Private client: Nisi does it

After a decade of high profile cases and escalating payouts, 2009 could herald the reform of arcane divorce laws, says Peter Baughan.

Private client special report: Nisi does itThese have been an interesting few years for divorce. We’ve had intense media interest following the spectacle of the McCartney divorce and, more recently, Madonna’s divorce. Slightly less glamorously, if of more relevance, we’ve also had some influential cases, starting with the House of Lords decisions of Miller and McFarlane (2006).

The relevant statute is over 35 years old and itself consolidated earlier laws. While we have benefited from the flexibility of the judiciary adapting the law as times have changed, we have perhaps suffered from the lack of clarity and certainty that updated primary legislation should offer.

Where are we now? Ten years ago Mrs Dart received £9 million from total assets of £400 million after 15 years of marriage (Dart v Dart (1996)). How times have changed – in 2006 Mrs Miller received £5 million from total assets of £32 million after less than three years of marriage. The aspirations of claimants in big money cases have risen hugely and, as noted by the President of the Family Division, Sir Mark Potter, London has become known as the “divorce capital of the world” (Charman v Charman (2007)). This is despite Lord Nicholls comments in the landmark case of White v White (2001) that a presumption of equality should not be introduced other than by primary legislation.

Section 25 of the Matrimonial Causes Act 1973 lists the factors courts must consider when deciding claims for ancillary relief. These factors are wide open to interpretation and the courts are crying out for reform. As Thorpe LJ stated in Cowan v Cowan (2002): “There is a pressing need for legislative review since reforms to match social shifts since the late 1960s cannot be achieved by the judges without trespassing beyond their legitimate function.”
How can the law be reformed? The trend in many other jurisdictions has been towards predictability at the expense of flexibility. Practitioners are increasingly confronted with cases that have jurisdictional issues, with many applicants preferring to achieve a London award. A standardised, tariff system could lead to unfairness, which means any reform needs to address the balance between certainty and flexibility. For the time being the position, as articulated in Charman, is that: “Almost uniquely our jurisdiction does not have a marital property regime … More correctly we have no regime, simply accepting that each spouse owns his or her own separate property during the marriage but subject to the court’s wide distributive power in prospect upon a decree of judicial separation, nullity or divorce.”

In June 2008 The Law Commission published its Tenth Programme of Law Reform. Although it recognised that “there should be an in depth review of the relevant law”, it specifically ruled out the possibility of amending section 25 at the present time. It was felt it would “inevitably have to engage with highly controversial socio political debate” which “would need to be underpinned by large scale empirical research which is not currently available”.

Practitioners will recall the demise of part I of the Family Law Act 1996, which was to introduce no fault divorce. These changes were largely welcomed by the profession but the proposals died a death when newspaper reporting made it a political hot potato. The Ministry of Justice (which requested and funded the commission’s recent cohabitation project) has indicated that it would prefer the commission to examine the law governing the status and enforceability of marital property agreements (or pre-nups).

For many years pre-nups were regarded as void as a matter of public policy, for undermining marriage. For example, in F v F (1995) Mr Justice Thorpe described pre marital agreements as having very limited significance. Against this, the courts have recognised the rights of people to contract as to their property rights after marriage (Edgar v Edgar (980)). What’s more, in recent years the courts have shown greater willingness to consider pre marital agreements, culminating in the case of Crossley v Crossley (2008) where the agreement was of “magnetic importance”.

We also have the recent decision of the Privy Council in McLeod v McLeod (2008), which upheld a post nuptial agreement. So perhaps this is where we will see reform – the area of marital agreements. The Law Commission intends to prepare a draft bill, although it is not due until 2012.

A change in the law can be prompted in different ways. There is increasing pressure to consider and harmonise laws across Europe. Lord Lester of Herne Hill has introduced a private bill to the House of Lords, which may codify the law relating to unmarried couples (this followed a Law Commission report which recommended reform, but the commission was unable to prepare a draft bill, so it looked like the proposals would never make it to the statute book).

There is wide recognition that we need reform. We anticipate a draft bill on martial agreements in 2012 but there is no sign of the Government amending the Matrimonial Causes Act, which is likely to see it’s 40th birthday. The judiciary will remain at the forefront of reform, despite their protestations.

Peter Baughan is a senior solicitor at Mills & Reeve.