Non-Court Dispute Resolution and Costs

Non-Court Dispute Resolution and Costs

Duncan Lomax, a Solicitor in our Family team, considers the recent updates to the Civil Procedure Rules and the Family Procedure Rules.

As of 1 October 2024, the Civil Procedure Rules now contain an express power for the court to “order the parties to engage in alternative dispute resolution (ADR)”. This is a significant amendment in that it represents the first time within certain family proceedings the court can compel the parties to try and settle matters out of court before a hearing can proceed. The court now may choose to effectively postpone proceedings until it is satisfied that the parties have sufficiently engaged in ADR. This will specifically apply to cohabitation matters under the Trusts of Land and Appointment of Trustees Act 1996 and family matters under the Inheritance (Provision for Family and Dependants) Act 1975.

Notably, it appears as though the court may not accept the parties to simply confirm that they have attended a form of ADR, rather they must satisfy the court they have engaged meaningfully with the process for matters to proceed and to limit the risk of cost consequences.

Within the family courts, the position is less forceful, but the route of travel is clear. The Family Procedure Rules were updated on 29 April 2024 to make any failure by a party, without good reason, to attend non-court dispute resolution (NCDR) a reason for the court to consider whether a costs order, whereby a party pays a proportion, or all, of the other party’s costs for the hearing/proceedings, should be made. This affects all proceedings under the Matrimonial Causes Act 1973 (finances on divorce), and the Children Act 1989 (child arrangements).

The rules stopped short of providing the court with the power to order the parties to attend NCDR and it remains to be seen whether the court will seek to enforce these new rules strictly, or whether there will be an increase in costs orders. The courts have, historically, applied the general starting point that each party should bear their own costs in family proceedings.

However, the message from the Ministry of Justice and the Family Courts is very much that matters need to urgently be moved out of the court and all parties must carefully consider resolving matters via NCDR both before an application is made and this should be constantly reassessed throughout proceedings.

Whilst parties can engage in out of court negotiations via solicitors, this will not constitute a form of NCDR within the new definition, and, therefore, parties must consider one of the following processes:

  • Mediation;
  • Arbitration;
  • Early Neutral Evaluation;
  • Collaborative law.

To ensure the position is constantly reassessed, each party is now obliged to complete a form (FM5) before every hearing setting out their position in relation to non-court dispute resolution.

It is clear, moving forward, that in the event a party presents an unreasonable position on NCDR to the court, they are at risk of an adverse costs order against them.