Guide to Financial Orders After Divorce

by Paul Summerbell, 27th Nov 2014

A BRIEF PROCEDURAL GUIDE TO FINANCIAL ORDERS AFTER DIVORCE

Stage 1: Preliminary

The Court’s powers to distribute assets following divorce is sometimes referred to as “ancillary relief” or an “Application for a Financial Order”. It is common for lawyers to refer to the proceedings as ancillary relief when referring to all orders regarding matrimonial finances and property that a Court can make following divorce, judicial separation or nullity proceedings.

The Court has wide powers to make Orders for Periodical Payments (sometimes referred to as maintenance), Secure Periodical Payments, Lump Sum Orders, Property Adjustment Orders or Orders for Sale of Property and in addition, there are powers to deal with pensions.

The procedure for obtaining such Orders is Court controlled. The Court imposes a timetable within which it expects certain events or steps to be taken. The participants will be required to personally attend Court hearings, unless otherwise ordered by the Court. There may well be cost consequences for anyone who disobeys any of the Court’s directions or Orders.

Prior to making any Application for a Financial Order, the Court requires any potential Applicant for a Financial Order, to consider, with a mediator, whether the dispute may be capable of being resolved through mediation before commencing proceedings. The Court will also expect to see attempts at settlement, either by correspondence or otherwise, before an Application is made. This is sometimes referred to as the pre-application protocol. The protocol states that pre-application disclosure should be encouraged but only where both parties agree to it and disclosure is not likely to be an overly lengthy or expensive issue. In other words, it must be proportionate. The parties involved would be expected to reveal or disclose their financial position to each other and this could be done by completing a Court Form referred to as the “Financial Statement” (Form E).

An Application for a Financial Order is commenced by filing with the Court an Application in Form A. A Court fee is payable of £255.00 at the date of writing this article. The Court will subsequently issue the Application within a few days of receipt and send to each party a sealed copy of the Form A (endorsed with the Court stamp), accompanied by a Notice from the Court of the First Appointment date (Form C) and a Notice of Response to the First Appointment (Form G). The Notice of First Appointment contains the following information:

1. The date and time of the First Appointment.
2. A timetable for the case up to the initial hearing date (the First Appointment). This timetable contains specific dates on which the parties must take certain steps which include exchanging documents with each other as follows:

a. A Statement of Information about their financial circumstances (Form E) must be exchanged between the parties, usually no later than 35 days before the First Appointment.
b. A concise statement of issues between the parties.
c. Chronology.

d. Exchange Questionnaires setting out the further information and documents each party requires from the other or a statement that no information is required.
e. A completed Form G (see above) indicating whether the party is in a position to treat the First Appointment as a Financial Dispute Resolution Hearing.
f. An estimate of the legal costs incurred by each party filed with the Court and exchanged with each other (Form H).

Stage 2: The First Appointment

The Court will fix a date for the First Appointment when the Applicant for a Financial Order files their Form A (see above). A short timetable is set by the Court to monitor the Application and its progress from an early stage with a view to limiting the issues and saving costs. Both parties and legal representatives must attend the First Appointment, unless the Court directs otherwise. At this appointment, the District Judge will decide how the Application for a Financial Order will proceed and give further directions as to its progress which may include:

a. The extent to which Questionnaires need to be answered.
b. Further documents to be produced.
c. Valuations of assets such as the former matrimonial home or pensions.
d. Production of any other evidence such as schedule of assets or in some cases, further statements.

Particular care needs to be taken with regard to the following:

a. Valuation of the former matrimonial home. The Court will seek to find an agreed valuation between the parties.
b. Valuation of any family business which may require expert or accountant’s valuations.
c. Whether there are any new partners involved. For example, one party may claim that the other party has a new partner who is working, and who is therefore able to contribute to the outgoings, thus freeing more cash for the former family or reducing the new family’s needs.
d. The valuation of pensions. This usually involves the completion of a Pension Enquiry Form (Form P) to be forwarded to the Pension Company to obtain a valuation.

At this point, the District Judge dealing with the case has two choices to make.

The Judge can give a date for the next Court hearing which is the Financial Dispute Resolution Hearing. This usually takes place where further investigation is required into the assets of each party. Alternatively, the Judge may treat the First Appointment as a Financial Dispute Resolution Hearing where the parties are able to proceed immediately and full disclosure of the financial situation has been given.

Experience tells us that few First Appointments are treated as Financial Dispute Resolution Hearings primarily because there are usually outstanding issues regarding the valuation of each party’s assets, particularly the former matrimonial home. Additionally, Replies to each party’s respective Questionnaires and request for documentation are usually required and, finally, there is usually insufficient Court time allocated at the First Directions Appointment to convert that appointment into a Financial Dispute Resolution Hearing.

Between the First Directions Appointment and the Financial Dispute Resolution Hearing, both parties should comply with all directions made by the District Judge (the Court) at the First Appointment before the FDR. Neither party can insist on any further disclosure without the permission of the Court and the person in the position of the Applicant must inform the Court of all offers or proposals and responses made to settle the matter at least 7 days before the Financial Dispute Resolution Hearing. The Court will expect the persons involved to make offers and proposals and to give such proposals proper consideration and not to attempt to exclude their consideration from the Financial Dispute Resolution Hearing.

Prior to the Financial Dispute Resolution Hearing, both parties must produce a second written costs estimate (Form H).

Stage 3: Financial Dispute Resolution Hearing (FDRH)

The aim of the FDR is to produce a settlement. All parties must personally attend and the District Judge will attempt to help the parties towards settlement by exploring common ground. All discussions at the FDR are completely privileged and any documents referring to prior offers or proposals to settle the matter must be returned to the parties who filed them at the conclusion of the hearing and not kept on the Court file.

If a settlement is reached at the FDR, the Judge may make a Consent Order reflecting that agreement. The District Judge also has authority to adjourn the FDR to allow both parties to consider their position. Where no agreement is reached, the Judge must make further directions including, where appropriate, setting a hearing date for trial. In large money cases, it may be possible that the Judge will order statements to be prepared and mutually exchanged between the parties (often referred to as Section 25 statements). Such statements may cover issues such as contributions by the parties or the source of any current assets and standard of living etc.

The District Judge hearing the FDR appointment will have no further involvement in the case other than to conduct a further FDR appointment or to make a Consent Order if agreement is reached.

The Court would expect anyone attending the FDR appointment to use their best endeavours to reach agreement on the matters in issue between them.

The parties are free to continue to negotiate between the FDR and the final hearing or trial.

Stage 4: Final Hearing or Trial

This hearing is usually before a District Judge in Chambers and in private. These hearings only occur in a minority of cases which we would estimate at 10 – 15%.

Final hearings or trials of this nature are informal. Trial bundles must be filed with the Court prior to the final hearing as part of the directions given at the FDR and the Judge will have read these papers prior to the commencement of the final hearing and/or trial.

The format of the final hearing and/or trial can be as formal or informal as the District Judge wishes. Having read the papers, the District Judge may open by letting the parties know what he has in mind and inviting them to consider and negotiate around that indication for a while. Alternatively, if the Judge wishes to proceed on a more formal footing, he may invite the Applicant’s Solicitor (or Barrister) to open with some remarks. The Applicant’s Solicitor and/or Barrister will outline the case and then call his evidence. This will consist of witness evidence. Generally speaking, any statements that have been filed with the Court will stand as the evidence in chief of the witnesses, although the witness may amplify on that statement. Witnesses are then cross examined by the Respondent’s Solicitors. The Respondent will then present their own case and once all evidence has been given, the District Judge will give an Order (or may reserve his judgment until a later date).

Experience tells us that a minimum of two days is usually required for a final hearing. The general rule is that the Court will not make a Costs Order in financial proceedings unless such an Order is justified by the litigation conduct of one of the parties. Costs will normally be treated as a liability of the relevant party and be taken into account when making the substantive Order. In other words, each party will pay their own legal costs. Any conduct issues (litigation conduct) usually refer to a failure to comply with Court Rules, any Court Order that has been given, whether it was reasonable for a party to raise, pursue or contest a particular issue, combined with the manner in which the party has pursued or responded to the Application.

Warren’s Law & Advocacy has expert Solicitors who are very familiar with this process to achieve the best result possible for you, should you be unfortunate enough to find yourself involved in such proceedings. For a free initial no obligation 30 minute diagnostic interview, please telephone Warren’s Family Law on 01323 430430 or email us at enquiries@warrensfamilylaw.co.uk

Disclaimer: While we do all that is possible in terms of ensuring its accuracy, this blog contains general information only. Nothing in these pages constitutes legal advice. You need to consult a suitably qualified lawyer from the firm on any specific legal problem or matter.