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OPEN OFFERS: THE NEW COSTS RULES
A PRACTICAL GUIDE
The changes
• The 3rd of April 2006 saw the Family Proceedings (Amendment Rules) 2006 (2006 No 352) introduced.
Summary of the new Rules
• The new starting point is:
‘The general rule in ancillary relief proceedings is that the court will not make an order requiring one party to pay the costs of another party; but…’ (r 2.71 (4) (b))
• Costs are now part and parcel of the substantive application and treated as a liability that a party has like any other legitimate debt such as a loan. Costs are not a separate issue to be determined at the end of the judgment. The court has to take into account the costs of the parties when considering the most appropriate order for ancillary relief. Costs should not be determined after judgment.
• Calderbank letters have been abolished. The only offers that are admissible are open offers. Strict without prejudice letters can still be written but they cannot be referred to except at an FDR.
• The general rule is that the court will not make an order requiring one party to pay the costs of another party. This applies to interlocutory hearings as well as the final hearing.
• Notwithstanding the general rule, the court may make an order for costs because of the litigation conduct of a party in relation to the proceedings (whether before or during them).
What should the court consider before making an order for costs?
• In considering what order, if any, to make for costs the court has a (non-exhaustive) checklist of matters to consider:
1) Failure by a party to comply with the FPR, any Court order and any relevant PD, e.g. Where
form E has not been filed by the time of the First Appointment in breach of FPR, r. 2.61B;
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2) Any open offer to settle made by a party, e.g. Where a respondent has made a generous offer at a stage where the applicant has sufficient disclosure to evaluate that offer which is declined without adequate explanation, the court may consider the sanction of casts against the applicant;
3) Whether it is reasonable to raise, pursue or contest a particular allegation or issue;
4) The manner in which a party had pursued or responded to the application or a particular allegation or issue;
5) Any other aspect of conduct in relation to the proceedings which the court considers relevant (catch all provision);
6) The financial effects on the parties of any costs order.