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Home > Articles > 2012 archive

Fact Finding Hearings: Who Pays?

Stuart Hughes, Senior Solicitor at Greene and Greene Solicitors, and Sabuhi Chaudhry, barrister at Coram Chambers, consider recent developments concerning costs in fact finding hearings and the divergence between private law and public law cases.

Stuart Hughes, Senior Solicitor at Greene & Greene Solicitors, and Sabuhi Chaudhry, barrister at Coram Chambers

The general rule
Children Act 1989 proceedings normally occupy a relatively unique exemption from the general rule in civil proceedings that 'costs follow the event' due to the departure from the CPR 44.3(2) by the Family Proceedings Rules 2010 Rule 28.2 (and prior to that the FPR 1991 r.10.27).

Family Law practitioners will be familiar with the court's extreme reluctance to make costs orders in Children Act 1989 proceedings save in the rarest of  cases where one party's behaviour may justify such an order.

Wilson J (as he then was) explained the rationale in London Borough of Sutton v Davis (Costs) (No 2) [1994] 2 FLR 569, 570H – 571C, in this way:

"Where the debate surrounds the future of a child, the proceedings are partly inquisitorial and the aspiration is that in their outcome the child is the winner and indeed the only winner. The court does not wish the spectre of an order for costs to discourage those with a proper interest in the child from participating in the debate. Nor does it wish to reduce the chance of their co-operation around the future life of the child by casting one as the successful party entitled to his costs and the other as the unsuccessful party obliged to pay them  The proposition applied in its fullest form to proceedings between parents and other relations; but it also applies  to proceedings to which local authorities are a party…….But the proposition is not applied where, for example, the conduct of the party has been reprehensible or the party's stance has been beyond the band of what is reasonable."

The 'exceptional' cases
The general principles to be applied in consideration of costs applications in CA 1989 cases were summarised by the Court of Appeal in Re T (Order for Costs) [2005] EWCA Civ 311, [2005] 2 FLR  681 at 690 and 694. This was a case in which the mother was found to have unreasonably frustrated contact:

"[36] The principles, which fall to be applied, are not, we think, in dispute. The Judge summarised them succinctly in the following way:

2.1 The CPR apply. Under normal circumstances, according to r44.3(2)(a), the general rule is that costs should follow the event, although the court can make a different order (r44.3(2)(b))

2.2 However this general rule does not apply to family proceedings (Family Proceedings (Miscellaneous Amendments) Rules 1999)

2.3 It is suggested that even in family proceeding, the general rule is probably the starting point but can more easily be displaced (Gojovic v Gojovik (No 2) [1992] Fam 40)

2.4 In some cases involving children in particular, costs awarded against one parent or another are exceptional since the court is anxious to avoid the situation where a parent may feel "punished" by the other parent which will reduce co-operation between them. This will only impinge ultimately on the welfare of the child or the children concerned (London Borough of Sutton v Davis (Costs)(No2) [1994] 2 FLR 569; Re M (Local Authority Costs) [1995] 1 FLR 533)

2.5 The conduct of the parties is in reality the major consideration when deciding whether or not an exceptional order for costs should be made. It should only be made if the penalised party has been unreasonable in his or her conduct. Moreover the 'unreasonableness' must relate to the conduct of the litigation rather than the welfare of the child (R v R (Costs: Child Case) [1997] 2 FLR 95)

2.6 One has to be very careful in this distinction when, as in the case of (the mother), the apparent unreasonableness is as a result of the personality of the relevant party. In such circumstances, there is often an overlap of that party's conduct of the litigation and the conduct relating to the welfare of the child."

The court's general reluctance to avoid costs orders even where there appears to be obvious and flagrant litigation conduct by one party is often a source of frustration to both client and family lawyer (see for example Re N (A Child) [2009] EWHC Civ 2096 (Fam), [2010] 1 FLR 454). However, recent cases have reminded us that there may be scope for costs orders particularly when dealing with factual issues of significance which arise between the parties and require costly bespoke fact finding hearings.  This is particularly so given the perceived increase in serious allegations being made and pursued in private law cases and the authors venture to suggest that such allegations might increase with the rise in the number of litigants in person. It is notable that costs issues for fact finding cases in the public law arena are moving in a different direction.

Ring fenced costs for fact finding hearings in private law cases?
In Re J (Children) [2009] EWCA Civ 1350, the Court of Appeal considered the proper approach for an application for costs by one parent against the other in a bespoke fact finding hearing within contact proceedings. The Court of Appeal allowed the mother's appeal to the extent that the respondent father was ordered to pay two thirds of the mother's costs of the fact finding hearing before the district judge and made it clear that the district judge should have taken greater account of the nature of the enquiry, the seriousness and relevance of the allegations made by the mother, the extent to which the father admitted them, and most importantly, beyond what the father admitted, the extent to which they had been found proved (or not proved) – [13]. Importantly Wilson J in Re J (Children) highlights that the effect of a direction for a separate fact finding hearing was that the costs incurred by the mother in relation to that hearing can confidently be seen to be wholly referable to her allegation against the father. There was, in that sense, a ring fence around that hearing and thus around the costs referable to it.

[17] "In my view the enquiry necessary to a valid exercise of the court's discretion in relation to the costs incurred before the District Judge should start with an acknowledgment that the Mother's allegations were allegations of violence of some seriousness ………The order for a bespoke fact finding hearing was surely to consign the determination of the mother's allegations into a separate compartment of the court's determination of the father's application for an order for contact. It went almost without saying …..that the optimum outcome of the contact application could be determined only by reference to the findings made at the fact finding hearing; but the effect of the direction for a separate fact finding hearing was that the costs incurred by the mother in relation to that hearing can confidently be seen to be wholly referable to her allegations against the father. There was, in that sense, a ring fence around that hearing and thus around the costs referable to it. Those costs did not relate to the paradigm situation to which the general proposition in favour of no order as to costs applies."

In respect of quantum of costs, interestingly the court's formula for calculation was that as the  hearing had been devoted exclusively to the court's consideration of  serious and relevant allegations against the father of what was described as 'misconduct' on his part and as over two thirds of the mother's allegations were true and less than one third of them were not established yet were not found to be untrue, the father was ordered to pay two thirds of the mother's costs of and incidental to the fact finding [19][20].

This is – arguably – a discernible move towards 'costs follow the event' in fact finding cases in private law CA1989 matters.

In a recent case of R v R v A [2011] EWHC 1158 (Fam), there was an extension of this theme as whilst there was no formal fact finding hearing,  the court made a costs order in any event as, amongst other things, the court felt that the father had been forced to defend false allegations made against him. The court in this case concluded that the manner in which an aunt and uncle had conducted proceedings either amounted to litigation misconduct or provided a basis upon which it was 'just' to order costs against them. The aunt and uncle had made a number of highly unpleasant and irrelevant allegations against the father, which he had been obliged to defend but which had never been brought to court to be tested. The court's view was that the proceedings should not have been brought by the aunt and uncle, having on the evidence little to do with the welfare of the child and being little more than an attack on the father – see paras [17][19],[24].

In addition, in the  recent case HH v BLW [2012] EWHC 2199 concerning an appeal against a costs order made by a district judge in the Principal Registry, whilst the court found merit in the appeal,  the unfortunate father lost the appeal on the basis of 'proportionality'.

The facts were that the applicant father issued a contact application in relation to his child who was then aged 15 and a half years old. The respondent mother's solicitors alleged that such an application was an abuse of the process and/or harassment of the mother and threatened to seek costs. The matter came before the district judge as a First Hearing Dispute Resolution Appointment (FHDRA) and a CAFCASS officer met with the child and reported to the court (and the parties) that the child was unwilling to have contact with the applicant father (in the run up to her GCSE examinations). The applicant father accepted the position and the court made no order. The respondent's solicitors then sought summary assessment of costs. Holman J, hearing the appeal, states as follows:

1. As to the principle of costs orders in Children Act cases 

"[13] As is of course very well known, the Family Procedure Rules 2010 disapply that part of the Civil Procedure Rules that provides a starting point that the unsuccessful party pays the costs of the successful party.  As Lord Justice Wilson memorably says in one case, the effect is that in family cases of this kind the court simply starts with a blank sheet of paper.  The district judge was later to say in his judgment:

'The court has a broad discretion to make such order as it thinks just, and the court has to consider in the circumstances whether it is right to order the father to pay costs, whether by reason of his litigation conduct or simply because it is the right thing to do.  That appears to be the test.'

It does not seem to me that there is any significant error in that broad description by the district judge of the discretion that he was exercising, or as to the approach.  He referred to the fact, as was self-evident, that the father had received legal advice (the content of which was unknown to the district judge, as it remains to me) and that, having decided to make an application for contact, the responsibility for that decision lay upon the father.  That also seems to me to be a perfectly correct and appropriate appraisal by the district judge.  The father is a gentleman of mature years and patent intelligence and full capacity, and he was, and indeed remains, fixed with responsibility for decisions that he took whether acting with the benefit of legal advice or not."

2.  As to the principle for permission to appeal

"[21] Since this case is governed by the Family Procedure Rules 2010, the relevant rule is rule 30.3 of those rules, although the material rule (namely 30.3(7)) is in identical terms to rule 52.3(6) of the Civil Procedure Rules.  Each of those rules provides that:

Permission to appeal may be given only where -

(a) the court considers that the appeal would have a real prospect of success; or

(b) there is some other compelling reason why the appeal should be heard.

It is not suggested in this case that there is some other compelling reason why the appeal should be heard, but Miss Rayson strongly submits that the proposed appeal "would have a real prospect of success".  With that, I agree.  That is far from saying that, in my view, the proposed appeal would definitely succeed. 

[22] On a substantive appeal as to costs, it would be necessary to show that the judge below had either made some significant error of law, which this judge did not do, or had reached a decision which was plainly wrong and such that no district judge correctly directing himself could properly have made.  As is quoted in a passage in the White Book, Volume 1 at para.52.1.5:

'The general approach of appeal courts is one of reluctance to interfere with costs orders…As is well known, orders for costs are very rarely disturbed [per Judge LJ in a case which is then cited].'

So the hurdle on any appeal from a discretionary decision as to costs is undoubtedly a very high one.  Although I myself have identified above a number of criticisms of the approach by, and language used by, the district judge, that is far from saying that the proposed appeal would inevitably succeed, although I do frankly say that I cannot conceive that I myself would have made any order as to costs if I had been hearing this matter on 14th March 2012. 

[23] But the test under rule 30.3(7)(a) is of course a much lower one, namely whether the appeal "would have a real prospect of success" and I am in no doubt that it would."

3.   As to why permission to appeal was not granted

"[27] Further, I do have to take into account appropriate allocation of the desperately hard pressed resources of the Family Division of the High Court.  In a very different context, in the case of Dow Jones & Co. Inc. v. Jameel [2005] EWCA Civ. 75, Lord Phillips, Master of the Rolls, giving the judgment of the court said at para.54:

'It is no longer the role of the court simply to provide a level playing field and to referee whatever game the parties choose to play upon it.  The court is concerned to ensure that judicial and court resources are appropriately and proportionately used in accordance with the requirements of justice.'

Later in the same judgment at para.69, the Court of Appeal was to say, metaphorically:

'The cost of the exercise will have been out of all proportion to what has been achieved.  The game will not merely not have been worth the candle, it will not have been worth the wick.'

It might seem harsh to the father, who sits here today, to hear metaphors of a "game" and a candle and its wick, but that was the language used by a Court of Appeal of great distinction in that judgment. 

[28] At page 2043 of the 2012 Family Court Practice, in the notes to Family Procedure Rules, rule 30.11, the editors write:

'Proportionality - In exceptional but appropriate cases the appeal court may decline to hear an appeal on the basis that further litigation is disproportionate to the costs and/or issues in the case (Cook v. Plummer…).'

Miss Rayson has kindly produced the full report of Cook v. Plummer [2008] EWCA Civ. 484; [2008] 2 FLR 989.  I mention that there is no reference in the judgment of Lord Justice Thorpe in that case to any test of exceptionality, but in a very different factual context he was to ask at para.13 (at the end of his judgment) a question:

'Is it proportionate that this court should permit her to do so?  I have reached the firm conclusion that it is not.'

This clearly indicates that, even in family litigation, appellate courts have to take into account broad overall considerations of proportionality.

4.  In summary and despite the appeal having merit permission was not granted due to proportionality.

The authors however highlight the passage at [29] 

"As I have already said, it does seem to me that a relevant matter, even in family proceedings, is the financial position of each party.  No family judge can fail to be aware that there are many, many people to whom even apparently very small sums of money matter acutely.  There are, of course, many people whose means are so limited that they might feel driven to appeal in relation to very small sums that to them are simply unpayable." 

Recent developments in the public law arena as to the costs of fact finding hearings
By contrast, the Supreme Court decision in T (Children) [2012] UKSC 36 is the most recent and most relevant current authority for assessing the court's approach to costs in public law CA1989 cases.

The facts of T (Children) concerned an appeal arising from a costs order made against the local authority infavour of a party in care proceedings. Two children who were the subject to an application under s.31 (2) Children Act 1989 had alleged sexual abuse at the hands of their father, six other men and that their father's parents (paternal grandparents) had colluded in the abuse. The court joined the six men and the grandparents to the proceedings and ordered a fact finding hearing. As a result of that fact finding exercise five of the six men and the grandparents were exonerated. The grandparents were ineligible for public funding and they re-mortgaged their home, expending £52,000 in legal fees, and at the successful end of the fact finding hearing they sought a costs order against the local authority. Importantly it was not suggested that the local authority had acted unreasonably.

The judge at first instance refused the grandparents costs application on the basis that it was not usual to award costs, save, in cases where a party had acted unreasonably or reprehensibly.

The Court of Appeal allowed the grandparents' appeal, holding that costs could be awarded in respect of discrete fact finding hearings.

Although it rarely hears appeals relating to costs, the Supreme Court granted permission to appeal because of the important point of principle raised by the appeal, on terms that, whatever the result, the grandparents' entitlement to recover their costs as a result of the order of the Court of Appeal would not be disturbed.

The Supreme Court unanimously allowed the appeal, holding that the general practice of not awarding costs in care proceedings against a party, including the local authority, in the absence of  unreasonable stance or reprehensible behaviour should not be the subject of an exception in the case of discrete fact finding hearings in such a case. It was the court's view inter alia that:

Conclusions
In public law proceedings, in the absence of 'reprehensible behaviour or an unreasonable stance', costs orders are very unlikely to be obtained after a fact finding hearing. The Supreme Court distinguishes the position of a civil litigant in private law proceedings and that of the local authority and in doing so highlights the risk that any privately funded party takes in asserting or denying a disputed fact which then results in a fact finding exercise.

By contrast, in private law Children Act 1989 proceedings, the authors suggest that there is a higher possibility of seeking and obtaining costs orders after a contested bespoke finding of fact hearing (bearing in mind  'The President's guidance to spilt hearings' of May 2010). Allegations made in private law applications which necessitate a finding of fact hearing elevate that application from a relatively straightforward welfare assessment to one where the welfare decision of the court cannot begin until findings are proved or disproved. Accordingly costs increase exponentially.

Family Law Practitioners are reminded of the following:
FPR 2010 28.1 - The court may at any time make such order as to costs as it thinks just. 

The FPR 2010 whilst departing from the general rule that 'costs follow the event' also  ensures that CPR 44.3 applies to family proceedings and it is important to re-state the applicable rules that the family court must consider:

(4) In deciding what order (if any) to make about costs, the court must have regard to all the circumstances, including –

(a) the conduct of all the parties;
(b) whether a party has succeeded on part of his case, even if he has not been wholly successful; and
(c) any payment into court or admissible offer to settle made by a party which is drawn to the court's attention, and which is not an offer to which costs consequences under Part 36 apply.

(5) the conduct of the parties may include:

(a) conduct before, as well as during, the proceedings and in particular the extent to which the parties followed the Practice Direction (Pre-Action Conduct) or any relevant pre-action protocol;
(b) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;
(c) the manner in which a party has pursued or defended his case or a particular allegation or issue; and
(d) whether a claimant who has succeeded in his claim, in whole or in part, exaggerated his claim.

14/9/12