The House of Lords “Voluntary participatorily-democratic two-way public-reach-out http://lordsoftheblog.net:- currently in progress July-August 2018
There are about 110,000 divorces in England and Wales annually, and financial orders are made by the court in about one-third of them. Some are negotiating their own settlements, induced by the unpredictability of judges’ determinations. The divorce decree itself has become a largely administrative process, but the division of income and property between spouses is often contentious, long drawn out and expensive because of
- the uncertainty of the basic principles in this area;
- the development of the law by judges in the last 30 years (during which it has not been thoroughly debated in Parliament), and
- changes in society (more women at work, divorce no longer fault based and more commonplace, civil partnerships, same sex marriage).
It is now urgent for Parliament to revisit the fundamental law governing financial provision, contained in s.25 of the Matrimonial Causes Act 1973, which lists the factors the court must take into account in determining the settlement. The reasons are:-
- The law is uncertain. Decisions used to be based mainly on “need”. Equality of the spouses then became a feature in judgments; and recent decisions have added consideration of compensation, and sharing the fruits of partnership, while statutory amendments provide for pension division and a clean break between the couple, if possible. Non-binding guidance has been issued – https://www.judiciary.uk/wp-content/uploads/2018/04/guidance-on-financial-needs-divorce-2nd-edition-april-2018.pdf – but it is still too complicated for certainty. There does not appear to be a case where it has been relied on.
- The leading judgments inevitably arise from “big money” cases that go to appeal, and are not necessarily helpful for low income families. We now have a largely judge-made law, which bears little resemblance to the statute, and there has been no public or democratic input. The wide exercise of judicial discretion, careful and sensitive though it is, leads to unpredictability and uncertainty, and therefore militates against mediation and settlement out of court. Judges differ with each other, and decisions conflict as new principles are enunciated. The uncertainty and unpredictability in this area is so great that it can fairly be said to offend against the rule of law.
- Legal aid has been removed from this area of the law. Many parties of modest means are left unrepresented and have to attempt to litigate on their own in emotional circumstances, with no understandable or settled principles to guide them in dividing assets and income. Judges are having to intervene, which is not their task, and brings delay. Long drawn out proceedings are detrimental to children and they are costly. There are many accounts of cases where nearly all the assets are wasted on the costs of litigation. E.g. a husband was awarded £50K but was left with a bill of £490K in costs; in another the assets were £25m, costs £1.7m; in another the couple’s assets were £42K, and the wife’s costs came to £16k; assets of £4m cost £850K to settle; and there was one where the costs swallowed up the entire assets.
- Organisations such as Resolution and the Centre for Social Justice have called for reform over the years, but without result. A recent Law Commission report recommended that prenuptial agreements be binding, with certain exceptions (arguably too many, for the more loopholes, the more likely it is that the agreement will be challenged: one couple recently spent £600K litigating over whether or not the prenup was binding, and another spent £2m); and they are continuing work on financial provision which they estimate will take years to complete.
My Bill will
- incorporate these recommendations. It relies on the proven efficiency of Scottish and overseas jurisdictions which administer a simpler and more certain law. Indeed, England and Wales are the exception in having such an uncertain law, one that attracts overseas wives who know they will get more generous settlements here than at home, with the result that London has become known as the divorce capital of the world!
- apply to all marriages and civil partnerships. It does not change the law relating to child support, which remains vital and always needs detailed and generous consideration.
- make prenuptial agreements binding, as long as the parties received independent legal advice, made full disclosure and entered into the agreement at least 3 weeks before the marriage.
- make postnuptial agreements binding, thereby assisting couples whose marriages are ending and who wish to sort out their arrangements themselves.
There is no evidence that marriage breakdown is encouraged by prenuptial or postnuptial agreements. Most countries where they are common have lower divorce rates than we do. It is unlikely that many couples will make them, except where there are assets from a previous marriage which they want to protect, or they are from overseas (about a quarter of marriages are second marriages and by older people). The advantages of such agreements are improved predictability of outcomes, fulfilling the public expectation that they should be able to make a binding agreement, and maybe encouraging marriage for those who, with past bad divorce experience, may be reluctant to commit again to a potentially financially ruinous position.
In so far as the couple’s assets are not dealt with by any agreement, then a system, often known as “the division of post-marital assets” will apply. There will 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 acquired 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 would 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 house to be retained for the accommodation of, say a mother and children under 21, or other exceptional circumstances. There are guidelines in the Bill to disentangle the situation where pre-marital assets are used over a long marriage to buy and improve marital property, so that they become post-marital assets available for division. Provision is made for only short term maintenance with exceptions (as in Scotland and Scandinavia), because maintenance is hard to enforce, relatively few orders are made (about 12,000 pa), and it is more sensible to load the separation of assets in favour of property, pensions and lump sums rather than ongoing periodical payments. Maintenance payments will be deducted pound for pound from Universal Credit and will not help the less well off, whereas payments to children will not be affected.
The result, if this Bill is enacted, should be better opportunities for mediation, less need to go to court, reduced trauma for children, lower costs, an easier time for litigants in person, and a fairer outcome recognising partnership in marriage. For the first time, it would recognise equality of spouses, rather than subjecting their claims to the view taken by a judge. Above all, it would be the result of democratic debate in Parliament and take account of public opinion and the need for certainty in the law.
The Scottish law, on which the Bill is closely modelled, has received an excellent review from a recent inquiry, Built to Lasthttp://eprints.gla.ac.uk/117617/1/117617.pdf. Some quotes:
- “the legislation has been successful in achieving one of its aims which was to encourage parties to reach their own agreements about the financial and property consequences of divorce.
- There was also strong approval for the concept of “matrimonial property”, with many interviewees highlighting the clarity and certainty of the matrimonial property regime as being an aspect of the legislation which worked well.
- This is a well-designed statutory framework with no fundamental need for reform. It is regarded as combining certainty with flexibility in a way which facilitates the work of each group of legal actors who put the legislation into practice.
- English law is broken and needs mending: but ours doesn’t. Ours doesn’t. Ours can always be improved, of course it can always be improved; but generally speaking, it’s a gem (quote from interviewee)”