The New Costs Rules: Transitional Provisions

By David Hodson

On 3 April 2006, new rules will bring about probably the most dramatic change in costs in family law finance proceedings that many family lawyers have witnessed in a lifetime of practice. The rules are simple, self-explanatory and, for the most part, clear to understand. However, for solicitors, legal advisers, advocates and judges, it is likely to make a big difference in the way they approach cases, the tactics they use and the key element that costs has in a case, both as to the client's payment of their costs and the client's recovery of costs against the other party. For clients, it may reduce the puzzlement and the bewilderment of the present costs law, but it may also lead to an unwelcome shift in the balance of power between the parties as cases head towards a final hearing.

The Family Proceedings (Amendment) Rules 2006 (SI 2006/352) create a new rule 2.71 FPR 1991. There is an accompanying President's Direction Ancillary Relief: Costs dated 20 February 2006.The new features are as follows:

• applicable only to ancillary relief proceedings, not Trusts of Land and Appointment of Trustees Act 1996 cases, Sch 1 Children Act cases or Part III Matrimonial and Family Proceedings Act 1984;
• Calderbanks abolished; starting point of no order for costs;
• court may make costs orders because of the conduct of a party in relation to the proceedings;
• factors in making costs orders include failure to comply with orders and rules, open offers, relevant conduct, manner of dealing with a case and whether reasonable to raise or contest an allegation;
• open offers will become the norm;
• new Form H at all hearings and new Form H1 at the final hearing to allow court to take costs liabilities into account;
• applicable only to new applications issued on and after 3 April 2006;
• no power for interim lump sums for costs introduced at the same time.

The new costs rules apply to all cases where:

(1) there is a petition or an answer with prayers for ancillary relief and issued on or after 3 April 2006 and there are no pre 3 April petitions or an answer with prayers;

(2) a Form A issued on or after 3 April 2006 by a petitioner when there was a pre 3 April petition without any prayers for ancillary relief;

(3) a Form A issued on or after 3 April 2006 by a respondent when there had been no pre 3 April answer or a pre 3 April answer with no prayers for ancillary relief; and

(4) the application in circumstances set out in rule 2.7 10 1(3) above made on or after 3 April 2006.

Note that where Form A is issued on or after 3 April 2006 based on a petition or answer issued before 3 April 2006 containing full prayers for ancillary relief the old rules still apply. The previous draft rules referred only to Forms A issued after a certain date. It seems therefore that a Form A post 3 April 2006 based on a pre 3 April 2006 petition or answer with prayers will not qualify under the new rules but a Form A post 3 April 2006 by a respondent without an answer (or with an answer without ancillary relief prayers) will.

More details in 'Farewell Calderbanks Hello Open Offers; the New Costs Rules' by David Hodson in April [2006] Fam Law 276.

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See also SI 2006/352 and the President's Direction below.