Hilary Lennox writes for Lexis Nexis Family Law Blog
Hilary Lennox, barrister at 5 St Andrews Hill, considers the Divorce (Financial Provision) Bill [HL] 2016-17, a private member’s bill introduced by Baroness Deech (crossbench). The Bill received its first reading in the House of Lords in May 2016, and passed its second reading in January 2017. It has been progressed to the committee stage, however a date is yet to be announced.
The Bill proposes to replace section 25(2) of the Matrimonial Causes Act 1973 (MCA 1973). MCA 1973, s 25(2) contains the criteria that a court should take into account when considering financial provision, ie:
- the income, earning capacity, property and other financial resources of the parties
- the financial needs, obligations and responsibilities of the parties
- standard of living
- the age of the parties, and the duration of the marriage
- any physical or mental disability
- contributions to the welfare of the family, and
- the conduct of each of the parties, where it would be inequitable to disregard it
This is the current position of the law.
Baroness Deech has highlighted some issues with this, namely that there is far too much judicial discretion, which makes it difficult for lawyers to advise on the likely outcome of financial proceedings. We can generally weigh up the odds of success for a party, and highlight the likely sums involved and to be awarded from our drafted table of assets, but we have all seen cases where the advice provided at the start of a case changes dramatically if the judge disagrees.
If the Bill is passed it will limit the judge’s discretion, and will make the law more structured and hopefully clearer.
Baroness Deech explained:
‘The purpose of this Bill is to reform the law relating to the splitting of assets on divorce. The current law is the Matrimonial Causes Act 1973, section 25, which has not been thoroughly debated by Parliament for 40 years despite radical changes in society and families, and which has been the subject of calls for reform from the Law Commission, Resolution and the Centre for Social Justice. Reform is urgent because the law is uncertain. It is 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. The Bill would implement provisions very similar to those of Scottish law, and 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; flexibility to allow the home to be retained for the carer and children; and binding prenuptial agreements. This is intended to facilitate mediation, reduce litigation and costs, and recognise equal partnership in marriage.’
Other calls for reform
Resolution launched its Manifesto for Family Law in 2015, which called for changes to the law surrounding divorce and separation.
The manifesto argued that people separate with little or no understanding of the financial consequences of their break up, thereby making it more difficult for them to reach agreement and, as a result, placing a burden on the court system. It also highlighted that the courts have seen an increase in unrepresented litigants due to the removal of legal aid for most family proceedings, with 50,000 people representing themselves in 2013.
Offering a solution to the issues raised, the manifesto recommended the reform of MCA 1973, s 25, including the addition of marital enforceable agreements, clear guidelines on the division of capital resources and pensions, and a distinction between matrimonial property and non-matrimonial property in cases where resources exceed the needs of the separating couple.
Baroness Deech’s proposals
The Bill includes provision to make pre and post nuptial agreements even more binding, rather than just persuasive. The current position was established by the decision in Radmacher (formerly Granatino) v Granatino  UKSC 42, where the wife sought to protect her £106m fortune. The court found that as long as certain criteria was established, eg both parties obtained independent legal advice, and full financial disclosure was provided, that pre-nuptial agreements are a useful guide for the court but are not binding.
The Bill proposes that pre-nuptial agreements should be binding only after the needs of the separating parties and any children have been taken into account. So to say, for example, ‘I leave my spouse one pound for every year we have been married’ won’t stand up in court.
The Bill also proposes that there is a starting point of a 50/50 split of any matrimonial assets acquired after the marriage. Currently the general approach is a 50/50 split after a long marriage. It proposes to exclude pre-marital assets (sigh of relief there!). This equal division will change and the balance be tipped by the following factors:
- any agreement between the parties relating to the ownership or division of any of the matrimonial property
- any destruction of matrimonial property by either party, and
- the needs of any children of the family aged under 21 and any liability caused by the transfer of property
Regarding spousal maintenance, the Bill proposes to tighten the court’s powers on spousal maintenance by providing a list of criteria for when maintenance can be provided, and by placing a cap of five years for maintenance except for exceptional circumstances.
When do we expect to see these changes? A date is still to be announced for the Bill to reach the committee stage, and thereafter it will have to process through the House of Commons.
Hilary Lennox is a barrister called to the Bar in Ireland, Northern Ireland and England & Wales. She specialises in international family and criminal law, extradition and human rights. Hilary is instructed to bring cases on behalf of individuals before the European Court of Human Rights and most recently against Ireland. She speaks French, Spanish and Irish.
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