Financial Remedy and Private Law Children barrister and Family Arbitrator, Patrick Goodings MCIArb, examines the recent case of Re X (Financial Remedy: Non-Court Dispute Resolution) [2024] EWHC 538 (Fam), and in particular the court's view of the parties' failure to consider Non-Court Dispute Resolution (NCDR) options.
In the High Court case, Mrs Justice Knowles describes the fact that the parties did not engage in non-court dispute resolution in either their children proceedings nor financial remedy proceedings as “utterly unfathomable”.
In summary, the expectation is that parties will have to be prepared to engage in non-court dispute resolution both prior to issuing proceedings, but importantly throughout the proceedings themselves. It is vital that practitioners are comfortable with the various avenues of NCDR available and are actively considering them at all stages.
In what is clearly a guidance judgment, Mrs Justice Knowles sets out the following matters to strongly consider:
Generally
- Those involved in family proceedings, whether concerning money or children, should understand the court's expectation that a serious effort must be made to resolve their differences before they issue court proceedings and, thereafter, at any stage of the proceedings where this might be appropriate.
- At all stages of the proceedings, the court will be active in considering whether non-court dispute resolution is suitable.
- Changes to the Family Procedure Rules 2010 ("the FPR") which are due to come into effect on 29 April 2024 will give an added impetus to the court's duty in this regard.
Family Proceedings Rules
- Rule 3.3.(1) of the FPR mandates the court with a duty to consider if non-court dispute resolution is appropriate at every stage in proceedings.
- When considering whether non-court dispute resolution is appropriate, rule 3.3.(2) states that the court must take into account whether (a) a MIAM (a family mediation information and assessment meeting) took place; (b) whether a valid MIAM exemption was claimed or mediator's exemption was confirmed; and (c) whether the parties attempted mediation or another form of non-court dispute resolution and the outcome of that process.
- Rule 3.4.1(a) states that, where appropriate, the court may direct that proceedings or a hearing in the proceedings be adjourned for a specified period in order to enable the parties to obtain information and advice about, and consider using, non-court dispute resolution.
- Rule 3.4(1)(b) states that adjournment for a specified period may also be appropriate where the parties agree to participate in non-court dispute resolution. The court may make such directions on application of the parties or of its own initiative.
- All the above rules are to be read in the context of the court's overriding objective to deal with cases justly having regard to any welfare issues (rule 1.1(1).
- Rule 1.1(2) states that dealing with a case justly includes, as far as practicable, the saving of expense and the allocation of an appropriate share of the court's resources.
- The court also has a duty of active case management (rule 1.4(1)), amongst which is encouraging parties to use a non-court dispute resolution procedure if the court considers that appropriate and facilitating the use of such procedure (rule 1.4(2)(f)), and helping the parties to settle the whole or part of the case (rule 1.4(2)(g)).
The New Approach
- The FPR does not, at present, give the court power to require parties to engage in non-court dispute resolution. Rule changes on 29 April 2024 will promote the court's ability to encourage parties in financial remedy and children proceedings to use natural gaps in the proceedings' timetable for the purpose of non-court dispute resolution or to adjourn the proceedings, if necessary, to encourage the parties to try non-court dispute resolution.
- Amendments to the costs sanctions the court can impose in financial remedy proceedings will take into account conduct relating to a failure either to attend a MIAM or to attend non-court dispute resolution.
- The court's general powers to compel parties in civil proceedings to engage in non-court dispute resolution was highlighted by the case of Churchill v Merthyr Tydfil County Borough Council and Others [2023] EWCA Civ 1416 (29 November 2023) ("Churchill v Merthyr Tydfil").
- Following extensive review of domestic and international case law, the Court of Appeal held that the court had the power to compel parties in civil proceedings to engage in non-court dispute resolution and/or stay proceedings to allow for non-court dispute resolution to take place. How a court should exercise its discretion to compel the parties was set out by the Court of Appeal in paragraph 65:
"The court should only stay proceedings for, or order, the parties to engage in a non-court-based dispute resolution process provided that the order made does not impair the very essence of the claimant's right to proceed to a judicial hearing, and is proportionate to achieving the legitimate aim of settling the dispute fairly, quickly and at reasonable cost." - It may be thought that the decision in Churchill v Merthyr Tydfil is of limited relevance to family proceedings. To make that assumption is unwise. The active case management powers of the CPR mirror the active case management powers in the FPR almost word for word and both the civil and the family court have a long-established right to control their own processes.
"…even with initially unwilling parties, mediation can often be successful. Mediation, early neutral evaluation and other means of non-court based dispute resolution are, in general terms, cheaper and quicker than court-based solutions. Whether the court should order or facilitate any particular method … is a matter for the court's discretion, to which many factors will be relevant." - Though the FPR rule changes due on 29 April 2024 do not go as far as compelling parties to proceedings to engage in non-court dispute resolution, the agreement of the parties to an adjournment for that purpose will no longer be required. Instead, the family court may – where the timetabling of the proceedings allows sufficient time for these steps to be taken – "encourage" the parties to obtain information and advice about and consider using non-court dispute resolution and "undertake non-court dispute resolution" (rule 3.4(1A) with effect from 29 April 2024).
- The accompanying Practice Direction 3A has been amended and makes clear that the court may also use its powers to adjourn proceedings to encourage the use of non-court dispute resolution (rule 4.1).
- In financial remedy cases, the power to encourage even unwilling parties will be reinforced by an amended rule 28.3(7) which will make the failure, without good reason, to engage in non-court dispute resolution a reason to consider departing from the general starting point that there should be no order as to costs.
- Going forward, parties to financial remedy and private law children proceedings can expect – at each stage of the proceedings - the court to keep under active review whether non-court dispute resolution is suitable in order to resolve the proceedings. Where this can be done safely, the court is very likely to think this process appropriate especially where the parties and their legal representatives have not engaged meaningfully in any form of non-court dispute resolution before issuing proceedings.
In Conclusion…
If it wasn’t already, the writing is now on the wall, there is a clear focus in Family Proceedings to drive parties towards NCDR in more circumstances than ever before. As lawyers and with that in mind, it is important to be alive to the significant benefits that NCDR offers, including: speed of resolution, cost effectiveness and privacy. It is also apposite to consider that whatever the litigants' differences, they, ultimately will have to work within the confines of any order or agreement. Collaborative solutions are therefore incredibly helpful.
Trinity Chambers is at the forefront of NCDR in the North East with a number of bespoke solutions available across a number of sites. Trinity Chambers can also cater for multiple parties concurrently in a suite of conference rooms. Please contact the Family Clerking team by email familyclerks@trinitychambers.co.uk clerks, or call 0191 232 1927, to discuss all forms of NCDR, including;
- Binding Arbitration
- Round table meetings
- Private FDRs