London – Divorce Capital of the World

Raising the Bar III

Camilla Choudhury- Khawaja was Called to the Bar in 1998 by the Honourable Society of Grays’ Inn, following in the footsteps of both her Grandfather and Father. Camilla is a family law barrister with a specialist practice, The Women’s Lawyer, specialising in matrimonial finance and Islamic Law. Camilla lives with her sons, Aman & Aden in Hertfordshire.

London – Divorce Capital Of the World

With divorce settlement guidelines set to come under official scrutiny, Camilla explains how proposed reforms could play out

The Matrimonial Causes Act 1973 reaches its 50th anniversary this year and a review of financial provision upon divorce is indeed opportune.

A Law Commission inquiry into guidelines on financial provision upon divorce was announced in March, as Britain’s top divorce lawyer took public aim at the current legislation in the House of Lords. Fiona Shackleton branded laws governing financial settlements ‘ hopelessly out of date’ in a speech to her peers. More recently a London High Court judge who oversaw a destructive £9 million divorce raised concerns over legal costs beyond any reasonable comprehension in a written ruling.

Could London’s reputation as ‘divorce capital of the world’ be under threat from an overhaul of the law? And how would reform work?

Baroness Shackleton of Belgravia, leading family lawyer, admitted she and her colleagues make a ‘ fortune from arguing’ because a lack of consistent guidelines and dependence on case law results in excess litigation.

The law is failing to deliver justice for divorcing couples and their children, says Shackleton, who counts the King of England (then Prince Charles) and Paul McCartney among her former clients. ‘There is no use in having a divorce if the money is not sorted out,’ she told the House of Lords. ‘The house has to be sold and the children are caught in the conflict.’ Shackleton’s speech came in support of a long- running campaign spearheaded by her fellow cross bencher Baroness Deech.

Deech, an expert in the ethics of family law, says the UK is ‘lagging 50 years behind nearly every other country in the western world’. Changes to the current 1973 guidelines should focus on four things; ‘certainty; reducing litigation; delivering equality; and [clarifying] prenups.’

Practising divorce lawyers such as myself welcome the movement for reform, with some caveats. The main danger is that strict rules can lead to unfair outcomes. Courts need to be able to look at all circumstances in order to make the right decision. The draft bill had proposed to cap spousal maintenance to five years, aside from exceptional circumstances. This is a good example of the law being slightly more prescriptive while still maintaining the necessary discretion. Crucially, it would limit the scope for claimants to argue that they should be supported for many years to come.

Uncertainty in the current system

In theory, divorce settlements in England and Wales are governed by the Matrimonial Causes Act 1973. Assets were divided according to the ‘reasonable needs’ of the financially- weaker party, until a surprising decision by the House of Lords in 2000 led to a new approach that increased the discretion available to judges.

A farming couple from Somerset had spent six years wrangling over how their £4.6 million marital assets from their 30-year marriage should be split until law lords ruled that along with ‘reasonable needs’, courts should keep in mind ‘the yardstick of equality’ when dividing assets.

‘There should be no bias in favour of the money-earner and the child- carer,’ Lord Nicholls said at the time. Despite the emphasis on equality in White, some parties have since been able to successfully argue for a more old-fashioned approach of so-called ‘ lifetime maintenance’. This is where courts award a large sum to the financially-weaker party on the basis that they have become accustomed to a certain lifestyle.

‘Cases like these are operating perfectly within the law,’ says Deech. ‘But they show how the system encourages excessive demands.’ Instead she says that the law should be updated to limit the scope around ‘lifetime maintenance’ and prioritise the needs of any children involved.

It is hoped the Law Commission will focus on providing greater clarity upon what precise financial needs should be at the focus of the court’s discretion when it comes to resolving finances upon divorce.

There is no use in having a divorce if the money is not sorted out…

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Providing greater support and recognition for the ability of couples to enter into a pre-nuptial or post- nuptial agreement to expressly set out how they wish to divide their financial resources in the event of divorce. Specific guidance upon circumstances when a clean break may not be appropriate and if so, how long parties may expect ongoing financial support from their spouse to continue for would be welcome.

Issues raised by prenups

In 2010, a major decision saw the Supreme Court recognise prenuptial agreements, at least in principle, thereby giving new legal status to prenups in the UK. The case concerned a divorce between the German heiress Katrin Radmacher and her ex-husband Nicolas Granatino. Radmacher’s lawyers were able to successfully argue that the court should apply the couple’s prenuptial agreement, limiting Granatino’s access to her wealth. ‘Under the current system, challenging a prenup can lead to long and extensive litigation – particularly for international families,’ says Deech. That means that a party can use the threat of litigation in order to get their way – even if it means less money for any children involved.

Both White v White 2020 and the Radmacher rulings have radically changed how the courts approach divorce law, electively departing from the 1973 legislation. Whatever the merits of the decisions, they have also increased the potential for costly litigation as parties battle for the best settlement.

By putting the law around prenups on a statutory footing, with clearer guidelines on when pre- and post-nups apply, parliament can provide comprehensive rules, limiting the scope for an uncertain future. Despite the Law Commission review looming, I do not believe it will make England less attractive to divorcing high net worth individuals. The biggest pull factor for high-net-worth clients is the huge respect for the integrity of our judicial process. Though, of course, if English divorce law begins to look more like its European and American counterparts and the high-net- worth client’s chances of a unique settlement in London closes, that might change.

I dedicate this article to my Father who passed on the 18th March 2023. Dad you are very much missed, thank you for encouraging me to read law and for making me the Barrister I am today. I love you Abba.

Camilla Choudhury – Khawaja, Barrister At Law, Founder of The Women’s Lawyer www.thewomenslawyer.co.uk