Divorce (Financial Provision) Bill [HL] — Second Reading

– in the House of Lords at 12:48 pm on 27th June 2014.

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Moved by Baroness Deech

That the Bill be read a second time.

Photo of Baroness Deech Baroness Deech Crossbench 12:51 pm, 27th June 2014

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 not 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.

Photo of Lord Mackay of Clashfern Lord Mackay of Clashfern Conservative 1:06 pm, 27th June 2014

My Lords, I strongly support the Second Reading of the Bill. I am delighted to see my noble friend Lord McNally back with us today, with his expertise on this subject.

There is no question that divorce, or the break-up of a civil partnership, produces a great deal of difficulty for both parties. In the case of divorce where there are children of the marriage, it is a terrific burden on the children. Usually the breakdown is preceded by difficult times for the children as well as for the adults, and the longer the argument lasts after the initial breakdown, the greater the damage that is done to the children as well as to the two participants in the original union.

There is a great deal to be said for judicial discretion, fitting for every single case, according to the decision of the particular judge. But I strongly take the view that there should be a clear framework that people who do not need to go to a judge will be able to operate for themselves. In my view, the proposals that the noble Baroness has put forward in her Private Member’s Bill are very suitable for that purpose. They give a framework to separating couples for what should happen in relation to the issues that are likely to divide them. Of course, the Bill does not deal with questions of care and custody of the children and so on, but it does deal with the essential area of the division of assets, with provision after the separation or divorce for other kinds of maintenance.

I strongly submit to your Lordships that the matters that the Bill deals with are all a good way forward. It is true that the Law Commission has this in hand, but—I was a member of the Scottish Law Commission for some time—the Law Commission’s way of working is not always conducive to speedy results. Thoroughness often leads to that difficulty. I agree with the noble Baroness that we really cannot wait for perfection; we can have a reasonable arrangement now which people who are in this situation can look to and on which they can build to frame their own settlement.

I have always had difficulty in seeing why prenuptial and post-nuptial contracts are thought not to be binding. After all, the atmosphere before the marriage is usually the best atmosphere possible for reaching agreement. If agreement is reached then surely there is a lot to be said for giving effect to it. Why should subsequent changes make a big difference? Now, of course, there are agreements and agreements, and various kinds of undue influence can arise, but these are not at the essence of the matter. If the agreement is not vulnerable to that kind of attack, I cannot see why it should not bind the parties when the issue has arisen for which the agreement provides.

As the noble Baroness said, many of the other provisions in the Bill have operated in Scotland for quite a number of years. While I cannot always say that what is good for Scotland is necessarily the best for the other parts of the United Kingdom, on the whole that is a reasonable proposition. That the arrangement has gone forward there without much litigation suggests to me that it is acceptable to ordinary people who find themselves in this situation. Of course, the huge assets of some splitting partners are such that any kind of general scheme probably would not work, but so far as the vast majority of people are concerned, it seems to me that it would work, and the sooner it is put in place, the better.

An attempt was made towards the end of consideration of my Family Law Bill in 1996 to deal with this matter, but unfortunately there were so many other items of contention in that excellent Bill that it was rather difficult to deal with everything. Anyhow, the opportunity is here now and, for my part, I strongly urge this House to take it.

Photo of Lord Davies of Stamford Lord Davies of Stamford Labour 1:12 pm, 27th June 2014

My Lords, I hope that I carry the whole House with me when I say that I think that the law should be, above all, four things. First, it should be clear—the citizen has an obligation to observe it and therefore has a right to understand it. Secondly, it should be permissive—we live in a free society and are proud of that, and a free society is defined by the fact that the state intervenes to restrict the freedom of the citizen only to the extent required to defend and protect the freedom of other citizens. If something is not allowed which, if it were allowed, would not undermine the freedom of other persons, that is an anomaly and should be addressed. Thirdly, the law should be protective of the vulnerable, of the weak and of the less sophisticated against the more sophisticated. Finally, the law should be just and fair. It should reflect the principles of justice and make the proper balance between the protective and the permissive.

In my view, the noble Baroness’s Bill would advance the law in all those four very important respects. First, so far as clarity is concerned and as the noble Baroness has already explained, there is an unanswerable case that jurisprudence in family law has run far away from the Matrimonial Causes Acts. It is impossible to know where one stands and what precedent one might be guided by in trying to anticipate future judgments. That is a very unsatisfactory state of affairs. It is exactly the same with prenuptial agreements. Sometimes they are enforced by the courts; sometimes they are not—it is completely unclear what the law is, and that is very unsatisfactory. When you have a situation like that, it is absolutely the duty of Parliament to do something about it. I congratulate the noble Baroness on having decided to do that with this Bill.

Secondly, in the area of fairness, the Bill introduces of the notion of matrimonial property, a concept drawn from Scotland, as the noble and learned Lord, Lord Mackay, has reminded us, and drawn by Scotland from the Roman law tradition which it has. A similar principle exists in the Roman law jurisdictions on the continent, where one can choose on marriage a regime either of séparation des biens or of communauté des biens. If one chooses the séparation des biens, one keeps separate the property that one brings to the marriage from other sources. The noble Baroness’s Bill would introduce into English law the notion of matrimonial property that would be subject to division on divorce and other matrimonial property that would be protected, such as inheritances and—according to the text of the draft Bill before us—gifts. That is definitely an enhancement of justice.

Then there is the contribution that the Bill would make to making the law more permissive. That is achieved through the provisions for prenuptial agreements. In a sense, if you have the rest of the Bill—the matrimonial property et cetera concept—then you have less need for prenuptial agreements, but on the permissive principle it is a good idea to make it absolutely clear that, if people want to enter into these contracts, they should be able to do so. Why? It is simply because, if two citizens wish to have a contract about anything, they should have an assumed right to make that contract—with the normal common law protections about disclosure of material facts, no undue influence and so forth. The burden is on those who wish to prevent two mentally capable adults from entering into such a contract. We have contracts in this country that are enforceable in law for all kinds of things: employment contracts, sale and purchase contracts, leasing contracts, licensing contracts, exclusivity contracts, partnership contracts and so on. Only gambling contracts are not enforceable under the law in this country. It would be an extraordinary state of affairs to put prenuptial contracts—with all the protections required and that are in the Bill before us with one small exception that I shall come to—on the same footing as gambling contracts.

I should not so much declare an interest as my own record on this matter. Many years ago in the other place, I introduced a Bill to provide legal standing and protection for prenuptial agreements, giving legal force to them. That got to an unopposed Second Reading but was never taken further for reasons of time. I have previous on this particular subject.

It seems to me that prenuptial agreements not only meet the criteria that the law should be permissive wherever possible but also advance the fairness of the law. People have been deeply offended by some of the gold-digging—that is the word one must use—that has had a lot of publicity recently. The McCartney case was famous. There was a case in point recently when one lady might have been involved in successful gold-digging on two separate occasions in the course of a relatively small number of years. That offends the public’s sense of justice. Both the noble Baroness’s provisions on the matrimonial property concept and prenuptial agreements would tend to address that issue and make the law more obviously fair and just. That is a very desirable achievement.

On the impact on people’s willingness to get married, it seems to me that in practice the opportunity of having prenuptial agreements for those who might want to take advantage of them would, logically, encourage more people to get married. Some people certainly feel inhibited without them. In my own anecdotal experience, I can think of people who have been inhibited from formalising their relationship because they wanted to protect family assets of one kind or another that they already had. The Bill would enable them to engage in a marriage with no such inhibitions or fears. That is a thoroughly desirable thing.

I make just one perhaps niggling comment or suggestion, but it is important. Full disclosure should include not merely assets as provided for in the Bill but also liabilities. A false picture would emerge of the net worth of the two parties if the liabilities were not disclosed. Parties to a potential prenuptial agreement might think, if only the assets were fully disclosed, that they both had assets of a similar order of magnitude when in fact one had massive liabilities and the other had none. There might be enormous distortion in showing such a balance, so it would be quite false not to bring to the attention of the two parties a true and fair picture at the outset of the negotiations over that particular contract.

I hope that the Bill makes progress; I think that it is urgent that it does so. I hope that it becomes a part of the law of this country as soon as possible and that the noble Baroness, whom I congratulate again on this initiative, will take on board my one small suggestion.

Photo of Lord McNally Lord McNally Liberal Democrat 1:19 pm, 27th June 2014

My Lords, I promised the noble Lord, Lord Faulks, when he took over from me in December, that I would not keep popping up like Banquo’s ghost at MoJ debates to reminisce about my past triumphs. I am making an exception today for three reasons, but, first, I thank the noble and learned Lord, Lord Mackay, for his kind words. I do not know about the noble Lord, Lord Faulks, but I always had a slight tingle in the shoulder blades when I found that the noble and learned Lord was in his usual place, just behind an MoJ Minister, although, most times, he dug me out of a hole instead of putting me into one.

As I said, I make the exception for three reasons. First, taking the point of the noble and learned Lord, Lord Mackay, about the thoroughness of the Law Commission, I pay tribute to it and its work. I couple that tribute with praise for what is now the not so new fast-track procedure used in the House of Lords to expedite Law Commission Bills and I couple that praise with praise for the noble and learned Lord, Lord Lloyd of Berwick, who has invariably taken the chair in Committee and guided Law Commission Bills through. As a result, we now have a steady flow of law reforms and updates which greatly benefit our citizens and the law.

My second reason for speaking is to give qualified support for the Bill before us today and to congratulate the noble Baroness, Lady Deech, on the clarity with which she brought the Bill forward. As she told us, divorce is painful, stressful and often costly. It can have a lasting, damaging impact on children. Making the financial consequences of divorce easier to navigate does not undermine marriage. It helps to mitigate the worst consequences of marriage breakdown.

My support for the Bill is qualified because we are still awaiting the Government’s response to the Law Commission’s draft Bill, which is promised for August. I must tell the Minister that I have never liked government responses promised in August. As a rule, they are not the best months for parliamentary scrutiny.

As I understand it, the noble Baroness, Lady Deech, believes that the Law Commission’s draft Bill still leaves loose ends and uncertainties. Critics of her Bill claim that its impact would be much wider than that of the Law Commission recommendations and that it proposes significant changes to the law of financial provision on divorce, not all of which would be welcome. It seems to me that, if the Bill is given a Second Reading today, those are matters that can be examined in detail in Committee. What seems to be common ground is that there is need for action by Parliament to clarify basic principles in this area so that the law better reflects the needs of modern society. I thoroughly agree with the noble Baroness that this is a matter for Parliament, not for judges.

My final reason for intervening has already been referred to by the noble Baroness, Lady Deech. It is to couple my support for action in this area with a reminder to the House that the recently passed Children and Families Act makes it a requirement for a person who wishes to start certain types of family proceedings first to attend a family mediation information and assessment meeting—a MIAM—to find out about and consider mediation rather than going through the stressful experience of going to court. Legal aid is available for that process and there are exemptions to that compulsion where a case is genuinely urgent or there is evidence of domestic violence. Mediation has a good story to tell of thousands of people achieving settlements in a way that is faster, cheaper and less stressful than mud-wrestling through the courts.

The noble Baroness, Lady Deech, told us that development in this area of law has been left to judges for the past 30 years. The Law Commission started its work in 2009. Now is the time for Parliament to step up to the plate and deliver clear and contemporary legislation, which may in the end be a synthesis of the proposals in the Bill, the work done by the Law Commission and the Government’s August response. I hope that in his response today the Minister will indicate that that is his direction of travel.

Photo of Lord Hope of Craighead Lord Hope of Craighead Judge 1:25 pm, 27th June 2014

My Lords, I, too, welcome this much needed Bill and congratulate the noble Baroness, Lady Deech, on bringing it forward. I know that it is the product of a great deal of thought and hard work on her part. I think we must all be grateful to her for that and for providing us with the opportunity to debate her proposals.

The measures that the Bill contains are of particular interest to me for a variety of reasons. First, to a very large extent, they bring the law of England and Wales about financial provision and property adjustment on divorce in line with the law of Scotland, as the noble and learned Lord, Lord Mackay of Clashfern, told us. I should add that I lived and worked with that system in the Court of Session for about 10 years before I came to this House as a Lord of Appeal in Ordinary in 1996. Secondly, I had something to say about that system in the high-value divorce case of Miller v Miller in 2006, which I will come back to in a moment. Thirdly, the provision about prenuptial and post-nuptial agreements recalls for me the case of Radmacher v Granatino, which was heard four years ago in the Supreme Court by nine justices, of which I was one. For all the reasons that the noble Baroness has given, legislation on these matters has for far too long been delayed and is now badly needed.

Perhaps I may start with the provisions about matrimonial property and periodical payments. These are closely modelled on Sections 8 to 11 of the Family Law (Scotland) Act 1985. It is worth noting that that Act followed closely a draft Bill that was recommended by the Scottish Law Commission in a report delivered to the noble and learned Lord, Lord Mackay—as, I think, the Lord Advocate—in November 1981. It was the product of many years’ research and it had taken a long time to be brought forward. However, there it was in 1981 and eventually that Bill was brought before this Parliament and enacted almost without amendment from the recommendations made there. The aim of the Scottish Law Commission was to do exactly as the noble Lord, Lord McNally, said: to replace judicial discretion with clear indications and principles laid down by Parliament, which the judges would be required to follow. It put forward a system that was based on what were described as fair and clearly stated principles but which left enough scope for judicial discretion to allow for different circumstances in different cases.

That Bill attracted little criticism when it was debated here but I remember, when I was sitting as Lord President in the Court of Session, being rather suspicious of it because at first sight it seemed to cut back the element of discretion for the judges too far. In fact, when one looked at the way in which it was working, it appeared that that was not really so and that there was enough discretion to allow for different cases, as the Law Commission had predicted. What I sought to do in the Appeal Court in which I sat was to discourage appeals that interfered with the exercising of discretion by the judges. The old system was fine when a very few judges in Edinburgh were dealing with divorce cases, but this measure coincided with the broadening of the jurisdiction to sheriffs sitting throughout the country. The risk of different views being taken by judges was very real, but it was an important change and, in the end, I greatly welcomed it when I was sitting as a judge.

However, there are two problems in this Bill and perhaps I might focus on them quickly. The first is the one that I mentioned regarding the case of Miller, which was drawn to the attention of the court in Edinburgh as that Act became law and was worked out in practice. It is the definition of matrimonial property and tying its net value to the date when the parties separate. The problem was that sometimes a great deal of time elapsed between the separation and the making of the award and to freeze the value at the date of the separation was in many cases seen to be unfair. That was cured by an amendment in the Family Law (Scotland) Act 2006 and I respectfully suggest to the noble Baroness that her Bill might be amended to take account of that amendment, replacing her formulation by directing attention to the date of the award.

The second point that troubled me greatly in Miller was the situation of a high-earning wife who gives up a career to look after the children, and indeed her husband, in the course of a marriage. I had before me at the time when I was dealing with Miller a letter from a lady in exactly that situation who lived in the south of England and was being taken to divorce in Scotland by her husband, in what I thought was a blatant piece of forum shopping, so that he could take advantage of the three-year “clean break” principle. Her position was that she could never return to the high-earning position that she had held before she married—that simply was not realistic—so she was being required, as the Scottish Law Commission put it, to adjust to a lower standard of living.

That seemed very unfair to me and I wondered whether the law could not be adjusted to give a little more discretion to judges to allow for such cases where high-earning women were being deprived of their ability to continue earning because of what they had done for the family and for the husband. I suggested that the law may have made sense in 1981 but, now that there was so much more equality and the opportunities for women to earn higher earnings was so much greater nowadays, it needed to be rethought. I was quite severely attacked by academics in Scotland for making that suggestion because it looked as though I was criticising the Scottish Law Commission. I was not trying to do that; I was just saying, “Let’s bring the matter up to date”. I suggest that the noble Baroness might like to consider that point, too.

I have one other point to make on the matter of post-nuptial and prenuptial agreements. The problem that the Supreme Court had in Radmacher v Granatino was twofold. First, there was a policy objection, which was based on the view that these agreements, particularly the prenuptial ones, in some way encouraged parties to breach the duty to live together that was the essence of marriage. We in the Supreme Court were able to say that that policy should be now discarded and I think that it no longer plays a part in modern thinking, but what we could not do was alter the primacy that the statutory law gave to the court in deciding whether these agreements should be enforced. It was important then, and it is important now when one reads the noble Baroness’s Bill, to substitute that with the primacy of the agreement of the parties, which takes one back to the situation that I, in common with the noble and learned Lord, Lord Mackay of Clashfern, would have seen the position to be in Scotland and indeed many other countries. That would substitute the agreement of the parties for the position of the court and in my submission that seems to fit well with the thinking in many places around the world. It would do something that the court could not do, which of course is the great benefit of legislation, as I think the noble Lord, Lord McNally, was suggesting. There is quite a lot to debate in this Bill when it comes to Committee and I very much hope that it has a Second Reading and will then proceed to that stage.

Photo of Baroness Bakewell Baroness Bakewell Labour 1:32 pm, 27th June 2014

My Lords, in the 1830s Caroline Norton campaigned for the Custody of Infants Act, which for the first time allowed women separated from their husbands—though not of course divorced—access to their own children. In the 1870s Caroline Norton went on to campaign for the Married Women’s Property Act, which allowed wives to keep some of their own property within their marriage. Today she is immortalised in her portrayal as Justice in the murals in this very House, painted by the Irish artist Daniel Maclise.

This Bill to amend the Matrimonial Causes Act 1973 is in that fine feminist tradition, and I congratulate my feminist friend, the noble Baroness, Lady Deech, on bringing it forward. I support it for four reasons. The first is demographic change. People live longer, and over a long lifetime there is more opportunity for things to go wrong—therefore, more divorces. People not only divorce but create separate families, have their own children from the first family and from the second and, perhaps, write wills favouring both. The complexities of how to deal with financial settlement only intensify with the situation of demographic change.

My second reason is that we live in times of ever greater equality between spouses. Not long ago, within living memory, the man on the whole was the breadwinner and the woman stayed at home and looked after children; on divorce, it became his responsibility to care for her and the children. Now, wives, by and large, have working lives, if not successful careers, and they bring wealth of their own to the marriage. This law would mean that assets acquired before the marriage would not be available for distribution. Women are marrying later. They are living equal lives. For that reason, this amendment that safeguards their property before marriage is increasingly appropriate.

Legal aid has largely gone from many aspects of this situation. We know that many couples who are separated and seeking divorce go on the internet to find ways of running their own divorce because the expenses are so very great. They do it at a time of enormous emotional stress and strain. They perhaps are not thinking clearly. It is difficult for them to find their way through the intricacies of the law as it stands. This Bill would help them deal with that.

Prenuptial agreements are more and more common for the reasons that are implicit in what I have said about women with careers. They represent a sensible approach for both parties. Currently, as we know, they happen primarily among the rich. We read about celebrities and rich City folk arguing about huge shares. Those stories make headlines, but ordinary people need prenuptial agreements that have the power of law: this is very important for them.

Finally, mediation between divorcing couples becomes less protracted if the rules are clear. The agonising months that follow a separation and divorce militate against the settled family life that fathers and mothers would wish for their children. Anything that clarifies the situation and shortens the period of distress is to be welcomed. That is why I support this Bill.

Photo of Baroness Meacher Baroness Meacher Crossbench 1:36 pm, 27th June 2014

I rise to contribute briefly to this important debate and most particularly to applaud the noble Baroness, Lady Deech, for taking the initiative to raise awareness of the urgent need for reform of the Matrimonial Causes Act 1973. As she said, modern marriages are very different from those of the early 1970s, such as in the role of fathers in the family and often their very active involvement in childcare. Part-time and flexible working by both parents, increasingly common today, would have been inconceivable in the 1970s. The growth of nursery provision and after- school clubs for children of school age has enabled mothers to be far more involved in the workplace than in the past. All this has changed the financial relationship between couples.

There are couples who opt for a very traditional marriage where for perhaps 20 years the mother stays at home looking after the children and the father goes out to work. The law will have to take account of them.

One of the reasons why divorces are so detrimental to children is the long, drawn-out court battle that too often accompanies them. The judge-made law, largely based on big-money cases of little relevance to couples with limited resources, has created too much uncertainty and complexity, opening opportunities for barristers to fight over endless details on a wide range of issues, costing vast sums of money and creating many months of misery for the whole family. The lack of clarity in the law also makes mediation much more difficult and unlikely to succeed in most cases. Any involvement of the courts in financial settlements should be seen as a failure of the system and of the parents as well—but while the law remains as it is, parents are often driven into the courts very much against their will.

The removal of legal aid from this area of law has already been mentioned. It was rightly highlighted by the noble Baroness, Lady Deech, and other noble Lords as a factor adding to the urgency of the need for reform. I have recently been close to a case where the parents represented themselves. The initial judge, who was certainly no mathematician, clearly found the financial issues impossible to resolve. The initial judgment was completely unworkable. The result was that the whole thing was sorted out only a year later on appeal. This case was limited to financial issues, and in a clear legal context it should have been sorted out in a matter of weeks through mediation. Under the existing law, it took more than two years in all to sort out the financial matters.

I also warmly welcome the proposal of the noble Baroness, Lady Deech, to limit periodical payments to three years or thereabouts. The current position, under which a divorce is a life sentence for the contributing party, cannot be right in the modern world. Yes, of course the lower earner needs time to adjust, but the contributing party also needs the prospect of a life free from the consequences of a failed marriage.

Finally, I strongly support the noble Baroness’s proposal that prenuptial and post-nuptial agreements should be binding. However, this has to be conditional on the parties having received independent legal advice—or at least having had the opportunity to do so—having made full disclosure and having entered the agreement a reasonable period before the marriage. All of that makes perfect sense to me. Ideally, this should become the normal route to a financial settlement, in which any glitches could be sorted out through mediation. I hope that the Government will allocate parliamentary time to this incredibly important, but in some ways fairly modest, Bill. It would transform the experience of divorce for many couples and save a great deal of misery and money.

Photo of Baroness Wilcox Baroness Wilcox Conservative 1:41 pm, 27th June 2014

My Lords, I, too, congratulate the noble Baroness, Lady Deech, on bringing forward, as sponsor, a Divorce (Financial Provision) Bill. From her I learn that, while the divorce decree itself has become largely an administrative process, the division of income and property between spouses is often a contentious, long-drawn-out and expensive process. The noble Baroness has outlined why: the uncertainty of the basic principles in this area, the development of law by judges and changes in society—which I find interesting to read, and feel part of as I have lived that long—with women at work, divorce no longer being fault based, civil partnerships and attitudes to the family. I add to her list the fact that we are all living for so long.

We have heard both why it is urgent for Parliament to revisit the fundamental law governing financial provision and how the Bill will work. I congratulate the noble Baroness, Lady Deech, on providing me with a briefing note that was written in plain English. As the originator of the Plain English Campaign and the former chairman of the National Consumer Council, I am only too delighted to be taking part in a Bill which, if it goes farther, I feel that I will be able to understand. I am not a lawyer, and so this bodes well for me in the future, and for allowing those who have to divorce better to understand the process. The last thing on divorce I found so accessible to the layman was an excellent booklet written some years ago by my noble friend Lady Shackleton of Belgravia, from whom we will hear later.

Why am I interested in this Bill, as I am neither a lawyer nor a judge? I believe in marriage. I have been both divorced and widowed, so I understand, know and feel deeply what happens during those procedures. However, I still believe that marriage is the best estate for family life: for the bringing up of children, for health and happiness and for companionship. The Bill will especially help older people like myself, divorced or merely widowed, who are afraid to marry again where there are assets they wish to protect and who are reluctant to commit again, fearing a potentially financially disadvantaged position at a time of life when starting again would be almost impossible and far too frightening to contemplate.

The Bill, if enacted, should bring better opportunities, as we have heard, from mediation, less need to go to court, lower costs, reduced trauma for children, and fairer outcomes, recognising partnership in marriage. It should bring clarity and encouragement for people like me to try again. The Bill could be a true vote for marriage, even if it is for the second time around.

Photo of Lord Scott of Foscote Lord Scott of Foscote Crossbench 1:44 pm, 27th June 2014

My Lords, I address your Lordships as a lawyer who is interested in the Bill, although in practice I did nothing in this particular field. The interest for me is provided only by a general interest in the law.

The problem with this area of the law is that it tries to deal with a situation in which two individuals, who know one another very well and have probably lived together for some time, are in dispute because their relationship has broken down. They have to come to decisions about what is to happen to them and to their respective lives, to their children—if they have any—and to the assets they have accumulated, because they are almost bound to have accumulated some. That happens at a time when their personal relationship has broken down. There is everything to be said for encouraging the use of prenuptial—and, indeed, post-nuptial—agreements, and everything to be said for making them. However, if they are to be made binding, it is essential that they be put in writing. If they are left as oral agreements, they will simply be another bone to be chewed over by the two parties: “I agreed this—you agreed that”. Long ago in this country it was decided that contracts for the disposition of an interest in land had to be put in writing. I am sure that those sorts of considerations were the reason for that. We have all become very accustomed to contracts that relate to land being in writing, and the same reasoning should apply to prenuptial and post-nuptial agreements; otherwise, they will be just another basis for further litigation between the disputing parties.

It has to be recognised that there is always a tension in deciding what the statutory framework should be for the management of the affairs of the disputing couple post marriage. There is a tension between certainty on the one hand and fairness on the other. Certainty can be achieved by careful drafting of legislation, but fairness depends on the circumstances of the individual case. However, individual cases and people are different, and people have different problems. The greater the certainty, the more likely that the rigidity of whatever the certain system is that has been decided upon will produce, in some cases, unfairness for one or other of the spouses. That is the justification for giving the judges the huge amount of discretion they have under the present statutory framework. Maybe that leads to more dispute and litigation than is desirable; maybe the judges should not have so much discretion. To introduce more certainty or cut down on the discretion would be at the expense of fairness. That is a very difficult balance to strike. The advantages of certainty will not solve satisfactorily all the problems, because the same answer does not necessarily produce fairness for everybody. That is a matter to be considered when one comes to look at the wording of the provisions in the Bill. Perhaps that is not a point for Second Reading, but it should always be borne in mind.

On the Second Reading question, it is clear that the Bill should have one. I join noble Lords in congratulating the noble Baroness on putting the Bill forward. It will require a lot of thought and attention in Committee, but there should certainly be a Second Reading, and there should certainly be agreements in writing. There is another provision in the Bill where agreements are referred to; all the agreements that are referred to in the Bill need to be in writing, so that there can be no dispute between the parties as to what they agreed.

Photo of Lord Grantchester Lord Grantchester Opposition Whip (Lords) 1:48 pm, 27th June 2014

My Lords, I support the noble Baroness, Lady Deech, in her endeavours to update Section 25 of the Matrimonial Causes Act 1973, to bring consistency of approach to applications for financial orders, to bring greater clarity of outcome to the distressing ending of relationships, to reduce the stress to families and the combative nature of proceedings to cases, to simplify the existing complexity, to widen the debate outside the legal profession and to give Parliament—the lawmaker in our constitution—a voice and influence on what people want.

I would like to go on, as I cannot find much to commend in the present situation regarding divorce laws. The UK’s financial provisions on divorce are outdated and out of step with those of other jurisdictions. Financial provision swings between divergent spectrums of needs, equality, equity, various definitions of matrimonial property and interpretations of what seems about right on levels of division. We all know that fairness is in the eye of the beholder. The most unsettling nature of the present situation is that the public debate mainly takes place among lawyers, who, after all, have their own interests. Where are the lay members of the Law Commission and the Family Justice Council? I endorse the comments of the noble Baroness, Lady Deech, regarding proposals recently put forward by these two organisations, and I eagerly await the contribution from the noble Baroness, Lady Shackleton of Belgravia, in the hope and expectation that she will show her independence, partnered with her experience and expertise. I was very pleased to see the winning combatant appear in white at the judgment of the Radmacher v Granatino case, which shattered the cultural perceptions of the prevailing judge-made outlook.

I always caution myself on speaking when I have little knowledge but, having been through the situation and having seen the effects of relationship breakdown, I shall share a few comments. In the present situation, the only advice that I can give anyone is to make sure that you marry someone better off than yourself. I would like to be assured that mediation must become a central part of the process concerning any dispute that may have arisen outside these arrangements, or when there are no nuptial arrangements. Any outcome must have some regard to how each party has conducted mediation. I would like to see in any reform that the process has regard to the protection of assets—that is, that the cost of litigation is carefully assessed. This should not be a one-way bet in favour of any spouse, whereby there is no disadvantage to the least wealthy side to challenge at every step. It is disappointing to see that one side should be better off as a result of a relationship breakdown than if the parties had stayed together.

The most vital aspect follows from the reduction and removal of legal aid from the process. At an emotionally distressing time for families, it would be disappointing to see a banking-style development of the legal profession, whereby legal loan companies were to flourish for profit.

Thirdly, there must be ability to protect wider family wealth from relationship breakdown and allow people to regulate their own affairs. This Bill will give greater certainty to nuptial arrangements by making them more categorical, with fewer exceptions and loopholes than the Law Commission would want. There must be more certainty provided, with certain fundamentals adhered to. We must be clear about what matrimonial property is, and the agreed interpretation of the parties in the relationship. Capital assets and income streams must be separated and clarified. I have seen SMEs, especially farming businesses, shattered when business assets have been built up over generations. As I said earlier, lawyers do not hesitate to apply a rule of thumb on the basis of an image of total assets and advise accordingly to their clients.

Finally, on the pace of change, we are all aware of how society has changed and how divergent cultural approaches do not make the changes easy. Nevertheless, in a will or trust situation, whereby a settlor may have made provision many years previously, there must be the ability to protect the assumptions under which provision was made. In this regard, it was not so long ago that the Law Commission advocated the extension of inheritance to cohabitees in a relationship. That would have a damaging effect on many wills and trusts, which must have the ability to future-proof people’s wishes, as couples may wish to pick and choose which level of commitment they may wish to abide by in their relationships. I am pleased that this Bill does not make any attempt to stray into that territory.

The Bill before your Lordships’ House today takes account of all these reflections and, no doubt, your Lordships will test them, and many others of their own, in Committee. We must guard against perfection being the enemy to the good. One small omission must not make a big enough hole in which we would want to bury this Bill. Parliament must now consider putting divorce and financial provision at relationship breakdown on a better footing than at present. I support the Bill and trust that the Government will enter into constructive participation.

Photo of Lord St John of Bletso Lord St John of Bletso Crossbench 1:54 pm, 27th June 2014

My Lords, I join in warmly welcoming my noble friend’s Bill, which addresses the urgent need for more certainty in the law pertaining to financial orders on divorce and disillusion, which is in a state of constant development. It is also an opportune time for my noble friend to introduce this Bill, following the Law Commission’s marital agreement proposals which, as has been mentioned, were set out in the draft nuptial agreements Bill.

I speak from my experience of being a practising divorce lawyer in South Africa, under Roman Dutch Law, which respects binding prenuptial agreements, and where there is far more certainty in the determination of financial settlements on divorce. I also have a personal strong interest in this Bill as I sadly endured a long and very painful recent divorce, which was both costly and hugely stressful for all concerned, particularly my children. The noble and learned Lord, Lord Mackay of Clashfern, was right to highlight the damage done to children by lengthy divorces.

Whatever may be the objections of the church to prenuptial and post-nuptial agreements, there is no evidence that marriage breakdown is encouraged by the drawing up of these agreements. It is well known that divorce among older couples is on the increase, with recent statistics showing that the highest percentage of divorces occur among couples aged between 40 and 45. There is increasing need for certainty in cases of bequests and family trusts, particularly with couples who have remarried and who want to make sure that they retain their inheritance. For those who have had a bad divorce experience—I note the comments of the noble Baroness, Lady Wilcox—and are somewhat reluctant to commit to another marriage, prenuptial and post-nuptial agreements provide far more certainty and comfort. I agree with my noble and learned friend Lord Scott that these agreements should be in writing. In this regard, I wholeheartedly support Clause 3 of the Bill.

It is a staggering statistic that there are more than 119,000 divorces in England and Wales annually, with financial orders made by the court in about a third of those. As several noble Lords have mentioned, the removal of legal aid has led to a steep rise in self-representation, overloading the divorce courts and causing even lengthier delays. Recent tax changes have also added to the difficulties of couples whose main asset is the family home. Until this year, married couples, or those in civil partnerships, qualified for tax relief on capital gains from the sale of their principal private residence for three years after separation. However, in the Autumn Statement, the Chancellor changed this to just 18 months. This has put more pressure on financial settlements, given the need to conclude the sale of the family home within a year and a half of one party leaving it.

I do not want to repeat the many cogent arguments that have been put forward in support of the Bill. There is no denying that, when it comes to building wealth or avoiding poverty, a stable marriage is in many cases the most important asset. However, the recent Law Commission report highlighted:

“Although the law is largely well understood by family lawyers, it is inaccessible to the general public and there is evidence that the courts in different areas of the country do not always apply the law consistently”.

Among its many benefits, the Bill, if enacted, would certainly provide better opportunities for mediation, less necessity to go to court, far less stress for divorcing couples, particularly for their children, and a massive saving in costs. In this regard, I wholeheartedly support it and hope that it is given a fair hearing in both this House and the other place.

Photo of Baroness Shackleton of Belgravia Baroness Shackleton of Belgravia Conservative 1:59 pm, 27th June 2014

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 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.

Photo of Lord Kennedy of Southwark Lord Kennedy of Southwark Labour 2:06 pm, 27th June 2014

My Lords, this has been an interesting debate and I congratulate the noble Baroness, Lady Deech, for bringing forward her Bill and securing a Second Reading so early in the Session. The Bill proposes to repeal Section 25 of the Matrimonial Causes Act 1973 and replace it with a series of principles that would apply in the determination of applications for financial orders in divorces.

I am not a lawyer, so I have come to the Bill as a lay person. I looked at what marriage is: it is, of course, an agreement by which two people enter into a certain legal relationship with each other and which creates and imposes mutual rights and duties. However, when you look carefully, it is a contract—but a very special contract—that comes into force if special formalities are observed and, apart for death, can be set aside or terminated only by a court of competent jurisdiction.

Of course, people enter into this contract because they love each other and want to be with each other and make a life together as a couple, and possibly have children. As an institution, marriage is something that Members on these Benches fully support. We believe that it is one of the bedrocks of stable relationships and society. We are very proud on these Benches that we introduced civil partnerships for gay people some years ago, and that we fully supported the Government last year, in the previous Session, when they decided the time was right to introduce equal marriage for gay people. We did that because we agreed with the Government that marriage is an important institution and that gay people have the right to be treated exactly the same, enjoying the same benefits and facing the same challenges in the society they are equal members of.

I then looked at divorce and what exactly it means. It is, of course, the termination of marital union, the cancelling and/or reorganising of the legal duties and responsibilities of marriage. I found it interesting that, with amendments over time, we are using an Act, which, although ground-breaking at the time, came on to the statute book 41 years ago. That may not be long in the life of legislation, but divorce is a live issue affecting thousands of people every year, as they go through the process either as divorcing spouses or as their children. I reflected on how different the UK is today from 1973.

On these Benches we welcome the debate and believe it is timely. Changes need to be made in the application of financial orders in divorces. However, I cannot at this stage give the Bill my wholehearted support—but, like the noble Lord, Lord McNally, I give it my qualified support. However, with careful debate, identifying the issues of concern, we could be in a position to agree amendments that would enable us to give it our full support.

The concerns can be outlined as follows. Clause 2 provides that either party subject to proceedings for divorce may apply to a court for an order in relation to matrimonial property, for the payment of a lump sum, for the transfer of property or for a pension-sharing order. Legislating on an approach to the division of assets would certainly provide greater certainty for couples who are separating, but we would want to see clear safeguards to protect the economically weaker spouse.

Clause 3 would make prenuptial and post-nuptial agreements binding on the parties, subject to a number of safeguards, and binding agreements could provide couples deciding to marry with the ability to plan with more certainty. I can see the argument that it would bring into full view the potential costs to each party, that significant money could be saved in lawyer and court costs, and that it could take some of the hostility and bitterness out of the process for both parties. I also understand that in many other jurisdictions prenuptial agreements are very common and that in many cases those same jurisdictions have much lower divorce rates. I think that we would want to carefully examine the proposals and test the competing arguments—that, on the one hand, this would undermine marriage and that, on the other, it would strengthen it.

Clauses 4 and 5 propose that the net value of the matrimonial property is shared fairly between the parties. The proposals seek to limit costly litigation by providing a process for asset division and maintenance.

They seek to remove, or certainly limit, the role that the court plays in deciding the appropriate division of assets and maintenance, and they limit the ongoing dependence of either spouse on the other as a means of allowing divorcing couples to establish independent lives as quickly as possible.

Our concerns here are that this appears to be a one-size-fits-all approach and that, if there is no place for individual circumstances to be taken into account, after three years when the welfare state is shrinking, the more vulnerable and economically weaker spouse would be left dependent on a shrinking welfare state. I understand that at present courts are told not to make a divorcing spouse dependent on the state where there are other resources to assist them. However, the case for indefinite maintenance orders needs to be looked at and reformed. Maybe an automatic review after a set period of time would be a better way of achieving the aims of the Bill in this respect.

This Bill seeks to deal with important issues and to find solutions to situations that are far from satisfactory at present. I have attempted to highlight some of the concerns from these Benches. However, I believe that, with the Government being fair and reasonable, the Bill could be significantly improved and make progress through your Lordships’ House. As the Opposition, we are here to play our full role in making those improvements.

Like the noble Baroness, Lady Deech, I have an interest in this. I am happily married, although I was getting a few funny looks this week from my wife, my noble friend Lady Kennedy, after getting out books on divorce.

In closing, I bring to the attention of the House that, although it is not proposed here, there is nothing in the rules of the House—I have checked this with the Clerk of the Parliaments—to prevent this Bill or any other Private Member’s Bill being committed to a Grand Committee. A few days in Committee in the Moses Room dealing with the issues that have been outlined today, particularly as highlighted by the noble and learned Lord, Lord Hope of Craighead, might have been a better way of proceeding. It might have produced something for Report that the whole House, or at least a substantial majority of the House, would be willing to support.

The noble Lord, Lord McNally, is right that it is time for Parliament to act on these matters. As the noble and learned Lord, Lord Hope of Craighead, said, action is badly needed and needs to be taken.

The noble Baroness, Lady Deech, is correct to point out that Governments sometimes find issues such as this difficult to deal with. In our recent history, since the Second World War, the Private Member’s Bill has had a very honourable tradition of dealing with these difficult issues, enabling the law to be changed and reformed with government support. However, that requires government support in providing time to work through the issues. We certainly have plenty of time and space in the Moses Room to make this happen if we want to. Before any noble Lord suggests that this Bill would be too controversial to put into Grand Committee, I ask them to reflect on that fact that the Government put the Welfare Reform Bill into

Grand Committee. There can be no argument that that Bill raised controversial issues, but the Government saw no reason not to have its Committee stage in the Moses Room.

In conclusion, I again thank the noble Baroness, Lady Deech, for bringing this Bill to the House and I wish her well in her endeavours.

Photo of Lord Faulks Lord Faulks The Minister of State, Ministry of Justice 2:14 pm, 27th June 2014

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 has 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.

Photo of Lord Davies of Stamford Lord Davies of Stamford Labour

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?

Photo of Lord Faulks Lord Faulks The Minister of State, Ministry of Justice

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—

Photo of Baroness Shackleton of Belgravia Baroness Shackleton of Belgravia Conservative

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.

Photo of Lord Faulks Lord Faulks The Minister of State, Ministry of Justice

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.

Photo of Baroness Deech Baroness Deech Crossbench 2:29 pm, 27th June 2014

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.