In an appeal from a decision made by a family judge in an inheritance dispute, the Court of Appeal has ruled that the consent of the parties is not needed for a court to order them to submit their case to an ENE, or “early neutral evaluation”. So what exactly is an ENE, and how does it differ from other forms of alternative dispute resolution (ADR), including (as commonly used in divorce cases) FDR, or financial dispute resolution?
The case is called Lomax v Lomax and the original judgment was by Mrs Justice Parker in May this year: [2019] EWHC 1267 (Fam). The Court of Appeal gave its decision in August: [2019] EWCA Civ 1467.
The dispute
The case concerns a dispute between relatives over a will. The claimant is the widow of the deceased, and one of the executors of his will, and is making a claim under the Inheritance (Provision for Family and Dependants) Act 1975 against her stepson who is also the other executor under his father’s will. As in most such claims under the Inheritance Act, as we shall call it, the widow believes she deserves more under the will than she is currently getting. The stepson, acting on his own behalf and that of other beneficiaries under the will, disputes her claim.
The judge began by observing that Inheritance Act claims have much in common with financial remedy proceedings (in a divorce):
“There are similarities in the relief that can be ordered: there is an element of discretion in the award; they usually concern family assets; there is often a family or domestic relationship; and they can give rise to deep emotions.”
However, they are governed by the Civil Procedure Rules (CPR) and not by the Family Procedure Rules (FPR). That turned out to be a critical distinction in this case.
Unfortunately, the judge made a bit of a meal of the case, taking 11 months to issue her judgment after being prompted by a note from counsel, in response to her initial draft order, to revisit her decision and then having to decide whether or not she could (spoiler alert, she could). But the nub of the case ultimately boiled down to whether the court could force the parties to submit to an ENE under the CPR in the same way as it could in a divorce case under the FPR, or whether it depended on the parties consenting to submit to the ENE themselves.
What is an FDR hearing?
Under part 9 of the Family Proceedings Rules (see para 9.17), an FDR hearing is a routine part of the process of determining financial remedies after a divorce. After a first appointment to define the issues in dispute, the second appointment is the FDR hearing, which provides an occasion for the parties to meet in person and negotiate a final settlement with the help of the judge. The hearing doesn’t usually involve anyone giving evidence, though the judge can look at all the information available, including any “without prejudice” offers made. The FDR hearing is itself without prejudice, meaning the parties are not forced to abide by anything they’ve offered or conceded in the FDR. But if they don’t reach a settlement in the FDR, the case will go on to a formal court hearing, before a different judge (who will not know about what was said or what happened in the FDR hearing).
FDR hearings are provided for under the court rules, but there is nothing to stop the parties avoiding the need for it by themselves engaging in an alternative process, eg of mediation or arbitration, if it helps them achieve a settlement. The point of the FDR hearing is to avoid the cost and aggravation of an adversarial court hearing if that can be avoided, and to allow a judge to give the parties the benefit of an initial view of their case to prompt them (but not force them) into settling rather than taking the dispute forward.
What is an ENE?
Under rule 3.1(2)(m) of the Civil Procedure Rules the court, as part of its general powers of case management, may
“take any other step or make any other order for the purpose of managing the case and furthering the overriding objective, including hearing an Early Neutral Evaluation with the aim of helping the parties settle the case.”
The overriding objective is that of “enabling the court to deal with cases justly and at proportionate cost” (see rule 1.1).
An ENE is similar to an FDR hearing, in that it is designed to enable the judge to give the parties a provisional “without prejudice” view of the case and to enable them to consider the options of settlement rather than persisting with the dispute to a formal hearing.
Was this a suitable case for an ENE?
It was. At para 123 the judge observed that “this is a case which cries out, indeed screams out, for a robust judge-led process to focus on the legal and factual issues”. The claimant widow wanted an ENE but the defendant stepson didn’t, and the judge decided that, under the CPR, as there was nothing in rule 3.1 to say so, she could not order the parties to submit to it unless they both consented.
Although there was nothing in the rules themselves as to the parties’ consent, there was a note in the “White Book” (as the big reference book containing the Civil Procedure Rules and accompanying commentary is generally called). This note said
“The court’s decision whether or not to conduct ENE is not dependent in any way on the consent of the parties. It is simply part of the court’s inherent jurisdiction to control proceedings. However, if all parties seek ENE, the court will usually give directions for it unless it decides that ENE would not be appropriate in that case (see, for instance, the guidance given in the Chancery Guide 2016…)”
This appeared to have been derived from the judgment of Mr Justice Norris in an earlier case called Seals v Williams [2015] EWHC 1829 (Ch) which had prompted the change in the rules introducing ENEs in the first place. However, the guidance in the Chancery Guide on Chancery FDR (described as a form of ADR or alternative dispute resolution) appeared to conflict with the view expressed in the note by saying “The Court will not direct Chancery FDR unless all the parties agree to it.” It also states that ENE may be provided by third parties but that “in appropriate cases and with the agreement of all parties the court will itself provide an ENE”.
This conflict in the guidance combined with the lack of clarity in the rules led the judge to decide she could not order an ENE in this case, much though it was needed.
The Court of Appeal ride to the rescue
While Mrs Justice Parker struggled with a lack of clarity in the rules and the lack of “a clear route to compulsory FDR in appropriate civil proceedings” such as those under the Inheritance Act, the Court of Appeal seemed to have no such difficulty. Having pointed out that commentary in either the White Book or court guides such as the Chancery Guide could not be determinative of what was said in the Rules, Lord Justice Moylan, giving the main judgment, said (para 32):
“I see no reason to imply into sub-para (m) [ of rule 3.1(2) of the CPR ] any limitation on the court’s power to order an ENE hearing to the effect that the agreement or consent of the parties is required. Indeed, in my view such an interpretation would be inconsistent with elements of the overriding objective, in particular the saving of expense and allotting to cases an appropriate share of the court’s resources…”
Comment
Claims under the Inheritance Act are routinely heard in the family courts, and as the judge observed they have many similarities with divorce cases where there is a dispute over who gets what when the money is divvied up. So it makes absolute sense that this decision effectively puts the ENE on a similar footing to the routine FDR hearing in divorce cases. The only difference is that in civil cases the ENE is available as a case management option were the court decides it would be useful, whereas in divorce cases it is now a routine part of the case management process.
In both regimes, the purpose is to try to limit the need to use up valuable court time on an often emotionally charged dispute that could be settled outside court. But as the Court of Appeal made clear in this case, there’s no question of depriving people who are really determined to have their day in court of the chance to do so. It’s just that they can’t achieve that without attempting to settle first, with the help of the judge. Nor does it deprive the parties of opting for ADR or mediation, outside the court process (although any settlement reached through ADR or mediation can then be brought to the court for approval by way of a consent order.)
It’s unfortunate that the terminology is different in different courts, and the guidance appears to be confused. Hopefully, that will now be clarified, as the judge hoped, in the light of the Court of Appeal’s very clear decision.
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