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Modernising the Court’s approach to financial provision on Divorce

On 23rd November the House of Lords will hear the committee stage of the Divorce (Financial Provision) Bill.

The law regarding financial provision on Divorce remains subject to a statute which is now 45 years old (Matrimonial Causes Act 1973). Some might say therefore that the law is somewhat outdated.
The Bill seeks to bring the legislation into line with more modern approaches to family law and 21st century relationships with reference to issues such as nuptial agreements (pre and post) and pre-acquired assets.
There are four main areas suggested for reform as follows:

“Matrimonial property”
The Bill proposes that financial orders will be limited to matrimonial property which was acquired during the marriage; otherwise than by gift, inheritance or succession from a third party; and does not represent property acquired before the marriage.
The Bill goes further to describe what will then determine such matrimonial property and attempts to make the law clearer as to what can be deemed to be matrimonial and non-matrimonial property. Interestingly, the Bill appears to address developing issues in case law such as special contributions and personal skill and efforts of one party.

“Pre-nuptial and post-nuptial agreements”
Prevailing case law suggests that whilst still not statutorily binding, providing that the proper processes are followed then nuptial agreements will be binding on the parties. The law is still developing with every case and so the Bill goes further to define in what circumstances an agreement will be binding; the relevant subsections largely following the decision in the landmark case of Radmacher v Granatino [2010] UKSC 42.

“Value of the Matrimonial property”
The Bill refers specifically to the “net value” of the matrimonial property being shared fairly between the parties. It goes further than the current legislation by also referring to the deduction of any debts incurred before the marriage relating to matrimonial property or during the marriage.
Similar to the provision regarding matrimonial and non-matrimonial property, this particular provision also makes direct reference to case law principles such as the dissipation of any matrimonial property.
Of further interest is the provision for an assessment of needs of any children of the family under 21 which is an extension from 18; no doubt recognition of modern families where children are reliant upon their parents for longer.

“Periodical payments and lump sums”
Plenty of cases have hit the news in recent years remarking on the ‘meal ticket for life’ nature of spousal maintenance. The Bill seeks to more clearly define in what circumstances spousal maintenance will be ordered, for how much and for how long.

Attention should be drawn in particular to the provision which provides for payments to be made for “a period of not more than five years from the date of the decree of divorce, such period not to be exceeded unless the court is satisfied that there is no other means of making provision for a party to the marriage and that that party would otherwise be likely to suffer serious financial hardship as a result”.
The Bill is on its second round of the legislative process and has been met with some resistance historically, due to concerns that the provisions will cause unnecessary hardship.
The Bill does strive to introduce more clarity. There appears to be a mix of the wide discretion provided by the factors within section 25(2) MCA 1973, together with specific references to how the individual orders will be determined, seemingly reflecting on case law principles which have developed over time.
It is questionable however if this will make things clearer or introduce more conflict over the interpretation of the individual clauses. Whilst the 1973 Act does have its faults and limitations, the wide discretion afforded to the Judiciary does at least continue to uphold the principle that every family is different and one size does not fit all.
Family lawyers will continue to watch the development of the Bill with interest.

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Andrew Smith

Associate Solicitor
Family Law
0113 322 2807
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