A Paradigm Case for Non-court Dispute Resolution

NA v LA [2024] EWFC 113

The court’s duty to further the overriding objective by actively case managing has been given added impetus by the revisions to FPR Part 3 and Part 28 which came into effect on the 29 April 2024.

On 23 May 2024 Nicolas Allen KC sitting as a Deputy High Court Judge in NA v LA, demonstrated a hands-on approach whilst exercising the powers under the new rules. He considered this a “paradigm case” for the court to exercise its new powers to encourage the parties to engage in Non- court Dispute Resolution (“NCDR”) as “this would be to their emotional and financial benefit as well as the benefit of their children” and he imposed a stay on the proceedings.

He referred at [9] to the ruling of  Gwynneth Knowles J in X v Y (Financial Remedy: Non-Court Dispute Resolution) [2024] EWHC 538 which preempted the changes in the FPR coming into effect and which was published 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 FPR Part 3 “will give an added impetus to the court’s duty in this regard”.

The judgement of Nicholas Allen KC highlights:

• any failure by a party without good reason to attend NCDR may amount to litigation conduct and an order for costs [7];
• that there is no need for financial disclosure to be given prior to parties engaging in NCDR [15];
• that the court has a duty to consider NCDR and must keep NCDR under active review at every stage in proceedings [26].
• that the court must enquire whether the MIAM exemption was validly claimed and where it was whether the exemption is still valid [29];

The court heard the return date of two orders:

• An ex parte non-molestation and occupation order under the FLA 1996 made by Hannah Markham KC (sitting as a Deputy High Court Judge) which required the husband to leave the family home within 6 hours of the order being personally served on him. The order also prevented the husband from having any contact with the parties three children except by agreement or order (3 days later on the 17 May 2024 the wife permitted the husband to return to the property and agreed that the order regarding the children should be discharged in its entirety).
• An order made by Peel J, under FPR 20.2 (1) (c) for the preservation of two London properties.

No MIAM had taken place and no prior notice had been given to the husband before the wife issued both her divorce order application and Form A, the wife having claimed exemption r3.8 (1) (c) (ii) (ae) any delay caused in attending a MIAM would cause irretrievable problems in dealing with the dispute (including irretrievable loss of evidence). 

By the return date, all three applications had been compromised by agreement and having been provided with three draft orders which he approved the judge raised the issue of NCDR with counsel and that he was considering staying the proceedings on his own initiative pursuant to r 3.4 (6) [20].

Wife’s counsel had contended that a First Directions Appointment would be required and thereafter there was the possibility of a private Financial Dispute Resolution Appointment [19] and that the judges suggestion of a stay was premature as the wife was “semi blind” in relation to the parties assets and that such an order would be seen by the husband as an “open goal” to frustrate settlement [21]. Whereas the husband was open to NCDR and endorsed the judges suggestion of a stay to enable the parties to attempt settlement [22].

The facts of the case are set out at [24] and were said to be “not particularly unusual”. The assets consisted of (i) a family home in London worth £8m (ii) a second London property purchased for £6.5 m and undergoing extensive renovations with a budgeted costs of £6.5 m (iii) other properties in the jurisdiction which according to the OCE belonged to the husband’s family albeit it is said beneficially to be owned by the husband (iv) a new build waterside apartment in Athens which the husband was due to complete on the purchase for £3m (v) the husband’s extensive non-UK based business interests and alleged interests in his billionaire father’s extensive business interests.  The wife was said to be a “conventional housewife”.

The New Rules considered

The judge noted at [4] that r 3.4 (1A) (b) 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” and that the agreement of the parties to an adjournment for that purpose is no longer required and (at [5]) the court may be give directions about the matters specified in r 3.4 (1A) on the application of a party or of its own initiative (r 3.4 (2)).

And at [6] the judge referred to accompanying PD3A which has also been amended with effect from 29 April 2024 and now states inter alia:

1. at 10A, that while the FPR 2010 does not give the court power to require the 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 10 B, 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 10 D, that the court also has general powers to adjourn proceedings (r4.1) which could be exercised to encourage the parties to attend NCDR.

The judge further highlighted at [7] that the power to “encourage” at r 3.4 (1A) is now backed by an amendment to FPR r 28.3 by the addition of a new sub rule 7(aa)(ii) which expressly makes any failure by a party without good reason to attend NCDR a reason to depart from the general starting point that there should be no order as to costs and the point is emphasized by para 10E of PD3A which states that “the court may take the parties’ conduct in relation to attending non-court dispute resolution into account when considering whether to make an order for costs in relation to the proceedings.

Disclosure

Peel J was noted as having said at [14] – “I know it is a culture shift, but all lawyers and judges must get into our heads that it is not simply a case of disclosure before we contemplate anything. Non court dispute resolution must be considered which can embrace disclosure ..” but the response from W was that disclosure would be required.

The judge echoed the comments of Peel J and held at [15] that “there is no need for financial disclosure to be given prior to the parties engaging in NCDR” observing that “NCDR will almost invariably provide for such disclosure to be given as part of the process” and “many forms of NCDR also have teeth to provide for disclosure”.

MIAM

The judge held at [26]:

“Under r 3.3 (1) the court must consider, at every stage in the proceedings, whether NCDR is appropriate.

Under r 3.3 (2) in considering whether NCDR is appropriate the court must take into account

• whether a MIAM took place
• whether a valid MIAM exemption was claimed
• whether the parties attempted mediation or another form of NCDR and the outcome of the process. there was nothing in the description of the case that suggest it will be unsuitable for NCDR”

The judge further noted at [29] the amended wording of r 3.10 (1) provides that if a MIAM exemption has been claimed the court will inquire into whether the exemption (a) was not validly claimed; or (b) was validly claimed but no longer applicable.

He observed the judgement of Sir Geoffrey Vos MR in Re K [2022] 2 FLR 1064 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 they need a without notice hearing ….  for the statutory MIAM requirement to be effective, it must be enforced.”

Given the terms of the agreed orders the MIAM exemption in this case was no longer applicable.

Outcome

Despite the wife’s objections the judge held that this was a paradigm case for the court to exercise its new powers [31] and made the following directions pursuant to r 3.4 (2) [32]:

1. the financial proceedings in Form A dated 14 May 2024 shall be stayed with immediate effect.
2. The form C is not to be processed and no First Appointment is to be listed at the present time.
3. Pursuant to r 3.4 (3) the parties must tell the court (by way of a joint letter sent by email to my ejudiciary address) by 4 pm on 4 July 2024 (i) what engagement (if any) there has been with NCDR; (ii) whether any of the issues in the proceedings have been resolved; and (iii) in the light of the forgoing their respective proposals for a way forward; and
4. Upon receipt of this letter I shall decide the appropriate way forward.

The judge reminded the parties that pursuant to r 3.4(4) if they do not update the court, “the court will give such further directions as to the management of the case as it considers appropriate” [33].

Costs

The final message is that parties must keep the issue of costs and the proportionality of incurring the same very much at the forefront of their minds as the judge observed at [35] “I shall certainly do so when considering the appropriate way forward for this case”.