10. Financial Dispute Resolution
The Financial Dispute Resolution (FDR) process consists of 3 stages and aims to deal with disputes over financial matters between parties quickly and efficiently. The 3 stages are:
- First Appointment;
- FDR Hearing;
- Trial (if parties do not reach a settlement after FDR)
PREPARATION FOR FIRST APPOINTMENT AND FINANCIAL STATEMENT (FORM E)
The purpose of a First Appointment hearing is to gather all the relevant documents and information that is needed to for the FDR Hearing.
After a claim for ancillary relief by a party is filed, the court will set down a date for the first appointment and notify both parties. Before the First Appointment hearing, parties will have to file and exchange with each other their Form E.
Form E has 7 parts in total:
- General Information
- Assets, Liabilities, and Summaries of Assets and Liabilities
- Current Monthly Expenses
- Other Information
- Orders Sought
- Schedule of Attachments
It is important that documentary evidence is also provided to support the information given in Form E. Even if those documents are not available at the time Form E is filed, it should be filed to the court and given to the other party as soon as they are obtained.
In relation to the Form E, the parties are required to make full and frank disclosure of their financial situation in it. This means the parties need to disclose all the information that is relevant to what is asked for in the Form E. Further, this obligation is on-going, which means that even after filing the Form E, if there are any big changes in the party’s financial situation, it should be included and updated in the Form E.
If a party is found to have deliberately been untruthful and does not make full and frank disclosure, the court may draw an adverse inference against the untruthful party (i.e. that he/she has hidden funds), be more favourable to the innocent party in the final order, and even requires the dishonest party to pay costs in the end. In serious cases, criminal proceedings for perjury may be taken against the untruthful party.
Even if a party knows that the other has not disclosed everything that is relevant to the financial dispute, parties should refrain from using ‘self-help’ measures to obtain those hidden or undisclosed documents. For example, a party should not take documents that have been stored in a password protected safe or personal computer that is in the matrimonial home. Doing so would be a clear breach of privacy and confidence. It may result in the court finding that those documents obtained are not admissible or cannot be used in court because the way it was taken is unfair.
Other than the Form E, the parties will have to prepare a First Appointment bundle. In this bundle, various documents must be included so that the court can deal with the case properly and make directions to move the case forward to the next step. These documents include:
- A list of directions and orders sought;
- Questionnaire / list of documents sought from the other party – questionnaires are used to seek more information and detail or clarification from things that the other party has disclosed in their Form E;
- A concise statement of issues between the parties;
- A chronology of events.
FIRST APPOINTMENT HEARING
At the First Appointment hearing, the judge will consider the orders sought from both parties and make appropriate directions to manage the case. Some common examples of the orders and directions made by a judge at the first appointment hearing include:
- allowing leave to file and serve parties’ questionnaires;
- ordering a party to disclose further information and documents;
- ordering that parties agree on the value of a particular asset;
- order that a Single Joint Expert be appointed so that there is a formal valuation of a property or company.
There may be a few First Appointment hearings if all the necessary information and documents are not ready or parties seek further case management directions from the court. The case will only proceed to FDR hearing when it is ready.
Note that the First Appointment hearing may be heard at the same time as the Children’s Appointment (the first step in CDR) if parties also have children matters that need to be resolved.
The purpose of the FDR hearing is to explore the options for settlement of the parties’ claims for financial relief so that the high costs and uncertainty of trial can be avoided.
Parties should note that they must have obtained their Decree Nisi before the FDR hearing.
Prior to the FDR hearing, both parties will need to prepare a FDR bundle. The bundle will need to include all the offers made, proposals, and correspondences between both parties.
Both parties are required to attend the FDR hearing and try their best to negotiate for a settlement. The parties or their legal representatives will make submissions to the court and present the strengths of their case and weaknesses of the other party’s case.
The judge in the FDR hearing acts as the facilitator and assists the parties in their discussion for settlement. After hearing the parties’ suggestions and submissions, the judge may indicate the likely outcome of the case, how the matrimonial assets are to be divided if the case proceeds to trial. Often, after the judge tells the parties of his or her thoughts and indications, 15-30 minutes will be given to the parties to leave the courtroom and discuss between themselves. Afterwards, the parties would return into the courtroom for an update on the negotiations. This may also happen for a few rounds in order to increase the chances of reconciliation.
Settlement cannot happen unless both parties consent to the terms and agreement. Further, the consented settlement will take effect only after the parties have obtained a decree absolute.
At the FDR hearing, parties cannot claim privilege in any offers or counteroffers made before the FDR hearing. On the contrary, any offers, counteroffers, proposals, and discussions made at the FDR hearing cannot be disclosed at trial and cross-examine the other side on the same. The aim of this is to facilitate negotiation and settlement between parties without the fear of their attempts at settlement being used against them in the future if trial commences.
In addition, the FDR hearing may be heard together with the CDR hearing (if both parties dispute on children-related issues).
If the parties do not reach a settlement, the parties’ financial dispute will have to go to trial.
While offers and discussions made at the FDR hearing cannot be disclosed at trial, open proposals or open offers (the amount to be allocated by the proposed parties) made for the purpose of the trial can and will be raised and cross-examined by the other party at trial.