Financial Issues On Divorce / Dissolution


The natural consequence of relationship breakdown is the need to re-order family life: arrangements for children, and the parties’ finances and their commitments to each other (if any) going forward.

In the context of divorce / dissolution, resolving financial issues can be achieved through a Court process, but this can be both expensive and time consuming. However, at any stage after Court proceedings have been issued, a negotiated settlement remains possible and can form the basis for compromising proceedings.

In fact, reaching a financial settlement upon divorce / dissolution does not have to involve the Court at all, save for approving the final Order reflecting the agreement reached.

There are a number of methods of dispute resolution (DR) available besides court proceedings, which include:

  • direct negotiation;
  • arbitration;
  • mediation and
  • negotiation through solicitors whether through the collaborative process or otherwise.

The process for reaching a financial settlement is the same upon the dissolution of a civil partnership as upon divorce. Therefore, we use the term partner below, which can be read as meaning either a husband, wife or civil partner.

Whether DR (of any model) or court proceedings are the vehicle used, fundamental is the concept of the full and frank exchange of relevant information and documents. Both partners will need to disclose their assets (including pension assets, or interest in trust assets), income and liabilities. Failure to provide such disclosure might fatally undermine the outcome by whichever route achieved. In extreme circumstances, it may result in a settlement being overturned by the Court at a later date with very significant costs penalty for the non-discloser. The duty of full and frank disclosure is a duty owed to the Court, rather than your partner, and there can be serious consequences of any failure to comply fully with that duty.

Whilst there are various forms of DR that can help partners agree about financial matters, only an Order approved by a Court can formally determine or terminate the financial claims partners have against one another.

The court process

The procedure is set down in Part 9 of the Family Procedure Rules 2010.

An application to the court cannot be made unless divorce / dissolution proceedings have already been started. Before an application is made, you may be asked to attend a Mediation Information and Assessment Meeting (often known as a MIAM) unless there is reason in the circumstances of your case to be exempt from this requirement.

Issuing the application at court

An application for a financial order (Form A) is issued in the same Court in which divorce / dissolution proceedings have been filed. This must be accompanied by a Family Mediation Information and Assessment Form (where applicable) and the Court fee. The partner who files the Form A is called the Applicant and the other partner the Respondent.

Once the application has been issued, the Court will set a timetable for your case to progress. At the same time as issuing the Form A the Court will list your application for the first Court hearing known as the First Directions Appointment (FDA). The FDA must take place between 12 and 16 weeks after the Form A is issued.

Exchange of financial statements (Forms E)

Financial disclosure must be provided by both partners completing a comprehensive disclosure statement known as Form E. Completion of this form is mandatory. It is a long form – around twenty-five pages – requiring disclosure of all of your assets and liabilities (including trust and pension assets) and the provision of up-to-date documentation supporting the figures given. The Form E also asks you to describe your financial needs going forward.

Forms E must be exchanged not less than 35 days before the FDA.

You will then each have the opportunity to consider the other’s Form E.

Exchange of FDA documentation

Not less than 14 days before the FDA, you and your partner must serve on one another and file at Court the following documents:

  • a request for information or documents to complete or clarify the evidence given in your partner’s Form E;
  • a chronology of the principal events in family life;
  • a summary of the (financial) issues the court is being asked to consider and resolve;
  • a statement of the legal costs incurred to the FDA, and
  • a document stating whether or not you will be in a position to use the FDA as a Financial Dispute Resolution Hearing.

The FDA

Both parties (and their lawyers, if instructed) must attend the FDA unless the Court has given permission for non-attendance. The purpose of the FDA is to enable the Court.

  • to identify the issues in the case;
  • to identify what additional information, evidence and documents will be needed in light of those issues, and
  • to identify what court resources need to be allocated so that the issues can be resolved.

Common directions include:

  • which requests for additional information and documents must be answered, and by when;
  • the commissioning of valuations or experts’ reports in relation to, for example, the value of any properties the value of which is disputed, and
  • the date on which the Financial Dispute Resolution Hearing will take place.

The Financial Dispute Resolution Appointment (FDR)

This hearing usually takes place at least three months after the FDA. Its purpose is to encourage the partners, with judicial assistance, to agree an overall settlement (or at least to narrow the issues).

The Judge will be provided with a summary of the assets, details of the remaining disputed financial issues, and (crucially) copies of settlement proposals. Each partner is under an obligation to make a settlement proposal before the FDR.

Both parties are required to attend Court at least one hour before the FDR to enable negotiations between the partners (and their legal advisers, if instructed) to take place.

At the FDR, the Judge will hear an account by or on behalf of both partners about the issues in the case. The Judge will then provide an indication of what he or she thinks would be a fair financial settlement. This will be based on what is said at court, what the Judge has read, the settlement proposals and the Judge’s experience of deciding similar cases. The Judge cannot impose a financial settlement, only indicate what he or she thinks it should be in the hope that helps move matters forward.

The FDR allows a valuable indication of a possible outcome. The indication given can help re-calibrate partners’ expectations and make negotiations more realistic and targeted. It is a chance to consider the Judge’s suggestion against the risks inherent in litigation and the costs implications and delay in waiting for a final hearing.

If a financial settlement is agreed at the FDR, the Judge can approve the settlement terms.

If a settlement is not agreed, the Judge will give directions to manage the case through to a Final Hearing. Such directions commonly include:

  • updating financial disclosure;
  • preparation of narrative witness statements in relation to any facts that remain in significant dispute, and
  • the date and duration of the Final Hearing.

As a rule of thumb, the Final Hearing will be at least four months after the FDR; possibly longer.

The Judge hearing the FDR is not allowed to have any further involvement with the case other than to conduct a further FDR, to approve settlement terms and / or to make case management directions. He or she is prohibited from dealing with the Final Hearing.

This is because the FDR is treated as a meeting held for the purposes of discussion and negotiation. The court expects both partners to place their cards face up on the table. That can only happen effectively if the partners can be assured their negotiating positions will not be deployed against them if the FDR is unsuccessful. So that the partners approach the FDR openly and without reservation, anything said at the FDR is usually inadmissible in any subsequent proceedings.

Prior to the Final Hearing

At least 14 days before the Final Hearing, the Applicant must file with the Court and serve on the Respondent a statement setting out in detail the orders they will be asking the Court to make. At least 7 days before the Final Hearing, the Respondent must do likewise. In this way the Court is aware from the outset of the areas of disagreement between the partners, and the distance between them on the suggested outcome.

The Final Hearing

This is a formal hearing which both partners are required to attend. They will almost certainly be required to give oral evidence. The Applicant will give evidence, on oath, first. He or she will then be asked questions (cross-examination) by or on behalf of the Respondent. The Judge may also ask questions. Then it is the Respondent’s turn to give evidence and be cross-examined.

Other witnesses might also give evidence if the Court has directed this is necessary (usually a decision taken at the FDR). Occasionally, an expert will give evidence, but more often experts’ evidence stands in the form of their written reports.

Evidence is given from the witness box. Prior to giving evidence, each partner must take an oath (or give an affirmation) to tell the truth. There can be very serious consequences of any attempt to give false evidence and to mislead the Court.

Once the evidence has been heard, first the Respondent then the Applicant (or their legal representatives) will conclude by summarising the evidence and the legal principles they say the Court ought to take into account when reaching its decision.

After hearing all the evidence and any arguments about the law, the Judge will make his or her decision as soon as practicable. In many cases, this will be immediately after hearing the evidence and legal arguments. In some situations, the Judge might take a little time to consider the case before announcing the decision (called reserving Judgment).

However the Judgment is given, the court must explain why it made its decision. The Judge needs to decide any relevant disputed facts. He or she needs to set out the legal principles that apply. He or she needs to say how the section 25 factors have informed the decision reached. The decision needs to be capable of being understood.

We are conscious that attending court, especially to give evidence, can be incredibly stressful. We have prepared some hints and tips for clients attending court for the first time that you might find useful.

Costs orders

At every stage of proceedings the Court must be kept informed of the costs which both partners have incurred.

The general rule is that the Court will not make an order requiring one partner to pay the costs of the other. There are exceptions to this general rule, for example, if one party has behaved in such a way during the proceedings so as to justify an adverse costs order (such as by ignoring court orders, causing their case to be run in an unreasonable and / or disproportionate way, or by destroying or dissipating assets, etc.), but they are increasingly rare.

How can we help?

  • Identify methods of DR that may be appropriate for your case;
  • Provide DR in the form of mediation or the collaborative process;
  • Advise generally in relation to the financial disclosure process, the consequences of not providing full and frank disclosure and what steps should be taken if the other party is not cooperative with the disclosure process;
  • Consider with you when the time is appropriate to issue an application for a financial order;
  • Help you prepare and exchange your Form E and FDA documentation;
  • Represent you in any application for urgent orders, to preserve assets or evidence;
  • Represent you in the substantive proceedings from commencement through to trial;
  • Advise generally in relation to your exposure to a costs order, and how best to protect you on costs.

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