Phillips v Pearce
| Jurisdiction | England & Wales |
| Judgment Date | 25 January 1996 |
| Court | Family Division |
JOHNSON, J
Financial provision – assessment of father's income by child support officer pursuant to Child Support Act 1991 – nil assessment – father nevertheless owning substantial capital assets from which income likely to be derived in the future – application for lump sum orders for child – whether power to make lump sum orders may be exercised in such a way as to provide for the regular support of a child – whether lump sum orders for the regular support of a child prohibited by Child Support Act 1991.
The relationship between the parties commenced in March 1993 and ended in September 1993. During October 1993, the mother discovered that she was pregnant. The mother declined the father's suggestion to terminate the pregnancy. The child was born on 12 June 1994. Prior to the relationship and the birth of the child, the mother had pursued a career as a model and a singer, however, from 1991, she was dependent upon State benefits. The father had questioned the paternity of the child before her birth, however this was resolved by DNA testing. The mother made preparations for the child's birth, purchasing clothes for herself and equipment for the baby, on a lavish scale. Despite an initial thought that he might remain in contact with the child after her birth, the father concluded that, partly because of the financial demands made of him by the mother and the litigation which resulted in a deteriorating effect upon their relationship, it would not be sensible for him to attempt to do so.
In due course, an assessment was made of the parties' financial circumstances by a child support officer, which resulted, surprisingly, in an assessment that the father could not make periodic payments for the maintenance of the child. The father lived in a property worth £2.6 million, and his standard of living was illustrated by the fact that he owned motor vehicles worth £190,000. The assessment made by the child support officer was undertaken according to the mathematical formula set out in the Child Support Acts of 1991 and 1995, whereby attention was focused upon actual income. Despite the obvious trappings of wealth, at the time of the maintenance assessment, the father was not in receipt of any income or any other remuneration from his own company. The mother accordingly applied to the court for lump sum orders pursuant to s 15 of and Sch 1 to the Children Act 1989, as, by virtue of s 8(3) of the Child Support Act 1991, she could not seek an order from the court for periodic payments or secured periodical payments.
Held – The power to make a lump sum order was not to be exercised in such a way as to provide for the regular support of a child, which would ordinarily have been provided by way of an order for periodic payments. In a case to which the Child Support Act 1991
applied, where a child support officer had jurisdiction to make a maintenance assessment, the court should only make a lump sum order to meet the need of a child in respect of a particular item of capital expenditure. No provision should be made by way of a lump sum order for the regular support of the child. Such an order, if made, could only be intended to avoid the provisions of s 8(3) of the Child Support Act 1989. In this case it would be ordered that the father settle upon the child the sum of £90,000 for a new home which would be held by trustees until the child had completed her education. Further, a lump sum order of £24,370.51 would be made to include birth expenses and to furnish the new home.
Per curiam: It was absurd that the law binding upon the Child Support Agency should have resulted in such an assessment of the father's ability to support his child. It was to be hoped that, when the father decided that his company would pay him a salary or other remuneration, or when the Secretary of State made the regulations foreshadowed in the Child Support Act 1995 (which might allow capital assets to be taken into account following a maintenance assessment), some arrangement for periodic support of the children would be forthcoming. Had the power been available to the court in this case, it was likely that a lump sum order would have been made for continuing support of the child, by her father, based upon a figure of £90 per week.
Statutory provisions referred to:Children Act 1989, ss 15, 105 and Sch 1.
Child Support Act 1991, ss 1 and 8.
Child Support Act 1995, Sch 2.
Cases referred to in judgment:Duxbury v Duxbury [1992] Fam 62; [1991] 3 WLR 639; [1990] 2 All ER 77.
Kiely v Kiely [1988] 1 FLR 248.
Lilford (Lord) v Glynn [1979] 1 WLR 78.
O'D v O'D [1976] Fam 83.
Jeremy Posnansky, QC and Elizabeth Todd for the applicant mother.
Barry Singleton, QC and Valentine Le Grice for the respondent father.
MR JUSTICE JOHNSON.Most people would think that a mother should have no difficulty in obtaining financial support for her child from a father who lives in a house worth £2.6 million and whose standard of living is illustrated by his three motor-cars worth respectively £36,000, £54,000 and £100,000.
In this case the Child Support Agency thought otherwise. In responding to the mother's application it said: "The child support officer has calculated that the weekly amount payable by the father is nought pounds."
In the circumstances of this case that will seem startling to the point of absurdity. However, it is no fault of the Agency. If blame is to be borne by anyone, perhaps it should be borne by the architects of the child support scheme whose appreciation of the realities of people's differing financial arrangements has been described by one learned author as naive. As to that I make no comment. My duty as a Judge is to seek to construe the Child Support Act 1991, to determine its effect on other
legislation, principally the Children Act 1989, and apply the law to the facts of the case as I find them to be. This father carries on business dealing in shares. He does so through a company which he owns and controls. At the time of the mother's application for child support the company was paying him no salary or other remuneration. It is of the essence of the policy underlying the Child Support Act 1991 that child support is to be assessed according to a mathematical formula which is to be applied rigorously, seemingly without any significant element of discretion to cater for the needs of a child in the circumstances of the child with whom I am concerned. The Act focuses attention on income that can be described as actual. No account is taken under the 1991 Act of income that is only potential.
This is quite contrary to the practice of the court which for generations, in seeking to assess entitlements to financial support for former spouses or children, has sought to achieve a result which is fair, just and reasonable, based on the realities and the practicalities. Of course, for many citizens their annual tax return and notice of PAYE coding are matters of crucial importance to them and their families. But there are some for whom, for one reason or another, such matters are of little interest as they have been able to shelter their financial arrangements from the depredations of the Revenue. In cases involving such people, lawyers and Judges will seek to assess the reality of the situation.
So nearly 20 years ago one finds Ormrod, LJ saying in O'D v O'D [1976] Fam 83 at p 90:
"In approaching a case like the present, the first stage should be to make as reliable an estimate as possible of the husband's current financial position and future prospects. In making this assessment the court is concerned with the reality of the husband's resources. Using that word in the bold sense to include not only what he has shown to have but also what...
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