DISPUTE RESOLUTION 'FAMILY STYLE'
Gareth Ledsham prepares civil law practitioners for embracing judge-led dispute resolution through ENE/FDR processes
For those practising in civil litigation, the family court and its differing rules and procedures can for many be the stuff of nightmares. However, civil practitioners may need to face their fears sooner than they think as family dispute resolution mechanisms are on the march into the civil world. This is the view of High Court Judge Mrs Justice Parker expressed in Lomax v Lomax  EWHC 1267 (Fam). She called upon the Rules committee to clarify whether an early neutral evaluation (ENE)/financial dispute resolution (FDR) hearing can be ordered without the consent of both parties; and to give consideration to providing a clear route to compulsory financial dispute resolution in appropriate non-family civil proceedings. The decision, which was handed down in May 2019, concerned an Inheritance Act dispute between a widow and stepson in which the widow wanted to engage in an FDR process.
However, the stepson did not agree. Parker J judged that this was a case “which cries, indeed screams out, for a robust judge-led process”. She considered that a mediator, even one who is legally qualified, was “unlikely to approach the issues in an authoritative way”; and that Inheritance Act cases were “a prime example” of cases where a compulsory FDR process should be available – but the route was not currently open to the court. This follows the earlier case of Seals and Seals v Williams  EWHC 1829 Ch as a result of which there was a subsequent amendment of the Civil Procedure Rules (CPR) 3.1(2) (in force since 1 October 2015) to specifically include the ability to order an ENE within the court’s powers. Seals also concerned an Inheritance Act dispute. Mediation had been unsuccessful due to “differing perceptions of the issues in dispute and of the strength of the respective arguments”. Norris J praised the proposal that the court undertake an ENE, stating it was “highly commendable that the legal representatives for the parties have proposed [it] as a way forward” and judged that the “process is particularly useful where the parties have very differing views of the prospect of success and perhaps an inadequate understanding of the risks of litigation itself ”.
The contrast between the two cases is that in Seals the parties had stalled at mediation and both parties had invited the court to carry out an ENE. In Lomax, the parties were in no such agreement. In the latter, the stepson would agree to mediation but not to an ENE or FDR. Reasons cited by his counsel were that an ENE/FDR would lead to a substantial increase in costs because of the extent of disclosure required. In Lomax, Parker J took the view that while an FDR hearing could be ordered, the rules were insufficiently clear to enable her to impose it. However, it is clear from her judgment that she did not view the objections cited to her necessarily as a bar to ordering the process; and, but for her uncertainty regarding whether the CPR allowed her to impose an ENE/FDR process, she would likely have done so. Indeed, Parker J’s view has been vindicated: on 6 August 2019, the Court of Appeal held that there is nothing in the wording of CPR r3.1(2)(m) which prevents a judge from ordering ENE as part of his/her case management powers, even if the parties do not all consent. Compulsory ENE/FDR is clearly, therefore, something with which civil practitioners and their clients will need to familiarise themselves, whether they like it or not. THE PROCESS ENEs and FDRs are distinct processes but with overlap.
The commentary in the White Book describes ENE as “a form of dispute resolution developed by judges seeking to further the overriding objective by actively managing cases such that they help parties settle the whole or part of the case”. Essentially, the judge will offer a provisional view of the merits of the case. This is not binding unless the parties agree to be bound by it. The FDR is a variation on this theme born of the Family Procedure Rules and dates back to 1996.
Again, it is a form of judge-led alternative dispute resolution (ADR) which aims to facilitate realistic negotiations and a settlement between parties. It is done within the context of the court proceedings themselves but can also be arranged privately. The role of the judge in an FDR falls into two phases:
— To carry out an early neutral evaluation and provide each party with an objective and realistic view of their case in order to provide a starting point for negotiations; and
— The judge acts as a mediator to try to bridge the gap between the parties. In an FDR, the judge will contemplate all relevant information including without prejudice offers in order to assist the parties in reaching a settlement. In doing so, the judge can provide an indication of what outcome they themselves would order at a final hearing. Both FDRs and ENEs are without prejudice proceedings and the judge is not allowed to then preside over the final hearing.
FDR has been highly successful in financial remedy cases in the family courts (the success rate is believed to be around 85 per cent) allowing the judge to highlight to the parties the merits (or lack of merits) of their individual arguments and the risks they incur in proceeding to litigation. This can be particularly useful in highlighting to a client who is unrealistic about the merits of their case that their case is not as strong as they believe it to be. The aim is to reach a settlement in the FDR itself. Even if a settlement is not reached on the day, the points raised in FDR often provide strong foundations for an agreement at a later date in facilitating the parties to focus on the key issues and move towards a more realistic starting position. As with any form of ADR, the costs of engaging in the FDR process are likely to be significantly less than if the matter proceeds to a final hearing – even if there is considerable disclosure which needs to take place beforehand.
The outcome of FDR is non-binding and may not lead to a settlement. Any indication by a judge of how they would decide the case may cause one party to become more convinced by the merits of their argument and thus entrenched in their position, hindering future negotiations. Conversely, it may compromise the losing party’s negotiating position. This is particularly an issue in complex disputes or disputes of fact, as the process is much more truncated than a full hearing. Indeed, in family FDRs judges specifically do not determine disputes of fact. The judge may therefore reach a very different conclusion on the basis of the more limited information available to them than might be ordered at a final hearing. A further issue is lack of time at the hearing: in the family division the hearing may only be listed for an hour. In complex disputes this may prove insufficient. It may also be there are unknown variables (indeed which cannot be known) at the date of the ENE or FDR. The most common of these results from a lack of available information, particularly in relation to the finances of the parties (in the FDR context) if full disclosure has not yet been provided. This presents a risk in terms of agreeing a settlement at that stage as a party may end up settling for less than they might if all relevant information was available. Perhaps one of the principal difficulties with the FDR process is that the experience of family practitioners of FDR hearings (which have been around for some time in the family division) can vary considerably, depending on the experience of the judge dealing with the case and of the practitioners themselves. Experienced practitioners in front of an experienced judge will be familiar with the process and its limits, such that they will be best placed to get the most out of it. On the other hand, a judge who is less familiar with the process may be less clear on their role which, in the worst-case scenario, may be more of a hindrance to settlement than a help. Likewise, an ill-prepared practitioner will not serve their client well as they will not be in a position to exploit the settlement opportunity presented to them. This means there is a risk of uncertainty in the outcomes. If the process becomes compulsory in civil litigation, the risk is arguably greater as it will take time for judges to receive training and for practitioners to become familiar with the process.
A FAVOURED OPTION
ENE and FDR processes appear to be viewed increasingly favourably by the courts in non-family civil matters as a method of pursuing the overriding objective in suitable cases. This is true of Lomax (particularly in light of the recent decision of the Court of Appeal) but is also echoed in the Chancery Guide which provides model orders. Indeed, I have been involved in a number of FDR hearings – with varying degrees of success! – in matters involving contested estates (principally Inheritance Act claims). One unsuccessful case involved a judge who did not appear to have a full grasp of the papers such that no useful indications could be given. However, in another case – where all parties and judge were well prepared – the intervention of the judge was incredibly useful in focusing the client’s mind on the possible outcome in the litigation, as well as giving them a taste of the court room which decided they would prefer not to repeat. In Lomax, Parker J particularly advocated an extension of the CPR to allow for courts to impose a compulsory ENE/FDR process where judges feel it would be useful or necessary to do so. As noted above, her position has been vindicated (ironically) by the Court of Appeal overturning her decision not to order same.
The Court of Appeal’s decision also appears to endorse Parker J’s rejection of the defendant’s submission that parties must be free to decide whether to submit to ADR, suggesting such an argument “may be open to challenge in the modern world and in pursuance of the overriding objective”. It is now clear that there is already a mechanism for voluntary ENE (which forms a major part of the Family Procedure Rules FDR process) built into CPR r3.1(2), and that this process may now also be ordered compulsorily, so this should be included in an evaluation of the possible ADR options more commonly considered when contemplating settlement, such as mediation or a round table lawyers’ meeting. As with any process, there are advantages and disadvantages to the ENE or FDR process and these should be considered carefully when advising clients. Generally speaking, however, with the right case – particularly those with emotive issues of fact (Inheritance Act claims are a prime example, but equally, TOLATA claims or boundary disputes might be well suited) – and thorough preparation, the ENE or FDR can be a useful unblocking tool. A mechanism for the courts to order a judicial ‘banging together of heads’ will be a welcome addition to civil practitioners’ tactical arsenal.