UKSC 36
On appeal from:  EWCA Civ 1585
Lord Phillips, President
JUDGMENT GIVEN ON
25 July 2012
Heard on 25 June 2012
Janet Bazley QC
(Instructed by Hull City Council Legal Section)
(Instructed by Sandersons Solicitors)
|Intervener (Children and Family Court Advisory and Support Service)
Teertha Gupta QC
(Instructed by CAFCASS Legal Services)
|Intervener (The Grandparents' Association)
(Instructed by Freemans Solicitors)
LORD PHILLIPS, DELIVERING THE JUDGMENT OF THE COURT
The Family Procedure Rules 2010
"1.1 The overriding objective
This section has no associated Explanatory Memorandum
(1) These rules are a new procedural code with the overriding objective of enabling the court to deal with cases justly, having regard to any welfare issues involved.
(2) Dealing with a case justly includes, so far as is practicable—
(a) ensuring that it is dealt with expeditiously and fairly;
(b) dealing with the case in ways which are proportionate to the nature, importance and complexity of the issues;
(c) ensuring that the parties are on an equal footing;
(d) saving expense; and
(e) allotting to it an appropriate share of the court's resources, while taking into account the need to allot resources to other cases."
"(4) In deciding what order (if any) to make about costs, the court must have regard to all the circumstances, including –
(a) the conduct of all the parties;
(b) whether a party has succeeded on part of his case, even if he has not been wholly successful; and
(c) any payment into court or admissible offer to settle made by a party which is drawn to the court's attention, and which is not an offer to which costs consequences under Part 36 apply.
(5) The conduct of the parties includes –
(a) conduct before, as well as during, the proceedings and in particular the extent to which the parties followed the Practice Direction (Pre-Action Conduct) or any relevant pre-action protocol;
(b) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;
(c) the manner in which a party has pursued or defended his case or a particular allegation or issue; and
(d) whether a claimant who has succeeded in his claim, in whole or in part, exaggerated his claim."
Reasons for making no order for costs in family proceedings that are not relevant in the present case
i) In ancillary relief proceedings each party's liability for costs will be taken into consideration when making the substantive award. This approach has the advantage of discouraging the parties from running up unnecessary costs – see Baker v Rowe  EWCA Civ 1162;  1 FCR 413, paras 20 to 23 per Wilson LJ.
ii) Orders for costs between the parties will diminish the funds available to meet the needs of the family – see Gojkovic v Gojkovic  Fam 40, 57, per Butler-Sloss LJ and R v R (Costs: Child Case)  2 FLR 95, 97, per Hale J. (This could, of course, be a good reason not to award costs against a family member in care proceedings).
iii) It is undesirable to award costs where this will exacerbate feelings between two parents, or more generally between relations, to the ultimate detriment of the child: see B (M) v B (R) (Note)  1 WLR 1182, 1185 per Willmer LJ; Sutton London Borough Council v Davis (No 2)  1 WLR 1317, 1319 per Wilson J. (Once again this could be a good reason not to award costs against a family member).
"As a matter of public policy it seems to me that where there is the exercise of [a] nicely balanced judgment to be made by a local authority carrying out its statutory duties, the local authority should not feel that it is liable to be condemned in costs if, despite acting within the band of reasonableness (to adopt the words of Wilson J), it may form a different view to that which a court may ultimately adopt."
The reasoning of the Court of Appeal
"Where the debate surrounds the future of a child, the proceedings are partly inquisitorial and the aspiration is that in their outcome the child is the winner and indeed the only winner. The court does not wish the spectre of an order for costs to discourage those with a proper interest in the child from participating in the debate. Nor does it wish to reduce the chance of their co-operation around the future life of the child by casting one as the successful party entitled to his costs and another as the unsuccessful party obliged to pay them. The proposition applies in its fullest form to proceedings between parents and other relations; but it also applies to proceedings to which a local authority are a party. Thus, even when a local authority's application for a care order is dismissed, it is unusual to order them to pay the costs of the other parties. But the proposition is not applied where, for example, the conduct of a party has been reprehensible or the party's stance has been beyond the band of what is reasonable: Havering London Borough Council v S  1 FLR 489 and Gojkovic v Gojkovic  Fam 40, 60C-D."
"In care proceedings the local authority and all other parties come into court in order to assist it in choosing the programme for the child's future which will best serve his or her welfare. In the case of Mrs Davis the local authority made an incorrect decision as to her fitness. She had a right to be registered and they infringed it. Mrs Davis afforded them the opportunity to review their decision by lodging an objection pursuant to section 77(3) of the Children Act 1989. But they resolved that the decision should stand. In order to establish her right to be registered, Mrs Davis had to appeal to the magistrates' court. The proceedings were adversarial and the local authority lost the argument. Such were the circumstances for application of the principle that costs should follow the event. Far from being satisfied that the justices were plainly wrong to decide that the local authority should pay the costs of Mrs Davis, I consider that they were right."
"The order for a bespoke fact-finding hearing was surely to consign the determination of the mother's allegations into a separate compartment of the court's determination of the father's application for an order for contact. It went almost without saying, although the circuit judge chose to say it, that the optimum outcome of the contact application could be determined only by reference to the findings made at the fact-finding hearing; but the effect of the direction for a separate fact-finding hearing was that the costs incurred by the mother in relation to that hearing can confidently be seen to be wholly referable to her allegations against the father. There was, in that sense, a ring fence around that hearing and thus around the costs referable to it. Those costs did not relate to the paradigm situation to which the general proposition in favour of no order as to costs applies."
"I consider that, where in care proceedings a local authority raise, however appropriately, very serious factual allegations against a parent or other party and at the end of a fact-finding hearing the judge concludes that they have not established them, the general proposition is not in play."
In that situation he held that the judge should approach the question of costs with a clean sheet.
"Even where the judge starts with a clean sheet, the fact that one party has been unsuccessful, and must therefore usually be regarded as responsible for the generation of the successful party's costs, will often properly count as the decisive factor in the exercise of the judge's discretion."
"In my view the facts that the grandparents were faced with allegations of the utmost severity, that accordingly it had been reasonable for them to stretch their economy to the utmost in order to secure for themselves a professional defence against them and that in the event the result was an exoneration, were all matters which should have been of great, indeed in my view of decisive, importance to a judge who was about to write on a clean sheet."
The relevance of a split hearing
"74. Care proceedings are not a two stage process. The court does have two questions to ask. Has the threshold been crossed? If so, what will be best for the child? But there are many cases in which a court has two or more questions to ask in the course of a single hearing. The same factual issues are often relevant to each question. Or some factual disputes may be relevant to the threshold while others are relevant to the welfare checklist: it may be clear, for example, that a child has suffered an injury while in the care of the mother, but whether the father or stepfather has a drink problem and has been beating the mother up is extremely relevant to the long term welfare of the child.
75. The purpose of splitting the hearing is not to split the two questions which the court must answer. It is to separate out those factual issues which are capable of swift resolution so that the welfare professionals have a firm foundation of fact upon which to base their assessments of family relationships and parenting ability: see In re S (Care Proceedings: Split Hearing)  2 FLR 773. A fact finding hearing is merely one of the case management possibilities contemplated by the new Public Law Outline … There is no point in splitting the issues if the facts cannot be determined relatively quickly, still less if it is unlikely to result in clear cut findings to help the professionals in their work.
76. But the finding of those facts is merely part of the whole process of trying the case. It is not a separate exercise. And once it is done the case is part heard…"
The issue of principle
"Parties should be free to bring personal welfare issues to the Court of Protection without fear of a costs sanction. Local authorities and others who carry out their work professionally have no reason to fear that a costs order will be made. … It is only local authorities who break the law, or who are guilty of misconduct that falls within the meaning of rule 159, that have reason to fear a costs order. Local authorities who do their job properly and abide by the law have nothing to fear. "
These comments were endorsed on appeal by Hooper LJ:  EWCA Civ 939, at para 17.
Should local authorities be protected from liability to costs in care cases?