Divorce (Financial Provision) Bill [HL]

Baroness Shackleton of Belgravia Excerpts

Friday 27th June 2014 Lords Chamber

[Baroness Shackleton of Belgravia (Con)]

My Lords, I practise in this area of law, and started five years after the 1973 Act came into being. I begin by praising the judiciary. In a world in which trust is a rare commodity, where politicians, the police and the press have all been found lacking, the judiciary is without question beyond reproach and stands out as a beacon of hope, commanding the confidence and respect of this country, as well as of others who choose to litigate their disputes here.

The judges work tirelessly, many of them for a fraction of what they have been earning in practice. In the field of law in which I practise, however, the legislation on which they depend is overdue for review and is no longer fit for purpose because its interpretation relies too heavily on the discretion of the individual enforcing it, thereby making it more difficult to predict and therefore advise on the outcome of a particular case. This creates uncertainty; and uncertainty creates litigation. It is for this reason that I wholeheartedly support the Bill, and I am very grateful to the noble Baroness, Lady Deech, for introducing it.

When one enters the building that houses most of the family courts, there is a life-size statue of a judge. The judge has a blank face and a wig, and the statue sits, with its commanding presence, before you go into court. The purpose of its existence is to show the users of the court that the identity of a judge is an irrelevance, and that the outcome of a case would be much the same, whoever happened to be occupying the blank face. Unfortunately, this is not always the case.

I shall give a clear example of a case in which I was involved a few years ago. First, by way of background, I shall try to zoom through 30 years of matrimonial finance in a most simple form—which I hope will please my noble friend Lady Wilcox. The courts initially, when I started to practise, looked at the one-third rule—the division of assets by a third. After that, the deciding criteria were normally the wife’s reasonable requirements, their needs. So one had to go through the expenditure, right down to the postage stamps, to justify the amount of money that one was looking for, in addition to a housing fund, and the surplus was generally kept by the person who earned it. This continued to be the case until the case of White, at the end of the last century or the beginning of this one, when the House of Lords decided that that was not what the statute intended, that needs were not the overriding criteria, and that the principle of sharing the surplus fairly—whatever that might mean—was the correct interpretation of the statute.

The case I refer to involved a huge amount of money, approximately £100 million, accumulated over a 33-year marriage. The facts were not disputed. Every case, before it gets adjudicated in the High Court or in the Principal Registry of the Family Division has to go before a financial dispute resolution, in which the judge sits as a mediator. That judge cannot hear the final hearing, but predicts—or tries to predict—what the outcome will be at the final hearing and encourages the parties to settle. One could call them “supreme mediators”. The judge on this occasion, having heard the facts, decided that the assets should be split equally, 50:50. She was completely deaf to any argument that the husband had made an exceptional contribution, saying that it was much more difficult to live with a genius, control-freak, high-achieving man than with a bog-standard one who had not made that amount of money; and she said that the wife’s contribution in bringing up the family was unquantifiable. The wife was happy with that and the husband was not.

The case went to a full hearing. On exactly those facts, the trial judge decided the man had made an unmatched contribution and awarded the wife 40%. That was a swing of £20 million. It was more than he had in fact offered, but nevertheless, it made it worth while for him to continue and for her not to accept the amount that was offered at the FDR. That leaves the law in a mess, because nobody knows when special contribution kicks in, what it means—it could be something that is not quantifiable in money—and what percentage would be applied to give recognition that someone has made an unmatched contribution. The Bill sorts that out.

Another example of uncertainty is the evolution of prenuptial contracts. When I started off they were considered to be repugnant for public policy reasons: no one should contemplate the breakdown of a contract that was meant to be lifelong. You can see judges slowly changing and shifting until the case of Granatino, which I was involved in and which nobody who practised believed would happen without the intervention of Parliament. We are now left with a situation where prenuptial contracts appear to be pivotal in many cases, but the Act is silent on this. We need help.

Uncertainty of outcome creates an industry for lawyers to litigate. It makes it difficult or impossible to have successful mediation, and the financial costs—not to mention the unquantifiable human cost mentioned by many noble Lords, aggravated often by delay because the courts are too full—are vast and unnecessary. The Bill seeks to limit the discretion of a court and provide direction from Parliament for matrimonial finance. I commend it and thank the noble Baroness, Lady Deech, for introducing it.

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[Lord Faulks]

I am not altogether sure whether that is a serious question, but of course human nature is not different. The answer is that there is no perfect solution to these difficult problems, as I am sure all noble Lords would agree. The Scottish solution is one that is certainly worthy of great consideration. The current solution in the law of this country is rather different. At the moment we are all concerned to find a solution which best serves the interests of all parties on divorce. Scotland has much to teach us, but it does not have necessarily the perfect answer. We need to learn from the experience in Scotland while accepting that human nature is the same in Scotland as it is in England.

As I say, the Bill provides for matrimonial property agreements to be binding upon couples on divorce. In its proposals on matrimonial property agreements, the Law Commission has strongly recommended that the courts should be able to depart from a matrimonial property agreement where this is considered necessary in order to protect the needs of a spouse or in the interests of any children. The Bill departs from that proposition. In its proposals on matrimonial property agreements, the Law Commission set out a comprehensive list of the requirements necessary to underpin enforceable agreements made prior to divorce. In considering the Law Commission’s proposals, the Government wish to reflect on the sufficiency of safeguards before committing to legislate to make agreements enforceable. We are currently considering those and, as my noble friend Lord McNally said, we will announce our response to them in the very near future. That will be in August—albeit that I heard what he said about the undesirability of reflecting and responding in that particular month.

The Bill’s proposals differ quite substantially from the recommendations made by the Law Commission in the light of really extensive consultation, which included consultation with family practitioners—although I am glad to say that this debate has benefited from the contribution of family practitioners. The proposals in the Bill are substantially different and their likely effects are at least unclear.

I appreciate, as I am sure the whole House does, the noble Baroness’s desire to ensure that financial division on divorce and on dissolution of a civil partnership is made simpler so that people will much more easily be able to estimate what they are likely to receive and be better able to negotiate with each other, and that couples should be able to enter into agreements to determine what they would receive on divorce.

The Government are considering the Law Commission’s report on matrimonial property agreements and how these could be made binding, and will respond in the near future. The report recommends making information available on the likely outcomes of financial applications on divorce—that has been developed during the debate—but recommends that there should be no change to the law governing “need”. The Government are concerned to give proper consideration to these and all the recommendations made by the Law Commission.

The Government recognise that divorcing couples often need help to reach an agreement and should be encouraged to avoid court proceedings. There is unanimity that court proceedings very rarely help in resolution of these disputes. They are far too expensive and the result is usually damaging both financially and, very often, to the future happiness of warring parties and children. The Government are therefore particularly anxious to encourage people to use family mediation and other forms of alternative dispute resolution.

For those who are eligible, legal aid is available for mediation. Under the Children and Families Act 2014, from 22 April this year applicants for financial orders and for financial provision on divorce must attend a mediation information and assessment meeting—

[Baroness Shackleton of Belgravia]

Mediation and indeed prenuptial contracts are practically impossible unless the outcome has some certainty as to what you are mediating for or what you are trying to anticipate when you are drafting a prenuptial contract. Unless the law is tidied up so that practitioners understand what the outcome would be to prevent the litigation, it is impossible to mediate.

[Lord Faulks]

I take the noble Baroness’s point but those helping the mediation, albeit that there is inevitably a measure of uncertainty because of the discretion given to the court, by reference to their experience and therefore what judges are customarily doing in a particular case, will nevertheless be able to advise on what is a likely outcome and what is perhaps in the best interests of the parties, and at least assist with the possibility of their not proceeding to court to have the matter heard there.

The application forms for the orders contain details of the provisions for the meetings and potential exemptions that might apply. The Government believe that these requirements will bring a significant number of people to learn about mediation and use it to resolve their disputes. Notwithstanding the point that the noble Baroness, Lady Shackleton, makes about uncertainty, if parties are happy with the outcome, that is of itself a desirable purpose in having this mediation. As my noble friend Lord McNally said, mediation has generally got a good story to tell, and increasingly that is the case.

The Government will not oppose the Bill receiving its Second Reading today but do have reservations about its approach and scope. What, however, I can take back to the department is the very clear—in fact, I think unanimous—view of those participating in today’s debate that the time has come for Parliament to intervene. That of itself is an important message that I can take back to government decision-makers about the future of this field of law. However, we consider that we are already addressing these issues. We shall continue to do so, greatly assisted by all the work that the noble Baroness has done and by the contributions to this excellent debate by all noble Lords.