Fraudulent Non-Disclosure in Financial Remedy Proceedings | Indemnity Costs Award Following Successful Appeal

HELLIWELL V ENTWISTLE [2025] EWCA Civ 1071

In Helliwell v Entwistle [2025] EWCA Civ 1071, the Court of Appeal addressed costs issues following the appellant husband’s successful appeal against a financial remedy order, which had upheld a pre-nuptial agreement despite the respondent wife’s fraudulent non-disclosure of assets. The appellant sought indemnity costs totalling £669,840 for both appeal and first-instance proceedings, plus repayment of a £75,000 costs order, with immediate payment. The respondent contested indemnity costs, seeking standard basis assessment with deferred payment until after the remitted needs assessment or any Supreme Court appeal.

Applying the “out of the norm” test from Excelsior Commercial & Industrial Holdings Ltd [2002] EWCA Civ 879 and Esure Services Ltd v Quarcoo [2009] EWCA Civ 595, the court found the respondent’s deliberate non-disclosure, express warranties of full disclosure, and obstructive conduct (including preventing the appellant from receiving legal advice) fell well outside ordinary and reasonable conduct of family proceedings. The unanimous judgment awarded indemnity costs for both stages of proceedings if not agreed. The decision demonstrates that fraudulent non-disclosure in financial remedy proceedings, particularly where coupled with express warranties, will justify departing from standard basis assessment.

“We do not consider that such conduct can possibly be described as reasonable in relation to the use of a pre-nuptial agreement. Still less can it be regarded as the ordinary and reasonable conduct of proceedings in the Family Division. It was well ‘out of the norm’. In our judgment, this is an entirely appropriate case in which to order costs, both at first instance and on appeal, to be assessed on an indemnity basis if not agreed.”

Citations

Excelsior Commercial & Industrial Holdings Ltd v Salisbury Hammer Aspden & Johnson [2002] EWCA Civ 879 Indemnity costs may be awarded where a party’s conduct or particular circumstances make the case exceptional, taking it “out of the norm” such that standard costs would be insufficient. Esure Services Ltd v Quarcoo [2009] EWCA Civ 595 Conduct that is dishonest or outside the bounds of ordinary and reasonable litigation behaviour justifies the imposition of indemnity costs as it falls markedly outside the norm.

Track allocation housing disrepair CPR 46.13 settlement sum costs restriction SCCO

MRO fee markup cap 25% detailed assessment personal injury Senior Courts Costs Office

Security for costs refused CPR 25.27 very high probability success excessive estimate King's Bench

IPEC scale costs transfer Patents Court PD 30 para 9.2 costs caps Court of Appeal

Costs budget variation CPR 3.15A promptness significant development unfair prejudice Chancery Division

Costs budgeting inter partes proportionality high hourly rates AI disclosure Patents Court CPR 3E

Beneficiary personal liability section 71(3) Solicitors Act 1974 indemnity costs VAT self-supply SCCO

Summary assessment indemnity costs unless order payment on account disclosure default Chancery Division

Provisional assessment set aside CPR 3.1(7) points of dispute filing duty PD 47 para 14.3 SCCO

Fixed recoverable costs police claims CPR 26.9(10)(e) intentional tort exemption

Key Points

Indemnity costs may be awarded where a party’s conduct is found to be outside the ordinary and reasonable conduct of proceedings, taking the case “out of the norm” in accordance with CPR 44.3(1)(b).
Fraudulent non-disclosure, particularly in the context of family proceedings involving financial disclosure, justifies an award of indemnity costs where such conduct materially undermines the fairness of the litigation process.
The court’s discretion under CPR 44.2 to make costs orders requires consideration of all relevant circumstances, including the conduct of the parties before and during proceedings, the reasonableness of pursuing particular issues, and any settlement offers made.
A party who fails to accept a reasonable proposal at an early stage and instead persists with unreasonable positions that result in adverse findings may be liable for adverse costs orders on the indemnity basis.
The deliberate use of misleading communications to induce waiver of legal advice and reliance on incomplete disclosure may constitute conduct warranting indemnity costs.

“In addition, what cannot in any event be disputed is that the Respondent deliberately failed to disclose the majority of her assets notwithstanding that she expressly warranted to the Appellant that she had made full disclosure under the terms of the agreement. She also used the copy and paste email to induce the Appellant to accept, on the basis that her disclosure would be full and frank, that he would not be able to receive legal advice from his lawyers as to that disclosure.”

Key Findings In The Case

The Court found that the Respondent had deliberately failed to disclose the majority of her assets, despite expressly warranting that she had made full disclosure under the terms of the agreement; this conduct was found to constitute fraudulent non-disclosure and materially undermined the fairness of the financial remedy proceedings [12–13].
The Respondent knowingly induced the Appellant to waive his right to legal advice by using a misleading “copy and paste” email purporting to demonstrate full and frank disclosure, which the Court found to be a deliberate act intended to manipulate the negotiation process [13].
The Respondent rejected a reasonable proposal put forward by the Appellant at an early stage—namely, that the pre-nuptial agreement be set aside in favour of a straightforward needs assessment—which ultimately aligned with the outcome on appeal; her refusal contributed to unnecessary litigation and undermined the possibility of early resolution [10, 14].
The Court determined that the Respondent’s continued defence of the agreement, including advancing unfounded explanations for her non-disclosure and maintaining that her conduct was not dishonest, was unreasonable and well outside the acceptable bounds of conduct in family proceedings [14–15].
Having regard to the totality of the Respondent’s conduct both before and during the proceedings, including fraudulent non-disclosure and unreasonable litigation strategy, the Court found the case to be “well out of the norm” and held that indemnity costs were justified for both the appellate proceedings and the hearings at first instance [15].

“...the Respondent rejected an offer that she should forego reliance on the pre-nuptial agreement and simply agree to an assessment of the Appellant's needs by reference to section 25 of the Matrimonial Causes Act 1973. Instead, the Respondent chose to maintain, when challenged at the hearing before the judge, that her deliberate non-disclosure was not dishonest and the agreement should stand. She also advanced a number of self-interested explanations relating to her own and her father's tax affairs in an attempt to justify why she had chosen to mislead the Appellant."

The Court of Appeal’s recent costs judgment in Helliwell v Entwistle [2025] EWCA Civ 1071 demonstrates how deliberate non-disclosure in financial remedy proceedings can justify indemnity costs orders. Following a successful appeal against Francis J’s financial remedy order, the court awarded costs on the indemnity basis both for the appeal and the proceedings below, finding the respondent’s (wife’s) conduct was “well out of the norm”.

Background to the Costs Application

The costs judgment arose after the appellant (husband) successfully appealed Francis J’s order of 20 March 2025 in financial remedy proceedings. The Court of Appeal found that the judge’s decision to uphold a pre-nuptial agreement was wrong due to the respondent’s (wife’s) fraudulent non-disclosure of assets, with the matter being remitted to the High Court for an assessment of the appellant’s (husband’s) needs.

Francis J’s original costs order had required the appellant (husband) to pay £75,000 to the respondent (wife). Following the successful appeal against that decision, the appellant (husband) sought to recover this sum alongside his costs of both the proceedings at first instance and on appeal.

The Costs Orders Sought

The appellant’s (husband’s) costs application comprised three distinct elements totalling over £669,000:

£120,522 for the costs of the appeal on the indemnity basis
Repayment of the £75,000 paid under the costs order of 20 March 2025
£474,318 for costs incurred up to and including the first instance hearing, also on the indemnity basis

All sums were sought to be payable by 13 August 2025, with the appellant (husband) requesting summary assessment rather than detailed assessment.

The Respondent’s Position on Costs

The respondent (wife) accepted liability in principle for the costs of the appeal but “fiercely resisted” any assessment on the indemnity basis. She sought standard basis assessment with detailed assessment unless quantum could be agreed. More significantly, she proposed substantial delays to payment, seeking to defer payment until either 14 days after determination of the appellant’s (husband’s) remitted needs assessment, or if permission to appeal to the Supreme Court were granted, until after conclusion of that appeal.

The respondent (wife) also submitted that costs of the hearings below should be considered at the conclusion of the remitted needs assessment rather than being determined immediately.

The Court’s Analysis | Conduct “Out of the Norm”

The Court of Appeal applied the established test from Excelsior Commercial & Industrial Holdings Ltd [2002] EWCA Civ 879, which requires conduct or circumstances taking the case “out of the norm” to justify indemnity costs. The court particularly relied upon Waller LJ’s clarification in Esure Services Ltd v Quarcoo [2009] EWCA Civ 595 that “norm” reflects something outside the ordinary and reasonable conduct of proceedings, rather than statistical frequency.

The court identified several factors that placed the respondent’s (wife’s) conduct well outside reasonable parameters:

The respondent (wife) had deliberately failed to disclose the majority of her assets despite expressly warranting to the appellant (husband) that she had made full disclosure under the terms of the pre-nuptial agreement. She had also used what the court described as a “copy and paste email” to prevent the appellant (husband) from receiving legal advice about that disclosure.

When challenged at the hearing before Francis J, the respondent (wife) maintained her position, denying dishonesty and advancing “self-interested explanations relating to her own and her father’s tax affairs” to justify misleading the appellant (husband). The court noted that the respondent (wife) had rejected an offer that would have resulted in precisely the outcome that would now occur following the successful appeal – an assessment of the appellant’s (husband’s) needs under section 25 of the Matrimonial Causes Act 1973.

The Costs Decision

The court concluded that such conduct could not “possibly be described as reasonable in relation to the use of a pre-nuptial agreement” and was not “the ordinary and reasonable conduct of proceedings in the Family Division”. Finding the conduct was “well out of the norm”, the court ordered costs both at first instance and on appeal to be assessed on an indemnity basis if not agreed.

While the judgment does not explicitly address the timing of payment or confirm the specific quantum sought, the court’s robust language and unanimous decision on the indemnity basis issue suggests strong support for the appellant’s (husband’s) position on immediate enforcement.

Implications for Family Solicitors

This decision provides important guidance for solicitors handling financial remedy proceedings, particularly regarding disclosure obligations and their potential costs consequences. The court’s willingness to award indemnity costs demonstrates that fraudulent non-disclosure will be treated as conduct falling well outside normal parameters, especially where a client has given express warranties about full disclosure.

The case highlights the critical importance of ensuring clients understand their disclosure obligations from the outset. Where pre-nuptial agreements are involved, solicitors should be particularly cautious about any warranties or representations regarding full disclosure, as these can create additional exposure if subsequently proved false.

The judgment also illustrates how the rejection of reasonable settlement proposals can contribute to findings that conduct justifies indemnity costs. The appellant (husband) had proposed at the outset the very outcome that ultimately occurred, yet the respondent (wife) chose to maintain her position based on incomplete disclosure. This suggests solicitors should carefully evaluate whether their client’s position is sustainable if fuller disclosure were to emerge.

For solicitors advising clients in financial remedy proceedings, the case serves as a stark reminder of the costs risks associated with inadequate disclosure practices. The court’s characterisation of the respondent’s (wife’s) conduct as fraudulent, combined with the substantial costs award exceeding £669,000, demonstrates the serious financial consequences that can flow from deliberate concealment of assets.

The decision also indicates that attempts to delay costs payments pending further proceedings or potential appeals may be unsuccessful where the conduct justifying indemnity costs is clear and established. While the judgment does not explicitly rule on the timing issue, solicitors should be aware that courts may show little sympathy for arguments seeking to postpone the costs consequences of established misconduct.

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