To ask His Majesty’s Government, following the Law Commission’s Financial Remedies Scoping Report published in December 2024, what consideration they are giving to the reform of the law relating to financial provision on divorce.
My Lords, for nearly 50 years I have been calling for reform of the way assets are distributed on divorce, a law now contained in the Matrimonial Causes Act 1973. In that time, divorce law itself has undergone profound changes and is now entirely no fault and administrative. In 1973, the financial provisions were based on the difficulties that had arisen when divorce was first detached from fault, and women and the Church had argued that the husbands should pay for what they saw as the abandonment of their wives. It was a sop to them.
In the past decades, society has changed. Sadly, the harm to children remains, and it is shameful how their maintenance is neglected and not enforced—one of the ills that I am seeking to remedy. The statutory law, however, has remained frozen in a 1960s state. Over the years, the noble Baroness, Lady Shackleton, the great expert, and I, have pointed out that it is so full of discretion that it is unpredictable to the point of being in breach of the rule of law. It is unstable, being thrown into fresh disarray every time there is a Court of Appeal or Supreme Court decision. It still contains gaps in coverage. For example, to what extent do pre-matrimonial assets become matrimonial, on which the case of Standish has opined after 52 years? There is the treatment of pensions. Does domestic abuse make a difference, even if general conduct does not? Why should an oligarch’s wife such as Mrs Potanina be able to clog up our courts, with only the slightest link to this country, in order to seek millions more to add to the £31 million she had already been awarded in Russia?
All this has a devastating effect on litigants. There is no legal aid, and I have witnessed less well-off couples in court, ignorant of even the basics, such as the paramountcy of the child’s welfare. I have seen them weeping at the adversarial nature of the proceedings, needing more judicial guidance than there is time for. I have seen much of a couple’s assets dissipated in legal costs—for example, assets of £1.5 million running up costs of £280,000 in EC v JC.
Let there be no misunderstanding: this is a lucrative field for lawyers representing better-off couples, and their opposition to reform is understandable. I have seen what were thought to be watertight nuptial agreements torn up by judges in different ways. It is disgraceful, too, that the law’s uncertainty keeps the door open for blackmail by husbands in religious divorces.
Some discretion is a good thing, but it has reached a pitch that is too costly and too damaging to the parties. As the Law Commission explained, Scotland and some Australian states have statutory guidelines that promote mediation and settlement without ruling out judicial nuance. I no longer need to make the case for reform. The noble Baroness, Lady Shackleton, and I have been totally vindicated by the Law Commission’s scoping report of December last year, which in hundreds of pages explored the deficiency of the law and determined that it has to be reformed.
I congratulate the noble Baroness, Lady Deech, on securing this debate, and her excellent and compelling speech. She and the noble Baroness, Lady Shackleton, deserve great credit for their campaign and persistence in pressing for action on this matter.
The Law Commission report strongly supports the noble Baronesses’ arguments that the law on financial provisions on divorce requires change to ensure certainty and accessibility. I share the view that some form of judicial discretion is important but—dare I say?—rather like the debate over VAR in modern football, greater consistency will be welcome.
I have just a few questions for the Minister, which relate to the place and role of religious courts in relation to divorce proceedings and financial settlements. This House has been alert in previous debates to ensuring that religious courts and their procedures are not used as a means of undermining the rights of women or to disadvantage them. This is a serious matter in the case of some—thankfully, a small number —of Jewish religious divorces and in other cases.
First, I would be grateful if the Minister will confirm that, in whichever solution the Government alight on, they will ensure that consideration is given to the question of conduct. Frequently, the problems associated with denying a religious divorce can be a form of domestic abuse and especially a form of coercive control. Will the Minister undertake to consider addressing this in the Government’s proposal of how to go forward?
Secondly, we have seen terrible cases where, in the process of agreeing to a religious divorce, the religious courts, their officials and their processes have tied this outcome to varying the financial settlements and even child access arrangements, including those agreed through the courts. Will the Minister confirm that consideration will be given to including a specific exclusion to this practice?
My Lords, I happily join the congratulations the noble Lord, Lord Mendelsohn, gave to the noble Baroness, Lady Deech, on getting this timely debate, and the firm tone in which she addressed the Minister and the Government: for heaven’s sake, get on and do something and do not let things languish any longer.
That having been said, in this debate, I shall concentrate only on the matter of financial provision for children. I am no lawyer; I have no financial interest to declare or any interest in any of my professional and business undertakings. For complete transparency, I have never had any involvement in divorce or legal separation. So I am speaking tonight as a generalist—an amateur in a Chamber full of experts in this matter.
I have long been concerned about the correlation between children having divorced parents and the likelihood of later offending, as shown by the excellent longitudinal studies by its researchers coming out of the Home Office over so many years. It is a department of state, I have to say in passing, that I think is very often unfairly excoriated for being guilty of all sorts of things, when it is facing people who are guilty of lots of other things. It is a very difficult department to run.
Of course, what the figures show is a correlation and not a causation—a guaranteed outcome. Lots of children from divorced families are at risk of unhappiness or issues of a behavioural nature. Most do not offend, but some do, and the statistics are as plain as a pikestaff. Together, these are facts and statistics that these days we almost dare not speak their name, because they do not often get a welcome in polite discourse. They are uncomfortable facts for a lot of people, but they should be much more widely known—that is why I am speaking tonight—to be dealt with more effectively through public education, challenging though that would be.
I believe that too many young people do not get timely help in the midst of parental conflict, and therefore I have two suggestions. First, to take account of the longer-term effects on children, which go on and on, provision of financial support should be extended from 18 to 21 to help mitigate these issues, which take time to resolve—if they ever can be wholly resolved.
My Lords, I too am delighted that the noble Baroness, Lady Deech, has put forward this Question. I support much of what the noble Lord, Lord Patten, said about the importance of children and the fact that they are, in many ways, not properly recognised when we look at financial provision.
I spent most of my life at the Bar and in three tiers of the judiciary, in family disputes over children and the division of financial assets. I was a divorce registrar when the 1973 legislation became law—see how long I have been in this. Most of the financial disputes I tried were with couples either, if lucky, with a house and a few other assets or with no property owned and only debts. One important aspect of financial dispute cases that do not settle is often the high degree of emotion in the background. Rather like in child disputes, the parties are fighting the issues of the broken relationship in the context of the court cases.
The Law Commission’s excellent scoping report correctly identified the extent to which big-money cases have distorted the approach to the usual divorce case. I am largely out of touch, having retired many years ago, but I recognise in the scoping report much of what I dealt with. The issues have not changed very much. It seems clear—from the report, from the noble Baronesses, Lady Deech and Lady Shackleton, and from what I have heard from practitioners—that some substantial adjustment to the existing law now needs to be provided by Parliament. I was attracted to some extent by the Law Commission’s “codification-plus”, but I fear it would need “plus, plus, plus” to achieve enough certainty, together with a residual discretion.
Both the Scottish and the New Zealand legislation would, with additions—many of which are proposed by academics—probably meet what is needed. I do not entirely support the divorce Bill proposed by the noble Baroness, Lady Deech, because in my view it is too rigid. There are frequent situations that her Bill, if it became law, would not provide for; there is not sufficient flexibility. I would like to see more certainty, with enough discretion for the judge to meet the more unusual needs of certain spouses and partners. I very much support prenups, so long as a judge can retain a discretion to help a spouse or partner, male or female, who develops a serious medical problem such as MS, Parkinson’s or indeed dementia.
My Lords, I am grateful to the noble Baroness, Lady Deech, for this debate. I feel humbled to follow the noble and learned Baroness, Lady Butler-Sloss. I have spoken on many occasions in your Lordships’ House about the urgent need for reform in relation to ancillary relief in divorce. Rather than go over very familiar territory, which just gets lost, I will focus—as previously flagged to the Minister—on the law in prenuptial contracts, in the hope that something will actually get done. It is simply not acceptable that the legislators will not deal with this issue as a stand-alone one to be fixed. This came before your Lordships’ House on 28 February, and I am still waiting for a response from the noble Lord, Lord Timpson. I do not make any criticism there, because when we were in government it was no better.
To say that this depends on sorting out the entire matrimonial financial remedies situation, including cohabitation rights, is an absurd excuse for dealing with an issue that is not even mentioned in the 1973 legislation as amended, and on which the Supreme Court in Granatino, now 15 years ago, invited Parliament to legislate. I declare my interest both as a divorce lawyer and as a member of the Marriage Foundation. As one can imagine, 15 years since the ruling in Granatino upholding the validity of prenuptial contracts in certain circumstances, there has been a seismic shift in the acceptability of such contracts. As a consequence of them being entered into, and those marriages breaking down now, the occurrence of cases appearing before the family courts has increased.
According to a recent survey, 46% to 47% of people under 50 regard such contracts as a good idea, whereas 37% of the over-65s are in favour of them. The best statistics that I could glean in relation to prenuptial contracts coming before the courts are as follows. In 2010-15, there were 310; in 2015-20, there were 359; and in 2020-25, there were 542. Prenups are no longer the preserve of the rich—or exclusively of the rich—and sufficient time has passed since Radmacher for prenups to trickle down into public consciousness. Not only are prenuptial agreements more common, but they are also entered into by parties who have modest assets but wish to retain their financial autonomy—maybe one is a homeowner, or maybe there are two professionals —or by people entering a second marriage.
Can I just finish quickly then? The president has announced that financial remedies are being taken out of the list, because there is no time to deal with them. The courts are being blocked by litigants in person and rich people and, in a situation where the law were clearer, the courts would have more space to deal with people who really need them.
My Lords, I join in thanking the noble Baroness, Lady Deech, for raising this question for further debate. The Law Commission’s thorough and balanced scoping report asks if it is agreed that the law needs reform and which of the four suggested models for reform should be preferred by the Government. Importantly, it asks the Government to consider what underpinning principles should appear in reforming legislation.
The Law Commission made it clear that future work in this area will require a number of significant policy decisions. Having worked since the early 1970s as a barrister, then until recently as a judge, dealing with matrimonial and other family cases, I hope that I understand the strengths and weaknesses of existing law and practice. When I started, the law, introduced in 1970 and reproduced in 1973, moved the focus of cases away from largely sterile disputes over legal ownership of property towards the realities of the needs of the parties and their children. The Act of 1984 added the aim of achieving financial independence and an immediate or deferred clean break. Case law has emphasised the objective of a fair outcome. Present company, I hope, will forgive me for saying that case law has not been assisted with its concept of matrimonialisation, which has perhaps moved the clock back, and arguments about it should be confined to a luxury in bigger money cases.
Whatever reform option is selected, the need will be for law that gives clarity, predictability and some flexibility and can address any significant financial disadvantage and disparity. While trying to avoid uncritical attachment to what is familiar to me, I suggest that problems with the operation of the existing law have in some respects been overstated. Much of the current law has evolved through authoritative decisions in big-money cases involving ultra-high-net-worth individuals, which have little similarity to the average case, with far less cloth to be cut, trying to create two households out of one mortgaged family home and stretched incomes and borrowing capacity. Whatever option is selected—I prefer the so-called codification plus model, with principles clearly stated on the face of the statute, maintaining the ability of judges to exercise discretion—I think the time has come for a decision to be made.
I, too, congratulate the noble Baroness, Lady Deech, on introducing this debate, and I congratulate her and the noble Baroness, Lady Shackleton, on their tenacity in bringing these issues before the House.
A lot has happened in society since the 1970s, when Parliament last intervened, and the heavy lifting in the development of the law has been done by the judges. They have introduced in various cases quite a lot of different expressions. I declare an interest as a barrister, and one who was recently instructed in the two cases mentioned by the noble Baroness, Lady Deech: Standish and Potanin. Some of the concepts that they have introduced, such as needs, as already mentioned, present a very different concept of what needs would normally be expected to mean, for example. Then there is the sharing principle, the yardstick of equality, matrimonialisation of property, mingling, compensation, stellar contribution —and then the very difficult thing that judges apparently have to assess sometimes, matrimonial endeavour. I am sure that all of us would ask ourselves from time to time whether we have been sufficiently endeavouring matrimonially.
The problem is that there is a very big discretion. The issue always, for a court, and indeed for so much of the legislature, is flexibility versus predictability. The difficulty is the 1970 Act; the 1973 re-enactment of the 1970 Act contained no statutory aim, just a big discretion. What is fair is rather subjective and can be different in the eyes of different judges. Sir Nicholas Mostyn, a retired High Court judge, never short of a forthright opinion in this area, is quoted in this very substantial document from the Law Commission. He described the approach of the judges as having a “woolly discretion”. His view was that the law,
“will never be predictable, transparent, economical or consistent”
as it is at the moment. Surely, we need to attempt some form of legislation, such as the Bill suggested by the noble Baroness, Lady Deech. I do not know, but I am sure that she would not be wedded to every single word of that Bill. It is at least a significant improvement on the current uncertainty that prevails.
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The existing law is an intellectual delight for the lawyers, an accountants’ bonus, solicitors’ sustenance, an area of judicial creativity, a windfall for the wives of oligarchs, an academic goldmine, an impoverishment of children, but a desert for the average divorcee. We are out of step with most of Europe and the common-law world, especially Scotland, where the default position is a 50:50 split of assets acquired after the marriage, very limited ongoing maintenance and prenuptial contracts that are binding. This is what I have tried in successive years to achieve in my Private Member’s Bill. Now we are nearly there.
The Law Commission identified four potential models for reform and invites the Government to choose one. The first is codifying the existing law, but that would lead only to the continuation of the discretionary scheme and all its attendant ills. The second is guidelines-based discretion, which would retain judicial discretion within a structured framework. This, too, would keep the door open to too much uncertainty. The third is, as I recommended in my Bill, a matrimonial property regime which limits division to assets acquired during marriage, excludes premarital, inherited or gifted assets, aligns with Scotland and other European countries, and limits maintenance. If that sounds harsh, remember that wives, typically, who are in receipt of universal credit will have their maintenance reduced pound for pound. The husbands in that category are unlikely to have any income to give away in any case. The fourth option is a community property model without discretion—just dividing equally all post-marital assets. That may be a step too far for now.
Whatever model the Government choose, they should be mindful of artificial intelligence: ChatGPT has entered family law. There are already online models for clarifying which assets are in play and suggesting a settlement. The way forward is obvious. Once the law is reformed and has clear principles, AI will gather the information and predict the resulting split that should occur, leaving only the very dissatisfied to continue to fight in court at huge expense.
The other imperative is that there is no point in legislating for cohabiting couples to join the fray while the law is unsettled. That would only open the door to blackmail and a waste of assets. All the Government have to do is choose one of these models and the Law Commission will get on with the work of transposing it into statutory form for enactment. We have waited long enough. If this House believes in reducing child poverty, as I know it does, a law that prioritises child maintenance from divorcing parents and stops wasting their assets must be a good thing.
In the meantime, the Government could immediately bring forward for enactment the Bill already drafted by the Law Commission for the statutory enactment of pre- and post-nuptial agreements with conditions. That would enable all those who dislike the present law to get around it. It would also enable cohabiting couples to make agreements with some confidence that they will be upheld. It is imperative that the Government choose one model now for the sake of litigants, the general economy and peace of mind of families. Vested interests and uncertainty about direction can now be put aside. I ask the Minister to say which model the Government will go forward with.
Thirdly, will the Minister also consider reinforcing that courts of arbitration must not exceed their jurisdiction in such matters? Whilst the provisions of the Arbitration Act 1996 provide a regime which should deal with this, the obligation falls on the unfortunate victim to have to seek relief and very often in circumstances where they are under terrible pressures. Will the Minister take the opportunity to place this obligation on the courts of arbitration to ensure that they and their members are at fault if they exceed their jurisdiction in these matters?
Fourthly and finally, in relation to prenuptial agreements, will the Minister confirm that the Government will allow for PNAs to be enforced to deal with financial and other matters where financial pressures could be exerted, so that they can be forcefully upheld and varied only in exceptional circumstances?
Secondly, the law should now provide for binding nuptial agreements—not just hopes but binding commitments for future years—regarding future children yet to be born, or, in other words, a clear understanding and undertaking that they have lengthy responsibilities ahead of them. All this is happening at a time when, as I read only last week, people are pressing legal persons to consider taking into account the future of their pets in nuptial agreements.
One major issue came up again and again in the cases I tried. With couples with children owning a flat or a house and no other assets, what should happen to the house after the mother—generally the mother—and the children have had it during the childhood? I do not know the answer to this. We used to say that, after the children reached 18 or 21, it was sold. Nowadays, that is said not to be a good idea, but I am not sure what is better.
I am particularly concerned about the longish marriage: the wife who does not work—the husband says she does not need to—or who takes a very small job, and he then leaves her. She is middle-aged or elderly; how does she cope? Quite simply, to cut off maintenance after five years or so would not allow for that sort of case.
I am interested in the idea of cohabitants, but I entirely agree with the noble Baroness, Lady Deech, that we should not start on that line until we have dealt with divorce and financial provision; it would disturb that.
I would very much like to see any legislation that this Government are brave enough to introduce being treated as all-party. Pre-legislative scrutiny would help, in my view, and I hope that it would reduce the number of amendments.
The point made by my noble friend Lord Patten on children is good and valid. Wearing my hat as a Marriage Foundation member, I note that statistics show that, when children are born of unmarried couples, they fare less well and that that relationship is more likely to flounder. People do not get married when the uncertainty of getting divorced is so obvious and they cannot protect themselves.
There is absolutely no consistency in how these contracts are applied, the two-step test in Radmacher being that the contract has to be entered into freely between the parties but will not be upheld if a court determines that it is unfair to do so. What is fair depends on the judge, who from Parliament is given no legal direction. The application of the law is now at odds with the facts in this case, where there was no disclosure and the husband, although advised to get legal advice, did not get any. Had he done so, he would have found that the law in England, where the parties were living, was that these agreements were only evidential and unenforceable.
The issue of fairness, which influences whether the court will uphold such a contract, usually revolves around the applicant’s needs, although needs is a very elastic and discretionary term applied by the tribunal. It is not even clear with the whether the existence of a PNC limits or curtails needs. For the avoidance of doubt, it is impossible to contract out of children’s maintenance, which is always open for the court to adjudicate on. The absence of any legislation in this regard leaves such contracts open to challenge; at a time when the rest of the law is so very uncertain, their reliability is even more important. The idea that alternative dispute resolutions or mediators are able to sort out the problem in relation to the treatment of a PNA is fanciful, when two respectable lawyers can differ in their interpretation of the law and therefore frustrate any mediated situation. From October this year to May of next, the president has announced—
I wish to make the following final points. First, leaving some level of informed discretion to the court should not be seen as a bad or undesirable thing. Achieving greater certainty should not require restrictive rigidity. If anything, family law practitioners know that one size does not fit all. Secondly, any new law should highlight the importance of pensions and reform should address the question of accessible and affordable valuation of pensions. Thirdly, the temptation to allow for greater emphasis on domestic abuse as relevant conduct should be resisted, except in extreme cases. If disputed, allegations of domestic abuse have to be tried, and the cost to the parties and the court time taken will be greatly increased. Even when established, such abuse is hard to quantify in monetary terms, unless serious enough to have had a long-term financial consequence. Fourthly, if there is to be further delay, as has been said, the Government can at least now legislate for prenuptial agreements.
Finally, I suggest that the views of experienced specialist practitioners at the coalface should not be disregarded. They have to operate any changed legislative cogs, perhaps consoled by the advice of the late Joseph Jackson, doyen of matrimonial law, that there is always at least 10 years’ work in any new Act of Parliament.
Finally, let me deal with the question of prenuptial agreements. The House of Lords was clear—or at least eight out of nine of them were clear—as to what the approach should be. One would have thought, reading that case, that judges would be all too keen to honour prenuptial agreements where they had been reached. In fact, quite a lot of judges seem to take the view that, if it turns out for one reason or another—and stuff happens in life—that the prenuptial agreement does not seem to them to be fair, as things now are, they find some reason to avoid the consequences of the prenuptial agreement, thereby completely undermining the public policy that was identified in that seminal case.
There is a public policy, I suggest, in favour of marriage, and if people, particularly people in their second marriages, are very hesitant to approach the question of marriage without a prenup—because who knows what might happen and what other people might have claims—it is simply contrary to public policy not to have a statute. I do not find the argument that we cannot do anything until we do everything, which was the answer we got last time from the noble Lord, Lord Timpson, the Minister’s colleague, very satisfactory. Let us do something; preferably let us do everything, but let us not sit back and say we can solve the problem only if we solve every single issue.
The scoping paper does not provide any answers, but it provides some options. I congratulate, rather late in time, the Minister on her appointment. I think she has policy responsibility. Please give an answer that previous Ministers, including me, were unable to give.
Financial Provision on Divorce · Order Paper · Order Paper