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DE v AB [2011] EWHC 3792

Appeal from a district judge’s final order in Schedule 1 Children Act 1989 proceedings. Appeal allowed in part. No order as to costs.

At the date of the hearing before the district judge, the mother had earned about £60,000 p.a. gross, plus commission, although had subsequently lost her employment. She had significant mortgage indebtedness in addition to considerable credit card and overdraft debts, leaving her in negative equity overall. Nevertheless, the mother wished to retain her home, despite the district judge having stated that it should be sold. Baron J, hearing the appeal, agreed that the mother would need to sell her home, because it was unaffordable, and consequently the mother's debt would be considerably reduced.

The father had been employed as a City trader before being made redundant in 2004, when he received some £951,000 as a redundancy package. These monies had however been effectively spent by the father and his only assets were his home, with equity of circa £360,000, which the district judge considered should also be sold as the father's mortgage was unaffordable. The CSA had assessed the father's income from his business at just £28,000, although the district judge considered £100,000 was more realistic. Although the business was now winding up, Baron J agreed that the father's earning capacity was in the region of £100,000 gross.

At first instance the district judge had awarded the mother a lump sum of £335,000, of which £85,000 was towards her liabilities of £177,000 and £250,000 on trust (a housing fund) to provide a home for the child, to revert to the father upon the child ceasing full-time education. F appealed, asserting that this was too high as it left the father with effectively no capital. F also argued that a housing fund would be "unfair". Additionally, the father complained that his contribution towards the mother's liabilities had involved an element of double-counting, as it included the payment of revenue costs such as mortgage interest which should be covered by CSA payments, and that the calculation was unjustified. The father offered no housing fund at all, arguing that the mother should rent, but was willing to offer a total lump sum of £40,000 plus 50% contribution towards nanny costs and nursery fees.

Baron J considered the statute and the authorities. Her Ladyship rejected the arguments about double-counting on the basis that the father had, as a result of the flawed CSA assessment, been underpaying and as such the court was entitled to supplement the mother's provision by way of capital. However, Baron J considered that the district judge should have justified his conclusions and should have analysed the overall effect of his award on each party, as each should make a full contribution towards the costs of the child.

Her Ladyship upheld the district judge's housing fund of £250,000. However, her Ladyship considered it unfair that the father was thereafter left with no capital and accordingly reduced the lump sum to £40,000. This would still leave the mother in debt, albeit the debt would be manageable once the mother sold her home. The appeal was therefore allowed in part.  No order as to costs.

Summary by Stephen Jarmain, barrister, 1 Garden Court Family Law Chambers


Neutral Citation Number: [2011] EWHC 3792 (Fam)
Case No. FD08P02089
Royal Courts of Justice

Date: Tuesday, 30th November 2010


(In Private)
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B E T W E E N :

 DE Applicant/Respondent
 -  and  - 
 AB Respondent/Appellant

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Transcribed by BEVERLEY F. NUNNERY & CO
Official Shorthand Writers and Tape Transcribers
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MISS S. PHIPPS  (instructed by Raydens) appeared on behalf of the Applicant/Respondent.

MR. M. JOHNSTONE  (instructed by Davies Arnold Cooper) appeared on behalf of the Respondent/Appellant.

1 This is an appeal by Mr. AB (to whom I shall refer as "the father") from the decision of District Judge Bassett Cross given on 25th March 2010.  The issue which the learned judge determined on that occasion arose under Schedule 1 Children Act 1989 and was in respect of the financial provision to be made for a child, C, born on 2nd March 2008 and now 2¾ years.  His mother, DE (to whom I shall refer as "the mother"), cares for him on a daily basis.

2 The basic facts are outlined in the judgment of the district judge and, in the main, are uncontroversial.  In brief, the child's parents were in a relationship for a short period but never married.  Having read their statements it is clear that they had different expectations.  It would seem that the mother was convinced that she was in love and that the father's intentions were honourable.  He, on the other hand, considered the relationship to be casual and merely sexual.  Indeed, he combined it with another relationship (and that lady remains his current girlfriend).  Thus, it is clear that his level of commitment was negligible. The district judge described it thus:

"To read the parties' narrative statements one would have been forgiven if one had thought that the two cases set out were about two totally different cases." 

3 I am clear that the differing expectations of these parents have bedevilled their lives and their approach to this litigation.  The mother, once pregnant, was anxious to have the child whereas the father was shocked when he learned about the impending birth.  He advised her to obtain a termination.  When she refused, he indicated that he would not support her decision.   The district judge was highly critical of his attitude.  The father did not offer any voluntary financial support in the interim period and did not think about the consequences of his actions. 

4 After the birth the wife commenced litigation and sought a CSA assessment. In the light of this, the father has made the following payments to date  (i) 50% of the costs of a nanny and nursery school fees; (ii) periodical payments in accordance with the CSA assessment; and (iii) a lump sum of £40,000 as part payment of the order made by the district judge, he having applied for a stay of the remainder of that order. 

5 His offers to compromise this litigation have been paltry.  It is clear that he has never become reconciled to his financial and other responsibilities as a result of fathering a child.  It would seem that he believes that as he did not want C he should not be obliged to support him or, in particular, house him. 

6 A court of law is not a court of morals.  But every adult understands that a sexual encounter, however brief, can lead to conception.  If a child is born, then the parents (and I stress both parents) have obligations under law. 

7 The mother is C's main carer.  However, I understand that C sees his paternal grandmother each Monday for the day.  The father sees C during that visit.  Save for those periods, the father has, in reality, little input into C's life. In a way I am not surprised because this mother has behaved like a  "woman scorned".  At one time her behaviour was such that the father had to apply for an injunction against her.  Those proceedings were eventually compromised by way of undertakings.  Having observed her in my court, I have formed the view that she remains emotionally labile.  During the hearing, at times, she was smiling and laughing for no apparent reason. At other times, she was in tears.  I believe that the bulk of the tears were caused by the realisation that her own finances were perilous and that she could not expect the father to bail her out as opposed to make proper provision for his son.

8 At the outset of this case I remind myself that it is an appeal.  Therefore, it falls to be dealt with under the rubric of the case of Cordle v. Cordle [2002]  1 FLR 207.  In that case their Lordships decided that it was necessary to reform the previous practice by which an appeal lying from a district judge to a judge was heard with the latter exercising his or her own discretion de novo.  Their Lordships held that this practice did not fit comfortably with Section 55 of the Access to Justice Act 1999 which provided that permission to appeal should only be given if an important point of principle or practice was raised, or for some other compelling reason.  As a result, since 2002, it has been clear that any appeal from a decision of a district judge in ancillary relief (or akin) proceedings will only be allowed by a Judge if it can be demonstrated that there has been some procedural irregularity or that, in conducting the necessary balancing exercise, the district judge has taken into account matters which were irrelevant, or ignored matters which were relevant, or has otherwise arrived at a conclusion which was plainly wrong.  Equally, Cordle further supports the conclusion that the judge hearing the appeal should not admit fresh evidence unless there is a need to do so on the application of the more liberal rules for the admission of such as are required in family proceedings.  I take all of those factors fully into account when reaching my decision.

9 The mother is 37 years old.  C is her only child.  At the date of the hearing before the district judge the mother was employed as a private client director with firm X at a gross salary of about £60,000 per annum plus commission.  She was on a probationary contract.  Since that Hearing she has been released from her contract.  Consequently, since October 2010, she has been unemployed and currently is in receipt of Jobseekers' allowance.  As such, her income is minimal and her enormous mortgage is already falling into significant arrears.  The mother is looking for work but, to date, she has not secured employment.  I was informed that, allegelly, she had been offered a post with a substantial salary of some £90,000 per annum plus a potential bonus of the same level.  Futhermore, I was told and I quote "it was blocked by HR as she did not have the relevant qualifications".  This latter submission, on instructions, was odd and I was left with the impression that the so called job offer was not one upon which I could place any reliance as being an indicator of the mother's future earning capacity.

10 Prior to C's birth the mother was employed at firm Y with a basic salary of some £70,000 per annum.  She was also entitled to a bonus which, in one year, equalled her salary.  She lost that employment at about the time that she became pregnant.  I am clear that the mother's ability to earn is circumscribed by her need to care for C.  I so state, even though it has been agreed that the father should contribute half of the cost of a nanny and a nursery school. I consider it probable that the mother will be able to re-establish herself in employment, but only at the gross salary of about £60,000 plus a modest bonus.  This is in line with her earning as found by the district judge.  In other words, I do not expect she will achieve her pre-pregnancy earnings.

11 Prior to meeting the father, the mother had purchased a 3 bedroom property  in London.  She took out a mortgage for £570,000.  The mortgage was (and is) transferable to another property.  I am amazed that she took on this level of liability, even allowing for the fact that in one year she earned  a significant sum.  Even if her earnings were £140,000 gross inclusive of bonus (her best year), the mortgage represented four times that gross total.   More significantly it was just over eight times her basic salary.  When the mother lost her job with firm Y she raised a further £30,000 on mortgage to take the overall debt to £600,000.  She used the additional funds towards her living expenses whilst she was unemployed and awaiting C's birth. 

12 Currently, the mortgage costs are £30,000 per annum in the round on an interest only basis.  That is an enormous level of liability.  The mortgage represents ten times her current earning capacity as and when she is able to gain employment.  Since October 2010 the mother has not been able to pay her mortgage.  Over the years, she has accumulated significant arrears in relation to it.  In reality, she has only been able to retain the property by borrowing monies from her mother, other family members and friends to reduce her arrears.  Recently, when she received part of the lump sum from the father, she used a large proportion to pay a tranche off accrued arrears.  The precise figure is somewhat unclear but the reduction was in excess of £17,000.  As of today, her arrears are £5,000 but they are rising by £2,534 per month.  The mother will not receive housing benefit until she has been unemployed for at least three months.  Thereafter, I have been informed her housing benefit will be capped at the interest on a notional mortgage of £100,000.

13 The mother's home was worth £725,000 at the date of the hearing. When Wood J. dealt with the Directions for this appeal, he did not permit updated valuations.  Accordingly, I must assume the house is still worth £725,000.   Presuming the mortgage is currently £605,000 (inclusive of arrears) and that the costs of sale are some 3% (approximately £22,000) the net equity is currently £98,000 without taking into account any of the mother's other debts. 

14 In fact, the mother's updated disclosure indicates that she has credit card debts of £83,626 and unsecured bank overdrafts of £27,759.  These two sums total £111,385.  If the mother used the entire equity in her property to clear these debts, she would still owe about £13,500, without allowing any figure for monthly mortgage payments increasing as a result of unpaid instalments.  I would have thought that anyone with any sense of financial "nous" would have considered it important to address that debt pattern.  However the mother's counsel, upon specific instructions, advanced the case (as she did at trial) that her client wished to retain her house. 

15 When I asked how the mounting debts were to be covered, I was informed by her counsel on instruction that her creditors would "be likely to write them off".  I was, quite frankly, surprised by the naïveté of that proposition.   Either it is irresponsible, or it is simply foolish to approach debt in this manner.  I am astonished that a lady who works in financial services industry should have put forward such an unrealistic case.

16 The district judge was clear that the mother had to sell her home.  He so stated in his judgment.  He was correct.  The mother loves her property and   I can understand and sympathise with that emotion, but the simple truth is it cannot be afforded.  She has considered a scheme of renting it out for periods, she has taken in a lodger, but nothing will sustain that home because the mortgage is far too high and she has no other assets.  The property must be sold.  She must clear most of her debts because it is important for her to seek to maintain a good credit record, consequently she must pay her liabilities.   After the house is sold she will, in effect, have no capital.  She will still be left with a small amount of debt which hopefully she can clear over time.

17 Assuming that she earns £60,000 per annum, realistically she can afford a mortgage of about £150,000 which is 2.5 times her salary.  Perhaps this could be stretched to £180,000 but that is about the limit.  The sooner this reality bites home the better.

18 The father is 39 years old.  He is the only son of Mr. Z and his third wife.  His father is deceased, but his mother (who was some 30 years younger than her husband) lives in a nice part of Kensington where she has a flat.  She has been very supportive of her son.  She has assisted him financially and has taken an interest in her grandson, which is much to her credit.

19 The father had a good education and, in due time, became a boarder at a public school.  Thereafter, he went into the City and worked as a successful trader with an American institution until he was made redundant in 2004.   His redundancy package provided him with capital of some £951,000 which the district judge found was a net figure, although I have seen some indication in the papers which shows that it may have been gross.  The father took a 3 year sabbatical from employment.  During that period he decided to spend all the capital that he had received.  He was, of course, a single man and had no responsibilities for anyone but himself.  Thus, he chose to maintain a stylish and very expensive lifestyle.  He purchased a 50% share in a game reserve in South Africa with a partner.  Later he purchased the partner's interest so that he now owns 95% of the enterprise.  It consists, as I understand it, of some 2,500 hectares of land and a hunting lodge.  I have no doubt that it is expensive to run.  Unfortunately, although the father seems to have invested at least £450,000 in this project, it would seem that he has little prospect of obtaining any realisable value because the land has been "gazetted" by the South African government.  In effect, this means that the land may be compulsorily purchased and returned to the native tribe (being the Masheti) who once roamed over it.  Unfortunately, although the government have made this announcement, they cannot afford to pay the £300,000-odd (which is their current estimate of value) until, at least, 2025.  Consequently, the land's value is effectively blighted.  As the district judge put it, it had to "be placed on one side" because it was illiquid.  Indeed it cannot be certain that the father will ever receive anything for his investment.

20 I comment that, given the father's overall wealth at the date of the game park purchase, he was dealing with his finances in an unrealistic way. With hindsight, it would appear that the correct phrase is "folie de grandeur".  His total worldly wealth and earning capacity meant that this purchase was (and is) an unaffordable luxury.  Some might consider that it would have been more prudent to have used the capital received in 2004 to reduce his mortgage.

21 In 2001 the father had purchased a London house for £750,000 with the aid of a £600,000 mortgage.  The latter was subsequently increased to £800,000  so as to raise funds for living expenses and to enable the father to introduce £100,000 into a financial business started in 2007 with one other partner.  The new company was called "MN" and later, two other individuals joined. The father was working in this business at the date of the hearing before the district judge.  His drawings from MN were always modest.  From what I have seen, the business (which included the management of a hedge fund) was, even in March 2010, in the doldrums.  The father's income from it, as reported to the CSA, was minimal.  In consequence, the CSA assessed his salary as £28,000 per annum.  This meant that his payments towards his son were and always have been very modest.  At one time they were just over £300 per month and currently the sum paid is even lower. 

22 The district judge considered that the CSA analysis was flawed.  He put the father's earnings/drawings at more like £100,000 per annum.  However, since the hearing, MN has been, or is in the process of being, wound up.   I am informed there is no prospect of any capital return.  In consequence, the father is seeking employment.  His CV is with head hunters and he has had two interviews for posts in New York and Dubai.  Even allowing for difficult market conditions, I expect that this father will secure employment.  Based on the evidence which I have been given, I would consider his earning capacity to be in the region of the £100,000 posited by the district judge. If he works in Dubai, that figure would be net.

23 The father's London house is currently worth some £1.2 million.  Therefore, after deduction of the mortgage, its net equity (allowing for 3% costs of sale) is in the region (as found by the district judge) of £358,000 (although my calculation made it £364,000).  As the father has lost his business investment, this represents his sole potential liquidity for the foreseeable future. 

24 The district judge told the father that this property had to be sold.  He was correct.  Just like the mother, this father does not want to sell his home. In taking this stance he is being equally unrealistic because he cannot afford an £800,000 mortgage, even allowing for his current earnings potential. 

25 The district judge was highly critical of both these parties.  He cannot be faulted in that assessment.  He was presented with schedules of the mother's indebtedness at the date of trial.  For ease of reference I produce that headline schedule as Annex 1 to this judgment.  The mother's debts in relation to living expenses totalled some £130,000.  In addition, she had a liability for costs in the region of £40,000.  In the light of this, at trial she sought a total lump sum of £177,000 to cover her liabilities.  The debts included mortgage interest, loans to cover arrears of mortgage and the huge credit/bank card debts which I have already outlined.  A detailed list of expenses in connection with the child was provided.  The district judge heard evidence and cross-examination about the manner in which the debts had accumulated.  He also heard detailed submissions from both parties' counsel in relation to the analysis of all these debts.  The district judge took a very broad brush approach and made an order that the father pay £85,000 towards the mother's overall indebtedness.  Given that he made no order as to costs, it must be taken that this sum included such liability as the district judge considered appropriate as a contribution towards the mother's costs, if any.  In addition, he made an order that the father provide a trust fund of £250,000 to assist with C's housing on the usual terms that the money resulted to the father upon C attaining majority and ceasing full-time education.   Thus the total of the award was £335,000 (being the addition of £85,000 and £250,000).

26 Mr. Johnstone, for the father, submits that the exercise of this discretion was excessive in the context of the total liquid assets of some £358,000 as found by the district judge given that it would leave the father with a mere £23,000 less, I suppose, his own costs.  Mr. Johnstone submits that, in principle, the lump sum is far too high because it leaves his client "effectively with nothing".

27 The father's offer before the district judge was a lump sum of £5,000 plus some additional payments towards 50% nanny costs and nursery fees, plus the monies that he was already due to pay under the CSA assessment.  Before me, the father's offer was in similar terms, but the lump sum had increased to £40,000.  The father simply eschews a housing fund because he considers it to be "unfair".

28 During the course of the trial the mother ran her case on the basis that she should remain in London home.  The father's counsel produced housing particulars which he showed to the court below, indicating that the mother could rehouse in the less salubrious parts of London (in ex-council houses) for the sum of £380,000.  The housing particulars which he produced fell between this figure (at the lowest level) and £550,000 (at the highest level).  Although such particulars were produced, the father's case was that the mother should rent a home rather than buy one.  Apparently the basis of that submission was that the father could make his contribution to such rental through the CSA assessment which the district judge found was inadequate and flawed.

29 The district judge was not persuaded that the mother should rent.  As his Judgment makes clear, he considered that she should buy a property.  He was further persuaded that the particulars produced by the father gave a realistic estimate of what was affordable in London.  On the basis of the mother's salary and using a realistic mortgage figure, the district judge's order enabled the mother to purchase a modest property in a nice area or (and I take judicial notice of this factor) a rather better property in the suburbs.  I so state because assuming she can obtain a mortgage of £150,000, the monies that would be available on the basis of the district judge's award total some £400,000. In the context of this case, the district judge's logic appears to me to be completely justifiable.

30 In her excellent written submissions Miss Phipps, on behalf of the mother, accurately set out the law.  It is clear that Schedule 1 Children Act 1989 provides as follows: 

"Orders for financial relief against parents.
On an application made by a parent [F1, guardian or special guardian] of a child, or by any person in whose favour a residence order is in force with respect to a child, the court may—
in the case of an application to the High Court or a county court, make one or more of the orders mentioned in sub-paragraph (2);
in the case of an application to a magistrates' court, make one or both of the orders mentioned in paragraphs (a) and (c) of that sub-paragraph.(2)
The orders referred to in sub-paragraph (1) are—
an order requiring either or both parents of a child—
to make to the applicant for the benefit of the child; or
(ii) to make to the child himself,
such periodical payments, for such term, as may be specified in the order;
[Of course, I note in relation to the latter that can only now be ordered in the context of the provisions under the Child Support Act which provide that the court only has power in the event of a maximum assessment, which is not this case.]
(b) an order requiring either or both parents of a child—
to secure to the applicant for the benefit of the child; or
(ii) to secure to the child himself,
such periodical payments, for such term, as may be so specified;
[The same applies.]
(c) [this is relevant] an order requiring either or both parents of a child—
to pay to the applicant for the benefit of the child; or
(ii) to pay to the child himself,
such lump sum as may be so specified;
(d)[this is also relevant] an order requiring a settlement to be made for the benefit of the child, and to the satisfaction of the court, of property—
to which either parent is entitled (either in possession or in reversion); and
(ii) which is specified in the order;
(e) an order requiring either or both parents of a child—
to transfer to the applicant, for the benefit of the child; or
(ii) to transfer to the child himself,
such property to which the parent is, or the parents are, entitled (either in possession or in reversion) as may be specified in the order."

31 Subparagraph (4) sets out the matters which the court is to have regard to in making an order for financial relief.  That includes:

"(a)the income, earning capacity, property and other financial resources which each person mentioned in sub-paragraph (3) has or [importantly in this case] 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 [in this case none];
(e) any physical or mental disability of the child [in this case, fortunately, none];
(f) the manner in which the child was being, or was expected to be, educated or trained."

32 In subparagraph 5 are set out provisions relating to the lump sums: 

"(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."

33 This is relevant in relation to the matters which the court is entitled to take into account when considering the right amount of the lump sum.

34 I have been referred to a number of authorities, in particular the case of Morgan v. Hill [2007] 1 FLR in which the Court of Appeal reduced a lump sum of £100,000 to £50,000 (on the basis that the mother had two children by different fathers).  The Court of Appeal obviously and correctly considered the father who was appealing should only be liable for his own child.        This case was placed before me in support of the submission that the court "takes a broad view" and consider a number of elements when deciding the proper amount of a lump sum.  As Thorpe LJ put it in that case:  "It is very much a broad brush assessment".

35 In Re P (Child) (Financial Provision) [2003] 2 FLR 865 Thorpe LJ again emphasised that there was a broad discretion in these sort of cases.  "It is not for the court to specify the precise amounts of each category of the claim,   but to take an overall sum to make provision for the components that are referred to."  This was again confirmed in the case of M v. E [2008] 1 FLR 1629.

36 I am clear that the district judge took the correct approach in his analysis of the law. He considered needs in a broad brush manner without auditing the claim.  I differ from him only in the manner in which the final calculation is to be analysed.

37 The grounds of appeal set out the father's case with admirable clarity. They are further bolstered by excellent written submissions in support of his appeal.  I will not repeat the detail of that document, for it speaks for itself.  The essence of the complaint against the district judge's order is that he did not consider (1) the overall impact of his total award; (2) the fairness of it upon the father who was left with no available liquid capital; and (3) or give clear reasons as to how the figure of £85,000 had been reached as a contribution towards the mother's overall indebtedness. 

38 Mr. Johnstone asserts that it would seem that the £85,000 represents some two-thirds of the figure which the mother posited owing (being some £129,000).  If such, Mr. Johnstone submits, the district judge's approach is not legitimate because, inter alia, it includes paying revenue costs such as mortgage interest, which should be covered by the CSA payments.  Therefore, Mr. Johnstone concludes that the effect of the order means that the expenses have been double counted.

39 This argument might be a good one if the father had truly been making a significant contribution via the Child Support Agency, particularly given the district judge's findings as to the true level of his earning capacity.  But he was not.  He has only ever paid minimal sums, and currently he is paying some £22 per week.  Mr. Johnstone also contended that the district judge was only entitled to make lump sum provision in respect of specific purchases for the direct benefit of the child which were assessed, as he put it, at £46,575.    I do not accept this submission because the statute is widely framed. Mortgage payments and general running costs are recoverable because they are (of necessity and in part) for the direct benefit of any child.  Obviously, such payments cannot be double counted, but inadequate provision towards running costs, based on a flawed CSA calculation, would, in my view, entitle the court to supplement such expenditure in the right case by way of capital provision, particularly if merited on the facts. 

40 Equally, I am clear that the district judge was entitled to take a broad brush approach when assessing such sum as was fair in all the circumstances.       He was not required to carry out a detailed accountancy exercise. That stated, I consider that some form of overall analysis is always required to demonstrate, in broad terms, how the final figure is reached.  That type of analysis is entirely absent in this case.  For example, given that he made no order as to costs, it would have been prudent for the district judge to clarify what part, if any, this item took in his analysis of the proper lump sum.  Equally, it would have been sensible to deal with the particular factors which led to his calculation of £85,000 in the sense of analysing what part was direct provision, what part was to be taken as a contribution to running costs, given that the father had been making inadequate payments.

41 Much more importantly, the district judge should then have stood back and undertaken a final analysis as to the overall effect of his award on each party, given that they should each be making a full contribution towards the cost of their son, not only in money but in money's worth. 

42 In this appeal the father offers only £40,000.  This is patently too low.  It follows the pattern of his offers to date.  I have come to the clear conclusion that the district judge was absolutely justified in his award that the father should contribute £250,000 towards a housing fund.  Given the net equity in his property, as found by the district judge, was £358,000, prima facie that figure is completely unappealable.  I am surprised that so much was not conceded before me.  After all, this sum is, in reality, a long-term loan which will be recovered in due time and will provide this child with a secure house from which to reach his full potential as he grows towards adulthood.  This sum will be invested in a property which will be purchased.  The mother can, if she wishes, make a contribution through a mortgage, but such mortgage must never exceed the amount which the father is investing (i.e. £250,000) so as to ensure that (i) the mortgage payments are affordable and (ii) the father is not placed at undue risk of losing his part of the equity through non payment of a mortgage. I have already given an indication of the prudent level of mortgage in this case.  The mother is at liberty to choose the property which the father shall approve, his approval not to be unreasonably withheld.    This will allow for the fact the mother may wish to purchase a smaller flat with two bedrooms in a  better area, or to move to another part of this country, for example into the commutable suburbs, to secure better housing for C and herself.  If the parties cannot agree then the court will have to determine the proper home and mortgage level.

43 As to the additional lump sum of £85,000.  I have come to the conclusion that the district judge did not analyse this part of his award with sufficient care, particularly when assessing its impact upon the parties.  The effect of the award was to leave the father with effectively little or no capital, after his very significant contribution towards housing for C.  That is unfair.

44 I consider that such a lacuna in his analysis was plainly wrong.  Accordingly I am free to exercise my discretion as to this part of the award.  The father has already paid £40,000.  The mother has used all of these funds to clear part of her indebtedness.  I have indicated that if she seeks to sell her home, then she can clear the bulk of her remaining debt, or at least leave herself in a position where she can cover smaller debts over time.  Assuming no further payment from the father, she will be left with residual but manageable sums after selling her home.  Moreover the award means that she will have secured sufficient monies for housing (via the trust) to enable her to purchase a home with a manageable mortgage until C has grown up.
45 Assuming no further payment, the total sum which the father will have to pay from the £358,000-odd equity in his home is a total of £290,000.  This will leave him with capital of £68,000 less his costs.  That sum will provide him with a modest deposit for a flat for himself.  Given his superior earnings and his current supposed wish to pursue work abroad, that, as I perceive it, is fair.  If the father obtains a £300,000 mortgage, then I have no doubt, subject to costs, he will be able to buy a modest property.  His mortgage liability will be greater than that of the mother.  His property will be less valuable than the mother's home for C, but that, equally, is fair.

46 Neither of these parties seems sufficiently to have considered or expected that a sexual relationship would lead to the birth of a child.  However, that is a known consequence.  If a child arrives, then parenthood brings with it significant financial and other responsibilities.  Both these parties have to make a continuing contribution in that regard for the good of their son.     Both will suffer financially because the new circumstances will mean that they do not have the freedom and the financial flexibility that they once had.  But that is a consequence of their own actions.  As adults, they have to bear responsibility for such.  Statute provides that the child must be protected and that is why my order is, as I have explained, fair.  That is my judgment in this appeal.

47 I have just given judgment in this appeal and now, as usual, I am faced with competing applications for costs.  The Civil Procedure Rules 1998 apply in all such cases.  Order 44 r.3 gives the court a discretion.  Subparagraph (6) sets out the factors which the court must take into account when exercising its discretion.  The orders which I can make are: for a proportion of one or other of the parties' costs; for a stated amount in respect of costs; for costs to a certain date; or for any other portion of the costs as I consider are appropriate, relating to particular steps or to a distinct part of the proceedings.  I have to take into account the conduct of the parties in pursuing the litigation, and take into account how much, if anything, and the degree to which they have succeeded. 

48 It seems to me in this case that the appeal itself was justified, but the ambit of it was not.  To place before this court the assertion that the entire housing fund should be removed, and that the lump sum should be limited to £40,000 was wholly unrealistic. 

49 The submission made by Mr. Johnstone on behalf of the father is to the effect that this only represents one half of the costs of this appeal.  I beg to differ, for this mother had no option but to defend the appeal when so much was at stake as far as she was concerned. I note that for the most part she acted in person and so, rather unfortunately from her perspective, no offer was made in respect of the compromise of the appeal.  Miss Phipps on her behalf make an application for her costs on the assumption, presumably, that she had no alternative but to defend this appeal.

50 I have come to the conclusion, as the district judge came to the conclusion below, that each of these parties is equally at fault or, to look at it from another perspective, was equally right to have pursued/defended part of the appeal.  The father's costs are £22,000 which, in the context of his victory, might not be seen as proportionate.  The mother's costs are some £11,000 including £2,500 for the costs of prospective implementation.  Her liability is lower because she has acted, for the most part, in person.  In fairness I think the right award, given that the father only achieved a 13% alteration in the order, is no order as to costs.  That is the order I make. 

51 I think the parties should now retire and prepare a draft of the order and any other consequential directions.  I think it would be foolish and expensive for these parties to have to come back and argue about the mechanics of this award.  Accordingly, I will return at 2 p.m.