The recent amendments to the Family Procedure Rules 2010, effective from 29 April 2024, place an increased obligation on parties, family practitioners and the courts to consistently evaluate whether cases are suitable for non-court dispute resolution, both before and during court proceedings. These changes reflect the broader efforts of the government and the judiciary to encourage parties to resolve matters constructively using alternative dispute resolution options.
This can be seen in the recent case of Re. X (Financial Remedy: Non-Court Dispute Resolution) [2024] EWHC 538 (Fam), in which Mrs Justice Knowles restated the court’s expectation that parties consider non-court dispute resolution before issuing court proceedings.
In Re. X (Financial Remedy: Non-Court Dispute Resolution) [2024], the court was concerned with a pre-hearing review in financial remedy proceedings where the assets were valued between £27m to £29m. It was a ‘needs case’ following the breakdown of a 15-year marriage, where the parties shared an 11-year-old daughter. The parties were also engaged in separate Children Act proceedings at the time of the hearing.
It transpired during the course of the hearing that whilst the parties had attended a Financial Dispute Resolution (FDR) hearing, and exchanged open offers, neither of the parties had engaged in any form of non-court dispute resolution prior to issuing either the financial remedy and Children Act proceedings. This, in Mrs Justice Knowles’ view, was “utterly unfathomable.”
What is more, the cumulative costs incurred by both of the parties during the financial proceedings alone ran up to £581,000. The parties’ protected costs were estimated to be almost equal to those already incurred, meaning that the total costs are estimated to amount to c. £1m, which amounted to c. five percent of the overall marital assets.
Consequently, to allow the parties the opportunity to consider non-court dispute resolution, the court ordered that the case management directions to trial would not fall due until mid-March 2024, to enable the parties to focus minds on resolving their issues directly, before incurring further, and hopefully unavoidable, costs in preparing for a trial.
Widening definitions
The judgment comes as a reminder to family practitioners of the increased need to actively consider whether non-court dispute resolution is appropriate once the changes to the Family Procedure Rules (pursuant to The Family Procedure (Amendments No. 2) Rules 2023/1324) are effective.
For example, the definition of ‘non-court dispute resolution” will be widened to mean “methods of resolving a dispute other than through the court process, including but not limited to mediation, arbitration, evaluation by a neutral third party and collaborative law”. Consequently, MIAM (mediation information assessment meeting) providers will be asked to provide information on all forms of non-court dispute resolution before one party issues proceedings, rather than primarily focusing on mediation alone.
In addition, circumstances that may qualify for the mediation exemption will be narrowed, and the court can direct parties provide evidence to support of their claimed exemption when lodging their application. Furthermore, parties will be expected to set out their views regarding non-court dispute resolution, on a court form which is to be supported by a signed statement of truth. This aims to encourage parties to genuinely consider other resolution methods and, if not appropriate, to clearly explain to the court their reasons.
Increased powers
The court will also have increased powers to adjourn proceedings for a specified period to enable parties to obtain information and advice about, and consider using, non-court dispute resolution. At the moment, the court is only able to stay proceedings where parties are in agreement, however these new rules will allow for the court to make its own assessment as to whether non-court dispute resolution would benefit the parties, so long as the adjournment would not impact either party’s claims. This rule mirrors the case management powers in civil litigation, as demonstrated in the case of Churchill v Merthyr Tydfil County Borough Council and Others [2023] EWCA Civ 1416 (29 November 2023) ("Churchill v Merthyr Tydfil").
The issue in Churchill v Merthyr Tydfil was whether the court could direct the parties engage in a non-court dispute resolution process, and, if so, in what circumstances it should do so. It was held by the Court of Appeal that the court can order parties to engage in non-court dispute resolution, and that an adjournment can be directed (irrespective of whether the parties agree) to enable parties to engage in a non-court dispute resolution method, so long as it does not impair one parties’ claim, and it comes at a reasonable cost.
Finally, the court will now have supplementary powers to impose cost sanctions should parties fail to attend a MIAM or non-court dispute resolution without sufficient reason. Rule 28.3(7) states the general starting point that there be no order as to costs will be rebutted should parties refuse to engage in non-dispute resolution unreasonably. This order can be made against one or both of the parties, depending on the situation at hand and applies both to financial remedy and children act proceedings in equal measure.
Alternative methods
It is widely accepted that litigation can erode family relationships and increase parties’ costs, often depleting the family finances. In addition, with the family court’s present backlog it is sensible to steer families away from the court process when it is unnecessary and disproportionate, to leave the system available for those whom the court’s input is especially needed.
Therefore, the expectation that parties need to consider a wider choice of alternative methods to resolve disputes, rather than just mediation, is welcomed. If greater information about those processes that are available to parties at the outset of their case and reviewed as to the case progresses, this will help encourage parties to find a method that best suits their needs and issues and their families. In addition, by narrowing the exemptions to attend mediation, the courts attention will be focused on those few cases that require judicial input, such as cases with complex issues or where domestic violence is/or has been a factor.
On the other hand, questions may be raised as to whether the new rules are fit for purpose. There may be some concern that cases where domestic violence is an issue, but where parties struggle to evidence its presence may find they are directed to consider non-court dispute resolution methods, which may, in certain circumstances, not be fit for purpose. Family advisors ought to ensure that the suggested methods recommended to clients still safeguard the safety of both parties involved, so as to not cause serious harm.
Step in the right direction
There is a concern that the imposing of cost orders may be unnecessarily punitive, where the majority of the cases in the family system turn on each of the parties’ ‘needs’, cost orders can mean that there is less money available to meet those needs. In addition, threats of cost orders often increase tensions between parties, which is an aim these changes are trying to avoid. However, little comes to mind as to how else to enforce these rules, if it is not in relation to costs.
Finally, some may argue that these rules do not go far enough. The court will have the authorisation to adjourn proceedings and invite the parties to consider non-court dispute resolution, however unlike civil proceedings, it cannot force parties to engage in the process. The court only has general powers to adjourn proceedings through their own case management powers, which it may use to create gaps between hearings to accommodate time for non-court dispute resolution practices to take place, however it cannot direct them to do so. This, in certain cases, may cause unnecessary delay.
It remains to be seen how effective the new Family Procedure Rules will be. However, they will certainly be a step in the right direction and allow the courts more discernment on parties’ unique situations and where alternative dispute resolution may be necessary or prudent.
Laura Williams is an Associate at Stowe Family Law
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