When it comes to divorce, judges in the family courts have a wide discretion to redistribute income and assets. Their main goal is to produce a result that’s fair to both sides. There’s no set formula – each case is different and will be judged on its own individual facts – but certain factors must be taken into account. While we cannot predict exactly what would be awarded we can certainly advise you, within certain limits, on the kind of financial settlement you can expect.
We always attempt to agree a settlement, rather than see a case go to a full, contested court hearing where a judge will have to impose a settlement on the parties. An agreed settlement is often quicker and will usually resolve a dispute more amicably. Also, the legal costs involved in a negotiated settlement will probably be less than if the matter proceeded to a contested court hearing. If a satisfactory settlement is not possible though, we would advise issuing an application that ultimately could go before a Judge to be decided.
Below we’ve set out the types of orders a court has the power to make in relation to financial settlements and the factors a judge must consider when making such orders. This page is meant as a guide only, so please feel free to ask us any questions.
1. Orders The Court Can Make
The orders available are as follows.
- Maintenance pending suit: Maintenance for a spouse/civil partner to tide him/her over while the divorce is being finalised. It stops once the divorce/dissolution of a civil partnership is concluded.
- Periodical Payments: Maintenance for an ex-spouse/civil partner which will start after divorce/dissolution. It can be open-ended or limited in time.
- Secured Periodical Payments: Payments which are secured against property or assets to ensure payment. This is a rare type of order, but will be considered in exceptional circumstances.
- Lump Sum Order: Payment of a lump sum of money from one spouse/civil partner to the other. There is no limit on the amount that can be awarded and it can be paid by instalments.
- Property Orders: Various orders redistributing interests in property (usually the family home) can be made. These include a transfer of property from one spouse/civil partner to the other and a sale of the property which, if ordered, would include a direction on how the proceeds are to be divided. We deal more fully wit this aspect of financial settlements in Section 3 below.
- Pension Orders: The court can order pension sharing or earmark part of the spouse/civil partner’s Pension Scheme for the benefit of the other spouse/civil partner.
- Variation of Settlement Order: This gives the courts power to vary settlements or trusts that have been set up in favour of one spouse/civil partner. This is a rare type of order.
2. Financial Orders: Factors The Court Must Consider
When deciding what financial orders to make the court has a duty to consider all the circumstances of the case. Primary consideration must always be given to the welfare of any minor child of the family. The court will want to ensure that any minors have adequate accommodation. The specific factors the court must consider are as follows:
- The income, earning capacity, property and other financial resources of each party, including what each party is likely to have in the foreseeable future e.g. by way of inheritance.
- The financial needs, obligations and responsibilities of each party.
- The standard of living the family enjoyed before the marriage broke down.
- The age of each party and the length of the marriage/civil partnership.
- Any disability of either party.
- Contributions made by each party to the welfare of the family, including contributions to be made in the foreseeable future.
- The conduct of each party but only if that conduct is extreme.
- The value to each party of any benefit that they will lose as a result of the divorce e.g. pension rights.
In medium to long marriages the starting point is equality, but it is important to note it is only a starting point. Different factors can push decisions on finances either way e.g. inheritances, exceptional contributions, gross bad behaviour etc. As we’ve said each case must be assessed on its own facts.
The Court will also specifically consider making each party financially independent of the other; to achieve what’s known as a “clean break”. While a clean break sounds attractive in theory, in practice it is often not as good as it sounds – so carefully consult us before agreeing to this type of settlement. .
3. Division Of The Family Home
The matrimonial/civil partnership property is often a couple’s most valuable asset. However, it usually also provides a home for the family and therefore must be given special consideration. A useful starting point is often to consider whether it is reasonable and financially possible for one of the parties to remain in the home (particularly the party with whom any children are to reside following divorce). If this is possible then the property can be transferred to that party, perhaps with an adjustment in the other party’s favour in terms of the amount of any lump sum that may become payable under the financial settlement. If enabling one party to remain in the family home is not financially possible, then the property could be transferred on the basis that it will be sold at a later date (usually when the remaining spouse/civil partner remarries or forms a further civil partnership or the children complete full-time education) when the vacating spouse/civil partner can receive a share of the proceeds. (This is known as a “Martin Order”).
Consideration would also have to be given to whether the remaining spouse/civil partner can discharge any mortgage on the family home and whether the mortgage company will agree to the mortgage being transferred into that party’s sole name. If a transfer from one party to the other is not appropriate, the court may decide that the property must remain in the joint names with a sale taking place at a later date. (This is known as a “Mesher Order”). Consideration may also be given to a sale of the property and division of the proceeds – especially where the size or value of the house was excessive to each party’s needs.
4. When Orders Can Be Made And Their Duration
An application can be made for a financial order any time after the filing of the divorce/dissolution or (judicial) separation application. The court can make an order for maintenance pending suit any time after the issue of the divorce application but can only make financial orders after the conditional order of divorce or dissolution. Property orders are not effective until the issuing of the final order of divorce or (judicial) separation order.
Any order for periodical payments should state how long such payments are to last or alternatively leave the duration open-ended. Either party can re-apply to the Court at any time before the order ends to vary the maintenance payments (upwards or downwards). This would normally be appropriate if there had been a change in circumstances. Because these types of order depend on joint lives, you might need to consider life insurance in case the payer dies during the term of the order.
Capital orders (i.e. lump sums and property orders) are normally phrased as being final. This means that neither party can re-apply to the Court at any stage in the future to vary the capital division.
It is important to note that remarriage or forming a subsequent civil partnership bars you from making a claim against your former spouse/civil partner if you have not initiated such a claim before remarriage. Further, your remarriage or subsequent civil partnership ends any entitlement to maintenance that was previously ordered to be paid by your former spouse/civil partner.
5. The Procedure
If agreement can be reached, then the solicitors on behalf of the parties can draw up an agreement known as a Consent Application. This is signed by the solicitors and lodged with the Court, where it is made into a formal Court order, known as a Consent Order. If agreement cannot be reached, then one or other party will have to make an application to the Court. We list below the steps taken before such an application is heard finally by a Judge.
Your solicitor will prepare an application which will initiate the process. On submission to the Court, a hearing date will be fixed, known as the First Directions Appointment or ‘First Appointment’ (FDA) some 12 to 16 weeks ahead. A strict timetable is then applied within which the parties must each prepare a financial statement known as Form E which the parties are required to fill out and exchange. The purpose of the form is to enable both sides to provide the Court with full details of their finances. If the form is complete and there are no further material questions left unanswered, then the chance of using the First Appointment as a Financial Dispute Resolution Appointment is considerably improved. In advance of the FDA the parties must each prepare a concise statement of issues, a chronology and a questionnaire setting out any further questions they want to ask or any further documentation required of the other party.
A notice must also be lodged with the court stating whether the party is able to proceed with the next stage (Financial Dispute Resolution Appointment or FDR) at the FDA thereby short circuiting matters. As we’ve said this is usually only possible when the disclosure given is relatively complete at an early stage and the issues are not too complex. For each hearing in the process the parties must also prepare an estimate of their legal costs to that point.
b. The First Directions Appointment (FDA)
The Court will give directions as to what questions are to be answered, whether any valuations are to be obtained etc. We usually recommend instructing a barrister for this appointment and probably we will have a preliminary meeting beforehand. A further timetable will be fixed and a Judge may adjourn the FDA or direct that the Financial Dispute Resolution Appointment (FDR) must take place. This will usually be fixed a few months ahead. In the interim both parties must comply with all the directions made at the FDA. We can leapfrog this FDA by agreement but experience tells us that – except in the simplest cases – that is not desirable.
c. The Financial Dispute Resolution Appointment (FDR)
This hearing is designed to define the issues and encourage the parties to reach agreement. Before the appointment each party must have submitted their proposals to the court. Note that:
- No order can be made unless the matter is agreed.
- If agreement is reached then the Court can make an order thus finalising matters.
- If no agreement is reached then further directions can be given and the matter fixed for a Final Hearing.
- The Judge who conducts the appointment is disbarred from adjudicating at the final hearing.
- If the FDR does not settle the matter the court will list it for a final hearing usually some months ahead.
Where your solicitor attempts to negotiate a settlement on your behalf, the correspondence may be marked “Without Prejudice”. Any communication labelled this way will not be revealed to the court if the matter proceeds to a final hearing, enabling the party who made a without prejudice offer to suggest an entirely different order to the court. The reason to make a without prejudice offer is to enable the parties to negotiate freely without being held to any offers if the matter is not settled. If a without prejudice offer is accepted however it then becomes open and cannot remain private to the parties.
d. The Final Hearing
If it is necessary for there to be a final hearing, then both parties must attend court to give oral evidence and be cross-examined by the other party’s legal representative. This hearing usually takes place in front of a District Judge and no-one, other than the parties, their legal representatives and any necessary witnesses, such as valuers, may attend.
6. Legal Costs
It is common for each party to be responsible for their own costs if agreement is reached, although this is not always the case. For example, if one party has more income and/or capital than the other it may be appropriate that they agree to pay their spouse/civil partner’s legal costs.
If the matter proceeds to court, then the judge has the power at any stage of the proceedings, where he or she considers it appropriate, to make an order that one party pays the other party’s costs due to their conduct in relation to any failure to comply with the court rules, failure to disclose financial information, the reasonableness of their position etc.
7. Child Support
The Child Maintenance Service is in charge of the assessment and collection of child maintenance rather than the courts, save in a few exceptional circumstances. The Child Maintenance Service applies a formula in assessing the amount of child support payable. We can assist you in dealing with the Service and run a calculation for you, provided we have the necessary information.
Or call us: +44 (0)20 7430 8470