Divorce (Financial Provision) Bill 2017 (or, 'Look North')

Divorce (Financial Provision) Bill 2017 (or, 'Look North')

Published:

Author: John Fotheringham

Applies to: England and Wales

Scots family law clients are identical to English and Welsh family law clients. The terminologies of the two systems in English family law are misleadingly similar.

However the substantive law, especially in relation to financial provision is very different on either side of the border.

Baroness Deech has introduced the Divorce (Financial Provision) Bill in the House of Lords, and was no doubt happy to see it pass the Second Reading stage at the end of January. No date has been set for the Committee Stage yet, but already there has been a disappointing response from the government, and negative comment from Lord Wilson of the Supreme Court.

The background

The new Bill does not adopt Scots family law on financial provision for England but it does propose to make the law in England into a closer cousin of Scots Law, rather than the much more distant relation that we see now. The advantages of the proposed change were well set out repeatedly in the House of Lords debate at the end of January and it is the purpose of this article to distil the arguments for the change and to illustrate how the philosophy behind the Scots policy can lead to advantages for courts, for lawyers and for litigants.

The essence of Scots financial provision in divorce is an exercise in establishing what matrimonial property is and then how it should be divided. With two main exceptions, matrimonial property is that which accrues to the parties or to either of them during the core period between the marriage and Relevant Date. This is the date when the parties cease cohabitation as man and wife - not necessarily the same as the date of separation. Pre-marital property is left out of account altogether unless it is the matrimonial home which was bought by either party before marriage and for use as a family home with the eventual spouse.

If the matrimonial home was owned by either party before the marriage and had not been bought for that purpose then it does not become a matrimonial home no matter how long the couple may live in it together.

The second exception is that property which accrued to either party during the core period but by gift from a third party or by inheritance is excluded from the pot of matrimonial assets to be divided, so long as it remains in its original form.

Spousal Maintenance, called ('Periodical Allowance') in Scotland, is the other main area of difference between the two jurisdictions. The policy is to effect a clean break whenever possible, and to discourage later litigation. If either party has been substantially financially dependent on the other during the marriage, the financially weaker party can seek a periodical allowance for a maximum of three year from the divorce to enable her to readjust to that loss of support. There is one further provision, fielding on the third man boundary, so that in the case of serious financial hardship that spouse can seek periodical allowance for a longer period. That does not happen very often in practice. We see it in the case of a spouse who has reached, say 60 years and has not been employed during a long marriage, having devoted themselves to home and hearth. Another feature is that the court is enjoined to capitalise that periodical allowance whenever possible in order to discourage later applications for variation.

The Bill

Baroness Deech's Bill, to some extent, echoes the general shape of the Scots provision. Clause 2 provides that Matrimonial Property means all the property, including pension rights which was acquired during the marriage and otherwise than by gift or succession from a third party. The clause does not specifically se the device of the Relevant Date which is such a hinge of the Scots system. Perhaps it will be added by amendment.

Clause 2(2)(a) includes within matrimonial property '. any premises and household goods acquired before the marriage for use by them as a family home .'. There is provision in the Bill, not paralleled in Scots Law, allowing for the exclusion of property from the matrimonial pot if it has been acquired 'by the exceptional personal skill or effort of either party'. This will allow consideration of the stellar contributions made by some individuals in big money cases, but does seem to fly in the face of matrimonial property being seen as accrued by a matrimonial partnership. This provision may encourage more litigation than Scots family law has found necessary for the last three decades.

The next part of this very short Bill deals with prenuptial (Pre Nup) and postnuptial (Post Nup) agreements. Scotland has had little difficulty in recognising the merit of these contracts and has generally enforced their terms unless they were faulty at common law, such as by fraud, or else if they were not 'fair and reasonable' at the date of the agreement (s16 of the 1985 Act). Changes to the parties' circumstances after that date are irrelevant. Even then it is difficult to overturn a Pre Nup if independent legal advice had been available. The new Bill goes even further than Scots Law by making Pre and Post Nups actually binding in England subject to some saving provisions. In Scotland a Pre Nup is just one of the factors which the court takes into account, though it certainly has a heavy weight in an argument.

One of the most striking features of the Bill appears in clause 5 which covers periodical payments and lump sums. In a close echo of the Scots provision we see that '. a party who has been dependent to a substantial degree on the financial support of the other party should be awarded such periodical payments as ids reasonable to enable that party to adjust to the loss of that support on divorce over a period of not more than five years from the date of decree of divorce. Perhaps it should be noted that in Scotland, where the equivalent period is three years, it is actually quite rare for the award to be for as long as that. A typical award is for eighteen months or two years to enable retraining. And more particularly the award, where possible is capitalised. There is no equivalent provision in Baroness Deech's proposal. In any event, if the English practice is to follow the Scots, as the substantive law may follow, it should not be assumed that five years of payment should be the norm, nor even the starting point.

During the debate many peers spoke about the benefits of the proposed Bill, chiefly from the point of view of predictability and affordability. The government contribution was lukewarm at best and it remains to be seen what progress the Bill will make in due course. It passed the Second Reading stage successfully and now goes to Committee, though there's no date for that yet.

Disclaimer

This document is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.