Rule 34 and Divorce Settlement Gridlock

One of the better ways of resolving a divorce is through a negotiated settlement agreement. Simply put, this involves the clients and their attorneys sitting down and trying to reach agreement on the various issues in dispute.

These disputed issues usually revolve around who gets what, as well as around contact, residency and cost issues relating to childen born from the marriage.

During the divorce settlement process, there may be a situation where one person (known as the plaintiff) refuses to accept a settlement offer made by the other person (known as the defendant). The person who refuses is often the one who holds the purse strings.

This can be very frustrating for the defendant who has made the offer, as they’re then forced to continue with litigation even though they’ve tried to resolve at least one of the major issues.

In this situation, Rule 34 of the Uniform Rules of the High Court can be used to break the gridlock in a divorce settlement agreement. Essentially, the rule states that where a sum of money is claimed (for example a proprietary settlement and maintenance claim), the defendant may at any time make a written offer to settle the plaintiff’s claim.

This offer can either be unconditional or without prejudice. An unconditional offer means that the defendant admits the plaintiff’s claim in whole or in part, while an offer without prejudice means the defendant denies liability but makes an offer of settlement. The offer must also state whether the defendant will pay all or only a part of the plaintiff’s costs.

The offer is made by notice, which is a short document prepared along the lines of rule 34. If the notice is unconditional, it will be filed in court, i.e. the judge hearing the trial will have reference to the document. If the notice is given without prejudice, it will only be made available to the court after judgement has been given in the matter.

The plaintiff on receipt of the notice may then elect to accept the offer, which means that litigation is resolved on that basis. Alternatively, they can refuse the offer and choose to continue with the litigation.

If the offer exceeds the amount of any judgement ultimately awarded by the court, the usual practice is to order the plaintiff to pay the defendant’s costs from the date of the Rule 34 offer until the date of the judgement.

If you’re currently negotiating a divorce settlement agreement and are given a Rule 34 offer, it’s wise to carefully consider whether or not the offer is reasonable. This is important because if you decide to continue with litigation in spite of what’s seen as a decent offer, you may find yourself funding a large portion of your opponent’s legal bills simply because you’ve failed to accept that offer.

By Gillian Lowndes, attorney specialising in family law