Financial Matters upon Divorce or Separation

At Sousa Richards we actively encourage divorcing or separating couples to agree financial matters sensibly and amicably whether directly, through Mediation or via the Collaborative Law process.  

Consent Order

If you agree financial matters upon divorce a consent order can be drafted by us incorporating the terms of the agreement.  There may be some financial issues which you have not considered if you have come to direct agreement such as pension assets or maintenance payments for example.  You will be advised by us about any missing parts of the agreement for inclusion into the Consent Order to ensure that the Order is comprehensive and there is no possibility of the order being overturned or revisited in any way in future.  

You will be asked to provide a schedule of the value of assets and liabilities (including equity in property and pension valuations) whether in joint or sole names.  This information will be recorded in a form known as a Statement of Information and must be accurate. The Consent Order and Statement of Information are both sent to the Court for approval by the Judge with the Court fee of £45.  The Consent Order cannot be filed with the Court until after decree nisi is pronounced and importantly the Court will not accept the Consent Order without the statement of information.

The District Judge will consider the Consent Order and Statement of Information and if satisfied that all is in order the Consent Order will be approved and sealed by the Court making it a final Order and legally binding. The Judge does have the power to refuse to make an Order, although this rarely happens.  If on the face of the paperwork the agreement appears essentially unfair the Judge may ask questions or even request a hearing to justify the reasoning behind the agreement.  

Court Proceedings

If financial matters are not capable of agreement then it may become necessary to issue court proceedings for financial orders to be made so that a Judge may decide on what should happen with regards to the couple’s finances.  If the matter proceeds to a final hearing then the interval between filing the original application and the final hearing may be in the region of 10 – 12 months.  

Under the court rules there are various stages where the control of the procedure is in the hands of the court.  The principle stages in an application to decide financial orders upon divorce are set out below in a simplified form.  It is important to remember that each stage can be avoided if prior agreement or settlement of claims is reached.  

• The process begins by sending a ‘form A’ to the court to issue.  This can be done by either the husband or wife irrespective of who is the Petitioner.  There is a court fee of £240.00 to issue the application.
• The court will then give a date of the first hearing known as the ‘First Directions Appointment’ (FDA).
• At least 35 days before the FDA, both husband and wife have to exchange and file at court full details of their capital income, assets, liabilities and details of all other matters in a prescribed form called ‘form E’.  This form is both important and complex and should be completed by a specialist divorce solicitor. It is essential that full and frank financial disclosure is provided.
• At least 14 days before the First Appointment, both parties have to file at court and exchange a concise statement of the issues in dispute, a questionnaire setting out what further information and documents are required, a ‘form G’ stating whether the FDA can be used as a Financial Dispute Resolution Appointment (FDR) and finally a chronology of events.

First Directions Appointment (FDA)

Both husband and wife and their legal advisors should attend this hearing unless excused from doing so by the court.  The court will be in possession of a substantial amount of information about the financial issues between the couple and the Judge will set out an agenda for the case which would usually include a timescale within which the questionnaires must be answered and within which any valuations must be obtained for certain assets such as property, businesses or pensions.  The Judge will also consider whether any other evidence should be filed to enable effective negotiations between the couple.  This agenda will be set out in a court order and will include a date for a 'Financial Dispute Resolution' (‘FDR) Appointment often 3 – 4 months later.

Financial Dispute Resolution (FDR)

As with the FDA this hearing must be attended by both parties and their legal advisors who must all arrive at least one hour before the hearing is listed so that some negotiations can be attempted before if possible.  The FDR will be conducted by a Judge who will have copies of all offers for settlement which have been made and all evidence which has been filed with the Court. There is a duty of on-going disclosure and therefore further updating statements and values may be required at this stage to ensure that an accurate schedule of assets and income can be produced.  The purpose of the FDR is to see if it is possible to come to an overall financial settlement.  Frequently but not always this objective is achieved and the Judge can then make a final order which once complied with means that the case has been concluded.  At FDR a Judge will be invited to give an indication as to the likely outcome of the case if it were to proceed to Final Hearing.  This can be an invaluable tool to assist settlement. If the FDR is unsuccessful and agreement is not reached the Judge will give further directions for any remaining documents or evidence to be produced and will fix a date for a Final Hearing.

Final Hearing

At the final hearing the Judge will hear evidence from both husband and wife in a witness box and decide on the appropriate financial order.  The Judge will ask specific questions about each party’s financial dealings. The final order may or may not be in line with what one spouse was seeking. This hearing usually lasts at least 1 day or more.   

When making a financial order upon divorce the Court will take various matters into account.  The Court considers all the circumstances of a case, and in particular the Court has regard to the following matters:

1. the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future, including in the case of earning capacity any increase in that capacity which it would in the opinion of the court be reasonable to expect a party to the marriage to take steps to acquire;
2. the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future;
3. the standard of living enjoyed by the family before the breakdown of the marriage;
4. the age of each party to the marriage and the duration of the marriage;
5. any physical or mental disability of either of the parties to the marriage;
6. the contributions which each of the parties has made or is likely in the foreseeable future to make to the welfare of the family, including any contribution by looking after the home or caring for the family;
7. the conduct of each of the parties, if that conduct is such that it would in the opinion of the court be inequitable to disregard it;
8. in the case of proceedings for divorce or nullity of marriage, the value to each of the parties to the marriage of any benefit which, by reason of the dissolution or annulment of the marriage, that party will lose the chance of acquiring (most usually pension provision).

The aim of the Court is to achieve fairness.  Following the landmark case of White v White [2000] the Court must consider an equal division of assets built up during the marriage, unless the marriage was of short duration, or the assets are insufficient to satisfy capital needs. 

Costs

At every stage of appearance at court both husband and wife must provide a schedule of costs to the court which has to be in a prescribed form - 'Form H'.   The vast majority of cases are settled and never go to a final hearing.  There is a general costs rule that each party will bear their own legal costs unless there is strong evidence that one party has behaved inappropriately within the court proceedings such as hiding assets or not fully disclosing financial information. 

We hope this is helpful as an overview – it is only an overview however and we will advise you along the way in relation to more detailed aspects of each stage and your particular case and circumstances as necessary. 

For specialist advice in relation to financial issues on divorce or separation please contact us on 02380 713060 (Southampton) or 01962 670510 (Winchester area) for a free initial consultation.