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The continuing role of the FDR judge after Myerson

When should the judge step away from the case after the FDR? Matthew Brunsdon-Tully examines the impact of the case of Myerson

imge of Matthew Brunsdon Tully, pupil 1 hare court

Matthew Brunsdon-Tully, Pupil, 1 Hare Court

Introduction
On 20 November 2008 the Court of Appeal heard a hastily arranged interlocutory appeal against the decision of Baron J not to recuse herself from an ancillary relief matter (Counsel for the Respondent Wife (‘W’), in whose chambers the author is a Pupil, was given just three hours notice). The decisions subsequently given by Thorpe, Lawrence Collins and (arguably to a lesser extent, as will be discussed) Goldring L.JJ in Myerson v Myerson [2008] EWCA Civ 1376 Times, January 7, 2009 are very much a victory for the without prejudice purist but may have some unfortunate consequences.

The key facts can be briefly stated. Baron J had decided, having herself made an order by consent at the conclusion of a successful financial dispute resolution (‘FDR’), that she could later decide subsidiary issues which the parties had failed to agree as envisaged. As it turned out, the principal area of disagreement was that of security for a lump sum to be paid in instalments.

The FDR is a meeting, in the presence of the parties (r 2.61E (9)), their representatives and a judge, held for the purposes of settlement. Parties attending the FDR appointment must use their best endeavours to reach agreement on the matters in issue between them (r 2.61E (6)). Everything which takes place in the context of the FDR, for example evidence only for its purpose, submissions made and any proposed offers, is strictly without prejudice, so as to encourage settlement.

It is for this reason that the FDR judge, in the present case Baron J, who has seen and heard without prejudice material, has regulated contact with the matter thereafter. The rule is (ostensibly) simple and stated at r.2.61E (2) of the Family Proceedings Rules 1991. It provides:

“(2) The District Judge or Judge hearing the FDR appointment must have no further involvement with the application, other than to conduct any further FDR appointment or to make a consent order or a further directions order.”

The first, open-ended, order of Baron J was dated 19 March 2008. She made a further order for the security matter to be determined, on 1 April 2008. The envisaged hearing was eventually listed on 10 July 2008 when the Judge was informed that the issue of security was ongoing.  Baron J made a series of directions to enable the outstanding issues to be determined by her on a future date.

At this stage it seems, Baron J’s ongoing participation in proceedings, despite her involvement in the FDR, was not questioned. Such is not surprising given her decision in G v G [2007] 1 FLR 237, where she said at p.241:

“The reason for the embargo in the…Rules which stops a judge from taking any further part in the case after a mediation session is simply to cover the fact that each of the parties have made their without-prejudice position entirely clear.  Accordingly, that judge should take no part in any other aspect of the case while those matters remain undecided.  But once they have been decided by another judge, or have been dealt with by consent, for my part I think the original judge, who dealt with the FDR, should be able to deal with further or new applications that come into being unless there is some good reason which is fact specific.”

It is also fair to say that, until Myerson, family practitioners had not substantially questioned the ongoing participation of FDR judges in dealing with the fat, as opposed to the meat, of cases when parties were substantially in agreement, with an order reflecting the substantial nature of that agreement.

Indeed that position was considered beneficial. Having the FDR judge involved in cases like Myerson cut out the time which might otherwise have been spent educating any subsequent judge about the case at hand, especially in cases of protracted enforcement (which are, in the author’s limited experience, fairly common).

The ongoing role of the FDR judge was considered to reduce the potential scope for parties entering into satellite litigation over what was actually agreed at the FDR and, more importantly, on what basis. It also reduced the likelihood that one of the parties would try to renege on any agreement to fight another day with a different judge.

This was to change. The Husband (‘H’), no doubt hit by the ongoing financial crisis (see The Times, Thursday February 12, 2009, p.58 for examples), set himself on a path which challenged the original order. He perhaps considered it unlikely that such a challenge would be successful in front of the Judge who had made the original order, and who had heard detailed submissions, on a without prejudice basis, about the case at FDR stage – and indeed upon whose indications an agreement on the substantial issues had been forged. H therefore seemingly sought to ‘eliminate’ Baron J in the Court of Appeal.

He succeeded. It is worth looking at Myerson with r 2.61E in mind.

‘The Application’
As stated, the key area of dispute was as to the meaning of ‘the application’ in r.2.61E (2). H’s counsel submitted that ‘the application’ must mean the application for ancillary relief, commenced by the filing of Form A and ending only upon determination of an application for leave to appeal out of time.

H sought to fortify this position using the underlying premise for the rule – the protection of parties’ without prejudice discussions – quoting Lord Griffiths who in Rush and Tomkins v GLC [1988] 3 WLR 939 said at 943E:

“I would therefore hold that as a general rule the ‘without prejudice’ rule renders inadmissible in any subsequent litigation connected with the same subject matter proof of any admissions made in a genuine attempt to reach a settlement.”

H suggested a fictional case to make his point (see Thorpe LJ, at [18]), in which H offers a lump sum of £150 payable as to £100 immediately and five annual instalments of £10 each thereafter.  Alternatively he offers an immediate lump sum of £120.  W accepts the first offer. Implementation breaks down and W applies for variation to accelerate and H variation to extend or to release.  The judge who heard the FDR could not properly determine those cross-applications because the judge would be prejudiced by the recollection of the alternative offer that the wife had not chosen.

W in response relied on Baron J’s assessment that, ‘save for in exceptional circumstances (which I suppose might occur in some cases), the judge who makes an order in the circumstances in which I made this order can and should deal with consequential issues that arise as a result of the consent order’.

Echoing the practical considerations outlined earlier, W contended that Baron J’s assessment that ‘judge[s] can and should deal with matters arising from the final order such as defining security in the event that the parties cannot agree’ was a sensible resource-saving one, given that there is obvious merit in judicial continuity (see K v K (Financial Relief: Management of Difficult Cases) [2005] 2 FLR 1137).

The overriding objective of the Family Proceedings rules, at r.2.51D, reads as follows:

2.51D— The overriding objective
(1) The ancillary relief rules are a procedural code with the overriding objective of enabling the court to deal with cases justly.

(2) Dealing with a case justly includes, so far as is practicable–

(a) ensuring that the parties are on an equal footing;
(b) saving expense;
(c) dealing with the case in ways which are proportionate–

(i) to the amount of money involved;
(ii) to the importance of the case;
(iii) to the complexity of the issues; and
(iv) to the financial position of each party;

(d) ensuring that it is dealt with expeditiously and fairly; and
(e) allotting to it an appropriate share of the court's resources, while taking into account the need to allot resources to other cases.

(3) The court must seek to give effect to the overriding objective when it–


(a) exercises any power given to it by the ancillary relief rules; or
(b) interprets any rule.

(4) The parties are required to help the court to further the overriding objective.

(5) The court must further the overriding objective by actively managing cases.

(6) Active case management includes–

(a) encouraging the parties to co-operate with each other in the conduct of the proceedings;
(b) encouraging the parties to settle their disputes through mediation, where appropriate;
(c) identifying the issues at an early date;
(d) regulating the extent of disclosure of documents and expert evidence so that they are proportionate to the issues in question;
(e) helping the parties to settle the whole or part of the case;
(f) fixing timetables or otherwise controlling the progress of the case;
(g) making use of technology; and
(h) giving directions to ensure that the trial of a case proceeds quickly and efficiently.

In the context of the overriding objective, it might have been thought that the Court would have been keen to interpret ‘the application’ in a proportionate way, if at all possible. A Practice Direction (Family Division: Judicial Continuity), 22 March 2002, [2002] 1 W.L.R. 2183, states at 5.1 that ‘judicial continuity will be observed whenever possible, in particular in very complex cases and in cases where there are very substantial assets’ (qualified by 5.2 admittedly in relation to rule 2.61E, but of course that qualification adds little without defining the scope of the rule, which is the point here).

It is not unreasonable, in the light of the above, to suggest that ‘the application’ is in effect at an end when any substantial consent order is made at the FDR, certainly when the only remaining issues relate to security and enforcement.

Indeed, Thorpe LJ had himself said in Xhydias v Xhydias [1999] FLR 683 (at p.694):

“Clearly both counsel understood that they had settled the case... those convictions rested on firm foundation. In ancillary relief litigation a clear distinction has always been drawn between the determination of a liability and the determination of the security for the performance of the obligation.”

However, unfortunately for the Wife in this case, Thorpe LJ, without referring to his own judgment in Xhydias, stated (at [28]) that ‘where, as here, the parties did not reach agreement as to the nature and extent of the security (my italics), the dispute must be listed before another judge.’

Thorpe LJ went on:

“So too must issues of enforcement be listed before another judge.  Equally subsequent applications to vary or set aside the consent order achieved at the FDR appointment must be listed before another judge.”

H was ‘correct in his submissions as to the proper interpretation of the rule’ – for Thorpe LJ (at [26]), ‘the underlying policy of the sub-rule is clear.  Litigants distrustful of each other and made anxious by the complex tactics of contested litigation must be confident that conciliation within the court proceedings guarantees them... confidentiality’.

This is clearly one way of looking at the matter. Another would be that litigants distrustful of one another are more likely to resile from agreements, or delay their implementation, where at all possible. After Myerson, it is possible for a party to assert one thing at an FDR, obtain a consent order, then ‘eliminate’ the FDR judge on a Myerson basis when it comes to variation or enforcement and then start asserting facts different from those asserted at the FDR in the context of the order made upon the basis of those facts. Indeed, a party can only have two possible reasons for wanting to ‘set aside’ an FDR judge – either he will want to assert different facts, or he does not like the judge (or both!).

The idea that a spouse can later assert a contradictory case is plainly absurd and hardly an aid to finality, which is as important to the idea of settlement as is freedom to negotiate, here at FDR. Whilst it is only fair that parties should be allowed freedom to impart without prejudice information in an FDR without fear of it being used against them later in proceedings if there is no settlement, there is surely a question mark as to whether the same applies to a party who freely negotiates an agreement at the FDR which is subsequently made an order by the court by consent.

It is hardly fair that (as is usual) a Wife should be expected to sit silently in the back of court at a later hearing whilst her ex-Husband asserts materially different facts to those asserted at the FDR for the purposes of agreement. Yet this must be the result of the decision, because it cannot be said that in that kind of situation the FDR material can be accessed by the subsequent judge to show the contradiction, because that itself would undermine the FDR/without prejudice rule to an even greater extent, applying as it would equally to all judges, leaving the emperor (r.2.61E (2)) without any clothes.

Whatever the author’s view, the end result is that, save for further FDR appointments, consent orders or further directions, the FDR judge must have no more involvement with an application for ancillary relief so defined by the Court of Appeal.

But does ‘must’ mean what it says on the tin?

‘Must’
There was brief argument in the Court of Appeal as to whether r. 2.61E could be waived. After all, the parties could decide to waive the without prejudice nature of the proceedings, such that there is no reason why the same judge ‘must’ not take part at a later date. This is not fully dealt with in the judgments. Thorpe LJ alludes to the point at paragraph 31 of his judgment, stating:

“During the course of argument there was some discussion as to whether, despite the terms of the rule, the parties might, for whatever reason, prefer the determination of the FDR judge on subsidiary issues that could not be agreed and therefore apply for the issue to be listed before the same judge.  That issue does not arise on the present appeal and I would prefer to express no opinion on the point.”

Lawrence Collins LJ, in an interesting short judgment, is more forthright, arguing (at [35] – [36]) that parties might waive the rule. He states (at [36]) that:

“The policy behind the Rule is to encourage settlement and in particular to protect without prejudice communications. That policy is not undermined by allowing the parties to waive the requirement.”

Finally, Goldring LJ, obiter and very tentatively, said (at [61]):

“61. In G v G there was of course agreement that Baron J should not recuse herself.  There was some discussion as to whether as a consequence of sub-paragraph 2 she did not have the jurisdiction to hear the case at all, whether or not the parties consented.  We have heard no detailed submissions on this aspect, which does not arise here. Plainly, if the parties consent to the FDR judge continuing to act, very different considerations may apply.  What the position then is must be for future consideration.”

So whilst the Court made no definitive decision on the issue, a majority (Lawrence Collins and Goldring LJJ) formed an initial conclusion that r.2.61E can, potentially, be (jointly) waived by the parties.

The author wonders why without prejudice is not itself waived, after an agreement is reached, in respect of facts asserted which (either in their correct or incorrect form) affect the other party’s approach to settlement. Yet having rigidly interpreted ‘the application’ when perhaps it need not have done (in the author’s submission), the Court of Appeal has tentatively turned ‘must’ into an optional imperative. The word ‘must’ remains in the new draft rules.

If such waiver is to become common, it will be important to keep parties to their bargains.

‘Make a consent order’
As counsel for W pointed out in the course of argument (referred to at [22] of the judgment of Thorpe LJ), the FDR Judge making a consent order at the conclusion of the appointment is not simply rubber stamping the terms that the parties have agreed.

There is abundant authority that establishes that he is exercising an overriding statutory responsibility to ensure that the contract is fair to both parties, within the broad ambit of a discretionary judicial determination.  Thus the judge in exercising that responsibility is surveying not just the available evidence but also all the without prejudice disclosure. 

As Butler-Sloss LJ said in Kelley v Corston [1998] 3 W.L.R. 246 at 714:

“The court retains the duty laid upon it under section 25 in respect of consent orders as well as contested proceedings. It has to scrutinise the draft order and to check, within the limited information made available, whether there are other matters which require the court to make inquiries. The court has the power to refuse to make the order although the parties have agreed it. The fact of the agreement will, of course, be likely to be an important consideration but would not necessarily be determinative. The court is not a rubber stamp.”

It seems odd that the FDR judge is entitled to check any order against s.25 of MCA 1973, as is required, yet is not allowed to police enforcement of the order made, thus allowing a party to assert facts inconsistent with those upon which the order was made in the first place. It is this author’s contention that the analysis of the Court of Appeal, instinctively attractive in terms of ‘bright lines’, does not stand up to scrutiny.

Further involvement
There are some differences between Thorpe LJ and Goldring LJ on the further involvement of the FDR judge, despite Goldring LJ’s purported agreement with Thorpe LJ. It is suggested that, despite his criticism of Baron J ‘attempting to sub-categorise’ the rule (at [50]) this is, in fact, what Goldring LJ himself does (rightly, in the author’s view).

Thorpe LJ was clear on the nature of the further involvement of the FDR judge, saying, at [28]:

“Where, as here, the parties did not reach agreement as to the nature and extent of the security, the dispute must be listed before another judge.  So too must issues of enforcement be listed before another judge.  Equally subsequent applications to vary or set aside the consent order achieved at the FDR appointment must be listed before another judge.”

Goldring LJ’s judgment neatly highlights the problem this article seeks to demonstrate. At [57] he points out that:

“By sub-paragraph 2, they know that if no agreement is reached, the FDR judge can have only very limited further involvement and only for the purposes there stated.”

Then, at [58], he goes on:

“... “the application” in sub-paragraph 2... is not finally resolved if there is outstanding a dispute of substance albeit there may be agreement on other matters which is reflected by an order.  There is, it seems to me, no distinction in principle between a judge deciding a dispute following a complete failure to reach agreement, and resolving what is a dispute of substance following what in reality was only partial agreement. In neither case has privilege been lost, as Rush and Tomkins makes clear.

The interesting point to note here is that Goldring LJ underpins his analysis on the basis of ‘agreement’ rather than ‘the application’. He is therefore (arguably) not in agreement with Thorpe LJ at all. Some questions arise from Goldring LJ’s judgment, in particular:

Finally, Goldring LJ also narrowed the part of Thorpe LJ’s decision in Xhydias dealing with privilege, namely the passage (at p.695) in which Thorpe LJ had said:

“... [I]t was the husband who first sought leave to introduce the evidence of his negotiating counsel. Of course an agreement serves to open without prejudice correspondence and if there is a dispute as to whether or not that stage was reached the without prejudice record must be admitted to determine that issue. Since I am in no doubt that an agreement was concluded this issue requires no further consideration.”

Goldring LJ confined (at [59]) what Thorpe LJ had said in Xhydias ‘to the particular facts of that case’, which he said was ‘authority for no wider a proposition than that the court may look at the without prejudice material in order to decide whether or not an agreement has in fact been reached’. This is interesting because it at least protects the purpose of r.2.61E, which is to foster belief in the idea of the ‘open’ FDR, although one wonders whether judges will be able to resist further encroachment.

Conclusion
In conclusion, for such a hastily arranged matter, Myerson may punch above its weight. It will not only change the way ancillary relief matters are dealt with once some agreement has been reached – a victory for without prejudice purity perhaps - but may encourage some further thought about the ongoing role of the FDR judge. Certainly, the ramifications of this short appeal may turn out to be disproportionate to the time allotted for its argument and, whatever one’s views of the result (the author may be in the minority), the new rules (or indeed a Practice Direction) must clarify matters.

For the time being, although the judgment of Thorpe LJ must hold sway, it is submitted that the judgment of Goldring LJ is the more persuasive, despite his purported agreement with Thorpe LJ. There is no perfect solution. As Counsel for H noted (referred to at [18] of Thorpe LJ’s judgment and above), to hold other than the Court of Appeal did would be to undercut a party to a consent order when alternative without prejudice structural suggestions were made which subsequently turn out to be apposite. But the FDR judge will also be able to appreciate better why the agreed structure was adopted, and it should be remembered that a different judge will in many circumstances need more persuasion, not less, to depart from what was agreed.

In the meantime, with Baron J removed, Mr Myerson will return to fight another day.


 


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