The current law
At present, there is no standard formula for calculating appropriate financial provision on divorce.
Instead, the court has a duty to consider all the circumstances of the case and to take into account a range of specific statutory factors set out in section 25 of the act (the section 25 factors). The court’s approach is to calculate and then distribute the parties’ available resources between them to achieve a fair outcome.
The Section 25 factors can be summarised as follows:
- The income, earning capacity, property and other financial resources which each spouse has or is likely to have in the foreseeable future. This includes any increase in earning capacity which a spouse can reasonably acquire (for example, by completing further training);
- The financial needs, obligations and responsibilities which each spouse has or is likely to have in the foreseeable future;
- The standard of living enjoyed during the marriage;
- The age of each spouse and the length of the marriage;
- Any physical or mental disability which either spouse has;
- The contributions which each spouse has made or is likely to make to the welfare of the family in the foreseeable future. Crucially, this includes contributions made by looking after the family home or looking after children;
- The conduct of each spouse, although in practice little if any weight is given to this factor, unless there is misconduct that is so serious that it would be inequitable to disregard it;
- Any value which either spouse will lose the chance of acquiring as a result of the divorce (for example, interests under a pension).
Where possible, the court seeks to achieve a clean break between parties on divorce, so that they are no longer financially dependent on one another.
Is reform necessary?
The courts reluctance to introduce rigid guidelines within financial cases means that different judges may reach different conclusions on the same facts, all of which would be within their judicial discretion. With that in mind, under the current law it can prove difficult to advise clients on exactly what settlement they are likely to receive. Despite the development of guiding principles through case law, critics of the Act argue that divorcing couples should be given more certainty.
How is this likely to be achieved?
A review of the law on financial remedies has now been formally announced by the Law Commission, although the first stages are unlikely to be complete until September 2024. Whilst reform is likely to see a full review of the section 25 factors by the Law Commission, they may also give consideration to the law in other jurisdictions. Potential reforms could see the formalisation of pre- and post-nuptial agreements or definitive guidelines in relation to spousal maintenance.
If you wish to discuss your divorce or matrimonial finances with our family team, please contact Yasmin on 01482 974479 or email yasmin.palmer@jameslegal.co.uk.
