Russell v Reilly [2014] EWHC 1349 (Fam)

Case No FD02P00534[2014] EWHC 1349 (Fam)
IN THE HIGH COURT OF JUSTICE
FAMILY DIVISION
Venue Royal Courts of JusticeDate Monday, 17 th March 2014
Before
MR JUSTICE HOLMAN(sitting throughout in public)
B E T W E E N:
Between
JACQUELINE RUSSELLApplicantMICHAEL REILLYRespondent
Transcribed by BEVERLEY F. NUNNERY & CO.Official Court Reporters and Audio TranscribersOne Quality Court, Chancery Lane, London WC2A 1HRTel: 020 7831 5627 Fax: 020 7831 7737info@beverleynunnery.com
THE APPLICANT appeared in person. for in personTHE RESPONDENT appeared in person. for in person
J U D G M E N T
[1]I have conducted the whole of the present hearing in public and now deliver this judgment in public. This is to my mind both a tragic and a pitiful state of affairs. It concerns significant arrears of maintenance payments in relation to a son who is now in fact aged 25.[2]The essential factual background is as follows. The mother, who is the appellant at this hearing, is now aged 66. She is a fully retired teacher and lives in Scotland. The father is now aged 64. He is a solicitor, who has been practising here in London. Around 1988, when the mother was aged about 40 and the father a little younger, there was some relationship between them. They were in fact each married to other people at the time, and the father, but not the mother, has other children as well.[3]As a result of their relationship, the only child of these parties was born in late 1988. He is therefore, as I have said, now aged 25. He is a highly intelligent and very well educated man, who has both a first degree and now also a higher MSc from Edinburgh University. He appears to be a normal, healthy 25 year old man of considerable intelligence, although he currently does not have any job, nor, apparently, any means of support. There can, however, be no possible question of any current or future liability on the part of his father to support him and, indeed, any possible liability must have ended at the very latest in summer 2011 when he completed his first degree.[4]There has been a good deal of litigation between the parents since apparently about 1990 in relation to maintenance, presumably always founded on the provisions of schedule 1 to the Children Act 1989. It is not necessary to record the full details of the subsequent very protracted, and indeed bitter, litigation.[5]The more recent most significant dates and events are these. In May 2007 District Judge Waller, who was then the Senior District Judge, heard an application by the father for a variation downwards of the then level of periodical payments, and a cross application by the mother for enforcement of arrears. The upshot of the order of District Judge Waller was, in summary, that the arrears were crystallised as arrears of general maintenance of £21,500, plus school fees in the sum of £36,319, plus some costs in the sum of £10,000; so that as the case moved from District Judge Waller in May 2007, the father owed the mother £67,819.[6]There was an attempt by the father to appeal from that decision and order, which was refused or dismissed by Sir Mark Potter, the then President of the Family Division.[7]The next significant hearing was before District Judge Malik in June 2010. By then it seems to have been agreed that the arrears of maintenance, costs and interest stood at, in round terms, £70,000. The father undertook to pay off those arrears at the rate of £1,000 per month by standing order of £700 per month into a bank account of the mother and £300 per month into a bank account of the son (who was by then of course fully adult and nearing the end of his first degree at Edinburgh University).[8]I do observe that a total payment of £70,000 at the rate of £1,000 per month would require payments altogether for 70 months or a further almost six years.[9]The father paid very little towards, or in satisfaction of, that order, so there was a further hearing before Deputy District Judge Simpson on 3 May 2013. According to paragraph 2 of the judgment of Deputy District Judge Simpson, the arrears at that date stood at £62,000. Deputy District Judge Simpson acceded to the proposal and draft order proposed by counsel who appeared on that occasion on behalf of the father. She remitted all the arrears as at that date, “save to the extent of £23,400”.[10]Pausing there, that had the effect that around £37,000-worth of arrears were remitted. The order provided that the remaining £23,400 should be payable over a period of three years at the rate of £650 per calendar month from and after 1 June 2013.[11]The order further provided that: “The [mother’s] application for general enforcement do stand adjourned with liberty to restore in the event that the [father] does not make the payments ordered”, as I have just summarised.[12]The mother was understandably very dissatisfied by that outcome and applied to the High Court for permission to appeal from that decision and order. At a hearing before Mr Justice Peter Jackson in September 2013, that judge helpfully identified and summarised in a preamble to his order the “grounds of appeal … potentially available to” the mother. I will not set them out in this judgment but I have read them and have them all firmly in mind. He granted to the mother permission to appeal. It is that appeal which is now before me today. Meantime, however, by an application finally issued on 17 February 2014, the father himself has applied for permission to appeal, and permission to appeal out of time, from the same order of Deputy District Judge Simpson made on 3 May 2013.[13]It is clear, however, that the father’s own application for permission to appeal should properly be characterised as an application to vary the order of 3 May 2013 on the grounds of a subsequent change in circumstances. As I have already mentioned, the actual order made by Deputy District Judge Simpson was to all intents and purposes (although she fixed a slightly higher monthly repayment figure) an order as proposed by the father himself through his counsel, so he is scarcely able now to say that the decision and order of Deputy District Judge Simpson was wrong on the facts and in the circumstances that prevailed as at 3 May 2013.[14]In any event, it is clear that the father’s essential case is that there has been a marked deterioration in his financial circumstances since that date. Accordingly, as I have said, his proposed application is properly not one for permission to appeal but one to vary. In order to be practical and having regard to the overriding objective in rule 1 of the Family Procedure Rules 2010, I propose to refuse his application for permission to appeal, but to treat that application as an extant application before me today to vary the order of Deputy District Judge Simpson on the grounds of a subsequent change in circumstances.[15]The present circumstances of each of these parents are, frankly, as I have already said, both tragic and pitiful. Starting with the mother, she suffered a stroke during September 2013. That has left her with a number of physical problems which she has described to me, but which I will not set out in this public judgment; and it has left her with a number of what she describes as “cognitive problems”. In particular she has problems now in coping with numbers and sequences, and problems, for instance, in organising in any rational way the papers in this case. She says that she now has no savings whatsoever. She lives with her own sister, aged 64, in a rented flat in Scotland under a settled arrangement between them. Her only sources of income are a combination of her state old age pension and a very modest teacher’s pension. She says that her combined income from all sources is about £10,000 per annum.[16]Clearly, the son can no longer reasonably expect to rely on his mother any more than on his father for maintenance and support but, she says, the reality is that she is continuing in various ways financially to support her son.[17]Clearly, therefore, any further payments that the mother can recover and receive from the father will be enormously welcome to her. The fact of the matter is that, as of May last year, he owed her under court orders that he had simply failed to obey the sum of around £62,000. To her, in her present circumstances, £62,000 would make an enormous difference to her security and comfort in older age and as she adjusts to living with the physical and mental disabilities following her stroke. The father never fully complied with maintenance obligations for many years during the childhood of his son. The result was it was the mother who bore the brunt of supporting their son as well as paying for private education for him. The father still, on any view, morally owes her all this money, and it is in part because of his failure to pay it that her own circumstances are now so exiguous.[18]On his side, however, the situation also appears to be a bleak one. He says — and for the purposes of today I will accept — that prior to 2003 he was a senior partner in an apparently prosperous firm of solicitors which unfortunately became insolvent and “went bust” in 2003. As a result, he himself became personally bankrupt, and being bankrupt, was unable to practise his profession as a solicitor between 2003 and 2007. He did then re-establish himself as effectively a sole practitioner under the name of a limited company A & M Legal Services Limited. He says, however, that the work of that firm was essentially publicly funded family law work. As is well known, there have been crippling cutbacks in the provision of public funding or legal aid for family work recently, with the result indeed that a significant number of “High Street” firms in that field have been forced to close down or, at any rate, branch out into different spheres of legal practice.[19]He says, in effect, that the work of his firm has now completely dried up and that he himself is, once again, in a very dire personal and professional situation. This is the basis of his application to vary downwards the order of Deputy District Judge Simpson on the grounds of subsequent change in circumstances. He has produced today a letter from his accountants, BPU Chartered Accountants, which encloses various documentation. The letter says:
“We have received your instructions to prepare annual accounts for A & M Legal Services Limited for the year ended 31 October 2013 but, as you know, this work is currently on hold pending payment of our outstanding fees. We are also aware that you have contacted a licensed insolvency practitioner to discuss your options in connection with that company, including a possible creditor’s voluntary liquidation.”
[20]The principal creditor would appear to be HM Revenue & Customs, for the letter from the accountants encloses a letter dated 8 March 2014 addressed to the firm from HM Revenue & Customs, “Late Stage Debt Resolution” Department. The letter indicates that an earlier agreement between the firm and/or the father for stage payments has not been met, and that HMRC have accordingly “cancelled the arrangement”.[21]HM Revenue and Customs now claim a total of £118,556 for arrears of VAT and other taxation and penalties and interest dating from October 2010. The letter is a pro forma letter, but continues:
“If you do not take action within seven working days of the date of this letter, we will wind up the company for this debt …”
It is to be noted that the word used is not “may”, but “will”. The outlook for the company, and accordingly for the continued practice and indeed personal solvency of the father, accordingly looks very bleak indeed.[22]Since the order of Deputy District Judge Simpson made on 3 May 2013, the father has made precisely three payments each of £650 rather than the ten payments which by now he should have made, so the debt (as already significantly remitted by Deputy District Judge Simpson) now stands at £23,400 minus £1,950, namely £21,450.[23]The mother says that there are a number of errors in the approach and decision of Deputy District Judge Simpson. She says that the father was in breach of a number of orders for disclosure, which should have operated against him. She says that District Judge Waller back in 2007 had regarded the father as a serial offender for non-disclosure and disobedience over many years to orders of the court. She says that Deputy District Judge Simpson “did not pay sufficient attention to what had gone on before”.[24]It must, however, be appreciated that in relation to periodic maintenance there has long been an approach of the courts to limit enforcement of “stale” or very stale arrears. There is, indeed, a practice (I expressly do not describe it as a rule) that the courts may not enforce arrears which are more than about 12 months outstanding. Whilst that approach appears not to have weighed with District Judge Waller back in 2007, it obviously did weigh more with Deputy District Judge Simpson in 2013.[25]There are indeed obvious differences between the situation and circumstances when District Judge Waller was dealing with this case about eight years ago, and when Deputy District Judge Simpson was dealing with it last May. By now, as I have said, the child concerned is well and truly adult, being aged 25, and very highly qualified. By now, the mother has, of course, reached the age of 66 and is retired and not entirely well — but also the father has reached the age of 64. Undoubtedly, small firms of solicitors such as his practising in the field of publicly funded family law have recently faced a financial hurricane, and however the case may have struck District Judge Waller in 2007, it clearly looks very different now.[26]I have considered the actual judgment of Deputy District Judge Simpson given on 3 May 2013. I cannot, for my part, see that it contains any significant error of law or approach, or that it is outside the band of reasonable discretionary decision making by a district judge. She examined the then financial circumstances of the father. She said, “He now runs a legal aid firm, as a sole practitioner …” She looked at such evidence as was available as to the income and financial viability of the firm. She said, “I have to look at the reality, and none of these matters mean that in any way the husband is going to be able to repay £60,000 plus. He has a legal aid contract for three years, and the mother makes the point that he could very likely go on after that. That is possible, but I cannot have sufficient confidence that he will be able to, to make an order which assumes that. At his age he is vulnerable to potential ill health and he made the point, which is valid, that there have already been changes in the payment structure from government in relation to legal aid and his type of work could be vulnerable to more of that type of government intervention.” “I have to look at the reality, and none of these matters mean that in any way the husband is going to be able to repay £60,000 plus. He has a legal aid contract for three years, and the mother makes the point that he could very likely go on after that. That is possible, but I cannot have sufficient confidence that he will be able to, to make an order which assumes that. At his age he is vulnerable to potential ill health and he made the point, which is valid, that there have already been changes in the payment structure from government in relation to legal aid and his type of work could be vulnerable to more of that type of government intervention.”[27]Deputy District Judge Simpson continued by saying that she approved the structure of the proposal that the father’s counsel had made to resolve this matter and that, “I believe that the arrears should be remitted and that he should make payments for three years which will bring an end to the matter …” As to quantum, she said, “I am going to slightly increase the payment that he will be making by £100 a month [from that proposed and offered by the father] so that he will pay £650 a month and, therefore, £7,800 a year and the total will be £23,400 …”[28]That seems to me to be a completely intelligible and rational approach and decision by the deputy district judge, who was obviously mindful of the general approach of the court in relation to stale arrears. For those reasons, I decline to allow this appeal or to interfere on the appeal with the decision and order of the deputy district judge.[29]In support of his application to vary that order so as further to remit arrears and reduce the amount which he is now required to pay, and to reduce the rate at which he is required to make payments, the father has highlighted what he describes as his dire financial situation that I have already summarised. He did, however, after the lunch break, offer that, however dire his situation, he will make payments at the rate, not of £650 but rather of £400 per month. He also told me quite openly that he has been in communication with his own elder son (who is, of course, the half-brother of the son concerned in this case). He said that his elder son is a high earning lawyer, and implied, without saying so directly, that he may be able to get some help in his own parlous circumstances from his son to enable him to discharge his own legal obligations to the mother of this other son.[30]The history of this case is, frankly, lamentable. It is not at all to the credit of the father that so much arrears have been allowed to arise and accumulate over the years. He has already had a very substantial reduction in the arrears from £62,000 down to £23,400. I am simply not prepared to exercise a discretion further to reduce that amount, nor indeed to reduce the rate of repayment. If the rate of repayment is reduced from £650 to some lesser amount a month, the obligation to repay will stretch so far ahead as to become almost meaningless in the hands of the mother.[31]So, for those reasons my formal decision is to dismiss both the appeal and the deemed cross application by the father to vary downwards the order of Deputy District Judge Simpson. My formal order will provide as follows:
“Upon hearing the appellant mother, Jacqueline Russell, in person, generously supported by Mrs Betty Dalrymple of PSU, and the respondent father, Michael Reilly, in person, upon the mother’s appeal from the decision and order of Deputy District Judge Simpson made on 3 May 2013, and upon the father’s application issued on 17 February 2014 for permission to appeal and permission to appeal out of time from the said order, it is ordered that 1 The order of Deputy District Judge Simpson which currently bears the date “22 April 2013” shall be amended under FPR rule 29.16 (the “slip rule”) to delete the words “22 April”, where they appear in the preamble to, and foot of, the said order, and to substitute the words “3 May”. 2 The father’s application for permission to appeal from the said order is refused, but the court will treat that application as an application to vary the order of Deputy District Judge Simpson made on 3 May 2013 on the grounds of a subsequent change in circumstances. 3 Both the appeal and the said application to vary are dismissed.”
The order will continue by saying, “And the court records that since the order made on 3 May 2013, the father has made three payments, each of £650, on 30 July, 15 August and 10 October 2013 but no further or additional payments. As a result, the enforceable arrears as fixed by the order of 3 May 2013 in the sum of £23,400 now stand (on 17 March 2014) at £21,450”. Those will be the terms of the formal order.[32]The mother may, if she wishes, now seek to pursue any alternative methods of enforcement that she may consider are open to her. In the event that the father is himself made personally insolvent, she will not be able to prove for the maintenance debt in the insolvency, although discharge from the insolvency will not of itself release the father from an obligation to pay the amounts still outstanding.