Jp v Jrp [2004] EWHC 3180 (Fam)

[2004] EWHC 3180 (Fam)

Case No FD95P00397

IN THE HIGH COURT OF JUSTICE

FAMILY DIVISION

Venue Royal Courts of Justice, Strand, London, WC2A 2LL

Date 27 January 2005

Before

THE HONOURABLE MR JUSTICE SINGER

Between

JPApplicant

JRPRespondent

Howard Shaw (instructed by Lloyd Platt & Co) for Applicant

Barry Singleton QC and James Roberts (instructed by Davenport Lyons) for Respondent

Hearing Hearing date: 17 November 2004

Judgment

[1]On 5 March 2004 the mother (M) instituted proceedings under Schedule 1 of the Children Act 1989 for a range of financial provision orders in relation to her daughter C who is now 10. The respondent to the application, C's father (F), and M were never married. M's application is the most recent in−court litigation between the parents, the first round of which was decided by Mr Justice Johnson in January 1996, and is reported as P v P

[1996] 2 FLR 230

[2]On 14 May 2004 District Judge Bradley transferred the application to the High Court at the invitation of counsel then appearing before her, and directed that it should be listed for what was described as a Case Management Conference to decide 'which if any of the component parts of the application should proceed'. That hearing took place before me on 17 November 2004 when I heard submissions from Mr Howard Shaw for M and from Mr Singleton QC appearing with Mr James Roberts for F. I announced my decision there and then and gave directions intended to facilitate and govern the efficient expeditious and proportionate disposal of the issues which remain between the parties. This now is my judgment which I give leave to report. The background

[3]M is now 41 and F 47. Their relationship lasted about six months from March to September 1993. C was born the following June. M at some stage made application to the Child Support Agency, and it seems that in parallel to the intermittent court proceedings which I shall describe there has been a running battle of applications and other proceedings under the Child Support Act 1991. At the outset of his 1996 judgment Johnson J referred to the seeming absurdity that F's liability could under the regulations then extant be calculated at zero when he lived in a house worth well over £2 million, had the use of three motorcars which cost £190,000, and enjoyed a corresponding lifestyle.

[4]For reasons which are elaborated in his judgment Johnson J rejected the invitation advanced by Mr Posnansky QC (who then appeared for M) which would have allowed a hard case to make bad law, and declined to adopt the expedient of dressing periodical maintenance payments up as a lump sum payable by instalments. What he did do however was to fix the sum which F should settle for the purpose of the acquisition of a home for M and C until, in accordance with the terms of the trust deed the detail of which was thereafter agreed between the parties, the property should revert to F. The amount in question was £90,000. In addition that judge ordered F to pay a lump sum of £24,300 of which £15,000 related to his estimate of the cost of the additional furniture which would be required when M moved from the accommodation she and C then occupied.

[5]M did not attempt to appeal that decision, and F might well have expected, so far as his responsibility to house C was concerned, that the order defined its limits. He complied with that

[6]There was further litigation between the parties in 1999 which resulted in an order made by Mr Horowitz QC (as he then was) sitting as a deputy High Court judge. There had been intervening developments culminating in a decision of the Child Support Appeal Tribunal on 4 September 1998 as a result of which F's liability in respect of C was recalculated at £143.40 per week. The application upon which Mr Horowitz QC adjudicated, amongst other things, related to claims in relation to school fees (for by now C was at a London private day school) and a 'top up' order in relation to which it was claimed that the court at that stage of the CSA saga had jurisdiction. Provision was made for F to meet the school fees (and some but not all the extras). The judge made findings of fact which ruled out a 'top−up' order at that stage.

[7]At the time when M issued her current application in March 2004 she was awaiting the outcome of a further appeal procedure within the CSA system which, she again hoped, would pave the way for this court to make a 'top up' order. It is one of the forms of relief which she hopes to achieve as part and parcel of her current applications. Whether or not her expectation that the relevant procedures would by now have been concluded was a reasonable position to hold, the fact is that the Tribunal hearing in question will not take place until next spring. Meanwhile F is paying just under £450 per month for C, plus her private school fees which currently run at the rate of about £10,500 per annum. The fact that finality (if indeed it will be such) had not been reached by the time of the hearing before me led to an ill−advised and last−minute application to adjourn until the outcome of the Tribunal hearing is known. That is not a sensible rationale for deferring what is essentially a jurisdictional argument based upon the construction of Schedule 1 and consideration of the way in which it has been interpreted and applied. As a result of the decisions taken at this hearing these parties can more realistically prepare for and maybe even negotiate their way out of the trial of the remaining issues. The relief sought

[8]By her initiating Forms C1 and C10 M comprehensively seeks 'an order for interim periodical payments, periodical payments (with security on such asset that the Court may order), a lump sum, a settlement of (a new) property for the benefit of the child, and a transfer of property order for the benefit of C'. She makes it plain in addition that she seeks the 'top−up' payment referred to above.

[9]In June this year M swore a lengthy and somewhat diffuse affidavit purportedly in response to the district judge's direction that she should set out her case in support of her application for a lump sum. From this the gist of her claims as formulated at that stage emerges. In summary:(a) She contends that the existing settled property is now too small and that she (M) needs a four bedroom house or flat so that each of her children may have a bedroom and to accommodate guests. She values her existing property at £320,000 and suggests that £700,000 would enable her to rehouse. The claim under this heading is therefore for additional funds of the order of £380,000, but a further £45,000 also would be needed (and only F could pay it) for stamp duty, and conveyancing costs on sale and purchase.

(b) She estimates that she would need £60,000 to refurbish the new property.

(c) She describes a number of shortcomings and items of disrepair which again, she says, render her existing accommodation unsuitable. These range from defective lights and taps through to the need to replace a non−functioning toilet, the boiler, carpets and her entire kitchen. She estimated the cost of these works as £50,000, without any breakdown.

(d) She seeks the replacement of her car with a new one costing £25,000 to £30,000.

(e) She suggests that C's educational fees be secured and that to this end F should set aside a fund of £200,000, a surprisingly large figure for a child aged 10 destined so far as I am aware to attend a London fee−paying day school.

[10]The capital claim levied against F, thus categorised, adds up to about £700,000 if M succeeds in her housing aspiration, or perhaps about £280,000 if not. M's claims for C do need to be seen in their context, I suggest, even though the issues with which this judgment deals relate primarily to questions of construction and jurisdiction.

[11]I forbear therefore to comment at this stage on the merits of a claim which appears in large measure to arise because of the developing needs of an after−born child for whom F bears no responsibility and to whom he owes no duty to provide a roof. The factual situation may however in the light of argument prove distinguishable from that considered by Hale J as she then there was in J v C (Child: Financial Provision)

[1999] 1 FLR 152

where (as she put it at 160E) she needed to look at the need which the relevant child there had to live with her mother in a house adequate for her family unit which already comprised when she was born into it her two older half−sisters for whom their lottery−winning father similarly bore no responsibility.

[12]So far as the application for transfer of property is concerned, the documentation thus far filed in support of the application offered no hint as to what particular property to which F (in the language of the statutory provision) is 'entitled (either in possession or in reversion)' M has set her sights upon as the target she seeks to have transferred 'to the applicant, for the benefit of the child, or to the child herself'. In answer to my inquiry Mr Shaw was however able to clarify that M does not intend (if indeed jurisdiction exists) to direct C's claim against F's home (which Mr Shaw estimates may now be worth of the order of £5 million) or against any of his shareholdings in public or private companies, but rather against a three bedroomed property in immediate proximity to his home in Belgravia. Given thus fortuitously the opportunity to respond to the specific claim, F maintains that he disposed of his interest in that property to a company for approximately £450,000 as long ago as 1994. M revealed that it would be her contention that the company in question is one of which he is the sole director. Again, none of this affects the point of construction but the complexities and scale of the way in which M may develop and extend her case underline how appropriate it must be to stop the claim sooner rather than later if indeed there is no jurisdiction to pursue it.

The statutory provisions

[13]It is clear (indeed it is clear from Johnson J's judgment in this very case) that the court has no jurisdiction in current circumstances to make a periodical payments order and thus that there is no power to make an interim order for periodical payments. The Child Support Act so ordains. This was conceded only on the eve of the hearing before District Judge Bradley, who gave M leave to withdraw her application for those forms of relief, save in relation to school fees. The existing school fees order made by Mr Horowitz QC needs amendment, as to which there is no dispute, to provide for payments to be made to whichever is the next school C will attend. M seeks a relatively modest increase in the scope of the extras to be paid for by F, although he is suspicious (as on the information thus far provided it seems to me he is entitled to be) about the estimates M has made in this (and other) areas.

[14]The power to make the other orders which M seeks derives from paragraph 1 of Schedule 1, which (so far as relevant) reads as follows: 1(1) On an application made by a parent or 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− (a) 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); (b) in the case of an application to a magistrates' court, make one orboth of the orders mentioned in paragraphs (a) and (c) of that sub−paragraph.

(2) The orders referred to in sub−paragraph (1) are− (a) an order requiring either or both parents of a child− (i) 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; (b) an order requiring either or both parents of a child− (i) 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; (d) an order requiring either or both parents of a child− (i) 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; (e) an order requiring a settlement to be made for the benefit of the child, and to the satisfaction of the court, of property− (i) to which either parent is entitled (either in possession or in reversion); and (ii) which is specified in the order; (f) an order requiring either or both parents of a child− (i) 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.

(3) The powers conferred by this paragraph may be exercised at any time.

(4) An order under sub−paragraph (2)(a) or (b) may be varied or discharged by a subsequent order made on the application of any person by or to whom payments were required to be made under the previous order.

(5) Where a court makes an order under this paragraph− (a) it may at any time make a further such order under sub−paragraph (2)(a), (b) or (c) with respect to the child concerned if he has not reached the age of eighteen; (b) it may not make more than one order under sub−paragraph (2)(d) or (e) against the same person in respect of the same child.

Is M now entitled to seek a settlement or transfer of property order?

[15]It might be thought that there is an inconsistency between sub−paragraph (3), permitting the exercise of these powers 'at any time', and the prohibition in sub−paragraph (5)(b) preventing a court from making more than one settlement of property or transfer of property order against one person for the same child. However, these provisions of the 1989 Act were (as will be demonstrated) closely modelled on parallel provisions now reflected in sections 23 and 24 of the Matrimonial Causes Act 1973 where powers arise 'on pronouncing a [relevant] decree or at any time thereafter'. I am quite satisfied that all that sub−paragraph (3) means is that where indeed there is power under any of the provisions of the paragraph to grant relief, then it matters not at what stage and age of the child's life the application is made. The short point of construction which does arise is whether the sub−paragraph (5)(b) embargo on making 'more than one order [requiring the settlement of property or requiring the transfer of property] against the same person in respect of the same child operates to inhibit the court from making any further order of either sort once it has already made one of the other or of the same description; or only from making another of the same sort and so leaving it permissible to make a subsequent one of the other description. Put more succinctly, is the word 'or' linking the designation of the two types of order conjunctive or disjunctive?

[16]What is clear on either view is that where (as here) an application is made for a second order under paragraph 1(2)(d) requiring F to settle further property (or the cash with which to acquire it) for C's benefit, that application cannot succeed. I therefore strike out M's application for 'the settlement of a new property' as inadmissible.

[17]But can M nevertheless pursue an application for transfer of property? Mr Singleton submits that the phrase is conjunctive and that the statute envisages and intends one bite of the cherry only (as against the same person in relation to the same child) for both species of relief. He therefore invites me also to strike out as lacking jurisdiction M's application for a transfer order.

[18]The legislative history of paragraph 1 of Schedule 1 is that its wording derives most immediately from sections 11B and 11C of the Guardianship of Minors Acts 1971 and 1973, which were in virtually identical terms. Under that legislation, however, the court had 'no power to make orders for secured periodical payments, or to make property adjustment orders (that is to say orders for the transfer or settlement of property, and orders varying marriage settlements)', as was pointed out in paragraph 6.6 of 'Family Law: Illegitimacy' (1982) Law Com 118 which continues thus:

'It seems to us, however, that if unmarried parents separate it is only right that the court should be able to make any appropriate order in favour of a child of theirs, just as it could make an order if the child's parents were in the process of divorce or judicial separation. The parents' relationship may well have lasted as long as many marriages which end in divorce, and the child's financial position may equally need to be secured. Moreover, it could well be particularly desirable to give the court power to make what would often be intended to be a once−and−for−all settlement in those cases where the father intends to have no future relationship with the child. Just as courts lean against making substantial capital orders in favour of the children of a marriage, so we would not expect these additional powers to be frequently exercised; but they could be useful in some circumstances.' [Emphasis applied]

[19]The terminology of 'property adjustment orders' adopted in that paragraph, and also familiar from section 24 of the Matrimonial Causes Act 1973, is picked up and reflected in paragraph 4.66 of the Law Commission Report which led to the passage of the Children Act, 'Family Law: Review of Child Law: Guardianship and Custody' (1988) Law Com 172, in the section commencing at paragraph 4.59 which deals with 'financial provision and property adjustment for children'. Paragraph 4.66 reads:

'We consider that all orders are essentially interim, in the sense that they are the best order that can be made at the time, but circumstances may change and create the need for a further order. The court should therefore have power to make further orders for periodical payments or lump sums " from time to time '

' after the original application has been determined. However, property adjustment orders are intended as a once and for all settlement when a relationship ends. Under the Matrimonial Causes Act 1973, it is not possible to make a further order or to vary an existing one. We therefore recommend that the courts should not be able to make a further property adjustment order against the same person in respect of the same child.'

[20]The sentence which I have italicised has a footnote referring to paragraph 6.6 of the 1982 report, quoted above. Schedule 1 of the draft Bill appended to the 1988 report contains provisions in every way identical to paragraph 1(1) to (5) of Schedule 1 to the Children Act 1989 as it was enacted. The legislative intention is very clear. Orders for the benefit of a child for the transfer and settlement of property are to be regarded as different methods of dealing with the same, one−off, need for property adjustment in an appropriate case.

[21]Mr Shaw in opposition in effect baldly submitted that as no transfer of property order has as yet been made it is 'on any view' open to the courts so to do. He did though recognise that the outcome of an order for the transfer of land 'to the applicant for the benefit of the child or to the child himself' would one way or the other result in a situation at least analogous to if not identical with an order for settlement of that land, and would thus produce or come close to producing the result which (I have no doubt in concluding) paragraph 1(5) prohibits. Thus if a transfer of land were directed to be made 'to the applicant for the benefit of the child' M would hold as bare trustee for C; and an order for the transfer of land 'to the child herself 'would give rise to the land being held in trust as a result of the combined operation of the Law of Property Act 1925, section 1(6) and section 2 and Schedule 1, paragraph 1 of the Trusts of Land and Appointment of Trustees Act 1996.

[22]I therefore agree with Mr Singleton that in this case the correct construction of the Schedule precludes an application for a transfer of property order, given that a settlement of property order has already been made, and I dismiss M's application. Furthermore, there is no power to review or indeed to vary a property adjustment order of either sort, nor to vary any lump sum order (except as provided for by paragraph 5(6) in relation only to an order for a lump sum by instalments, as also may be done under section 31 of the Matrimonial Causes Act 1973 in respect of similar orders made under Part II of that Act), and that consideration must be borne in mind when I turn next to the jurisdiction to make more than one lump sum order.

The scope of the power to award a second lump sum

[23]There can be no doubt about the power to order a second or subsequent lump sum, for the Schedule expressly provides for them by paragraph 1(5)(a). The power to order successive lump sums extends not only to the generality of such orders made under paragraph 1(2)(c), but also for the additional purposes spelled out by paragraph 5(1)(a) which provides for a lump sum payment to be ordered to meet 'any liabilities or expenses incurred in connection with the birth of the child or in maintaining the child; and reasonably incurred before the making of the order'. Furthermore, the court has power to make lump sum orders even in favour of an applicant child who has attained adulthood in specified circumstances (paragraph 2); and on the occasion of varying or discharging an order for periodical payments or secured periodical payments (paragraph 5(3)). Thus the diversity of circumstances in which more than one lump sum may be ordered is wide.

[24]The court's power to grant M's application for a further lump sum order for C's benefit is not challenged by Mr Singleton. What he seeks to shut off from consideration at final hearing is M's attempt to seek to finance the upgrading of her accommodation by this limb of her application if (as I have decided they do) her claims for both forms of property adjustment order must fail. I am therefore not here concerned directly with jurisdiction, but with a request on behalf of F that I should at this stage rule whether the attempt to obtain from him a further £425,000 or so to finance the substitution of a £700,000 home for the existing £320,000 flat is so devoid of any prospect of success that I should at this stage stop it in its tracks.

[25]Mr Shaw dealt with this aspect of M's case succinctly in argument as in his opening note. He submitted that there is no reason why the present settlement should not be varied so that further monies go into it by way of a lump sum, and that there is no embargo against using a lump sum towards housing. He elaborated the submission by suggesting that the award of a lump sum for this purpose might be subjected to conditions, such as would require the money to be used towards housing which would in due course revert to F, in accordance with the same provisions as govern the trust of the existing accommodation.

[26]Again, as it seems to me, these novel propositions emphasise how far removed in concept and effect such a lump sum would be from anything so far contemplated by existing authority to meet the needs of a child during and (in the specified circumstances of paragraph 2 only) beyond his minority.

[27]Lump sums are not designed to revert to the payer. It is of their essence that they are paid once and for all and are used to reimburse past expenditure or are spent on current or future needs. To the extent that whatever was purchased with the lump sum is not consumed it will be retained for or by the child.

[28]There is a clear line of authority from Chamberlain v Chamberlain

[1973] 1 WLR 1357

;

[1974] 1 All ER 33

, CA through Lilford v Glynn

[1979] 1 WLR 78

[1979] 1 All ER 441

, CA and thence to Re P (Child: Financial Provision

[2003] 2 FLR 865

, CA via A v A (A Minor: Financial Provision)

[1994] 1 FLR 657

. Extensive citation is unnecessary: they are all to the effect that a lump sum for a child is not intended to endow the child for life, but only to deal with his requirements until he is no longer, or should reasonably no longer be, dependant on the paying parent. As Hale J (as she then was) pithily put it in J v C (Child: Financial Provision)

[1999] 1 FLR 152

at 155F 'children are entitled to provision during their dependency and for their education, but they are not entitled to a settlement beyond that, unless there are exceptional circumstances such as a disability, however rich their parents may be.' That indeed is the rationale for the practice which has developed of settling accommodation purchased with a view to occupation by the child and the primary care−giving parent, with ultimate reversion to the payer.

[29]The device of a lump−sum subject to conditions which require, in effect, its repayment in due course or, put another way, involve treating the money or what is acquired with it as a repayable loan, produces effects very close to an order for settlement of the money or whatever it is used to purchase.

[30]Certainly Mr Shaw's final suggestion, that the lump sum be in effect merged with the corpus of the existing settlement so as to enable a more expensive property to be bought, runs straight onto the buffers of what to my mind is the inevitable conclusion that this would be tantamount to varying the settlement, or ordering a second settlement, and is thus impermissible as a stratagem designed to evade the statutory scheme and the express provisions of paragraph 1(5)(b).

[31]Certain it is that in the leading case of Re P at paragraphs [45] and [46] in the judgment of Thorpe LJ (which Bodey J at [76] expressly echoed) the distinction is drawn between expenditure on a home which will 'ordinarily be transiently required during the child's minority until further order' and for which the appropriate mechanism is a settlement of property order; and a lump sum designed to meet the cost of furnishing and equipping the home and the cost of a family car.

[32]It would in my view be just as much a misuse of the court's power were M enabled by claiming a lump sum to circumvent the prohibition on a second property adjustment order created by paragraph 1(5)(b) as it would have been if Johnson J in 1996 had succumbed to the blandishments proffered by Mr Shaw's predecessor and had awarded a series of lump sums to thwart the intendment and the requirements of the Child Support Act.

[33]I feel confident that Mr Shaw's submissions on this topic cannot so significantly be improved upon that I or another tribunal would find in his client's favour and award a lump sum calculated to boost the provision by way of settlement previously ordered and already effected. I accordingly rule that his argument fails as a matter of law, and that the case should proceed so far as lump sum provision is concerned on bases which exclude this aspect of M's aspirations for C.

The future conduct of the Application

[34]That has the immediate benefit for those who ultimately will finance this litigation, which has so far alone cost £25,000 on M's side and £38,000 on F's, that the remaining claims can be seen in context and the future conduct of the application proportionately directed by the court.

[35]Mr Shaw, in the light of the rulings which I indicated, put the top value of his client's case at £200,000. This initially appeared to F to be a high limit bearing in mind that M had by this stage of the hearing produced as an open document a formulation of what remains of the lump sum claims under headings totalling just over £70,000. But there remains also the claim for a secured fund for future education. F at the same point in the hearing offered £27,000 in relation to the lump sum claim. So that, although the gap between the parties still stood at £43,000 (that is almost exactly just two thirds of what so far has been lost in costs), it is perhaps more amenable to negotiation after further discussion and the exchange of information than was the case when the upgraded housing, by whatever route, remained an issue.

[36]F has been prepared formally to concede that he can meet any orders which may be made up to that limit of £200,000. There is therefore no need to embark upon what would, from what I have read, be no doubt extensive questionnaires designed to flush out details of F's financial position, nor for property valuations, nor for permission to be sought to file evidence from one or more forensic accountants: all directions which Mr Shaw had been minded to seek.

[37]I therefore directed that M should file a short updating statement designed to introduce yet greater clarity into her formulation of the remaining lump sum claims, and the claims for a school fees fund and for school fees and extras. I also took the view that it was relevant and in no way oppressive in the circumstances of this case to require M to explain how her own costs paid to date and hereafter in prospect have been and are to be funded. I also made provision for the case to be fixed before me for the substantive hearing, unless in the meanwhile further directions become necessary in the light of the outcome of the Child Support Act appeal, if one materialises and if it would permit the 'top up' application to be pursued in this court.

[38]In essence the hearing before me was concerned with the legitimacy of M's claim for a further housing fund to be financed by F. She has comprehensively failed. For the reasons I expressed there and then I have ordered her to pay his standard basis costs of and incidental to the hearing, but such costs are not to be enforced without the court's leave.

order

a two−bedroom flat in NW6, selected by M, was acquired by the trust and furnished, and M and C now live there together with M's second child now aged four. The father of that child, says M, is untraceable and has never provided any financial support.