Ancillary Relief – resolving the financial issues within Divorce

Alongside divorce proceedings, it is necessary to try and reach a settlement of the financial issues between you and your spouse.  Before you and your Solicitor can begin to consider what terms of settlement might be appropriate, it is necessary to have full disclosure of your spouse’s financial position.

There are four options for resolving the financial issues, as follows: -

1. Mediation – A Mediator acts as an independent third party and does not offer legal advice. There is usually an average of four to six sessions before a “Memorandum of Agreement” can be drawn up.  The Mediator would assist you in arranging a mutual exchange of financial disclosure within the Mediation process. Most Clients then return to their Solicitors in order to discuss the Memorandum of Agreement and have it incorporated into a Consent Order for the Court to approve, so that it becomes legally binding.
   
   
2. Voluntary Disclosure – If your spouse agrees to provide their financial disclosure we can exchange this with your financial disclosure and try and negotiate a settlement.  This can then be recorded in a Consent Order.  The drawback to this option is that there are no imposed time limits – only those which are agreed between the parties.
   
   
3. Court Proceedings – Once the divorce proceedings are issued, it is possible for either you or your spouse to make an application to the Court in order to resolve the financial issues.  This is known as an application for “Ancillary Relief”.  The Court fee for issuing the application is £210.  This will result in the Court issuing a timetable with which both you and your spouse must comply.  Both of you will have to complete a financial statement known as “Form E”, and exchange these forms within a certain period of time.  Both parties can then ask questions on the other’s Form E and a Court Appointment is held in order to try and reach a settlement.  The first Court Appointment will be within three to four months of the application to the Court and is known as a “First Appointment”.  If it is not possible to reach a settlement at the first Court Appointment, there will be a further Court Appointment, known as a Financial Dispute Resolution Appointment (FDR).  If a settlement cannot be achieved at the FDR Appointment, then a Final Hearing takes place.  Provided there is full disclosure, most cases settle at the FDR stage, due to the costs involved of a Final Hearing.
   
   
4. Collaborative Law – The aim of Collaborative Law is to assist couples in resolving all matters arising from the breakdown of their relationship in a dignified and respectful way.

Both you and your spouse would employ separate specially trained collaborative lawyers*.  The two of you and the lawyers enter into a written agreement in which you all commit to work together to find creative solutions to the issues between you, without threatening to involve the court.  Rather than a catalogue of letters going back and forth between the two lawyers and you and your spouse attending court appointments, the work would be done by the four of you sitting around a table.  All information and disclosure is provided in the collaborative process. There is a commitment to absolute transparency and settlement is explored in this non-confrontational way in a series of “4 way” face to face meetings (two of you and two lawyers).  You and your spouse set the agenda for each meeting and remain in control of the process.  Your lawyers offer guidance and advice on the legal issues.  Your lawyer acts for you but works with your spouse and his lawyer as part of a team to work towards a settlement which is fair for both of you.

The lawyers are disqualified from acting for you and your spouse in the event that no settlement is reached.  Not only you and your spouse, but also the two lawyers are attempting to achieve settlement without threatening, or being subject to the threat of, court proceedings when things become difficult.  Unfortunately Public Funding (Legal Aid) is not available for Collaborative Law.

As a process, Collaborative law is not suitable for every client.  However, if some of the following are important for you, then it is worth considering:

• Your main focus is not to seek revenge on your spouse
• You and your spouse have children and wish to focus on achieving a settlement which meets their needs
• You wish to resolve issues in a dignified and constructive manner
• You value retaining control over decisions but with advice from experts
• You need the assistance of a lawyer to help you negotiate in face to face meetings
• You and your spouse have wider family and friends with whom you would wish to remain in contact in the future
• You do not wish to incur the costs and conflict, which can result from the traditional court process.

With option 2, voluntary disclosure, there is the potential for matters to drag on if both parties are not committed to the disclosure process, whereas the advantage of option 3, the Court process, is that you would have the discipline of the Court timetable, with which your spouse would be obliged to comply. 

With each option, there are a number of factors to be taken into consideration when deciding what would be a fair financial settlement. The first consideration to have regard to is the welfare of any child of the family and it is normally the need to secure their housing which takes precedence. Other factors that are taken into consideration are as follows:-

(a) the income, earning capacity, property and other financial resources which each of the parties has or is likely to have in the foreseeable future and in the case of earning capacity, the court can consider any increase in that capacity which they think is reasonable for a party to take steps to acquire;

(b) the financial needs, obligations and responsibilities which each party has or is likely to have in the foreseeable future;

(c)  the standard of living enjoyed by the family before the breakdown of the marriage;

(d) the age of each of the parties and the duration of the marriage;

(e) any physical or mental disability of either of the parties to the marriage;

(f)  the contributions which each of the parties has made or is likely to make in the foreseeable future. (This includes financial contributions as well as non-financial, including bringing up the children of the family.);

(g) the conduct of the parties (this is very rarely taken into consideration);

(h) the value to each of the parties to the marriage of any benefit, for example a pension which by dissolution of the marriage, a party would lose.

The Court can make orders regarding income, capital, property adjustment and pension sharing.

* Alison Hanna at GoodyBurrett LLP is a specially trained Collaborative Lawyer.