What is a financial dispute resolution hearing?
A financial dispute resolution hearing is a court hearing in the financial court process when a husband or wife asks the family court to decide how their assets should be split.
In this blog, our Family Law Solicitors explain what a financial dispute resolution hearing is and how to prepare for the FDR.
Contact OTS Solicitors Today for Expert Family Law and Divorce Legal Advice.
What is a financial dispute resolution hearing?
The best way to describe an FDR hearing is a judge-mediated mediation. The family judge tries to help you reach a negotiated financial settlement after a preliminary hearing and financial disclosure.
If a financial agreement is reached at an FDR hearing, the judge makes a binding financial consent order, and the financial application is concluded. A successful FDR hearing can save you thousands, as you won't have to go to a final hearing of the divorce financial application.
What happens at a financial dispute resolution hearing?
A judge reads the paperwork prepared for the FDR hearing and hears submissions (representations made by your Family Lawyer). Evidence is not provided by the husband or wife, or by others, such as forensic accountants. Instead, the judge gives a view on the type of order they think the family court would likely make if the financial settlement application went to a final hearing and a different judge decided the financial order after hearing evidence from both husband and wife and additional legal arguments.
If the couple reach an agreement at the FDR, the judge makes a binding financial court order. If an agreement cannot be reached, the financial application is listed for a final hearing.
Without prejudice negotiations at a financial dispute resolution hearing
The FDR negotiations and court hearing take place ‘without prejudice.’ This means any concessions made or offers cannot be used in evidence at the final hearing.
You can be open about what you want because you know your bottom line won't be disclosed to the judge at the final hearing. For example, you may want to stay in the family home and obtain a 50% pension-sharing order. However, at the FDR, you may be prepared to settle for the family home and a 25% pension sharing order, provided you don’t have the expense and uncertainty of attending a final hearing. Your ex-spouse may make a counteroffer, and you must be prepared to consider it.
Reaching an agreement at a financial dispute resolution hearing
Time is usually given outside the courtroom to discuss the judge’s indication and see if a compromise can be reached. If an agreement can be reached, the judge will either make a binding financial consent order, or the Divorce Solicitors will prepare heads of terms setting out what has been agreed between you. The terms are also binding but are prepared if, for example, information or agreement from a third party is needed before the court can make the financial consent order.
Like mediation, you can't be forced to settle at an FDR hearing. If an agreement cannot be reached, the judge will list the financial application for a final financial hearing before a different judge who won't see any of the FDR paperwork or read about the discussions at the FDR hearing.
The advantages of settling at an FDR hearing
The advantage of settling a financial dispute at the financial dispute resolution hearing is that you have certainty. A deal is done, and you can get on with your post-separation life even though you may have to wait for the family home to be transferred to you or sold or for a pension sharing order to be implemented by the pension administrators.
Settling at the FDR also saves on:
- Money
- Time
- Stress
- Parenting disputes
Attending a final hearing for a financial application can cost a significant amount in legal fees. Your Family Law Solicitors should explain the likely costs so you can weigh the pros and cons of reaching a financial settlement at the FDR hearing.
If a financial application is listed for a final hearing in a London family court, it will likely be many months away. Documents and valuations will need to be updated before the final hearing, and you will need to have further meetings with your Family Lawyers, who will prepare the court paperwork for the final hearing to comply with court rules.
Waiting for a final hearing date can add to your stress. With an agreed financial consent order, you have the certainty of a negotiated deal and do not need to worry that the judge won't agree with your point of view about staying in the family home or getting a share of your spouse’s pension.
When you are a parent, there is a lot to be said for reaching a financial agreement. A financial settlement can make co-parenting much easier to handle, as you won't have the stress of having a further financial court date looming over you.
What is the disadvantage of reaching a financial settlement at a financial dispute resolution hearing?
The only disadvantage to settling at a financial dispute resolution hearing is regret.
You may regret settling because:
- You felt under pressure to settle.
- Further information becomes available about your ex’s financial circumstances.
- Your situation has changed.
You may have felt under pressure to settle because of limited money to go to a final hearing or because you felt under time constraints on the day of the FDR hearing. That’s why preparing for the hearing with your Family Law Solicitors is essential, so you understand the options and the consequences of agreeing to a financial deal.
Contact OTS Solicitors Today for Expert Financial Settlement Legal Advice.
Re-opening an agreement reached at the FDR hearing
If additional information is discovered about your ex’s finances after the FDR hearing, you may be able to reopen the order if you can prove that your ex-spouse didn’t provide full and frank financial disclosure. For example, you may be able to reopen the deal if your former spouse didn’t disclose the existence of shares or failed to provide information about an offer received for the family business. The fact that shares increased in value or the company is being sold years after the FDR hearing won't give you grounds to try to reopen the financial consent order.
If your financial or personal situation has changed, you may be able to reopen the financial consent order depending on the terms. For example, if you cannot work due to ill health, you may be able to apply back to court to increase your spousal maintenance payments. You won't be able to do this if you negotiated a clean break financial settlement.
It's normal to wonder if you would have done better at a final hearing rather than settle at an FDR hearing. Preparing for the hearing and drilling down into your options is the best way to avoid regrets, as you will then know that you struck the best deal you could.
The financial settlement court process
To understand the FDR process, you must know how it fits into the financial proceedings. In most financial applications, there are three court hearings:
- The first directions appointment hearing (FDA).
- The financial dispute resolution hearing (FDR).
- The final hearing.
Sometimes, additional court hearings are needed. For example:
- To ask for an interim order, such as spousal maintenance. This is referred to as maintenance pending suit (MPS).
- To seek an injunction order to prevent the disposal of assets. This is referred to as a section 37 injunction application.
- To seek additional directions, for example, permission to instruct a single joint expert on the tax consequences of disposing or transferring assets because tax issues have arisen after the first court hearing or FDA.
- To join additional parties to the proceedings, such as a relative who says they have a financial interest in the family home.
The steps from financial application to FDR hearing
The steps in the financial settlement court process are:
- The husband or wife starts financial proceedings by issuing an application.
- The application is served on the respondent spouse and any relevant third parties.
- The court lists a timetable of dates for things to be done by and court hearing dates.
- The spouses gather their financial paperwork to prepare their Form E financial document.
- The spouses swap Form E’s and paperwork with their respective husband or wife’s Divorce Solicitors.
- The Family Law Solicitors review the spouse’s Form E and documents.
- A questionnaire is prepared to ask any follow-up questions or to ask for more information and supporting documents.
- The spouses try to agree on values for key assets, such as the family home or shares in a family business.
- A spouse may receive a questionnaire and a request for additional documents from their ex-spouse’s solicitor.
- A Family Lawyer prepares the key court-ordered paperwork for the first directions appointment hearing, such as a statement of case and Form H.
- The court lists a first directions appointment hearing. At that hearing, the judge decides if both spouses must answer all the questions on the questionnaire and provide extra documents. The judge also decides if valuation reports or expert reports are necessary. The judge lists the financial application for a financial dispute resolution hearing after the questionnaires have been completed and the expert reports are available.
- Any experts are instructed, generally through a jointly agreed letter of instruction. The court could order a family home valuation, a forensic accountant report on the family business's value and liquidity, or an actuarial report on pension values and pension sharing options.
- A Divorce Lawyer prepares a questionnaire response and reviews the former spouse’s reply to the questionnaire and extra paperwork. If the replies are unsatisfactory, an additional hearing may be required.
- The lawyers review the experts' reports and financial disclosures and discuss financial settlement options.
- Financial proposals are exchanged between the Divorce Lawyers. If a financial settlement is reached, the lawyers draft a financial consent order and ask the court to vacate the FDR hearing.
- If no agreement can be reached, the Family Law Solicitors prepare for the FDR hearing. A spouse may be asked to check that their financial position or outgoings have not changed. For example, the savings in a bank account may have reduced, or outgoings may have increased since completion of the Form E.
- If a spouse is represented by a barrister at the FDR hearing, a conference/s will be held to discuss what can be achieved from the FDR and for the barrister to set expectations.
- Court rules require the Family Lawyers to prepare various documents, including position statements, a schedule of assets, chronologies, Form H, and other documents.
- The spouses discuss the format of the FDR hearing with their lawyers so they are primed and ready to instruct their lawyers if they cannot reach a financial settlement by agreement or using non-court alternative dispute resolution methods, such as family mediation.
- If a financial agreement is reached at an FDR hearing, the judge makes a binding financial consent order, and the financial application is concluded.
The financial dispute resolution hearing
At an FDR hearing, the judge reads the prepared summaries and key financial documents and then hears submissions from legal representatives. The judge will not usually ask either spouse questions or ask anyone to give evidence.
The judge will consider all the documents and submissions and then provide an impartial indication, based on their experience, of what is likely to happen and what will be ordered at a final hearing.
The judge’s indication may be like a spouse’s financial proposal or may be radically different. For example, a husband may want to stay in the family home, but the judge may say they think it will need to be sold and how the net equity should be split. Alternatively, a wife may want spousal maintenance for life, and their ex-spouse may want a clean break order. The judge may indicate that they think a deferred clean break is appropriate, so the wife receives spousal maintenance on a time-limited basis.
Time is usually given for both spouses to consider the indication and for the lawyers to negotiate further with the other spouse’s lawyer. The judge may be asked for a further indication, for example, on the amount of spousal maintenance or whether payments should rise with inflation.
The judge at the FDR hearing will be keen to help reach a financial settlement and will spell out the costs and risks of proceeding to a final hearing, but the decision to settle is down to the applicant and the respondent. No one can be forced to settle if they do not want to.
Talk to the Divorce Financial Settlement Solicitors
Our expert Family Law Solicitors can guide and support you through the financial application process and help you secure a negotiated financial settlement.
Contact our London Family Law Solicitors Today for Expert Family Law Legal Advice.
Appointments are available at our office in London and by phone or online consultation.
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