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	England and Wales Family Court Decisions (other Judges)
You are here: BAILII >> Databases >> England and Wales Family Court Decisions (other Judges) >> DF v YB (No. 2: Costs) (Rev1) [2025] EWFC 76 (B) (31 March 2025) URL: http://www.bailii.org/ew/cases/EWFC/OJ/2025/76.html Cite as: [2025] EWFC 76 (B)

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IN THE FAMILY COURT
SITTING AT THE CENTRAL FAMILY COURT

		31st March 2025

1. On 14^th February 2025 I handed down judgment in relation to the final hearing of W's application in Form A dated 4^th May 2023. This judgment has been published as DF v YB [2025] EWFC 46 (B).
2. I stated in this judgment that:

[15] This case has been fought at significant financial cost to both parties. Excluding estimated implementation costs - £10,000 on H's side and £24,000 on W's side - the financial remedy proceedings have cost W £566,289 and H £378,611 – i.e. a total of £944,900. These figures include VAT which (on H's case but not W's) he will incur because he will have been UK tax resident from 6^th April 2024.

[19] W's costs of both sets of proceedings are materially higher than H's. It is common ground that both parties' paid and unpaid costs should be 'top-sliced' from the schedule of assets. The effect of this in a case where the net assets are to be divided equally is that in effect H will pay one-half of the difference between the two figures. Very broadly (as the precise figure depends on whether H is considered liable for VAT from 6^th April 2024 on his fees) H will therefore in effect pay c. £150,000 towards W's costs.

[20] In light of the above and more generally both parties reserved their position on costs until receipt of my draft judgment.

[110] Miss Campbell has confirmed that she has instructions to apply for costs. Miss Cowton considers any such application to be without merit. I shall deal with this application on paper following receipt of concise written submissions from both counsel.

3. Miss Campbell now applies for costs on W's behalf. This is resisted by Miss Cowton on H's behalf. Written submissions were filed on 26^th February 2025 and 5^th March 2025 respectively.
   
4. W seeks all her costs from after the PFDR Appointment to date. This sum is calculated as follows:

	W	H
Date Forms H1	25/11/2024	25/11/2024
W's costs include Vat - H's exclude VAT (per judgment)	590,289	353,653
W's costs while H in person:
3/23 - 30/6/23 and 2/9/23 - 27/9/23	88,787
Deduct W's costs while H in person for comparison	-88,787
Add Vat for comparison purposes		70,731
Comparative costs	501,502	424,384
Costs associated with settlement
Costs post PFDR 26/1/24 - 12/7/24	79,154
Costs post W's 2nd offer 12/7/24	209,260
Costs for application for penal notice	5,292
Costs from 7/1/25 - 24/2/25	9,894
Total:	303,600

5. Miss Campbell submitted that these costs (£303,600) should be met by H in full. She said that as a result of the extent and seriousness of H's breaches of the rules and his other conduct, there should be no discount against this sum.
6. Pursuant to FPR 2010 r28.1 the court "may … make such order as to costs as it thinks just".
7. As these are financial remedy proceedings to which r28.3 applies:

a) by sub-paragraph (5) (and subject to sub-paragraph (6)) the general rule is that the court will not make an order requiring one party to pay the costs of another party;

b) by sub-paragraph (6) the court may make an order requiring one party to pay the costs of another party 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); and

c) by sub-paragraph (7) in deciding what order (if any) to make under sub-paragraph (6), the court must have regard to (a) any failure by a party to comply with the FPR, any order of the court or any practice direction which the court considers relevant; (aa) any failure by a party without good reason, to attend a MIAM or NCDR; (b) any open offer to settle made by a party; (c) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue; (d) the manner in which a party has pursued or responded to the application or a particular allegation or issue; (e) any other aspect of a party's conduct in relation to proceedings which the court considers relevant; and (f) the financial effect on the parties of any costs order.


8. These rules are supplemented by PD28A - Costs which states inter alia as follows:

4.3 - Under rule 28.3 the court only has the power to make a costs order in financial remedy proceedings when this is justified by the litigation conduct of one of the parties. When determining whether and how to exercise this power the court will be required to take into account the list of factors set out in that rule …

4.4 - 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. ... 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. …

9. I observed in my earlier judgment that W's costs in both the private law children and financial remedy proceedings were materially higher than H's and that the effect of 'top slicing' all paid and unpaid costs where the net assets are to be divided equally is that in effect H will pay one-half of the difference between the two figures which (very broadly) is a contribution of c. £150,000 towards W's costs.
10. In relation to this observation, Miss Campbell reminded me that H was in person for two periods (from March 2023 to 30^th June 2023 and from 2^nd September 2023 to 27^th September 2023). It is said that during that time, when H was acting "in a belligerent and obstructive manner", W incurred costs of £88,787. Miss Campbell submitted these costs should be notionally deducted from W's total as the inclusion makes her costs appear unfairly higher than those incurred by H. It would not have been reasonable or fair to expect W to litigate in person in response to H's litigation conduct and emotional and financial abuse. Hence the presentation in the table above. There is some force in this submission.
11. The Editorial Notes in the Family Court Practice 2024 to r28.3 state at [3.1136[3]]:

In normal circumstances, as a starting point, unpaid costs are treated as a liability of the paying party. However, where disproportionate costs are incurred by one party, the simple inclusion of costs (whether already paid or unpaid) in the court's assets schedule is likely to be unfair to the moderate spender, as the distribution exercise (whether on a needs or sharing basis) can amount to something very similar to an inter partes costs order, apparently breaching the spirit of the no order for costs starting point under the FPR 2010, r 28.3(5). The court may, therefore, make an adjustment in the distribution of capital by ignoring any disproportionate unpaid costs as a liability and/or adding back (some of) the costs already paid, thus appropriately penalising the over-spender without actually making an inter partes order for costs …

12. If both parties' costs had been broadly equal there may well have been force in the submissions made on W's behalf that the repeated breaches by H of court-ordered deadlines (he was late in serving his Form E, his Replies to Questionnaire and his s25 statement), the manner in which H "pursued or responded to the application or a particular allegation or issue" and "other aspect[s] of a party's conduct in relation to proceedings" were all relevant to the issue of costs. It is also true that on 12^th July 2024 W offered on an open basis to accept a lump sum of £488,929 (which was lower than the lump sum ordered) with Wells sharing of the illiquid investments.
13. However as Miss Cowton submitted (i) the lump sum figure ordered of £510,000 was between the parties' respective open lump sum proposals (£60,000 (H) and £780,000 (W)); (ii) in relation to the four points I was asked to adjudicate on H 'won' on two and W 'won' on two; (iii) I was critical of W in effect pursuing s25(2)(g) 'conduct' by the back-door, despite never having pleaded the same; and (iv) although W's open offer of 12^th July 2024 sought a lump sum lower than my final determination (£510,000) she also sought that (a) H resign as a trustee from the children's trusts (which was not pursued at final hearing); (b) H indemnify her in relation to £710,000 in withdrawals he made from the children's trusts (likewise); (c) H pay child maintenance of £20,000 pa per child until the end of secondary education (the agreed figure was £7,500 pa per child); and (d) if the offer was not accepted the quantum of the lump sum payable should increase pound for pound for any legal fees incurred from the date of the offer to the date of any final order.
14. It is also unclear whether in W's offer of 12^th July 2024 she was also seeking that H alone pay £400,000 into an education fund as opposed to the fund being met equally by the parties (which is what was agreed). In her written submissions on costs Miss Cowton interpreted the offer as being that H alone was to pay into the education fund. Miss Campbell did not. The confusion is understandable. The wording of W's offer of 12^th July 2024 said (emphasis added) "[H] shall pay £400,000 (top-sliced from the assets) into an account as an "Education Fund" …". This differed from W's first open offer of 2^nd February 2024 which stated (emphasis added) "Each of our clients to pay £200,000 each into an account as an "Education Fund" …". W's third open offer of 18^th November 2024 then stated her solicitors were (emphasis added) "instructed to revise the offer of 12 July 2024 as follows" and then said "Paragraph 14: Our respective clients will pay £200,000 each into an education fund". However the letter also said that until 20^th November 2024 the offer of 12^th July 2024 remained open for acceptance (and which was said to be that H pay £488,929 as a lump sum with the education fund of £400,000 being top-sliced off the assets).
15. If both parties' costs had been broadly equal, I may well have made an order that H pay a contribution to W's costs although it would have been significantly less than the £303,600 sought. However, and in the words of the Editorial Notes to the Family Court Practice 2024 there has already been "something very similar to an inter partes costs order" in this case as H has already contributed (very broadly) c. £150,000 to W's costs. I am not satisfied that any of the submissions made on W's behalf, whether individually or collectively, justify the making of (in effect) a further order for costs. Therefore and save for the single application I deal with below there shall be no such (further) order.
16. This conclusion on costs takes nothing away from my observation in my previous judgment that H is guilty of having behaved poorly - and at times very poorly - during and since the parties' separation. I repeat that his messages were highly abusive, offensive, and misogynistic both of W and her solicitors. In her submissions on costs Miss Cowton again accepted that H "did at times send wholly inappropriate messages/emails to W and her solicitors, mostly when drunk (for which he apologised in s.25 statement and oral evidence)".
    
17. One of the submissions made by Miss Campbell was that I ought to have regard on the facts of this case to r28.3(6)(aa) – i.e. "any failure by a party without good reason, to attend … NCDR". This was one of the amendments to the FPR introduced on 29^th April 2024. This is repeated in PD3A para 10E which states "the court may take the parties' conduct in relation to attending non-court dispute resolution into account when considering whether to make an order for costs in relation to the proceedings." An unreasonable failure to attend NCDR is therefore now on the same footing in the rules as other litigation misconduct.
18. Given the nature of the FPR costs rules, whereby the default in family proceedings is the application of r28.2 from which r28.3 is excepted for "financial remedy proceedings", the amendments which came into force on 29^th April 2024 did not affect proceedings such as CA 1989 Schedule 1, interim applications, or appeals which are governed by r28.2 (which applies a modified version of CPR Part 44) and nor did it affect claims under the Trusts of Land and Appointment of Trustees Act 1996 and under the Inheritance (Provision for Family and Dependants) Act 1975 (which apply CPR Part 44 in full).
19. However, changes to the CPR 1998 consequent upon the decision in Churchill v Merthyr Tydfil County Borough Council and Others [2023] EWCA Civ 1416 have changed this position. These amendments came into effect on 1^st October 2024 when the Civil Procedure (Amendment No. 3) Rules 2024 entered into force. Amongst the amendments is an insertion within r44.2 (court's discretion as to costs) at sub-rule (5)(e) so the conduct of the parties to which the court will have regard in deciding what order (if any) to make about costs will include "whether a party failed to comply with an order for alternative dispute resolution, or unreasonably failed to engage in alternative dispute resolution."
20. All other family proceedings and claims under the Trusts of Land and Appointment of Trustees Act 1996 and the Inheritance (Provision for Family and Dependants) Act 1975 were therefore brought into line with financial remedy proceedings with effect from 1^st October 2024. Of course, at least at present, the family court - unlike the civil courts - does not have the power under the FPR to order parties to attend NCDR and hence the different wording of the two sets of rules.
21. Miss Campbell relied on the following under this heading as examples of H without good reason either not attending or withdrawing from NCDR:

a) although it was W who withdrew from pre-litigation mediation (which took place between September 2022 and March 2023) she only did so when H insisted that he would not discuss finances until children issues were fully resolved;

b) H left the PFDR Appointment heard by Geoffrey Kingscote KC on 25^th January 2024 immediately after the indication and there was no negotiation;

c) on 6^th February 2024 W suggested the parties arbitrate the remaining issues rather than wait for a final hearing. On 9^th February 2024 H rejected W's proposal without any explanation as to why;

d) on 14^th February 2024 W proposed a without prejudice roundtable meeting. W specifically proposed in her open offer that the parties continued negotiations relying upon the updating balances/disclosure recorded for the PFDR Appointment to avoid arguments about add-backs and excessive interim expenditure. H refused on the basis that there were outstanding questions raised by both parties and he required further full and frank disclosure;

e) in circumstances where H had unilaterally spent £800,000 in savings (excluding legal fees) between January and August 2023, it was to H's advantage to continue negotiating with figures frozen as of January 2024. It would only benefit H to continue without further disclosure where (i) he held all the moving assets; and (ii) he asserted, falsely, that W was overspending and depleting the asset pool; and

f) in April 2024 the parties learned that the final hearing would not take place until the end of November 2024. On 24^th April 2024 W again proposed arbitration instead, to avoid delay and costs. H failed to give a substantive response.

22. In her response Miss Cowton submitted there had been no such failure:

a) H engaged in both mediation and a PFDR Appointment (mediation from September 2022 to March 2023 with Suzanne Kingston and a PFDR Appointment before Geoffrey Kingscote KC);

b) the court is not entitled to enquire into what happened at the PFDR Appointment and what offers were or were not made "as W's advisers know well";

c) W's proposal to have a roundtable meeting in February 2024 before H had responded to her post-PFDR Appointment disclosure questions (relating particularly to the assets to be Wells-shared, a key issue between their proposals) – and she to his - would have only led to wasted costs;

d) H himself proposed a roundtable meeting in June 2024; and

e) no litigant is required to commit to arbitration; H's preference for the disputed issues to be dealt with at the Central Family Court by the allocated judge at final hearing (an approach approved by the same judge in listing the final hearing) cannot be criticised.


23. I am satisfied that on the facts of this case there has not been any failure by a party without good reason to attend NCDR. This is one reason why I have not made any further order for costs.
24. However, in relation to what was said by Miss Campbell about H having left the PFDR Appointment on 25^th January 2024 "immediately after the indication and there was no negotiation" and Miss Cowton's response that "the court is not entitled to enquire into what happened at the PFDR Appointment" I do not agree with Miss Cowton. The Financial Remedies Court Primary Principles Document of 11^th January 2022 states under the heading "Assisting compromise" as follows:

8. … Where a private FDR has taken place, the next FRC Judge dealing with the case will ordinarily wish to be satisfied that a thorough FDR exercise has taken place and parties should provide a written explanation to that judge of what has happened so the FRC Judge can be so satisfied. Absent specific enquiry by the FRC Judge, this explanation should not include reference to any without prejudice positions, but should describe the date of the private FDR, the tribunal, the time spent and an assurance that offers were made on each side and an indication given.

25. It is therefore clear that the court is entitled to enquire into what happened at the PFDR Appointment so as to be satisfied that a thorough FDR exercise has taken place. This expressly includes the time spent, that an indication was given, and an assurance that offers were made on each side.
26. I have no doubt that in due course there will be a family case in which a failure by a party without good reason to attend (or engage in) NCDR will be considered to be litigation conduct and justify a costs order whether the applicable rules are the FPR or the CPR. Even prior to the rule changes, a failure to mediate was penalised in costs (H v W (Cap on Wife's Share of Bonus Payments) (No. 2) [2015] 2 FLR 161 per Eleanor King J (as she then was)). In X v Y [2024] 2 FLR 800, Gwynneth Knowles J observed at [2] that she wished "to signal that, at all stages of the proceedings, the court will be active in considering whether non-court dispute resolution is suitable. Changes to the Family Procedure Rules 2010 ('the FPR') which are due to come into effect on 29 April 2024 will give an added impetus to the court's duty in this regard" and at [9] that with effect from 29^th April 2024 "[a]mendments to the costs sanctions the court can impose in financial remedy proceedings will take into account conduct relating to a failure either to attend a MIAM or to attend non-court dispute resolution".
27. Gwynneth Knowles J then placed the rule changes of 29^th April 2024 within the wider litigation landscape in civil proceedings and stated (at [15]) that to assume that the decision in Churchill v Merthyr Tydfil County Borough Council and Others was of limited relevance to family proceedings was "unwise" as "[t]he active case management powers of the CPR mirror the active case management powers in the FPR almost word for word and both the civil and the family court have a long-established right to control their own processes."
28. However, this is not that case.
29. Wholly separately H has accepted that he will pay the reasonable costs of W's penal notice application in relation to his failure to file and serve his s25 statement before the date he had been directed to do so. He served the statement before my order of 4^th November 2024 but Miss Cowton accepted that he was late and costs were incurred. Miss Cowton submitted, however, that the costs claimed were excessive. The N260 totals £5,291.80 (inclusive of VAT and disbursements). It was said this was a straightforward paper application not requiring any witness statement or complicated advice, preceded by a couple of chasing letters. There was no need to have five lawyers at Mishcon de Reya working on it ranging from Grade A to Grade D (5.5 hours claimed is clearly disproportionate), as well as taking the advice of leading counsel. The court would always have made the order when a s25 statement is late and a final hearing is imminent (which is all the D11 needed to say). The maximum reasonable costs were said to be £1,000 (inclusive of VAT).
30. I consider that the costs claimed in respect of this application are excessive for the reasons given on H's behalf. I assess the costs payable on the standard basis as £2,000 (inclusive of VAT and disbursements). These are payable within 14 days.
31. That is my judgment.

RECORDER NICHOLAS ALLEN KC