Karen Elliott: Divorce specialist
An agreement on financial issues does not become binding until it has been approved by the court. This means for there to be finality – there needs to be a consent order (or an order made by the court after hearing evidence and without consent).
However, the court will not simply rubber stamp any agreement that is reached between the couple and which the court is asked to approve.
The court retains a discretionary role under the Matrimonial Causes Act 1973 (MCA 1973) and the corresponding provisions of the Civil Partnership Act 2004 (CPA 2004). The court will therefore consider whether the agreement represents fair and proper financial provision for the parties in all the circumstances of the case.
The court must be given specified information to enable it to exercise its discretion under MCA 1973, s 25. (See our page on the section 25 criteria)
The Court cannot lawfully exercise its powers without full details of both parties’ circumstances. For this reason, every draft consent order sent to the court to be approved must be accompanied by an additional form which summarises the financial situation and proposed living arrangements of the family.
Kris Seed: Divorce specialist
The financial consent order is a legal document and would ordinarily be drafted by solicitors (even if the negotiations have taken place through mediation or directly between the couple).
The President of the Family Division (the most senior family Judge) has issued guidance as to the use of a standard set of precedents. These precedents are used by lawyers when drafting financial consent orders. They provide a helpful and standardised starting point. Different precedents will apply in different circumstances. The precedents can also be adapted to ensure that the order will give effect to what the couple have agreed.
Recitals and undertakings
The first part of a draft order will normally contain what are known as recitals and undertakings.
Recitals and undertakings may be used to cover issues that the court could not otherwise order.
Recitals can provide an explanation of the basis upon which the court order is made. The recitals can include preliminary agreements between the couple.
David Howell-Richardson: Divorce Specialist
The Court does not have the power to order anything that is requested. The court only has the power to order what Parliament has decided that it can order. This would include things like the transfer or sale of the property or the payment of a lump sum order or the payment of maintenance by one of the couple to the other. Orders can also be made about pensions. Since the introduction of the Child Support Agency (now the Child Maintenance Service) the Court’s powers in respect of child maintenance are restricted.
An undertaking is a promise made to the court. This is a formal promise. Breach of an undertaking can result in a fine or imprisonment for contempt of court.
They should be in clear terms and the implications of giving an undertaking should be fully explained. Where possible, the order should be signed by both parties and always where the order includes undertakings given by that party.
Although there is no presumption in favour of there being a financial clean break between parties on divorce, the court is under a duty to consider whether it would be appropriate to exercise its powers so that the financial obligations of parties towards each other can be terminated.
On exercising its powers, under the Matrimonial Causes Act the Court must consider how the financial obligations of each party towards the other will be terminated as soon after the final decree of divorce as the court considers just and reasonable.
Kris Seed: Divorce specialist
The court requires a summary of the financial circumstances of the family before it will consider whether or not to approve a financial consent order. It is therefore not surprising that financial disclosure is a fundamentally important feature in any negotiations. Delay by one or other of the couple in providing full financial disclosure will inevitably cause delays in negotiation – and if one of the couple refuses to provide disclosure – they can expect the other to make an application to the Court. The Court will make orders to require financial information to be provided.
If one of the couple ask their solicitor to draft a financial consent order when there has not been full financial disclosure – they can expect the solicitor to refuse or to ask them to sign a disclaimer – which will say that the client accepts that it is their own fault if they have been misled and if the agreement is a bad one.
Variation of financial consent orders
Whilst financial orders are intended to be final – or provide a framework for finality – in certain circumstances orders can be varied or discharged and suspended or revived by the Court. This is not simply financial consent orders but also financial orders which would have been made by the court after hearing evidence.
There is insufficient space here to go into the circumstances where it would be appropriate for there to be variation of a financial consent order/financial order.
If you have a financial order and there has been a difficulty with its implementation or where it has become apparent that there has been nondisclosure, or where something is happened which means there is a complete change in circumstances – then the best thing to do is to get in touch for some specific advice.
Bridget Garrood; Divorce specialist
Drafting Orders (two)
Because a financial consent order is a legal document it is always best for the document to be drafted by lawyer.
If the order is being drafted to give effect to what has been agreed by a couple without legal advice – then expect the lawyer to want to know what financial disclosure there has been and to give advice as to whether there should be financial disclosure/due diligence – to make sure that what is being proposed is reasonable.
If the Court doesn’t approve a Draft Financial Consent Order
If the court is of the view that the contents of a draft financial consent order are not sufficiently fair then the first step is for the Court to ask for more information. The court may also ask the parties (and their lawyers) to attend the hearing to justify what is being proposed. Ultimately – even with a hearing the court does not have to approve what is put before it.
This discretion is one of the strengths of the divorce law in England and Wales.
Notice to show cause
If one of the couple considers that an agreement has been reached (usually in relation to financial arrangements between the parties), or an agreement was made but one party seeks to resile from it, the party relying on an agreement reached between the parties may make an application for the other party to show cause why an order should not be made in the terms of the agreement.
Lack of financial disclosure or legal advice can be perfectly good reasons not to be held to an agreement reached directly between a couple.
Legal advice is essential
Therefore, getting legal advice at an early stage is always a good idea.