Thorpe & Thorpe

SOLICITORS AND
COMMISSIONERS FOR OATHS

Second Floor Offices Swan House 1 Edde Cross Street
Ross-on-Wye Herefordshire HR9 7BZ

Telephone: 01989 562903
Facsimile: 01989 566041
Email: info.thorpe@btconnect.com
Website: www.thorpeandthorpe.co.uk
DX No: 22484 ROSS-ON-WYE

 

GUIDE TO ANCILLARY RELIEF

What is “Ancillary Relief”?

In most divorce cases the husband and wife (called “the parties” ) will have some property such as a house, savings, shares or endowment policies which are owned between them in some way (“joint ownership”) and other property in their sole names e.g. bank accounts; sometimes the house will be owned by only one party.

There are also likely to be pensions, intended to benefit both parties in retirement.

The court has wide powers to reallocate the parties’ assets, in order to achieve a just and fair division. The court is not concerned with actual ownership.

In most cases, the parties can agree, with suitable legal advice, how their property is to be divided up.

Once agreement has been reached, it is usually wise for this to be confirmed by a Court Order, known as a ‘Consent Order’. The Order is agreed by the parties and their solicitors and is then approved and sealed by the Court. It is then legally binding.

In some cases, e.g. where there are no grounds for divorce, a Separation Agreement can be entered into. This will be legally binding as between the parties but does not limit the powers of the Court if it is asked to deal with the matter at a later date.

In other cases, where there is no agreement, it is usually necessary for the court to decide how the assets are to be allocated. If so, one of the parties makes an “Application for Ancillary Relief”.

This means that the the court is being asked to exercise its powers,( “ancillary” to the divorce), to allocate the assets between the parties.

Even where there has been an application for ancillary relief, there is no reason why the case cannot still be settled by agreement at any time up to the final hearing.

Disclosure

“Disclosure” involves the parties, usually through their solicitors, confirming to each other the full extent of their financial assets, income and pension.

In many cases the parties will feel that they already know enough about each other’s financial position, but is always wise to consider disclosure. A party who has given no formal disclosure of their financial position, and who then goes on to agree to a Consent Order, stands the risk of the Order being set aside if it turns out that there was some matter of which the other party was not made aware and which would have made a difference to their decision in agreeing to the order. Likewise, a party who declines to ask for disclosure will only have themselves to blame if they later find that the other party has substantial assets which could have been part of the settlement.

Especially in longer marriages with larger assets, and where the parties are estranged, it is possible for each party to build up assets of their own without the other party’s knowledge. In such cases disclosure is essential if there is to be a fair outcome.

 

 

What the Court can do

The Court’s powers include:

(a) “Transfer of Property Orders”: The court has the power to ‘adjust’ the ownership of property to achieve a fair division. These orders are most often used in relation to the family home e.g. by one party transferring it to the other, or transferring their share of the property to the other, in return for a ‘Lump Sum’.

 

(b) “Lump Sum Orders”: orders for the payment of a specific sum of money, either at once or by instalments over a period of months or years. This may have to be raised by way of mortgage on the house.

 

(c) Orders for Sale of Property”: the court can order that property be sold, whether it is a house or other property such as shares. This has to be combined with a Lump Sum or Transfer of Property order.

 

(d ) Periodical Payments Orders, or ‘Maintenance Orders’): regular payments by one party to the other, usually monthly.

(e) “Maintenance pending suit”: (temporary maintenance orders until the divorce is through) In some cases, one of the parties has a need for money in order to keep going financially. The Court cannot normally make financial orders until after Decree Nisi, but where there is a real need for maintenance it can make this order before then.

( f) Pension Sharing Orders

The Court can adjust the parties’ pensions, once again in order to achieve a fair division. The subject of pension sharing is complex, and it is often necessary to obtain expert advice from an Actuary as to the value of any particular pension. This is particularly the case with larger pension schemes such as Final Salary Pension Schemes or where the party with the pension is in the Police, NHS or Armed Forces.

 

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Procedure where matters are agreed in principle

a) Where matters are settled, the solicitor for the party who is going to benefit from the Order most will prepare and agree with his client a “Draft Consent Order”. This is then sent to the other party’s solicitor for approval. That solicitor will provide his client with a copy of the draft, explain the consequences of it and deal with any proposed amendments or queries.

b) Once the wording of the draft Order has been agreed and signed by the parties and their solicitors, each party completes a “Statement of Financial Information”. This is a simple document (sample copy attached) which gives brief details of the parties’ income, assets and pensions and of their intentions with regard to accommodation and the care of the children. The document also asks whether either party intends to re-marry, or possibly live with someone on a permanent basis (known as “co-habiting”), and requires the parties to confirm with any mortgage lender or pension scheme that they have no observations on the proposed order.

Once the Statements of Financial Information are complete the solicitor for the party with the benefit of the Order sends the following documents to the County Court dealing with the divorce proceedings:

1. The signed Draft Consent Order;

2. The Statements of Financial Information;

3. A form confirming that the parties’ claims can be dismissed on the basis of the Consent Order;

4. A cheque for the Court’s approval fee, (it is usual for each party to contribute half).

A District Judge then considers the documents and decides whether the Order can be approved. Sometime he will have queries or suggest amendments to the Order e.g. if parts of it are unclear. In other cases, especially if one party is not legally represented, the Judge will ask the parties to attend court so that he can confirm that they are fully in agreement and are aware of the consequences of the Order. These “approval hearings” are usually brief.

 

 

Contested Applications

Where agreement has not been reached on financial matters the procedure is as follows:-

The Application

a) The party making the application sends to the Court a form, known as “Form A” (sample copy attached), with a fee of, at the time of writing, £210.00;

b) On receipt, the Court issues an Order to both parties setting a timetable for the future conduct of the case.

The timetable will first require the parties to complete the form of detailed financial disclosure known as “Form E”, file it with the court and exchange copies with the other party within a period of, usually, about six weeks.

Following exchange of Form E each party must prepare the following documents and send them to the other party and to the Court:

1) A Questionnaire: requests for further information or documents arising from the other party’s Form E;

2) A ‘Statement of Issues’: a summary of the matters which the Court is going to be asked to deal with, such as whether the matrimonial home should be transferred, or whether there should be periodical payments or a lump sum;

3) A ‘Chronology’: a short list of the relevant dates, starting with the date of the marriage;

4) ‘Form G’, stating whether the matter is likely to be resolved on the first occasion when it comes before the court;

5) ‘Form H’, a statement of the party’s legal costs to date.

 

The First Appointment

The Court will fix a date for a First Directions Appointment, when both parties and their solicitors have to attend. By then, both parties will have filed and exchanged Form E , prepared the documents referred to above and filed those in court.

The First Directions Appointment is heard before a District Judge in Chambers and will take only about 20 minutes. The purpose of the Appointment is:

a) To decide what further information, if any, the parties and the Court require before a decision can be made or the matter can be settled;

b) To decide whether the case is likely to settle on the next occasion it comes before the court, or whether it will require a final hearing.

 

 

 

The Financial Dispute Resolution Appointment

If the Court decides that the matter is likely to settle in due course, given further negotiations, (this is the case in most ancillary relief claims), the Court will list it for what is known as a Financial Dispute Resolution or “FDR”. On that occasion, which is usually listed for about two hours, the Court will expect everyone to make as much effort as possible to reach a final settlement. Parties are expected to have made at least one offer in settlement before the date of the FDR. It is not a contested hearing and although the District Judge is present, his function is to assist the parties by giving his view on the likely outcome of the matter if it were to go to a final hearing.

The Final Hearing

If the matter, exceptionally, has still not settled by the FDR, it will be adjourned to a final hearing, before a different District Judge. These hearings usually take up to a full day or longer, and will involve the parties in giving live evidence and being subject to cross - examination. At the end of the hearing the District Judge will make his decision, either there and then or later in a reserved judgment. The parties are bound by the Judge’s decision (subject to any appeal) and it may well be that one or even both parties are unhappy with that decision but have to live with it. This underlines the importance of attempting settlement, which avoids not just the cost of a Final Hearing, but the uncertainty of its outcome.

 

How the Court uses it powers

The approach of the court in all cases, whether or not agreement has been reached, will be:

To treat the welfare of any children as its first consideration;

To achieve a fair outcome;

To encourage the parties to become self sufficient;

To apply the “yardstick of equality” to assess whether a fair outcome will be achieved.

The court must take all the circumstances into account and, in particular, the following factors:

a) The parties’ financial resources including income, earning capacity and property, either now or in the foreseeable future;

b) The parties’ financial needs, obligations and responsibilities, now and in the foreseeable future;

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

d) The age of each party and the length of the marriage;

e) Any physical or mental disability of either of the parties;

f) The contributions which each of the parties has made, or is likely to make in the foreseeable future to the welfare of the family including any contribution by looking after the home or caring for the family;

g) The conduct of each of the parties, if that conduct is such that it would in the opinion of the court be ‘inequitable’ to disregard it; (in practice this is rarely a factor).

(h) The value to each of the parties of any benefit which they will lose the chance of acquiring by reason of the marriage being dissolved.

 

Each of these factors are of equal weight and must all be considered by the court in arriving at its order. Although the yardstick is equality, this does not mean that all cases must be dealt with on a 50/50 basis. There are many cases where it is essential to depart from equality, e.g. where children have to be rehoused with the wife.

In addition, in relation to pensions, the court must take into account any benefits under a pension arrangement which a party will lose the chance of acquiring as a result of the dissolution of the marriage (e.g., a widow’s pension.)

The court will also attempt to deal with the matter on what is known as a “clean break” basis, so that both parties become self-sufficient. A clean break order achieves a once and for all settlement by dismissing any outstanding claims and preventing them from being revived in the future. It is not always possible to achieve this, especially where there are young children and funds are limited.

 

 

 

The Costs of Ancillary Relief Proceedings

In most cases, the Court will expect each party to pay their own solicitor’s costs. It is rare for one party to be ordered to pay or even part of the other party’s costs, although such cases do occur e.g. where one party has not obeyed Court orders.

a) Consent Order: matters agreed

Where matter are agreed and there is basic disclosure, leading to a Consent Order within a few months, costs are usually somewhere between £750.00 - £1,000.00 plus VAT and Court fees. They may, however, be significantly more or significantly less than this figure depending on the particular case.

 

b) Form A issued but no FDR

Where matters are not agreed, and an application in Form A is made, this will involve further work in complying with the Court Order, in particular the preparation of Form E and the Questionnaires, Statements of Issues, Chronology etc. There will also be the necessity to prepare for an attend the First appointment. In such cases, therefore, you can expect your costs to be either two or three times the amount which will be involved in an agreed application.

c) Form A issued; FDR

If the matter does not settle fairly rapidly after the first appointment, and goes to an (“FDR”) Financial Dispute Resolution Hearing you can expect the costs to increase further, usually by a factor of about two. This, however, depends on the amount of documentation and the number of issues that are being considered. It also depends on the amount of the assets in dispute. It is usual, but not invariable, for the parties to be represented by experienced Family Law Counsel (Barrister) at this stage. Counsel often has more of a feel for an appropriate settlement than solicitors, simply because they are doing these cases on a daily basis before District Judges.

d) Final Hearing

A final hearing, usually taking up to a day of court time, and with both parties represented by Counsel, can involve fees upwards of £12,000 plus VATper party because of the amount of preparation and court time involved. By this stage, attitudes are likely to have hardened, so that each party will be doing their best to put their case as forcefully as possible to the Judge which necessarily involves careful and detailed preparation.

As the matter proceeds we will keep you fully informed of the level of your costs, both actual and anticipated, to help you to decide how far you need to litigate any particular issue before the court. In some cases the amount involved is not significant enough to justify the expenditure of costs; in other cases it may be so important that the costs have to be found in order for a fair outcome to be achieved.

You should not hesitate to speak to the person dealing with your case if you are at all anxious about the level of costs being incurred, or likely to be incurred in your case.

This guide to ancillary relief proceedings is necessarily brief, and is not a complete or authoritative statement of the law as it may apply in any particular case. It is intended as a general guide only and specific advice on specific cases should always be sought.

Thorpe & Thorpe N Morrow Brown
Solicitors May 2009