Judge-led dispute resolution

A recent inheritance claim has raised interesting and important litigation issues for civil litigation as a whole. It could lead to the wider use of early neutral evaluation to settle disputes before litigation is considered.

In Lomax v Lomax [2019] EWHC 1267 (Fam), a widow began proceedings for reasonable financial provision out of her late husband’s estate under the Inheritance (Provision for Family and Dependants) Act 1975. Her stepson was the defendant and defended her application (he was also the co-executor and beneficiary).

During proceedings, the widow sought an Early Neutral Evaluation hearing (ENE) or a Financial Dispute Resolution hearing (FDR) (note that an FDR procedure is also provided for in the Family Procedure Rules). However, the stepson was opposed to these, so it was for the court to decide whether it could in fact order such a hearing, in the absence of consent, under Civil Procedure Rule (CPR) 3.1 (2) (m).

At issue was whether the parties can be compelled to attend ENE in the absence of consent. It proved a difficult issue for the courts.

What is Early Neutral Evaluation?

ENE is a form of alternative dispute resolution (AD) where each party presents its submissions to a neutral person (typically a judge). The process is also known as judge-led dispute resolution. Once those submissions have been heard, the neutral person then gives their without prejudice opinion on what they think would be the most likely outcome at trial.

Importantly, this opinion is not binding but it performs a key role in helping focus the parties’ minds on the issues at stake, whether that is liability or quantum; and can help the parties reach an early settlement. Any process or procedure that can reduce the risk of a dispute reaching litigation is vital.

There are also other clear benefits of having the expert opinion of a neutral third party: it provides an objective legal opinion untainted by emotion and is likely to be ‘listened to’ by the parties in dispute.

What did the court decide?

The Court of Appeal has ruled that the parties can be compelled to attend ENE. The court ruled that r3.1 gives the court case management powers which include power to order an ENE. Furthermore, the CPR did not include express words requiring the parties to give consent to an ENE.

It is worth noting that in the High Court, Parker J made clear how “extremely difficult” she found her decision and decided, “on the finest of fine balances” that she could not order an ENE or FDR if one party does not consent. Her reasons included:

  • The CPR contains powers to compel the parties to participate in a court process by filing documentation and most importantly to attend;
  • She could not be clear these are intended to provide for a non-consensual evaluation;
  • The fact that there is no reference to consent “cuts both ways” and did not assist her;
  • The current Rules “are insufficiently precise in their formulation for me either to conclude, or be confident that the Rule makers intended, that the judge is permitted to give directions which lead to a non-consensual ENE”.

However, Parker J also admitted that she “may well be wrong, and overly cautious”.

The Court of Appeal found that she was indeed wrong and over cautious. It ruled that the court does have power under CPR 3.1(2)(m) to order ENE even where one of the parties opposes it.

Its rationale was there were no express words in the rules requiring the parties to consent, so if the court took the view that ENE was appropriate in a particular case, it would compel the parties to do so.

Does this ruling extend to cases where ENE may be appropriate but neither party consents to the process? On that issue, it is not yet clear.

What does this mean?

ENE is a form of ADR and, along with similar procedures, are becoming more common in non-family proceedings not least because they are well suited to disputes where feelings are running particularly high. ENE is not, of course, appropriate in all cases and practitioners need to exercise caution when considering different options to resolve disputes.

It’s worth noting that the courts have previously encouraged ENE, which is unsurprising given the courts’ keenness to encourage the parties to mediate and settle, and avoid litigation where possible). In Seals and another v Williams [2015] EWHC 1829 – also an inheritance claim – Norris J stated: “It seems to me plain that the expression of provisional views – with a view to assisting the parties – reduces the areas of dispute and the general scope of the argument, and is an inherent part of the judicial function both in civil litigation and in criminal proceedings.”

He also commented that ENE “by a High Court judge … would be part of the judge's judicial function in enabling the parties to resolve the dispute and in discharge of the obligation to abide by the overriding objective”.

It may be advisable in an increasing range of civil disputes for practitioners to consider ENE as a viable, indeed beneficial, alternative to litigation and mediation early on. Thorough preparation, including disclosure before entering the process, is vital.

Furthermore, if one party seeks to engage in ENE the other side may not be able to avoid engaging in the process, following this ruling. A measure of comfort for an unwilling party may be derived from the fact that a decision following an ENE or FDR is not binding, but whether they will then choose to risk the cost of pursuing litigation is another matter.

Back to Parker J’s ruling: she expressed the noteworthy view that, despite her decision her “view [is] that this is a case which cries, indeed 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. Mediation (even by a legally trained mediator, if one could be found to assist where the issues are specialised, is unlikely to approach the issues in an authoritative way…”.

 

 

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