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Mostyn J calls for fixed pricing in ancillary relief cases

‘Totally disproportionate’ costs of £920,000 consume 32% of assets

Mr Justice Mostyn has exhorted the law makers, whether that be the legislature or judiciary, to address the scale of litigation costs in ancillary relief cases (adopting the terminology of Mostyn J, used in accordance with the primary legislation).  He said that a litigant must be able to demand a fixed price for each of the phases of an ancillary relief case.

His comments were made in his judgment in J v J [2014] EWHC 3654. In that case the parties' litigation costs ran to £920,000 or 31.9% of their total assets. By the FDR in March 2014, the parties had incurred £226,000 in costs. Mostyn J considers this sum, although not uncommon, to have been "totally disproportionate" given the scale of the assets. The costs had escalated as a result of the failure of the DDJ hearing the first appointment to appoint a single joint expert to value the husband's interests. The husband was also permitted to reject his own expert and instruct a new one during the proceedings. The forensic accountants instructed charged collectively £154,000 to produce no fewer than six reports.

In the eight months between the failed FDR and the final hearing, the parties incurred £700,000 in further costs. The total litigation costs of £920,000 represent a third of "everything (the parties) built up over 18 years. ... The result has been to make a case that was surely so easily settleable almost impossible to compromise, and to impose on the High Court a seven day trial....".

Mostyn J said that whilst the impact of the costs expenditure was not as calamitous as it was in KSO v MJO & Ors [2008] EWHC 3031 (Fam), this case demonstrated that nothing had been done to curb soaring costs despite the mantra "something must be done" being repeated time and again since the iconic judgment of Booth J in Evans v Evans [1990] 1 FLR 319. Mostyn J exhorted the law-makers in this country, whether they are legislators or judges, to "stop saying something must be done and actually do something".

Whilst reflecting at para 13 that "perhaps the culture is just too ingrained to be reformed", His Lordship suggested that the first thing to do is to insist on fixed pricing for cases. He deplores the fact that this was first suggested two and half years ago and nothing has happened such that "these wasteful and inefficient practices persist". Mostyn J opines that a litigant must be able to demand a fixed price for each of the three phases of an ancillary relief case namely: (1) Form A to First Appointment, (2) First Appointment to FDR, and (3) FDR to trial.

The second measure advocated is for the court to be able to impose at the very beginning of the case a costs cap on what may be charged by the lawyers to their client for each of the three phases of the case. Naturally this cap would be variable if circumstances changed but the change of circumstances would have to be a big one for a variation to be allowed(see para 14).

Only if these two measures were adopted would "the grotesque leaching of costs, such as has occurred in this case, be arrested," said Mostyn J. He expressed the view that fixed pricing might have the beneficial consequence of reducing the present volume of self-representation, and that it by no means followed that fixed pricing would lead to a reduction in revenue for lawyers.

Mostyn J also criticised the failure of the parties to adhere to PD27A and the Statement on the efficient conduct of financial remedy final hearings allocated to be heard by a High Court Judge whether sitting at the Royal Courts of Justice or elsewhere (issued on 5 June 2014) on the preparation of bundles.
The learned judge remarked that a prodigious amount of time was wasted while witnesses were referred to various parts of the twelve individual bundles.

For the judgment and summary by Katy Chokowry of 1 King's Bench Walk, from which this item is derived, please click here.

17/11/14