Recent court case supports Private FDRs

The courts have been under increasing pressure for years, and this has come to a head as a result of the impact of the Covid-19 pandemic. In finance cases on divorce where the parties can’t agree how to split their assets, resulting in one party making an application to court, delays continue to increase.  The courts have been (understandably) prioritising urgent cases, such as care cases and domestic abuse, followed by children cases. 

Consequently, it can take weeks or months to process a finance application, and there can be several months between hearings. 

After the First Directions Appointment (or FDA), the court will make directions (which could include more disclosure, answering questionnaires, expert reports – eg property valuations, pension sharing reports) to progress the case and prepare for a Financial Dispute Resolution hearing (or FDR).  At this hearing, a judge gives an indication of the order that could be made by a different judge at a final hearing. This process is designed to help the parties focus their settlement discussions and ultimately, to reach an agreement if they can (thus saving their time, the court time and the costs of a final hearing where a judge will impose a financial settlement on the parties). 

What is a Private FDR?

As a result of the increased delays to list hearings and the limited time that judges have on the day, we have seen an increase in the use of Private FDRs instead – where the parties appoint a private (paid-for) judge to act as the FDR judge.

Private FDRs are a fantastic way of reaching an early settlement and can avoid the cost and time of further court proceedings.  Private FDRs and Early Neutral Evaluations can also be used to help parties reach a settlement without court proceedings already on foot.  They have proved to be an increasingly popular choice for those seeking judicial input without the delays.

The benefits include:

• The judge is yours for the day and so will have more time for your case, to get to grips with the papers and provide real insight
• Negotiations can take time, and the judge can be involved at any stage throughout the day where needed.
• At court, you have a specific slot and the judge may have an hour or less to give you indications and you are then left to discuss and negotiate between yourselves, and report back to the judge later in the day.

As a result of better judicial input, Private FDRs have a high success rate.  

In the recent case of AS v CS (Private FDR) [2021] EWFC 34: , the judge dealing with the case, Mostyn J, said:

“Private FDRs are to be strongly encouraged. They seem to have a higher success rate than in-court FDRs. This may be a result of more time being available to the judge both for preparation and in the hearing itself. Private FDRs take a lot of pressure off the court system which is highly beleaguered at the present time. They free up judicial resources to hear cases that must be heard in court.”

Recent court case concerning Private FDRs

However, until recently it hasn’t been clear what the implications are if one party unilaterally tries to cancel a Private FDR (it being a voluntary decision in the first place to take the case out of the court system).

This issue was considered by Mostyn J in the recent case of AS v CS.  The parties had agreed to attend a Private FDR.  It was adjourned once  by agreement, and the wife then tried to cancel it unilaterally.  The husband didn’t agree as it would cause further delay but assumed that there was no option but to agree to it not going ahead if the wife didn’t agree, and so asked the court to change a planned directions hearing into a court-based FDR instead.

When notified of this, Mostyn J confirmed that the Private FDR listing should be treated the same as a court-based FDR, which could not be cancelled unilaterally or without input from the court.  The judge ordered that the Private FDR should take place.

The case confirms that where it has been ordered that parties are to attend a Private FDR, neither party can unilaterally cancel it and the date can only be changed by a court order (which can be made by consent).

Comments

This will be reassuring for many clients who want to benefit from a Private FDR without the risk that the other party may withdraw and the knock-on impact this may have to the progress of the case (and costs of dealing with that problem).

There are various options open to divorcing couples to help agree their financial split and resolve any points of dispute, without the need to apply to court.  Indeed, it is a requirement that (unless exceptional circumstances apply) parties must at least attend an initial mediation session, if not a course of mediation, before applying to court about their finances.  

If you are interested in finding out more about the different out of court options, please do get in touch.