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You are here: BAILII >> Databases >> England and Wales High Court (Family Division) Decisions >> H (S) v H [2005] EWHC 247 (Fam) (24 February 2005) URL: https://www.bailii.org/ew/cases/EWHC/Fam/2005/247.html Cite as: [2005] EWHC 247 (Fam) |
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FAMILY DIVISION
Strand, London, WC2A 2LL |
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B e f o r e :
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Christine Joy H (S) |
Applicant |
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- and - |
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Alaric Innes H |
Respondent |
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(instructed by Messrs Hughmans) for the Applicant
Mr Philip Moor QC (instructed by Harcus Sinclair) for the Respondent
Hearing dates: 13th and 17th December 2004
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Crown Copyright ©
The Hon. Mr Justice Sumner :
Introduction
Background
"The history is complicated; the factual disputes are legion."
The judgment on ancillary relief
The sum of £275,000 and the appeals in March and May 2004
The judgment of District Judge Brasse on costs
"Application for costs I must make order which in parts given FPR 2.69 © takes into account all circumstances of case. Wife claims £600,000 on two grounds, first stellar contribution, secondly cheated of a property through Cap Ferrat. Wife never put case .. money introduced at date. I found that was the only contribution. His response not too far short to order in court, alleged misconduct which I find not proven, generated by wife's stance and costs bound to conclude misconceived and I have no choice. It is not just but I make an order for costs against wife either 12th February or 8th November. If wife had taken up the offer, real prospect the offer of the 8th November 2002 could have led to a settlement. From that date.
Deferred payment pursuant to FPR 2.69 ©(e), I agree that could undermine, therefore order costs payable on payment and charge of interest on judgment debt."
Representation
The amount of costs
Test to be applied on appeal
Offers by the husband and wife
i) It offered no irrevocable undertaking not to change the will later. This is just the sort of point argued Mr Moor that would have emerged and be resolved in negotiations but there were none. Mr Blair responded that if the safeguard was so readily available it would have been mentioned.
ii) It was, said Mr Blair, too risky. The husband might spend his capital and leave insufficient money by his will to make the payment.
iii) It required the wife to give up a present safeguard in the form of the caution for a future promise which might not be met.
iv) It came too early for acceptance at the time or within 28 days. The husband's Form E had not been received. It was sent 2 weeks later. It was not sworn for a further 2 months when a questionnaire was returned by the husband, because it was said that the Form E was deficient.
Offers by the Wife
The sum of £275,539 ('£275,000')
Main submissions for the wife
Main submissions for the husband
"There is another reason also for assuming this equivalence between the different kinds of contribution. It is plainly the hope of the courts to discourage divorcing couples who inevitably look back at failed relationships and they seek to blame each other for that failure, to embark on a retrospective accounting of who earned the most and who took the most from what was earned. Despite that discouragement, that is what happened in this case. Indeed, the wife actually drew up what she termed 'a profit and loss statement' in which she sought to evaluate what each contributed to the material wealth of the marriage and what each got out of it.
I studied it carefully and found it to be a tendentious enterprise from the word go because it was designed to make a case favourable to the wife. It was coloured by her belief that she had been cheated. Inevitably it was replete with unverifiable estimates. There was some double accounting in it, some figures were disputed, there were disputed assertions as to the provenance of payments for assets, and there were significant omissions. .
.. The wife spent three and half days giving evidence in effect to support this profit and loss account. This approach to the case prompted disclosure of documents which have filled three lever arch files. ..
In this case the wife held the magnifying glass over the business side of the marriage. She neglected the other side, the non-pecuniary side altogether, and as I have said I have found her presentation in her profit and loss account to be highly partisan, and in many respects very unhelpful."
"In my judgment, it cast a flood of light on her priorities in life and revealed a complete lack of sensitivity to what reasonable people would have regarded as the inhibiting factors to this behaviour, namely that they were embroiled in contested matrimonial proceedings and that the husband was a sick man. It revealed, in my judgment, a degree of arrogance and a wilful determination to safeguard her perceived rights at any cost. It utterly belies the impression she sought to portray to me of a woman whose will could be overborne at Cap Ferrat."
i) The wife's greater interest in the purchase monies of HN than the husband agreed.
ii) The promise by the husband to make some provision for her from the sale of HN. "He made that promise because she had virtually paid outright for Halebourne (para. 130)".
iii) The husband's expenditure which were added back as part of his assets.
The Law
'"2.69 Offers to settle
(1) Either party to the application may at any time make a written offer to the other party which is expressed to be 'without prejudice except as to costs' and which relates to any issue in the proceedings relating to the application.
(2) Where an offer is made under paragraph (1), the fact that such an offer has been made shall not be communicated to the court, except in accordance with rule 2.61E(3), until the question of costs falls to be decided.
2.69B Judgment or order more advantageous than an offer made by the other party.
(1) This rule applies where the judgment or order in favour of the applicant or respondent is more advantageous to him than an offer made under rule 2.69(1) by the other party.
(2) The court must, unless it considers it unjust to do so, order that other party to pay any costs incurred after the date beginning 28 days after the offer was made.
2.69C (revoked)
2.69D Factors for court's consideration under rules 2.69B
(1) In considering whether it would be unjust, or whether it would be just, to make the order referred to in rule 2.69B, the court must take into account all the circumstances of the case, including
(a) the terms of any offers made under rule 2.69(1);
(b) the stage in the proceedings when any offer was made;
(c) the information available to the parties at the time when the offer was made;
(d) the conduct of the parties with regard to the giving or refusing to give information for the purposes of enabling the offer to be made or evaluated; and
(e) the respective means of the parties.'"
"However, in the Family Division there still remains the necessity for some starting-point. That starting-point, in my judgment, is that costs prima facie follow the event (see Cumming-Bruce LJ in Singer v Sharegin [1984] FLR 114 at p.119), but may be displaced much more easily than, and in circumstances which would not apply, in other Divisions of the High Court. One important example is, as the judge pointed out, that it is unusual to order costs in children cases. In applications for financial relief, the applicant (usually the wife) has to make the application in order to obtain an order. If the financial dispute can be resolved, it is usual, and normally in the interests of both parties, that the applicant should obtain an order by consent; and if money is available, and in the absence of special circumstances, such an agreement would usually include the applicant's costs of the application. If the application is contested and the applicant succeeds, in practice in the divorce registries around the country where most ancillary relief applications are tried, if there is money available and no special factors, the applicant spouse is prima facie entitled to, and likely to obtain, an order for costs against the respondent. The behaviour of one party, such as in material non-disclosure of documents, will be a material factor in the exercise of the court's discretion in making a decision as to who pays the costs."
"It is, therefore, clear that Calderbank offers require to have teeth in order for them to be effective. This is recognised by the requirement in RSC Ord.62, r.9 (and the equivalent CCR Ord.11, r.10) for the court to take account of Calderbank offers, and, by analogy, open offers, in exercising its discretion as to costs. There are certain preconditions. Both parties must make full and frank disclosure of all relevant assets, and put their cards on the table. Thereafter, the respondent to an application must make a serous offer worthy of consideration. If he does so, then it is incumbent on the applicant to accept or reject the offer and, if the latter, to make her/his position clear and indicate in figures what she/he is asking for (a counter-offer). It is incumbent on both parties to negotiate if possible and at least to make the attempt to settle the case. This can be done either by open offers or by Calderbank offers, both adopted by the husband in this case. It is a matter for the parties which procedure they prefer. There is a very wide discretion in the court in awarding costs, and as Ormrod LJ said in McDonnell the Calderbank offer should influence, but not govern, the exercise of discretion.
There are many reasons which may affect the court in considering costs, such as culpability in the conduct of the litigation; for instance (as I have already indicated earlier) material non-disclosure of documents. Delay or excessive zeal in seeking disclosure are other examples. The absence of an offer or of a counter-offer may well be reflected in costs, or an offer made too late to be effective."
"The lesson of this case, which litigants and lawyers alike must recognise and give effect to, is that just because ancillary relief applications have to be conducted and prepared in the fraught emotional atmosphere that so often and understandably exists after marriage and its breakdown, nevertheless that does not mean that common sense and commercial realities can be allowed to fly out of the window. A spouse who does not respond constructively to a Calderbank offer, whether a good offer as in this case or only one that is bad or indifferent, stymies whatever chance there is of settlement. Such a spouse cannot with impunity expect immunity from responsibility for that if, as her, his actions mean that only over 2 years and £60,000 of costs later, on the eve of the hearing, does it emerge that the difference between the parties is £5,000 and some chattels: and of course an argument about the £60,000 of costs."
"It is well-recognised that a number of factors may affect the exercise of the discretion as to costs in the Family Division which would not operate elsewhere. The need to use all available money for family purposes is likely to be an important consideration. I do not wish for a moment to be understood to reduce in any way the obligation upon parties to family litigation to engage in sensible, realistic negotiation. If they do not, they are at risk of being penalised in costs. That is shown conveniently by the decision of Singer J. in A v A [1996] 1 FLR 14. Indeed, under the new Civil Procedure Rules, it may be that similar approach will in future inform decisions upon costs in other divisions also."
"Thus, we are left only with r. 2.69(B) which appears to contemplate the position where one party alone has made a Calderbank offer. Where the position is (as here) that each party has made such an offer, the rule becomes unworkable. I agree with Mr Marks' submission that:
The surviving r. 2.69(B) is incomprehensible. It is impossible to divine what the draftsman had in mind. Very often in a case such as this the order ends up between the offers in which case, under the rule, both parties pay "the costs."
"It is very easy to see why in an era where the wife's claim was perceived to be against the husband's money for a sum necessary to meet her reasonable requirements, costs should, prima facie, follow the event. Her position was comparable to that of an ordinary civil claimant. It is much more difficult to apply the analogy in the post-White era where the court's function is (per Thorpe LJ in Cowan v Cowan [2001] EWCA Civ 679, [2002] Fam 97, [2001] 2 FLR 192 AT PARA. [701]) to determine the parties 'unascertained shares' in the pool of assets that is the fruit of the marital partnership ..
This is a submission that is often made: 'the wife has had to come to court to get her money'. But surely the husband has equally had to come to court to get his? Each party has had to come to the court to obtain an order which fairly disposes of the issues between them.
There are further objections. First, I agree with Mr Marks' submission that a presumption that the husband (for it is almost always him) should pay the costs until and unless he has protected himself with a Calderbank letter backed by full disclosure must be discriminatory.
Secondly, it seems to me that the present system in effect forces the parties to engage in a mandatory form of spread betting. The parties are required to guess the outcome of the case and to take a position. If they have guessed correctly then they win a large amount; if they have not then they lose. But there is one significant difference to a spread bet. With a spread bet the amount the gambler wins or loses is the difference between the result and the position-maker's spread. If he has bought and the result is higher than the top of the spread, he wins; if it is lower, he loses. If he has sold and the result is lower than the bottom of the spread, he wins; if it is higher, he loses. The closer the result is to the position-maker's spread the smaller the amount the gambler wins or loses."
"I recognise the difficulties which arise and which have been so trenchantly expressed by Mr Mostyn QC as set out above. The removal of r. 2.69C increases the awkwardness of the language of r. 2.69B and has presented problems. It does not, however, make that rule incomprehensible. In any event it is not for judges to deem a rule or a section of an Act of Parliament incomprehensible or unworkable. If passed by Parliament, whether it be primary or secondary legislation, it is the duty of the court to do its best to make sense of it. Judges do not have the right to dump the awkward passage wholesale. In my judgment, therefore, Mr Mostyn QC in his judgment in GW v RW (Financial Provision: Departure from Equality) [2003] EWHC 611 (Fam), [2003] 2 FLR 108 was wrong to treat the rule as incomprehensible and to substitute his own approach by making a decision which was not based on the existing rules .
The court is, nonetheless, obliged to apply the rules unless or until they are amended. Rule 2.69, as amended, provides the current code on Calderbank offers to be followed until any further rule changes are made. Sub-rules 2.69(1) and (2) give statutory authority to the Calderbank practice in ancillary relief proceedings. The starting point in r. 2.69B is whether the offerer offers more or less than the court order. If less, he/she will pay the costs incurred after 28 days after the offer was made, unless the court considers it would be unjust to do so.
In my judgment, therefore, r. 2.69B and 2.69D can be managed and, where the court considers it unjust to apply r. 2.69B, it can make a different costs order to reflect the justice of the case. Mr Pointer QC, in his thoughtful and comprehensive skeleton argument, sets out in a bar chart a series of permutations arising from a court order to a wife of £1 million. I take one hypothetical situation. If a husband offers £800,000 and the wife asks for £1,200,000, neither has achieved the figure of the order and each is wide of the mark by the same amount. In broadly comparable situations, not tied to exact percentages since each case must be decided on its own facts, the result might be termed, as Mr Cusworth for Mr Norris suggested, a draw. In my view, in some offer and counter-offer cases, the proper approach might well be, under the present procedure, to make no order as to costs and leave each party to pay his/her own costs.
A complication in subr 2.69B(2) is that the order for costs dates from 28 days after the (relevant) offer was made. Neither judge in the two cases before us had his attention drawn to that part of the sub rule. It seems to me, however, that the costs prior to the relevant offer are to be dealt with in the exercise of the court's discretion.
The difficulties which undoubtedly arise from r. 2.69, set out by Mr Mostyn QC with clarity in his judgment in GW v RW (Financial Provision: Departure from Equality) [2003] EWHC 611 (Fam), [2003] 2 FLR 108, do now urgently require a rethink and it is time for further amendments to the rules governing awards of costs in ancillary relief cases. The present rules may affect disproportionately the payers in big money cases."