Relevant document: 3rd Report from the Delegated Powers Committee
Clause 1: Amendment of the Matrimonial Causes Act 1973
1: Clause 1, page 1, line 2, after “25” insert “(2)”
My Lords, I will speak also to the question of whether Clause 6 stand part of the Bill. All these amendments, starting with this one, have at their heart the protection of children and assistance to middling and lower income families, who are facing terrible problems now that legal aid has been removed from assistance in divorce law, and with the exceedingly high number of divorces that we have every year.
The law needed reform anyway, but the urgency that now arises comes from the removal of legal aid. Only this week, the Bar Council reported an 88% increase in the number of people having to represent themselves in the courts. Throughout the Bill, I am trying to provide a framework that is just but which also promotes autonomy, clarity and entitlement. Given that legal aid has been removed—and I do not envisage an improvement in that situation for years to come—we have to help the poor families who are struggling at one of the worst moments in their lives with something expensive and complicated. Noble Lords will all have seen the accounts of cases in which couples have assets of, let us say, £1 million—not so difficult if you have a house—half or three-quarters of which goes on lawyers’ costs because they cannot reach an agreement; they have no firm framework within which to do so.
This first amendment emphasises what was implicit—it would now make it clearer—that the Bill is not meant to affect the existing provision for children, let alone make it worse. This amendment has the effect of retaining untouched Section 25(1) of the Matrimonial Causes Act 1973—note that this House has not revisited that law since 1973—and retains a provision that in dealing with finance after divorce the interests of children under 18 are the first consideration for the court. They are not “paramount”, which is an even stronger word that is used as regards decisions about their residence.
There is of course scope in the Bill, as there has been previously, for the matrimonial home to be preserved for the use of, let us say, the mother and young children until they reach majority, even if a half share has already been allocated to the father but its realisation or liquidation postponed. From that follows the deletion of Clause 6, which spelt that out in a different way. This amendment also serves to preserve Section 25A of the Matrimonial Causes Act—the desirability of the clean break.
We are not talking about child maintenance as such, because there is a new Child Maintenance Service, successor to the Child Support Agency, and that law will continue as ever. I might also add at the beginning for clarification that the noble and learned Baroness, Lady Butler-Sloss, who cannot be in her place today, supports this, and the noble and learned Lord, Lord Mackay, has specifically authorised me to give his view to the House. He says:
“I support your Bill and support the amendments. I think it vital that the law should contain a provision setting out a generally suitable formula for the division of the assets of a divorcing couple that would guide them without recourse to the courts. It would not harm this concept that a discretion should be available to the court to depart from it on cause shown”.
In fact, a general consensus is building up through the courts that something must be done about this law. It is for the run-of-the-mill divorcing couple who can no longer afford legal representation. I beg to move.
My Lords, I am sure that the House is very grateful to the noble Baroness for bringing forward this Bill for consideration, and I hope that we can make progress today through the Committee stage. I am supportive of what the Bill seeks to do. It is a fact that relationships break down, and proposals to make financial settlements between parties as simple as possible, enabling both parties to retain a greater proportion of their assets, are to be welcomed. As the noble Baroness has explained, this group of amendments seeks to leave untouched Section 25(1) of the Matrimonial Causes Act, which makes it clear that the interests of the children are the first consideration when dealing with finances after divorce. It is also proposed in this group, as a consequence of that amendment, that Clause 6, which dealt with children, should no longer stand part of the Bill, as it would be confusing and could conflict with provisions already in place. These are very sensible amendments, which I hope will find favour with the Government.
My Lords, I begin by congratulating the noble Baroness, Lady Deech, on skilfully steering this Bill to Committee stage. I thank her very much, too, for communicating with the Government about the amendments and the thinking behind them; we are extremely grateful for that clarification.
The Government’s position was made clear at Second Reading and it would not be helpful to repeat that position at this stage. Since then, the noble Baroness has met my ministerial colleague, Simon Hughes, who has responsibility for this policy and is aware of the Government’s thinking. I will restrict my comments in Committee to one or two brief points about the amendments and leave it very much at that.
The first amendment relates to Clause 1 and the protection of children on divorce, and it is of course convenient to take Clause 6 stand part together with the amendment. Amendment 1 limits what was the repeal of all of Section 25 of the Matrimonial Causes Act 1973 to subsection (2) of that section, which contains the list of matters to which the court must have regard in deciding how to exercise its ancillary relief powers. This amendment leaves the other provisions of Section 25 in place and, accordingly, restores the court’s duty to give first consideration to children of the family in deciding how to exercise ancillary relief powers, retaining the list of matters to which the court must have regard in making specific financial relief awards in relation to children of the family. The amendment adds considerably to protection for children given in the Bill. As a result of this, the noble Baroness has indicated that she does not wish Clause 6, which contained the previous provision for children in the Bill, to stand part of the Bill. The Government welcome this improvement in protection for children.
Amendment 1 agreed.
2: Clause 1, page 1, line 6, leave out “section” and insert “subsection”
My Lords, in moving Amendment 2, I speak also to Amendments 3, 4, 20A, 21, 22 and 26. What the amendments in this group have in common is that they are minor and technical. I had great assistance with the drafting of this Bill over the summer, as your Lordships will have noticed, and these amendments arise from the refinement of the drafting as it took place in reaching the final state of the amendments.
Amendment 2 is simply a correction, while Amendment 3 is a clarification. Amendment 4 ensures that this law, as I hope it will turn out to be, applies equally to civil partnerships and same-sex couple marriages. Clearly, a new law must apply to all different sorts of couples, whoever they are, who may go through the courts. Amendment 20A has come about simply because there has been a redraft. Amendments 21, 22 and 26 arose from the fact that there has been a preservation of flexibility of lump sums in distribution of property. This entire group is technical. I beg to move.
My Lords, this is an important technical group of amendments, which follow on from the previous group in clarifying that the provisions of Section 25(1) of the Matrimonial Causes Act remains in force and that we are referring only to subsection (2), for all the reasons that noble Lords gave in the previous debate, along with Amendment 3, which again makes it clear that we are referring to the Act in the amended form. The addition and clarification of the 2004 and 2013 Acts, as the noble Baroness advised the House, will clarify that the new law will apply to civil partnerships and same-sex couples, but not to cohabiting couples, who are the subject of a different Bill, to be introduced by the noble Lord, Lord Marks, which will have a Second Reading shortly.
The second part of the group removes subsections 5(1) and (2), which deal with the issue of periodical payments, discussed during the Second Reading debate in your Lordships’ House. They seek to address an issue that everyone recognises needs to be looked at; on these Benches we were concerned that there appeared to be a one-size-fits-all approach. In a later group, we will look at amendments that seek to take on board concerns expressed in the Second Reading debate and elsewhere.
Amendments 21, 22 and 26 make clear the divide between lump sum payments and ongoing periodical payments.
My Lords, I shall speak briefly to this group of amendments. As the noble Baroness said, a number of these are technical or drafting improvements on which I need not detain the House; I have only these brief comments of substance to make.
I acknowledge the noble Baroness’s intention to limit the potential for litigation under this Bill through her amendments. Amendment 20 is consequential to the removal of paragraphs (b) and (d) of Clause 4(7). It removes the provisions on the making of periodical payments and the duration of such periodical payments and the requirement for the court to consider whether a lump sum payment would be sufficient to meet the needs of the person concerned; it also removes the restrictions and duration limits on the court when making orders for periodical payments, for which the existing subsection (1) of Clause 4 provides.
Amendments 21 and 22 remove from Clause 5 references to lump sum payments as an alternative to periodical payments in Clause 5, and Amendment 26 removes a reference to a lump sum order as an alternative to an order for periodical payments. The Government welcome the greater flexibility for payment of periodical sums provided by these amendments.
Amendment 2 agreed.
Amendments 3 and 4
3: Clause 1, page 1, line 10, after second “1973” insert “as amended”
4: Clause 1, page 1, line 10, at end insert—
““2004 Act” means the Civil Partnerships Act 2004;
“2013 Act” means the Marriage (Same Sex Couples) Act 2013;”
Amendments 3 and 4 agreed.
5: Clause 1, page 1, line 19, at end insert—
““relevant financial order” means—
(a) an order for lump sum provision in favour of a party to a marriage under section 23(1)(c) of the 1973 Act,(b) a property adjustment order in favour of a party to a marriage under section 24(1) of that Act,(c) a pension sharing order under section 24B of that Act,(d) a pension compensation sharing order under section 24E of that Act,and also includes any order under the corresponding provisions of the 2004 Act and the 2013 Act.”
My Lords, I rise to move Amendment 5. Consequent on it is whether Clause 2 stands part of the Bill. This provision, as amended, is rather more technical, but also flexible. It brings together the definitions of the relevant financial order—the sort of things that the court may deal with—and defines and spells out what was implicit in the original draft, the various types of order that the court may make. After some discussion, lump sum orders are included, as they may assist flexibility in dividing up the total assets. This will assist the court in achieving maximum flexibility. My aim throughout is to promote sufficient clarity to enable people to arbitrate and mediate and yet preserve a little bit of discretion, which is a good hallmark of our law. I beg to move.
My Lords, this amendment, as the noble Baroness said, introduces a definition of a new expression, “relevant financial order”. The most significant feature of the new definition is that it does not include an order for periodical payments, but to leave it there would perhaps be a rather meagre explanation. In the long run, it might be helpful to considering some later amendments if I speak very briefly about the terminology and structure of the Matrimonial Causes Act 1973.
Many of your Lordships will recall that the concept of no-fault divorce was introduced in England and Wales by the Divorce Reform Act 1969. Scotland followed suit in 1976. The 1969 Act did not contain any provisions altering what was then, in the old-fashioned phrase, called ancillary relief. New provisions were brought in by the Matrimonial Proceedings and Property Act 1970, which for the first time gave the court power to direct the transfer of specific assets, rather than dealing simply with sums of money. The 1969 and 1970 Acts were consolidated in the Matrimonial Causes Act 1973. My noble friend Lady Deech, with great respect, is not quite right in saying that the Matrimonial Causes Act 1973 has not since been revisited by Parliament. On the contrary, it has been amended at least 12 times. I may have got that number wrong, but it is a very much amended Act. However, the noble Baroness is quite right in saying that what Parliament has not revisited is the essential provision in Section 25(2), the guidance as to how judges are to exercise their very wide discretion. As the supporters of the Bill say, that is the provision that cries out for a simpler and more workable test.
The 1973 Act, unusually for a consolidating Act, introduced two entirely new definitions: first, a financial provision order, which was either an order for periodical payments or an order for a lump sum; and secondly, a property adjustment order, which reflected the introduction by the 1970 Act of a power to direct the transfer of particular identifiable assets. The difference between those two forms of order is essentially that between orders for a sum of money and orders relating to identifiable assets. The powers of the court were extended further in 1999 by the introduction of pension sharing orders, and in 2008 by pension compensation sharing orders following the introduction of the pensions compensation Act. That is the range of powers open to the court at present. The new definition of “relevant financial order” includes all the types of order—that is, property adjustment orders, pension orders and lump sum orders, but not orders for periodical payments. The shape of the Bill as we seek to remould it reflects that. Clauses 2 and 4 are concerned primarily with the scope of “relevant financial orders”, as they now would be defined. Clause 5 would be concerned with periodical payments orders, which are treated and stand on their own and to which the Bill adopts the attitude of discouraging them as a long-term measure except when they are essential.
The Bill seeks to amend what is by now a very complex situation. I hope that this definition adds a little clarity to that. Perhaps I may add that if the Bill does go through, it certainly would be high time for there to be a further consolidating Act to replace the much amended 1973 Act.
My Lords, this next group of amendments, or one amendment and one clause stand part, seeks to improve the Bill from its original form, taking into account matters brought out on Second Reading. I think that all noble Lords who spoke in that debate thought that the Bill was seeking to address issues that had not been addressed for far too long, so what we are seeking to do here today is very welcome. Amendment 5 in the names of the noble Baroness, Lady Deech, my noble friend Lord Grantchester and the noble and learned Lord, Lord Walker of Gestingthorpe, sets out clearly what a relevant financial order is so that there can be no ambiguity about it. As the noble Baroness, Lady Deech, said, lump sum orders are also included as they may assist in providing flexibility in dividing up total assets. The noble Baroness, Lady Deech, is opposing that Clause 2 stand part of the Bill, as there are amendments down that better define what is sought to be achieved here. If agreed, those amendments will be an improvement to the Bill as it is presently drafted. I can see the logic here and the clarification that that brings.
My Lords, I wish to say simply that of course the noble and learned Lord, Lord Walker, is right—that is why he is learned and I am just a noble Baroness and not learned. However, my point is that this House has not revisited the principles of financial provision on divorce in more than 40 years, despite all the changes in society and all the things that have happened—the changes in the position of women, women going out to work and the rise in divorce. It is really crucial to do so now because of the removal of legal aid and the need to help those who mediate and arbitrate and give them a starting point. The Government favour mediation yet there has been a decrease in the use of mediation. How can people mediate if they do not know what the starting point is? To mediate means to find a middle way, and therefore we need a parameter. That is why we are trying to clarify this law.
I am sure that all noble Lords realise that what the noble Baroness meant by saying that the 1973 Act had not been revisited was that the approach that was set out in that Act has not been changed since that date. Although there have in fact been a considerable number of amendments to the Act, as the noble and learned Lord, Lord Walker, pointed out, the overall thrust of the noble Baroness’s point remains the same. Amendment 5 moves, in amended form, the list of financial orders in Clause 2 so that they now form the definition of “relevant financial orders” in Clause 1, which deals with interpretation. This amendment goes with the proposal that Clause 2 does not stand part of the Bill, as the provisions for financial orders would as a result be dealt with elsewhere in the Bill.
The Bill as amended will limit the court to making relevant financial orders only to the extent that a binding prenuptial or post-nuptial agreement did not “deal with the matter”, and only in relation to matrimonial property, as defined by the Bill.
Amendment 5 agreed.
Clause 1, as amended, agreed.
6: After Clause 1, insert the following new Clause—
“Orders limited to matrimonial property
(1) In this Act “matrimonial property” means all property and interests in property, including any pension rights, which could be the subject of a pension sharing order or a pension compensation sharing order, belonging to the parties or either of them at the date of the relevant financial order which—
(a) was acquired—(i) during the marriage; and(ii) otherwise than by gift, inheritance or succession from a third party; and(b) does not directly or indirectly represent property acquired by them or either of them before the marriage.(2) For the purposes of subsection (1)(b)—
(a) any premises and household goods acquired before the marriage for use by them as or in their home shall be treated as acquired during the marriage;(b) if any property that would otherwise fall within subsection (1)(b) is used and applied so as to increase the value of any matrimonial property the property so used or applied shall be treated as matrimonial property;(c) if any matrimonial property belonging to one party is used or applied so as to increase the value of an asset which belongs to the other party, and is not matrimonial property, a proportionate share (by value) of that asset shall be treated as matrimonial property; and(d) paragraph (c) shall also apply if by exceptional personal skill or effort a party to the marriage increases the value of an asset which belongs to the other party, and is not matrimonial property.(3) Subsections (2)(b) to (d) do not apply in relation to any asset if it appears that the costs of investigation and valuation required for the application of the relevant paragraph in subsection (2) would be likely to exceed one-fifth of the amount of the proportionate part or adjustment.
(4) Except as provided in section 3 (pre-nuptial and post-nuptial agreements), no relevant financial order shall be made otherwise than in relation to matrimonial property.”
My Lords, I rise to move Amendment 6 and in so doing I propose to speak to Amendments 14, 15, 15A, 16, 18 and 19. They all stand together, forming one of the great pillars of the Bill, which is to seek to bring the law into line with what the Supreme Court in its judgments has more or less inched its way towards—to bring our law into line with Scottish law and the law applying in most of North America and the continent of Europe. In brief, it is that when the court is dividing up the matrimonial property, it should divide only the property acquired after the marriage by the couple. That would aid greatly simplicity and negotiation. Of course, it is not absolutely rigid. The family home will always be treated as matrimonial. I assure your Lordships that there are many provisions and precedents in the law for manoeuvring that situation to ensure that children, and usually their mother, stay in the home until they leave for university or careers. Incidentally, it is an interesting question whether one should treat children as ending their childhood at 18 or whether, as it is now so common for school-leavers to go to university or college, one should say that they need the protection of the law in that respect until they are 21.
There is, however, room for manoeuvre in this amendment. It is modelled on New Zealand and Scottish law and makes provision for how to treat property that was separate but has been increased in value by the assets or efforts of the other party. It is not the case that selfishness will be promoted. If one spouse works on the premarital property of the other, a proportion would be regarded as reverting to the ownership of the one who has put in the effort.
Again, this is a law, and this is an amendment, for the average couple. Very wealthy couples will always be able to afford lawyers and may make prenups and sort out the property between them. This is for the hundreds of thousands of couples who get divorced every year and are clogging up the courts and having to face each other in court without representation and with no clear guidance on what would be a fair and equitable settlement. If this Bill is passed, this provision in particular would give them a steer.
Noble Lords may have seen the report last week that a couple spent £1 million on lawyers and experts while fighting over the division of assets worth £2.9 million. There was a call to cut excess litigation costs and for cost caps. However, you cannot cut unless you make the law simpler and clearer and give couples a starting point for mediation. A cartoon in the Times yesterday showed two lawyers expressing shock and horror over the case I mentioned and at the fact that one-third of the assets was used up in costs. A final box in the cartoon says, “Absolutely shocking! When I did a divorce case, we used up half the assets”. This situation cannot be allowed to continue. It would be better to have broad-brush justice to help those struggling without legal aid and lawyers. I mean no criticism of the Supreme Court. Its judgments have been sophisticated and compassionate. But only the richest people reach the Supreme Court and the level of detail and sophistication that its judgments have provided does not help the man or woman in the high street battling over how to divide up their sparse assets, and where every penny spent on costs takes money away from the children.
Amendment 14 would simply change the date on which the valuation of the assets is calculated. I was advised by judges that I should make this change, which would change the date on which the financial order is made. Amendment 15 is consequential drafting. Amendment 15A would provide maximum flexibility by allowing people to carve up their assets by using lump sums, not necessarily chopping the house in half or having to sell it but using such assets as they have to reach a 50:50 settlement in their negotiations. Amendments 16, 18 and 19 spell out the ways I mentioned earlier of departing from a 50:50 split in certain circumstances, mostly where one party has put in extra effort or, indeed, for the protection of the children. Flexibility would be maintained but couples who know nothing about the law would be able to start with the presumption that whatever they acquire after they get married should be divided in half. I used to run an all-party parliamentary group on family law in this House and members of the public attended its proceedings. They did not always understand the niceties but one message came through from the hundreds of people who attended the proceedings. They said, “Please, can’t we have a booklet when we get married to tell us what our rights and duties are and what’s going to happen to us—what we will owe—when we get divorced? We ask people and nobody can tell us”. This is what I am trying to provide. Here is a guide to what will happen in the unfortunate event of people getting divorced. I beg to move.
My Lords, I thank the noble Baroness, Lady Deech, for her great efforts to allow the courts to bring certainty to this situation. As regards her last comment, I hasten to add that I do not think people enter marriage with the idea that they are going to get a divorce. Similarly, I do not believe that anybody turns up to work with the intention of fouling up, but these things happen. I support the amendment as it would bring certainty and enable couples facing divorce to be given clear advice on what their future situation will be and how the matrimonial assets will be divided. The starting point for this process should be that of defining what the matrimonial assets are.
My Lords, I will speak to Amendments 6 and 15A. As the noble Baroness, Lady Deech, said, Amendment 6 is one of the main pillars of the Bill. The revised proposed new clause embodied in Amendment 6 lays down the general principle that matrimonial property is to be divided equally in normal circumstances. That is the easy bit. The more difficult bit is defining with reasonable precision what matrimonial property is. The revised proposed new clause largely reproduces—we hope in a clearer form—what was in the Bill as introduced, although there are one or two significant alterations to which I shall draw attention. I recognise, of course, that in this context clarity is a pretty relative concept and that the proposed new clause is not particularly easy going.
One way of viewing the proposed new clause is as laying down three general principles in proposed new subsection (1), followed by four qualifications or refinements in the four paragraphs of proposed new subsection (2). The first general principle is that property acquired before marriage should not be regarded as matrimonial property but as—to use a clumsy but unavoidable term—non-matrimonial property. The second general principle is that gifts received from third parties or inheritances or intestate succession to the estates of third parties are also to be treated as non-matrimonial property, even if the gift is made, or the death occurs, during the marriage. I should treat the third general principle at some length because it differs from both the Bill as introduced and from the Scottish legislation embodied in the Family Law (Scotland) Act 1985, from which these provisions are fairly obviously derived.
I mention in passing that I very much regret that my noble and learned friend Lord Hope of Craighead cannot be here today because he, as former Lord President in Scotland, has unparalleled experience of the practical working of Scottish legislation. I have had the advantage of some discussion with him but I take responsibility for what I say about the law of Scotland, which will be far less learned than if it came from him.
The problem can perhaps be illustrated by a simple example. Suppose that a wife owns a portfolio of stock exchange investments that are managed on a discretionary basis by a financial adviser. It may be that she does not know that the portfolio is being changed from time to time, with her authority, by the adviser. After several years of a long marriage, a few of the investments held in that portfolio may be exactly the same as those that were in the portfolio when she got married. Are they or are they not non-matrimonial property? The answer that Scottish law has given, rather surprisingly, is that they would cease to be non-matrimonial property—that a mere change of investments in a managed portfolio would be enough. Indeed, in one case decided in the Court of Session, a company reorganisation carried through by a simple share-for-share exchange converted a very large and valuable holding from non-matrimonial to matrimonial property. We take the view that that is unfair and against the public interest, in that it has the effect of inhibiting normal economic activity if it is essential to keep non-matrimonial property in just the same form as before.
The amendment proposes that property that can be regarded as directly or indirectly in substitution for non-matrimonial property shall have the same character, subject to the exceptions and qualifications that I now come to. The notion of tracing property through to substitute property is familiar in several areas of English law—for instance, in tracing misappropriated trust assets and, in a very different context, in tracing the proceeds of crime for the purposes of the Proceeds of Crime Act. It can create difficulties but it is the lesser of two evils to have a provision about substituted property as against a position under which non-matrimonial property may suddenly and almost irrationally turn into matrimonial property.
I come to the four qualifications or refinements. The first, in subsection (2)(a), is well understood and, I think, non-controversial; the matrimonial home and its household contents should be regarded as matrimonial property, even if acquired before the marriage. The second qualification, in proposed subsection (2)(b), is concerned with the situation in which property loses its non-matrimonial status by, in effect, being merged with matrimonial property. To follow on from the simple example of the wife with the portfolio, if she decides to raise £20,000 from her portfolio and put it towards improvements to the matrimonial home, it is no longer traceable as non-matrimonial property and becomes matrimonial property—and that is, no doubt, the fair and simple solution.
Proposed subsection (2)(c) is concerned with the converse case, whereby matrimonial property is used in turn to enhance the value of non-matrimonial property. Again, using the same example, if the wife’s investment portfolio includes shares with a large, valuable rights issue but the wife is not in a position to put up the cash to take up the rights, and the husband says, “I will do that”, the new shares acquired on the rights issue would be an example of matrimonial property being recycled, as it were, into non-matrimonial property but would keep its character as matrimonial property.
Fourthly, proposed subsection (2)(d) applies the same principle to where the contribution is not in cash or assets but in skill, time and effort. It is not intended to apply simply to a bit of help given from time to time by a husband to his wife in her business, or vice versa, but contributions that are beyond the ordinary, by which the value of non-matrimonial property is enhanced, should be marked by an appropriate adjustment.
Those are the purposes of the four paragraphs in proposed subsection (2). They largely follow the Scottish pattern but we venture to hope that we may have made them somewhat clearer and simpler. They do not follow exactly the Scottish pattern. That is the way in which we have tried to provide a reasonably sensitive but nevertheless not too complicated pattern for distinguishing between matrimonial and non-matrimonial property.
My Lords, I rise to thank the noble Baroness, Lady Deech, for bringing in the Bill and to declare my interest as a practitioner in matrimonial law for 30-plus years. I am grateful to the noble Baroness because the Bill is overdue and much needed. It provides some clarity and simplicity for those of us who operate in the field, at the moment without proper statutory guidance. It is vital that the matters that she is addressing are put forward for debate, and reform is long overdue.
The simplicity behind the Bill is wonderful. It applies not only to what happens when things go wrong and people get divorced but to the drafting of prenuptial agreements, which is practically impossible if one does not know what is going to happen at the other end if a marriage, civil partnership or same-sex marriage is dissolved. Such agreements are become increasingly fashionable, despite the fact that there is nothing in Section 25 of the 1973 Act about the enforceability of prenuptial agreements. The courts are therefore enforcing them in circumstances that they think may or may not be fair. There is no official guideline from Parliament as to how they should be enforced.
There should be a purer definition of what people can expect upon the breakdown of a marriage. This is not for rich people who can afford to spend a small percentage of their money litigating matters. They can have the luxury to do what they want, like they can in everything else. This is for the average person who goes into a marriage trying to protect the assets that they previously acquired and knowing what they are going to end up with, should it break down. I welcome these amendments and the Bill. I thank the noble Baroness very much indeed for introducing it.
My Lords, this amendment in the names of the noble Baronesses, Lady Deech and Lady Wilcox, my noble friend Lord Grantchester, and the noble and learned Lord, Lord Walker of Gestingthorpe, and the other amendments in the group—namely, Amendments 14, 15, 15A, 16, 18 and 19—deal with matrimonial property, an issue central to the Bill.
The new clause proposed by Amendment 6 is detailed and, as we have heard from the noble Baroness, Lady Deech, and the noble and learned Lord, makes it clear that the split of assets on divorce should be limited to property acquired after marriage by the couple. The family home will be treated as matrimonial but property, gifts and inheritances acquired before the marriage will not be matrimonial or available for sharing.
I very much see the point that without the certainty that the proposed new clause aims to give, couples run the risk of spending vast sums of money fighting over the division of assets and thereby reducing the assets that they are left with. As the noble Baroness, Lady Deech, said, to reduce costs we need to make things simpler and clearer for divorcing couples. These are welcome amendments that seek to do just that. I also associate myself with the comments of the noble Baroness, Lady Shackleton of Belgravia, in thanking the noble Baroness, Lady Deech, for bringing forward the Bill.
My Lords, the amendments in this group would provide greater clarity about how the court is to approach the making of orders dividing matrimonial property on divorce. Clarity and a degree of certainty are clearly desirable. Against that, one has to weigh the need for flexibility, with the possibility that flexibility can sometimes bring fairness that certainty precludes. I am very grateful for the way in which the group was introduced by the noble Baroness, and indeed for the elaboration by the noble and learned Lord, Lord Walker of Gestingthorpe. He explained with great lucidity the attempt to improve upon the Scottish definition to deal with the problems of portfolios and the like, which may change and therefore change their character in legislative terms.
The proposed new clause seeks to define matrimonial property as property acquired “during the marriage”, rather than property owned before the marriage by either party, or property received as a gift during the marriage. Its intention is to clarify the definition of matrimonial property, which, under the terms of the Bill, will be the only property in respect of which financial orders can be made on divorce, except where there is a significant additional contribution by one party, or if the property has increased in value. The noble and learned Lord described what is meant by a significant additional contribution.
Matrimonial property would normally be divided equally between the parties. The Government have concerns over the definition of “matrimonial property” and the rigid equal division of matrimonial property, as the definition may be unfair in many cases: an equal division of property is rarely found in most ancillary relief cases, due to the lack of assets of the family, and the needs of the children and of the family. If the provisions of the Bill were to be taken forward we would need to define matrimonial property extremely carefully to ensure that any division was fair.
Existing provisions for division of property on divorce give the court a wider discretion to divide property and determine who should have which assets, in the context of the needs of the family. That enables the court to seek to achieve fairness in all the circumstances. The Government are not convinced that the certainty that the Bill and these amendments intend to provide would not come at too great a cost in rigidity. Therefore, the Government believe that the definition of matrimonial property in the Bill is problematic and, I fear, continue to have significant reservations about it.
Amendment 14 is in a different category. It would clarify the date on which the net value of the matrimonial property is to be valued. Instead of the “relevant date” described in Clause 4(4), the valuation is to be made on the date of the relevant financial order made by the court. This provides a clear and unequivocal date for the valuation: the date on which the property is divided. Consequentially, Amendment 15 removes the definition of the date at which the matrimonial property is valued in Clause 4(4). That is clearly desirable.
Amendment 17 would insert a new subsection into Clause 4, describing how a lump sum order is to be taken into account on the division of property on divorce. A lump sum payment is to be taken into account as part of the equal sharing of the matrimonial property, irrespective of the assets used to pay the lump sum. The amendment clarifies the position as to how lump sum payments are to be taken into account.
The Government welcome the greater clarity that would be introduced into the Bill, but as I have indicated remain concerned about the lack of flexibility for the court to determine how to divide property on divorce, and about the fact that the provisions in the Bill apply only to matrimonial property, allowing no flexibility for the court to consider what might be fair to the parties of a marriage in particular circumstances. I acknowledge the noble Baroness’s intention, through her amendments, to limit the potential for litigation under the Bill. The Government and all noble Lords are particularly aware of the unsatisfactory nature of the law, in the sense that it can so often lead to protracted disputes.
Amendments 18 and 19 concern Clause 4. They would remove paragraphs (b) and (d) from Clause 4(7), so that, under the Bill, the court would no longer have to take into account the source of funds not derived from the efforts of the parties during the marriage when making an unequal sharing of the matrimonial property—nor would the court have to take into account the nature and use of the matrimonial property in such circumstances.
I completely appreciate the Government’s concerns on this. We are united in wanting to ensure that the costs of litigation are removed or reduced and that people get fair shares. It is a very difficult issue. I do not want to withdraw the amendment at this stage, but given that the Bill will have many more stages to go through—including, I hope, in the House of Commons—I and others would be happy to enter into discussion with the Government on this very tricky issue of how to define what should be shared, bearing in mind that the Supreme Court has already indicated, in a number of judgments, that sharing matrimonial property is the way forward. That has to be our starting point, even if we try to refine it in the many stages that lie ahead of us before the Bill becomes law.
Amendment 6 agreed.
Clause 2 disagreed.
Clause 3: Pre-nuptial and post-nuptial agreements
7: Clause 3, page 2, line 16, after “agreement” insert “in writing and signed by both parties to the marriage”
My Lords, in moving Amendment 7, I will speak to Amendments 8 to 13 as well. What binds them together is that they concern prenuptial and post-nuptial agreements.
First, let me counter criticisms I have heard. Unfortunately, it is no good saying that nobody ever contemplates the end of their marriage. Only too sadly, it is unavoidable to think of it. There cannot be anyone in this House who has not had a member of their family go through divorce—or, indeed, has not been divorced themselves. It is a very current feature of life. I know the arguments that the Bishops might have put forward, had they been here: that having a prenuptial agreement somehow undermines marriage. That is not so. Such agreements are common in every country in Europe and in North America. In all those places the divorce rate is lower than it is here, except possibly in the United States. I do not think it can be argued that they in any way undermine marriage. Moreover, the Supreme Court swept away the public policy issue that there is somehow something wrong with making an agreement about the end of a marriage in the famous case of Granatino v Radmacher, which was unusual in that it was the wife who was very wealthy and the husband, although comfortable, was not quite so wealthy.
First in this group, I took account of what was a glaring omission in the first draft. The prenuptial or post-nuptial agreement must of course be in writing. That is covered by Amendment 7. This was a mere oversight. It follows the recommendation of the Law Commission in its report on matrimonial property agreements and it follows practice abroad. There can be hardly any dissent from that. Amendment 8 is an improved draft: a way of saying that prenuptial and post-nuptial agreements are binding.
Amendment 9 is about disclosure. Obviously, if people are making a prenuptial or post-nuptial agreement they ought to tell each other what their assets are before they sign it. This amendment seeks to deter legal challenges to an agreement if a small or unimportant asset was overlooked and not declared. For example, if a wife omitted to mention in her list of assets her second-hand car kept somewhere else in the country, one would not want the agreement voided for that unimportant failure to disclose. How many of us could at any time make a completely comprehensive and accurate list of everything we own? Therefore, the amendment provides that a failure to disclose will not ruin the prenup or post-nuptial agreement provided that the asset is not of great significance. I have been advised by judges that there is no need to make any fresh statutory rules about disclosure—hence Amendment 12.
Amendment 11 is meant to prevent someone who would not be damaged taking advantage of non-disclosure. Others will give more substantial examples of that. For instance, if a wife failed to disclose her second-hand car, she could not rely on that to destroy the prenuptial agreement so as to give her an advantage. The idea is that, set against a background of clarity in dividing up assets, the court will accept the prenuptial or post-nuptial agreement as binding.
The Supreme Court has already almost worked into that position, but it attached so many conditions in the well known case of Granatino v Radmacher that about a dozen other cases followed where couples argued simply over whether the prenuptial agreement was binding. If they start going to court to argue about that, the very point of the agreement is undermined and costs accumulate.
The provisions in this group of amendments cumulatively will give very strong, although not complete, force to the binding nature of a prenuptial or post-nuptial agreement. Because the normal laws of contract will apply, if there is a mistake, duress or fraud, it will be possible to undermine a prenup. Section 35 of the Matrimonial Causes Act provides, in limited circumstances, a way to attack a post-nuptial agreement, so that is already quite common.
The great advantage of this provision is the encouragement that it will give people to get married. The noble Baroness, Lady Wilcox, who apologises for not being in her place today as she has been called abroad on urgent business, told me enthusiastically about her feelings and those of other Members of this House of riper years who might contemplate a second marriage. People who do so, having once been widowed or divorced, may well say to themselves, “But if I get married again, all the property that I inherited from my first husband or everything I have worked for might, in the event of a second breakdown, go to the second spouse and his family”. I think that most people of a riper age who are thinking of getting remarried would prefer to keep their property for their original family, and the existence of a prenuptial agreement would encourage and help them.
The prenuptial agreement is very common in other countries. Of course, as your Lordships know, there is many a transnational marriage these days. People who were married abroad get divorced here and vice versa. An English person marries someone from abroad who takes it as a matter of course that there should be a prenuptial agreement. Years ago, I had a student at my college in Oxford who got engaged. She came bouncing in to see me and said, “I’m engaged, Mrs Deech. I’m engaged. Who do I go to? Which lawyer do I see about my prenup?”. That was about 20 or 30 years ago, and one can well imagine how my jaw dropped. However, she was Canadian, from Quebec, and that is what they do in Quebec, in France, and in other places. Having decided to get married, the young couple go off and see a lawyer to discuss what they call the “matrimonial regime”, where they talk about what sort of property ownership will apply. It does not undermine their marriages in those countries. As I have said, their divorce rate is lower than ours.
I find it very curious that when the average couple in this country spend £20,000 on arranging a wedding, and spend years doing it—we all know just how complicated these things are—they do not spend just a few pounds on going to see a lawyer to decide who is going to own the property and how things are going to be sorted out. It runs contrary to our nature—or at least it used to. However, I think, and hope, that the noble Baroness, Lady Shackleton, will explain to us that these prenups and post-nups are catching on, because, sadly, none of us can be unaware of how these things can go wrong and what it will cost us. As I said, the Supreme Court has already pretty much worked itself into this position.
Therefore, I very much hope that your Lordships will accept this group of amendments, which will make prenups and post-nups binding against a background of dividing up assets fairly on divorce and will give couples a clue as to what is fair when drawing up a prenup. Alternatively, they might say, “No, I’m not going to draw up a prenup. Don’t you love me? We don’t need a prenup”. I am sorry to say that that would be a bit naive these days but this group of amendments would greatly improve the situation for couples with a foreign element, older couples embarking on a second marriage and couples where there is a great disparity of wealth: the model who marries the footballer, the singer who marries the Russian oligarch and so on. It is perfectly understandable that they might want to discuss how those assets should be owned and divided up. It is too late for me, I am afraid, but not necessary anyway. However, I very much hope that this House and the Government will recognise that that is modern society and that the amendments would greatly help a number of couples. I beg to move.
My Lords, I support the concept behind this pillar of the Bill. It is vital that there is more clarity as to when, why and where prenuptial agreements should be binding. If they are made de rigueur in this country, as they are in other countries, there will not be any romance in it; it will just be like trotting along to get your marriage licence. There will be WH Smith forms and, if the couples do not take legal advice, they will be protected.
There are problems because the current law does not provide for binding prenuptial agreements but there is a lot of travel within the European Community. People come to this country having signed a prenuptial agreement which is not a prenuptial agreement: it is a property regime which, with no legal advice, is translated into a prenuptial agreement in this country, and it causes a lot of problems. If people know in clear terms that those are not going to work, then they will know where they stand. They will know what will work and they can be given appropriate advice before they arrive here if they are intending to come to this country.
My noble friend Lady Wilcox believes that this proposal will positively encourage marriage, and I support that wholeheartedly. Unfortunately, I see a cottage industry in my profession of stepchildren encouraging divorce. It is forced upon a parent so that the parent can, putting it crudely, collect the money before they die because there is no prenuptial agreement. Therefore, divorce is being promoted by stepchildren so that assets on one side of the balance sheet can be collected and they can profit by inheritance. That is ugly. A prenuptial agreement would avoid such circumstances.
Also, second marriages are often broken by stepchildren. If those stepchildren know that their financial security is intact and protected by law, there is every chance that the marriages will survive. Speaking in my other capacity as a patron of the Marriage Foundation, I believe that everything should be done to enhance the prospect of people remaining married. Prenuptial agreements protect people because they know what will happen to them should the ghastly event of divorce happen. It is very important that people get independent legal advice because at the time they get married they are, in my experience, concentrating on the dress, bridesmaids, venue and canapés and not what may go wrong. To have people in love not being properly shown the horrors of divorce is a mistake.
I wholly agree with this measure becoming part of the statute. I was the lawyer for Mr Granatino and it was an ugly shock when the Supreme Court decided to apply contractual measures to something that had hitherto, as part of the Matrimonial Causes Act, not been legally enforceable.
My Lords, I add my support for prenuptial agreements. I say that in the context that I trained as a Roman-Dutch lawyer, under which law a prenup is recognised. In an era when we have one of the highest divorce rates ever, certainly this is the time to simplify this important part of divorce law.
I say a prenup rather than a post-nup because obviously a prenup is more certain and there is far less scope for negotiation than with a post-nuptial agreement. But a prenup makes the likelihood of successful mediation far more likely than is the case now.
A common theme of the Bill has been to provide more certainty. Ideally, we want a clean break for those going through the unfortunate process of getting divorced. Apart from the huge cost of lengthy divorces, not much has been mentioned today about the huge stress that this has on children from this prolonged and tortuous process. The noble Baroness, Lady Wilcox, mentioned the important fact that, without this protection, those who have gone through traumatic divorces are far less likely to want to get remarried. I am sure that she will also have mentioned that 16 million people in Britain are over the age of 65. That is another reason why this clause should be promoted.
My Lords, I was not intending to speak but I have one or two points to make. When my noble friend talked about a cottage industry I thought that was probably scaling things down a little; it is a mansion industry rather than a cottage industry. I accept the total impeccable logic of the case advanced by the noble Baroness, Lady Deech. She is talking about an unfortunate necessity. Only this week I met a young girl in her 20s. I have known her since she was born. She married with great hope less than 18 months ago and the marriage is foundering now. Of course, I accept all that, but am I alone in your Lordships’ House in expressing infinite regret that we are where we are?
My Lords, it might surprise the noble Lord, Lord Cormack, to know that I am absolutely with him on the importance of marriage. I have spent much of my academic career writing about it in an atmosphere where I was almost a lone voice. I am with him all the way. I wish there was more we could do about it without being accused of claiming the moral high ground and so forth.
Nevertheless, I have studied the situation and realised, as the noble Baroness, Lady Shackleton, pointed out, that this is going on. The Supreme Court has recognised it. It is for this House to grab a hold of it. We should grab hold of all this law, which has been interpreted and elasticised and twisted around by the judges for 40 years without this House getting a grip on the principles. Now is an opportunity to recognise that we are where we are with 100,000 couples divorcing every year, leaving aside the many more breakdowns of cohabitation—and possibly in the future, civil partnerships and the relationships of same-sex couples who have not turned up in the statistics yet. My heart is absolutely with the noble Lord.
My Lords, this group of amendments starting with Amendment 7 in the names of the noble Baronesses, Lady Deech and Lady Wilcox, and my noble friend Lord Grantchester are all to Clause 3, which concerns prenuptial and post-nuptial agreements.
I see the arguments made that these agreements, which were not very common a few years ago, are on the increase and can provide certainty to both parties as to the division of assets in the result of a breakdown of the relationship. I recall the comments of the noble Lord, Lord St John of Bletso, when he told us at Second Reading that these agreements had in no way encouraged the breakdown of marriage. Also, the noble Baroness, Lady Wilcox, spoke about people who had been widowed or divorced and were afraid to marry again where there were assets they wished to protect and who were reluctant to commit again, fearing a potentially financially disadvantaged position at a time of life when starting again would be almost impossible. The noble Lord and other noble Lords spoke about this again today.
The amendments themselves seek to provide further clarity as to what this Bill seeks to do in respect of pre and post-nuptial agreements and build on the comments and points raised both inside and outside your Lordships’ House.
My Lords, this has been a useful and instructive debate on this interesting and significant area. There are those who retain great faith in the institution of marriage. The noble Baroness herself said that, and I for one see no tension between thinking that and nevertheless being of the view that it is important there should be some sensible provision about prenuptial agreements. Her student may have been anticipating a trend by suggesting going to a lawyer almost immediately, in the heady days of announcing her engagement. A number of popular songs that suggest going to see the preacher at that juncture may have to be amended to reflect this different approach.
These amendments all relate to this clause. Amendment 9 changes the threshold of the duty of disclosure placed on both parties for the prenuptial or post-nuptial agreement to be binding on both parties. The Bill currently requires that the parties fully disclose their assets before the agreement will be binding on them and this amendment would require only “proper disclosure”.
Amendment 7 corrects the omission of the requirement in the Bill for a prenuptial or post-nuptial agreement to be made in writing. I recall that that point was specifically drawn to the House’s attention by the noble and learned Lord, Lord Scott of Foscote, at Second Reading. As the noble Baroness said, this is an essential prerequisite and a key feature of the recommendations made by the Law Commission.
The intention is clearly to protect people entering into prenuptial agreements by imposing the formality of a written and signed agreement. However, the Government have already indicated that we have reservations about the lack of flexibility in the Bill for the court to override an agreement that is unfair or does not adequately provide for “needs”. This is especially so given that people often enter into a prenuptial agreement at a point when they are not as realistic about events, sadly, as they should be.
The Government has yet to consider the detailed proposals for binding matrimonial property agreements put forward by Law Commission in its report on Matrimonial Property, Needs and Agreements. We have informed the commission that a final decision on the proposals should be made by the new Government after the election. However, the Government would not seek to oppose this amendment to the Bill.
The requirement under the existing divorce process is for both parties to make,
“full, frank, clear and accurate”,
disclosure of their assets using form E. We have concerns that undefined “proper” disclosure would be open to interpretation and offer scope for possible hiding of assets in a way that the current requirement is designed to avoid.
Amendment 8 amends the formulation of subsection (1) of Clause 3 and, if I have understood it correctly, is intended only to tidy up the drafting and not to change its substantive effect. The amendment seeks to replace the words,
“binding on the parties and is to be given effect unless”,
with “binding on them unless”. However, I believe that normal legislative drafting convention means that the effect would be to omit the crucial word “unless”, which is necessary to apply the conditions set out in paragraphs (a) to (e) of subsection (1).
Amendment 11 inserts a new substantive provision into the clause which sets out the requirements for a prenuptial or post-nuptial agreement to be binding. It does not set a new condition for the agreement to be binding; rather, it provides that only the person who has been disadvantaged can rely upon failure to obtain legal advice or failure to disclose assets as a means to make the agreement non-binding. The Government remain generally concerned about the lack of protection for people entering into binding prenuptial or post-nuptial agreements under the terms proposed in the Bill. These amendments do not appear to improve significantly on the protection offered and are substantially different from the approach recommended by the Law Commission, which would preserve the ability of the court in appropriate cases to override an agreement made between the parties where in the view of the court its terms are manifestly unfair or where they fail to provide adequately for needs. The Government have yet to consider the Law Commission’s detailed proposals. In relation to the Bill we are concerned that leaving prenuptial agreements to be subject to the rules of contractual law around validity and enforceability, and post-nuptial agreements subject to review by the court under the provisions set out in Section 35 of the Matrimonial Causes Act 1973, does not amount to a coherent set of protections.
Amendment 12 would remove the possibility of the Lord Chancellor making rules to specify what constitutes the full disclosure of assets, which is one of the requirements in the Bill for the prenuptial or post-nuptial agreement to be binding. The noble Baroness said that she has been advised that the law in relation to disclosure is sufficiently clear not to need further elaboration. As already noted, the second amendment would alter “full disclosure”, which as she rightly says is well understood, to “proper disclosure”. The Government agree that there are already established principles around disclosure. I understand that the noble Baroness is really concerned with what might be regarded as de minimis omissions from the list, but I do not think that that would in fact cause a difficulty on the existing rules. We are concerned that the use of the term “proper disclosure” could open up some areas of concern.
Would the Minister clarify that he is talking about form E? Form E is an incredibly detailed analysis of someone’s wealth; it could not be fuller than full disclosure. Is the Minister talking about disclosure of that nature, because I think that the amendment is meant to catch disproportionate non-disclosure? Form E is the most comprehensive document known to man. It goes down to the last £500 or number of pairs of cufflinks that a man may own.
I am not seeking to suggest that form E is not an extremely thorough document and I am sure that my noble friend is absolutely right on the point. But the amendment seeks to alter the rules from “full disclosure” to “proper disclosure”. If form E is going to be what proper disclosure is, my noble friend may well be right. My point is simply that proper disclosure appears to be a different description. If I have understood her correctly, the noble Baroness, Lady Deech, said that this was in order to ensure that the whole thing could not be set aside on the basis of a failure to include in the list something that someone had forgotten about or which was so trivial that it did not enter the heads of those entering into it. I understand that that is the aim, but the Government remain concerned that “proper disclosure” could open the door to someone saying, “Well, it was not proper for me to disclose that”. That is my answer to my noble friend.
Finally, Amendment 13 alters the court’s powers when dealing with the division of property on divorce when a prenuptial or post-nuptial agreement is to be treated as binding on the parties so that instead the court can make a financial order as described in amended Clause 1(3). The orders the court can make under the revised clause are an order for a lump sum payment, a property adjustment order, a pension sharing order, a pension compensation sharing order and corresponding provisions of the Civil Partnership Act 2014 and the Marriage (Same Sex Couples) Act 2013 in so far as the provisions of the 2013 Act are not already covered by the provisions of the Matrimonial Causes Act 1973 as amended by the Bill. This increases the range of orders which can be made. However it still falls some way short of the flexibility that the courts currently have under the 1973 Act and, for the reasons I have already given, the Government still have some concerns about the approach.
The noble Lord said that one of the reasons why the Government would introduce the full setting aside of a prenuptial agreement would be “need”. If that is the case, would that not, first, have the potential to open up an area of great ambiguity and uncertainty because “need” would have to be defined very closely? Secondly, would there not be a real risk that “need” could be interpreted by a court as being the right to retain the same standard of living as had been the case when the party had been married, and that might be possible only by drawing on prenuptial, non-matrimonial property? That would undermine the whole purpose and force of the Bill. Will the noble Lord say a few more words about how the Government envisage defining the word “need” in this context?
The noble Lord makes an important point. What I did say was that the Government had not yet concluded how they proposed to respond to the Law Commission’s recommendations. The Law Commission has said that it considers it appropriate to override an agreement in some cases. I take entirely his point that if, as it were, the court is going to have a free rein to override an agreement simply because it thinks it fairer in the circumstances to come to a different conclusion, that would significantly undermine the degree of certainty which can be obtained by a prenuptial agreement. However, at the heart of what the Government will have to decide on this is to respect all the advantages that one can obtain from having a prenuptial agreement for the reasons that have already been outlined in the debate, yet not making it iniquitous in some circumstances—limited circumstances, I would imagine—where it is manifestly unfair for a party to be restricted by the scope of that agreement.
My Lords, I am sure that the Minister will agree that the best should not be the enemy of what is workable and good going forward. I am also sure that the Minister and I are united in the deep concern I have about the unfortunate couples who are wasting their money as they go through the process at the moment. I am willing to try almost anything because this has been a concern of mine for the past 40 years. We need a framework for couples that is more in line with what is tried and tested in New Zealand, Australia, Scotland, North America and Europe. While appreciating that this is an issue in flux and the fact that the legislation I am proposing would still have to go through the Commons, I hope very much that the noble Lord will be open to discussion with me and other concerned parties about how to get exactly the right wording in relation to proper disclosure—I absolutely understand his concerns—and the flexibility that is necessary. I am convinced that we must do this and I believe that the Minister shares that concern.
Amendment 7 agreed.
Amendments 8 to 13
8: Clause 3, page 2, line 16, leave out from “on” to “unless” and insert “them”
9: Clause 3, page 2, leave out line 26 and insert “one or both parties failed to make proper disclosure of that party’s assets before the agreement”
10: Clause 3, page 2, line 28, leave out “the applicable rules” and insert “any rule”
11: Clause 3, page 2, line 29, at end insert—
“( ) Any non-compliance with subsection (1)(b) or (d) may be relied on only by the party disadvantaged by such non-compliance.”
12: Clause 3, page 2, line 35, leave out subsection (3)
13: Clause 3, page 2, line 41, leave out from “may” to end and insert “make a relevant financial order”
Amendments 8 to 13 agreed.
Clause 3, as amended, agreed.
Clause 4: Matrimonial property
Amendments 14 to 16
14: Clause 4, page 3, line 4, leave out “relevant date” and insert “date of the relevant financial order”
15: Clause 4, page 3, line 10, leave out subsection (4)
15A: Clause 4, page 3, line 13, at end insert—
“( ) The amount of any order for lump sum provision in favour of a party to a marriage shall be taken into account as part of the equal sharing of the matrimonial property (irrespective of what assets are actually resorted to by the other party in compliance with the order).”
16: Clause 4, page 3, line 14, leave out subsections (5) and (6)
Amendments 14 to 16 agreed.
Amendment 17 had been withdrawn from the Marshalled List.
Amendments 18 and 19
18: Clause 4, page 4, line 1, leave out paragraph (b)
19: Clause 4, page 4, line 6, leave out paragraph (d)
Amendments 18 and 19 agreed.
Amendment 20 had been withdrawn from the Marshalled List.
Clause 4, as amended, agreed.
Clause 5: Periodical payments and lump sums
Amendments 20A to 22
20A: Clause 5, page 4, line 14, leave out subsections (1) and (2)
21: Clause 5, page 4, line 23, leave out “or lump sum”
22: Clause 5, page 4, line 32, leave out “or lump sum”
Amendments 20A to 22 agreed.
23: Clause 5, page 4, line 33, leave out “three” and insert “five”
My Lords, Amendments 23 to 25 are all about what we specialists call periodical payments, which, I ought to explain to the House, are ongoing maintenance payments that many people are familiar with, whereby usually a husband, although not always, is ordered to pay his ex-wife a monthly or annual sum, year in, year out. A Member of this House has told me that he is still paying maintenance to his ex-wife after 30 years and many intervening marriages.
In fact, only about 12,000 such orders are made every year, although, as I have said more than once, there are more than 100,000 divorces every year. Not many of these orders are made, which must mean that people are reaching their own agreement: they are settling the matter once and for all by a lump sum, or, very likely, there simply is not any money to go around. As I have said before, the law that I am trying to reform affects largely lower and middle-income people. Of course, as we know, in the lower income bracket, people may well be living on benefits with a great deal of state subsidy; there simply is no money to go around and no order is made.
Noble Lords will recall the great difficulty there has been over the decades in trying to extract from fathers, who have no reason to object, ongoing maintenance for their children after a divorce. It has been like trying to get blood out of a stone, and so it remains. I suspect that in many of these divorces no order is made because one or both of the couple are living on benefits.
In many ways, the current law is regressive. Reverting to an analogy I have used before, were I or any other noble Baroness in this House so fortunate as to marry a footballer for a brief period, we could expect at the end of the marriage, which undoubtedly would come about, to be kept in that particular style for ever and ever—it really is not that amusing; that is the law at the moment—whereas if a noble Baroness in her youth was so altruistic as to marry a vicar she would get absolutely nothing, or next to nothing, on divorce. I have said for many years—and I have been involved in educating women all my career—that the message that goes out is, “Find that footballer and sit back”.
The Law Commission has said that periodical payments—maintenance—should be a transition. In an era when women, mothers included, are expected by the Government not to claim benefits once their child is six, it is very hard to argue that once a woman has children she should always be kept after the end of the marriage, let alone if she has no children or those children have grown up. I am sure that noble Lords know from their acquaintances the inequity and rather arbitrary nature of what goes on.
The Law Commission has said that maintenance should be a period of transition to full independence. We know that this may be hard on the older woman but it may very well be that there are lump sums and a division of assets. Moreover, I have shown in these amendments that I am listening to the concerns of the Government. At Second Reading they said that this may be hard. These amendments therefore say that maintenance should last in the first instance for five years—which represents the average period between the end of one marriage and the beginning of another—and that they may continue where there is evidence of “serious financial hardship”.
To change the law in this way would be only to bring us into line with what goes on, as I have said before, in North America, the rest of Europe, Scandinavia, Australia and New Zealand. It is very hard to argue, when our divorce law, rightly or wrongly, is no longer based on fault but on irretrievable breakdown—“This marriage has come to an end; it is nobody’s fault”—that a man should continue to keep his ex-wife in the style to which she became accustomed for ever and ever until the end of their joint lives. It does not actually happen—as I said, there are only 12,000 cases.
I will quote briefly from some of the blogs. Whenever I mention this in public, the public come back and say things such as,
“desperately needed reform of financial proceedings on divorce … The financial interests vested in the current lawlessness are colossal … all that comes out of court is injustice, direct/indirect discrimination … It is fundamentally unfair and an affront to the rule of law that the outcome of cases should vary randomly to such a degree”.
Even the Law Commission reported that its consultees said that operating financial provision in divorce for a judge is like a bus driver being given a bus and told to drive it but not being told where that bus is to end up.
What is the objective of maintenance at the end of divorce? The House has not really got to grips with this ever since the change in the divorce law in 1969. Actually, periodical payments are withering on the vine. It is time for us to give a steer. I absolutely understand that the Government have concerns and think that people will end up on benefits, but the people who are likely to do so are living on benefits already.
I have provided in Amendment 24 that the period may be extended. Again, I quote from some of the consultees:
“Many people going through divorce have grown sick and tired of hearing that the legal profession has spent the decades since the Matrimonial Causes Act was enacted failing to develop a coherent set of straightforward principles to govern division of income and assets on divorce”.
“ The Scottish system”—
which I am copying here—
“is by no means perfect, but it does at least provide a framework for dealing with financial provision. Legislation will always be open to interpretation by lawyers … The public should however be able to rely on and understand a basic set of provisions regulating the division of matrimonial property on separation and divorce”.
“Nobody knows where they stand. The judge you get on the day can do virtually anything based on a whim”.
That is how it seems—a point made strongly by the noble Baroness, Lady Shackleton, at Second Reading.
Moreover, one must remember that many women now, especially younger women, are earning more than their husbands. Men somehow seem to take it on the chin when they have to pay maintenance to their ex-wives, but there is nothing like the fury of an ex-wife who already feels that she has been betrayed by the man she married who is earning less than her when she realises that she is going to have to keep him for the rest of his life. I beg to move.
My Lords, I welcome all the noble Baroness’s amendments. They seem sensible and the principle of equality is at the heart of them. I just wanted to point out that, given the equal marriage Act and the Civil Partnership Act, feasible as it is for a noble Baroness to find her footballer, it is equally feasible for a noble Lord, too.
My Lords, on the footballer point, I suggest that noble Lords should look at carefully at the teams, because certainly the teams that I and my noble friend Lord Hunt support probably would not give the sort of assets that people would be looking for.
The three amendments in this group in the name of the noble Baroness, Lady Deech, beginning with Amendment 23 in her name and that of the noble Lord, Lord Grantchester, again respond to concerns raised at Second Reading. I and others then raised the concern that the one-size-fits-all approach would not work in all cases, as there was no provision to take account of individual circumstances that could leave an individual in a much weaker position than would be reasonable. The amendments seek to address those concerns. In particular, Amendment 24 sets out a specific duty for the court to satisfy itself. This is a step in the right direction, but I am still left wondering whether we should go a little further to protect the weaker partner. However, the case for indefinite maintenance orders needs addressing and these amendments make progress in that respect.
My Lords, the amendments deal with Clause 5 and periodical payments. Amendment 23 concerns the power of the court to make orders for periodical payments and extends the duration of those permitted under the Bill from three years to five.
Amendment 24 inserts a new substantive provision into Clause 5(3)(c) and provides a mechanism for the court to extend the duration of a periodical order beyond the five-year maximum under the Bill in circumstances where there is no other means to make provision for a party to the marriage and that party would otherwise be likely to suffer serious financial hardship as a result.
Amendment 25 removes the provision in the Bill which would have provided that any party to the marriage at risk of suffering financial hardship should be awarded only such periodical payments or lump sum as is,
“reasonable to relieve that party of such hardship over a period of three years or such shorter period as the court considers reasonable”.
The noble Baroness has written to me to say that she has listened to the Government’s concerns—as indeed she has said today—that divorcees need sufficient time to adjust to their new circumstances and should not find themselves on benefits because of a lack of maintenance, as it was sometimes referred to.
The proposed amendments would go some way to address concerns held by the Government about the real possibility of hardship, with an economically weaker party to the marriage being forced to live on benefits. That risk needs to be balanced against the understandable desire on the part of many parties to a marriage for a clean break in the event of divorce. We continue to have reservations about the protections under the Bill for ensuring that an economically weaker party to a marriage can successfully complete the transition to financial independence, but we entirely accept the concern that has been well expressed about continuous and over-lengthy reliance on periodical payments, whether it is from footballers or Members of your Lordships’ House.
Amendment 23 agreed.
Amendments 24 to 26
24: Clause 5, page 4, line 34, after “divorce” insert “, such period not to be exceeded unless the court is satisfied that there is no other means of making provision for a party to the marriage and that that party would otherwise be likely to suffer serious financial hardship as a result”
25: Clause 5, page 4, line 35, leave out paragraph (d)
26: Clause 5, page 5, line 10, leave out “or lump sum”
Amendments 24 to 26 agreed.
Clause 5, as amended, agreed.
Clause 6 disagreed.
Clauses 7 and 8 agreed..
Bill reported with amendments.