NCDR and the new Financial Remedies Pre-Action Protocol – is there scope for further judicial clarification?

On 29 April 2024, revisions to Parts 3 and 28 of the Family Procedure Rules allowed the court to stay proceedings on its own initiative, to encourage parties to engage in non-court dispute resolution (NCDR) including mediation, arbitration, and other methods.

On 29 May 2024, new pre-action protocols for financial remedy proceedings were introduced, prescribing (inter alia) full voluntary Form E disclosure, attendance at a Mediation Information & Assessment Meeting (MIAM), engagement in at least one form of NCDR, and a meaningful attempt at negotiating a settlement before proceedings are issued, with limited exceptions. Failure to comply with key aspects of the new protocol may result in a departure from the general rule of no order as to costs.

These developments are very welcome and are a step in the right direction in pushing parties to consider alternative forms of dispute resolution outside of the backlogged court system. However, there has been uncertainty as to how these rules will be applied in difficult cases where NCDR might not have previously been considered appropriate, and – whilst illuminating in many ways – the first High Court decision relating to these new rules certainly leaves scope for further judicial clarification.

The decision of Nicholas Allen KC in NA v LA [2024] EWFC 113 was made in the context of urgent applications by the wife for a non-molestation order, occupation order and preservation of property order (alongside MPS and LSPO applications). With her Form A, she claimed a MIAM exemption on the basis of urgency and sought directions for the exchange of Form E disclosure and the listing of a First Appointment.

The judge refused the latter aspect of the wife’s applications, and instead made an order to stay proceedings for three months so that the parties could engage in NCDR. In response to the wife’s position that she could not engage in NCDR without the benefit of court ordered financial disclosure (given her serious concerns about the husband’s lack of transparency), he held that this was an unnecessary concern because “NCDR will almost invariably provide for such disclosure to be given as part of the process” and “Many forms of NCDR also have ‘teeth’ if there is (say) a reluctant discloser”.

Whilst the new pre-action protocol expects parties to have exchanged full voluntary financial disclosure, NA v LA arguably goes further, compelling parties to engage in NCDR regardless of whether such a prior exchange takes place. This raises several issues:

  • Disclosure: of the various forms of NCDR, only arbitration has real “teeth” in relation to disclosure. The other forms of NCDR lack mechanisms to compel full, frank and clear financial disclosure, risking ineffective negotiations and leaving solicitors potentially unable to advise properly. There is also a lack of clarity at present as to at what point within an NCDR process which is doomed to fail, will parties be deemed to have sufficiently engaged with it before they may issue proceedings.
  • Delay and abuse: financial non-disclosure and economic abuse often go hand in hand, and requiring parties to engage in NCDR where one party is determined to frustrate the process may only serve to facilitate further abuse.
  • Court hearings: while NCDR aims to reduce the burden on the court, in practice there are some couples who (for valid reasons) may only ever settle at the door of the court, when the prospect of having a decision imposed on them by a judge looms large. In these cases, mandatory NCDR is likely to lead to significant wasted costs.
  • Timing issues: the judgment and protocols do not address in detail how the court is to approach time-sensitive applications, such as for backdated child periodical payments or Inheritance Act claims, raising questions about NCDR’s applicability in these contexts.

NA v LA applied the amended Family Procedure Rules in a strict way, and it is anticipated that judges will take the same approach in relation to the new pre-action protocol. However, there will be cases where the new orthodoxy won’t be appropriate and it will be interesting to see how the jurisprudence develops to protect those who might otherwise be harmed by a strict application of the new rules.

Alex Brereton, Partner. Polly Atkins & Eri Horrocks, Senior Associate

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