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Financial provision: the new forms and procedure

New forms for financial provision applications are in place from 5 December 2005. David Hodson looks at the changes and signposts some areas for further reform.

David Hodson

Summary

Introduction
In late October 2005 a statutory instrument was passed which implements many changes to the forms used for financial provision in divorce, most as recommended by the Law Society in its report in May 2003. Unfortunately the profession has yet again been given only limited advance warning between legislation and implementation. The new rules apply to all new applications in Form A from 5th December.

The Family Proceedings (Amendment) (No. 5) Rules 2005, SI 2005 No. 2922 (L. 26) was laid before Parliament on 25th October 2005. With the appendices containing the new forms, it can be accessed through the Family Law Week site here. This article explains the more important changes including comparison with existing forms. The statutory instrument also covers the vast number of changes required by civil partnerships law and also from the Adoption and Children Act 2002 but this article does not cover those changes save for impact on marital finance cases.

Form A Notice of application for financial provision
The heading in the case is to be changed from "In the marriage of …." to "Between (petitioner) and (respondent)". It is understood this is to accommodate same-sex relationships. This change of wording is regrettable. The present heading was only introduced recently with the intention of removing the overtly adversarial wording found in civil litigation. The present, more neutral wording was specifically recommended by the Law Society. It fits in with an objective search for fair solutions. Moreover it overcame the problem of distinguishing which party was petitioner and respondent. Respondent to the divorce? Respondent to the financial application? Applicant to their own cross financial application? Confusion abounded. There is no good reason why in practice the present heading cannot continue with civil partnership cases having their own alternative heading. Many firms are likely to continue the more conciliatory style, using "In the marriage of .." or "In the civil partnership of ..", as applicable.

Instead of the present reference in the tick boxes to parties seeking "an order under s24B, s25B, or s25C of the Act of 1973", there should now be reference to "a pension sharing order or a pension attachment order". By way of reminder, it is no longer necessary to state a Land Registry number of any property sought to be transferred nor the precise terms of any pension order sought, both being Law Society recommendations.

Reference to seeking maintenance pending suit must now be to "maintenance pending suit or outcome of proceedings" to take account of civil partnerships, although given that this is only a tick box, many practices are likely only to include the applicable words on the form.

Form B has also been changed in similar ways.

Form E financial statement
For all applications in Form A issued on or after 5th December 2005 the new Form E must be used. The Law Society Family Law Committee reported in 2003 that there was much to commend Form E in contrast to the previous affidavit of means. However with use of the form came realisation of its shortcomings. It is not very suitable for IT use including Excel documents. There were some obvious inconsistencies between boxes. Descriptions of what should be included in which box could be improved. The new form will produce more comprehensive disclosure and less opportunity for parties to make mistakes or omissions, innocent or deliberate! The following summarises the major changes for practitioners.

It is the experience of many specialist family finance solicitors that once disclosure is satisfactorily obtained, a settlement is invariably reached quite quickly. It is getting to satisfactory disclosure which causes delays, costs and client frustration. A much improved financial statement should improve the process of getting to disclosure. It should mean fewer questionnaires. It should mean more FDRs at FA stage and therefore more early settlements. It should mean less "innocent" mistakes and omissions. It definitely means less opportunity for excuses for non complete disclosure.

Pension forms
At a First Appointment where either party may be seeking a pension-sharing or pension attachment order, the district judge may direct a party with pension rights to file and serve a pension inquiry form, Form P (note: not P3 as referred to in the draft statutory instrument). This changes Rule 2.61D (f) (iii). This form is sent to the pension company. The new form has been prepared by top family law pensions experts in conjunction with the pensions industry and is intended to elicit the specific information that will be required in the circumstances of a case. The document must be signed by the pension holder. Not all of the pension inquiry form will be required in every pensions case but lawyers will need to know which parts are relevant. The form should remove the need for individualised questions in questionnaires and make it easier to ascertain when a non CETV valuation should be obtained. It may be good practice in some cases for the form to be completed voluntarily before the first appointment.

Lawyers should study the form now to know which parts of the form will be relevant in which cases and when the simple CETV information is sufficient. Naturally lawyers should understand what to do with the information when the form is received back from the pension company, or who to ask!

There is a new pension-sharing annex and pension attachment annex for final orders which again requires much more precise and specific information required by pension companies for the best implementation of the terms of court orders. These are forms P1 and P2 respectively. They will require careful study by practitioners before they are first used but will make more efficient and speedy implementation of pension orders more likely. They are a significant improvement.

Form M1 has also been amended to make it clear when a pension sharing consent order is being requested that the necessary information from the pension inquiry form has been obtained and that there is power to make the requested order. The form is now even clearer about serving the notice of application (Form A) on mortgage companies and pension companies.

Financial information for consent order, Form M1
The form is amended with additional information regarding pensions, as set out above.

The requirement in Form M1 in a marital case to state whether a party has an intention to remarry or to cohabit is now expanded to state any intention to enter into any civil partnership. This may come as a surprise to a number of clients. There is a massive difference between a general inquiry of a client about possible cohabitation, which could be with either sex, and about an intention to form a relationship, publicly, with someone of the same sex. Some clients may be embarrassed to be asked. Some will be downright offended. Lawyers need to be very sensitive to their clients including the very strong feelings felt on the subject by a number of clients.

The 1991 FPR have been amended by the statutory instrument so that any requirement in the 1991 Rules (including in the forms) to state if either party to a marriage has remarried or has any intention to marry or remarry shall be read as also requiring parties to indicate if they have entered into a civil partnership or have any intention to do so. Moreover cohabitation as now defined does not include those who are married or are in a civil partnership.

Courts
To cover civil partnership cases, "divorce county courts" are now "designated county courts". Moreover, references in certain pieces of legislation to a "divorce town" should now also be to a "dissolution town" to fit in with civil partnership terminology. Those towns will not though appreciate being referred to in shorthand as dissolute towns.

Failure to provide reasonable maintenance
There have been ancillary changes to both the forms and to the relevant sections of MCA for this now relatively unused financial provision.

Headings to actions
Practitioners dealing with divorce and financial provision cases must be aware that most family court forms, including headings and references to marriage, husband and wife, spouse and to specific marital provision have now been comprehensively changed to embrace issues and terminology referable to same-sex couples. Whilst some changes are fundamental because of changes in substantive law, some changes merely parallel the two jurisdictions. Some firms may decide that they will have parallel precedent forms for marital and non marital cases, particularly as some clients may be surprised and/or shocked that their marital affairs now seem to be on a par with same-sex couples. There can be no reasonable objection to such parallel forms.

The statutory instrument runs to over 100 A4 pages excluding appendices and forms. Most are amendments to existing rules and forms to take account of the civil partnership law. Given the vast resources, costs and personnel time which these changes will cause to libraries, precedent banks and stationery supplies of law firms, court offices and others, it must be hoped that the take-up of the new law justifies it.

Form H, costs changes and interim lump sums
This form about costs which must be filed at all financial hearings requires much improvement, as recommended by the Law Society. However it is the subject of discussion in respect of the proposed dramatic changes to the costs rules. The DCA anticipated in August that the new costs rules would be introduced with these other changes with effect for Form As from 5th December. Substantial differences on the committee overseeing the costs changes have meant delays this autumn. It may now be introduced in March with a new form H.

The Law Society in May 2003 strongly urged the introduction of the power for interim lump sums, including for interim payment of costs. Parliament included it in the FLA 1996 (but not implemented) so its merits are not disputed in principle. The DCA are supportive but nothing has happened. It is long overdue. Its absence works injustice. Moreover a change in costs to introduce a starting point of no order as to costs will work real injustice to wives and other applicants for financial provision unless there is also a power for interim lump sums, as exists in Australia and other jurisdictions where such "no order" costs regimes apply. It would be much better to delay the costs rules until interim lump sums are available.

David Hodson is an English and Australian solicitor and mediator, an arbitrator and a DDJ at the PRFD. He was a member of the Law Society group which produced the May 2003 report. He can be contacted on dh@davidhodson.com. He is grateful for the assistance of Chelly Milliken, an Australian solicitor and policy adviser on family law matters at the Law Society. A longer version of this article can be found on his website.