PRACTICE DIRECTION 9A – APPLICATION FOR A FINANCIAL REMEDY
PRACTICE DIRECTION 9A – APPLICATION FOR A FINANCIAL REMEDYThis Practice Direction supplements FPR Part 9
|Pre-application protocol||Para. 2.1|
|Procedure before the first appointment||Para. 4.1|
|Financial Statements and other documents||Para. 5.1|
|Financial Dispute Resolution (FDR) Appointment||Para. 6.1|
|Consent orders||Para. 7.1|
|Section 10(2) of the Matrimonial Causes Act 1973 and section 48(2)of the Civil Partnership Act 2004||Para. 8.1|
|Maintenance Orders – registration in magistrates' courts||Para. 9.1|
|PPF Compensation||Para. 11.1|
Part 9 of the Family Procedure Rules sets out the procedureapplicable to the financial proceedings that are included in the definition ofa ‘financial remedy’.
The procedure is applicable to a limited extent toapplications for financial remedies that are heard in magistrates’ courts(namely, those under section 35 of the Matrimonial Causes Act 1973, paragraph69 of Schedule 5 to the Civil Partnership Act 2004, Part I of the DomesticProceedings and Magistrates’ Courts Act 1978, Schedule 1 to the ChildrenAct 1989 and Schedule 6 to the Civil Partnership Act 2004). However, unless thecontext otherwise requires, this Practice Direction does not apply toproceedings in a magistrates’ court.
Where an application for a financial remedy includes anapplication relating to land, details of any mortgagee must be included in theapplication.
The ‘pre-application protocol’ annexed to thisDirection outlines the steps parties should take to seek and provideinformation from and to each other prior to the commencement of any applicationfor a financial remedy. The court will expect the parties to comply with theterms of the protocol.
Rule 9.27 applies in the High Court and county court. Therule requires each party to produce to the court, at every hearing orappointment, an estimate of the costs incurred by the party up to the date ofthat hearing or appointment.
The purpose of this rule is to enable the court to takeaccount of the impact of each party’s costs liability on their financialsituations. Parties should ensure that the information contained in theestimate is as full and accurate as possible and that any sums already paid inrespect of a party’s financial remedy costs are clearly set out. Whererelevant, any liability arising from the costs of other proceedings between theparties should continue to be referred to in the appropriate section of aparty’s financial statement; any such costs should not be included in theestimates under rule 9.27.
Rule 28.3 provides that the general rule in financialremedy proceedings is that the court will not make an order requiring one partyto pay the costs of another party. However the court may make such an order atany stage of the proceedings where it considers it appropriate to do so becauseof the conduct of a party in relation to the proceedings.
Any breach of this practice direction or thepre-application protocol annexed to it will be taken into account by the courtwhen deciding whether to depart from the general rule as to costs.
Procedure before the first appointment
In addition to the matters listed at rule 9.14(5), theparties should, if possible, with a view to identifying and narrowing anyissues between the parties, exchange and file with the court –
(a) a summary of the case agreedbetween the parties;
(b) a schedule of assets agreed betweenthe parties; and
(c) details of any directions that theyseek, including, where appropriate, the name of any expert they wish to beappointed.
Where a party is prevented from sending the detailsreferred to in (c) above, the party should make that information available atthe first appointment.
Financial Statements and other documents
Practice Direction 22A (Written Evidence) applies to anyfinancial statement filed in accordance with rules 9.14 or 9.19 and to anyexhibits to a financial statement. In preparing a bundle of documents to beexhibited to or attached to a financial statement, regard must be had inparticular to paragraphs 11.1 to 11.3 and 13.1 to 13.4 of that Direction. Whereon account of their bulk, it is impracticable for the exhibits to a financialstatement to be retained on the court file after the First Appointment, thecourt may give directions as to their custody pending further hearings.
Where the court directs a party to provide information ordocuments by way of reply to a questionnaire or request by another party, thereply must be verified by a statement of truth. Unless otherwise directed, areply to a questionnaire or request for information and documents shall not befiled with the court.
(Part 17 and Practice Direction 17Amake further provision about statements of truth)
Financial Dispute Resolution (FDR) Appointment
A key element in the procedure is the Financial DisputeResolution (FDR) appointment. Rule 9.17 provides that the FDR appointment is tobe treated as a meeting held for the purposes of discussion and negotiation.Such meetings have been developed as a means of reducing the tension whichinevitably arises in family disputes and facilitating settlement of thosedisputes.
In order for the FDR to be effective, parties must approachthe occasion openly and without reserve. Non-disclosure of the content of suchmeetings is vital and is an essential prerequisite for fruitful discussiondirected to the settlement of the dispute between the parties. The FDRappointment is an important part of the settlement process. As a consequence ofRe D (Minors) (Conciliation: Disclosure of Information)  Fam 231,evidence of anything said or of any admission made in the course of an FDRappointment will not be admissible in evidence, except at the trial of a personfor an offence committed at the appointment or in the very exceptionalcircumstances indicated in Re D.
Courts will therefore expect –
(a) parties to make offers andproposals;
(b) recipients of offers and proposalsto give them proper consideration; and
(c) (subject to paragraph 6.4), thatparties, whether separately or together, will not seek to exclude fromconsideration at the appointment any such offer or proposal.
Paragraph 6.3(c) does not apply to an offer or proposalmade during alternative dispute resolution.
In order to make the most effective use of the firstappointment and the FDR appointment, the legal representatives attending thoseappointments will be expected to have full knowledge of the case.
The rules do not provide for FDR appointments to take placeduring proceedings in magistrates’ courts.
Rule 9.26 (1)(a) requires an application for a consentorder to be accompanied by two copies of the draft order in the terms sought,one of which must be endorsed with a statement signed by the respondent to theapplication signifying the respondent’s agreement. The rule is consideredto have been properly complied with if the endorsed statement is signed bysolicitors on record as acting for the respondent; but where the consent orderapplied for contains undertakings, it should be signed by the party giving theundertakings as well as by that party’s solicitor.
(Provision relating to theenforcement of undertakings is contained in the Practice Direction 33Asupplementing Part 33 of the FPR)
Rule 9.26(1)(b) requires each party to file with the courtand serve on the other party a statement of information. Where this iscontained in one form, both parties must sign the statement to certify thateach has read the contents of the other's statement.
Rule 35.2 deals with applications for a consent order inrespect of a financial remedy where the parties wish to have the content of awritten mediation agreement to which the Mediation Directive applies made thesubject of a consent order.
Section 10(2) of the Matrimonial Causes Act 1973 and section 48(2)of the Civil Partnership Act 2004
Where a respondent who has applied under section 10(2) ofthe Matrimonial Causes Act 1973, or section 48(2) of the Civil Partnership Act2004, for the court to consider his or her financial position after a divorceor dissolution elects not to proceed with the application, a notice ofwithdrawal of the application signed by the respondent or by the respondent'ssolicitor may be filed without leave of the court. In this event a formal orderdismissing or striking out the application is unnecessary. Notice of withdrawalshould also be given to the applicant’s solicitor.
An application under section 10(2) or section 48(2) whichhas been withdrawn is not a bar to making in matrimonial proceedings, thedecree absolute and in civil partnership proceedings, the final order.
Maintenance Orders – registration in magistrates' courts
Where periodical payments are required to be made to achild under an order registered in a magistrates’ court, section 62 of theMagistrates’ Courts Act 1980 permits the payments to be made instead tothe person with whom the child has his home. That person may proceed in his ownname for variation, revival or revocation of the order and may enforce paymenteither in his own name or by requesting the designated officer of the court todo so.
The registration in a magistrates’ court of an ordermade direct to a child entails a considerable amount of work. Accordingly, whenthe court is considering the form of an order where there are children, careshould be taken not to make orders for payment direct where such orders wouldbe of no benefit to the parties.
The phrase ‘party with pension rights’ is used in FPRPart 9, Chapter 8. For matrimonial proceedings, this phrase has the meaninggiven to it by section 25D(3) of the Matrimonial Causes Act 1973 and means‘the party to the marriage who has or is likely to have benefits under apension arrangement’. There is a definition of ‘civil partner with pensionrights’ in paragraph 29 of Schedule 5 to the Civil Partnership Act 2004 whichmirrors the definition of ‘party with pension rights’ in section 25D(3) ofthe 1973 Act. The phrase ‘is likely to have benefits’ in these definitionsrefers to accrued rights to pension benefits which are not yet inpayment.
The phrase ‘party with compensation rights’ is used inFPR Part 9,Chapter 9.For matrimonial proceedings, the phrase has the meaninggiven to it by section 25G(5) of the Matrimonial Causes Act 1973 and means theparty to the marriage who is or is likely to be entitled to PPF compensation.There is a definition of ‘civil partner with compensation rights’ inparagraph 37(1) of Schedule 5 to the Civil Partnership Act 2004 which mirrorsthe definition of ‘party with compensation rights’ in section 25G(5).Thephrase ‘is likely to be entitled to PPF Compensation’ in those definitionsrefers to statutory entitlement to PPF Compensation which is not yet inpayment.
Notes of guidance
Scope of the Protocol
This protocol is intended to apply to all applicationsfor a financial remedy as defined by rule 2.3. It is designed to cover allclasses of case, ranging from a simple application for periodical payments toan application for a substantial lump sum and property adjustment order. Theprotocol is designed to facilitate the operation of the procedure for financialremedy applications.
In considering the options of pre-applicationdisclosure and negotiation, solicitors should bear in mind the advantage ofhaving a court timetable and court managed process. There is sometimes anadvantage in preparing disclosure before proceedings are commenced. However,solicitors should bear in mind the objective of controlling costs and inparticular the costs of discovery and that the option of pre-applicationdisclosure and negotiation has risks of excessive and uncontrolled expenditureand delay. This option should only be encouraged where both parties agree tofollow this route and disclosure is not likely to be an issue or has beenadequately dealt with in mediation or otherwise.
Solicitors should consider at an early stage and keepunder review whether it would be appropriate to suggest mediation and/orcollaborative law to the clients as an alternative to solicitor negotiation orcourt based litigation.
Making an application to the court should not beregarded as a hostile step or a last resort, rather as a way of starting thecourt timetable, controlling disclosure and endeavouring to avoid the costlyfinal hearing and the preparation for it.
The circumstances of parties to an application for afinancial remedy are so various that it would be difficult to prepare aspecimen first letter. The request for information will be different in everycase. However, the tone of the initial letter is important and the guidelinesin paragraphs 14 and 15 should be followed. It should be approved in advance bythe client. Solicitors writing to an unrepresented party should alwaysrecommend that he seeks independent legal advice and enclose a second copy ofthe letter to be passed to any solicitor instructed. A reasonable time limitfor an answer may be 14 days.
Negotiation and Settlement
In the event of pre-application disclosure andnegotiation, as envisaged in paragraph 12 an application should not be issuedwhen a settlement is a reasonable prospect.
The protocol underlines the obligation of parties tomake full and frank disclosure of all material facts, documents and otherinformation relevant to the issues. Solicitors owe their clients a duty to tellthem in clear terms of this duty and of the possible consequences of breach ofthe duty, which may include criminal sanctions under the Fraud Act 2006. Thisduty of disclosure is an ongoing obligation and includes the duty to discloseany material changes after initial disclosure has been given. Solicitorsare referred to the Good Practice Guides available to Resolution members at www.resolution.org.uk and canalso contact the Law Society’s Practice Advice Service on 0870 606 2522.
All parties must always bear in mind the overridingobjective set out at rules 1.1 to 1.4 and try to ensure that applicationsshould be resolved and a just outcome achieved as speedily as possible withoutcosts being unreasonably incurred. The needs of any children should beaddressed and safeguarded. The procedures which it is appropriate to followshould be conducted with minimum distress to the parties and in a mannerdesigned to promote as good a continuing relationship between the parties andany children affected as is possible in the circumstances.
The principle of proportionality must be borne in mindat all times. It is unacceptable for the costs of any case to bedisproportionate to the financial value of the subject matter of thedispute.
Parties should be informed that where a court isconsidering whether to make an order requiring one party to pay the costs ofanother party, it will take into account pre-application offers to settle andconduct of disclosure.
Identifying the issues
Parties must seek to clarify their claims and identifythe issues between them as soon as possible. So that this can be achieved, theymust provide full, frank and clear disclosure of facts, information anddocuments, which are material and sufficiently accurate to enable propernegotiations to take place to settle their differences. Openness in alldealings is essential.
If parties carry out voluntary disclosure before theissue of proceedings the parties should exchange schedules of assets, income,liabilities and other material facts, using the financial statement as a guideto the format of the disclosure. Documents should only be disclosed to theextent that they are required by the financial statement. Excessive ordisproportionate costs should not be incurred.
Any first letter and subsequent correspondence mustfocus on the clarification of claims and identification of issues and theirresolution. Protracted and unnecessary correspondence and ‘trial bycorrespondence’ must be avoided.
The impact of any correspondence upon the reader and inparticular the parties must always be considered. Any correspondence whichraises irrelevant issues or which might cause the other party to adopt anentrenched, polarised or hostile position is to be discouraged.