Introduction

When a married couple divorce in England, the Matrimonial Causes Act 1973 provides a wide range of financial provision for the spouses.  Where an unmarried couple have a child together, the parent with care may have to seek financial provision for the child under Schedule 1 of the Children Act 1989.  

The case of PG v TW (no.2) (Child: financial provision) neatly illustrates the wide range of powers under this piece of legislation and also the generous approach of the Courts, particularly where the absent parent is very wealthy.

Facts

Both the Mother and Father were born in Africa (the identity of the country has been anonymised owing to the Father’s high profile).  The Father was 30 and the Mother 25.  They started a relationship in 2007 and their daughter was born a year later in 2008.  The relationship ended in March 2009 (although the Mother and child had returned to Africa in October 2008 to live with her parents). 

The Father was a very successful and prominent footballer.  He had moved to Europe and had recently started playing in England.  The Mother had minimal income and savings, although she took a job in April 2009 to help support herself.  She was living with her parents in a modest house in a city suburb. She shared a bedroom with her daughter.  Laser beam alarm security was fitted but it was not in a gated community.  As part of her claim she was seeking good quality accommodation in a gated community with 24 hour security personnel.   Her concern regarding security was highlighted when during the course of the proceedings her father intercepted and shot dead an intruder in the property.

African proceedings

The Mother had started proceedings in her local court in Africa in June 2009 seeking £350 per month by way of maintenance.  A settlement was reached in that figure.  She then instructed a second set of African lawyers and claimed a higher rate of maintenance at £3,400 per month (to include an au pair and domestic assistance).  She withdrew her claim and a settlement was reached at £1,150 per month.   There was no equivalent Schedule 1 provision in local law for the mother to seek any capital award.

It was only when the Mother became aware of the powers under the English Court that she withdrew her claim in Africa.  The final hearing took place in Africa in December 2011.  The Mother sought to dismiss the proceedings on the basis of the English proceedings which were now in train.  The Judge refused to do so. 

The English proceedings

The Mother made two applications under Schedule 1 of the Children Act 1989, the first in May 2011 and the second in March 2012.   It is also important that in this case the Mother relied heavily upon her African accountant, who helped produce her budget.

At the time the Mother issued her application, her claim under Schedule 1 as a parent for a child living overseas was limited under paragraph 14 to periodical payments and secured periodical payments only (therefore excluding lump sum and capital provision for housing or any other purpose).

However, the EU Maintenance Regulation 2011 removed all restrictions on an application by an overseas resident against a respondent resident in this jurisdiction and consequently applicants under Schedule 1 may now seek lump sum and property settlement orders in addition to periodical payments.   The implication of the EU Maintenance Regulation was not picked up by the Mother’s legal team immediately.  However, when they did become aware of the effect on the Mother’s application, they immediately notified the Father’s solicitors and made a second application seeking capital provision as well as periodical payments. 

The Court’s discretion

In Schedule 1 cases the Court’s discretion in deciding whether to and how to exercise its powers is guided by a six point checklist (similar to but narrower than the s25 of the Matrimonial Causes Act 1973). 

Section 4 (1): In deciding whether to exercise its powers under paragraph 1 or 2, and if so in what manner, the court shall have regard to all the circumstances including—E+W

(a) the income, earning capacity, property and other financial resources which each person mentioned in sub-paragraph (4) has or is likely to have in the foreseeable future;

(b) the financial needs, obligations and responsibilities which each person mentioned in sub-paragraph (4) has or is likely to have in the foreseeable future;

(c) the financial needs of the child;

(d) the income, earning capacity (if any), property and other financial resources of the child;

(e) any physical or mental disability of the child;

(f) the manner in which the child was being, or was expected to be, educated or trained.

Costs in Schedule 1 proceedings

Applications under Schedule 1 are applications for a financial remedy but are not financial remedy proceedings. Accordingly, the award of costs is discretionary (and subject to CPR r.44.3) and the court will take a broad brush approach. The successful party should expect to recover costs and Calderbank offers continue to be used. In this case, the Judges’ willingness to use the full extent of the Court’s powers was illustrated clearly.

The Mother was awarded a lump sum of in respect of the African litigation costs.  The Mother owed her African lawyer £135,000.  A lump sum was awarded payable 50% directly to the lawyers and 50% to be held in escrow pending costs assessment by the African court.

The Mother was also awarded costs on an indemnity basis. The Judge stated that “…the conduct of the litigation by the father has been a steady abandonment of one defensive position after another” and “his disclosure was only brought up to an acceptable standard at the hearing itself.”  

Interim funding:

The Mother made an ‘A v A’ application for the Father to contribute to or fund her legal costs, both historical and moving forward.  

The Court accepted the Mother’s case and divided her award into four parts:

The Mother’s costs to date (excluding the interim application itself) (lump sum of £80,000 less the £35,000 already paid by the father)

The costs relating to the Father’s application to stay/strike out the proceedings (£27,000)

The costs of the legal funding application itself (£40,000)

Mother’s future costs to the final hearing (£60,000)

Accordingly, the Mother secured over £200,000 in interim costs provision.  The Judge carried out a careful analysis of the costs breaking them down into these various sections and also by comparing the costs incurred by both parties.

Findings

The Judge followed the earlier case of Re P (Child: Financial Provision) [2003] 2 FLR 865 in which Thorpe LJ suggested at paragraphs 45-47 an analytical framework in affluent/extremely wealthy cases:

“i) The starting point is the decision at least generically on the home to be provided by the respondent in value, size and location;

ii) That choice bears upon and frames the reasonable capital cost of furnishing and equipping the house as well as future income needs both directly in the case of outgoings and indirectly in the case of external expenditure such as travel, education and holidays;

iii) A lump sum appropriate within that determination will provide for the cost of furnishing, equipping the home and a car.

Next step is to determine the budget the mother reasonably requires to fund her expenditure on maintaining the home, content and meeting other expenditure external to the home including school fees, holidays, routine travel expenses, entertainments presents etc.

The assessment is broad but will include the mother's allowance which is checked but not diminished by the absence of any entitlement in her own right. While there is to be no slack or margin for saving, the court must recognise the sacrifice of the unmarried parents generally the mother as primary and usually exclusive carer with a budget that reflects both her position and the position of the father, both social and financial. She is to be free from anxiety or resort to parsimony where the other parent chooses to live lavishly.

The Court is required to navigate between rival budgets produced by specialist family lawyers on a broad commonsense assessment [47]. I add that on both sides this is a calculation of a household not formed and election between an aspirational budget and a critique of proposed alleged extravagance quite different from the factual task performed by a court under section 25 forming an evidential view as to the standard of living actually enjoyed and the accuracy of its recollection by the parties.

vii) Bodey J in what I respectfully describe as a helpful and succinct supporting judgment proposed that in big-money cases the mother's budget should be painted with a broad brush without being bogged down in detailed analyses and categorisations of specific items making up opposing budgetary presentations. The better approach was to seek to achieve a fair and realistic outcome by the application of broad commonsense to the overall circumstances of the particular case.”  

In this case, the Judge followed Re P and the main orders were as follows:

Housing

Mother’s position: Occupation with the child until 18 or completion of first degree.  The Mother initially sought a figure of £395,000 inclusive of purchase costs but reduced this to £300,000.

Father’s position: Purchase in his name for the child’s occupation and the Mother until the child reached 18, in the value of £128,500 (occupation rent to be payable if anyone other than the maternal grandparents lived with the Mother and the child).

Judge’s findings: The Judge entirely rejected the Father’s position (which he maintained very close to the hearing) that the Mother and child should continue to live with the maternal grandparents and awarded the Mother £300,000.   The Judge acknowledged the Mother’s compromise on her housing budget.  The Order was made to the end of tertiary (university) education with liberty to apply.

Fitting out

Mother’s position: The Mother sought c.£71,428 for removals and fitting out her home from scratch.

Father’s position:  The Father offered £15,000 for fitting out.

Judge’s findings: The Judge awarded £50,000.

General maintenance

Mother’s position: The Mother’s claim included a carer’s allowance and she should receive £9,000 per month (£108,000 per annum) reducing to £6,500 per month when the child was in tertiary education.

Father’s position: The Father said that maintenance should be at the African rate of £857 per month (£10,285 per annum).  He asserted that no carer’s allowance was due.

Judge’s findings: The Judge awarded the Mother £4,821 per month (£57,750 per annum).  The Judge stated “I respectfully suggest that the concept of a carer’s allowance is past its utility.”  The Mother’s Counsel conceded that he had no problem with the carers’ allowances and maintenance being ‘lumped together’.  The Judge agreed and recorded that the figure acknowledges and takes into account the mother’s modest income and the need for back up child care and housekeeping to enable her to work without anxiety during the day, through inevitable childhood illnesses and school holidays.

Car

Mother’s position: The Mother’s position at final hearing was to seek an initial purchase of a BMW 1-series at £25,000 and a rolling trade-in or renewal at 3 year intervals, requiring £87,500 to age 21.

Father’s position: The Father offered a 1 year old Toyota Yaris/Ford Fiesta at £12,000 replaced every 5 years (he then distanced himself from his offer at trial).

Judge’s findings: The Judge adopted the Mother’s position.

School fees

Mother’s position: The mother wanted the child to be privately educated.

Father’s position: The father wanted the child to go to an agreed school.

Judge’s findings: The Judge ordered private schooling to be agreed between the parties

As this case illustrates, the powers of the Court under Schedule 1 of the Children Act 1989 are vast and financial provision for children can be very generous. Other reported decisions may be relevant to your case so it is crucially important that you take advice at an early stage to ensure that your case is presented carefully, whether you are the parent seeking financial provision for your child, or whether you are the paying parent.

For more information about applications under Schedule 1 please contact a member of our specialist family law team. You can make an email enquiry by clicking here.