In any financial family matter the applicant is require to file and serve their open proposals not less than 14 days before the final hearing according to Family Procedure Rules (FPR) 2010 rule 9.28. Not more than 7 days after service of the open proposal the respondent must file with the court and serve on the applicant an open proposal. An open proposal is a concise document that sets out the amounts involved in the case and what the party proposes as a fair division of these assets. The offers within these open proposals may be accepted at any time up until the final hearing unless withdrawn in writing. The Judge at a final hearing will view the offers made. Therefore the open proposals must be carefully considered both when making and responding to them. Rule 44.3(2) of the Civil Procedure Rules states that the general rule is that the unsuccessful party to an application pays the successful parties costs, however rule 28.3 of the FPR states that the general rule in financial remedy proceedings is that the court will not make an order requiring one party to pay the other parties costs. The court can however depart from this general rule and Rule 28.3(7) of FPR includes a list of criteria that the court must have regard to when considering making an order requiring one party to pay the costs of the other party. These include 28.3(7)(b) FPR, ‘any open offer to settle made by a party’. Whilst the court is not going to reduce the financial pot to below the needs of either party by ordering a costs order, it is imperative, in order to avoid a costs sanction, that a client does not simply dismiss an offer and that the offer you propose is fair.
It is possible to check the fairness of an open proposal by using a net effect calculation. This is a calculation that has been created in order to measure any offer against the yardstick of equality, established in White v White 2001. The net effect calculation is achieved by taking the open proposal figures and assigning them to each party then calculating the sum of what each party will retain. You can then work out what percentage each parties retained assets equates to. The starting point for any split of assets is 50/50, so the closer you get to this the better. However the court may depart from this 50/50 split for a number of reasons including the needs of each party.
I think my first net effect calculation went quite well but there is apparently an amazing way you can do it in excel so that there is no way you will miss a trick or should I say a figure.