Costs orders — Family Court adopting more robust approach

In stark contrast to civil proceedings — where costs orders are routinely made in favour of the successful party — in family proceedings, costs orders are generally only made when justified by the litigation conduct of one of the parties. 

Here, Debbie Heald explains the Family Court’s approach to costs orders.

How does the Family Court determine costs orders?

In determining any costs application, the Court will consider the litigation conduct of both parties. This includes a consideration of how each party sought to assist the Court in dealing with the case justly, alongside the nature, importance and complexity of the issues. It’s a case-specific exercise. 

While the Court adopts a holistic approach, it’s likely to consider:

• Are costs disproportionate to the sums in dispute?
• Have the parties engaged in Non-Court Dispute Resolution (NCDR)? 
• Have the parties openly and reasonably negotiated?
• Has either of the parties adopted an inappropriate stance or run a meritless argument in the case?

When will the Family Court make costs orders?

Historically, the Family Court has been reluctant to make costs orders when dealing with proceedings concerning the distribution of assets on divorce. However, in two recently published cases, the Court didn’t hesitate to make costs orders as a result of one party’s conduct — even when the outcome was determined by the parties’ needs.  

In Helliwell v Entwistle [2024] EWHC 1298 (Fam) the Court was faced with determining a costs application against the Husband. At the end of the proceedings, the Wife’s costs totalled £600,000 and the Husband’s costs were in excess of £450,000. In ordering the Husband to pay £75,000 towards the Wife’s costs — despite having determined the case on the Husband’s needs — the Court found the following factors relevant: 

• Both parties initially adopted inappropriate stances.
• The Husband should have accepted the Wife’s second open offer. He wasn’t awarded more than that offer at the final hearing. 
• The Husband had dishonestly advanced an inaccurate factual matrix to further his own case.
• The Husband lacked realism as to what his claim was worth.

The intention of the Judge in this case was to send a clear message to both parties (and practitioners) that the Court won’t shy away from making costs orders — commenting that: “offers need to be focussed, wise, based on likely outcome and not on greedy expectation”. 

Further, in DH v RH [2024] EWFC 79, both parties incurred eye-watering legal fees in raising various arguments in relation to the non-disclosure of assets, overpayments of maintenance and Imerman. The Wife accrued costs of £1.9m and the Husband incurred £987,000. The Judge found that the Wife’s approach constituted litigation misconduct and ordered her to pay £255,654 towards the Husband’s legal costs. 

Arguments were also raised in relation to the Wife’s disproportionately large expenditure on legal fees, which the Court considered to amount to wanton expenditure and for which it ‘added back’ £800,000 to the Wife’s side of the asset schedule to reflect the reduced capital available for distribution due to the Wife’s reckless spending on legal fees. 

This demonstrates that the Court is not only willing to make costs orders but also consider the impact of heightened legal fees of one party on the assets available for distribution and make appropriate ‘add backs’ to ensure overall fairness.

What about NCDR?

The new rules that impose an obligation on parties to attempt NCDR have (at the time of writing) been in place for over two months. These are designed to encourage the resolution of disputes outside of Court by placing a requirement on both parties to engage in NCDR (and evidence the same). Failure to do so will place that party at risk of an adverse costs order. 

The impact of this on costs orders in practice is yet to be seen. However, it’s already clear that the Courts are taking a robust approach to the new rules surrounding NCDR — and with the Family Procedure Rules having been specifically amended to state that a failure to engage without good reason may lead to a departure from the usual ‘no order as to costs’ principle in family cases, it’s likely that costs orders will begin to follow.

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