Financial Claims: Alternatives & Procedure

 

Court is not the only option for resolving financial disputes on divorce; in fact Court should be seen as a last resort. We have set out below a summary of the different options for reaching an amicable settlement with your spouse.

Achieving the Settlement

There are several ways of approaching the question of split of financial assets and future financial provision on relationship breakdown. The most appropriate approach will depend the level of assets and income and whether children are involved.

(a)  Direct discussion between the parties

If the total available assets are not high or there are no property assets and no real issues between the parties then direct negotiation between the parties without the intervention of lawyers will often produce a cost effective solution. The lawyers can then be used only to advise on whether the proposed settlement is reasonable and whether it would be advisable to record the agreement reached in either a formal written agreement or by means of a court order made by consent.

(b)  Negotiation between lawyers

Where the level of assets are higher or there are property assets and especially where there are children it will usually be necessary for  lawyers to investigate the finances of both parties and advise on an appropriate settlement and how this can best be achieved.

Such investigation of finances will involve each side summarising their finances on a detailed form and offering voluntary disclosure of all relevant financial documents. This disclosure will generally include :

1. Statements of bank and credit card accounts for about 12 months
2. Property valuations and mortgage statements
3. Investment valuations
4. Pension valuations
5. Documents confirming debts and liabilities
6. Documents confirming income and employment benefits
7. Schedule of outgoings

If the lawyers are unable to agree an appropriate settlement or where there is delay by one side in furnishing information or attempts to hide assets then it is likely that the wife’s lawyer will issue a further Court application to ask the Court to intervene  (see below).

(c)   Facilitated negotiation with a mediator

Litigation through the Court can be very expensive. Where the parties cannot agree it is often helpful to obtain assistance from a mediator. Family mediators are trained lawyers, that are independent and neutral. A mediator will help the parties identify the issues in dispute, so that they can be discussed constructively with a view to reaching an amicable agreement. Mediation is most useful where both sides agree to use that process. Any agreement reached through mediation can be drafted in to a formal agreement by solicitors (see below). The benefits of mediation are:

•  The ability to choose an independent mediator in whom both parties have confidence
•  A cost saving as the mediator fee will be split equally between the parties 
•  It has been proven that agreements reached amicably between parties rather than imposed by the court are more likely to be long lasting    
  

(d)  Private Arbitration

A process that is fairly new to family law is that of private arbitrations. In this process, the parties nominate an independent arbitrator to act informally as a ‘Judge’ to decide on an appropriate outcome. These independent arbitrators have undergone specialist arbitration training, and are made up of barristers, solicitors or retired Judges.

The benefits of such arbitration are as follows:

• The ability to chose an arbitrator in whom both sides have confidence
• Knowing that the arbitrator will be available when he or she has been booked to be available and  will have read the papers, 
• A choice between following normal procedure (Forms E etc), or choosing a different procedure,
• The option of  directions hearings being conducted on paper, by telephone or by video link,
• If there is one specific issue impeding settlement, the scope for it to be determined on written       submissions,
• Complete confidentiality.
  

(e)   Collaborative Law

The collaborative family law process is a relatively new way of dealing with family disputes. Each person appoints their own lawyer but instead of conducting negotiations between you and your partner by letter or phone you meet together to work things out face to face.

Each of you will have your lawyer by your side throughout the entire process and therefore you will benefit from legal advice as you go. The aim of collaborative law is to resolve family disputes without going to court. 

(f)    Litigation through the Court

If the Court is asked to intervene it will set a timetable for steps to be taken by each side leading up to a final Court hearing when the Judge will decide on what financial settlement is to be imposed on the parties. A typical timetable will involve the following steps :-

1. Issue of application in Form A by one of the parties.
2. The Court sets a date for exchange of financial statements by each side in Form E together with financial disclosure and also sets a date for the first hearing
3. There is exchange of Form Es by the parties together with financial documents
4. Each side will review the Form E and financial documents of the other party in detail and prepare a questionnaire of what further information/documents (if any) they require from the other side.
5. Each side will deal with the questionnaire of the other although there may be arguments as to what questions are strictly relevant
6. The parties (if available) and their legal representatives attend the first hearing at Court. It will often be appropriate to instruct a barrister to represent you. The Judge will decide what further evidence the parties should prepare and deal with any arguments on the questionnaires. There may be directions by the Judge to obtain expert evidence (eg house valuation from a surveyor). Sometimes the parties have been able to agree a settlement by this stage and, if so, the Judge can be asked to confirm that settlement by means of a formal Court order. If the parties have not been able to agree the Judge will set a date for a Financial Dispute Resolution (FDR) Court hearing.
7. The purpose of the FDR is to try to facilitate a settlement between the parties. Both parties should therefore attend Court that day. It will usually be essential to instruct a barrister to represent you. The Judge will expect each side to have made formal offers to settle by that stage. There is often considerable negotiation between the parties and their lawyers on the day. If the parties still have not been able to reach settlement the Judge will often give an indication of what settlement order he would have imposed based on the evidence available.
8. A date for the final Court hearing is set.
9. There will be considerable work to be done in the intervening period including preparing your formal statement, arranging updates for valuations and documents and preparing the bundles of documents to be used at the final hearing including a formal Schedule of Issues and a Chronology.
10. At the final Court hearing you will have a barrister representing you and it will be necessary for you to attend Court. You will have to give oral evidence and answer questions from your spouse’s barrister. The final hearing may well take more than one day depending on the matters still to be agreed. At the conclusion of the hearing the Judge will make his order.

Recording the Settlement

A decision will also have to be taken as to the most appropriate method of recording any settlement reached. Again there are several choices.

Simple verbal agreement with no written record

This is unlikely to be appropriate in any but the simplest of cases. It has two important disadvantages. Firstly there is no time limit under English law after which one party cannot claim a financial remedy against a former spouse. This may become a crucial point at a much later date if one parties’ financial position greatly improves in the future. Secondly English law allows a spouse or former spouse to make a claim against the estate of the other on his/her death. This can only be prevented by means of a formal Court order.

Written record by means of a formal agreement

This is often used where parties are to separate but not to obtain a formal divorce. As much or as little detail can be provided for in the agreement. English law states that a formal agreement may be help to be binding as long as both parties have sought independent legal advice, there has been disclosure of both parties financial positions, and there was no duress. If parties are undergoing divorce, it is more advisable for an order to be obtained through the Court which would be directly enforceable.

A formal agreement can be helpful as an interim measure when the parties have separated but not yet decided to divorce, or when a divorce could not yet take place (for example where the parties had not been married for a year).

Court order by consent

It is common for the essential agreed terms of a settlement to be recorded in an order of the Court which is made by consent. The procedure simply involves the drafting of an order confirming all the terms and submission of papers to the Court. There is no need for either party to attend Court. If the Judge approves the proposed order it will be confirmed by the Court.

Such consent orders often provide for a “clean break” between the parties, either immediately or at a specified time in the future. Such a “clean break” will mean that the parties become financially independent with no possibility of any future claims on each other.

It is possible to have a “clean break” as between the parties even where children are involved and there is to be continuing financial support by the father for the children.

Court order following decision by the Judge

Where the parties have followed the litigation route the Judge will ultimately decide the terms of the financial settlement to be imposed on the parties unless there is some interim agreement which can then be dealt with as a Court order by consent.

Interim Claims

It is possible to make an application to Court in certain circumstances, for example:

• For urgent interim financial assistance. This is known as maintenance pending suit (MPS). Such an application can also be coupled with a request for financial assistance towards legal costs where the party has no other means by which to pay.
• To protect matrimonial assets when it is feared that one party may remove or dissipate funds.
• To recover assets that have been removed or dissipated by one party
• To uncover assets, by requesting the examination of documents or the direct questioning of a third party

The position is complex and we will give you guidance as appropriate.