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  1. 1. + Ancillary Relief I FDR Keith Hotten
  2. 2. + A Note on Cohabitation – See Ch 12 The term ‘common-law marriage’ is frequently used but is not recognised in law in Hong Kong, and therefore does not confer any rights or obligations on the parties, equivalent to those who have entered into marriage. Legal questions as to the division of assets upon separation even involving life-time cohabitees, where the parties are unmarried, fall outside any statutory regime dealing with ancillary relief. Rather, determination of cohabittees’ property disputes, inter alia falls under trusts law. For example, see the cases underpinning this area of the law, and its development in Pettitt v Pettitt [1970] AC 777, Gissing v Gissing [1971] AC 886 and Lloyds Bank v Rosset [1991] 1 AC 107. A recent landmark judgment of House of Lords in this area is Stack v Dowden [2007] UKHL 17 Re Children see IDC v SSA FCMP  158/2011 (unreported) 22nd January 2013
  3. 3. + Financial Dispute Resolution (FDR) Procedure  The procedure under Practice Direction 15.11 takes much from the English Family Proceeding Rules 1999, which came into force in England and Wales on the 5 June 2000.  Itis intended to reduce delay, facilitate and encourage settlements, limit costs incurred by parties to the proceedings and provide the court with much greater control over the conduct of proceedings than before.  Practice Direction (as amended) 15.11 came into force on 23rd July 2012 – Explanatory Notes at foot of PD  See generally Practice Direction 15.12.
  4. 4. + FDR hearing is a ’pre-trial’ procedure with the primary objective of avoiding a full trial.  Itdeals with financial and related custody issues. Leave has to be sought in cases where parties wish to proceed directly to trial without an FDR hearing. The new rules look to achieve, inter alia:  tighter case management by the court; a strict timetable for filing of documents;  compulsory filing of evidence in the prescribed Form E;  compulsory attendance in court save with leave.
  5. 5. + FDR Judge is barred as trial judge  Ithas the advantage of allowing a Judge who has read the files and heard submissions, to give an ‘indication’ as to the likely terms of settlement a court would order.  Thisenables the parties to reflect on their respective positions and to agree an order by consent.  The advantages of agreeing a consent order at FDR should be off-set by reference to the emotional and physical strain of protracted litigation, the time involved, the effect on any children and the future parenting relationship and not least the escalation of costs.
  6. 6. + Financial Dispute Resolution Scheme is Mandatory Ancillary Relief procedure is in three stages, each stage ending in a ‘milestone’ court hearing, that is: - the first appointment hearing - the FDR hearing - the trial of the issue. Save for applications for nominal maintenance and cases where the parties have reached agreement on ancillary relief (and the appropriate consent summons filed) to which Practice Direction 15.11 does not apply, (1)anotice of intention to proceed with an application for ancillary relief made in the petition, answer or in a joint application; or (2)asubsequent application for ancillary relief, must now be made by notice in Form A ‘Notice of [Intention to Proceed with] an Application for Ancillary Relief (Form 25). Forms A to G are annexed to the Practice Direction and may be downloaded from there.
  7. 7. + First Appointment The court will allocate a date for the first appointment by notice in Form C ‘Notice of a First Appointment’  with 15 minutes allocated in the first instance  noless than ten weeks and no later than 14 weeks after the date of the filing of the pleadings or notices.
  8. 8. +  This first appointment is similar to the more usual Family Court ‘call over’ hearing. The date fixed for the first appointment, or for any subsequent appointment, will not be vacated save with the leave of the court and, where it does vacate, a new date must be fixed if appropriate.  Itis the applicant’s duty to serve a copy of the Form C on the respondent and any other relevant document, for example, the ‘Statement as to Arrangements for Children’, if any. See Matrimonial Causes Rules (Cap 179A) rr 9(2), 33(2B), Schedule, Forms 2B, 2D
  9. 9. + Financial Statement’ Form E  Notless than 28 days before the date of the first appointment, the applicant and the respondent shall each file with the court and simultaneously exchange with each other a sworn (or affirmed), Form E  Fulland frank disclosure must be made at this stage. In the event that only one party is in a position to file Form E on the due date, then that party may do so in a sealed envelope to which the other party will not have access until he or she is in a position to file and exchange his or her Form E.  The statement shall annex only such documents as are necessary to explain or clarify any of the information contained therein.
  10. 10. + Judge’s Role First Appointment At the first appointment the judge, with the objective of defining the issues and saving costs will: (i) determinethe extent to which each such questionnaire and/or request for particulars shall be answered, and such documents produced, and shall give directions as to the production of future and updating documentation; (ii)give directions as to valuations of assets (including, where practicable, the joint instruction of independent experts) and the obtaining and exchanging of experts’ evidence (including directions as to the meeting of experts); (iii)(iii) give directions as to any evidence sought to be adduced by each party including the filing of affirmations/affidavits and the attendance of witnesses at the hearing of the application and as to any chronologies or schedules to be filed by each party;
  11. 11. + (iv) give directions as to service of all relevant persons (if any) to be served under s 6A(5) (third party order for sale of property) and s 17 (restraining order on any party intent on defeating the claim) of the Matrimonial Proceedings and Property Ordinance (Cap 192), and the issue and service of Form F ‘Notice of Allegation in Proceedings for Ancillary Relief;  (vi) give directions in relation to custody and access, of any children, including the filing of affirmations/affidavits and the attendance of witnesses at the hearing of the application, and the preparation of Social Welfare Reports;  (vi) make such interim custody and access orders as may be necessary or adjourn all matters of custody for mediation, negotiation or sine die;  (vii) direct that the case be referred to an FDR hearing, unless, exceptionally, he decides such referral is not appropriate;
  12. 12. + (viii) where he decides that a referral to an FDR hearing is not appropriate, direct, and in each case (where applicable), fix a date forthwith (1)that the case be fixed for a further directions hearing (2) that a hearing be fixed for an interim order (3) that the case be fixed for final hearing (and determining, in accordance with the provisions of r 80 of the Matrimonial Causes Rules (Cap 179A), the level of court before which it should be heard) (4) that the case be adjourned for out of court mediation, private negotiation, or, exceptionally, sine die, (ix) consider making an order as to the costs of the hearing having regard to all the circumstances including the extent to which each party has adhered to the rules.
  13. 13. +  Further, the judge at first appointment may also (i) in a case of urgency, make any interim order and (ii) with the consent of both parties, treat the appointment, or part of it, as an FDR hearing to which the rules of the FDR hearing apply  TheJudge shall have no further involvement with the application other than to give further directions and/or conduct any further FDR hearing.
  14. 14. + First Appointment continued …  Following the first appointment, no party shall be entitled to seek further discovery of documents save pursuant to any directions given at the first appointment or with the leave of the court. However, at any stage (i) a party may apply for further directions or a FDR hearing; and/or (ii) the court may give further directions or direct that the parties attend a FDR hearing.  In some cases, parties may seek leave to adjourn the first appointment hearing with agreed directions for reasons such as to avoid costs, where they are engaging in mediation or negotiations on settlement.
  15. 15. + At the FDR Hearing  TheFDR hearing must be by notice in Form D ‘Notice of a Financial Dispute Resolution Appointment’ and then served by the applicant on all parties concerned.  Bothparties must personally attend every hearing unless the court otherwise orders. The judge conducting the FDR hearing will have no further involvement with the application (eg should the matter go to trial), other than to conduct any further FDR hearing.  Evidence of anything said or of any admission made in the course of the hearing will not be admissible in evidence in court, save upon the trial of a person for an offence committed at the hearing.
  16. 16. +  No offer or proposal made by a party, whether orally or in writing, nor any response to any such offer or proposal, may be excluded from consideration at the FDR hearing by virtue of a claim of privilege (except for offers made in any mediation hearing).  For that reason, the case must be transferred to a different judge for trial if FDR fails.  Not later than seven days before the FDR hearing, the applicant must apprise the court of details of all such offers, proposals and responses between the parties by lodging an indexed and paginated FDR bundle containing the relevant documents including, in particular the exchange of settlement offers or ‘Calderbank’ correspondence.  At the conclusion of the hearing the FDR bundle will be returned to the applicant or respondent as appropriate and not retained on the court file.
  17. 17. + FDR proceedings are not to be regarded as a stepping stone to trial Parties attending the FDR hearing must use their best endeavours to reach agreement on relevant matters in issue between them. The Family Court judges are very much alive to the fact that parties (and their legal advisors) should come to FDR proceedings properly prepared and ready to negotiate a settlement in good faith. Even where a client has given such instructions, legal representatives attending the first appointment or FDR hearing are required to have full knowledge of the case. Any solicitor found sending along a ‘junior unfamiliar with the case merely in order to get the matter ‘listed for trial’ may find themselves facing the possibility of paying their opponent’s costs.
  18. 18. + Both parties and their legal representatives must attend the FDR hearing.  The parties should attend at least an hour before the hearing and use the opportunity to negotiate a settlement on their own initiative. Both parties and their lawyers must then attend the hearing itself and advise and update the FDR judge whose role is to facilitate and encourage a settlement.  At the FDR hearing, a judge may give an indication of the court’s likely ruling (on the basis of not having heard sworn evidence) if the case goes to trial to allow the parties to consider their respective positions and balance the costs involved were the case to be contested at trial.
  19. 19. + Parties and their legal advisors should not be surprised if at the FDR hearing, the court introduces a completely different approach on the facts of the case to that ether advised in conference or envisaged by the parties. Family Court judges are prepared to be very flexible in their approach and, particularly where one party may be unrepresented, conduct the FDR hearing much like a mediation hearing.  It is important to be prepared to consider a broad range of options for settlement. Where an FDR is adjourned to a later date it is helpful to summarise in a letter to the client (and opponent) what had been agreed or what the last offers were, to ensure there is no misunderstanding and to expedite matters at the adjourned hearing.  Whilst there is often considerable pressure to settle the matter and to avoid a trial (often on the basis of increasing costs, if nothing else), a client should never be ‘forced’ into an agreement, provided always that he or she is properly advised of the likely consequences of not reaching a settlement and resolving the matter at trial.
  20. 20. +  The FDR hearing is completely ‘without prejudice’ and any offers or discussions are privileged.  An FDR hearing is not a ‘trial’ of the issues. It is, therefore, not a forum where evidence will be adduced or tested.  Neither party will be asked to take an oath. The relative informality of the FDR hearing has the sole aim of facilitating settlement of the case.  Both parties and their legal representatives will be expected to demonstrate to the FDR judge that they have given thought to the terms of agreement before coming to FDR.  In essence, an FDR is a judge-facilitated negotiation process almost in the manner of a mediation hearing, save that, unlike a mediator, the judge is expected to take a proactive role and give an indication (often quite early on) as to what their own views are.  Depending on the facts of any particular case, the FDR hearing can take a good deal of time and negotiation and parties should often expect the process to last a full day or even longer
  21. 21. + What happens after FDR?  The FDR hearing may be adjourned from time to time, and at the conclusion of the hearing the court may make such a consent order as may be appropriate.  Ifthere is a failure to settle, despite having heard the views of the judge on the issues, the court must then give directions for the future course of the proceedings, including, where appropriate, the filing of evidence and fixing a final hearing date.  Thus, atstage three, a second judge will then preside at a trial of the matter in the normal way.
  22. 22. + What is the Agreement? As to the question at what point in the proceedings an ‘agreement’ is reached in an FDR, see Rose v Rose (2003) 2 FLR 197, [2002] 1 FCR 639, per Thorpe LJ “Whether an FDR appointment was designated a hearing or a meeting was of purely semantic significance”. It was certainly a hearing in the sense that attendance of the parties was obligatory, and they were obliged to use their best endeavours to reach agreement on the matters in issue between them.
  23. 23. + Categories of Order Post FDR  The appointment was presided over and controlled by the judge, and an order would result at its conclusion.  Only three categories of order were possible (i) an order adjourning the appointment (ii) a consent order disposing of the case and (iii) directions to progress the case to its final hearing.  Moreover, an FDR hearing might take many forms depending on the style and practice of an individual judge and it was unhelpful to impose any restrictions on the exercise of the judicial discretion in this innovative and elastic field.  Early neutral evaluation at an FDR hearing remained a tool to be used with due circumspection and successful use depended both upon thorough preparation and the nature of the case.
  24. 24. + The FDR is an invaluable tool for dispelling unreal expectations but beware the danger … However, in the finely balanced case FDR is no substitute for trial. But the whole purpose and effect of the FDR would be lost or compromised were the parties free to analyse and re- evaluate a crucial decision of the previous day or week and to decide on further reflection that they had made the wrong choice. See Edgar v Edgar [1980] 3 All ER 887, [1980] 1 WLR 1410, (1981) 2 FLR 19, CA. Blooman v Blooman [2009] EWCA Civ 109, per Wall LJ, where an application for permission to appeal orders in ancillary relief proceedings primarily on the basis that an agreement had not been reached at an FDR was refused. The couple owned a substantial matrimonial home and a property in Florida. At the FDR, the heads of agreement were not signed on the day and also the agreement did not take into account the contents of the house. Wall LJ considered several points raised by the process but, inter alia, there was no reason to interfere with the previous decisions: any remedy for the husband lay against the solicitors.
  25. 25. + Next Week LG4 Children II Before LG5 AR II You should read – at the very least White Miller/McFarlane LKW v DD