D(R) Day: Today’s Changes to FPR Parts 3 and 28

Published: 29/04/2024 07:00

FPR Part 3 has historically been underused. This is strange given that:

  1. FPR 1.4(1) provides that the court ‘must further the overriding objective by actively managing cases’; and
  2. FPR 1.4(2)(f) states that 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’.

Important revisions to both FPR Part 3 and Part 28 come into effect today – 29 April 2024.1

The definition of ‘non-court dispute resolution’ (‘NCDR’) at FPR 2.3(1)(b) is 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 (such as a private Financial Dispute Resolution process) and collaborative law.’

A new FPR 3.3(1A) allows the court to require parties to file and serve ‘in the time period specified by the court, a form setting out their views on using non-court dispute resolution as a means of resolving matters raised in the proceedings’. This is Form FM5.2

The making of an order under FPR 3.3(1A) will be closely akin to the making of an Ungley order (so-called because it was first devised by Master Ungley to encourage the use of NCDR in clinical negligence cases), by which a court may require a party to file a statement to similar effect and thereafter make an adverse costs order if there have been no reasonable invitations made to engage in NCDR, or if such invitations have either been ignored or unreasonably refused. The only substantive difference is that whereas the statement filed pursuant to an Ungley order is ‘without prejudice save as to costs’, the form filed pursuant to this rule will be open, meaning that the court will be aware, at all stages of the case, of the parties’ positions regarding NCDR.

Details as to how the new Form FM5 will work in practice are set out in an amended PD 3A referred to further below.

An Ungley order was made in Mann v Mann [2014] 2 FLR 928, by Mostyn J. He also noted that what was then FPR 3.3(1)(b), but later became FPR 3.4(1)(b), permitted the court to adjourn for NCDR only ‘where the parties agree’ and called for consideration to be given by the Family Procedure Rule Committee (FPRC) to the removal of that proviso.3

That provision has now been deleted. An amended FPR 3.4(1A) provides that where ‘the timetabling of proceedings allows sufficient time for these steps to be taken’, the court should ‘encourage parties’ to ‘undertake non-court dispute resolution’. The agreement of the parties to an adjournment for that purpose is therefore no longer required.

The court may give directions about the matters specified in FPR 3.4(1A) on the application of a party or of its own initiative.

The accompanying PD 3A has also been amended with effect from 29 April 2024.4 It states:

  1. at 10A, that while the FPR does not give the court the power to require parties to attend NCDR, ‘the court does have a duty to consider, at every stage in the proceedings, whether non-court dispute resolution is appropriate’;
  2. at 10B, that the court ‘will want to know the parties’ views on using non-court dispute resolution as a way of resolving matters’; and
  3. at 10C, that each party must serve on all other parties a standard form setting out their views on using non-court dispute resolution, i.e. an FM5, (i) at least seven days before the first hearing in the proceedings held on notice (i.e. the First Appointment in financial remedy proceedings and the FHDRA in private law children proceedings) or within such other period before that hearing as the court may direct; and (ii) if required by the court, at least seven days before a subsequent hearing or within such other period before a subsequent hearing as the court may direct. The form must be verified by a Statement of Truth.5

Paragraph 10D of PD 3A states that the court also has general powers to adjourn proceedings (FPR 4.1) which could be exercised to encourage the parties to attend non-court dispute resolution.

Paragraph 10E states that if the court allows time for parties to attend NCDR or adjourns the proceedings specifically for that purpose:

‘any failure of a party, or parties, to then attend non-court dispute resolution will not affect any substantive decision the court makes in the proceedings’.

In financial remedies cases, the power to ‘encourage’ at FPR 3.4(1A) is now backed by an amended FPR 28.3(7), which will expressly make a failure, without good reason, to engage in NCDR a reason to consider departing from the general starting point that there should be no order as to costs. This point is repeated in para 10E of PD 3A.

It has been held in the civil context (under CPR 3.1(2)(m)) that the consent of the parties is not necessary for a case to be referred to Early Neutral Evaluation (Lomax v Lomax [2019] EWCA Civ 1467 on appeal from Lomax v Lomax (Referral to Early Neutral Evaluation) [2019] EWHC 1267 (Fam), [2020] 1 FLR 30).

In ‘Compulsory ADR’ (a report of the Civil Justice Council published in June 2021) it was said that any form of compulsory ADR which is ‘not disproportionately onerous and does not foreclose the parties’ effective access to the court’ is lawful.

In Churchill v Merthyr Tydfil CBC [2023] EWCA Civ 1416 the Court of Appeal sidestepped the decision in Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576 and determined that it is permissible in some circumstances for the court to order that the parties attempt to resolve their dispute via NCDR prior to seeking a judicial determination and/or stay proceedings to allow for NCDR to take place, although such a power must be exercised in a way which does not impinge on the Article 6 right to a fair hearing within a reasonable time by an independent tribunal and must be proportionate to achieving the legitimate aim of settling the dispute fairly, quickly and at reasonable cost.

If applied to family proceedings, that element of the court’s reasoning might be considered to pose an interesting question as to whether arbitration under the IFLA scheme is among the forms of NCDR which the court can ‘encourage’, almost to the point of mandation (arbitration being specifically referred to in the amended definition of NCDR). This may turn on whether the court’s residual discretion, to decline to uphold an arbitral award which is subject to a successful challenge, tantamount to an appeal, provides sufficient access to a full judicial hearing.

The Court of Appeal did not set out any guidance as to how or at what stage in the litigation the court should decide to make such an order, with Sir Geoffrey Vos MR commenting that ‘it would be undesirable to provide a checklist or a score sheet for judges to operate’ although some potentially relevant considerations were highlighted at [61] to [63].

In X v Y (Financial Remedy: Non-Court Dispute Resolution) [2024] EWHC 538, Knowles J gave and published a ruling so as to ensure that those involved in family proceedings (at [4]) ‘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’, and to signal that ‘at all stages of the proceedings, the court will be active in considering whether non-court dispute resolution is suitable’ and the changes to Part 3 ‘will give an added impetus to the court's duty in this regard’.

It was also said by Knowles J that to assume that the decision in Churchill v Merthyr Tydfil CBC was of limited relevance to family proceedings (at [15]) ‘is unwise’ as:

‘[t]he 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. The settling of cases quickly supports the accessibility, fairness and efficiency of the civil, and I emphasise, the family justice system.’

New paragraphs are being added to the Standard Financial and Children Orders to reflect FPR 3.4(1A) – and will shortly be announced by Mr Justice Peel (Judge in Charge of the Standard Orders) with the authority of the President of the Family Division – and the FR pre-action protocol (annexed to PD 9A) is also being rewritten by the FPRC with an increased focus on NCDR.

The amendments made to Part 3 represent the fruit of the FPRC’s consultation on the early resolution of private family law arrangements.6

Time will tell whether the amendments will herald a change in culture and interest in NCDR in a similar fashion to how PD 28A para 4.4 and recent case law has incentivised a culture change for the making of open offers.

The provisions go to the edge of but do not represent mandation of NCDR, which was the subject of an MOJ consultation which decided against mandation.7

Given the more robust approach to the making of costs orders encouraged in cases such as OG v AG (Financial Remedies: Conduct) [2021] 1 FLR 1105 per Mostyn J,8 these rule changes, the judgment in X v Y (Financial Remedy: Non-Court Dispute Resolution), and the forthcoming changes to the FR pre-action protocol may well create conditions in which many parties will have to ask themselves whether they can really afford not to participate in appropriate NCDR.

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