Consultation in relation to making provision for Calderbank offers to be taken into account when determining whether to make an order for costs in financial remedy proceedings

This paper sets out the responses of Resolution’s Regional Liaison Committee and Litigants in Person Committee.

Representatives from our Berkshire, Cambridge & West Suffolk, Cornwall, Devon, Dorset, East Sussex , Hampshire, Ipswich, Kent, North East, Somerset, South Wales, South Yorkshire, Surrey, West Midlands, West & North Yorkshire, and West Sussex regions contributed via the Regional Liaison Committee.

The Litigants in Person Committee focussed their discussion on the impacts on litigants in person.

The consultation will also be discussed by our Domestic Abuse Committee at their meeting on 6 October and any further or differing views expressed will follow.

Litigants in Person

If courts were able to take offers made without prejudice as to costs (i.e. Calderbank offers) into account as “conduct” when deciding under r28.3 FPR 2010 whether to make an order for costs in financial remedy proceedings, what impact would this have on litigants in person?

Calderbank offers were a key part of negotiating settlements and a useful tool prior to their abolition – parties adopted sensible positions. There is now very little incentive for parties to settle out of court although this has improved slightly since recent changes to the FPR. Parties often say “we’ll just see what the judge says”. In principle these offers should be admissible as a disincentive to taking cases to final hearing. This would be consistent with the rules for parties to make open offers following FDR.

Litigants in person can frequently drive up the costs, penalising both themselves and their spouse in the end.

The obvious question is whether litigants in person would understand what a Calderbank offer or the term “without prejudice” means, and it is doubtful whether they would fully understand the concept. However, that is not a good reason for Calderbanks not to be re-introduced as it must be questionable whether litigants in person are fully equipped to understand many other areas of the court process, including the open offer costs regime. Calderbanks still apply in MPS and other proceedings, and this inconsistency could be argued to be more complicated for litigants in person than them being available across the board.

Where one party is represented it puts some onus on the lawyer to explain questions of process (including Calderbanks, if reintroduced) to both parties. Some concerns were expressed that there is a risk in circumstances where one party is unrepresented that s/he would consider costs warnings provided by the other party’s representative to be mere “bullying” which may taint the relationship and negatively impact negotiations and/or risk the warning being dismissed by the litigant in
person. However, litigants in person may perceive that they are at an unfair advantage in any event. It was generally felt that the potential benefits of a rule change, focussing minds and making negotiations easier would outweigh the risk.

One consequence of reintroduction may be that some litigants in person are encouraged to seek professional advice (even if that is specific only to any proposals which have been made) if they are concerned that they could be personally responsible for their ex partner’s costs.

The FPR provide a degree of protection against any misunderstanding by litigants in person:

1. There would be the safeguard of the unreasonable refusal to accept an offer made in accordance with Calderbank principals being potentially considered as “conduct”, and such a refusal would have to be found to have been unreasonable in the circumstances. It would need to be made clear that a without prejudice save as to costs offer is not intended to put pressure on the recipient to accept, but to set out what is a reasonable settlement proposal.

2. The CPR prescribe what a Part 36 proposal must contain. If it is intended that the FPR or guidance should do the same, these could be written in conjunction with bodies working with litigants in person to make them more easily understood by litigants in person and the risk on costs if they fail properly to consider any proposals made.

There would be an additional burden on the judiciary to explain clearly and consistently what the implications might be for the litigant in person. This is difficult where the judiciary are overburdened, but a form of words, perhaps provided to the parties in writing, could be provided to judges, and this would mitigate the burden of any additional work.

Wording could be added to the standard orders about the duty to negotiate, make open and other proposals, with warnings about costs consequences and so on (although it was noted that standard orders are already long, and it is questionable the degree to which litigants in person read and/or absorb their detail). This might also aid consistency across courts.

Resolution’s Litigants in Person Committee would be happy to provide support if the Working Group and FPRC decide to proceed. They would provide a guide to costs and consequences for litigants in person and information for lawyers to use with both their clients and litigants in person about the basic principles of Calderbank offers and what both a without prejudice and open offer actually are.

Referring to without prejudice save as to costs offers as “Calderbanks” will not assist litigants in person in understanding their purpose or meaning. Exclusionary and intimidating wording should be avoided. The CPR refer simply to the rule under which the offer is made. If a rule change is made, all professionals should be encouraged to use new language.

Domestic abuse

If courts were able to take offers made without prejudice as to costs (i.e. Calderbank offers) into account as “conduct” when deciding under r28.3 FPR 2010 whether to make an order for costs in financial remedy proceedings, what impact would this have on victims of domestic abuse?

Financial remedy proceedings can be used to continue domestic abuse in person in the court setting, by refusing to negotiate at all or where a financially strong abuser tries to get the other party to accept a very low offer. Some perpetrators seek to drive up the costs of their represented victim.

Where a party to financial remedy proceedings is a victim of domestic abuse and is legally aided, the statutory charge will apply and that can be high where the financial remedy proceedings go to a final

hearing and there have also been difficult child arrangements proceedings involving findings as to facts.

If courts were able to take offers into account as set out in the question, it is felt that this should generally have a positive impact and might benefit victims by alleviating the coercive control and financial abuse that some are suffering.

All parties should be made to focus on the matter in hand and have the opportunity to benefit from potential settlement tools as settlement may be more cost effective. Whilst not all will be deterred, there should be more risk of the making of costs orders against those ignoring attempts to settle the case reasonably and cost effectively, whether that is deliberate as a perpetuation of domestic abuse or for some other reason.

Some concerns were expressed that recovering costs against such a party may prove difficult, causing further conflict and more stress to their victim, and bearing in mind that the victim may have to continue to work with the perpetrator regarding any ongoing contact arrangements for the children. Such concerns should not preclude the introduction of any rule change.

Lower money/needs cases

If courts were able to take offers made without prejudice as to costs (i.e. Calderbank offers) into account as “conduct” when deciding under r28.3 FPR 2010 whether to make an order for costs in financial remedy proceedings, what impact would this have on parties in lower money/needs cases?

Lower money/needs cases may involve domestic abuse victims and/or at least one litigant in person. “Conduct” will only be dealt with at a final hearing, and by then any party with legal representation will have incurred more costs.

Drafting an offer and so on would add to costs. There are concerns about affordability, especially if any system was to exactly mirror the Part 36 CPR system and the added expense of having to file requests to extend the timetable which could inadvertently pressurise vulnerable unrepresented parties. That could be very counterproductive.

But generally it was not considered that affordability in itself should exclude lower money/needs cases from any new rule. Any party could behave better and be prepared to negotiate if under pressure as to costs.

Lower money/needs cases should not be excluded as a rule, the system needs to be more nuanced than that and discretionary. There will be cases where there is wriggle room and a party has behaved so badly, that a costs order would be justified. “Needs” is a broadly interpreted term.

The question would be how the line would be drawn as to what is a lower/money needs case or a medium money case, for example, if a party is capital rich and income poor. It isn’t possible or beneficial to totally rule out cases from any new provision.

In light of this do you think that Calderbank offers should be admissible in considering the “conduct” of a party for the purposes of r28.3 FPR 2010?

Yes, but only a discretionary basis. Cases might of course be low value and involving litigant/s in person and a victim of domestic abuse.

For litigants in person, yes, with the safety net ultimately of the judge’s discretion, on the basis that the risk of being personally liable for the other party’s costs is necessary to incentivise them to settle and not behave badly. It was observed that litigants in person particularly benefit from robust warnings at an early stage about failing to negotiate, or taking an unreasonable position, in an effort to increase costs and make the other party capitulate before the final hearing.

Whilst there are a few concerns around the need for early, repeated and clear explanation, generally such a rule change should encourage parties to actively and meaningfully negotiate, and litigants in person to focus on a sensible resolution where some may prolong knowing there are no cost consequences (on both sides). In cases where one is represented and the other is not it will discourage the litigant in person from failing to engage or behaving unreasonably due to lack of consequence. In cases where both are in person this may mean that proceedings are concluded by agreement within proceedings rather than both just going through the process and relying on court determination at a final hearing.

There would also be more alignment of the approach in divorce financial work with TOLATA work.

For domestic abuse cases, yes, they should be admissible in considering “conduct” for these purposes because it would be helpful to have a tool to tackle and punish the abusive behaviours outlined above. The judge should be obliged to view a Calderbank offer in considering “conduct”, but s/he should have discretion around whether or not to make a costs order

For lower value money/needs cases many similar points to those above apply. The majority view was yes, it is beneficial overall for the tool to be available but again on the basis that the judge will have discretion around whether to make an order for costs. It would not be helpful for lower money/needs cases to be excluded if there is a rule change. A small minority were less sure because they queried adding to costs and if the necessary framework and tools were already available through the most recent rule changes. Those did need to be applied more uniformly though.

Views would be different if the proposal was to take a non-discretionary approach or simply replicate the whole of Part 36 CPR.

October 2020