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When divorce proceedings are issued, it is necessary to try and reach a financial settlement. It is important to keep all of your financial documents, such as payslips, bank statements and credit card statements, mortgage statements and pension statements. The reason for this is so that your Solicitor can give you full advice about an appropriate settlement, there will need to be an exchange of financial disclosure. This exchange of financial disclosure will be necessary during the course of negotiations, Court proceedings or mediation.

There are three main ways to reach a financial settlement:-

1. Negotiation

It can be possible to reach an agreement by negotiation with the assistance of your Solicitor following a voluntary exchange of financial disclosure. If an agreement is reached, then it can be incorporated into a Consent Order, which is a document setting out the agreement between you. The Consent Order is then signed by you both and sent to the Court with a Statement of Information form, which gives basic disclosure of your financial positions. There is also a Court fee to pay of £100.00, although some people are exempt from the fee. If the document is approved by the Judge, then a Court Order will be made.

2. Mediation

A mediator acts as an independent third party and does not offer legal advice. During the mediation process, the mediator will assist you in arranging a mutual exchange of financial disclosure and will then assist you in resolving the issues between you. If proposals for settlement can be agreed in Mediation, the Mediator will prepare a Memorandum of Understanding setting out those proposals. Most clients then return to their Solicitors in order to discuss the Memorandum of Understanding and have it incorporated into a Consent Order for the Court to approve so that it becomes legally binding.

3. Court Proceedings

Sometimes it becomes necessary for Court proceedings to be issued to reach a financial settlement. When an Application is made to the Court, the Court has to consider all of the circumstances of the case and the aim of the Court is to achieve fairness. The Court will give first consideration to the welfare of the children of the family and will then look at the factors which are set out in Section 25 of the Matrimonial Causes Act 1973. These are:-

  1. The income, earning capacity, property and other financial resources which each spouse has or is likely to have in the foreseeable future including, in the case of earning capacity, any increase in that capacity which it would be, in the opinion of the Court, reasonable to expect a person to take steps to acquire.
  2. The financial needs, obligations and responsibilities which each spouse has or is likely to have in the foreseeable future.
  3. The standard of living enjoyed by the family before the breakdown of the marriage.
  4. The ages of each spouse and the duration of the marriage.
  5. Any physical or mental disability of each spouse.
  6. The contributions which each spouse has made or is likely to make in the foreseeable future to the welfare of the family, including any contribution by looking after the home or caring for the family.
  7. The conduct of each spouse, if that conduct is such that it would, in the opinion of the Court, be inequitable to disregard.
  8. The value to each spouse of any benefit which one spouse, because of the divorce, will lose the chance of acquiring (most usually pension provision).

The procedure for making an application in the Court is as follows:-

1. Your Solicitor will file your Application at Court, which is called a Form A. This will be accompanied by a Court fee, which is currently £255.00. The person making the application will be known as the Applicant and the other party will be known as the Respondent.

2. Upon receiving the Form A the Court will send out a list of important dates by which certain documents have to be filed at Court and sent to the Respondent’s Solicitors. The Court will also list a date for the First Appointment.

3. At least thirty five days before the First Appointment, the Applicant and Respondent (“the parties) via their Solicitors have to exchange their financial disclosure, which is set out in a form called a Form E.

4. At least fourteen days before the First Appointment, the parties have to exchange and file at Court:-

  1. A Statement of the issues in the case.
  2. A Questionnaire setting out any further information and documents required.
  3. A Notice in Form G stating whether each of you will be able to treat the First Appointment as a Financial Dispute Resolution Hearing (FDR).
  4. Both parties and their legal representatives must attend Court for the First Appointment. At this hearing, there will be an opportunity to try to reach an agreement regarding the finances. If an agreement can be reached, a Consent Order will be prepared and given to the Judge for approval. If an agreement cannot be reached, the Court will set a timetable for the case and Directions which are appropriate, for example, a date by which the Questionnaire needs to be answered or that there be a valuation of the former matrimonial home or other assets. The Court will then list a date for the FDR. If financial disclosure is complete at the First Appointment and no further documents need to be obtained, then the First Appointment can be treated as an FDR, thereby reducing the number of Hearings in the case.
  5. Both parties and their legal representatives must attend the FDR. The legal representatives must give the Court details of any offers made and the District Judge will give an indication of how he or she would settle the case if they were the Judge conducting the Final Hearing. If an agreement is not reached at the Financial Dispute Resolution Hearing then the Judge will give any other Directions as necessary and is likely to list the case for a Final Hearing, which can be several months ahead.

If Court proceedings are issued, there is usually no reason why the parties, with the assistance of their Solicitors cannot continue to try and resolve the matter by negotiation.