Recent amendments to the Family Procedure Rules 2010 (FPR) have brought in changes to the way costs are dealt with in financial litigation in divorce.
The changes relate to the timing of when settlement proposals are made during the case and the provision or more specific and detailed costs information (including projected costs) at every hearing. It is hoped this will encourage the parties and their lawyers to focus on the costs consequences of continuing with court proceedings.
The primary changes introduced by FPR 9.27A are as follows:-
Open Proposals to be made at an early stage
There is still a duty, as before, on the applicant to make an open offer 14 days before the final hearing and for the respondent 7 days before the final hearing.
Provision of New Costs Estimates (including Future Costs) at each hearing
i) An estimate of the costs incurred to the date of that hearing
ii) An estimate of the costs they expect to incur up to the next hearing
It is important to keep in mind that under Practice Direction 28 the Court will take a broad view of the parties’ conduct in financial litigation when considering whether or not to make a Costs Order. This includes when either party refuses to openly negotiate reasonably and responsibly. The Court will also consider this in a “needs” based case where a party’s conduct has been so unreasonable that the costs incurred have become disproportionate to the overall financial settlement.
The aim of the changes in the costs rules are to:-
1. produce a greater awareness of the level of legal costs in the litigation and how they are mounting at every stage.
2. impose clearly defined responsibilities/obligations on the parties to make early settlement proposals.
It is as yet unclear what effect the new rules will have on litigation within financial proceedings in divorce but it seems likely there will be serious costs consequences ensuing if there has been unreasonable litigation or a failure to negotiate.
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