Costs in financial remedy proceedings – who pays?

The “no order as to costs” rule has been effective in financial remedy proceedings since 2006, with general principles to this approach set out in rule 28.3 of the Family Procedure Rules 2010 (FPR) and Practice Direction 28A. The FPR and practice directions also detail the exceptions to the “no order as to costs” rule in the case of litigation misconduct and the procedural requirements of the FPR costs rules.

The FPR differ to the rules in other civil proceedings, where costs generally follow fault. The FPR acknowledges that the breakdown of a marriage and distribution of family assets is a misfortune affecting both parties, rather than being the fault of either of them. The award of costs may often distort the intention of the final financial order in distributing the family assets on a fair and reasonable basis.

The general “no order as to costs rule” that applies to financial remedy proceedings is subject to the following caveat detailed in Rule 28 of the FPR:

“A court may make an order requiring one party to pay the costs of another party at any stage of the proceedings where it considers it appropriate to do so because of the conduct of a party in relation to the proceedings (whether before or during them)”

In deciding if they need to make an order for costs, the court  must take into account the nature, importance and complexity of the issues in the case. This may be particularly significant for applications for variation orders and interim variation orders or other cases, where there is a risk of the costs becoming disproportionate to the amounts in dispute.

The court must consider any failure by a party to comply with the procedural rules, any order of the court or any practice direction which the court considers relevant, e.g. failing to file or serve documents or disclosure, together with a proportionality study on the resulting impact on the case. The court will also consider any open offers to settle made by a party, whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue and the manner in which a party has pursued or responded to the application or a particular allegation or issue, together with any other aspect of a party’s conduct in relation to proceedings which the court considers relevant. This is a catchall provision, but this conduct must increase the costs of the other party. Finally, the court will consider the financial effect on the parties of a costs order.

If you feel court proceedings are required to resolve your matrimonial finances, contact us on 01234 889777 to discuss the matter further with one of our specialist family lawyers.

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