Divorce & Finances

At Townsend’s, before we apply to court, we will encourage you to attempt to settle your case by voluntarily exchanging financial information and then trying to negotiate. If you are able to agree a settlement without going to court, we can incorporate your settlement into an agreement called a “consent order”. This will not only set out what has been agreed and the timing of the implementation of the agreement, it will also provide for a dismissal of your financial claims against each other called a “clean break” which means that once the order has been approved by the court, it will be legally binding and neither you or your ex-spouse can make a financial claim against each other in the future.

The grounds for re-opening a financial settlement are limited and once the door to a claim is closed it remains shut. It’s really important that before you commit to a financial settlement you are completely comfortable with it because there is no turning back.

The only claims that can remain open are maintenance or lump sum orders payable by instalments. Increasingly these days the payment of spousal maintenance is time limited and not payable over the lifetime of a party unless the financial circumstances demand it. Child maintenance payments set out in a Court Order are only legally binding for a period of one year, following which the Child Maintenance Service reclaims jurisdiction.

There is no set formula that applies to financial settlements. As explained above, there are factors that a Court takes into account. These factors are worded in a way to allow judicial discretion in their interpretation the purpose of which is to achieve a fair outcome in each  case that comes before a Court. Every case is unique with its own special set of financial circumstances. It can be dangerous to expect the same outcome as a friend or family member who has been through a divorce process. It rarely works that way.

It’s important not to fix your expectations on settlement because this can  lead to disappointment. In most cases there has to be some give and take in negotiating a financial settlement. Our experience has taught us that clients come to terms more readily with financial settlements that are agreed through negotiation rather than imposed by the courts.  

If you can’t reach a financial settlement through solicitors you can make an application for a financial remedy order.  Before making the application, you will need to attend a mediation information assessment meeting or “MIAM” for short. This is explained more fully further on.

Once your application has been issued, your case will be listed for what is called a First Directions Appointment (“FDA” for short) before which both parties will file with the court and exchange with each other a financial statement called a “form E”. This is a comprehensive document and if completed properly should limit further enquiry.  

In advance of the first hearing parties are allowed to raise a questionnaire setting out the further information that they need from each other before they can properly negotiate a settlement. At the FDA, if there any questions in dispute the Judge will decide which questions will and will not be answered and direct when answers should be provided. 

The FDA will also be used to decide on issues of valuation, joining third parties into the proceedings such as family members who have an interest in a matrimonial asset or property and taxation issues.

The next hearing is the Financial Dispute Resolution hearing (“FDR” for short).  Sometimes the court will allow the FDA to be used as an FDR if the parties and the court consider that there is sufficient disclosure to proceed and the parties are agreed on the issues they need the court to help them with. In advance of the FDR, the questionnaires need to be answered and values of assets need to be agreed. Both parties will have provided the FDR Judge with a summary of their settlement position and the Judge will give an indication of how the court at trial would judge the case. This Judge is excused from hearing the case further because he or she knows the party’s settlement positions. The purpose of the indication from the Judge is to encourage the parties to settle at the FDR stage or soon after to avoid the enormous expense of a final hearing.  Most cases will settle around the FDR stage provided the party’s expectations have been properly managed, they are not fixed on an outcome and they are prepared to compromise.

If a settlement cannot be reached the proceedings will be timetabled to a final hearing before which both parties will be directed to file statements. The decision of the Judge will be final and binding unless there are grounds to appeal a decision. Appeals are rare.

At every stage of the proceedings the court must be informed of the costs incurred to that stage. This is to encourage parties to reflect on what they are spending in legal fees, to take a step back and to think about whether it is financially worthwhile continuing to litigate.

The general rule is that the Court will not make a costs order, that one party pay the costs of the other, unless that is justified by the way one of the parties has behaved within the proceedings. Costs Orders are extremely rare in family proceedings.

Enforcement is a means by which a party can take the other party back to court if they have not honoured a financial settlement or obeyed a final order and the court’s assistance is required, for example to make a party pay maintenance or transfer over their share of the family home or shares in a business. The court has power to sign documents on behalf of a party who is refusing to sign them, to force monthly payments to be deducted at source in the same way as PAYE tax, to send bailiffs or High Court Enforcement officers to seize assets or to impose sanctions such as a fine or committal to prison in extreme circumstances.