Financial Claims Procedures
MAKING FINANCIAL CLAIMS
The process for determining financial arrangements following a divorce or dissolution operates separately from the divorce/civil partnership proceedings. These are referred to as Financial Remedy Application proceedings. It’s vital to understand your options before proceeding with financial arrangements between you and your ex-spouse.
Both current and former spouses have the right to apply to the Court for the following financial Orders:
- Maintenance (regular income payments)
- Transfer of property ownership (e.g., from joint to sole ownership)
- Lump sum payments (capital amounts)
- Pension sharing or attachment orders
There are two ways that the right to make a financial remedy claim can be terminated. The most common is through a Court Order, where either both spouses agree, or the Court issues a Financial Order, followed by a Clean Break—meaning no further financial claims can be made at present or in the future, including after death.
The second method occurs if a spouse remarries after divorce without having applied for Orders (such as lump sums or property transfer) before remarrying. In this situation, known as ‘the re-marriage trap,’ the individual loses the right to make financial claims against their former spouse.
If the re-marriage trap doesn’t apply and no Court Orders are obtained for financial provision, any financial claims remain open. This creates uncertainty, as either spouse can make claims in the future. However, one might delay a final settlement if they believe their ex-spouse’s financial situation will significantly improve.
When neither spouse wishes to make claims against the other, it is usually more practical to apply by consent to have all claims dismissed.
MEDIATION Once instructed, we will exchange financial information promptly, as full financial disclosure is necessary before solicitors can provide advice on appropriate financial settlements. If early agreement appears unlikely, we will recommend Mediation. You cannot apply for a Financial Order until a Mediation Information Assessment Meeting (MIAM) has taken place, and we strongly suggest Mediation if suitable for your circumstances.
Mediation involves a neutral third party helping those involved in family breakdowns to communicate and come to their own agreed decisions regarding financial and other matters. Mediation can be advantageous as it is less expensive and avoids Court involvement. It can also preserve a better relationship with your ex-partner, which is particularly crucial if children are involved.
Numerous organisations provide Mediation and conciliation services. If you would like further information, please contact us.
SUMMARY OF FINANCIAL REMEDY PROCEEDINGS We aim to summarise the key stages of the Financial Remedy process, which applies to most cases. However, each case is unique, and certain stages may be avoided if a settlement is reached early.
Typically, there are three hearings in Financial Remedy proceedings:
- The First Appointment (FDA)
- The Financial Dispute Resolution Appointment (FDR)
- The Final Hearing
In cases where a Final Hearing is necessary, it may take 10 to 12 months from the filing of Form A. This is because the process follows certain Court-mandated timelines, and cases must wait their turn in the Court schedule.
APPLICATION FOR FINANCIAL REMEDIES To apply for Financial Remedies, you must file a Form A. Once submitted, the Court will schedule the First Appointment, typically about 16 weeks after filing.
PREPARATION FOR THE FIRST APPOINTMENT Both parties must exchange and submit the following to the Court at least 35 days before the First Appointment:
- Form E, a comprehensive financial statement detailing each party’s income, assets, liabilities, and other relevant information.
- At least 14 days before the First Appointment, both parties must provide:
- A Statement of Issues outlining disputes
- A Questionnaire for additional relevant documents
- A Chronology of key dates before, during, and after the marriage
- Form G, declaring whether they are ready for an FDR
- Form H, a summary of legal costs incurred to date.
THE FIRST APPOINTMENT Both parties and their solicitors must attend the First Appointment, which is an informal private hearing before a District Judge. During this hearing, the District Judge will:
- Set a timetable for the progression of the case, documented in a Court Order.
- Identify any additional information needed to move the case forward.
- If asset values are disputed, order valuations and set deadlines for their completion.
- If necessary, transfer the case to the High Court due to the complexity or asset value.
- Set a date for the FDR Appointment, typically in 3–4 months, depending on the Court’s availability and case complexity.
PREPARATION FOR THE FDR APPOINTMENT Both parties must follow any directions provided by the Court during the First Appointment. Additionally, the Court will expect negotiation attempts between both parties, with various offers being exchanged.
THE FDR APPOINTMENT Both parties and their legal representatives must attend the FDR Appointment. This semi-informal hearing is focused on reaching an overall financial settlement, with the District Judge encouraging both sides to explore possible agreements. The Judge may also provide an indication of the likely outcome if the case proceeds to a final hearing.
Often, an agreement is reached at the FDR, and the Judge will issue a Consent Order outlining the settlement terms, concluding the case. If no agreement is reached, the Judge will issue further instructions and set a date for the Final Hearing.
THE FINAL HEARING Most cases are resolved before the Final Hearing. However, if it proceeds, the hearing typically takes place 4–9 months after the FDR and lasts from 1 to 5 days, depending on the case’s complexity.
During the Final Hearing, both parties must provide oral evidence, and expert or witness testimony may also be required. The District Judge will then issue a final order and may address any disputes regarding costs. The Court’s priority is the welfare of any children under 18, and several factors are considered when determining financial provisions, including:
- Each spouse’s income, earning capacity, assets, and financial resources.
- Financial obligations and responsibilities.
- Standard of living prior to the marriage breakdown.
- The ages and health of both spouses.
- Contributions made by each spouse to the family’s welfare.
- Conduct, if relevant.
- The value of lost benefits due to divorce, such as pension rights.
The Court’s aim is to achieve fairness, usually through an equal division of assets, but often based on the reasonable needs of both parties, particularly regarding housing.
MISCELLANEOUS ISSUES PENSIONS The Court can handle pensions in a few ways:
- Off-setting, where the person without a pension receives other assets in lieu of a Pension Sharing Order.
- Pension Sharing, which divides an existing pension fund.
- Pension Attachment, where a portion of a pension or death benefit is allocated to the other spouse.
Since pension laws are complex, seeking expert advice is often necessary.
DISPOSAL OF ASSETS If your spouse has disposed of assets to avoid financial settlement, the Court has broad powers to intervene under section 37 of the Matrimonial Causes Act 1973. The Court can restrain transactions or reverse those made with the intent of evading financial claims.
These powers can be exercised during or after financial remedy proceedings. However, the Court cannot to be reversed if it has been carried out in good faith and for a proper purpose, or if the person who received the asset or property gave valuable consideration for it. These powers exist to prevent one party from deliberately reducing the available assets in order to prevent a fair financial settlement. If you believe your spouse has disposed of assets in such a way, it is essential to act quickly and seek advice as the Court’s powers to reverse transactions may be time-limited.
FREEZING ORDERS
In cases where there is a real concern that your spouse might attempt to dispose of or hide assets, you can apply to the Court for a Freezing Order. A Freezing Order can be used to prevent your spouse from disposing of or dealing with particular assets or from withdrawing large sums of money from bank accounts. These orders are usually granted on an emergency basis and may initially be made without notice to your spouse, known as an ex-parte application. However, for the order to remain in place, a full hearing must later be held where both parties can present their arguments.
If the Court grants a Freezing Order, it is vital to comply with all of its terms. The consequences of breaching a Freezing Order can be severe, including fines or imprisonment for contempt of court.
COSTS
The costs of Financial Remedy proceedings can be significant, especially if the case goes to a Final Hearing. Each party is expected to meet their own costs, although in certain circumstances, the Court may make an order for one party to contribute to the other’s costs. This usually happens where one party’s conduct has been unreasonable, or where the court finds that one party has unreasonably refused to negotiate or settle the case.
However, it is important to note that, even where the Court makes a costs order, it may not cover all of your expenses, so you should be prepared for the possibility of paying some or all of your own legal costs.
CONCLUSION
Navigating Financial Applications and remedy proceedings following a divorce or dissolution of a civil partnership can be complex and emotionally challenging. Understanding your rights and the potential outcomes at each stage is crucial to making informed decisions. Whether you aim for mediation, consent orders, or final court decisions, the goal remains to achieve fairness and ensure that financial needs and obligations are addressed appropriately. If at any stage you are uncertain about your rights or the processes, legal advice should be sought to protect your interests.