When a marriage breaks down, the parties to the marriage will seek to dissolve their marriage by issuing a divorce petition in the Family Court. Occasionally, instead of commencing divorce proceedings the parties may agree to issue a petition for judicial separation in the Family Court to dissolve their marriage at a later date.
As part of the dissolution of marriage, any financial arrangements following the parties’ separation will need to be dealt with. If the financial aspects cannot be resolved between the parties, they will need to apply to the Family Court to have their financial disputes resolved. The process of seeking the Family Court’s assistance in adjudicating all financial aspects of a marriage following the issuance of a divorce petition is called the ‘ancillary relief’. In other words, financial application is ‘ancillary’ and entirely separate from the dissolution of marriage.
The term ‘ancillary relief’ is widely referred to in financial orders in practice.
The purpose of this guide is to provide an explanation in clear terms on the key phrases often referred to in divorce proceedings relating to the parties’ financial claims arising out of a breakdown of a marriage.
Financial orders that the courts have power to make in ancillary relief proceedings
Either the husband or the wife can apply for ancillary relief in proceedings for divorce or judicial separation, either for themselves and/or the children of the family.
The Family Court can make various interim and final financial orders. Interim orders are made to financially assist a party to the divorce proceedings when the proceedings are on-going. Final orders are made when the decree nisi (i.e. the first stage of divorce) is made absolute (i.e. the last stage of divorce and the official end of a marriage). The forms of ancillary relief (or financial orders) that the Court can make include:
(a) an order for maintenance pending suit;
(b) a periodical payments order;
(c) a secured periodical payments order;
(d) a lump sum order;
(e) a secured lump sum payment Order;
(f) a settlement of property order;
(g) a transfer of property order;
(h) a variation of settlement order.
For the purposes of this guide, we will be explaining the following few financial orders:
- Maintenance Orders
Interim orders can include maintenance pending suit (“MPS”), i.e. the Court will order the husband/wife to pay maintenance to the other party pending the determination of the proceedings. MPS can include maintenance for the spouse and the children of the family as well as a contribution towards the spouse’s litigation costs. Interim orders will come to an end upon the making of the final orders.
Maintenance orders can be made by way of periodical payments or secured periodical payments. Periodical payments are made after the final decree i.e. decree absolute, at which point any MPS if granted will cease. If the Family Court orders a secured periodical payment, it is done so when there is concern that the paying party will be unable to make the periodical payments unless they are guaranteed.
The Family Court has the power to limit the duration of the maintenance orders and these can be varied upwards or downwards based on substantial changes in the circumstances of either parties.
- Lump Sum Orders
A lump sum order can be made by the Family Court upon division of assets to achieve a ‘clean break’ settlement between the parties i.e. a resolution of all financial claims including any maintenance claims. The Family Court can order the lump sum to be paid in one go or by instalments.
- Transfers of Property
A transfer of property order can be made by the Court to transfer a landed property in the matrimonial pot from a party’s sole name to the other party’s sole name, from the parties’ joint names to a party’s sole name, or from the name of a company to a party’s sole name. Examples of common situations where the Court would make such an order:
- Where it is in the children’s interests for them to remain in the matrimonial home with one of their parents.
- Where it is difficult for a party to secure a roof over his/her head after the divorce.
- Where the recipient party has the ability to finance the mortgage and other maintenance costs of the property, if any, with or without the assistance of the other party
How to file for ancillary relief in Hong Kong
It is only possible to file for ancillary relief in Hong Kong upon a divorce or judicial separation. In other words, one cannot make a standalone application for ancillary relief without first commencing proceedings for divorce or judicial separation.
The application for ancillary relief is usually prayed by the Petitioner (i.e. referred to as the person who initiates the divorce proceedings) in the petition for divorce or judicial separation to commence the proceedings. If the Respondent (i.e. referred to as the party who is not the initiator of the divorce proceedings) wishes to apply for ancillary relief, s/he can file a document, called Form A to indicate which forms of ancillary relief (or financial orders) s/he would like to claim.
How long does ancillary relief take and what are the usual cost orders?
From issuing the divorce petition to the conclusion of the ancillary relief proceedings, it generally takes, on average, a minimum of 2 years or more if the parties are unable to reach a financial settlement and are required to proceed to an ancillary relief trial. This is because the parties will usually take part in the Financial Dispute Resolution (“FDR”) which is designed to allow the parties of the divorce proceedings to negotiate their financial settlement without the need for an ancillary relief trial (which can be costly and time-consuming). FDR is an informal hearing in the Family Court to allow parties to engage in constructive discussion with the Judge in the hope to resolve their differences on finances. If FDR fails, then the matter will proceed to ancillary relief trial before another Family Court Judge.
Considering the time and costs involved in this process, often parties will be encouraged to settle amicably through other means e.g. mediation without having to wait until the ancillary relief trial.
The party who succeeds at trial will generally be able to recover his/her costs from the other party, but the Family Court has the ultimate discretion in determining who should pay for the legal costs, and how much.
Having said that, in most cases where the parties are able to reach a settlement on their ancillary relief claims with the assistance of the Court, mediator or solicitors, the usual costs order in that case will be ‘no order as to costs’ i.e. that the parties will each bear his/her respective legal costs involved in their ancillary relief applications.
Each case has its own unique facts and circumstances. We would recommend parties to a divorce seek specialist advice on ancillary relief which are tailor-made to their own needs, so as to ensure that their and their children’s needs are protected.