Development of ‘no-fault’ & the future of family law

Date: 20 Sep 2023

Karen Jones

It has been nearly a year and a half since ‘no-fault’ divorce was implemented. In this feature, Citywealth speaks to family law practitioners on how their practice has developed since this significant change. We also look to the future of family law; what other concerns and legal changes are on the horizon that could be shaping the sector?

On 6 April 2022, the Divorce, Dissolution and Separation Act 2020 was amended to remove the concept of fault from the divorce process. This change replaced the original ‘five grounds’ for divorce to allow couples to divorce without assigning fault, removed the possibility of contesting the divorce and additionally introduced the option for joint divorce applications. The law also applies to civil partnerships. The change was intended to simplify the divorce process, but what has the reality been in the last 18 months?

Samantha Woodham, Family Law Barrister at 4 Paper Building Chambers and Co-founder of The Divorce Surgery, said: “No-fault divorce has simplified the divorce process for a huge number of separating couples. It’s also normalised the joint nature of divorce: now couples can submit a joint application for divorce, without ascribing blame. This means they can start the legal process by working together, rather than against each other, which is a massive psychological shift.”

Henry Hood, Senior Partner, Hunters Law agreed and said: “The advent of no-fault divorce has certainly simplified the divorce process, both from a procedural perspective and, by removing the need for one spouse formally to blame the other for the relationship’s breakdown, a psychological perspective.” However, regarding the introduction of joint divorce applications, Hood said: “[I] am not seeing many separating couples opting to make joint applications for divorce – perhaps because the reality remains that it is often one spouse who is particularly keen for the divorce to progress.”

Simpler for lawyers, but more complex for their clients?

Richard Handel, Partner, Family Law and Divorce, Burges Salmon, agreed that, on the whole, this new approach to divorce has been a positive development. He said: “The frequent discussions or correspondence at the outset of a case about why the marriage broke down or whose fault it is are no longer needed and this generally means the divorce and financial issues start off on a better footing.”

However, he noted the alternative impact of the reduced need to dig into the reason for divorce: “[F]or some clients, the old process was a cathartic one, and being able to apportion blame (rightly or wrongly) and their voice being heard in relation to that was important. There is no longer the ability to air this in the divorce process, which for some clients is proving challenging, and they feel the need to refer to the reason why the marriage broke down in relation to financial or other issues. In cases where this is an issue, it is becoming clear that there needs to be a different channel for raising these issues. We have always suggested to clients that counselling can help them process separation and divorce, and that continues to be important, perhaps even more so where there is no outlet in the divorce process itself.”

Katie McCann, Partner, Lowry Law agreed and said: “It can be said that no-fault divorce has simplified the process for separating spouses. It is now simply a non-contentious ‘tick box’ procedure which the other party is to acknowledge. For the vast majority of people, this new procedure has taken some of the heat out of divorce and has worked well. However anecdotal, a number of clients in our own practice have been disappointed with this. Some feel that they have lost the opportunity to ‘have their say’ at that early stage. They may have had friends or family who have been divorced using the old regime and so have been exposed to that process and expect the same. So the reviews, if practitioners are to be honest, are mixed. However, as the public gains a wider understanding of the benefits of no-fault divorce as it becomes more established over time, it can undoubtedly only be a very positive thing for divorcing couples, allowing them to focus on the main issues as opposed to the contents of the actual petition.”

So it seems that, whilst no-fault divorce has generally simplified the process for family lawyers and their clients, there are still some mixed reactions. We asked our experts what other pieces of case law or legislation are impacting the family law practice.

Updates on other case law

Katie McCann gave some insight into the case of Unger & Anor v Ul-Hasan (deceased) & Anor [2023] UKSC 22, which asks whether a party can continue to pursue a financial remedy order against a spouse who dies before the conclusion of a divorce. She explained: “In this case, the husband died before conclusion of the wife’s financial remedy application… Despite Mostyn J considering the decision in Sugden v Sugden was incorrect, he applied this authority in this case, ruling that the wife’s claim for financial relief expired with the death of the husband… It was decided that on the true construction of the 1984 Act, read with the 1973 Act, the rights to apply for financial relief are personal rights and obligations which end with the death of a party to the marriage and cannot be pursued against the deceased estate. Lord Stephen’s therefore dismissed the wife’s appeal.”

McCann also mentioned RA v KS (Interim Order for Sale) [2023] EWFC 102: “In this very recent case, Recorder Allen KC concluded that in an application made under section 17 of the Married Women’s Property Act 1882, the court cannot order vacant possession of a property if the respondent has a legal and beneficial interest in the property. In this instance, the applicant would be left with no choice but to make an application under Trusts of Land and Appointment of Trustees Act 1996, blurring the lines between family law and civil law.”

Richard Handel delved into the implications of Radmacher v Granatino which, despite being ruled thirteen years ago, is still bringing cases before the court as one party in a divorcing couple is seeking to challenge a pre-nuptial agreement. He said: “Whilst we have always advised clients on the Radmacher principles, and the safeguards that need to be put in place, there has been little caselaw post-Radmacher. We are now learning what the courts are focusing on. The judgments we are seeing are in relation to pre Radmacher and post Radmacher agreements and the treatment by the court is no different (as yet).  Notably, arguments that an agreement was signed under duress or without proper disclosure are not troubling the court a great deal. The central issue the courts are looking to is fairness, and in particular whether the party seeking to challenge the agreement has had their reasonable needs met.”

“Agreements that do not make sufficient provision are not being upheld by the Court, or at least not upheld to the letter of the agreement. Those that do make sufficient provision are tending to be upheld. Importantly, even cases where a pre-nuptial agreement is not upheld completely, we are seeing the court making reduced awards, limited to need only. This can mean significant wealth, even that created during the course of a marriage, is being protected from being shared on divorce. Going forward, the focus must continue to be striking a balance between meeting needs and protecting wealth.”

Henry Hood suggested that the development with the greatest potential to seriously affect family law is coming from the government rather than the judiciary. He said: “The Law Commission is to consider whether the Matrimonial Causes Act 1973 – which governs the outcome of divorce settlements – requires updating. It is anticipated that Law Commission may endorse an approach under which judicial discretion is reduced, mandating a more formulaic approach. This would be a see a change in family law – and not one I consider necessary or desirable.”

With all this in mind, we asked what considerations our experts see on the horizon in the family law sphere that are particularly pertinent to the UHNW individuals they work with.

Cyber threats and reporting risks

Susan Apthorp, Partner, Keystone Law flagged privacy and data concerns. She said: “The protection of UHNW privacy and data both between opposing lawyer firms and experts in a case has become a centre stage issue. Cyber-attacks/cybercrime is a lucrative market and UHNW individuals are an easy target as they often haven’t invested in security at the level a business has. Data suggests that 28 % of UHNW individuals have been subject to a cyber-attack. The super rich, famous and the infamous do not want details of their personal wealth and any dirty laundry or otherwise at risk of attack and entering the public domain. Specialist cybersecurity around these individuals is now a given and a consideration from the get go, with more meetings taking place to discuss sensitive issues and communications subject to rigorous designed-for-purpose security.”

“Alongside this, and again to protect privacy, there is a definite trend for UHNW clients to be advised to arbitrate their divorces to remove the reporting risk that arises if their cases are heard in the court system. This issue is a real concern to clients, not only as publication is an unwelcome intrusion on their private lives but information that becomes public in the course of proceedings and is reported may cause reputational damage to both them and their business interests. 2023 has seen the family court system continue to grapple with the balance between transparency and privacy; the direction of travel is clear, clients can no longer rely on a degree of privacy on divorce. Within the next year or so the anonymity afforded to most cases may be removed.”

Wealth planning woes and complex assets

Henry Hood highlighted the unforeseen consequences that entering into wealth planning arrangements during a marriage is having on divorce settlements. He noted particular examples from recent case law: “For example, in WX v HX [2021] EWFC 14, the proceeds of the husband’s banking career, which he had used to support the family, were shared, but the wife’s trust assets were not, as they had been kept separately in her sole name, meaning she exited the marriage in a far more comfortable financial position than her husband. In L v L [2021] EWFC B83 the parties’ interests in a business established by the husband’s father decades before the marriage were shared equally because of the terms of a restructure which took place during the marriage. Then in ARQ v YAQ [2022] EWFC 128, assets of £77m accumulated by the husband prior to the marriage but transferred to the wife as part of a tax planning strategy were held to be matrimonial and where therefore shared with the wife, which would not have been the case had been retained in his name – this case is currently being appealed to the Court of Appeal.” Hood concluded: “By the time a family lawyer sees such a case, there will be little that can be done about the position, highlighting the need for close collaboration between family and private wealth practitioners long before divorce proceedings may be in contemplation.”

On top of the navigation of pre-nuptial agreements and the often international elements and competing jurisdictions of UHNWs that needs to be worked with, Katie McCann outlined the issues faced when dealing with complex asset bases. She said: “In matrimonial cases dealing with UHNW individuals, the asset base is invariably complex and unique. When businesses are involved, for example, it can be difficult to value such assert bases, especially if the business involves offshore corporates, trust structures and worldwide assets. Luckily, we are experienced in all such elements and ensure that we can deliver current advice to the client, in conjunction with relevant experts. It is also usually necessary to build a team around a UHNW client from the outset, i.e., an accountant, a tax advisor, a corporate lawyer and so on, to ensure that all angles are covered and strategized for.”

“Similarly, when complex trusts are involved, and the spouse without an interest argues that the trust is a financial resource to the other party and should be considered, it is extremely important that the family lawyer acting for the UHNW individual can provide them with expert advice in relation to this intricate area of law. We always act in conjunction with specialist trust counsel at the earliest opportunity when these circumstances. It is also vital to ensure the individual receives expert advice in respect of international elements, such as the UK’s departure from the EU and any impact this may have on the individual’s personal and complex business assets. If a spouse has generated a significant amount of the income in the marriage in a standout or unusual way, family lawyers must also consider special contribution arguments. The definition of ‘needs and sharing’ and what constitutes as non-matrimonial property must also be considered thoroughly. These areas of law are complex and fast changing and our knowledge and awareness of the same is prime to ensure that we can assist the individual from all angles.”

Impacts of economic uncertainty

Richard Handel divulged that current economic uncertainty is top-of-mind for clients seeking advice. He expanded: “It is never easy to reach the decision to divorce and clients who have yet to start divorce proceedings are concerned about whether now is the right time or whether it is better to wait until the economy stabilises or improves. Although the decision is usually an emotional one and not financially based, clients are concerned about what impact divorce will have on their financial circumstances, so the state of the economy is a factor they may take into account in their decision making. Those who are already divorcing are concerned about how the economy may impact on financial settlement. Many clients are concerned that valuations are too high and do not accurately reflect the value of assets, in particular business assets. They are concerned that, if retaining the business asset and it is over-valued, they are potentially giving up other assets as a consequence and not achieving a fair settlement. Other clients are taking a more conversative approach to settlement. Where they would have been willing to take a greater share of risky assets, feeling confident they would increase in value in future years, they now want to have a more balanced settlement, including safer, copper-bottomed assets. This in turn can make settlement more difficult to achieve as parties may have to remain financially tied for longer, which often neither party particularly wants if it can be avoided.”

Thank you to the experts who have contributed to this feature.

On 18 October, we will be releasing our Top 15 NextGen Family Lawyers – keep an eye out for it on our Leaders List!

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