Indemnity Costs in Family Proceedings: Timokhina v. Timokhin [2019] EWCA Civ 1284

Introduction

The case of Timokhina v. Timokhin ([2019] EWCA Civ 1284) addresses the complexities surrounding the award of costs in family proceedings, particularly in circumstances involving international elements and criminal conduct. The dispute arose following the breakdown of the marriage between Anna Timokhina (the mother) and Alexander Timokhin (the father), Russian nationals living in London with their two children. Central to the case were the arrangements for the children's future care, the mother's criminal actions in Russia, and the ensuing legal battle over the awarding of substantial costs to the father.

Summary of the Judgment

The Court of Appeal considered the mother's appeal against an order that mandated her to pay £109,394 in costs incurred by the father during litigation over the children's future arrangements. The original order by His Honour Judge Meston QC involved two hearings: one on 26 July 2018 concerning an application for a stay of an order allowing the father to relocate the children permanently to Russia, and another on 2 October 2018 dealing with the costs associated with the appeal process itself.

The mother contended that the costs order was inappropriate on multiple grounds, including the silence of the initial order regarding costs, the basis of assessing costs on an indemnity basis, the summary assessment of costs without detailed documentation, and the overall quantum of costs awarded. The Court of Appeal dismissed three of the four grounds, upholding the jurisdiction to order costs for the 26 July hearing and the basis of indemnity costs. However, it allowed a reduction of £31,250 from the total costs awarded, primarily questioning the reasonableness of counsel fees.

Analysis

Precedents Cited

The judgment references several key precedents and rules governing costs in civil and family proceedings. Notably:

Family Procedure Rules 2010 (FPR): Governing the conduct of family proceedings, specifically Rule 28, which provides the court with discretion over costs.
Civil Procedure Rules (CPR) Part 44: Governing general costs in civil litigation, particularly CPR 44.2(2) which sets the general rule that costs follow the event.
Three Rivers District Council v Bank of England [2006] 5 Costs LR 714: Outlining principles for awarding indemnity costs.
Bristol-Myers Squibb Co. v Baker Norton Pharmaceuticals inc. [2001] EWCA Civ 414: Discussing the 'slip rule' for amending orders post-judgment.
Tibbles v SIG Plc [2012] EWCA Civ 518: Considering the court's jurisdiction to vary or revoke its own orders.
Lemmens v Brouwers [2018] EWCA 2963: Affirming the court's wide discretion in matters of costs.
Re S (A Child)(Costs: Care Proceedings) [2015] UKSC 20: Highlighting the rarity of costs orders in child-related proceedings.

These precedents were instrumental in shaping the Court of Appeal's approach to the discretion exercised by the lower court in awarding costs, especially in the sensitive context of family proceedings.

Legal Reasoning

The core legal issue centered on whether the lower court had the jurisdiction under FPR 28 to make a retrospective costs order, even when the original order did not explicitly mention costs. The appellant argued that, under CPR 44.10(1)(a)(i), no party is entitled to costs where costs are not mentioned in the order. However, the Court of Appeal interpreted FPR 28 in conjunction with CPR 44.10, concluding that the term "general rule" in CPR 44.10(1)(a)(i) does not preclude the court from exercising its discretion under FPR 28 to award costs retrospectively.

The judgment emphasized that FPR 28.1 grants broad discretionary powers to the court to make such orders as it deems just, which can include retrospective costs orders. Additionally, the court scrutinized the nature of the costs incurred, particularly the high counsel fees, determining that some portions were unreasonable and thus warranting a reduction.

The court also addressed the argument regarding the summary assessment of costs, referencing CPR PD 44.9, which allows for such assessments to promote efficiency and reduce costs. The judgment upheld the use of summary assessment in this case, deeming it appropriate given the circumstances and the succinct nature of the hearings involved.

Impact

This judgment reinforces the principle that courts retain discretion to award costs in family proceedings, even retrospectively, provided it aligns with the overarching principles of justice and fairness articulated in the overriding objective of the Family Procedure Rules. By upholding the lower court's decision to award indemnity costs, the Court of Appeal underscores the seriousness of unreasonable litigation conduct, especially actions that may undermine the welfare of children involved.

Furthermore, the partial reduction of the awarded costs illustrates the court's willingness to scrutinize and adjust costs orders to ensure reasonableness, thereby promoting proportionality in the expenditure of legal fees. This decision may influence future cases by setting a precedent for the assessment and potential reduction of costs deemed excessive, particularly in sensitive family-related disputes.

Complex Concepts Simplified

Indemnity Costs

Indemnity costs are a higher form of cost award, where the losing party must cover not only the winning party's legal costs but also their own. This type of costs order is typically reserved for instances where a party has acted unreasonably, such as bringing forward a baseless appeal or failing to cooperate in the litigation process.

Summary Assessment of Costs

A summary assessment is a streamlined process for determining legal costs, usually applied when a case is straightforward or of short duration, thereby avoiding the need for a detailed, itemized review of all expenses incurred.

'Slip Rule'

The 'slip rule' allows for minor corrections or amendments to a judgment or order immediately after it is passed, provided that these changes do not alter the substantive rights of the parties involved. It is not intended for making significant alterations based on post-judgment reflections.

CPR 44.10

This rule outlines the general principle that if a court's order does not mention costs, then no party is entitled to costs related to that order. However, exceptions exist, and in the context of family proceedings, certain rules modify how this principle is applied.

Conclusion

The Timokhina v. Timokhin case serves as a pivotal reference in understanding the discretionary powers of courts in awarding costs within family proceedings. It highlights the court's commitment to ensuring that costs orders are just and proportionate, particularly in cases where one party's actions may be deemed unreasonable. By partially upholding the costs order and reducing the total amount awarded, the Court of Appeal balanced the need to penalize unreasonable conduct with the imperative of fairness and proportionality in legal costs. This judgment reinforces the standards expected in family litigation, emphasizing that while costs can be awarded to deter misconduct, they must also remain reasonable and justified.