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Costs in financial remedy cases: LM v DM (Costs Ruling) [2021] EWFC 28A short but important judgment

Date:30 MAR 2021

A short but important judgment emphasising the costs consequence that a litigant may face if they have failed to negotiate openly and reasonably in the context of financial remedy proceedings was handed down by Mostyn J on 12 March 2021 in the case of LM v DM (Costs Ruling) [2021] EWFC 28.

The wife in this case had been successful in her applications for maintenance pending suit, interim periodical payments for the parties’ children and a legal services payment order. She applied for an order that the husband pay her legal costs of bringing the applications. Mostyn J considered that the ‘no-order-for-costs’ general rule, as per FPR 28.3(5), did not apply to the wife’s interim applications, as they are instead governed by a soft costs-follow-the-event principle and the court may make such an order as it sees just, as per FPR 28.1.

Although the wife did not achieve as much in quantum as she had requested, Mostyn J considered that the outcome of her application was much closer to her position than the husband’s. The wife also succeeded on issues of principle and there were aspects of the husband’s case that were unreasonable. Hence Mostyn J’s starting point of awarding the wife her standard costs of her application.

When involved in financial remedy proceedings, parties are obliged to negotiate openly and reasonably, as per FPR 28.3(4), paragraph 4.4, PD 28A. Mostyn J considered that although paragraph 4.4 of PD 28A did not strictly apply to the wife’s interim applications, the parties in this case were still obliged to negotiate openly and reasonably. He held that the wife had made no serious attempt to negotiate openly and reasonably beyond setting out her in-court forensic position in her witness statements. Mostyn J’s impression of the wife was that she had chosen to litigate the applications, regardless of the potential outcomes. On this basis, the wife was penalised, and Mostyn J reduced by 50% the costs order that he had made in the wife’s favour. 

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This is just one judgment of many judgments handed down by Mostyn J where, despite being successful in their application, a litigant in a financial remedy case has had a costs order made against them for failing to negotiate openly and reasonably. This shows a change in the approach of Family Court judges. It is also a reminder to those involved in financial remedy cases that litigation must be viewed as the last option, that there are many other out of court alternatives that can be pursued, and that open and fair negotiation will be expected of all litigants.

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