Divorce reform: An outline of the review dealing with the financial aspects of divorce

The Law Commission has launched a review of the principles for financial provision following a divorce under the Matrimonial Causes Act 1973. This comes one year after “no fault divorce” which has been widely commended by both practitioners and divorcing couples.

Reason for the review

The review is set to take place 50 years after the introduction of the Matrimonial Causes Act. Baroness Shackleton (a leading divorce practitioner), states that the current law is “hopelessly out of date”. Social norms and marriages since 1973 have changed greatly. There is now much more equality between husband and wife and it is considered normal for a household to be a two-income household. As a result of this, the Act has been interpreted to keep up with the developing social norms and this has resulted in a great deal of case law. Whereas this shows the key interpretation function of the judiciary to keep legislation up to date, the main criticism is that it has led to a huge amount of uncertainty and a grey area on how far judge’s discretion extends.

Issues to be reviewed

The Law Commission will undertake a detailed analysis of the current framework to see where the problems lie and where there is scope for reform on any particular issue. In particular, the following areas will be reviewed:

• The discretionary powers given to judges over the division of financial assets, and whether there is a need for a clear set of principles, enshrined in law, to give more certainty to divorcing couples.
• Whether there should be wider powers given to the courts to make orders for children over the age of eighteen.
• How maintenance payments for an ex-spouse or civil partner should work.
• What consideration the courts should give to the behaviour of separating parties when making financial remedy orders.
• Orders relating to pensions and whether they are overlooked when dividing the divorcing parties’ assets.
• The structure of the system for making regular financial payments from one person to another after divorce.
• The factors judges must consider when deciding which, if any, financial remedy orders to make

The areas for review indicate a complete overhaul of the financial remedy principles. The main criticism appears to be that the same facts can be put before a variety of different judges and each judge will give a different indication or make a different order. This highlights the inconsistency in the current framework.

Comparisons with other jurisdictions

In addition to the areas for review, the Law Commission will be undertaking a review of the financial remedy laws in other jurisdictions, such as Australia and other European countries.

The law of England and Wales in relation to matrimonial finances has commonly been described as over generous due to the starting point of capital being 50:50 between spouses. A departure from equality can be argued in “needs” cases in favour of the financially weaker party. This approach is far more generous than many other European jurisdictions where there is a greater recognition of assets brought into the marriage by one party and where maintenance is only given in set circumstances and for a limited number of years.

Nuptial agreements

One possible solution could be to afford greater weight to prenuptial agreements and postnuptial agreements. These types of agreements can give greater certainty over the division of assets on divorce and the ongoing financial position of each party in the event of divorce.

In some jurisdictions, nuptial agreements are standard agreements that most marrying couples enter into. This will decrease the discretion that judges have and puts the obligation in the hands of the marrying couple to consider what is fair in the event of a divorce.

Nuptial agreements should be subject to review periods to account for any events which happen during the course of the marriage and change the effect of the proposed financial provision, such as the birth of a child or a life changing illness.

Conclusion

Whilst greater certainty is something to be aimed for, it cannot be ignored that discretion in family law is fundamental to ensure the outcome is fair. It may not be possible for one statutory framework to work for every divorcing couple. Any reform must allow for an element of discretion to accommodate complex family dynamics.

Discretion is a key part of the legal system of England and Wales. It enables our statute to be interpreted to keep up with social norms in a quicker and more cost-effective way than frequent reforms through Parliament.

The Law Commission is due to publish its report on the review in September 2024. No doubt matrimonial practitioners will be keeping a keen eye on the developments and areas for reform.

This article was written by Jenny Dodds, a lawyer in the family and divorce team. It was first published in Law News in April 2023.