BY v GC: costs orders, litigation conduct and the limits of r28.3

In BY v GC (No. 3: Costs) [2026] EWFC 50, Mr Nicholas Allen KC (sitting as a Deputy High Court Judge) addressed the costs of financial remedy proceedings in which the parties had together spent over £3.1 million in litigation. The judgement offers a careful analysis of when litigation conduct justifies departure from the general rule under FPR 2010 r28.3(5), and serves as a measured reminder that dishonest disclosure attracts judicial censure regardless of subsequent procedural steps.

The wife (W) sought costs totalling some £621,932, spanning her costs of defending a failed Daniels v Walker application, disbursements referable to that application, expert attendance costs at the final hearing, and 50% of her overall remaining legal costs. The husband (H) maintained that no order should be made save that the costs of any further hearing remain at large.

The Daniels v Walker application

The court had little difficulty concluding that H, having brought an unsuccessful Daniels v Walker application, should bear W's costs of it. Applying the Gojkovic soft presumption that costs prima facie follow the event in clean sheet cases, the decisive factor was H's failure. The N260 figure of £23,371 was reduced to £19,000 after the court found a 62.5% attribution of hearing costs to the application overstated; 50% was the appropriate proportion, with a further modest reduction on summary assessment to reflect what a detailed assessment would likely have produced.

Expert evidence and the costs of the final hearing

W's argument that H should bear the costs of Survey Spain and PwC attending the final hearing failed on both. In relation to Survey Spain, W had herself benefited from a third report produced following oral evidence, which increased the valuation of the Spanish property by approximately €963,000 — a figure W relied upon and which the court adopted. It would have been inequitable to require H alone to bear costs of evidence that enhanced W's own recovery. The court reaffirmed the principle drawn from r28.3(7)(c) and (d): the relevant question is not whether a challenge succeeded, but whether it was reasonable to mount it and whether it was pursued in an appropriate manner. Cross-examining an SJE on the valuation of a private trading company — an exercise often described as art rather than science — will generally satisfy that test.

Form E disclosure and the costs penalty

The more significant aspect of the judgement concerns H's treatment of Company A in his Form E, where he attributed a nil value to an asset later valued by the SJE at approximately £24.8 million. The court found this to be a knowingly inaccurate assessment. Applying W v W (Financial Provision: Form E) [2004] 1 FLR 494, Mr Allen KC held that deliberate falsification of a Form E demands judicial censure and a penalty in costs, and that this obligation is not displaced simply because an SJE had already been agreed. Causative connection to the specific costs incurred was held to be of limited relevance; it is the principle that matters.

That said, the court declined to award the full sum sought. W's own negotiating conduct weighed against her: her open offer of 27 June 2025, seeking a lump sum exceeding £34.2 million against an eventual award of £24.75 million, was unreasonable in light of the financial landscape then available. H had made a reasonable open offer of £20 million on 10 June 2025, before approximately £1 million in further combined costs were incurred. The outcome — a 55/45 division broadly midway between the parties' positions — was neither a clear win nor a clear loss for either side.

The court ultimately ordered H to pay £79,000 in total (£19,000 for the Daniels v Walker application; £60,000 reflecting the Form E conduct), assessed summarily. The judgement reinforces that knowingly false financial disclosure will carry costs consequences in all but exceptional circumstances, and that open negotiating conduct remains a powerful counterweight in any r28.3 analysis.

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