Financial Provisions within Divorce Proceedings
Within a divorce the Court may, on the application of either party, make Orders for Financial Remedies
These Orders can be made with the consent of the parties (Consent Orders) or as a result of the Court determining the outcome of Court proceedings.
Other than an Order for Maintenance Pending Suit or Interim Maintenance, the Court must have first pronounced a Decree before it has any authority to make Orders for a Financial Remedy.
An Order for Periodical Payments is commonly known as maintenance. It is a regular payment from the income of a spouse or former spouse to the other spouse or former spouse, typically payable weekly or monthly. In determining whether a spouse is entitled to periodical payments the Court will have regard to a number of factors which will include the needs of the parties and the payer’s ability to afford periodical payments. The Court is not obliged to order periodical payments but it must consider whether it is possible instead to achieve a clean break (the dismissal or extinction of financial support between spouses or former spouses).
Periodical payments are most commonly payable for a specific term e.g until a child is eighteen but sometimes it can be for the parties joint lives where e.g the parties are of mature years.
Sometimes it is necessary for the Court to consider Maintenance Pending Suit or Interim Periodical Payment Orders. These are often made as a result of a party’s immediate need for income for the duration of the proceedings. Any order so made will be reviewed prior to the end of proceedings.
Lump Sum Order
This is the payment by one party to the other of a specific lump sum or sums. A Lump Sum may be ordered in conjunction with a transfer of a property or some other asset or ordered to be paid independently.
Property Adjustment Order
The Court can order a sale of a property or a transfer of the property from one spouse to another. On a sale or transfer of the property, the Court will consider the division of the proceeds of sale or the appropriate lump sum, if any, that should be paid in conjunction with the transfer. Sometimes, particularly where there are dependant children, the property will be retained by one spouse for a particular period of time e.g. until the children leave education with the other spouse retaining an interest in the property.
The most common pension order is a pension sharing order. This is an Order that one spouse’s pension fund transfers to the other spouse’s pension fund all or a percentage of the pension fund. As an alternative, the Court can order that a spouse’s claim for a Pension Order be resolved by adjusting or setting off their entitlement to another asset. Less common are Attachment Orders where the Court directs a proportion of the pension to be paid to the other spouse at the time of payment.
What factors does a court take account of when making a Financial remedy Order
Whenever the Court is asked to consider making an Order for a Financial Remedy, it must have regard to Section 25 of the Matrimonial Causes Act 1973. This part of the act provides the Court with a “check list” which must be considered in every case and whether the order is being made by consent or not..
The “check list” includes the income, earning capacity, property and other financial resources of the parties as well as their financial needs, obligations and responsibilities, together with a series of other factors. However, the Court’s first consideration is always given to the welfare of any minor or dependent child of the family.
Each party to a divorce has a duty to the Court and to each other to make full and frank financial disclosure. This means revealing all financial information/assets whether the other party is aware of them or not.
Where an Agreement has been reached in respect of Financial Remedies
If an agreement can be reached between the parties regarding their financial arrangements then it is possible for this agreement to be recorded within a Consent Order. The Court can be invited to consider a Consent Order at any time after the granting of a Decree Nisi. It is usually presented to the Court through the post supported by a document completed by the parties which they are obliged to disclose to each other and then to provide to the Court. This form then enables the Court to consider whether it is appropriate to approve the terms of the Consent Order. If the Judge is satisfied with the terms of the Consent Order then the Order will be sealed and will become a legally binding document. This course of action generally means that there is no need for either party to attend Court unless this is specifically requested by the Judge.
Where an Agreement cannot be reached
If an agreement cannot be reached then an application for a Financial Remedy can be issued with the Court at any time after the issue of a Petition. An Order cannot be made, whether by consent or as a result of a determination by the Court, until a Decree Nisi has been pronounced. Either party to the proceedings can issue an application for a Financial Remedy although before doing so the parties must first attempt mediation. If a party does not engage in mediation or mediation does not result in any agreement then the Mediator will sign a Certificate to inform the Court that mediation has been attempted but failed. This will then allow the Court to issue proceedings.
On the receipt of an application for a Financial Remedy, the Court will send the parties a Notice of a First Appointment. The Notice will order the parties to prepare and exchange Financial Statements (Forms E) and it will direct the parties to attend the first directions appointment (FDA).
At the FDA the District Judge will consider the documents filed to date and will give consideration to any further documents or information which may be required and make directions accordingly. This may, for example, include directions for the joint valuation of any property, the filing of medical evidence etc.
If the parties are unable to reach any agreement at this early stage of the proceedings, the Court will at the FDA list a Financial Dispute Resolution appointment (FDR). At the FDR every effort will be made to try and settle the proceedings. The parties are expected to attend, having previously informed each other and the Court of their proposals for settlement. The District Judge will be available to assist the parties with their negotiation at the FDR and may possibly give an indication to the parties of the sort of outcome that they can expect if the case proceeds to a final hearing. Most cases settle at the FDR but if an agreement cannot be reached then the Court will fix a final hearing. At a final hearing the District Judge will consider all of the evidence in the case including the parties’ oral evidence and will determine the outcome.
As has already been explained, the parties are expected to attempt mediation before either applies to the Court for an Order for a Financial Remedy (with the exception of a Consent Order where attending mediation is not obligatory). At mediation the parties work with a qualified Mediator who will assist them to hopefully reach an agreement. Any agreement reached at mediation is “without prejudice” and does not formally bind the parties and so they will be invited to enter into a Memorandum of Understanding which they will then take to their own legal advisors for advice and possible implementation. It remains necessary for the parties to obtain a Consent Order.
The Court has a range of powers to make Orders in an emergency in addition to Maintenance Pending Suit and Interim Periodical Payments referred to above. These Orders might include an Order that a party’s assets or Bank Accounts are frozen until the outcome of proceedings. .
Effect of Divorce and Decree Absolute
Many people wrongly believe that a Decree Absolute ends all financial ties between the parties. This is not the case. If there is no Financial Remedy Order (Consent Order or otherwise) then it may be open to either party to bring a financial claim in the future.