Divorce and civil dissolution of a partnership is often a very stressful time for couples who face navigating new arrangements with respect to any children and resolving their finances. Where agreement cannot be reached regarding their finances, this will need to be resolved through the courts by making an application for a Financial Remedy Order.

The relevant statute applied by the court when dealing with applications for a financial remedy on divorce is Section 25 Matrimonial Causes Act 1973 (MCA 1973) and the Civil Partnership Act 2004 for dissolution of Civil Partnerships.

Section 25(2) MCA 1973 sets out a list of factors the court considers when resolving finances on divorce which include:

• the income, earning capacity and resources of both spouses;
• financial needs, obligations and responsibilities;
• standard of living during the marriage;
• age of parties and duration of marriage;
• any disabilities of the spouses;
• contributions to welfare of the family;
• conduct which it would be inequitable for the court to disregard; and
• the value of any benefit which either spouse will lose the chance of acquiring because of the divorce.

As there is no set formula, the court has a wide discretion. Whilst this means that each case can be dealt with on its own merits and particular circumstances, critics argue that the wide discretion and lack of certainty makes it difficult for couples to understand what may represent a fair agreement in their case.

Financial Remedies on Divorce and Dissolution: Law Commission’s Report

On December 18, 2024, the Law Commission published a comprehensive report addressing the outdated laws governing financial remedies on divorce and dissolution. The current legislation, rooted in the Matrimonial Causes Act 1973, has not been updated for over 50 years and has been criticised as lacking a cohesive framework for fair and certain outcomes.

The report identifies four potential models for reform:

1. Codification: Minimal changes to the existing law, with case law codified to provide clarity.
2. Codification-plus: Codification of current law with additional guidelines to enhance clarity.
3. Guided Discretion: Introduction of principles and objectives to guide judicial discretion in financial remedy orders.
4. Default Regime: Implementation of a matrimonial property regime, similar to those in other European and Commonwealth jurisdictions, to provide clear rules for asset division.

The report also explores reforms in several key areas:

• Binding Prenuptial Agreements: Consideration of legally binding prenuptial agreements to provide certainty in financial arrangements.
• Serious Misconduct: Evaluation of how serious misconduct, including domestic abuse, should influence financial remedy orders.
• Pension Division: Ensuring pensions are adequately considered during asset division.
• Maintenance Payments: Proposing a time limit on maintenance payments to ex-spouses.
• Orders for Children Over Eighteen: Expanding court powers to make financial orders for children over the age of eighteen.

The report aims to update and clarify the laws surrounding financial remedies for both divorce and dissolution of civil partnerships, ensuring a fair and predictable legal framework for all couples.

The Law Commission emphasizes the need for reform to provide divorcing couples with a fair and predictable legal framework, reducing disputes and promoting settlements.

It will now be up to the Government to consider and respond to the report with an interim response expected within 6 months and a full response within a year.

The current law on financial remedy will continue to be applied and our experienced Family Solicitor, Tayo Taylor will guide and provide you with expert legal advice including strategies to ensure the best possible outcome in your case.

You can contact Tayo Taylor at tayo.taylor@mhhplaw.com or on 020 3667 4783.