The war of the roses

District Judge Susan Spencer with some advice on how to deal with an agreement reached at a financial dispute resolution appointment

'I am very happy to record it'.

So said Mr Justice Bennett in Rose v Rose [2002] All ER (D) 269 when told of the ancillary relief agreement reached between the parties.

It was on the basis of that statement, uttered at the end of a financial dispute resolution hearing (FDR) that the Court of Appeal decided that an order in agreed terms had been made at the FDR and the objecting party (the husband in this case) was stuck with it.

Before the terms had been converted into a court order, the husband sought to resile.

He alleged duress, and said he could not meet the terms.

The Court of Appeal ruled that the outcome of the FDR was an 'unperfected order of the court'.

Only three outcomes were possible from an FDR - an order adjourning the FDR; a consent order disposing of the case; or directions to take the matter to a final hearing

Neither an adjournment, nor directions to final hearing had been given.

Indeed, the final hearing was vacated.

Therefore, there had been an order in the terms agreed.

When the judge said that he was 'very happy to record it' he meant that he was making an order in agreed terms.

The rules

The FDR appointment is covered in the Family Proceedings Rules1991, rule 2.61E.

It provides that the FDR 'must be treated as a meeting held for the purposes of discussion and negotiation'.

At its conclusion the court may make an appropriate consent order, 'but otherwise must give directions for the future course of the proceedings, including, where appropriate, the filing of evidence and fixing a final hearing date'.

Also of interest in this context is the president's direction of 25 May 2000 [2000] 1 FLR 997 which at paragraph 3.1 says: 'Parties must approach the occasion openly and without reserve.

Non-disclosure of the content of such meetings is accordingly vital and is an essential pre-requisite for fruitful discussion directed to the settlement of the dispute between the parties...

evidence of anything said or of any admission made in evidence will not be admissible in evidence.'

The critique

In terms of the conduct of FDRs, the Court of Appeal was keen to support the judge's approach.

He offered an early neutral evaluation, on the basis of thorough preparation and in a case well suited to such an approach.

The FDR was no substitute for a trial, nor was it to be used as a 'discouragement' to go to trial in a finely balanced case.

An FDR properly prepared for by the parties, with full documentation supplied to the judge, could lead to a useful narrowing of issues, and to the dispelling of unrealistic expectations.

Even if the matter did not settle on the day, there could be benefit.

In Rose, the issue was simple.

Nonetheless, the case is clear authority for the more general enthusiasm in the Court of Appeal for the provision of an early neutral evaluation at an FDR.

In terms of the substantive outcome, Rose is not without its difficulties.

When does an 'outline/in principle/subject to contract/without prejudice (extremely or otherwise)' agreement become an unperfected order?

One approach is to say that a bargain plus judicial approval equals an unperfected order.

However, suppose that the parties, through representatives, reach an outline agreement which lacks only clarification of supporting undertakings.

The representatives relate this to the judge who says 'I am very happy to record that'.

Is there an unperfected order?

Furthermore, suppose that subsequently the undertakings needed to support the 'agreement' cannot be agreed.

The agreement is far more than just a 'broad agreement'.

It is very detailed.

But the order may not work without the undertakings, and the court cannot force a party to give them.

Therefore, there can never have been an unperfected order in the first place.

The judicial approval of even detailed heads of agreement cannot, in those circumstances, entitle one party to demand an order in the terms of the agreement.

Note that the entire contents of an FDR which ends with other than an order (perfected or not) remain confidential (see the president's direction of 25 May 2000 above) and cannot be used for any purpose, including arguments about costs.

By making statements of general principle in the unusually straightforward case of Rose the Court of Appeal may have created an opportunity for satellite litigation.

The lessons

Do not leave the building without, at the very least, a 'heads of agreement' containing all relevant terms and undertakings (the 'bargain'), signed by the parties, their legal representatives and initialled as approved by the judge ('judicial approval').

That will be an unperfected order.

The heads must be detailed - a 'negotiation leading to no more than broad terms' will not suffice (Rose).

The parties need not be concerned with the wording of the order and need not sign it as it will contain nothing new (see Lord Justice Thorpe's warning in Xydias v Xydias [1999] 2 All ER 386).

If the final order is not drafted and approved at the FDR, then do not leave without a date in about 28 days for a five-minute appointment at which the order can be approved or any Rose-style problems explored.

Ensure that it is labelled as an adjourned FDR, and, therefore, that it is one of the approved Rose outcomes.

This avoids the risk of there being an (unintended) unperfected order, the consequent loss of confidentiality in the proceedings, and satellite litigation.

FDRs will not change in emphasis.

Practitioners can expect the judiciary to continue to offer an early neutral evaluation at FDR stage, perhaps inviting negotiation during the balance of the day on the basis of indications given.

Practitioners should consider inviting the judge to remain until they have hammered out heads of agreement for the judge's approval, or follow the suggestions above for the protection of all concerned.

District Judge Susan Spencer sits at Leeds Combined Court