Jersey Unreported Judgments

Matrimonial - application for child maintenance.

[2012]JRC165A

Royal Court

(Family)

19 September 2012

Before     :

Vincent James Obbard, Registrar, Family Division, sitting alone.

 

REASONS FOR LUMP SUM PAYMENT FOR THE BENEFIT OF THE CHILDREN

Advocate R. E. Colley for the Applicant.

Advocate N. S. H. Benest for the Respondent.

judgment

the registrar:

1.        These are the facts of this case.  The summary I have used is a modified version taken from part of the respondent's skeleton argument. 

2.        The parties met in 1998 and commenced cohabiting in 1999 when the applicant ("mother") moved into the respondent's ("father's") home which he rents from his mother. 

3.        They never married.  The father is now 45 and the mother 44. 

4.        There are two children of the relationship C (11 years) and D (6 years).  They both attend private schools. 

5.        The mother moved out of the family home, taking the children with her, in December 2011.  Initially she lived in rented accommodation, but has since then, with the assistance of a mortgage, purchased a property in the country. 

6.        The mother works for and is a director of a financial management company.  The father is a self-employed artisan, owning his own company. 

7.        The mother seeks an order for child maintenance and a lump sum payment, as well as an order for the father to pay the children's school fees and a 50% contribution to other expenses. 

8.        More precisely, the mother actually seeks two individual lump sums as follows:-

(i)        £240,000, being the amount outstanding on her mortgage;

(ii)       £24,867.38, being made up as follows:-

(a) in respect of the purchase costs of purchasing her own property (£12,003.38); and

(b) for providing replacement children's clothing, toys and domestic items (£12,864). 

9.        Finally, she asks for her legal costs.  Costs are considerable on both sides.  The mother's costs are estimated at £36,335 and the father's costs at £17,643. 

10.      There is a huge discrepancy in the parties' open positions.  As I have described, the mother seeks two lump sums, maintenance, school fees and extra expenses. 

11.      The father denies that any lump sum payment is reasonable, in view of the fact that he provided the mother with the sum of £11,000 when they separated. 

12.      Whereas the mother is asking for child maintenance at the rate of £692.50 per child per month, the father is offering child maintenance at the rate of only £270.83 per child per month.  Both, in the course of submissions, claimed that their case is in line with Child Support Agency guidelines. 

13.      Whereas the mother wants the father to pay all of the children's school fees, the father offers to pay one half of the total school fees bill for both children, plus one half of the usual extra education expenses incurred on their behalf. 

14.      The father has chosen a relatively modest standard of living, in the light of the clear business success of his company.  His affidavit of means discloses that he has an estimated net income for 2012 of £32,708 (£2,725 per month) and total income needs (including the school fees for D and legal fees) of £3,199 per month.  Without the legal fees of £550 per month this is well within budget.  However, his two bank accounts (as at the date of swearing his affidavit) total over £135,000.  This balance has been relatively static for a period of time.  In addition, his recent company accounts reveal that there remain cash reserves of £870,580 for the year ending 28^th February, 2012.  However, he has no private insurance policies and no pension provisions, just cash.  His income could, no doubt, be higher if he were to invest some of this cash or even open a deposit account.  As Advocate Colley on behalf of the mother pointed out, at only 2% interest, £750,000 would yield an income of £15,000.  The father explained in evidence that he runs the company like his father before him and sees no reason to change.  Furthermore he can foresee the need to use some of the cash in acquiring the freehold of his business premises which he has always held as a tenant and, secondly, to buy new vehicles for the business because they need replacing.  In terms of his housing needs, he rents property from his mother at a most reasonable rent and may in due course inherit from her, but this is, of course, by no means certain.  He has spent his own money on keeping the property in good condition. 

15.      The father's income is subject to higher tax because he is "deemed" to have a company "dividend" and "attributed income" which he does not, in actual fact, draw from the company.  For 2011, his deemed income was £69,030.  If tax is deducted at 20%, his net deemed income for tax purposes for 2011 was £58,224. 

16.      Advocate Colley argues that his income should be deemed to be higher still, if he were to invest some of the cash. 

17.      Another feature of the case requiring attention is what I will describe as the mother's apparent "self-sufficiency". 

18.      The mother has indeed worked for the same financial services company for many years and is now a director of that company.  Her net annual income is said to be £34,416 in her skeleton argument.  In her affidavit of means, it is clear that this does not include her bonus, but it does include director's fees.  Her most recent pay slip for March 2012 in the bundle shows:-

Basic pay	£3,500
Directorship	£416.67
Less Income Tax	£548.33
Social Security	£226.68
Private Medical	£23.03
SAYE	£250.00
Net Pay	£2868.63

However, this net monthly figure varies and it is noted that £250 is deducted each month as "SAYE".  I have added together her "net pay" for the 12 months ending with March 212 and find that her total net pay, having added back SAYE, is £40,445 (£3,370.41 per month). 

19.      The mother has bought her own property to house herself and the children.  There was argument as to whether it is larger than the parties' former home or not.  Without actually visiting both properties, and from the descriptions I was given by each of the parties, I am left with the impression that it is not a lot different.  She pays £1,224 towards the mortgage each month and total expenses, including legal fees come to £4,644.23 per month. 

20.      The following questions immediately spring to mind:- Does the mother really need the assistance of a lump sum?  Without going into the savings she could make in her monthly budget, could the gap (£1,274 per month) between what the mother spends (£4,644 per month) and what she earns (£3,370 per month) be bridged by a simple order for child maintenance?  Admittedly this would be a high rate of child maintenance of £147 per child.  The father's argument is that the mother has her own resources, which were built up to a large extent during the relationship, during which the father provided the parties' home and financial security.  Those resources have been sufficient to buy a house for herself and the children, and sufficient to fund it until now.  It was put to her that she didn't have to borrow funds to help her purchase the house.  It was suggested that it might have been more economical to rent, but she countered that suggestion by saying that it would cost her more to rent a similar property.  It was suggested that she had been given £10,000 by the father to start up on her own and £1,000 rent deposit towards temporary accommodation.  Would it be fair to order more? 

21.      In my judgement, there remains a difficulty in coming to a conclusion that the mother could cope without any assistance, self-sufficient and independent as she may have been to date both financially and emotionally from the father.  She has done amazingly well to accumulate sufficient wealth of her own to purchase property and continue to fund it unaided.  The question remains in my mind whether it is reasonable to expect a mother of two still young children to work so hard to remain afloat.  For example, she works through her lunch hour every day and has taken additional responsibility at work (a directorship) in order to fund a mortgage of £240,000.  It is a well-known fact that jobs in the finance industry are no longer as secure as they once were.  It is a lot of responsibility on her shoulders, despite the fact that, according to Advocate Benest, the Bank would not have given her the mortgage if they had not been content that she could honour her obligations under its terms. 

22.      The arguments with regard to the payment of the second lump sum are a separate matter and I will come to that later (see paragraph 34 below).  My principal concern is whether or not it is reasonable for the mother to continue to fund her property to house the children without assistance from the father in the special circumstances of this case. 

23.      Advocate Colley sets out the law which, in her submission, applies as follows:-

(i)        Article 15 of the Children (Jersey) Law 2002 provides that the Court may make orders for financial relief in respect of any child in accordance with Schedule I;

(ii)       paragraph 1(a) of Schedule I of the Law provides that an order (or orders) may be made requiring either or both parents of a child to:-

(a)       make periodical payments;

(b)       secure such periodical payments;

(c)       pay such lump sum; and

(d)       transfer property to which the parent is or the parents are entitled as may be specified in the order to the applicant for the benefit of the child or to the child personally;

(iii)      paragraph 5 of Schedule I makes further provisions relating to the Court's power to order the payment of lump sums:-

"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 reasonably incurred before the making of the order to be met which were incurred in connection with the birth of the child or in maintaining the child."

24.      I should make it clear that I do not believe this paragraph 5 applies at all (although Article 15 and Schedule 1(a) certainly do).  The schedule, by this paragraph (5) is making it clear that, in addition to the powers set out in paragraph 1, the Court may make orders, if necessary in arrears, relating to the birth of the child and in maintaining the child from birth.  This would include the "accouchement" and the "layette" of the child as described in cases which, before the passing of the Children (Jersey) Law 2002, used to be referred to the Judicial Greffier by the Inferior Number for the assessment of maintenance and expenses.  A good example of this is the case of Hullah-v-Lelliot [1991] JLR N 9b.  Advocate Benest's argument relied on the notion that paragraph 5 in some way limits the application of paragraph 1 by saying that lump sums must only be ordered in situations where expenses have been "reasonably incurred" by the claimant.  I am not saying that the Court should consider making orders for lump sums where expenses have not been reasonably incurred.  However, I do say that it is not paragraph 5 which governs the exercise of the Court's powers under paragraph 1.  Paragraph 5 begins "without prejudice to the generality of paragraph 1 ..."  This means it does not govern paragraph 1.  What can be clearer than that? 

25.      A guide to the exercise of the Court's powers under paragraph 1 is, however, provided by paragraph 4(1) which reads:-

"4(1) In deciding whether to exercise its powers under paragraph 1 or 2, and if so in what manner, the court shall have regard to all the circumstances including:-

(a) the income, earning capacity, property and other financial resources which each person mentioned in sub-paragraph (4)[i.e. any parent of the child] has or is likely to have in the foreseeable future;

(b) the financial needs, obligations and responsibilities which each person mentioned in sub-paragraph (4) [any parent] 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;

(e) any physical or mental disability of the child; and

(f) the manner in which the child was being, or was expected to be, educated or trained."

26.      A helpful guide on what this means in practice was given by Bodey J in the case of Re P [2003] EWCA Civ 837.  At paragraph 76 of that case he said:-

"In the light of paragraph 4 of the schedule I of the Children Act 1989 [similar to the Law enacted in Jersey]... the following summary can be offered as to the considerations applicable to claims under Schedule I:-

(i)        The welfare of the child while a minor, although not paramount, is naturally a very relevant consideration as one of "... all the circumstances ..." of the case. 

(ii)       Considerations as to the length and nature of the parents' relationship and whether or not the child was planned are generally of little if any relevance, since the child's needs and dependency are the same regardless: J-v-C (Child: Financial Provision) [1999] 1 FLR 152 at 154B. 

(iii)      One of the "... financial needs of the child..." (to which by paragraph 4(1)(c) the court must pay regard) is for him or her to be cared for by a mother who is in a position, both financially and generally, to provide that caring.  So it is well established that a child's need for a carer enables account to be taken of the caring parent's needs: Haroutunian-v-Jennings [1980] 1 FLR 62 at 66C; and A-v-A (Minor: Financial Provision) [1994] 1FLR 657 at 665G. 

(iv)      By Paragraphs 4(1) and (b) of Schedule 1, the respective incomes, earning capacities, property and other financial resources of each of the parents must be taken into account,  together with their respective financial needs, obligations and responsibilities.  So "... the child is entitled to be brought up in circumstances which bear some sort of relationship with the father's current resources and the father's present standard of living..." - per Hale J in J-v-C (Child: Financial Provision) (above). 

(v)       However, as this latter concept lends itself to demands going potentially far wider than those reasonably necessary to enable the mother properly to support the child, "... one has to guard against unreasonable claims made on the child's behalf but with the disguised element of providing for the mother's benefit rather than for the child..."  J-v-C (Child: Financial Provisions) (above). 

(vi)      In cases where the father's resources permit and the mother lacks significant resources of her own, she will generally need suitable accommodation for herself and the child, settled for the duration of the child's minority with reversion to the father; a capital allowance for setting up the home and for a car; and income provision (with the expense of the child's education being taken care of, generally, by the father direct with the school). 

(vii)     Such income provision is reviewable from time to time, according to the changing circumstances of the parties and of the child.

(viii)    The overall result achieved by orders under Schedule 1 should be fair, just and reasonable taking into account all the circumstances."

The welfare of the children (subparagraph (i)).

27.      I have no reason to believe the children's welfare would suffer directly if the mother was not awarded the lump sum she desires, provided adequate child maintenance is ordered.  However I do believe that the necessary sacrifices she would have to make could have an indirect impact on the family's standard of living. 

28.      I ignore any consideration of the length and nature of the parents' relationship (subparagraph (ii)).

The mother's financial position (subparagraph (iii)).

29.      The mother, I have established, can afford the existing mortgage, just.  However, she has little room to manoeuvre if things go wrong, for instance, if she loses her present job or has any difficulty with her health as so often can happen due to financial pressure.  

Similar standard of living to father (subparagraph (iv)).

30.      The children are entitled to be brought up in circumstances which bear the same sort of relationship with the father's resources.  That means, I think, all his resources, including sums at present held by the company and by him in bank accounts, even though he has not availed himself of the normal kind of security which most families these days have consideration for, like life insurance, stock and shares, pensions and the like.  It seems wrong to me that one parent should be in a position to accumulate cash in bank accounts when the other parent is left caring for their children without such financial security.  Even with the father's policy of leaving money in the business, it is agreed that the family did enjoy a good lifestyle, enjoying off-island holidays and meals out. 

Mother's claim for her own benefit? (subparagraph (v))

31.      Could the mother be making this claim for her own benefit rather than the children?  It is all a question of what is reasonable.  Could an order for a lump sum, for example, enable a mother to speculate on the security of the home to take out further loans on property or otherwise to her own profit?  Any order needs to be structured so that the financial assistance is linked in time to the children's minority. 

The usual order (subparagraph (vi))

32.      This leads to the next and most important consideration.  The father's resources do, in my judgement, permit the payment of a lump sum to ease the burden of the mother in providing accommodation for the children until they leave education and I consider that the payment of a lump sum of £150,000 is reasonable.  It is not reasonable to expect a single mother, who is the principal carer of her children, to rely on her career income alone to support her children, when the father has ample resources.  To maintain the standard of living potentially enjoyed by the parties when they were together would be precarious without additional support from the father.  A lump sum of £150,000 is well past the half way mark of the applicant's mortgage of £240,000.  She presently pays £1224 per month towards the mortgage.  I realise that a re-negotiation of the mortgage may not be without its cost and it does not follow that the monthly payments will necessarily reduce in proportion to the reduced amount outstanding.  However, a contribution of this size should considerably reduce the pressure on the mother to fund the house on her own.  On the other hand, the mother does have her own financial resources and a well-rewarded career, so it would be wrong to enable her to live mortgage free to her own personal advantage, by awarding her a lump sum greater than this. 

33.      In my opinion, the father will not be disadvantaged.  His policy of holding large sums of cash means that he not only earns no interest from the cash, he is also taxed for "deemed income".  The diversion of £150,000 from his savings, whilst attracting interest, will be put to good use until the children have finished their education.  In accordance with paragraph (vi) of the principles of Bodey J in Re P, the capital sum of £150,000 will be returned to the father when D, or the youngest surviving child, reaches 18 or ceases full-time tertiary education.  Interest of £3,000 per annum will be paid by the mother to the father on the return of the funds, which will be at the earliest, in 2024.  The funds will be secured by a judicial hypothec to be registered on the property.  The interest will compensate the father for any increase in value of the property (in part due to his provision of funds) when it is sold. 

Second Lump Sum

34.      The mother asked for the payment by the father of her legal costs incurred in buying her property and for the costs of re-equipping her home with household goods and toys for the children, a total of £24,867.  Bodey J mentions "a capital allowance for setting up home and for a car".  I have already said sufficient about the mother having her own resources and feel that the sum of £11,000 was reasonable in the circumstances for this part of her claim.  However I would like to add this.  The separation was an unhappy one.  She left with very little from the former home.  She has been back once to collect things from the garage.  There are more things in the loft.  I have not put this in the order, but the father should have the decency to put the remaining things from the loft in the garage for the mother to collect at a prearranged time.  He has indeed already paid the mother £11,000, but there were two lists of items, which together come to more than twice that sum, which it is claimed needed replacing by the mother because, on her evidence, of her inability to collect things she wanted from the parties' former home.  Whatever the parties' differences may be, the payment of £11,000 does not absolve him from at least letting her have her personal things and things of sentimental value, like photographs of the children, reasonably requested by her.  However, I think he should also let her have back all the things he has kept in the loft and anything else of hers which he retains unreasonably.  I would be happy to consider making a specific order in this respect, but hope that the parties will make satisfactory arrangements through their lawyers.  Having said that, I believe the order I have made need not be subject to review, and is fair, just and reasonable, taking into account all the circumstances (subparagraphs (vii) and (viii)). 

Child Maintenance

35.      Child maintenance must be calculated from the last complete tax year, namely for 2011.  The deemed income for 2011 was £69,030, less tax of £13,806 leaving net income of £58,224.  This is a weekly net income of about £1,120 per week.  20% of £1,120 is £224 resulting in a weekly maintenance figure for each child of £112 or £485 per month. 

Costs

36.      The mother has been obliged to spend her time, effort and expense in pursuing her claim which, despite huge difference in open positions, I did not find difficult to determine in her favour.  The mother's costs have been much greater than the father's, presumably because she has had to make the running in the gathering of information for the hearing.  I think it right that the father should contribute the sum of £10,000 towards her costs. 

Authorities

Children (Jersey) Law 2002.

Hullah-v-Lelliot [1991] JLR N 9b.

Re P [2003] EWCA Civ 837.

C-v-L [2009] JRC 165A

S-v-G [2003] JRC 091A

Vaughan-v-Vaughan [2011] Fam.46.

O'D-v-O'D [1976] Fam. 83.

N-v-D [2008] 1 FLR 1629.

CF-v-KM (Financial Provision for Child: Costs of Legal Proceedings) [2011] 1 FLR 208.