Law Commission publish their scoping report on financial remedies on divorce - reform is needed

On Wednesday 18 December 2024, after much anticipation, the Law Commission published their scoping report, considering financial remedies on divorce and the dissolution of civil partnerships.  

This report is a scoping report so does not make any specific recommendations for reform but, following a detailed analysis of the current law, has highlighted issues and problems with the current law and considered areas for potential reform. In 2014 the Law Commission published a previous report on Matrimonial Property, Needs and Agreements and, as part of the current review, have considered whether any issues outlined in that report also need to be reviewed.

The scoping report was eagerly awaited by Family lawyers - the current governing statute, the Matrimonial Causes Act 1973 (“MCA”), is now over 50 years old and there have been many calls for reform, particularly over the last 20 years as some consider the current law does not reflect societal changes and modern family structures. For example, at the time the MCA was introduced the concept of a nuptial agreement was almost non-existent in England and Wales, whereas we are now seeing these being increasingly commonplace. The introduction of no fault divorce following the Divorce, Dissolution and Separation Act 2020 in April 2022 was seen as a significant step but there are still calls for reform in other areas, including Cohabitation law as well as how financial matters are dealt with on a divorce. 

In summary, the report concludes that the current law requires reform, although how this is implemented is a matter for Government. In the summary document the Law Commission conclude that “The law lacks certainty and accessibility to an extent that could be argued is inconsistent with the rule of law” and the current law does not ““provide a cohesive framework in which parties to a divorce or dissolution can expect fair and sufficiently certain outcomes”.

Whilst the flexibility and discretion under the current law ‘seems ideal’, it is said that this is an ‘elusive ideal’. It seems a challenging task to consider what reform could look like and the Law Commission have set out possible models on which reform could be based – ranging from codification to a default regime (see page 12 of the summary report).  

Some of the key points raised are outlined below:

Conduct

Conduct is one of the statutory factors that the court can consider when deciding to make a financial remedies order. Pursuant to section 25(2)(g) MCA the court should take account of conduct “if that conduct is such that it would in the opinion of the court be inequitable to disregard it”.

The development of case law has been such that it is essentially only in extreme and exceptional cases that conduct is considered relevant, and only where there is a direct link to the finances – where there is a ‘gasp’ factor (an example given is an attempted murder of a wife by her husband which left her unable to work).

The issue of conduct is very sensitive and there are contrasting views outlined in the report; particularly following the introduction of the Domestic Abuse Act 2021 some commentators have felt that domestic abuse should have ‘greater recognition’ whereas some members of the judiciary say this will already be taken into account where it is relevant as ‘part of the court’s consideration of the parties’ needs’. 

In summary, the scoping report concludes ‘that it would be beneficial for the law to state clearly:

• what forms of behaviour will be considered conduct (whether that be personal misconduct or litigation misconduct); 

• the impact that conduct will have on a claim for financial remedies; and 

• the process to be adopted when making an allegation of conduct.

Nuptial agreements

In the Law Commission’s 2014 report on Matrimonial Property, Needs and Agreements it was recommended that if certain ‘legal safeguards’ were met it should be possible for couples to enter into a Qualifying Nuptial Agreement (QNA). These recommendations have not been taken forward by any Government since, however the Law Commission have again said that: “Any reform of the law relating to nuptial agreements would depend on the model of reform adopted as our 2014 recommendations are based on the current law in which needs plays a central role. Our draft Nuptial Agreements Bill could be implemented as part of a codification plus model, or provision for binding nuptial agreements could  form part of a guided discretion or default regime model.”

Spousal maintenance 

The question of any potential restriction to spousal maintenance claims is a controversial issue and there are conflicting views. Some say there should be a statutory term and formula whilst others say that maintaining discretion and flexibility is key. The current legal framework is analysed in detail in the report and the Law Commission have set out the below:

“It is clear therefore that consideration of a formula to calculate spousal maintenance requires a decision first to be taken as to whether the law will be reformed and what model that reform will adopt. However, we continue to support further work to progress the development of a formula, by the analysis of the data gathered via the new Form D81. This data could provide important insight into how parties are approaching financial remedies on divorce, including asset levels and the types of agreements that parties are reaching. In the context of spousal maintenance this data is potentially useful in ascertaining whether parties who reach their own agreements are making use of spousal maintenance, and in what way. In a broader reform context, the D81 data could inform law reform proposals based upon or around any of the models we have identified.”

Children over 18

One of the more interesting points considered in the report, given societal change over the last 50 years, is whether there should be wider court powers to make orders for the maintenance of children who are over 18 – lifestyles have changed and adult children are living with their parents longer and thus may remain financially dependent.

The report says that at present ‘financial provision for children aged 18 and over is uncertain and constrained by the limitations in the MCA” and “Central to any reform would be whether and on what basis the limited circumstances in which a financial remedies order for the spouse with whom the child continues to live into adulthood should be extended”.

Conclusion 

Whilst it is clear that reform is needed, what reform, if any, the Government consider necessary and what form it will take will be interesting to see. Given the current position on possible reform of Cohabitation law (which seems will not be taken forward in this parliamentary term) it is not anticipated that this will be taken forward in the immediate future.