A Reminder to Act Reasonably in Financial Remedy Proceedings
In a recent divorce case , Mostyn J has made costs orders against both parties for acting unreasonably throughout proceedings.
What Happened in the Case?
In the case of E v L (No.2: Costs) [2021] EWFC, the husband has been penalised for his failure to negotiate reasonably and for his conduct throughout proceedings. It was stated that the main reason the case failed to reach a settlement was because of the husband's refusal to accept that the fairest outcome would be equal sharing between the two. As a result of this, Mostyn J ordered the husband to pay 25% of the wife's legal costs which amounted to £109,000.
The wife was also made subject to a costs order because she had read and photographed her husband's private documents and attempted to use them in proceedings. Mostyn J stated that this conduct is "entirely unacceptable" and ordered the wife to pay all of the husband's costs that were referable to this conduct issue - amounting to £23,400. This concluded to the wife obtaining a total costs award of £85,600.
How Are Costs Usually Handled in Financial Remedy Proceedings?
The general rule is 'no order as to costs'. This means that the court will not make any order requiring one party to pay the costs of another. However, this rule is subject to exceptions and a cost order may be made in circumstances where:
- a party has not fulfilled their duty to negotiate openly, reasonably and responsibly
- it is appropriate to do so because of the conduct of a party
- it is appropriate to do so because a party has unreasonably pursued or contested a particular allegation or issue
It should be noted that the court has the power to make costs orders even in cases where there is only enough finance available to meet both parties needs. This can therefore put both parties at a large detriment and demonstrates the importance of remaining responsible throughout. Once the financial landscape is clear, parties should be willing to negotiate and come to a reasonable settlement.
Why Is This Case Relevant?
This judgment is a further example of the courts willingness to penalise a failure to act reasonably throughout proceedings. As Mostyn J stated, it is hoped this will be a reminder that "if you do not negotiate openly, reasonably and responsibly, you will suffer penalties in costs".
If you require any further advice regarding your finances following the breakdown of your relationship, please contact Sam Hickman in our Family Law team on 0117 314 5435, or complete the form below.