Financial Claims – within Divorce / Civil Partnership dissolution
This page provides some basic information about the law and processes involved to obtain financial and property orders within divorce, judicial separation, nullity or civil partnership dissolution proceedings. A similar process is followed in each case, but for simplicity we shall refer to ‘divorce’ only.
The orders available
Under the Matrimonial Causes Act 1973 (MCA), the court has wide powers, within divorce, to make a range of orders in relation to financial and property matters. These include:
- Maintenance pending suit – a regular payment made by one spouse to the other after the original petition has been issued but before decree nisi (or conditional order)
- Periodical payments (ongoing maintenance) for the spouse or child(ren) of the family
- Lump sum
- Property adjustment (usually transferring or selling matrimonial property)
- Pension sharing or earmarking orders
The court can also make urgent injunction to prevent the disposal of assets (freezing orders) or set aside ‘reviewable dispositions’. A divorce must have already been issued and appropriate evidence should be provided to show the nature and extent of the assets in question and the facts as to why they are at risk or circumstances in which they have already been disposed of.
A bit about the law
Before making any of the orders listed above, the Court must, under Section 25 MCA consider all the circumstances of the case, giving priority to the welfare of any children of the family under the age of 18. There are also specific factors set out in the Act which are:
(a) The income, earning capacity, property and other financial resources which each spouse has or is likely to have in the near future including any increase in earning capacity which it would be reasonable to expect a person to acquire.
(b) The financial needs, obligations and responsibilities which each spouse has or is likely to have.
(c) The standard of living enjoyed by the family before the breakdown of the marriage.
(d) The ages of each spouse and the duration of the marriage.
(e) Any physical or mental disability of each spouse.
(f) The contributions which each spouse has made or is likely to make to the welfare of the family, including any contribution by looking after the home or caring for the family.
(g) The conduct of each spouse, if that conduct is such that it would in the opinion of the Court be inequitable to disregard (this is very rarely used however).
(h) The value to each spouse of any benefit which one spouse, because of the divorce, will lose the chance of acquiring (most usually pension entitlement).
The Court’s Approach
The aim is to achieve fairness. Often a key factor is the reasonable needs of each party, particularly as to housing and income. As a starting point, the court generally will consider an equal division of matrimonial assets but can divert from this particularly if for instance half the assets will not meet one party’s reasonable needs, or it would be unfair to because the marriage is too short. If there are children, the party with whom they are to reside may be entitled to more capital enabling them either to stay in the former matrimonial home or to purchase suitable alternative accommodation.
Maintenance: Should one party’s income be significantly higher than the others, the court may consider it appropriate to make a spousal maintenance order. This will specify the amount, frequency and end date, which could be fixed (perhaps when the spouse receiving maintenance would be reasonably expected to resume work) or when they remarry or die; or when any children attain full age or are no longer in full-time education. Sometimes a claim for spousal maintenance can be ‘offset’ by the receiving party taking a larger chunk of the matrimonial assets.
Clean Break: The court is under a duty to try and achieve a “clean break” wherever possible. The idea is to provide finality once an order is made and prevent either party to the marriage from making any more financial claims against the other in the future. The terms of the clean break will be set out in the final court order. It would not be appropriate if a spousal maintenance order has been made in which case a full clean break will only happen once that stops. It is usually possible therefore for either party to re-apply to vary the terms of the maintenance order at any time while it is still in force, if they have grounds to do so.
Child Maintenance: In most cases, the Court no longer has power to make orders for child maintenance except by agreement, which can be based on current statutory calculations: https://www.gov.uk/child-maintenance. If such maintenance cannot be agreed, an application should be made to the Child Maintenance Service. In some special cases ‘top up’ maintenance orders can be made e.g. if the non-resident parent is a very high earner and/or the child is attending a fee paying school.
Pension Provision: In a mid to long term marriage, and where there is a considerably disparity in each parties’ pensions (perhaps one spouse may have a very valuable scheme or schemes and the other have little or none) the court will expect this to be rectified by means of pension sharing or for the disadvantaged party to receive more capital from another source, to achieve more equality.
First Steps (ADR)
The courts do expect parties to make some attempt in reaching agreement by negotiations with or without the help of ADR (Alternative Dispute Resolution), particularly mediation. For more information about this, see our ADR factsheet. This forms part of the Pre-action Protocol which family lawyers should adopt. If resolution cannot be achieved this way or there are other reasons why court proceedings are necessary, such as where the other party is not co-operating at all, or is attempting to hide/dispose of assets, or there are difficult points of law to consider, then an application should be made to the court. This is done only once the divorce has been issued.
The court process – a brief overview
This can be started by either party sending into the divorce court a completed Form A, with the current court fee, or an EX160 fee remission form (if the applicant is on low income/benefits) along with prescribed supporting evidence.
The court will then issue a notice providing standard directions to timetable the case comprising:
- The date by which each party must file their Form E Financial Statement.
- The dates when other documents should be filed: Statement of Issues, Chronology, Questionnaires (if either party has questions about the other’s financial disclosure) etc.
- The date of the first hearing – this must be within 12-16 weeks of the date of issue.
It is then incumbent on both sides to comply with these directions, crucially the completion of their Form Es. This involves completing a comprehensive form supported with appropriate evidence, typically: up to date valuations of all assets in the marriage, bank statements, wage slips, P60s, evidence of debts including mortgage(s), pension statements, schedule of monthly income/ outgoings; evidence of mortgage raising capability, etc. Where the disclosure provided is insufficient, further items can be requested either formally through a ‘Questionnaire’ or informally. Sometimes the court will order specific items to be provided. There is an ongoing duty for both parties to provide sufficient and up to date disclosure when requested, for the duration of negotiations or court proceedings.
First Appointment/FDR (Financial Dispute Resolution)
The parties can elect to use the first hearing as an FDR appointment, usually once both sides have received sufficient financial disclosure from the other. In that case, the hearing will be used as a meeting for the purpose of discussion and negotiation. The District Judge will be aware of the issues in dispute and may provide some helpful indications as to an appropriate settlement. If agreement is reached he will draft/approve the consent order. If no agreement is reached he cannot then have any further judicial involvement in the case (save to conduct a future FDR). Directions are then made as to the filing of additional evidence, and listing of further hearing(s).
Most cases are resolved without the need for a final, contested hearing, primarily due to the costs involved which will of course eat away at the assets being argued over. It is however often the case that more than one hearing is required to deal with procedural matters and ensure that sufficient and appropriate disclosure has been obtained. Costs are an important feature and each party is required to provide at every hearing a form showing the costs they have incurred to date. If agreement is reached outside of court, the parties must send in an approved/signed consent order setting out all the terms agreed, for the District Judge to approve. Ultimately, however the court can make a final decision at a contested hearing.
Clearly this area of law is quite complicated and everyone’s case is different. It is therefore recommended that independent legal advice is obtained at an early stage.
Click the link below to download this fact sheet.