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A Short Circuit to Settlement

Deborah Jeff asseses the novel use of the oral discovery procedure in the case of OS v DS

A Short Circuit to Settlement

Deborah Jeff, Solicitor, Rooks Rider

picture of deborah jeff

Introduction

The case of OS - v - DS (Oral Disclosure: Preliminary hearing) 2004 EWHC 2376 (Fam) set an extremely useful precedent of how, in appropriate cases, the Canadian oral discovery procedure can be used to expedite settlement. But when can this procedure best be used and what are the benefits? Are there any disadvantages of using the procedure?

Circumstances of this particular case

This was a short marriage of some 8 years. The Respondent husband was some 20 years older than the Applicant wife and it was a second marriage for them both. There were no children of this relationship although there were adult children from both parties' earlier marriages. Much of the husband's wealth was in place when the parties married. The wife didn't work and the husband's financial circumstances were complicated, the wife alleging that he had assets scattered around the world. The husband had made his money in Nigeria and such capital was contained in extremely intricate corporate structures outside England & Wales. The wife had applied for various other parties (with whom she alleged the husband had financial dealings) to be joined to the proceedings. By the time we reached a review hearing in October 2003 the wife had produced her third Questionnaire and there were already over 30 lever arch files of disclosure from the husband. In acting for the Respondent husband it was all too clear that there was no common ground between the parties on what the net matrimonial assets amounted to. After Replies to two of the Questionnaires from the wife (of more than 100 questions, each with sub-questions) we were still no closer to agreeing a net Asset Schedule and the further disclosure simply prompted more questions from the wife.

Nature of the Procedure

It was at the review hearing when the wife was seeking to submit her third Questionnaire that Mr Justice Coleridge suggested we adopt the Canadian procedure, novel to ancillary relief proceedings here in England and Wales, of oral discovery from the parties (in this case from the husband). Used after primary disclosure its intention is to resolve issues crucial and central to the litigation in the hope of expediting settlement. Skeleton arguments and section 25 MCA affidavits were provided ahead of the oral discovery hearing to aid the process. Regardless of whether the oral discovery hearing was to be seen as a trial of a preliminary issue, or instead as the first part of a split final hearing, the Court had power to manage the case in whatever manner it felt most useful, complying with the overriding objective in FPR 2.51B.

Advantages

The benefits of the procedure are many:

• The saving on time is enormous. When this matter was set down for hearing in October 2003 we were faced with waiting until May 2005 for the 10-day final hearing. Instead, the 2-day oral discovery hearing was able to take place in October 2004. After a morning of cross-examination of the husband the central issues were sufficiently clear and the parties were able to settle that afternoon. The oral discovery therefore saved the parties the stress of a further 7 months wait and the pressure of the final hearing itself. The procedure also freed up the 10-day final hearing for other court users. It could also be implemented at perhaps an earlier stage. In our case it was not until after replies to the wife's second financial questionnaire that it became apparent that further questionnaires and replies would solve little. It could be that in future, cases where the oral discovery procedure is used could be identified as early as the first appointment when questionnaires are filed but not yet answered. More likely it will be at the FDR stage where replies to the first questionnaires have been filed but do not answer the other parties in queries or indeed raise further questions.

• Saving on costs. By the time of the oral discovery hearing the parties had incurred costs between them of £750,000 which were likely to double by the end of the 10-day final hearing. Money that would otherwise have been spent on legal fees was kept within the family as part of the settlement.

• It gives clarity as to what further disclosure, if any, is required and whether further parties need to be joined to the proceedings. The wife had issued applications for various other parties to be joined and the judge would have had to make a decision, based on the husband's oral discovery and disclosure to date, on whether those parties were to be joined. The intervention of those parties, their attendance and no doubt their own disclosure would have added to costs. But if the husband did have financial connections with those individuals and companies they would have to be joined for any final order of the judge to be binding on those parties.

• It gives advisers the benefit of providing more accurate and specific advice once the central issue is addressed. For example, once the parties were aware of the size of the matrimonial "pot" so to speak, settlement then followed very quickly.

• It gives the Court the opportunity of testing explanations and factual issues at a stage far earlier than the final hearing. By focusing on detail at such an early stage the Court is much more able to give appropriate directions, for example, as mentioned above, as to further disclosure and perhaps the joinder of other parties.

Disadvantages

These are limited and are outweighed by the wealth of benefits. However, they can be summarised as follows:

• The adjudicating Judge must remain alert to the possibility of this procedure jeopardising the parties' respective rights to a fair hearing. However, this can largely be safeguarded by the fact that the husband (or wife) being cross examined is, of course, examined in chief and re-examined by his own counsel.

• Risk of increasing costs if the oral discovery procedure does not provoke settlement. This is, however, a minimal risk since the time estimate of the final hearing is likely to be reduced by having the central issues addressed at the oral discovery hearing.

In this particular case the central issue needing to be resolved was that of disclosure and the extent of the net assets. The oral discovery procedure worked as the husband acknowledged that he could answer any questions that the wife had much more effectively in the witness box then he could have done in Replies to further Questionnaires. Bearing in mind the effectiveness of the procedure, I anticipate it will be used in similar cases in future where there are issues of non-disclosure and questions over the extent of the matrimonial wealth. However, it could also be effectively used where other Section 25 (2) factors are central, such as for example, is a party in receipt of periodical payments cohabiting with a new partner? If that issue were addressed by oral discovery then only the level/duration of any continuing periodical payments would fall to be determined at a final hearing. It could also be used where there is any alleged ill health on the part of either the husband or wife or in the rare circumstances when conduct is pleaded. A two or three day interim oral discovery hearing may crack those central issues as, seen in OS - v - DS, quite often the documents simply do not speak for themselves and the client can do a much better job of that in the witness box.

Deborah Jeff