Hot topics in family law

Transparency - opening up the family court

The push for justice not only to be done but to be seen to be done continues. Those going through the court process to sort out their finances or arrangements for their children can no longer expect total privacy. Depending upon where you are in the country (and whether your local court is in the pilot schemes or not), you may find journalists and legal bloggers attending hearings and reporting on what they’ve seen and heard – subject to rules around protecting the anonymity of children.

Arbitration

With the push for transparency, couples are increasingly moving away from resolving their disputes (both financial and children-related) in the overstretched family court system and towards using arbitrators who have both the experience and time to grapple with the issues of their case. Arbitration guarantees parties privacy while allowing cases to progress faster and more cost-effectively. We expect to see a continued uptick in the number of families turning to arbitration to resolve disputes.

The Law Commission recommendations

In Autumn 2024, the Law Commission will publish a scoping report outlining whether the law that sets out how finances on divorce should be dealt with remains fit for purpose. This report could pave the way for a significant reform of how finances are divided on divorce, potentially overturning 50 years’ worth of law. The Law Commission is also revisiting its decade-old recommendations for introducing nuptial agreements, which would be legally binding providing that certain safeguards were met. In 2023, the Law Commission set out a number of recommendations to improve outdated surrogacy laws.

Despite increased demand, the law hasn’t kept pace with the changes in surrogacy and fertility treatments, often failing to adequately protect those involved. The Law Commission has proposed a whole new regulatory regime that offers more clarity, safeguards and support. We wait to see when these recommendations will be implemented.

Non-court dispute resolution

April 2024 brought a number of changes designed to encourage the early resolution of family disputes outside of the courtroom... A big change is that couples in the court process are now required to tell the judge their views on using processes such as arbitration, mediation, evaluation by a neutral third-party or collaborative law, collectively called non-court dispute resolution (NCDR), instead of using the court.

Judges will proactively be looking for opportunities to adjourn proceedings to allow other options to be tried. Taking an unreasonable stance against NCDR may come back to bite couples as judges have the power to award costs orders at the end of proceedings against individuals who unreasonably refuse to consider anything other than court. With the Family Court overwhelmed with cases, and court proceedings expensive, time consuming and stressful for all involved, this seismic cultural shift came as no surprise.

International divorce

In the Supreme Court, Potanina v Potanin dealt with the family court’s power (and the correct procedure) to make a financial order in England and Wales after a couple have divorced overseas, provided the couple have met certain requirements. The likelihood after the Supreme Court’s decision is that these applications are going to be harder to make.

Rising fees

Rising interest rates and extreme inflation seen in 2022 and 2023 increased the pressure on family finances, making it more difficult for some couples to divorce. Research from Legal & General pointed to 20% of divorces being delayed because of the cost of living crisis. The Government increased court fees by up to 10% earlier this year, generating £42 million a year to help improve the court’s service delivery, subsidise the cost of free services and reduce the overall cost to the taxpayer of the court service. More regular fee increases are expected. The cost for issuing a divorce application is now £652.

The sharing principle

In May 2024, the Court of Appeal gave us a long-awaited judgment in a case called Standish v Standish. This has already had an immediate impact because it dealt with something called the “sharing principle” and how that principle should be applied, which affects a great many of our clients. The sharing principle says that wealth generated during a marriage (often called matrimonial assets) should be shared equally on divorce. Non-matrimonial assets, things like inheritances or pre-marital wealth, brought in by one spouse isn’t shared unless to make sure the couple’s needs on separation are met.

Sometimes a non-matrimonial asset can become “matrimonialised” – this happens when matrimonial and nonmatrimonial assets get mingled. For example, a valuable antique is inherited by one spouse and sold to buy a holiday home for the family to enjoy.

Central considerations to ensure a fair outcome revolve around the source of wealth and not just who owns an asset at the time of divorce. The case also made headlines for the extraordinary reduction in the wife’s settlement. Originally, she was awarded £45 million; the Court of Appeal reduced her award to £25 million. Rumour has it that Mrs Standish is looking to appeal to the Supreme Court.

Changes in government policies

Ahead of the General Election, the Labour Party and the Liberal Democrats both indicated that they would look to reform cohabitation laws, recognising that, in Labour’s words, “for too long, women in cohabitating couples have been left with no rights when those relationships come to an end”. Although there is scant detail, the fact that for the first time since 1972 marriage has dropped under 50% means politicians can no longer ignore this pressing problem.

Read the latest edition of Private Affairs for updates in private wealth law.