Ancillary Relief Proceedings

Throughout family proceedings of divorce, the parties to proceedings will be required to divide their finances. These matters may also be referred to as Financial Remedy Proceedings and the division of finances will include consideration of all financial assets, such as property and pensions.

The process for dividing finances is not part of the divorce proceedings and instead runs separately, though they may take place at the same time.

If couples cannot negotiate reasonably and responsibly, thus prohibiting them from agreeing on how to divide the finances, it may be necessary for the Court to direct an Ancillary Relief Costs Order.

General Rules on Costs

In family law, the ‘rule of thumb’ is that each party should bear their own costs. This was not always the acceptation, though subsequent to criticism, the rule was incorporated into the Family Procedure Rules.

Prior to the incorporation, the matter of Calderbank v Calderbank had set the precedent for this area of law. This was the case where the phrase ‘calderbank offers’ was coined. The facts of the matter were that Mrs Calderbank had proposed numerous reasonable offers highlighted as “without prejudice save as to costs” to Mr Calderbank. However, Mr Calderbank rejected these offers. Though when the matter came to trial, Mr Calderbank failed to get a better settlement and a costs order was finalised, with the matter resulting in the costs incurred by Mrs Calderbank being paid by Mr Calderbank.

This approach has since been re-considered and the Family Procedure Rules implemented the default position of ‘no order as to costs’.

As a result of the amendments, it is now unlikely that an order requiring one party to pay the legal costs will be directed by the Court in family proceedings. Nevertheless, there are some exceptions to this rule.

Exceptions to the Rules for Costs in Ancillary Relief Proceedings

Practice Direction 28 examines when there may be an exception to the general rule. Passage 4.3 within this direction states that:

“the court only 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.” 

The passage goes onto explain that when a judge is considering the implementation of a court order,

“the court will be required to take into account the list of factors set out in that rule.” However, they “will not be able to take into account any offers to settle expressed to be ‘without prejudice’ or ‘without prejudice save as to costs’ in deciding what, if any, costs orders to make.” This was a factor considered in the now criticised Calderbank v Calderbank judgment.

In simple terms, the poor conduct of a party during litigation is the only reason that the Court may find sufficient when considering the making of a costs order for Ancillary Relief Proceedings.  The failure of a party to beat an offer is not in itself considered poor conduct, though a failure to engage in ADR may itself be considered poor conduct.  The Court would also be required to examine the “nature, importance and complexity of the issues in the case” in order to further the overriding objective.

What is Considered “Poor Conduct” During Litigation?

When seeking a costs order stating that one party is to pay the costs of another party, a party must establish at least one of the following: that open offers to settle have already been made, whether it was reasonable to raise a particular issue, failure to comply/engage with any Court directions, and the financial effect that a costs order would have.

The Court would also have to see that the opposing party could reasonably afford the legal costs payment stated in an order.

To prove that a party has conducted themselves poorly during litigation, the opposing party would have to prove a failure to adhere to the Family Procedure Rules, failure to adhere to a Court Order or a failure to negotiate reasonably and responsibly.

Costs Procedure in Ancillary Relief Proceedings

Subsequent to July 2020, there have been further procedural requirements for each stage of the proceedings that have been put in place for family law. These new rules were highlighted in the Family Law Procedure (Amendment) Rules 2020.

A summary of costs, in Form H format, must be filed with the Court and served upon all parties at least one day before every hearing. When this hearing is a First Directions Appointment or a Financial Dispute Resolution hearing, this summary of costs should enclose an estimate of costs, going up until the next substantive hearing.

Moreover, detailed costs particulars are now required to be served no less than 14 days before the date of the final hearing.

Each of these costs documents must also include a statement of truth which highlights that these figures have been agreed with the client and provided to the other party.

It is very important for legal practitioners to adhere to these rules and remain updated with new procedure, as a failure to do so may be seen as a serious enough breach to reason an order for costs.

How can ARC Costs Assist?

At ARC Costs, our team of expert Costs Draftsman and Costs Lawyers have been providing consistently excellent results for our clients for years.

Our overriding objective is to seek the best costs outcome for our clients and whether you require production of a costing instrument such as a Bill of Costs, or advice on negotiations, or advocacy in court, we can be of service.

If a party to your proceedings is behaving unreasonably, we can provide advice on the chance of success when seeking a costs order. Alternatively, we can also provide aid if you have had a costs order served upon yourself and as independent costs experts, we can represent either Paying or Receiving Parties.

To find out more about how we can help you with legal costs in Ancillary Relief Proceedings, please contact us at 01204 397302. Our experts are also available via email at info@arccosts.co.uk.

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