Divorce costs under microscope

A review of the use of costs orders in divorce proceedings has been set in train ahead of a little-publicised change later this month which will mean that judges can no longer impose punitive costs sanctions.

Rule 2.69D of the Family Proceedings Rules will be abolished on 24 February.

Since its introduction two years ago, judges have been able to order indemnity costs against one party with interest of up to 10% above base on both the settlement and the costs.

The rule turned on whether the order was 'more advantageous' than an offer made by the other party.

Although it was introduced with the aim of encouraging parties to reach an amicable costs agreement, the rule has proved unwieldy and complex to impose.

Peter Watson-Lee, chairman of the Law Society's family law committee, said: 'The rule was very difficult to follow and apparently did not achieve what was intended by the drafters.

Because of its difficulty it was not often applied but the penal nature of it was a cause of concern.'

He said that under the rule, a failure to guess correctly what a judge might order could have drastic cost consequences, making work 'a licensed gamble'.

The move was brought about by the President's Ancillary Relief Advisory Group (PARAG) and follows concerns expressed about the effect of the rule by the committee and the Solicitors Family Law Association.

PARAG has set up a working party to review the operation of costs rules within the financial aspects of a divorce.

'Such costs orders are hardly known in other jurisdictions and can sometimes be something of a lottery,' said Mr Watson-Lee.

'Against that there is no doubt that they can be effective in persuading a reluctant party to approach financial settlements more sensibly.'

Until the working party reaches a conclusion, rule 2.69B will remain in force.

This provides that where the order is more advantageous than an offer, then the court must, unless it is unjust to do so, order the other party to pay any costs incurred after the date beginning 28 days after the offer was made.

Victoria MacCallum