- October 29, 2012
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Financial Claims by unmarried parents for their children
Many parents who are not married to their partners do not realise that financial claims including a lump sum and property transfer orders can be made against the other parent. In some cases the courts have awarded significant sums of money over £1m to the mother. (Obviously there is no reason why an unmarried father could not apply against a mother if he was the child’s main carer).
Two recent cases show the different approaches that may be taken by the courts in such cases. In the first case called DE v AB heard in 2010 but only reported recently the mother brought proceedings under Schedule 1 Children Act 1989 which gives the parents of children (whether married or not) the right to apply to a court for financial support including a lump sum order and property adjustment order. In this case the child was aged almost 3. The mother had been earning £70,000 per annum and had purchased a property with a mortgage of £570,000 which was increased, when she became pregnant to £600,000. The father had been working as a trader but was made redundant in 2004 and received a pay off of just under £1m. He decided not to work and live off this money for the next few years. As a result he enjoyed a lavish lifestyle. He purchased a house worth £1.2m and had liquid assets remaining of around £358,000.
The Child Support Agency assessed his salary in his new business venture at £28,000 per annum and assessed child maintenance accordingly. However, the original trial judge found his salary to be close to £100,000 PA even though the business had been wound up. The judge at the first hearing ordered that the father should provide a trust fund of £250,000 to house the child on the basis that the money would revert to the father when the child finished full time education. The judge also ordered that the father should pay £85,000 to meet part of the mother’s debts. Until the time of the first trial the father had paid 50% of the costs of a nanny and nursery school fees and maintenance of £22 per week in accordance with the child support assessment. The husband appealed against the decision. The judge hearing the appeal was a very highly experienced Mrs Justice Barron said the trial judge was entitled to take the broad brush approach in assessing what sum would be fair in all the circumstances and was not required to carry out a detailed accountancy exercise. However, some analysis is required to demonstrate how the final figure was reached and this was absent in this case. The Judge felt that the housing fund figure of £250,000 was un-appealable given the level of the father’s equity in his property. However the effect of the further award of £85,000 would leave the father with effectively little or no capital. The absence of any justification for the judge’s reasoning meant the Court was free to exercise its discretion fresh. The father had already paid £40,000 towards the lump sum which left him with £68,000 less his costs which would provide him with sufficient to provide a deposit for a flat. Still a good outcome for the mother and child.
In the second case concerned a formerly married couple who had divorced. In the original divorce proceedings in 2007 the mother had received a sum of £950,000 on the basis that that should provide a full clean break i.e. she was not entitled to come back to the Court for more capital or maintenance for herself. The order also provided that the father should pay £15,000 PA in child maintenance plus school fees and extras. Unfortunately the father later lost his job and applied to the Child Support Agency (CSA) which made a lower calculation of child maintenance. As a response to this the mother issued an application under Schedule 1 of the Children Act 1989. The mother initially claimed lost maintenance that she no longer received because of the Child Support calculation. The District Judge did not deal with jurisdiction but gave directions for full disclosure on the mother’s Schedule 1 Application. The father appealed against that order and asked for an order that the mother’s application be struck out. The judge gave permission to appeal on the basis that the father had a strong argument. At the appeal it was accepted the court had no jurisdiction to make the child maintenance given that child maintenance was exclusively dealt with by the CSA. Nonetheless the mother sought lump sums for her and housing provision which she said was for the child’s benefit. The mother’s case was rejected. Although the Court did have jurisdiction to hear an application for a lump sum provision under the Children Act even though there had been a clean break in divorce the circumstances had to be very exceptional. The mother in such cases had a very high hurdle to overcome to bring an application under the Children Act. In this case as the mother already had a 2 bedroom flat, mortgage free, it was impossible to see how she could make a further claim for housing.
As she was not successful the mother was ordered to pay some of the father’s legal costs.
These cases demonstrate that although the Children Act is available for children of married and unmarried couples it is largely in respect of the latter that the courts will make orders.