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What do court proceedings for a financial order actually involve?

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When married couples separate, there are lots of different matters to sort out; often the two most important are the arrangements for the children and financial matters.

There are various ways of resolving both, such as direct through the parties, through mediation/arbitration/solicitor negotiations or through the court process. This blog focuses on the court process available when couples are unable to agree how their assets should be split. The court process is formally known as ‘proceedings for a financial order.’

Making an application to the court for a financial order may seem scary to many people who have not previously had any dealings with the courts. The other solicitors in the team at Clarion and I, understand this and endeavour to provide the appropriate level of support to our clients to assist them with taking this step. Clients do tend to find some reassurance in the fact that the courtrooms used in these types of cases are not like those they see on TV. Instead, they are usually rooms with a ‘U’ shape table, the Judge sits at the head and each party and their lawyers sit on either side. Also, the hearings tend to be fairly informal and sometimes the Judge will ask the parties questions direct.

Step 1: making an application

In practical terms, making an application for a financial order is fairly simple and straightforward. It involves an application form being completed and sent to the relevant court.

Step 2: the court timetable

Upon receipt of the application, the court will ‘issue it’ and send a copy of the sealed application form to each of the parties involved, with an Order setting out what steps each party must take next. At this point, the court will also send to each party a Notice as to when the first hearing, known as the First Directions Appointment, will take place.

The court’s first Order states that each party must exchange with the other a ‘financial statement’ called a Form E. A blank Form E is a 28 page document and in addition to completing the document, the requested enclosures should also be provided, these include 12 months bank statements, up to date pension valuations (known as a ‘CETV’), recent debt and investment statements, 2 years of business accounts, the last three payslips and P60. This Form is therefore onerous and our clients tend to want to leave it to us to complete with their input; sometimes they just want to hand over the enclosures and leave us to complete the document then seek their further input and we are happy to have as much involvement as our clients require.

The court also demands in its first Order that each party prepares a Questionnaire before the first hearing, this is a document which sets out the deficiencies in the other’s Form E so for example, if 12 months bank statements have not been provided for, we will include a question in the Questionnaire asking for them to be provided.

The court timetable should be complied with and the documents should be filed at the court and served on the other party in line with the deadlines set by the court. Failure to do so could result in the court imposing sanctions such as an Order that s/he pays the other party’s costs or, the worst case scenario at the first hearing, is that the Judge deems non-compliance with the court Order to be contempt of court which is punishable by a fine or imprisonment.

Usually, we will prepare the documents required for the first hearing with input from our clients and try to reach an agreement with the other party about settlement, or about the necessary steps (also known as ‘directions’) which need to be taken in order to narrow the issues in dispute between the parties. These directions can relate to a variety of actions such as: properties/other assets being valued and further documents being disclosed.

Step 3: the First Directions Appointment

If the parties cannot agree a settlement or directions before the date of the First Directions Appointment, they will attend court with their solicitor or barrister. The purpose of this hearing is to try to get an Order from the Judge as to the onward timetabling of the case. Before being called before the Judge, it is common for the parties’ lawyers to enter into discussions to try to agree on at least some directions. The parties and their lawyers will then usually go before the Judge who will determine the next steps in the case. Usually, if the parties can agree the onward management of the case, the Judge will endorse their agreement.

Step 4: the FDR

If the matter does not settle, the next hearing which is usually the FDR (Financial Dispute Resolution Hearing) will be listed to take place. The main feature of an FDR hearing is that it is ‘Without Prejudice.’ This means that what is said in the hearing cannot be referred to in the future by the parties or the court. The logic of this is to encourage parties to speak freely and use their best endeavours to settle the matter.

Before the FDR, the parties should comply with any directions made at the First Directions Appointment and make an offer to the other party in an attempt to settle the matter. Parties also have to inform the court of the offers they have made.

Either way, if a settlement cannot be reached, the parties and their solicitors and/or barristers will attend court for the hearing. As with the First Directions Appointment, before seeing the Judge, the parties’ lawyers usually have discussions to see if an agreement can be reached and the matter concluded.

If an agreement is reached, the parties are often invited to attend before the Judge and their lawyers will inform the Judge of the agreement reached. The Judge cannot simply rubberstamp the agreement to convert it into a Final Order; instead the Judge has to consider whether the division of the assets the parties have agreed is fair. If the Judge considers the agreement to be fair, then s/he is usually happy to endorse the Order.

Alternatively, if an agreement is not reached, the parties are called before the Judge and their lawyers will inform the Judge of the status of negotiations and the parties’ respective positions. In response, the Judge will often give an indication as to what Order s/he would make if the matter was before him/her at a Final Hearing.

If after hearing the Judge’s opinion, the parties are still not in a position to settle, the Judge will make a further Order managing the future of the case (such as providing for the parties to provide up to date financial disclosure, or to prepare witness statements) and the matter will be listed for trial, known as a Final Hearing.

Step 5: the Final Hearing

If the parties do not reach an agreement shortly after the FDR, they will need to start preparing for the Final Hearing and complying with the directions the Judge made or they agreed. There is a great deal of work to do which is the reason the parties’ legal costs usually double between the FDR and the Final Hearing.

On many occasions, cases settle during the morning of a Final Hearing. If not, the parties will effectively ask the Judge to make a decision about how their assets will be distributed. The hearing will usually last in the region of 2 days but will sometimes last longer if the complexity of the case, or the number of issues at hand, demand it. During the hearing, the parties are required to give oral evidence and are cross-examined by the other party’s barrister.

Following this, and hearing evidence from any other relevant parties (such as experts or third parties), the Judge will make an Order setting out how the assets are to be distributed.

As a final point, this process usually takes in the region of 9 months to 1.5 years depending on various factors including the complexity of the case and the attitudes of the parties. Clearly if the parties settle at an early stage the case will conclude quicker than if no settlement can be reached and the case proceeds to a Final Hearing.

Summary

It is important to highlight that whilst there are disadvantages of court proceedings for a financial order, such as the uncertainty of leaving the matter to a Judge to decide, and the emotional and financial cost, there are also benefits.

One of the main benefits is that the court will set a timetable setting out when certain actions need to be taken and listing the case for a hearing. This timetable can be invaluable in some cases where, one party is refusing to cooperate with the other or will not exchange financial information. The duty to give the other party full and frank disclosure is a legal obligation which some parties deliberately try to avoid. Full and frank disclosure is essential because a party cannot know what a fair deal is, without understanding the value of the assets in question.

So the message is, whilst it is often cheaper and quicker for a couple to try to reach an agreement direct between themselves, this is not always possible or in their best interests. Accordingly, in the first instance, the parties would be well advised to seek legal advice from a solicitor and to bear in mind that court proceedings are sometimes necessary and/or helpful, and result in a party receiving a more favourable settlement than they may have achieved otherwise.

Nevertheless, at Clarion we do seek to resolve financial matters without financial order proceedings being issued if at all possible and if doing so would not compromise our client’s position.


If you would like any further information about proceedings for a financial order, or are interested in making such an application and would like assistance, please feel free to contact me at justine.osmotherley@clarionsolicitors.com or 0113 336 3323.
 

Disclaimer: Anything posted on this blog is for general information only and is not intended to provide legal advice on any general or specific matter. Please refer to our terms and conditions for further information. Please contact the author of the blog if you would like to discuss the issues raised.