Divorce (Financial Provision) Bill [HL]

Baroness Shackleton of Belgravia Excerpts

2nd reading (Hansard): House of Lords
Friday 11th May 2018 Lords Chamber

[Baroness Shackleton of Belgravia (Con)]

My Lords, I thank the noble Baroness, Lady Deech, for the time and energy that she has devoted to bringing this Bill before your Lordships’ House. As a practising divorce lawyer for nearly four decades, I want to register my total support for this legislation, which is long overdue, and I beseech the Government to do something about the existing sorry state of affairs. Practising in this field, I see people entering this area of litigation become victims of a statute that is no longer fit for purpose and which leaves too much discretion in the hands of the judges who apply it.

I have recently been reading a little book by George Mikes called Wisdom for Others. I alighted on a vignette about divorce. It was written in 1950, but could be equally applicable today. I quote from it:

“Once when I was about 12 I read a story in a boy’s paper about a big dance to which people were invited by huge posters with the announcement, ‘No Entrance Fee’. Many went, danced and enjoyed themselves then, on leaving, they were stopped at the door and requested to pay. ‘What do you mean? We were told there was no entrance fee’. ‘That’s quite true’, was the answer, ‘there was no entrance fee, but there is an exit fee’. I considered that story at the time silly. Silly indeed it was, but impossible? Look at the marriage laws of modern civilised countries, especially in the Anglo Saxon ones. There is no entrance fee but there is a terrific exit fee—financially as well as emotionally”.


To develop this line of thought, say it was worse than simply finding out that no entrance fee did not necessarily mean no exit fee, and that you knew that, in all likelihood, you would be charged, but what? Imagine if the level of the exit fee depended on the discretion of the person employed on the gate to levy it—let us call him the bouncer. On some nights leavers could be favourably treated, with perhaps a reduction for those over a certain age, or for couples who danced beautifully. On other nights, leavers could face far harsher treatment: perhaps a surcharge for failing to consume any refreshments. Such random increases or reductions in the exit levy are dependent on the identity and discretion of the bouncer, and nobody knows who the bouncer is until they get to the exit. Without meaning to sound at all disrespectful, substituting the bouncer on the gate for the judge in the divorce court brings us close to the sorry state of the operation of the law in the field in which I have practiced for so long.

As we have heard from the noble and learned Lord, Lord Walker, Section 25(2) of the Matrimonial Causes Act 1973, enacted some 45 years ago, gives the court almost total discretion in deciding the level and nature of financial awards on divorce. Judges can follow the letter of the statute but exercise their discretion in myriad different ways. It is not uncommon in High Court financial dispute resolution hearings, where a judge gives an early, neutral evaluation of the outcome of the case in the hope of encouraging settlement, for the parties to be told that there are mean judges and generous judges. That being so, and with parties perhaps not knowing until the day before the final hearing which judge is allocated to their case, it makes a great deal of sense to settle their case now, to get a result within their control.

I have done financial dispute resolutions where the recommended settlement bracket is wildly different from the trial judge’s ruling on identical facts. For example, the judges recommend that parties settle at 50%, only for the judge at the full trial a few months later to award the applicant 40%, or vice versa. Or the FDR judge says that a prenuptial contract is of no significance whatever, only for the trial judge and the Court of Appeal to find that it has magnetic importance. This disparity of judicial discretion, enshrined in an out-of-date statute, cannot be right or fair for the, sadly, very many couples engaged in matrimonial litigation.

The Bill of the noble Baroness, Lady Deech, seeks the production of a statutory framework to ensure a far more a reliable prediction of outcome. This would enable parties to reach an agreement soonest, as their lawyers could advise with confidence on the likely outcome, and the parties would be less likely to “roll the dice”. It would enable FDR judges or mediators to predict the outcome of a case with almost certainty, irrespective of the identity of the judge at the final hearing, and judges would have the comfort of operating within defined, determined and clear statutory parameters to produce more uniform judgments.

Having heard Professor Jane Mair speak about the Scottish system on which this Bill is based, I was overwhelmingly persuaded of that system’s infinite superiority. The appeal of predictability of outcome is obvious. The most difficult situation for most people to cope with in life is uncertainty. It may be true that many cases settle before a full trial, but the statistics do not mention the very significant financial and emotional costs involved in getting to the FDR. Because the ambit of judicial discretion is so wide, technicians practise the dark arts of minimising or maximising financial claims—depending on which side they are paid to argue for—as until the identity of the tribunal is known, it is not possible to know which arguments are likely to meet with favour. Sometimes the reasons for settling are akin to the television programme “Take Your Pick!”, where a contestant is asked whether they would prefer to take the money or open the box, the money being certain but the box—as in proceeding to a trial—being uncertain.

I recognise that I now specialise predominantly in high net worth cases, although I have in the past worked in a law centre and I take on non-high net worth, pro bono work. Where the asset base is lower and the legal cost often unaffordable or disproportionate, uncertainty of outcome is even more damaging. For example, it is not currently possible to predict whether an applicant—wife or husband—is entitled to maintenance payments for life or for a fixed period of time. This is quite a significant discrepancy, with huge financial consequences. Much depends on the postcode lottery. Anecdotally, the northern courts seem to prefer the applicant to get back on their feet and become financially independent. The southern courts seem more indulgent. Uncertainty of outcome leads to delay in settling cases. Delay in getting a court hearing not only has financial implications—money being wasted on costs unnecessarily—but a huge emotional effect in what is already a traumatic time for families. Financial proceedings cause bitterness and rancour and often aggravate the ability of parents to co-parent effectively. Children are damaged and become the unwitting victims of uncertainty and delay in resolution.

There is a further reason why I support the Bill. The appeal process has recently been changed. A request for permission to appeal from a High Court judge to the Court of Appeal is now to be considered by a single justice, often from the Family Division. If the single justice does not give leave, there is no right for an oral hearing to argue against the single family judge’s decision. This is the Family Division marking its own homework. Potential appeals will be blocked—appeals often being the lifeblood of change and clarification. Historically, when brakes have been imposed on the exercise of extensive lower court judicial discretion and “impermissible gloss” on the interpretation of the statute reined in, more often than not that is not driven by the family judges but predominantly by the non-family judges. It is often the latter who correct what they perceive as a misrepresentation of the law as applied by the lower courts, and create new law.

In the then House of Lords judgment in the ground-breaking case of White, the overriding application of the “reasonable needs” concept, liberally applied and developed over many years, was summarily replaced by the principle of sharing and a seismic change in the way that finances were divided on divorce. In 2010 in Granatino v Radmacher, to which the noble and learned Lord, Lord Walker, has already referred—I represented Mr Granatino in that action—the Supreme Court held that in certain circumstances prenuptial agreements could be effectively binding, but to illustrate what I am saying the dissenting judge was the only family judge sitting on the panel which voted in favour of the application of the prenup by a majority of eight to one.

The Supreme Court and the Law Commission have favoured changing the current law in respect of prenuptial contracts but nothing has yet been done. Even if the law on prenuptial agreements were changed so as to make them binding so long as they were “fair”, it is the bouncers, with their ultimate discretion, who would then determine what is fair. To quote the Supreme Court:

“Then fairness, like beauty, lies in the eye of the beholder”.


I conclude as I began, with gratitude to the noble Baroness, Lady Deech, for introducing this Bill, which is long overdue and which I implore the Government to move forward on.

--- Later in debate ---

[Baroness Vere of Norbiton (Con)]

My Lords, I congratulate the noble Baroness, Lady Deech, on securing the Second Reading of her Bill. Indeed, I thank her for all the work she has done, and no doubt will continue to do, in this vital area. Although currently much maligned, it is a strength of your Lordships’ House that noble Lords such as the noble Baroness, Lady Deech, with a passion for and deep understanding of an issue, can work tirelessly with Governments of all persuasions to encourage reform. It has been my pleasure to listen to your Lordships today. I thank all noble Lords for the insight they have brought to the debate. I will encourage my colleagues in the MoJ to study them carefully.

The resolution of financial matters is one of the many challenges of divorce or civil partnership dissolution. Although there are differences of opinion within your Lordships’ House and beyond, it seems that there is an agreed and twofold objective: that the process should be as supportive and clear as possible, and that the outcome for both parties and any children involved should be fair.

From the debate it is very clear that there is consensus among your Lordships that reform of the law governing divorce finances is overdue, but it is also the case that consensus on the type of reform is not universal. The President of the Family Division, Sir James Munby, who, as the noble Baroness, Lady Deech, noted, favours reform, also recently observed that,

“views on what form such reform should take are sharply divided”.

It seems that this divide comes from the differences of opinion about how we should balance the law. We can all agree that the current legal framework gives the court wide-ranging flexibility in making financial orders and that judges skilfully exercise that flexibility and discretion every day. For those who see the virtue of the existing law, that flexibility allows for fairness. For those who see a problem with the law as it is, that same flexibility makes for uncertainty. For example, the noble and learned Baroness, Lady Hale, the President of the Supreme Court, has suggested that, sometimes, open-ended periodic payments are the only way to,

“give each party an equal start on the road to independent living”.

It is clear to me that the breadth of views, including from those at the very top of the legal profession, warrants careful consideration by the Government.

Rebalancing a law such as this—if we are satisfied that it needs rebalancing—cannot be an easy undertaking. The law—one law—must allow the court to deal equitably with the widest range of cases, from shorter marriages of young people, both with successful careers and great prospects, to longer marriages of older people where it was jointly decided that one of them should give up a career to build a home and raise children. Here I must note that, although there might be a perception that the law is out of step with how men and women live their lives today, the law is gender-neutral. Equality of spouses is in statute, so how does it get put into practice? One might conclude—indeed, some have alluded to this—that it is not the law that needs to change but the attitudes of some of those who apply it.

It is clear that the law must retain a measure of flexibility. The question before your Lordships’ House is how much flexibility is needed to allow the court to make orders that are fair to both parties in a very wide range of cases and circumstances. This must be balanced with the need to provide greater certainty about financial outcomes to inform and manage the expectations of the separating couple. The Government want to encourage couples to agree financial arrangements themselves where it is appropriate and safe for them to do so.

In 2014, the Law Commission noted criticism that the law on financial needs was not always consistently applied, but it concluded that the law on this did not need statutory reform. Instead, it recommended that the Family Justice Council prepare guidance on the meaning of “financial means”. The Government listened and took action. With government funding, the Family Justice Council produced detailed guidance for the judiciary and legal practitioners. The noble Baroness, Lady Deech, commented on the guidance’s complexity, but it is for those with the skills and experience to deal with complexity, not for the divorcing couple. It was only relatively recently that this work was completed—indeed, within the last few years. It is only right that we give it time to bed in. If, in due course, it is decided that it is not fulfilling its purpose, perhaps it will need to be reviewed.

There is good guidance for the divorcing couple—a topic mentioned by the noble Baroness, Lady Falkner. The Government produced an excellent guide for divorcing couples to help them agree their finances. The guide, Sorting Out Your Finances When You Get Divorced, is accessibly written, is just 50-odd pages long, is well presented and has been available since September 2015. It explains the options available and how the court makes decisions, so that divorcing couples can have a realistic perspective on their separate financial futures.

[Baroness Shackleton of Belgravia]

I need to repeat the difficulties presented by that document when the judges applying it do not agree. When you are advising somebody and want somebody to mediate an agreement, or when you are faced with a client who comes into your office and says, “What should I settle at?”—it does not matter if you are dealing with a pro bono person or somebody who can afford many times most people’s annual income—if the adviser cannot predict the outcome because judges apply the same rules differently, we are in big trouble and a settlement cannot be agreed. Therefore, there is a delay; therefore, there is uncertainty; therefore, people get upset and, therefore, children become involved or get disaffected. Most people can deal with things when they know what it is; they cannot deal with uncertainty and delay. The cost of finding out the solution from the document that has been produced is not working.

[Baroness Vere of Norbiton]

I thank the noble Baroness for her insights on that. To a certain extent, the Government agree. It is why we have been working with the Family Justice Council and are continuing to look at this area. We want to make sure that everything is in alignment. Everything has eventually to be in alignment, whether that be the decisions of the judges or the expectations of those going in front of them and seeking a fair divorce.

Returning to the guide, I wish I had seen it when I went through my—thankfully—only moderately costly divorce. Reaching a financial agreement is very stressful, as I think all divorcing couples can attest. The further away from judges that agreements between the individuals can be reached, the better it is.

I return to flexibility and certainty, as mentioned by the noble and learned Lord, Lord Brown, my noble friend Lady Bottomley and the noble Lord, Lord St John of Bletso. In any reform of the law to balance flexibility and certainty, the Government need to be sure that a proposal would achieve what it sets out to do and would not cause unintended difficulties. Given the complexity involved in disentangling the finances of a shared life and the impact of any changes at a personal level, the Government are keen to see a solid evidence base for reform. We are very open to reviewing any and all evidence from the noble Baroness, Lady Deech, or any noble Lords. Put simply, we all want to get this right.

I acknowledge that noble Lords have pointed to the model of Scots law. I am grateful to the noble and learned Lord, Lord Davidson of Glen Clova, for his comments on its operation and some of its consequences. The noble Baroness, Lady Deech, has drawn attention to research by Professor Jane Mair and others on how the Family Law (Scotland) Act 1985 has worked in practice. A proposal to amend English law in line with Scots law may well appear attractive. I am conscious, however, that there are dissenting voices among the judiciary, family law practitioners and beyond—and, perhaps as significantly, in another place. If the Government conclude that the law in England and Wales needs reform, whether of the duration of periodical payments or of the matters that a court must consider, we must take account of the provisions as a whole and the effects of any changes.

The so-called “big money” divorces mentioned by many noble Lords make for eye-catching tabloid headlines, and I appreciate that several of your Lordships think that awards have been overgenerous. One might also conclude that the fact that such cases come to our country and to the English courts demonstrates perhaps our laws in this jurisdiction are fair, and that the impartiality of our judiciary is highly regarded. But such cases are small in number and a world away from the circumstances faced by the vast majority of divorcing couples.

The question for government is where any reforms would leave more typical cases, perhaps those involving people of an age at which it would be difficult to return to their former career, be that a man or a woman. Couples who have no intention of divorcing make decisions in the expectation of a long-term partnership. These decisions then have serious repercussions on one or more of the parties when, against their initial expectations, their marriage breaks down. With all this in mind, I now turn briefly to the detail of the Bill.

Clause 2 defines matrimonial property—in broad terms, this is property acquired during the marriage but not, for example, from an inheritance—and seeks to exclude property acquired before the marriage from consideration as an asset when financial orders are made. The Government’s concern remains that this could cause hardship if someone’s financial needs could be met only if assets that the other spouse had acquired before the marriage were included.

Clause 3 seeks to make nuptial agreements enforceable on condition of certain safeguards. The Government are considering a similar recommendation, made by the Law Commission, which has additional safeguards. I note the comments of the right reverend Prelate the Bishop of Chester, suggesting a test of reasonableness or fairness when making an agreement, and the need for independent advice, noted by the noble Lord, Lord St John of Bletso. We are considering introducing nuptial agreements and we will make our position known on this recommendation in due course. If the Government decide to go ahead, we will of course give consideration to the guidance needed for couples, as mentioned by the noble Baroness, Lady Falkner.

Clause 4 sets out a presumptive 50:50 split of property. People do not, of course, always leave a marriage equally. One partner often has better employment prospects. One partner is often expected to shoulder most of the caring responsibilities. The existing law allows for redistribution of assets to make up for this. The Government remain concerned that changing the law in the way proposed could have an adverse effect on the financially weaker party and their transition to full financial independence.

Clause 5 seeks, in part, to limit the duration of periodical payments to five years,

“unless the court is satisfied that there is no other means of making provision for a party to the marriage and that that party would otherwise be likely to suffer serious financial hardship as a result”.

I appreciate that periodical payments often draw headlines, being called “a meal-ticket for life” in divorce cases that involve the more affluent. However, it is worth noting that most people do not, in fact, apply for periodical payments when they divorce. It is important that one type of divorce should not cloud the debate around what happens to those of more limited financial means. We have, it is important to say, common ground in wanting to support people to move to financial independence. The Government are not persuaded, for the time being, that the existing law does not support this objective. However, as I said previously, we are happy to review any evidence that comes to light.

On Clause 6, the Government continue to believe that the existing provision on taking a party’s conduct into account remains adequate.

I have outlined the Government’s reservations about the Bill, but I want to focus on where we agree. While the Government’s position on the accessibility of the law and the clarity that it offers divorcing couples may differ from the position of the noble Baroness, Lady Deech, we all want the law to support couples and encourage a fair outcome. I am conscious, too, that other individuals and groups have also shown an interest in divorce finances, and the Government will wish to take a range of views, and solid evidence, into consideration if we conclude that reform is necessary. My honourable friend Dr Phillip Lee recently said in another place that he is hopeful that the Government can work across the House and beyond as we continue efforts to improve the family justice system. This remains true. It would not be helpful to approach consideration of reform in any partisan way.

I am aware that I have spoken at length and may not have covered as many points as I would have liked, but I really wanted to set out the Government’s position. If I am able to add more colour, I will write to all noble Lords who have spoken today. I acknowledge the mood on all sides of this House and the strength of support for the Bill. I assure your Lordships that the Government will reflect on all that has been said today.