DIVORCE FINANCIAL PRINCIPLES

THE MATRIMONIAL CAUSES ACT 1973

The court has wide powers in respect of property in a divorce. The issue of a divorce petition triggers those powers, which are given by Section 25 of the Matrimonial Causes Act 1973. The Section is an important one and has been added to or amended substantially since it was first enacted. One of the most significant changes came with the Pensions Act. Whilst the court could, prior to the Pensions Act, include in its calculations an allowance or provision for a wife's loss of retirement benefits or widow's benefits (remember, if an ex-spouse dies you are not his or her widow or widower) the amendments to Section 25 gave it power to make a really meaningful order which will put the divorcee near to retirement in a position similar to that in which he or she would have been but for the divorce.

WHAT DOES THE ACT DO?

To state the matter shortly, the Act says that in deciding what is to happen to matrimonial property on a divorce the court must make such order as is reasonable. This bald statement, on its own, doesn't tell us much! However, section 25 goes on to stipulate various matters to which the court must have regard. These include each party's:

  • INCOME, EARNING CAPACITY, PROPERTY AND OTHER FINANCIAL RESOURCES

    This covers not only what they presently have but also what they are likely to have in the foreseeable future. In the case of earning capacity it also covers what a party could reasonably be expected to earn.

  • FINANCIAL NEEDS, OBLIGATIONS AND RESPONSIBILITIES

    Either present or expected in the foreseeable future

  • STANDARD OF LIVING ENJOYED DURING THE MARRIAGE

    The millionaire's wife will not be expected to live in a hovel

  • AGE

    Additionally, the court must look at the length of time for which the parties have been married - for a very short marriage, say 1 to 2 years, the parties might only expect to take out of the marriage what they put in.

  • PHYSICAL OR MENTAL ABNORMALITIES IF ANY

    A husband with a heart condition who might be retired from work on health grounds might not be expected to make such substantial provision for his wife if he needs enough money to cover his own reduced circumstances.

  • CONTRIBUTIONS TO THE WELFARE OF THE FAMILY

    This extends not only to financial contributions but also to "contributions in kind" by looking after the family and the home. If a wife leaves work and interrupts her career to bring up the children she can be credited with a contribution similar to that of the husband who has worked throughout the marriage to bring in an income.

  • CONDUCT

    If, but only if, it is so bad that "it would be inequitable for the court to disregard it" - raising conduct is difficult and rarely worth the bother and expense. An adulterous or even violent husband is unlikely to have his adultery or violence used against him unless the circumstances are really bad or have an effect on the finances of the wife. Some interesting cases which provide examples of how conduct might be relevant are:
    (1) the case in which the wife, W, allowed her husband, H, to transfer the house into joint names while she was having an affair and was ordered to transfer her share back,
    (2) the case in which W had an adulterous affair with her father in law (H's father) and
    (3) the case in which H attacked W with a razor leaving her so hideously scarred that she was unemployable.
    (1) and (3) are reasonably logical as they both involved conduct which had an effect on the financial position of the wronged party. It is doubtful whether case (2) would be decided in the same way in today's rather more liberal atmosphere.

  • THE VALUE OF ANY BENEFIT, WHICH WILL BE LOST BECAUSE OF THE DIVORCE

    These might be a pension or widows benefits under a life policy. The Pensions Act gives the court power to make different types of order to reflect pension rights built up during the marriage. The court also has to look at other ways in which it can equalise the positions of the parties in respect of such matters. The obvious ways to do so are by reference to a lump sum payment by which the wife might buy an annuity to cover her loss or even maintenance/periodical payments in certain circumstances.

The balancing of the considerations under section 25 can be a very complex exercise. The court has to try to do justice between the parties and to make an order which is reasonable. Strangely, the most difficult cases are often those in which there is only a limited amount which the parties have to share and in which it is almost inevitable that one of them will take a higher share than the other in order to keep the children housed. This is an area which will often call for professional advice and you may wish to speak to a solicitor.