Costs in financial applications

Posted on: 14/06/2022

Category: For you

Rule 28.3 (5) of the Family Procedure Rules says that “the general rule in financial remedy proceedings is that the court will not make an order requiring one party to pay the costs of another party.”

Are there any situations in which that general rule will not apply? Answer – yes. The exceptions are limited, but here are a few of them;

1. Litigation conduct: probably the best known exception. This is not conduct during the marriage but instead is aimed at the person whose conduct within the financial case is inappropriate. Examples could be failing to disclose, pursuing meritless points, raising endless questions etc.
2. Interim maintenance applications: these applications are expressly outside Rule 23.3 (5). Applications that need a decision by the court are comparatively rare – possibly because of the risk of adverse costs orders – so the vast majority of cases are agreed.
3. Legal Costs orders: available under s.22ZA (9) Matrimonial Causes Act 1973, under which the court has the power to make on order requiring one spouse to fund the other spouse's legal advice. The court may not make an order unless satisfied that without the amount the applicant would not "reasonably" be able to obtain "appropriate" legal services for the proceedings or part of the proceedings.
4. Under Practice Direction 28A para 4.4 of the Family Procedure Rules: in effect this is really a sub-paragraph of “Litigation conduct”. The court will take a broad view of conduct for the purposes of this rule and will generally conclude that to refuse openly to negotiate reasonably and responsibly will amount to conduct in respect of which the court will consider making an order for costs.

The real impact of this is its reference to the requirement “to negotiate reasonably and responsibly”. It is up to the court, in any given case, to assess whether the behaviour of the parties falls within that bracket. However the case of LM v DM 2021 showed the willingness of the courts to make the orders.

These powers tend to be used to discourage behaviour of which the court disapproves. It’s not just a question of “winner gets costs”. The overall message remains – be sensible, make early realistic offers, be prepared to negotiate, don’t delay or drag things out. Any competent family lawyer will agree that those methods produce the quickest and most cost effective solutions.