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High Court judge urges parties to consider arbitration in family proceedings

Date:11 APR 2019
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In CM v CM [2019] EWFC 16, Mr Justice Moor made a short but punchy judgment after hearing cross applications involving a dispute about the wording of a letter to a single joint expert in financial remedy proceedings.

Moor J had made an order at the First Appointment for an independent accountant to answer six questions about a family business. These were: 

  1. the current value of the Companies;
  2. the current value of the parties’ individual shareholdings (whether held directly or through another entity) in the Companies;
  3. the financial benefits that the Respondent has derived from the Companies since the accounting year ending 2014;
  4. the likely income that the Respondent may derive from the Companies in the foreseeable future;
  5. the liquidity within the Companies and the extent to which it could reasonably be made available to the parties;
  6. the tax arising on the sale, disposal or transfer of shares in the Companies by the parties (or either of them) and the mitigation of any such tax;

Such questions are quite usual in financial remedy proceedings and are designed to provide the parties and the court with adequate information about a business to determine how that particular asset should be dealt with on divorce.

The usual procedure is for one party to draft the letter of instruction and to send it to the other side by a specific a date. In this case, the husband’s legal team duly completed an initial draft and sent it to the wife’s legal representative on the date required. They then had an opportunity to review the letter before either agreeing that it could be sent as drafted or proposing any amendments. Again, there was a time limit within which their position must be communicated to the other side. In this case, the wife’s legal representatives did not respond within the required time, but instead responded late and with a catalogue of amendments to the letter. 

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Moor J describes the amendments as follows:

“The six questions in my order became ten. The twelve lines in my order became twenty-eight. A number of new issues were raised. Amendments were made to all but two of the original questions.”

The letter could not be agreed and so the matter was returned to Moor J to determine by way of cross applications. He received these applications with “dismay”.

Moor J found against the wife and was critical of her conduct in seeking such extensive amendments which could and should have been dealt with at the First Appointment. So unimpressed was he that he ordered her to pay the husband’s costs of the cross applications, which is unusual in such proceedings.

Whilst there is no information in the anonymised judgment about the value of the assets in this case, it is clear this dispute should never have arisen, and significant costs had been wasted. That said, legitimate issues do sometimes arise. It is, however, not always necessary to refer the matter back to a Judge. Moor J says at paragraph 10 of his judgment:

“High Court Judges are exceptionally busy. They do not have time to draft letters of instruction or even to determine disputes as to the wording of such letters. On this occasion, there was no legitimate dispute as I had already made an order that set out the issues [the SJE] had to consider. If, however, in a future case, there is a genuine issue as to drafting, I consider it would be exactly the sort of matter that should be referred to an arbitrator who is accredited by the Institute of Family Law Arbitrators.”

Arbitration has been available as a means of dispute resolution in financial remedy proceedings since 2012 and in children proceedings since 2016. The parties can decide who is the arbitrator and what issues they will decide. These can range from determining the entire application or a single issue which cannot be agreed such as the wording of the single joint expert letter of instruction, as in this case. It can be an excellent way to maintain more control over family litigation and can be a quicker, less stressful and possibly less expensive method of resolving disputes than court proceedings.