The Law Commission published its scoping report on the laws governing finances on divorce and the ending of a civil partnership on 18 December 2024. In an earlier article written by trainee Victoria Lee Domenech, we considered the project’s terms of reference and previous attempts at reform.
In this article, knowledge lawyer Carla Ditz looks more closely at the conclusions of the scoping report and the possible models for reform identified by the Law Commission in its review.
Outcome of the scoping report
The fundamental question at the heart of the review was whether the current law provides a cohesive framework in which parties to a divorce or dissolution can expect fair and sufficiently certain outcomes. It came as little surprise that the Law Commission found that it does not.
At 373 pages long, the report takes a deep dive into the issues with the law as it stands and, on a practical level, how it impacts those going through divorce. While no specific recommendations for reform of the law are made, the report identifies possible models for reform.
The Law Commission concluded that “the current law contained in the Matrimonial Causes Act 1973 (and mirrored in the Civil Partnership Act 2004) does not reflect the significant developments to financial remedies law arising out of judicial decisions”.
It continued: “Combined with the wide-ranging discretion contained in the current law, this means that it is not possible for an individual going through 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.”
Lack of certainty
The lack of certainty refers to the fact that judges have wide discretion to determine the division of assets on divorce. This feature of our legal system can prolong negotiation and proceedings and drive up legal costs. While this discretion enables bespoke and fair solutions for couples resolving their financial arrangements, it means outcomes can be unpredictable. There can, therefore, be said to be a trade-off between judicial discretion and certainty, although many argue that this discretion is a positive feature of our legal system. Even where cases do not come before the court, there is still flexibility within the current framework for couples to reach an agreement to suit their circumstances, and this should not be underestimated.
Lack of accessibility
The lack of accessibility relates to the fact that the Matrimonial Causes Act 1973, representing the foundation of the law on financial remedies, is over 50 years old, and the law has subsequently evolved through the interpretation of statute and, importantly, through settled case law. While the evolution of the law in this way has meant it has been able to move with the times and adapt to socio-economic changes, it cannot be said that the law is known or easily understood by the vast majority of couples going through divorce.
Adopting the words of the scoping report’s terms of reference, there is an absence of a “cohesive framework” by which the law can be readily or easily identified. Without legal advice, few divorcing couples know what the law provides for them on relationship breakdown and what their options are regarding the division of assets. Access to legal advice and support is axiomatic in this respect and is a self-evident flaw in the present justice system.
Reform of perceived issues with current law
The findings with respect to the current law on financial remedies have been clearly stated in the report. What is less clear is what reform could solve the perceived issues. Practitioners are divided in this respect. While many agree that reform is required, there is concern that an overly rigid system will compromise flexibility and the ability to achieve fairness in each case.
The law is complicated and difficult to navigate, but the present system has many positive aspects. The challenge is how to reform the law to accommodate the vast spectrum of cases without losing the ability to produce fair outcomes. The Law Commission has said that any reform will indeed need to balance fairness with greater certainty and that procedural reform should be considered alongside any reform of the law.
Models for reform
So what might reform look like? The scoping report identified four possible models on which any reform could be based. It will be for the government to determine what, if any, reform is required and to identify a “preferred” model.
- Codification: this would involve minimal change to the existing law as set out in section 25 of the Matrimonial Causes Act 1973 (MCA 1973). However, settled case law would be incorporated (“codified”) into statute. Wide judicial discretion would be retained under this model, but it would do little to increase certainty. It would represent the simplest model of reform.
- Codification-plus: this would go beyond codification of the current law as additional reform would be introduced to deal with specific areas where the law is not settled. Judicial discretion would remain, but limitations may be placed on exercising discretion in relation to any newly introduced areas of reform.
- Guided discretion: this would see the introduction of “a set of underpinning principles and objectives” which guide the exercise of the court’s discretion and application of the law. Legislation would prescribe how and when discretion could be exercised.
- Default regime: this would involve wholesale reform of the law by creating a matrimonial property regime. In practice, this would mean couples would know at the point of marriage how their property will be divided if they divorce. The couple could opt out of such a regime by entering into a nuptial agreement. Adopting a default regime would need to go hand in hand with introducing binding nuptial agreements. A feature of such a model would mean a high level of certainty and limited judicial discretion.
Additional areas of reform
The Law Commission also considered specific areas that could be subject to reform, namely:
- Nuptial agreements: The Law Commission has commented that any reform of the law relating to nuptial agreements would depend on the model of reform adopted. Under the codification model, the current law surrounding nuptial agreements would be embodied into statute, and such agreements would be upheld if they are considered “fair”. The draft Nuptial Agreements Bill, as set out in the Law Commission’s 2014 report on Matrimonial Property, Needs and Agreements, could be implemented as part of codification-plus model. Or, a provision for binding nuptial agreements could form part of a guided discretion or default regime model. For many family law practitioners, the time has come to introduce binding nuptial agreements (with appropriate safeguards). This could be achieved in isolation from other law reforms and preferably sooner rather than later.
- Spousal maintenance: the report evaluated possible statutory restrictions on the term of a spousal maintenance order and whether a formula could be developed to calculate the appropriate level of maintenance. Again, reform in this area would centre around which model is adopted.
- Financial provision for children over 18: the law currently provides that financial support for children will generally cease when they reach 18. With an increasing number of adult children still being dependent on their parents for financial support beyond 18, there is an argument for reform given that they may well be living with parents at the point of divorce and until they are financially independent.
- Conduct: while conduct is one of the factors to be considered under section 25 MCA 1973 when making a financial remedies order, there is currently no statutory definition of conduct. The Law Commission has said that it would be beneficial to define what forms of behaviour would be considered “conduct”, what impact conduct would have on a claim for financial remedies, and the process to be adopted when making an allegation of conduct.
- Pensions: pension sharing on divorce happens in a minority of cases. The scoping report considers whether pension sharing should become the default position in any reform of the law to ensure pensions are not overlooked as a potentially significant asset for division on divorce.
Next steps
The dust has now settled, and family practitioners have had a chance to mull over the details of the Law Commission’s report. Reform of the law of financial remedies is undoubtedly a divisive issue, and the next stage is as eagerly anticipated as the scoping report itself. An interim response from the government is expected within six months of the publication of the report and a full response within a year. What is evident, therefore, is that there will be no reform of the law until 2026 at the earliest.
Partner Lisette Dupré, fellow of the International Academy of Family Lawyers and Law Society Family Law committee member, comments: “This report is an excellent appraisal of our law as it stands and it acknowledges many of the challenges faced by divorcing couples. Legalisation on such an important issue needs to reflect the society it serves and be accessible. We also need to recognise that we are living in an ever more international world. Striking the right balance will not be easy for Parliament.”
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