Conduct and Cost Orders in Family Proceedings
The current court process for families to achieve a financial remedy order (a final order which sets out how the matrimonial assets should be shared during a divorce) follows the principle that there should be no cost orders awarded unless one party to the proceedings has behaved badly within those proceedings. Generally, bad behaviour would need to be such that it has increased the legal costs of the other party unnecessarily. Examples of such behaviour are failing to be truthful, failing to comply with the Court orders ie for filing documents by a specified time, failing to attend hearings and failing to be willing to negotiate.
It is in relation to the latter of these examples that the Ministry of Justice is currently holding a consultation.
Historically, negotiations were undertaken in correspondence and proposals for settlement were marked “Calderbank”. An offer marked as a Calderbank offer carried cost implications. If the party making the Calderbank offer achieved a result equal to or better than the Calderbank offer, then he or she would have their legal costs paid by the other party from the date of the Calderbank offer. The ability to negotiate in this way was removed in 2006. It was the view that parties should be able to negotiate openly without the fear of incurring a costs order (an order made against one party to pay the legal fees of the other) hanging over them. The Ministry of Justice is now considering whether failure to accept a reasonable offer should be considered alongside other conduct when considering applications for a cost order.
When parties find themselves in court proceedings in order to settle their matrimonial finances, it is generally due to the fact that their separation has been acrimonious and they are unable to discuss the issues in a practical and amicable way. Family solicitors will often see parties negotiating on principle rather than focusing on the real issues of how their family can be provided for from their limited matrimonial pot. In these circumstances, proposals for settlement can be unrealistic and not capable of acceptance. It would be in such circumstances that the Court may consider the approach to negotiation as conduct capable of resulting in a cost order.
If the outcome of the current consultation is that such negotiations will be considered conduct, parties will need to be advised very carefully regarding their approach to putting forward proposals and to considering proposals made. If parties are not given careful advice regarding these issues, lawyers may find themselves on the end of an application from disgruntled clients who were unaware of the risks. The consultation ends on 31st October 2019. Here at Askews we shall be awaiting the outcome of the consultation and will update this article confirming the Ministry’s decision.
If you are going through a divorce or considering commencing one and need advice regarding the court process and how that will impact upon your family’s financial arrangements, please contact Karen Reardan our Head of Private Family Law on 02476 231000.
