The Law Commission has published its scoping report, Financial Remedies on Divorce and Dissolution, recommending that the law relating to the financial consequences of divorce should be reformed. It sets out a suite of potential models for reform ranging from codification of the existing law to the implementation of an entirely new civil-law style default property regime. Further, the report identifies several areas where the substantive law is ripe for reform: nuptial agreements, spousal maintenance, financial orders for adult children, conduct, pensions and limitation periods. Being a scoping report, it does not make specific recommendations what the reformed law should be, but it does set out concerns raised by stakeholders.

No one reading this report can have any doubt just how important it is that the law is transparent and just. This is principally because of two particularly important points made within the report. First, astonishingly, the majority (around 60%) of divorcing couples apparently do not apply to court for any form of financial remedies. Plainly, this could produce seriously unfair consequences for both parties. Second, there is a growing body of evidence, including from the Nuffield Foundation’s Fair Shares Project, that women continue to be financially disadvantaged by divorce, especially those who are victim-survivors of domestic abuse.

Matrimonial Causes Act 1973

The starting point is s 25 of the Matrimonial Causes Act 1973. It mandates that the court must give consideration to all the circumstances of the case and that the welfare of minor children is the first consideration. Then, s 25(2) sets out a list of factors to which the court must have regard, most notably the parties’ financial resources and their financial obligations. The fact that the primary statute is now half a century old is often cited as a reason in itself that the law must need reform. We contend, on the contrary, that it is remarkable how the language of the statute has adapted with the times.

Knowledge gaps

When and how do we know that the law requires reform? We suggest, perhaps stating the obvious, it is when the outcomes provided by the law do not meet contemporary standards of justice.

Despite the prevalence of divorce, there is a dearth of knowledge concerning the substantive outcomes produced by the law. This is regrettable because the data exists and is, or should be, easily accessible.

The vast majority of applications for financial remedies do not proceed to trial but conclude with a consent order. Unlike most other types of civil proceedings, the financial remedies court must approve the terms of the consent order and satisfy itself that the terms are fair. The court summarily undertakes its task, applying the factors within s 25, informed by the Form D81. Since 2019, parties must complete, and file jointly Form D81 when submitting a draft final consent order. This sets out the parties’ respective financial circumstances and the financial impact of the draft consent order on each. Where the court is not satisfied that a draft consent order is fair, further enquiries are made of the parties and ultimately the court may, at any rate in theory, refuse to approve the order if not so satisfied (although this only happens very rarely).

Further, where matters do proceed to a contested trial, the President of the Family Division has recommended that judges should publish 10% of their judgments annually.

The many final consent orders accompanied by Forms D81 and ever-growing bank of published judgments constitute a significant body of data capable of analysis. Were this data to be analysed, ex hypothesi it would indicate normative outcomes.

What would the data actually show?

This data would answer many of the pertinent questions raised by the scoping report.

A significant issue is that the law is too discretionary and therefore too hard for lay people and professionals to predict. The data would show whether this is the case or whether, as we suspect, there is a narrower margin of outcomes within certain types of cases. If there are patterns to outcomes, do they differ between outcomes achieved via consent and those decided by a judge at a contested trial? If they do, does this suggest that certain types of litigants tend to under/over settle. Or does it suggest that patterns of judicial decision-making are not sufficiently known by the public?

Answering these questions is key because it will help inform whether there needs to be reform and if so, what model should be adopted. A total lack of any known trends in judicial decision-making would suggest that there is a high level of arbitrariness, and therefore reform should look to reduce the ‘unfettered’ level of discretion given to the judges. Equally, strong trends would indicate that the criticisms have been overstated and that, maybe, reform is not currently necessary.

It is even possible that analysis of the data could itself form a fifth model of reform. If there are trends, then it should be feasible to create a database. Details of analogous cases and their outcomes could help guide lay people and professionals in predicting future outcomes. Such a database exists to help professionals in the field of personal injury. Why not for financial remedies?

More fundamentally, statisticians would be able to analyse the substantive outcomes and assess whether macro trends reflect our notions of fairness. We are deeply concerned by the information from the Fair Shares Project that women, especially female victim-survivors of domestic abuse, remain financially disadvantaged and by the alarming rates of poverty among women in retirement. It is surely vital that all lawmakers have access to such evidence, particularly when it comes to addressing lazy tropes that divorce is a gravy train for wives.

As mentioned, the scoping report identifies a number of discrete areas where the substantive law could be reformed. We, however, advocate a more ambitious approach. Judges and litigants must devise orders that are holistically fair to both parties. Issues of property, income and pensions, for example, are not separate silos. If there is Parliamentary appetite for reform, it must ensure outcomes which are just and fair overall rather than to tinker with individual hot topics, as Australia has just done by lowering the threshold for the admission of conduct in a property settlement case there.

A missed opportunity

Once we know whether the law is producing unfair outcomes and if so, why, it will be far easier to know if, and how, the law should substantively be changed. We cannot provide a cure if we do not know the disease.

Every case since 2019 settled by consent has been accompanied by a new Form D81. Additionally, there are increasing numbers of published judgments after contested trials. There is a mine of data available which would go a long way to answering the most important question: Does the law produce outcomes which are generally fair?

Unsurprisingly, we suggest that it is highly regrettable that the project to extract and analyse the data from the thousands of Forms D81 filed each week, initiated more than four years ago by Mr Justice Mostyn and the then Chair of the Law Commission, Lord Justice Green, appears to have stalled. 

References

The Law Commission’s scoping report can be read here. The report was the subject of an episode of the podcast Law and Disorder released on 21 December 2024 of which Nicholas Mostyn was a co-host along with Charlie Falconer and Helena Kennedy, and where Holly Symonds was a guest.