Pre-action reform – the background

Over recent years, there have been an increasing number of public consultations and reports considering how to support the earlier resolution of civil disputes, both within the Family Courts and across other areas of practice.

Whilst there are, of course, many benefits to the early resolution of disputes, a key driver behind the perceived need for additional focus on this area is the overwhelming backlog of cases within the court system, causing significant delays for court users across England and Wales and limiting access to justice.

To give just one example, per the most recent Family Court statistics1 it currently takes an average of 44 weeks for private law children cases to reach a final order, contrasting with an average of less than 25 weeks as recently as 2016. Although the COVID-19 pandemic is in part to blame, there has been a growing view that too much of the court’s time is taken up by cases that should (in theory at least) be capable of being settled without judicial involvement, and where the parties’ interests would better be served in a less adversarial environment. As the then Lord Chancellor, the Rt Hon Alex Chalk KC MP, wrote in the foreword to the Government’s response to its consultation paper ‘Supporting earlier resolution of private family law arrangements’ in January 2024:

‘While most families are able to resolve their issues between themselves without the need to go to court, too many still end up in conflict … Families encounter a justice system that can, at times, reinforce that conflict, pitting parents against each other to “win” an unnecessary and destructive legal battle.’

It has for some time been acknowledged that reforming the pre-action procedure for Family Court cases, to create an environment where parties are – in effect – mandated to meaningfully engage in a form of non-court dispute resolution (NCDR), offers a clear and obvious route to achieving the earlier resolution of disputes whilst at the same time relieving pressure on the court system.

The benefits of meaningful engagement in NCDR are clear. Where successfully adopted, they can offer a cost-effective and speedy resolution to seemingly complex and intractable disputes, and allow for a much more bespoke approach than the court process provides. By providing a platform for parties to re-establish positive communication and reach a settlement by agreement, NCDR also offers the opportunity for families to re-build bridges that might otherwise remain damaged/destroyed, with positive implications for future co-parenting arrangements amongst other things.

However, the opportunity for reform in this area has been limited by the Court of Appeal’s judgment in Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576, where Dyson LJ found that to compel unwilling parties to engage in mediation would amount to a constraint on their right of access to the court and would therefore breach their right to a fair trial under Art 6 of the European Convention for the Protection of Human Rights and Fundamental Freedoms.

This position (whilst undoubtedly not universally popular) remained unchallenged until 9 November 2023, when the Court of Appeal held in Churchill v Merthyr Tydfil CBC [2023] EWCA Civ 1416 that Dyson LJ’s comments in Halsey were obiter, and that the court does, in fact, have the power to lawfully stay existing proceedings for the parties to engage in a form of NCDR, or make an order requiring the same.

As a result, the gates have now been opened for much heralded reforms to the pre-action stage in family disputes, designed to encourage a more meaningful engagement in NCDR.

The new financial remedies pre-action protocol

On 29 April 2024, revisions to Parts 3 and 28 of the Family Procedure Rules 2010 (SI 2010/2955) (FPR) allowed the court to stay proceedings on its own initiative, without the parties’ agreement, to encourage parties to engage in NCDR including mediation, arbitration, and other methods.

On 29 May 2024, an updated pre-action protocol for financial remedy proceedings was introduced (annexed to FPR PD 9A), prescribing (inter alia) full voluntary Form E disclosure, attendance at a Mediation Information and Assessment Meeting (MIAM), engagement in at least one form of NCDR, and a meaningful attempt at negotiating a settlement before proceedings are issued, with limited exceptions. Failure to comply with key aspects of the new protocol may result in a departure from the general rule of no order as to costs. In particular, under the updated protocol (and FPR 28.3(7)), a failure, without good reason, to attend NCDR is an express reason for the court to consider making a costs award.

The very helpful blog2 by Michael Allum and Rhys Taylor in the FRJ summarises the pre-action protocol and the key changes we should all be aware of in practice.

It is worth noting that the pre-action protocol in relation to private law children proceedings (annexed to FPR PD 12B) also makes clear that the court has the power to make costs orders as a result of one party’s conduct. However, failure to attend NCDR is not referred to as an express reason for such an order to be made.

NA v LA

Reported shortly before the arrival of the new pre-action protocol (on 24 May 2024), the decision of Nicholas Allen KC (sitting as a Deputy High Court Judge) in NA v LA [2024] EWFC 113 was made in the context of urgent applications by the wife for a non-molestation order, occupation order and preservation of property order (alongside MPS and LSPO applications). With her Form A, she claimed a MIAM exemption on the basis of urgency and sought directions for the exchange of Form E disclosure and the listing of a First Appointment.

The judge refused this aspect of the wife’s applications, and instead made an order to stay proceedings for 3 months so that the parties could engage in NCDR. In response to the wife’s position that she could not engage in NCDR without the benefit of court-ordered financial disclosure (given her serious concerns about the husband’s lack of transparency), the judge held that this was an unnecessary concern because ‘NCDR will almost invariably provide for such disclosure to be given as part of the process’ and ‘Many forms of NCDR also have “teeth” if there is (say) a reluctant discloser’.

Rebekah Batt’s FRJ blog3 goes into more detail on the judgment.

Impacts of the new protocol, the decision in NA v LA and scope for further development in financial remedy cases

Disclosure

Although the judgment was handed down before the amended pre-action protocol was publicly released, NA v LA seems to go further than the protocol requires, by stipulating that the absence of court-ordered financial disclosure does not provide justification for failing to engage in NCDR. The pre-action protocol anticipates that the parties will exchange full and honest financial disclosure on a voluntary basis, but what if one party fails to do so? Arguably, the decision in NA v LA requires that parties continue with NCDR regardless.

Arbitration, which is cited in the judgment as being an example of NCDR where parties can be legally compelled to exchange financial disclosure, is very much the exception rather than the rule. There is no other form of NCDR where a failure to provide full and honest financial disclosure can be mandated in this way.

Although (per paragraph 25 of the protocol) the court must, when considering whether to make a costs order, take into account ‘whether a party has provided appropriate financial disclosure’, it is not a certainty, and what of those cases where the non-disclosing party is not concerned by the risk of an adverse costs order and seeks to continue with NCDR regardless? In those circumstances, must the other party incur the wasted time and cost of having to engage in NCDR despite not being provided with full and honest financial disclosure, for fear of a costs order being made against them?

It is the submission of these authors that this Sophie’s choice cannot have been the intended consequence of the new reforms, and further judicial clarification would be welcome on this issue. It may be that in such cases, the court will allow for proceedings to be issued and a court timetable imposed for the exchange of disclosure (either at that stage, or after the First Appointment and orders having been made for Replies to Questionnaire and the instruction of SJEs, etc) before then considering whether a stay to encourage engagement in NCDR would be appropriate. This would be in-line with paragraph 31 of the updated protocol, which makes clear that pre-action voluntary financial disclosure ‘may be particularly suitable where providing or obtaining financial disclosure is not likely to be an issue or has already been adequately dealt with separately’.

Particularly difficult will be those cases where one party is convinced of the other’s non-disclosure, but where it cannot readily be demonstrated. As practitioners, we have all had those cases where our client has insisted on pursuing what outwardly appears to be a fishing expedition, only for it to turn out that their concerns were entirely correct. It is right that those parties should be able to pursue their reasonable enquiries with the support of the court’s investigative powers (where appropriate) and it is a concern that the new reforms may make this more challenging in practice.

In any case, as the old aphorism goes – you can lead a horse to water, but you cannot make it drink. Some parties (rightly or wrongly) may never accept the other’s disclosure until a judge (at First Appointment or perhaps even later) indicates that it is acceptable. The average person is not trained to forensically analyse financial disclosure, and whilst some can afford specialist advisers who can assist them in this endeavour, many cannot. Will it always be right that they be sanctioned by the new regime for refusing to engage in NCDR until they have this comfort?

Delay and abuse

Financial non-disclosure and economic abuse often go hand in hand, and pushing parties to engage in NCDR where one party is determined to frustrate the process risks widening the scope for further abuse.

In the short period since NA v LA was reported, the authors of this article have seen a surge in correspondence from parties insisting on pre-action engagement in NCDR whilst at the same time refusing to engage in a meaningful disclosure exercise. It is telling that the method of NCDR most often being suggested in these circumstances is mediation, where there are no teeth to compel full and honest disclosure, and which has historically been considered inappropriate in cases where there are concerns about non-disclosure, abuse or where there is a power imbalance. Although shuttle mediation and lawyer-led mediation are useful options, without proper disclosure from the other party, legal advisers will be limited in their ability to provide meaningful advice. Solicitors cannot be expected to simply fall back on their indemnity policies by advising in these circumstances.

Mediation and other forms of NCDR also lack the rigour of an externally set timetable that must be adhered to. Despite the significant delays that exist within the court system, there is not the same scope for ‘drift’ that exists pre-action, where promises can easily be reneged on and negotiations can drag for many months, wasting time, money and goodwill. It is easy to see how the new reforms might be weaponised by those whose interests are served by keeping their affairs outside the court system.

What is it to engage in NCDR?

Under the new regime, there is a lack of clarity as to at what point within an NCDR process which is doomed to fail, will parties be deemed to have sufficiently engaged with it before they may issue financial proceedings. Moreover, whilst mediation, arbitration, early neutral evaluation and the collaborative process are referred to specifically within the updated protocol as qualifying forms of NCDR, other mechanisms such as solicitors’ round-table meetings ‘may be considered sufficient’. More guidance is needed in these areas for solicitors to be able to advise their clients whether or not they may be at risk on costs by issuing proceedings, despite having had some level of engagement in NCDR. This may be particularly relevant for vulnerable clients including those with disabilities, who have specific requirements that cannot easily be provided for in traditional forms of NCDR.

It is worth noting that in their recent August 2024 FRJ blog ‘NCDR Redux: The Impact of October’s CPR Amendments’,4 Nicholas Allen KC and Rhys Taylor make the point that the wording at FPR 28.3(7) allowing the court to depart from the general rule of no order as to costs where there is a failure by a party, without good reason, to ‘attend’ (emphasis added) NCDR was deliberately chosen by the FPR Committee because of concerns that using the alternative ‘engage in’ might encourage judges to carry out a subjective assessment of how hard they had tried at it, which should be avoided (not least as it might risk breaching WP privilege). This is helpful comment, however the pre-action protocol nevertheless refers – in several instances – to the expectation that parties will have ‘engaged in’ NCDR prior to issuing proceedings, and practitioners will therefore continue to feel under pressure to carry out the same subjective assessment when advising their client.

Timing issues

Further guidance is needed in relation to time-sensitive application, for example – applications for spousal maintenance, where payments can only be backdated to the date of the application itself. In those circumstances, are parties nevertheless expected to first engage in NCDR before issuing proceedings?

Conclusion

It is hard to see how the judgment in NA v LA could have applied the amended FPR any more strictly, and it is anticipated that judges will feel encouraged to take the same approach in relation to the updated pre-action protocol. However, there will be cases where the new orthodoxy will not be appropriate and it will be interesting to see how the jurisprudence develops to protect those who might otherwise be harmed by a strict application of the new rules.