While unusual, it is possible and occasionally necessary for an applicant in financial remedy proceedings to withdraw their application, and all other related applications. The problem that arises commonly in this unusual situation is ‘what happens next?’

It commonly happens in financial remedy proceedings that, as the proceedings evolve, certain arguments can and will be abandoned (on good advice) – the most well-known of these include issues about conduct or alleged non-disclosures without basis.

From the authors’ own experience, there are very few instances where the applicant’s instructions are to withdraw the entirety of the financial remedy application before that application has been finally dealt with. The main reason for that is obvious – even if the applicant were able to obtain an order for withdrawal, nothing would stop the respondent from simply filing a new application to re-start the proceedings. In other words, withdrawals are a poor mechanism to bring proceedings to a premature but definite conclusion. Further to that, the various moving parts and contingent components of financial remedy proceedings means that repeat applications to restart proceedings would simply end up magnifying costs through unnecessary duplicated work.

The only truly obvious scenarios of withdrawal we have seen are where the original application was altogether incorrect: a Sch 1 CA 1989 case which should have been properly pursued under TLATA 1996 or a MCA 1973 case which needed to considered under Part III, MFPA 1984. This is unusual, but not impossible.

Withdrawing proceedings

There is no specific application procedure or applicable legal test for withdrawal applications when it comes to financial remedies proceedings. There is no specific reference to the withdrawal of financial remedies proceedings within the FPR 2010, or indication of how one might go about it. The authors make the ordinary assumption that, as such, the Part 18 procedure would apply notwithstanding that there isn’t anything to comprehensively support that proposition.

There is, however, one notable reference in FPR 2010.

That reference is found under FPR Part 29, which provides the only clue we have about how one would go about an application to withdraw. According to FPR 29.4(2), where the conditions of FPR 29.4(1) apply, an application can only be withdrawn with the permission of the court.

The conditions under FPR 29.4(1) are as follows:

‘a) Under Part 7

b) Under Parts 10–14 or any other Part where the applications relates to the welfare or upbringing of a child or;

c) Where either of the parties is a protected party.’

Assuming for the moment that neither party constitutes as protected within the meaning of FPR 2.3 (a party who lacks the capacity to conduct proceedings within the meaning of the Mental Capacity Act 2005), none of those conditions automatically apply to financial remedies applications, falling as they do under FPR Part 9.

It follows on the basis that they have not been included in the listed proceedings under FPR 29.4(1), that an applicant does not require permission to withdraw financial remedy proceedings. Of course, as indicated above and explored in more detail below, this does not mean that an applicant can simply ‘drop hands’ and walk away without consequence. However, it is peculiar that these consequences only arise via secondary, though often unavoidable, arguments of costs and proportionality.

Notably, there is nothing within the FPR 2010 or elsewhere that suggests the existence of a particular test or otherwise, in relation to applications to withdraw in financial remedies proceedings.

What actually happens, then, if there is no prescribed need for permission to be given? For practical reasons, we suggest that an application should still be made. Such an application would allow the applicant to clearly explain the reason for the withdrawal and address the broader consequences if the financial remedies application were withdrawn. In the most straightforward cases, such an application could be considered on the papers, the court without any substantive argument on the same could simply grant the withdrawal and the matter left therein.

However, what about more complicated cases? Assuming, as we do above, that such an application would be made using the Part 18 procedure, the respondent would be given notice of the application unless the court directed otherwise. What if the respondent, perhaps sensibly, wishes to contest the application for withdrawal?

It must be possible for a court to hear a contested application for withdrawal and for the reasons for such a withdrawal to be scrutinised. If so, does a withdrawal application behave as any other? There may not be an explicit need to grant permission. However, where it is contested, presumably it is for the court to determine the issue. This has an in-principle benefit for both parties. The applicant, if successful, is able to draw a more authoritative line under those proceedings that have been withdrawn. The respondent is given the opportunity to challenge the application if they wish. Both parties are able to seek recorded agreement or judicial indication on the practical next steps after any withdrawal. What, then, is considered by the court during a contested application for withdrawal?

With so little guidance on matters, we assume that determination of withdrawals in the family court is purely another exercise of the court’s discretionary powers, logically examined through the overriding objective as per FPR 1.1. There is no real other guiding light in respect of contested withdrawal applications and how they are to be conducted save that they behave visibly like any other application.

So far, so confusing. Clearly, a party needs to formulate the exact reasons for the withdrawal – whilst there is nothing about a withdrawal application that necessarily links it with the Part 18 procedure, there is no reason why it cannot be followed with some authority. This is often the case with a large majority of interim applications. If the applicant then needs to provide some element of evidence, the respondent ought to have opportunity to respond – but what could the competing cases actually be?

Costs

Withdrawal of specific elements of a financial remedies claim (as opposed to the entire claim) do appear with a little more frequency in authorities. The most notable decision in that vein is Crowther v Crowther and Ors [2020] EWHC 355 (Fam) where Lieven J was dealing with the specific withdrawal of one particular aspect of proceedings, set to be heard as a preliminary issue hearing.

The case had quite the history which may not be as relevant for our purposes – the proceedings would later arrive at a final hearing and be determined as such, so this is not a question of an application to withdraw an entire financial remedies application. However, it is important to note that the wife in that case had raised a series of extremely serious allegations against the husband to which he had been required to respond. The matter was accordingly set down for a contested preliminary issue hearing. A matter of days before that hearing was scheduled to take place, the wife withdrew her allegations.

One key part of this judgment relates to questions about costs. Lieven J set out the reason why costs orders were material when the allegations were being withdrawn:

‘47. On the face of it, this situation is grossly unfair to Mr Crowther. He has faced a barrage of allegations by Mrs Crowther, and hugely complex litigation, for some of which time he has not been represented. He has been put to enormous expense, but also massive personal inconvenience. His reputation must also have been greatly damaged by these allegations, particularly as they have been widely publicised. Mrs Crowther has now decided not to pursue the allegations, thus preventing Mr Crowther of the chance to clear his name.

48. The analysis under the FPR is as follows. Under FPR r.28.1 the Court may make such orders as to costs as it thinks just. FPR r.28.3 does not apply because, as is accepted by Mrs Crowther, the trial of the preliminary issue is not financial remedy proceedings for the purpose of the Rules, and therefore costs would normally follow the event. Under CPR r.38.6, the presumption is that the party who discontinues is liable for costs, but that Rule does not apply because it is not referred to in FPR r.28.2.

49. However, in my view, the principle in CPR r.38.6 is highly relevant to my determination. If a party decides to discontinue an action or part of an action, then they should generally be expected to pay the costs. This is merely a reflection of the obvious position that if one party necessitates the other party to incur costs and then does not pursue the point, they would normally expect to be liable for the wasted costs incurred.

50. This proposition is strongly reinforced in this case by the fact that the allegations which have been withdrawn are those of fraud and conspiracy. It is a basic principle, in any Division, that fraud should not be pleaded without sufficient evidence. As Sales LJ said in Playboy Club v Banca Nazionale Dei Lavori Spa [2018] EWCA Civ 2025, pleading fraud has serious reputational consequences and parties should therefore be reticent before pleading it.

51. This must mean that where a party pleads fraud, and then withdraws that claim, the argument that they should pay the other party's costs must be even stronger than in the withdrawal of other types of claim.’

Lieven J pointed out that costs principles in applications concerning preliminary issues do not apply the ordinary assumption in financial remedy proceedings that there be no order as to costs (see FPR 28.3). Starting from a ‘clean sheet,’ she focused on the fact that the specific allegations pleaded by the wife were of fraud and conspiracy by the husband.

Her Ladyship went on to link matters more specifically (in terms of costs) to the parallel principles under the CPR 1998 in relation to ‘discontinuance’ which she used, partially, as a basis for making costs orders against the wife for deciding to no longer pursue the issue.

Discontinuance is a term used in civil proceedings; it is effectively a parallel reference to the withdrawal of an application. Such claims for discontinuance are governed by CPR 38.6 – these rules have no equivalent or opposite number in FPR 2010 and do not appear (as is confirmed by Lieven J, in Crowther) to have been adopted by any rule or part of FPR 2010.

In the circumstances of the Crowther case though, Lieven J points to the applicable basis for costs and noted under CPR 38.6 that a discontinuance assumes the costs of withdrawal lie with the discontinuer. Notwithstanding its absence from FPR 2010 and family proceedings, Lieven J goes on to describe it as nonetheless being ‘highly relevant’ to her determination. She goes on to describe its applicability in broad terms, in circumstances where ‘a party discontinues and action or a part of an action’.

The insertion of this provision in Lieven J’s determination is particularly odd when one examines matters from a costs perspective. It is correct that no part of CPR 38.6 has been expressly incorporated within FPR 2010. At the same time, while the applicable procedures differ, the standing position that a claimant can discontinue part or all of a claim is enshrined in CPR 38.2(1).

The permission criteria in CPR 38.2 ff do not expressly collide within anything in aforementioned FPR 29.4 and the provisions do not emerge as mutually exclusive.

However, the principal reason why CPR 38.3–38.4 do not seem to match up with FPR 2010 is that there are no equivalent procedures for ‘discontinuance’ in financial remedy proceedings. Unlike civil proceedings, this is not provided for.

And yet, Lieven J followed the logical route that the idea of discontinuance is tantamount to a withdrawal when approaching matters from a costs perspective. This is a peculiar position. In effect, the court didn’t include the provisions of CPR Part 38 in the overall process of withdrawing/discontinuing a claim but then relied upon the same rule when determining the issue of costs.

It is the view of the authors, this was a misfire. Reliance on CPR Part 38 by Lieven J is an odd decision as it is not incorporated into FPR 2010, particularly where other elements of CPR 1998 are expressly applied and given that discontinuance is not a cause of action used in family proceedings. The authors regard it as incorrect for the court in the Crowther case to arbitrarily insert costs principles that form no part of the FPR 2010 into a financial remedies case in this way.

There is another side to the position. We do not suggest at all that the court could not or should not make orders for costs in such circumstances – in our view it is simply the reliance on CPR Part 38 which is an incorrect basis upon which costs for withdrawals or partial withdrawals should be formulated.

What is the impact on withdrawal of the entirety of financial remedy proceedings then?

We opened with a discussion about the costs principles referrable to the entirety of financial remedy proceedings – indeed, withdrawal of a preliminary issue hearing can still attract cost consequences under the existing FPR 2010. But how does this apply when one party is granted an order to withdraw all of the proceedings?

In Crowther the costs principles were implemented on a singular issue. What of an application to withdraw the entirety of the financial remedy proceedings? CPR Part 38 refers to the entitlement to withdraw elements or all of the proceedings – if we used Lieven J’s analysis, then the same principle on costs would apply and costs orders could be made whether for withdrawal of all or some of the proceedings. If that principle is logically extended to the entirety of financial remedy proceedings, it seems even more unlikely that anyone would withdraw proceedings at all if they somehow ran the risk of paying the other side’s entire costs.

However, as an alternative, the court preserves broad discretion as to the making of a costs order. Notwithstanding the general rule in FPR 28.3(5), the court may depart from that rule if it considers it just. In other words, the court has the power make a costs order without recourse to CPR Part 38.

Where the applicant wishes to withdraw their application in its entirety, the court is entitled to consider their conduct in doing so and by reference to the factors listed in FPR 28.3(7). Of these, we consider that FPR 28.3(7)(c) will be prima facie relevant in the majority of those cases; namely, whether it was reasonable to the applicant in this scenario to have raised or pursued their application. Whilst this falls some way short of the proposition in CPR Part 38, expressed by Lieven J above, it still affords the court significant scope to award costs if an applicant wishes to withdraw their application.

It is easy to see how this would apply in the ‘obvious’ scenario noted at the start of this article, where the application for a financial remedy had been brought incorrectly and the court was without jurisdiction. In such circumstances it is unlikely to be reasonable for the application to have been made and costs will surely follow.

However, what if the situation is more complicated and less obvious? For example, consider a scenario in which one party was justified in making their application for a financial remedy but, for one reason or another, they were unable to pursue it any longer. Perhaps they can no longer afford legal advice nor bear the thought of representing themselves; perhaps they wish to bring proceedings to an end, but it is not possible to agree a consent order or achieve a resolution.

In this situation, would FPR 28.3(7)(c) be sufficient? We consider it would be. In this or similar situations, the court may consider whether it was reasonable for the applicant to continue pursuing their application, or to have pursued it to that point. However, as above, this falls a long way short of Lieven J’s much stronger proposition that there should be a general expectation for the party to pay costs.

While there are likely very few instances of entire financial remedies proceedings being withdrawn, we take the view that there needs to be a clear approach on how costs are to be dealt with in cases where the applicant is adamant that they wish to seek withdrawal. This needs to acknowledge the regime in FPR Part 28 and the general rule for financial remedies, but need not shut the door on costs entirely. The situation, at the moment, seems to have a faulty basis if Lieven J’s analysis is to be accepted.