Earlier this month in a case reported as WL v HL, Recorder Allen QC used his case management powers under Part 3 of the Family Procedure Rules to stay proceedings to enable the parties to engage in non-court dispute resolution ("NCDR"). Recorder Allen QC did so purely on the basis that the costs incurred by the parties and the estimated future costs were disproportionate to the issues he had to determine.
The costs incurred by the parties at the time of the decision were £15,000 and a further £15,000 had been estimated by the parties' solicitors to take the matter to the FDR hearing. The parties were both relatively wealthy in terms of their income. Their joint net monthly income amounted to £21,297 (£255,564 net per annum) so the decision was not based on the prospect of financial hardship if the parties continued to litigate the matter at Court; it was purely about proportionality.
Whilst the Family Court (and its previous incarnations) has long taken an interest in parties' costs, the decision in WL v HL is a clear signal that the Court is becoming increasingly proactive on this issue. Judicial admonishments to litigants about the financial impact of continuing litigation will no doubt continue but this case signals a further step by the Family Court to intervene on the subject. Indeed, Mr Justice Mostyn, the National Lead Judge of the Financial Remedies Courts in England and Wales, asked Recorder Allen QC to publish his judgment
WL and HL separated in October 2017. A financial settlement was agreed and set out in an Order of the Family Court on 1 June 2018. A dispute subsequently arose as to HL's payments to WL in respect of nursery and childcare costs for their child, CL. In August 2020, WL made an application to enforce the 2018 Order and the matter came before Recorder Allen QC in November 2020. The application was dismissed, with reluctance, because Recorder Allen QC found that HL had only breached the spirit of the 2018 Order and not the actual obligations placed on him. WL promptly applied to vary the terms of the 2018 Order in respect of pre-school childcare for CL and a "top up" order to meet the costs of caring for CL. She also applied for an interim variation.
On hearing the interim variation application in December 2020, HL was ordered to pay backdated nursery costs and a monthly sums to be paid going forwards. Having made such an order, the remaining dispute essentially concerned whether the parties should re-employ a nanny for CL and, if so, whether and in what proportions should each party pay towards the nanny's costs. It was at this point Recorder Allen QC decided he should exercise his case management powers as it was clear to him that "the parties expenditure on costs was already disproportionate to what was in dispute" (§8).
The Court's power
Accordingly, Recorder Allen QC exercised his specific powers under Rule 3.3 of the Family Procedure Rules 2010 which states that the Court "must consider, at every stage of proceedings, whether non-court dispute resolution is appropriate" and if so, per Rule 3.4 the Court may adjourn proceedings to enable the parties to obtain information and advice regarding ADR and for such non-Court resolution to take place.
As the costs were disproportionate to the dispute, Recorder Allen QC found that NCDR was appropriate and adjourned WL's applications until 15 January 2021 so ADR could be explored and engaged where possible. To add "bite" to his decision, he also ordered the parties' solicitors were to write to him on a joint basis by 14 January 2021 setting out the parties' engagement in ADR together with a schedule of the dates (only) any offers and replies to such offers had been made.
A further two week adjournment was granted as the solicitors reported that the parties had engaged in mediation but a further session was required. An agreement was in the offing and offers were made so a further two week adjournment was granted. A substantial agreement was reached to which the parties agreed they were bound but a discrete issue had to be determined by Recorder Allen QC, which he did on paper on 5 March 2021 bringing the matter to a satisfactory conclusion, with considerably lower costs being incurred than would otherwise have been the case.
The Private Law Working Group, headed up by Mr Justice Cobb, and one of its subgroups, has raised concerns about an apparent reluctance by Judges to use their Part 3 FPR powers and has suggested that cases are not being actively managed as they perhaps should be such that NCDR settlement opportunities are being lost. As Recorder Allen QC concluded, the exercise of his Part 3 FPR powers "led to a better, quicker and less expensive outcome than would otherwise have been the case" (§26). Whilst that no doubt applies to parties engaging in NCDR, it also benefits the Family Justice system in terms of disproportionate use of increasingly valuable Court time and resources.