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

Part of the debate – in the House of Lords at 12:53 pm on 11th May 2018.

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Photo of Baroness Shackleton of Belgravia Baroness Shackleton of Belgravia Conservative 12:53 pm, 11th May 2018

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

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

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

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

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

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

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

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

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

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

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

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

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

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