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Running up costs… and paying them

A couple of judgments popped up on Tuesday of this week that had quite a bit to say on the thorny subject of costs in court proceedings.

The first case was yet another example in the long line of cases in which the judge railed against the extravagant way in which both parties had run up costs which were out of all proportion to the issues involved. J v J involved a financial remedies claim following divorce, heard by Mr Justice Mostyn in the High Court.

At the outset of the proceedings Mr and Mrs J had assets totalling some £2,885,000. However, during the course of those proceedings they managed to run up legal costs and expert fees totalling £920,000. The result of this, said Mr Justice Mostyn, “has been to make a case that was surely so easily settleable almost impossible to compromise, and to impose on the High Court a seven day trial where the principal focus has been a bitter war of recrimination and denunciation about who was more at fault for this appalling state of affairs.”

By the close of his judgment Mr Justice Mostyn had awarded the wife a total of £1,123,500 and the husband received £841,500. This meant that out of the total assets the wife received 38.9 per cent, the lawyers and experts received 31.9 per cent and the husband received just 29.2 per cent. Mr Justice Mostyn concluded: “These figures speak for themselves. Such a result should not be allowed to happen again.”

The second case involved quite different proceedings. SB v MB concerned a Hague Convention application in which Mr Justice Hayden had to decide whether the child was habitually resident in the UK, as the mother contended, or in Israel, as contended by the father. He found in favour of the mother, who then sought an order that the father pay her costs.

The usual costs order in child abduction cases is no order as to costs, in other words each party will pay their own legal costs. However, the court can unusually make an order that one party pay all or part of the other party’s costs where that party’s conduct has been unreasonable, or where there is a disparity of means between the parties.

Mr Justice Hayden described the case “as having been ‘litigated to saturation point’”, both in this country and in Israel, where the case had been pursued with what he called “the father’s hallmark vigour”. The litigation in Israel was not, however, directly relevant to the issue of the father’s conduct.  What Mr Justice Hayden did find illuminating, though, was the father’s reaction to the mother withdrawing the child from the school she attended in Israel. He described the mother’s actions as a ‘war’ against him and declined to claw back from that sentiment when given the opportunity to do so in cross examination. Mr Justice Hayden found that this view characterised the father’s entire approach to the litigation.

As part of the father’s ‘war’ he had deliberately sought to obscure the facts as to his daughter’s habitual residence in Israel, making out that she was settled there when he knew full well how unhappy she was living there. In the circumstances, Mr Justice Hayden concluded that the father should be responsible for half of the mother’s costs.

These two cases contain a clear lesson for litigants, or would-be litigants: the way that you conduct your case can have serious costs implications, both in respect of your own costs and your liability to pay the other party’s costs. That lesson should be borne in mind throughout the conduct of all court proceedings.

John Bolch often wonders how he ever became a family lawyer. He no longer practises, but has instead earned a reputation as one of the UK's best-known family law bloggers.

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  1. Nordic says:

    John. The lesson that could and should be drawn from the first case is that the system for financial relief is designed to encourage, rather than prevent, such disasters. In doing so it completely fails to protect the parties and their children. In my anecdotal experience the squandering of 20-30% of couples hard-earned wealth on legal fees is not unusual at all, often in cases with much less money and hence ability to recover. The current system essentially makes lawyers a third party to the asset division, as J v J demonstrates.
    As usual, your conclusions blame the litigants. However, if you read J v J, Justice Mostyn actually spends much of his judgement bemoaning the complete absence of controls on, and governance of, legal costs. In his view it is time policy makers, be they legislators or judges, stop talking about how “something must be done” and finally resolve to actually do something. One can but agree.
    Justice Monstyn considers a number of potential remedies aimed at curbing lawyers scope for financial exploitation. While well intentioned, these remedies are neither practical nor effective. What is needed is recognition that unlimited judicial discretion in financial relief cases is unnecessary and very harmful. It creates unlimited uncertainty across all divorces which in turn stimulates fighting and enables litigation. The judges are tinkering with the asset allocation percentages to fine-tune justice while Rome burns and the family implodes in conflict and acrimony. This is not justice. This is not how you look after the wellbeing of families and their children. This is how you turn family law into a money machine.
    What is needed is a legally binding regime for matrimonial assets which remove the courts completely from asset division. Couples should know what they commit to when marrying and know it will be upheld on divorce. Such regimes creates certainty across all divorces, frees up loads of court time, preserves families wealth and removes a massive source of parental conflict. Their design and positive impact can be studied in many of our neighbouring North-western jurisdictions.
    What is missing in English family law is law itself.

  2. Luke says:

    Nordic makes some very powerful points above and basically takes John Bolch’s article apart.
    The most striking and jarring part of his article is that John puts far too much blame on the litigants and far too little blame on the conduct of members of his own profession in happily racking up their costs – this seems to be a long running theme in John’s articles…

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