It is uncommon that financial proceedings upon divorce are decided by a judge. In the majority of cases, with the assistance of their legal teams, parties are usually able to reach an agreement between themselves. This is in no small part due to a particular aspect of the court financial proceedings upon divorce called the financial dispute resolution hearing (“the FDR hearing”).
What is the FDR hearing?
There are largely three stages to financial proceedings upon divorce. The first is to establish what the assets are and how much they worth. In theory, once this is clear, the parties are ready to negotiate. This is where the FDR hearing comes in to play.
The FDR hearing is usually the second hearing within financial proceedings upon divorce. The focus of the FDR hearing is to encourage the parties to come to an agreement. By settling, the parties do not need to incur the significant cost, and bear the risk, of going to a final hearing at which a judge will decide the outcome of the case.
The FDR hearing is a without prejudice hearing, which means that what is said at the hearing cannot be later be referred to. The allows the parties to make offers and concessions in the knowledge that by doing so they are not prejudicing their case. This encourages parties to put their best offers forward before, or at, the FDR hearing.
At the FDR hearing the parties, through their legal teams, put forward their respective cases in terms of the appropriate outcome of the case. Importantly, having heard from the parties, the judge will give their opinion as to what the likely outcome of the case would be if it went to final hearing. This often highlights to the parties the strengths and, importantly, weaknesses of their cases. The judge’s indication is also without prejudice and cannot later be referred to in court.
Preparation for the FDR Hearing
There needs to be as much agreement about what the assets are and how much they are worth as possible. It may be the case that there is not complete agreement between the parties but areas of dispute need to be minimised in order to give the case the best chance of reaching settlement on the day of the FDR hearing.
If expert reports are required, such as property valuations, corporate valuations or tax advice, these should ideally be finalised in good time ahead of the FDR hearing.
It is important that offers are exchanged in advance of the FDR hearing. Presenting an offer for the first time on the day of the FDR hearing is not generally conducive to settlement – parties need some time to digest what the other is offering.
The day before the FDR hearing the parties will exchange position statements and send copies to the judge. These set out each side’s arguments over issues such as capital division, maintenance and pensions. All of the key documents will be include in the court bundle.
Having heard the judge’s indication at the FDR hearing, the parties then put together new settlement proposals taking into account what they have heard from the judge, which generally will move closer to what the judge’s indication was. Offers will then pass back and forth through the legal teams (although there is no obligation to negotiate), until either an agreement is reached or it becomes clear that settlement will not be possible that day.
After the FDR Hearing
If the parties manage to come to an agreement it will either be made into an order that day and approved by the judge if there is time or, if there is not, an order will be finalised in the following days and sent to the judge for final approval. Once the order has been made the parties will apply for decree absolute, which concludes the divorce, and implement the terms of the agreement.
If agreement isn’t reached at the private FDR hearing, then negotiations may continue through solicitors’ correspondence in the followings days and weeks with a view to bridging the gap between the parties. If ultimately settlement cannot be achieved, the case will proceed to a final hearing, at which another judge will decide the outcome of the case.
Increasingly parties are opting to attend a private FDR instead of the court FDR hearing. This is an FDR hearing that takes places outside of the court with a privately hired judge. Our guide to private FDR hearings explains in details what the process entails and the advantages of it.