Divorces are usually concluded by agreement and without the
need for court hearings since in most case the parties agree
that the marriage has come to an end.
Sorting out the division of matrimonial assets, however, can
be quite a different matter. Disputes over matrimonial
property can cause bitterness and tension.
Even if the couple do reach an agreement at the outset some
involvement of lawyers will in most cases usually be necessary
to draw up a written settlement to ensure that it will become
a final and binding settlement by being made into a Court
order (see Consent Orders). It is always sensible to take
legal advice and find out your rights and ensure that what you
have agreed with your spouse is a fair deal for you.
Of course, early agreement is encouraged, since it reduces
costs and as the involvement of solicitors is kept to a
minimum. Another advantage of an agreed settlement is that it
can be much more flexible and tailored to suit the parties’
individual wishes and it makes provision which the Court
itself would not be able to impose. It is always better if the
parties feel they have had some influence in the eventual
settlement rather than have it imposed by the Court.
Where agreement is not possible between the couples themselves
at the outset an attempt can be made by negotiation between
solicitors and if that fails then a court application can be
made. Even when a court application is made negotiations do
not stop and in most cases an agreement will be reached before
a final hearing to avoid the tension, delay and costs of a
final hearing.
Negotiation can only effectively take place once both parties
have made disclosure of their assets and liabilities. All
assets are taken into account and include house, car, savings,
shares, pensions, family business, etc. It does not matter if
the asset is in joint or sole names as the court has full
power to distribute the assets in order to achieve fairness
and to ensure that provision is made for the children as far
as is possible.
Solicitors will negotiate by applying the same criteria (see
Criteria for Financial Orders) and legal principles that the
Court will do with a view to achieving a settlement which is
within the range of what the court is likely to order. Of
course every case is different and it is not always possible
to accurately assess what outcome the Court would achieve and
there are many variables.
At the initial stages both parties solicitors will request of
the other voluntary disclosure of their finances such as
income, savings, investments, and liabilities. The parties
will be advised that they are required by the Court to give
full and frank disclosure. If it seems that one party is not
fully complying with this obligation and as a result
meaningful negotiation cannot take place then the next stage
is for a court application to be made. Making a court
application does not automatically mean that the matter will
be decided by the court since it is a long process before the
case reaches to a final hearing. A court timetable is imposed
on the parties to comply with disclosure, requests for further
information from the other party and other matters such as
joint valuations of property. Once an application is made and
the parties are incurring more costs and are working within a
court timetables the possibility of moving towards an agreed
settlement is increased (See Financial Claims for more
information on the court procedure).
Offers to Settle:
During the course of negotiation proposals on a ‘with’ or
‘without prejudice’ basis can be made. This means that the
offer will not be disclosed to the Judge at the final hearing.
Such offers, also called “Calderbank Offers” enable a party to
make a compromise without weakening their position should the
other party refuse and the case has to go to a final hearing.
Obviously you may be willing to accept less and compromise
what you ideally wish in order to avoid the additional costs
and delay of a final hearing but you may not be willing to
make that compromise if the other party refuses your offer and
the case has to go to a final hearing in any event.
The term ‘Calderbank’ comes from a case of Calderbank v
Calderbank (1975) where the Court held that there should be a
mechanism available to the party to make a proposal to settle
and to be afforded some protection against further costs.
Caldlelrbank offers are a very important part of the process
of resolving financial disputes and they can be made at any
time during the proceedings by either party. In England and
Wales the normal rules for the court in litigation is for the
loser to pay the legal costs of the winner and this should
always be born in mind. In financial claims on divorce this is
not applied so rigorously since it is not always clear who the
winner is since the division of assets is not always a
question of mathematical percentage but can be a far more
complex with provision for term maintenance or deferred
interests.
Example: if the issue in the case is who get what from the
matrimonial home sale proceeds then the wife may be propose an
offer of 80% whereas the husband may offer a 50/50 split. Each
party will be at risk of paying the other's legal costs (as
well as their own) if he/she loses. If the wife has offered to
settle for 70% and is awarded more than this then the husband
will be ordered to pay the wife’s costs from the date of her
offer. However, if the court awards her 50% then the wife will
be ordered to pay the husband’s legal costs from the date of
his offer.
Obviously the parties will have to carry out a cost benefit
analysis as to whether the difference between their positions
is worthwhile pursuing in terms of their own costs and the
risk of having to pay the other side’s costs. On the above
example if the house has an equity of only £30,000 then the
difference between their respective positions based on 80% and
50% is only £9,000 whereas an equity of £100,000 would result
in a difference of £30,000.
Thus the ‘without prejudice’ proposals can then be taken into
account by the Judge in deciding whether to make an order for
one party to pay or contribute to the other’s costs. Such
offers therefore have to be given proper consideration by the
other party as an automatic rejection of the offer may result
in a costs penalty.
It is also possible to make ‘open offers’ which the court can
be made aware of and it is also a requirement that before the
Financial Dispute Resolution appointment both parties must
forward to the Court copies of open offers and Calderbank
offers that have been made and the responses to them. Although
the Calderbank offer must not be disclosed to the Judge who
sits at the final hearing - the Judge hearing the FDR is not
permitted therefore to sit at the Final hearing.
