A fairer end to relationships – Ministry of Justice consultation (England and Wales)

The Ministry of Justice (MoJ) has published a consultation paper proposing reform to three major areas of family law in England and Wales. If implemented, these reforms would bring widespread change to financial remedies on divorce, including in the area of domestic abuse and to the rights of cohabitants on separation and on death in England and Wales

The consultation paper reviews the current frameworks under the Matrimonial Causes Act 1973, the Trusts of Land and Appointment of Trustees Act 1996 and the Inheritance (Provision for Family and Dependants) Act 1975. There is an explicit acknowledgement of the changing nature of family structures and the continued rise of cohabitation across the UK.

This article examines the MoJ consultation on family law reform in England and Wales, comparing the existing and proposed frameworks governing financial remedies on divorce or the dissolution of civil partnerships and the rights of cohabitants on separation and death with the established statutory position in Scotland.

Financial remedies on divorce

In Scotland, the division of matrimonial property is governed by the Family Law (Scotland) Act 1985 (as amended). In England and Wales, the division of matrimonial property is governed by the Matrimonial Causes Act 1973. Each Act sets out the orders for financial provision which can be sought in the respective jurisdiction, together with general principles that the courts should apply when considering making such orders. Both regimes also allow for an element of judicial discretion in order to achieve fairness, thus creating a body of case law which has helped to develop the law over time. However, a 2024 consultation by the Law Commission in England and Wales identified a lack of certainty in the application of the 1973 Act – at least in part due to the wide scope for judicial discretion. In response to those findings, the MoJ now proposes codification of certain well-established case law principles which would enshrine a “sharing” and “needs-based” approach as the core route to fairness on the division of assets upon divorce in England and Wales. Judicial discretion would remain but in a more structured form, in the expectation that this would produce more predictable outcomes and reduce the scope for argument on first principles.

In Scotland, “fair sharing” is integral to our statutory regime. Indeed, the 1985 Act provides that a fair distribution of matrimonial property will be an equal one, unless special circumstances are found to apply or certain principles are established. For example, the use of inherited funds in the acquisition of matrimonial assets may constitute a special circumstance justifying unequal division, and the court must also have regard to certain factors such as economic advantage/disadvantage and the ongoing economic burden of childcare when determining how the value of a couple’s matrimonial property should be shared between them. Whilst the Scottish courts are required to consider whether any orders would be “reasonable having regard to the resources of the parties”, the 1985 Act is only obliquely concerned with needs, and the concept of need does not feature in the legislation.

By contrast, the 1973 Act is far less prescriptive about the mechanics of asset sharing on divorce, and the requirement to ensure parties’ ongoing needs are met has been established through case law as a key aspect of judicial decision making. The current statutory regime in in England and Wales does not set equal sharing as a default or starting point. Instead, section 25 of the 1973 Act requires the court to firstly have regard to the welfare of any child under 18, and then to then to a series of factors which give the court broad discretion about which orders to make. The concept of “fairness” does not appear in the legislation but has been developed through case law as being a key objective – to be achieved by considering the principles of sharing, needs and compensation. In practice, the requirement of meeting need has often resulted in an unequal division of assets.

The MoJ’s proposals seek to formally codify “sharing” and “need” as key principles of the legislation, with the objective of dividing matrimonial assets between a couple equally in order to provide equal benefit to both parties. A departure from equal sharing would only occur where required to meet the needs of a party. The section 25 factors would remain, but would be enhanced by the introduction of an additional requirement on the court when assessing sharing and need to take into account any economic disadvantage suffered by a party during the marriage – broadly similar to section 9(1)(b) of the 1985 Act in Scotland.

The proposals also seek to introduce a more methodical approach to assessing need, suggesting a three-stage hierarchy of needs is: (i) children; (ii) the parties’ housing, income and pension needs; and (iii) discretionary needs (luxury items). The stated objective is to support a transition to independence for the couple post-divorce, mirroring the clean break principle familiar in Scotland. It would also be made clear in the legislation that “needs” would also include needs not directly linked to the relationship or the breakdown of it – for example, long term illness or disability.

The concept of “matrimonialisation” would also be recognised, effectively codifying recent case law such as the decision in Standish, where it was held that unless there is mutual intention to treat pre-matrimonial wealth as shared, then the asset will generally not be held to be matrimonial property. The MoJ is also proposing to formally define “matrimonial property” and “non-matrimonial property” for the first time. Again, this would make the statutory regime in England and Wales more closely aligned to Scotland, where the concept of matrimonial property is defined in the 1985 Act.

Other proposals include making nuptial agreements binding (subject to safeguards) as they are in Scotland, a greater emphasis on pension provision, and an explicit compensation factor where economic disadvantage has arisen during the marriage.

Domestic and financial abuse

A notable aspect of the proposed reform is the intention to give greater recognition of the relevance of domestic abuse in financial provision cases. The consultation identifies the difficulties in recognising misconduct in financial provision cases, and invites responses on the extent to which such conduct should affect the division of assets. In Scotland, our legislation provides that the court may consider conduct (including domestic abuse) in the context of financial provision on divorce but only where that conduct has had an adverse impact on the parties’ finances. The proposed shift in England and Wales, towards a more explicit recognition of domestic abuse in financial outcomes, represents a welcome step in acknowledging the broader and long-lasting financial consequences of such abuse.

Rights of cohabitants on separation

A key element of the MoJ’s consultation in the proposal to introduce a limited statutory regime for financial provision for cohabitants in England and Wales. The proposals are framed as a targeted safety net for those in committed, long term cohabiting relationships rather than giving former cohabitants rights which are equivalent to those of spouses or civil partners. Awards would be capped so as not to exceed those that would have been made on divorce.

The framework would apply to couples in an “enduring family relationship”, generally requiring three years’ cohabitation (waived where there are children of the relationship). The starting position would be that each party retains their own property, with court intervention only to meet ‘defined needs.’ This represents a deliberately narrower regime than divorce. Provision would again prioritise children, followed by the parties’ needs, and with a strong emphasis on achieving a clean break.

Cohabiting couples in Scotland have had the right to seek financial provision on the ending of their relationship since the coming into force of the Family Law (Scotland) Act 2006. The Scottish approach to claims upon the ending of cohabitation provides that compensation may be sought if economic advantage and/or disadvantage can be established which is narrower in scope than the needs-based approach proposed in England and Wales. The limitations of the current statutory regime in Scotland, however enlightened it may have appeared in 2006, are widely recognised and reform has been recommend to expand the extent of financial remedies available to separating couples, to extend the strict time limits for making claims following a partner’s death and to replace the definition of cohabitation with a more inclusive standard.

Rights of cohabitants on death

As in Scotland, cohabitants in England and Wales currently have no automatic succession rights (unless they are provided for in their partner’s will). In England, parties must rely on claims per the Inheritance (Provision for Family and Dependants) Act 1975.

The MoJ consultation proposes that qualifying cohabitants should inherit in broadly same way as spouses on intestacy, with equivalent priority to administer estates. A detailed analysis of these proposals from a trusts and estates perspective (including the proposed qualifying criteria, the impact on blended families, and the inheritance tax position of cohabitants) is addressed in a separate Brodies insight piece prepare by Nadine Walton, a trust and estate practitioner qualified in England and Wales.

The proposals would give rise to an obvious tension between the rights of surviving cohabitants and those of children from previous relationships. However, the proposals would at least address the “common law marriage” misconception and offer greater financial protection to surviving partners. The MoJ’s proposals would go further than the current position in Scotland, giving, cohabitants in England and Wales an automatic right to inherit from their partner’s estate.

Commentary

Across the proposals for reform of the law in England and Wales, there is a consistent emphasis on prioritising children, protecting the vulnerable, and promoting financial independence through clean break outcomes.

There is also a clear policy intention to preserve the distinct status of marriage, with the cohabitation scheme intentionally narrower, needs-based and subject to limits. Cohabitation is not treated as equivalent to marriage, albeit, rights upon death would be significantly increased and provide a much greater level of protection to the individuals concerned.

In relation to divorce, it is interesting to note the proposed shift towards a more codified, structured regime for financial provision in England and Wales, with the aim of reducing the scope for uncertainty by defining more clearly the limits of judicial discretion. Whilst certain aspects of the proposals point towards a closer alignment with the Scottish regime for financial provision, it is clear that the concept of need and meeting parties’ needs will continue to play a far more prominent role in England and Wales than it does is Scotland.