1. On 18 December 2024 the Law Commission published its scoping report on potential reform of the law on Financial Remedies.
2. The Law Commission was asked whether the current law requires reform. It concludes that it does because it “does not provide a cohesive framework by which parties can expect a fair and certain outcome”.
3. The full report runs to 373 pages and is well worth a read, not least because it includes a useful summary of the current state of the law and an erudite explanation of how it was arrived at. For those without the time or inclination to read the full report, the accompanying summary is only 24 pages.
4. The report highlights various perceived deficiencies in the current law namely:
• The width of judicial discretion and the lack of a statutory objective within MCA section 25.
• The extent to which case law has developed section 25, leading to a lack of clarity, particularly for litigants in person.
• The difficulty in predicting accurately the nebulous concept of “needs”.
• Different judicial interpretations of the concept of “matrimonialisation”.
• The high cost of representation.
• Uncertainty surrounding whether nuptial agreements will be upheld.
5. The Law Commission’s overarching criticisms of the current law are its uncertainty and inaccessibility:
“Whilst the court process, and related non-court dispute resolution options, encourage couples to try and settle their financial disputes, the discretionary nature of the current law makes it difficult for couples to know what a court will decide, and negotiate on that basis. The degree of discretion, and the resulting uncertainty in the law, can be said to promote dispute rather than settlement. Even if a couple seek legal advice, their lawyers may not agree about the appropriate outcome; for those who do not obtain legal advice, the position is even less clear.
The flexibility offered by discretion to achieve a fair outcome, tailored to the couple’s own circumstances, instinctively seem beneficial. In practice, however, it is an elusive ideal. While divorcing couples may expect fair outcomes if their case is decided by the court, the majority of couples will not have their cases heard by the court. They will not benefit from an outcome tailored for their particular circumstances. Even couples who do obtain a judicial resolution will face delays and legal costs before their case is eventually determined.”
6. Our system prides itself on providing bespoke solutions for each couple, recognising that no two cases are the same and that a rigid or formulaic approach risks unfair outcomes. The price paid for such a system is uncertainty, however, and in Lady Deech’s pithy words “people prefer the certainty of misery to the misery of uncertainty.”
7. This uncertainty is combined with the cost of litigating and delays in the court process, and the Law Commission report makes a compelling case for change.
8. In considering how things could be done better, the report includes a lengthy section on the way in which different jurisdictions, primarily Scotland, continental Europe and the Nordic countries, separate assets on divorce.
9. Most of these countries have either an immediate community of property regime or a deferred regime applicable on divorce, together with “pillars” of possible supplementary orders, usually relating to maintenance, pensions and the family home. Often parties are able to opt out of these default regimes and to enter a binding nuptial agreement.
10. In each of the jurisdictions studied maintenance orders are much rarer than in England and Wales and in many instances where such orders are made they are capped in terms of duration and quantum.
11. By comparison with each of these other countries the law in England and Wales is unclear, the eventual outcome uncertain and the incidence of claims brought to court much higher.
12. The purpose of a scoping report is not to make recommendations for reform and this one does not purport to do so. It does propose four models for reform, however, namely:
|
Codification |
Codification Plus | Guided Discretion |
Default Regime |
| Minimal change to the law | Current law is codified | Set of principles and objectives introduced to guide judicial discretion | New matrimonial property regime created |
| Current case law is codified | Additional reform to deal with problem areas | Section 25 reformed | Couples know on marriage how property will be divided on divorce |
| Court retains wide discretion | Judicial discretion limited | Very limited discretion |
13. The four models therefore comprise a spectrum of different degrees of reform, with codification at one end and a new default regime at the other:
a) Codification would not significantly change the substantive law, but would enshrine existing case law in a new or amended statute. Familiar concepts, such as sharing matrimonial property, would appear for the first time in the new section 25, and the law would thereby be made easier to identify and apply.
b) Codification Plus would implement modest changes to certain areas of the law, such as nuptial agreements, maintenance, conduct, pensions and the definition of when the family home is not to be regarded as matrimonial. It could also limit the width of judges’ discretion, for example in the circumstances in which a court could depart from a nuptial agreement.
c) Guided Discretion would amend section 25 and introduce principles and objectives which judges would be required to take into account when exercising their discretion, similar to the regimes in Scotland and New Zealand. The Law Commission notes that the regime in Scotland, which is sometimes regarded with suspicion in this jurisdiction, provides certainty and, unlike our own law, is thought generally to work well.
d) If a new Default Regime were implemented this would apply unless the parties chose a different outcome. In this way the parties would know from the outset how their assets would be divided were they to separate. The law as we know it would be swept away.
14. The report also:
a) Makes clear that substantive and procedural reform must go hand in hand. The rules surrounding costs are felt to be particularly ripe for change and the report expresses concern at regional variations and a lack of judicial specialisation.
b) Expresses concern at courts’ different interpretation of “needs”, particularly in the context of departure from nuptial agreements and suggests that further guidance is needed.
c) Includes a lengthy section on the treatment of conduct within the meaning of section 25(2)(g) and concludes that the court’s current approach may not be fair, particularly given that research indicates that survivors of domestic abuse are often left in a more precarious position than other divorcees.
15. The ultimate conclusion of the report is that:
“Any further reform work in this area will need to weigh up the costs and benefits in terms of both monetised and non-monetised impacts, as well as seeking to minimise inequality where possible. In some cases, a balance will need to be struck between competing interests, for example between the certainty of limiting spousal maintenance with the equality impact on women of doing so. Equally, a decision not to pursue reform means that existing inequalities and
impacts will not be addressed and therefore remain, continuing the present unsatisfactory and potentially unfair
regime.”
16. The Government now has six months in which to provide an interim response and 12 months to provide a full response. Watch this space, but bear in mind that the government did not implement the recommendations made by the Law Commission in its 2014 report into nuptial agreements or many of those made in its 2016 report into enforcement.
17. The MCA is 51 years old and ripe for reform. In a world where parties are able to get divorced easily they should also be able to separate their finances easily. A system where parties regularly feel they have to spend a high proportion of their assets to achieve a fair outcome is not a system which is working.
18. However, few areas of law have the potential to generate as much heat as reform of the law applicable on divorce, with the potential that whatever change is implemented runs the risk of upsetting 50% of the population. The government has plenty of other work to be getting on with, and may feel its priorities lie elsewhere.
Nick Sproull
6 January 2025
