In most cases where parties separate, whether they wish to divorce or not, arrangements have to be made with regard to finances. This can involve what should happen to the family home, whether maintenance should be paid by one party to the other, what the parties should receive with regard to the family assets and what level of child maintenance is appropriate. Financial orders and financial remedies are an extremely complex area of the law where there is both statute and Court based interpretation of the law on a constantly evolving basis. The potential outcome for you is likely to be very heavily dependent on the facts of your case. Every case is unique. It is our main area of expertise.
Financial orders and financial remedies are the description given to the financial proceedings that arise on the breakdown of a marriage or civil partnership. This area of law is highly complex and constantly evolving, with new decisions from the Appeal Courts on a frequent basis.
There is an overriding duty to provide full and frank disclosure to the other party of your financial circumstances.
Any long term financial agreements you enter into will have a fundamental long term impact on your lifestyle, your standard of housing and your long term security, possibly even into retirement. It is important therefore to obtain specialist advice from solicitors who specialise in this area of work.
In the first instance, we may try to reach a compromise with the other party in the form of a negotiated settlement. Often, however, proceedings have to be issued to provide a structured Court timetable and in turn provide a framework for a negotiated settlement. In rare cases, a contested trial is required.
When divorce proceedings are issued, either party to the proceedings can claim against the other or for the children, the following:
This is an application for interim "maintenance", that is, financial support. It is designed to cover the short-term position until long-term financial arrangements are made. It may also provide funding for legal fees.
The Court's ability to make maintenance orders for children is now severely restricted. Whilst a Court can, with the agreement of both parents, still make a maintenance order for a child, once the order has been running for a year either parent can apply to the Child Support Agency to calculate what should be the appropriate child support payment under the Agency's formula and this will then replace the Court ordered figure.
The basic formula is that the “non-resident” parent will pay from their net (as defined) weekly income:
This calculation can be affected by various other factors, such as the number of nights the child or children stay with the “non-resident” parent.
Generally, whilst on the face of it, calculations under the new formula are less complex compared to the old one, there are still very many complications and in some instances a discretion is built into this new system which may affect your case.
In cases where there is an international element with the child or one of the parents abroad, it is likely that the Court will have jurisdiction over child support.
The CSA/CMEC website is helpful and it includes a CSA calculation module.
As to maintenance orders for a spouse these may be open-ended, end at a set date or on the occurrence of a particular event, for example, the children ending their full-time education. All such orders may be increased or decreased to reflect changing circumstances, such as, for example, unemployment. A spouse receiving maintenance payments can later ask the Court for a further lump sum in exchange for giving up their rights to maintenance.
A sum of money ordered to be paid to one party by the other, usually within a specified time.
An order for one person to transfer to another a property, frequently the former family home, but the definition of "property" is very wide.
The Court may make pension sharing orders against a pension fund, that is, an order against the pension fund trustees to transfer a proportion of a scheme holder's pension into a separate fund for their spouse. Some schemes allow "internal transfers", that is, to allow the spouse who is receiving the pension sharing order to stay within the same scheme, or there can be a "transfer out" where the recipient spouse has the funds transferred out into a new scheme.
Alternatively, the Court can order what used to be called "earmarking" but are now called "attachment" orders against a scheme so that upon a pension scheme holder's eventual retirement, a proportion of the lump sum or pension income can be paid to the other spouse. The essential difference between these orders and pension sharing orders is that the latter can come into effect now whereas earmarking/attachment orders do not come into effect until retirement, which might be in many years' time. Further, earmarking/attachment orders may be variable, whereas once a Pension Sharing Order is made, it is final. Because of these unhelpful complcations Attachment Orders are now only rarely made.
This is a very complicated area of the law and we encourage all of our clients to take advice from pensions advisers and/or independent financial advisers as to the best course to follow in their particular case.
If you and your spouse cannot agree the long-term division of the matrimonial assets, then you have to ask the Court to make a decision for you. Proceedings relating to financial orders and financial remedies are expensive even though most are settled without the need for a final contested hearing. In order to advise you as to the settlement terms which should be put forward, we have to try to gauge what a Judge hearing the issues on a contested basis might decide. However, before meaningful negotiations can take place there must be "disclosure of means" by both you and your spouse. This disclosure of means process may involve the exchange of "Form E" setting out your present financial circumstances together with the financial history of the marriage and the other factors which are likely to affect a Judge's discretion as to how to apportion the family assets and liabilities. You will receive at our fixed fee meeting further information describing the Financial Order Court procedures together with a copy of a Form E and guidance notes as to its completion. Subsequently, after the exchange of Form E, there may be an exchange of Questionnaires. It is difficult to understate the importance attached by the Court to parties making full and frank disclosure to allow meaningful negotiations to take place.
Historically, a feature of many financial orders cases has been for one of the spouses to take photocopies, original documents or data from a computer or telephone belonging to their spouse because of a concern that their spouse will not make proper disclosure. The Courts have previously taken a relatively relaxed view of such "self help" unless the material was "privileged", for example, correspondence between that spouse and his or her solicitors. However, the position has now changed and there is now a risk that such "self help" could be a breach of both criminal and civil law. Accordingly, where you have such documentation or data in your possession we must ask you to inform us as to its nature before passing it to us. In certain circumstances our receipt of such material could make it difficult for us to act for you subsequently.
Whilst there is encouragement to make voluntary disclosure and for negotiations to take place, unless it becomes clear very soon that disclosure is to be made voluntarily, or that there are unlikely to be any major disclosure issues and that negotiations are likely to progress rapidly, then the professional guidance that we are given is that it would be appropriate to issue an application for a Financial Order, that is, to issue the financial proceedings with the Court so as to obtain the benefits of the Court time table and Court based mediation procedures, which invariably obtain a settlement to the proceedings.
The issue of proceedings produces a timetable of set dates, for example, a time limit for the preparation for a Form E and other documents. If these time limits are not complied with, then there is a real risk of the Court making costs orders against the defaulter.
During the Court process there will be a need for you to establish a negotiating position to try and resolve the matter as there is a duty on both parties to explore settlement wherever possible.
Confused about financial orders and financial remedies? Call our specialists on 020 8423 3525