Private Financial Dispute Resolutions and Early Neutral Evaluation

We know that the landscape of the family court and family practice is changing. There are already very significant delays in the administration of family justice through the court system; in part because of the effects of Covid since 2020, but there were already significant delays which were worsening. Cuts to the Ministry of Justice budget, and especially the Court Service are to blame. The cuts implemented some years previously, but many viewed the current position to be as a result of the reduction in funding rather than Covid itself. The timeframe for courts dealing with financial remedy and children applications from issue to final hearings is substantially in excess of 12 months. It is highly unlikely that the Court Service will receive any additional funding to remedy the situation.

We have already heard from senior judges, including the presence of the Family Division Sir Andrew McFarlane about the development of private family law outside of the Court Service. This was outlined by the president as early as 9 June 2020 in his “The Road Ahead”. The president further expanded his views and vision in a speech to the Jersey International Family Law Conference – Supporting Families In Conflict- There Is A Better Way on the 11 October 2021. Here the president focused on the need to provide information to separating couples about the harm that conflict, including court conflict can cause. There is to be a new language and a move away from “fighting for my rights”. Family courts are likely to be reserved for only domestic abuse related cases and public law.

Change is coming from another direction too and in particular from the separating parties themselves. They are no longer willing, even if able, to pay for representation in fully contested proceedings. Clients are becoming more internet savvy and are shopping around for information and options.

In the statement issues by Mr Justice Mostyn and HHJ Hess on the 11 January 2022 on the ‘Efficient Conduct of Financial Remedy Hearings Proceeding In The Financial Remedies Court Below High Court Level’ a new procedure has been outlined for the conduct of financial remedy proceedings. It requires more preparation and collaboration in the court process to invested by participants and their lawyers. It front loads much more work pre the first appointment and requires the lawyers to work collectively on narrowing issues. This increases time and cost, but it is with a laudable aim of putting the parties in better shape to settle cases. If they are foolish enough not to, then the costs under this new process will be higher.

Since the pandemic there has been a marked increase in the use of out of court dispute resolution. Most forms of dispute resolution have seen an increase and in particular mediation, arbitration and private financial dispute resolutions or early neutral evaluation. Such alternative processes are proving popular with the separating parties, the lawyers and are invariably cheaper, quicker, and more effective. ENE and PFDRs are a non binding form of alternative dispute resolution for both financial and children disputes for married or cohabiting couples who are separated.

Private FDRs and Early Neutral Evaluations ENE

A private financial dispute resolution [PFDR] or early neutral evaluation [ENE] is simple concept principally, that a family law expert (a barrister, solicitor or retired family judge) is paid to act as an evaluator or private ‘judge’ in a financial dispute resolution. A financial dispute resolution is designed to enable the parties, with assistance of the judge to identify and seek to resolve the real issues in their case, with the aim of limiting the overall financial costs and lessen the emotional and practical strain on the parties. The PFDR is a meeting held for the purposes of discussion and negotiation where the parties should use their best endeavours to reach agreement on the main issues between them. Usually written and oral submissions are made to the private FDR judge and the judge gives her or his opinion as to the likely outcome if the parties were foolish enough to go to a final hearing. The views of the “judge” are not binding but are invariably influential and persuasive. The private FDR process is without prejudice to any final court hearing, enabling the parties to be more open and involved about trying to resolve cases.

The judge is not to determine issues of fact, but the judge can offer her or his views on the likely outcome of disputed matters where appropriate. The key benefit of the private FDR is when the “judge” gives her or his opinion as to how the law as set out in section 25 of the Matrimonial Causes Act and associated important case law would apply to the parties’ individual circumstances. Sometimes the judge can give a definitive view or certainly a range of outcomes. The parties, with the benefit of their lawyers are then encouraged to negotiate a settlement with the benefit of the opinion of the “judge”. The “judge’s” opinion can be sought by way of further clarification as the negotiations progress.

The private FDR takes place at a time convenient to the parties. This can include parties who are based abroad or even the appointment itself taking place abroad on a face to face basis. This often can be the solicitors or the barrister’s chambers and a full day is set aside to maximise the prospects of settlement. Private FDRs conducted by Zoom or other video platforms have proved successful especially when the parties are in the same room as their own lawyer.

The “judge” explains to the parties in simple and clear terms what the relevant law is and how they consider it applies to the circumstances of their particular case. The “judge” balances competing factors and is often able to explain the practical basis of the application of the law in the particular case. A key advantage of early neutral evaluation is that the parties themselves can tailor the process to their needs and a genuine bespoke service can be offered in fairly sharp contrast to the Family Court Service.

A great advantage of private FDRs and early neutral evaluations is that they are confidential and private and therefore there is no risk that the facts, issues and settlement becomes public. As transparency rules develop there is an increasing risk for those involved in the formal court process that details concerning their relationship breakdown, finances and children will become public

A private FDR can usually be arranged within weeks rather than the court process where there is often the delay of at least six months from the first directions appointment for an FDR. Private FDRs are conducted at a time where the financial position of the parties is reasonably well known and is usually undertaken after disclosure of financial information has been successfully completed and appropriate valuations obtained of properties, companies and pension assets.

Also, in most family courts they will list three FDRs with 2-3 FDAs (first directions appointments) for the same judge to deal with.

In a private FDR an agreed bundle and the parties’ submissions are sent to the “judge” days before the FDR enabling the judge to spend time familiarising herself or himself with the detail of the case whereas in a court based FDR many judges will not receive the bundle and supporting notes until the day of the hearing itself. Although the private FDR does require financial investment by the parties in the fee for the private judge, this expense is generally outweighed by the advantages gained particularly the speed and effectiveness of the process. A hearing can take place at time convenient to the parties and even in the evening or weekend. Anecdotal evidence suggests that private FDRs have a very high settlement rate.

As part of the private FDR process it is usual for the private judge to set out directions for how the private FDR is to be prepared and that will include the exchange of without prejudice proposals in advance of the appointment.

Private FDRs can be undertaken independently of any court process and indeed emerging practice is to avoid the court process completely and go straight to a private FDR. Private FDRs can also be utilised within a mediation or collaborative process if the participants become stuck on either a single or a range of issues.

An early neutral evaluation can be obtained in writing without the need for a formal meeting. This might be appropriate where there is a single issue to be resolved rather than a range of competing factors.

Choice of evaluator or private ‘judge’

The parties themselves can agree as to who to instruct to be the evaluator with the assistance of their legal advisors. Many experienced family solicitors, barristers and retired family judges offer the service and at a price to suit most pockets. Private FDRs tend to be the description of the process when applied to finance and property disputes whereas any neutral evaluation is often used in children cases. Private FDRs are suitable for all forms of relationship breakdown including cohabiting couples and not just divorcing couples. Of course the law that is applied may well be very different but the process and principles are the same.

There is no formal qualification required to be a private FDR or early neutral evaluation “judge”. However, many who offer the service have also been trained as mediators, collaborative practitioners and arbitrators so the additional benefit of those skills can be applied to the dispute resolution process.

The courts and the dispute resolution process

The Family Procedure Rules [FPR] already expect and indeed require the parties to consider dispute resolution –

• FPR 2010 r1.4 states that the court “must further the overriding objective by actively managing cases”.

• By FPR 1.4 (2) (f) active case management includes “encouraging the parties to use a non-court dispute resolution procedure if the court considers that appropriate and facilitating the use of such procedure.”

These rules were considered in Mann v Mann [2014] 2 FLR 928 by Mostyn J at [25]–[28]. He identified where r.3.4 (then r.3.3) differed from the Civil Procedure Rules [CPR] 1998 r.26.4(2A)4 and, in particular, noted that the power under the FPR to adjourn so as to enable non-court dispute resolution to take place, while capable of being exercised on the court’s own initiative, can only be exercised where the parties agree whereas, under the CPR, the court can impose a stay in favour of dispute resolution whether the parties agree or not. Mostyn J suggested at [28] that the Family Procedure Rule Committee give consideration to deleting the words “if the parties agree” from (now) r.3.4(1)(b) so that it was put on the same footing as its CPR counterpart. This amendment has not yet been made.

In Mann v Mann [2014] 2 FLR 928 Mostyn J observed at [36] that although he could not compel the parties to engage in mediation he could “robustly encourage them by means of an Ungley order” in the following terms:

i. ‘If either party considers that the case is unsuitable for resolution by ADR, that party shall be prepared to justify that decision at the conclusion of the enforcement proceedings, should the judge consider that such means of resolution were appropriate, when he is considering the appropriate costs order to make.
ii. The party considering the case unsuitable for ADR shall, not less than 7 days before the commencement of the adjourned enforcement hearing, file with the court a witness statement without prejudice save as to costs, giving reasons upon which they rely for saying that the case was unsuitable.

PFDRs where proceedings have already been issued

In the statement issues by Mr Justice Mostyn and HHJ Hess on the 11 January 2022 on the ‘Efficient Conduct of Financial Remedy Hearings Proceeding In The Financial Remedies Court Below High Court Level’

The following was said about Private FDRs where proceedings have already been commenced- paragraph 15.

“If the parties propose a private FDR, and the court agrees to this course, the order permitting this course shall:

a. identify the private FDR evaluator;

b. dispense with the in-court FDR;

c. state that the private FDR once fixed may only be adjourned by agreement or pursuant to an order of the court; and

d. provide that the matter shall be listed for a mention shortly after the private FDR, with this hearing to be vacated if a consent order is filed and approved by a judge in advance of the hearing.”

The order will normally be made at the first appointment. If the identity of the private FDR evaluator has not been agreed prior to the FDA then parties must bring to the appointment details, including the fees, of their proposed evaluator. If the identity of the evaluator cannot be agreed at the appointment the court will resolve the issue at the FDA.

If the PFDR is not successful, then ideally agreed directions can be sent to the court for approval or otherwise attend at the adjourned appointment for directions for a final hearing to be given. Any interim applications must be made to the allocated financial remedy judge.

Children’s cases

Although the above procedure very much focuses on financial remedy cases, there is no reason at all why the same process cannot be undertaken in respect of children cases where there is agreement to do so.

Any important safeguarding issues can be addressed by the appointment of an independent social worker or other relevant expert to provide the private “judge” with relevant information and opinion.

David Emmerson
Partner Anthony Gold. Accredited and hybrid trained family mediator. Collaborative practitioner. Deputy District Judge specialising in complex financial remedy and children cases. Solicitor Advocate
david.emmerson@anthonygold.co.uk

* Disclaimer: The information on the Anthony Gold website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. It is provided without any representations or warranties, express or implied.*