Consent Orders: Triumph or Disaster? Working towards best practice in reaching consent orders

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Carol Mashembo has written an article for the Family Law week website in conjunction with Dr David Pitcher, CAFCASS titled ‘Consent Orders: Triumph or Disaster? The article follows a hugely successful multi-disciplinary seminar which gathered professionals involved in all aspects of family proceedings to share ideas and experiences of the issue of consent in private law proceedings and to inform future best practice.

The article can be downloaded from  http://www.familylawweek.co.uk/site.aspx?i=ed192142

The Rise of Private Financial Dispute Resolution Hearings

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Paul Waterworth

Retired District Judge, Associate at Magdalen Chambers, Exeter and Member of their Financial Resolution Consultancy

In his final announcement, the recently retired President of the Family Division of the High Court, Sir James Munby, referred to a development which is playing an increasingly significant role in financial disputes in family cases. This is the increase in the use and effectiveness of the process known either as early neutral evaluation or private financial dispute resolution hearings (private FDR’s). For the purposes of this piece, the latter description is used.

What is a private FDR?

Sir James said:

‘A private FDR is a simple concept. The parties pay for a financial remedy specialist to act as a private FDR judge. That person may be a solicitor, barrister or retired judge. The private FDR takes place at a time convenient to the parties, usually in solicitors’ offices or barristers’ chambers, and a full day is normally set aside to maximise the prospects of settlement. It usually replaces the in-court FDR.’

The timing of a private FDR

The President continued his remarks by mentioning the inter-relationship between the formal court process and a private FDR:

‘Usually, where the parties have agreed to a private FDR, the order made at the first appointment will record such an agreement in the recital, and will provide for a short directions hearing shortly after the date of the private FDR. The directions hearing can be vacated if agreed minutes are submitted following a successful FDR. If it has been unsuccessful then directions for the final hearing can be given. An alternative is for the case to be adjourned generally while the private FDR takes place.’

As a rider to the comments by Sir James, it should be noted that a private FDR can take place at any time during the court process or even, if the parties agree, before an application is issued. There will usually be little difficulty obtaining from the court, an (often temporary) adjournment of the court process to enable the private FDR to be held.

It is, however, important that the parties have made full, or at least adequate, disclosure of their respective financial positions before the private FDR is held, to avoid any later arguments about the financial information upon which a settlement was achieved.

Who will conduct a private FDR and where?

Private FDR’s are invariably conducted by practising or retired legal practitioners or retired judges, using the knowledge and expertise gained in this discrete area of family law.

There are groups of retired judges and practising and retired legal professionals (both barristers and solicitors) who have established polished systems and facilities for dealing with private FDR’s.

The advantages of a private FDR

The advantages of the private FDR system, now formally endorsed by the President of the Family Division, as indicated above, as an alternative to at least part of the exclusively court based process, are seen to be many.

Busy family practitioners are more aware than most of the problems associated with the court FDR lists which include:

. Delays in cases reaching court are inimical to the maintenance of the momentum of

  negotiations between the parties.

. Even when a date has been obtained, cases are regularly over listed so that is

  frequently the case that there is insufficient time for the judge both to prepare

  adequately for all the FDR’s in the list or to give each case the time that is needed to

  explore in depth the possibilities of a settlement.

. Cases often overrun and parties cannot guarantee that their case will start on time

  with the result that there are unacceptable waiting times

. Facilities in courts are far too often found to be unsatisfactory, insufficient and not

  conducive to calm and effective negotiations.

. Cases are sometimes listed before judges with insufficient experience or the

  expertise required for a particular case.

In contrast, if parties elect to hold a private FDR:

. Whilst the structure of the private FDR bears a resemblance to a hearing in court,

   the atmosphere is less formal and intimidating for the parties.

.  There are no other cases or parties and the surroundings are quiet and conducive to

   calm discussion and negotiation.

.  With the help of their lawyers, the parties can select the identity of the private FDR

   judge thought to be suitable for the case from amongst those professionals offering

   this service.

.  There is less, often much less, delay in fixing an appointment for a private FDR than

   waiting for a court date so that continued uncertainty for parties is reduced.

.  The judge conducting the private FDR will have time to read the papers and prepare

   for the hearing.

.  The judge will have no other cases to hear on the day fixed for the private FDR and

   can give sole attention to the private FDR.

.  There will be adequate time for privater discussion by the parties with their lawyers

    and negotiations with the other party

.  The parties can continue to have the support of their legal advisors who can

   accompany them to the private FDR.

.  Whilst the judge at the private FDR cannot make a formal court order, the parties

   can sign an agreement setting out the terms of any agreement reached which can

   later be converted into a court order approved by the court usually without the need

   for the parties to attend court.

. The parties have the advantage of hearing the views of an independent professional

   experienced in cases of this sort and will be given reasonable time to consider

   whether or not an agreement can be achieved.

.  The private FDR will be conducted on the basis that what is said is confidential to

   that meeting, so that if agreement is not achieved, neither party can take advantage

   of anything said at the private FDR. This means that the parties can speak freely

   and openly without fear of prejudicing their legal position.

.  Research has shown that cases which are resolved by agreement between parties

   rather than being imposed upon them by the court, have a far higher prospect of

   being observed.

.  If the private FDR does not result in an agreement to settle the case, the parties are

   still able to continue the proceedings in court.  

Summary

There are some who say that the system of private FDR’s is a “privatisation” of the justice system, akin, for example, to private medicine or education. The reality is that the engagement of an independent expert to express a view on a case is no more than many parties seek already, for example, in attending mediation or taking a (sometimes second) professional opinion on the whole or part of their case.

Others refer to the cost as being a disincentive to attempts to settle in this way. Again, in cases which are conducted before the courts, more often than not, when parties are legally represented, there will be regularly be discussions and negotiations between the lawyers who seek to achieve a fair settlement. Such actions by the lawyers will not take place without cost  to the clients. If a case is referred to a private FDR and a settlement is achieved, then the continuing costs of the court case is avoided.

The Financial Resolution Consultancy, which is part of Magdalen Chambers, offers a full and confidential private FDR service by retired judges and practitioners who have judicial experience.

For further information and a confidential preliminary discussion please contact chambers.

01392 208484 frc@magdalenchambers.co.uk

Charles Cooper

NIL-RATE BAND LEGACIES AND THE NEW RESIDENCE NIL-RATE BAND

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CHARLES COOPER REVIEWS THE CONSEQUENCES FOR NIL-RATE BAND LEGACIES OF THE NEW RESIDENCE NIL-RATE BAND FOR INHERITANCE TAX

Since 09 October 2007 it has been possible to claim, on their death, the unused Inheritance Tax Nil-Rate Band (‘NRB’) of their spouse or civil partner who died before them. This is often referred to as the ‘Transferable Nil-Rate Band’ or ‘TNRB’. By 2014, the Court of Appeal had been asked  to consider whether the wording of a so-called ‘Nil-Rate Band Legacy’ should properly include the TNRB as well. The case was Loring v Woodland Trust [2014] EWCA Civ 1314.

In that case, the relevant part of the NRB legacy read:

                ‘MY TRUSTEES shall set aside out of my residuary estate assets or cash of an aggregate value equal to                        such sum as is at the date of my death the amount of my unused nil-rate band for inheritance tax and to                      hold the same for such of the following…’

The Court of Appeal upheld the first instance decision that the legacy should be calculated so as to include both the unused NRB and the TNRB, even though the legislation had been introduced after execution of the will. Particular reference was made to the wording of s.8A Inheritance Tax Act 1984 as applying to increase the NRB rather than being a separate, additional, NRB.

HMRC has criticised the decision in Loring, in their Inheritance Tax Manual at IHTM43065, on the basis that the clause uses the specific words ‘the amount of my unused nil-rate band’.

From 06 April 2017, however, there is now an additional ‘Residence Nil-Rate Band’ and a ‘Transferable Residence Nil-Rate Band’ to contend with, the legislation for which is set out at ss.8D-8M Inheritance Tax Act 1984. Now, more than ever, caution is advised when drafting or interpreting NRB legacies within a will.

June 2018

 [Charles practised as a Solicitor and Higher Court Advocate before being called to the Bar, and specialises in tax, trusts, wills and probate.]

Pimlico Plumbers Ltd & Mullins v Smith [2018] UKSC 29

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In what is likely to be the leading authority on employment status for years to come, the Supreme Court today has dismissed the appeal of Pimlico Plumbers from the Court of Appeal decision that Mr Smith was a worker and not a self-employed contractor.

Mr Smith is a plumber who carried out work for Pimlico between 2005 and 2011. After suffering a heart attack in 2011, Mr Smith claimed to have been unfairly dismissed despite having presented himself as self-employed for VAT and income tax for 6 years. The facts of his engagement are complex, but the dispute between the parties centred around the legal categorisation of Pimlico’s business model. The model presented operatives to clients as working for the business, but at the same time the business internally sought to maintain that there was a legal relationship of self-employed independent contractor rather than employer and employee. The paperwork in this regard was confusing at best. The employment tribunal, EAT and Court of Appeal all reached the decision that Mr Smith was a ‘worker’ rather than a self-employed contractor. Today the Supreme Court judgment upheld that finding.

Whether or not someone is a worker or an employee is largely a matter of fact for the Tribunal to decide. Here Lord Wilson determined that, “the dominant feature of Mr Smith’s contracts with Pimlico was an obligation of personal performance …there were features of the contract which strongly militated against recognition of Pimlico as a client or customer of Mr Smith. Its tight control over him was reflected in its requirements that he should wear the branded Pimlico uniform; drive its branded van, to which Pimlico applied a tracker; carry its identity card; and closely follow the administrative instructions of its control room. The severe terms as to when and how much it was obliged to pay him, on which it relied, betrayed a grip on his economy inconsistent with his being a truly independent contractor.” The substantive claims will now proceed to be heard in the employment tribunal.

Although Charlie Mullins (the owner of Pimlico) prophesies that companies using self-employed contractors now face a ‘tsunami of claims’, this claim is most likely a gross exaggeration. As has always been the case, every individual case will require careful legal analysis of the true nature of the working relationship. The contractual label alone is not enough. The contract may term the relationship as one of self-employed contractor, but the substance of the obligation of personal performance is what counts. Here, there was criticism of “an irrelevant contract, cast in highly confusing terms”, necessitating proper scrutiny of the entire engagement. The famous judgment of Lord Templeman in Street v Mountford [1985] AC 809 comes to mind that “The manufacture of a five pronged implement for manual digging results in a fork even if the manufacturer, unfamiliar with the English language, insists that he intended to make and has made a spade.”

Companies routinely engaging self-employed contractors on any sort of routine basis would do well to potentially scrutinise and revise its contracts in light of this judgment. Individuals who feel as though they have been ‘strong armed’ into signing a contract declaring them to be self-employed, despite being heavily controlled by their company, may wish to consider negotiating a clearer and more honest working legal relationship. When it comes to drafting contracts that seek to control an operative whilst describing them as self-employed, the ‘careful choreography’ exercised by Pimlico is not enough to balance such inconsistent objectives. In future, contracts- be they for an employee, worker or self-employed contractor- should really call a spade a spade.

https://www.supremecourt.uk/cases/docs/uksc-2017-0053-judgment.pdf

Andrew Worthley

Solving Family Problems: Evolution or Revolution?

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The out-going President of the Family Division, Sir James Munby, recently delivered a compelling lecture in Liverpool, calling for the creation of an enhanced and re-vamped family court with much wider powers to engage with the many difficulties faced by families in society.

With laudable ambition, the President referred to the simplicity of his proposals whilst recognising that the road to achieving them would be long and hard.

“We have somehow to create a one-stop shop in an enhanced re-vamped family court capable of dealing holistically, because it has been given the necessary tools, with all a family’s problems, whatever they may be. More narrowly, dealing holistically with the family court’s traditional concerns with status, relationship breakdown and family finances; more widely, and ultimately more importantly, dealing holistically with all the multiple difficulties and deprivations – economic, social, educational, employment, housing and health (whether physical or mental) – to which so many children and their families are victim. Family justice is surely about something much wider than mere lawyers’ law.”

In his sweeping assessment of the limitations of the current family justice system, the President identified four problems that needed solving.

Firstly, there is the problem that the complex procedures (both statutory and as set out in the Family Procedure Rules 2010) for addressing the three central concerns of family law – status, relationship breakdown and the family’s finances – prevent the family court ever addressing the family’s problems holistically and in a simple ‘one-stop’ process. This fragmentation of the family court’s processes can lead only to delay, added cost and, worst of all, additional stress for all concerned.
Secondly, family courts should be, but for the most part are not, ‘problem-solving’ courts. He pointed to the success of the Family Drug and Alcohol Courts, noting the greater incidence of reunification in cases managed through this problem-solving paradigm.

Thirdly, cases involving families, parents and children are spread across the jurisdictions, so that families from time to time find themselves enmeshed in the various justice systems in England and Wales. In this regard, the President highlighted the different jurisdictions (and avenues of appeal) to decide family cases, criminal cases involving children, mental health issues and issues such as asylum and immigration. Rather then bringing these jurisdictions under one overarching enhanced court, the President considered judicial ‘cross-ticketing’ as a means of bringing expertise and experience to these many and varied jurisdictions.

Fourthly, the President identified a very common frustration in public law proceedings in particular – the family court cannot direct that resources be made available or that services be provided; it can merely seek to persuade. The President argued eloquently for primary legislation, which would give the court the power to direct the provision of services in certain circumstances.

Evolution or revolution? However one characterises the reforms proposed by the President, his assessment of the current state of the family justice system is only one step away from its condemnation as a system not fit for the holistic objective purpose of solving family problems.

Richard Powell

Constructive Dismissal: Appealing the Last Straw

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Constructive Dismissal: Appealing the Last Straw

Can the rejection of an appeal against a final written warning constitute a ‘last straw’ for the purposes of a constructive dismissal claim? Not in the case of Kaur v Leeds Teaching Hospitals NHS Trust [2018] EWCA Civ 978, where the Court of Appeal determined that “such a process, properly followed…cannot constitute a repudiatory breach of contract, or contribute to a series of acts which cumulatively constitute such a breach.”

The appellant in this case had been involved in an altercation with a colleague and raised a grievance over the matter. This triggered disciplinary proceedings against her which were conducted by way of a combined grievance/disciplinary procedure. The outcome was a final final written warning against the appellant for inappropriate behaviour. She appealed this sanction, but due to a period of maternity leave and various other factors, the appeal was not concluded until some 15 months after the incident. When the appeal was finally rejected, the appellant brought a claim for constructive unfair dismissal, claiming that the rejection of her appeal was the last straw in a series of acts which, taken together, amounted to a breach of the implied term of trust and confidence.

The employer successfully applied to strike out her claim. The judge at first instance decided that the disciplinary process and its outcome were unarguably reasonable and so there was no reasonable prospect of the appeal outcome constituting a ‘last straw’. On appeal, the EAT recognised a complication arising from the authority of Addenbrooke v Princess Alexandra Hospital NHS Trust UKEAT/0265/14, which had stated, ‘if there is subsequently conduct which, taken together with the employer’s earlier fundamental breach, causes the employee to resign or plays a part in the decision of the employee to resign, the later act effectively reactivates the earlier fundamental breach’. Although the appeal was dismissed, the Court of Appeal granted leave to appeal so as to properly review the ‘last straw’ doctrine and its interaction with the re-activation of ‘waived’ or ‘affirmed’ breaches.

The Court of Appeal this week dismissed the appeal and affirmed the well-known earlier decision of the Court of Appeal in London Borough of Waltham Forest v Omilaju [2005] ICR 481. The pertinent part of Lord Justice Dyson’s judgment in that case was cited in full as follows,

“19. … The quality that the final straw must have is that it should be an act in a series whose cumulative effect is to amount to a breach of the implied term. I do not use the phrase ‘an act in a series’ in a precise or technical sense. The act does not have to be of the same character as the earlier acts. Its essential quality is that, when taken in conjunction with the earlier acts on which the employee relies, it amounts to a breach of the implied term of trust and confidence. It must contribute something to that breach, although what it adds may be relatively insignificant. 

  1. I see no need to characterise the final straw as ‘unreasonable’ or ‘blameworthy’ conduct. It may be true that an act which is the last in a series of acts which, taken together, amounts to a breach of the implied term of trust and confidence will usually be unreasonable and, perhaps, even blameworthy. But, viewed in isolation, the final straw may not always be unreasonable, still less blameworthy. Nor do I see any reason why it should be. The only question is whether the final straw is the last in a series of acts or incidents which cumulatively amount to a repudiation of the contract by the employer. The last straw must contribute, however slightly, to the breach of the implied term of trust and confidence. Some unreasonable behaviour may be so unrelated to the obligation of trust and confidence that it lacks the essential quality to which I have referred.
  1. If the final straw is not capable of contributing to a series of earlier acts which cumulatively amount to a breach of the implied term of trust and confidence, there is no need to examine the earlier history to see whether the alleged final straw does in fact have that effect. Suppose that an employer has committed a series of acts which amount to a breach of the implied term of trust and confidence, but the employee does not resign his employment. Instead, he soldiers on and affirms the contract. He cannot subsequently rely on these acts to justify a constructive dismissal unless he can point to a later act which enables him to do so. If the later act on which he seeks to rely is entirely innocuous, it is not necessary to examine the earlier conduct in order to determine that the later act does not permit the employee to invoke the final straw principle. [Emphasis supplied]”

Effectively therefore, if the conduct complained of is continued by a further act or acts, in response to which an employee resigns, they can still rely on the totality of the conduct in order to establish the necessary fundamental breach. The obvious observation otherwise is that “it would be extraordinary if, by failing to object at the first moment that the conduct reached the Malik threshold, the employee lost the right ever to rely on all conduct up to that point.”

That being the case however, Underhill LJ agreed that the appeal outcome in the instant case was incapable of forming part of a cumulative breach. Had the conduct of the disciplinary process been seriously unfair, a tribunal would very likely have held that that was a sufficient repudiatory breach in itself, without the need to refer back to events of a different character some time previously. The appellant was – of course- entitled to believe the outcome to be wrong; but the true test is objective, and a fair disciplinary process cannot, viewed objectively, destroy or seriously damage the relationship of trust and confidence between employer and employee simply because the outcome was not desired by the employee.

For cases of constructive dismissal therefore, legal advisers (and tribunals) should ask themselves the five questions posed by Underhill LJ as follows:

(1)              What was the most recent act (or omission) on the part of the employer which the employee says caused, or triggered, his or her resignation?

(2)              Has he or she affirmed the contract since that act?

(3)              If not, was that act (or omission) by itself a repudiatory breach of contract?

(4)              If not, was it nevertheless a part (applying the approach explained in Omilaju) of a course of conduct comprising several acts and omissions which, viewed cumulatively, amounted to a (repudiatory) breach of the Malik term? If it was, there is no need for any separate consideration of a possible previous affirmation.

(5)              Did the employee resign in response (or partly in response) to that breach?

As Underhill LJ observed although none of the questions are conceptually problematic in and of themselves, “answering them in the circumstances of a particular case may not be easy.” The Magdalen Chambers employment team are on hand to assist for those difficult cases.