What is the Impact of No-Fault Divorce on Financial Settlements?

Where an agreement cannot be mutually agreed upon regarding the division of matrimonial assets and ongoing financial arrangements, the last resort is to seek assistance from the courts to draw up a financial order. With the introduction of the new Divorce, Dissolution and Separation Act 2020, which brought no-fault divorce to England and Wales, it is understandable to assume this will have consequences for financial settlements, but is this the case? In this article, we will explain how the new no-fault divorce process introduced in April 2022 will impact divorce financial settlements.

Does no-fault divorce change how financial settlements will be reached?

While it is fair to assume that doing away with blame when it comes to filing for divorce will have an effect on financial settlements, this is not the case. This is because the underlying law referred to by the courts when considering financial settlements (the Matrimonial Causes Act 1973) is separate from the new Divorce, Dissolution and Separation Act 2020. Section 25 of the Matrimonial Causes Act 1973 includes all of the matters to be considered by the courts when determining:

• Financial provision orders
• Property adjustment orders
• Orders for the sale of property, and
• Pension sharing orders.

Will conduct during marriage determine the outcome of a financial provision order?

Section 25 of the Matrimonial Causes Act states that the following must be taken into account by the courts when deciding on an order:

• 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
• the standard of living enjoyed by the family
• the age of each party
• the duration of the marriage
• any physical or mental disability of either of the parties to the marriage;
• the contributions which each of the parties has made or is likely in the foreseeable future to make to the welfare of the family
• the conduct of each of the parties if that conduct is such that it would, in the opinion of the court, be inequitable to disregard it;

The last of these confirms that the conduct of the separating parties will be taken into account but only if, in the opinion of the court, it would be “inequitable to disregard it”. In practice, the conduct of parties during the marriage or civil partnership is only taken into account in exceptional circumstances.     

Section 4.4 of Form E used when making a financial statement in relation to a financial order under the Matrimonial Causes Act 1973 and the Civil Partnership Act 2004 states, “Bad behaviour or conduct by the other party will only be taken into account in very exceptional circumstances when deciding how assets should be shared after divorce/dissolution. If you feel it should be taken into account in your case, identify the nature of the behaviour or conduct below”.

What is meant by exceptional circumstances?

Unfortunately, there is no single legal definition of what is meant by “exceptional circumstances” in this context, and hence, this can be difficult to establish. As such, the courts typically refer to case law to determine where exceptional circumstances have been successfully argued. Two types of conduct may be considered; personal conduct and financial conduct.

Personal conduct includes extreme acts (e.g. violence) by one party towards the other, but not always. Evans vs Evans (1989) involved a wife who incited another person to kill her partner, and this was deemed to be significant enough to change the financial order. The judgment, in this case, stated, “there was an approach by the wife to a clairvoyant, through whose agency she sought to arrange the murder of her husband. There was also an approach by her to try and obtain others to murder her husband, by one means or another, on payment of a fee to them of £1,000, what is called a ‘contract fee’”. In other cases, such as Hall vs Hall (1984), which involved a wife who stabbed her husband, the former still received a financial award despite her conduct.

Financial conduct includes deliberate actions by one party to unfairly cause financial disadvantage or loss. This may include dishonesty, such as when one party fails to disclose a sizeable portion of their assets.

Final words

Actions such as extreme violence or threats of violence by one party towards another during a marriage or civil partnership may not reflect in a financial order because such matters are not deemed to be under the jurisdiction of the family courts. The starting point for family courts in financial order cases is a fair and equal division of assets. A case can still be made for the existence of exceptional circumstances, but this is not altered by the new no-fault divorce law.

For a free consultation regarding any legal matter relating to divorce or financial orders, please call our understanding and caring family law team on 0208 300 6666.