When a couple separates through divorce, civil partnership dissolution, judicial separation or nullity there are inevitably practical issues which need to be resolved as a result of that relationship breaking down. Legally bringing that relationship to an end is in fact one of the easier elements especially if both parties agree that the relationship has come to an end.
The difficulties arise where agreements cannot be reached about any children involved and in particular, about the finances. For some couples this process is easier than for others and the ease at which you reach agreements depends very much on the individual circumstances and the personalities involved.
Reaching a financial settlement need not be a drawn out legal battle and indeed there is greater focus now by both the Courts and the government on alternative dispute resolution (ADR). These are the methods of resolving a dispute without having to go to Court. This includes mediation, collaborative law and arbitration. It is recognised by all those who work in the justice system that going to Court is an expensive, lengthy and distressing process which often results in outcomes that neither party is happy with.
It is hoped that applications to the Court for Financial Remedies will start to become an absolute last resort and the alternative dispute resolution methods referred to above will become the norm. In fact the methods described above are increasingly being referred to as Dispute Resolution, thereby dropping the word alternative. No longer are these methods seen as alternatives to Court applications but as the best way, in the majority of cases, for couples to resolve the financial matters arising from the breakdown of their relationship in a cost effective, dignified and respectful way.
Applying to Court for Financial Remedy
That being said there is still a place for the Court to become involved in financial settlements especially where there is a clear imbalance of power between the parties or in circumstances where one party refuses to provide information about their finances.
The spouse applying to the Court is referred to as the Applicant and makes their application to the Court in a document called a Form A. The spouse who receives the application is called the Respondent. The Form A tells the Court which Orders the Applicant is seeking and includes some of the following;
- property adjustment orders
- lump sum payments
- periodical payments (maintenance)
- maintenance pending suit (maintenance paid on an interim basis)
- Pension orders
When the Form A is issued with the Court this sets in motion a strict Court timetable for the filing of documents and Court hearings. Within Financial Remedy Proceedings (previously called Ancillary Relief) there are usually 3 separate hearings;
- The First Directions Appointment
- The Financial Dispute Resolution Hearing
- The Final Hearing
What is the process for a Financial Remedy Application?
Below is the usual procedure for a Financial Remedy Application;
The Form A, once it has been issued by the Court (either online or on paper), is sent to the Respondent or their Solicitor, with a further copy is sent to the Applicant and their Solicitor. With the Form A is a Notice from the Court listing the date and time for the First Directions Appointment (FDA) as well as a list of dates for the disclosure and filing of documents (Form C). The disclosure and preparation of these documents is to take place ready for the FDA.
The first document that the parties will need to each complete before the FDA is the Form E. This is a large financial statement which requires information about property ownership, savings, investments, pensions, debts and income. The Form E must also have attached to it up-to-date documentary evidence in support of the figures that have been put into the Form E. Each party is under a duty to provide full and frank financial disclosure and that obligation continues throughout the proceedings so that if new information arises you are expected to disclose it. The Court takes a very dim view of those who do not provide the disclosure that has been requested in the Form E and this may result in cost penalties. In some extreme cases this can result in committal to prison but in reality this is rare.
After the Form E has been completed the parties sign their respective forms and these are exchanged. The exchange happens on or before the date given in the notice provided by the Court. Following exchange of Form E the parties must then each prepare a Questionnaire. The Questionnaire is an opportunity to seek clarification of information contained within the Form E that has been received from your spouse. The Questionnaire can also request additional disclosure if this has been omitted from the Form E. It is not necessary to complete a Questionnaire if it appears that the Form E has been completed comprehensively and honestly. In addition to the Questionnaire the parties must also prepare a Chronology (this is simply a list of relevant dates of which the Judge might need to be aware) and a statement of issues. The Statement of Issues is a document which tells the Judge what each party feels are the main issues in the case which need to be resolved. This may include disputes over the valuation of a property, a dispute about whether certain assets should be considered matrimonial property or whether certain contributions made by one party to the marriage should be taken into account. The issues can be wide ranging but the purpose of the statement is to try and narrow the issues at an early stage.
Once the Form E, Questionnaire, Chronology and Statement of Issues has been exchanged the parties should be ready for the first Court hearing, the FDA. In some circumstances parties can ask the Court whether they can skip the FDA and move straight onto the Financial Dispute Resolution Hearing (FDR). The Court will ask for confirmation of this before the hearing so that it can prepare to hear an FDR instead. This will only happen if both parties are in agreement and Questionnaires raised by each party have already been answered. The parties would need to agree that no further information was required and that the Court had sufficient information to move on to the next stage.
The First Directions Appointment is used for a number of reasons but the aim is to manage the case. This is done by considering with the District Judge what additional information may be required from each party whether individually or jointly in order to put the Court in a position where it can give a view about how the matter should be settled. This usual means appointing a joint expert to value the former matrimonial home, business assets, land, shares etc. This is only necessary where the parties cannot agree the value themselves. The District Judge will also review each parties Questionnaire and he may upon hearing from the parties or indeed of his own volition strike out any questions that he does not feel are relevant to the case. The District Judge will make an order which usually includes the some or all of the following;
- A date by which any single joint expert should be instructed
- A date by which the expert should file his or her report
- A date by which the parties must file answers to Questionnaires
- A date for the next hearing – the Financial Dispute Resolution Hearing (FDR)
The District Judge will certainly encourage the parties to continue negotiating outside of Court and just because Court proceedings are in place this does not mean that the parties are prevented from settling the finances through their own agreement. It is usual therefore that the next hearing, the FDR, is set for several weeks after the filing of answers to Questionnaires and the filing of any expert report. This allows the parties time to reflect upon the new information and if possible to try and settle matters without any further Court hearings.
If settlement has not happened the next stage is for the parties to attend an FDR. This hearing is designed to promote negotiation between the parties and if possible achieve an agreement. The FDR is usually listed for an hour and the parties will be expected to attend one hour before the listed Court hearing in order to engage in negotiations. It is possible that if an agreement is reached before the hearing that agreement can be presented to the District Judge and he may sign it off that day. If agreement is not reached the hearing will proceed. The District Judge will consider the papers that have been filed and he will hear arguments from the Applicant and Respondent’s Solicitors, Barristers or the parties themselves if they are acting in person. The District Judge having heard arguments from each side will then give an opinion as to how the matter should be settled. The parties will be invited to consider that opinion and if it is accepted by both then an order can usually be drawn up that day and approved by the Court.
If matters have not settled at the FDR then the matter is listed for a Final Hearing. The length of the final hearing really depends upon the issues involved and the complexity of the finances. Typically they are listed for between 1 and 2 days. Each party will give evidence at the final hearing by standing in the witness box and answering questions put to them. At the Final Hearing the Judge will make a decision about how the finances are to be divided. The parties are stuck with whatever decision the Judge makes. It is possible to appeal a decision but this is very expensive and there are only limited circumstances in which an appeal is possible.
A financial remedy application can be a very lengthy and extremely expensive process and if it can be avoided so much the better. These applications in light of their cost will not be suitable for all cases.