Evidence, Practice and Procedure: Disproportionate costs and Children Act 1989 Sch 1 orders
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Mar 21, 2013, 10:52 AM
Article ID :101931
Two Family Division judges have recently berated two couples for their disproportionate expenditure on funding their litigation. Both were financial remedy proceedings; though the issues involved in each were very different. Instinctively most family lawyers would agree with the judges on what was said of costs; though with the caveat, for most, that if the client instructs a lawyer to act in a particular way and provided that it is not unlawful then the lawyer must so act.
In Evans v Evans  EWHC 506 (Fam), Moylan J dealt with proceedings involving relatively large amounts and few matters of legal principle fell to be decided. The parties were involved in proceedings to persuade the judge as to how to divide up the matrimonial assets. The case cost them both £2.7M, that is 5-6% of their joint assets (this figure includes an earlier aborted trial before Mostyn J). On costs the judge made no order and said (para ): '[Both parties] pursued and contested issues which should not have been pursued or contested and both made open offers to settle which are significantly different from the terms of my judgment... I do not agree with [the wife's counsel] that neither party can say that the other is to blame. In my judgment, they are both to blame and there is no sufficient discriminating feature to justify one paying the other's costs.'
KD v ND (Schedule 1: Appeal: Costs)  , Mostyn J was a Children Act 1989 Sch appeal concerning whether a mother should have more that the district judge had awarded below for periodical payments and towards a child's school fees, and whether she should have her costs below. The answer was no to all three issues; and she was orders to pay costs of the appeal assessed by the judge at £13,000 payable as to £500 per month by deduction from THE periodical payments. Mostyn J treated the no-order-for-costs order below as that the mother was acting in a representative capacity for the child, and that the court should operate a 'clean sheet' approach (para ); though Children Act 1989 Sch 1 proceedings are not covered by the no order for costs rule in FPR 2010 r 28.3(5)). On appeal, said Mostyn J, different expectations apply. Costs do not follow the event in family proceedings (Civil Procedure Rules 1998 r 44.2(3) is disapplied for family proceedings: the costs follow the event principle does not apply). However, as the Court of Appeal said in Gojkovic v Gojkovic (No 2)  Fam 40,  2 FLR 233, the judge has to start somewhere. All other things being equal a starting point could be costs following the event. Mostyn J favoured that approach in KD. And, as he pointed out, that is the position with most civil appeals.
A lot of time, and therefore of costs, was spent on analysing the parties' respective expenditure. Not much can be said to praise the child support scheme; but one thing it does is to recognise that expenditure is linked to the payer's income. Payments are automatically linked to that as an index. That obviates any challenges to detail of expenditure or how money is spent. If a straight percentage of income - whether gross or net (according to whether the basis of the old or the new schemes are preferred) - is chosen, then at least it provides a starting point. Subject to a couple of cross-checks it may be the end point as well.
The judgement cannot tell the reader of the report how the case was prepared and how it was case-managed. Firm ('robust' is the modern preferred epithet) case management might have weeded out a good few of the expenditure arguments: perhaps one or two others as well; and that might have reduced some of the disproportionate costs by an appreciable margin. Inflated costs are not all the fault of the parties. With judicial rumblings like those in Evans and KD it may not be long before costs case management is introduced into family proceedings - at least for financial remedy proceedings.