I make just one perhaps niggling comment or suggestion, but it is important. Full disclosure should include not merely assets as provided for in the Bill but also liabilities. A false picture would emerge of the net worth of the two parties if the liabilities were not disclosed. Parties to a potential prenuptial agreement might think, if only the assets were fully disclosed, that they both had assets of a similar order of magnitude when in fact one had massive liabilities and the other had none. There might be enormous distortion in showing such a balance, so it would be quite false not to bring to the attention of the two parties a true and fair picture at the outset of the negotiations over that particular contract.

I hope that the Bill makes progress; I think that it is urgent that it does so. I hope that it becomes a part of the law of this country as soon as possible and that the noble Baroness, whom I congratulate again on this initiative, will take on board my one small suggestion.

1.19 pm

Lord McNally (LD): My Lords, I promised the noble Lord, Lord Faulks, when he took over from me in December, that I would not keep popping up like Banquo’s ghost at MoJ debates to reminisce about my past triumphs. I am making an exception today for three reasons, but, first, I thank the noble and learned Lord, Lord Mackay, for his kind words. I do not know about the noble Lord, Lord Faulks, but I always had a slight tingle in the shoulder blades when I found that the noble and learned Lord was in his usual place, just behind an MoJ Minister, although, most times, he dug me out of a hole instead of putting me into one.

As I said, I make the exception for three reasons. First, taking the point of the noble and learned Lord, Lord Mackay, about the thoroughness of the Law Commission, I pay tribute to it and its work. I couple that tribute with praise for what is now the not so new fast-track procedure used in the House of Lords to expedite Law Commission Bills and I couple that praise with praise for the noble and learned Lord, Lord Lloyd of Berwick, who has invariably taken the chair in Committee and guided Law Commission Bills through. As a result, we now have a steady flow of law reforms and updates which greatly benefit our citizens and the law.

My second reason for speaking is to give qualified support for the Bill before us today and to congratulate the noble Baroness, Lady Deech, on the clarity with which she brought the Bill forward. As she told us,

27 Jun 2014 : Column 1498

divorce is painful, stressful and often costly. It can have a lasting, damaging impact on children. Making the financial consequences of divorce easier to navigate does not undermine marriage. It helps to mitigate the worst consequences of marriage breakdown.

My support for the Bill is qualified because we are still awaiting the Government’s response to the Law Commission’s draft Bill, which is promised for August. I must tell the Minister that I have never liked government responses promised in August. As a rule, they are not the best months for parliamentary scrutiny.

As I understand it, the noble Baroness, Lady Deech, believes that the Law Commission’s draft Bill still leaves loose ends and uncertainties. Critics of her Bill claim that its impact would be much wider than that of the Law Commission recommendations and that it proposes significant changes to the law of financial provision on divorce, not all of which would be welcome. It seems to me that, if the Bill is given a Second Reading today, those are matters that can be examined in detail in Committee. What seems to be common ground is that there is need for action by Parliament to clarify basic principles in this area so that the law better reflects the needs of modern society. I thoroughly agree with the noble Baroness that this is a matter for Parliament, not for judges.

My final reason for intervening has already been referred to by the noble Baroness, Lady Deech. It is to couple my support for action in this area with a reminder to the House that the recently passed Children and Families Act makes it a requirement for a person who wishes to start certain types of family proceedings first to attend a family mediation information and assessment meeting—a MIAM—to find out about and consider mediation rather than going through the stressful experience of going to court. Legal aid is available for that process and there are exemptions to that compulsion where a case is genuinely urgent or there is evidence of domestic violence. Mediation has a good story to tell of thousands of people achieving settlements in a way that is faster, cheaper and less stressful than mud-wrestling through the courts.

The noble Baroness, Lady Deech, told us that development in this area of law has been left to judges for the past 30 years. The Law Commission started its work in 2009. Now is the time for Parliament to step up to the plate and deliver clear and contemporary legislation, which may in the end be a synthesis of the proposals in the Bill, the work done by the Law Commission and the Government’s August response. I hope that in his response today the Minister will indicate that that is his direction of travel.

1.25 pm

Lord Hope of Craighead (CB): My Lords, I, too, welcome this much needed Bill and congratulate the noble Baroness, Lady Deech, on bringing it forward. I know that it is the product of a great deal of thought and hard work on her part. I think we must all be grateful to her for that and for providing us with the opportunity to debate her proposals.

The measures that the Bill contains are of particular interest to me for a variety of reasons. First, to a very large extent, they bring the law of England and Wales

27 Jun 2014 : Column 1499

about financial provision and property adjustment on divorce in line with the law of Scotland, as the noble and learned Lord, Lord Mackay of Clashfern, told us. I should add that I lived and worked with that system in the Court of Session for about 10 years before I came to this House as a Lord of Appeal in Ordinary in 1996. Secondly, I had something to say about that system in the high-value divorce case of Miller v Miller in 2006, which I will come back to in a moment. Thirdly, the provision about prenuptial and post-nuptial agreements recalls for me the case of Radmacher v Granatino, which was heard four years ago in the Supreme Court by nine justices, of which I was one. For all the reasons that the noble Baroness has given, legislation on these matters has for far too long been delayed and is now badly needed.

Perhaps I may start with the provisions about matrimonial property and periodical payments. These are closely modelled on Sections 8 to 11 of the Family Law (Scotland) Act 1985. It is worth noting that that Act followed closely a draft Bill that was recommended by the Scottish Law Commission in a report delivered to the noble and learned Lord, Lord Mackay—as, I think, the Lord Advocate—in November 1981. It was the product of many years’ research and it had taken a long time to be brought forward. However, there it was in 1981 and eventually that Bill was brought before this Parliament and enacted almost without amendment from the recommendations made there. The aim of the Scottish Law Commission was to do exactly as the noble Lord, Lord McNally, said: to replace judicial discretion with clear indications and principles laid down by Parliament, which the judges would be required to follow. It put forward a system that was based on what were described as fair and clearly stated principles but which left enough scope for judicial discretion to allow for different circumstances in different cases.

That Bill attracted little criticism when it was debated here but I remember, when I was sitting as Lord President in the Court of Session, being rather suspicious of it because at first sight it seemed to cut back the element of discretion for the judges too far. In fact, when one looked at the way in which it was working, it appeared that that was not really so and that there was enough discretion to allow for different cases, as the Law Commission had predicted. What I sought to do in the Appeal Court in which I sat was to discourage appeals that interfered with the exercising of discretion by the judges. The old system was fine when a very few judges in Edinburgh were dealing with divorce cases, but this measure coincided with the broadening of the jurisdiction to sheriffs sitting throughout the country. The risk of different views being taken by judges was very real, but it was an important change and, in the end, I greatly welcomed it when I was sitting as a judge.

However, there are two problems in this Bill and perhaps I might focus on them quickly. The first is the one that I mentioned regarding the case of Miller, which was drawn to the attention of the court in Edinburgh as that Act became law and was worked out in practice. It is the definition of matrimonial property and tying its net value to the date when the

27 Jun 2014 : Column 1500

parties separate. The problem was that sometimes a great deal of time elapsed between the separation and the making of the award and to freeze the value at the date of the separation was in many cases seen to be unfair. That was cured by an amendment in the Family Law (Scotland) Act 2006 and I respectfully suggest to the noble Baroness that her Bill might be amended to take account of that amendment, replacing her formulation by directing attention to the date of the award.

The second point that troubled me greatly in Miller was the situation of a high-earning wife who gives up a career to look after the children, and indeed her husband, in the course of a marriage. I had before me at the time when I was dealing with Miller a letter from a lady in exactly that situation who lived in the south of England and was being taken to divorce in Scotland by her husband, in what I thought was a blatant piece of forum shopping, so that he could take advantage of the three-year “clean break” principle. Her position was that she could never return to the high-earning position that she had held before she married—that simply was not realistic—so she was being required, as the Scottish Law Commission put it, to adjust to a lower standard of living.

That seemed very unfair to me and I wondered whether the law could not be adjusted to give a little more discretion to judges to allow for such cases where high-earning women were being deprived of their ability to continue earning because of what they had done for the family and for the husband. I suggested that the law may have made sense in 1981 but, now that there was so much more equality and the opportunities for women to earn higher earnings was so much greater nowadays, it needed to be rethought. I was quite severely attacked by academics in Scotland for making that suggestion because it looked as though I was criticising the Scottish Law Commission. I was not trying to do that; I was just saying, “Let’s bring the matter up to date”. I suggest that the noble Baroness might like to consider that point, too.

I have one other point to make on the matter of post-nuptial and prenuptial agreements. The problem that the Supreme Court had in Radmacher v Granatino was twofold. First, there was a policy objection, which was based on the view that these agreements, particularly the prenuptial ones, in some way encouraged parties to breach the duty to live together that was the essence of marriage. We in the Supreme Court were able to say that that policy should be now discarded and I think that it no longer plays a part in modern thinking, but what we could not do was alter the primacy that the statutory law gave to the court in deciding whether these agreements should be enforced. It was important then, and it is important now when one reads the noble Baroness’s Bill, to substitute that with the primacy of the agreement of the parties, which takes one back to the situation that I, in common with the noble and learned Lord, Lord Mackay of Clashfern, would have seen the position to be in Scotland and indeed many other countries. That would substitute the agreement of the parties for the position of the court and in my submission that seems to fit well with the thinking in many places around the world. It would do something that the court could not do, which of course is the

27 Jun 2014 : Column 1501

great benefit of legislation, as I think the noble Lord, Lord McNally, was suggesting. There is quite a lot to debate in this Bill when it comes to Committee and I very much hope that it has a Second Reading and will then proceed to that stage.

1.32 pm

Baroness Bakewell (Lab): My Lords, in the 1830s Caroline Norton campaigned for the Custody of Infants Act, which for the first time allowed women separated from their husbands—though not of course divorced—access to their own children. In the 1870s Caroline Norton went on to campaign for the Married Women’s Property Act, which allowed wives to keep some of their own property within their marriage. Today she is immortalised in her portrayal as Justice in the murals in this very House, painted by the Irish artist Daniel Maclise.

This Bill to amend the Matrimonial Causes Act 1973 is in that fine feminist tradition, and I congratulate my feminist friend, the noble Baroness, Lady Deech, on bringing it forward. I support it for four reasons. The first is demographic change. People live longer, and over a long lifetime there is more opportunity for things to go wrong—therefore, more divorces. People not only divorce but create separate families, have their own children from the first family and from the second and, perhaps, write wills favouring both. The complexities of how to deal with financial settlement only intensify with the situation of demographic change.

My second reason is that we live in times of ever greater equality between spouses. Not long ago, within living memory, the man on the whole was the breadwinner and the woman stayed at home and looked after children; on divorce, it became his responsibility to care for her and the children. Now, wives, by and large, have working lives, if not successful careers, and they bring wealth of their own to the marriage. This law would mean that assets acquired before the marriage would not be available for distribution. Women are marrying later. They are living equal lives. For that reason, this amendment that safeguards their property before marriage is increasingly appropriate.

Legal aid has largely gone from many aspects of this situation. We know that many couples who are separated and seeking divorce go on the internet to find ways of running their own divorce because the expenses are so very great. They do it at a time of enormous emotional stress and strain. They perhaps are not thinking clearly. It is difficult for them to find their way through the intricacies of the law as it stands. This Bill would help them deal with that.

Prenuptial agreements are more and more common for the reasons that are implicit in what I have said about women with careers. They represent a sensible approach for both parties. Currently, as we know, they happen primarily among the rich. We read about celebrities and rich City folk arguing about huge shares. Those stories make headlines, but ordinary people need prenuptial agreements that have the power of law: this is very important for them.

Finally, mediation between divorcing couples becomes less protracted if the rules are clear. The agonising months that follow a separation and divorce militate

27 Jun 2014 : Column 1502

against the settled family life that fathers and mothers would wish for their children. Anything that clarifies the situation and shortens the period of distress is to be welcomed. That is why I support this Bill.

1.36 pm

Baroness Meacher (CB): I rise to contribute briefly to this important debate and most particularly to applaud the noble Baroness, Lady Deech, for taking the initiative to raise awareness of the urgent need for reform of the Matrimonial Causes Act 1973. As she said, modern marriages are very different from those of the early 1970s, such as in the role of fathers in the family and often their very active involvement in childcare. Part-time and flexible working by both parents, increasingly common today, would have been inconceivable in the 1970s. The growth of nursery provision and after- school clubs for children of school age has enabled mothers to be far more involved in the workplace than in the past. All this has changed the financial relationship between couples.

There are couples who opt for a very traditional marriage where for perhaps 20 years the mother stays at home looking after the children and the father goes out to work. The law will have to take account of them.

One of the reasons why divorces are so detrimental to children is the long, drawn-out court battle that too often accompanies them. The judge-made law, largely based on big-money cases of little relevance to couples with limited resources, has created too much uncertainty and complexity, opening opportunities for barristers to fight over endless details on a wide range of issues, costing vast sums of money and creating many months of misery for the whole family. The lack of clarity in the law also makes mediation much more difficult and unlikely to succeed in most cases. Any involvement of the courts in financial settlements should be seen as a failure of the system and of the parents as well—but while the law remains as it is, parents are often driven into the courts very much against their will.

The removal of legal aid from this area of law has already been mentioned. It was rightly highlighted by the noble Baroness, Lady Deech, and other noble Lords as a factor adding to the urgency of the need for reform. I have recently been close to a case where the parents represented themselves. The initial judge, who was certainly no mathematician, clearly found the financial issues impossible to resolve. The initial judgment was completely unworkable. The result was that the whole thing was sorted out only a year later on appeal. This case was limited to financial issues, and in a clear legal context it should have been sorted out in a matter of weeks through mediation. Under the existing law, it took more than two years in all to sort out the financial matters.

I also warmly welcome the proposal of the noble Baroness, Lady Deech, to limit periodical payments to three years or thereabouts. The current position, under which a divorce is a life sentence for the contributing party, cannot be right in the modern world. Yes, of course the lower earner needs time to adjust, but the contributing party also needs the prospect of a life free from the consequences of a failed marriage.

27 Jun 2014 : Column 1503

Finally, I strongly support the noble Baroness’s proposal that prenuptial and post-nuptial agreements should be binding. However, this has to be conditional on the parties having received independent legal advice—or at least having had the opportunity to do so—having made full disclosure and having entered the agreement a reasonable period before the marriage. All of that makes perfect sense to me. Ideally, this should become the normal route to a financial settlement, in which any glitches could be sorted out through mediation. I hope that the Government will allocate parliamentary time to this incredibly important, but in some ways fairly modest, Bill. It would transform the experience of divorce for many couples and save a great deal of misery and money.

1.41 pm

Baroness Wilcox (Con): My Lords, I, too, congratulate the noble Baroness, Lady Deech, on bringing forward, as sponsor, a Divorce (Financial Provision) Bill. From her I learn that, while the divorce decree itself has become largely an administrative process, the division of income and property between spouses is often a contentious, long-drawn-out and expensive process. The noble Baroness has outlined why: the uncertainty of the basic principles in this area, the development of law by judges and changes in society—which I find interesting to read, and feel part of as I have lived that long—with women at work, divorce no longer being fault based, civil partnerships and attitudes to the family. I add to her list the fact that we are all living for so long.

We have heard both why it is urgent for Parliament to revisit the fundamental law governing financial provision and how the Bill will work. I congratulate the noble Baroness, Lady Deech, on providing me with a briefing note that was written in plain English. As the originator of the Plain English Campaign and the former chairman of the National Consumer Council, I am only too delighted to be taking part in a Bill which, if it goes farther, I feel that I will be able to understand. I am not a lawyer, and so this bodes well for me in the future, and for allowing those who have to divorce better to understand the process. The last thing on divorce I found so accessible to the layman was an excellent booklet written some years ago by my noble friend Lady Shackleton of Belgravia, from whom we will hear later.

Why am I interested in this Bill, as I am neither a lawyer nor a judge? I believe in marriage. I have been both divorced and widowed, so I understand, know and feel deeply what happens during those procedures. However, I still believe that marriage is the best estate for family life: for the bringing up of children, for health and happiness and for companionship. The Bill will especially help older people like myself, divorced or merely widowed, who are afraid to marry again where there are assets they wish to protect and who are reluctant to commit again, fearing a potentially financially disadvantaged position at a time of life when starting again would be almost impossible and far too frightening to contemplate.

The Bill, if enacted, should bring better opportunities, as we have heard, from mediation, less need to go to

27 Jun 2014 : Column 1504

court, lower costs, reduced trauma for children, and fairer outcomes, recognising partnership in marriage. It should bring clarity and encouragement for people like me to try again. The Bill could be a true vote for marriage, even if it is for the second time around.

1.44 pm

Lord Scott of Foscote (CB): My Lords, I address your Lordships as a lawyer who is interested in the Bill, although in practice I did nothing in this particular field. The interest for me is provided only by a general interest in the law.

The problem with this area of the law is that it tries to deal with a situation in which two individuals, who know one another very well and have probably lived together for some time, are in dispute because their relationship has broken down. They have to come to decisions about what is to happen to them and to their respective lives, to their children—if they have any—and to the assets they have accumulated, because they are almost bound to have accumulated some. That happens at a time when their personal relationship has broken down. There is everything to be said for encouraging the use of prenuptial—and, indeed, post-nuptial—agreements, and everything to be said for making them. However, if they are to be made binding, it is essential that they be put in writing. If they are left as oral agreements, they will simply be another bone to be chewed over by the two parties: “I agreed this—you agreed that”. Long ago in this country it was decided that contracts for the disposition of an interest in land had to be put in writing. I am sure that those sorts of considerations were the reason for that. We have all become very accustomed to contracts that relate to land being in writing, and the same reasoning should apply to prenuptial and post-nuptial agreements; otherwise, they will be just another basis for further litigation between the disputing parties.

It has to be recognised that there is always a tension in deciding what the statutory framework should be for the management of the affairs of the disputing couple post marriage. There is a tension between certainty on the one hand and fairness on the other. Certainty can be achieved by careful drafting of legislation, but fairness depends on the circumstances of the individual case. However, individual cases and people are different, and people have different problems. The greater the certainty, the more likely that the rigidity of whatever the certain system is that has been decided upon will produce, in some cases, unfairness for one or other of the spouses. That is the justification for giving the judges the huge amount of discretion they have under the present statutory framework. Maybe that leads to more dispute and litigation than is desirable; maybe the judges should not have so much discretion. To introduce more certainty or cut down on the discretion would be at the expense of fairness. That is a very difficult balance to strike. The advantages of certainty will not solve satisfactorily all the problems, because the same answer does not necessarily produce fairness for everybody. That is a matter to be considered when one comes to look at the wording of the provisions in the Bill. Perhaps that is not a point for Second Reading, but it should always be borne in mind.

27 Jun 2014 : Column 1505

On the Second Reading question, it is clear that the Bill should have one. I join noble Lords in congratulating the noble Baroness on putting the Bill forward. It will require a lot of thought and attention in Committee, but there should certainly be a Second Reading, and there should certainly be agreements in writing. There is another provision in the Bill where agreements are referred to; all the agreements that are referred to in the Bill need to be in writing, so that there can be no dispute between the parties as to what they agreed.

1.48 pm

Lord Grantchester (Lab): My Lords, I support the noble Baroness, Lady Deech, in her endeavours to update Section 25 of the Matrimonial Causes Act 1973, to bring consistency of approach to applications for financial orders, to bring greater clarity of outcome to the distressing ending of relationships, to reduce the stress to families and the combative nature of proceedings to cases, to simplify the existing complexity, to widen the debate outside the legal profession and to give Parliament—the lawmaker in our constitution—a voice and influence on what people want.

I would like to go on, as I cannot find much to commend in the present situation regarding divorce laws. The UK’s financial provisions on divorce are outdated and out of step with those of other jurisdictions. Financial provision swings between divergent spectrums of needs, equality, equity, various definitions of matrimonial property and interpretations of what seems about right on levels of division. We all know that fairness is in the eye of the beholder. The most unsettling nature of the present situation is that the public debate mainly takes place among lawyers, who, after all, have their own interests. Where are the lay members of the Law Commission and the Family Justice Council? I endorse the comments of the noble Baroness, Lady Deech, regarding proposals recently put forward by these two organisations, and I eagerly await the contribution from the noble Baroness, Lady Shackleton of Belgravia, in the hope and expectation that she will show her independence, partnered with her experience and expertise. I was very pleased to see the winning combatant appear in white at the judgment of the Radmacher v Granatino case, which shattered the cultural perceptions of the prevailing judge-made outlook.

I always caution myself on speaking when I have little knowledge but, having been through the situation and having seen the effects of relationship breakdown, I shall share a few comments. In the present situation, the only advice that I can give anyone is to make sure that you marry someone better off than yourself. I would like to be assured that mediation must become a central part of the process concerning any dispute that may have arisen outside these arrangements, or when there are no nuptial arrangements. Any outcome must have some regard to how each party has conducted mediation. I would like to see in any reform that the process has regard to the protection of assets—that is, that the cost of litigation is carefully assessed. This should not be a one-way bet in favour of any spouse, whereby there is no disadvantage to the least wealthy side to challenge at every step. It is disappointing to

27 Jun 2014 : Column 1506

see that one side should be better off as a result of a relationship breakdown than if the parties had stayed together.

The most vital aspect follows from the reduction and removal of legal aid from the process. At an emotionally distressing time for families, it would be disappointing to see a banking-style development of the legal profession, whereby legal loan companies were to flourish for profit.

There must also be ability to protect wider family wealth from relationship breakdown and allow people to regulate their own affairs. This Bill will give greater certainty to nuptial arrangements by making them more categorical, with fewer exceptions and loopholes than the Law Commission would want. There must be more certainty provided, with certain fundamentals adhered to. We must be clear about what matrimonial property is, and the agreed interpretation of the parties in the relationship. Capital assets and income streams must be separated and clarified. I have seen SMEs, especially farming businesses, shattered when business assets have been built up over generations. As I said earlier, lawyers do not hesitate to apply a rule of thumb on the basis of an image of total assets and advise accordingly to their clients.

Finally, on the pace of change, we are all aware of how society has changed and how divergent cultural approaches do not make the changes easy. Nevertheless, in a will or trust situation, whereby a settlor may have made provision many years previously, there must be the ability to protect the assumptions under which provision was made. In this regard, it was not so long ago that the Law Commission advocated the extension of inheritance to cohabitees in a relationship. That would have a damaging effect on many wills and trusts, which must have the ability to future-proof people’s wishes, as couples may wish to pick and choose which level of commitment they may wish to abide by in their relationships. I am pleased that this Bill does not make any attempt to stray into that territory.

The Bill before your Lordships’ House today takes account of all these reflections and, no doubt, your Lordships will test them, and many others of their own, in Committee. We must guard against perfection being the enemy to the good. One small omission must not make a big enough hole in which we would want to bury this Bill. Parliament must now consider putting divorce and financial provision at relationship breakdown on a better footing than at present. I support the Bill and trust that the Government will enter into constructive participation.

1.54 pm

Lord St John of Bletso (CB): My Lords, I join in warmly welcoming my noble friend’s Bill, which addresses the urgent need for more certainty in the law pertaining to financial orders on divorce and dissolution, which is in a state of constant development. It is also an opportune time for my noble friend to introduce this Bill, following the Law Commission’s marital agreement proposals which, as has been mentioned, were set out in the draft nuptial agreements Bill.

27 Jun 2014 : Column 1507

I speak from my experience of being a practising divorce lawyer in South Africa, under Roman Dutch Law, which respects binding prenuptial agreements, and where there is far more certainty in the determination of financial settlements on divorce. I also have a personal strong interest in this Bill as I sadly endured a long and very painful recent divorce, which was both costly and hugely stressful for all concerned, particularly my children. The noble and learned Lord, Lord Mackay of Clashfern, was right to highlight the damage done to children by lengthy divorces.

Whatever may be the objections of the church to prenuptial and post-nuptial agreements, there is no evidence that marriage breakdown is encouraged by the drawing up of these agreements. It is well known that divorce among older couples is on the increase, with recent statistics showing that the highest percentage of divorces occur among couples aged between 40 and 45. There is increasing need for certainty in cases of bequests and family trusts, particularly with couples who have remarried and who want to make sure that they retain their inheritance. For those who have had a bad divorce experience—I note the comments of the noble Baroness, Lady Wilcox—and are somewhat reluctant to commit to another marriage, prenuptial and post-nuptial agreements provide far more certainty and comfort. I agree with my noble and learned friend Lord Scott that these agreements should be in writing. In this regard, I wholeheartedly support Clause 3 of the Bill.

It is a staggering statistic that there are more than 119,000 divorces in England and Wales annually, with financial orders made by the court in about a third of those. As several noble Lords have mentioned, the removal of legal aid has led to a steep rise in self-representation, overloading the divorce courts and causing even lengthier delays. Recent tax changes have also added to the difficulties of couples whose main asset is the family home. Until this year, married couples, or those in civil partnerships, qualified for tax relief on capital gains from the sale of their principal private residence for three years after separation. However, in the Autumn Statement, the Chancellor changed this to just 18 months. This has put more pressure on financial settlements, given the need to conclude the sale of the family home within a year and a half of one party leaving it.

I do not want to repeat the many cogent arguments that have been put forward in support of the Bill. There is no denying that, when it comes to building wealth or avoiding poverty, a stable marriage is in many cases the most important asset. However, the recent Law Commission report highlighted:

“Although the law is largely well understood by family lawyers, it is inaccessible to the general public and there is evidence that the courts in different areas of the country do not always apply the law consistently”.

Among its many benefits, the Bill, if enacted, would certainly provide better opportunities for mediation, less necessity to go to court, far less stress for divorcing couples, particularly for their children, and a massive saving in costs. In this regard, I wholeheartedly support it and hope that it is given a fair hearing in both this House and the other place.

27 Jun 2014 : Column 1508

1.59 pm

Baroness Shackleton of Belgravia (Con): My Lords, I practise in this area of law, and started five years after the 1973 Act came into being. I begin by praising the judiciary. In a world in which trust is a rare commodity, where politicians, the police and the press have all been found lacking, the judiciary is without question beyond reproach and stands out as a beacon of hope, commanding the confidence and respect of this country, as well as of others who choose to litigate their disputes here.

The judges work tirelessly, many of them for a fraction of what they have been earning in practice. In the field of law in which I practise, however, the legislation on which they depend is overdue for review and is no longer fit for purpose because its interpretation relies too heavily on the discretion of the individual enforcing it, thereby making it more difficult to predict and therefore advise on the outcome of a particular case. This creates uncertainty; and uncertainty creates litigation. It is for this reason that I wholeheartedly support the Bill, and I am very grateful to the noble Baroness, Lady Deech, for introducing it.

When one enters the building that houses most of the family courts, there is a life-size statue of a judge. The judge has a blank face and a wig, and the statue sits, with its commanding presence, before you go into court. The purpose of its existence is to show the users of the court that the identity of a judge is an irrelevance, and that the outcome of a case would be much the same, whoever happened to be occupying the blank face. Unfortunately, this is not always the case.

I shall give a clear example of a case in which I was involved a few years ago. First, by way of background, I shall try to zoom through 30 years of matrimonial finance in a most simple form—which I hope will please my noble friend Lady Wilcox. The courts initially, when I started to practise, looked at the one-third rule—the division of assets by a third. After that, the deciding criteria were normally the wife’s reasonable requirements, their needs. So one had to go through the expenditure, right down to the postage stamps, to justify the amount of money that one was looking for, in addition to a housing fund, and the surplus was generally kept by the person who earned it. This continued to be the case until the case of White, at the end of the last century or the beginning of this one, when the House of Lords decided that that was not what the statute intended, that needs were not the overriding criteria, and that the principle of sharing the surplus fairly—whatever that might mean—was the correct interpretation of the statute.

The case I refer to involved a huge amount of money, approximately £100 million, accumulated over a 33-year marriage. The facts were not disputed. Every case, before it gets adjudicated in the High Court or in the Principal Registry of the Family Division has to go before a financial dispute resolution, in which the judge sits as a mediator. That judge cannot hear the final hearing, but predicts—or tries to predict—what the outcome will be at the final hearing and encourages the parties to settle. One could call them “supreme mediators”. The judge on this occasion, having heard the facts, decided that the assets should be split equally,

27 Jun 2014 : Column 1509

50:50. She was completely deaf to any argument that the husband had made an exceptional contribution, saying that it was much more difficult to live with a genius, control-freak, high-achieving man than with a bog-standard one who had not made that amount of money; and she said that the wife’s contribution in bringing up the family was unquantifiable. The wife was happy with that and the husband was not.

The case went to a full hearing. On exactly those facts, the trial judge decided the man had made an unmatched contribution and awarded the wife 40%. That was a swing of £20 million. It was more than he had in fact offered, but nevertheless, it made it worth while for him to continue and for her not to accept the amount that was offered at the FDR. That leaves the law in a mess, because nobody knows when special contribution kicks in, what it means—it could be something that is not quantifiable in money—and what percentage would be applied to give recognition that someone has made an unmatched contribution. The Bill sorts that out.

Another example of uncertainty is the evolution of prenuptial contracts. When I started off they were considered to be repugnant for public policy reasons: no one should contemplate the breakdown of a contract that was meant to be lifelong. You can see judges slowly changing and shifting until the case of Granatino, which I was involved in and which nobody who practised believed would happen without the intervention of Parliament. We are now left with a situation where prenuptial contracts appear to be pivotal in many cases, but the Act is silent on this. We need help.

Uncertainty of outcome creates an industry for lawyers to litigate. It makes it difficult or impossible to have successful mediation, and the financial costs—not to mention the unquantifiable human cost mentioned by many noble Lords, aggravated often by delay because the courts are too full—are vast and unnecessary. The Bill seeks to limit the discretion of a court and provide direction from Parliament for matrimonial finance. I commend it and thank the noble Baroness, Lady Deech, for introducing it.

2.06 pm

Lord Kennedy of Southwark (Lab): My Lords, this has been an interesting debate and I congratulate the noble Baroness, Lady Deech, on bringing forward her Bill and securing a Second Reading so early in the Session. The Bill proposes to repeal Section 25 of the Matrimonial Causes Act 1973 and replace it with a series of principles that would apply in the determination of applications for financial orders in divorces.

I am not a lawyer, so I have come to the Bill as a lay person. I looked at what marriage is: it is, of course, an agreement by which two people enter into a certain legal relationship with each other and which creates and imposes mutual rights and duties. However, when you look carefully, it is a contract—but a very special contract—that comes into force if special formalities are observed and, apart from death, can be set aside or terminated only by a court of competent jurisdiction.

Of course, people enter into this contract because they love each other and want to be with each other and make a life together as a couple, and possibly have

27 Jun 2014 : Column 1510

children. As an institution, marriage is something that Members on these Benches fully support. We believe that it is one of the bedrocks of stable relationships and society. We are very proud on these Benches that we introduced civil partnerships for gay people some years ago, and that we fully supported the Government last year, in the previous Session, when they decided the time was right to introduce equal marriage for gay people. We did that because we agreed with the Government that marriage is an important institution and that gay people have the right to be treated exactly the same, enjoying the same benefits and facing the same challenges in the society they are equal members of.

I then looked at divorce and what exactly it means. It is, of course, the termination of marital union, the cancelling and/or reorganising of the legal duties and responsibilities of marriage. I found it interesting that, with amendments over time, we are using an Act, which, although ground-breaking at the time, came on to the statute book 41 years ago. That may not be long in the life of legislation, but divorce is a live issue affecting thousands of people every year, as they go through the process either as divorcing spouses or as their children. I reflected on how different the UK is today from 1973.

On these Benches we welcome the debate and believe it is timely. Changes need to be made in the application of financial orders in divorces. However, I cannot at this stage give the Bill my wholehearted support—but, like the noble Lord, Lord McNally, I give it my qualified support. However, with careful debate, identifying the issues of concern, we could be in a position to agree amendments that would enable us to give it our full support.

The concerns can be outlined as follows. Clause 2 provides that either party subject to proceedings for divorce may apply to a court for an order in relation to matrimonial property, for the payment of a lump sum, for the transfer of property or for a pension-sharing order. Legislating on an approach to the division of assets would certainly provide greater certainty for couples who are separating, but we would want to see clear safeguards to protect the economically weaker spouse.

Clause 3 would make prenuptial and post-nuptial agreements binding on the parties, subject to a number of safeguards, and binding agreements could provide couples deciding to marry with the ability to plan with more certainty. I can see the argument that it would bring into full view the potential costs to each party, that significant money could be saved in lawyer and court costs, and that it could take some of the hostility and bitterness out of the process for both parties. I also understand that in many other jurisdictions prenuptial agreements are very common and that in many cases those same jurisdictions have much lower divorce rates. I think that we would want to carefully examine the proposals and test the competing arguments—that, on the one hand, this would undermine marriage and that, on the other, it would strengthen it.

Clauses 4 and 5 propose that the net value of the matrimonial property is shared fairly between the parties. The proposals seek to limit costly litigation by providing a process for asset division and maintenance.

27 Jun 2014 : Column 1511

They seek to remove, or certainly limit, the role that the court plays in deciding the appropriate division of assets and maintenance, and they limit the ongoing dependence of either spouse on the other as a means of allowing divorcing couples to establish independent lives as quickly as possible.

Our concerns here are that this appears to be a one-size-fits-all approach and that, if there is no place for individual circumstances to be taken into account, after three years when the welfare state is shrinking, the more vulnerable and economically weaker spouse would be left dependent on a shrinking welfare state. I understand that at present courts are told not to make a divorcing spouse dependent on the state where there are other resources to assist them. However, the case for indefinite maintenance orders needs to be looked at and reformed. Maybe an automatic review after a set period of time would be a better way of achieving the aims of the Bill in this respect.

This Bill seeks to deal with important issues and to find solutions to situations that are far from satisfactory at present. I have attempted to highlight some of the concerns from these Benches. However, I believe that, with the Government being fair and reasonable, the Bill could be significantly improved and make progress through your Lordships’ House. As the Opposition, we are here to play our full role in making those improvements.

Like the noble Baroness, Lady Deech, I have an interest in this. I am happily married, although I was getting a few funny looks this week from my wife, my noble friend Lady Kennedy, after getting out books on divorce.

In closing, I bring to the attention of the House that, although it is not proposed here, there is nothing in the rules of the House—I have checked this with the Clerk of the Parliaments—to prevent this Bill or any other Private Member’s Bill being committed to a Grand Committee. A few days in Committee in the Moses Room dealing with the issues that have been outlined today, particularly as highlighted by the noble and learned Lord, Lord Hope of Craighead, might have been a better way of proceeding. It might have produced something for Report that the whole House, or at least a substantial majority of the House, would be willing to support.

The noble Lord, Lord McNally, is right that it is time for Parliament to act on these matters. As the noble and learned Lord, Lord Hope of Craighead, said, action is badly needed and needs to be taken.

The noble Baroness, Lady Deech, is correct to point out that Governments sometimes find issues such as this difficult to deal with. In our recent history, since the Second World War, the Private Member’s Bill has had a very honourable tradition of dealing with these difficult issues, enabling the law to be changed and reformed with government support. However, that requires government support in providing time to work through the issues. We certainly have plenty of time and space in the Moses Room to make this happen if we want to. Before any noble Lord suggests that this Bill would be too controversial to put into Grand Committee, I ask them to reflect on that fact that the Government put the Welfare Reform Bill into

27 Jun 2014 : Column 1512

Grand Committee. There can be no argument that that Bill raised controversial issues, but the Government saw no reason not to have its Committee stage in the Moses Room.

In conclusion, I again thank the noble Baroness, Lady Deech, for bringing this Bill to the House and I wish her well in her endeavours.

2.14 pm

The Minister of State, Ministry of Justice (Lord Faulks) (Con): My Lords, like all other noble Lords, I thank the noble Baroness, Lady Deech, for introducing the Bill and for enabling the House to debate the appropriate division of financial provision on divorce. She has done the House a great service by prompting this high-quality debate.

The Bill has the highly laudable aim of seeking to assist divorcing couples and civil partners undergoing separation in resolving disputes over the division of property. It is intended both to recognise and enforce prior agreements between separating spouses and substantially to amend the law on financial provision on divorce.

The Bill makes fundamental changes to the law on financial provision on divorce as it has applied for over 30 years. However, it differs from and goes beyond recommendations made by the Law Commission report, which the Government are currently considering. Comments were made about the speed at which the Law Commission has historically proceeded. There is no criticism of the quality of the work that the Law Commission does and I echo the comments made by my noble friend Lord McNally about the way in which a number of Law Commission Bills have been going through Parliament recently.

The Government are not anxious to pre-empt the consideration that is taking place of the Law Commission’s report. In any event, the Government have a number of concerns about the Bill’s provisions and whether these sufficiently safeguard the needs of children and families so as to avoid potential hardship. I will set out these concerns by reference to the current law, the proposals in the Bill and the proposals on matrimonial property agreements made by the Law Commission.

The current law on financial provision on divorce provides a number of important safeguards. This is governed in England and Wales by the Matrimonial Causes Act 1973. Section 23 provides for lump-sum payments and various other forms of financial provision; Section 24 enables property transfers; and further provisions allow for orders for the sale of property, pension-sharing orders and so on.

The courts have a wide discretion as to what orders to make in any particular case and must have regard to the factors set out in Section 25 of the Act. On the face of it, that might seem to be a fair state of affairs. However, there has been a great deal of criticism during the course of the debate that, although the Act provides for all these matters to be taken into consideration, it nevertheless produces uncertainty of outcome—too much depends, perhaps, on the idiosyncrasies of particular judges and fashions—and it does not enable parties to be sufficiently clear on divorce about what is the likely division of property.

27 Jun 2014 : Column 1513

However, Section 25, importantly, says that the first consideration of the court is the welfare of any child of the family under the age of 18. Other factors in Section 25 include the income and earning capacity of the parties, contributions made to maintaining the home and children, the financial needs and obligations of the parties, the age of the parties, the duration of the marriage and any physical or mental disability suffered by either.

The noble Baroness’s Bill provides that Section 25 will be repealed and will therefore no longer have effect in relation to orders for financial provision between the parties to a marriage or civil partnership. The Government would be particularly concerned if this had the effect of weakening the protection given to children when their parents divorce. The noble Baroness has indicated that maintenance for children will not be affected, but the Government are concerned that the removal of the welfare of minor children as the court’s first consideration in making financial provision for spouses might cause adverse consequences for children. This would plainly require a great deal of consideration.

Clause 6 addresses the provision for children of the family and provides that the court must have regard to any order for support of a child of the family, the age and health of any child, the educational and financial circumstances of the child and so on, but it does not make the welfare of the child the first consideration of the court, and thus may not provide as much protection for children as the current law. The Government think that the court should look at the needs of the children first and then go on to consider the division of property between the parents.

The Bill proposes that subject to certain exceptions, matrimonial property, defined as is, should be divided equally between the parties. The Government are concerned that this would also be potentially unfair and could cause hardship, particularly for poorer families and for families with children. The noble Lord, Lord Kennedy, referred to the danger of a one-size-fits-all provision. Moreover, reference has been made during the debate to the changes in society since 1973, including the demographic changes described by the noble Baroness, Lady Bakewell, and women’s increasing equality. None the less, as the noble Baroness, Lady Meacher, said, the old models of marriage do still exist in some sections of society and we cannot ignore them when deciding on an appropriate change to the law, if indeed any is needed. In fact, the Law Commission recommended that there should be no change to the law on need in financial provision on divorce.

The Bill provides that periodical payments for spousal maintenance should be for a maximum period of three years and that lump-sum payments and periodical payments should be intended to enable the recipient to become independent of financial support within three years. An absolute three-year limit on maintenance would be similar to the law in Scotland, referred to by the noble and learned Lord, Lord Hope, and my noble and learned friend Lord Mackay. Having looked at the matter, I see that it emanated from a recommendation by the Scottish Law Commission that eventually became part of Scottish law. But, again, the Government are

27 Jun 2014 : Column 1514

concerned that this could cause hardship and may be inappropriate for many couples. Having to adjust to a new financial reality may take longer than three years, so the Government currently consider that it is better for the court to retain a discretion to provide as it thinks best to meet the circumstances of each individual family.

Lord Davies of Stamford: My Lords, I am listening to the noble Lord with great attention. Would he be kind enough to say what it is that makes circumstances or human nature different in England from what they are in Scotland?

Lord Faulks: I am not altogether sure whether that is a serious question, but of course human nature is not different. The answer is that there is no perfect solution to these difficult problems, as I am sure all noble Lords would agree. The Scottish solution is one that is certainly worthy of great consideration. The current solution in the law of this country is rather different. At the moment we are all concerned to find a solution which best serves the interests of all parties on divorce. Scotland has much to teach us, but it does not have necessarily the perfect answer. We need to learn from the experience in Scotland while accepting that human nature is the same in Scotland as it is in England.

As I say, the Bill provides for matrimonial property agreements to be binding upon couples on divorce. In its proposals on matrimonial property agreements, the Law Commission has strongly recommended that the courts should be able to depart from a matrimonial property agreement where this is considered necessary in order to protect the needs of a spouse or in the interests of any children. The Bill departs from that proposition. In its proposals on matrimonial property agreements, the Law Commission set out a comprehensive list of the requirements necessary to underpin enforceable agreements made prior to divorce. In considering the Law Commission’s proposals, the Government wish to reflect on the sufficiency of safeguards before committing to legislate to make agreements enforceable. We are currently considering those and, as my noble friend Lord McNally said, we will announce our response to them in the very near future. That will be in August—albeit that I heard what he said about the undesirability of reflecting and responding in that particular month.

The Bill’s proposals differ quite substantially from the recommendations made by the Law Commission in the light of really extensive consultation, which included consultation with family practitioners—although I am glad to say that this debate has benefited from the contribution of family practitioners. The proposals in the Bill are substantially different and their likely effects are at least unclear.

I appreciate, as I am sure the whole House does, the noble Baroness’s desire to ensure that financial division on divorce and on dissolution of a civil partnership is made simpler so that people will much more easily be able to estimate what they are likely to receive and be better able to negotiate with each other, and that couples should be able to enter into agreements to determine what they would receive on divorce.

27 Jun 2014 : Column 1515

The Government are considering the Law Commission’s report on matrimonial property agreements and how these could be made binding, and will respond in the near future. The report recommends making information available on the likely outcomes of financial applications on divorce—that has been developed during the debate—but recommends that there should be no change to the law governing “need”. The Government are concerned to give proper consideration to these and all the recommendations made by the Law Commission.

The Government recognise that divorcing couples often need help to reach an agreement and should be encouraged to avoid court proceedings. There is unanimity that court proceedings very rarely help in resolution of these disputes. They are far too expensive and the result is usually damaging both financially and, very often, to the future happiness of warring parties and children. The Government are therefore particularly anxious to encourage people to use family mediation and other forms of alternative dispute resolution.

For those who are eligible, legal aid is available for mediation. Under the Children and Families Act 2014, from 22 April this year applicants for financial orders and for financial provision on divorce must attend a mediation information and assessment meeting—

Baroness Shackleton of Belgravia: Mediation and indeed prenuptial contracts are practically impossible unless the outcome has some certainty as to what you are mediating for or what you are trying to anticipate when you are drafting a prenuptial contract. Unless the law is tidied up so that practitioners understand what the outcome would be to prevent the litigation, it is impossible to mediate.

Lord Faulks: I take the noble Baroness’s point but those helping the mediation, albeit that there is inevitably a measure of uncertainty because of the discretion given to the court, by reference to their experience and therefore what judges are customarily doing in a particular case, will nevertheless be able to advise on what is a likely outcome and what is perhaps in the best interests of the parties, and at least assist with the possibility of their not proceeding to court to have the matter heard there.

The application forms for the orders contain details of the provisions for the meetings and potential exemptions that might apply. The Government believe that these requirements will bring a significant number of people to learn about mediation and use it to resolve their disputes. Notwithstanding the point that the noble Baroness, Lady Shackleton, makes about uncertainty, if parties are happy with the outcome, that is of itself a desirable purpose in having this mediation. As my noble friend Lord McNally said, mediation has generally got a good story to tell, and increasingly that is the case.

The Government will not oppose the Bill receiving its Second Reading today but do have reservations about its approach and scope. What, however, I can take back to the department is the very clear—in fact, I think unanimous—view of those participating in

27 Jun 2014 : Column 1516

today’s debate that the time has come for Parliament to intervene. That of itself is an important message that I can take back to government decision-makers about the future of this field of law. However, we consider that we are already addressing these issues. We shall continue to do so, greatly assisted by all the work that the noble Baroness has done and by the contributions to this excellent debate by all noble Lords.

2.29 pm

Baroness Deech: My Lords, it has been a privilege to hear from experienced noble and learned Lords in this debate. In particular, the wisdom of the noble and learned Lords, Lord Hope, Lord Scott and Lord Mackay, has been invaluable, as well as the wisdom of those who have been through divorce or who have been involved in helping others. That means a great deal to me and to all those who think that the law should be reformed.

I am the first to admit that the drafting of the Bill is not perfect. How could I have overlooked the need for agreements to be in writing? Of course, they have to be in writing. But it has been a lesson to me, in that it is one thing to criticise a draft when you have it in front of you, but it is quite another—I could never begin to be parliamentary counsel—to start with a blank sheet and draft a law. Undoubtedly, if the Government give us a fair wind, as I hope they will, professional draftsmen must be let loose on this Bill. It is not something that someone like me can draft exclusively. I am most grateful to all those who have made utterly sensible drafting suggestions. They are all absolutely right. I agree with the noble Lord, Lord Davies, about disclosure of liabilities and all the other suggestions that have been made.

I want to clarify what the Law Commission has done. After some years of work, it has made proposals about prenuptial agreements, but I find it difficult to see how those can stand alone, if they are to be enforced, without reforming the rest of the law. The Law Commission has not completed its work on the sharing of matrimonial property and has stated in the report that it needs another five years of work to do that. It will not advance the cause for most couples just to enact, if that were to be the case, a Bill about prenuptial agreements; one has to tackle the whole thing. No further advice will come from the Law Commission, as it said, for about another five years. It is not as if the Law Commission has come to any firm conclusions about the division or sharing of matrimonial property.

We have to learn from the recent reforms that Scotland has made. England and Wales is the odd man out on this. We have all referred to Scotland, but most of Europe and most of North America have a law which is much more like the law proposed in the Bill than our existing law.

I value the feminist compliment from the noble Baroness, Lady Bakewell, and the moving speech by the noble Baroness, Lady Wilcox. I value, too, the experience brought forward so clearly by the noble and—I cannot call her learned—deeply experienced Baroness, Lady Shackleton. I welcome the contributions from the noble Lords, Lord St John and Lord

27 Jun 2014 : Column 1517

Grantchester, and others who have spoken. In none of them have I heard anything to undermine the principles and the three pillars of reform that I have put forward: prenuptial agreements being binding, splitting assets and curbing lifelong maintenance. People may think that it should last for three years; others may think that it should last for five. Those are matters for discussion. I simply point out to the Government that the widows’ bereavement allowance lasts for only one year these days and that it is now expected that women should seek work when their youngest child reaches six. The Government have therefore abandoned the notion of the housewife staying at home until the children reach 21 or some such age. The Bill would simply bring our law into parallel with developments around the rest of the world and developments in the Government’s own law relating to benefits and social security.

I therefore hope that the Minister will agree to see me to arrange a way forward for this Bill, because I do not believe that we can wait another five years for the conclusions of the Law Commission when 119,000 couples are getting divorces every year. While I appreciate the sensitivity and generosity underlying the comments made by the Minister, were they to be followed through to their logical conclusion, it would take us back full circle to a law where nobody knew what the outcome should be and where people continued to waste half their combined assets on paying for the litigation and the lawyers involved in the case.

I shall move shortly that the Bill be committed to a Committee of the Whole House, but I welcome the suggestion of the noble Lord, Lord Kennedy, that committal to a Grand Committee, where a lot of small details could be ironed out, might be a sensible way forward, given that I sense a certain consensus that there is a need not only for a broader reform but for a lot of work on the detail. I would welcome such a way forward.

Bill read a second time and committed to a Committee of the Whole House.

Parliamentary Privilege (Defamation) Bill [HL]

Second Reading

2.35 pm

Moved by Lord Lester of Herne Hill

That the Bill be read a second time.

Lord Lester of Herne Hill (LD): My Lords, Section 13 of the Defamation Act 1996 provides that:

“Where the conduct of a person in or in relation to proceedings in Parliament is in issue in defamation proceedings”,

he or she may waive the protection of parliamentary privilege given by Article 9 of the Bill of Rights for the purpose of those proceedings. The purpose of my essentially one-clause Bill is simply to repeal Section 13 of the 1996 Act. I am very pleased that my noble and learned friend Lord Mackay of Clashfern has been able to remain in the Chamber because he will remember, as I do, what happened 14 years ago.

27 Jun 2014 : Column 1518

First, I should say what this Bill does not deal with. It does not deal at all with the merits of the Defamation Act, to which my noble friend Lord McNally made such a contribution as Minister. It does not deal with the passionate arguments about press regulations, Hacked Off or any of those matters. It is confined to a very important issue about parliamentary privilege in the context of defamation and nothing more.

If this Bill is read a second time, it may well not have to go any further because the Deregulation Bill that reached this House on Tuesday says in Clause 82—to be read with paragraph 40 in Part 8 of Schedule 20—exactly the same as my Bill. If the Deregulation Bill goes through this House, I will not take the House’s time seeking to push my Bill any further because it will be completely unnecessary.

A bit of background: on 7 May 1996, with my noble and learned friend Lord Mackay of Clashfern on the Woolsack, the noble and learned Lord, Lord Hoffmann, moved an amendment that was addressed to the Neil Hamilton problem. The problem of Neil Hamilton MP was that he sued the Guardian for defamation and a High Court judge decided that parliamentary privilege under Article 9 of the Bill of Rights of 1689 prevented him doing so since it involved questioning proceedings in Parliament outside Parliament. Hamilton did not appeal against that judgment—as I, if I had advised him, would have recommended. Instead, he lobbied for an amendment to be made to the Defamation Bill which had been introduced as a Private Member’s Bill by the noble and learned Lord, Lord Hoffmann.

There was then a strong and well attended debate in which the noble and learned Lord, Lord Hoffmann, made it clear that he was agnostic about his own amendment; he expressed the arguments in favour and against very fairly. Since he was at the time a sitting judge it was obviously a delicate matter. Nor did he reply to the debate. Again, that might have caused some difficulty. Instead, both he and my noble and learned friend Lord Mackay of Clashfern showed their attitude towards the Bill by not voting in the Division called on it. The Bill was carried in this House and the other place and has been on the statute book ever since.

Every commission that has looked at the matter has criticised Section 13 and recommended its repeal. The first example was in the heavyweight 1999 Joint Committee on Parliamentary Privilege chaired by the noble and learned Lord, Lord Nicholls of Birkenhead, which strongly criticised Section 13. In my Private Member’s Bill in 2010, I sought to do what the Bill is intended to do today. The noble Lord, Lord McNally, indicated in debate on the Bill that the Government were thinking about other matters of reform of parliamentary privilege and, therefore, it was unlikely that they would want Section 13 removed at that stage. Indeed, in their draft Bill and actual Bill, they did not do so. The noble and learned Lord, Lord Hoffmann, said at Second Reading of my Bill:

“I am sure that the noble and learned Lord, Lord Mackay of Clashfern, who piloted that Bill through the House, will agree that Section 13 was hastily put together at the last minute, and that hasty reforms tend to cause trouble”.—[Official Report, 9/7/2010; col. 431.]

That was a fair observation of the position.

27 Jun 2014 : Column 1519

On Second Reading of the Defamation Bill, Mr Robert Buckland, Member of Parliament for South Swindon, again criticised the section and urged its removal. At that stage, the Government did not have a firm position. Then there was the report of the 2013 Joint Committee on Parliamentary Privilege. It, too, reported that Section 13 creates great damage, and the Government agreed in December 2013 that repealing Section 13 would be the wisest course.

In the debate on a Motion to take note of the committee’s report on 20 March 2013, the noble Lord, Lord Brabazon of Tara, the chairman of the committee, said that he would welcome the repeal of Section 13, the noble Lord, Lord Bew, said that the committee was disturbed by the failure to take action, the noble and learned Lord, Lord Brown of Eaton-under-Heywood, said much the same, and the noble Lord the Leader of the House, Lord Hill of Oareford, said that the Government adhered to the committee’s reservations about Section 13. He continued:

“I understand that my noble friend Lord Lester of Herne Hill … proposes to introduce a Private Member’s Bill to deal … with this small but important change. The Government are in principle supportive of this measure to make that clear, and we look forward to seeing if it can make progress”.—[Official Report, 20/3/13; col 344.]

In the other place, in the debate on the Deregulation Bill, Sir William Cash and other Members from both main parties joined together to say that the section should be got rid of. Thomas Docherty, MP for Dunfermline and West Fife, made a strong speech advocating reform.

Everybody, as far as I am aware, agrees that we should now undo what we did 14 years ago and remove that unconstitutional provision. In the original debate, it was condemned by jurists who are, sadly, no longer with us, such as Lord Simon of Glaisdale and Lord Renton, for constitutional reasons. I submit that it is undesirable for a Member of Parliament or Member of this House to be able to pick and choose on an individual basis whether or not to waive parliamentary privilege according to whether it suits them as claimants or defendants in individual proceedings. No other legislature in the world allows that, and this is a day on which one can at last begin to get rid of it. I beg to move.

2.44 pm

Lord Prescott (Lab): My Lords, I offer my congratulations to the noble, Lord Lester, for his Parliamentary Privilege (Defamation) Bill, which I support on the balance of the arguments. As the noble Lord pointed out, it arises from a dispute between a Member of Parliament in the other House and a paper, the Guardian. Therefore, this conflict raises a number of points in my mind about parliamentary privilege.

The first point arises from a decision taken in the courts in dealing with Rebekah Brooks. Before the committee of the House that dealt with the matter, she gave evidence that she or they had been involved in payments to the police. That is a matter of considerable concern but, despite being covered by all the press, it could not be put in the court for consideration because

27 Jun 2014 : Column 1520

parliamentary privilege prevented it being presented there. That may have been right but it meant that the jury in the court did not get an important point which they should have considered.

Secondly, can the Minister confirm—or perhaps the noble Lord, Lord Lester, can comment on this—whether the defamation case against the media is affected by the changes made in the Legal Aid, Sentencing and Punishment of Offenders Act? With the transfer of costs that were taking place under that legislation, which we recall debating in this House, an exemption was made for the media cases. That was for a number of reasons. Under the old Act the transfer of costs, whether they were to do with the premiums for insurance or the actual costs and success fees, remained the same. Can the Minister confirm whether that is still the case? It is particularly important for many of those who might want to sue for defamation in regard to the hacking cases that are now before the courts. Is that still the position or do the Government intend to repeal that? There was some talk about a repeal perhaps being considered against the background of the introduction of the royal charter, given what Leveson pointed out was a means of dealing with some of these claims. Perhaps the Minister could write to me about that, as there is a complication of things here, but I would be grateful if he could give a statement on that.

Thirdly, is the Minister aware that during the recent Joint Committee on Privacy and Injunctions, which took evidence on super-injunctions and reported to this Chamber, a man called Mr Burby gave evidence to that committee? I protested about that because Mr Burby was involved in the courts for blackmail and harassment. He was under an injunction not to say anything about the case but he simply went to the committee and gave his statement, which was exactly what the court had prevented. The committee then published the whole of the accusations he was making and his case, completely in defiance of the injunction. How was it able to do that? By parliamentary privilege, as on the one hand the committee was able to claim, “We produce under the name and principle of parliamentary privilege”, yet the paper which could not do so under the court injunction then reported everything that he had said, using the report published by the committee, and claimed parliamentary privilege for that.

The only person who really suffered from that lack of the proper application of parliamentary privilege was the woman who was in court trying to protect her name. The court supported her and gave an injunction against this man but she was the one who suffered. The court was not able to protect under what we would normally have thought its role was, simply because Parliament had decided, “Publish and be damned”. That gives no satisfaction to the poor woman before the courts who was trying to secure justice for charges made against her on a matter of harassment and blackmail, so that raised a number of questions in my mind about the use of parliamentary privilege.

I have a couple of other points about the operation of parliamentary privilege. We have a rule in both Houses, or so I thought, about sub judice so that if a matter is before the court we are prevented from

27 Jun 2014 : Column 1521

speaking about it. No law actually says that; it is apparently up to the Speaker, if he can get in before anybody makes a sub judice statement. There are a number of examples of that. It can almost be raised, although it is not quite right to do so, in regard to the Prime Minister making a statement before they were finished in the court. We have heard the exchanges between the judge and the Prime Minister. It could be argued that it was not made here but in No. 10, but does parliamentary privilege extend there? In regard to sub judice, the judge certainly made a point about politicians—and we can include in that the Prime Minister—going out and making a statement. The Prime Minister judged that he should make an apology that everybody thought was necessary; however, he did it while the case was under way. All politicians were warned about that. I think that both sides ran in a bit too fast, but one certainly led to the other. Was that under the protection of parliamentary privilege? Was it a breach of sub judice?

Recently in the other place there was an MP who decided that he wanted to get something on the record because he had told the press that he was going to say something, even though it was sub judice. What did he do? He jumped up before the Speaker could say anything. He got the relevant few words out before the Speaker said, “Now, now, sub judice”, and the press printed it because it was protected by parliamentary privilege. If you ask, “What is the power of the Speaker?”, you are told, “Ah, you won’t get into debates in future”—that is, the Speaker’s eye will never find you in the Chamber. Still, I am afraid that if someone is looking for a word or two in the papers and wants to abuse the parliamentary protection system, then that is an abuse.

The examples I have referred to show that we have parliamentary privilege. It is an important privilege, provided that it is not abused. It is true that there may be some different interpretations of what I have said here, but it is important that parliamentary privilege is maintained and not abused. There are examples of such abuse through ignorance, through intention or because of a partnership between the press and some Member who wants to get a few lines in the papers and then uses parliamentary privilege to achieve it, and parliamentary privilege was not intended for that. I simply want to raise the issue that this is an important principle that we enjoy, and over my 40 years in Parliament I have sometimes seen it abused in different ways. In the main it has worked properly but, since we are now talking about parliamentary privilege, it is about time that we considered preventing this kind of abuse of it.

2.51 pm

Lord Mackay of Clashfern (Con): My Lords, as the noble Lord, Lord Lester, said, I was Lord Chancellor when the amendment that this Private Member’s Bill seeks to delete was passed. The noble Lord has suggested that it was introduced for a particular case. There certainly was a case that was prominent at the time, but the Privy Council had already made a decision in a case from New Zealand called Prebble that said, in effect, that if a Member of Parliament—I think that at that time he was a Minister—is defamed by someone outside Parliament in respect of something that he has

27 Jun 2014 : Column 1522

done in Parliament, then there is nothing that the Member can do about it. I felt that that was not particularly fair; on the other hand, it is for Members of Parliament to decide whether they wish to be defamed in Parliament without remedy.

The question was how this could be dealt with in a way that would be fair. The amendment that the Government prepared, and which the noble and learned Lord, Lord Hoffmann, moved, was intended to deal with that problem. It is not a problem only about a past case that the individual involved might have been wise not to pursue; the question is whether it is right that a Member of Parliament can be defamed by people in respect of something that he or she has said or done in Parliament and that, if that happens, he or she has no remedy.

The Bill would bring that about once more. There is no way that a Member of either House of Parliament can do anything if he or she is defamed in respect of what he or she has said or done in Parliament. As far as I am concerned, the Government have decided to accept an amendment moved in the House of Commons to do exactly this. At this juncture, therefore, the Bill from the noble Lord, Lord Lester, seems on the whole not very necessary because the Government have taken this on themselves in their Deregulation Bill. Now that I no longer have responsibility for trying to look after Members of Parliament, I am not concerned; if they prefer not to have this protection, so be it. This Government are willing to accept that, so I shall simply point out that there is that problem but say no more about it. I do not propose to get involved on this point when the Government’s Bill comes along.

2.55 pm

Lord Williams of Elvel (Lab): My Lords, I am grateful to the noble Lord, Lord Lester, for introducing this Bill. I voted against the Hoffmann amendment on Third Reading in May 1996. I did so for two reasons. First, I was persuaded by the arguments used by the noble Lord, Lord Lester, and others that this was tampering with Article 9 of the Bill of Rights and that that should not be done by simply tacking an amendment onto some Bill or other going through this House but should be properly considered. I was less impressed by the conduct of the Government of the day on the procedure. The noble Lord, Lord Lester, has described how it all started, and the noble and learned Lord, Lord Mackay of Clashfern, has confirmed that the noble and learned Lord, Lord Hoffmann, was put up to this by the Government. To have a serving Law Lord, even in those days, putting forward an amendment of extreme constitutional importance seemed slightly exaggerated.

Lord Mackay of Clashfern: I did not say that he was put up. The idea of putting the noble and learned Lord, Lord Hoffmann, up to anything is quite remote from my idea. It struck me that it was a constitutional matter. It was a matter on which the Privy Council, of which he was a member, had made a decision, and in those days it was perfectly reasonable for a Law Lord to move amendments to legislation. I asked him whether he would be willing to consider doing that, and after

27 Jun 2014 : Column 1523

some time, he decided he would. That is the answer. If I was wrong in asking him, I am extremely sorry, but I do not think I was. It was perfectly reasonable to ask him. I could not do anything more than ask him, and it was for him to decide whether he wanted to do it. He decided to do it, and I well remember the circumstances in which he did it.

Lord Williams of Elvel: The noble and learned Lord has accepted responsibility for the intervention by the noble and learned Lord, Lord Hoffmann. I am quite happy to accept that it was up to the noble and learned Lord, Lord Hoffmann, whether he accepted the Government’s remit.

Nevertheless, to follow the narrative of the noble Lord, Lord Lester, at Second Reading, the noble and learned Lord, Lord Hoffmann, referred to this problem. I shall not go into the basis of the problem because that has been well aired and discussed. I want to consider further the procedure of this House in April and May 1996 and to see just how far this amendment should have been on the statute book in the first place. In Committee, the noble and learned Lord, Lord Hoffmann, moved his amendment. It was discussed and withdrawn. On Report, the noble and learned Lord, Lord Hoffmann, was not in his place to move his amendment. It was then taken over by Lord Finsberg, who moved the amendment, and then the noble and learned Lord, Lord Hoffmann, came in and spoke to it. It then became the Finsberg amendment. Lord Simon of Glaisdale had put down an amendment of a slightly different nature, but the Lord Chancellor of the day quite rightly pointed out that it had to be considered as an amendment to the Finsberg amendment. The problem was that the Public Bill Office had advised Lord Simon of Glaisdale that his amendment was out of order as it was not relevant to the Bill. Indeed, the Lord Chancellor of the day stood up and said that he had to advise the House that the amendment was not relevant to the Bill. Lord Simon of Glaisdale then said that he had not realised that, but he was still going to move his amendment and have it discussed. The Lord Chancellor of the day then said that he was perfectly entitled to do that and that in that sense the advice of the Clerk of the Parliaments was academic.

The debate went on around the Simon amendment. Then Lord Simon of Glaisdale said that he could not divide on the amendment because it was out of order, so he withdrew it. The House then came to the Finsberg amendment, and at the end of the debate on that amendment there was a question of whether there should be a Division. I remember that Lady Seear said that the House was too thin for that. Nevertheless, Lord Finsberg said that he was going to push the amendment. He did so. Nobody went into the Division Lobbies. The House was vacant and, at this point, the then Lord Chancellor, the noble and learned Lord, Lord Mackay, got up and quite rightly said on the second question that the amendment was negatived.

The Companion tells us clearly that when an amendment is negatived, having been discussed and decided upon, it should not come back at Third Reading. Nevertheless, Viscount Cranborne got up after a few days and said that he had been advised that many

27 Jun 2014 : Column 1524

noble Lords wished to have the matter ventilated again at Third Reading. How and why he had been so advised, because there had been endless discussions on the matter, I know not; if I look again at the noble and learned Lord, Lord Mackay of Clashfern, I may see a little twinkle in his eye. The Leader of the House was advised that he should get up and say, in spite of all that the


says, that we should have this again at Third Reading.

That was therefore done. At the end of Third Reading, we had a Division. By that time, the Hamiltonians—if I may refer to them as such—had got their act together, and it was passed. I do not believe that that is a proper and right way to introduce an amendment that may be tampering with Article 9 of the Bill of Rights.

I welcome the noble Lord’s Bill. We have to move on and find some way, if there is a mischief, of doing proper justice to those Members of the House of Commons or Members of this House who have a problem. However, that was not the way to do it, and I hope that we will never repeat that. Of course, what happened was that Mr Hamilton sued the Guardian, lost, and went to join UKIP.

3.02 pm

Baroness Hayter of Kentish Town (Lab): My Lords, it is for me a particular privilege with an element of déjà vu to be standing here. Almost four years ago, on 9 July 2010, as the noble Lord, Lord Lester, said, I was fortunate to make my maiden speech during the introduction of his Private Member’s Bill. The noble Lord, Lord McNally, who is not in his place, was then of course the Minister. My noble friend Lord Prescott stood by me, more or less holding my hand as I spoke. It is therefore nice to be back here for another Private Member’s Bill moved, as usual, so ably and succinctly by the noble Lord, Lord Lester.

It is also for my noble friend Lady Wheeler and myself something of a privilege to sit here—still, perhaps, as the new girls—and hear from the very mouths of the noble Lords who were here and who spoke in that debate of the machinations that took place in the passing of that legislation. It is also a privilege to hear from my noble friend Lord Prescott about some outstanding issues, including that of costs.

The Bill is short, simple and, as well as being necessary, one with which we would all concur and would happily send on its way—except, of course, that it is perhaps a little unnecessary given that, as the noble Lord, Lord Lester, says, on page 203 of the Deregulation Bill we have almost exactly the same words, which have been through the House of Commons. Although I am not in the prediction business, I have a feeling that those words will go through this House without too many difficulties.

There is one little lesson we might take from this, which we have found before with the Dangerous Dogs Act and others: legislation passed either in haste, as the noble Lord, Lord Lester, says, or to answer one particular case, is rarely good legislation. This Hamilton amendment was passed by the previous Conservative Government—disgracefully, as my honourable friend said in the other place—to assist a then Tory MP, who,

27 Jun 2014 : Column 1525

as has been said, is now a UKIP fundraiser, in a dispute with the


. I also take another lesson from this: namely, that it is probably best not to take on that newspaper. I think of Jonathan Aitken, Mr Coulson and various others.

We on this side are very content that this section of the 1996 Act disappears, and concur with the June 2013 view of the Joint Committee on Parliamentary Privilege that any replacement discretionary waiver would cause uncertainty and a possible chill. I am glad to see the noble Lord, Lord Lester, nodding, because when he gave evidence to the 1999 Joint Committee he said that a replacement might be appropriate. I think we are now all agreed that this simple “thank you and goodbye” is appropriate.

3.05 pm

Lord Wallace of Saltaire (LD): My Lords, we have all learnt some interesting things in this debate, which are no doubt well known to some of us, but certainly not to all of us. The noble Lord, Lord Prescott, raised some important and delicate legal issues on which it is much better for me to offer to write to make sure that we get it entirely accurate, rather than try to answer now.

The Government are, of course, strongly supportive of the reform of Section 13 of the Defamation Act. As has already been said, two Joint Committees have recommended that, and the Government were simply waiting for the appropriate place in a Bill going through the House on to which it might be tacked. The Government agree that Section 13 is at odds with the principle that free speech is a privilege of the House—and of Parliament—as a whole rather than of individual Members. The Government recognise that Section 13 also creates an imbalance whereby one party to proceedings can choose to use the parliamentary record but not the other.

For that reason, following the recommendations of the two Joint Committees, the Government accepted an amendment to the Deregulation Bill on Report in the House of Commons. The Deregulation Bill has had its First Reading in this House; it will have its Second Reading on 7 July, and will move through Committee and Report stages after the summer, when we return in October. It is also for that reason that I express reservations about the Bill before us today. We entirely accept the policy intent of the Bill, but we do not believe that it is necessary given that the House of Commons has already included exactly the same provision in another Bill now moving through Parliament. Provided that noble Lords do not seek to amend the Bill on this issue—I entirely agree with the noble Baroness, Lady Hayter, that that seems extremely unlikely—my noble friend Lord Lester will have secured his aim, and therefore need not detain this House further.

I understand my noble friend Lord Lester’s desire to have a contingency plan given the determination and tirelessness with which he has campaigned on this issue. However, in the light of what I have said, I hope that he can rest assured that Section 13 will be repealed when the Deregulation Bill completes its remaining parliamentary stages.

27 Jun 2014 : Column 1526

Lord Lester of Herne Hill: Before the Minister sits down, I will make just two points. First, does he agree that one can never take anything for granted? In other words, we cannot know at this stage what the fate of Schedule 20 will be: therefore, this is a belt and braces approach. Secondly—I think I gave notice of this—can he clarify the Sewel amendment? My Bill says that it applies to the whole of the United Kingdom. The Explanatory Notes to the Deregulation Bill go into the Sewel amendment in various ways. Can he confirm that if the Deregulation Bill goes through in its present form, because this is about parliamentary privilege it will apply to Scotland and Northern Ireland as well as to England and Wales? It is not absolutely clear from the language that that is so; obviously it should be so, but I would be grateful if my noble friend could clarify that.

Lord Wallace of Saltaire: My Lords, on the first point, I entirely take the noble Lord’s belt and braces approach—nothing is certain in life apart from death and taxes, and some people are quite good at getting around taxes, too.

On page 146 of the Explanatory Notes, it states very clearly:

“This repeal forms part of the law of England and Wales and Scotland”,

and Northern Ireland, and,

“will come into force at the end of the period of 2 months beginning with the day on which the Bill becomes an Act”.

I hope that that provides the reassurance that the noble Lord looks for.

Lord Lester of Herne Hill: I am very grateful to the Minister and to all noble Lords and noble and learned Lords who have spoken. Listening to the noble Lord, Lord Williams of Elvel, I thought that what he was saying sounded like Hilary Mantel’s Bring Up the Bodies. It certainly reminded me of a great deal that I had forgotten about those events. It would not be conducive to an entirely harmonious situation were I to add to the noble Lord’s description as I could. The noble and learned Lord, Lord Mackay, said at the time that the Government were neutral about the amendment; those were his words. All I can say is that it was a strange form of neutrality, and seemed so to me at the time. I thought that it was inappropriate for a serving senior judge to have moved the amendment—and I have said so in the past. However, having said all that, I do not think that there is any point now in doing much about what happened then.

The noble Lord, Lord McNally, has criticised me for my lack of arithmetic, because that happened not 14 years but 18 years ago—and he said that I would be hopeless in the Treasury, which is probably true.

I thank everybody. I hope that the Bill will be read a second time.

Bill read a second time and committed to a Committee of the Whole House.

House adjourned at 3.12 pm.