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During a divorce you will have the best chance of making a strong case for yourself if you understand how the courts determine your divorce settlement.
That's where knowing about Section 25 of the Matrimonial Causes Act 1973 comes in handy.
In this guide I'll teach you everything you need to know about this important piece of legislation, including:
- What is Section 25 of the Matrimonial Causes Act 1973?
- Why does it matter?
- How do the Section 25 factors apply to your case?
- And more...
Let’s take a look.
Section 25 Matrimonial Causes Act 1973: What Is It?
Section 25 of the Matrimonial Causes Act 1973 is an important piece of divorce law that sets out a list of factors that the courts must take into account when deciding your divorce financial settlement.
What Are The Section 25 Factors?
Section 25 of the Matrimonial Causes Act 1973 (or "s25 MCA 1973" for short) lists the following factors that the court must consider during your settlement:
These are also sometimes referred to as the Section 25 Factors - the court will consider them when determining how to divide assets in the event of a divorce or other legal separation.
Important: Even if you are involved in or your own settlement negotiations (rather than a court ordered award), the Section 25 factors still matter, as the court has to <bloglink>approve<bloglink> your final agreement (even if it was negotiated between yourselves, or with the help of solicitors or a mediator).
The court won't approve your settlement agreement if they don't think it's fair. And, when deciding whether it's fair or not they must consult... the Section 25 factors.
So, whether you settle out of court or litigate, Section 25 of the Matrimonial Causes Act applies.
The Guiding Principles
The Section 25 Factors have been considered by the appeal courts many times.
That's because, although the checklist gives the courts a helpful guiderail as to what they should take into account, it does not tell the courts how much weigh to give to each factor (or in other words, how important each fact is in relation to the others).
Each divorce <bloglink>settlement<bloglink> is decided on it's own specific facts, and there is no set formula to calculate the outcome- what is a very important factor in one case may be much less important in another case.
That being said, the senior courts have given some guidance as to how the checklist should be applied. The leading case is the House of Lords ruling in <bloglink>Miller v. Miller and McFarlane v. McFarlane <bloglink>, where the court identified the 3 important concepts of sharing, needs, and compensation:
In simple terms, the sharing principle says this:
Both parties contribute to a marriage. This can be financial (say, as the main breadwinner), or non-financial (such as raising children or being the home keeper). A marriage is a shared enterprise, and when you divorce your assets should be shared equally (regardless of who's name they are in, or how the asset was earned or paid for).
This is often cited as the '50/50 starting point', and the court will seek to divide your assets (and debts) equally, unless there is a good reason not to.
The main reason a court may depart from the 50/50 starting point is where doing so would mean one spouse's financial needs were not met.
And since there is rarely any extra money or assets to go around in <bloglink>most divorces<bloglink>, this situation is fairly common.
In short, if the court concludes that one party requires a greater share of the assets to meet their needs, and the other party can make do with less and still have their needs met- then the court can make an unequal distribution of the assets.
The concept of 'needs' goes beyond basic needs. It is relative to the standard of living currently enjoyed by the parties. For example, a millionaire cannot say that their spouse's basic needs are met (housing, income etc) by a very small house, or a subsistence income. The court will assess the ex-spouse's needs in the context of the lifestyle they enjoyed during the marriage.
Sometimes, this might be achievable via a simple 50/50 split. But if not, the court won't hesitate to depart from the 50/50 starting point.
Important: If there are any children to the marriage under 18, their needs will always come first in the eyes of the court.
This happens in a very small percentage of divorce cases, for example when one spouse gives up a high earning career to care for the family.
The spouse asking for the additional compensation must prove to the court that it is almost certain that if they hadn't given up their high flying career for the marriage, they would have made significantly more money or had a higher earning capacity.
Even then, additional compensation will only be awarded after the court is satisfied that the needs of the other spouse have been fully met.
The ultimate goal when applying these 3 concepts is to achieve a fair outcome; and the the bottom line is that the factors listed under Section 25 are interpreted keeping this fairness principle in mind.
The Section 25 Checklist
The checklist serves as the guiderail for the courts and practitioners when considering an application for a financial order.
We have broken down the factors in terms of priority so it is easy for you to see what you need to consider when going through a financial settlement in case of divorce, or separation.
The needs of a minor child
First and foremost, the court keeps the welfare of any minors in a family (ie under 18) as it's first consideration, which is outlined under section 25 (1).
In reality, this means the court will give special consideration to the child(ren)'s housing and daily income requirements, and such needs may take on a higher relevance in relation to the other Section 25 factors.
The assets you and your partner have
Section 25(2)(a) requires the court to take into account your and your spouse’s present income as well as your potential future earnings.
Potential future income means the court will take into account factors like a promotion in the foreseeable future or an imminent retirement, that would substantial change your income (either up or down), and can adjust the settlement award accordingly. Also, the court considers that spouses have a responsibility to look for work and earn an income if they can. So, if you didn't work during the marriage, but the court finds that you could and should get a job in future, these potential future earnings will be taken into account.
You and your partner’s needs
Under section 25(2)(b) the court considers the financial requirements, commitments, and responsibilities that you and your partner has or is anticipated to have in the near future. These include your financial demands, housing, and income requirements.
As discussed earlier, ensuring the financial needs of each party is met is often a reason for the court to depart from a 50/50 split. And remember, 'needs' is not interpreted in the most basic sense, but is considered in relative terms to the standard of living you enjoyed during the marriage.
Your and your spouse’s age and the length of your marriage
Your and your spouse’s age is relevant to your earning capability and your ability to get a mortgage. Although, under section 25(2)(d), strictly speaking the court may only examine the period between the marriage and the breakup when determining the length of the marriage - subsequent case law has decided that, if partners transition easily from cohabitation to marriage, then the period before you were married can be taken into account.
In short, the longer the marriage the more likely the court is to enforce the 50/50 split as the starting point. In very short marriages (5 years or less) the court is more likely to decide that the parties should go their separate ways and each keep a larger chunk of their own assets (although, as always, there is no set formula and each case depends on it's own unique facts).
Your and your spouse’s contributions to the marriage
The court considers the contributions that you and your spouse has made during the marriage, including any contributions made by looking after the house or caring for the family.
For example, these contributions can include:
- Direct financial contributions (earnings, assets, or investment income)
- Indirect financial contributions (such as an <bloglink>inheritance<bloglink>)
- Non-financial contributions (such as raising a family)
The takeaway is that each partner’s contributions are considered equal in the opinion of the court, regardless of their financial or non financial value. Ie. taking care of the family home or caring for children is considered to be just as valuable as financial resources, such as earning the family income.
The conduct of the parties
The court can can take the conduct of the parties into account, but this is only done in exceptional circumstances.
For example the court might take into account the fact that there was a long history of domestic or child abuse during the marriage (as this is extremely serious), but would be unlikely to take into account any adultery (as while this may be ethically wrong, it is not a crime).
Your standards of living during the marriage
As discussed above, the court will try to ensure both parties maintain their standard of living as closely as possible, while still recognising that the same pot of money will now need to support two households.
This is why it is not possible for a very rich spouse to say their partner's basic needs could be met by a minimal amount of money. The court will try to match the previous standard of living, so that neither party has to drastically downgrade their standard of living, if possible. And this might mean the financially weaker spouse gets a larger percentage of the divorce settlement.
Any physical or mental disability
If either party has a disability the court can take this into account, and award extra finances in favour of that party in order to meet their needs.
Any benefit either party will lose as a result of the divorce
Although this is one of the less important factors, it can still be relevant, particularly regarding pensions. For example, after you divorce if one of you then dies the surviving spouse will no longer be classed as a widow or widower. Depending on the terms of <bloglink>your pension plan<bloglink>, this can sometimes have a large effect on the eventual payout. The court can therefore take account of this risk when dividing the marital assets, and award a larger sum to compensate.
As we learned at the outset, while the court must consider all the applicable factors under section 25, it is to the judge to decide how much weight to put on each factor (so some elements may be considered more important that other in your specific case).
That's why, even if you provide the identical set of facts to many judges, each of them may order a different settlement outcome. However, broadly the outcomes should be within an approximate range and not completely different from a similar case.
And it's important to remember that the overriding principles are that the court strives to achieve fairness between the parties (whatever that may mean in your particular case), and that if there are any children under 18 in the marriage, their needs are paramount.
The Section 25 Factors- FAQs
What is a section 25 statement?
The section 25 statement is a witness statement you will prepare during your divorce (with the help of your divorce solicitors). It's the most important statement prepared during your divorce settlement proceedings, as it will be taken into account by the judge when determining which assets are eligible for distribution and what percentage of those assets you should receive. In the statement you should address all of the section 25 factors that apply to your case, and tell the judge why those factors justify the settlement award that you are seeking.
Is section 25 of the Matrimonial causes Act 1973 only applicable in court cases?
No, the s25 MCA 1973 checklist is kept in mind in out of court settlements as well (for example where you settle via <bloglink>divorce mediation<bloglink>). This is why many couples choose to negotiate a financial settlement, which provides them with assurance, rather than have a court decide their fate, the outcome of which is less under their control.
Do the same principles apply to Civil Partnership Dissolution?
Yes, the principles in this post apply equally to <bloglink>the dissolution of a civil partnership<bloglink>, and the equivalent provisions to section 25 can be found in <bloglink>Schedule 5, Part 5 to the Civil Partnership Act 2004<bloglink>
Now It's Your Turn To Comment
I hope this guide was of use to you. What are your thoughts?
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