Solomon v Solomon & Ors (Rev 2)

In an interim application arising from financial remedy proceedings, the general costs rule in Family Procedure Rules 2010 r 28.3 did not apply. Costs were therefore at the court’s discretion under Civil Procedure Rules 1998 Pt 44. In a clean-sheet case, the starting point is that costs follow the event, although that starting point is more readily displaced in family proceedings. The court may take account of a misconceived statutory application, the parties’ conduct, and costs that were largely wasted. Any overlap between costs incurred for that application and later proceedings may be addressed on detailed assessment to prevent double recovery. Where a disposition is alleged to be fraudulent but was not made by either spouse, a declaration concerning its validity or beneficial ownership is the appropriate route rather than an application under s 37 of the Matrimonial Causes Act 1973.

The husband appealed from an order of Mostyn J dated 10 May 2012 striking out his application under s 37 of the Matrimonial Causes Act 1973 and ordering him to pay the wife’s costs. The application sought to set aside transfers of properties, cancel mortgages and rectify the register. The husband did not pursue the appeal against the striking-out order, but challenged the costs order.

The Court of Appeal considered whether the application fell within the costs regime for financial remedy proceedings under Family Procedure Rules 2010 r 28.3, and whether the judge had properly exercised his discretion under Civil Procedure Rules 1998 Pt 44. The central issue was whether the costs order was within the judge’s discretion.

1. Disposition. Permission to appeal against the costs order was refused and the appeal was dismissed. The costs order was within the first-instance judge’s discretion.
2. The husband’s s 37 application was not the appropriate vehicle for resolving the alleged fraudulent transfers. A declaration that a conveyance was a nullity, or that the husband was the beneficial owner, was the appropriate application. Pursuing s 37 without invoking the High Court’s additional powers was likely to result in dismissal without resolving ownership.
3. The general no-order-as-to-costs rule in Family Procedure Rules 2010 r 28.3(5), for financial remedy proceedings, did not apply to the interim applications decided by Mostyn J. Costs were consequently in the court’s discretion, and the principles in Civil Procedure Rules 1998 Pt 44 applied.
4. In a clean-sheet case, the starting point is that costs follow the event, although the starting point may be displaced more readily in family proceedings. The judge was entitled to consider the misconceived nature of the s 37 application, the wife’s repeated submissions on jurisdiction, the observations of earlier judges and the husband’s eventual acceptance of the point. The conclusion that the costs had been largely wasted was open to him.
5. Any congruence between preparation for the s 37 application and preparation for declaratory-relief proceedings could be considered on detailed assessment, so that there was no double recovery. This did not undermine the costs order.

• Court of Appeal (Civil Division) [2013] EWCA Civ 1095: refused permission to appeal against the costs order and dismissed the appeal.
• Principal Registry Family Division, High Court: Mostyn J, on 10 May 2012, struck out the husband’s s 37 application and ordered him to pay the wife’s costs.