Summary of Court of Appeal Costs Judgment

Factual and Procedural Background

This opinion concerns costs arising from an appeal determined by this court on 4 September 2025 (neutral citation: [2025] EWCA Civ 1136). The Appellant (the "wife" in the original opinion) appealed the refusal of her application for leave to make an application under Part III of the Matrimonial and Family Proceedings Act 1984. The court's judgment on that appeal is the subject of the present short judgment, which addresses questions of costs related to that appeal.

The parties agree that the Respondent (the "husband") should pay the Appellant's costs of the present appeal on the standard basis, subject to assessment if not agreed, but disagree on a number of consequential matters. The Respondent is a designated person under the Russia (Sanctions) (EU Exit) Regulations 2019, which requires the Appellant to obtain a licence before receiving payments from him.

Two prior costs orders within these proceedings are relevant background:

• On 13 May 2021 the Court of Appeal ordered the Respondent to pay the Appellant's costs of that appeal and to make two specified payments on account (£255,301.20 and £236,138.60) by 20 May 2021.
• On 28 March 2024 the Supreme Court made a costs order requiring the Appellant to pay 50% of the Respondent's costs of his appeal, with detailed assessment and a deferred payment regime tied to the Appellant obtaining an appropriate licence and other conditions (see [2024] UKSC 3).

Legal Issues Presented

1. Whether the Court of Appeal's costs order of 13 May 2021 (in favour of the Appellant) should be varied in light of the Supreme Court's subsequent decision (2024).
2. Whether the Respondent should be required to make a payment on account of the Appellant's costs, and if so, how much.
3. Whether the Respondent should be permitted to offset against his liability for costs in this appeal the sum which the Appellant was ordered to pay by the Supreme Court.
4. What time period should be allowed for the Respondent to meet any costs award given the sanctions regime applicable to him (dispute between 14 days, 60 days, and 90 days was posed).

Arguments of the Parties

Appellant's Arguments

• The Appellant argued that the 2021 costs order should remain unaltered because she had comprehensively succeeded in demonstrating before this court that Judge [Last Name] had not been materially misled at a without notice hearing in January 2019; that factual foundation was not challenged on the Respondent's appeal to the Supreme Court.
• The Appellant relied on the fact that the Supreme Court upheld the Respondent's appeal on grounds that had not previously been raised, and therefore that the Supreme Court decision did not disturb the basis of her success on the 2021 appeal.
• The Appellant sought a payment on account of £350,000 (approximately 72% of her total claimed costs) and proposed that any sums be payable within 14 days of her obtaining the required licence; she noted, however, that the Supreme Court had itself allowed a longer period (90 days) in its 2024 order at the Appellant's request because of her personal banking difficulties.

Respondent's Arguments

• The Respondent contended that the 2021 orders should be varied in light of the Supreme Court's decision; he accepted liability for certain costs (the Appellant's costs of Judge [Last Name]'s de novo determination of her leave application and those arising under the Maintenance Regulation) but disputed liability for costs associated with the set-aside aspect of the proceedings and associated appeal.
• The Respondent submitted, as a compromise, that each party had succeeded on aspects of the litigation and proposed to pay 50% of the costs of the 2021 appeal and 50% of the costs before Judge [Last Name].
• On the payment-on-account issue the Respondent disputed that any payment on account should be required but, if one were ordered, did not appear to contest the figure proposed by the Appellant.
• The Respondent sought a 90-day period to make any payments following authorization (licence) because of what he described as practical difficulties in routing funds through intermediary banks and compliance processes arising from his sanctioned status, and he sought the right to offset amounts that the Appellant was ordered to pay in the Supreme Court.

Table of Precedents Cited

Court's Reasoning and Analysis

The court's analysis proceeded from the factual and procedural matrix of the prior orders and from the submissions of the parties. The court emphasised the following points in its reasoning:

1. On whether to vary the 2021 costs order: the court concluded that it should not disturb the costs order of 13 May 2021. The court accepted the Appellant's submission that the fundamental basis on which she succeeded in the 2021 appeal — notably that Judge [Last Name] had not been materially misled at the January 2019 without notice hearing — was not materially challenged by the Supreme Court. The Supreme Court had determined the Respondent's appeal on grounds not previously argued, and therefore the court saw no basis for varying the earlier costs award.
2. On who should be regarded as the successful party: taking a "stand-back" view of the proceedings, the court found the Appellant could properly be described as the successful party because she has been given leave to pursue her financial application. The court treated that result as an important factor (citing Baker v Rowe) in awarding costs in her favour.
3. On payment on account: applying CPR 44.2(8) the court was satisfied that there was no good reason to refuse a reasonable payment on account of costs. The sum claimed by the Appellant (a little over 70% of the total claimed costs on her form N260) was regarded as appropriate. The court therefore ordered a payment on account in the sum of £350,000.
4. On offsetting the Supreme Court order: the court held it was not open to it to vary the Supreme Court's costs order and therefore rejected the Respondent's request to offset the amount the Appellant was ordered to pay in the Supreme Court against his liability for costs in the present proceedings.
5. On the appropriate time for payment given the sanctions context: the court recognised the practical difficulties asserted by the Respondent in transferring funds while subject to sanctions but found 90 days to be excessive and 14 days to be unrealistically short. The court therefore fixed a period of 60 clear days for the Respondent to comply with the payment obligations following written notification from the Appellant that she has obtained the required licence(s).
6. Consequential provisions: the court provided for payment of the remaining balance within 60 clear days of agreement on quantum or the conclusion of detailed assessment (provided the Appellant has notified the Respondent that she has obtained the relevant licence(s)). If payments are not made by the due dates, interest at the applicable judgment rate will begin to accrue immediately after the due date(s). All payments must comply with the terms of the licence(s) authorising transfers.

Holding and Implications

Core Ruling: The Court of Appeal declined to vary its 13 May 2021 costs order and made specific supplementary orders dealing with payment on account, the timing for payment, interest on late payments, and compliance with licence terms. The court also confirmed that the Supreme Court's 28 March 2024 costs order remains unaltered.

Key elements of the order (as anonymised):

• Paragraphs 6 and 7 of the Court of Appeal's order dated 13 May 2021 remain undisturbed.
• The Respondent must pay the Appellant's costs of the present appeal, to be subject to detailed assessment on the standard basis if not agreed.
• The Respondent must pay £350,000 on account of those costs within 60 clear days of the Appellant notifying the Respondent in writing (via solicitors) that she has obtained the relevant licence(s) authorising receipt of funds.
• The Respondent must pay the remaining balance within 60 clear days of agreement on quantum or conclusion of detailed assessment (subject to the Appellant having first provided the licence notification). If the Appellant does not provide that notification by the relevant event, the remaining balance is deferred until 60 clear days after she provides such notice.
• Interest at the applicable judgment rate will accrue on any sums not paid by the due date(s).
• All payments must be made in accordance with the terms of the licence(s).
• For the avoidance of doubt, the Supreme Court's costs order of 28 March 2024 stands unaltered.

Implications: The immediate effect is to require the Respondent to make a substantial payment on account and to confirm the Respondent's overall liability for the Appellant's costs of this appeal subject to assessment. The court refused the Respondent's claim to offset against the Supreme Court order and confirmed it could not vary an order of the Supreme Court. The judgment does not purport to establish a new general precedent beyond its application of established principles (including CPR 44.2(8) and the authorities cited), and its practical effect is confined to the parties in this litigation and the handling of payments consistent with sanctions licensing requirements.