UK Family law news: No fault divorce, pension sharing orders and co-habiting couples’ rights

Our partner firm, Stowe Family Law, share insights into key principles of UK family law and also implementing Australian pension sharing orders in the UK.

By Julian Hawkhead, Senior Partner, Stowe Family Law

No-fault divorce to be introduced next year

No-fault divorce has been a feature of Australian family law for many years and the focus of a tireless campaign in England and Wales, which has finally achieved its goal. From 6 April 2022, couples in our jurisdiction will be able to agree that their marriage has ‘irretrievably broken down’ as the only reason for wanting to obtain a divorce and will not have to make allegations of bad behaviour as is currently the case. 

Our divorce laws had not changed since the 1970s, when attitudes to marriage and divorce were very different. Couples have had no choice but to either wait, living apart, for two years before divorcing by consent, or make allegations of adultery or bad behaviour against one of the parties before asking for a divorce. These laws have been criticised as causing unnecessary acrimony at a difficult time for families and exacerbating the conflict between couples, which can be particularly upsetting for any children who may be caught up in the battle.

The campaign for no-fault divorce was driven by lawyers, judges, politicians and other professionals working with families. They argued that a less confrontational way of dealing with divorce would pave the way for couples to resolve the associated issues of financial settlements and arrangements for children more amicably. 

The new law allows either one or both spouses to make a statement that the marriage has irretrievably broken down. The statement is conclusive evidence that the marriage has broken down, and the court must then make a Divorce Order. The new law introduces a minimum period of 20 weeks from the start of proceedings to confirm that a Conditional Order of divorce may be made. This allows for a period of reflection and, perhaps, the possibility of reconciliation. 

The divorce can be made final six weeks after the Conditional Order is made. The new legislation also updates old-fashioned terminology such as decree nisi and decree absolute to make the process easier to understand. 

The new divorce laws have been widely welcomed. Those working within the family justice system are optimistic that they will help families move on from divorce more amicably, avoiding the ‘blame game’ and finally catching up with our Antipodean cousins. 

Financial remedies in England and Wales – the wide discretion to re-allocate resources

London has been called the divorce capital of the world. Our courts have seen enormous awards made in ‘big money cases’. For example, Pauline Chai, a Malaysian model, won £64 million in her divorce from fashion tycoon Khoo Kay Peng. In another case, a wife claimed from her billionaire husband an annual allowance of £40,000 a year for fur coats, along with £21,000 annually for shoes and £109,000 per year for haute couture. One of the reasons the claims have been brought here is the wide discretion that the courts have in deciding how to deal with financial claims upon divorce. 

Of course, most judges up and down the country are not involved with deciding whether it is reasonable to allow £100,000 per year for handbags; but all judges have considerable discretion to re-allocate resources and provide a tailor-made award. This can make it difficult to predict outcomes for clients with any real certainty. However, a bank of case law has developed, which, provides a set of principles that govern resource allocation when combined with statutory guidance. 

The key statute is the Matrimonial Causes Act 1973. Section 25 of this Act sets out the different factors which the court needs to consider. These include: 

• the parties’ financial resources;
• the standard of living enjoyed by the parties before the breakdown of the marriage;
• the ages of the parties and the duration of the marriage;
• any physical or mental disability;
• all contributions made by the parties, both economical and by looking after the home or caring for the children; and
• in exceptional circumstances, the conduct of the parties. 

In UK family law, the court must consider all the circumstances of the case, with the welfare of any children of the family being the first consideration. 

Some of the key guiding principles that the court uses in interpreting the statute are as follows:

1. Sharing

the division of the assets will be measured against the ‘yardstick of equality’. This means that in practice, matrimonial assets will generally be divided equally unless there is a good reason not to do this. The main reason for an unequal division will be to meet the needs of one of the parties. This is common in situations where one party will need the family home to provide for the children of the family.

2. Needs

When deciding whether a departure from equality is necessary, the court will make sure that the needs of the parties are met. Needs will be assessed generously and will be judged in light of the standard of living of the parties during the marriage. 

3. Non-discrimination

In the pivotal case of White v White [2001], the highest court in the country made it clear that fairness requires that there should be no discrimination between husband and wife in the respective roles that they played during the marriage. If they both made an equal contribution to the welfare of the family, then it does not matter if one party went out to work and built up the assets whilst the other stayed at home, looking after the children. Their contributions will be considered of equal value.

4. Achieving a clean break, if possible

The court has the power to order that one party makes maintenance payments to the financially weaker party. However judges will strive to ensure that the parties can achieve financial independence – or a ‘clean break’ – as soon as reasonable. While a judge can make an order that one party pays maintenance for the rest of the parties’ joint lives, this is becoming increasingly rare, and the weaker financial party is encouraged to reduce their financial dependence on the other. The aim is for the party receiving maintenance to adjust to the termination of that maintenance without suffering ‘undue hardship’.

5. Non-matrimonial property can fall outside the sharing principle

Whilst needs will always trump, where property has been accumulated outside the marriage, the sharing principle may not apply. So, for example, if a spouse brings considerable inherited wealth to the marriage, the principle of sharing equally will not necessarily apply, particularly if the other party’s financial needs can be met without recourse to those inherited assets. This aligns with the overarching principle of “fairness” in that it does not seem fair for a party to benefit from assets to which they have made no contribution at all if their needs can be met without using those assets.

Our discretionary system has many detractors who argue that the current system is far too unpredictable. They propose reforms providing for a rules-based system to provide couples with greater clarity and certainty when they separate. It does not look as though these reforms will be introduced any time soon, but it remains to be seen whether the changes brought in by Brexit will impact upon London’s reputation as a divorce mecca.

The legal rights of cohabiting couples 

When it comes to UK family law, the issue of the rights of cohabiting couples is a controversial question in our jurisdiction. More and more couples live together without getting married. Many operate under the mistaken assumption that the fact that they have been living together, sometimes for many years, gives them the same legal rights as a married couple. This is not the case. The idea of ‘common law’ marriage is a myth, and those who believe in it can be left in a very vulnerable position if their relationship breaks down.

There is no automatic legal responsibility to support each other financially, and there is no automatic right to a share in the property, which may be held in one partner’s sole name on separation. Strict property rights govern how a court deals with this situation, and there is no discretion for a court to redistribute assets, no matter how long the couple may have lived together. As a result, many people have found themselves in the desperate situation of being without any legal rights to maintenance, a private pension or home, even after a lengthy relationship during which they may have brought up children together and assumed they would be supported for life. Sometimes, legal avenues are open to them, but these are often costly, time-consuming, and hugely uncertain. 

Despite repeated calls from UK family law professionals to address this situation, our Parliament has not seen fit to prioritise it. There has been one attempt to introduce a law that would, amongst other things, provide basic financial protections for former cohabitants, but unfortunately, there seems little chance of reform happening imminently. 

Implementing Australian pension sharing orders over UK pensions 

A common area where we find ourselves helping divorcing or separating couples living in Australia, navigating UK family law, is where they need to make arrangements for their UK pensions. Many people living in Australia, especially British ex-pats, have spent time working in the UK and contributed to a pension here. Australian family courts are accustomed to making pension sharing orders in respect of UK based pensions. Generally, UK pension providers will require a local order to be made in England before implementing the pension sharing order. Note that Scotland is a separate jurisdiction from that of England and Wales. 

The English court has the power to make financial orders (including pension sharing orders) following an overseas divorce under a law called the Matrimonial and Family Proceedings Act 1984. However, there was a difficulty with this, which meant that the parties had to show that one party was habitually resident or domiciled in England or Wales to enable the courts to make the order. Before Brexit happened, thanks to an EU Regulation, even if neither party could show such a connection to this jurisdiction, it was possible to ask the courts here to make pension sharing orders, provided there was no other court in the EU that had the power to do so.

After England left the EU, the law changed, and now it is much more difficult for couples based abroad to obtain pension sharing orders over English pensions. In the lead up to Brexit, lawyers urged those affected by this to obtain their English pension sharing orders before 1 January 2021. For those whose orders come after this, and until English domestic law is changed, there may be real problems implementing a pension share of an English pension following proceedings in Australia. You should seek specialist advice early in the proceedings to establish whether the court in England and Wales might have the power to make the order for a pension share based on habitual residence or domicile.