The law on matrimonial finances – time for change?

On 17^th December 2024 the Law Commission published their 373-page scoping report upon financial remedies on divorce and dissolution of a civil partnership.

The Law Commission is an independent body established to make recommendations to Government upon law reform.

The Law Commission’s report recognized that the end of a marriage or civil partnership is often a stressful and unhappy time for a couple. The report looked at how couples currently resolve the financial consequences of their separation and possible ways this could be reformed.

The law determining the resolution of financial matters is governed by s25 of the Matrimonial Causes Act, passed as long ago as 1973, which sets out that the judge must have regard to all of the circumstances of the case, with first consideration being given to the welfare of children under the age of 18. The factors the court take into account include the following;

1. the income, earning capacity and resources of both parties;
2. the financial needs, obligations and responsibilities of both parties;
3. the standard of living during the marriage;
4. the age of parties and the duration of marriage;
5. any disabilities of the parties;
6. the parties’ contributions to the welfare of the family;
7. any conduct which it would be inequitable for the court to disregard; and
8. the value of any benefit which either party will lose the chance of acquiring because of the divorce.

Each divorce which comes before the court is dealt with on a case-by-case basis and the judge dealing with the matter has wide discretion to apply the above s25 factors. This creates a degree of uncertainty and regional variations. Many of the reported cases upon financial remedies which have created precedents for the court to follow involve so called high net worth “big money” cases, which are a far cry from everyday more modest cases where the needs of the parties will be paramount.

The Law Commission’s report referred to the Nuffield Foundation’s research project “Fair Shares? Sorting out money and property on divorce” report which was published in November 2023. That report confirmed that most divorce cases are “needs” cases where there are insufficient assets to meet the parties’ needs and those of their children.

Unsurprisingly, the Law Commission report concluded that the current law does not provide a cohesive framework in which the parties can expect fair and sufficiently certain outcomes.

The report looked at different potential models for reform to the current law including amending the current legislation to embody the principles of fairness, needs and sharing by codification of the existing case law. The report raised many questions including whether Prenuptial Agreements should be binding, whether there should be a term imposed on the duration of spousal maintenance and whether Pension Sharing Orders should be the default position. The report also questioned whether we should adopt a default matrimonial property regime expressly providing how property should be shared on divorce, such as in certain other European and Commonwealth jurisdictions.

The Government will ultimately consider the Law Commission’s report and decide if the law governing financial remedies upon divorce should be amended. There is however no change to the law on the horizon.

With the current unpredictability of the final outcome of financial cases coming before the court, coupled with the long delays in the court system and the costs involved, it is no wonder that court proceedings should often be seen a last resort. Non-court dispute resolution such as mediation, collaborative law and private Financial Dispute Resolution (FDR) hearings should be considered to try and keep cases out of the court arena.

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Porter Dodson have experienced and specialist family lawyers who can guide you through the divorce process and help you to achieve the best possible outcome for you and your family in the timeliest and most cost effective manner. This includes divorce, separation and the resolution of financial and children matters. For more information, please contact our Family Law Team who would be happy to advise you.