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FAMILY LAW – COSTS AWARDED BUT SLASHED ON SUMMARY ASSESSMENT
A recent decision of the High Court Family Division serves to demonstrate very clearly that the Courts will apply stringent tests on proportionality if costs between the parties are awarded.
In K v K [2016] EWHC 2002(Fam), MacDonald J summed up his approach as follows:
“The stringent test of proportionality in relation to costs incurred applies with equal force in family proceedings. It is remarkable that such a significant sum of money has been spent by these two parents arguing over a single question the answer to which was indisputable from the outset. The costs incurred in this case were disproportionate to the single issue at hand. I again observe that the single question in the case was entirely straightforward in nature and answered by one unassailable legal submission.”
He did indeed apply a stringent test by reducing the costs claimed by more than 90%.
The case involved an application by a Mother to enforce in this jurisdiction an Order made in the Russian Courts concerning contact with her daughter. She succeeded in procuring registration of the Order here. She then sought to enforce it. The Father subsequently maintained that the English Court did not have the jurisdiction to register the Order because it was made prior to the coming into force of the relevant provisions of the Hague Convention.
It is apparent that the Mother was given erroneous advice at the outset by her English Solicitors and by her Russian Lawyers. However, she did then have advice from both Junior and Leading Counsel to the effect that the position adopted by the Father was correct and that there was little or no prospect of defeating that argument. Notwithstanding this, there was a reluctance on the part of the Mother to drop her application and therefore an Appeal was lodged by the Father and was heard by Macdonald J.
As will be seen from the quote set out above, he was of the view that the point was blindingly obvious and unanswerable. It was entirely clear that the English Court did not have jurisdiction to register the Order and therefore the Appeal was allowed.
However, he was also asked to determine the question of costs. The Father made a claim in the sum of £38,813 and the Mother’s costs were in the order of £22,800. In a very careful analysis of the proper approach to take the Judge set out the following considerations:
i) The court may, pursuant to FPR 2010 r 28.1, make such order as to costs in family proceedings as it thinks just. Applications for recognition and enforcement under the 1996 Hague Convention fall within the ambit of FPR 2010 r 28.1.
ii) In exercising its wide discretion as to costs the court must, pursuant to FPR 2010 r 1.2(a) further the overriding objective to deal with case justly having regard to the welfare issues involved;
iii) The general rule in CPR r 44.2(2) that the unsuccessful party will be ordered to pay the costs of the successful party does not apply in family proceedings;
iv) In deciding whether to make an order in respect of costs, pursuant to CPR 44.2(4) the court must have regard to all the circumstances, including the conduct of the parties, whether a party has succeeded on part of his case even if he has not been wholly successful and any admissible offer to settle made by a party which is not an offer to which costs consequences under CPR Part 36 apply. The court is also entitled to have regard to a disparity of means between the parties (E C-L v DM (Child Abduction: Costs) [2005] 2 FLR 772). Each case will turn on its own facts.
v) Pursuant to CPR 44.2 and so far as is relevant in this case, the conduct of the parties relevant to the issue of costs includes conduct before as well as during the proceedings, 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 defended his case or a particular allegation or issue.
vi) The general practice of not awarding costs against a party in family proceedings in the absence of reprehensible behaviour or an unreasonable stance is one that accords with the ends of justice (Re T (Costs: Care Proceedings: Serious Allegation Not Proved) [2013] 1 FLR 133 at [44]).
vii) Where the court is to assess the amount of costs (whether by summary or detailed assessment), pursuant to CPR r 44.3(1) the court will not allow costs which have been unreasonably incurred or are unreasonable in amount. Pursuant to CPR r 44.3(2), when assessing costs on the standard basis the court will only allow costs which are proportionate to the matters in issue and costs which are disproportionate in amount may be disallowed or reduced even if they were reasonably or necessarily incurred.
CPR r 44.3(5) provides, in so far as is relevant to this case, that costs incurred will be proportionate if they bear a reasonable relationship to the complexity of the litigation, any additional work generated by the conduct of the paying party and any wider factors involved in the proceedings, such as reputation or public importance (see also FPR 2010 PD28A para 4.4). viii) In deciding the amount of costs, CPR r 44.4 also requires the court to take into account whether the costs were proportionately and reasonably incurred. The court will also have regard to, inter alia, the parties conduct before, as well as during, the proceedings, the efforts made before and during the proceedings to try and resolve the dispute, the importance of the matter to all the parties, the particular complexity of the matter or the difficulty or novelty of the questions raised, the skill, effort, specialised knowledge and responsibility involved, the time spent on the case and the place where and the circumstances in which the work was done.
ix) On the question of proportionality, the touchstone of reasonable and proportionate costs is not the amount of costs which it was in the party’s best interests to incur but the lowest amount which he or she could reasonably have been expected to spend in order to have his or her case conducted and presented proficiently having regard to all the relevant circumstances. Expenditure above and beyond that level is for a party’s own account and not recoverable from the other party (Khazakstan Kagazy PLC v Zhunus [2015] EWHC 404 (Comm)).
x) When making an order for costs the judge should clearly state his or her reasons (English v Emery Reimbold & Strick Ltd [2002] EWCA Civ 605). It was argued on the Mother’s behalf that there should be no order for costs made against her. Various submissions were made, not least of which was that the Father has been in breach of the Russian order and that there was a financial disparity between the parties. The Judge felt that given her obstructive stance an order for costs was justified but was obviously somewhat aghast at the level of costs claimed.
He therefore looked carefully at each of the elements of the claim for costs and reduced the Father’s claim from £38,813 down to £3,737.50. For example hourly rates were reduced from £550, £270 and £150 down to £325, £200 and £125 for Grades A, C and D respectively. He reduced the time claimed with the client and opponent and allowed just £325 on “documents” as opposed to the £9352 claimed on the basis that Counsel had drafted the Notice of Appeal and documents for the hearing and that therefore there was little need for any further documentation to be prepared. He found that it was not appropriate for the conducting Solicitor to attend the hearing with Counsel and allow that time at Grade D.
Counsel’s fee for the various advices was reduced from £4,550 down to £800 and the £8500 for attendance at the 2 hearings was reduced to £1,250.
On any view, those are extremely robust and significant reductions. This is another case which demonstrates a step change in the approach of the Courts to the issue of the recoverable costs between the parties. Clearly, the outcome on costs was influenced to a large extent by the view of the Judge that the matter in issue was entirely straightforward and really should never have generated so much debate and general time spent. However, it is a stark warning even to those who feel they have an unanswerable case that they may well end up with a hefty balance on their legal bill even if successful.