Reform of Financial Provision on Divorce

Published: 01/07/2024 07:00

What’s the problem?

After much hesitation and delay, both from the government and the profession, it seems that at last the Law Commission will set to reforming the law of financial provision on divorce. The significant problems of this area were addressed, but not completely resolved, in the Law Commission report Matrimonial Property Needs & Agreements.1 The report covered the difficulties, stress, uncertainty and expense of the English/Welsh law relating to the division of assets and ongoing maintenance awards on divorce. The current law is s 25 Matrimonial Causes Act 1973, which has not been reviewed by Parliament for nearly fifty years despite radical changes in society and families. It has been the subject of calls for reform from the Law Commission, Resolution2 and the Centre for Social Justice.3 Reform is urgent because the law is uncertain. It has become largely judge-made law, which bears little resemblance to the statute. Judicial discretion has led to unpredictability and conflicting decisions, which make it hard for parties to negotiate and lead to disproportionate costs. Legal aid has been removed and parties of modest means are left unrepresented with little guidance as to the right outcome.

One could say that it goes so far as to contravene the rule of law. Lord Bingham’s definition was that the law must be accessible and, so far as possible, intelligible, clear and predictable.4 The English law of financial provision is none of these. The outcome varies from judge to judge and era to era. The result is unpredictable. The principles change every time the Supreme Court has the opportunity to give judgment in – usually – a case concerning wealth. Even the most experienced of solicitors and barristers cannot predict the award. The uncertainty pushes couples to settle for fear of what a judge might unpredictably order, and that is not in accordance with the rule of law. The law is occasionally altered with retrospective effect, such as when many years after the divorce the claimant spouse returns to court for a fresh or increased order based on new situations. Valid contracts, that is pre-nuptial agreements, are set aside on grounds that may not seem fair or justifiable. Section 25 Matrimonial Causes Act 1973 has been interpreted out of all recognition and s 25A of that Act (clean break) is frequently ignored. It is also unsatisfactory that there should be such a difference between the law of England/Wales and of Scotland, and England/Wales and the rest of the western world especially when there are so many international marriages.

Our Private Member’s Bill

Now that there is hardly any legal aid and, indeed, even when it was available, costs associated with uncertainty are a deplorable waste of resources that ought to be preserved. The vested interests of barristers who act for the very few extremely wealthy couples, and who have opposed all reform, should not be permitted to block reform for the average and the many.5 I have been arguing for reform since 1977,6 shortly after I started teaching family law. Once Baroness Shackleton, with her wealth of experience in practice, joined in calling for reform, things moved quickly and in April 2023 the Ministry of Justice asked the Law Commission to review the law. I fear that it will be a long drawn-out process over years – will it happen in my lifetime? – and that even if the Law Commission reports that thorough reform is needed, there is no guarantee that the government of the day will implement its recommendations. Before we even get to that stage, there is more delay caused by the Law Commission’s decision to carry out a scoping review, reporting later this year. This is really unnecessary given that so much is known about the law and its problems7 and about other countries that have managed to reform it with little difficulty, Scotland being the best example.

Baroness Shackleton and I have introduced in the Lords in successive years the Divorce (Financial Provision) Bill8 which would implement provisions very similar to those pertaining in Scottish law, and in the laws of most European and North American states. It would introduce as a fair starting point the equal division of all the property and pensions acquired by the couple after marriage; provision for short-term maintenance for an ex-spouse and longer maintenance for children; flexibility to allow the home to be retained for the carer and children; and binding pre-nuptial agreements. This is intended to facilitate mediation, reduce litigation and costs, and recognise equal partnership in marriage. We have born in mind the likely move to more technology in family law settlements, necessitating a law that works with online and AI use. This is the model we hope the Law Commission will recommend.

Reform pre-nups at the very least

The 2014 report by the Law Commission contained a draft bill on pre-nuptial agreements. While one could suggest that it contained too many discretionary provisions that might thwart certainty, nevertheless it would have been an improvement had it been brought into law. Pre-nuptial agreements have become more acceptable and common since then, especially in international marriages, but the uncertainty as to whether they are enforceable has given rise to very costly litigation to determine whether or not they are valid.9 This defeats the purpose, even though more than ten years have passed since the groundbreaking Radmacher judgment.10 There seems to be a gradual move to more acceptance of them. Certainly, if there is any more delay in reforming financial provision law, immediate introduction of a pre-nuptial agreements bill would remove much of the trouble because it would enable couples to make their own arrangements and bypass the law to a significant extent. The argument put forward by the government that one cannot reform family law piecemeal and that therefore pre-nuptial agreements have to wait is simply untenable.11 At the very least the Law Commission should reiterate its pre-nuptial agreements proposal.

No-fault divorce was introduced in 2022.12 There is no point in bringing in no-fault divorce with the aim of removing the bitterness and deception alleged in fault-based divorce when the same elements, writ large, dominate financial provision law. Increasing numbers are turning to arbitration and mediation in order to avoid the courts.

The kids aren’t alright

The position of the children involved in divorce is not sufficiently considered in the law. Baroness Shackleton and I want maintenance for children to continue to the age of 21, given that so many continue into higher education, and to shift the focus of financial settlement towards the support and housing of children. The enormous legal costs attaching to disputed financial cases sometimes dissipate the very assets that should be preserved for the children. Examples include a monthly award of £177 for a child which racked up £150,000 in costs.13 There are many accounts of cases where nearly all the assets are wasted on the costs of litigation.14 In M v M each spouse emerged with £5,000 of liquid assets having incurred nearly £600,000 of costs.15 In ND v GD costs of £483,000 exceeded the amount in dispute between the couple and represented 18% of their wealth.16 The eponymous case of A Wife v A Husband17 was a small money case which involved 7 years of litigation and £1.5m in costs. There are many more accounts of disproportionate costs and expressions of judicial disapproval of them. While some couples do litigate unreasonably, the judicially created uncertainty escalates costs. One judge at a financial dispute resolution hearing might estimate the award to a wife to be £Xm, and shortly thereafter another would estimate £2Xm, and the varying approaches of different judges are well known. Issues that should have been resolved years ago recur: the effect of premarital cohabitation; conduct; childlessness; future earnings; extraordinary contribution; length of marriage and others.

Full marks for Scotland

Scottish law has received an excellent review from an inquiry into its 30-year history, Built to Last.18 I hope the Law Commission will take on board the Scottish provisions. The principles it should aim for are: s 25(2) Matrimonial Causes Act 1973 should be replaced; only matrimonial property including pensions should be available for sharing at the end of a marriage; pre- and post-nuptial agreements should be binding with certain conditions; as a starting point property should be shared equally; limited term periodical payments; and support for children up to the age of 21.

If a more formulaic approach of the sort proposed were adopted it would lend itself more readily to online use, as trialled in Australia;19 and would be of assistance to couples who have no legal representation. They amount to about 40%, a proportion that is rising.20 It would save costs, leaving fewer issues over which to negotiate or litigate, and would provide a useful starting point for mediation. It would be fairer, being based on equal division and on equality of the sexes as former partners. It might dispel the widespread feeling of unfairness generated by existing law.21

There is no European state with a law as discretionary and stereotyped as English/Welsh law. They often have community of property systems and no or short-term maintenance, as well as binding pre-nuptial agreements. The comparable laws of New Zealand, Australia and the USA resemble the Scottish model, not the English.22

Will the Law Commission grasp the nettle?

I hope the Law Commission will look at the matter of principle addressed by other countries, namely, ending the status of the ex-wife (usually) as a supplicant asking for her needs to be met by her ex-husband, and turn instead to treating her as an equal partner in the venture of marriage. The default position of many judges and academics seems to be that women are less employable once married. This is at odds with government calls for women to take up to half the positions on boards, in the judiciary, universities and so on. It contrasts with the attitude of other western countries. It has been argued that maintenance has to be long lasting and generous in England/Wales because social support for women is insufficient. Yet the Global Gender Gap Index has the UK at above average, and ahead of many states that have financial provision laws resembling those recommended here.23 The complex affairs of the very wealthy will no doubt always present difficulties and require the services of lawyers, but others should be assisted by this new approach. Judgments and recent academic writings24 place great emphasis on the contribution made by a wife as the rationale for ongoing maintenance – styled compensation – after the end of the marriage. This takes one back to the arguments of more than 50 years ago when ‘irretrievable breakdown’ became the sole ground for dissolution, sweeping away with it in theory any reason for ongoing spousal support. This much was admitted by Leo Abse MP, a driver of reform, and incidentally a relative of mine.25 The resistance to divorce reform in the late 1960s was on ideological grounds (the ‘innocent’ wife losing her status) but also, when it was clear that that position was not sufficiently convincing, the arguments switched to the inadequacy of support for the wife after divorce. That dichotomy is revived today: on the one hand, family law should reflect the independence and autonomy of spouses and the equality of women within marriage; on the other hand, the assumption that she has always to be protected financially through a man’s resources. The economic position of women and the opportunities available to them have changed significantly over those 50 years and it is alarming to see the neo-feminists of today chipping away unthinkingly at the grounds of women’s equal standing.

The contribution made by ex-wives as a rationale for maintenance is based not only on an untested model but is also associated both with the ideas that a woman should expect to rely on providing womanly services as a quid pro quo and with the commodification of men’s role in marriage. He is only good for financial support, it seems. The use of stereotypes in this debate reflects their use in court. Taken at face value, the typical wife’s contribution through housework and childcare in marriage indeed attracted compensation, there and then, through the support provided by the typical husband throughout their joint lives, the housing, clothing, support, holidays and every affordable need of the wife and children. She is paid, if that is how it is to be regarded, every day. Sadly, however, the message being given out by those who are too young to remember the many waves of feminism before the current one, is that the best that a woman can do is attach herself to a man and count on him for support for all time. Moreover the rewards are regressive. The better off the husband the less burden the wife may have taken on and the more she will already have been compensated by way of being provided with necessaries and more. It is in the poorer families that the wife cannot afford the luxury of staying at home and has to have a job, but is unlikely to receive any award of significance on dissolution. Universal Credit will be reduced pound for pound by the maintenance award. Even the benefits system requires women to be available for work when the children are quite young. It is noteworthy that the departure from this stereotype often occurs where a wife who is wealthier than her ex-husband might find herself giving a great deal to him, an outcome the judges seem reluctant to contemplate very often.26 Unless the principle is addressed, the status of a wife will remain as that of a needy supplicant, not a partner in the financial dissolution. Moreover, in our law there continues to be no support for the many women, and men, who truly deserve support because they have given lifelong care, the sisters, the daughter-carers of parents, who usually have no claim. It is hard to understand why a sexual relationship, even brief and childless, is taken as the passport to financial claims throughout family law and state provisions, but not the caring relationship. Significantly, academic writers’ focus on the need to support ex-wives is blind to the needs of single women in jobs where they are paid less than men, or have smaller pensions, and the single mothers where the father is not supporting the child. This pressure for lifelong support for divorced women is hardly feminist at all in its focus only on women who attached themselves to a man.27

English exceptionalism

In relation to theoretical hardship resulting from reform, no answer from opponents has ever been given to the question why England/Wales is alone in the western, Antipodean and North American world in its treatment of spousal dependency and unequal division.28 The proposed Scottish-style reforms would offer an off-the-peg solution. They would end the attitude of some barristers that, since we all look better in Savile Row suits, there must be no Marks & Spencer ready-made. By legislating for equal partnership it would also bring an end to the demeaning situation that continues to be adopted in English law and society, namely that the status of the woman is forever determined by the man she marries. Simone de Beauvoir captured this in 1949 when she wrote that ‘man defines woman not in herself but as relative to him … she is defined and differentiated with reference to men … women live … attached through residence, housework, economic condition and social standing to certain men’.29 I hope the Law Commission will be brave.

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