H (S) v H

On an appeal concerning costs in ancillary relief proceedings, the court must apply the Calderbank-offer rules together with the requirement to consider all the circumstances. The comparison between an offer and the order is only a starting point. The court must consider the offer’s terms, timing, available information, disclosure, conduct and the parties’ means, and may depart from the usual costs consequence where it would be unjust. Materially incorrect or incomplete disclosure may justify postponing any expectation that the receiving party should negotiate. A costs order based on an early, unsecured and inadequately informed offer was therefore plainly wrong, although the receiving party’s excessive litigation conduct could still justify a substantial reduction in costs.

The applicant appealed against a costs order made by District Judge Brasse at the conclusion of ancillary relief proceedings between former spouses. The District Judge ordered her to pay the respondent’s costs from 8 November 2001, relying principally on an offer made by the respondent and on the applicant’s failure to negotiate.

The applicant had obtained a deferred interest and other relief worth approximately £237,500, but had pursued substantial allegations concerning contributions, undue influence, assets and a payment of £275,000. Material information about that payment was incorrectly given and was not fully disclosed until the first appeal. The central issue was whether the original costs order was plainly wrong under the applicable procedural rules.

1. The appeal was allowed. The court applied the appellate test in Cordle v Cordle (2002) 1 FLR 207: intervention was justified where the District Judge had taken an unjustified approach to relevant matters and had reached a plainly wrong conclusion.

2. Under Civil Procedure Rules 44.3 and Family Procedure Rules 2.69, read in the light of Norris v Norris; Haskins v Haskins (2003) 2 FLR 1124, the starting point is whether the judgment is more or less advantageous than the relevant offer. That is not conclusive. The court must consider all the circumstances, including the terms and timing of offers, the information available, disclosure conduct, means and general litigation conduct. The rule must be applied despite drafting difficulties.

3. The November offer was too low, too risky and too early. It provided an unsecured testamentary benefit which could be altered and was made before adequate financial disclosure. It was therefore plainly wrong to order costs from that date.

4. The February offer was closer to the eventual award, but the respondent had still supplied incorrect information about the £275,000 and failed to answer material questions. The applicant was entitled to investigate that issue without being penalised in costs. The obligation to negotiate could properly remain on hold, or be only tentative, until the disclosure issue was resolved.

5. The applicant’s excessive pursuit of unsuccessful issues and disregard for time and cost nevertheless justified an adverse outcome in part. The court substituted an order awarding her 20% of the costs of the nine-day hearing. It ordered her to pay 70% of the costs of the appeal before the court, reflecting the late disclosure, while leaving the earlier costs order before Johnson J undisturbed.

• High Court (Family Division): the appeal from the District Judge’s costs order was allowed. The order requiring payment of the respondent’s costs from 8 November 2001 was replaced by an order awarding the applicant 20% of the costs of the nine-day hearing.
• Earlier appeal: an application for disclosure of bank accounts had been refused by Johnson J. The related costs order was not disturbed.