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Calderback to the future?

Date:23 NOV 2015
Edward Floyd, Senior Associate, Penningtons Manches

Practitioners could be forgiven for believing that Calderbank offers (without prejudice offers that are only admissible in arguments as to costs at the conclusion of proceedings) are an extinct species. However, in the debate about legal costs in family cases, there are growing calls from some corners of the profession for Calderbank's reintroduction (either in full or in modified form). In a forthcoming article in the December issue of Family Law, Joanna Edwards and Charlotte Doherty explore in detail whether Calderbank offers should be reintroduced or, if not, what the political alternatives could look like.

Against that backdrop, the decision of Moor J in WD v HD [2015] EWHC 1547 (Fam) has provided a timely reminder and clarification of the circumstances in which Calderbank offers can still be used.

The question Moor J was faced with was whether a Calderbank offer was admissible in determining the costs of an appeal against a financial order. The Family Proceedings Rules (as they were then) were amended in 2006 to introduce the current costs regime for financial applications under which the starting point is that each party should bear their own costs. Alongside that, the Calderbank regime was abolished, as it was argued at the time that the effect of costs orders based on Calderbank offers was to distort carefully crafted financial outcomes and affect the ability of one party to meet needs.

In its current incarnation, Rule 28.3(8) provides in relation to 'financial remedy proceedings', that:

'(8) No offer to settle which is not an open offer to settle is admissible at any stage of the proceedings, except as provided by rule 9.17' [which is not relevant here as it relates to Financial Dispute Resolution Hearings].
Within the same rule, 'financial remedy proceedings' are defined to mean proceedings for a financial order except an order for interim maintenance (including provision for legal costs) or other forms of interim order.

In WD v HD Moor J noted with surprise that the rules and authorities were silent as to whether an appeal against a financial order would be caught within the prescribed period of 'any stage of the proceedings', within which Calderbank offers are prohibited.

Support for considering appeals to be outside the definition of 'any stage of the proceedings' was drawn by making an analogy to the decision in Judge v Judge [2008] EWCA Civ 1458, [2009] 1 FLR 1287, in which the Court of Appeal decided that an application for an order setting aside ancillary relief orders would not in itself constitute 'ancillary relief proceedings' for the purposes of applying the 'no order as to costs' regime. The Court of Appeal considered that the 'no order as to costs' principle was of greater relevance to first instance decisions, where the court would need to factor the parties' respective liabilities for costs into its substantive award. It is suggested that that analogy is supported by the Supreme Court's decision in Sharland v Sharland [2015] UKSC 60, in which Lady Hale observed that applications after the conclusion of proceedings in cases of non-disclosure and fraud can be made by either way of appeal or by application to set aside.

In WD v HD Moor J did not need to decide whether Calderbank offers are admissible in appeals, as he did not find that there was a Calderbank offer from the wife that 'bit' for the purposes of awarding costs. It is therefore interesting that Moor J chose to clarify that Calderbank offers are admissible in determining the costs of appeals. Moor J explained his decision by highlighting the need to 'encourage litigation to settle', and urged parties to 'protect themselves [by making Calderbank proposals] where the costs of the appeal can be totally disproportionate to the amount at stake'.

Of course, the issue of costs becoming disproportionate to the amount at stake is an issue that is becoming all too common in all family financial proceedings, not just to appeals, as has been highlighted by trenchant recent judicial comment. Moor J's apparent support for the advantages of Calerbank, where they are currently permitted, will no doubt feed into the wider debate about whether there should be a reintroduction of Calderbank offers alongside a broader view of the costs regime in family financial proceedings. In the meantime, the decision provides a helpful clarification of where such offers can be deployed within the current rules.

'Calderback to the future?' by Jo Edwards and Charlotte Doherty (Pennington Manches) will publish in the December issue of Family Law.