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LM v DM (Costs Ruling) [2021] EWFC 28 – costs order reduced for failure to negotiate

Posted on 29 July 2021

The wife had sought orders for maintenance pending suit (MPS) and a costs allowance, by way of a Legal Services Payment Order (LSPO). Having succeeded, she sought costs of the application. Mostyn J noted that MPS/LSPO applications are not included in the proceedings referred to in Rule 28.3(5) of the FPR 2010 as being those to which the "no order for costs" principle applies. Accordingly, the court could make such order as it thinks just.

He considered that, although paragraph 4.4 of PD28A (which provides that, when considering issues of conduct for the purposes of costs, the court can have regard to a refusal to negotiate openly and reasonably) did not apply to the wife's applications, that parties were still obliged to properly negotiate. Although the wife had been successful in her applications, she had failed to negotiate openly or reasonably. He therefore reduced the costs order made in her favour by 50%.

Kate Clark says:

This is an important decision to which clients and solicitors must pay careful attention when negotiating. It makes clear that a 'successful' outcome at court does not prevent a party from being penalised on costs if they are found to have failed to make a serious attempt to negotiate openly and reasonably.  

There has been a marked change in approach by judges over the last few years, who are increasingly making concerted attempts to encourage parties to negotiate, such that litigation should be viewed as the last option. In a recent Court of Appeal civil case (Lomax v Lomax [2019] EWCA Civ 1467), it was ruled that the court could require parties to engage in non-court dispute resolution, even where one party did not consent. The Family Court cannot, at present, order parties to do the same, but there is a clearly a move towards ensuring that out of court alternatives to resolving a dispute should be properly explored, and that all litigants will be expected to negotiate openly and fairly, or be penalised for not doing so. Simply waiting for the case to reach final hearing and litigating regardless of the outcome, may have costs consequences and so impact on the final award.

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