Mr Nicholas Allen KC. Application for costs following a final hearing.

Facts

On 14 February 2025, Nicholas Allen KC handed down judgment in relation to the final hearing, which is published as DF v YB [2025] EWFC 46 (B). Significant costs were incurred in these proceedings, totalling £944,900. W’s costs were materially higher than those of H. It was common ground that the parties’ paid and unpaid costs should be top-sliced from the schedule of assets, meaning that should the net assets be divided equally, H would pay one half of the difference between his own and W’s costs. However, W made an application for the entirety of her costs from after the private FDR to date, calculated as £306,600.

H was in person for two periods and W claimed that during this time he acted ‘in a belligerent and obstructive manner’. W sought for these costs to be notionally deducted from W’s total as the inclusion made her costs appear unfairly higher.

W also asked the court to consider whether H had failed without good reason to engage in NCDR. A number of examples were given including H leaving the pFDR immediately after the indication and without any negotiation, and H failing to give a substantive response to W’s offer of arbitration when the final hearing was delayed. H argued that the court was not entitled to know what happened at the pFDR and no litigant is required to commit to arbitration.

Legal principles

Under FPR 28.1, the court may make such order as to costs as it thinks just. The general rule is that the court will not make an order requiring one party to pay the costs of another party, but the court may make an order for one party to pay the other party’s costs where it considers it appropriate to do so because of the party’s conduct. In deciding whether to make an order, the court will consider:

• failure to comply with the FPR;
• failure without good reason to attend a MIAM or NCDR;
• any open offer to settle;
• whether it is reasonable for a party to raise, pursue or contest a particular allegation or issue;
• the manner in which a party has pursued or responded to the application or a particular allegation or issue;
• any other aspect of a party’s conduct considered relevant;
• the financial effect on the parties of any costs order.

These rules are supplemented by Practice Direction 28A which states that the court has the power to make a costs order in financial remedy proceedings when this is justified by the litigation conduct of one of the parties. In considering this, the court will have regard to the obligation of the parties to help the court to further the overriding objective and will take into account the nature, importance and complexity of the issues.

Unpaid costs are treated as a liability of the paying party. However, where disproportionate costs are incurred, the simple inclusion of costs in the court’s assets schedule is likely to be unfair to the moderate spender as the distribution exercise can amount to something very similar to an inter partes costs order (Editorial Notes in the Family Court Practice 2024 to r 28.3).

Judgment

The lump sum ordered was a sum between the parties’ respective open proposals. In relation to the four points the court was asked to adjudicate on, each party ‘won’ two. Although W’s open offer sought a lower lump sum than the final determination, she had made other demands alongside this including, for example, child maintenance of £20,000 per annum per child until the end of secondary education. The judge stated that if both parties’ costs had been broadly equal then he might have ordered H to pay a contrition, although significantly less than the sums sought. However, H had already contributed c.£150,000 to W’s costs. The judge did not make a further order for costs.

An unreasonable failure to attend NCDR is now on the same footing in the rules as other litigation misconduct in light of the fact that the FPR was amended in April 2024 to state, ‘any failure without good reason, to attend … NCDR’. The family court, unlike the civil courts, does not have the power under the FPR to order parties to attend NCDR – at the moment.

The judge found no failure by a party without good reason to attend NCDR in this case. Nicholas Allen KC did however make clear that he disagreed with submissions made on behalf of H that a judge was not entitled to enquire into what happened at the pFDR. Per the Financial Remedied Conduct Primary Principles Document, dated 11 January 2022:

‘Where a private FDR has taken place, the next FRC Judge dealing with the case will ordinarily wish to be satisfied that a thorough FDR exercise has taken place and parties should provide a written explanation to that judge of what has happened so the FRC Judge can be so satisfied. Absent specific enquiry by the FRC Judge, this explanation should not include reference to any without prejudice positions, but should describe the date of the private FDR, the tribunal, the time spent and an assurance that offers were made on each side and an indication given.’

Therefore, the court is entitled to enquire into what happened at the pFDR so as to be satisfied that a thorough FDR exercise has taken place. This expressly includes the time spent, that an indication was given, and an assurance that offers were made on each side.

Nicholas Allen KC expressed that he has no doubt that in due course there will be a family case in which a failure by a party without good reason to attend (or engage in) NCDR will be considered to be litigation conduct and justify a costs order whether the applicable rules are the FPR or the CPR. He noted that even prior to the rule changes, a failure to mediate was penalised in costs (H v W (Cap on Wife’s Share of Bonus Payments) (No. 2) [2015] 2 FLR 161).