Divorce (Financial Provision) Bill [HL]
Friday 27th January 2017
(7 years, 9 months ago)
Lords ChamberDivorce (Financial Provision) Bill [HL] 2016-17 View all Divorce (Financial Provision) Bill [HL] 2016-17 Debates Read Hansard Text
Baroness Deech (CB)
My Lords, this is not the first time that this Bill has been before you, and I assure you that it will not be the last, for it or something similar, for there is a moral, legal and practical imperative for the Government to do something about this area of the law. Unlike the current law, which is widely disliked, criticised and out of date, this Bill would, above all, improve the lot of every child whose future needs are jeopardised by the waste of parental assets in fighting over money.
There has been much publicity recently about the alleged advantages of so-called no-fault divorce, but bitterness and mud-slinging cannot be eradicated from divorce. Mediation and reasonableness can be achieved only when the far more antagonistic and inflammatory law of financial provision and asset splitting is cleaned up. This is what the Bill will do. It is more urgent than ever because legal aid has been removed from this area of the law and there is no prospect of its restoration. Judges and self-representing litigants complain. The judges complain that they have to do the work of lawyers for the couple appearing before them without advocates and with little idea of the law, dragging out hearing times. The ex-spouses complain because they are thrown into a situation where there is no signpost to a fair outcome, at the most stressful time of their lives. They are expected to mediate and negotiate without any pointers. The Law Commission, which has called for reform, compared the current adjudications on maintenance to a bus driver who has been told to drive a bus but not been told where it is going.
The law has been developed by the judges over the last 40 years, almost as if the guiding statutory provision in the Matrimonial Causes Act 1973 did not exist. In all this time, it has not been thoroughly debated in Parliament, despite the enormous changes in society with same-sex marriage, women reaching equality in work and education, and profoundly different attitudes to divorce and the family. The judges have scrambled to keep up. They have tried manfully to do so, but the result of their swerving from one principle to another, as they carve up assets and income, has been to leave lawyers and divorcing couples less and less able to predict what might be a proper outcome for them. Stories abound about the different views of judges in different parts of the country. Their attitudes may well have been shaped in a different era and according to their own views of their marital roles.
The law that seeps through to the public and into the textbooks inevitably arises from big-money cases that go to the highest courts. These pontifications are not necessarily helpful to low-income families. I am not alone in blushing at the media stories of the divorcing wives of oligarchs who claim, and are awarded, for their alleged needs sums from their husbands such as £2.1 million per annum on travel; £83,000 per annum on cocktail dresses—a sum that would provide 19.7 million water purification tablets for Africa—and £39,000 per annum on watches, which is equivalent to funding a month’s food for 1,695 malnourished children. Meanwhile, the ex-wives of low-income husbands have to struggle along as best they can. This is one of the reasons why the consideration of needs, as the Government will no doubt call for, is regressive and subjective.
This area of law desperately needs public and parliamentary input. Go to any of the blogs about this and see the misery of couples who have spent a fortune on settling and do not understand why their sense of fairness is disregarded. Read the many reports that have tried to reform this area, and you uncover an area of misery, wasteful expense and incomprehension.
The Law Commission reported on this area and backed prenuptial agreements. It said that after a few more years of work, it might end up with a formulaic system for the division of assets on divorce. In the meantime, the Family Justice Council has issued guidance running to 64 pages. The council is a group of family law professionals, not judges or members of the public. Its guidance is opaque and not binding, and it brings into question the role of Parliament. How can it be right in a democracy to leave guidance to unelected, non-judicial people who should be applying the law, not making it? What a statement it amounts to, in relation to the unsatisfactory condition of the law, that Parliament has apparently thrown up its hands in despair. Each year 100,000 children and twice as many adults are adversely affected by this. They call on the Government to do something. The current law has a reputation for putting people off getting married because it is so arbitrary.
At the crux of the issue is the value of judicial discretion in every case versus plain rules, as contained in the Bill. Our divorce judges are doing their best with care, generosity and sensitivity, but the result is uncertainty, expense and unpredictability. The rule of law demands that the law be predictable and certain, all the more so when the Government have removed the prop of legal aid.
A couple of prominent family judges will no doubt say they are opposed to reforming the law to bring in clear and understandable firm rules, but they are the ones whose intricate judgments have aggravated what is already obsolete. Their preference for individual tailor-made solutions is unaffordable. Judicial objections amount to saying that there should be no Marks & Spencer because we all look better in a Savile Row suit tailored in the latest style. A senior judge wrote recently to warn of what he called,
“the crude and amateurish reform of the delicately calibrated law of financial provision following divorce, which is currently attracting some support in the House of Lords”.
That is a very narcissistic comment. It is Parliament’s job to make policy in the interests of the entire country. It is the judges’ job to apply it, not to determine the legislation. That is a reminder of the separation of powers. There are also a few solicitors with a vested interest in no reform because their task of leading couples through the maze of the existing law is very well paid. Happily, the vastly experienced, outstanding family lawyer, the noble Baroness, Lady Shackleton, who is unable to be in her place this afternoon, is on side and wishes me to emphasise her wholehearted support.
What does the Bill say? It will provide that prenuptial agreements about what might happen to a couple’s money on divorce and how needs arising from the marriage might be met will be binding, subject to the usual contractual rules. At the moment, we have the worst of both worlds. Judges have said that prenups can be binding, but they have applied so many conditions to their validity that couples now spend hundreds of thousands of pounds litigating over whether the prenup is binding, which defeats the purpose. Prenups will not undermine marriage. Those countries which have binding prenups have lower divorce rates than ours. Many a widowed or divorced older person has told me that they would like to marry their companion but fear to do so because if the second marriage ends in death or divorce, the assets from the first marriage which they wish to hand down to their children would end up in the ownership of the second spouse. Binding prenups would give them peace of mind and could also deal with the vexed issue of maintenance.
The substance of the Bill is this: it adopts a system which prevails in most of Europe, the US, and especially our neighbour, Scotland, called the division of post-marital assets. The presumption would be that a fair starting point is the equal division of all the property and pensions acquired by the couple after marriage. Assets owned before marriage, inheritances and gifts would remain in the possession of the owner and not be available for transfer. Thus in a short marriage there would be little to divide but in a long marriage, where the couple started with nothing, everything would be divisible. There is flexibility in the Bill to allow for the home to be retained for the use of, say, a mother with children still in education.
Fortunately, a few months ago a university researcher’s review was published of the Scottish law on which this Bill is very closely modelled and which has been in operation for 30 years. The Scottish law was given the highest praise. The report was called Built to Last and its conclusion was that not a word of the Scottish law should be changed and that it had been,
“successful in achieving one of its aims which was to encourage parties to reach their own agreements about the financial and property consequences of divorce”.
The report quotes an interviewee as saying:
“English law is broken and needs mending: but ours doesn’t … generally speaking, it’s a gem”.
This is the gem the Bill puts before your Lordships and which the public deserve and need. Nor has there been a problem in Scotland with more divorced wives claiming state benefits: claims for ongoing maintenance are diminishing in England and Wales year by year and are nothing but an ongoing source of trouble.
Many noble Lords who are unable to be here this afternoon but are in support, such as the noble and learned Lord, Lord Mackay of Clashfern, say: “Why do the Government not get on with it? The Bill is so obviously sensible and sooner or later, it will be the law”. I can only hazard a guess that successive Governments are scared of what they see as moral issues—although this law is more practical than moral.
Women want reform, for there is a growing number of wives who are better off than their husbands and resent, even more than men do, having to give what they see as a disproportionate amount of their hard-earned assets to the man who left them. The public desperately want new, clear law. Most people prefer the certainty of misery to the misery of uncertainty.
My proposed law combines autonomy with fairness. It will give divorcing wives entitlement and end the practice of treating them as supplicants for a discretionary allocation. It will protect the family business and the working wife. It has the potential to save millions in litigation costs. It will provide a good starting point for mediation and negotiation. It will restore some dignity, clarity and reasonableness to family law. The proposals are firmly based in the successful laws of other countries and on the reports of reform organisations here.
Divorce means divorce. The Bill will provide couples with a White Paper for a fair deal and a smooth transition to a single life. No more negotiations without a plan; no more hard exits. Will the Government recognise the problems and take action? I beg to move.
Lord Kirkhope of Harrogate (Con)
My Lords, first, I refer to my entry in the Members’ register of interests as a practising lawyer—but not, I must emphasise to the noble Baroness who has just spoken, a divorce lawyer in recent times, so my vested interest does not extend to the things that she suggested a lot of lawyers might be thinking about in discussing this matter. I am here to urge some caution, based on my own experience, not only as a practising lawyer who has had contact with family law matters but also as a former Home Office Minister aware of the effect of legislation and the importance of considering it and sometimes protecting oneself from it.
This is a very interesting subject and we need just perhaps to be slightly historical—not hysterical, but historical. Before 1857, the whole issue of divorce was entirely in the hands of the Church and it was not until the Matrimonial Causes Act 1857 that it was possible to have divorce in the secular courts. Indeed, all the matters relating to financial provision and the like had to take a much lower position in the considerations that followed. It was not until 1937 that a further Matrimonial Causes Act was introduced, which in context allowed other grounds, and very strict grounds for adultery, to be used for the separation of parties in divorce actions.
I remember in 1969, when I was an articled clerk, the Divorce Reform Act. My old law lecturer, Bernard Passingham at Guildford, wrote the best book on the subject. We dealt with remaining divorces only on grounds of irretrievable breakdown, with no fault on either side—no fault in terms of the legislators, perhaps, but not necessarily reflected in the views of couples who were coming to divorce.
The Matrimonial Causes Act 1973, in which the noble Baroness, Lady Deech, wishes to repeal Section 25(2), is in my view an important piece of legislation, which I believe in general has been very successful. There are of course well-known cases where there have been areas of despair—concern that abuse has taken place and so on—but I still believe that the wideness and flexibility of that Act is its most important aspect, along with its consideration of the needs of a child or children to be most important. I fear that the proposals by the noble Baroness will to some extent take away the priority of our need to consider children.
In 2004 Lord Justice Thorpe, in a case called G v G, said that, using the width of discretion available to him under Section 25, the judge could balance conduct against the shortness of marriage, adding in a wife’s contribution and essentially having flexibility in determining financial matters. Indeed the 2014 Law Commission, to which the noble Baroness has referred, made this statement in the context of the financial settlements:
“The objective is, and should be, to enable the parties to make a transition to independence, in a way that takes account of the choices made within the marriage or civil partnership, its length, the parties’ ongoing shared responsibilities (for example, for any children), the need for a home and the standard of living during the relationship. We think this is what, for the most part, the courts are doing anyway”.
Despite concerns in some areas, I believe it is important that we maintain that flexibility. I therefore fear the rigidity of these proposals and the danger that the repeal of this part of that Act would not serve the purposes of giving extra flexibility.
I shall refer, if I may, to prenuptial agreements, which are also part of the noble Baroness’s proposals. There are concerns regarding these agreements, which have grown in number extensively over the last few years. Yes, they are often a good idea, but it is important that we follow the terms that were referred to—there are other speakers in the Chamber today who will have much better knowledge of the Supreme Court than I do—in October 2010 in the case of Radmacher v Granatino, when it was said that prenuptial agreements are fine but there has to be a set of principles to have them drawn up in a proper manner if they are going to be upheld in the courts. That covered a number of things but it also included whether the terms of the agreement meet everyone’s needs, including those of the children.
I come back to children in my remarks because I think that they are important. This is what worries me in scrutinising these proposals: we have to be sure that the priority of children remains. Nothing—no deals, no agreements—must get in the way of the consideration of children, who are the ones, despite the suffering of the parties themselves, who suffer the most in society. Our duty is to protect them.
Lord Walker of Gestingthorpe (CB)
My Lords, I strongly support the Bill. I shall be brief partly because time is limited but also because the noble Baroness, Lady Deech, has explained so clearly and cogently the case for her Bill. Having said that, I cannot resist making one comment on the interesting speech of the noble Lord, Lord Kirkhope of Harrogate.
The Bill that became the Matrimonial Causes Act 1857 was opposed in the other place by Mr Gladstone on the very proper ground that it discriminated against wives as compared with husbands as to the grounds for divorce. It was opposed by Bishop Wilberforce of Oxford in this House because he did not approve of divorce. The question of financial provision did not arise in 1857, because the property of every married woman, unless protected by equity, had vested in her husband on marriage. That continued to be the position until the Married Women’s Property Act 1882.
Returning to the Bill, I shall be brief, but I emphasise the uncertainty of outcome under the present law. It depends on the exercise of a very wide judicial question, depending on a number of factors between which there is no hierarchy established by statute. Such a wide discretion is not, and cannot be, exercised in a uniform and predictable way. That has been confirmed in the latest reports from the Law Commission. It cites well-documented fieldwork which shows variation between different judges, different groups of courts and different regions of the country.
It is true that, from time to time, general guidance to judges has been given by the court of last resort. That is now the Supreme Court; before 2009, it was, of course, this House acting in its judicial capacity. Inevitably, the cases that go to the court of last resort, cases that are sufficiently robust in terms of money to stand two appeals, are very much the exception. They are the biggest of the so-called big money cases and are by no means typical of the problems of ordinary married couples.
As the noble Baroness, Lady Deech, said, civil legal aid is no longer available for divorce, except where children are concerned or in cases of domestic violence. The costs of legal advice and representation and court fees—which I emphasise—rise inexorably. The court’s discretion as to how the costs are to be borne is a further uncertainty in the matter. Of course, the judge’s discretion, both as to the order he makes and the order he makes on costs, must be exercised judicially, but judicial exercise of discretion still gives great room for unpredictable outcomes.
The financial outcome is so unpredictable in contested cases that it is hard—I would go so far as to say impossible—for judges to give confident advice on the outcome. That makes expensive contested proceedings more likely, because the parties cannot be advised sensibly what would be a proper settlement. Divorce is often traumatic enough without the whole family’s resources being depleted by swingeing legal costs.
The Bill would authorise antenuptial settlements, subject to appropriate safeguards. There are appropriate safeguards, but I believe that the noble Baroness, Lady Deech, is of the view that it is desirable that those safeguards should not be too complicated or too many, because the more grounds there are for challenging an antenuptial settlement, the more there will again be expensive contested proceedings. In the absence of such agreement, it would introduce new rules similar to those which are working very well in Scotland. The new rules would limit judicial discretion and make the outcome more predictable, reducing the volume of contested proceedings. The principle is made very clear in the Bill that the needs and rights of children of the marriage will always, as before, continue to take priority. I commend the Bill to your Lordships’ House.
Lord Dykes (CB)
My Lords, I must deliberately exercise great care after speeches by three considerable legal experts at the beginning of this debate. I speak very much as a layman—but declaring none the less a personal interest in having experienced divorce proceedings that ended in 2001. I have no complaint, by the way, about the proceedings, which were entirely satisfactory, but I noted even then, when there was a very low degree of contention and a high degree of amicability, the gradually amassing cost of the proceedings because of endless discussions of assets and other matters, which led the lawyers themselves to say that it was about time that we exercised control over the rise in the amounts of money involved. In this case, fortunately, there was no actual hardship or difficulty in those costs—none the less, that is one of the realities of these matters. Again, in the reverse sense, extra costs arise from the arbitrariness of different judges’ deliberations—and I make no criticism of individual judges, as it is a very difficult job for them.
I congratulate the noble Baroness, Lady Deech, on introducing the Bill and wish her well with it. She herself was chairman of the Bar Standards Board from 2009 to 2014, so has considerable knowledge and legal expertise in all matters of law and not just in divorce.
We have reached a crucial stage whereby the haphazard nature of the press reports about proceedings, the huge amounts of money involved, and lots of Sturm und Drang and drama mean that rationalisation and modernisation is long overdue. If you take the rising amounts of money, for all sorts of reasons, with the devastating blow of the removal of legal aid, you have a cocktail of real difficulties, which is unfair on modern society in Britain. I add my expression of support to what the noble Baroness said about the system in Scotland, where they provide a good example of moderate, sensible law-making in comparison, sometimes, with English or British law-making, in quite a variety of fields. But here again, too, the comments of people interviewed on the Scottish law and how it was working were extremely encouraging.
I was grateful for the excellent House of Lords briefing document on this Bill. I note that Resolution, an illustrious body that we often study very closely, commented on this issue, saying:
“Divorce law relating to finances is complex and difficult to understand. Outcomes can be difficult to predict, even for legal professionals. Section 25 of the Matrimonial Causes Act 1973, which determines how money is divided up on divorce, has fundamentally remained unchanged for the last 40 years”.
That is 40 years in a rapidly changing society—I think that that really is unacceptable. I hope that there will be enormous encouragement today, including, I hope, a positive response from the Minister when she comes to reply.
In one paragraph of the excellent briefing document from the sponsors and supporters of the Bill, I note the excellent summary, which describes the Bill and its qualities. It says that if the Bill is enacted, the result should be better opportunities for mediation, less need to go to court, reduced trauma for children—a very important point that the noble Lord, Lord Kirkhope, mentioned lower costs and an easier time for litigants in person and a fairer outcome, recognising partnership in marriage. For the first time, it would recognise equality of spouses, rather than subjecting their claims to the view taken by a judge. Above all, it would be the result of democratic debate in Parliament, and take account of public opinion and the need for certainty in law.
I hope that the noble Baroness, Lady Deech, and other supporters of the Bill in Committee will look closely at Clause 3, and the excellent points that she made on the quality of prenuptial agreements. Subsection (1)(d) needs to be made absolutely watertight in its description to avoid the kind of difficulties there have been in the past.
Over the years we have all heard the music hall jokes about marriage and divorce. I particularly like the very cynical New York joke which I heard some years ago: marriage is like a banquet where you start with the pudding and work backwards. In this case, we need to repair some of the damage in society that has come from divorces—sometimes they are needless, sometimes unavoidable. Sometimes people avoid marriage altogether for all sorts of modern reasons—no one can complain about that. I hope that this time there will be a more positive government response. We go through this rather sad process of knowledgeable Members of this House putting up extra Bills, particularly on Fridays. We then expect the inevitable government reaction that we heard twice today from the noble and learned Lord, Lord Keen of Elie, who was unable to accept any suggestions at all. I hope that the newly-appointed Minister on duty will be more positive in this case.
I first got into the House of Commons years ago. In 1972, although I was a PPS in Edward Heath’s Government, I was still allowed to put forward a Private Member’s Bill because I came number two in the ballot. I introduced a Bill to control and govern the movement and parking of heavy juggernaut lorries which were becoming a menace in Britain at the time. It was pure “Yes Minister”. Right at the beginning, a senior civil servant said that under no circumstances could they even begin to consider such an idiotic and ridiculous Bill. Nine weeks later, the same person phoned me to say: “Now that we have looked at the text again and have our own components to put in to your excellent Bill, we propose to proceed with it”. They did so, and it became the Dykes Act governing the movement of heavy lorries. That was a sweeping change, and I would not expect a drama of that magnitude to take place today. None the less, the Bill deserves the support, not just of the House but of the Government.
Lord Carlile of Berriew (Non-Afl)
My Lords, I will speak briefly in support of the Bill in the name of my noble friend Lady Deech, who has committed a great deal of endeavour, energy and her formidable intellect to devising it. Very good reasons for supporting the Bill have been given by other noble Lords and, especially, by my noble friend in her opening speech. As my noble friend Lord Dykes has just said, the issue is the depletion of assets. We should think about the assets of people of moderate or nearly no wealth. For divorcing couples of that kind, the loss of assets in costs means that there is often very little left, much to the prejudice of the children. I agree with the noble Lord, Lord Kirkhope, that they are an important part of the picture.
When I was a young barrister—though not for the last 30 or 35 years—I used to do divorce cases. In those days, there was actually a degree of certainty about the money. It was not fair, because there was what we called the two-thirds/one-third rule. I am sure your Lordships can guess who got the two-thirds and who got the one. However, at least there was certainty and very little argument over money in most cases. Also, in those days we did not have the huge oligarch cases on the regular basis that we see now. The celebrated cases then mostly involved Members of your Lordships’ House. However, in those days we did not have any certainty about children. As a barrister, I was involved in some painful and distressing cases—and I do not distress easily in my professional role—about who should have what was then called custody and access to the children. In one case in which I appeared the father killed the two children a year after he received a settlement over them which he did not like. We have much more certainty today about arrangements for children. There are presumptions about natural parenthood which inform the courts and there are not such great battles over children, though I certainly do not suggest that there are none.
Now it is the other way round. As the noble and learned Lord, Lord Walker, illustrated, one of the problems is that the appeal cases—the precedents which lawyers read and on which they advise their clients—often involve vast sums of money and have no real relationship to the ordinary divorcing couple. This Bill seeks to address the position of the ordinary divorcing couple by inserting some certainties into the picture, which I applaud.
The Bill also seeks to give particular status to prenuptial settlements. There is a degree of dislike among young people of prenuptial settlements as they suggest that they do not have absolute confidence in each other. When some of them are divorced years later, the suggestion is that they should have had less confidence in each other. If it is a true relationship, the creation of a prenuptial settlement should not break it asunder. If it does, it tells them something. Therefore, I do not think that we have anything to fear from prenuptial or, indeed, post-nuptial settlements as long as they are conducted fairly. This deliciously short Bill puts those principles into statutory form and produces greater certainty for people who unfortunately, having married, find that they can no longer remain married to one another. Therefore, I hope that your Lordships will support my noble friend’s Bill.
Lord St John of Bletso (CB)
My Lords, I join in warmly supporting my noble friend’s Bill and her efforts to reform and bring more certainty to the financial provisions in Section 25 of the Matrimonial Causes Act 1973.
I was encouraged by the recent publication, just two Fridays ago on 13 January, of the report by the Ministry of Justice on the implementation of Law Commission proposals. I note that the Family Justice Council has developed and introduced financial guidance for separating couples and unrepresented litigants. I also note that the Ministry of Justice is working to develop an online tool, supported by formulae, to assist separating couples and clarify how to make financial arrangements on divorce. I had hoped that the publication would give a clearer commitment to legalise a binding form of prenuptial agreement. I hope that the Minister will give us some guidance on whether this may be forthcoming in the future.
I speak from a personal background of having specialised in family law in South Africa, where I practised as an attorney under the Corpus Juris Civilis—Roman Dutch law—which is very similar to Scottish law, where antenuptial agreements are binding and where there is a clear framework for the determination of financial settlements. As all speakers have mentioned today, this Bill is to a large degree crafted on Scottish law. For that reason, I warmly support it as it is far more efficient, less expensive and less stressful for children.
Clearly, there is a need to provide clearly defined guidelines for divorcing couples and move away from the precedent of largely judge-made law, which bears little resemblance to the statute, which frankly is outdated. Even though the divorce rate continues to fall, almost a third of the 110,000 divorces in England and Wales every year go to court for financial orders. That overloads the divorce courts, causing lengthy delays, stress and, again, excessive costs. I entirely agree with my noble friend that long drawn-out divorces are highly detrimental to children. As my noble friend Lord Carlile mentioned, hard-earned family assets are often lost as a result of the litigation costs.
I therefore wholeheartedly support Clause 3, which makes pre-nuptial and post-nuptial agreements binding, as long as both parties receive independent legal advice and make full disclosure. I also agree that there is no evidence that marriage breakdown is encouraged by pre-nuptial or post-nuptial agreements. If enacted, an added benefit of the Bill would be to provide better opportunities for mediation, which we all support. I am grateful for the useful research note that we received from the Library, in which reference was made to the then Minister, the noble Lord, Lord Faulks, who expressed concerns in Committee on my noble friend’s similar Bill that:
“The Government are not convinced that the certainty that the Bill and these amendments intend to provide would not come at too great a cost in rigidity”.—[Official Report, 21/11/14; col. 629.]
I am sure that when the Bill, I hope, comes to Committee, there may be scope to amend Clause 5(1)(c), for example.
In conclusion, I congratulate my noble friend on her tenacity in promoting the Bill and wish it a speedy passage through your Lordships’ House.
Baroness Watkins of Tavistock (CB)
My Lords, I support the Bill brought forward by my noble friend Lady Deech.
It is important to remember that no one enters a marriage expecting to get divorced. At the time of marriage most people are deeply in love, and the last thing on their mind is how to settle the division of assets during the emotionally charged process of a divorce. Therefore, to encourage pre-nuptial settlements seems an eminently sensible idea. Other noble Lords have outlined some of the challenges experienced by couples when trying to reach fair and just financial settlements for both parties. This is particularly difficult when one party does not wish to get divorced.
We now have non-binding Guidance on “Financial Needs” on Divorce, which was published in June 2016, but it remains complicated. My noble friend Lady Deech has argued that we have largely judge-made law, with the exercise of wide judicial discretion, which, though careful and sensitive, leads to unpredictability and uncertainty and often militates against mediation and out-of-court settlements. Legal aid is no longer available for this area of law and many parties, particularly those of lower means, are often left unrepresented, with no straightforward set of principles to assist them in dividing assets and income. This frequently results in long, drawn-out procedures, which are certainly costly in emotional terms, and which in turn can result in stress, not only for the two parties involved in the divorce but for any children who are involved, particularly if for financial reasons their two parents still have to live under the same roof. It should be noted that many organisations, including the Centre for Social Justice, have made the case for reform.
David Davis recently said in the other House in relation to the Brexit process—a form of divorce—that information to be provided in new legislation should be “straightforward”. The Bill has just that merit: the man or woman in the street could easily understand the principles it contains. Many noble and learned Lords have spoken in this debate. I, of course, have no experience of the law but understand the aims of the Bill. To continue for a moment with the Brexit theme, the four nations of the UK will need to work more closely together, while maintaining their national identities and delegated powers. I have been involved in two company mergers, one in the NHS and the other in a housing association, and the principle of taking the best from each party to build the new organisations was adopted by both boards. In each case, this was successful. The Bill relies on the proven efficacy of Scottish jurisdiction, which would administer a simpler and more certain law in England and Wales—indeed, it has been described as a gem. I believe that adopting the Bill, which is largely modelled on Scottish legislation, to provide similar certainty in all marriages and civil partnerships in England and Wales would lead to advantages and be a positive benefit.
If the Bill is passed, it is likely to shorten the period of negotiation relating to financial matters during any divorce and result more quickly in stability for the families involved. It will reduce lengthy bitter discussions about the division of wealth and provide a swifter, straightforward approach to the financial division of assets in divorce. It may well also reduce some of the harmful effects of prolonged exposure to parental disharmony that some children experience—it will be no surprise to noble Lords that there is evidence that prolonged periods of parental argument can be extremely detrimental to children’s mental health. I would hope that that would, in turn, reduce at least some of the anxiety and depression in young people in families where divorce is occurring. I therefore see nothing but merit in the Bill, the principles of which I fully support.
Baroness Meacher (CB)
My Lords, I strongly support the Bill of my noble friend Lady Deech. She set out the case for it in her usual eloquent and systematic way, and she has almost certainly said all that really needs to be said. I will take only a few minutes of the House’s time to reinforce some of the points that she made.
I have been close to too many divorces which have tragically gone to court. The reason for the courts becoming involved has seemed to be, time and again, that each side has, perfectly reasonably, come to a completely different conclusion about their rights to their property. The Bill would greatly reduce the number of contested cases, as others have said, and that must be in everyone’s interests—and most particularly in the interests of children, who inevitably suffer months, if not years, of instability that could be avoided. Also, importantly, these contested cases lead to much greater animosity between the parents than would otherwise be the case. There is absolutely no doubt in my mind and in the minds of most other people that really poor relationships between children’s divorced parents are always far more detrimental than any financial settlement could compensate for.
Reform in this area has become more pressing as divorce has become more commonplace, as my noble friend Lady Deech pointed out. There are 110,000 divorces a year, involving about 500,000 people, including children. Help for those suffering individuals must surely be a priority. Our Prime Minister has said that her priority is to help ordinary people who are going through great difficulties in life. I cannot think of many people who are going through more difficulties in life than the children of a divorcing couple.
A major concern is the loss of legal aid to this area of the law and the growing number of people with modest means representing themselves in court—50,000 in 2013, as we know from the Library briefing. This, in the context of a lack of clarity in the law, leads to endless adjournments and delays as the litigants and judges struggle to find a way towards a solution. My noble friend referred to the careful and sensitive exercise of judicial discretion in these situations, and I think that that is perhaps the only point on which I might disagree with her. In my experience, judges in the lower courts struggle terribly to deal with the conflicting accounts and mountains of paper, and there is no question that on occasion they come to erroneous decisions. These then have to be sorted out in the appeal court—and, again, an appeal means yet more months of delay and yet more waiting around and uncertainty.
An important reform in this Bill is that prenuptial agreements would be binding on the conditions set out, as my noble friend Lady Deech made clear. In my view, this alone could achieve a significant reduction in cases reaching the courts, to the benefit of all.
I have to say I find it extremely difficult to understand the conclusion of the noble Lord, Lord Kirkhope, that somehow confusion and uncertainty are a help to the children involved.
The fact that a very similar law has been in place in Scotland for some years and is operating successfully simply reinforces the argument that the Bill should be given government time to reach the statute book. There is no need for a pilot and no need for concerns about unintended consequences; we know that the Bill would work.
At a time when government takes the views of the public exceptionally seriously, it is of note that, in this case, 72% of those asked in a YouGov poll supported the proposal that the courts should recognise prenuptial agreements. Perhaps the Minister would like to comment on the public support for such a reform and on whether the Government have a response to this that is different from their response to the Brexit vote.
Lord Stone of Blackheath (Lab)
My Lords, I rise for one minute to mention something personal in support of the Bill. My son, Daniel Stone, spent a lot of time and effort to qualify as a lawyer specialising in family law. After a few years of practice, with great courage and much regret, and after long conversations with myself, he decided to leave the profession. His reason was that he was upset and distressed to find that the divorce laws lacked compassion and fairness. It was too costly and complex a process, in which many people were unable to find satisfactory, equitable settlements. I support the noble Baroness, Lady Deech, and applaud her for bringing this Bill to the House so that we can begin to address these issues.
Lord Kennedy of Southwark (Lab)
My Lords, like other noble Lords, I congratulate the noble Baroness, Lady Deech, on bringing forward her Bill and securing a Second Reading. The Bill proposes to amend Section 25 of the Matrimonial Causes Act 1973 and replace it with a series of principles that would apply in the determination of applications for orders in divorce, including prenuptial and post-nuptial agreements.
I am not a lawyer, so I have come to the Bill as a lay person. I looked at what marriage is: it is, of course, an agreement by which two people enter into a certain legal relationship with each other that creates and imposes mutual rights and duties. However, when you look carefully, it is a contract—a very special contract—that comes into force if special formalities are observed and, apart from death, can be set aside or terminated only by a court of competent jurisdiction. People enter into this contract because they love each other, want to be with each other and want to make a life together, possibly with children.
Marriage as an institution is something that Members on these Benches fully support. We believe that it is one of the bedrocks of stable relationships and society. We are very proud on these Benches that we introduced civil partnerships for gay people some years ago, and that we fully supported the then coalition Government, in the last Parliament, when they decided to introduce equal marriage for gay people. We did that because we agreed with the Government that marriage is an important institution and that gay people have the right to be treated exactly the same, and to enjoy the same benefits and to face the same challenges in the society of which they are equal members. It is something that I very much wish was on the statute book in Northern Ireland.
I then looked at what exactly divorce means. It is, of course, the termination of a marital union and the cancelling and/or reorganising of the legal duties and responsibilities of marriage. I found it interesting that, with amendments over time, we are using an Act that, although ground-breaking at the time, came on to the statute book 44 years ago. That may not be long in terms of legislation, but divorce is a live issue affecting thousands of people every year, either as divorcing spouses or as their children. I reflected on how different the UK is today from 1973. On these Benches we welcome the Bill and believe that it is timely. I give my support to the Bill.
Clause 2 provides that either party subject to proceedings for divorce may apply to a court for an order in relation to matrimonial property only. Legislating on an approach to the division of assets would certainly provide greater certainty for separating couples, and we want to see some safeguard to make sure that the economically weaker spouse is protected.
Clause 3 would make prenuptial and post-nuptial agreements binding on the parties, subject to a number of exceptions and safeguards. Binding agreements could provide couples deciding to marry with the ability to plan with more certainty. I can see the argument that it would bring into full view the potential costs to each party, that significant money could be saved in lawyer and court costs and that it could take some of the hostility and bitterness out of the process for the divorcing parties.
I also understand that in many other jurisdictions, as we have heard, prenuptial and post-nuptial agreements are very common and that in many such cases they have much lower divorce rates. We should examine carefully the proposals and test the competing arguments that on the one hand it would undermine marriage and on the other that it would strengthen it. Clauses 4 and 5 propose that the net value of the matrimonial property is shared fairly between the parties. The proposals seek to limit costly litigation by providing a process for asset division. They seek to remove or certainly limit the role that the court plays in deciding the appropriate division of assets and maintenance.
The Bill seeks to deal with important issues and to find solutions to situations that are far from satisfactory at present. I have highlighted some of those issues. I believe that if the Government are fair and reasonable, the Bill could make progress through your Lordships’ House. As an Opposition, we are happy to support it. I should say that I am not a lawyer and I have no interest in the Bill. I am happily married and have never been divorced—and I am not looking to get divorced. I was getting a few funny looks this week when I sat at the kitchen table reading papers on divorce.
In closing, I bring to noble Lords’ attention that, although it is not proposed here, there is nothing in the rules of the House to prevent the Bill going to a Grand Committee in the Moses Room rather than coming to the Floor of the House and disappearing, never to be seen again. As the noble Lord, Lord Carlisle, said in an earlier debate, many Private Members’ Bills do a lot of good and we need to find a way to move them on.
Baroness Buscombe (Con)
My Lords, I thank the noble Baroness, Lady Deech, for introducing the Bill and for enabling the House to once again debate the important issue of financial provision on divorce. We take this issue very seriously. I want to reassure all noble Lords who have spoken today that I have had good discussions with my colleague in another place, Sir Oliver Heald QC MP, the Minister responsible, concerning progress and plans for an all-encompassing reform of private family law.
The Bill has a very commendable aim of seeking to assist divorcing couples and civil partners undergoing separation in resolving disputes over the division of property and periodical payments or “maintenance”. The Government agree that there is scope for greater clarity and certainty concerning the law and the court’s practice in this important area, but we wish to identify ways to achieve this that do not cause hardship and undermine fairness, which, I say with great respect, this Bill would be likely to do. Clarity and predictability must be balanced with the need for flexibility, with the possibility that flexibility can sometimes bring fairness that certainty precludes.
We also recognise that the law cannot be based on a one-size-fits-all approach that does not cover the uncertainties that life presents. The law must have the breadth to meet the various circumstances in which divorcing couples find themselves at the end of a marriage. There is also a need to take into account the fact that aggrieved individuals are likely to be the most vocal, and that the evidence base in this area is sometimes anecdotal, including in relation to how, why and at what stage settlements are reached.
The Bill seeks radically to change the law of financial provision on divorce and differs substantially from, and goes much further than, the recommendations made in 2014 by the Law Commission concerning matrimonial property agreements and clarifying the approach to financial needs on divorce. Those recommendations were made after wide public consultation which included a public attitude survey. The coalition Government provided a preliminary response to the Law Commission stating that further careful consideration would be given to its proposals in the next Parliament. That Government took forward one of the proposals in the report by funding guidance for separating couples, Sorting Out Finances on Divorce, to help make the law and the court’s practice on financial needs and arrangements more understandable and accessible.
That guidance was published in September 2015 by the Family Justice Council and is being promoted in a number of ways including online and through advice agencies. It provides information about financial settlements for couples who are getting divorced or ending a civil partnership, including matters such as maintenance, housing and pensions, as well as the type of orders a judge is likely to make. The original Family Justice Council guidance is on the judiciary.gov.uk website and a simplified, plain English version of it is available on the Advicenow website, which is a charity dedicated to ensuring that people are aware of their legal rights. It also contains advice for unrepresented litigants—this I think is particularly important—to make use of in court by giving concise and easy to understand information about the law.
In respect of that I would refer, as did the noble Lord, Lord St John of Bletso, to a note from the noble Baroness, Lady Deech, dated 27 January which does indeed make reference to guidance. However, that guidance is actually for the judiciary. For anyone else it is somewhat complicated in that a lot needs to be considered in the law. What I am talking about is known as a “survival guide” which responds to much of what noble Lords have been talking about in the debate in terms of providing simple and straightforward references to what people can do in different circumstances. It is incredibly easy to understand and helps couples to sort out their financial affairs without asking the court to decide. It explains consent orders, the process for mediation and the fact that people can access legal assistance for that. It also explains what happens if couples cannot agree and have to go to court. I commend the guidance to all noble Lords.
The corresponding guidance for judges, which is strongly endorsed by the President of the Family Division, Sir James Munby, followed in June last year. The president has described the guide as providing a “succinct summary of the law” and a “useful tool” for the judiciary in relation to making orders to meet financial needs following divorce and the dissolution of civil partnerships.
The Government are also looking at other ways to make the law more easily understandable. We want to make the best use of technology to equip individuals with the information they need to resolve the disputes that often arise following divorce. We are investigating current practice in financial disputes with the aim of developing a tool, again referenced by the noble Lord, Lord St John of Bletso, to help separating couples sort out financial disagreements. The development of this tool will assist couples in resolving financial disputes without going through the courts.
The Government recognise that when disputes go to court, that only increases the acrimony and tension which often arise in such circumstances, and we are therefore considering how to provide improved information and signposting so that more people are made aware of how mediation can help in dispute resolution. We strongly believe that agreements are more long-lasting and sustainable when individuals are able to make decisions for themselves without the intervention of the court. I think that all noble Lords who have spoken in the debate would agree with that. Mediation is generally considered to be a more cost-effective way of resolving disputes than going to court and must be considered before a person can apply to the court for a financial order unless there is evidence of domestic violence or another exemption applies. It can help separating couples make their own financial arrangements and reduce tension when individuals are faced with making difficult decisions about their money and property at such a stressful time.
The Government are also considering the Law Commission’s recommendation to introduce qualifying nuptial agreements which would make prenuptial and post-nuptial agreements legally binding, subject to certain protections. These agreements, unlike those proposed in the Bill, could not be used to enable one party to contract out of responsibility to provide for the other party’s financial needs.
The other recommendations in the report are currently under consideration by the Government as part of developing our plans for wider private family law reform, and we will announce our response in due course. Our reforms will be underpinned by the Government’s ambition to enable people to resolve their disputes in a way that is just, affordable and transparent. I want to reiterate that the Law Commission’s proposals are based on extensive consultation, which this Bill’s far more radical proposals are not. The likely effects of the Bill’s proposals are also far less clear.
I will very briefly outline the current law of financial provision on divorce. The majority of couples resolve the financial consequences of divorce by agreement, but where this is not possible the court has a wide discretion to decide how their property and income should be distributed, guided by case law and the fundamental principles of financial provision set out in Section 25 of the Matrimonial Causes Act 1973. This includes consideration of the circumstances of the parties and any children in their care, and concepts of fairness and needs. Importantly, the Act requires that the first consideration of the court is the welfare of any child of the family aged under 18.
Other factors in Section 25 include: the income and earning capacity of the parties; contributions made to maintaining the home and the children; the financial needs and obligations of the parties; the age of each party and the duration of the marriage; any physical or mental disability suffered by either party; the conduct of the parties, if it is such that it would be inequitable to disregard it; and any benefits that the parties will lose as a result of the divorce or dissolution.
The first of the main provisions in the noble Baroness’s Bill is that prenuptial and post-nuptial matrimonial property agreements should be binding upon couples on divorce, except in very limited circumstances. The Government are concerned that this does not take adequate account of the needs of parties following divorce, which may have changed since the agreement was made. For example, if the matrimonial property agreement was a valid contract but left one party destitute, we believe it would nevertheless be binding under the Bill. We are currently considering proposals from the Law Commission on binding nuptial agreements with safeguards not present in the Bill. We would wish to consider these more fully within the context of the broader private family law reforms before committing to legislate to make agreements enforceable.
The second provision is that, subject to certain exceptions, matrimonial property—defined essentially as all property obtained during the marriage, except that obtained by a gift, inheritance or succession—should be divided equally between the parties. This would also be potentially unfair and could cause extreme hardship, particularly for lower-income families and for families with children, where the matrimonial home might need to be retained for the children to have a home. A straight division of matrimonial property would not necessarily work in the best interests of the children, who would face the trauma not only of divorcing parents but of their family home having to be sold. All noble Lords have spoken about the needs and priorities of children. This is something we take very seriously and must retain. Indeed, my noble friend Lord Kirkhope of Harrogate urged caution, particularly concerning the priority of children and the possibility of that priority being at risk. I suggest to the noble Baroness, Lady Meacher, who suggested that he was in that way against certainty, that this is more about the priorities of children and the need to be flexible.
I am aware, and welcome the fact, that the Bill has been amended to remove its previous proposal that, although the court should have regard to provision for children, it would not have to make the needs of minor children its first consideration, as the law requires it to do currently. While this softens the Bill somewhat it remains unclear what the effect would be on the provisions overall and the extent to which they could be overridden to ensure that the needs of children were adequately met. As I have said, the lack of flexibility for the court of course remains in cases where children are not the primary consideration.
Support for a “sharing principle” appears to have, in the main, developed out of the “big money” cases, referenced so eloquently by the noble Baroness, Lady Deech. It is seen as unfair that one party would receive a surplus of high-value net property that had been accumulated together over many years. In the vast majority of divorces, financial provision is about meeting needs. Generally, people do not leave a marriage equally—one partner generally has better employment prospects and caring responsibilities are often distributed unevenly. Under the current law, distribution of assets is usually weighted to make up for this. For example, assets may have to be distributed unequally to reflect the fact that one of the parties may not be able to secure a mortgage due to age or ill health. A 50:50 presumptive split of property would generally benefit the person with better ongoing employment prospects or earning capacity and fewer caring responsibilities. This is likely to disproportionately negatively affect women.
The third major provision is that periodical payments for spousal maintenance should be for a maximum period of five years, subject to narrow exceptions. While only one in 10 divorces in England and Wales ends up with periodical payments of spousal maintenance, a five-year limit would not take account of need in the way the current system does and could cause hardship for many couples, and for women in particular. While the Bill gives the court the power to make exceptions to the five-year limit, it nonetheless introduces a presumption against continuing financial support after divorce. The current law recognises the risk that one of the parties in a divorce might not have reached a financial position where they no longer need financial support after five years.
The Law Commission has concluded that, although the courts are given a wide discretion, in practice, financial orders and other financial settlements tend to lead the parties to financial independence in the majority of cases, although the time needed to achieve this will vary according to the circumstances of the parties involved. Having to adjust to a new financial reality may take longer than five years; for example, for a woman who put aside her career because of the competing demands of raising children. We believe, therefore, that it is better for the court to retain the discretion to provide as it thinks best to meet the circumstances of each individual family.
The Bill also provides that the court should not consider the conduct of the parties unless it affects the financial position of either party or it would be unfair not to consider it. The Matrimonial Causes Act 1973 already provides for the court to consider conduct if it would be unfair not to take it into account. The Government believe that this provision is adequate and should be retained. I appreciate the noble Baroness’s desire to ensure that financial division on divorce or dissolution of a civil partnership is made simpler, so that people will more easily be able to estimate what they are likely to receive. In turn, people would be better able to negotiate with each other and couples should be more confident to enter into agreements determining what they would receive on divorce. I say again that this “survival guide”—so well named—contains examples of what couples might receive in different circumstances. It helps to manage expectations, which is an enormous assistance, but we agree that this is not enough.
The Government recognise that more needs to be done to help divorcing couples reach agreement. The Government, as I have said, are considering the Law Commission’s report on matrimonial property agreements and other financial arrangements on divorce and will respond formally in due course in the context of our wider plans for family law and system reform. The Government will not oppose the Bill receiving its Second Reading today but we have concerns about its approach; that it could cause hardship to many families; and that its proposals, which would radically change the law in this area, have not been subject to public consultation. We believe that we are already considering many of the issues raised by the noble Baroness’s Bill and how these might be addressed as part of a wider approach to family private law reform. Finally, I thank all noble Lords who have taken part in this debate, particularly the noble Baroness, Lady Deech.
Baroness Deech
My Lords, I thank everyone who has stayed here on Friday afternoon to support the Bill, particularly the noble and learned Lord, Lord Walker, who has helped me throughout this very long process. I assure noble Lords, particularly the Minister and the noble Lord, Lord Kirkhope, that children do, indeed, have priority in the Bill. There is nothing in it to change the existing law about children. Indeed, I wish as much attention were paid to extracting maintenance from unwilling fathers as is paid to other elements of family law. We have a very bad track record there. This law would not change it; indeed, it would extend the age up to which you have to house your children to 21 rather than 18, given that so many of our children are at university until that age. It allows for a house to be retained for the housing of children where this is necessary.
Secondly, the law I am putting forward is by no means experimental. It has been acted on with great success in Scotland for 30 years. There is nothing more that needs to be learned about it. I suspect that the Government are fearful of an increase in ex-wives going on welfare. This has not actually happened in other countries.
If the Government really want to tackle the problem of the damage and cost of family breakdown, which is the price we pay for the pursuit of liberty and happiness, we could cut the cost by making better efforts to extract child support from fathers and investing in affordable childcare to help women back into work. As it is, although I am very pleased that the Government are taking this seriously and are making some moves, the Minister’s reply speaks only of applying sticking plasters to an ill patient who is bed-blocking, who really needs be cured and booted out. The principles underlying the old law remain but they are not just and mediation is difficult because there is no direction, sense of justice, certainty or feeling of fairness at the end. I think the Minister knows and the House knows that reform will come sooner or later.
Luckily, I have no interest in this. I have never been divorced and I have never earned anything from family law, but I claim a distant relationship to the late Leo Abse MP, who fought for years to reform divorce law and succeeded in the end.
There is one other serious issue I would like to raise. This Government risk becoming a do-nothing Government. It is quite striking that widespread expertise in the three Bills that have been before us today—years of expertise, not just from me as an academic but from the noble Baroness, Lady Cox, the noble Lord, Lord Ramsbotham, and others—has been swept aside. We all say that this House earns its place in the British constitution because it contains expertise and experience. Do the Government not risk undermining the contribution and reputation of this House when not just today but in the Higher Education and Research Bill—with dozens of vice-chancellors and professors and experts—our comments have just been stonewalled? The Government need to listen to this House if they value it and its place in our constitution, which is what we have all said, and yet the expertise is being dismissed by—dare I say it?—ministries that may know less about the topics than the people who have spoken in the various Bills today and this week.
Constitutionally, I do not think that I am able to ask for the Bill to be referred to a Grand Committee. I therefore end by asking the House to give it a Second Reading.