Security for costs in family proceedings … really?

Piers Pressdee QC, barrister at 4PB, who represented the successful mother in the recent case of MG v AR, considers its implications.

The rareness of costs orders in children and financial remedy cases has meant that rules 20.6 and 20.7 of the Family Procedure Rules 2010, providing for the power to award security for costs in family proceedings, must be among the least read and considered provisions of the Rules. Perhaps no more, following the recent High Court case of MG v AR, in which Mr Justice Mostyn not only determined that an order for security for costs should be made in favour of the mother in that case but not uncharacteristically took the opportunity to make some new law – setting out in the absence of prior reported authority how the power to award security for costs should be exercised in family proceedings.

The facts of this extraordinary case could make up a John Grisham novel. London 2012. Young Lebanese-Canadian woman meets Saudi-British man, a member of a wealthy Saudi family. They have a Muslim marriage but separate not long after, following the birth of their daughter. Proceedings in the Central Family Court ensue and leave the child in the care of her mother with weekly contact with her father. But the father later moves to Dubai and the mother takes the child to visit him there – she says for a holiday, he says as a permanent relocation. And there in Dubai mother and child remain for the next year – the father says voluntarily, the mother says trapped.

The mother and child escape, to Canada via Lebanon. The father initiates “abduction” proceedings in Ontario and obtains a “return order”, but the mother successfully appeals to the Court of Appeal of Ontario, which considers that the English court should consider the case. Belatedly the father, who has left a trans-Atlantic trail of unmet costs and financial orders, begins proceedings in the High Court, seeking to invoke the parens patriae jurisdiction based on the child’s British citizenship, so as to effect her “return” to Dubai.

At the PTR the mother applies for an order for security for costs against the father, who by then owes her over £127,000. The father opposes the application but Mr Justice Mostyn grants it, ordering the father to pay the mother security of £50,000. The father, he concludes, does not have a meritorious substantive case, whilst the mother has a good chance of obtaining a costs order, which the father had the means to pay but which the mother would struggle to enforce.

Mr Justice Mostyn was much taken by the fact that the Family Procedure Rules effectively replicated the equivalent provisions of the Civil Procedure Rules. But, given that in civil proceedings costs orders are the norm whereas in family proceedings they are the exception, something, he felt, had to be said about how the power to award security for costs should be exercised in family cases. And he says it, distilled into the following 12 points:

• The court must find as a fact which gateway condition in rule 20.7(2) (for the making of such an order) applies.
• The court must have regard to all the circumstances in order to determine whether to make the order for security would be just.
• If the applicant has a meritorious case and is of limited means so that the imposition of an order for security would hinder or stifle their substantive application, it would not normally be just to make an order for security.
• Subject to (iii), the court must have regard to the merits of the substantive application and to the strength of the defence, as well as to the means of the parties, in order to determine if the respondent has a good chance of obtaining a costs order at the final hearing of the substantive application.
• When assessing the applicant’s ability to pay a costs order and accordingly security for those costs, the principles in TL v ML [2005] at [124] should be applied.
• If the court determines that the respondent has a good chance of obtaining a costs order, it must then be satisfied by evidence that there is a real risk that they will not be in a position to enforce it.
• In determining whether it would be just to make an order for security the court will pay particular attention to whether the application for security was made promptly.
• If the court decides to make an order for security it will fix the amount in a robust, broad-brush manner, deploying a wide discretion. Historic costs are fully claimable. The evidence of the respondent seeking security must provide full detail of claimed historic costs and a detailed estimate of future costs.
• The court may reflect future litigation uncertainties, as well as potential reductions on a detailed assessment, in a percentage discount from the sum claimed.
• In the first instance, security should only be provided in a financial remedy case up to the FDR and in a children’s case up to the PTR (or equivalent). Security should be payable in monthly instalments rather than in a single lump sum.
• Before making an order for security, the court must finally stand back and satisfy itself that what it is going to do is just. In a children’s case the court must be satisfied that what it is proposing to do is consistent with the children’s best interests, or at least not contrary to their interests.
• In the event of default in providing security, there should not be an automatic strikeout of the substantive application. Rather, the respondent should be entitled to apply urgently for a hearing at which the court will consider what measures should be taken in light of the default. Such measures will include a summary dismissal of the substantive application, but in children’s proceedings the court must be satisfied that such an order is in the children’s best interests, or at least not contrary to their interests.

Over 10 years after the Family Procedure Rules first came into force, it was perhaps surprising that there had been no reported decision on security for costs in family proceedings. Now we have one and it is something of a judicial tour de force. Whether it will actually lead to more applications for security for costs being made, only time will tell.

Piers Pressdee QC, Barrister at 4PB,