There are growing calls for reform to the law relating to the division of property and finances in the event of divorce in England and Wales.
THE CURRENT LAW – AND ITS SHORTCOMINGS
The current law, which the courts must follow, is the Matrimonial Causes Act 1973.
In July of this year, Baroness Deech introduced a Private Member’s Bill calling for a re-examination of the Matrimonial Causes Act which, despite the many changes to British family structure, dates back to 1973 and has not been debated in parliament for 40 years. Deech argued that the current law allows for too much judicial discretion, leading to unpredictability and a lack of consistency.
Sarah Jackson, Head of Family Law at BLB Solicitors, comments on her team’s position as follows: “We would welcome a reform to the law relating to the splitting of assets on divorce to assist couples to reach amicable agreements and reduce the need for litigation and costs, and to enable courts to show greater consistency in outcomes.”
But where do we stand now? A recently published briefing paper provides a really useful and comprehensive summary of the current law for divorcing couples and explains how the law has evolved and why changes are necessary.
REACHING AN AGREEMENT
The ideal situation is that a couple who are getting divorced or having their civil partnership dissolved, come to an agreement about the division of their assets themselves, with or without professional legal guidance. This agreement can then be enshrined in a consent order, which once approved by the court becomes legally binding.
THE COURT’S DISCRETION
In cases where an agreement cannot be reached, however, a spouse is able to apply for a financial order from the courts. The orders typically dictate the division of money, property and pensions, as well as any ongoing maintenance payments.
However, under current law, financial orders are dealt with on a case-by-case basis. The law states that the welfare of any children is the highest priority, but a number of other factors will also be taken into account: each individual’s future income, earning capacity and financial resources; financial needs and obligations; the current standard of living; physical or mental disability; the financial and family contributions of each party to date; and the conduct of the people involved.
PRACTICAL PROBLEM OF MEETING BOTH SPOUSE’S NEEDS
Whether a settlement is reached with or without the involvement of a judge, the practical problem is, as noted by the Law Commission in 2011, that “… it is usually difficult to meet the needs of two households out of the resources formerly devoted to one.”
HOW HAS JUDGE-MADE LAW (CASE LAW) EVOLVED?
Before the year 2000, judgements were made by the court according to the belief that “the reasonable requirements of the financially weaker party must be met”. This would often result in the ‘weaker’ party receiving only a fraction of a richer partner’s wealth. This all changed in 2000 when the judges in the case of White v White decided that the role of the home-maker was to be regarded as equal to that of the main breadwinner, bringing greater equality to the division of assets.
The judge-made law in this area further evolved in 2006 when it was decided in the cases of Miller v Miller and McFarlane v McFarlane that three principles should guide the court when trying to achieve fairness:
· the needs of the parties;
· compensation for any relationship-generated disadvantage (where one spouse has given up a lucrative career); and
· the principle of equal sharing.
THE COURT APPLICATION PROCESS
In general, couples will be required to attend a Mediation Information Assessment Meeting (MIAM) prior to applying to the court for a financial order, although exceptions can be made in cases where there is evidence of or risk of domestic violence.
There is no time limit imposed on applications for a financial order as the courts view marriage as a life-long obligation; you can apply at any time during or after a divorce. Courts may take into account any reasons for a delayed application, however.
Financial applications need to be sent to the regional divorce centre which is processing, or has processed, your divorce. If your application is for a consent order, the application will be dealt with by a judge at the regional divorce centre. If your application is contested, further to the success of a recent pilot scheme designed to separate divorce proceedings from financial proceedings, your application will (if the scheme has been fully rolled out by the time you are applying) be dealt with separately by your local court.
GUIDANCE FROM THE FAMILY JUSTICE COUNCIL
In 2014 the Law Commission published its ‘Matrimonial Needs and Agreements’ report, which concluded that the law relating to former spouses’ responsibilities to meet each other’s financial needs is not in need of reform.
However, it did find that the law was largely inaccessible to the general public and was not always followed consistently in different areas of the country. It found that the lack of clear law – the fact that the law essentially says “it is up to the judge” – was particularly problematic given that most couples reach an agreement without requiring a judge to adjudicate.
Thus, the Law Commission recommended that guidance be produced to clarify the meaning of ‘financial needs’ and raised the possibility of a calculator that couples could use to calculate their ‘financial needs’ as a tool for assisting with settlement negotiations.
With the approval of the Coalition Government of the time, guidance was published two years later by the Family Justice Council. The first guide, published in April 2016, is intended to help litigants in person and the second, published in June 2016, is aimed at the judiciary.
In January 2017, the current Conservative Government said that an online tool, as recommended by the Law Commission, will be developed.
In July 2017, the Government confirmed, in response to a Law Commission report in 2016 on the issue of enforcing family financial orders, that it would “give careful consideration to the full range of recommendations in this report as part of the Government’s broader thinking on the family justice system” and would provide “a full response once that process is complete”.
It would appear, then, that changes to the family justice system are anticipated.
It remains to be seen, however, whether the law itself will be changed and Baroness Deech’s Bill to amend the Matrimonial Causes Act 1973 and make the law clearer in relation to financial settlements following divorce, has yet to be given a date for its second reading.
In the meantime, the law in this area remains complex and uncertain.