Sherdley v Sherdley
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,LORD JUSTICE NEILL,LORD JUSTICE BALCOMBE |
| Judgment Date | 18 April 1986 |
| Judgment citation (vLex) | [1986] EWCA Civ J0418-1 |
| Docket Number | 86/0337 |
| Court | Court of Appeal (Civil Division) |
| Date | 18 April 1986 |
[1986] EWCA Civ J0418-1
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
FAMILY DIVISION
(MR. JUSTICE WOOD)
Royal Courts of Justice.
The Master of the Rolls
(Sir John Donaldson)
Lord Justice Neill and
Lord Justice Balcombe
86/0337
No. 11107 of 1984
MR. JOSEPH JACKSON, Q.C. and MR. A.V. LE GRICE (instructed by Messrs. Pritchard Englefield & Tobin) appeared on behalf of the (Petitioner) Appellant.
MR. JAMES HOLMAN (instructed by the Treasury Solicitor) appeared as amicus curiae.
This appeal raises issues of far-reaching importance concerning the extent to which the courts are entitled to take account of the fiscal effects of their orders.
The parties married in January 1972 and there are three children of the marriage, a girl aged 13, a boy aged 11 and another girl aged 9. In December 1984 the husband petitioned for divorce upon the grounds that the marriage had irretrievably broken down and that the conduct of the wife was such that he could not reasonably be expected to live with her. A decree nisi was pronounced on the 28th February, 1985. In these proceedings custody, care and control of the children was given to the husband and staying access was granted to the respondent, subject to conditions which are immaterial for present purposes.
In May 1985 the husband applied to the court for orders for periodical payments by him to the children in respect of school fees, such fees to be paid direct to the school. Such payments were the subject of a practice direction, [1983] 1 W.L.R. 800, in the following terms:
"
Maintenance orders which contain an element in respect of school fees frequently have to be varied when the school fees increase. This requirement could be avoided if the relevant part of the maintenance order were to be automatically adjusted when the school fees go up.
The Inland Revenue have agreed to this principle. A form of order which they would find acceptable is as follows:
'It is ordered that the [petitioner] [respondent] do pay or cause to be paid to the child AB as from the day of 19 until [he] [she] shall attain the age of 17 years [or for so long as [he] [she] shall continue to receive full-time education] or further order periodical payments for [himself] [herself]
(a) of an amount equivalent to such sum as after deduction of income tax at the basic rate equals the school fees [but not the extras in the school bill] [including specified extras] at the school the said child attends for each financial year [by way of three payments on and and] [payable monthly]; together with
(b) the sum of £ per annum less tax payable monthly in respect of general maintenance of the said child.'
It should be noted that, even if the amount referred to in part (b) is within the current limits of small maintenance payments, it should still be expressed as 'less tax' because the relevant figure for the maintenance order will be the combined total of the two parts.
In such cases the revenue will required to be satisfied that the payer under the order has no contractual liability for payment of the school fees.
If an order expressed as payable to the child, whether made in this form, or in a form which includes an element in respect of school fees for a specific amount, also provides that payment of the element representing school fees should be paid direct to the school (because, for example, it is feared that the other spouse might dissipate it) the revenue have agreed subject to the condition hereafter set out, that tax relief will be given on that element. The wording of the order should be
'And it is further ordered that that part of the order which reflects the school fees shall be paid to the [Headmaster] [Bursar] [School Secretary] as agent for the said child and the receipt of that payee shall be sufficient discharge.'
The school fees should be paid in full and should be paid out of the net amount under the maintenance order after deduction of tax. Certificates for the full tax deduction should continue to be provided [to] the other spouse (or other person referred to in rule 69 of the Matrimonial Causes Rules 1977) ( S.I. 1977 No. 344) in the normal way.
It is a condition of such an order being acceptable for tax purposes that the contract for the child's education (which should preferably be in writing) should be between the child (whose income is being used) and the school and that the fees are received by the officer of the school as the appointed agent for the child.
A form of contract which is acceptable to the Inland Revenue is as follows:
'THIS AGREEMENT is made between THE GOVERNORS OF……………………by their duly authorized officer…………………(hereinafter called "the School") of the first part………………and the [Headmaster] [Bursar] [School Secretary] of the second part and……………(hereinafter called "the Child") of the third part.
WHEREAS [it is proposed to ask the……………Court to make an order] [the……………Court has made an order] in cause number……………that the Father of the Child do make periodical payments to the child at the rate of £………per annum less tax until the Child completes full-time education (or as the case may be) and that that part of the order which reflects the school fees shall be paid to the [Headmaster] [Bursar] [School Secretary] as agent for the Child and the receipt of that agent shall be a sufficient discharge.
1. The Child hereby constitutes the [Headmaster] [Bursar] [School Secretary] to be his agent for the purpose of receiving the said fees and the Child agrees to pay the said fees to the said School in consideration of being educated there.
2. In consideration of the said covenant the [Headmaster] [Bursar] [School Secretary] agrees to accept the said payments by the Father as payments on behalf of the Child and the School agrees to educate the Child during such time as the said school fees are paid.
Dated the day of 19'
This direction supersedes the registrar's direction of November 10, 1980, which is hereby cancelled: see Practice Direction (Minor: School Fees) [1980] 1 W.L.R. 1441.
Issued with the concurrence of the Lord Chancellor.
B.P. TICKLE,
June 16, 1983.
Senior Registrar"
Such orders are normally sought by the party (usually the wife) having care and control of the children and require the other party (usually the husband) to make the periodic payments. In the instant case the wife is not involved and the order is sought by the husband requiring him to make the payments. This is most unusual, but not unique.
Mr. Justice Wood, to whom the application was made, refused to make the order. He said:
"In this case the father—the Petitioner—has custody care and control of his 3 children. I have been asked by him to make an Order against himself and in favour of his son for the payment of school fees, and to make it in the usual form for payment to the school as agents for his son. There is no doubt that I have power to make such an order. In the exercise of my discretion I have decided not to do so. My reason is one of policy. Let me explain.
Where homes are broken and parents live apart a number of Orders can be made under which the family, in one way or another, can derive substantial fiscal benefits. The present system gives such benefit to many hundreds of thousands of families.
Aggregation of incomes has been considered by the Inland Revenue in the past, and it has forborne to take any steps towards such an end by the decision of the Courts not to make Orders in favour of a child and against the parent who has the care and control of that child. It has been the policy of the Judges of this Division for at least some 8 or 10 years—probably longer—not to make such Orders. I have spoken to the learned President who has confirmed that this policy continues, and I shall comply with it."
I may have misunderstood the judgment of Mr. Justice Wood, but he appears to be saying that, as a matter of policy, the judges of the Family Division refrain from making orders in favour of a child against a parent who has the custody and control of that child because, if they did so, the Inland Revenue might be provoked to recommend changes in the law, which would be contrary to the fiscal interests of broken families generally. If this is indeed the policy of the division, I consider it to be misconceived.
The essence of our unwritten constitution is that it is for the courts to interpret and administer the law as it stands and that it is for Parliament to decide whether, and in what respects, that law should be changed. Any policy for the administration of justice which involves a consideration of whether or not Parliament will thereby be caused to change the law offends against this constitutional dichotomy and cannot be supported.
I therefore approach the problem raised by this appeal by asking myself three questions. First, has the court any jurisdiction to make the order which the father seeks? Second, is there any and, if so, what reason for making the order? Third, does that reason justify making the order?
Jurisdiction
The jurisdiction to make the order sought is to be found in section 23(1)(d) of the Matrimonial Causes Act 1973, which provides that: "On granting a decree of divorce…the court may make…(d) an order that a party to the marriage shall make to such person as may be specified in the order for the benefit of a child of the family, or to such a child, such periodical payments, for such term, as may be so specified." What is proposed is that the father shall be ordered to make periodical payments to each of his three children...
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