Financial Dispute Revolution? The Family Procedure (Amendment No 2) Rules 2023

Published: 26/01/2024 08:00

There was a time when an unwritten rule seemed to provide that a marriage could only be described as long once the parties had celebrated their china anniversary and entered a third decade together, but times change, and so eventually do some rules. On any view, however, 20 years is a long time.

It has been very nearly that long since Thorpe LJ gave judgment in Al-Khatib v Masry [2004] EWCA Civ 1353, [2005] 1 FLR 381, and suggested at [17] that ‘there is no case, however conflicted, which is not potentially open to a successful mediation, even if mediation has not been attempted or has failed during the trial process’.

For much, though clearly quite not all of the intervening period, under Family Procedure Rules 2010 (SI 2010/2955) (FPR) Parts 1 and 3, the courts have had not only a power, but also a positive duty, to encourage and facilitate the use of non-court dispute resolution (NCDR), where appropriate, and yet it seems to many that the duty has often not been discharged and the power has generally been underused.

Notwithstanding occasional innovation in certain spheres, the law, lawyers and the judiciary may be considered to be fundamentally quite conservative. We tend to be wary of change and instinctively to favour doing things the way we have always done them. Some baulk at essentially judicial functions being discharged by others who, no matter how eminent and experienced, are not judges, properly-so-called.

It does now appear at last, however, that, as Bob Dylan might say, ‘the times they are a-changin’.’ One seminal Court of Appeal decision made in civil proceedings late last year suggests that they are. With effect from this April, FPR Part 3 certainly will be.

Churchill

On 29 November 2023, the Court of Appeal, formed of the Lady Chief Justice, the Master of the Rolls and Birss LJ, decided Churchill v Merthyr Tydfil CBC [2023] EWCA Civ 1416. Sir Geoffrey Vos MR deftly sidestepped the decision in Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576, which had been (mis)understood, for nearly 20 years, to be authority for the proposition that the court cannot compel parties to civil proceedings to engage in mediation. Holding that the comments of Dyson LJ (as he then was) that to oblige truly unwilling parties to mediate would be to impose an unacceptable obstruction on their right of access to court were merely obiter, the Court of Appeal 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.

Such a power, it was held, must be exercised in a way which does not impinge on the Art 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.

Sir Geoffrey Vos MR stated at [59] that:

‘even with initially unwilling parties, mediation can often be successful. Mediation, early neutral evaluation and other means of non-court based dispute resolution are, in general terms, cheaper and quicker than court-based solutions. Whether the court should order or facilitate any particular method … is a matter for the court’s discretion, to which many factors will be relevant.’

The Court of Appeal did not set out any guidance as to how or at what stage in the litigation it should decide whether to make such orders, with Sir Geoffrey Vos MR commenting at [66] 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]–[63].

A crystal ball was not required to foresee the outcome of Churchill. The Court of Appeal had previously held that, pursuant to Civil Procedure Rules 1998 (SI 1998/3132) (CPR), 3.1(2)(m), the consent of the parties was not necessary for a case to be referred to Early Neutral Evaluation (Lomax v Lomax [2019] EWCA Civ 1467) and in Compulsory ADR (a report of the Civil Justice Council published in June 2021 and cited in Churchill) it was said that any form of compulsory NCDR which is ‘not disproportionately onerous and does not foreclose the parties’ effective access to the court’ is lawful.

Equally, the public policy considerations militating in favour of a departure from the status quo ante were plain for all to see – including the government, which in July 2023 announced that all small claims in the county court (generally disputes up to £10,000) will have a free mediation session integrated into the court process.

Those considerations surely apply with equal and arguably even greater force in relation to family proceedings.

Resolution’s call for change to MIAMs

In the same week that Churchill was decided, Resolution launched its ‘Vision for Family Justice’.1 One call is for the replacement of statutory Mediation Information and Assessment Meetings (MIAMs) with an Advice and Information Meeting (AIM). The AIM would be delivered by a wider range of family justice professionals than purely accredited family mediators. Whether fairly or not it has been perceived for some time that a MIAM necessarily conducted only by an accredited mediator may have an inbuilt bias towards family mediation, rather than the full smorgasbord of NCDR options which have developed over the years. MIAM providers suggest that all forms of dispute resolution can be discussed at a MIAM, but there remains an anxiety that this may not always be the case.

Resolution also calls for more rounded advice on the NCDR options, beyond just family mediation. The potential issues with family mediation (and indeed all forms of dispute resolution) are helpfully explored in the recent Fair Shares study, a large-scale empirical research project conducted by Professor Emma Hitchings et al.2 The President of the Family Division also recently set out his stall concerning the need to consider a wider range of dispute resolution options than purely family mediation.3

Forthcoming changes to the FPR concerning NCDR

The Family Procedure (Amendment No 2) Rules 2023 (SI 2023/1324)4 were laid before Parliament on 7 December 2023 and will come into force partly on 8 April 2024 and partly on 29 April 2024.

They are the result of the work and consultation undertaken by the Family Procedure Rule Committee (FPRC) concerning the early resolution of private family law arrangements.5 The FPRC was essentially charged with consideration of how the rules might encourage early resolution of private family law disputes short of mandating NCDR.

The Ministry of Justice recently conducted a separate consultation concerning the issues associated with mandating NCDR and the results of that are still awaited.6

A new definition of NCDR

From 29 April 2024, the definition of ‘non-court dispute resolution’ at FPR 2.3(1)(b) 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 (such as a private Financial Dispute Resolution process) and collaborative law.’

A change to the conduct of MIAMs

FPR 3.9(2) will be amended to impose a requirement for MIAM providers to ‘indicate to those attending the MIAM which form, or forms, of non-court dispute resolution may be most suitable as a means of resolving the dispute and why’ and ‘provide information to those attending the MIAM about how to proceed with the form, or forms, of non-court dispute resolution in question’.

Resolution have not quite got their AIM, but surely their glass is half full. Henceforth NCDR does not mean just mediation and there will be a requirement on MIAM providers properly to triage into an appropriate form of dispute resolution.

Changing the name might be regarded as cosmetic and in any event beyond the scope of the FPRC since the term MIAM is to be found in primary legislation.

This is surely the moment for MIAM providers and those who train and accredit them to grasp this nettle (some may call it a lifeline). If the current MIAM community cannot step up to this task, then it may be that the Resolution call to widen the scope of MIAM providers will become unanswerable.

References to domestic violence will be widened to include all forms of domestic abuse, in keeping with the Domestic Abuse Act 2021. It will remain the case that domestic abuse provides an exemption from MIAM requirements.

Otherwise, MIAM exceptions will be tightened up, and most notably the FPR 3.8(1)(c)(ii)(ad) ‘unreasonable hardship’ will be substituted for the tighter ‘significant financial hardship’.

Parties and practitioners can also expect a beadier review of MIAM compliance once the matter is before the court. One thinks in this regard of Re K [2022] EWCA Civ 468, [2022] 2 FLR 1064 and Sir Geoffrey Vos MR’s comments at [6] that it was ‘unfortunate’ that the parties did not attend a MIAM and had they done so the ‘issues between the father and mother that concerned the logistics of the father’s contact might have been speedily resolved before the inevitable trauma caused to the family by the fact-finding process’ and at [35] that it ‘is a matter of concern that a party can avoid the statutory MIAM requirement by simply asserting that a case is urgent and that they need a without notice hearing’, ‘for the statutory MIAM requirement to be effective, it must be enforced’ and ‘[t]the father ought to have been required to engage with the MIAM process.’

A requirement to state your views about NCDR

A new FPR 3.3(1A) will provide that ‘when the court requires, a party must file with the court and serve on all other parties, 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 the matters raised in the proceedings’. The court will require this form to be filed digitally in cases which are managed by the family law online portal (currently financial remedies, public law children, and the private law children pilot).

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’, one 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. The form will have to be filed and served. This will require parties to think and talk to each other about NCDR.

Fresh carrot, bigger stick

An Ungley order was made in Mann v Mann [2014] EWHC 537 (Fam), [2014] 2 FLR 928, by Mostyn J, who 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 FPRC to the removal of that proviso.

From 29 April 2024, it will be deleted and an amended FPR 3.4(1A) will provide that where ‘the timetabling of proceedings allows sufficient time for these steps to be taken’, the court may adjourn proceedings to ‘encourage parties’ to ‘undertake non-court dispute resolution.’ The agreement of the parties will no longer be required. This is the fresh carrot.

Most importantly, in financial remedies cases, this power to ‘encourage’ will be backed with 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 is the bigger stick.

It will be interesting to see whether the forthcoming amendments will herald a change in culture and interest in NCDR, as FPR PD 28A, para 4.4 and recent case-law have incentivised cultural change with regard to the making of open offers.

Taken together, the new provisions go close to, but do not quite amount to, the mandation of NCDR. It remains to be seen whether change is indeed upon us, or whether these provisions will slide into misuse and obscurity. It is hoped that these rule changes will encourage judges, practitioners and parties to keep at the forefront of their minds the possibility of resolving disputes comparatively swiftly, amicably and inexpensively, away from the court.

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