Date Published: 30/04/2024

Author: Will Foulkes, Paralegal

What is a costs order?

A costs order is a court order made against one or other of the parties concerning the costs of the court proceedings or part of them.

No order as to costs

In financial remedy proceedings, the starting point is generally that each party will pay their own legal costs (FPR part 28.3(5)). This rule does not apply to certain proceedings, such as Schedule 1 proceedings, interim applications, and hearings separate from the main proceedings.

When will a court deviate from this starting point?

Where the exceptions do not apply, the court can, in certain circumstances, make a costs order, requiring one party to pay the legal costs of another. FPR part 28.3(6) allows the court to make such an order at any stage of the proceedings where the conduct of a party in relation to the proceedings makes it appropriate to do so.

Prior to April 2024, per FPR part 28.3(7) examples of such conduct included:

• a failure by a party to comply with any order of the court or any practice direction.
• a failure by a party to attempt to settle openly or reasonably.
• unreasonably raising, pursuing, or contesting an issue or allegation.
• any other relevant conduct in relation to the proceedings.

Additionally, in 2019, FPR Practice Direction 28A 4.4 was updated to include the following:

“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. This includes in a ‘needs’ case where the applicant litigates unreasonably resulting in the costs incurred by each party becoming disproportionate to the award made by the court.”

Amongst other recent cases, Rothschild v de Souza [2020] EWCA Civ 1215 and HO v TL [2023] EWFC 21 have confirmed that a party guilty of misconduct may ultimately receive a sum less than their needs would otherwise require, owing to an adverse costs order.

Whilst, historically, it was unusual for the family courts to deviate from the general rule, in recent years, a more robust approach to costs has emerged.

Non-Court Dispute Resolution

As of 29 April 2024, FPR Parts 3 and 28 have been updated.

Part 3 of the FPR governs the rules relating to Non-Court Dispute Resolutions (NCDRs). As part of the update, the new definition of NCDR, under FPR part 2.3(1)(b), has been widened to: “methods of resolving a dispute other than through the court process, including but not limited to mediation, arbitration, evaluation by a neutral third party (such as a private Financial Dispute Resolution process) and collaborative law.”

Moreover, under new rule, FPR part 3.3(1A), the court can now order parties to file and serve a form “setting out their views on using Non-Court Dispute Resolution (NCDR) as a means of resolving matters raised in the proceedings”.

Additionally, FPR part 3.4(1A) now allows the court to adjourn proceedings to encourage parties to undertake non-court dispute resolution if there is sufficient time in the proceedings. Previously, under FPR part 3.4(1)(b), NCDR required the agreement of the parties. This provision has been removed, and agreement is no longer required.

Meanwhile, FPR part 28.3(7) has also been amended. In addition to the examples listed above, it now expressly states that a failure, without good reason, to engage in NCDR is a reason that court can consider departing from the starting point of no order to costs.

Comment

Whilst falling short of mandating NCDR, these changes reflect an effort to encourage early resolution of family law arrangements and to reduce the burden on an overwhelmed court system.

Against a backdrop in which the family courts are taking a more robust approach to costs, these changes provide warning to a party that if they fail, without good reason, to engage in non-court dispute resolution, they will be at an increased risk of facing an adverse costs order.

At Ketley Miller Joels, we offer mediation, arbitration, and private Financial Dispute Resolution hearings. Margaret Kelly-Edwards specialises in NCDR. She is well-placed to deal with these matters as she also sits as a Deputy District Judge primarily in the Central Family Court. If you have any queries, please contact us via info@kmjsolicitors.com.

Posted on 30/04/2024