1. The UK Government is reviewing 50-year-old legislation that determines how financial assets are split after divorce in England & Wales
A court in England or Wales has a discretion in deciding what financial provision or property adjustment orders to make. There are guidelines for the exercise of this discretion: the court has to have regard to the factors set out in section 25 of the Matrimonial Causes Act.
The Section 25 factors are:
- The income, earning capacity, property and other financial resources;
- The financial needs, obligations and responsibilities;
- The standard of living enjoyed by the family;
- The age of each party to the marriage and the duration of the marriage;
- Any physical or mental disability of either of the parties to the marriage;
- The contributions which each of the parties has made or is likely in the foreseeable future to make to the welfare of the family, including any contribution by looking after the home or caring for the family;
- The conduct of each of the parties;
- In the case of proceedings for divorce or nullity of marriage, the value to each of the parties to the marriage of any benefit which, by reason of the dissolution or annulment of the marriage, that party will lose the chance of acquiring.
- This legislation has been interpreted by the courts so that it is accepted that the principle is to achieve sharing and fairness, measured by the yardstick of equality. In general, this means that everything is shared equally (the starting point being 50:50).
There may be exceptions, requiring a departure from equality. A common instance is need: one spouse may have more than half, for example where a wife is caring for children, and needs a bigger house than the husband. Another reason to depart from equality is an unmatched contribution by one spouse. Premarital assets may represent a contribution unmatched by an equivalent contribution of the other spouse. A stellar contribution argument usually arises in so-called “big money” cases, where the court may accept that the “genius” of one of the spouses was the generator of the family wealth, and that it would be unfair to ignore this in making a financial provisional property adjustment order.
No one of the section 25 factors is more important than the other, and the Court has to consider the factors holistically in considering each case. It has however been said that in a particular case, there may be a “magnetic factor”. The existence of a prenuptial agreement may be such a “magnetic factor”. The case law about prenuptial agreements is anything but simple. In 2010 the UK Supreme Court of Appeal recognised a prenuptial agreement, in determining a financial remedies case. However, it is not automatic that a prenuptial agreement will be recognised, and this is within the discretion of the Judge. Because the exercise is a discretionary one, there is no certainty, and it can be down to the luck of the draw as to the judge allocated.
Given that the legislation is now 50 years old, publication of the Law Commission’s scoping paper, due in September 2024, is eagerly awaited by family law practitioners in the hope that it could pave the way for a full review and reform of the current financial remedy law. This is arguably the next logical step following the introduction of ‘no-fault divorce’ in April 2022 removing the blame in divorce proceedings.
In its review, the Law Commission will carry out a detailed analysis of the current laws that were put in place half a century ago to determine whether they are working effectively for all involved or whether the current framework requires reform to align with the needs of society today. There will be various considerations, but a key focus will be on fairness versus certainty. It is expected that the Law Commission will report their findings in September 2024, that report could include future financial remedies reform. The review is the very first stage of a long process in terms of a reform, which may be implemented dependant on the findings of the report.
2. Transparency in the Family Courts
i. Children Proceedings
For many years, parties to proceedings in the Family Courts could often safely expect that their case would be heard in private and if the judgment in their case was published, it would be anonymised.
The Transparency Pilot was launched on 30 January 2023 and was introduced in Leeds, Cardiff and Carlisle. It will run for a year, and a transparency order allows accredited journalists, reporters and legal bloggers to report on what they see and hear in court whilst also allowing them access to certain case documentation such as skeleton arguments, case outlines and position statements.
Another significant change is that parties will be allowed to speak with journalists about their own case without the risk of being held in contempt of court for disclosing details. Despite this, it remains the case that parties will not be able to publish information themselves about their case. Furthermore, whilst journalists can report, this is subject to strict restrictions around reporting the identities of the individuals involved, cases will still need to be anonymised and journalists are unable to name or photograph the parties involved. It will remain a criminal offence to publish information intended or likely to identify children.
The success of the pilot is yet to be seen, however if it is able to increase public confidence in the family court, whilst ensuring that the parties involved remain protected, it could bring about positive change. At its conclusion, the pilot will be reviewed by an external agency and if successful, could be implemented across the family courts in England and Wales.
ii. Financial Remedy Proceedings
The Reporting Pilot does not apply to financial remedy proceedings. However, Mr Justice Mostyn and His Honour Judge Hess proposed a standard reporting permission order (“RPO“) to enhance the transparency of financial remedy proceedings in the Financial Remedies Court.
The privacy of financial remedy proceedings had been protected by three restrictions on the ability to report:
- Children are generally not named, and their schools are not identified;
- Financial information disclosed by the parties under compulsion is protected and may not be referred to in a published report without leave of the Court; and
- Journalists and legal bloggers cannot see any documents without leave of the Court. Mostyn J and HHJ Hess have explained that without sight of these documents, the right to attend and report on the hearing is “largely rendered meaningless” as the media representative and/or legal blogger would not have a sufficient understanding of the case.
However, the proposed RPO would allow journalists and legal bloggers to have sight of documents with key protected financial information, subject to strict conditions so that the journalist or legal blogger is supplied only with the documents necessary to understand the case, those documents are not to be “bandied about” and that they are destroyed, at the latest, six months after the case is over.
Under the wording of the proposed RPO, journalists and legal bloggers could publish parties’ names and photographs of the parties. They may also report a description of the factual, evidential or legal issues in the proceedings including the open proposals made by the parties. Journalists and legal bloggers may quote from witness statements, replies to questionnaire, voluntary disclosure, position statements, and witnesses’ oral evidence.
It is anticipated that in 2024, a similarly widespread shift will be seen in relation to children’s proceedings in the family court. It is anticipated that this increased transparency in children’s cases will translate into an uptake in alternative dispute resolution (ADR), particularly arbitration, as parties attempt to maintain privacy and exclude media presence. Due to court backlogs, there may be the added advantage that these disputes can be resolved more quickly through the alternative methods..
3. Alternatives to Court – Arbitration & Mediation
A continuing emphasis on guiding parties to seek to resolve their affairs outside of the justice system is likely to continue in 2024. At the end of 2023 we have seen the (non-family) case of Churchill v Merthyr Tydfil CBC  EWCA Civ 1416 which has made it clear that it is possible for a Court to insist that the parties explore mediation. In the family arena there is likely to be an even greater push on directing the parties to non-court-based dispute resolution methods. The current MIAM scheme has become something of a box ticking exercise but changes that come into force on 29 April 2024 will remove some of the potential exemptions and MIAM providers will have to provide a greater degree of information about alternatives to going to court.
As a result, in 2024 we could see mandatory mediation for all suitable low-level family court cases (excluding those which include allegations or a history of domestic violence). The aim is to divert family disputes away from stretched courts and protect children from the impact of acrimonious and long-running court cases. It’s hoped the proposals will mean more people can make decisions and achieve resolutions with the support of a qualified mediator, rather than placing the decision with the family court.
Furthermore, in a push towards transparency, anonymity in the family court has been an important topic, particularly over the past 12 months with The Transparency Pilot being launched. As a result of this increased transparency, parties are increasingly moving away from resolving their disputes (both financial and children-related) in the overstretched family court system and towards using arbitrators who have both the experience and time to deal with the issues of their case. Arbitration guarantees parties continued privacy while allowing cases to progress quicker and more cost-effectively. We expect to see a continued increase in the number of families turning to arbitration to resolve the issues arising upon the breakdown of their marriage or relationship.
4. Cohabitating Couples
Ahead of a general election this year, the Labour Party has committed to reforming cohabitation laws, recognising that “for too long, women in cohabitating couples have been left with no rights when those relationships come to an end”.
Cohabiting couples are the UK’s fastest and most significantly increasing family type. It is of course no surprise that the need for reform to safeguard those most vulnerable and reflect changing family structures has gathered pace in recent years. Many couples mistakenly believe they are protected under ‘common law marriage’ and are automatically afforded the same rights as married couples. The only financial claims a cohabiting couple may have upon separation are on behalf of any minor children of the relationship (schedule 1) or potentially in relation to property (in specific circumstances).
The difference upon relationship breakdown for a married couple versus a cohabiting couple are obvious and can leave the financially weaker cohabitee in a highly vulnerable position. The unfairness generated by the current gap in the law is further highlighted by the contrast between a cohabitee’s rights on separation versus upon the death of their partner. If one half of a cohabiting couple dies without making sufficient provision for their partner in their will, the surviving partner may have a claim under the Inheritance Act 1975 as a dependant. However, if they simply separate, then there are no financial claims.
Reform in this area is much needed and long overdue. Several proposals for reform have been put forward such as Resolution, and approaches taken in other jurisdictions, such as Scotland have also been proposed, for example:
- Introduction of certain “eligibility criteria” for those long-standing cohabiting couples.
- The ability to apply for maintenance to reflect relationship generated disadvantage.
- The creation of a legislative “safety net” for those most vulnerable on relationship breakdown.
If the Labour Party does come into power and follows through on its commitment to reform the law for cohabiting couples, there will inevitably be a rise in cohabitation agreements to regulate the financial terms of unmarried couples upon separation.
5. Nuptial Agreements Becoming Binding
Pre-nuptial agreements in this country, although persuasive, are not binding.
As long ago as 2014 the Law Commission reported on introducing “qualifying nuptial agreements” which would be legally binding provided that certain safeguards were met. There has been little progress in the intervening decade. Indeed, the issue of nuptial agreements has been put behind the Law Commission’s current assessment on reform of the law governing finances on divorce (see above). However, the Law Commission is to produce a scoping paper with a targeted deadline of September 2024 which will include consideration of whether there is the need for further work on nuptial agreements. Given the glacial pace of reform there are unlikely to be any substantive developments in 2024.
The government has already stated that pre-nuptial agreements affect “a relatively small and privileged cohort, and [the issue] must take its place in the queue on that basis”. While reform does not seem imminent, the Law Commission review demonstrates that the status of pre-nuptial agreements and the possibility of them becoming legally binding remains a live and ongoing issue and may add to the pressure to legislate.
If pre-nuptial agreements become binding in England and Wales, it would bring our law in line with many of our European neighbours and the United States. Subject to safeguards, binding pre-nuptial agreements would finally recognise the autonomy of couples to make their own decisions in the event of divorce.
Resolution, the organisation for family lawyers, has recently announced their “Vision for Family Justice.” The recommendations put forward focus upon steps that could be taken to improve the needs of modern family structures. On Resolutions agenda for change are (in brief):-
- Recognising the changing face of families – this includes seeking reform on the law around cohabiting couples, the legislative framework of Schedule 1 (to provide support for the children of unmarried parents) and recognising all kinds of families;
- Helping families to find solutions – by supplying more public funding for early legal advice and information, providing co-parenting programmes and giving people options to broader advice on ways to settle disputes without reference to the courts;
- Protecting the vulnerable – in particular, supporting and protecting victims of domestic abuse;
- Ensuring that the Family Courts meet the needs of families – the court estate should not be permitted to shrink further, and online services should be available where appropriate. Smaller financial remedy cases should be fast tracked.
- Making family law fit for purpose – looking at:
- Child arrangements on divorce;
- Improving public children law;
- Reforming financial remedies law;
- Looking at the international position – continuing to press the EU to allow the UK to accede to the Lugano Convention to enable reciprocal enforcement in Europe.
This is an important piece of work that will be considered and debated in 2024.
7. Proposed amendment to Victims and Prisoners Bill affecting parental responsibility
In January 2024 the Ministry of Justice’s proposed amendment to the Victims and Prisoners Bill moves to the next stage. The proposal announced in 2022 seeks to automatically remove parental responsibility for parents convicted of the murder or voluntary manslaughter of their co-parent.
The legislation change emerged after the death of Jade Ward, whose partner and father of her child murdered her in 2021. He was found guilty and sentenced to a minimum of 25 years in jail. Since then, Jade’s family have lobbied for a change in the law to automatically remove parental responsibility so that convicted offenders can no longer seek information about their children or make key decisions about their lives.
The Ministry of Justice have confirmed that there will be exemptions in cases involving domestic abuse. The Victims and Prisoners Bill is a long-awaited piece of legislation, aiming to strengthen the rights of victims of crime. It is an opportunity to ensure that Restorative Justice is more widely available, with enforceable rights that people affected by crime can rely
8. Economic Uncertainty
The rising interest rates and extreme inflation seen in 2022 and 2023 have caused increased pressure on family finances and have made it more difficult for some families to divorce. In times when the cost of living has been so high, it has been hard for families to contemplate funding two separate households following a separation. Whilst these pressures presently remain, they are likely to ease during the latter part of 2024, which may lead to an increase in parties formalising their separations.
Amidst the challenges, divorce also signifies a new beginning. Individuals contemplating divorce are encouraged to communicate and resolve disputes amicably, focussing on co-parenting for the wellbeing of their children. The end of a marriage can be an opportunity for personal growth and positive change. If you are considering divorce, seek the guidance of divorce professionals to ensure a fair and equitable process. Whether it’s financial advice or legal support, taking proactive steps can pave the way for a smoother transition. Embrace the new chapter that awaits and ensure that the decisions made during this challenging time lay the foundation for a brighter future.
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