Law commission to review how finances are shared on divorce

On the issues with the current rules, Deborah explains:

On a macro level, one of the main issues is that the current legislation determining how finances are to be shared upon marital breakdown is fifty years old. Society has changed considerably in this time, but the legislation has remained largely unchanged, and where it has been updated, it has happened in a piecemeal fashion. When family judges are asked to deal with sharing assets on divorce, the law on which they base their decision is made up of both legislation (such as the Matrimonial Causes Act 1973 (MCA 73), the main piece of legislation governing finances upon divorce) and the outcome of previous cases decided in the past. So although we have fifty years of case law to help hone the statutes from 1973, the decisions made in these cases cannot divert radically from the existing legislation. Instead, we are reliant on judicial interpretation reflecting the views and values of society at a given time in how the MCA 73 is applied, and it’s that built in discretion that is good on one hand as it allows the old statute to still be in place now but it results in uncertainty of outcome which in turn leads to costly litigation if the parties aren’t able to reach agreement.

Deborah discusses why London has become such an attractive jurisdiction for HNW divorces:

Yes, particularly wives. London has earned the not-entirely flattering moniker of the ‘divorce capital of the world’ due to the way assets are shared. In 2000, the House of Lords decision in the case of White v White enshrined in law the principle that both parties to a marriage make an equal contribution, whether that be as breadwinner, homemaker or otherwise – they are all equally valued. Prior to White, the law had been interpreted and evolved to again reflect society’s values over the years. The ‘traditional’ set up historically led the MCA 73 to be interpreted to reflect that the contributions in that traditional arrangement were unequally valued, with the breadwinner’s contribution being rewarded greater than any domestic role. Generally, because of how couples shared the family roles between them historically, this thinking benefitted men over women. White swept away this discriminatory approach but it still exists in some other jurisdictions around the world.

If I’m acting for the homemaker on divorce, I will therefore want to secure jurisdiction here in England and Wales whereas if I’m acting for the breadwinner, I’ll do my utmost to find another jurisdiction where the family may be either domiciled or habitually resident if it rewards more the person who has earned the money.

On whether the division of assets is up to the judge's discretion, Deborah remarks:

‍Yes, it’s a discretionary jurisdiction here so if there were 10 judges all being asked to decide a case, you’d likely have 10 slightly different outcomes – within the same ballpark though.

It’s advantageous on one hand as it allows the judges and lawyers acting for the parties to interpret the law to reflect the circumstances of each particular family. However, it causes uncertainty, and where uncertainty exists there is the opportunity to litigate. It’s that uncertainty which ideally needs to be tightened in my view, retaining it but shrinking the ‘ballpark’ so fewer cases proceed to trial and costs are kept to a minimum. It’s the scope of the current discretion which also allows parties to use litigation to vent their upset at their estranged spouse through our already overloaded family justice system.

Deborah also comments on the lacking guidance as to how wealth should be divided:

‍The factors are open to interpretation, allowing practitioners to interpret them to fit around how a client’s case should be argued to achieve their financial objectives. It’s this discretion that I refer to above and there is never certainty of how a judge will decide a case. We advise clients that it’s effectively a roulette wheel above the court door if their case goes to trial and generally better for clients to retain some say over their financial future by agreeing terms between them, even if there are parts they’d prefer not to concede. Psychologically, it’s difficult for clients to have a judge effectively parachuted into their financial affairs, making decisions that affect the rest of their lives and then leave the family to live out those decisions.

Asked whether the proposed reforms put London's status as the divorce capital of the world in jeopardy, Deborah remarks:

Different practitioners will have different views on this, but in my opinion, no. The reason why London earned the title of divorce capital of the world was due to the emphasis of the divorce courts on fairness, non-discrimination and equality. I predict that any reforms will preserve and strengthen these three pillars, not diminish them.

Deborah's comments were published in the Financial Times, 28 August 2023, and can be found here.