The Future of Private Financial Dispute Resolution hearings: the case of AS -v- CS [2021]

Even once you have issued a financial application on divorce, it is sensible to try and reach a negotiated outcome. This often happens just before or after the second of the three court hearings, called a Financial Dispute Resolution hearing.

The court procedure for resolving finances on divorce is a three-stage process:

1. The First Appointment: The objective being to identify the issues in dispute and for a judge to determine what needs to happen for the case to progress.
2. The Financial Dispute Resolution Hearing (FDR): This presents an opportunity for the parties to negotiate a settlement with the assistance of the parties’ legal representatives and judges’ input. This hearing is “without prejudice” which means that any concessions made by the parties whilst trying to reach a settlement will not be used against them in the event that negotiations fail.
3. The Final Hearing: If the parties are not able to reach a settlement, the judge will make a final order dividing assets.

Parties who are in the court process can opt for a private FDR instead of an in-court FDR. This is a paid version of the second hearing, which is heard by a specialist family lawyer, often in their office or chambers rather than before a judge in court. The private FDR takes place at a time convenient to the parties and is without prejudice. There are many reasons why parties may choose a private FDR instead of the standard in-court procedure, most commonly to guarantee the judge’s time and focus on their case. This means there is more time for negotiation and an increased likelihood of reaching an agreement.

In the recent case of AS v CS [2021], Mr Justice Mostyn has ruled that parties can now be compelled to attend (and pay for) a private FDR where one has been agreed in place of an in-court FDR.

The Facts

The parties had previously agreed a variation to the standard in-court procedure and the court had accepted this on the condition that the first appointment would be dealt with by arbitration followed by a private FDR on 23 October 2020. This private FDR was agreed to be adjourned and take place on 3 March 2021.

The respondent sought to adjourn the private FDR again until certain questions were answered, with the rescheduled date set to take place in autumn 2021. The applicant disagreed and made an instant application for an order that a directions appointment on 10 June 2021 be converted to an in-court FDR.

The Judgement

Mostyn J, delivering the judgement on 19 April 2021, refused the application and ordered that the private FDR should proceed.

The judge stated that:

“Where an agreement was reached that a private FDR appointment would be held, an order should be made which (a) disapplies the in-court FDR process, (b) requires the parties to attend a private FDR on a specific date, and (c) provides that the date may only be altered by an order of the court (which may, of course, be made by consent).”

Mostyn J looked to the provisions in the Family Procedure Rules (FPR) to clarify his judgement:

• He acknowledged that while there is no specific power in Part 9 of the Family Procedure Rules to order that the parties should attend a private FDR, rule 4.1(4)(a) allows the court to make an order subject to conditions. In this instance, the order requiring the parties to attend a private FDR should be seen as a condition which disapplies the standard in-court procedure.
• Furthermore, FPR 4.1(3)(o) empowers the court to “take any other step or make any other order for the purpose of managing the case and furthering the overriding objective”. As such, the judge argued that “the parties were fully bound to comply with the requirement to attend the private FDR”.

The judge argued that private FDR hearings were to be strongly encouraged, due to their higher success rate than in-court FDRs. Private FDRs also take pressure out of the court system and free up judicial resources for cases that must be heard in court.

However, Mostyn J warned against abuse of the private FDR system, stating that parties should not expect to be in a better position if they take the private option. Parties who remained in the standard in-court procedure would not be allowed unilaterally to pull out of an FDR even if they felt there was a deficiency of disclosure which may lead to a barrier in negotiation. Instead, they would have to apply to the court for an adjournment of the FDR. This position should not be any different for parties that are in the private sector.

The judge criticised both the action of the applicant and the inaction of the respondent. There was an order in place for a private FDR and there had not been an application from the respondent to adjourn. If the parties had agreed to an adjournment, the court would be highly likely to approve. However, until the necessary application is made, the scheduled private FDR would go ahead.

The judgement in AS v CS [2021] demonstrates clear judicial support for the use of private FDR hearings, acknowledging their greater success at reaching an agreement between parties and releasing pressure from an over-burdened court system. However, the judgement also comes with a warning, mostly prominently that the private system should not be abused. Parties must think carefully before committing to opt out of the standard in-court process as once the decision is made, they will be compelled to attend and pay for a private FDR hearing.

If you are unsure about the court procedure for finances on divorce and need further advice on how your case will progress, please get in touch with one of our family law experts on 0808 252 5231.