The costs risk conundrum: how a change in the law has congested courts

Divorce|January 23rd 2012

I read with great interest a post by my colleague, John Bolch of Family Lore, and its reference to the phrase “blood on the court carpet”. It was drawn from a comment originally made by District Judge Nicholas Crichton, who sits in Inner London and whose concern about the growing numbers of litigants in person and their attitude to litigation is reported in the Law Society Gazette. The Judge describes the current situation as “horrendous” and goes on to say:

“We are getting more and more people coming to court in private law cases without the benefit of sensible, structured legal advice, wanting to spill blood on the court carpet. Angry with each other, they shout across the court, they refuse to listen when you try to calm them down and it is very difficult to find a solution that they will go away and work with.

“The government wants people to stay out of court but it is very difficult to get people to mediate when they are still very angry and haven’t had the benefit of decent legal advice. These cases take an inordinate amount of time, which is having a knock-on effect on public law cases getting before a judge”.

For an experienced and well-respected senior judge to make those comments publicly, in a professional journal, the situation must have reached crisis point and children caught up in public law cases are suffering the backlash.

As practitioners, we all know that representing a client against a Litigant in Person (LiP) is very difficult. The judge has to be seen to be neutral but always needs to keep addressing the general ignorance of law and practice, language and conduct of the LiP – who is not bound as legal representatives are by the professional conduct rules. No wonder these cases are blocking all the court lists. It has a knock-on effect too because clients who do pay for legal representation perceive themselves to be at a manifest disadvantage, constantly noting the courtesies that judges extend to self-representing parties.

Cases that might normally take fifteen minutes can turn into hours. Plus the number of these cases is growing, which is frustrating the judges. When unrepresented litigants finally get to trial, the judge is then left with possibly the worst job of all, dealing with running the entire case.

So why are there such a growing number of unrepresented litigants? You might assume that given the economic gloom, people assume that they can’t afford a lawyer – a situation that isn’t helped by diminishing eligibility criteria for legal aid. But I have another explanation. I wonder whether inadvertently, the judiciary in supporting changes to the costs rules, might not be responsible for their own misfortune.

The ‘No Order’ principle.

The removal of the costs risk from private family law cases, has also removed lawyers from many cases. Some may say it’s a good thing. Although I suspect most judges and all LiPS forced into litigation who would instruct a lawyer if there was any prospect of recovering their expenditure, would not share that sentiment.

In children cases, the ‘No Order’ principle is routinely applied. Each side pays their own costs except in the most exceptional of circumstances. But why? I understand that people should have unhindered access to the courts when it comes to their children and I also accept that in most cases, one parent is usually as concerned as the other; but costs risks can be a powerful deterrent against frivolous actions by both parties.

If at risk of a substantial costs bill from both sides, parents may conduct themselves better and settle faster. Conversely, given the lack of a costs risk, more applications are being made to clog the courts and fewer litigants in children cases are minded to instruct solicitors; they argue there is no point if they can’t recover costs and if the judges are so obviously patient in assisting LiPs.

In 2006 the costs rules relating to finances were also changed with judicial support and encouragement. The “No Order” principle was introduced. The court still retained discretion to make costs orders in certain circumstances, but in general it was intended there would be no order for costs – each party would pay their own costs.

Some had argued for such a change in the interests of fairness and simplicity, the costs of both parties should thereafter come off the top slice of the family’s assets and the rest could be divided between them. Others supporting change argued that the system encouraged secret offers that the judge did not hear about until after the hearing and therefore caused unfairness to the parties, particularly to husbands. A senior costs judge also expressed his concerns that: “The successful spouse on one side vows to bleed the other dry of any penny if at all possible, while the paying spouse goes out of his way to deny the other the possibility of any recovery”. Solicitors apparently had “a vested interest in maximising the costs recoverable from a paying party”.

However, from my perspective, offers of settlement before trial undoubtedly had teeth. Both the settlement and the costs of the action depended on the outcome. All offers post the trial would be carefully scrutinised by the trial judge. If the “winner” beat their own offer of settlement, they could expect their costs to be paid on an indemnity basis and recover virtually every penny they had spent. If the winner beat the offer made by the losing party, around two thirds of the costs would be repaid. So the risk in costs for the losing party was very real on both sides. It concentrated the minds of both parties, neither of whom could be oblivious to the serious risk they were running.

Unfair to the weaker party

The changes, although well intentioned have probably caused as many problems as they sought to resolve including an increase in the numbers of litigants in person. I have written before about the unfairness of the new costs rules: the weaker party is indisputably affected by the about-turn. A wealthier spouse can keep litigating, safe in the knowledge they may do better at trial and the only risk is his lawyer’s increased bill. He or she has no risk of paying two sets of legal fees which could affect their decision. If the spouse is well off, he or she may gamble it’s worth it. And for those who can afford to string out their case in a bid to outgun the financially weaker spouse and force them to settle, it certainly is.

The position is discussed in this month’s copy of ‘Family Law’ in relation to the provision of interim funding, through interim costs orders, by the wealthier party to the other, a practice which has arisen since the case of AvA (Maintenance Pending Suit: Provision for Legal Fees) (2001 ) 1 FLR 377. The unsatisfactory position which has resulted has added still further to the problem, not least since interim orders usually stop after the FDR and before trial. This has occurred since the case of Currey v Currey (No 2) (2006) EWCA Civ 1338. Furthermore, the FDR Judge may not extend the order to trial, which is the role of a Judge not connected with the FDR. More time, more costs, more pressure.

The weaker spouse is now in the invidious position of being forced to litigate at greater cost, which they won’t recover, if they refuse a low and clearly inadequate offer. Although the court could make an order for costs at trial in those circumstances, it often does not. In those circumstances, the weaker spouse may feel they have no choice but to settle. If they continue with litigation, they will still have to pay increased costs that will be taken from whatever they receive. Like an increasing number of people, including many readers of this blog, they decide to go it alone and see how they fare in court.

The  “No Order” principle for financial cases became enshrined in Part 28 of the  Family Procedure Rules 2010.  The wider powers to make costs orders if the court is inclined are at Rule 28.3.7, as mentioned in my earlier blog post on the subject. Post 2006 there were expectations that costs orders would be made in appropriate cases, the courts are generally not doing so. Constrained by the “No Order” principle, my experience is that costs orders are rarely made in the average case. This encourages more litigants in person who understandably see little reason to pay lawyers if there is no prospect of a costs recovery. And this is, I suspect, the real reason for the “horrendous” situation of which District Judge Crichton complains.

But all may not yet be lost. There is hope on the horizon in the form of Family Arbitration for financial claims in family law which begins on 22nd February 2012. Cases may be resolved out of court and will be legally binding on the parties. Yet arbitrators need not be constrained by the same lengthy procedural process as judges. The cases they deal with are expected to be dealt with more quickly and in many cases more cheaply. How the costs are to be dealt with too, is up to the couple involved.

Author: Marilyn Stowe

The founder of Stowe Family Law, Marilyn Stowe is one of Britain’s best known divorce lawyers. She retired from Stowe Family Law in 2017.

Comments(14)

  1. JamesB says:

    What a load of rubbish. The problem is obvious, the lack of a definition with regards to what is a family.

    Without any set in stone definition or definitions, the rest is nonsense. A lip will resent any Judge telling him how he should bring up his or her family.

    The courts have no legitimacy to interfere. The problem is by taking out blame from the process, and implementing child support you don’t know what you are doing; thus many go to the Rabbi or Immam instead and the rest call you and the Judiciary idiots in court, which is what you are.

  2. JamesB says:

    Cafcass and courts have no respect for fathers also, and lets be blunt that is what the judge is moaning about, fathers shouting at him for shouting at them.

    Editors note.
    The rest of this comment has been removed as it is abusive.

  3. Kathryn Evans says:

    Marilyn – I have seen numerous clients (mainly wives) feeling under serious pressure to accept what practitioners and the Courts would consider to be an entirely unacceptable settlement offer simply due to the fear factor of knowing the other party has a significant pot of money with which to fund legal fees but where my client is left to beg, steal and borrow to fund her own litigation. Not to mention those parties who use litigation as a further weapon, against an already downtrodden spouse, with complete disregard for the costs implications for themselves and/or their spouse . It takes a significant amount of client confidence-boosting and careful bill-management on my part to keep the client on track. I can’t help but feel that costs order, used in the appropriate circumstances, would help in such situations.

    Kathryn Evans
    Solicitor
    Tees Solicitors

  4. Marilyn Stowe says:

    Thanks Kathryn
    I’m interested to note that’s your experience.
    Costs orders do have their place in civil litigation, and we are constantly being reminded the Family Division is not a law unto itself.
    Marilyn

  5. Kate Gomery says:

    A very interesting piece Marilyn and obviously a big talking point amongst family solicitors who are instructed regularly in finances cases. I wasn’t qualified before the No Costs principle was instroduced, but I can think of several cases I am involved in where a LiP other side (husbands, all of them) are being particularly obstructive / uncooperative with no real incentive to do otherwise. In recent experience the Courts have refused to make costs orders (even in cases which have been severely hampered by LiP non-disclosure) and I can’t help but agree with you that a more broader application of Costs orders would ensure a far more concentrated approach by the parties to acheive a fair, sensible and quicker resolution.
    Kate

  6. Marilyn Stowe says:

    Kate
    Thanks very much for your observation. I’m pleased you agree!
    Best wishes
    Marilyn

  7. Nicole says:

    Agreed. I represented a wife last year and by the end of the hearing, suggested that she also represent herself (as was her husband) so that they could be on a level with one another.

    The District Judge was an absolute joke, continually insisting it was my duty to keep the husband informed (I had already gone out of my way and not charged for this work, why should my client pay) and allowing absuive behaviour from him.

    Despite 3 letters from myself to H about the importance of filing form e etc, nothing was done, the hearing was a waste of time and had to be re-listed. Yet still the Judge refused to give my client a costs order.

  8. Marilyn Stowe says:

    Nicole – Thank you.

    How times have changed. How many practitioners have experienced what you describe? Many if not most of those who practice at mid levels, I would suggest. 

    I have a theory that by the mid part of the Noughties, the impression generally was that London was the capital of the divorce world for wealthy women, it was felt they were getting too much in settlements and their costs paid to keep on going, it was all unfair to the wealthier paying party and probably it was!

    We have since seen the increased development of the law in White v White, by actively ring-fencing pre-marital and inherited assets.

    We have also seen changes in the general rule that ‘costs follow the event’ to the ‘no order’ principle. Then as a result, there arose the issue of funding the less wealthy spouses costs in the meantime. There is still no interim lump sum available.

    We also saw the development of costs law in financial disputes that post Currey v Currey (cited in the main post above) does limit the poorer spouse in terms of obtaining payment of her ongoing costs and given the overall ‘no order’ principle, can put her under unfair pressure to settle. 

    The major problem arising from it all therefore isn’t so much the big money cases that probably started all the concerns, as all the mid range cases where the knock on effect is being very harshly felt. 

    Thus a woman who is going to be very wealthy will still obtain funding. Banks are still more than happy to lend provided there is a decent asset base. A woman who is going to be modestly catered for will not so easily obtain funding if at all and may have no choice but to decide she can’t afford to continue. These numbers are growing and how many miscarriages of justice are occurring as a result we can only guess. I suspect there will be large numbers from amongst LIPs.

    Add to it an LIP on the other side too, a weak Deputy or District Judge who won’t even make costs orders he could or should make in the interim (whether out of misplaced sympathy or concern for being appealed it doesn’t matter) thus allowing the LIP to perpetuate his misconduct, regardless of whether the opponent is represented, and it is all a recipe for disaster, as we are all of us, seeing time and again in the courts.

    Marilyn

  9. DT says:

    I think the increase of LiPs will lead to a rise in people using the Human Rights Act 1998, namely:

    • Article VI – Right to a fair trial
    • Article VIII – Right to a family life

    Whether so and whether successful or not, shall remain to be seen; however, I think that LiPs may well think that they haven’t received a fair hearing and as such, family life is being denied.

    It’s inevitable that in some cases, there will be so much that many will not understand and may well think that their case hasn’t been treated equitably.

    If this does happen, this will have a devastating affect upon the court system, the public purse and families.

  10. Rachel says:

    My husband has stated his intention to appeal the order made by a district judge at the final hearing in divorce proceedings. He has stopped making maintenance payments and has allowed the 50/50 distribution of the liquid capital part of the order to take place then decided to appeal the pension sharing and maintenance parts of the order. I have raised a mortgage to release him from the matrimonial home but he will not sign the transfer of title document in compliance with the order.
    My problem is that I have used my 50% share of the capital to reduce the mortgage on my home and I have no money left to defend the appeal. I have no choice but to enter into further proceedings as a litigant in person. Is it possible to do nothing and hope that his appeal does not succeed? In the meantime, I have made an application to the court to enforce the maintenance. I have lost the will to keep fighting my corner. Two district judges have stated that I am entitled to 45% of the pension but he cannot accept it. He is earning ten times more than me and can afford to ‘keep fighting’.

  11. Dadzarmy says:

    Less Family Law that is transparent, easy to follow and relate ot is what we need. We need to build funding around less court time and more care and family management so that we do not waste the few resources we have in the adverserial court environment. It is on this basis I disagree entirely with the Judge, the law is at its worst when it gets into the nitty gritty of family life which is becoming more and more complex. Instead I would encourage easy to follow, onlin even pre-action protocols that would encourage the participant to engage more before the proceedings and also to ensure that the courts control the use of court time better before applications are made.

  12. Russell Armstrong says:

    HI Marylin

    I have just discovered your web site and find your approach re the vicky Haigue case to be qhite level headed and REAL

    I cannot comment upon marital and financial settlement issues I have no experience with them, but upon contact disputes I have a passing amount of experience both as an LIP and then as a McKenzie.

    its all too easy to “blame” an LIP as having no experience and therefore not doing the correct actions, however, surely that is down to good case management by the judge is it not, giving the LIP the correct directions as to what the court expects of the LIP, the correct protocol if you will.

    Maybe the Judge in that instance needs a handout of basic court protocols as to what the LIP must do/not do

    Any document sent to court must be served upon other party etc a basic ten commandments if you will, then if the LIP doesn’t comply, possible sanctions (costs) may be incurred relative to the “crime” so for each docuent not served maybe the costs of asking for the document to be awarded (over and above what admin would normally be needed to process a properly served document)

    However I speak of a judge who is all knowing and knowledegable of the law and its nuances and maybe that is the problem, not all judges are good same goes for lawyers and for LIP’s and McKenzies

    My own experience was that my lawyer represented me so badly that (of course I made sure I got the evidence first) they not only waived their own fees of some £6000 but also because they failed to return my file to me (they used the lein trick) they got asked by the ombudsman to hand me £200 and the file

    Now you tell me thats a good lawyer!!!

    I would love to enter into a conversation about correct lawyering with you as your point seems to be that LIP’s are bad news for the legal system

    Well may I say that meybe if Lawyers actually represented the solutions that were correctly child focused in the balance of the equation (actual DV issues as opposed to just the false claims that are made to try and abuse the process to further the (usually) mothers aims for wanting to unfairly restrict the fathers contact) then more people woiuld be willing to allow the lawyers to represent them

    I was and came unstuck and it was only my experienced McKenzie and my own knowledge that uncovered the “conspiracy” that lead to my unfair 91/14 being imposed (uncontested by my lawyer!!!!) upon me.

    LJ Wilson called the imposition “indefensible” and could not understand why a circuit judge (QC no less) had made the order.

    Me and lawyers now dont see eye to eye in court, but I am respectful and if they treat my parent fairly then I am perfectly ameaniable to them, but so many of them try and take the preverbial

    Love to go on but thats enough for now, would love to hear your reply about the idea of a do and dont list for an LIP given by the court with sanctions thereafter

    Oh and tehn one for the solicitors who “swing the lead”

  13. Lilleyman v Lilleyman: a question of costs. By Laura Guillon. - Marilyn Stowe Blog says:

    […] here’s a final thought. The ‘no order’ principle in divorce costs has been widely criticised as encouraging litigation by the wealthier […]

  14. Letter from America: a busy week for family law back in Britain - Marilyn Stowe Blog says:

    […] I’ve written before about my objection to the ‘no order’ principle in financial cases on marital breakdown, where there is no doubt at all in my mind that the current costs regime acts against the weaker party. And it is now clear that the current costs regime could even potentially lead to abuse as above in care proceedings, and almost certainly does in private children cases. There are many who strongly argue in favour of the no costs principle enshrined in law as it is, but perhaps it is now time to consider the arguments against. […]

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