Early Neutral Evaluation: Can a party be compelled to participate?

On 6 August 2019 the Court of Appeal overturned the first instance decision discussed below. The appeal court held that there were no express words in the CPR requiring the parties’ consent to an ENE (Early Neutral Evaluation). Consequently, the Court may compel the parties to attend an ENE, if the Court decides an ENE may be helpful and even if one of the parties objects.

In Lomax v Lomax [2019] the High Court considered whether a reference to the Early Neutral Evaluation process could only be made by consent of all parties.

In this case, the claimant, Mrs Lomax, brought a claim for provision out of her late husband’s estate, pursuant to The Inheritance (Provision for Family and Dependants) Act 1975. The deceased’s estate was worth approximately £5.5m, which was to be held on trust for the claimant, so that she would receive income during her lifetime. Thereafter, the capital and income was to be held in a discretionary trust with the defendant (the claimant’s stepson), as one of the beneficiaries. Additionally, shares in a family company were held in various settlements, in respect of the majority of which the defendant and his wife were trustees. The claimant further contended that the defendant and his wife had distributed large amounts of funds to themselves whilst acting as trustees.

The defendant resisted the application on the basis that adequate provision had already been made for the claimant in the will. The claimant sought an Early Neutral Evaluation (ENE) hearing; a form of Alternative Dispute Resolution whereby an independent expert gives an assessment on the merits of each party’s case. This is often utilised in circumstances where parties have differing views on the prospects of success, and can serve as a useful basis for continuing negotiations. However, the defendant contended that ENE was unnecessary as the claim had no merit and the application was an abuse of legal process. In the alternative, the claimant sought a Financial Dispute Resolution (FDR) hearing. However it was agreed that since the Family Procedure Rules 2010 (FPR) do not relate to Inheritance Act proceedings, the FDR procedure prescribed in the FPR would not apply, although comparisons between the two processes were drawn. The question before Justice Parker was therefore whether an order for ENE could be made, against the wishes of the defendant.

The court considered the judgment in Seals and Seals v Williams [2015] and the resulting amendment to the Civil Procedure Rules (CPR). CPR 3.1 (2)(m) now states that the court has the power to hear an ENE with the aim of helping the parties settle the case, as part of its general powers of case management. The accompanying White Book commentary further states that the court’s decision on whether or not to conduct ENE is not dependent on the consent of the parties, but is part of the court’s inherent jurisdiction. However, the defendant argued that the language of the CPR is directed towards the court facilitating Alternative Dispute Resolution, rather than permitting the court to order non-consensual ENE.

The defendant’s position was preferred by the judge and it was held that ENE could not be ordered, as it is inconclusive whether the CPR creates a compulsory process which the parties can be obliged to participate in. The judge noted that it was not appropriate to use ‘the catch-all of inherent jurisdiction to make an order which is not governed by the Rules’. Further, the judge called for the Rules committee to clarify whether ENE is compulsory and to provide a clear route to compulsory FDR in civil proceedings, particularly Inheritance Act litigation.

Originally posted by Natalie Powers on 7 June 2019, updated on 15 August 2019.