Sophie Key considers the impact of Coronavirus on financial settlements ordered by the Financial Remedies Court.
The Financial Remedies Courts are introducing the following measures in light of the Coronavirus pandemic:
1. First Appointments (the first hearing in the financial proceedings) should, wherever possible, be held using the accelerated paper-only procedure to reduce the need for Court attendance for parties, professionals and Court staff alike. The strict requirement to adhere to procedure is relaxed and judicial latitude is encouraged. Judges are being encouraged to accept consent orders dealing with First Appointments without the need for parties’ and professionals’ attendance at Court.
2. Financial Dispute Resolution (FDR) Hearings are being encouraged to take place privately. (This is the second hearing within the financial proceedings at which the parties are able to negotiate a settlement and, in cases where they are not agreed, make representations to the Judge who will give an indication as to the settlement s/he would order if they were adjudicating. If this doesn’t result in agreement between the parties the case is listed for a Final Hearing on a subsequent date and the FDR Judge is barred from being involved in the case further). A private FDR is where the parties pay for a financial remedy specialist (a barrister, solicitor or retired judge) to conduct the Hearing in place of the Court FDR Hearing. These are often held to reduce the significant delay encountered in the Family Courts. These hearings should take place remotely where possible.
3. Other hearings should be done by telephone or Skype.
4. Physical hearings should take place only where this is absolutely unavoidable and is subject to the Lord Chief Justice’s guidance regarding Court attendance in the wake of the Coronavirus pandemic.
(www.gov.uk/guidance/coronavirus-covid-19-courts-and-tribunals-planning-and-preparation)
5. The physical handling of documents and lodging them at Court should be avoided. Instead, documents, including the Court bundle, must be submitted by email and there is extensive Court guidance as to the protocol for such documentation.
6. The Family Remedies Courts judges are being encouraged to work from home as much as possible.
These are unprecedented times. Her Majesty’s Courts and Tribunals Service has been under considerable pressure in recent years with the main impact on divorcing couples being delay to the resolution of their cases and the stress and financial cost that delay brings. The Coronavirus pandemic will undoubtedly cause further delay but it is reassuring to note that the judiciary is being encouraged to be flexible and to consider modern alternatives to a physical courtroom hearing as part of the quest to ensure access to justice for all.
However, it is not simply the impact of the Coronavirus on the practicalities of obtaining a court-ordered financial settlement that we must bear in mind. We are in a very uncertain financial climate. If you are in the process of resolving your finances in connection with your divorce, it would be sensible to consider the following:
• Values of some assets (including real property, investments, pensions and business) are falling. It may be sensible to obtain up-to-date valuations of assets before a settlement is agreed/ordered, particularly where valuations had been obtained prior to the Coronavirus pandemic. This may add to the cost of your case but the cost of new valuations is likely to be minimal compared to the amount you could lose if relying on over-inflated valuations.
• In view of changes to the values of assets subject to current negotiations, it may be wise to consider the timing of obtaining those new valuations and the resumption of negotiations - is it in your interests to wait to see if the financial situation improves before embarking on negotiations? Alternatively, is it in your interests to seek a resolution now while valuations are low?
• If a settlement has already occurred (either by agreement in the form of a Consent Order or as ordered by a Judge), and the value of assets has decreased significantly as a consequence of the impact of Coronavirus, it is likely to be difficult to set aside the settlement.
If you have any questions regarding financial settlements on divorce during this time, or a general family law enquiry, please contact our Family Team.
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