4 June 2019

Judge rules that parties cannot be forced to engage in alternative dispute resolution procedures

Lomax v Lomax [2019] EWHC 1267 (Fam), Parker J has ruled that she cannot order the parties to engage in ENE or FDR procedures where one party objects to doing so.

ENE and FDR

Early Neutral Evaluation (ENE) and Financial Dispute Resolution hearings (FDR) are two types of alternative dispute resolution (ADR), both consisting of preliminary hearings, which may assist parties in understanding and settling claims. ENE consists of the Court stating its preliminary view on a claim; while Chancery FDRs have been introduced following success in the Family Division and usually involve a Chancery Master providing an opinion as to a range of settlement figures, and sometimes specific comments on the merits of the underlying claim. Both procedures are without prejudice to the claim as a whole and non-binding on the parties (although participants in ENE can agree otherwise) and the judge will have no further involvement in the case. Directions will be given in advance of either hearing, usually including directions regarding bundles and position statements.

Claims under the Inheritance (Provision for Family and Dependants) Act 1975 (the 1975 Act)

As might be expected given its Family Division origins, FDR can be a useful tool in claims under the 1975 Act. There have been many successful settlements at or following an FDR hearing of a 1975 Act claim, as the parties are able to be heard in Court, and be given guidance as to the Court’s likely approach to the claim (and therefore the risk they run in pursuing the claim to trial). They are particularly effective in cases which are highly fact specific or discretionary and where mediation or negotiation is proving difficult and could be assisted by judicial guidance. ENEs can assist in a similar way in such claims, by providing the parties with guidance as to the potential outcome of their claim at trial.

The Civil Procedure Rules (CPR)

Nevertheless, the CPR and Chancery guides are somewhat inconsistent in their guidance on the use of ENE or FDRs. This was the problem raised in Lomax.

The Decision

Lomax is a claim by a widow, under the 1975 Act, against her late husband’s estate, and two lifetime trusts. She seeks variation of the trusts, in order to meet her reasonable needs, and her stepson is strongly resisting her claim. The £5.5 million estate is held on trust for the widow for life, following which it is held on discretionary trust for the children and remoter issue of the deceased. Parker J presumed that the claim was being defended on the basis that the widow was adequately provided for without any further award. The parties' positions are starkly opposed and in Parker J's opinion, the case “screams out, for a robust judge-led process to focus on the legal and factual issues presented by this case; and perhaps even craft a proposed solution for the parties to consider.” Parker J considered that this is a case which is unlikely to benefit from mediation.

Whilst much of the reported judgment details the evidential issues and timings which pre-dated her decision, Parker J declined to order ENE or FDR, as she concluded that she was unable to be sure that the CPR intended to impose ENE or FDR on parties who do not consent to the same. This is in line with the principle set out by the Court of Appeal in Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576 that the Court is unable to order unwilling parties to engage in mediation (i.e. another form of ADR); but distinguishes the Chancery FDR from the Family FDR (which can be imposed on the parties).

Parker J urged the rules committee to clarify whether ENE is compulsory, and asked them to consider providing a clear route to compulsory FDR in appropriate cases. Given the values involved and the wider interest, this may not be the last we hear on this issue.

Roberta Harvey is a partner, and Hannah Mantle a senior associate, in our Dispute Resolution team.

"Very professional and assured practice".
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