NCDR – The new rules and pre-action protocol in practice

Insight

19.11.2024

New Family Procedure Rules relating to Non-Court Dispute Resolution ('NCDR') and Mediation Information and Assessment Meetings ('MIAMs') came into effect on 29 April 2024. In addition, a new pre-action protocol which applies to all applications for a financial remedy, and which emphasises the importance of NCDR, came into force on 31 May.

This month's column considers the new rules and pre-action protocol, and provides insight into how they will impact our cases, as demonstrated by recent case law.

What is NCDR?

FPR, r1.4(2)(f) requires the court to encourage parties to use NCDR. The recent changes include a widening of the definition of NCDR, included at FPR, r 2.3 as "methods of resolving a dispute other than through the court process, including but not limited to mediation, arbitration, evaluation by a neutral third party (such as a private Financial Dispute Resolution process) and collaborative law."

The new pre-action protocol adds further guidance regarding what may be considered NCDR. The court may consider advice obtained via the "single lawyer" or "one couple, one lawyer" scheme as good evidence of a constructive attempt to obtain advice and avoid unnecessary proceedings, provided the parties have complied with the other requirements of the protocol.

The pre-action protocol also makes clear that, although there is a place for constructive negotiation via correspondence between legal representatives, that alone is not a sufficient attempt at NCDR. Other forms of negotiation between legal representatives, such as round table meetings, may be considered sufficient depending on when and how they took place.

Duties of legal representatives before proceedings are issued

The pre-action protocol provides that any legal representative instructed should give a copy of the protocol to all parties and explain the meaning and implications to their client. They must therefore explain to their client that the court will expect appropriate engagement in NCDR and that the purpose of NCDR is to enable the parties to understand each other's position, to assist them in deciding how to proceed, to identify the issues in dispute, to narrow the scope of the dispute, to try to settle the issue without court proceedings, to support efficient management of dispute resolution, and to reduce the costs of resolving the dispute.

The protocol also emphasises that parties should bear in mind that many (if not all) of the benefits of having a court timetable can be achieved via a NCDR process such as arbitration. Therefore, even where mediation is not felt to be appropriate, arbitration may provide a valuable alternative to the court process.

MIAM attendance

The court will require both parties to have attended a MIAM unless a valid exemption applies. There have been changes to the exemptions; some have been removed entirely (for example, there is no longer an exemption that one of the parties is not habitually resident in England and Wales) and others have been amended. A full list is included at r 3.8 of the FPR 2010. The applicant claiming the exemption must attach supporting documentation and evidence to their application. Paragraphs 20, 21A and 21 of PD 3A set out the evidence that is required to support each exemption.

Adjourning proceedings to allow NCDR to take place

It is clear that whilst the new rules do not go as far as compelling parties to proceedings to engage in non-court dispute resolution, the court can order an adjournment of proceedings to allow NCDR to take place without the parties' consent (see FPR, r 3.4(1A)(b)).

Pursuant to r 3.10(1), if a MIAM exemption has been claimed, the court will examine the supporting evidence either on allocation or at the first hearing in order to determine whether the exemption is valid. If the court considers that the exemption is not valid, it may direct the parties to attend a MIAM and may adjourn the proceedings for this to take place.

Rule 3.10(1) also requires the court to consider whether an exemption that was properly claimed at the time is no longer applicable, and whether there should now be an adjournment for NCDR to take place. As highlighted by the recent case of NA v LA [2024] EWFC 113, although there may have been good reasons to start court proceedings before attempting NCDR (for example if a preservation order was required), the court will still expect parties to attempt NCDR once the urgent issue which necessitated court proceedings being issued has been resolved.

It is also important to note that there is no need for financial disclosure to take place before parties engage in NCDR as financial disclosure will almost invariably provide for such disclosure to be given as part of the process (see NA v LA).

Requirement to exchange views about NCDR

If proceedings are issued, the new FPR, r 3.3(1A) and the pre-action protocol require the parties to set out their position on using NCDR using Form FM5 and send it to the court and the other party at least 7 working days before the first hearing, or as directed by the court.

The Form requires the parties to state what form of NCDR they have attended and provide details, including why NCDR was not the right way of resolving the outstanding disputes in the case. If they have not attended NCDR, they must state whether any exemption still applies and why NCDR is not appropriate in their case. It also includes a Statement of Truth.

These documents are likely to be referred to later in relation to costs arguments.

Costs orders in financial remedy proceedings

Under r 28.3(6) the court can make a costs order where it considers it appropriate to do so because of the conduct of a party in relation to the proceedings, whether before or during them. This is supported by para 4.4 of PD 28A which states that to refuse openly to negotiate reasonably and responsibly will amount to conduct in respect of which the court will consider making an order for costs. Further weight is added to this stance by the most recent amendments, which include an amended FPR, r 28.3(7) that expressly states that any failure to attend a MIAM or to attend NCDR must be taken into account when considering what costs order to make. It is therefore likely that we will continue to see costs orders being made, even in needs cases, where a party has failed to attend a MIAM, or attend NCDR, before or during the proceedings.

A sea change?

It is clear that practitioners must engage fully with the various NCDR options available, as appropriate in each case. Where an exemption applies, it must be evidenced, and as and when it no longer applies, NCDR should be undertaken at that stage. As Gwynneth Knowles J makes clear at the outset of her judgment in X v Y [2024] EWHC 538 (Fam), those involved in family proceedings, whether concerning money or children, need to understand that a serious effort must be made to resolve their differences before they issue court proceedings. Further, the court will be active in considering whether NCDR is suitable at all stages of the proceedings. As has already been demonstrated by the courts, failure to do so risks an adjournment of proceedings and potential costs consequences.