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Festive Review 2021

A round-up of developments in financial remedies

This time of year, if I’m not playing Merry Xmas Everybody’ by Slade, I’m probably forcing my family to listen to Happy Xmas (War is Over)by John Lennon and Yoko Ono, with its poignant opening lines: “So, this is Christmas, and what have you done?/ Another year over. A new one just begun”.

Which prompts the lawyer in me to consider (i) what have we done, in terms of financial remedy work in 2021? (ii) what awaits us in the New Year; and (iii) doesn’t New Year traditionally begin after Christmas?

(1) The Financial Remedies Court

First and foremost, 2021 was the year in which financial remedies finally got its own court. This was the culmination of a five year scheme, announced by Sir James Munby in November 2016, which began with a pilot scheme in the West Midlands in April 2018. On 15 February 2021, the Financial Remedies Court was announced, under the auspices of Mr Justice Mostyn and HHJ Hess, as a subsidiary structure working within the Family Court (see overall structure document).

The FRC have published a range of practice guidance including:

Inevitably, there is work still to do. There is a (very) long-standing ambition to bring quasi-family claims under TLATA and the Inheritance Act into the fold. The FRC website is in its infancy and does not yet have all of the relevant guidance. Practitioners have to adjust to the terminology (Financial Remedy Court/ FRC not FRU). However, this is a bold start for – dare I say – an area of law which has traditionally been the Cinderella of Family Law.

(2) Confidence and Confidentiality

My second festive pick also isn’t a case; it’s the final report of the President’s Transparency Review, ‘Confidence and Confidentiality’ (28 October 2021).

This surveyed the bewilderingly complex state of the law relating to privacy in the family court, and asked why earlier procedural reforms had produced such paltry results (A. while the press might be able to attend, what they could report was severely prescribed and subject to the contempt of court provisions at s.12 of the Administration of Justice Act 1960).

The report marked a decisive shift of gear in opening up the family court, balanced against the need to preserve confidentiality of children. The time has come

[35] My overall conclusion is that the time has come for accredited media representatives and legal bloggers to be able, not only to attend and observe Family Court hearings, but also to report publicly on what they see and hear. Reporting must be subject to very clear rules to maintain both the anonymity of the children and family members who are before the court, and confidentiality with respect to intimate details of their private lives. Openness and confidentiality are not irreconcilable and each is achievable. The aim is to enhance public confidence significantly, whilst at the same time firmly protecting continued confidentiality

The President indicated reform to s.12 would be achieved through the Family Procedure Rules Committee and not Parliament (although, query how a statute can effectively be nullified by a procedural rule). Other recommendations included the encouragement for judges are to be encouraged to put more judgments on BAILII (McFarlane P suggested 10%), setting up links between the family court and editors, a more systemic approach to data collection and moves away from anonymisation of court lists. A separate consultation document has now been produced by Mr Justice Mostyn and HHJ Hess.

The first sign that ‘Confidence and Confidentiality’ might actually change the way we work, in terms of how cases are heard and reports, (as opposed to being observed in the breach), was contained in two decisions by Mostyn J, in BT v CU [2021] EWFC 87 and A v M [2021] EWFC 89, in which the Learned Judge indicated that from now on, his presumptive position in financial remedy cases should be (subject to preserving the children’s confidentiality) publishing the names, as in other areas of law. A second sign of movement towards open justice, albeit in a very different context, is the Court of Appeal’s decision to identify the perpetrator of marital rape (as found on the balance of probabilities at a fact-finding hearing) in Griffiths v Tickle [2021] EWCA Civ 188

(3) Maintenance pending suit

The calendar year began with the Court of Appeal’s decision in Rattan v Kuwad [2021] EWCA Civ 1. This was an unusual case, in that it was a second appeal from an interim decision, involving a comparatively modest asset case. The significance of the decision is that it restored the decision of the trial judge and held that there was no need for extensive analysis, or the invariable production of an interim budget in every case. This remains a discretionary area of law in which the court might legitimately apply the broad brush (see earlier article). Also see E v B (Interim Maintenance: Inaccurate Time Estimate) [2021] EWFC B90 for the general warning that applications for MPS and/ or costs allowances must be conducted proportionately, allowing the court adequate time.

(4) Covid probably not a Barder event

Back in what future generations might describe as ‘Year 1 of Covid’ (when we thought it would be over by Xmas), for many lawyers, the question arose: might it be possible to re-open final orders based on the basis that it was ‘unforeseen and unforeseeable’. Might an event as unprecedented (at least since the flu pandemic of 1918-20) or seismic, cause the courts to review the historic reluctance to reopen cases based on economic change (cf Myerson No 2 [2009] EWCA Civ 282).

In two words, the answer is ‘probably not’. In BT v CU [2021] EWFC 87 Mostyn J concentrated on the net effect of COVID to the business at stake, and concluded that the downturn was insufficient for the purposes of a set aside application. In BT v CU the business was saved by a huge level of Government support by way of the furlough scheme. Indeed, the reason why the courts have not been swamped with applications to reopen final orders from late 2019/ early 2020 is probably down to the support from furlough. An interesting counter-factual is, what would the outcome have been without Government largesse of that level? BT v CU contains important guidance in relation to other issues including executory orders/ Thwaite

(5) Litigation 101: witness statements and draft orders

On 10 November 2021, Sir Andrew McFarlane handed down memoranda on two areas of practice, to gently remind practitioners that when it comes to witness statements and drafting orders, there actually are some fairly basis rules and requirements to follow. Both of these documents are important to read (assuming you are not already au fait with the, generally overlooked, evidential requirements of FPR Pt 22 which are largely modelled on CPR Pt 32).

Indeed, the encouragement that family lawyers should bear in mind wider legal principle, is very much a current theme. If there was a word of the year in family law, that word was probably ‘Alsatia’. And, as everyone will readily recognise (ahem), Alsatia refers to that part of Whitefriars which for a period of time in the seventeenth century provided sanctuary for perpetrators of crime. The reason why family judges make reference to Alsatia is to underline the point that for too long family lawyers have acted as though they operate their own, special law (see, e.g. traditional approach to freezing orders). Accordingly, in several judgments by Sir James Munby and Mostyn J, the point is made that family law is not an Alsatia and in fact needs to return to the mainland of the law.

(6) Schedule 1 – WATCH THIS SPACE

The Court of Appeal’s judgment in DN v UD is expected imminently (22 December 2021). Without wanting to overly raise expectations, this appeal from the magnum opus decision of Williams J (see earlier article), might involve a substantial review of this area of law which has been largely unexamined at an appellant level since Re P

There is, for students of unusual claims, the decision in Siddiqui v Siddiqui [2021] EWCA Civ 1572 which is probably a contender for the case with most unsurprising outcome, to the effect that a 41 year old man cannot obtain financial relief for himself from his parents through Schedule 1 to the Children Act.

(7) Variation of lump sums

In BT v CU [2021] EWFC 87, Mostyn J also addressed (and disapproved) the practice of drafting ‘a series of lump sums’ as opposed to ‘lump sums by instalment’, thereby to avoid the court’s variation powers at s.31. Per Mostyn, this practice amounts to no more than ‘camouflage’ (cf. CA in Hamilton [2013] EWCA Civ 13), but observed that for two generations the court have overlooked the original Law Commission recommendations from 1969, whereby any lump sum by instalment should be variable, but only as to timing and not quantum.

(8) Costs – an ongoing debate

The issue of costs in financial remedies remains somewhat vexed. We now operate in a system where Calderbank offers cannot be effectively made (except in Schedule 1), but parties are now obliged to send two open proposals: one following the FDR; the other in advance of a final hearing. The duty is ‘to negotiate openly and reasonably’ (PD28A § 4.4)

We are beginning to have reports of cases where court has made costs orders, applying rules requiring reasonable open negotiation. In OG v AG [2020] EWFC 52, Mostyn J warned practitioners:

[31] It is important that I enunciate this principle loud and clear: if, once the financial landscape is clear, you do not openly negotiate reasonably, then you will likely suffer a penalty in costs. This applies whether the case is big or small, or whether it is being decided by reference to needs or sharing.

In the more recent case of LM v DM (Costs Ruling) [2021] EWFC 28, Mostyn J reduced the applicant’s costs order following an MPS application by 50% to reflect the fact that she had ‘made no serious attempt to negotiate openly and reasonably beyond setting out her in-court forensic position[‘

The system is far from perfect and practitioners will be aware of handful of cases involving (to deploy Peel J’s memorable phrase) ‘nihilistic’ litigation in Crowther v Crowther [2021] EWFC 88, where parties destroyed their assets on lawyers.

2022: Incoming

So, what of developments for the coming year (or, according to John Lennon, the year that ended shortly before Christmas), watch out for the following:

(1) The development of structures of the FRC including website containing guidance and a selection of judgments;

(2) Further moves towards open justice. Will we in years to come look back fondly on the days of cases being reported as ‘A v B’ and ‘S v S’? Will anonymisation and even hearings in private one day become the exception rather than then norm;

(3) With the new year comes a new publication (in which I declare an interest): the Financial Remedies Journal, which will be launched in Spring 2022;

(4) Is 2022 going to involve a change of the law in relation to areas such as domestic abuse in financial remedies. Is the current law so out of step with other areas (e.g. private law, Re HN [2021] EWCA 448) that the conduct which falls short of being ‘very exceptional’ (see wording of Form E) might be taken into account?

Alexander Chandler

19 December 2021

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