M v M

In ancillary relief proceedings, the general rule is that each party bears their own costs. The court may depart from that rule where a party’s conduct in the proceedings makes a costs order appropriate. Relevant conduct includes pursuing an unreasonable issue, changing the basis of the case late, failing to comply with procedural requirements, and adopting an unconstructive approach.

An issue-based costs order may be expressed as a proportion or stated amount of overall costs where separate assessment would be impracticable or disproportionate. A detailed breakdown proving the precise additional costs caused by the issue is not essential.

The judgment concerned an application by the husband for a contribution to his costs following financial relief proceedings. The application was heard at a directions hearing after the trial judgment.

The husband relied principally on the wife’s late application for the transfer of his business and her subsequent claim for periodical payments. He argued that these changes caused substantial additional work and expense. The wife contended that the litigation had changed because of a dramatic fall in the value of the business and that a specific costs order required detailed proof of the costs attributable to each issue.

The central questions were whether the wife’s conduct justified an issue-based costs order and, if so, how the order should be quantified.

1. Costs jurisdiction. In ancillary relief proceedings, FPR 1991 r 2.71 displaces the ordinary civil rule that costs follow the event. Costs normally lie where they fall, but the court may order payment where the conduct of a party in relation to the proceedings makes such an order appropriate.
2. The court must apply the overriding objective in FPR 1991 r 2.51D. The parties share the obligation to assist the court in dealing with the case justly, including by saving expense and adopting a proportionate approach. The principles in Charman v Charman [2006] 2 FLR 422 and Crossley v Crossley [2008] 1 FLR 1467 supported that approach.
3. The wife’s proposed transfer of the business was wholly misconceived. The bank’s control requirements, the business partner’s opposition, and the proper construction of the financial documentation should have made the application untenable. Her late changes of position and late periodical-payment claim shifted the focus of the litigation shortly before trial and materially increased the husband’s preparation burden.
4. The court was entitled to consider the wife’s wider conduct, including non-disclosure, misleading or evasive presentation, and the preparation of a revenge-driven budget. Although the shortcomings of her experts were relevant, the wife remained responsible for the conduct of her case as between the parties.
5. Following National Westminster Bank plc v Kotonou [2007] EWCA Civ 223, the court should use a percentage or stated amount where practicable instead of requiring detailed assessment of costs attributable to individual issues. An issue-based costs order was justified, but the starting point that costs lie where they fall and the inevitable costs of the complex litigation required moderation.
6. The application was granted. The wife was ordered under CPR 1998 r 44.3(6)(b) and (7) to pay the husband £175,000, representing approximately 20 per cent of his untaxed costs.