Financial procedures on divorce

Various orders for financial provision can be made following divorce, including the payment of 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, between the parties directly or through non-court dispute resolution (NCDR). If voluntary disclosure or an agreement to use NCDR is not forthcoming, then an application to the court should be made.  To initiate an application for financial provision, one party will file an online Form A at court with the court fee, currently £303. 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).

Non-court dispute resolution

It is a legal requirement to attend a Mediation Information and Assessment Meeting (MIAM) before making a court application. This will be with a trained mediator who will provide information about mediation and other non-court dispute resolution options (NCDR) and assess whether they are appropriate in your case. NCDR refers to the options for resolving a dispute other than through the court process, including but not limited to mediation, arbitration, evaluation by a neutral third party (called a private financial dispute resolution hearing) and collaborative law.

There are some limited exemptions to this requirement such as where the parties have tried mediation before, there has been domestic violence or where one party lives abroad. The other party or parties to the intended application will also be invited to attend a MIAM although this may be at a separate meeting. If mediation or other form of NCDR is not deemed suitable the mediator will complete the necessary section on the application to be sent to the court.

The court can pause court proceedings to give time for NCDR to be explored. This can occur without the agreement of the parties. Failure to engage in NCDR without good reason can be considered by the court when deciding whether cost orders are appropriate. This aims to encourage active participation in alternative methods and to discourage unjustified resistance.

The Court Process

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. The court will serve a copy on the other party, who becomes the Respondent to the application.

Subject to judicial resources, every case will be allocated to an individual judge at the earliest opportunity. The allocated judge should then conduct all hearings apart from the FDR.

The court will also produce a timeline setting out the documents both parties must provide in advance of the First Appointment. 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 include:

• Any property valuation obtained in the previous 6 months.
• The most recent mortgage statement/s.
• 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 jointly obtained market appraisal for each property currently used as the family home. If a joint market appraisal is impossible, the parties should each file a market appraisal for each property and be prepared to explain the reason for the impossibility to the court.
2. A Questionnaire setting out any further information or documents requested from the other party. The questionnaire should not exceed four pages of A4 meaning that the questions asked must be relevant to the issues before the court.

In addition, each party must use their best endeavours to:

1. File with the court and serve on the other party no more than 3 sets of property particulars showing what their case is likely to be on housing need for themself and the other party.
2. File with the court jointly obtained brief indicative material as to their respective borrowing capacities. If obtaining this jointly is impossible, each party can obtain their own material.

The day before the first hearing, the parties should file with the court an agreed case summary using template ES1 and a composite schedule of assets and income using template ES2.

Both parties must be present at all hearings unless 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. The purpose of the First Appointment is for the court 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 court will decide which questions should be answered and what further documentation is required.

The court may also, where appropriate, direct the parties to obtain a formal valuation of any properties or to instruct an accountant to prepare a report to value a family business or calculate tax that may be payable. Such instructions are usually on a joint basis so as to save costs for the parties.

Lastly the court 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.

The Financial Dispute Resolution Appointment (FDR)

The FDR is a more informal hearing usually heard by a 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:

1. An updated case summary and composite schedule of assets and income.
2. A composite chronology recording in neutral terms the key dates of the parties’ relationship and of the litigation and where any agreed events are clearly denoted.
3. 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 situation of the parties and the issues in dispute between them. The “without prejudice” offer letters will not be kept on the court file after the FDR hearing.

The hearing typically lasts 1 – 1 ½ hours in the course of a morning, but the court expects the parties and their advisors to be available for the whole day of the FDR to allow time for negotiations. 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 possible outcome of the case. In addition, the District Judge is likely to check that the parties have attempted NCDR, 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. Every case listed for a Final Hearing of 3 or more days will likely have an extra hearing called a Pre-Trial Review, to be held approximately 4 weeks before the Final Hearing.

At a Final Hearing, the court will hear oral evidence and see all relevant documents. The parties will almost certainly both be represented by a barrister. At the conclusion, judgment will be given imposing a final decision about 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 or there has been a refusal to engage in NCDR.

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.