Divorce and Financial Orders

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Divorce and Financial Orders

Whenever possible attempts will be made to negotiate a financial settlement between the parties. If a settlement is agreed an order can be recorded by the court, by consent, at any time after pronouncement of the Decree Nisi, without the need for an attendance at court.

If matters cannot be agreed it will be necessary to issue an application to the court, known as an Ancillary Relief application.

When deciding the division of capital and income, the court must try to achieve fairness between the parties. It is obliged to take into account all the circumstances of the case including, but not limited to, a number of specific factors set out in the Matrimonial Causes Act 1973. Those factors include:

the net income, earning capacity, property and other financial resources of each party both now and in the foreseeable future including any increased earning capacity
financial needs, obligations and responsibilities which each of the parties has or is likely to have in the foreseeable future
the standard of living enjoyed by the family before the breakdown of the marriage
the age of each party and the duration of the marriage
any physical or mental disability
contributions which each of the parties has made or is likely to make to the welfare of the family including a contribution by looking after the home or caring for the family.
the value of any benefit which either party has lost by the dissolution of the marriage (usually pension provision)
whether it would be appropriate to exercise the court’s powers of earmarking pension funds
the conduct of the parties if it is inequitable to disregard that conduct (in other words very serious conduct)

An application for Ancillary Relief is commenced by filing a Form A and the court fixes a date for the First Directions Appointment (FDA) 12 to 16 weeks ahead.

Both parties file and exchange a Form E at least 35 days before the FDA setting out their financial circumstances and supporting the information given with relevant documents.

At least 14 days before the FDA the parties file and serve a concise Statement of Issues, a Chronology and a Questionnaire seeking any outstanding documents or information required.

The objective of the FDA appointment is to define the issues and save costs. Both parties must attend. The district judge will decide which questions need to be answered and deal with such things as valuations of property and experts if appropriate. It may be appropriate to turn the FDA appointment into a Financial Dispute Resolution appointment (FDR) but if not the district judge will direct an FDR hearing, although it is possible to list a final hearing if an FDR hearing is inappropriate.

If, as is usual, an FDR hearing is directed the FDR appointment normally follows around six to eight weeks after the FDA appointment. It is expected that offers of settlement should be made before the FDR appointment and these offers need to be filed with the Court at least seven days before the appointment.

The objective of the FDR appointment is to reach agreement. The appointment is conducted by a district judge who will not have anything else to do with the case if the case does not settle. Normally the district judge will take an active part in the discussions and negotiations and give an informal view about what his or her feelings are about the issues in dispute. We need to attend court to commence our discussions with the other side at least one hour before the hearing and it could be that we are at court for a considerable period of time. There is every incentive to settle the case at an FDR appointment because the costs of proceeding to a final hearing are substantial.

If a settlement is achieved then normally the district judge will approve an order there and then. If no settlement is achieved he will list a final hearing which is normally two months or so after the FDR and give directions as to what needs to happen before the final hearing.

Of course it is possible to settle the proceedings at any stage, even before the First Directions appointment. The big advantage is a saving in costs.

The court has a wide discretion to make orders with respect to financial matters to include a property adjustment order (for example to transfer a property to one party), a lump sum order (for a child or a party), orders for spousal maintenance and pension sharing orders. Orders for child maintenance can be made in certain circumstances if this is in accordance with a prior written agreement (usually by consent). If there is no consent an application must be made to the Child Support Agency. The court retains jurisdiction to make orders for child maintenance in certain limited circumstances e.g. in order to meet school fees.

Frequently Asked Questions about Divorce & Financial Orders

How is child maintenance assessed by the CSA?

Currently four rates apply:

Basic rate – where the non resident parent’s weekly net income is £200 to £2,000, he pays 15% of his net earned income for one child, 20% for two children and 25% for three or more children.
Reduced rate – where the weekly net earned income is £100 to £200, the non resident parent pays £5 on the first £100, plus 25%, 35% or 45% of the balance between £100 and £200.
Flat rate - £5 per week where the weekly net earned income is less than £100.
Nil rate – if the non resident parent is for example a prisoner or a qualifying child themselves.

Rates are adjusted so that if there are other relevant children (i.e. children in the non resident parent’s household for whom child benefit is being received) the net earned income is reduced by 15%, 20% or 25% for the purposes of calculation of child support maintenance. In addition if there is shared care (i.e. overnight contact) then 52 days contact per annum reduces child support maintenance by 1/7th, 104 days by 2/7th’s etc.

In what circumstances can the court make an order for child maintenance?

The court can make an order for child maintenance if it is in accordance with a prior written agreement (usually by consent) or by way of a top-up order (for those on a very high income), to cover school fees, where the child or one or both parents is not habitually resident in the UK, where the child is married, over 19 or over 16 and not in advanced education, where the order is made to pay expenses of a disabled child, where the claim is against the parent with care or step-parent or where the parties have not yet separated.

If the court makes an order for spousal maintenance, how long will it last?

The length of any order will vary from case to case. The court is under a duty to consider whether it would be just and reasonable to terminate the financial obligations of each party towards each other following divorce. If the court decides to make an order for periodical payments, it must consider how long it would be before the party receiving payment would be able, without undue hardship, to adjust to a point where they are no longer financially dependent. The court can also direct that no application may be made to extend that term. Without such a direction an application could be made to extend the period payments are made, if such an application is made before original order expires. An order will expire on the death of either party or the remarriage of the receiving party.

If the court makes an order for child maintenance, how long will it last?

An order for child maintenance should not be expressed to extend beyond the child’s 17th birthday in the first instance, but can be worded to extend beyond that date if the child remains in education or if there are special circumstances (e.g. physical or mental disability).

How will the court deal with the former matrimonial home?

Each case will be decided on its own merits. However if an outright transfer to one party is not deemed to be appropriate, the court could either order an immediate sale and division of the proceeds or a transfer on payment of a lump sum to the other party. If neither option is feasible (because for example the court decides that the property needs to be retained to provide a home for the children but the resident parent cannot afford to buy the other party out immediately), the court can put off the sale. This will be until the first of specified “triggering events” occurs, usually the re-marriage of the person living in the house or their ceasing to live there or the youngest child reaching 18.

What powers does the court have to make interim orders?

The court can, within divorce proceedings, make a Maintenance Pending Suit order to provide for spousal maintenance on an interim basis. There is no power (except in very limited circumstances) to make orders for interim lump sums or interim orders for sale. An order for sale may be obtained on an interim basis under different legislation by way of an application, for example, under the Married Woman’s Property Act 1882 or under the Trust of Land and Appointment of Trustees Act 1996.

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