Where financial remedy proceedings are concerned, reported decisions of the higher courts can often seem to have little bearing on the very many cases that continuedly overwhelm the family courts situated throughout England and Wales.
These are the regular cases where the parties’ resources are not just comparatively modest (exceptional wealth spread across jurisdictions is, after all, exceptional) but, even stretched to the limit, barely meet (or fail to meet) the needs of both parties. What paid for one home must now pay for two and must do so without increase but plenty of expense. Where the maths does not go, there is simply no scope for the district judiciary to apply principles which have an entry price and require the resources to extend beyond needs.
‘Sharing’ will remain little more than an idea when there is not enough to go around and if a distinction between matrimonial and non-matrimonial property can sometimes seems necessary (as when there is an inheritance or a short marriage), it is a distinction, as likely as not, which will only prove academic and at risk of becoming a laboured exercise in futility.
Last month, in GH v GH [2024] EWFC 2547, Peel J addressed a ‘narrow but important point’ (para 1) which applies in every case irrespective of wealth. Before him, an appeal of interim orders made by the unnamed Judge below.
These orders included an order to dispense with the Financial Dispute Resolution (“FDR”) and proceed straight to a Final Hearing which, at the time of appeal, had not yet taken place. Peel J had already allowed the appeal, dealing with it by way of an ex tempore judgment.
However, in respect of the order to dispose of the FDR, Peel J had further decided to commit his decision to writing (para 1). As such, GH v GH is the latest in the series of written judgments from Peel J (National Lead Judge of the Financial Remedy Court) which have been tailored and distributed with the express intention of distilling and clarifying various substantive and procedural issues in an area of law which he regards as well settled but in need of restating (the prime example being the paragraph 21 of WC v HC [2022] EWFC 22 in which the entirety of the general law of matrimonial finance was reduced to sixteen bullet points).[1]
GH v GH
Peel J held that the Judge should not have dispensed with the FDR. He determined that ‘the essential facts and resources are clear and there is no impediment to the parties making offers, or to the court giving a firm steer’ (para 7). Peel J observed, ‘The judge seems to have taken the view that the FDR should be dispensed with for two reasons’ (para 4). Namely, there was (i) an ongoing factual dispute about the wife’s earning capacity and (ii) the wife’s position had not crystallised so as to enable the FDR process to be successful (para 4). Whilst we do not know the facts of the case, those reasons (which presumably needed to be inferred from the judgment) are, on the face of it, rather weak and a little surprising.
Rule 9.15(4)(b) of the Family Procedure Rules states that “the court must direct that the case be referred to a FDR appointment unless… there are exceptional reasons which make a referral to a FDR appointment inappropriate”.[2] By para 6.1 of PD9A: “A key element in the procedure is the Financial Dispute Resolution (FDR) appointment”. Peel J emphasised that ‘exceptional reasons’ needs ‘no gloss or interpretation’ (para 2). Paragraph 5 of the judgment deserves reading in full:
The FDR (which for these purposes includes the increasingly popular Private FDR) is an integral part of the court process. Its value has been proved time and again. Its without prejudice status allows the judge to look behind the litigation posturing which is so familiar in these cases and give clear, robust views. Anecdotally, it facilitates settlement in a significant number of cases. It is not only relatively straightforward cases which are susceptible to settlement at FDR. So, too, are complex cases. In my personal experience, even the most intractable case can yield to settlement at the FDR. The purpose of it is to enable the parties to hear (probably for the first time) an independent evaluation of the likely outcome, and the risks (in terms of costs, uncertainty, delay and emotional toll) of continued litigation. The FDR judge is there to tell the parties if their proposals are sound or devoid of merit, or if particular points or arguments are or are not likely to find favour at trial. It is often those hard cases where one or other party appears utterly intransigent that the FDR judge’s indication and observations can be of greatest utility. The FDR judge is well able to deal with factual issues (such as, in this case, W’s earning capacity), not by determining them but by expressing a view as to how they appear on the available evidence and how relevant they are. The FDR judge is also well able to give a clear overview even if (as the judge assumed to be the case here) one or other party’s position is not fully crystallised.
It is hard to disagree. Clearly, not every FDR will settle but that is rather beside the point when the point in issue is whether the opportunity of the FDR should be forsaken entirely.
Whilst orders to dispense with FDR are not common, they are familiar enough. It may be that such orders wax and wane in popularity but then they may not. As ever, there is very little knowledge about what Courts actually order. There is no option but to resort to the anecdotal and one’s own experience. That said, at a time when listing is as it is and financial remedies come a distant second to Children Act cases, the benefits of bypassing an FDR are hard to fathom. ln court centres without specialist Judges dedicated to financial work, Final Hearings are likely to be in the distant future but an FDR listing available within familiar timescales.
Assertions that a particular case is ‘just not going to settle’ may well prove correct but that does not make the assertion sound or informed. What is certain is that if there is no FDR then there will be no settlement at FDR and no-one will ever be the wiser. Indeed, experience says that it is not only true that the most intractable cases can and do settle at FDR but often seem to be precisely the kind of cases that do settle at FDR. It may be that one or both parties required a reality check or perhaps just needed to put down their rackets, stop the game of tennis by correspondence (written unfortunately and read uncharitably) and get in the same building to talk (with potentially three sets of fresh eyes). The enlivening effect of an indication from an authority figure (and, hopefully, one who is experienced and expert too) and the inherent benefits of a without prejudice hearing and negotiations should not be underestimated.
An FDR may only as good as the people involved and luck is also required. Nonetheless, the familiar complaints about FDRs can just as easily, whether by design or accident, be turned to the parties’ advantage. A busy list can catalyse negotiation as much as act as a break. A duff indication is hardly welcome but there would have been no such opportunity without an FDR and such indication can be readily overcome. Even if resolution is not reached on the day, the FDR may well have corralled the parties closer together and set in train an eventual compromise. Even if the FDR only serves to reduce the litigation, it will have served some purpose.
When the issue of dispensing with FDR does arise, the existence of a factual dispute of particular significance is often the hook that the argument and decision is hung on. It is only ever frustrating to hear that a factual dispute warrants the immediate listing of a Final Hearing. It has always been deeply frustrating to hear Judges refuse to give a view based on what evidence is before the Court. Peel J’s judgment makes it plain that Judges should be doing precisely that.[3]
The suggestion that it is not the purpose of the FDR to address contested issues as that is the function of the Final Hearing is entirely confused. In truth, it is that very suggestion which confuses the respective functions of FDR and Final Hearing and fails to recognise the difference between expressing a view and deciding the issue. From counsel’s point of view, the frustration of inheriting a case before a Final Hearing only to find there was no FDR is, hopefully, a thing of the past.
The logic of the other regularly cited reason and the second base of the Judge’s decision in GH, that an FDR should be bypassed because a parties’ financial position is not known or fully known or has not been crystallised, fares no better in the analysis. If the concern is non-disclosure, there are much better ways of addressing that concern than giving up the opportunity of FDR. This may be otherwise, however, if the other side is proving wholly uncompliant and failing to engage in any meaningful way. As Peel J continued at paragraph 6:
It is very hard to envisage a situation where the FDR should be dispensed with. Perhaps if one party has not engaged at all, including not attending court hearings, and has stated that they will not attend the FDR. No doubt there are other situations which might justify proceeding from First Appointment to final hearing without the FDR. But these will be very few and far between.
Of course, there will be parties who are disappointed after an FDR. Such disappointment is understandable and not uncommon. Conceivably, a few may be disappointed after an FDR which has settled but it seems unlikely that their disappointment lies with the FDR itself and the fact an FDR took place. In any event, it is hard to see how bypassing FDR would have served them better. Most of those who are disappointed, however, will be disappointed because an FDR has not settled. If that is so, it is equally hard to see how the disappointed party, eager to settle, could have improved their situation in advance of the FDR by skipping the process.
If there is concern about the cost of an FDR appointment, intuition suggests its bypass is likely to be a false saving. Where private FDRs are concerned, the calculus is different but private FDRs should not be seen as reserved for the well off. Clearly, private FDRs fall within the definition of FDRs (para 5). That private FDRs constitute an exceptional reason for dispensing with the court FDR was made clear in AS v CS [2021] EWFC 34. Private FDRs can be expensive and paying for a Judge who seems to come free within the Court process can be difficult to entertain, particularly when they are a significant part of the additional cost. However, the benefits of a private FDR are the same for everyone and early resolution is likely to amount to a significant saving.
The non-financial benefits of settlement are unquantifiable if not priceless and such benefits may well be worth their weight in the proverbial gold (take a look at Daniel Hooker’s excellent “Guide to Private FDRs” from August 2024 in these pages).
If procedure changes significantly over the coming years then the role of FDRs may well change (e.g. if there is substantive change in the law or new procedural models are trialled and introduced; if more Final Hearings do become submissions based, the prospect of “going to trial” and the motivations for settlement at FDR may subtly alter) but that is for the future.
FDRs have been a success story of the last 25 years and integral to the high settlement rate of cases in financial remedy work. In emphasising the importance of having an FDR and highlighting FPR 9.15(4)(b), Peel J does not set out new ground but that is not the intention of these judgments which are intended to clarify what is already established. They form part of a broader project of ensuring uniformity.
Nonetheless, the words, ‘It is very hard to envisage a situation where the FDR should be dispensed with’ and ‘very few and far between’ will no doubt form the centrepiece of any arguments about heading straight to Final Hearing and will likely prove definitive where exceptionality is in doubt.
[1] Mostyn J added a seventeenth bullet point to the ‘impeccable summary’ which was ‘justly famous’ in Clarke v Clarke [2022] EWHC 2698 (Fam). By way of reminder and illustration, the parties in WC v HC were ‘very affluent’ and divided their time between the UK and Switzerland. The Wife’s needs-based award would amount to £7.45 m or 60% of the assets.
[2] Rule 9.15(4)(a) permits the Court to dispense with an FDR when the FDA has been treated as an FDR and the FDR was effective (but, as is implicit, did not produce settlement). That is, (a) actually provides for the situation where has been an FDR but it so happens that it took place by agreement at the FDA. To large extent, r. 9.15(4)(a) is otiose.
[3] Whilst conduct is not specifically mentioned, Peel J’s views have become very well-known over the last year. His synopses of the law in respect to conduct and its correct procedure and case management are as set out in his own judgments in N v J [2024] EWFC 184 and Tsvetkov v Khayrova [2023] EWFC 130).
