Clause 4

HC Deb 27 May 1970 vol 801 cc1990-6

ORDERS FOR TRANSFER AND SETTLEMENT

OF PROPERTY AND FOR VARIATION OF

SETTLEMENTS IN CASES OF DIVORCE,

ETC.

Mr. Percival: I beg to move Amendment No. 73, in page 4, line 27, at end insert: and the children of the family or either or any of them '.

The Amendment arises out of a discussion which we had in Standing Committee when we were discussing that part of Clause 4 which gives the court power to vary settlements; that is subsection (4)(c), which provides for an order varying for the benefit of the parties to the marriage and of the children of the family or either or any of them any of the settlements of the kind there referred to.

So it is perfectly clear that what we have in mind here is the giving of the power to vary not only for the benefit of the parties to the marriage, but for the benefit of the children of the family as well, or for the benefit of the parties and the children.

It is to the second part of this provision that the Amendment relates. In the second part of the subsection one finds set out the settlements which may be so varied, and those are restricted to settlements made on " the parties to the marriage ". So it would appear, as this subsection stands at the moment, that it is only settlements made on the parties to the marriage which may be varied, although they may be varied either for the benefit of those parties or for the benefit of the children or for the benefit of the parties and the children.

The purpose of the Amendment is purely and simply to remove any doubt which might thereby be created or which may already exist as to the power of the court to vary settlements which are made on the parties and the children of the family or settlements which are made on the children of the family.

When we discussed this matter in Committee I confessed to the Committee my personal ignorance of the subject, but said that I understood, from friends and colleagues who practised in this field, that there was here a point of doubt which the House could usefully resolve, and the undertaking which I gave was to consult further with them and to ascertain whether I had correctly understood what they had said, and, if so, what were the reasons for that. That I have done, and I have provided the Solicitor-General with the information which has been supplied to me, and that enables me to make very briefly now the point of principle in support of the Amendment.

I am told by those friends and colleagues who practise in this field that there is doubt felt in the courts whether settlements made on children may be varied. I am also told that there may be cases where it is necessary and desirable that such settlements should be varied.

12 midnight

Where a settlement is made by a husband on his present and future children by any marriage, such children to take on attaining 21, the children of the first marriage would have fixed interests. They could never be deprived of all their interest. Their interest would vary accordingly only to the number of children. If the husband had three children of the first marriage, those three children would take under the settlement and until the husband remarried and had further children they would be the only children entitled under the settlement. If he remarried and had another three children, they would each take one-sixth instead of one-third, but at least they would still retain an interest.

The problem arises under discretionary settlements. Although the number of discretionary settlements will, as a result of the Finance Act, 1969, probably be fewer in future, there are still a large number of settlements to be worked out. Under those settlements there is no obligation on the trustees to give anything to any particular child. In the case I have postulated, of a man with three children by his first marriage and three children by the second marriage, the trustees could exercise their discretionary powers so as to cut out the three children of the first marriage and give the whole of the beneficial interest under the settlement to the children of the second marriage. One hopes that it would not be a regular or frequent occurrence, but it would be folly to ignore the possibility that it might happen.

Although, as a matter of strict law, under discretionary settlements the trustees have a free hand, one knows full well that they habitually pay great attention to the wishes of the settlor, and if a settlor desired to act in this way the trustees nominated by him might comply with his request. There is, therefore, a strong case for saying that the divorce court should have jurisdiction to vary a settlement made on the children, and in particular a discretionary settlement, so as to prevent the children of the first marriage being excluded by the trustees in the exercise of their discretionary powers, and to provide that a specified fraction of the trust funds should be allotted to the children of the first marriage. Only in this way can security for the children of the first marriage be secured.

We are back to the origins of the Bill. In many respects we have made substantial changes to the Bill all of which are within the Long Title, but many of which bear little relationship to the origins. The Bill's origins link up with the Divorce Reform Bill which we discussed last year and the desire of the House to ensure that if divorce were made easier, as it was by that Bill, the court should have wider powers in providing for the wife and children of the first family.

This Amendment is linked to that origin and object. Its whole purpose is to make quite sure the court has the power which I have been describing. Some people say it is there already, but I am informed by the practitioners in this branch of the law that there is some doubt. Although in at least one case the court has accepted such jurisdiction, where the parties were agreed, those who practise in this field say that in the absence of such agreement there is doubt whether the court would come to the conclusion that it had or had not such jurisdiction.

The purpose of the Amendment is to remove the possibility of such an argument arising. If the outcome of an argument were that a court had no such jurisdiction, then the Amendment would have been proved to be necessary. But to go a stage further, by accepting the Amendment we would cut out the possibility of such an argument arising and having to be decided. Therefore, this is a useful and practical provision.

If there were any technical defect in the wording I realise that it is too late to put it right. I will not take up time on that matter because I submit that the wording of the Amendment is simple and clear. It follows the same formula adopted in paragraph (b) and I hope it will be just as appropriate and effective in this respect. For the moment I assume there is no technical objection to the wording, and I hope that it can be accepted.

The Solicitor-General

The hon. and learned Gentleman was good enough to discuss with me the effect and content of the Amendment. If I may say so, it is very desirable that matters of this kind should be dealt with in that way between members of the profession. One of the documents that he was good enough to show me was a distinguished opinion by counsel dealing with the point.

I have given careful thought to what is here proposed. It is true that it has not arisen as a novelty, because an Amendment of a similar kind was moved by the right hon. and learned Member for Huntingdonshire (Sir D. Renton) in Committee, and I undertook to give further consideration to the point.

The Amendment is designed to give the courts jurisdiction to vary settlements on the children of the family where the settlement does not make provision for the spouses. If the object of the Amendment is to vary trusts in favour of children regardless of the existence of interests in favour of parents, the matter ought to be considered in the wider context of the variation of trusts for children generally.

It is at this point that, rightly or wrongly, I come to what I regard as the substance of the argument in favour of the rejection of the Amendment. One asks the question: why should children whose parents are divorced be treated differently from children who lose one of their parents? That is a question which constantly arises and creates a real difficulty for us. It arose on the important issues, which have been raised throughout our consideration of the Bill, concerning the mutuality of property.

Why should the principle of mutuality, for which there was much to be said, be introduced to deal with the peculiar situation of a marriage which has broken down? If one was to deal with that matter and make changes in the law affecting it, there was much to be said in favour of doing it compendiously and not in a financial Measure dealing with the case of divorce and the marriage which has broken down.

If the Amendment were accepted, the courts could only exercise their discretion at the expense of the children of the first marriage. The courts have set their face against acting to the prejudice of the children of a broken marriage. After all, they are innocent parties. It is felt that the Amendment would go some way to reverse this desirable trend.

The Clause covers settlements by third parties as well as settlements by the spouses. Thus it would cover a settlement by a wife's father. If the Amendment were accepted, the courts would be able to make an order benefiting the second wife's children at the expense of the settlor's grandchildren—that is, the first wife's children. Finally, the Amendment is not adapted to the Clause, which speaks of post and ante-nuptial settlements. A settlement on children alone is not really such a settlement, and there might be some confusion.

If the parties want to settle property on children so that they can take account of the children of all their future marriages, it is open to them to do so already, albeit with some embarrassment.

Those are the considerations which lead me to recommend that the Amendment should be rejected.

Mr. Percival rose—

Mr. Speaker

Order. The hon. and learned Gentleman has exhausted his right to speak. He may speak by leave of the House, which is not usually granted on Report.

12.15 a.m.

Mr. Percival

If 1 have the leave of the House, I should like to draw attention to one matter.

I understood the Solicitor-General to say that if the Amendment were accepted the court could exercise the power only at the expense of the children of the first marriage. If that is the reason for rejecting the Amendment, I think that I should point out that the object of the Amendment is precisely the opposite, so that the court will have a discretion which it may exercise not at the expense of the children of the first marriage, but to safeguard them.

As this matter arises at such a late stage and obliged as I am to the House for granting the courtesy of allowing me to make the point, I should like to reciprocate that courtesy by asking for leave to withdraw the Amendment.

Amendment, by leave, withdrawn.