According to the Law Commission, the current law does not “provide a cohesive framework in which parties to a divorce or dissolution can expect fair and sufficiently certain outcomes.” The reason for this is the wide-ranging discretion contained in the current law, which allows judges significant scope for interpreting the legislation.
The rationale for the discretion is that it provides judges with the ability to come up with bespoke outcomes (every family being different) but the trade-off is that this flexibility creates uncertainty of outcome.
Before examining the proposals in the review, this article will consider the current law governing financial considerations in divorce.
Current provisions for financial settlements in divorce
Financial settlements in divorce are based on the principle that there should be a fair division. The law establishing this is contained in the Matrimonial Causes Act 1973 (the “Act”). Whilst the provisions indicate that they should be fair, that does not mean there must be a 50/50 split. Indeed, ‘needs’ can often be the driving force and could result in a departure from 50/50 in one person’s favour.
Clause 25 of the Act introduced several matters to which the court must have regard when exercising its powers in relation to financial settlements. The court must consider all the circumstances of the case, gives first consideration to the welfare of any children of the family under the age of 18 and, in particular, the court has regard to the following matters:
- Each party's income, earning capacity, property and other financial resources. The judge will consider each party's resources now and for the foreseeable future.
- The financial needs, obligations and responsibilities of each party.
- The standard of living the family enjoyed during the marriage.
- The parties' ages and how long they were married.
- Whether either party had a physical or mental disability.
- What contribution each party has made or is likely to make to the family's welfare in the foreseeable future. This includes looking after the home or caring for the family.
- How each party has conducted themselves. This applies if the conduct is such that, in the court's opinion, it would be inequitable to ignore it.
- The value to each party of any benefit they will lose due to the divorce (a typical example being a pension scheme).
When the court weighs these wide-ranging provisions, it might conclude that an unequal split of assets on divorce should favour one of the parties.
The Civil Partnership Act 2004 contains provisions that mirror those in the Matrimonial Causes Act 1973 and apply to the dissolution of a civil partnership.
The Law Commission and financial considerations in divorce
The Law Commission has recently conducted a review of the law. It has concluded that “it is not possible for an individual going through a divorce to understand, by reading the statute, how their case will be decided. The law lacks certainty and accessibility to an extent that could be argued is inconsistent with the rule of law.” In other words, the Law Commission believes this area of law potentially needs remediation and consolidation.
On 18 December 2024, the Law Commission published a Scoping Report. This is a detailed report, and it discusses four possible models for reforming the law:
- Codify the existing law.
- Codify the law and provide statutory reform on specific points (for example, pre-nuptial agreements).
- Introduce a set of underpinning principles and objectives to guide the court’s discretion.
- Create a ‘matrimonial property regime’ that will provide rules for dividing up property on divorce, with the court’s discretion strictly confined.
The Law Commission puts the ball into the government’s court to decide whether the law requires reform and, if so, what shape any reform should take. A response from the government is expected before the end of the year so we will watch this space to see if any changes are in the pipeline.
This article was originally written by LawNet and has been republished here with permission.