Reform set for financial orders on Divorce

Financial order reforms set to improve the enforcement of financial orders:

The government has this week agreed to improve the enforcement of financial orders in an attempt to help unfairly treated former partners and families. The move comes as a direct response to the 2016 Law Commission ‘Enforcement of Family Financial Orders’ report.

The 2016 Law Commission report found that the law in this area was too complicated and consequently sometimes ineffective, as parties did not know how to comply with complex orders. Now in a letter to the Law Commission, Justice Minister Lucy Frazer has said that the government will bring forward non-legislative measures to improve the enforcement of the system.

The issue of enforcement of financial orders arising from divorce is a constant problem that judges in England and Wales have to face, particularly when dealing with cases involving high net worth individuals who have assets in various jurisdictions. As the 2016 Law Commission report disclosed, a shocking £15 – £20million goes unpaid each year through non-compliance with family financial orders, both intentionally and unintentionally.

The limitations in current law could not have been better highlighted than in the recent case of Akhmedova v Akhmedov [2018] EWFC 23 (Fam). In 2016 Mrs Akhmedova was awarded a £453million lump sum comprising of £350million cash sum together with the transfer of various properties. However, in January of this year it was reported that Mrs Akhmedova was yet to receive a penny from her husband who was using corporate entities to shield his true wealth in an attempt to avoid paying Mrs Akhmedov the financial support that she was rightfully entitled to.

As Law Commissioner Professor Nick Hopkins has said: “If a Court decides that a former partner or children are deserving of financial support, it is not for a debtor to act or do otherwise.” However unfortunately, as the law currently stands, this can often be the case and we often see parties being awarded large sums only to remain penniless for years whilst enforcement proceedings have to then be undertaken.

In an attempt to address these issues, the government has agreed to consider amendments to the Family Procedure Rules 2010 to:

• rationalise the rules on enforcement so that the law and procedure can all be found in one place and is easier to understand and use;
• make sure that the general enforcement application – which allows a creditor owed money to ask the court to enforce the order in the way it thinks best – is fit for purpose;
• introduce new guidance for litigants so they know how to go about enforcing their awards;
• amend or change the court forms so that debtors and creditors understand what is required of them, the financial information necessary for enforcement is provided by debtors and to let debtors know the consequences of lying;
• and streamline the system to cut down on unnecessary hearings where all are in agreement and save money for all involved.

Whilst the government’s response is undoubtedly a step in the right direction, going at least some way to simplifying the current highly complex system of enforcement, it still fails to address how to deal with issues faced when having to enforce orders in relation to offshore assets and how to put greater pressure on debtors. However, the Law Commission report is still under consideration by the government and over the coming weeks we should see some further developments and more details in relation to what non-legislative measures the government will be bringing forward to improve the current system.