Financial proceedings - overviewGeneral principles

In ancillary relief (financial order) cases, the costs position depends on whether

This distinction is due to a significant change in the rules concerning costs by the application of the Family Proceedings (Amendment ) Rules 2006. This introduced a new r 2.71 to the Family Proceedings Rules 1991 (FPR 1991) and disallowed consideration of offers made without prejudice save as to costs for applications made after 3 April 2006. The old rules continue to apply to applications made before that date.

The Family Procedure Rules 2010 (FPR 2010) replace the amended FPR 1991 for proceedings issued on or after 6 April 2011 (or those issued prior to that date which are subject to the transitional arrangements set out in the FPR 2010), and provide a practice direction giving more detail. The rules have not substantially changed. These rules only apply to specific financial remedy applications and not to, for example, applications under the Children Act 1989, Sch 1, or for maintenance pending suit and associated interim remedies.

With effect from 6 April 2011 family proceedings issued on or after that date, in all levels of courts, are governed by the FPR 2010. Proceedings issued prior to 6 April 2011 are subject to the transitional provisions set out in Pt 36 of the FPR 2010 and PD 36.

In all cases the costs rules should be complied with and clients should be kept informed about costs in accordance with Solicitors Regulation Authority requirements and the Family Law Protocol.

Costs after 3 April 2006

In family proceedings the general rule is the court may, at any time, make any order as to costs as it considers just.

In financial remedy proceedings, the general rule is that the court will not make an order requiring one party to pay another’s costs. This rule is subject to the court's discretion to make a costs order at any stage when it considers it appropriate due to the litigation conduct of one of the parties.

Rule 28.3(7) sets out the criteria to be considered by the court when deciding whether to make a costs order, including:

Calderbank offers are no longer admissible in relation to costs. Privileged letters will still be relevant, but such letters cannot be referred to on the issue of costs. Instead, open offers will be considered.

A costs estimate in Form H must be produced at each hearing. The estimate relates solely to the costs of the ancillary relief proceedings. At least 14 days before the final hearing, both parties must file and serve a statement in Form H1 providing a more detailed breakdown of their costs.

The court will take into account the reasonable costs incurred by the parties in the proceedings as one of their liabilities.

If it is intended to apply for a costs order, this should be made clear in open correspondence or in the skeleton arguments. If a costs order is made, it will include the costs of implementing an order, eg conveyancing costs following an order for transfer of the home.

In exceptional cases the court has the power to order security for costs.

Costs before 3 April 2006

Where an application for ancillary relief was made in a petition or answer or by application in Form A or B before 3 April 2006, the unamended FPR 1991 continue to apply along with CPR 1998. The court has a broad discretion as to costs. The starting point is CPR 1998 and if offers to settle have been made then the provisions of FPR 1991 must be considered. Following a decision of the Court of Appeal, the case law was that costs follow the event, although that principle was capable of being readily displaced. A subsequent Court of Appeal decision suggested that that approach had been overtaken by, and had to be read in the light of, the CPR 1998 and FPR 1991 provisions. Where a Calderbank offer has been made, the court will, when considering costs, have regard to the criteria in FPR 1991, including: