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28 SEP 2015

Early Neutral Evaluation of cohabitation and Inheritance Act disputes

Rhys Taylor

Barrister, arbitrator and mediator

@RhysTaylor32

Early Neutral Evaluation of cohabitation and Inheritance Act disputes
In Seals v Williams [2015] EWHC 1829 (Ch), concerning an Inheritance Act dispute, Norris J noted, 'An attempt at mediation has largely stalled because of the differing perceptions of the issues and of the strength of the respective arguments.'

Norris J commended the suggestion that the parties engage in judge-led Early Neutral Evaluation (ENE), noting, 'The process is particularly useful where the parties have very differing views of the prospect of success and perhaps an inadequate understanding of the risks of litigation itself.'

The court went on to find a jurisdictional basis for ordering ENE, even if the parties did not consent (they did here) in CPR 3.1(m) which provides the court with the power 'to take any other step or make any other order for the purpose of managing the case and furthering the overriding objective'.

From the 1 October 2015 rule 3.1(m) is to be amended to make express provision for ENE, providing power to 'take any other step or make any other order for the purpose of managing the case and furthering the overriding objective, including hearing an Early Neutral Evaluation with the aim of helping the parties settle the case.'

Briggs LJ commended ENE in the Chancery Modernisation Review: Final Report(2013) (see paras 5.23 – 5.30 and 16.19). This is an area where family lawyers are almost light years ahead, having used the Financial Dispute Resolution appointment as the principal way of disposing of financial remedy claims for many years. The learned authors of the White Book note,

'The amended rule is not, as might have been expected limited to Chancery proceedings. It is of general application. While it is likely to be used more readily in the immediate future in Chancery proceedings given the impetus to its use by the Brigg’s Review and Norris J’s judgment, its use in appropriate cases in the Queen’s bench Division and the County Court is likely to become increasingly common.' (Civil Procedure News Issue 8/2015)
But hold on a minute: where does the'early' come into ENE? The parties in Seals had already been engaged in months of litigation prior to the white flags being hoisted before Norris J.

The timing of an ADR process is a key ingredient to its success and costs control. In Nigel Witham Ltd v Smith & Isaacs [2008] EWHC 12 [TCC] at para [32] Coulson J made comments which would be equally applicable in the ENE context:

'It is a common difficulty in cases of this sort, trying to work out when the best time might be to attempt ADR or mediation. Mediation is often suggested by the claiming party at an early stage. But the responding party, who is likely to be the party writing the cheque, will often want proper information relating to the claim in order to be able to assess the commercial risk that the claim represents before embarking on a sensible mediation. A premature mediation simply wastes time and can sometimes lead to a hardening of the positions on both sides which make any subsequent attempt of settlement doomed to fail. Conversely, a delay in any mediation until after full particulars and documents have been exchanged can mean that the costs which have been incurred to get to that point themselves become the principal obstacle to a successful mediation. The trick is many cases is to identify the happy medium: the point when the detail of the claim and response are known to both sides, but before the costs that have been incurred in reaching that stage are so great that settlement is no longer possible.'
The parties in 'family property' Chancery litigation will usually have spent thousands to get to a Case Management Conference at which court led ENE is proposed. Pleadings, costs budgeting, etc will all have to be contended with.To keep it 'early' the parties may want to consider engaging in private ENE before a specialist solicitor or barrister in the area of their dispute.  Article continues below...
The degree of case preparation will obviously depend on the nature of the case and will vary enormously. In an advisory capacity, this writer commends pre-action protocol letters and replies to be written with the particularity or specificity of a statement of case. The pre-action protocol letter is not a pleading, but if there are key events and discussions which will be relied upon in due course, you would be well advised to set them out properly from the outset (see further 'Recurring Misconceptions in TOLATA cases'). An exchange of well-thought out pre-action letters, attaching key documents to be relied upon, may well be enough to allow a realistic view to be given.

Of course, the holy grail of the 'right' answer is only available after the last drop has been wrung from the litigation process. Often that is disproportionate to the value of the dispute and the means of the parties. Many may well be content with an indication 'in the right parish' which provides a route map for negotiating the final touches to an agreement.

Brown & Marriot suggest the following [1]:
  • The parties enter into an agreement to obtain an evaluation, which would as required provide that the process including its related material are confidential and without prejudice,and that communication made in the ENE, including the evaluation itself, may not be disclosed or used in any pending or subsequent proceedings (save of course that any evidence that is otherwise admissible or disclosable will not be rendered inadmissible or non-disclosable because of the its use in the process).
  • The parties furnish the evaluator with summaries of their case and submissions, together with a bundle of relevant documents, which may include pleadings (statements of case) in any pending litigation or arbitration. The case summaries would comply with the evaluator’s requirements as to length and nature of content.
  • The evaluator is required to consider these summaries and documents (and any others which the evaluator may request) and to convene an evaluation session within a prescribed period,unless the parties have agreed that the evaluation should be made on a documents-only basis.
  • Arrangements will be made for the venue and timetable for the evaluation session, and for the parties’ representation.
  • At the evaluation session, the parties themselves, or their legal representatives, each make an oral presentation...
  • The evaluator may identify areas of agreement and the issues in dispute and provides an assessment of the relative strengths and weaknesses of the case, explaining his or her reasoning for the views expressed. This may be done at the session, or in writing within a specified period afterwards, as may be agreed...
  • If the evaluator thinks it might be helpful and appropriate to have any follow-up activities after the initial session, these can be arranged. Usually, they would be in the form of written or telephone communications, and perhaps, with the consent of the parties, a second evaluation meeting.
Given that an evaluation as to merits is being given, it is suggested that the parties may wish to have the independence of the evaluator in mind, borrowing jurisprudence from the judicial or arbitral context. A useful summary of the principles is to be found in Sierra Fishing Co v Farran [2015] EWHC 1829 (Comm) from para [51].

For knotty Trusts of Land and Appointmentof Trustees Act and Inheritance Act disputes, ENE now has the fair wind ofjudicial and statutory encouragement and appears a proportionate way in whichto help resolve such disputes.

Rhys Taylor is shortlisted for the Family Law Commentator of the Year at the 2015 Family Law Awards.

[1] ADR: Principles and Practice (Sweet & Maxwell, 3rd edn), at 18-083.  

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