Law Commission proposes litigant-friendly divorce reforms

New guidance should be drawn up to give couples a clearer idea of how their needs would be assessed on divorce, the Law Commission has recommended in wide-ranging proposals that would also see pre-nuptial agreements become binding in English law.

The commission's report, 'Matrimonial property, needs and agreements', falls short of recommending a full-scale recast of English matrimonial law but outlines a structure for gradual reform to cope with the growing number of self-represented litigants.

In a key recommendation, the report says the meaning of 'financial needs' should be clarified in Family Justice Council guidance to ensure that the term is "applied consistently by the courts, reinforcing judicial best practice".

"It will also give people without legal representation access to a clear statement of their responsibilities and the objective of eventual independence that a financial settlement should strive to achieve," the report says.

This would be accompanied by the possible introduction of formulas allowing couples to calculate their financial liability, as is the case in Canada, subject to further research as to whether this would be workable.

WORKABLE FORMULA

"Formulae, if developed, would take the form of non-statutory guidance and would give a range of outcomes within which the separating couple might negotiate," the report recommends.

"Regional variations between courts have created a bit of a postcode lottery," said Irwin Mitchell partner Alison Hawes. "The increase in litigants in person means a predictable formula will bring certainty and make the judges' job easier."

“The recommendations for greater guidance on how financial needs will be assessed can only assist in making the family justice system more accessible to the average man on the street,” said Stewart Law associate Adrian Clossick.

The formula-based approach also had support from academics who responded to the commission’s consultation and members of the public.

“Certainty of outcome on divorce is extremely important,” said an anonymous consultee. “We have ‘palm tree justice’ right now. I would favour a publicly available table of % financial settlement results on a divorce with maximum and minimum % in different situations.”

But Clossick has concerns that a formula-based approach, combined with the withdrawal of legal aid, the proposed substantial increase in court fees and the continued focus on compulsory mediation, “will lead many family lawyers to see this as a tentative step towards the government’s long-term goal of taking divorce out of the existing court system.”

Largely predicted to form the core of the proposal, prenups would only be binding if they met certain conditions and only after both partners' financial needs, and any financial responsibilities towards the children, have been met.

"We believe that married couples and civil partners should have the power to decide their own financial arrangements, but should not be able to contract out of their responsibilities for each other's needs, or for their children," said Professor Elizabeth Cooke, the commissioner heading the project.

QUALIFYING PRENUPS

At present, the courts will enforce prenups in most circumstances where they are satisfied that the parties have entered into them willingly and after receiving independent legal advice, but there is no guarantee that they will be upheld.

"Pre- and post-nuptial agreements are becoming more commonplace but the courts will not always follow them and lawyers are therefore not able to give clear advice about their effect," Professor Cooke said.

"Qualifying nuptial agreements would give couples autonomy and control and make the financial outcome of separation more predictable," she added. "We have built in safeguards to endure that they cannot be used to impose hardship on either party, nor escape responsibility for children or to burden the state."

Prenups would be binding if there has been no undue influence, the parties have received independent legal advice, have been signed at least 28 days before the wedding, and that there has been full disclosure.

A draft bill attached to the recommendations would make the required amendments primarily to the Matrimonial Causes Act 1973 and Civil Partnership Act 2004. This, however, will depend not just on parliamentary timetable but also on the government's willingness to take the proposals forward.

"We may now, at last, be on the threshold of welcome change," said Jane Keir, senior partner at Kingsley Napley. "We urge Parliament not to miss this opportunity to allow couples greater certainty and pre-agreed financial control should their relationship disintegrate."

Adrian Crossick too agreed that “giving nuptial agreements contractual weight will, quite rightly, be seen as game changer. But for the vast majority of people, additional practical guidance about how their financial needs will be met on divorce will be more relevant as it will provide greater certainty as to the likely outcome in their divorce.”

 

KEY RECOMMENDATIONS

1. Financial needs Family Justice Council to produce "authoritative guidance" that would explain the outcome a judge should aim to achieve in a settlement, including achieving financial independence for the parties. 2. Formulas Government to commission study on whether a non-statutory formula to calculate settlements would be workable. Formulas are used "successfully" in other jurisdictions, Canada in particular, where they are used to produce a guideline range within which the parties and judges can work. 3. Prenups A draft bill attached to the report proposes to make "qualifying prenuptial agreements" binding. Prenups will "qualify" if: - They are valid as contracts (no fraud or misrepresentation, for instance); - The parties have received independent legal advice; - There has been full disclosure of material information about the other party's financial situation; - The agreement was signed at least 28 days before the wedding or civil partnership; - It is made by deed and contains a statement that the parties understand that the prenup will partially remove the court's discretion to make financial orders.