On 11th September the Law Commission published a paper on the law relating to financial orders in divorce and dissolution of civil partnership. The document is 131 pages long.
The Law Commission is an independent body tasked with reviewing current law and making proposals for reform, where necessary. Many family law issues have been discussed by the Law Commission in the past and the result is often a high-profile media frenzy; as we have seen in the recent proposals regarding shared parenting and prenuptial agreements.
The most recent consultation focuses on possible reform to the law relating to eedsand the treatment of on-matrimonial property
The law relating to matrimonial finances changed significantly in 2000 when the case of White v White introduced the sharing principle. In reality, such a principle is mostly relevant in big money cases.
In the most common scenario, matrimonial lawyers are faced with the difficulty of distributing the relatively few assets that most of us have - typically the family home, pensions etc. in the most fair and efficient way between two people facing potential financial catastrophe brought on by a separation.
This brings us back, therefore, to the principle of needs, which is one of the factors a judge must have consideration to when deciding how to divide matrimonial finances. The judge must have regard to the needs of each party and any children. The wide discretion afforded to the judge in making such a decision is one of the many uncertainties facing matrimonial lawyers.
It is extremely difficult to define what needs is precisely, and the wide and varied case-law on the subject shows how uncertain the principle is in practice. The Law Commission therefore asks valid questions as to the future of the law in this area and endorses the general view that the lack of principle in defining needs adds to confusion and inconsistency into how much and for how long needs should be met.
I am uneasy with any proposal that a hard and fast rule should be apportioned to a calculation of needs and my view is that discretion should continue to be used in any assessment, taking each case as it comes and looking into each individual family circumstances. Certainly, where children are involved rules tend to go out of the window.
Interestingly however, at least in the short term, the Commission suggest the use of widely available guidelines for both the profession and the public in the form of an online hub. Will this be any different to guidelines within judicial discretion and case-law? It remains to be seen. Online information hubs suggest to me that the government is attempting to soften the blow of restrictions to legal aid.
Turning back to the sharing principle as referred to above, a result of that principle and something which is becoming frequently disputed is the question of pre-acquired on-matrimonial property. This usually takes the form of pre-owned property or businesses but can also include inherited assets, either pre- or post marriage.
The courts have been at pains to attempt to define on-matrimonial property and again there is wide and varied case-law which often brings differing decisions and opinion. Once again, this only serves to create confusion. The general consensus is that on-matrimonial property is those assets that are not likely to be shared in a division of finances, especially where they are not needed to satisfy either party's needs (see above).
I think it will be extremely difficult to create a legal, statutory definition of such property. The Law Commission initially proposed that property held in the sole name of one party to the marriage or civil partnership; either received as a gift or inheritance; or acquired before the marriage or civil partnership takes place; should no longer be subject to the sharing principle.
On the face of it, it is a valid proposal. However, the questions arising from this seemingly broad-brush approach appear to be endless. Indeed, the Law Commission acknowledge the difficulties. Why does it matter where the property came from? What happens to the family home? What happens when non-matrimonial property merges with matrimonial property? Does the passage of time affect the principle of how the property is dealt with? How far should the assessment of needs affect the treatment of the property?
Again, similarly to the discussion on needs, the question is raised by the Law Commission as to whether or not the principle should be dealt with by rules or guidance. We face the same dilemma of placing too rigid an assessment of individual cases, against having a clear and defined approach to the law.
Guidance would again be helpful, and certainly in the short term. The sheer length and detail of the consultation suggests that reform will be a long time coming, if at all.
For more information on the issues discussed above, contact our Family Law team for a free initial consultation on 0113 201 4900 or firstname.lastname@example.org.Back to Blog