A look at the Divorce (Financial Provision) Bill

Divorce|Family Law|June 18th 2014

Baroness Deech’s private members’ bill, the Divorce (Financial Provision) Bill, is aimed, as its name suggests, at reforming the law on finances and divorce. It had its first reading in the House of Lords on the 9th of June. I thought it might be interesting to have a quick look.

The Bill has three main provisions, relating firstly to pre- and post-nuptial agreements, secondly to matrimonial property and thirdly to spousal maintenance and lump sums. I shall deal with each of these in turn.

As to pre- and post-nuptial agreements, the Bill intends that these should be treated as binding on the parties and that they should be given effect, provided that certain conditions are met. For the most part those conditions are the same as, or similar to, those we have heard before: that the parties have taken independent legal advice (or had the opportunity to do so), that there was full disclosure of assets before the agreement was entered into and, in the case of a pre-nuptial agreement, that it was made at least 21 days prior to the marriage.

All pretty standard stuff, and not dissimilar to the Law Commission’s recommendations in its Matrimonial Property, Needs and Agreements project.

However, unlike the Law Commission, Baroness Deech does grasp the nettle regarding matrimonial property. The Bill proposes that all such property (essentially, all property acquired after the parties were married, save for gifts and inheritances) should normally be divided equally between the parties. The court should only depart from equal division if it is satisfied that to do so would be fair, having regard to various factors such as any agreement between the parties, the source of the funds used to acquire any of the property, the nature of the property (e.g. if it was used for business purposes) and the needs of any children.

As to spousal maintenance and lump sums, the Bill seeks to re-write the provisions of the Matrimonial Causes Act 1973, both in terms of the court’s powers and in terms of the factors that the court should consider before making such orders. Essentially, the Bill seeks to restrict and ‘tighten’ the present system, for example by putting a three-year limit on spousal maintenance orders. The intended effect of this, I think, is to make settlements less generous than they are at present towards the financially ‘weaker’ spouse’, and to encourage them to gain economic independence as soon as possible.

I can certainly see the attraction of the provisions in the Bill. As I have said myself many times, the law relating to finances on divorce is in need of serious overhaul – something it has not had for the last forty years. In particular the law is uncertain, making it difficult to advise upon and hampering settlement. During those forty years the courts have made numerous attempts to clarify or ‘update’ the law, but this has in many ways only made things more confusing, with a huge body of case law attaching itself to the original statute. It is, of course, the job of parliament to make proper, coordinated reform, but alas there seems to be no appetite for this in government, hence the matter is left to private members’ bills.

The Bill certainly clarifies the law, making it more certain. The problem, of course, is that the great strength of the present law is its very ‘vagueness’, with which it gives judges a wide discretion to make fair decisions in the vast range of circumstances that come before them. Drawing ‘lines in the sand’ such as by limiting spousal maintenance to three years, runs the risk of leaving a party with inadequate provision where the situation does not fall within the range of ‘normal’.

Having said that, I don’t know what the answer is to improving the present system, and the Bill does have some interesting elements. As a private members’ bill its chances of becoming law are, of course, very slim, but hopefully at least it will spur debate on a subject where debate has been long overdue.

Photo by Anjaneyadas via Wikipedia under a Creative Commons licence

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  1. Nordic says:

    John. From the perspective of families and their children the “vagueness” and unconstrained judicial discretion in financial proceedings is a disaster and, in my view, the biggest unrecognised scandal in this country. When families are splitting up and at their most vulnerable, they are dumped into a complete legal vacuum in which the family law industry has an open field to create “conflicts of interest” between the parents (in the best interest of the children, of course). Most North-Western European jurisdictions replaced such vagueness with matrimonial asset division regimes and firm rules for spousal and child maintenance decades ago. You simply cannot fight about all the things parents actively are encouraged to fight about here. Most of these jurisdictions do not have a need for specialised family courts because they have family law. In England and Wales we have family courts, but no family law. What is missing in English family law is law itself.

    As a parent, I can only view the English system of family “law” with contempt. However, as a professional consultant I am deeply impressed. I have never encountered industry anywhere so completely absent basic governance and so totally controlled by vested financial interests. From that perspective I fully appreciate that the current lawlessness is viewed as a great strength.

  2. Luke says:

    “The problem, of course, is that the great strength of the present law is its very ‘vagueness’, with which it gives judges a wide discretion to make fair decisions in the vast range of circumstances that come before them.”
    On the contrary, I think that it’s one of its major flaws, it might be good for people who are in the business of law with a patronising attitude – but for the general public it is a nightmare for so many.
    Nobody knows where they stand. The Judge you get on the day can do virtually anything based on a whim.

  3. Andrew says:

    Nordic: firm rules for money are one thing and a good thing: equal division, postponed if necessary during the minority of the children in which case the share is adjusted by a formula.

    But firm rules for who the children should be with, whether and how often the other should see them, which school they should go too? Must be case-by-case. And that’s the just the,private-law side , , ,

  4. Cath Karlin says:

    Much of these reforms emulate the Scottish system which has been in force since 1985. It 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 as that is what we are trained to do . 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.

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