A capital idea: Will courts now consider other assets in child maintenance cases? By guest blogger Lindsey Randall
October 21, 2011 38 comments
In recent weeks one case has set a marker that could prove significant for those struggling to receive a fair level of child maintenance from an absent parent.
In the recent High Court case of FG v MBW ( EWHC 1729 (Fam) child maintenance payments were ordered to be made out of a non-resident father’s capital.
So does this then set a precedent for similar orders where an absent parent fails to pay a fair level of child maintenance from his or her income? Or is the ruling highly specific to the details of this case?
The circumstances of this case are particularly complex and worth considering in some detail.
The relationship between mother and father had lasted 4 years and they had a child in 2002, named Luc, but remained unmarried. They separated shortly after Luc’s birth and the father then had a further son after marrying and then later divorcing. At the time of this judgment he resided with a new partner and had fathered a third child.
He made maintenance payments to Luc in accordance with an order made under Schedule 1 of the Children Act 1989. Maintenance payments had not been subject to a Child Support Agency (CSA) assessment because the father earned in excess of the £2,000 per week maximum level of CSA assessable income. Therefore the case concerned a higher“top-up” maintenance payment, based on the lifestyle the mother had enjoyed during their relationship and their future expectations for Luc as they had been at that time.
Under an order made in 2005, the father paid £1,886 in child maintenance each month. This was based upon the couple’s salaries, which amounted to £130,000 per year in total. They had a comfortable lifestyle and were paying for Luc to be privately educated.
During the father’s divorce proceedings, Luc’s mother learnt that shares in one of the companies he had owned appeared to still belong to him, whereas during the 2005 maintenance proceedings he had alleged these were in his wife’s name.
The mother obtained disclosure of the husband’s financial position as he had been presenting it during divorce proceedings. It was shown that he hadclaimed that the shares belonged to him and had been put into his wife’s name to “ensure they were protected from a litigious ex-girlfriend”.
Giving evidence during the 2011 proceedings, the father claimed that he had only made that statement because he wanted the shares to be included in the pot of family assets for the purposes of the divorce.
The father’s earnings had also increased consistently over the years since the original maintenance order, which had been based on a projected future salary of £150,000. In addition, it was thought that he could expect significant capital growth in the future. He failed to disclose these facts to the mother and, although he had made some small voluntary increases in child maintenance, these were not proportional to his increase in income and capital.
The mother had been unemployed for some time after sustaining injuries in a car accident. She was in receipt of state benefits and her long-term prognosis and capacity to work were uncertain.
A decision born of uncertainty
There are two distinct features of this case:
- It is a “top-up” case in which maintenance is to be higher than the level at which the CSA administrates;
- Non-disclosure was alleged by the mother and the application was for an upward variation of maintenance payments. It was not a case of non-payment, but of under payment.
It is only in top-up cases,or where an agreement has been reached between the parents as to child maintenance arrangements,that the court has the jurisdiction to make a maintenance order under Schedule 1 of the Children Act 1989. However where an agreement is reached, a party may apply to the CSA for an assessment after 12 months have passed. This may result in the sum of the original child maintenance agreement, which may have been relatively generous, being reduced and maintenance arrangements falling outside of the jurisdiction of the court.
It may be possible for a “Christmas” order to be agreed between parties,which would have the effect of ensuring that the maintenance agreement was never more than 12 months old and therefore could not be subject to CSA assessment.
It is likely that where relations between parties are acrimonious, no agreement will be reached. Where there is no substantial wealth on the part of the absent parent and no agreement, the CSA will have the jurisdiction to deal with the matter. Unfortunately this excludes the vast majority of cases from the court’s jurisdiction.
In delivering his judgment in this case Mr Justice Charles found that there had been inconsistences in the father’s account of his ownership of the company shares. The father’s financial position was described as being “in a state of transition” and his future income therefore uncertain. His current disclosed income indicated that he would have to meet maintenance payments by using his capital reserves.
So why were payments ordered out of the father’s available capital of £130,000? This was largely due to the uncertainty of the financial positions of both parties and the fact that there would only be clarity as to their positions in the long-term. In the meantime, even though an increased maintenance order would mean the father eating into his capital, this was considered preferable to reducingpayments to Luc: the interests of the child were paramount. In this instance the issue of maintenance will be subject to future review in light of any future capital gains or increase in income.
Balance of fairness
I believe that the most crucial point to emerge from this judgment is the alteration of the balance of fairness between the parents. The balance had previously been tipped in favour of the father, insofar as he was able to conceal income and assets and the onus was on the mother to uncover any facts that would entitle her to a higher level of maintenance for their son.
As a result of this decision, the balance of fairness seems to have been equalised, as in order for the father to make any application for a reduction in maintenance payments he must provide financial details showing that he cannot afford the current payments He therefore must disclose information for his own benefit.
The advantage gained by the mother is that she is at the very least able to maintain the higher level of payment awarded in the case. Combined with the order made by the judge for further, regular disclosure in the future by the husband, her son is in a much more certain and strong position as to his future financial wellbeing.
But is this an example of maintenance payment enforcement in the long-term, or an example of a short-term arrangement designed to secure payment just for the time being?
It is clearly not intended that the father carry on making payments out of his capital. However, now that the balance of fairness has been adjusted between the parties the likelihood of being able to enforce maintenance at an appropriate level in the future does seem to be stronger.
The court expecting an absent parent to pay maintenance from capital reserves could be a crucial development. But the circumstances of this case are very particular. It will prove difficult to extend this principle to CSA-assessed cases where the court does not have jurisdiction.So only time will tell as to whether this ruling sets a precedent, or is merely an inventive solution to individual circumstances.
Lindsey Randall studied at Trinity College, University of Cambridge, for an MA in English before deciding to pursue a career in law. She attended The College of Law in York before going on to study for the Bar at BPP Law School in Leeds. She is a barrister member of the Middle Temple, having been called to the Bar in 2010.Following a brief career in Banking Litigation Lindsey has decided to pursue a career in family law. She has now joined Stowe Family Law LLP .
October 21, 2011
Categories: Child Maintenance Service & CSA