Consultation in relation to the treatment of Calderbank offers when determining issues relating to costs

Closes 31 Oct 2019

Current FPR provision in relation to costs in financial remedy proceedings

The current costs regime applicable in financial remedy proceedings is primarily set out in Part 28 FPR 2010, in particular r.28.3(5) (the general rule), r.28.3(6) (costs orders having regard to conduct), r.28.3(7) (matters to be taken into account), r.28.3(8) (inadmissibility of offers that are not open offers except at the FDR), subject to the guidance set out in Practice Direction 28A (PD 28A) supplementing the FPR 2010 (in particular paragraphs 4.3 and 4.4).

So far as it relevant to the issues raised in this consultation, the current costs regime in relation to financial remedy proceedings provides, in summary, as follows:

a. at every hearing, each party must produce a ‘full and accurate’ estimate of the total costs incurred up to the date of that hearing to include details of any sums already paid (FPR 2010 r.9.27(1) and PD9A paragraphs 3.1 and 3.2); in addition, not less than 14 days before the final hearing, unless the court otherwise directs, each party must file and serve on the other party a statement giving full particulars of all costs incurred and expected to be incurred (FPR 2010 r.9.27(2));

b. the applicant must file with the court and serve on the respondent, not less than 14 days before the final hearing, unless the court otherwise directs, a statement setting out concise details including the amounts of the orders sought (i.e. an open offer) (FPR 2010 r.9.28(1)), to which the respondent must then reply not more than 7 days later (FPR 2010 r.9.28(2));

c. the general rule in financial remedy proceeding is that ‘the court will not make an order requiring one party to pay the costs of another party’ (FPR 2010 r.28.3(5));

d. however, the court may make an order requiring one party to pay the costs of another party at any stage in the proceedings when it is ‘appropriate’ to do so having regard to the ‘conduct of the party in relation to the proceedings’ (FPR 2010 r.28.3(6));

e. the list of factors set out in the FPR 2010 to which the court is required to have regard when considering whether to make an order requiring one party to pay the costs of another party in light of a party’s conduct is: (a) any failure to comply with the rules, any order or a practice direction, (b) any open offer to settle, (c) whether it was reasonable for a party to raise, pursue or contest any issue, (d) the manner in which a party has pursued or responded to the application or a particular allegation or issue (e) any other relevant aspect of a party’s conduct in relation to the proceedings which the court considers relevant; and (f) the financial effect on the parties of any costs order (FPR 2010 r.28.3(7));

f. in considering ‘conduct’ the court must also have regard to (a) the obligation on both parties to assist the court to further the overriding objective, (b) the nature, importance and complexity of the issues (which may be of particular importance in variation/interim variation applications, in which costs may be disproportionate to the matters in issue) (PD28A, paragraph 4.4). A refusal openly to negotiate reasonably and responsibly will amount to conduct in respect of which the court will consider making an order for costs (PD28A paragraph 4.4, as amended with effect from 27 May 2019: see below);

g. no offer to settle which is not an open offer (i.e. no offer which is made wholly or partly ‘without prejudice’ or ‘without prejudice save as to costs’ i.e. a Calderbank offer) is admissible at any stage of the proceedings (except at an FDR) and so cannot be taken into account when considering whether to make an order requiring one party to pay the costs of another party (FPR 2010 r.28.3(8)).