The parents were both Russian; they relocated from Russia to London in 2004. Their two children were now 15 and nearly 8. Following the breakdown of the marriage, bitter children arrangements proceedings followed.
In November 2017, the father applied for permission to remove the children permanently to Russia to live with him. In April 2018, during the course of the proceedings, the mother travelled to Russia, where she was arrested after attempting to bribe a police officer to instigate criminal charges against the father in order to assist with her own claims in the children proceedings. As a result of the mother being held in prison in Russia, the English court adjourned the final hearing of the father’s relocation application.
The mother was not allowed by the Russian authorities to attend the adjourned hearing by video link, which went ahead in her absence because of what the judge described as the ‘pressing welfare needs of the children’. The judge heard evidence from an independent social worker who was concerned that a further delay would make it more difficult for the children if they were to go to Russia, in terms of schools start dates. The social worker was equally clear that the mother had significantly failed to meet the children’s emotional needs while they had been living with her and that their best interests lay in living with the father and the court giving him permission to remove the children permanently from the jurisdiction. The judge set 28 July 2018 as the date for the children’s return, giving the mother time to appeal whilst they were still in this jurisdiction. In the early part of July the father’s solicitors wrote to the mother’s solicitor, asking for confirmation that there would be no appeal, but no reply was received to that letter, or to a subsequent letter seeking to deal with the children’s immigration status.
On 25 July, the mother issued an application for permission to appeal and a stay of the order. On the following day the stay application was listed for an urgent hearing. The mother was represented by leading counsel and the father by leading and junior counsel. The mother’s application was refused. Her permission to appeal application was listed for October. Any application by the father for a security for costs order was to be made by 9 August 2018 but the order was otherwise silent as to costs.
In September 2018,the mother pleaded guilty in Russia and was sentenced to 4 years’ imprisonment; she appealed. On 6 September, the father’s solicitors wrote again to the mother’s solicitors, inviting the mother to withdraw her appeal, and putting her on notice as to costs. No reply was received and a chasing letter was sent. On 17 September, the mother’s solicitor wrote to the father’s solicitors, seeking an adjournment of the application for permission to appeal until after the mother’s appeal against the Russian sentence had been determined. The father’s solicitors refused the request and said they would be seeking costs in full, on an indemnity basis, to include the costs of her application for an appeal and stay and his costs in the substantive children proceedings. The mother’s solicitors replied on the same day, offering to withdraw her appeal on the basis that there was no order as to costs. This was not agreed and in a telephone conversation on 19 September 2018, the father’s solicitors informed the mother’s solicitors that briefs would be deemed to have been delivered at 9.am on 20 September 2018. In a written reply at the end of the day on 19 September, the mother’s solicitors stated that the appeal would be withdrawn on the basis of no order as to costs and that it would be ‘simply absurd’ to incur substantial counsel’s fees in respect of what was now the only outstanding issue, namely costs. The father’s solicitors received this letter before 9.00am on 20 September 2019, the deadline for the delivery of briefs, but nevertheless wrote to the mother’s solicitors on 24 September, saying that counsel’s fees were now deemed and that they would be seeking indemnity costs. On 27 September, the mother offered to pay the father’s costs on a standard basis to be assessed if not agreed. This offer was rejected. The mother’s solicitors protested that indemnity costs were inappropriate, alleging that the costs schedule produced by the father’s solicitors was excessive and disproportionate, in particular in relation to the hearing on 26 July 2018. They explained that in the light of the husband’s stance, they would be instructing counsel to attend the hearing to argue the issue of costs.
At the costs hearing, the mother was represented by counsel, whose brief fee was £1,500. The father was represented by leading counsel, with a brief fee of £25,000 and junior counsel, with a brief fee of £12,500. These fees were in addition to the fees incurred on 26 July, which had been £20,000 for the father’s leading counsel and £10,000 in respect of the junior counsel.
The judge awarded the father his costs from 25 July to date, on an indemnity basis, assessing those costs at £109,394, the figure given in the schedule of costs.
The mother appealed.
The Court of Appeal dismissed the mother’s appeal against the making of an indemnity costs order but allowed her appeal as to the amount, reducing the overall figure by £32,500.
The state of play at close of business on 19 September 2018 was, in the court’s judgment, clear; namely that the mother had said, in terms, that her appeal would be withdrawn and that such withdrawal was no longer subject to the father agreeing not to seek an order for costs. The only remaining issue, therefore, was as to costs. Further, in the same way that the father’s solicitors had earlier flagged up their intention to seek indemnity costs in relation to the proposed appeal, the mother’s solicitors had flagged up their contention that it would be “simply absurd” to incur substantial counsels’ fees in respect of what was now the only outstanding issue, namely costs.
The starting point to the issue of jurisdiction in relation to the 26 July hearing was FPR r.28. The rule was the overarching provision and said in terms that the court could at any time may make such order as to costs as it thought fit. The court did not accept that the rule prohibited the making of a retrospective order where no order had been made. Whether a court would in fact make such an order would depend upon the circumstances of the case and where costs had not been mentioned in the original order, an application would be necessarily considered by the court against the backdrop of CPR 44.10 (i)(a) that, as a general rule, the party seeking the order for costs was not entitled to an order. Given its incorporation into FPR 28, the court’s approach was informed by the proper interpretation of CPR 44.10 (i)(a), an interpretation which would be the same for all purposes regardless of whether or not the application was made under the umbrella of the FPR. The exceptions to the general rule identified in CPR 44.10(2)(a) – (c) were not intended to be exhaustive, even setting aside the fact that FPR 28(2) specifically excluded those exceptions in family proceedings, leaving only the general rule at CPR 44.10(1)(a)(i) coupled with the broad discretion at FPR 28.1.
Neither counsel had been able to take the court to any decided cases where consideration had been given as to the limitations of CPR 44.10, if any, or in respect of the interpretation of the expression ‘general rule’ as used in the Civil Procedure Rules. The court had not been taken to the Statutory Instruments referred to in the explanatory notes to the Rule in the White Book, but tracing those Statutory Instruments was in fact illuminating. As originally enacted on 26 April 1999, para (1) of the then rule, stated simply that where the court made an order which did not mention costs “no party is entitled to costs in relation to that order”. However, this was amended with effect on 25 March 2002 when the absolute nature of the rule was softened to say:
“(1) Where the court makes an order which does not mention costs-
- a) The general rule is that no party is entitled to costs in relation to that order.”
The rule had therefore been amended to provide a ‘general rule’ which, given the earlier wording, was clearly intended to leave the court with a residual discretion to make a costs order if it felt it to be appropriate. It was not until the Civil Procedure (Amendment) Rules 2008/2178, which came into force on 1 October 2008, that the exceptions now found at CPR 44.10(2)(a)-(c) were introduced.
Under CPR 44.2(2), costs followed the event. Each of the three exceptions in CPR 44 (1)(2) were examples of cases where an order for costs (had it been made) would have resulted in a costs order in favour of the applicant. The exceptions therefore simply removed the necessity for a specific ex post facto application to be made where, for whatever reason, the order failed to mention costs.
The position was clear; CPR 44.10 was exactly what it said it was – a general rule. When the statutory instruments were traced through, it became apparent that, following the amendment to the rule by statutory instrument on 25 March 2002, the rule ceased to be an absolute rule. Had the intention been to restore that position, the word “general” would have been removed when the exceptions were added in 2008. Further, as noted above, the principle that costs follow the event did not apply in family proceedings. The exclusion of CPR 44.10(2) therefore fitted logically into the wholly discretionary approach to costs in family proceedings and reinforced the view that, in referring to a “general rule” in CPR 44(1)(i), the intention of the draftsman was to leave the court with a residual discretion.
The judge had had the jurisdiction to make an order for costs in respect of the 26 July hearing, contrary to the judge’s own view, jurisdiction was not dependent on the slip rule (or the so-called Tibbles jurisdiction). The connection with and continuity between the applications on 26 July and 2 October was plain. Equally plain was that it was a proper exercise of the judge’s discretion and entirely in accordance with the overriding objective for an order for costs to be made against the mother in respect of that hearing.
It had plainly been within the ambit of this judge’s discretion to make a costs order on an indemnity basis. The mother’s appeal had always been hopeless. The mother had obviously known that she was guilty of the criminal charges brought against her in Russia, conduct which resulted in a substantial term of imprisonment following her guilty plea. In addition, the evidence, in particular from the independent social worker, was overwhelming. The children’s best interests were unequivocally served by going to live with their father in Russia.
The general rule was that costs should be summarily assessed at the conclusion of a hearing that had not lasted more than one day (CPR,PD 44.9.2(b)) unless there was a good reason not to do so. The transcript of the costs hearing showed that whilst the judge’s assessment had been succinct, he had had the benefit of detailed submissions. The judge had been entitled, in the exercise of his discretion, to conduct a summary assessment of the costs in this matter.
Given the critical importance to the children that their planned relocation should not be disrupted or delayed, it could not be said that it had been outside the judge’s discretion to consider it reasonable for the father’s entire legal team, namely leading and junior counsel, to attend the hearing on 26 July 2018. Whilst the court had significant reservations as to the level of fees incurred for that hearing, it would not be right to ‘tinker’ by seeking to reduce the total amount of the fees charged on behalf of counsel. However, the court did not accept that the letter from the mother’s solicitors sent on the afternoon of 19 September could be interpreted as in any way a conditional withdrawal by the mother of her appeal. The letter had been unequivocal in its terms and it had been abundantly clear that the only remaining issue was as to costs. Pursuant to CPR 44.4, the costs did not have to be “proportionate”, the test was whether they are “unreasonable” and that pursuant to rule 44.3 (3):
“Where the amount of costs is to be assessed on the indemnity basis, the court will resolve any doubt which it may have as to whether costs were reasonably incurred or were reasonable in amount in favour of the receiving party.”
The court had those principles firmly in mind, together with the importance of resisting the temptation inappropriately to interfere with the exercise of discretion of the first instance judge. However, counsels’ fees for the hearing on 2 October 2018 were, on any basis, unreasonable. The costs were “unreasonable in amount” pursuant to CPR 44.4(1)(b)(ii). By the time the matter came to hearing, the principle of costs had also been agreed, leaving only the question as to whether they should be summarily assessed and if so, whether on a standard or indemnity basis. The attendance of the father’s leading counsel at this low-level hearing, where there was no longer any threat to the welfare of the children, let alone marked at £25,000, was unreasonable, even absent a requirement for proportionality and notwithstanding the CPR 44.3(3) presumption in favour of the receiving party where indemnity costs are ordered. The father’s junior counsel would have been more than capable of dealing with a summary assessment of costs alone. It followed that in the court’s judgment leading counsel’s fee for the costs hearing had been unreasonably incurred pursuant to CPR 44.4(1)(b)(i). Further, the father’s junior counsel’s fee of £12,500, whilst reasonably incurred, had been unreasonable in amount. The court could not help but compare it with the £1,500 on the brief for the mother’s counsel.
The court therefore allowed the appeal in relation to quantum and reduced the global figure by £31,250, namely a figure equal to the leading counsel’s brief fee and half of that of the junior counsel. The court substituted an order for costs in the sum of £78,144 in place of that of £109,394 as ordered by the judge.