Divorce settlements set for seismic shift
Experts predicting a ‘run on the bank’ as divorce payouts look set for reform
The trend for massive divorce settlements is set for seismic change if new recommendations go ahead, and experts are predicting a rush to the courts for unhappy spouses looking to capture a big pay-out before changes are introduced.
At present the law gives judges almost absolute power to order redistribution of property between couples on divorce or on the ending of a civil partnership, but it does not give judges guidelines or objectives. The result is uncertainty and the result of the uncertainty is that couples are more likely to go to court because they cannot tell in advance what the judge might order.
Until 2000 and the landmark case of White v White, it was commonly believed that in the case of a couple where one was the wealth creator, the other should be awarded enough to maintain a decent standard of living, but not much more. But in White v White it was decided that there was no reason why the award for the financially weaker party should be limited in this way and this opened the door to escalating awards and London becoming known as the divorce capital of the world.
But now The Law Commission, whose job it is to research and make recommendations for non-political law reforms, wants to put an end to this. The Law Commission has now announced a consultation on what needs should be provided for in divorce settlements and how non matrimonial property such as an inheritance should be treated on divorce.
Family law expert Richard Sauvain of Aylesbury solicitors Parrott & Coales LLP commented : “Divorce judges have been compared with a bus driver who, after being told in detail how to drive the bus, is ordered to drive off without being given a route to follow. The Law Commission wants to recommend reforms that will give judges and the public greater clarity as to the route the courts will take.”
This follows on the heels of their consultation last year over pre-nuptial agreements, where couples agree in advance how their property is to be divided in the event of divorce. These agreements have previously been unenforceable in England because an agreement in contemplation of divorce was thought to be contrary to public policy.
Richard Sauvain added: “The fact that the Law Commission is widening its terms of reference suggests that it’s likely to make recommendations for sweeping reforms. The signs are that prenuptial agreements will be given the green light and that the needs that should be provided for on divorce will no longer extend to a nine bedroom mansion and a £1.65 million pension pot, as happened in the case of Grubb v Grubb last year.
“The issues are controversial. Regarding prenuptial agreements as contrary to public policy may be thought old fashioned, but there is a danger that they will put the financially weaker party in a disadvantaged position.
“We have all been surprised at the generosity of some recent awards, but there’s a risk of a bouncing to the other extreme if we see the needs of a spouse treated too restrictively. This could lead to a situation for example where a woman might be given no credit for giving up her career, raising a family and providing the background support that enabled her husband to build a successful business.”
He added: “In the meantime, we’re expecting a rush to court from those contemplating divorce who stand to benefit under the current regime, which could be an unfortunate by-product of the changes.”