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Morgan v Hill [2006] EWCA Civ 1602

Appeal by father against an order for financial relief under the Children Act 1989. Appeal allowed in part.

The case is of interest as it one of the first reported cases where an applicant is seeking to vary an order under s37 of the MCA 1973. Further interest arises from the counsel for the appellant's arguments on two points of principle: 1) that Edgar principles should apply as the parties had negotiated a settlement intended as final and 2) the order had imposed financial obligations on the appellant that relieved the father of the mother's first child of financial responsibilities.


Case No: B4/2006/1393 & B4/2006/1393(A)

Neutral Citation Number: [2006] EWCA Civ 1602

Mr Peter Hughes QC sitting as a Deputy High Court Judge
FD 05 P 00050
Royal Courts of Justice
Strand, London, WC2A 2LL

Tuesday 28th November 2006
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(Transcript of the Handed Down Judgment of
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Mr C Howard Q C (instructed by Gordon Dadds) for the Appellant
Mr P Cayford QC & Mr J Tod (instructed by Mishcon De Reya) for the Respondent

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As Approved by the Court

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Lord Justice Thorpe:
1. The appellant, Stephen Peter Morgan, appeals against the order of Mr Peter Hughes Q.C., sitting as a deputy judge of the Family Division, dated 13th June 2006. The order reflects the outcome of a five day hearing commencing on 20th February 2006, the reserved judgment being handed down in mid March. The appeal raises at least two points of novelty and of difficulty. Permission to appeal was given by Wilson LJ on 25th July 2006. His order also imposed a stay on certain of the provisions within the judge's order of the 13th of June.

2. The mother, Janet Hill, has filed a respondent's notice and a cross appeal. The cross appeal goes only to a small point of quantum. For convenience I say at once that it seems to me to rest on the flimsiest of foundations. The Judge made an assessment of her transport needs having heard the oral evidence of the parties. He sufficiently explained his conclusions. No error of principle is asserted. The suggestion that we should exercise an independent discretion is therefore unprincipled and I would dismiss the cross appeal.

3. The litigation arises out of the fact that the parties to the appeal are the parents of a son named Mark born on the 29th December 2000. The parents never married, indeed never cohabited. Accordingly the mother's claim for financial provision was brought under s15 of the Children Act 1989 and the first Schedule. The circumstances surrounding the issue of proceedings under the Act are both complex and important.

4. The mother is now 39 years of age. She is highly educated and qualified. In the mid 1990s she was living in Paris and working for a leading financial institution. She had an affair with a married man, a fellow employee. She conceived and on the 25th June 1997 gave birth to their daughter, Mary. After their relationship ended the mother commenced an affair with the appellant. He is some 14 years older than her and is immensely rich. Their relationship did not long survive Mark's conception and by the month of May 2000 informal financial negotiations were under way.

5. During the course of the 2 years of intimacy between them the appellant was generous to the mother. He arranged for her to move to the North West and to employment by a company in which he had a substantial interest. Mary's father had no contact with her after her birth and made no financial contribution for her. Accordingly the appellant assumed finanacial responsibility for her as well as her mother.

6. However after the breakdown of their relationship financial arrangements for the future quickly became contentious. By October 2000 the parties had instructed prominent specialist solicitors in London. In the ensuing correspondence the father made it plain that he did not intend to continue to provide for or subsidise Mary's maintenance. By August 2001 negotiations concluded with an agreement. The agreement was expressed to be comprehensive and to make provision for the foreseeable future. In the correspondence there was a discussion as to whether or not the agreement should be made the subject of an order of the court. No order was sought. Neither party pressed for it. It was seemingly agreed that an order was not necessary because there were no proceedings on foot.

7. However in 1999 the mother had commenced proceedings under s15 against Mary's father in the local County Court. Apparently the proceedings were fully contested and resulted in a judgment awarding the mother periodical payments of £80 per week.

8. To understand the complex agreement reached between solicitors it is necessary to record that shortly before the end of their relationship the appellant helped the mother to buy a cottage in equal shares with her sister. The cottage was a conversion carried out by the company in which the appellant had a substantial interest. He was able to arrange a £30,000 discount in the price. The property was largely purchased on mortgage. The foundation of the agreement was that the appellant would buy out the mother's sister. I take the following summary of the terms of the contract from a chronology filed on the mother's behalf:-

"Material terms
a) Trustees – F and M and their solicitor
b) The Cottage held on trust – F and M hold beneficial title in equal shares – F purchased his interest mortgage free – M holds her interest subject to her original mortgage
c) If M were to move within 5 years it will be her cost – thereafter F may consider making a contribution
d) Re-marriage trigger to end the trust save if M applies successfully to the Court to extend
e) If M co-habits ends trust save if she moves house – however M to pay rent re F share in property
f) F to pay 50% of internal and external decoration and building insurance
g) F to pay periodical payments at the rate of £3,250 pcm (£39,000) index linked from 1st August 2001 payable until Mark is 18 or finishes secondary education whichever is the later – payments to reduce to £16,000 in the event that M remarries – if M co-habits her part of the periodical payments ceases – in the event that M works her income to reduce the periodical payments by 50p in £1
h) F to pay £100 pcm towards running costs of car
i) F to pay nursery fees and day school fees – if Mark boards F can vary the periodical payments
j) F to pay nursery fees and day school fees – if Mark boards F can vary the periodical payments"

9. In 2002 the mother applied in the County Court against Mary's father for an increase in the periodical payments order. The application was transferred to the Principal Registry of the Family Division. Another leading London specialist firm was instructed on behalf of Mary's father. Our knowledge of the course and outcome of the variation application is limited to what we were told by Mr Philip Cayford Q.C. during the course of the hearing. Apparently each filed a Form E setting out their respective financial positions. There was a first appointment and questionnaires were served. There was then something akin to an F.D.R. appointment which did not resolve the application. Accordingly a trial date was fixed. Shortly before the trial an agreement was reached between solicitors and a consent order sought increasing the periodical payments to £12,000 per annum plus school fees. That order was made on the 17th of July 2003. Effectively school fees for Mary prior thereto had been provided or subsidised by the appellant.

10. Although the mother attempted to resume her career in Paris after the birth of Mark on a three day a week commitment, not surprisingly she found it too much and abandoned the attempt after some three months. That aside she had been largely unemployed since October 1998, when the employment arranged by the appellant had to be terminated as a result of publicity surrounding their affair.

11. On the 17th January 2005 the mother issued her application seeking against the appellant a settlement of property order, a lump sum order and a maintenances order.

12. No doubt part of the impetus to litigate arose from the mother's move from the cottage to a newly built detached house on an estate not far from the cottage. To enable her to do so the mother invested not only her share of the proceeds of the sale of the cottage but also took out a mortgage in the some of £225,000. This onerous charge gave her a 65% share in the new home, reducing the appellant's share to 35%. The combination of the inevitable costs and expenses of a move together with the burden of the big mortgage drove her into debt which by the date of the trial amounted to the sum of £97,000.

13. The appellant's response to the mother's application was predictable. First he said that his liabilities had been comprehensively defined by the agreement and that the principles enunciated by this court in the case of Edgar v Edgar [1980] 1WLR 1410 disentitled the mother to an order. Secondly he asserted that the mother's application was an attempt to fix on him liabilities in respect of Mary which should properly be borne by her father.

14. The mother's application was the subject of a directions order made on the 22nd of March 2005 which fixed the application for a four day hearing before a High Court Judge. It also referred to the High Court a further directions hearing at least 15 weeks prior to trial.

15. The directions hearing took place before His Honour Judge Farnworth on the 7th of November 2005. At that hearing counsel for the appellant sought the disclosure of the mother's application form and budget in the principal registry variation application which she had brought against Mary's father. The application was dismissed (for reasons which we have not seen and which I find it hard to understand) although the judge gave the appellant liberty to re-new the application at the trial.

16. This he duly did and his application was properly granted by the trial judge. The judge recorded that Mr Charles Howard Q.C. for the father had not sought any more extensive disclosure; in particular he did not seek disclosure of Mary's father's means or of his response to the application.

17. The outcome of the trial before the judge was a resounding success for the mother. Indeed before us Mr Cayford has conceded that the judge's orders lie at the top end of the generous ambit of his discretion. He ordered the appellant to set up a housing trust fund of £700,000 to provide for Mark during his minority. In so ordering he accepted the mother's case that the growing family badly needed a property in the country with paddocks and stables to enable them to pursue their passion for riding. He ordered the appellant to pay a lump sum of £100,000 to clear, and perhaps more than clear, her debts. He increased the appellant's liability for periodical payments from the amount then due under the indexation provisions of the agreement to £60,000 per annum. That would give the mother £72,000 per annum, bringing Mary's father's contribution into account, with child benefit and school fees on top. Finally he marginally increased the motor allowance, holding that the wife should have a new car in 2006 at a cost of £25,000 to be replaced at the appellant's expense thereafter in every fifth year. The judge's reasoning for these conclusions will emerge when I consider the rival submissions of counsel.

18. Mr Howard rests his appeal on two points of principle. The first derives from the decision of this court in Edgar v Edgar. Mr Howard submits that the principles endorsed by this court in that case disentitled the mother to any relief. The trial judge should have applied the Edgar principles rigorously and simply dismissed the mother's statutory claims on the grounds that she had negotiated with the best legal advice an agreement intended to be final and comprehensive of all her claims. It was mere accident that it had not been converted into an order of the court. It was therefore to be treated as though it were effectively an order. A transfer of property order to provide a home for a child cannot be revisited. The court has no jurisdiction to make a second or further order. There was no basis for a review of periodical payments or the motor car allowance since these benefits were index linked in order to avoid the need for future review.

19. Mr Cayford submits in response that the Edgar principles should not be extended in application to claims brought under s15 for a child. The principles in Edgar were developed to restrict the capricious adult from settling a claim with full formality, reneging on the contract and commencing proceedings which, thanks to the history, are then particularly bitterly contested. Proceedings are brought under s15 to secure the future financial needs of a child. Any settlement of such a claim requires particularly careful judicial scrutiny. Mr Cayford cites by analogy CPR 21.10. An infant settlement in the Chancery Division can not be made without the approval of the court. Similarly settlement of a personal injury claim concerning a child cannot be concluded in the Queens Bench Division without the court's approval. The Court's responsibility is not reduced because there is a parent or other guardian representing the interests of the child or because the settlement is commended by specialised lawyers of high repute. In s15 claims the parent who is the applicant on behalf of the child may be subjected to subtle emotional pressure such as a threat from the respondent to withdraw from the child's life unless his terms be accepted.

20. In relation to the facts of this case Mr Howard submits that the mother has failed to identify any factor vitiating the agreement nor did the judge identify any such factor. Against that Mr Cayford stresses that the negotiations commenced soon after the breakdown of the relationship when the mother was pregnant and continued during the months of Mark's early life, which were inevitably stressful for the mother.

21. Before coming to my judgment on this issue I must introduce a novel argument that emerged during the course of this trial. In Edgar and in all like cases since reported, the applicant seeking to escape from the contract has only asserted an over riding right to issue an application under s22-25 of the Matrimonial Causes Act 1973 and to press for a judicial award. There is no reported case in which the applicant has alternatively or additionally advanced a claim under s37 of the Matrimonial Causes Act, the section which empowers the court to vary a financial agreement (widely defined) in certain specified circumstances.

22. The overall shape of the Matrimonial Causes Act is replicated in the first Schedule, headed "Financial Provision for Children". Section 1 defines the various orders for financial relief that the court may make against parents. Thus paragraph 1(2) empowers the court to order periodical payments, secured periodical payments, a lump sum, and a settlement of property order and a transfer of property order. Paragraph 1(4) and (5) however have the effect that:-

a) Periodical payments and secured periodical payments may be varied or discharged
b) The court may make additional orders for periodical payment, secured periodical payments or lump sum
c) The court may not make more than one settlement or transfer of property order against the same person in respect of the same child.

23. Paragraph 4 of the first Schedule contains the statutory check list, akin to that to be found in s25A of the Matrimonial Causes Act 1973. The absence from the check list of any mention of the welfare of the child was explained by Hale J in J v C (Child's Financial Provision) [1999] 1FLR 152.

24. Paragraph 5 (1) of the Schedule provides a definition of the purpose of a lump sum order thus;-

"Without prejudice to the generality of paragraph 1, an order under that paragraph for the payment of a lump sum may be made for the purpose of enabling any liabilities or expenses –
(a) incurred in connection with the birth of the child or in maintaining the child; and
(b) reasonably incurred before the making of the order,
to be met."

25. Finally I emphasis paragraph 10 of the Schedule which is headed "Alteration of maintenance agreements." What follows is particularly reflective of s37 of the Matrimonial Causes Act 1973. The foundation for the exercise of this power is to be found in paragraph 10(3), as follows:-

"(3) If the court to which the application is made is satisfied either-
a) That, by reason of a change in the circumstances in the light of which any financial arrangements contained in the agreement were made (including a change foreseen by the parties when making the agreement), the agreement should be altered so as to make different financial arrangements; or
b) That the agreement does not contain proper financial arrangements with respect to the child,
Then that court may by order make such alterations in the agreement by varying or revoking any financial arrangements contained in it as may appear to it to be just having regard to all the circumstances."

26. In the present case the deputy judge, in considering Mr Howard's reliance on the principles in Edgar, noted that the mother's application might have been brought under paragraph 10 as well as or instead of under paragraph 1 of the Schedule. He reasoned that as the mother was seemingly entitled to such variation "as may appear to (the judge) to be just having regard to all the circumstances", the Edgar objection to her claims brought under paragraph 1 had to be assessed in that context.

27. The vitiating factors approved by this court in Edgar did not expressly extend to the insufficiency of the original agreement and indeed Mr Johnson's endeavour to run that argument did not find favour. However in later cases, such as Camm v Camm [1983] 4 FLR 577 and Smith v Smith [2000] 3FCR 374 the inadequacy of the original agreement has been recognised as a proper basis for a judicial award greater than the settlement to which the applicant had originally agreed. Mr Howard accepted that reality but submitted that the degree of inadequacy had to be massive or, as he put it, "off the Geiger counter".

28. In my judgment that puts the bar much too high against the applicant. The simple answer is to be found in paragraph 10 (3)(b). The court is empowered to alter an agreement provided it is satisfied that it "does not contain proper financial arrangements with respect to the child." The resulting alteration must however "be just having regard to all the circumstances." The agreement itself may be a very significant circumstance. In the present appeal the judge's essential conclusions are clear. In paragraph 69 he rejected Mr Cayford's submissions relating to the circumstances surrounding the creation of the agreement. He said:-

"I have no doubt that mother was under considerable stress and pressure to reach an agreement, caused in part by her difficult circumstances, and contributed to by father's attitude and the tenor of the correspondence, but I am not persuaded that this led her into making a bad bargain. It is, also, not part of her case that she did so against advice."

29. The basis on which the judge explained his departure from the agreement was two fold: first that it had not worked in practice and would not prove any more workable in the future. That is to be found from paragraph 70 – "I am entitled to have regard to how it has worked in practice": paragraph 73 – "insufficient thought was given at the time of the agreement to Mark's future reasonable housing requirements…": and paragraph 75 – "having seen and heard the parties, I am drawn to the conclusion that there can be little confidence that they will be better able to make the agreement work in the future. There is a need for a fresh and simpler approach."

30. As to the inadequacy of the agreement the judge found it to be inadequate in relation to:-

a) The mother's future earnings – see paragraph 95
b) The re-marriage or co-habitation clause – see paragraph 98
c) Mark's future housing needs – see paragraph 107
d) The level of periodical payments – see paragraph 117.

31. On those findings I am in no doubt that the deputy judge was correct to reject Mr Howard's reliance on the Edgar principle and to make such greater financial provision for Mark's future as he considered to be just in all the circumstances.

32. We have heard submissions about the burden of proof. They arise out of Mr Howard's criticisms of paragraphs 60 and 63 of the judgment in the following terms:-

"60. Underlying the scheme of Schedule 1, in my judgment, is the policy that the court, in exercising its powers to make financial provision for a child, should be free to depart from whatever agreement the parents may have entered into unless satisfied that it continues to make satisfactory provision for the child.

63. I conclude, therefore, that, although, I can and should take account of the agreement as something which the parties agreed and which has regulated the financial provisions for S to date, I should consider the question of financial provision for S in the wider context of the statutory criteria in paragraph 4 of Schedule 1 and make what I consider to be proper financial provision, unless satisfied that such provision is already made by the terms of the agreement."

33. I accept those criticisms in that the paragraphs cited, taken out of the context of the judgment as a whole, do seem to reduce the significance of the agreement to negligible proportions. Plainly whether a claim is brought under paragraph 1 or paragraph 10 of the Schedule the first hurdle that the applicant must surmount is the pre-existing agreement, which must be either demonstrated to be unenforceable given the circumstances surrounding its creation or, as the judge here found, inadequate in its extent. Thus the pre-existing agreement is the starting point of the court's assessment. It is plainly one of the circumstances of the case and the weight to be attached to it will vary from case to case. If the court conceives that the applicant is capricious or unreasonable in the attempt to depart from the terms of the agreement then the dismissal of the application will naturally follow. In upholding the judge on the facts of this particular case I do not mean in any way to depart from the approach adopted in previous cases under the Matrimonial Causes Act 1973.

34. Clearly it is undesirable that any advantage should be attached to the chosen procedural route. Thus whether the application is mounted under paragraph 1 or paragraph 10 the same weight must be given to a pre-existing agreement. It is one of the circumstances of the case and its impact must be assessed in the search for justice.

35. A surprising feature of the history is that solicitors negotiating in 2001 do not appear to have appreciated the significance of converting the contract into an order of the court. It was in the mother's interests to go no further than the contract. It was in the father's interests to obtain an order. Had an order been made then paragraph 1 (5) (b) of the first Schedule would have prevented the judge from making the substantial settlement of property order which he did.

36. Mr Howard's second point of principle is that the judge fell into error in imposing financial obligations on the appellant which had the effect of conferring benefit on Mary and thus relieving Mary's father of his financial responsibilities. Although in my judgment this was the more powerful of Mr Howard's two principal submissions it was dealt with comparatively briefly in paragraphs 84-88 of the judgment. In paragraphs 84 and 85 the judge cited two relevant precedents, A v A (a minor; financial provision) (1994) 1FLR 657 and J v C, which I have cited above. In paragraph 86 he summarised Mr Howard's contention to the effect that it would be wrong in principle to order the appellant to subsidise Mary or make good any short fall in the provision made by her father. The judge dealt with the point in the following two paragraphs in these terms:-

"87. The point that M was already a single mother is, though, in my judgment, decidedly two edged. She was a single mother, but F knew that when he chose to have a relationship with her. It does not seem to me that he can reasonably complain, therefore that D will indirectly benefit from the provision he should make for M to bring up his son

88. There is no ideal or perfect solution. I have to look at things as they are. I have to take account of the provision that M receives from P in deciding what provision F ought to make, but I do not consider that it would be right to reduce the level of that provision on the basis that M ought to be seeking more from P."

37. In my judgment the deputy judge can not be supported in those conclusions. The appellant of course commenced his affair with a single mother, and indeed was generous to her so long as their relationship endured. But that history does not prevent him from objecting to the assumption of the financial responsibilities of Mary's father. I also reject the judge's ultimate conclusion that it would not be right to scale down the mother's claim against the appellant were she failing to seek an increase due from the other father.

38. It is in practical terms inevitably difficult to separate out costs and expenses relating to Mary from expenses relating to Mark. Direct costs, such as food clothing and holidays, may be capable of identification. Indeed in the claim against Mary's father that the mother compromised in 2003 she put her direct costs in maintaining Mary at £24,000 a year. In the budget prepared for her claim against the appellant she put those direct costs at £35,000 a year. However indirect costs, such as the costs of the household and motoring expenses, are less easily disentangled. However such practical difficulties do not allow the judge to gloss over the objection in principle. My conclusion that in principle the objection is well founded can be simply explained. The court's jurisdiction under paragraph 1 of the Schedule is, in the context of the present case, limited to making an order against the appellant as a parent of a child. The only child of which he is a parent within the mother's application is Mark. It follows that the court has no jurisdiction to make an order against him to the mother for the benefit of Mary.

39. A parallel situation can arise in matrimonial proceedings where a mother has had a child by each of two husbands and has live periodical payments claims against both husbands for herself and her children. In such situations the practice has always been to require separate applications against each of the fathers either consolidated at an early stage to enable the court to make a fair apportionment as between the two respondents in one judgment at the conclusion of a single trial or listed for consequential trial before the same judge. Had that practice been adopted in the present case the judge would perhaps not have made the order against the appellant which he did.

40. How did it come about that the mother made a separate claim against each father rather than simultaneous claims against both? Both claims against P were concluded before any claim was brought against the appellant and there is some force in Mr Howard's characterisation of the mother as selecting one target or the other as she has fallen into debt. The mother's claim against the appellant was launched some three years after the launch of her second claim against Mary's father. As soon as she launched it the cross subsidy defence was raised on behalf of the appellant. In my estimation the proper response on the mother's behalf would have been to have offered to issue proceedings against Mary's father. The only order she had obtained against him was a periodical payments order. She could therefore apply for its upwards variation. Equally she could apply against him for a lump sum order and a settlement of property order, since against him there was no bar under paragraph 1 (5) (b). In making that offer she could have stated that she only sought to achieve her financial objectives and that it was therefore a matter of indifference to her as to how the court allocated what need she established between the two fathers. She might have added that she wished to be reassured that if she issued separate proceedings against Mary's father, effectively at the appellant's behest, she should not be at a risk of a costs order in favour of Mary's father. In other words she would effectively have interpleaded.

41. Regrettably she adopted an entirely different tactic. She refused any information as to the financial circumstances of Mary's father and equally refused disclosure of any of the papers from the two applications which she had brought against him.

42. At that stage the appellant should in my judgment have applied to the court for the joinder of Mary's father making it plain that if the mother refused to issue further applications against him then she should run the risk of shortfall.

43. What the appellant in fact did was to apply for disclosure limited to the second application against Mary's father and further limited to the mother's application form and details of the budget which she had filed in support of her application. That application was dismissed by H.H.J. Farnworth at the directions hearing on the 11th of November 2005, as I have recorded. However given that he granted leave for it to be renewed at the trial on notice, I can understand Mr Howard's decision not to appeal. The renewed application succeeded before the deputy judge but with the results that the limited disclosure sought was not available until a very late stage.

44. At that stage it would have been open to the judge to say that, in the light of the cross subsidy defence, the appellant plainly needed to put evidence of the means of Mary's father before the court. The application for disclosure could have been widened to the whole file in each case and the application could have been adjourned for the joinder of Mary's father. What in fact the appellant did was to issue a witness summons against Mary's father, but the summons was never served. We were further told that there was some conversation between the two men, apparently concerning their desire for confidentiality.

45. I have recited the procedural steps and commented upon them at length to explain my conclusion that the responsibility for the absence of Mary's father from the judgment seat is more or less equally shared. What is plainly objectionable in principle is for an applicant under s15 to obtain more by consecutive application than she would have obtained by simultaneous applications.

46. To what extent do Mr Howard's submissions demonstrate a need to reduce the judge's awards? First I am not satisfied that, in exercising his discretion on his adjudication of any of the mother's claims, the judge inadequately reflected the circumstances of the prior agreement. Furthermore his quantification of the housing allowance, the motoring allowance and the mother's income needs were all well within the broad ambit of the discretion which he exercised.

47. But can it then be said that in respect of each of those three heads he should have ordered only a portion against the appellant, leaving the mother to apply against Mary's father for the balance? In respect of the housing fund in my judgment the answer is no. The judge rightly held that the mother was unsuitably, and in relation to the father, disproportionately housed where she was. Clearly her target of a place in the country with a bit of land to enable the children to pursue their out door activities, particularly riding, was reasonable. The sum required was not demonstrated to inflate because the applicant was a mother of two rather than a mother of one. Furthermore the appellant has the sole reversion under the trust and the mother has forgone part ownership, with the attendant prospect of capital appreciation.

48. Nor do I think that the argument succeeds in relation to the periodical payments order against the appellant. I recognise the startling disparity emphasised in Mr Howard's submission, to the effect that the mother emerges with a £700,000 house and £72,000 per annum, all but £12,000 per annum provided by the appellant. Against that is the fact that in 2003 the court approved an agreement that set the contribution of Mary's father at £12,000 per annum. In approving that assessment the court had the evidence of the payer's means which the deputy judge lacked. That circumstance I conclude, albeit it narrowly, justified the deputy judge in ordering the appellant to pay the balance.

49. As to motoring expenses both parties sought to bicker over fine tuning. Neither appeal nor cross appeal raised any point of principle or demonstrated any error of law or discretion.

50. It is in relation to the judge's lump sum order that Mr Howard's second submission succeeds. The mother's overall debt of £97,000 had a number of ingredients, many of which resulted from her decision to move houses. Whilst the majority were commercial debts, £24,000 was a soft debt to her father. Nonetheless the judge rounded up rather than down in ordering a lump sum of £100,000. Furthermore consideration had to be given to her retention of the flat in Paris. If she sold it it would certainly have cleared her debts and possibly produced a small balance. Mr Howard also emphasised that the rental income failed to cover the instalments on the repayment mortgage, a deficit which Mr Howard therefore submits the appellant is subsidising.

51. However whilst in principle any order under s15 should not include a benefit for the recipient otherwise than qua mother, there is no rule or principle which obliges the mother to contribute her own capital. The disparity between her present and likely future fortune and the appellant's is so great as to be almost incalculable. Under the judge's order she forfeits her share in the equity of her home. I consider that the judge was entirely justified in his refusal to set off the debts against the value of her flat. The flat was her only appreciating asset and its liquidation would destroy her only financial security. However in the end I conclude that plainly part of the responsibility for the overall debt rested with Mary's father. His child is the first born and the move to a bigger home was as much driven by Mary's growing needs as Mark's. The amount of the £100,000 ordered against the appellant that could be ascribed to back dating the variation of the periodical payment is only approximately £15,000. In what is inevitably very much a broad brush assessment I would propose the reduction of the lump sum payable by the appellant to £50,000.

52. Accordingly I would allow his appeal only to that extent.

53. In conclusion I would add some general guidance limited to financial claims brought under the Children Act 1989 against extremely rich fathers. In the year 2000 radical procedural reforms were introduced for the determination of contested applications brought under the Matrimonial Causes Act 1973. Those reforms have proved extremely successful. However they have no application to financial claims brought under the Children Act. I understand from the Senior District Judge that the Family Procedure Rules Committee is likely to bring Children Act claims into line. Pending that application in my opinion the parties should anticipate the development and seek agreed directions that financial information be exchanged by the use of Forms E and that any questionnaires should be limited to those directed by the court. Further they should seek a direction for an appointment to be treated as a privileged occasion in accordance with the practice governing FDR appointments. Pending the reform of the present rules an appointment equivalent to a FDR appointment can only be achieved consensually.

54. Second in any case where the applicant has a statutory claim against more than one father the court should ensure that the applicant establishes their respective liabilities at a consolidated hearing or at consecutive hearings.

55. Third in exceptional cases consideration should be give to separate representation of the child. Even in cases where there is no financial impediment to separate representation special circumstances would need to be demonstrated. I think of cases in which a major task for the judge is discerning what are the child's objective needs and what may be the mother's subjective targets for herself as much as for the child.

Lord Justice Keene:
56. I agree fully with the judgment of Thorpe LJ on all aspects of this appeal and wish to add only a few comments of my own on the first issue, concerning the relevance of the pre-existing agreement, when a court is dealing with an application about financial provision for a child. It seems to me to be entirely clear that there cannot be a different approach to be adopted, depending on whether the application is made under paragraph 1 of the Schedule or under paragraph 10 thereof. Parliament cannot be taken to have intended a different outcome as the result of the adoption of one of two alternative procedures. Consequently the reference in paragraph 10(3)(b) to "proper financial arrangements with respect to the child" must be seen as providing guidance to the court dealing with an application under paragraph 1. As Thorpe LJ has emphasised, that does not mean that the agreement reached in the past may not be of considerable significance in helping to determine what are "proper financial arrangements", but the degree of significance will depend on the circumstances.

57. Normally, the agreement should be seen as the starting point, since there are important public policy reasons why agreements carefully negotiated and freely entered into should be treated as of great weight. But ultimately it is the interests of the child which must provide the crucial test and it is for the court to reach a determination as to what those require.

58. For these reasons, as well as those set out by Thorpe LJ, I too would make the order which he proposes.

Lord Justice Hughes:
59. I agree with the order proposed by Thorpe LJ.

60. At the conclusion of a careful and thorough judgment, the Deputy Judge cited some observations of Thorpe LJ in Re P [2003] I FLR 865 at para 70 on the great benefits of mediation and of avoiding a contested hearing. He endorsed them, as respectfully do I. Contested hearings in matters of this kind are ruinously expensive in money but also, and more importantly, in the toll which they take both of the parties emotionally and of hopes for their future amicable co-operation in the upbringing of their shared child. That is but one reason why where parties have, through experienced advice and detailed negotiation, arrived at a comprehensive agreement, there is great public and private interest in that agreement governing their affairs unless there is really good reason why it should not.

61. I agree that where there is such an agreement the approach of the court must be the same whether a fresh application is made under paragraph 1 of Schedule I or a variation application is made under paragraph 10. Where what is made is a fresh application under paragraph 1, the agreement is one of the crucial circumstances of the case for the purposes of paragraph 4. It represents the starting point. It is powerful evidence of what the circumstances of the case require by way of provision for the child, and usually it will be the best evidence of it. Ordinarily it will be not only the starting point, but also the finishing point, unless there is established one of the two grounds set out in paragraph 10 for varying it, that is to say either that a change in circumstances (foreseen or unforeseen) since the agreement was made calls for a change in provision, in which event the change of circumstance is both the occasion for and normally the measure of the variation, or it is established that the agreement does not make proper financial arrangements for the child. To the extent that the Judge said that he should make what he considered proper provision, unless satisfied that the existing agreement already did so, that is to put the question the wrong way round, although often little will turn on the incidence of the burden of proof.

62. I also agree that where an agreement relating to the financial support of a child is in question, the child's interests will prevail over any terms which his parents have reached, if that agreement does not make proper financial arrangements for him. But that is to say nothing different to paragraph 10(3) (b). It does not mean that when an application under Schedule I (of either kind) is made, the court starts from scratch and evaluates the claim as if the agreement had not been reached.

63. Like Re P this is an unusual case because of the enormous gulf between the means of mother on the one hand and father on the other, and because the depth of the latter's pocket is such that his child can expect to be brought up with resources available which would be unrecognisable to the great majority of families.

64. It seems to me that given those unusual factors the Judge was entitled to come to the conclusion that this agreement did not make proper financial provision for Mark. The cottage in which he was living as a seven month old baby at the time of the agreement was not going to be appropriate to his growing years, still less to those of teenage, and particularly with his father living not many miles away in such obviously different style. The new order for periodical payments is much larger than was agreed, nearly half as much again. But in the end I agree that the Judge was entitled to conclude that this followed largely from the decision that a different level of lifestyle, and housing, is appropriate to Mark.

65. There is simply no jurisdiction to order this father to support Mary. It seems to me that the Judge fixed the new periodical payments correctly by reference to the needs of Mark. To the extent that Mary may derive incidental benefit from the fact that she lives in the same house as Mother and Mark, which is provided essentially by Father, the latter is not being ordered to support her. What is not permitted is any order which does have the effect of fixing some of the responsibility for Mary onto him, and this is so whether or not her own father is making proper provision for her, or is in a position to do so. It seems to me that the lump sum order did contravene this principle. Mother's various detailed written budgets of her expenditure are, in this as in all such cases, inevitably unreliable guides to (a) actual and (b) reasonable spending. Like all such documents they should be viewed with caution. Her evidence was nevertheless that her spending separately attributable to Mary had been running at the level of not less than approximately £20,000 (exclusive of school fees) since at least 2002 and apparently well before. At some stages of her evidence she advanced, or accepted, significantly larger figures, but those latter sometimes included housing and similar common costs. Until July 2003 the only money she received from Mary's father was about £4000 p.a.; after that it was no more than £12000. It follows that even assuming that Mother were now to adjust her spending on Mary, there was a large historic shortfall which must have contributed largely to the way in which she ran herself into debt. I entirely agree that to order this Father to settle the debts by way of an additional lump sum of £100,000 was inevitably to fix him with significant responsibility for Mary, for which there was no jurisdiction. I agree that that lump sum must be not less than £50,000 too large.

66. I should add that I also agree that many of the difficulties of possible cross-subsidy will be avoided if in a case such as this both fathers are before the court at the same time. There may continue to be real problems of quantum when the means of the two fathers are very different, and incidental benefits from common costs fall to be considered, but those can only be resolved case by case. It seems to me that they should at least be resolved with full knowledge of the financial positions of all concerned.