Indemnity Costs Ordered in Matrimonial Proceedings Following Material Non-Disclosure

The England and Wales Court of Appeal in Helliwell v Entwistle [2025] EWCA Civ 1071 (7 August 2025) ordered indemnity costs for the entire legal proceedings be paid by the wife in matrimonial proceedings where the wife was found to have made a material non-disclosure of assets in a pre-nuptial agreement.

The agreement, entered into on the day of the wedding, involved the parties agreeing, upon separation, to walk away from the marriage with the assets they had brought in.

The husband was awarded 400,000 pounds by the Court of Appeal after showing that the wife failed to disclose the full extent of her assets worth 66 million pounds, which the Court considered to be a fraudulent non-disclosure.

The Court considered the legal position:

5. The court’s power to award costs is found in CPR 44.2. The court has a wide discretion in respect of costs. CPR 44.2(4) provides that in deciding what order to make the court has 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 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.”

6. CPR 44.2(5) further provides:

“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 its case or a particular allegation or issue;

(d) whether a claimant who has succeeded in its claim, in whole or in part, exaggerated its claim…”

7. The court’s power to award costs to be assessed on the indemnity basis is to be found in CPR 44.3(1)(b). In Excelsior Commercial & Industrial Holdings Ltd [2002] EWCA Civ 879 the court held that the making of an indemnity costs order would be appropriate where the conduct of the parties, or other particular circumstances of the case, (or both), was such as to take the case “out of the norm” in a way which justifies the making of an order for indemnity costs (see Waller LJ at [39]).
8. In Esure Services Ltd v Quarcoo [2009] EWCA Civ 595 Waller LJ provided further clarification. Having reiterated at [17] that the right starting point is the rules, he went on to say at [25]:

“In my view the word “norm” was not intended to reflect whether what occurred was something that happened often so that in one sense it might be seen as “normal” but was intended to reflect something outside the ordinary and reasonable conduct of proceedings. To bring a dishonest claim and to support a claim by dishonesty cannot be said to be the ordinary and reasonable conduct of proceedings.”

9. We have in mind Waller LJ’s observations and all the factors in CPR 44.2 in determining the Appellant’s application for indemnity costs.

The Court decided as follows:

12. The judgment on the substantive appeal sets out why the court considers that the Respondent’s deliberate non-disclosure in the circumstances of this case can properly be characterised as fraudulent.
13. In addition, what cannot in any event be disputed is that the Respondent deliberately failed to disclosure 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.
14. Further, and as indicated, 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.
15. 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.

The UK Court of Appeal case can be found here.

The substantive case can be found here.

An article about the case can be found here.