This is intended to provide a comprehensive picture of each party’s assets and income plus their future capital and income needs. There will be an opportunity for the other party to ask questions later if they need additional information or documents but costs can be saved by ensuring that the Form E has no gaps and likely questions are anticipated and answers provided in full.
Honesty is vital – if the other’s party’s solicitor has any suspicions that disclosure has not been full and frank, this can cause delay and push the legal costs up substantially.
Invaluable assistance from advisers
Prompt assistance from the client’s independent financial adviser can be invaluable at this stage, especially if the adviser is familiar with the requirements of the Form E. The adviser can ensure that all the necessary financial information and documents are collected and delivered to the solicitor in good time. The adviser can also prompt the client to consider any tax implications, such as capital gains tax on the sale of any of their assets, and to identify any issues that may arise as to contested valuations.
In respect of the assessment of the client’s future needs, they must state their full capital requirements, including housing, possibly multiple properties, in a high value case, cars and repayment of any debts. But the most troublesome aspect can often be the monthly expenditure budget, such as in the Estrada case.
The sharing principle does not apply to issues of income, so the quantum of maintenance is decided on the basis of need alone. The court will have regard to the parties’ standard of living, so while Estrada’s claims may seem extreme by most people’s standards, she may succeed if she can prove that this is the lifestyle she enjoyed during the marriage and it would be reasonable for that to continue.
At an interim hearing, the judge remarked that the husband had “throughout provided this family with an extraordinary standard of living and it is one which they both enjoyed”.
The balance can be difficult to find; if the budget is too modest, this can adversely affect the quantum of the client’s award but if the budget is exaggerated the court can view it as just a “wish list”.
This is illustrated by the notorious budget put forward by the charity campaigner Heather Mills in her divorce from Paul McCartney in 2008. She fatally damaged her credibility with the court by failing to put a rational and logical case for the future needs of her daughter and herself.
Despite the fact that the parties had lived in a fairly modest way, considering their wealth, during the marriage, Heather Mills put forward a ridiculously high budget of £3.25m a year.
This budget inculded items that simply could not be justified such £39,000 a year for wine – she is tee-total – and was penalised in the award as a result.
Clients must be advised that if the case proceeds to a final hearing, they have to be able to justify each and every item under clinically precise cross examination from the other party’s barrister. This can often mean careful analysis of the client’s bank account and credit card statements to ensure that what they think they might spend in the future is rooted in reality rather than their pipe-dreams.
