Financial Procedures on Divorce

Various orders for financial provision can be made following divorce, including payments for maintenance, lump sums, orders for the transfer of property and the sharing of pension interests.

Guidelines provide for mutual disclosure of financial information to enable negotiation in the hope that a settlement can be achieved amicably. Ideally this will be provided voluntarily, possibly between solicitors, the parties direct or through mediation. If voluntary disclosure is not forthcoming, then an application to the court should be made. To initiate an application for financial provision, one party will file a Form A at court with the court fee, currently £255. The person that does so is the Applicant. That form states the claims that are being made (for example Maintenance, Lump Sum, Property Adjustment or Pension Sharing Orders).

Since 22 April 2014 it has been mandatory for parties to (at least) consider mediation before an application can be made to the court. The Applicant (and ideally also the Respondent) will need to attend a Mediation Information and Assessment Meeting (MIAM) to establish whether it might be possible to resolve any disputes through mediation, rather than through the court process. There are various reasons why a case may not be suitable for mediation, e.g. domestic violence. If the assessor determines the case is not suitable for mediation, the Form A confirms this to the court.

When the Form A is issued, the court will issue a Notice of First Appointment setting a date for the first court hearing (called the First Appointment). Depending on the court, this will usually be 12-16 weeks after the Form A has been filed. Within 4 days of filing the Form A, the court will serve a copy on the other party, who becomes the Respondent to this application.

At least 35 days before the First Appointment, both parties must exchange and file at court their Form E. This document is signed by each party and sets out full details of their financial position. Certain documents are required by the court to support the Form E and these are as follows:-

  • any property valuation obtained in the previous 6 months.
  • the most recent mortgage statement.
  • 12 months statements for all bank, building society and other bank accounts.
  • surrender value/quotations for all life insurance policies.
  • the latest P60 and the last 3 payslips.
  • the last 2 years accounts of any company which a party has an interest in and any valuation of the
    company relied upon.
  • the last 2 years accounts for self employed businesses or partnerships.
  • the latest cash equivalent value for any pension scheme or letter of request asking for that valuation.

Once the parties have exchanged their financial information it may be possible to start negotiations with a view to reaching a settlement. However, disclosure is not always complete or clear. Consequently at least 14 days before a First Appointment, both parties must file at court and serve on each other the following documents:-

  1. A Questionnaire setting out any further information or documents requested from the other party, or
    alternatively a statement saying that no further information or documents are required.
  2. A brief Statement of Issues between the parties essentially setting out the main points of dispute.
  3. A Chronology setting out the history of the matter.
  4. A Form G stating whether or not the party will be in a position to negotiate at the First Appointment or
    whether further information is required before that is a possibility.

Both parties must be present at all hearings unless there are special circumstances or the court has excused their attendance. At each hearing, solicitors for each party must submit an estimate of their total costs to date. This is to ensure that both parties know what their costs are, what their spouse’s costs are and what effect these will have on any overall settlement.

THE FIRST APPOINTMENT

The First Appointment is the first court hearing before a judge, usually a district judge. It is usually listed to last for 30 minutes. The purpose of the First Appointment is for the judge to give directions (instructions) for anything that might need to be done by way of the provision of further information, and to timetable these directions so that the parties are enabled to negotiate at or before the second hearing.

If there is a disagreement about what further information is required, the District Judge will decide which questions should be answered and what further documentation is required.

The District Judge may also, where appropriate, direct the parties to obtain a formal valuation of the matrimonial home or to instruct an accountant to prepare a report to value a family business. Such instructions are usually on a joint basis so as to save costs for the parties.

Lastly the District Judge will direct that the case be listed for a Financial Dispute Resolution appointment (an FDR). This hearing will usually be 2-3 months after the First Appointment, depending on how busy the court’s diary is. In exceptional circumstances a District Judge may decide that a case is inappropriate for a Financial Dispute Resolution appointment and allow the case to progress to the Final Hearing.

THE FINANCIAL DISPUTE RESOLUTION APPOINTMENT (FDR)

The FDR is a more informal hearing before the District Judge, the purpose of which is to assist both parties in reaching a settlement. The FDR hearing is without prejudice (confidential) and the District Judge who presides at the FDR will not be able to take any further part in the proceedings.

7 days before the FDR the Applicant must submit to the court details of any offers made between the parties, including those that are “without prejudice”, so that the District Judge has full knowledge of the proposals made by each party. The District Judge will also have details of the financial situations of the parties and the issues in dispute between them. The “without prejudice” offer letters will be handed back to the parties after the hearing: they are not kept on the court file.

Parties and their advisors are directed to attend court at least one hour before the court hearing for the purposes of negotiation. It is important that the parties make every effort to agree on the issues between them. The District Judge will hear from both parties’ lawyers and will usually express a view on the case. In addition the District Judge is likely to warn both parties of the litigation risk and the considerable expense of continuing litigation. If the District Judge cannot help the parties find common ground, further directions will be given to prepare the case for a final hearing.

THE FINAL HEARING

If a case does not settle at the FDR or in the following months, it will proceed to a Final Hearing. The length of the Hearing will be determined by certain factors, for example its complexity, the number of witnesses required and the extent of relevant documentation. Generally speaking the longer the hearing needed, the longer it will be before the Final Hearing is listed. Therefore in general, Final Hearings listed for one day will be heard more quickly than Final Hearings listed for five days.

At a Final Hearing, the court will hear oral evidence and see all relevant documents. At the conclusion, judgment will be given imposing a final decision on the division of the family assets on both parties by way of an Order. Having done so, the question of costs will need to be determined. The usual order will be that each party will bear their own costs, although the court does have the power to order a party to pay some or all of the other party’s costs. This will usually only occur where one party has behaved poorly in their conduct within the proceedings.

In general, it will take around 9-12 months from issuing a financial application to resolution. However, this timescale can be longer if a Final Hearing is required.

CONTACT US

For further information about financial procedures please contact:

Nicola Harries – Partner and Head of Family
Tel: 01483 401262 Email: nicola.harries@stevens-bolton.com

Caroline Gordon-Smith – Partner, Family
Tel: 01483 401215 Email: caroline.gordon-smith@stevens-bolton.com

 

The information contained in this article is designed to provide, for guidance purposes only, a general introductory summary of the subject matters covered. It does not purport to be exhaustive nor to provide legal advice nor should be used as a substitute for such advice.

© Stevens & Bolton LLP 2015

Contact our experts for further advice

Nicola Harries, Caroline Gordon-Smith

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