Divorce (Financial Provision) Bill [HL]

Baroness Deech Excerpts

Friday 27th June 2014 Lords Chamber

Moved by

[Baroness Deech]

That the Bill be read a second time.

[Baroness Deech (CB)]

My Lords, this is a Bill for every woman who ever felt that her marriage ended unfairly; it is a Bill for every man who was left with the impression that he had been deprived irrationally of everything he had worked for; it is a Bill for every child whose future material needs are jeopardised by the waste of parental assets in fighting over money; and, above all, it is a Bill to reintroduce transparency, democracy and understandability into an area of law which has moved a very long way from its statutory basis in the Matrimonial Causes Act 1973, Section 25, and needs to be reclaimed and revised by Parliament. I am not alone in this view; it is shared by the Law Commission, the Centre for Social Justice and Resolution, all calling for a fresh start.

The Bill is now urgent because legal aid has been removed from this area of the law. I regret it but we have to adapt. Litigants without representation are a new and large phenomenon. Hundreds of thousands of ordinary people turn up in court at the most emotional moment of their lives, with no clear law to guide them. The burden of steering litigation has fallen on the family judges—and it is definitely not their proper role to conduct the litigation—with the resulting delay and distortion of the way that litigation should be conducted.

The judiciary will no doubt tell you that maximum discretion and flexibility are the right way to handle cases, but that does not help most people. The judges are not there when divorcing couples have to live through months of negotiations through solicitors, with mounting costs; the judges are not there to give advice when a divorcing couple face each other across the table to start sorting it out; they are not there to advise the litigant in person. As the Supreme Court said the other day in the assisted suicide case, there are certain issues that affect many in the population where Parliament, not the judges, must take the lead.

I echo the theme of the previous Second Reading debate in attempting to speak for consumers, not the professionals. There are about 119,000 divorces every year in England and Wales. When divorce was based on fault, there was a rationale for maintenance. That has gone: it is now a law in search of a principle. Divorce itself is not much more than an administrative process, over quite swiftly, but the division of property and assets between spouses is often contentious, long drawn out and expensive. In practice, people of modest means can do nothing other than hope to be rehoused by the local authority; middle income couples will probably have to sell the house to provide two smaller ones; and in the case of very wealthy couples, the sky is the limit. The wife who is least likely ever to have put her hand in cold water during the marriage is the one most likely to walk off with millions, regardless of her contributions or conduct. Hence we find that London is the divorce capital of the world for the wealthy, and the phrases “gold digger” or “alimony drone” have been coined.

The law is uncertain in application because layers of interpretation have been superimposed on the statute. It has been developed by the judges in the past 30 years, during which it has not been debated in Parliament. There have been changes in society, such as civil partnerships, of which there is a rising number of dissolutions, women claiming equality at work and in education, and changed attitudes to divorce and the family. All have left judges scrambling to keep up. They have tried manfully to do so but the result of their ever changing formulation of principles to underpin the law has been to leave couples and their lawyers unable to predict what is the right settlement for them. Stories abound that one has to pick one’s judge, for different judges have varying views about these issues and the settlement may well depend on the predilection of that judge.

The leading judgments in the field inevitably arise from big money cases that go to appeal all the way to the Supreme Court, and their pontifications are not necessarily helpful for low-income families. No matter what one’s opinion of possible solutions, it is impossible to deny that this is an area that desperately needs public and parliamentary input. Go to any of the blogs about this and see the misery of couples who spent a fortune on settling, who do not understand why what seems to them very relevant issues about conduct are not taken into account. Read the many reports that have tried to reform this area and you uncover an area of misery, expense and incomprehension.

One of the ideological arguments which this House must face is the value of judicial discretion as opposed to more formulaic broad-brush law about dividing assets. We have, I posit, the best judges in the common- law world, wielding discretion in each case that comes before them with care, generosity and sensitivity, but the result is uncertainty and unpredictability. Couples are left to bargain in the shadow of the law but they do not know what the law is, or how to find out what it is. I used to run an all-party parliamentary group on family law here and there was one matter on which the members of the public who came were agreed: they wanted a booklet when they got married and when they got divorced telling them what their rights and duties were and what the law was. We fail in terms of the rule of law if the law is unpredictable in advance and far removed from the words of the statute. Not only that, but this state of affairs makes mediation very difficult. And now the Government are calling on all separating couples to try it. This reform would help.

When a couple can afford lawyers, look at what it costs them. In Jones v Jones, the court criticised the racking up of costs of £1.7 million relating to the division of assets of £25 million. Costs spiral out of control as couples appeal up the court structure because, scenting victory, a new principle may emerge or need to be clarified. In another case, a husband ended up after appeal with an award of £50,000 but the costs were £490,000. In another case, £16,000 was spent on dividing up £42,000. I know of at least one case where the costs swallowed up the entire assets and of another where an inheritance from parents was entirely dissipated. I could go on. Although I have great respect for the skills of practitioners in this area, one must take some objections from them to reform with a grain of salt. We have to face a situation where, either because of lack of means to pay a lawyer or in order to reduce discord, couples need to know what the law is and apply it themselves or get a clear, quick opinion on the right division.

The Supreme Court recently said that prenuptial agreements may be binding in principle, with a number of qualifications, and so has the Law Commission recommended. However, with all the exceptions, this invites litigation to challenge every prenuptial agreement, if they were to catch on. One couple recently spent £600,000 litigating over whether or not the prenup was binding. Another spent £2 million. In the most recent issue of Family Law Reports, one prenup was upheld, one was overwritten—even though the husband had signed it three times—and another half a dozen conditions were added for determining whether they should be binding. My Bill will make prenup and post-nup agreements binding, with very few exceptions.

It has been asserted by a bishop that thinking about prenups and the end of marriage may encourage the breakdown of marriage, but most countries where prenups are common have lower breakdown rates than we do. Given that 40% of marriages end in divorce, one can hardly hide one’s head in the sand, and indeed the ability to sign a prenup may even encourage some people to get married who otherwise would have held back for fear of the eventual consequences. The Home Office called for prenups to be binding as far back as 1998, and Resolution did so in 2004. A YouGov poll in 2009 found that 60% of the respondents agreed that they were a good idea.

The rest of the Bill deals with the couple’s assets in so far as they are not dealt with by any prenup. It proposes a system, common abroad and in Scotland, often called the “division of post-marital assets”. There would be a presumption 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 distribution. Thus in a short marriage there might be little to divide, but in a long marriage where the couple started with little, everything would be divisible. There is flexibility in the Bill to allow for the home to be retained for the accommodation of, say, a mother with children. This law has worked in Scotland for 30 years with efficiency and very little litigation.

As I have discovered from the letters and e-mails that I get every time I lecture on this topic, members of the public cannot understand why misconduct is totally ignored in financial settlements by judges while only domestic abuse attracts opprobrium. I have been inundated with sad and angry letters from men and women describing how a family business has been ruined, or a wife has remained in the former matrimonial home with her new boyfriend and the children while the husband has nowhere to live, or a second wife has had to go to work in order to support the first, or a working woman has found that her assets and pension have gone to an ex-husband who treated her badly and has gone to live with a younger woman. In my proposed system, where the fair baseline is a 50:50 division, there will be a good starting point for negotiation and mediation. There ought to be far less need for lawyers to be involved, at least until the point of court appearance, and far fewer court hearings.

The Bill combines autonomy with fairness. It will give women entitlement, not a discretionary allocation depending on the judge. It will protect the family business and the worth of a working wife. It has the potential to save millions in litigation costs, whether met privately or by the state. It will give a sensible basis for starting mediation and negotiation. It will restore some dignity, certainty, economy and clarity to family law. I may have bitten off more than I can chew—I would remind the House that noble Lords who put forward Private Members’ Bills get no help with the drafting—but these proposals are firmly based in reports by responsible organisations and the law of other countries. My noble and learned friend Lady Butler-Sloss is in support, although she cannot be here today, as are many other noble Baronesses in this House. What better credentials can there be?

The Law Commission, which has reported on this issue, has estimated that it will have to do another five years’ work on the matrimonial property element of its proposals, which might end up in a formulaic system. In the mean time, the Law Commission suggests that the needs of divorcing spouses should be defined by the Family Justice Council. The council is a group of senior family law professionals who are being invited to gather together and give guidance to litigants in person and the courts. But not only would such guidance be opaque and not binding, it would bring into question the role of Parliament. It is for Parliament to make the law, and when it is deficient to make it again, not to leave it to a group of professionals whose job is to apply the law, not make it.

There is a plea from many, not just me, to the Government to take this seriously and urgently, and not to leave it until after the next election. It is not a party matter, but I realise that Governments do not like to tackle it because of the emotional and moral issues that it stirs up. To the best of my belief, there would be gratitude from the affected public, so many of whom are almost destroyed by the current system. They would prefer the certainty of misery to the misery of uncertainty that they suffer now. We cannot wait another five years while another million people suffer and their children are even further deprived and stressed.

I have been bold but I should point out that I am a distant relative by marriage of the late Leo Abse MP, who fought a long and slightly eccentric battle to reform divorce law in the 1960s. I, too, shall return to the fight. I have no vested interest in this. Fortunately, I have never been divorced, or earned anything in connection with it. I am but an academic who has studied the subject for 40 years and wishes to see the lot of divorcing couples, and women in particular, reformed and clarified. There may be disagreement in this House and outside about the details but there is consensus that Parliament must take control of this law, with its three pillars: binding prenups, an equal division of post-marital assets, and some curbing of maintenance. I beg to move.

--- Later in debate ---

[Baroness Deech]

My Lords, it has been a privilege to hear from experienced noble and learned Lords in this debate. In particular, the wisdom of the noble and learned Lords, Lord Hope, Lord Scott and Lord Mackay, has been invaluable, as well as the wisdom of those who have been through divorce or who have been involved in helping others. That means a great deal to me and to all those who think that the law should be reformed.

I am the first to admit that the drafting of the Bill is not perfect. How could I have overlooked the need for agreements to be in writing? Of course, they have to be in writing. But it has been a lesson to me, in that it is one thing to criticise a draft when you have it in front of you, but it is quite another—I could never begin to be parliamentary counsel—to start with a blank sheet and draft a law. Undoubtedly, if the Government give us a fair wind, as I hope they will, professional draftsmen must be let loose on this Bill. It is not something that someone like me can draft exclusively. I am most grateful to all those who have made utterly sensible drafting suggestions. They are all absolutely right. I agree with the noble Lord, Lord Davies, about disclosure of liabilities and all the other suggestions that have been made.

I want to clarify what the Law Commission has done. After some years of work, it has made proposals about prenuptial agreements, but I find it difficult to see how those can stand alone, if they are to be enforced, without reforming the rest of the law. The Law Commission has not completed its work on the sharing of matrimonial property and has stated in the report that it needs another five years of work to do that. It will not advance the cause for most couples just to enact, if that were to be the case, a Bill about prenuptial agreements; one has to tackle the whole thing. No further advice will come from the Law Commission, as it said, for about another five years. It is not as if the Law Commission has come to any firm conclusions about the division or sharing of matrimonial property.

We have to learn from the recent reforms that Scotland has made. England and Wales is the odd man out on this. We have all referred to Scotland, but most of Europe and most of North America have a law which is much more like the law proposed in the Bill than our existing law.

I value the feminist compliment from the noble Baroness, Lady Bakewell, and the moving speech by the noble Baroness, Lady Wilcox. I value, too, the experience brought forward so clearly by the noble and—I cannot call her learned—deeply experienced Baroness, Lady Shackleton. I welcome the contributions from the noble Lords, Lord St John and Lord Grantchester, and others who have spoken. In none of them have I heard anything to undermine the principles and the three pillars of reform that I have put forward: prenuptial agreements being binding, splitting assets and curbing lifelong maintenance. People may think that it should last for three years; others may think that it should last for five. Those are matters for discussion. I simply point out to the Government that the widows’ bereavement allowance lasts for only one year these days and that it is now expected that women should seek work when their youngest child reaches six. The Government have therefore abandoned the notion of the housewife staying at home until the children reach 21 or some such age. The Bill would simply bring our law into parallel with developments around the rest of the world and developments in the Government’s own law relating to benefits and social security.

I therefore hope that the Minister will agree to see me to arrange a way forward for this Bill, because I do not believe that we can wait another five years for the conclusions of the Law Commission when 119,000 couples are getting divorces every year. While I appreciate the sensitivity and generosity underlying the comments made by the Minister, were they to be followed through to their logical conclusion, it would take us back full circle to a law where nobody knew what the outcome should be and where people continued to waste half their combined assets on paying for the litigation and the lawyers involved in the case.

I shall move shortly that the Bill be committed to a Committee of the Whole House, but I welcome the suggestion of the noble Lord, Lord Kennedy, that committal to a Grand Committee, where a lot of small details could be ironed out, might be a sensible way forward, given that I sense a certain consensus that there is a need not only for a broader reform but for a lot of work on the detail. I would welcome such a way forward.

Bill read a second time and committed to a Committee of the Whole House.