pre-costs starting point of £2,885,000, the wife would receive £1,123,500 (39% of the assets); the lawyers and experts would receive £920,000 (31.9%); and the husband £841,500 (29.2%) (see [58] of the judgment).

RH v RH (costs) (adjustment for gross disparity) [2008] All ER (D) 67 (Apr) considered.

Per curiam: ‘In my judgment the time has come when the law-makers in this country, whether they are legislators or judges, must stop saying something must be done and actually do something. The first thing would be to insist, as Lord Neuberger did in the lecture I have cited, on fixed pricing for cases, whether they are ancillary relief cases or anything else…. 

‘In my opinion a litigant should be able to demand a fixed price for each of the three phases of an ancillary relief case namely (1) Form A to First Appointment, (2) First Appointment to FDR and (3) FDR to trial. The second measure that needs to be taken is for the court in ancillary relief proceedings to be able to impose at the very beginning of the case a costs cap on what may be charged by the lawyers to their client for each of the three phases of the case. Naturally this cap would be variable if circumstances change but the change of circumstances would have to be a big one for a variation to be allowed…

‘In my opinion only if these two steps are taken will the grotesque leaching of costs, such as has occurred in this case, be arrested… I intend to bring this judgment to the attention of the president with a view to him raising this pressing matter as a matter of urgency with the Family Procedure Rules Committee’ (see [13], [14], [16], [19] of the judgment).

Per curiam: ‘The failure by both sides to comply with PD27A for the hearing on 1 October was very wrong… It must never happen again. If this requires a culture change in the way practices are run then so be it. I recall that in his minatory and mordant judgment of Re X and Y (Bundles) [2008] EWHC 2058 (Fam) [2008] 2 FLR 2053 Munby J threatened practitioners who defied the then practice direction about bundles with dire consequences.

‘Since then the practice direction has been incorporated within the FPR and reissued on 10 April 2014 in its current form incorporating the one bundle rule. But routinely the profession pays no attention to it. Again, it is no use the courts feebly issuing empty threats. I intend to draw this also to the president’s attention with a view to him raising this further pressing matter as a matter of urgency with the Family Procedure Rules Committee.

‘Perhaps it will be necessary for him to set up a special court before which delinquents will be summoned to explain themselves in open court, just as delinquent practitioners in the Administrative Court are summoned before the president of the Queen’s Bench Division… Perhaps such a court would regularly consider whether to disallow fees pursuant to CPR 44.11(1)(b) and/or section 51(6) Senior Courts Act 1981.’ (see [52] of the judgment).

Sally Harrison QC for the wife; Peter Mitchell for the husband.