Litigants in 1975 Act and TOLATA disputes may face costs orders for rejecting mediation

Thursday, 22 August 2024
As of 1 October, the courts of England and Wales will have powers to order legal costs against parties who refuse to engage with non-court dispute resolution in claims under the Trusts of Land and Appointment of Trustees Act 1996 (TOLATA) and the Inheritance (Provision for Family and Dependants) Act 1975 (the Act).
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The new power has applied to financial remedy proceedings since 29 April 2024, under Family Procedure Rule 28.3(7). An amendment to that rule makes 'any failure by a party, without good reason, to attend non-court dispute resolution' a basis to depart from the general starting point that there should be no order as to costs.

Until now, that amendment has not applied to other types of case. It did not affect proceedings such as the schedule 1 of the Children Act 1989, interim applications, or appeals which are governed by r 28.2, which applies a modified version of Civil Procedure Rules (the Rules) Part 44. Nor did it affect claims under the TOLATA and under the Act, which apply the Part 44 in full.

Changes are now to be made to the Civil Procedures Rules 1988 as a result of the England and Wales Court of Appeal's ruling in Churchill v Merthyr Tydfil CBC (2023 EWCA Civ 1416). That judgment clarified that parties to litigation can be ordered by the court to engage in alternative dispute resolution (ADR), thereby overruling the precedent set in Halsey v Milton Keynes General NHS Trust (2004 EWCA Civ 576) that making ADR compulsory would be against article 6 of the European Convention on Human Rights.

These changes to the Rules will thus bring TOLATA and 1979 Act family proceedings into the compulsory ADR net to some extent. The family court will not have the power to order parties to attend non-court dispute resolution, but it will have influence in the form of costs orders against those who do not cooperate. 

Barristers Nicholas Allen and Rhys Taylor draw attention to the use of the term 'engage in' rather than 'attend' non-court dispute resolution in Family Procedure Rules. The word 'attend' had been chosen by the Family Procedure Rule Committee because of a concern that using 'engage in’ may encourage judges to ask how hard parties had tried at non-court dispute resolution, which might risk breaching without prejudice privilege, and is also open to interpretation. By contrast 'attend' is a simple question of fact, they say.

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