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Private Financial Dispute Resolutions – a new era for private justice?

Parklane Plowden Finance and Property Group.

With contributions from Iain Hutchinson and Hannah Whitehouse as part of the Parklane Plowden Finance and Property Group

On 17 March 2020 Mostyn J gave guidance in respect of the Financial Remedies Courts.[1]Paragraph 2 states:

Parties should be encouraged to have their FDRs done privately. Such private FDRs should routinely be done remotely. Most barristers’ chambers and solicitors’ offices have facilities to enable FDRs to be done remotely.” 

Why hold a Private FDR? 

Practice Direction 9A of the FPR reminds us why FDRs were introduced in the 1990s:

Such meetings have been developed as a means of reducing the tension which inevitably arises in family disputes and facilitating settlement of those disputes.[2] 

In reality, however, there are a number of reasons why the laudable aims of “reducing tension” and facilitating settlement” by means of an FDR in Court are under strain. Often judges will have a number of FDRs in their list, increasing time pressure on both them and the parties; this is exacerbated when the FDR is listed in the afternoon. In addition, there are often insufficient conference rooms and inadequate facilities at Court which further increases anxiety and stress on the part of the parties. 

To hold the FDR privately offers a clear solution. In a Circular published at the end of his Presidency in July 2018, Sir James Munby expressed the hope that judges:

              “will take the opportunity to develop and encourage the use of “private” FDRs locally.”[3] 

Sir Hugh Bennett and Duncan Brooks produced their short guide on Private FDRs just months later.[4]  In his Foreword, McFarlane J endorsed the view of his predecessor stating that “the pros will normally outweigh the cons by some measure”.

The introduction of the Financial Remedies Courts across the country in 2019 and the accompanying FRC Good Practice Protocol[5] further supports the use of private FDRs. 

Back to basics

Private FDRs offer an alternative route to the usual FDR, held at court and presided over by a district judge. The FDR is the second court hearing in the financial remedy proceedings and was introduced in the 1990s to create a forum for negotiation between the divorcing spouses. As noted in Practice Direction 9A of the FPR:

Such meetings have been developed as a means of reducing the tension which inevitably arises in family disputes and facilitating settlement of those disputes”.

A further purpose of the FDR had been to reduce the vast number of cases going to final hearing, taking up precious court time and depleting the financial resources of those divorcing.  However, the ever-growing pressure on court resources can lead to several FDRs being put in the same list, which increases the pressures upon both the Judge, the parties and their representatives. This issue is compounded by the tendency to list hearings for an afternoon appointment leaving little time to deal with the relevant issues and negotiate and thus reducing the chance of settlement and increasing the risk of going to final hearing. As pointed out by Munby J in his 2018 circular, far more cases are now being listed for final hearing than there should be. It does seem all round that private FDRs offer a clear solution.

Private FDR process

Once the parties have agreed to go down the private FDR route, they are required to inform the court of the date of the private hearing. At this point a follow up directions hearing will be listed with the court.[6]

The parties then agree upon who will be instructed to conduct the private FDR and the venue. In choosing their judge the parties can opt for an individual who specialises in a particular area that arises in their case. For example, where complex issues in relation to a family company are involved, a tribunal with specialist knowledge in that area will be invaluable. In terms of a venue, the main focus for the parties is that they choose a location convenient to them. This can be one party’s solicitors’ office or counsel’s chambers.

Further detail as to the procedure adopted in a private FDR is set out in Munby J’s 2018 Circular and Bennett J and Brooks Guidance referred to above. 

Why should parties opt for a private FDR?

There are many benefits of a private FDR:

  1. Time, flexibility, and predictability

Firstly, a private FDR can be arranged a lot more swiftly and earlier than a court FDR. Not only does this shorten the proceedings, but also provides parties with the flexibility to choose a time convenient to them. Further, this can provide parties with the certainty that their hearing will be on a particular date.

Secondly, the private judge can dedicate far more time to the parties both in their preparation and on the day. In terms of preparation, the parties can be assured that the tribunal will have had time to prepare and read the papers thoroughly. This means that the judge will have the time to grapple with the real issues in the case in greater detail. Then, on the day, the judge will be available for the parties  whenever they need input and however many times they need it. This allows parties to narrow the issues far more quickly and to spend more time on the detail of their case.  

Thirdly, the parties are not constrained by the court’s operating times. The parties can arrive at a time convenient to them and continue as long as is necessary.

  1. Cost

Time and cost go hand in hand – the shorter the proceedings, the less you tend to pay in legal fees.

It may be thought that the parties are more likely to reach a settlement at a private FDR having more time on the day to negotiate, having  a dedicated specialist judge available, and everyone involved  invested in the process, given the initial agreement and the cost of the tribunal.  With the increased likelihood of settlement, the risk of going to final hearing reduces. Parties’ costs will increase substantially between FDR and final hearing. If the parties settle at FDR no further hearings are needed and therefore no further legal costs are incurred. So, whilst there might be the fee for the private tribunal, there is more likely to be a saving in the long term.

  1. Voluntary

The whole process is voluntary. The parties do not have to engage in a private FDR if they do not want to. However, should they choose to take that route, they are more likely to be committed to it. Rather than being forced to attend a court organised forum, the parties have a “voluntary seat at the negotiating table rather than a sense of being dragged there” (Munby J, 2018 circular). This is likely to focus the minds of the parties and increase the prospect of settlement. 

  1. Pleasant surroundings 

The hearing will take place in private and calmer surroundings than the usual court building. There will be guaranteed conference rooms for each party and a dedicated break out area for the parties’ counsel to negotiate freely. 

The parties will be provided with refreshments throughout, often with lunch being served to the conference rooms directly. The parties can set up camp for the day in the room and take breaks as and when they please. The approach is far more relaxed, thereby reducing the tensions that the parties would be more likely to experience at court.

There is also no risk of losing your conference room each time the judge calls the parties into court.

  1. Access to facilities

As part of the private FDR facilities offered by many Chambers and solicitors’ offices, the parties will be able to use services, such as printing,  on request The ability to print off a draft agreement is not to be under-estimated when contrasted with the difficulties which can arise at Court, whether in having documents printed off or sharing laptop screens. 

Remote Private FDRs – the impact of COVID-19 

Through use of video conferencing facilities and careful organisation FDRs are now being conducted remotely. 

As with all remote hearings, the key to a smooth hearing is preparation and organisation between both parties, and the tribunal.

a)       Facilities: Does your client have a private room where they can focus on the hearing without distraction.

b)      Choice of software:

  1. Zoom offers the most functionality to provide a ‘mock court’. It allows for private breakout rooms but to do so requires the host to be familiar with the controls. The meeting must also be set up with a secure password.
  2. Skype does not allow for break out rooms but can be used where the parties and legal representatives mute their audio and switch off their videos, conducting private breakouts via telephone. This approach clearly relies on both advocates ensuring they speak out if a microphone is accidentally live when it should be muted. The judge & advocates can also have discussions via telephone or Skype, where the private FDR judge leaves the room in which they are sat, to avoid hearing the discussion and allocating the advocates a specific time frame.

                  i.      N.B. Skype and Skype for Business are now interoperable with the Court’s system, so your client can use a regular Skype account to join.

c. HMCTS Cloud Video Platform (‘CVP’): At the time of drafting the CVP is about to be rolled out amongst the family courts. The specifics of its functionality are not yet known other than it operates within the Google Chrome internet browser. It is reasonable to expect that with the level of funding a bespoke CVP requires the Courts will be prioritising it’s use. Ensure your devices have chrome downloaded so you can use the CVP when it is ready.

c)       Familiarity with technology: The expectation should be for counsel to be fully familiar with the conferencing software so any minor technical issues can be addressed and allow for the focus to be on the case at hand, not the manner of the hearing.

d)      Pre-hearing conference: It is important to meet with Counsel, for all the usual reasons but additionally to test the internet connection and practice sharing documents.

e)      A timetable for the day: To ensure that time is used productively. 

Conclusion

Whilst there is concern in some quarters that the use of private FDRs is another step towards the privatisation of justice and an erosion of the common law tradition, it is clear that the benefits of private FDRs are significant and have been endorsed at the highest levels of the judiciary. The courts are under severe pressure in terms of volume of work and resources.

Private FDRs, whether in person or remote, provide a very useful and cost-effective alternative to court-based FDRs.

Parklane Plowden Chambers provides facilities for private FDRs and remote private FDRs and a number of our members conduct private FDRs and represent parties at them. For further details please contact Mark Williams: mark.williams@parklaneplowden.co.uk

20 April 2020.

[1]Appendix B COVID 19: National Guidance for the Family Court 19th March 2020 https://www.judiciary.uk/wp-content/uploads/2020/03/Presidents-Guidance_Covid-19-2.pdf

[2]Para 9.17

[3]President’s Circular: Financial Remedies Court Pilot Phase 2, para 7

[4] Bennett, H., Brooks, D. (2018) Private Financial Dispute Resolutions: A Short Guide, Class Legal

[5] https://www.judiciary.uk/wp-content/uploads/2019/11/FRC-Good-Practice-Protocol-November-2019.pdf

[6] Munby, J. (2018) The President’s Circular: Financial Remedies Court Pilot Phase 2, Family Law

(https://www.familylaw.co.uk/news_and_comment/president-s-circular-financial-remedies-court-pilot-phase-2)

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