Divorce: Be Prepared For Unpredictable Financial Settlements

Couples that are able to maintain an amicable relationship are often able to resolve the financial consequences of a divorce between themselves. Admittedly, though, it is often simply not possible given the nature of divorce itself so the court room beckons.

Resorting to court may give certainty to the outcome once it is finalised but predicting it in advance can be anything but certain. Financial settlements upon divorce have historically been unpredictable, given that there are wide discretionary powers given to judges to make financial orders based on the merits of the case at hand.

Why are financial settlements so unpredictable?

The Matrimonial Causes Act 1973 s.25 makes clear that all the circumstances of the particular case being heard must be taken into account. The first and foremost factor when determining a fair financial settlement between the parties is the welfare of any minor child of the family. As such, judges may have widely contrasting views or perceptions of the circumstances of a given case and this has led to great uncertainty. Arguably it has also been conducive to increased amounts of litigation, given the finances at stake following the filing of a Financial Remedy Application by a party to the divorce.

Does case law not gives us a clue?

At present, a huge body of case law now makes up much of the jurisprudence of the Matrimonial Causes Act 1973. However, although there are no guarantees in litigation, there are indeed key factors which may induce a more generous financial settlement for one of the parties.

Factors influencing a decision include the income earning capacities of the respective parties, now and in the future, and the financial obligations/needs the parties have. Furthermore, the court may take into account any conduct on the part of a party where it would be inequitable to disregard it.

How much influence do different considerations have on outcomes?

One of the key factors the court will take into account when making a financial order will be the parties’ comparative financial needs, where equality should only be departed from if there is a good reason for doing so White v White [2000]. Such consideration, where inevitably the oft-termed ‘weaker spouse’ will find property redistributed in his/her favour, has led to calls for the current state of the law to be tightened. Such calls are exemplified by proposals such as the setting of three-year time limits on any spousal maintenance orders, as outlined in the Divorce (Financial Provision) Bill.

Comment

That the law is at present difficult to apply to particular cases outside of the courtroom has, admittedly, also been cited as one of its strengths. In enabling discretion on the part of a judge to tailor orders according to the particular circumstances of a divorce, the law acknowledges the widely held proposition that divorces are rarely straightforward. Thus, the risk of leaving a party with an inadequate and unfair settlement is ever-threatening so judicial discretion –performing a balancing act between competing interests – will continue to be seen as preferable to rules and standards which, in family law, can all too easily be called out as arbitrary and inflexible.

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