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Divorce: A changing landscape in financial remedy proceedings

It is possible we are on the cusp of the most radical changes to divorce and the resolution of associated financial issues we have seen for many years. There is a drive to simplify the procedure, reduce costs and in turn help parties move on with their lives. For the time being, there have been some subtle, but noteworthy, changes to the way in which divorce and related financial disputes are managed by the Courts. Here, Partner in our Family team, Oliver Hall, discusses the key updates and issues.

Alternative Dispute Resolution

There is now an expectation on the parties involved to consider forms of alternative dispute resolution (as opposed to court proceedings) so as to avoid the need to embark on expensive and lengthy litigation, which may well create further animosity and drive the parties further apart. Increasingly, judges are levelling criticism on parties to divorce for the costs they have spent on the court process. This has prompted some immediate changes.

Even prior to the Covid-19 pandemic, changes were well under way to streamline the process of concluding financial issues on divorce and focus couples on reaching their own agreements, minimising the input from the Court. There is now an obligation on the party issuing financial proceedings to first consult with a mediator, and that requirement can only being circumvented in limited circumstances. Whilst some see this purely as a procedural hurdle or paying ‘lip service’ to their meeting with a mediator, a risk of costs penalties for not doing so may well promote more active engagement.

No-Fault Divorce

As you may have seen, the campaign for No-Fault Divorce has been successful and was supported by most practicing family lawyers, the consensus being that parties should be entitled to end their marriage without having to blame the other. It is hoped that starting on this footing will set the tone in favour of compromise. The No-Fault divorce Bill was passed on the 17 June 2020 and the new divorce procedure is likely to come into force at some point next year.

New approaches for a ‘new normal’

The closure and centralising of the Family Court and the implementation of new and enhanced computer systems was already underway prior to Covid-19 but has gathered greater pace, such has been the need for a swifter and less labour intensive processes.

With the country entering lockdown in the spring of this year, and with Courts having to turn to remote hearings, the need to implement those changes more quickly has been forced upon court users. It seems increasingly likely that, even when the Courts are able to freely conduct face-to-face Hearings, some of the changes introduced during lockdown are here to stay. Certain case management hearings are likely to still be conducted remotely and the online procedure of issuing divorce and related financial proceedings seems to be an improvement on the previous paper process. It is now possible for parties to file with the Court a financial Consent Order (setting out the terms of their financial settlement on divorce) through the online process and the turn around time seems to be much shorter than was previously the case when such documents had to be physically lodged for the Courts for approval. These changes will hopefully reduce costs for those involved in the process.

The wider outlook

My perception is that the willingness of parties to consider alternative forms of dispute resolution has increased. The uncertain climate, delays in the listing of court hearings, and the remote nature in which they were being conducted (with some Courts being able to adapt better than others) has seen people seemingly more willing to negotiate and consider other ways to reach a settlement. There has, for example, been an increase in the number of enquiries for processes such as arbitration, in which the couple privately employ an experienced family lawyer to determine their case. With the continuing uncertainty of Covid-19, and the question of when, and even if, the Courts can fully open up to “in-person” hearings, we would expect this trend to continue.

There will, however, still be cases which will need judicial involvement and determination. Couples engaged in those cases need to be aware of the changes to the costs rules that have been introduced in financial proceedings and the shifting attitude of the Courts towards making cost orders where one party is considered to have acted unreasonably, or has rejected proposals or failed to put forward any offers. The general rule in family proceedings relating to finances is that each party will bear their own costs and that the Court should not make an order requiring one party to pay the costs of the other. However, it has always been the case that costs are at the Court’s discretion. Parties have always been encouraged to make offers to settle but in far too many cases the offers made have been unreasonable, which has resulted in entrenched litigation. There is now a clear message in the court rules that a failure to negotiate reasonably may result in a costs order being made at the end of the case.

In addition, there is also an obligation to set out very clearly at each hearing what costs have been incurred and what additional costs will arise if the case continues. The rationale behind this is to focus the minds of each of the parties on what they are spending!

As a family solicitor and experienced mediator, do I welcome these changes? There must still be a recognition that this is a personal area of law and the breakdown of a marriage impacts both parties deeply. With that said, the days of one side taking advantage of the other as they have more resources to fight the fight are coming to an end and it can only be of a benefit that there is a deterrent to this. However, the discretion remains with the Court as part of its exercise of assessing fairness, and to impose the rigid rule that costs will always be awarded to the party who is deemed to have succeeded may lead to some arbitrary and unfair outcomes.

For help and advice on these developments, or any other private client matter, please get in touch with Oliver Hall, Partner in our Family Law team directly by emailing oliver.hall@andrewjackson.co.uk or by calling our friendly team on +44 01482 325242.

Correct as of 2pm 18.09.2020

 

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