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English judges tell warring spouses ‘Resolve financial disputes without courts’

  • March 30, 2016
  • By Hunters Law

This article was also published in Family Law.

Most mediators and almost all family lawyers have heard clients say that there is no point in attending a meeting because they know their partner so well that it will be a waste of time.

But if there is no negotiation, if offers are said to be ‘non-negotiable’ or there is no attempt at compromise, then the continuing litigation takes an enormous amount of court time (for which taxpayers pay and which deprive other needy cases of the attention of the judges who are involved in these lengthy court cases) and costs the clients a huge amount of money. The judges are determined that these costs come to an end. The courts work to an overriding objective, of proportionality in each case.

One former couple have had pressure from two High Court judges to deal with their dispute privately. The first judge was Mr Justice Holman, who tries to have all his court hearings held in open court, ie anyone can attend to hear the details of the financial circumstances of separating and divorcing couples. Most people really do not want that to happen. In addition to the clear need for transparency where possible in the family courts, the judge is sending a message that if you want to avoid this happening to you, you should steer clear of the courts and should resolve your disputes without involving a court trial.

In Gray v Work [2015] EWHC 834 (Fam), he judge ordered an equal share of the assets (which did not reflect what Mr Gray said was his ‘special contribution’ so he is appealing against the judgment). In addition to the body of the ruling, in his written judgment the judge included the following sentence in capitals:

‘THE COURT REMINDING THE PARTIES OF THE OVERRIDING OBJECTIVE AND URGING THE PARTIES TO NEGOTATE WITH A VIEW TO [N]ARROWING THE ISSUES AND, IF POSSIBLE, ELIMINATING THE NEED FOR A PHASE 11 HEARING.’

Then the dispute came to be heard by Mrs Justice Roberts. By the time the hearing before her was about to start, the difference between the parties (as calculated by three accountants who were experts) in the major calculation was US$11 million. The costs were in excess of £1 million, not taking account of Mr Work’s costs in relation to Phase 1 or the substantial disbursements in respect of his experts (for example, two of the accountant experts were flown in by him from Texas to work on the dispute over discounting for risk).

In her lengthy judgment in Work v Gray (Phase II: Computation and Distribution) [2016] EWHC 562 (Fam) Mrs Justice Roberts was very clear about her view of Mr Work’s refusal to negotiate. She quoted the ruling from Mr Justice Holman and went on to say:

‘His unwillingness to attend a meeting, or even to authorise his solicitor to attend a meeting on his behalf, seems to me to have been a lost opportunity to sit down and explore how a … settlement might have been achieved and the costs of this hearing avoided. I accept that H knew, and knows, W better than any of the lawyers in this case. His impression of the futility of achieving any shift in her position to reflect the need to factor in discounts at some level (if not his own figures) may well have been a view he held quite genuinely. I take on board the fact that he is probably right that, even if she had been prepared to countenance discounts for the purposes of a negotiated settlement, the accountants work would not thereby have come to an end. There may well have been further expense involved in a fully negotiated outcome to this case … However I suspect the costs would have been significantly less than those which have now been incurred… ‘.

These two judges could hardly be clearer about the future conduct of disputes, not only for wealthy couples but for all who need to rearrange their financial interests following separation and divorce.

a) Mediation is the first resort for all, and indeed before making an application to court to litigate, almost all clients have to attend a meeting giving information about and assessing suitability for mediation.

If you want more active involvement from your solicitor, you could pursue solicitor-assisted mediation.

b) If you want someone else to decide how to split up the assets and to provide future income, then arbitration suits some.

Judges now routinely uphold the division of finances reached through arbitration. The most recent reported case is that of DB v DLJ [2016] EWHC 324 (Fam) where Mr Justice Mostyn rejected the application by the wife to overturn the arbitration award, and conformed the division of assets as determined by the Family Law Arbitrator.

We do know that with the new raft of court closures and with the increase in court fees, the message from the judges and from the Government is very clear – don’t expect to get a good response from the courts if you refuse to negotiate at all. It is important that solicitors hear this and explain it to their clients.

Hazel Wright

Partner, Hunters incorporating May, May & Merrimans

 

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