Litigate intelligently in family cases says AA v AB
In this blog, FLiP Director James Pirrie discusses the case of AA v AB (Costs) 2021 EWFC B16 and highlights the importance of a careful and intelligent approach to litigation in family law proceedings.
David Salter was chair of the Solicitors Family Law Association (the pre-cursor of the lead family lawyers’ organisation, Resolution) between 1997 and 1999 and was on the board for many years before and after. When issues cropped up, we would chip in with our knee-jerk thoughts and then there would be a pause and then David would give us in calm and reflective tones his thoughts – which would, of course be the plan that we would all then agree to adopt.
In the same way, he is now a judge whose occasional written judgments will see most of us (and should probably see all of us) stop, truly drink in and adopt as the wise guidance to inform our approach. There is nothing particularly novel in his latest published decision – but his summary of the approach to be adopted is succinct and compelling and the fact that it comes from David surely brings the likelihood of consequences for unreasonable litigation more clearly into the mainstream across all of our cases.
Briefly, David, in his capacity as a Recorder, was dealing with a “needs” case (where there was not enough to go around) featuring agreements which had later been abandoned, following a slight change of circumstance, too much posturing and too little realism in the litigation (and probably too much correspondence around pets). The wife had spent £61k on her lawyers, contributing significantly to an overall asset base of:
- Wife: negative £65k (excluding small pension);
- Husband: positive £4k
The take-aways, which really just pull together a number of already clear elements, were these:
- Pets are chattels. If they are located abroad, the court will usually only make an order if there is agreement or where there is evidence that the order would be enforced in the foreign jurisdiction.
- Conduct should never be a make-weight – either plead it properly (and expect consequences if your case doesn’t reach the high bar required for it to become relevant) or exclude it from your thinking (unless it is the “conduct” of stepping away from agreements or how you have run your case).
- Agreements reached during the case don’t bind the court but will be compelling.
- So where one party wants to walk away from an agreement, they are likely to need to show a compelling change of circumstance.
- (and then base their open proposal on the changes urged upon the agreement by that change, rather than using the change as the chance to re-open discussions):
- Recorder Salter said “My approach throughout has been to accord respect to the parties’ agreement making only such adjustments as are necessary to reflect the changed circumstances in the light of the parties’ submissions.”
- Listen to your judge when indications are given in directions hearings. They are there to be acted upon: ”Issues have been pursued which did not merit any significant expenditure of costs. Warnings as to the costs being incurred have gone ignored.” (We rarely made the mistake of ignoring Mr Salter’s suggestions when he spoke in our committee meetings.)
- Costs orders will be made where one party fails to litigate reasonably: the guidance and key quotes included these:
- “people cannot litigate on the basis that they are bound to be reimbursed for their costs … no one enters litigation simply expecting a blank cheque” (Francis J)
- “It might be said that I have assessed her needs at a given figure. If I have done that, then how can I leave her with a lower sum which, by definition, does not meet her needs? This conundrum happens in so many cases. People who engage in litigation need to know that it has a cost …. She will have to make the sort of decisions about budget managing that other people have to make day in day out”. (Francis J)
- “if, once the financial landscape is clear, you do not openly negotiate or reasonably, then you will likely suffer a penalty in costs. This applies whether the case is big or small, whether it is being decided by reference to needs or sharing.” (Mostyn LJ).
- And there was also approval for the approach of Moylan LJ – which points towards a different sort of recognition for unreasonable litigation and a wider assessment and intervention than just deciding whether one party should contribute towards the costs of another.
- Moylan LJ said in a case reported last year: “The depletion of matrimonial assets through litigation misconduct will plainly not always be remedied by an order for costs. As I have said, such an order simply reallocates the remaining assets between the parties and does not necessarily remedy the effect of there being less wealth to be distributed between the parties. What is important is that, whether by taking the effect of the conduct into account when determining the distribution of the parties’ financial resources (both income and capital) and/or by making an order for costs, the outcome which is achieved is a fair outcome which properly reflects all the circumstances and gives first consideration to the welfare of any minor children.”
- This guidance is obviously harder to apply but suggests that a fair approach might involve recognising the broader impacts of failure to settle, for example, including the way that the assets are reduced generally by each side’s spend on costs – and perhaps on expensive interim living arrangements and so on.
This current case provides no final word or novel approach but it is an important staging post on a journey towards a different landscape in which the courts are going to visit consequences upon those who fail to make wise decisions during their litigation. We must remember that the concept of “needs” (how ever they are finally pitched) is not your irreducible minimum, where your management of your case to get there is seen as falling short of reasonable behaviour. Here you should expect to fund the other side’s costs from your needs fund. The court cannot be depended upon as the safe refuge that will make everything alright in the end, because ‘alright’ may include unreasonable use of the court judged with the 20:20 vision of hindsight.
The importance of adopting intelligent approaches to the issues arising at separation cannot be overstated.
James Pirrie is a director at Family Law in Partnership. He specialises in complex financial issues and non-adversarial and cost effective approaches to divorce and separation including mediation, arbitration and collaborative law. He helps clients take control of the issues that affect them, clarifying priorities, exploring all the options and identifying the best way forward. James is a qualified arbitrator for both financial and children matters. To find out how James can help you in your family law matters, contact James at E: email@example.com or T: 020 7420 5000.
At Family Law in Partnership we adopt a constructive and strategic approach to settling family law issues both within and outside the court system. Contact us to find out more about our unique approach to the resolution of family law issues.