S v S: Dealing with a disparity in costs

Mr Justice Mostyn

A summary of S v S [2012] EWHC 2960 (Fam). WARNING: Contains maths.

This case concerned an application for permission to appeal against a financial remedy order. There were two points of appeal, but the interesting one is on the issue of costs, and that is the only one that I shall deal with here.

The wife claimed that the husband was guilty of "extreme litigation misconduct in giving misleading and false disclosure; in failing to comply with orders; and in raising and pursuing issues unreasonably", the result of which was to drive up the costs substantially. The district judge considered the husband's litigation misconduct and ordered him to make a payment of £100,000 towards the wife's costs.

On the application for permission, the wife's counsel argued that in his award (which essentially granted the wife 55% of the total assets) the district judge had not taken into account the husband's litigation misconduct properly, or at all. The net effect of the award to the wife was as follows:

55% of the total assets - £1,317,304

Less her unpaid costs - £263,163

Add costs payable by husband - £100,000

NET RECEIPT - £1,154,141

Looking at the position had the district judge taken unpaid costs off the top (as is the normal starting-point), counsel for the wife appears to have a good point:

The pool of net divisible assets after deduction of unpaid costs - £2,097,621

55% share to wife - £1,153,692

However, as Mr Justice Mostyn explained, such an argument was flawed, as can be seen when taking into account the disparity between the costs incurred by the wife and those incurred by the husband, and calculating the true net payment by one party to the other in respect of costs:

Wife's total costs - £365,564

Husband's total costs - £124,472

W pays 55% of H's costs = £68,460

H pays 45% of W's costs = £164,504

Therefore H pays the difference, i.e. £96,044, to W's costs

(Mr Justice Mostyn suggested that this was a useful technique in cases where there was a striking disparity in the costs.)

He concluded:

"I cannot judge that contribution to be unreasonable on the district judge's findings. Had I been sitting at first instance I may have taken a different view. Under FPR 2010 28.3 the starting point is no order as to costs. Where the combination of a disparity of costs and the division already means or effects a significant net costs shift between the parties I have to suggest that the conduct referred to in that rule would have to be very poor indeed to warrant any further adjustment."

Accordingly, he refused permission to appeal.