Russell Haley v Kelly Haley
| Jurisdiction | England & Wales |
| Judge | Lady Justice King,Lord Justice Moylan,Lord Justice Popplewell |
| Judgment Date | 23 October 2020 |
| Neutral Citation | [2020] EWCA Civ 1369 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: B6/2020/0587 |
| Date | 23 October 2020 |
[2020] EWCA Civ 1369
Lady Justice King
Lord Justice Moylan
and
Lord Justice Popplewell
Case No: B6/2020/0587
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM HIGH COURT OF JUSTICE
(FAMILY DIVISION)
Deputy High Court Judge Ambrose
BV18D11995
Royal Courts of Justice
Strand, London, WC2A 2LL
James Ewins QC and William Tyzack (instructed by Levison Meltzer Pigott Solicitors) for the Appellant
David Walden-Smith (instructed by Nockolds Solicitors) for the Respondent
Hearing dates: 22 July 2020
Approved Judgment
The issues in this appeal arise from an arbitral award made on 23 October 2019 by Mr Howard Shaw QC. The underlying litigation concerned applications for financial remedies in the Family Court sitting at Chelmsford, between Kelly Haley (“the wife”) and Russell Haley (“the husband”). The husband believed that the award made by Mr Shaw was unfair. He therefore made an application to the High Court seeking either to appeal the arbitral award or, alternatively, for an order to be made by which the court would decline to make an order under the Matrimonial Causes Act 1973 (“MCA 1973”) in the terms of the award and would instead exercise its discretion anew.
On 27 February 2020, Deputy High Court Judge Ambrose (“the judge”) dismissed the appeal and refused the application to interfere with the award. The judge accordingly made an order in the terms of the arbitral award.
It is against this order that the husband now appeals. In giving permission to appeal in this case, Moylan LJ identified an important point of principle as to “the proper approach which the family court should take to arbitral awards when making a financial remedy order.”
Arbitration in Family Cases
Unlike commercial arbitration, the availability of arbitration in financial remedy cases is relatively recent. The Family Law Arbitration Financial Scheme operates under the Institute of Family Law Arbitrators (“the IFLA Scheme”). The scheme was launched in February 2012 as a collaboration between Resolution, the Family Law Bar Association, the Chartered Institute of Arbitrators and the Centre for Child and Family Law Reform. The ILFA Scheme's authority derives from the Arbitration Act 1996.
There is a common misconception that the use of arbitration, as an alternative to the court process in financial remedy cases, is the purview only of the rich who seek privacy away from the courts and the eyes of the media. If that was ever the position, it is no more. The court was told during the course of argument, that it is widely anticipated that parties in modest asset cases (including litigants in person) will increasingly use the arbitration process in the aftermath of the Covid-19 crisis as the courts cope with the backlog of cases, which is the inevitable consequence of “lockdown”.
It goes without saying that it is of the utmost importance that potential users of the arbitration process are not deterred from using this valuable service; either, on the one hand, because the outcome is not seen as sufficiently certain or, on the other, because arbitration is regarded as providing no adequate remedy in circumstances where one of the parties believes there to have been an unjust outcome.
In the present case, the wife's application for financial relief following the breakdown of the marriage went through the normal court process, including an unsuccessful financial dispute resolution hearing. The parties were unable to settle the case and the matter was set down for trial to be heard in front of a District Judge for two days and to commence on 19 September 2019. Only a week before the trial, on 12 September 2019, the parties were told that there would be no judge available to hear the case and that the matter would have to be listed for an unspecified date in the future. It was in those unhappy circumstances that, on 13 September 2019, the parties — anxious to have the case heard, and it being ready for trial — signed an arbitration agreement on the ARB1 FS form provided under rules governing the IFLA Scheme. Mr Howard Shaw QC was named as the arbitrator.
The arbitration hearing took place on the same days as those which had been already set aside by the parties and their legal teams for the trial, the 19 and 20 September 2019. In due course a draft award was circulated to counsel. Counsel for the husband sought clarification as to certain matters, but this request was declined by Mr Shaw. On 23 October 2019, Mr Shaw produced his final award in substantially the same terms as the draft award, save that he had increased the figure which he awarded by way of periodical payments for the wife.
The husband subsequently made the following applications to the court:
i) An order setting aside the award for serious irregularity under s68 Arbitration Act 1996 (“AA 1996”) (Challenging the award: serious irregularity);
ii) Permission to appeal under s69 AA 1996 (Appeal on a point of law);
iii) An order that the award should not be made into a final order by the court under the MCA 1973.
The judge dismissed the applications under s68 and s69 AA 1996. No further appeal was made in relation to s68 AA 1996, and it is common ground that, after the judge refused the application under s69 AA 1996, the Court of Appeal had no jurisdiction to grant permission to appeal from that refusal (see The Northern Pioneer [2003] 1 Lloyd's Rep 212).
The judge held that the test to be applied in determining whether to refuse, in the exercise of her discretion, to make an order in the terms of the arbitral award, was akin to the test under s68 and s69 AA 1996. Further, she held that if she was wrong as to the correct test to be applied, the award made by the arbitrator was “not wrong.”
This appeal is limited, therefore, to a consideration as to the test to be applied where one party declines to consent to or challenges the making of an order under the MCA 1973 in the terms of the arbitral award following family arbitration under the IFLA Scheme. The questions to be determined are as follows:
i) Did the judge apply the wrong test, namely one which was akin to that applied under the AA 1996?
ii) If so, is the correct test that which was characterised by Counsel as the ‘appeals test’ applicable under the MCA 1973?
iii) If the appeals test is the appropriate test, then if properly applied is there a real prospect that the first instance court would have concluded that the arbitral award was wrong;
iv) If so, should the matter be remitted to a first instance court or is this court able to substitute its own order?
It is useful before examining the IFLA Scheme and the appeals process under the MCA 1973, to identify in broad terms the differing approach and philosophy that apply to a challenge to an arbitral award under the AA 1996 on the one hand, and an appeal under the MCA 1973 on the other.
The principal routes of challenge to an arbitral award are that the arbitrator “lacked substantive jurisdiction” (s67 AA 1996); or there was “serious irregularity affecting the tribunal, the proceedings or the award” (s68 AA 1996); or that the award was wrong on a question of law (s69 AA1996). As set out at [22] – [26] below, the test under section 69 (which is the route most commonly used in an attempt to challenge an award) is applied on the basis of the facts as found by the arbitrator. The party challenging the award requires leave and must show that the decision on the question of law was “obviously wrong”, unless the question is one of general public importance, in which case it must be shown to be at least open to serious doubt. Fairness as a concept has no place in a challenge to an arbitral award; arbitration being a procedure designed to provide certainty across the international commercial world.
By contrast, where there has been a contested financial remedy trial heard in court (which would have been the preferred option of the parties) then leave, as with a challenge under s69 AA 1996, will be required. However, permission will be given if the judge concludes that there is a real prospect that the proposed appellant can satisfy the appeal court that the order made was: (a) wrong; or (b) unjust because of a serious procedural or other irregularity in the proceedings in the lower court. Fairness will be central to the court's determination.
The judge in the present case held that the proper test, where the challenge is in respect of a family arbitration under the terms of the IFLA Scheme, is “closely aligned” to that provided under the stringent terms of the AA 1996, save where there has been a supervening event or mistake.
The Arbitration Agreement
As noted in the judgment at [13], the parties each signed the ARB1 FS form. By paragraph 6.4 of the form, the parties confirm that they:
“…understand and agree that any award of the arbitrator appointed to determine this dispute will be final and binding on us, subject to the following:
(a) any challenge to the award by any available arbitral process of appeal or review or in accordance with the provisions of Part 1 of the Act;
(b) insofar as the subject matter of the award requires it to be embodied in a court order (see 6.5 below), any changes which the court making that order may require;
(c) insofar as the award provides for continuing payments to be made by one party to another, or to a child or children, a subsequent award or court order reviewing and varying or revoking the provision for continuing payments, and which supersedes an existing award;
(d) insofar as the award provides for continuing payments to be made by one party to or for the benefit of a child or children, a subsequent assessment by the Child Maintenance Service (or its successor) in relation to the same child or children.
6.5 If and so far...
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