[2011]JRC041A
royal court
(FamilyDivision)
17th February 2011
Before : |
Mrs J. M. O'Sullivan, Registrar., Family Division, sitting alone. |
Between |
P |
Petitioner |
And |
A |
Respondent |
And |
B |
Co-Respondent |
IN THE MATTER OF P
Reasons
Advocate R. E. Colley for the Petitioner.
Advocate C. R. G. Davies for the Respondent.
The Co-Respondent did not appear and was not represented.
judgment
the Registrar:
1. This is an application by the father to reduce the level of child maintenance he pays for C, aged 13, D, who will be 10 and E, aged 5. The parties divorced in 2006. The father is currently paying £2,038 per month although the mother argues it should be £2,238 per month. In fact the sum of £2,238 per month was ordered by consent on the 29th June, 2009, at which time a capitalised lump sum of £105,000 was paid to the mother in lieu of maintenance of £2,000 per month, spousal maintenance having previously been ordered by consent on the 22nd November, 2006. The father wants the figure reduced to £1,000 per month whereas the mother wants the figure remaining at £2,238. The father has remarried and his wife has two children of her own so she receives maintenance of £1,186 per month for her own children.
2. The father is seeking a downward variation due to what he says is a material change in his financial circumstances. In 2006 when the original order was made he earned £71,550 net per annum and a further £40,000 director's fees, a total of £115,500 per annum. By consent he was ordered to pay £2,100 per month. I was referred to a letter from Advocate Whittaker dated 16th November, 2006. The global figure of £2,100 was agreed, but initially the structure of the maintenance was on the basis of £1,300 in respect for his salary and £800 in respect of director's fees. However, to assist the mother in respect of a mortgage, the structure was changed so she would receive £1,900 per month; £1,300 per month, to be increased on the RPI basis, £600 to be reviewed but not on a RPI basis and £200 per month from director's fees. If director's fees were lost it was to constitute a material change of circumstances, and there was provision in any case for a review on a material change of circumstances and if his basic salary exceeded £110,000 per annum. The order did also provide for C's school fees to be paid. The order was varied on the 29th June, 2009, providing a capitalised lump sum to the mother, referred to in paragraph 1. At that time his salary was £120,000 per annum and director's fees £30,000 making a total with pension allowance of £165,000 per annum. The father was ordered by consent to pay a total of £2,238 per month for the three children, presumably because his income had increased, but with the review provisions left in place, and bonus provisions.
3. Having paid the mother £105,000 in June 2009, the father gave evidence that he resigned voluntarily from his then job on the 31st July, 2009, but had no choice in doing so. He got paid until 31st October, 2009, and was given £75,000 which is more than he would have received had he stayed on and fought a constructive dismissal case. I accept his evidence. He had hoped he would easily find other employment but eventually found work in April 2010 at less than 50% of his former earnings. His earned income is now £54,046 net of ITIS and Social Security, £4,503 per month. He has no directorship fees or bonuses. He was asked if there were better paid jobs he could be in but said from what he is aware there are not.
4. The father was asked about his asset position and said the £75,000 was all spent as it was used on living expenses, so he has no savings. The mother is arguing inter alia that he should not seek a variation of child maintenance because he and his wife own three properties. The house G in which he lives with his wife and her children was the home of the wife, but he contributes to 50% of the mortgage. He and his wife in 2007, when he had his previous job, bought F as a buy to let property. He and his wife receive a rent of £1,550 per month (£775 each), and the mortgage payments, service charges rates etc equate to about £1,537. He was asked about selling this but his evidence was that there were a lot of flats in Jersey. No valuation was produced but I accept that there is little point in selling the property, bearing in mind that at present the expenses are largely met by the rental although the mortgage may increase in April. He was asked about selling G but it is his wife's property, purchased prior to their marriage using capital derived from her own divorce, so he will not ask her to sell it as it is her home for her children.
5. With regard to a Spanish property he owns with his wife, no formal valuation was provided but the father gave evidence that the Spanish property market had collapsed to the extent that he would realise a substantial loss if he sought to sell it. A British man who is a developer in Spain told him he would get about £295,000 the mortgage being £320,000. The father has no spare money to meet any shortfall following sale. He says his 50% share of the mortgage is £350 per month, and £100 running costs. The father was asked why he was not renting out the Spanish property - he said that he has no liability insurance, he does not have a commercial mortgage, and there is no lock up to keep their things safe. He would want to take the children there when the rental would be at the highest. It was put to him that there are rentals in the area of £1,200 per week but he said he had not investigated it so there may be a possibility of renting but it would cost him money to organise this. The father gave evidence that he had borrowed money from his father to do up the Spanish property. He thought he would have no problem in repaying this from his next bonus, but because he had to leave his job he did not get any bonus with which to pay off the loan, and he is not at present making any repayments to his father as he cannot afford to do so. He had hoped to take the children to Spain in August 2011 but if so, will have to drive them as it is too expensive to fly. The advantage of the Spanish property is that it does provide a holiday venue for the children which he could not otherwise afford.
6. The respondent gave evidence that he sold his car because of financial pressures and thereby reduced his expenditure because he no longer has a car loan, car insurance, car repairs and parking charges, and he now walks, cycles or takes the bus to work. His mortgages have reduced by £364 and £72 per month. Both he and his wife earn but they have cut down on their cleaner's hours, and they have reduced their shopping bill by no longer shopping at M&S and he takes sandwiches to work. He has cancelled the gym, cut down on Sky packages, and eating out is a treat. He does not have money to pay for any maintenance arrears. He owes tax arrears of £13,000 and expects his ITIS to go up from 19%, and anticipates it will be at least 20%. He said it had been hard to reduce his lifestyle but he had to do so.
7. He gave evidence that had he known he was about to lose his job he would not have given the petitioner capitalised maintenance. I accept this - why do this when his income was high if he thought it was going to reduce, and why agree to a higher maintenance figure?
8. The respondent was questioned about going to Barbados. He said he told his sister that he could not afford to go to the wedding she is having there but has had his flights to Barbados paid, although he will have to meet living expenses when there. Because his children are not going to the wedding he had booked for Euro Disney but he anticipates some of this expenditure will be paid back to him from other members of his family.
9. Having looked at the schedule produced by him, he accepted he could not at the moment pay £450 per month to his father for the loan, he was no longer paying car insurance of £62, the car loan of £600, petrol of £30, the car service of £50, and his food bill had reduced by £100 per month , there had been a mortgage reduction but his ITIS will increase, and the mortgage on G is variable and is likely to go up if the base rate goes up.
10. I was asked by the mother to order the father to clear arrears of maintenance from 30th November, 2009, to present, which she calculates as being £3,546. This is on the basis the father should have been paying £2,238 with a RPI increase in December 2010 to £2,276 per month. The father disputes this and says he has no savings with which to clear any arrears.
11. The mother got 70% of the sale proceeds of the former matrimonial home, and purchased the house in which she and the children live. The mortgage rate is now £1,219 per month. She was a dental nurse when she met the respondent. Since the divorce she did get a part-time job at the airport and at a nail bar. She is seeking employment. When she got £105,000 as capitalised maintenance she did not use the money to re-train and reduce her expenses. She paid off £17,000 legal fees, but she purchased an expensive car with some capital but even borrowed additional money to do so, which costs £283.52 per month in loan repayments and, in addition pays £80 per month for a cleaner, saying "I have always had a cleaner" even though she is not working. She is now going to sell her car and is seeking repayment of the money she has lent. She is still paying storage for a barbeque chalet which she could sell. She says her total expenditure is £4,603.50. I note that the father's schedule of expenditure makes no provision for entertainment, Christmas, holiday provision whereas the mother makes such provision for herself and the children. She gave evidence about the children's health and the time they have had off school. The father was asked about this and said he would help if the children were ill.
12. She said she did not know from where he could get money to pay any arrears of maintenance. She was not asking him to sell the properties except if it meant she had to sell hers. She considered that it was up to the respondent to look after his children. She accepted that if his circumstances had changed, she understood there would be a review of maintenance. She gave evidence that the barbeque chalet which had cost £10,000, and is now being stored at £50 per month in the next door garden but one day will have to be sold.
13. She will have to work - she accepted in hindsight she could have applied for courses - and not spent so much capital in 2009. She gave evidence that she was 'scared' about receiving capitalised maintenance, but then loaned money to a friend, did not go on a training courses or courses to increase her skills for the job market, went on a safari and took out a car loan.
The Law
14. When considering what child maintenance should be paid I am required to look at Article 25 of the Matrimonial Causes (Jersey) Law 1949, as amended ("the Law"). Under Article 33 of the Law, I am required to have regard to:-
"all the circumstances of the case, including any increase or decrease in the means of either of the parties to the marriage."
I am not required in these proceedings to look at the Children (Jersey) Law 2002.
15. The mother is seeking maintenance based on the total income of the father and his wife. She appears to be arguing that the father's new wife has to work to help keep his children when she, despite having received capitalised maintenance in 2009, is not working. In the case of L-v-D & R [2004] JLR 334 the now Bailiff held that where a mother was cohabitating and the father applied for a downward variation, the children were not the responsibility of the father's cohabitee. The children remain the responsibility of the parents, and the father's wife is not responsible to maintain his children. I do have to take into account the contribution of the wife to the joint household expenditure. She is working but she is splitting household expenses with her husband as can be seen from the schedule of expenditure which was provided, and I accept that she is making an appropriate contribution to the household income. Therefore I must consider the father's financial position and his expenditure taking into account a 50% split on the matters as scheduled by him. If the father of the wife's children applied for a downward variation the Court would have to consider her income and expenditure on the same basis.
16. I am being invited to put the children in the same position as far as is practicable as it would have been had the parent's marriage not broken down. Croft-v-Moy 1971 JJ 1793, but I have to look at all the circumstances of the parties, including any increase of decrease in income.
17. Following the case of S-v-G [2003] JRC 091A, the Child Support Agency 2000 guidelines are used as guidance when a higher rate is chosen approaching or in excess of £100 per week. Subsequently Jersey cases have used the CSA guidelines as a benchmark.
18. What is the position on a review of child maintenance? In the case of J-v-M [2008] JRC 031A, in which a father sought to reduce spousal and child maintenance, Registrar Obbard ordered a figure roughly in accordance with the CSA guidelines. He considered the case of L-v-D [2004] JRC 164 and W-v-O [2004] JLR N53.
19. In the case L-v-D the Court adopted the previous agreement as the starting point. The husband had applied for a downward variation due to the wife's cohabitation but he did not have any difficulty in making the agreed payments. The Court made an adjustment to take into account the changes. The legal principles on a variation were considered. In paragraph 16 the then Deputy Bailiff said:-
"the Court should take the agreed figure as a starting point and then simply decide what variation would be fair and reasonable in the light of the changed circumstances".
In paragraph 17 he went on to say:-
"This principle is particularly applicable where the court is considering financial provision for a spouse. It is not quite so strong in relation to child maintenance. The court must always do what is necessary to ensure that children are adequately maintained and do not suffer hardship as a result of insufficient maintenance when a parent is well able to afford it. Accordingly, if, for example, an agreement fixes a very low level of maintenance, as a result of which the children are not being properly provided for, the court may, on an application to vary, do what is necessary to ensure that fair and proper provision is made. The children's interests must come first. But that will be the exception. In the average case, where the parties have agreed a reasonable figure (even if it is not the figure which the court itself might have fixed upon initially had it been called upon to resolve the matter) it is not appropriate to reopen the whole level of maintenance simply because there has been a change in circumstances. The correct course is to acknowledge and respect the fact that the parties have reached an agreement and the court's role is limited to determining what variation, if any, would be fair and reasonable taking into account the change in circumstances."
In this case of course, the father's circumstances have changed and he is arguing he cannot afford to pay the current maintenance.
20. In the case of W-v-O [2004] JRC 218A, Registrar Obbard commented and followed and expanded on the L-v-D. In paragraph 20 he said:-
"I have confidence in the Deputy Bailiff's conclusion that a pre existing order must be taken into account. But all circumstances are relevant, not just the order or agreement and the change in circumstances since it was made."
In paragraph 25 he said:-
"The CSA tables can be a comparative tool which can be used constructively to resolve child maintenance issues in a broader prospective."
He used the CSA tables as a guideline, but checked against overall fairness and all up-to date circumstances.
21. In the case of B-v-C & B [2009] JRC 036A the mother sought an increase in child maintenance in the event that spousal maintenance was reduced. Registrar Obbard used the CSA 2000 guideline as a benchmark and did not increase the child maintenance save that the husband was to contribute towards certain expenses.
Decision
22. It is clear that the father's circumstances have changed since the orders both of 2006 and 2009. The mother argues that the father may well have known his job was at risk in 2009. However, I accept that if the father had known this, he would not have sought an order for capitalised maintenance, based on his then income as it was not in his financial interest to do so, and would not have agreed to child maintenance of £2,238 per month. The wife said she was 'scared' about accepting a capitalised sum, but did not utilise the monies received (apart from paying off legal costs) to get skills training. I accept the father has tried to reduce his expenditure, for example by selling his car, but the mother does not seem to have done this.
23. It is accepted by both parties that the father's income has decreased. In the original 2006 order, child maintenance was agreed to be set at £1,300 per month on a salary of £71,500 as set out in the letter from Advocate Whittaker. The respondent's wage is £5,833 per month less social security and ITIS amounting to £4,506. He gets rent of £775 from F, so his total income is £5,281 per month, or £63,372 per annum. With three children the CSA figure is £1,319.50 per month. Should he pay this sum? I must consider what figure is fair and reasonable in the light of changed circumstances. I have analysed his expenditure and accept that some of the figures he gave in his schedule have reduced (which I have taken into account) but his mortgages and his tax are likely to go up and unlike the mother, there is no expenditure set aside for entertainment, Christmas, and holiday provision, although he may be able to obtain an income from the Spanish property, and it does provide holiday accommodation. At some stage he will need to repay his father for monies lent. On analysis of his expenditure, taking into account the figures supplied at court, his expenditure is £3,685 per month. I am ordering that the maintenance is reduced to £1,450 per month as from April 2010, which is about 27.5% of his net income. I accept that this may cause the wife financial difficulties but I think that this is as much as the husband can afford to pay, and is a fair and reasonable figure taking into account the changed circumstances.
24. The mother is seeking arrears of maintenance. The father says he wants child maintenance dropped from the next payment but as he cannot afford to pay arrears, even if it is accepted that there are arrears, he wants any proposed maintenance backdated. The mother provided a schedule of arrears. The father I accept is not in a position to clear any arrears but neither is the mother in a position to pay back overpayment of maintenance. It would be open to me to backdate the downward variation to April 2010, but I am ordering that the maintenance is varied as from March 2011, on the basis that neither party pays any monies in this regard to the other.
25. I was asked to consider the other provisions regarding child maintenance, kept in by paragraph 5 of the 2009 order. I am keeping in paragraphs 4, 5 and paragraph 7 of the 2006 order and am putting in a RPI provision. I am keeping in paragraph 12 if the father were to get a bonus but unfortunately, the parents' financial circumstances are such that the father is unable to pay school fees and therefore am deleting paragraph 13 but keeping in the provision as to equal payments by the parties as to school uniform, agreed school trips and other extras that may be agreed form time to time.
Authorities
Matrimonial Causes (Jersey) Law 1949.
Children (Jersey) Law 2002.
Croft-v-Moy 1971 JJ 1793.
Child Support Agency 2000 guidelines.
W-v-O [2004] JLR N53.
S-v-G [2003] JLR N 29.
J-v-C (Child: Financial Provision) [1999] 1 FLR 152.
Vautier (née Rabet)-v-Vautier [1994] JLR N 10b.
Child Support Agency 2000 Guidelines.