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The Lord Chancellor moved Amendment No. 114:


Page 36, line 35, leave out from ("instrument") to ("60(3)") in line 36 and insert ("containing an order, rules or regulations made under this Act, other than an order made under section 4(5) or").

The noble and learned Lord said: My Lords, with this I shall speak also to Amendment No. 115. Clause 4(5) allows the Lord Chancellor to vary the length of the period between the end of the period of reflection and consideration and the time limit for making an application for a divorce or separation order. I have tabled Amendments Nos. 114 and 115 to Clause 58 to provide that any order made for this purpose should be made under the affirmative resolution procedure. This matter was raised in Committee by my noble and learned friend Lord Simon of Glaisdale and supported by the noble Earl, Lord Russell. I indicated in Committee that I should be happy to table an amendment to alter the parliamentary procedure for making an order under Clause 4(5) and I am pleased now to be in a position to do so. My Lords, I beg to move.

Lord Simon of Glaisdale: My Lords, I am very much obliged to my noble and learned friend.

On Question, amendment agreed to.

The Lord Chancellor moved Amendment No. 115:


Page 36, line 37, at end insert--
("( ) No order shall be made under section 4(5) unless a draft of the order has been laid before, and approved by a resolution of, each House of Parliament.").

On Question, amendment agreed to.

Clause 60 [Short title, commencement and extent]:

[Amendment No. 116 not moved.]

Lord Coleraine moved Amendment No. 116A:


Page 37, line 7, after ("Act") insert (", other than section (Division of pension assets)").

The noble Lord said: This amendment was spoken to by my noble friend Lady Hollis of Heigham when on Thursday, 29th February she successfully moved Amendment No. 10 and spoke, within the grouping, to that amendment, Amendment No. 86A and Amendment No. 116A. I beg to move.

On Question, amendment agreed to.

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Schedule 1 [Arrangements for the Future]:

[Amendment No. 117 not moved.]

Schedule 2 [Financial Provision]:

Lord Coleraine moved Amendment No. 118:


Page 40, line 41, at beginning insert ("Subject to section 22B of this Act").

The noble Lord said: I speak to Amendment No. 118, which stands in the names of my noble friend Lady Young and myself, and also to some of the amendments in a group which seems to amount to nearly fifty amendments. The amendments I shall speak to are Nos. 119, 120, 126 and 129. I understand that my noble and learned friend will be speaking to Amendments Nos. 120A and 126D, which deal with the same subject in this sub-group.

We have now reached Schedule 2, which deals with property matters on divorce, and the broad intention of these amendments is to alter the Bill in order to promote reconciliation and to give mediation and property settlements by agreement a chance to work out.

Under the Bill, once a statement has been made, a party may apply for and obtain a financial order. In the case of a property adjustment order, the order will be effective only on the granting of the divorce in due course, except in special circumstances.

As your Lordships will know, because we have referred to it before, under the existing law those financial orders are made only on decree nisi and come into effect on decree absolute. It is obviously entirely consistent with the thrust of the Bill and my noble and learned friend's intention, which I share entirely, that arrangements for the future should be completed before the divorce is granted. In this Bill, the question of financial arrangements should not be settled as late as they are under present law.

On the other hand, the effect of allowing the party to go to court immediately and obtain an order, whether that order comes into effect immediately or whether it is deferred until the divorce is granted, is really to create irretrievable breakdown in all but name. Once somebody has gone to court in that way at the very beginning of the period for reflection and consideration, thereafter there is really no practical chance of saving the marriage.

It is quite clear that one cannot preclude applications to the court for the entire period for reflection and consideration. Again, that would make it impossible for the future arrangements to be concluded in time. Therefore, these amendments try to strike a happy medium and provide that you cannot go to court until six months of the period has expired. The effect of that will be that, during that period, the parties involved in the divorce will have the opportunity of mediation and mediation will be given the opportunity to get off to a good head start over court applications; or the parties may attempt reconciliation; or they may go to their lawyers and try to reach agreement without going to court. That is bound to be beneficial to the ultimate divorce or to the reconciliation, if that takes place.

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Amendment No. 118 is a paving amendment for Amendment No. 120. In short, it provides that no financial provision, other than interim periodical payments, shall be incorporated in an order during the first six months of the period. Amendment No. 126 provides similarly for property adjustments orders: they are not to be made during the first six months of the period.

Amendment No. 119 deals with lump sum orders. Amendment No. 120 provides that they are not to be made during the first six months but Amendment No. 119 provides that during the second six months an order for the payment of the lump sum is not to take effect until the divorce order is made, except in special circumstances. The amendment goes on to outline those special circumstances, including the case where the parties have agreed early on as to the terms of the proposed order. At this hour, I do not propose to go into any more detail about that amendment. I should explain that in relation to property adjustment orders, the Bill provides that they will not come into effect until the divorce is granted, except in special circumstances. The special circumstances defined in the Bill are defined in fairly broad terms. Amendment No. 129 seeks to expand and make clearer what those special circumstances are to be. I believe that the total effect of the amendments would be to make the provisions for financial provision in the Bill much more reasonable as between the parties and much more likely to promote a good divorce. I beg to move.

11.45 p.m.

The Lord Chancellor: My Lords, there are quite a number of amendments in the group. It may help at this late hour if I were to try to state my position in relation to them, giving such explanation as I think appropriate. Noble Lords who have tabled later amendments in the group would then at least know what I have in mind. However, whether or not your Lordships will be enlightened by what I say may be open to question.

I undertook in Committee to seek the advice of my Ancillary Relief Advisory Group (which is a group made up of experts, including members of the judiciary and practising barristers and solicitors, together with two leading academics) on the amendments tabled by the noble Lords, Lord Meston and Lord Clifford of Chudleigh to Schedule 2 to the Bill. I have now taken the group's advice and considered it carefully. As a result, I have tabled amendments to Schedules 2, 8, 9 and 10 to the Bill. I propose to speak to groups of the amendments which deal with particular aspects of financial provision. I shall, therefore, also deal with the amendments tabled by my noble friends Lady Young and Lord Coleraine, the noble Baroness, Lady Hamwee, and the noble Lord, Lord Clifford of Chudleigh. At the same time, I shall speak to the Government amendments on the particular subjects.

Amendments Nos. 118, 119, 120, 120A, 126, 126D, 129, 133G and 133L all relate to the time when property adjustment orders and financial provision orders should take effect. Amendments Nos. 120A and 126D give effect to the intention that there should now be a general rule that financial provision and property adjustment

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orders should not take effect until on or after the making of the divorce order or separation order. The exception is that those orders can take effect before the making of the divorce or separation order where the court is satisfied that, in all the circumstances of the case, it would be just and reasonable to do so.

Amendment No. 133G ensures that, so far as the taking of the orders is concerned, where the court is varying the orders under Section 31 of the Matrimonial Causes Act 1973 it may only vary the time when the order is to take effect to a time earlier than the making of the divorce order or separation order where it would be just and reasonable in all the circumstances to do so. The amendments adopt the principles behind the amendments moved in Committee by the noble Lord, Lord Clifford of Chudleigh, and Amendment No. 119 tabled in the names of my noble friends Lady Young and Lord Coleraine.

On that one issue, however, I have not followed the views of my Ancillary Relief Advisory Group. The group's view was that those orders should always be made and be capable of taking effect before the divorce order or separation order was made. In particular, the group had in mind circumstances where the husband and wife are living in the same house with the children; there are insufficient funds to enable one spouse to seek alternative accommodation and the application for financial provision is contested. The couple are unlikely to agree a sale in those circumstances, yet the family could be living in a hostile environment for over six months until the divorce order or separation order is granted. The group considered that the availability of occupation orders in those circumstances would not provide assistance. The couple could feel forced to make allegations against one another so that occupation of the house could be regulated, or, alternatively, violence could actually result because of the tension in the home. The view taken was that there would be little to gain from having two sets of litigation proceeding at one time.

I considered the group's views carefully but decided that the rules should not generally permit orders to take effect before divorce. The making of the order itself should sufficiently focus parties' attention on the often grave financial consequences of divorce and the impact of divorce on their lives and those of their children to make them reflect further on whether divorce is really the right path for them to follow. Parties will not, therefore, generally sever financial links between them until divorce. Divorce settlements which take effect before the divorce order or separation order will not be the norm.

To accommodate the various circumstances where there may be a genuine need for an order to take effect earlier than the making of the divorce order or separation order such as those outlined by members of the advisory group, I have made the exception to the rule, which is that orders can take effect before that time where the court considers that it is just and reasonable that they should do so.

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Amendment No. 119 in the name of my noble friends Lady Young and Lord Coleraine states that financial provision orders can take effect in special circumstances. The special circumstances are listed for financial provision orders and, in Amendment No. 129, for property adjustment orders, and include where one or both parties urgently need to be rehoused. I hope that my noble friends Lady Young and Lord Coleraine will agree that the basic rule underlying those amendments and my own is the same. I have no longer referred to "special circumstances", which was the term previously used in relation to property adjustment orders, as my advisory group said that that term could be readily applied to most circumstances following divorce and it was therefore inappropriate to use the term "special". The term I have used is more likely to be effective in controlling the use of that power.

I have also received comments from certain members of the group on the specific circumstances referred to in my noble friends' amendments. I wondered whether they should be examples of circumstances when it would be just and reasonable for the order to take effect earlier than the divorce order or separation order. The views which I have received were against specifying those circumstances in the Bill. That is favourable towards trying to keep the orders' effect to the later stage. If one specifies circumstances then the court is likely to use those circumstances to make the order earlier, whereas if they are not specified the court's discretion is wider and, therefore, in the cases mentioned, the power will not necessarily be used to make the orders earlier. I suggest that the principle behind my noble friends' amendments would be better served by not specifying the particular circumstances. Fettering the court's discretion in that way is also out of line with the other discretionary powers in the 1973 Act. I accept the members' advice and urge your Lordships not to go down the road of specifying particular circumstances.

One of the circumstances specified in my noble friends' amendment is where both parties are agreed on the terms of the proposed order. I have given effect to that in Amendment No. 133L, which permits couples to obtain a consent order which takes effect before the divorce order or separation order where the exception to the general rule applies. I intend that rules should prescribe the type of information which the courts will require before making such an order. I do not wish generally to require court hearings when parties are agreed as that could lead to bitterness and hostility and incur costs. However, we need to ensure that the parties' agreement is properly recorded before the court proceeds on the basis that the order is agreed to.

I also asked my advisory group's views relating to my noble friend's amendments, Amendments Nos. 120 and 126, which prevent property adjustment orders and financial provision orders being made in the first six months of the period of reflection and consideration. Those members' views I received were that the new rule relating to the time when orders could be made and take effect was sufficient. It should ensure that couples do not rush into settlements. Where couples have agreed the financial settlement, they may well wish the court to

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approve the agreement as soon as possible to ensure that neither of them can renege from the agreement, which could lead to costly litigation. There are also other circumstances where one or more of the parties may want a court order within six months where, for example, one party is seriously ill or where a wasting asset needs to be sold. Other examples include the other circumstances outlined in Amendment No. 119. I therefore invite your Lordships not to agree that particular amendment of my noble friend.

I have also considered my noble friend's amendment, Amendment No. 118, which makes the new Section 22A(1) dealing with financial provision orders subject to the new Section 22B which contains restrictions on when these orders should be made. The amendment is unnecessary as the new Section 22A(11) already makes the new Section 22A(1) subject to these restrictions. I am sorry that this is a little dense, but I hope, nevertheless, that it is as sufficiently clear as the subject matter allows.

I now pass to interim lump sums, and Amendments Nos. 118C, 118D, 133A, 133B, and 138A. I have taken on board the amendment tabled in Committee by the noble Lord, Lord Meston, and Amendment No. 118D tabled by the noble Baroness, Lady Hamwee, and by Amendment No. 118 have given the court a statutory power to make interim lump sum payments until the application for a financial provision order can be heard. I believe that this was widely sought and I think that it is a considerable improvement. My Ancillary Relief Advisory Group's view was that the court's current inherent jurisdiction to grant interim lump sums was very limited and inadequate. There seems absolutely no reason to have great discussions about that if the circumstances of the case seem to require an interim lump sum. Amendments Nos. 133A, 133B and 138A are made as a result of conferring the power. They make necessary consequential amendments to the other provisions of the 1973 Act and among other things ensure that these lump sums can be paid by instalments. In addition, the criteria in the new Section 25(5) of the 1973 Act in Schedule 8 is extended so that it applies to interim lump sums and interim periodical payments.

I now refer to the deletion of new Section 22A(5) and (6) of the 1973 Act. Amendments Nos. 118E and 118F delete the new Section 22A(5) and (6) of the 1973 Act. The noble Lord, Lord Clifford of Chudleigh, drew my attention to the amendments when he tabled drafting amendments to them during the Committee stage. My Ancillary Relief Advisory Group considered that these provisions, which replace Section 23(3(a) and (b) of the 1973 Act, no longer added anything to the powers of the court to grant lump sum orders and that they should be deleted.

I now come to the question of interest on lump sums payable by instalments and deferred lump sums; Amendments Nos. 118G to 118L and 125A to 125F. Amendments Nos. 118G to 118L and 125A to 125F solve a technical problem with the wording of Section 23(6) of the 1973 Act, which is replaced by the new Section 22A(10) and (11) of Schedule 2. They ensure that the court can make an order for interest to be paid on lump sums payable by instalments or deferred lump

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sums from the date of the order to the date when it is due to be paid at any time on or after the making of the order. Equivalent amendments are made for the provisions relating to nullity. It is currently not possible to make such an order for interest after the making of the order.

The noble Lord, Lord Clifford of Chudleigh, tabled in Committee an amendment linking the rate of interest payable to the bank base rate. My Ancillary Relief Advisory Group considered this proposal but advised against it on the grounds that it was important that the court had complete discretion as to what rate of interest should be payable. The referral of the payment of a lump sum was of benefit to the payer and there were circumstances where the bank base rate may be wholly inappropriate as the court may consider a penal rate of interest is required or, alternatively, in other circumstances that a very low rate would be appropriate.

I turn now to the powers of the court on considering an application to vary a periodical payments order. Amendments Nos. 133H to 133K and 146A and 146B adopt, with technical adjustments, the amendments tabled in Committee by the noble Lord, Lord Meston. They give the court power, when dealing with an application for variation or discharge of periodical payments order, to make a property adjustment or lump sum order where it considers this appropriate in order to enable it to bring about a "clean break" by discharging or limiting the term of the periodical payments order. The amendments implement, with some minor modifications, the recommendation of the Law Commission in its report The Ground for Divorce and deals with the problems created by a lack of such a power which were highlighted in S v. S (1986), 1 Family Law Reports at page 71. My Ancillary Relief Advisory Group was in favour of the power.

The group was not, however, in favour of the other amendment to Section 31 of the 1973 Act tabled by the noble Lord, Lord Meston, at the Committee stage. It extended the power of the court to vary, discharge, suspend or revive a property adjustment order settling property, varying a settlement or extinguishing or reducing an interest in a marriage settlement. Some members of the group were reluctant to see any extension of the power to vary property adjustment orders in the interests of certainty.

The collective view of the group was that the question of when property adjustment orders should be varied was very difficult. The complexities surrounding it meant that this was one matter which could only be considered in the context of a major review of the substantive law relating to financial provision on divorce. In the meantime, where a question arose as to the variation of a settlement, use would have to be made, where appropriate, of the power to order a sale of the property under Section 24A of the Matrimonial Causes Act 1973 and the limited powers of the court to set aside orders, for example in Barder v. Caluori (1988), Appeal Cases, page 20.

I turn to the question of conduct which was raised by the noble Lord, Lord Clifford of Chudleigh. His Amendment No. 129AB proposes that the court should

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take into account any conduct of the parties and the cause of the breakdown of the marriage. At present, one of the factors to which the court is to have regard when deciding whether, and if so how, to exercise its powers in relation to financial provision on divorce is the conduct of each of the parties if that conduct is such that in the opinion of the court it would be inequitable to disregard it.

Amendment No. 129AB is similar to the amendment which was tabled at Committee stage and on which I have sought my Ancillary Relief Advisory Group's advice. The group considered that the current provision worked well--it was reviewed in 1984, which led to the current provision--and there was no call for change. I accept that advice. Ancillary relief proceedings are not the appropriate means of identifying in detail the cause of marital breakdown. I am satisfied that it is right that conduct should be taken into account to the extent that is necessary to reach a proper distribution of the property between the parties and that the present test on which that is done is the appropriate one.

Costs, delay and litigation would be increased by extending the role of conduct. That test has been adopted as a result of very mature consideration of the matter over the years by the courts. I am not inclined to increase the role of anything that would cause unnecessary conflict when I believe that, where a substantial issue is raised by conduct, the courts can take account of it properly under the present arrangements.

Two other main amendments were tabled by the noble Lord, Lord Clifford, during the Committee stage of the Bill which my advisory group advised me against accepting: first, the proposal that periodical payments and secured periodical payments should automatically end when a party in whose favour the order is made starts to cohabit with another party as if married. This rule currently applies only on remarriage. The group was against extending the rule in the way in which the noble Lord suggested for two reasons. First, a cohabitee has no legal duty to maintain another cohabitee, in contrast with the position regarding spouses. Secondly, there are evidential difficulties in determining whether the payee is cohabiting as if married.

Secondly, the group was not in favour of the noble Lord's amendments to the provisions relating to variation on reconciliation. In particular, it was against removing protection to third parties who would be prejudiced if the order which had been made was varied or discharged.

There are then drafting amendments and amendments inserted for clarification: Amendments Nos. 118A, 118B, 126A, 126B and 126C. They are intended to ensure that the scope of financial provision orders should not be circumscribed by the making of an order in earlier proceedings and that the making of a property adjustment order in earlier proceedings should not prevent a further order being made in later proceedings subject to the restriction in the new Section 23A(2) of the 1973 Act.

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Amendments Nos. 122A and 129A clarify that applications have to be made for financial provision and property adjustment orders on nullity and bring the provisions into line with those on divorce in this respect.

Amendments Nos. 133E, 133F and 148A relate to the variation of property adjustment orders on or after the making of a separation order. They amend Section 31(2)(e) of the 1973 Act so that the powers to vary property adjustment orders made before or after the making of a separation order varying or settling property apply only where there is an application for a divorce order.

The new Section 31A of the 1973 Act in paragraph 8 of Schedule 2 which provides for variation on reconciliation could then be used where the separation order is rescinded. This had been my intention but the previous amendment to the provision did not put this properly into effect.

During the Committee stage, the noble Lord, Lord Meston, said he did not appreciate why the amendments to the 1973 Act were inserted by way of substitution. The reason, I understand, is that Parliamentary Counsel at the Law Commission who drafted the original Bill took this approach because of the complexities of the amendments necessary to take account of the change to the time at which the various orders could be made in relation to separation and divorce but not nullity. The separation and divorce provisions had to be "pulled" out of the existing relevant sections of the Matrimonial Causes Act and amended but the nullity provisions left as they are. Counsel took the view that to amend each section and subsection as it stood by distinguishing between the timing of orders during the separation and divorce process and those following nullity would have made the amended sections incomprehensible. (And if Parliamentary Counsel says they are incomprehensible, I am prepared to say that they are!) That is why the provisions relating to separation and divorce were separated out and redrafted.

Parliamentary Counsel's advice is that it is unlikely that the position will have changed in the developments that have taken place since then, but he has agreed to look again at the matter over the next few weeks as the Bill proceeds on its course in the light of the latest amendments to Schedule 2.

The Bill does not amend the law of nullity. For this reason, Schedule 2 to the Bill makes only minor modifications to the law relating to financial provision on nullity. I am accordingly unable to accept Amendments Nos. 122B and 122C by the noble Baroness, Lady Hamwee, to confer a statutory power on the court to make interim lump sum orders on nullity. Other amendments in the 1973 Act have also not been applied to nullity for the same reason. I will, however, take the need for a statutory power to make interim orders on nullity fully into account when I am reviewing the whole of the substantive law relating to financial provision on divorce and nullity in the future.

I hope that in the light of this explanation my noble friends Lady Young and Lord Coleraine will be able to withdraw the amendments to which I referred, and that Amendments Nos. 118D, 122B and 122C will not need

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to be moved. I hope that the noble Lord, Lord Clifford of Chudleigh, will feel that his Amendment No. 129AB need not be pursued in the circumstances.

I am sorry to take so long. On the other hand, I have been able as a result to give a reasonably comprehensive view of what all the later amendments in my name are about. I hope that noble Lords will feel that this is of some assistance.


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