AA v AB (Costs): Even parties of modest means can incur ruinous costs

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...or perhaps that should be 'no means'.

It is of course a feature of reported financial remedy cases that they almost invariably involve couples of substantial means. It is also an all-too-regular feature that the couple incur ruinous costs, as they fight a never-ending battle, oblivious of the cost.

But anyone who believes that such folly is the sole preserve of the rich is sorely mistaken. Those of modest, or even no means, are equally capable of running up absurd legal bills.

And this was demonstrated in the judgement of Mr Recorder Salter (the one-time Chairman of Resolution, I believe) in AA v AB (Costs). (As I write this the judgement is dated 19 March 2020, but I believe it should be 2021.)

I am not going to go into the detail of the judgment - my purpose here is to mention it merely as a warning to others involved in financial remedy disputes.

All I am essentially going to point out are the bare facts and figures involved in the case, which speak for themselves.

Fact 1: We are told that the parties’ overall financial position is in deficit, to the tune of the precise sum of £57,278.75.

Fact 2: Judge Salter tells us that: "The level of costs in these proceedings has been ruinous to the parties. It is utterly disproportionate to the assets involved ... Issues have been pursued which did not merit any significant expenditure of costs. Warnings as to the costs being incurred have gone ignored." We are not told the exact amount that the husband incurred, but we know that he had liabilities, including his costs, of about £75,000. One liability, a loan from his employer, was for some £25,000, so his costs liability appears to be a little less than £50,000. For the wife, we have an exact figure: ££61,167.80 (yes, some £4000 more than the parties’ joint deficit, as Judge Salter pointed out.)

Fact 3: The parties did manage to reach an agreement in October 2020, but that agreement broke down, and the parties proceeded to the final hearing, despite a clear warning from Judge Salter "that there is a danger in this case that the cost of litigation and any final hearing will be disproportionately high relative to the asset base." Believe it or not, one of the main issues, raised by the wife, related to the repatriation of the family pets (the family had lived in the UAE).

Fact 4: As the reader has probably guessed, at the final hearing Judge Salter essentially made an order in the terms of the October 2020 agreement.

Fact 5: The husband then sought his costs from the date of the agreement, in the sum of £29,669. Whilst Judge Salter acknowledged that the husband’s litigation conduct had on occasions been found wanting, the wife's failure to negotiate and focus on the pets issue, rather than the larger picture, meant that the 'balance of the culpability' on costs laid with her. Accordingly, she was ordered to make a £10,000 contribution towards the husband's costs.

You can read the full judgment here.

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