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Children Act Schedule 1 claims: Latest Cases

David Burles of 1 Garden Court reviews recent cases concerning Schedule 1 of the Children Act 1989 and assesses the post-White impact on such claims.

David Burles, 1 Garden Court, Barrister
Member of the Legal Advisory Group to the Law Commission's Cohabitation Project

The dramatic changes to the landscape of divorce provision heralded by White v White, [2001] 1 AC 596 and Lambert v Lambert [2003] Fam 103 have taken their time to influence the awards made in Schedule 1 cases, but there is no doubt now that a similar period of change is upon unmarried parents. The straitjacket of needs-based capital provision for unmarried parents has been largely unbuttoned (although not actually discarded) and the narrow limitations on income awards swept away. White and the cases subsequent to it were underpinned by a determination not to discriminate against the domestic contributions of non–breadwinning spouses. Re P (Child: Financial Provision) [2003] 2 FLR 865 and the subsequent decisions have at their heart a different core standard, namely an unwillingness to allow second class financial provision in family breakdown for unmarried parents, at least for as long as there remain children requiring support.

Re P

Re P (Child: Financial Provision) [2003] 2 FLR 865 represented the first opportunity for the Court of Appeal to undertake a searching review of the principles underlying Schedule 1 cases. Before Re P guidance in this area was largely taken from the important High Court decisions of Johnson J (Phillips v Peace [1996] 2 FLR 230), Hale J (J v C (Child: Financial Provision) [1999] 1 FLR 152) and Ward J (A v A (A Minor) (Financial Provision) [1994] 1 FLR 657). From those decisions we knew that the court could not use Schedule 1 provision to circumvent the bureaucratic limitations of the Child Support Agency, that the quality of accommodation of the applicant mother should not be markedly inferior to that of the paying father and that income awards were entitled to include an element for the mother herself. However what was not available was guidance on the fundamental issue affecting practitioners on a day-to-day basis, namely what constituted reasonable provision in Schedule 1 cases.

The essential facts of Re P are uncomplicated. The young applicant mother had little capital of her own and no real earning capacity. By contrast the much older father was very wealthy. The child was very young and the parties had never lived together. The case at first instance proceeded conventionally, with the battle ground focussing on the applicant's housing need and income provision. She was awarded £450,000 to buy a property together with associated furnishing lump sums and £35,360 per annum as income provision, reducing automatically on the child's 7th birthday and ending on her ceasing secondary education. The Court of Appeal allowed the mother's appeal against that award and substituted capital provision of £1,000,000 together with income of £70,000 per annum and deletion of the provision for automatic reduction in maintenance. More importantly Thorpe LJ took the opportunity to make some key observations that all those advising parties in this area would do well to keep in mind.

When considering income provision he made clear that "… a more generous approach to the calculation of the mother's allowance is not only permissible but also realistic" [para 43] and although "there can be no slack to enable the recipient to fund a pension or an endowment policy or put money away for a rainy day" the mother should have "control of a budget that reflects her position and the position of the father, both social and financial". [para 49]. Perhaps the only surprise was that the award still ceased at the conclusion of secondary education and in this respect did not follow Hale J's observations in J v C.

When considering the child's welfare, a factor that is not amongst the governing criteria set out in paragraph 4 of Schedule 1, Thorpe LJ commented that "welfare must be not just "one of the relevant circumstances" but, in the generality of cases, a constant influence on the discretionary outcome." [44].

For those seeking a broad summary of the principles currently guiding Schedule 1 claims the summary offered by Bodey J in allowing the appeal is an excellent starting point.

Importantly however the Court did not seek to alter the essential "Schedule 1" quality of property adjustment orders, namely that the property reverts to the respondent on the child reaching maturity.

Developments Since Re P

Working Mother
The generosity of approach envisaged by the Court of Appeal in Re P has been taken up by subsequent judges. Singer J in F v G (Child: Financial Provision) [2005] 1 FLR 261 was faced with a young child, a working applicant mother and a wealthy respondent father. In keeping with Re P he awarded generous provision, both as to capital and income.

The decision is perhaps most interesting by reason of two important factual differences from the position in Re P. Firstly Singer J observed that in F v G the parents had lived together with their child before separation, whereas in Re P they had not. Although the parties' "standard of living" did not feature in para 4 of Schedule 1, Singer J rejected any suggestion that it was an irrelevant criterion, and suggested that where the child was older, it might prove a very important consideration.

The other major difference was that the mother in F v G had returned to work and the court was obliged to wrestle with the proper treatment of the mother's earnings. Should she be free to spend them as she wished or should she deploy them to reduce the father's child maintenance obligation? The compromise settled on by Singer J was notionally to allocate the cost of the nanny to the mother's earned income and require the father to meet the balance of the day-to-day income needs of the mother and child. The court considered that the mother should be free to deploy the balance of her earned income (i.e. over and above the cost of the nanny) as she thought fit, e.g. towards pension provision, thus neatly sidestepping the limitations against the creation of such savings mentioned by Thorpe J in Re P.

Legal Costs as Part of Maintenance in Schedule 1 Cases
In W v J (Child: Variation of Financial Provision) [2004] 2 FLR 300 Bennett J considered whether the jurisdiction to include provision of litigation costs in maintenance pending suit under the 1973 Act (recently confirmed in Moses-Taiga v Taiga [2005] EWCA 1013) could be extended to include similar costs within maintenance payments by an unmarried father under the 1989 Act. In W v J the litigation for which the mother sought funding included contested applications for residence, for leave to remove from the jurisdiction as well as proceedings under Schedule 1 for financial provision. Bennett J concluded that legal costs could not be properly recovered as child maintenance because of the express requirement that such provision under the 1989 Act had to be explicitly for the "benefit of the child"; see Para 1 of Schedule 1. The issue appeared to have been laid to rest.

However, without disputing the correctness of the decision in W v J, the Court of Appeal recently felt able to substantially limit its impact. In Re S (Child Financial Provision) [2005] 2 FLR 94 the Court was faced with the application of a Sudanese mother seeking provision from the father inter alia to meet her costs, both legal and subsistence-based, of travelling to Sudan to litigate in that country to enforce contact and residence orders the mother had previously secured. It was perhaps of some significance that the father had abducted the child to Sudan in the first instance. Nevertheless the Court of Appeal felt able to conclude that the mother's future legal costs of the litigation in Sudan were for the "benefit of the child" and thus permissible under Schedule 1. Thorpe LJ restricted the implications of W v J, describing it as being "an extreme case" and one that did not go "… much, if any, beyond [its] facts". The phrase "for the benefit of the child" was analysed and, in keeping with the overall trend in increasing provision under Schedule 1, the Court felt it "… should be given a wide construction". [para 19].

At the same time as dealing with the costs issue in Re S the Court of Appeal was also able to shed some light on the implications of para 14 of Schedule 1, i.e. where there are applications under Schedule 1 and the child concerned is resident abroad in a non-Brussels II jurisdiction. It is now clear that an applying parent can seek full Schedule 1 provision where the facts fall within Re S. Whether para 14 is to be interpreted more widely on different facts in the future will be determined on a case-by-case basis.

The Future – Law Commission Project

Following Re S it remains to be seen what additional items of expenditure might be brought within a claim for income provision under the 1989 Act jurisdiction which might previously have been considered outside it. The mood, in keeping with the decision in Re P and the clear prevailing trend, is to meet genuine needs in a generous way wherever possible.

The profession still awaits amendments to the Schedule 1 procedure, in particular the introduction of an equivalent of the Financial Dispute Resolution hearing in cases under the 1973 Act. To date Thorpe LJ's sensible observations to this effect in Re P have not resulted in the hoped-for changes.

Some features of the 1989 Act provision seem unlikely to change. Chief amongst these is the principle that property settled on an applicant for the benefit of housing the child (and mother) will revert to the settlor when the child reaches its majority. There seems little or no prospect of an outright transfer ever being awarded under the Schedule 1 jurisdiction. Moreover, as shown by the second round in the saga of Phillips v Peace (now reported at [2005] 2 FLR 1212), it is also clear that applicants can have just one settlement of property order and that any attempt at a second application can be automatically struck out. It is important therefore that applicants secure housing sufficient to provide for their long-term needs.

Accordingly, regardless of the quality of the accommodation secured, the applicant will still lose it on the child reaching its majority. Those looking for any mitigation of the severity of this principle seem unlikely to secure it through common law developments. Perhaps the most likely source of change lies in the Law Commission Project on Cohabitants (to which the author of this article is a Member of the Legal Advisory Group). A draft paper on the Project is likely to be distributed for consultation in the near future. If it does lead to legislation then, for the first time, there may be scope for courts to grant outright housing provision for an unmarried applicant. Insofar as this does materialise it may not necessarily be limited to a process of amendments to Schedule 1 to the Children Act but might involve Parliament painting with a wider legislative brush altogether.