Inconsistency creates uncertainty in divorce proceedings

The Matrimonial Causes Act 1973 has come under attack, and justifiably so many say. Section 25 of this act sets out the various factors that judges are under a duty to consider when dividing assets on divorce.

To name a few, the financial needs of the parties, their financial resources, the duration of the marriage, the standard of living during the marriage, the parties’ contributions and so on. The statute offers almost no guidance on interpretation of these factors; that has come from the senior courts when applying the legislation in the half century since the act came into force.

The problem family lawyers currently face stems from that lack of statutory guidance. Judges have been left with no choice but to interpret these factors as they see fit, with the aim of reaching a decision that is fair in the circumstances.

The inevitable problem is that ‘fairness’ does differ, sometimes considerably, from judge to judge. A judge can, in theory, reach any one of a range of possible decisions, having regard to the specific facts of an individual case. This difference in potential outcomes can make a material difference to the parties involved. Divorce proceedings are stressful enough for separated couples, who must navigate a seemingly mysterious and complex system of practice and procedure. The lack of certainty about the ultimate outcome inevitably adds to their stress.

The guidance from caselaw can be enormously helpful when advising a client, but the age-old problem exists: the facts in reported cases are rarely particularly similar to the facts of an individual client’s case. Coupled with a generous helping of discretion, it is difficult to advise clients on what the likely outcome will be. When asked this question, the response will typically involve a lot of caveats, and consequently limited reassurance that the client is headed in the right direction.

This uncertainty has been a perennial bone of contention in legal circles. Mr Justice Mostyn has long campaigned on the issue, recently stating to the UK Parliament: “reform is necessary now. For as long as the present system keeps overlaying simple rules with woolly discretion, it will never be predictable, transparent, economical or consistent.”

The “woolly discretion" he describes, which is permitted by senior courts, feeds into the practice of the lower courts. Such discretion, he maintains, is the reason for enormous legal costs being run up in "middle money" cases where there are not vast swathes of assets to divide.

The costs issue arises because a party has the ability to pursue arguments which may, or may not, be successful all the way to a final trial. Generally, there are no or limited restrictions imposed along the way to tighten the scope of permitted arguments, so the parties’ positions can remain completely polarised.

These arguments become very costly over a period of 12 to 18 months before the case is finally determined. At that point, both parties are waiting for the judge to decide what is, in that individual judge’s view, a ‘fair’ outcome. The concern of many family law professionals is that the lack of consistency and consequent uncertainty over the meaning of ‘fairness’ greatly adds to the financial burdens on each side.

A particularly thorny area is the determination of the parties’ financial needs. Financial needs usually centre on the amount of money a person needs to sustain themselves now and the type of property appropriate for them to live in. On both points judges are notoriously inconsistent in their assessment, with interim orders for maintenance (anecdotally) being the worst offenders.

The standard of living factor can be particularly difficult when the needs assessment is undertaken. There will inevitably be a drop in standard of living when one pot of assets or income is split in two, to maintain two separate households on separation, and the court will want to ensure that decrease is shared equally.

This becomes more difficult when there are children to consider as, under the 1973 Act, the welfare of minor children is the court’s first consideration when dividing the family pot. Is it fair or practical for that drop in standard of living to be borne equally? Different judges have different views. As an example, when the court is faced with an argument that the family home should be retained for the child and main carer in the interim period to provide stability for the child, and a counter argument that this will lead to the parties’ finances being unnecessarily (and potentially precariously) stretched on the other hand, it is impossible to predict with any confidence what a judge will do.

The same type of question almost always arises in respect of long-term housing needs – one party says that they need X sum for a house and the other party disputes this, saying that only Y sum is needed. The judge often plumps for a figure in the middle, having taken a look at Rightmove beforehand. Neither party is necessarily wrong to advocate for X or Y sum, both could be considered fair and thus are pursued throughout many months of litigation.

The inconsistency affects more than just a handful of outlier cases. Instead, given that the vast majority of divorce cases are 'small money needs cases', where the emphasis is on making a decision that allows the reasonable financial needs of each party to be met, such inconsistent approaches have a far-reaching effect across the country.

To allow a situation where such an enormous range of needs can be validly argued is not conducive to keeping legal costs down or to reaching agreement. Mr Justice Mostyn is right that more rules are needed to tackle the problem.

The concern among lawyers proved so great that the Law Commission launched a review in April to determine whether there is a need for reform of the laws governing finances on divorce. The Commission will specifically review the level of discretion afforded to judges, the operation of maintenance payments, and the factors that judges must consider when dividing assets – primarily being the section 25 factors.

However, the Law Commission’s findings will not result in a quick solution. It does not aim to publish a scoping paper until September 2024, and any subsequent consultation on proposed reforms is perhaps unlikely to be undertaken earlier than the spring of 2025. Accordingly, reform itself may take at least another 12 months thereafter to become effective. This anticipated timeframe only serves to underline how long the wait will be before any substantive reforms to the current law are made - if they are made at all.

The Law Commission must now determine how to achieve a fair balance between the need for greater clarity and consistency and the need to retain the court’s ability to find creative and bespoke solutions that accommodate the individual circumstances of each party. Since the latter is arguably one of the most unique and attractive features of our divorce legislation, delivering benefits that should not be underestimated, the task faced by the Law Commission will be far from straightforward.

Anna Shadbolt is a partner at Dawson Cornwell