Recent Amendments to Practice Direction 28A and the Costs Consequences of Open Offers to Settle in Financial Remedy Proceedings.

Recent amendments to Family Procedure Rules 2010 Practice Direction 28A (PD28A) have helped clarify the Court’s approach to costs in financial remedy proceedings where one party has failed to engage reasonably in negotiations.

The relevant parts of Rule 28.3 have not changed, it is still the case that:
• The general rule in financial remedy proceedings is that the Court will not make an order for one party to pay the costs of another party (r28.3(5))
• The Court may make a costs order where it considers it appropriate to do so because of the conduct of a party in relation to the proceedings (r28.3(6))
• In deciding what order (if any) to make in respect of costs the court must have regard to the list of criteria in r28.3(7) including any open offers to settle.

Previously PD28A did not offer any further assistance to the Judge to decide what weight to give to the fact that open offers had or had not been made when assessing the ‘conduct’ of a party for the purposes of r28.3(6).

The Practice Direction has been amended as of 27th May 2019 to give greater guidance. It now states at para 4.4 that when considering a party’s litigation conduct:
“The Court will take a broad view of conduct for the purposes of this rule and will generally conclude that to refuse openly to negotiate reasonably and responsibly will amount to conduct in respect of which the Court will consider making an order for costs. This includes in a ‘needs’ case where the applicant litigates unreasonably resulting in the costs incurred by each party becoming disproportionate to the award made by the Court. Where an order for costs is made at an interim stage the Court will not usually allow any resulting liability to be reckoned as a debt in the computation of the assets.”

This amendment stops a long way short of the civil procedure style costs consequences where a failure to ‘beat’ an offer made by the other party will frequently mean paying a proportion of the other party’s costs. However it does emphasise that where a party fails to make reasonable open offers to settle they will be at risk of a costs order against them. There is specific encouragement to ensure that ‘needs’ cases are conducted reasonably and proportionately. The steer from the Practice Direction is clear, where limited resources are available to house the parties etc these resources should not be eaten up in legal costs caused by the unreasonable litigation stance of one party and unreasonable litigants even in ‘needs’ cases are at risk of costs orders.

It remains to be seen how the Court will approach such matters but this amendment makes it much clearer to parties that a failure to negotiate reasonably opens them up to adverse costs consequences.

The Family Procedure Rule Committee has also opened up consultation on the question of the treatment of Calderbank (without prejudice save as to costs) offers when determining issues relating to costs. The consultation ends on 31st October 2019 and can be found at:

https://consult.justice.gov.uk/digital-communications/treatment-of-calderbank-offers-consultation/