Poor conduct halves successful party’s costs award

The wife (W) whose conduct led to her husband (H) successfully applying for the consent order in their divorce to be set aside has been ordered to pay only 50% of his costs – albeit on an indemnity basis – because of his own poor conduct.

Mrs Justice Roberts said the pair had spent an “astonishing” £1.3m over the whole of their litigation “after a very short marriage of little more than two years (or no more than months, on H’s case)”.

The costs hearing in AB v CD [2016] EWHC 2482 (Fam) followed the judge’s earlier ruling that W’s failure to disclose the existence of a substantial injection of cash from an external investor into a fledging technology company which she had incorporated prior to their marriage amounted to material non-disclosure. That non-disclosure resulted in the setting aside of the consent order.

Looking at the costs of the set-aside application, Roberts J said H had clearly “primarily succeeded in his primary case in relation to that issue”. She continued: “However, because of the view which I take in relation to both parties’ litigation conduct in these proceedings, I consider that W is entitled to a discount in respect of her liability for those costs.”

The judge said the discount fell to be assessed by reference to three factors: H’s misconduct in approaching the national press about the case during the proceedings; that W succeeded in resisting findings of fraud in relation to several aspects of the case which H was seeking to run against her; and the finding that W made a “realistic and sensible offer” to settle as long ago as February 2014.

Roberts J continued: “To an extent, each is the author of his/her own misfortune. I take on board all that has been said on W’s behalf in relation to the early offers which she made and H’s response to them. That response (including the approach to a member of the national press) has, in my judgment, significantly soured the relationship between them and their ability to co-operate in finding a practical and pragmatic way through this litigation.

“Nevertheless, I cannot ignore the fact that W has failed on the substantial issue of her defence to the set-aside application. That failure has to find reflection in my award of costs which is underpinned to a significant extent by the matters which I have set out at some considerable length in this judgment. My conclusion taking all these factors into account is that W must pay to H 50% of his costs of the set aside application.

“Notwithstanding the financial impact on her of such an award, it properly reflects all the facts and matters which I am obliged to take into account in these very long-running and hard-fought proceedings. Having given her the benefit of a substantial discount for the reasons set out above, I can see no reason why her 50% liability for H’s costs should not be assessed on an indemnity basis. In my judgment, to do otherwise would be to penalise H unfairly and to accord too little weight to the consequences of her own litigation misconduct.”

However, she directed that H should not take any steps to enforce that costs award or progress the detailed assessment until the conclusion of the November rehearing of the financial remedy applications. She also declined to order a payment on account.

This post was posted in ACL e-Bulletin

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Costs News
Published date
14 Oct 2016

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