GH V GH: October 2024 – A New And Helpful Reminder Of The Importance Of The Financial Dispute Resolution Appointment

In the recent case of GH v GH [2024] EWFC 272 which had its judgement handed down on 3 October 2024, the court heard an appeal against interim orders made by a judge in the course of financial remedy proceedings, one of which was to dispense with a Financial Dispute Resolution (‘FDR’) hearing and proceed straight to a final hearing. Justice Peel dealt with the appeal, and significantly overturned the interim order. Whilst the other issues at appeal were dealt with by an ex tempore oral judgment, Justice Peel felt it important to put on paper his reasons for overturning the interim order which dispensed with the FDR. Consequently, the judgment helpfully re-iterates the benefits and reasons for engaging fully with the FDR process, as a key step within financial remedy proceedings.

This blog will explore the reasoning of Justice Peel’s decision to overturn the Order, the circumstances when an FDR could be dispensed with, and whether a Court FDR is the right avenue for dealing with your financial dispute.

What is a Financial Dispute Resolution Hearing and why are they needed?

An FDR is typically the second hearing in financial proceedings, and is where an independent judge will give an indication as to what they believe the outcome would be at a final hearing if they were deciding the case today. The hearing is conducted on a without prejudice basis, which means the judge at the final hearing will not be aware of any offers or concessions that may be made during negotiations at the FDR hearing. There is a strong emphasis on both parties at the FDR to try and settle before proceeding to a final hearing where they will inevitably occur substantially more legal costs, time and emotional stress

Justice Peel highlighted in his judgment that the without prejudice status at a FDR allows the judge to look, “behind the litigation posturing” and give, “clear and robust views”. As a result, more often than not, cases will settle at an FDR. The benefits of settling at an FDR rather than proceeding to a final hearing cannot be overstated, especially given the very significant delays which now face those parties waiting for a final hearing court date.

Justice Peel went on to emphasise that FDR’s are not only for those parties which are close to an agreement, but also assist those parties with particular entrenched views to settle. Often, the FDR Judge is able to indicate to parties which of their proposals and positions are sound and likely to be taken into account at a final hearing and those which are not. The Judge is also able to give an indication on any factual disputes which are a particular sticking point for the parties and are preventing the possibility of settlement. In many cases, this may be the first time the parties have had an entirely independent opinion given on the case and their positions as a whole, and can result in parties rethinking whether they wish to pursue certain issues all the way to a final hearing, especially given that what they may lose in legal costs may be greater than what they would gain deciding the issue which would make it disproportionate to continue arguing that particular point any further.

When will a Financial Dispute Resolution Hearing be dispensed with?

The Family Procedure rule 9.15(4) lays out that the Court must direct that the case be referred to an FDR appointment unless:

a) “The first appointment or part of it has been treated as a FDR appointment and the FDR appointment has been effective; or
b) There are exceptional reasons which make a referral to a FDR appointment inappropriate”

In this case, (a) did not apply and Justice Peel emphasised that “exceptional reasons” means just that, as an FDR appointment remains a key element in financial remedy proceedings.

The Judge at the initial hearing relied on the reasons that there was an ongoing factual dispute about the wife’s earning capacity and the wife’s position had not crystallised so as to enable the FDR process to be successful. Whilst at appeal, Justice Peel found it, “very hard to envisage a situation where the FDR should be dispensed with”, safe for when one party has made it very clear either through their actions or words that they will not engage with or attend the FDR.

Alternatives to a Court Financial Dispute Resolution Hearing

At appeal, attention was drawn to the fact that the parties had not engaged in any Non Court Dispute Resolution (‘NCDR’), attended round table meetings or exchanged any offers to settle, which made an FDR all the more important. Since the family procedure rules now place a heavier emphasis on NCDR, it is vital that you seriously consider whether your case could be resolved outside of court, even when both parties are particularly entrenched in their positions. In addition, since the Court has now made clear that only in truly exceptional circumstances will an FDR be avoided, you are unlikely to proceed directly to a final hearing in any event, allowing more than sufficient time to reconsider NCDR even after proceedings have been issued.

Many forms of NCDR provide similar benefits to FDR’s. The most obvious being a private FDR, which is similar to a Court FDR but provides advantages. Firstly, a private FDR can be arranged much quicker and at a more convenient location as the parties do not have to wait for a court date and it does not need to take place in a Court building. A Private FDR can even take place prior to any proceedings being issued at Court, to hopefully allow the parties to resolve the dispute as soon as possible. Secondly, cases are more likely to settle at a private FDR as the barrister acting as a judge, will have more opportunity to read the papers and will be available for the whole day, so there are less time constraints on negotiations. Lastly, although parties who are particularly fixed in their positions may think that they will not be compelled outside of a Court room to settle, often the fact that they will have spent money on an FDR judge and spent the whole day negotiating creates focus and beneficial pressure to lead to a settlement. Many parties may feel anxious to spend additional funds on a private FDR judge, but this should be considered against the backdrop of the considerable fees that will be incurred if the parties proceed to a final hearing.

In addition to private FDR’s a round table meeting may also be beneficial. Although it may not be as likely to lead to settlement as a private FDR when the parties are deep rooted in their positions, it may help narrow the issues and uncover what each party actually wants to achieve, which could assist with later negotiations or proceedings. Furthermore, the meeting takes place without prejudice like an FDR, so the parties are able to discuss freely what they are willing to concede without fear that anything discussed will be used in court proceedings. Round table meetings allow parties to come up with creative solutions for settlement to find ways around particularly contentious issues, which a Judge could not order at court.

GH v GH helpfully highlights the importance of the FDR including the vital without prejudice proposals and negotiations which can really help progress parties to settlement. If you would like any advice to assist you in reaching a financial settlement, please do not hesitate to contact one of our Family Law specialists to discuss the best approach for your situation. Please call our legal experts on 0330 822 3451 or request a callback online.