The rise of cost sanctions in family law proceedings (even against successful parties!)

Last year's decision of Mr Justice Mostyn in LM v DM [2021] EWFC 28 on 11 March 2021 involved applications made by a wife for various interim orders (interim maintenance for herself and the children and an order that her husband fund her legal costs).

Although the applicant was granted the orders she sought (the outcome being described by the judge as “clearly a win” for her), she was criticised for making no serious attempt to negotiate openly and reasonably. Mr Justice Mostyn said his impression was that she was “determined to fight the application come what may”.

As a result, the costs award that he made in her favour was reduced by 50%. This meant that instead of recouping from the husband around 60% of her legal costs relating to the application (which is roughly the amount that she might have expected to recover on a standard basis), she is now likely to receive much less than this - around 30% of her legal costs. This is despite the fact that she succeeded almost entirely in her application.

This reflects the increasing willingness of judges in the family court to criticise parties and even impose cost sanctions where they fail to negotiate reasonably and on an open basis. No doubt this has been driven by the relatively recent amendments to paragraph 4.4 of FPR Practice Direction 28A, which contains a strong steer towards costs orders in certain circumstances. A few other examples are set out below:

• In MB v EB [2019] EWHC 3676 Fam, Mr Justice Cobb criticised the husband for the conduct of his case and described his legal costs of £650,000 as wholly disproportionate. Whist he acknowledged that the wife’s proposals were insufficient, he stressed that if the husband had made a sensible counter-proposal (or in fact any counter-proposal at all) then the matter would have been capable of a swift resolution.
• In OG v AG [2020] EWFC 52, Mr Justice Mostyn made the following statement: “It is important that I enunciate this principle loud and clear; if, once the financial landscape is clear, you do not openly negotiate reasonably, then you will likely suffer a penalty in costs. This applies whether the case is big or small, or whether it is being decided by reference to needs or sharing”.
• In JB v DB [2020] EWHC 2301 (Fam) (a case in which this firm acted for the successful applicant wife), Mr Justice Mostyn stressed the obligation on parties to engage properly in negotiations and said that “in circumstances where the husband has woefully refused to do so he must face a sanction of costs”. The husband was ordered to pay £15,000 towards the wife’s costs.

The case of LM v DM is a cautionary tale for litigants and reflects a growing trend. Even if a party is justified in pursuing their case at Court and ‘wins’ on the substantive points, there is still a risk of a costs sanction if there is no meaningful attempt to try to reach a negotiated settlement outside of Court. In the words of Mr Justice Mostyn, “litigants must learn that they will suffer a cost penalty if they do not negotiate openly and reasonably.”