Divorce (Financial Provision) Bill [HL]

Lord Faulks Excerpts

Friday 27th June 2014 Lords Chamber

[The Minister of State, Ministry of Justice (Lord Faulks) (Con)]

My Lords, like all other noble Lords, I thank the noble Baroness, Lady Deech, for introducing the Bill and for enabling the House to debate the appropriate division of financial provision on divorce. She has done the House a great service by prompting this high-quality debate.

The Bill has the highly laudable aim of seeking to assist divorcing couples and civil partners undergoing separation in resolving disputes over the division of property. It is intended both to recognise and enforce prior agreements between separating spouses and substantially to amend the law on financial provision on divorce.

The Bill makes fundamental changes to the law on financial provision on divorce as it has applied for over 30 years. However, it differs from and goes beyond recommendations made by the Law Commission report, which the Government are currently considering. Comments were made about the speed at which the Law Commission has historically proceeded. There is no criticism of the quality of the work that the Law Commission does and I echo the comments made by my noble friend Lord McNally about the way in which a number of Law Commission Bills have been going through Parliament recently.

The Government are not anxious to pre-empt the consideration that is taking place of the Law Commission’s report. In any event, the Government have a number of concerns about the Bill’s provisions and whether these sufficiently safeguard the needs of children and families so as to avoid potential hardship. I will set out these concerns by reference to the current law, the proposals in the Bill and the proposals on matrimonial property agreements made by the Law Commission.

The current law on financial provision on divorce provides a number of important safeguards. This is governed in England and Wales by the Matrimonial Causes Act 1973. Section 23 provides for lump-sum payments and various other forms of financial provision; Section 24 enables property transfers; and further provisions allow for orders for the sale of property, pension-sharing orders and so on.

The courts have a wide discretion as to what orders to make in any particular case and must have regard to the factors set out in Section 25 of the Act. On the face of it, that might seem to be a fair state of affairs. However, there has been a great deal of criticism during the course of the debate that, although the Act provides for all these matters to be taken into consideration, it nevertheless produces uncertainty of outcome—too much depends, perhaps, on the idiosyncrasies of particular judges and fashions—and it does not enable parties to be sufficiently clear on divorce about what is the likely division of property.

However, Section 25, importantly, says that the first consideration of the court is the welfare of any child of the family under the age of 18. Other factors in Section 25 include the income and earning capacity of the parties, contributions made to maintaining the home and children, the financial needs and obligations of the parties, the age of the parties, the duration of the marriage and any physical or mental disability suffered by either.

The noble Baroness’s Bill provides that Section 25 will be repealed and will therefore no longer have effect in relation to orders for financial provision between the parties to a marriage or civil partnership. The Government would be particularly concerned if this had the effect of weakening the protection given to children when their parents divorce. The noble Baroness has indicated that maintenance for children will not be affected, but the Government are concerned that the removal of the welfare of minor children as the court’s first consideration in making financial provision for spouses might cause adverse consequences for children. This would plainly require a great deal of consideration.

Clause 6 addresses the provision for children of the family and provides that the court must have regard to any order for support of a child of the family, the age and health of any child, the educational and financial circumstances of the child and so on, but it does not make the welfare of the child the first consideration of the court, and thus may not provide as much protection for children as the current law. The Government think that the court should look at the needs of the children first and then go on to consider the division of property between the parents.

The Bill proposes that subject to certain exceptions, matrimonial property, defined as is, should be divided equally between the parties. The Government are concerned that this would also be potentially unfair and could cause hardship, particularly for poorer families and for families with children. The noble Lord, Lord Kennedy, referred to the danger of a one-size-fits-all provision. Moreover, reference has been made during the debate to the changes in society since 1973, including the demographic changes described by the noble Baroness, Lady Bakewell, and women’s increasing equality. None the less, as the noble Baroness, Lady Meacher, said, the old models of marriage do still exist in some sections of society and we cannot ignore them when deciding on an appropriate change to the law, if indeed any is needed. In fact, the Law Commission recommended that there should be no change to the law on need in financial provision on divorce.

The Bill provides that periodical payments for spousal maintenance should be for a maximum period of three years and that lump-sum payments and periodical payments should be intended to enable the recipient to become independent of financial support within three years. An absolute three-year limit on maintenance would be similar to the law in Scotland, referred to by the noble and learned Lord, Lord Hope, and my noble and learned friend Lord Mackay. Having looked at the matter, I see that it emanated from a recommendation by the Scottish Law Commission that eventually became part of Scottish law. But, again, the Government are concerned that this could cause hardship and may be inappropriate for many couples. Having to adjust to a new financial reality may take longer than three years, so the Government currently consider that it is better for the court to retain a discretion to provide as it thinks best to meet the circumstances of each individual family.

[Lord Davies of Stamford]

My Lords, I am listening to the noble Lord with great attention. Would he be kind enough to say what it is that makes circumstances or human nature different in England from what they are in Scotland?

[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.