M v M

In financial remedy proceedings, the general expectation of no order as to costs may be displaced where a party’s conduct makes a costs order appropriate. A party joined against its will is not protected by that general rule. The court has a clean sheet and must exercise its discretion having regard to the conduct of the parties and all relevant circumstances.

Indemnity costs are justified where the conduct of the litigation is materially outside the norm, including deliberate non-disclosure, contempt of court, disregard of orders, dishonest evidence and advancing cases that are obviously bound to fail. The assessment may be summarily undertaken where a detailed assessment would be disproportionate.

The applicant wife sought indemnity costs following judgment in her Part III financial remedy application. The husband had not attended the trial or the costs hearing. Three companies, which had contested the beneficial ownership of properties held in their names, were also absent from the costs hearing and unrepresented.

The court had previously found serious litigation misconduct by the husband and the companies, including deliberate non-disclosure, contempt of court, dishonest conduct and pursuit of an unsustainable case. The issues were whether costs should be ordered against the husband and companies, whether liability should be joint and several, and whether the costs should be assessed on the indemnity basis.

1. Costs orders. The court ordered the husband to pay the wife £1,041,063 for the first period. The husband and the fourth, fifth and sixth respondents were made jointly and severally liable for £473,535 for the second period.
2. Applicable discretion. Under FPR 2010 Part 28.3, the general rule of no order as to costs in financial remedy proceedings may be displaced where the conduct of a party makes an order appropriate. The relevant conduct included failures to comply with rules and orders, unreasonable pursuit or contest of issues, the manner in which the case was conducted, and any other relevant conduct.
3. The no-order principle did not protect parties joined against their will. Under FPR 2010 Part 28.2(1), the CPR costs provisions applied to the relevant family proceedings, but the court retained a discretion under CPR 44.2(4), having regard to all the circumstances, including conduct and the extent of success.
4. The husband’s and companies’ conduct made a costs order inevitable. It included persistent non-disclosure, contempt of court, disregard for the court’s authority, dishonest evidence, breaches of orders, failure to call proper evidence and the pursuit of a defence which the evidence plainly contradicted.
5. Indemnity costs were appropriate. The conduct took the case outside the norm within the meaning explained in Excelsior Commercial and Industrial Holdings Ltd v Salisbury Ham Johnson [2002] C.P.Rep. 67. It was extreme, deliberate and underhand, and had generated substantial unnecessary costs and distress.
6. The court ordered summary assessment. A detailed assessment or preparation of a Woolf schedule would have imposed disproportionate additional expense.