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LM v DM [2021] EWFC 28

(Financial Remedy - Ruling on costs after contested hearing for maintenance pending suit, interim periodical payments for the children, (and for a legal services payment order - not relevant to this article).

The short judgement by Mostyn J emphasises the following points:-

  • the applications before the courts were interim applications
  • the no-order-for-costs general rule in FPR r.28.3(5) doesn’t apply
  • they are governed instead by a soft costs-follow-the-event principle
  • Calderbank letters are permissible
  • the obligation to negotiate openly and reasonably is especially important in interim applications
  • That obligation to negotiate clearly applies to these interim proceedings notwithstanding that PD 28A para 4.4[1] technically applies only to r.28.3 cases.

Mostyn J considered that W won because the court’s award was nearer her position, she succeeded on issues of principle, and there were aspects of H’s case had been unreasonable.

So the starting point was that the applicant should be awarded her standard costs of the application.

BUT the applicant made no serious attempt to negotiate openly and reasonably beyond setting out her in-court forensic position in her witness statements.  The judges impression was that the applicant was determined to fight the application come what may.

Mostyn J was clearly of the view that litigants must learn that they will suffer a cost penalty if they do not negotiate openly and reasonably so he held that the applicant will be deprived of 50% of the award which he would otherwise have made in her favour.

His order was that H pay 50% of the W's costs of the applications to be assessed on the standard basis if not agreed.

He also added that no part of the sum payable pursuant to his legal services payment order is to be treated as reducing the amount of the applicant's assessable costs pursuant to s.22ZA(9) Matrimonial Causes Act 1973 as that legal services payment award relates to costs yet to be incurred, whereas the order for costs made today in the applicant's favour relates to costs already incurred, and which will be met from the applicant's own funds (sale proceeds of a car).

[1] In considering the conduct of the parties for the purposes of rule 28.3(6) and (7) (including any open offers to settle), the court will have regard to the obligation of the parties to help the court to further the overriding objective (see rules 1.1 and 1.3) and will take into account the nature, importance and complexity of the issues in the case. This may be of particular significance in 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 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. Where an order for costs is made at an interim stage the court will not usually allow any resulting liability to be reckoned as a debt in the computation of the assets.