The costs and delays associated with divorce hearings means couples are strongly encouraged to reach negotiated agreements.
This can be seen in several ways. For example:
- The requirement – in almost every case – for couples to attend at least one mediation meeting (a MIAM)
- A financial incentive from the government to encourage mediation (the Family Mediation Voucher Scheme)
- The emphasis on reaching early settlement at the Financial Dispute Resolution hearing
The view is that it is in everyone’s interests that settlements are reached by agreement rather than by a court battle. This prevents family resources being used up unnecessarily. An early settlement also has the potential to reduce ongoing conflict that could damage the parties’ relationship further and negatively impact wider family members, including children.
What happens then, if one spouse simply refuses to engage in any realistic or meaningful discussions about the division of assets. Instead of negotiating they force the other spouse to wait for an available court date and incur all the legal costs that come with a full financial remedies hearing?
As we’ll see below judges are willing to take this kind of behaviour into account, notably when deciding who should be responsible for the costs of proceedings. Whether it’s a complex ‘big money’ case or one where there are limited assets and meeting financial needs is the priority, a non-cooperative spouse is now much more likely to face a costs penalty than was previously the case. In our experience this is an aspect of financial remedy cases that is not always fully appreciated by the parties.
Who Pays Costs In A Divorce Case?
When a couple can’t agree the terms of a financial settlement it’s for the Financial Remedies Court (the FRC) to decide matters. When a case goes to a full hearing, legal costs invariably rise and become a significant consideration for both sides. Under the Family Procedure Rules the usual approach is for both spouses to shoulder their own costs. But crucially the FRC has a discretion to order one side to pay the other’s costs where they have conducted themselves inappropriately during the proceedings.
We have discussed the role conduct plays in divorce settlements before and explained that it is really only taken into account in limited circumstances where the behaviour complained of is extreme. However since 2019 judges have been much more willing to make costs orders against a spouse who has refused to negotiate. This is largely down to an addition, made at that time, to the guidelines used by judges in financial remedy cases. Practice Direction 4.4 was introduced enabling the FRC to take a refusal to ‘openly, reasonably and responsibly’ negotiate into account when deciding who should be the costs of proceedings.
When Will Courts Penalise a Refusal to Negotiate?
Perhaps the best way to illustrate the way courts apply Practice Direction 4.4 is to look at cases where it has been used as the basis for penalising a refusal to negotiate. In BM and MB (2025) for example, £1,110,000 had been spent on legal fees. The judge was clear that the case had grown out of all proportion to its issues, and it should have been resolved without the waste of this amount of money.
While there was blame on both sides, the length and expense of proceedings was, in the judge’s view largely the fault of the wife. She had completely failed to negotiate reasonably. She had made an offer to settle at one point, but this was described as ‘absurdly high and totally impractical’. (It took no account of the non-marital source of much of the assets and overvalued the family home by more than £1million). The judge was also unimpressed by the fact that the offer was only kept open for two days giving the husband little opportunity to properly assess its merits.
Even though the husband made two further offers of settlement, the wife took no additional steps to negotiate openly and reasonably.
In light of this the wife was ordered to pay 25% of the husband’s costs – a considerable amount. This was deducted from the lump sum the husband ultimately had to pay. (Note that the husband was not blameless. In fact he was required to pay the costs of the wife’s separate successful application in which she established that he had transferred certain assets to try to defeat parts of her financial claim.)
Finally, it is also worth pointing out that a spouse who refuses to negotiate openly may still be ordered to pay the other spouse’s costs even where the case is ‘needs based’. That is to say, even where the negative costs order would result in a spouse having to dip into a lump sum and end up with less than they need, courts can still penalise the failure to negotiate openly. Practice Direction 4.4 makes clear that it applies to a ‘needs’ case where the spouse seeking a financial award litigates unreasonably and this results in the costs incurred by each party becoming disproportionate to the award ultimately made by the court.
Comment
There is no legal obligation to negotiate and finalise a financial settlement outside court. And in some cases a final hearing before a financial remedy judge will be appropriate. From what we have discussed however, it’s clear that against a backdrop of delays and reduced availability of judges, the courts are concerned about the impact the refusal of one spouse to negotiate openly can have on the other. With the force of an explicit Practice Direction behind them we can see that in appropriate circumstances FRC judges won’t shy away from penalising an uncooperative party. Whether this means paying the other spouse’s costs or changing a lump sum to reflect the additional expense incurred because of the refusal to negotiate will depend on the circumstances.