For the third time this week I find myself referring here to a newspaper article, although on this occasion I will only be looking at the article’s headline, not the story below it.
The headline, in The Telegraph, read:
“Divorcees don’t need to afford lifestyle they were accustomed to in marriage, Court of Appeal judge says as he rules against ex-wife”
Now, as I have said I will not be commenting upon this particular case (in any event at the time of writing this the law report of the case has not been published, so far as I am aware), but the headline has suggested to me that it might be useful to write a post about the issue of placing the parties in the financial position in which they would have been had the marriage not broken down. The idea behind this issue is that it should be the aim of the court when dealing with a financial remedies claim following divorce to try to place the parties in the same financial position that they would have been in had the marriage not broken down. It is an idea that, as we shall see, was once enshrined in English law, and which still crops up today from time to time.
Before I proceed I should explain for the benefit of non-lawyers that the basic principles that the court should follow when considering a financial remedies claim are set out in section 25 of the Matrimonial Causes Act 1973. In particular, section 25(2) sets out a list of matters to which the court should in particular have regard. The list comprises such things as the income, earning capacity, property and other financial resources of the parties, their financial needs, their ages, the duration of the marriage, and so on.
Now, when the Matrimonial Causes Act was first drafted that list (then in section 25(1)) concluded with the following instruction to the court:
“…and so to exercise those powers [i.e. the court’s powers to make financial orders] as to place the parties, so far as it is practicable and, having regard to their conduct, just to do so, in the financial position in which they would have been if the marriage had not broken down and each had properly discharged his or her financial obligations and responsibilities towards the other.”
That instruction was removed by the Matrimonial and Family Proceedings Act 1984. Accordingly, it is no longer a requirement that the court should, if possible, place the parties in the same financial position in which they would have been had the marriage not broken down.
So why the change?
The pre-1984 principle was referred to as the “minimal loss”, or ‘status quo’ principle. The principle came in for increasing criticism, in particular in a report by the Law Commission on the financial consequences of divorce, published in 1981. The Commission said that it had received an “overwhelming body of evidence” to the effect that the minimal loss principle imposed upon the courts “a fundamentally mistaken objective, widely thought to be capable of producing unjust and inequitable results”. Not only was it rarely possible for the court to achieve (simply because in most cases the parties do not have the means to maintain the same standard of living across two households), but if it was then in the great majority of cases such a result was undesirable. The Commission therefore recommended that to seek to place the parties in the financial position in which they would have been had the marriage not broken down should no longer be the statutory objective.
Note that the law does, and did prior to the 1984 Act, require the court to have regard to the standard of living enjoyed by the family before the breakdown of the marriage. Accordingly, whilst a party to a divorce is no longer entitled to expect to keep the same standard of living, the standard of living they enjoyed is still a factor to take into account in deciding what financial orders should be made.