Financial Settlements on divorce – Section 25 factors (Blog 1 of 4)

I am going to roll out a series of blogs to provide some consideration of the individual factors dealing with the Court’s overall approach when looking at financial cases on divorce. This should also involve consideration of the issues of equality and fairness, which have assumed a greater significance over the years. It is also important to go back to basics and to consider Section 25 of the Matrimonial Causes Act 1983 as this contains the matters which the Court is to have regard in deciding how to exercise its powers when looking at financial cases on divorce.

The “guidelines” are as follows:

• The first consideration is the welfare of any minor child of the family who has not attained the age of 18.

In respect of the powers of the Court i.e. for adjusting rights and property, lump sums, pension sharing, maintenance and so on, a Court should have particular regard to the following matters:

• The income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future.

• The financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future.

• The standard of living enjoyed by the family enjoyed before the breakdown of the marriage.

• The age of each party to the marriage and the duration of the marriage.

• Any physical or mental disability of either party to the marriage.

• The contributions of which each of the parties has made or is likely to make in the foreseeable future.

• The conduct of each of the parties (which has to be quite significant and is rarely taken into account).

Each case will turn on its own facts but reference to these “guidelines” is always essential.
I will next look at equality and fairness for considering these Section 25 factors.

Equality and fairness – Section 25

Although Section 25 lists the matters which a Court must have regard to when looking at financial cases on divorce, it does not recommend a starting point or formula for deciding what proportion of the assets each of the parties should receive.

It is frequently argued that perhaps there should be a change in the law of England & Wales but we are still left with the Court weighing up the Section 25 factors and each Judge exercising his or her discretion.

That said, case law has provided us with some guidance. It is important to note, first of all, that the words “fairness” or “equality” do not appear in the Matrimonial Causes Act. However, in the leading case of White v White, Lord Nicholls stated that the Court must act in a just and non-discriminatory way, the Court must be fair and fairness implies equality. From the subsequent case law, three principles have evolved: meeting needs, compensation and sharing. In summary, each can be looked at as follow:

(1) Meeting the needs for the parties.

Fairness requires that the assets of the parties should be divided so as to meet their housing and financial needs. Needs may arise as a result of one party having been a homemaker and child carer and needs generated by such a choice are “a perfectly sound rationale for adjusting the parties respective resources in compensation”.

(2) Compensation.

Lord Nicholls said that compensation is aimed at readdressing any significant perspective disparity between the parties arising from the way they conducted their marriage but it has also been described as compensation for relationship – generated disadvantage, which goes beyond needs.

(3) Sharing

Husband and wife are equal partners in the marriage and this concept has been developed as “sharing the fruits” of the marriage. These are general principles and they must be adapted to suit each individual case. Lord Nicholls emphasised that e quality applies “unless there is a good reason to the contrary”. The yardstick of equality is to be applied as an aid, not a rule”.