What if we can't agree a financial settlement?
During or after the divorce proceedings
, you might be completely unable to agree about financial and property matters, and would like to apply to the court for such things as maintenance, your fair share of the matrimonial assets such as the house and the other party’s private pension.
These days, the courts expect and encourage the parties to negotiate a settlement
themselves and then to submit the agreed settlement terms for the Judge to issue as what is known as a Consent Order. This is still a binding court order, but is much better for the parties as:
- The parties get to decide exactly what goes into the order
- There are no court hearings
- The parties will each save several thousand pounds
If one of the parties does decide to apply to the court for a full financial case our fixed-fee for a divorce does not cover this additional case (ancillary case) concerning property, assets or financial matters. Ancillary cases can be very expensive, as there are additional court fees, valuers fees, barristers fees and much more. If an ancillary case goes all the way to a third and final hearing, you would need to budget around £10,000 for the average case.
This is a very large figure, but a lot of the cost comprises such things as:
- Additional court fees
- Fees paid to valuers and estate agents for reports and valuations
- Fees paid to independent Financial Advisers for valuations of assets
- Fees paid to pension fund trustees for a pension valuation
- Barrister’s fees for the final hearing (the average barrister’s fee for this is around £2,000, to include reading a large bundle of paperwork and financial documents, and a pre-hearing consultation with you)
Letting the court deal with the matrimonial assets (ancillary case)
The first thing we have to say is that this part of the case is never easy for a client, as you will have to attend either two or three court hearings and it is very expensive as outlined above. We always spend a lot of time corresponding with the other party’s solicitor in an attempt to try and get them to agree some sort of ‘out of court’ settlement. In those cases, the client still gets a court order, but does not actually have to appear in court. If an agreement has been reached with the other party, we can simply send full details of the agreement to the Judge and ask him to issue an order (called a consent order) and you do not then have to appear in court.
The biggest problems for a client arise, however, if agreement simply cannot be reached. In those cases, the client has to decide if they want to continue as there will be at least two, and sometime three court hearings, the third hearing (the final hearing) being quite upsetting on many occasions, and the result is not always what the client considers to be fair i.e. the Judge will think it fair but the client won’t)
The first thing that must be done is for a formal application to be filed with the court (known as Form A). This tells the court that you want the District Judge to decide how to divide the matrimonial assets. A fee of £255.00 must be paid to the court when Form A is filed.
On receipt of Form A, the court will send out a time-table to both parties requiring them to prepare and file certain documents in court bay a certain date. The most important of these documents is Form E. This is a 26 page financial and assets statement, which must be sworn. It is quit an intrusive document, and requires full details of all personal assets anywhere in the world. Also, both parties must obtain and file all sorts of other documents such as a years worth of bank statements, building society statements, tax documents, savings and investment documents, credit card and loan documents and more besides. We, of course, will complete the Form E for the client but the client must let us have all the necessary documents. It is essential, also, that we do not exceed the various dates that the court will have laid down.
The First Court Hearing
This first hearing is a fairly short hearing where the Judge will want brief details from both parties lawyers as to what the case is about, and will then issue an order, known as a order for directions, which tells the parties what further steps they must both take, and by what dates, in order for the court to be able to deal with the case.
The Judge will, for instance, direct that house properties must be valued and that the valuers report must be filed at court, or that further bank statements must be obtained and filed. Things like valuers and surveyors fees must be paid for by the parties.
About eight to ten weeks later is the Financial Dispute Resolution (FDR) hearing.
The FDR Hearing
This hearing is fairly informal but can still be quite upsetting for the client. You must attend this hearing, and can be in court for around a couple of hours. No actual evidence is given, and you will not be cross-examined by anyone.
What happens is that the Judge will hear legal submissions from both parties lawyers. He will then effectively drop a very big hint as to what sort of order he would be inclined to make if the case went to a full, final hearing. Judges will say things like, “I hope the parties can agree something today, as I would think at a final hearing everything would be split on a 50/50 basis” or, “I would probably order the house to be sold”. He will then send everyone out of the courtroom to try and negotiate a settlement.
The parties and their lawyers then spend at least an hour or so discussing possible ways of settling the case, and offers and counter-offers are usually made. If agreement is reached, the lawyers will inform the Judge and provide him with full details of the terms of settlement, and the Judge will then draw up and issue an agreed final order in the case. Although this is known as a consent order, it is still a court order and can be enforced if either party defaults.
We appreciate that even this informal hearing can be very upsetting for a client. It is probably the first time you will ever have been to court in your life, and the whole thing can be daunting, and you will also be coming into contact with an ex-spouse whom you may not have seen for a long time. We do everything we can to make the whole process as easy as possible, but you can still be upset by it and need to mentally prepare for that.
If no agreement can be reached at the FDR hearing, the Judge will order that the case must be listed for a full final hearing.
The Final Hearing
This hearings usually take a whole day (sometimes two) and is formal. Both parties have to give evidence on oath, and are cross-examined by the other party’s barrister. You will be asked at length about your personal and domestic circumstances, your financial affairs, your earning capacity, why you are not working (if you are not), what qualifications/work experience you have, your household bills and many other questions. You can also be asked questions about any new partner, and their finances.
At the end of the hearing, the Judge will make a final order, and this is usually NOT the order that either party would ideally have liked. Effectively, therefore, the Judge is imposing a compromise settlement on both of you, and will rarely give either party what they actually want. It is for this reason that we do everything we can, and urge clients, to try and agree some sort of compromise settlement before, or at, the FDR hearing. As the court is going to impose some sort of compromise anyway, it makes good financial sense to save the considerable legal fees incurred by a final hearing by reaching agreement without the need for such a hearing.
The Judge will make an order that he thinks is fair, not what the client thinks is fair, and clients usually feel then that they have not had any ‘justice’ from the civil justice system. It is certainly not a perfect system, and these days seems to do little more than ‘knock peoples heads together to make them settle’.
In addition, many clients find the final hearing very traumatic and feel very upset afterwards. Some clients have described feeling angry and upset at the way they were treated by the other party’s barrister or the Judge.
A final hearing is a last resort, and is best avoided. We would always urge a client to reach some sort of compromise agreement as early on as possible, both to avoid this sort of upset and to save a lot of money in legal costs.