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Response to Law Commission report ‘Matrimonial Property, Needs & Agreements’

27th February, 2014

The report recommends primary legislation to provide for Pre and Post Nuptial agreements which should be contractually binding on the parties and without any review by a future divorce court, save only where such an agreement fails to meet basic financial needs.

In those cases only will the ‘door of the court’ remain open and only to the extent of providing for those basic needs. The rest of the agreement will remain untouched. So-called ‘Qualifying Nuptial Agreements’ (QNAs) would provide couples before or during marriage an opt out of the current discretionary court system. Procedural safeguards are proposed to ensure that these contracts are properly entered into, with appropriate protections for the parties.

The report baulks at attempting to legislate so as to automatically exclude pre-acquired wealth or inheritances from the normal sharing exercise. Instead it says that courts should continue to develop the law in this area and that a QNA is the safest way to ensure these assets are excluded.

Finally, the Commission struggled to come to terms with the reform of ‘financial needs’ which often dominates the court’s thinking. It acknowledged the current law is muddled, lacked transparency, clear objectives and was subject to wide regional variations. The report recommended that the law should be clarified but shied away from legislation to provide this, preferring instead to let the Family Justice Council to provide the guiding principles. The Commission also avoided a rigid ‘formulaic’ approach to determine needs although did not rule out that some sort of standardised calculation could be achieved.

Richard Barge, head of family law at Aaron & Partners (Chester and Shrewsbury) said in response:

“The proposed legislation in relation to QNAs is most welcome and introduces a much needed element of wealth protection and certainty for couples. It will bring England and Wales into line with most other developed countries in providing an ‘opt out’ from the default system of equal division of assets on divorce. There is still protection for individuals where such an agreement does not meet their housing and income needs or the needs of children of the marriage.

Mr Barge added, that “the Commission had been far less robust and bold in its views on the definition and quantification of financial needs. The assumption is that the current law works perfectly well but it needs explaining clearly and applied equally wherever in the country you happen to live. I am glad that at this stage there is no move to a rigid mathematical formula as a ‘one size fits all policy’ has the potential to throw up unwelcome anomalies and cause unintended hardship. Every case is unique and the public know well the inequity of the child support system that moved to similar principles.

The report has been placed on the Justice Secretary Chris Grayling’s desk and it remains very much to be seen what appetite the government will have this side of a general election in Spring 2015 to bring forward the recommended legislation.

For further information please contact Richard Barge on 01244 405443 / 07881 950769 or email [email protected].

 

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