My Lords, the amendments in this group would provide greater clarity about how the court is to approach the making of orders dividing matrimonial property on divorce. Clarity and a degree of certainty are clearly desirable. Against that, one has to weigh the need for flexibility, with the possibility that flexibility can sometimes bring fairness that certainty precludes. I am very grateful for the way in which the group was introduced by the noble Baroness, and indeed for the elaboration by the noble and learned Lord, Lord Walker of Gestingthorpe. He explained with great lucidity the attempt to improve upon the Scottish definition to deal with the problems of portfolios and the like, which may change and therefore change their character in legislative terms.
The proposed new clause seeks to define matrimonial property as property acquired “during the marriage”, rather than property owned before the marriage by either party, or property received as a gift during the marriage. Its intention is to clarify the definition of matrimonial property, which, under the terms of the Bill, will be the only property in respect of which financial orders can be made on divorce, except where there is a significant additional contribution by one party, or if the property has increased in value. The noble and learned Lord described what is meant by a significant additional contribution.
Matrimonial property would normally be divided equally between the parties. The Government have concerns over the definition of “matrimonial property” and the rigid equal division of matrimonial property, as the definition may be unfair in many cases: an equal division of property is rarely found in most ancillary relief cases, due to the lack of assets of the family, and the needs of the children and of the family. If the provisions of the Bill were to be taken forward we would need to define matrimonial property extremely carefully to ensure that any division was fair.
Existing provisions for division of property on divorce give the court a wider discretion to divide property and determine who should have which assets, in the context of the needs of the family. That enables the court to seek to achieve fairness in all the circumstances. The Government are not convinced that the certainty that the Bill and these amendments intend to provide would not come at too great a cost in rigidity. Therefore,
the Government believe that the definition of matrimonial property in the Bill is problematic and, I fear, continue to have significant reservations about it.
Amendment 14 is in a different category. It would clarify the date on which the net value of the matrimonial property is to be valued. Instead of the “relevant date” described in Clause 4(4), the valuation is to be made on the date of the relevant financial order made by the court. This provides a clear and unequivocal date for the valuation: the date on which the property is divided. Consequentially, Amendment 15 removes the definition of the date at which the matrimonial property is valued in Clause 4(4). That is clearly desirable.
Amendment 17 would insert a new subsection into Clause 4, describing how a lump sum order is to be taken into account on the division of property on divorce. A lump sum payment is to be taken into account as part of the equal sharing of the matrimonial property, irrespective of the assets used to pay the lump sum. The amendment clarifies the position as to how lump sum payments are to be taken into account.
The Government welcome the greater clarity that would be introduced into the Bill, but as I have indicated remain concerned about the lack of flexibility for the court to determine how to divide property on divorce, and about the fact that the provisions in the Bill apply only to matrimonial property, allowing no flexibility for the court to consider what might be fair to the parties of a marriage in particular circumstances. I acknowledge the noble Baroness’s intention, through her amendments, to limit the potential for litigation under the Bill. The Government and all noble Lords are particularly aware of the unsatisfactory nature of the law, in the sense that it can so often lead to protracted disputes.
Amendments 18 and 19 concern Clause 4. They would remove paragraphs (b) and (d) from Clause 4(7), so that, under the Bill, the court would no longer have to take into account the source of funds not derived from the efforts of the parties during the marriage when making an unequal sharing of the matrimonial property—nor would the court have to take into account the nature and use of the matrimonial property in such circumstances.
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