Jenny Alzena Helliwell v Simon Graham Entwistle (Costs)

In financial remedy proceedings, the general rule is that the court will not order one party to pay the other’s costs. That rule does not prevent a costs order where the parties’ litigation conduct makes such an order fair. The court may consider unreasonable or unrealistic positions, refusal of reasonable settlement offers, the costs thereby incurred, the parties’ financial circumstances, and the effect of an order on the paying party’s needs. A needs assessment is not necessarily a subsistence-level assessment. Costs may therefore be paid from sums assessed for needs, provided the order does not undermine the substantive award.

The judgment concerned the wife’s application for costs following financial remedy proceedings which also included a show-cause application concerning a prenuptial agreement. The wife sought £150,000 from the husband. The husband opposed the application, including on the basis that the sum represented about 37 per cent of his needs award and that the financial effect would be significant.

The court considered the parties’ litigation conduct, their settlement offers following a private FDR, the costs incurred after the wife’s reasonable offer, the husband’s needs, and the interaction between any costs order and the substantive financial award.

1. Nature of the proceedings. Although the proceedings included a show-cause application, they were financial remedy proceedings because the wife had also sought a financial remedy order. The applicable principle was the general rule in FPR 10 r.28.3 that the court will not ordinarily order one party to pay another’s costs.
2. Departure from the general rule. The rule did not require the court to ignore litigation conduct. The husband had advanced an unrealistic claim, rejected reasonable offers of £500,000 and £800,000, and incurred substantial further costs. The wife’s first offer was regarded as appropriate, and the costs incurred after its rejection were substantially a consequence of the husband’s refusal to settle.
3. Financial effect and needs. Under FPR 10 r.28.3(7), including cl.(f), the court had to consider the financial effect of any costs order. The wife’s wealth made the effect on her immaterial in practical terms, whereas the order would have a real effect on the husband. However, the husband’s needs assessment had been generous and was not an assessment at basic subsistence level. It was therefore permissible to require him to meet costs from resources included in that assessment.
4. Order. Exercising the wide discretion in relation to costs, the court ordered the husband to pay £75,000 towards the wife’s costs. The sum was intended to mark the consequences of unreasonable litigation without operating as punishment or undermining the substantive award. It was to be netted off the amount payable by the wife to the husband under the substantive order.