Neutral Citation no. [2006] NIFam 16	Ref:     	GILF5697	
			
Judgment: approved by the Court for handing down	Delivered:	24/11/06	
(subject to editorial corrections)			

IN THE HIGH COURT OF JUSTICE IN NORTHERN IRELAND

 _______

FAMILY DIVISION

 ________

BETWEEN:

H

Petitioner;

-and-

W

Respondent.

 ________

GILLEN J

[1]	I have already given judgment on the substantive issues in this case dealing with the financial provisions under the Matrimonial Causes (Northern Ireland) Order 1978 ("the 1978 Order").

[2]	It now falls to me to consider the issue of costs and the separate submissions made by Mr Blair QC who appeared with Mr Donaghy on behalf of W in this matter.

The law

[3]	I have already set out the law that I consider governs applications for costs in cases of ancillary relief in Graham v Graham and Another (2004) NI 174 ("Graham's case").  In essence Northern Ireland costs are governed by the Family Proceedings Rules (Northern Ireland) 1996, SR 1996/322.  In particular r. 1.4 provides as follows:

"(1)	Subject to the provisions of these Rules and of any statutory provision, the Rules of the Supreme Court (Northern Ireland) 1980 and the County Court Rules (Northern Ireland) 1981 other than C.C.R. Order 25, rule 20 (which deals with a new hearing and rehearing) shall apply with the necessary modifications to the commencement of family proceedings in, and to the practice and procedure in the family proceedings pending in, the High Court and a County Court respectively."

Order 62 r. 3 of the Rules of the Supreme Court (Northern Ireland) 1980 provides as follows:

"(1)	This rule shall have effect subject only to the following provisions of this order.

(2)	No party to any proceedings shall be entitled to recover any of the costs of those proceedings from any other party to those proceedings except under an order of the court.

(3)	If the court in the exercise of its discretion see fit to make any order as to costs of any proceedings, the court should order the costs to follow the event, except when it appears to the court that in the circumstances of the case some other order should be made as to the whole or any part of the costs."

[4]	In Graham's case I determined that in light of the decisions of the House of Lords in White v White (2001) 1 AC 596, there is now much to be said for looking upon the division of matrimonial assets following divorces in big money cases as being something akin to the division of partnership assets on the dissolution of a partnership where costs are seen as a necessary expense of the dissolution with each party bearing their own costs.

[5]	I emphasised however in Graham's case that whereas the starting point in big money cases, where the assets exceed the aggregate of the parties needs, is that there should be no order as to costs, that shift in approach must not in any way be seen as diluting the positive duty on the parties to negotiate.  I borrowed the comments of Singer J in A v A (Costs Order: On Appeal) (1996) 1 FCR 186 at 197 where he said:

"The lesson of this case, which litigants and lawyers alike must recognise and give effect to, is that just because ancillary relief applications have to be conducted and prepared in the fraught emotional atmosphere that so often and understandably exists after marriage and its breakdown, nevertheless that does not mean that commonsense and commercial realities can be allowed to fly out of the window.  A spouse who does not respond constructively to a Calderbank offer, whether a good offer as in this case or only one that is bad or indifferent, stymies whatever chance there is of settlement.  Such a spouse cannot with impunity expect immunity from responsibility for that ….."

	I went on to add at paragraph 9 of Graham:

"Accordingly the courts will be wary to ensure that no encouragement is given to a party to misbehave in litigation safe in the knowledge that the starting point will be no order as to costs.  The courts will be watchful in order to discern those cases where exorbitant demands for disclosure, inordinate demands in correspondence, disproportionate attention to the minutiae of the case and tactical posturing have all contributed unreasonably to the costs of the case.  Such an approach will be characterised as unreasonable and the guilty party will be penalised."

[6]	It will be clear however  from the substantive judgment that I gave in this case on the ancillary relief, that whilst assets of approximately £2.75m were involved in this case – thus making it a relatively large money case – it was not a case which merited equality of distribution due to the shortness of the marriage, the presence of non-matrimonial property and other factors relevant to the departure from the equality approach.  In the event I approached the case on a needs basis making a clean break lump sum award of approximately 15% of the total assets.  I consider that this type of case i.e. a case which involves considerable departure from the principle of equality demands a different approach within the general principles I outlined in the Graham's case.  Courts in Northern Ireland must be cautious about following the approach adopted by courts in England and Wales because judgments there are governed by the Family Proceedings Rules 1991 as amended under r. 2.69.  That rule was wholly rewritten by the Family Proceedings (Amendment No. 2) Rules 1999, SI 1999/3491 dealing with, inter alia, offers to settle.  Nonetheless I consider that comments made in the English authorities are worthy of scrutiny even in our context in Northern Ireland and I have gained assistance from the following:

	In Gojkovic v Gojkovic (No. 2) (1992) 1 AER 267 Butler-Sloss J (as she then was) set out principles governing the conventional approach to costs as follows:

"There are many reasons which may affect the court in considering costs, such as culpability in the conduct of the litigation, or (as I have already indicated earlier) material non-disclosure of documents.  Delay or excessive zeal in seeking disclosure are other examples.  The absence of an offer or of a counter offer may well be reflected in costs, or an offer made too late to be effective.  The need to use all the available money to house the spouse and children of the family may also affect the exercise of the court's discretion.  It would, however, be inappropriate, and indeed unhelpful, to seek to enumerate and possibly be thought to constrain in any way that wide exercise of discretion.  But the starting point in a case where there has been an offer is that, prima facie, if the applicant receives no more or less than the offer made, she/he is at risk not only of not being awarded costs but also of paying the costs of the other party after communication of the offer and a reasonable time to consider it.  That seems clear from the decided cases and is in accord with the Supreme Court and County Court Rules requiring the court to have regard to the offer.  I cannot, for my part, see why there is any difference in principle between the position of a party who fails to obtain an order equal to the offer made and pays the costs, and a party who fails by the offer to meet the award made by the court.  In the latter case, prima facie costs should follow the event, as they would do in a payment into court, with a proviso that other factors in the Family Division may alter that prima facie position."

(ii)	In GW v RW (2003) 2 FCR 289, Mr Mostyn QC, sitting as a Deputy High Court Judge, reviewed in detail the current costs regime that obtains in England and Wales.  After revisiting the principle that the safe starting point in big money cases is that there should be no order to costs, he went on to offer some comments on exceptions to that approach.  At paragraph 96 he said:

"I should emphasise that the opinion I am offering is confined to the big money case where there is an identifiable pool of assets the creation of which is referable to the contributions, both financial and domestic, of each of the parties.  It would not apply where the wife's claim is specifically needs based, for instance, where all, or the majority of the assets are 'inherited'; or where the marriage is short.  In such a case I can see that the claiming wife can be more closely compared to an ordinary civil litigant and that therefore the orthodox theory should perhaps more directly apply."

[7](iii)	Finally I have also found assistance from a judgment of the experienced Master Redpath in Northern Ireland in MCM v MCM, unreported, Master 28, 8 December 2005 where he  said at page 4:

"I am of the view that the overarching objective of fairness must also apply to cost orders in cases such as this.  ….  The issue of costs therefore can have a disproportionate effect on the order that has been made.  I am of the view that the proper order for costs in big money cases where there is a minimum departure from equality is that the parties goes back to back in costs.  In cases where there is a very significant departure from equality as there was in this case, where the petitioner's Calderbank offer fell well short of the order that was made, and where there is an allegation that some of the estate has been dissipated in breach of an undertaking then the situation can be quite different."

[8]	Applying the principles to the present case

(i)	I consider there are three aspects to costs in this case.  First, the divorce proceedings between the parties, resulting in cross decrees being granted in May 2006 resulted in the trial judge leaving the matter of the costs in that suit to be determined by me.  Secondly, in the ancillary relief which I have now determined,  part of those proceedings was an unsuccessful application under Article 29 of the Matrimonial Causes (Northern Ireland) Order 1978 by the wife albeit she was successful in her application for a clean break/lump sum award.  Thirdly, the ancillary relief proceedings as a whole.

(ii)	Dealing first with the costs on the ancillary relief/Article 29 application, I consider that the costs incurred in the ancillary relief, but not those costs incurred in the application under Article 29 of the 1978 Order, should be awarded to the wife for the following reasons:

(a)	Although the assets involved in this case were substantial, I concluded that this was a case that merited departure from the equality principle because of a number of factors including the short marriage and the fact that the majority of the assets were acquired before the marriage commenced.  Essentially therefore I determined this case on the basis that the wife's claim was specifically needs based.  This was not a case where there was an identifiable pool of assets the creation of which was referable to the contributions both financial and domestic of each of the parties.  Accordingly I do not consider that this is a case where the approach that I adopted in Graham's case is appropriate where I decided that each party should bear their own costs.  In the instant case I consider that the wife can be more closely compared to an ordinary civil litigant and therefore the orthodox approach hitherto developed whereby under Order 62 rule 3 of the Rules of the Supreme Court (Northern Ireland) 1980 the court should order the costs to follow the event should apply.  Order 62 r. 3(3) does provide an exception when it appears to the court that in the circumstances of the case some other order should be made as to the whole or any part of the costs.  In my view that exception applies to the application brought by the wife under Article 29 of the 1978 Order.  This aspect of the case was unsuccessful, was not ever pursued at the hearing and in my view was always doomed to failure given the nature of this case.  Accordingly I award all the costs of the ancillary relief to the wife save for those costs engendered in the prosecution of the application under Article 29 of the 1978 Order, with reference to which I make no orders of costs.  I do not consider it appropriate to award H the costs of that aspect because it was merely one of many issues in the case and it was not pursued before me in any manner that contributed to an increase in  costs.

(b)	A second reason for adopting this approach lies in the tactics adopted by H in this matter.  To have raised the issue of conduct in light of the recent decisions in the House of Lords was always a hopeless quest on his part and one that was likely to constitute an impediment to resolution.  There could have been no compromise by the wife on this issue. Moreover I regard his attempt to argue that K was not a child of the family was similarly hopeless and once again provided an impediment to resolution since I could not envisage circumstances in which the wife could have made any concession on this aspect.  Not only did I find against the husband on these two matters, as was inevitable in my opinion, but I consider that their presence must have inevitably presented a quite unsustainable barrier to resolution of this case.  That in itself would have militated towards my granting the costs of this application for ancillary relief to W irrespective of the matters I have raised in "(a) above".  

(c)	In a needs based approach, the court must be wary to ensure that an award of costs does not become disproportionate to the effect of the order made.  If this wife was to bear her own costs, I believe it would have a disproportionate effect on the award that I have made and would render her needs inappropriately provided for.  That in itself would have pointed towards an award of costs to her on the basis that I have determined.

(d)	I have read the pre-hearing correspondence in this case.  Calderbank letters were invoked by each party.  It is clear to me that each party realised the consequence of invoking such an approach.  For example in a letter of 30 November 2005, the solicitors then acting on behalf of H concluded:

"We make this offer in the terms of Calderbank v Calderbank and the case law that follows therefrom.  In the event of your client rejecting this offer and pursuing any further litigation against our client in court arising out of the parties' marriage, we reserve the right to draw the terms of this letter to the attention of the judge at the conclusion of that litigation and to seek an order that your client should pay our clients costs in respect of same.  We consider that in particular, in view of the length of this marriage, our client's offer is reasonable."

After a fairly lengthy exchange of correspondence, on 13 October 2006 solicitors for the wife suggested settlement on the following terms:

(i)	Husband to pay a lump sum of £470,000 to W.

(ii)	W to retain K.

(iii)	W withdraw her application for maintenance under Article 29 of the 1978 Order.

(iv)	No orders of cost.

[9]	On 18 October 2006 the husband made a proposal that he would pay a lump sum of £310,000 with K being retained by W.  There was to be no order as to costs.

[10]	I consider that the offer by H was unrealistic given that costs were to be paid from that figure which would have had a disproportionate effect upon a needs based approach.  The proposal made  on behalf of W , namely of £470,000 with W retaining K with no order of costs is much closer to the spirit of the approach that I have determined is correct  given the need to ensure that the needs based award is not diluted by a disproportionate burden of costs.My decision- £404,000, inclusive of K, with costs-is  not materially different in effect from W’s proposal .It is a realistic appraisal of a needs based approach whereas the proposal on behalf of H was not  Accordingly I believe that the Calderbank approach would have favoured W in any event and is another separate reason why W should have her costs paid by H.

[11]	For all of these reasons, both individually and collectively, I have come to the conclusion that it is appropriate that W should have all her costs of the ancillary relief paid by H with the exception of the proceedings under Article 29 of the 1978 Order where each party should simply bear their own costs.  The awarded  costs shall be taxed in default of agreement.

Costs of the divorce proceedings

[12]	The chronological sequence and history of this matter were as follows:

(i)	The parties began to live separate lives in either January or February of 2005.  

(ii)	In June 2005 W commenced proceedings for maintenance under Article 29 of the 1978 Order.

(iii)	On 9 September 2005 H petitioned for divorce citing misconduct by W.

(iv)	On 24 October 2005 W filed her answer and cross-petition.  It contained serious allegations of  misbehaviour by H.  Both parties thus  relied on the unreasonable behaviour of the other.

(v)	The hearing of the divorce suit was originally fixed for December 2005 and subsequently for February 2006.  The matter was adjourned on both occasions.  Mr Blair asserted that  in February 2006 a lengthy negotiation ensured between counsel in an attempt to facilitate avoidance of publicity and save a substantial part of the potential cost of the prospective trial of the defended divorce which was then fixed for 23 May 2006.  I was furnished with a copy of a document headed "A Draft Agreement: Without Prejudice Save as to Costs and Subject to Contract".  In terms this was a proposed agreement whereby the parties would file and serve an amended petition and an amended answer and cross-petition to facilitate the granting of cross-decrees of dissolution founded upon the pleadings as amended.  The proposed agreement indicated that thereafter a series of steps would be taken leading towards the financial resolution of their differences.  At that stage the proposition was there should be no order as to the costs of the defended divorce suit, although each party could rely upon his or her liability for the costs as a relevant liability in the context of the courts quantification of any financial award.  It was Mr Blair's submission that H refused to accede to this proposition insisting that he was entitled to a decree nisi and that his wife was not.  He refused to settle on the proposed terms or any terms which did not recognise that proposition.  Accordingly the matter proceeded towards trial on the basis of a fully defended divorce suit and Mr Bruce submits that unnecessary costs were thereby incurred.  In the event on the date of the hearing in May 2006 the parties did agree to amend their petitions in the manner previously suggested and cross-decrees were granted.  It is Mr Bruce's submission that the position that was available in February 2006, and which was rejected outright by H, became the accepted position after an unnecessary escalation of costs on 4 May 2006 when the trial judge granted cross-decrees on the basis of the amended petitions.  On that date  McLaughlin J referred the question of costs to be determined by judge trying   the ancillary relief.  

[13]	In divorce proceedings between husband and wife, the general rule is that costs follow the event except when it appears to the court that in the circumstances of the case some other order should be made as to the whole or any part of the costs.  Normally therefore the successful party obtains an order for his or her costs.  If cross-decrees are made, the normal rule is that each party obtains their costs or, more often, no order as to costs is made.  However, the court in my view is entitled to investigate the issue of costs and to pay considerable attention to the question; whose conduct give rise to the litigation?  That question is broad enough in my view to embrace the considerations that arose in this case and the possibility that the parties could have resolved their differences rather earlier than occurred on the date of hearing in May 2006.  I can see no reason why the eventual solution that was adopted in May 2006 could not have been adopted in February 2006 when precisely that solution was available to both parties.  Conduct was never likely to be an issue that would influence the ancillary relief and therefore its relevance to future proceedings was non-existent.  The issue of costs had been addressed in February 2006 (I observe the reference to costs in the proposed draft agreement) and therefore both parties in my view were well aware of the implications of a failure to resolve their differences.  In the event I am satisfied that W was prepared to approach this contested divorce in February 2006 on the very basis that finally emerged in May 2006 whereas H was not.  His intransigence escalated the costs substantially.  

[14]	In considering the question of costs in divorce suits a relevant factor is the philosophy behind modern divorce legislation.  The legislation in England is similar to that in Northern Ireland with Section 20 of the Matrimonial Causes Act 1973 being similar to Article 22 of the 1978 Order.  Albeit in the context of a divorce on the basis of a five year separation the Court of Appeal in England and Wales in Grenfell v Grenfell (1978 1 AER 561) made some comments on the philosophy behind the legislation which are relevant to these proceedings.  Of the 1973 legislation, Ormrod LJ said at p. 566b:

"There is one ground, and one ground only now, on which the court has power to dissolve a marriage, and that is now set in s. 1 of the 1973 Act.  The ground is that the marriage has broken down irretrievably.  Parliament went on s. 1(2) to prescribe five separate facts, one of which has to be established in order to prove that the marriage is broken down irretrievably.  ….  On proof of any one of the five facts, there is a presumption, rebuttable it is true, of irretrievable breakdown and ….."

His Lordship continued at p. 566j:

"There is no point, as I see it, in a case like this in conducting an enquiry into behaviour merely to satisfy feelings, however genuinely and sincerely held by one or other of the parties.  To do so would be a waste of time of the court and, in any event, would be running, as I think, counter to the general policy or philosophy of the divorce legislation as it stands now. The purpose of Parliament was to ensure that where a marriage is irretrievably broken down, it shall be dissolved as quickly and as painlessly as possible under the Act, and attempts to recriminate in the manner in which the wife in this case appears to wish to do so should be, in my judgment, firmly discouraged."

[15]	I consider that the same philosophy should obtain in this jurisdiction and that parties should recognise that where there is sufficient material on the face of the papers as amended or otherwise to permit a decree nisi to be granted, then they should not further engage in prolonged enquiries into past behaviour solely, to borrow the phrase of Ormrod LJ, to satisfy feelings, however genuinely and sincerely held by one or other of the parties.  There was a clear opportunity in this case in February 2006 for each of the parties to obtain cross-decrees by an appropriate amendment to the pleadings.  That this was eventually achieved illustrates not only the pragmatism of the approach, but also the waste of costs engendered by refusal of H to do so at that early stage.  In the circumstances therefore I have come to the conclusion that W should have the costs of her decree paid by H from the date when the parties met in February 2006 to date.  There should be no order for costs on the husband's decree.

[16]	In all cases where I have awarded costs, these costs shall be agreed or, in default of agreement, taxed.  The award shall be paid within six weeks from the date of the handing down of this judgment i.e. on or before  5th January 2007 .                 
         On the occasion of the handing down of the main judgment Mr Blair asserted that there had been an inaccuracy contained therein insofar as I had taken into account a widowed mother’s allowance as part of W's income in the Duxbury calculation.  His assertion was that this would end when the child of the family became eighteen.  No evidence was presented before me to this effect but in any event the sum involved was not such as would have affected  my overall decision in arriving at the broad brush  final figure after invoking the various discounting factors and exercising my discretion.