Despite the huge amounts of case law and the statutory guidance on what the Courts should do in relation to financial provision on divorce this is still the area of greatest uncertainty presenting real difficulty for the lawyer advising clients.

Many of the well publicised recent cases involved what lawyers referred to as “big money” but despite that the guidance given by the Judges has been applied to what we may all see as the “average case”.

The Courts have very wide powers and discretions in adjusting the finances of divorcing couples.  In fact no other Court in England can deprive someone of property in the way that a Divorce Court can and does daily.

The financial orders available on divorce are broadly divided between orders for the husband and wife and those for children.

Children

Dealing very briefly with orders for children, for the time being child maintenance is in the hands of the CSA or its replacement.  The Courts can however still make child maintenance orders by consent.  There are also possibilities for top ups and a school fees order. 

There are other options for financial provision for children but those are best discussed in individual consultation between solicitor and client.

Financial Provisions between Husband and Wife

Equality is now considered to be the measure of fairness in distribution of capital assets.  This sounds simple and family lawyers wish it was.  No sooner is a simple principle formulated than lawyers look for the exceptions to the rule. In this case we refer to reasons for “departure from equality” and the best divorce lawyers are constantly inventing such reasons………………..and so it goes on.

Our object as lawyers as often as not is dealing with cases other than “big money” cases is to meet the needs of both parties and children by the division of inadequate capital and inadequate income.  The result is that major adjustments in lifestyle are inevitably made by both parties.

Agreement or Litigation?

However agreements are reached whether as a result of negotiation between solicitors, mediation or the collaborative law process the statistics are that the vast majority of financial settlements are reached by agreement rather than having to be imposed by a Judge following a fully contested hearing.

The process towards either agreement or litigation always begins with financial disclosure.  Both parties are obliged to make full and frank disclosure of their income, assets and liabilities, pensions and to generally proceed in an honest and open manner towards resolution of financial matters.

If negotiations break down an application can be made to the Court by either party and the matter then proceeds to a fairly rigid timetable and in accordance with the Family Proceedings Rules towards a first directions hearing, then a financial dispute resolution appointment when with the help of a Judge the parties are encouraged towards settlement and only if all else has failed the case is listed for a final hearing.  The Court can make interim orders such as maintenance pending suit when necessary.

The cost of litigation is a major burden to couples who take the litigation route. There is no single guideline or tariff that can be quoted and each case is assessed individually.  We give the best costs estimates we can at the outset and these may be revised a number of times as a case progresses.  Please refer to our web page headed The Firm where we have clearly stated our hourly rates.

This guide has deliberately avoided going into the case law and becoming a technical lecture on the principles of financial provision.  We feel that doing so in the space of this web page is dangerous and unhelpful.

As matrimonial lawyers we deal with each client as an individual and a case can generally be assessed fairly thoroughly in the first interview of no more than 60-90 minutes and at reasonable cost.

If you wish to consult us regarding financial issues please do your homework before coming to see us.  You should prepare a succinct financial dossier including such information as is listed here but please remember – you know your affairs best so use your judgment as to the information and documents that we will need to see.  Also please do a complete photocopy of your dossier for us so that you can leave this with us following our meeting. We prefer not to take your originals.  Whatever we advise you during our meeting will be confirmed by letter.

These are our suggestions only;

Evidence of Income

• If employed the last 3 payslips
• If self-employed your latest accounts
• If there is a family company please bring the last 3 years accounts with details of shareholdings

As to Capital  

• A mortgage statement
• Estimated values of assets including Family home, investments, insurances, endowment policies, ISAS, TESSAS, shares etc
• Schedule of Liabilities
• Latest pension statement

Budget 

• A rough budget for the family unit before and after separation – effectively preparing 2 separate budgets

Short Marriage Cases If there is a pre-marital agreement please include a copy in your dossier.

In every case we need evidence of Identity. 

The Credit Crunch has already had a very noticeable effect on matrimonial settlements and in a number of ways has made matrimonial settlements more difficult to achieve and to implement once negotiated.The effect has not been uniform across the range of matrimonial cases.The one consistent theme in financial settlements is that they represent a sharing of assets between husband and wife and that sharing has to be achieved either by the realisation of assets, possibly by sales or alternatively by raising capital through borrowing on the strength of assets.

In the average case involving clients of modest means the tightening of credit has had the effect of depressing the property market at a time when property prices were already becoming fairly static and at the same time making it more difficult to utilise a clients borrowing capacity to purchase the interest of the other party in whatever the jointly owned assets might be, as often as not the main item being thematrimonial home.The result is that people cannot move on with their lives and are often trapped in unsatisfactory relationships unable to afford to establish two separate households.

 Our more substantial and business clients suffer from the tightening of credit but in slightly different ways.Their situation is no different in that they must also realise assets at a time when stock market investments are not performing well and there is increasing talk of a further substantial adjustment in share prices.  In cases where the main asset may be a business ,bankers may be  reluctant to lend in order to finance a directors matrimonial settlement even though those same bankers would be happy to lend to the business to finance its normal commercial activities.

 Almost all matrimonial settlements are closely tied to residential property.  The residential property focus published by Savills in February 2008 presented a very mixed picture.  Certain hotspots remained desirable with properties selling well whilst other areas appear severely depressed.  The very top end properties with multi-million pound pricetags seemed not to suffer from affordability issues in the same way as the vast majority of residential property in the UK.

The outlook for the moment has to be seen as remaining difficult. The latest news on mortgage borrowing for 2009 predicts that the banks and building societies will lend no more than 50% of the 2008 mortgage lending and their lending criteria will be much more stringent.  This translates into a continuing difficult property market and inevitable hardship for many of our clients. 

Please feel free to contact Claire or John by telephone or email.

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Telephone : +44 115 958 0584                                                                                          15 April 2008