There are couples who are able to sit down and work out together how they are going to divide their property and reach agreement over their finances. Some couples are able to do so with the assistance of services such as Mediation or by using Collaborative Family law. For those divorcing couples, however, who are unable to reach agreement, then an application to the Court may be necessary.
Either spouse or civil partner can make an application to court to resolve financial disputes arising from divorce or civil partnership dissolution. The person making the application is the applicant and the other person is the respondent.
When either of you makes the application to court, the court automatically generates certain standard directions for helping to progress your case. These are:
- the date and time for the first court appointment (sometimes referred to as a first directions appointment or first appointment
- that five weeks before that appointment you must each file at court and exchange a completed financial disclosure form (Form E) giving full details of your financial circumstances, and
- that two weeks before that appointment, you must each file with the court and exchange certain documents.
Usually, at the first appointment the court will consider what more information is necessary to decide what should happen: the judge will order questionnaires to be answered by a certain date, consider what other expert evidence (eg on the value of property, or regarding pension details etc) should be obtained and by when, and then it will fix the date of the next court appointment.
The idea is that before the next court appointment each of you and the court will have enough information available about the financial picture to enable you to negotiate constructively about your financial matters.
Immediately before every court appointment, each person must file at court and exchange a statement of their legal costs.
The FDR (financial dispute resolution) hearing is usually the second court appointment. The FDR is a ‘without prejudice’ hearing, which means each of you is able to make proposals for settlement that cannot be referred to openly in court afterwards. The judge will try to assist you to come to a settlement and may give an indication of what they think could be an appropriate solution. If you reach an agreement the court can potentially make an order that day to formalise your agreement and end the court proceedings.
If you cannot reach an agreement on the day the judge will give any further directions about what is needed to get the case ready for the court to make a decision, which may include asking each of you to prepare a detailed statement, and will fix a date for the final hearing (or ‘trial’).
If it is not possible for the two of you to agree, the court will make orders at the final hearing about how your property, assets and income should be shared. You should bear in mind that very few people’s cases get to final hearing stage—most people agree (‘settle’) before then.
At a final hearing, the applicant presents their case first, then the respondent says what they want to happen. Each of you, and any experts you have asked for an opinion, will have to give evidence and be cross-examined by the other (or their legal representative if they have one). After hearing all the evidence and submissions from each of your legal teams, the judge will make an order about what should happen.
There is limited scope to have your costs paid by the other person in financial proceedings. The general rule is that each person pays their own legal fees.
The court follows the legal principles from legislation and case law in making its decision, although each judge has a discretion to do what they perceive to be appropriate on the evidence in each particular case. This means the precise outcome of financial court proceedings can be quite difficult to predict.
The statutory principles are set out in section 25 of the Matrimonial Causes Act 1973 and Schedule 5 to the Civil Partnership Act 2004. The court’s first consideration is the welfare of any children involved. Alongside that, when determining an appropriate division of resources, the court considers
- each person’s income, earning capacity, property and other financial resources, available now or in the foreseeable future, including earning capacity
- each person’s financial needs, obligations and responsibilities relevant now or in the foreseeable future
- the standard of living enjoyed by the family before the breakdown of the marriage
- each person’s age and the length of the marriage
- any physical or mental disability
- contributions made or likely in the foreseeable future to make to the welfare of the family, including any non-economic contribution
- the conduct of each of the parties, if that conduct is such that it would in the opinion of the court be inequitable to disregard it (although it is rare for conduct to be taken into account and the reason for the marriage or civil partnership breakdown is very unlikely to be a conduct issue for the purposes of a financial application), and
- the value of each of the parties to the marriage of any benefit which that party will lose the chance of acquiring
Other principles have become part of the law through the decisions of senior judges in important cases. These dictate that the court must be fair, considering each party’s needs, any compensation payable to one party for eg loss of career opportunity through marriage, and the sharing of any wealth above that which fulfils each party’s reasonable needs.
When dividing assets, the court will measure the end result against a benchmark 50/50 asset split to assess whether anything other than that is justified. It would be usual to expect that there would not be a 50/50 asset split where one person’s (or the children’s) needs require a higher proportion of the capital assets, eg for housing, or sometimes where one person came into the marriage with significantly greater assets than the other.
The court can decide to do any of the following:
- it can order a sale of a property, a transfer to one person (or to a child) or put it into a trust
- it can order a lump sum (whole or in instalments) or a series of lump sums, eg to pay off a mortgage
- it can order one party to pay maintenance to the other either for the rest of their joint lives/until the recipient remarries or enters into a subsequent civil partnership, or for a fixed period (a non-extendable or extendable term), eg until retirement; it can order money for educational expenses etc, but not usually for general child maintenance, except at higher income levels.
- it can order that a pension be shared, or attached—sharing is where funds are transferred or split between the parties; attachment is like maintenance direct from a pension, but can also be a lump sum.