Divorce: Effect on Children

Debate between Baroness Shackleton of Belgravia and Lord Faulks

Wednesday 26th November 2014 Lords Chamber

[Baroness Shackleton of Belgravia (Con)]

My Lords, I speak as one of the evil lawyers who practise in this area of the law. Does the Minister recognise that children’s disputes are very difficult to settle when financial disputes are rampaging through the courts? It is very difficult to settle financial disputes, particularly in non-wealthy families. The wealthy of course have the privilege of spending as much money as they like on lawyers, and where the law remains uncertain, the judge’s discretion is so large. Can the Minister assure us that the Government will address the issue of certainty, which the Bill of the noble Baroness, Lady Deech, seeks to address? It is a political matter and not one to be left to the judges.

[Lord Faulks]

My noble friend is well qualified to tell the House about the difficulties in settling matters, including those concerning children, where there are other, financial aspects that remain uncertain. She will be aware that the Ministry of Justice and the Department for Education recently published A Brighter Future for Family Justice, which covers the implementation of the Children and Families Act. That encourages mediation and the creation of child arrangements orders as opposed to the old contact orders and residence orders, and presumes the involvement of each parent in the life of the child. I am sure that the House will agree that, whatever the difficulties in financial arrangements, the interests of the children must come first.

Divorce (Financial Provision) Bill [HL]

Debate between Baroness Shackleton of Belgravia and Lord Faulks

Friday 21st November 2014 Lords Chamber

[Lord Faulks]

My Lords, this has been a useful and instructive debate on this interesting and significant area. There are those who retain great faith in the institution of marriage. The noble Baroness herself said that, and I for one see no tension between thinking that and nevertheless being of the view that it is important there should be some sensible provision about prenuptial agreements. Her student may have been anticipating a trend by suggesting going to a lawyer almost immediately, in the heady days of announcing her engagement. A number of popular songs that suggest going to see the preacher at that juncture may have to be amended to reflect this different approach.

These amendments all relate to this clause. Amendment 9 changes the threshold of the duty of disclosure placed on both parties for the prenuptial or post-nuptial agreement to be binding on both parties. The Bill currently requires that the parties fully disclose their assets before the agreement will be binding on them and this amendment would require only “proper disclosure”.

Amendment 7 corrects the omission of the requirement in the Bill for a prenuptial or post-nuptial agreement to be made in writing. I recall that that point was specifically drawn to the House’s attention by the noble and learned Lord, Lord Scott of Foscote, at Second Reading. As the noble Baroness said, this is an essential prerequisite and a key feature of the recommendations made by the Law Commission.

The intention is clearly to protect people entering into prenuptial agreements by imposing the formality of a written and signed agreement. However, the Government have already indicated that we have reservations about the lack of flexibility in the Bill for the court to override an agreement that is unfair or does not adequately provide for “needs”. This is especially so given that people often enter into a prenuptial agreement at a point when they are not as realistic about events, sadly, as they should be.

The Government has yet to consider the detailed proposals for binding matrimonial property agreements put forward by Law Commission in its report on Matrimonial Property, Needs and Agreements. We have informed the commission that a final decision on the proposals should be made by the new Government after the election. However, the Government would not seek to oppose this amendment to the Bill.

The requirement under the existing divorce process is for both parties to make,

“full, frank, clear and accurate”,

disclosure of their assets using form E. We have concerns that undefined “proper” disclosure would be open to interpretation and offer scope for possible hiding of assets in a way that the current requirement is designed to avoid.

Amendment 8 amends the formulation of subsection (1) of Clause 3 and, if I have understood it correctly, is intended only to tidy up the drafting and not to change its substantive effect. The amendment seeks to replace the words,

“binding on the parties and is to be given effect unless”,

with “binding on them unless”. However, I believe that normal legislative drafting convention means that the effect would be to omit the crucial word “unless”, which is necessary to apply the conditions set out in paragraphs (a) to (e) of subsection (1).

Amendment 11 inserts a new substantive provision into the clause which sets out the requirements for a prenuptial or post-nuptial agreement to be binding. It does not set a new condition for the agreement to be binding; rather, it provides that only the person who has been disadvantaged can rely upon failure to obtain legal advice or failure to disclose assets as a means to make the agreement non-binding. The Government remain generally concerned about the lack of protection for people entering into binding prenuptial or post-nuptial agreements under the terms proposed in the Bill. These amendments do not appear to improve significantly on the protection offered and are substantially different from the approach recommended by the Law Commission, which would preserve the ability of the court in appropriate cases to override an agreement made between the parties where in the view of the court its terms are manifestly unfair or where they fail to provide adequately for needs. The Government have yet to consider the Law Commission’s detailed proposals. In relation to the Bill we are concerned that leaving prenuptial agreements to be subject to the rules of contractual law around validity and enforceability, and post-nuptial agreements subject to review by the court under the provisions set out in Section 35 of the Matrimonial Causes Act 1973, does not amount to a coherent set of protections.

Amendment 12 would remove the possibility of the Lord Chancellor making rules to specify what constitutes the full disclosure of assets, which is one of the requirements in the Bill for the prenuptial or post-nuptial agreement to be binding. The noble Baroness said that she has been advised that the law in relation to disclosure is sufficiently clear not to need further elaboration. As already noted, the second amendment would alter “full disclosure”, which as she rightly says is well understood, to “proper disclosure”. The Government agree that there are already established principles around disclosure. I understand that the noble Baroness is really concerned with what might be regarded as de minimis omissions from the list, but I do not think that that would in fact cause a difficulty on the existing rules. We are concerned that the use of the term “proper disclosure” could open up some areas of concern.

[Baroness Shackleton of Belgravia]

Would the Minister clarify that he is talking about form E? Form E is an incredibly detailed analysis of someone’s wealth; it could not be fuller than full disclosure. Is the Minister talking about disclosure of that nature, because I think that the amendment is meant to catch disproportionate non-disclosure? Form E is the most comprehensive document known to man. It goes down to the last £500 or number of pairs of cufflinks that a man may own.

[Lord Faulks]

I am not seeking to suggest that form E is not an extremely thorough document and I am sure that my noble friend is absolutely right on the point. But the amendment seeks to alter the rules from “full disclosure” to “proper disclosure”. If form E is going to be what proper disclosure is, my noble friend may well be right. My point is simply that proper disclosure appears to be a different description. If I have understood her correctly, the noble Baroness, Lady Deech, said that this was in order to ensure that the whole thing could not be set aside on the basis of a failure to include in the list something that someone had forgotten about or which was so trivial that it did not enter the heads of those entering into it. I understand that that is the aim, but the Government remain concerned that “proper disclosure” could open the door to someone saying, “Well, it was not proper for me to disclose that”. That is my answer to my noble friend.

Finally, Amendment 13 alters the court’s powers when dealing with the division of property on divorce when a prenuptial or post-nuptial agreement is to be treated as binding on the parties so that instead the court can make a financial order as described in amended Clause 1(3). The orders the court can make under the revised clause are an order for a lump sum payment, a property adjustment order, a pension sharing order, a pension compensation sharing order and corresponding provisions of the Civil Partnership Act 2014 and the Marriage (Same Sex Couples) Act 2013 in so far as the provisions of the 2013 Act are not already covered by the provisions of the Matrimonial Causes Act 1973 as amended by the Bill. This increases the range of orders which can be made. However it still falls some way short of the flexibility that the courts currently have under the 1973 Act and, for the reasons I have already given, the Government still have some concerns about the approach.

Divorce (Financial Provision) Bill [HL]

Debate between Baroness Shackleton of Belgravia and Lord Faulks

Friday 27th June 2014 Lords Chamber

[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.