The Financial Remedies Court: A Year in Review

Published: 27/09/2023 14:09

On 28 July of this year, Mr Justice Mostyn sat for the very last time. Many words have already been said or written about him. I particularly enjoyed the appreciation of him by Sir James Munby, which was published in the summer edition of the Financial Remedies Journal.1 Few would argue with his description of Mostyn J as ‘a great lawyer and a great judge’. A valedictory awaits, as well as a round of dinners and other events marking his extraordinary contribution at the Bar and on the Bench to family law, and financial remedies in particular. I would like to add my personal appreciation. When I took over from him as National Lead Judge of the Financial Remedies Court and Judge in Charge of Standard Orders, Mostyn J stepped back and eschewed any interference as I attempted to learn the ropes. But whenever I had a query, he responded instantly, usually with a detailed explanation and copious references to law, procedure and guidance. He is a human version of ChatGPT, a walking encyclopaedia of statute, case-law and rules. I am enormously grateful to him for the support he has given me.

I believe that, in no small measure because of Mostyn J’s indefatigability, the Financial Remedies Court is generally in very good order and, in my view, is a flagship of the family law world. The only real cloud is the ongoing struggle with the contested portal, to which I will return.

In out-of-court settlements, financial remedies take the lead. At present, about 85–90% of all financial remedy cases settle before a contested final hearing, due in no small part to the forward thinking and creative approach to settlement among practitioners. The FDR, enshrined in the procedural rules, has proved to be an outstanding success. So too the widespread use of Private FDRs. Judges need little persuasion to permit parties to attend a Private FDR and return to court thereafter for, as the case may be, a mention hearing to endorse the consent order, or a directions hearing to timetable to trial. The use of Private FDRs has in turn relieved pressure on the courts. Despite these successes, I believe the settlement rate could, and should, be even higher than it is at present, and I applaud fresh initiatives designed to explore ways of reducing litigation. The Single Lawyer Model, for example, has attracted much interest. The aim is to enable parties to engage jointly one lawyer whose instructions are to gather the relevant facts and disclosure, and make a considered recommendation. The advantages are two-fold: (1) it ordinarily takes place at a very early stage of proceedings, or even before issue; and (2) the joint instruction of a single lawyer removes the parties from the adversarial world of separately instructed legal representation. I am delighted that Resolution launched a model along these lines last summer, known as ‘Resolution Together’. It is one of a number of areas upon which the Ministry of Justice and the Family Procedure Rule Committee consulted earlier this year as part of an ongoing push to promote ADR. Other areas included enabling judges to mandate attendance at ADR (subject to exceptions such as where there is evidence of domestic abuse) and a change to the rules to include failure to attend ADR as a relevant factor when making costs orders.

The Statement of Efficient Conduct for Cases below High Court level continues to be effective and successful. I have been impressed by the way in which practitioners have largely embraced its requirements, and have repeated both in and out of the courtroom that compliance is mandatory, not optional. As is often the way, one wonders why an idea as good as this was not thought of before; composite documents, including the asset schedule, and page limits on narrative statements and skeleton arguments are essential for the hard-pressed judge. Other areas of family law could, in my view, consider a similar rigorous approach to case management.

Similarly, I have repeated the mantra that judges should not be afraid to make costs orders where justified, particularly if one or other party does not litigate reasonably, and/or does not make reasonable open offers. A number of High Court judges have had no qualms about making costs orders in such circumstances; for example WC v HC [2022] EWFC 40. I appreciate that it is more difficult to do so when the assets are barely enough to meet needs, but even in those cases a judge is entitled to consider whether to make a costs award, however modest, to mark the court’s displeasure at the litigation conduct of the miscreant party. I am told that judges around the country (not just at High Court level) are increasingly following this approach. Practitioners should be aware that neither they, nor their lay clients, can assume that the No Order as to Costs starting point will automatically prevail, and they should warn their clients accordingly. No longer should parties take for granted that they will not be required to pay any part of their former spouse’s costs; the days of ‘free hit’ litigation, with no risk of adverse costs orders, are – if not over – abating.

In an article I did last year for the Financial Remedies Journal, I said this: ‘It has sometimes seemed to me that many cases could be fairly disposed of with no oral evidence.’2 My point was that as part of a drive for efficiency, cases could be swiftly dispatched without oral testimony where the factual and financial landscape is reasonably clear, and it would not be proportionate to explore relatively minor factual issues in the witness box. I suspect that will be the majority of cases, although where there is a material factual dispute (for example allegations of non-disclosure) fuller inquiry will inevitably be needed. In most cases, I strongly suspect that parties would willingly tolerate a judicial decision based on a relatively summary appraisal of the circumstances in return for a swifter, and cheaper, court process. At the time of writing that article, final determinations without oral evidence seemed a long way off. But there may be tentative moves in that direction. In a private law children’s case, Mother v Father [2022] EWHC 3107 (Fam), Lieven J upheld on appeal the decision of a magistrates’ court bench to determine child arrangements with oral evidence only from the Cafcass officer; the parties were not permitted to give evidence, or to be cross examined by the other’s legal representative. Lieven J emphasised FPR 22.1 (the ability of the court to limit cross examination) and 22.6 (the ability of the court to prevent a witness being called). At stake was whether the child should live with the mother or the father, hardly an inconsequential matter. Making substantive final orders without hearing oral evidence is routine in many areas of law. Administrative law is a stand-out example, but in family law the court often determines 1980 Hague Convention cases with no, or limited, oral evidence. Of course, interim orders are almost invariably made on the basis of submissions only. Similarly, judges give FDR indications without hearing evidence, and on the basis of relatively brief submissions. The time may be fast approaching where the court should consider conducting final hearings in financial remedy case without oral evidence, and justice may be served better in the round if cases are thus heard more swiftly and efficiently.

It is well known that in my view the law of financial remedies is reasonably settled. In the vast majority of cases there should be little or no issue as to the applicable legal principles. In WC v HC [2022] EWFC 22 at [21], I attempted to distil the general law in a series of bullet points, to which Mostyn J added a further bullet point in Clarke v Clarke [2022] EWHC 2698 (Fam) at [36]. I take no credit for this synopsis. It is an encapsulation of law which has developed over many years, largely thanks to the many judgments of Mostyn J which have brought discipline to the legal process while remaining faithful to s 25.

One aspect of financial remedies which has caused me concern for some time is the undisciplined and unfocussed approach to conduct. Too often parties simply say in their Form E that they reserve their position on conduct, or they list numerous pejorative complaints which do not come close to meeting the requisite threshold, or they attempt to introduce conduct through the back door by relying upon prejudicial matters as part of the overall circumstances without specifically relying upon conduct. I suggested in Tsvetkov v Khayrova [2023] EWFC 130 that the courts should exercise case management powers to exclude a purported conduct claim which clearly does not meet the threshold, or is unlikely to make any material difference to the outcome. If the court permits conduct to be advanced, the particularised allegations, and their relevance, should clearly be set out so that the alleged wrongdoer can know what case they are expected to meet. Although I did not explicitly say so, it seems to me that old cases which cast doubt on the ability of the court to case mange in this way, such as Walker-Arnott v Walker-Arnott (1983) 4 FLR 1, but which pre-date the Family Procedure Rules, should now be viewed as obsolete and no longer followed. Nor do I regard robust case management of this sort as akin to a strike out of a financial remedies claim of the sort regarded as impermissible by the Supreme Court in Wyatt v Vince [2015] UKSC 14; it is robust identification of relevant issues so as to enable the court to exercise its s 25 discretion in a focussed and proportionate way.

Readers of this article will be aware that the Law Commission is undertaking exploratory work in respect of financial remedies law. I welcome this initiative. In my view, the time is right to consider whether s 25 remains fit for purpose. Society has changed beyond all recognition in the past 50 years, and there is a legitimate debate to be had about the balance between: (1) the familiar discretionary exercise which enables the court to alight upon a bespoke solution, but carries with it a degree of uncertainty and, as a result, anxiety, delay and costs; and (2) the desirability of a fixed regime, such as is commonplace on the Continent, which is less flexible but respects autonomy and reduces the nature and scope of litigation. It is to my mind notable that the common law approach in England and Wales has moved the s 25 discretionary model much closer to the fixed regime than was conceivable back in 1973; thus, joint lives spousal periodical payment orders are almost unheard of now, a clean break tends to be the default position, the division between matrimonial and non-matrimonial assets is well recognised, and pre-/post-marital agreements are upheld absent good reason to the contrary. There is undoubtedly a case for, at the very least, shifting the dial towards statutory acknowledgment of these factors which are now received wisdom.

I said at the outset of this article that the Financial Remedies Court is generally in good health. Practitioners and judges alike enjoy the work, which is varied and stimulating. It is now a Judicial College requirement that every judge (full time or part time) who seeks to sit in the Financial Remedies Court must undertake a 3-day bespoke training course. Two such courses, each for some 70 candidates, are laid on each year by the College and, so far, they have all been sell outs, which is testament to the enduring popularity of financial remedies law within the family justice system.

One increasing area of concern, not by any means unique to financial remedies, is the growing number of litigants in person. There are, I suspect, two reasons for this trend. First, the sheer cost of legal representation which is unaffordable to many in an era where public funding is not available (a scandalous state of affairs), and off putting even to those who are able to afford it. And, secondly, the accessibility online of information about financial remedies law and procedure encourages some litigants to decide to attempt to navigate the system themselves. In the first half of this calendar year, in approximately 44% of all newly issued contested financial remedies cases at least one of the parties was unrepresented. This is a startlingly, and depressingly, high percentage. The burden on judges of dealing with litigants in person is enormous. It is hard to see the numbers reducing unless and until the government addresses this iniquitous state of affairs.

The other area of concern is the digital portal. It works well for uncontested cases (which, happily, is a high proportion of the overall case load) but is not working satisfactorily for contested cases. To say that judges are dissatisfied with it would be a considerable understatement. The intention behind it is laudable. The entire case file should be available online via the portal, with documents set out appropriately in separate dividers or ‘tabs’, and orders generated electronically. It is easy to forget that the previous system of large paper bundles, in broken lever arch files, accompanied by reams of miscellaneous loose documentation, delivered to the wrong court or judge, was in itself an antiquated system in need of repair. I am well aware, however, that the portal has not met expectations and in many cases has increased the work of judges and court staff alike. Digital roll out in other areas of family law has had similar problems. The Financial Remedies Court lead judges around the country earlier this year provided detailed feedback on the workings of the portal. With intervention from the President and Mr Justice Cobb, the lead judge of the Reform Programme, HM Courts & Tribunals Service (HMCTS) has acknowledged the need to address the failings in the portal as a priority. A new service provider is now in place, and I am hopeful that improvements will be seen before too long. One of the particular issues identified by judges is that documents are frequently uploaded by practitioners into the wrong tabs. I urge all practitioners to ensure that they follow the issued guidance, and upload documents as prescribed. In so doing, they will assist the judge and ensure that their cases, and their clients, will receive the service they deserve.

And so to the question of transparency in financial remedies. When Mostyn J gave judgment in Xanthopoulos v Rakshina [2022] EWFC 30, his view about reportability in the field of financial remedies, which had been presaged in earlier judgments, took definitive shape. Going against the long-established practices of confidentiality and anonymity in financial remedies, he turned the starting point on its head. As he put it at [128]:

‘The correct question is not:

“Why is it in the public interest that the parties should be named?”

but rather:

“Why is it in the public interest that the parties should be anonymous?”’

One of my first acts as the newly appointed National Lead Judge was to issue, together with HHJ Hess, a Notice dated 13 May 2022 inviting any judge confronted with a transparency issue arising out of Xanthopoulos, to refer any such issue to me for consideration. In fact, nothing has come my way. Nor has any High Court judge as yet followed the approach taken by Mostyn J. In my case, that is largely because it has not been debated before me with submissions for and against. In a recent decision of Tsvetkov v Khayrova [2023] EWFC 130, I said that unless and until it is comprehensively argued in front of me, I propose to follow the dicta of the Court of Appeal on this subject. It seems to me that it is for a higher court to decide the issue once and for all, or (even better) for Parliament to consider what is suitable in the 21st century. In taking that approach, I did not, and do not, express a view as to whether Mostyn J is right or not. As it happens, I decided to publish my judgment with the parties named because of a number of features which, to my mind, whatever the starting point in law, justified the spotlight of publicity. As for the future, the Farquhar Group presented a comprehensive report in April 2023 which did not opine on Mostyn J’s legal thesis, but suggested that whichever is the correct question posited above by Mostyn J, the answer is to permit reporting while at the same time preserving anonymity. Although one or two voices would question the lawfulness of that proposed approach, it is a proposal which is consistent with the views expressed by the majority of consultees, and which have been expressed to me by court users and judges over the last year or so; very few have expressed enthusiasm for going further.

As it happens, I suspect that the debate about transparency will only affect a handful of cases on the ground, probably at High Court level. In some ways, a better way to secure transparency is to obtain data about all financial remedies cases so that we can see prevailing trends. That would better enable the public, and the media, to understand the totality of the financial remedies system, rather than draw conclusions from a tiny minority of High Court cases which are invariably exceptional in terms of facts and finances. That in turn would better inform society, and our lawmakers. Currently, we know how many cases are issued (about 40,000–50,000 each year), and (approximately) how many are completed without proceeding to final hearing (85–90% thereof). We have some idea of how many parties are unrepresented. But we know next to nothing, beyond anecdotally, about: (1) the quantum of assets and income across the board; (2) the number of children and their ages; (3) whether parties have new partners; (4) the level of costs incurred; (5) whether a clean break is ordered, and so on. Armed with this information, I am confident that detailed analysis would confirm or explode preconceptions which we all have about the financial remedies system. To take one example: if we knew the costs incurred in every case, we would be better placed to evaluate whether the excessive and disproportionate costs seen in the High Court, and criticised by judges at that level, is as much an issue in the courts below. With this sort of information, Parliament, rule makers, judges and HMCTS alike would be better placed to make informed decisions about policy, law and practice. Happily, there is a way for this to be done, if the will can be found. HMCTS has confirmed that it is able, from a technical perspective, to harvest the wealth of valuable information on the Form D81 (lodged for every consent order). What is needed is commitment and funding to make it happen. I am confident that data of this sort, properly analysed, would in the long run reap considerable savings, and I hope that this valuable project will receive the support it needs.

Much else is going on in the Financial Remedies Court. By a change in the rules, nominated FRC judges are now able to dismiss by way of paper exercise applications for Permission to Appeal on a totally without merit basis, such that the application cannot be renewed orally. A new form has been promulgated on enforcement applications, which requires the debtor to fill in a Form E1 before the enforcement hearing. The fast-track project (for cases below £250,000) which would provide for all such cases to be completed within 26 weeks after two hearings (the first hearing being an FDR, and the second being the final hearing) continues to be evaluated. These are just a few examples. As always, I am enormously grateful to the sterling efforts of all those (judges, practitioners, HMCTS and others) who are doing their level best to move the Financial Remedies Court, and financial remedies, forward.

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