Financial Cases on Divorce – The Resurrection of Calderbank Offers?

When a couple divorce, they are encouraged by the Courts to consider other dispute resolution options such as mediation: before embarking on expensive financial proceedings at Court to settle their financial separation.

Cost Statements for Financial Proceedings on Divorce

If instead, the parties end up in financial Court proceedings on divorce, at every hearing they are both required to provide each other with costs estimates (Form H) and 14 days before the Final Hearing, a more detailed costs estimate (Form H1). These Forms can be found on the Court Service website.  They focus everyone’s minds on the costs incurred as the proceedings continue (frequently the costs double between each hearing).

Offers to Settle

In financial proceedings at Court, until April 2006, Calderbank offers could be made.  In April 2006, Rule 2.71 was introduced into the Family Procedure Rules 1991 (as they then were) bringing in the current No Order as to Costs presumption, later maintained in the Family Procedure Rules 2010.  These rules are the framework in which the lawyers, the Judges and the clients must work within the Court.

A Calderbank offer was an offer of financial settlement made “without prejudice save as to costs”.  Other than at the Financial Dispute Resolution Hearing, the Judge hearing the case would not be allowed to be told what that offer was.  The sting in the tail was where the Court decides the case at the final Financial Hearing (many cases settle before this).  If the case fights all the way to a final hearing, and if, say, the husband had made a Calderbank offer to the wife, which she refused, and the Judge awarded her less than the husband’s offer, then she was at risk of paying the husband’s costs from 28 days after the offer was made, on top of her own.  This used to put quite a lot of pressure on a party receiving a Calderbank offer to consider it seriously and to be quite confident before they continued their case through the Courts, seeking more.

The Family Procedure Rules Committee Costs Working Group has launched a consultation seeking views as to whether the 2010 Family Procedure Rules should be amended to take into account Calderbank offers as conduct when the Court is considering making an order requiring one party to pay the costs of the other party.  A link to the consultation can be found here.

Current position on costs

The current rule on costs is under Family Procedure Rules 2010 r 28.3  This sets out the issues the court should have regard to if it is to make a costs order:

• Failure to comply with the rules, an order or relevant practice direction
• Any open offer to settle
• Whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue
• The manner in which a party has pursued or responded to the application or a particular allegation or issue
• Any other aspect of a party’s conduct in relation to the proceedings which the Court considers relevant
• The financial effect on the parties of any costs order.

It’s not back to the old days

Taking into account Calderbank offers as conduct, is not as “black and white” in terms of costs penalties as the old rules, which provided that (my emphasis): “the court must unless it considers unjust to do so, order that other party to pay any costs incurred after the date beginning 28 days after the offer was made”.

The change would not mean that the general ‘no order’ rule set out in FPR 2010 r.28.3(5) should change or be deleted.   The consultation states that “in this way, excessive weight ought not to be attached only to whether one party has ‘won’ or ‘lost’ but proper account could be taken of whether either party has acted reasonably or unreasonably in the course of their negotiations (including those undertaken “without prejudice save as to costs”) having regard to all of the matters to which the court is required to have regard under FPR 2010 r.28.3(7) when deciding whether it is ‘appropriate’ to make an order requiring one party to pay the costs of another party having regard to ‘conduct of the party in relation to the proceedings’ under FPR 2010 r.28.3(6)”.

Resolution

The national member organisation consisting of family lawyers and other professionals committed to the constructive resolution of family disputes has also asked for its members to complete a survey on the matter, a link to which can be found here.

If the spirit of Calderbanks is introduced to the costs rules it will be interesting to see if this leads to the earlier settlement of financial cases on divorce in Court.

Contact

Lisa Pepper Partner
Family Law

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