In 2018 Pauline Lomax issued proceedings for reasonable financial provision from the estate of her late husband under the Inheritance (Provision for Family and Dependants) Act 1975 (‘Inheritance Act’).
Her step son Stuart Lomax is defending the proceedings on the basis that her claim has no merit as he believes adequate provision has already been made for her under the terms of the deceased’s will dated 23 December 2013 (‘the Will’).
The claim in general is ongoing but as part of it, Pauline made an application seeking an early neutral evaluation hearing (‘ENE’) or a financial dispute resolution (‘FDR’). Her application was resisted by Stuart, this being the subject of the present proceedings in the High Court.
Early neutral evaluations and financial dispute resolution are two types of alternative dispute resolution (ADR), both consisting of preliminary hearings, the aim being to narrow issues, ensure parties understand the claims and focus the mind on costs, risk and timescales involved, hopefully to facilitate early settlement discussions to avoid disputes escalating.
They have proved successful in the context of divorce, topping an 85 percent success rate. Even if settlement does not take place at the hearing itself seeds are often sown which lead to an agreed solution later.
It is accepted within the profession that alternative dispute resolution needs to be considered in every case and parties need to be willing to engage as costs consequences will otherwise follow. Both financial dispute resolutions and early neutral evaluations are now quite commonplace in various litigation fields including Inheritance Act claims. However, they are still relatively new and, as such, there is little authoritative guidance as to their use which was the problem for the judge, Parker J, in the Lomax case.
In this case the parties' positions were starkly opposed and so in Parker J's opinion the case “screams out, for a robust judge-led process to focus on the legal and factual issues presented by this case; and perhaps even craft a proposed solution for the parties to consider” i.e. an ENE or financial dispute resolution.
However, she felt that she could not be certain that the court had the power to impose alternative dispute resolution on parties who do not consent. She commented on the difficulty of her decision stating: “I have decided, on the finest of fine balances, that I cannot order an early neutral evaluations or financial dispute resolution. I have found this decision extremely difficult. I may well be wrong, and overly cautious.”
On appeal, the Court of Appeal recently overturned Justice Parker's High Court judgment in Lomax v Lomax, confirming that the court can order an early neutral evaluations or financial dispute resolution even without the parties' consent, because it is part of the court process rather than, as with other forms of alternative dispute resolution, such as mediation when to engage is voluntary.
Lord Justice Moylan explained that in his experience (which he suspected would be shared by "every other judge who has been involved"), it often achieves a great deal, even if the parties are resistant or actively hostile to alternative dispute resolution. He highlighted the impact of financial dispute resolution hearings in Family Division financial remedy cases, which both he and Parker J recognised as "outstandingly successful”.
Originally written for the Trusts and Estates Law and Tax Journal