The law setting out how assets should be divided on divorce was created over 50 years ago. This law has since been interpreted, and principles added to it, by judges who have decided cases since that time. Unlike other areas of law, there is a lot of freedom for Judges to decide how the law is applied to cases and this can lead to uncertainty.
The Law Commission, an independent body which is entrusted with the role of reviewing current laws, have recently issued a report on whether the current legal regime for resolving financial matters needs reform, and if so, what this reform could look like. This article written by Joseph Umerah, a paralegal at Staffordshire Family Law, considers the observations made by the Law Commission.
Joseph explains why this discretion can lead to uncertainty “There are no clear cut rules or formulas to be applied. The current law sets out a list of factors, such as the parties’ respective income and resources, their contribution and their needs, and most importantly the needs of any minor children, that the Judge has to consider when deciding what is a fair outcome. But what weight they attach to each of these factors will be down to the individual Judge, and they will then have their own views on what constitutes a fair split. Different judges could come up with different decisions on the same set of facts. This can make it difficult for solicitors to advise their clients exactly what they can expect to achieve at court, and in turn, this uncertainty can make reaching an agreement more tricky!”
The review was classed as a “scoping report” meaning that it only looks at possible reforms for consideration, rather than making firm recommendations.
Different systems
In their report, the Law Commission considered if the law should change and what this could look like, putting forward these four possible models:
- Codification – the current law is a combination of laws passed by Parliament (Statutes), and the laws arising from previously decided cases over the years, interpreting those Statutes (Case Law). Codification would mean accepting the way that Judges generally treat cases and making it official law within Statutes from Parliament.
This would be the simplest approach to reform; the law would not actually change and Judges would still having the discretion to decide each case on its own facts. However, the codification would at least clarify the law in one place, ratified by Parliament.
- Codification – plus – in this model, the current law would again be made official within Statute, but there would be development of specific areas of the law which are not yet completely clear. Judges would again retain freedom, but stricter rules on how they specific issues are to be treated may be introduced.
This model would go further in addressing the issues, and specifically reforming areas that the scoping report identified as creating uncertainty.
- Guided Discretion – This would involve the introduction of new rules and considerations that Judges currently do not take into account. This would not be a strict regime preventing the Judge from exercising their discretion, but would give principles and objectives to guide them when making decisions.
This is the system other countries like New Zealand and Scotland have adopted. It would be similar to the sentencing guidelines that Judges have to take into account in Criminal Cases.
- Default Regime – There would be more rigid rules, where matrimonial property would be divided under strict principles. Couples would know when marrying how property will be divided on divorce. This means a high level of certainty, as Judges would have very limited freedom to judge cases on an individual basis.
Judges would only retain a discretion to depart from the strict rules in very specific situations. This model is likely to improve the understanding of parties because a clear set of rules would be available to them, that apply to everyone, and would reduce the need to litigate. It would be the most extreme form of reform, completely overhauling the current system.
The downside would be that it could result in unfair outcomes. Each case is individual, with its own particular set of facts. Without a discretion to do what is fair and reasonable in the circumstances of that case, it may be that one or other party is treated unjustly, or that their needs may not be fully met.
Key areas for reform
The report also identified areas of the system which are most suitable for reform. This was based on research and interviews with thousands of people who have used the current system and issues they had.
- The introduction of binding nuptial agreements (“pre-nups”)
This was recommended by the Law Commission in 2014, agreements would be binding if freely entered into and the split of assets completely unfair. At the moment, although they carry some weight, pre-nups are not completely binding on the court, and they can be overridden.
- How far Judges should consider to the behaviour of separating parties, including domestic abuse, when deciding each case
Currently ‘conduct’ can be taken into account, where it so serious it cannot be disregarded. Although the Statute does not set out what would constitute conduct, the case law adopted over the years has set a very high threshold, meaning the behaviour has to be extreme for a Judge to bear it in mind, when dividing the assets. The report considers whether domestic abuse should be taken into account more commonly by the courts and essentially, whether the threshold for conduct should be lowered.
- Whether Judges should be given more powers to make orders for children aged over 18
Currently the Child Maintenance Service is entrusted with the power to determine maintenance in more cases , and only applies to children in secondary education in most cases. The report found in reality, children often need financial support children over the age of 18. Currently the law allows for maintenance to be paid for children over 18 where there are special circumstances (such as a mental or physical disability), but the report has questioned whether the maximum age of 18 should be raised, possibly to 21 for more situations.
- Whether there should be a time limit on how long a person can be required to pay spousal maintenance for an ex-spouse
In addition to Child Maintenance, the Courts currently have power to make a maintenance order against one spouse in favour of the other. In some circumstances, although rare, this could be for the joint lives of the parties. More commonly it would be for a fixed period, although again the Judge would have a discretion to decide over what term the maintenance would continue. The Commission assessed whether there should be a maximum number of years that maintenance can be claimed, such as for 5 years. However, they recognised that in some cases a time limit would be inappropriate for example where there are ‘vulnerable’ spouses (for example if they are disabled or unable to work)
- Whether there is enough focus on pensions when dividing the couple’s assets.
For many couples, their pension is the most valuable asset but often their importance is overlooked when parties are seeking to reach an agreement. The report examined whether the treatment of pension arrangements should be written into Statute. The Commission do make it clear that any reform which may take place must review how pension assets are to be treated.
Conclusion
In conclusion, the scoping report has made clear that this area of law would benefit from reform. Joseph explains “most lawyers practising in this area believe that reform would be a good idea. It is often difficult to advise clients when the outcome will, to at least some extent, be left to the judge determining the case, and his or her own view of fairness. Most people want to agree matters without court proceedings, but the lack of certainty can make it really difficult for parties to agree the split of assets. However, the difficulty in any reform will be balancing the need for certainty, with clarity as to how the assets will be divided, against the need for fairness. It is going to be very difficult to achieve a fair outcome for each and every person going through a divorce, if the judges do not retain some discretion to look at their individual circumstances and needs of the parties involved.”
Although the Commission’s report recommends possible models that could be adopted, it is extremely early in the process. It is now for the Government to consider the report and the responsible minister has six months to provide a basic response and one year to respond fully to the findings.
A summary of the report can be found online Financial remedies on divorce and dissolution: Summary of scoping report
If you are going through a divorce and need advice on how your assets are likely to be divided upon divorce, please contact Staffordshire Family Law Solicitors on 01785 336617 to arrange a free consultation.