When does provision for children end under Schedule 1? Lessons from N (A Child)
When should financial provision for children under Schedule 1 of the Children Act come to an end? Bik Wong looks at the conclusions of Munby J on this and other issues arising from the recent case of N (A Child)
The case of N (A Child)  EWHC 11 (Fam) concerned an application under s.15 Schedule 1 to the Children Act 1989 brought by the mother of a child (N) as long ago as 2005. The principal point of importance in this case, and hence its wider significance, was the argument that provision for a child should cover the child’s maintenance until they have attained the legal age of majority (ie 18), as distinct from 21 as indicated in the original order of the district judge. Dr Michael Pelling who acted throughout as the McKenzie Friend of the father, also raised a number of ancillary points on the practical implementation of the amended order sought by the father. Such points would almost certainly not have been raised had there been any degree of trust between the parties. This article does not seek to examine every contentious point considered by Munby J, but endeavours to draw out the principles which are of significance to practitioners
The child was born in March 2001 and had lived with the Applicant mother since the parties separated in 2002. The Respondent father had enjoyed extensive contact with his son since the parties’ separation, in accordance with an order.
In respect of the mother’s application for financial provision for the child, an order was made in her favour by District Judge Roberts sitting in the Principal Registry of the Family Division on 10 May 2005. The provisions of the order made by DJ Roberts, which were re-considered exhaustively by Mr Justice Munby (sitting in the Family Division of the High Court) in the later stages of the proceedings, were as follows:
1. The Father shall pay to the Mother by 29th July 2005 for the benefit of the Child N the sum of £20,000.00 absolutely.
2. The Father shall settle on the mother by 27th July 2005 for the benefit of the Child the sum of £220,000 which the Mother shall use to purchase a property to house herself and N until N reaches the age of 21 or completes tertiary education whichever is the later. The Father’s interest in the property purchased shall be whatever percentage of the gross purchase price the sum of £220,000 represents.
The order was made in the absence of the father because he asserted that he had been medically unfit to participate in the hearing on 10 May 2005, and for that reason did not attend it. Relations between the parties were acrimonious, trust between them was conspicuously absent. The father was a reluctant payer, consequently the mother predictably made several applications seeking to enforce the order made by DJ Roberts, whilst the father made applications to vary the order. The respective applications of the parties resulted in the order of District Judge Roberts being rigorously re-examined and then amended by Munby J.
The subsequent applications made by the father in respect of his desire to vary the order of DJ Roberts, were a clear indication of his lack of trust in the mother to actually apply the funds for their specified purpose. However, as already stated the principal point of importance in this case, was the argument, that provision for a child should cover the child’s maintenance until they have attained the legal age of majority (ie 18), as distinct from 21 as indicated in the order of District Judge Roberts. He did not quarrel with the principle that his son was entitled to maintenance beyond his legal majority should N undertake a degree course, although the father was concerned that he had some safeguard against his son deferring tertiary education beyond the usual age of commencing a degree course.
In the proceedings presided over by Munby J in the Family Division of the High Court,.
The father’s earlier application for a residence order in respect of N was also part of the factual background. His application for a residence order had been unsuccessful, his appeal against the dismissal of his application was again unsuccessful when considered by Sumner J on 9 December 2005. But, the father was nothing if not tenacious and renewed his application for a residence order. With reference to his second application, N was joined as a party to the s.8 proceedings and an officer from CAFCASS was appointed to be his guardian. Munby J therefore deferred his judgment in respect of the Schedule 1 matters until there had been a determination on the father’s renewed application for a residence order. This issue concluded by way of a Consent Order on 29 July 2008, which the father subsequently claimed he had not agreed to!
The proceedings between the parties after 10 May 2005, consisted of a tortuous series of applications by both parties. The father sought to appeal the order made by DJ Roberts, the following chronology ensued:
- On 9 August 2005 Baron J stayed the order of the DJ Roberts until 2 September 2005; the stay was then informally extended by agreement between the mother and father.
- The appeal was listed before Sumner J on 8 December 2005;
- On 9 December 2005 Sumner ordered that:
“upon condition that the Appellant Father pays the sum of £38,000.00 to the Respondent Mother’s solicitors by 20th January 2006 as security for the Respondent Mother’s costs … the Appellant’s appeal against the order of District Judge Roberts be allowed and the application remitted to be re-heard by District Judge Roberts”
Sumner J further directed that if the father defaulted in his payment to the Mother’s solicitors, his appeal against the order of District Judge Roberts would be dismissed.
The father did indeed default in his payment to the mother’s solicitors: all that he did was to give the mother a cheque for £20,000.00 which he then stopped. For this reason the order of District Judge Roberts stood in its entirety as the father did not pay either the £20,000.00 or the £220,000.00 referred to in her order.
- On 7 April 2006, the mother applied for a charging order against two properties described as being owned by the father, with the intention of enforcing what she described as the “judgment debt”. In fact though the father was the registered proprietor of one of the properties, the correct position in respect of the other property was that the proprietor was a company in which all of the shares were held by the father.
- On 2 May 2006, District Judge Redgrave made an interim charging order in respect of the £20,000 and £220,000 against the legal title of the property where the father was the registered proprietor;
- On 15 May 2006 when the mother’s application for a charging order came before Munby J, the learned judge expressed scepticism as to whether the sum of £220,000.00 was in law a judgment debt capable of being enforced by a charging order;
- The matter came before Munby J again on 26 April 2007, because neither party had complied with the directions which he had made, he re-listed the matter for further directions on 4 July 2007. In the interim three further applications were made by the parties;
- On 10 May 2007 the mother issued a summons seeking the appointment of a receiver of the father’s properties, ie she sought equitable execution;
- On the same date the mother issued an application “to implement” paragraph 2 of the order of DJ Roberts. Ie she sought insertion after the words “the father shall settle on the mother by 27th July 2005 for the benefit of the chid the sum of £220,000…”, the words, “by paying to the Mother the sum of £220,000.00”
- On 15 June 2007 the father issued an application seeking that paragraphs 1 and 2 of the order of District Judge Roberts be amended under the “Slip rule” in accordance with CCR 1981 Order 15, rule 5; or second, under the “court’s inherent power to carry out its own meaning and intention or to clarify and give expression to that meaning and intention and make it plain”; or c) what was described as “its general power to give directions and orders as to the implementation of its own substantive orders or (d) the court’s power to set aside and rehear an order made in the absence of a party.
With reference to the father’s application of the 15 June 2007, one would comment that the father’s application showed remarkable audacity if not effrontery, given that he had issued an appeal against the order of DJ Roberts, but then defaulted in ensuring its continuance. The point was made by counsel representing the mother that the father had sought to both appeal and then subsequently, amend the order of DJ Roberts, in short that he was trying to have his cake and eat it.
These applications were considered by Munby J on 24 July 2008, a draft of the judgment was sent to the parties on 8 September 2008, after a conclusion had been reached on the father’s application for a residence order, which settled by way of a Consent Order. The ever contentious father submitted no less than six pages of notes from Dr Pelling on the draft judgment: the notes comprised comments upon and suggested amendments to the draft. The points were considered, but in the main not entertained by Munby J on the basis that Dr Pelling was effectively asking him to reconsider his decision on certain points which was quite inappropriate. The judgment was finally handed down in public on 20 January 2009. The principles set out by Munby J are dealt with in order of importance (as perceived by the writer) as distinct from the order followed by the learned judge himself when giving judgment.
The length of provision
To first address the most important point of principle considered by Munby J, that is the length of time children are entitled to provision under Schedule 1 of the 1989 Act. The Act provides that children will be provided for during their dependency and/or for so long as they are in full time education. The moot point was at what age does a child’s dependency cease? The various authorities which were considered by Munby J with great care, set different ages for the end of a child’s dependency. Some judges who had considered this point saw dependency as ceasing at 18 years of age, others saw the relevant age as being 21. In short there was no absolute rule as to when dependency ceased.
The point pursued by the father was that he objected to maintaining his child until he was 21, if his son did not proceed to tertiary education. The father argued that the net effect of this, should his son not proceed to a degree course, would be that N would be maintained beyond the proper period of his dependency. His suggestion was that the appropriate provision should be that he maintained his child until the latter attained eighteen years of age or until he completed tertiary education, whichever was the later. The father’s argument was that save in exceptional circumstances (for example disability) children are not entitled to provision, under Schedule 1 to the 1989 Act, except during their dependency and for their education and dependency should be interpreted as ceasing at 18.
Munby J favoured the argument pursued by the father and further observed that the District Judge had erred in principle in directing that the property was to be settled until N reached the age of 21. He declared:
“… in my judgement, “special” or “exceptional” cases apart, “dependency” ceases at majority. So, “special” or “exceptional” cases apart, any capital settlement under Schedule 1 should be expressed as terminating upon the child attain the age of eighteen or completing tertiary education”.
(Para.78 of the judgment)
The learned judge lent further force to his decision by reference to s.1(1) of the Family Law Reform Act 1969 wherein Parliament reduced the age of majority from 21 to 18. He went on to say that there should be evidence which establishes the “special” or “exceptional” circumstances relied upon if the court is to be justified making provision beyond the end of dependence or education. Whilst Munby J recognized that there may be increasing numbers of adults who continue to live at the parental home, it was not for the courts to impose legally binding obligations on unwilling parents simply because other parents chose to voluntarily assume a financial, though not a legal burden. (refer to para 79)
It should be noted that Munby J observed that for District Judge Roberts to simply make the order she had done without considering whether the appropriate age was 18 or 21, or whether there were “special” or “exceptional” features, was plainly wrong (para. 80). Therefore there is clearly a judicial obligation to consider these issues.
At paragraph 81 of his judgment, the learned judge accepted that a parent responsible for the financial maintenance of their offspring is entitled to be protected against the child’s prolonged or indefinite postponement of attendance at university. However, he shrewdly observed that those who reach the age of university attendance may choose to take a gap year between school and university or indeed between completing study for a degree and commencing employment. He therefore made appropriate provision in the order finally made, to allow for N to do this:
“ The Father shall settle or cause to be settled on trustees for the benefit of the Child N the sum of £220,000 which the trustees shall use to purchase a property to house the said Child and the Applicant Mother until the Child attains the age of 18 or completes full-time education including tertiary education to first degree level, whichever be later, saving that in any event the Termination Date of the settlement (that is when the obligation to house ceases) shall absolutely be not later than 31 July 2023 …”
(clause 2 of the order)
Turning to the determination of Munby J on other points pursued by the father, these can be summarized as follows:
The Quistclose point
The father’s application to defer his obligation to pay the sum of £20,000.00 until contracts had been exchanged for the purchase of property was refused, though at the request of the father, the judge agreed to insert words into paragraph 1 of the order to make it explicit that the money was to be applied in moving to and furnishing a property;
The father’s assertion that the mother should be required to account to him for any residue of the £20,000 not used, and return it to him was met with some sympathy by Munby J: the judge did not concur with the four month time limit suggested by the father for the return of any residue, but did specify that any residue was to be returned within “ a reasonable time”;
In determining that the mother did have a duty to account to the father in respect of how the £20,000 had been applied, Munby J adopted the position described and followed by Thorpe LJ in Re P (Child: Financial Provision) . Although the sum considered in Re P was the much greater sum of £100,000, there was a valid correlation between the two cases this being that here was a sum awarded for and intended to be applied in a specified purpose. Therefore Munby J ordered that the mother was to provide receipts for all items costing more than £10. The father was also to have the benefit of the Quistclose principle in respect of this sum and the larger sum of £220,000, ie that any monies not applied by the mother in their designated purpose would automatically revert to the father under the Quistclose principle.
Who should be a Trustee?
Munby J also established a helpful principle on who should be Trustee of the settlement for N where predictably there was no agreement between the parties. Munby J decided that there should be two trustees, one appointed by the father, the other by the mother, neither Trustee need be a professional person. This was in part what had been proposed by the father. The learned judge also specified that a third trustee (who need not be a professional person) should be agreed between the parties, or in default of agreement, the Court would select the third Trustee. The Trustees could not act unanimously, but could act by simple majority. (Clause 2 (f)) of the order). Both of the parties were disqualified from acting as a Trustee on the basis that there was such a high degree of acrimony between them.
There had been a squabble between the parties as to whose responsibility it was to draw up the Trust Deed in respect of the settlement: Munby J refused to be drawn into this, but simply determined that the Deed of Settlement would be drawn up by the Applicant Mother at her own cost, the terms would be agreed, if possible by the parties with both sides having Liberty to Apply to the court. If the mother was to delay in providing the Deed within six months, of the date of the order, then the order would cease to have effect and no extension of time would be permitted. (Clause 2 (c) of the order).
Munby J accepted that the father should not be required to pay over the £220,000 until the relevant Trust Deed had been executed. With reference to the trust monies, he further directed that the father was entitled to the benefit of the Quistclose principle as described above.
Turning to issues which had been raised by the mother through her various applications, the learned judge directed as follows (paras 45-57 of his judgment):
- Interest at a judgment rate of 8% ran from 29 July 2005 because the father had failed to make the payment of £20,000.
- A final charging order was made against the legal title of the property where the father was the registered proprietor in respect of the sum of £20,000 only, though the mother’s right to enforce the order was postponed until such time as she had found a suitable property to house N and herself.
- The mother’s application for a charging order in respect of the £220,000 was dismissed as a matter of law. The point was that the sum of £220,000 was not a debt owed to the mother herself, rather it was a sum of money which the father was obliged to pay to the mother for her to apply in a specified purpose, ie to provide their child with appropriate accommodation: it was trust monies. For this reason it was not a sum capable of falling within s.1(1) of the Charging Orders Act 1979. However to address the mother’s understandable apprehensions that the father’s means of paying £220,000 may be dissipated by him, the learned judge imposed an injunction on the father to prevent him from dealing with the property of which he was the registered proprietor, though he was permitted to grant Assured Shorthold Tenancies at the property (this presumably being one of his sources of income).
- With reference to the mother seeking the guidance of the court on the precise terms of the £220,000 being settled on trust (ie the mother sought the right to buy out the father’s interest in the property), Munby J saw this as being acceptable in principle, though he commented that the father must be protected from having his interest being purchased at anything other than the market value, or when the property market was depressed. Clause 2 (d) of the order specified that such a provision must be inserted into the Deed of Trust.
- Munby J accepted the mother’s position that the costs of administering the Trust and the tax consequences should be borne by the parties in proportion to their contributions.
In conclusion, the principles set out in Re N (A Child) clarify when a child’s dependency ceases in relation to parental maintenance. The case also gives helpful observations on the establishing and implementation of a settlement in favour of a child in these circumstances, on who may be a Trustee and the obligations of a receiving party to the paying party. Finally the case is a salutary reminder that acrimony between parties, generates prohibitive legal costs, which in this case could sadly not be avoided because of the very high level of contention which was not capable of settlement without recourse to legal proceedings.
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