The Law Commission's scoping paper on financial remedies in divorce and civil partnership dissolution, published on 18 December 2024, marks a significant step towards modernising the current legal framework.
The existing laws, rooted in the Matrimonial Causes Act 1973 and mirrored in the Civil Partnership Act 2004, have long been criticised for their discretionary nature, which often leads to unpredictable outcomes. The statute, substantially unchanged for half a century, does not expressly explain what the ultimate objective is. Consequently, judges must rely on case law to fill in the gaps, despite most reported cases involving high net worth individuals; not the scenarios faced by most divorcing couples in England.
Current state of play and models for reform
Currently, courts aim for fair outcomes by considering the concepts of needs, compensation, and sharing as developed by case law. However, these principles are not defined in legislation and are therefore open to interpretation by judges against the facts of individual cases. This has led to inconsistent results and a 'postcode lottery'. This broad discretion fosters subjectivity among judges and cases and varied legal advice on expected outcomes. This unpredictability often encourages disputes rather than facilitating settlements, making the process more expensive and inaccessible, especially for those who cannot afford legal assistance.
The scoping paper sets out four possible models for reform on a sliding scale of discretion versus certainty:
1. Codification of the existing law and the principles of fairness, needs, and compensation. This would involve minimal changes to section 25 of the Matrimonial Causes Act 1973 and would retain the court’s wide discretion. Continued inconsistent outcomes could therefore be expected with this model.
Example: A judge might still have the discretion to decide what constitutes 'reasonable needs' for a spouse, leading to different outcomes in similar cases.
2. Codification-plus. The current law is codified as above but introduces reforms to address unsettled areas, such as the binding nature of nuptial agreements. The court would retain a wide discretion, but limitations upon it would be introduced to provide more certainty.
Example: Nuptial agreements would become binding, providing couples with more certainty about their financial arrangements, while judges still have discretion in other areas.
3. Guided discretion. This would enshrine clear principles in law to guide judicial discretion, with formulas as starting points for judges. This model aims for more consistent outcomes while retaining some judicial flexibility.
Example: Judges might use a formula to calculate spousal support but could adjust the amount based on specific circumstances, such as the health or earning capacity of a spouse.
4. Default regime. This creates a ‘matrimonial property regime’ with rules for dividing property on divorce, limiting judicial discretion.
Example: Property might be divided equally by default, but this could be unfair in cases where one spouse has significantly greater needs or has contributed more to the marriage.
What does this mean in practice?
At one end, codifying current case law keeps things largely the same but makes the law more accessible. At the other end, a default matrimonial property regime offers certainty but removes most judicial discretion.
The 'codification-plus' and 'guided discretion' models blend clarity with flexibility, sitting somewhere in the middle. Extremes likely won't work for most people; codification alone doesn't address underlying issues, and a rigid default regime could overlook the complexities of individual cases, especially where family needs and vulnerabilities are concerned.
The report highlights how the current system's flaws worsen access to justice issues. It shows that the current statute is outdated and fails to provide a clear framework. A better-defined statute would facilitate negotiations outside of court and help couples make their own arrangements. The current legislation lacks a stated objective, and while its underlying rationale is sound, greater clarity and awareness is needed. Updating the law against the social and economic background will be challenging, especially when striving to protect the most vulnerable, like survivors of domestic abuse.
Whilst the report highlights the urgent need for procedural and substantive reform, it stops short of direct recommendations. The responsible government minister has a year from publication to provide a full response after which it is expected that the Law Commission will prepare a further, more detailed report. A realistic outcome might strike a balance—providing clearer rules while still allowing judges to make case-by-case decisions. No two cases are the same, so it is essential that judges can use their discretion to ensure outcomes are not so binary that they fail to achieve a fair outcome.
The road ahead…
Ultimately, it is for the government to decide how to remedy these issues, promoting certainty without losing fairness and flexibility. Even if there is an appetite for reform, changes are likely to be gradual. Implementing some of these models would require very significant change to the legal framework. It is difficult to see how these could be implemented without significant extra resource for the family justice system, particularly if judges are also expected to deal with proposed reforms in respect of unmarried cohabitees and the assisted dying bill. A combination of codification of the existing law and guided discretion is likely to be the best solution, at least for now.
Victoria Batstone is senior associate at Stevens & Bolton LLP
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