An eye on expenses

Courts are becoming more likely to make awards of expenses in family cases if they think a party's conduct justifies that course

It has long been accepted that, as a general rule, “expenses follow success”. The case of Little 1990 SLT 785 stated that the general rule “should not be applied in its full rigour in family actions”. Since Little, awards of expenses have been uncommon. This can prove problematic when negotiating settlements, as the client’s sense of fairness and reasonableness is not necessarily reflected in the law. Matters are not assisted by family law practitioners tending to assume that any settlement will include a provision of no expenses to or by either party, notwithstanding that the circumstances might warrant recognition of expenses.

In Sweeney [2007] CSIH 11, Mrs Sweeney, the successful appellant, was also successful in arguing for expenses of the Inner House proceedings. The court concluded that the award should be made, together with expenses of the Outer House proof, based primarily on Mr Sweeney’s conduct in insisting on proceeding to proof. The expenses of the action were “conservatively estimated” to be in the region of £100,000.

A similar approach was adopted by Lord Cameron of Lochbroom in De Winton 1997 SLT 1118, when a wife pursuer awarded a capital sum was nevertheless denied expenses. Lord Cameron asked to see agents’ files in order to better understand the ebb and flow of negotiations. Agents be warned!

Increased scrutiny

These decisions serve as a cautionary tale for practitioners contemplating litigation. It is perhaps too easy to assume an outcome on expenses and become complacent. Practitioners should be alert to an increasing scrutiny of how parties have conducted a litigation before the court determines whether an award of expenses should be made. Put shortly, why are the parties in court and how are the issues before the court to be determined? In family cases it is not at all unusual to find several heads of claim with competing claims by the defender. If some claims are successful and others not, how does one measure success? Agents have a duty to conduct litigation appropriately at all stages.

Where an action settles on the morning of proof and it can be demonstrated that one party has failed to address the possibility of settlement, the expenses of preparation for and attendance at proof may not unreasonably be awarded against the recalcitrant party.

The spectre of an award of expenses can and should serve as a useful tool in ensuring that actions are dealt with efficiently and appropriately.

Sweeney guidelines

The Sweeney judgment provides practitioners with some useful guidelines in relation to the conduct of family litigation from the point of view of expenses:

Generally speaking the expense of litigation should fall upon the party who caused it. Justice dictates that a party put to expense in vindicating his rights should be entitled to recover it. Think carefully about the point at which litigation becomes necessary. Are the proposed proceedings premature?

The court has an inherent discretionary common law power to award expenses and to determine the sum. This element of unpredictability makes it all the more essential for practitioners to factor in the issue of expenses when advising clients on the prospects of success and risk.

The court can make an order for expenses against one party even where the issue in dispute is a pure question of law. It is prudent to undertake a risk assessment in advising clients on the merits of litigation.

In considering whether an award of expenses is appropriate the court will have regard to whether the proposed award would upset the balance of any financial provision ordered. The court is unlikely to consider awarding expenses if to do so would cause undue hardship.

In conducting a case, have regard to efficiency and co-operation. Valuations should be agreed as far as possible, and issues that are not capable of being agreed should be flagged up at the earliest opportunity. There is little more frustrating than preparing for proof without knowledge of what exactly is in dispute, and to put the other party to the expense of making preparations could give rise to a strong expenses argument.

Practitioners’ responsibility

In the arena of family law, fairness and reasonableness can be nebulous concepts. Ultimately it becomes the responsibility of practitioners to do their utmost to ensure that cases are conducted in the most efficient and focused manner possible. Where a party unreasonably insists on proceeding to proof, or conducts the litigation in a manner that is beyond the bounds of good practice or professionalism, the threat of expenses ought to be a real one. Increased sensitivity to the issue of expenses does not necessarily mean that family actions will become increasingly acrimonious or contentious. Rather, it is hoped that the Sweeney decision may herald an era of more imaginative settlements, having proper regard to expenses.

Amanda Masson, Morton Fraser Family Law Team