Stacey v McNicholas
| Jurisdiction | England & Wales |
| Judge | MOOR J |
| Judgment Date | 02 November 2022 |
| Court | Family Division |
Financial provision – Schedule 1 – Delay in providing capital for housing fund – Rental costs – Lump sum payments to cover – Ongoing monthly lump sums – Whether unacceptable ‘topping up’ of CMS maintenance – Option of interest on capital fund – Backdated order.
Following the separation of the unmarried parents in 2018, there was significant litigation between them. A child arrangements order was eventually made providing for the child to spend alternate weekends and one weekday per week with the father during term time, plus half the holidays.
After the separation, the mother and the child lived for a time with the maternal grandmother, before moving to rented accommodation at a cost of £2,500 per month. Initially the father paid £6,000 per month to the mother.
In September 2018, the mother applied for financial provision for the child under Sched 1 of the Children Act 1989. In February 2019, the father reduced his payments to the mother to £2,000 per month. In June 2020, at the time of the three-day final hearing, the father stopped his payments to the mother altogether. On 1 July 2020, the deputy district judge gave her judgment, finding that an appropriate housing fund for the child and the mother was between £525,000 and £550,000. The mother was required to deploy her existing capital resources as well and the judge considered that the mother could raise £150,000 towards the purchase price. The judge ordered the father to pay a lump sum of £350,000 to the mother, outright, having found that the father was holding money which he had invested on the mother’s behalf. The father was also ordered to pay a further £50,000 on standard Sched 1 terms, as a fund to held on trust by the mother and repaid when the child became an adult. The order provided for simple interest on the lump sums after 42 days, with the final payment date to be 29 December 2020. The father filed a notice of appeal.
From August 2020, the father paid £803.80 per month to the mother, until October 2021, when the payment reduced to £355.19 per month; it later reduced to £263.45 per month. In May 2021, the mother made a second Sched 1 application, seeking payments to cover her rental payments, pending receipt of the capital provision made by the judge.
For some reason, the father’s notice of appeal was not dealt with until September 2021, when he was granted permission to appeal solely as to the outright payment of £350,000, and refused permission to appeal as to the level of the housing need and his ability to pay.
Eventually, a compromise was reached on the father’s original appeal, the mother conceding that the outright lump sum had been ordered without jurisdiction. (The mother had not made a civil claim in relation to the money allegedly owed to her by the father; her only claim against him had been under Sched 1 and there was binding authority that housing provision should not be provided outright, save in exceptional circumstances.) The total award of £400,000 remained intact, but now all of it was on a reversionary basis, with no interest payable. The sum was to be paid by 12 April 2022. The mother was to pay £10,421 in respect of the father’s costs of the appeal.
On 1 December 2021, a different judge heard the mother’s second Sched 1 application, and directed that the father pay a further lump sum of £43,500 by 12 January 2022 to cover the rent up to the hearing date, followed by a series of lump sums of £2,500 per month from 17 December 2021, until the full capital sum was paid as per the original lump sum order. The father was to pay £3,600 in respect of the mother’s costs. Noting that the CSA assessment was about £300 per month at this point, and that it was impermissible to use lump sum orders to circumvent the provisions of the Child Support Act 1991, the judge nonetheless concluded that she was able to order the lump sum payments, on the basis that there was a clear distinction between housing provision and maintenance.
The father filed a second notice of appeal, arguing that the court had no jurisdiction to order the series of lump sums, as these were disguised maintenance payments. He applied for a stay of the payments and the mother applied to enforce the order. The father was eventually (after a delay caused by acting as a litigant in person) granted permission to appeal solely in relation to the element of the lump sum to 29 December 2020 and whether orders for the payment of rent by way of lump sums fell within the description of s 5(1) Sched 1 to the Children Act 1989 or were otherwise prohibited by s 8(3) of the Child Support Act 1991. He was refused a stay. On the mother’s enforcement application, a different judge made interim charging orders on various properties in which the father had an interest.
Held, dismissing the father’s appeal—
(1) The decision in Dixon v Rennie[2014] EWHC 4306 (Fam) was correct: the court could not ‘top-up’ a CMS assessment unless there was a maximum assessment. The question was whether the situation here was different (see [35], below).
(2) This court did, despite the existence of the Child Support Act 1991, retain jurisdiction to provide for the housing costs of the child and the parent with care by way of a capital sum. It had never been suggested that this fell foul of the provisions of the CSA. Capital awards were regularly made in large sums to enable a property to be purchased, even though the property was, almost always, held on trust for the payer. The courts had therefore clearly accepted that such provision did not fall within the maintenance provisions where the CSA had exclusive jurisdiction (see [36], below).
(3) If the court had jurisdiction to provide a capital fund for housing, it was difficult to see why it did not have jurisdiction to provide for the costs of such housing prior to the property being acquired. It would be completely illogical if one was not maintenance provision but the other was (see [37], below).
(4) The court did not accept that the only way to deal with this was by directing interest on the lump sum. First, interest was unlikely to cover the period up to the making of the order. Second, although interest was, in general, designed to compensate the payee for late payment, in the court’s view, any interest on a Sched 1 lump sum accrued to the capital fund and thus reverted to the payer in due course. In other words, it covered the position if the property market increased between the date when payment was due and the date on which payment was actually made, but it did not assist in paying rent in the meantime. The court’s conclusion therefore was that the court did have jurisdiction to make an award to cover rent before the capital sum was paid (see [38], [39], below).
(5) This had to be done by way of lump sums. There was no question that there was jurisdiction to make more than one lump sum. The provision of past payments of rent could easily be covered, as here, by a crystallised figure. The court had been more troubled about the ongoing monthly lump sums but took comfort from the decision in R v R (lump sum repayments)[2003] EWHC 3197 (Fam), where the overall lump sum had not been quantified but there had been monthly lump sums payable for a further 20 years (see [40], below).
(6) The court’s conclusion was therefore that the provision was justified. There was jurisdiction and a series of lump sums was the only way to do justice. The father could not complain on the merits, in that the delay in payment was entirely of his making. He had accepted the overall quantum of the provision when the appeal was compromised. He could have paid long ago and simply argued about the terms of payment. This would have obviated the need for the mother to rent in order to provide accommodation for the child. The father could not now benefit by his own default. Indeed, he had still not paid any capital even now, some two years after the original order and nine months after the order relating to the rent. The original judge had concluded that the father should be responsible for providing housing for the mother and the child during the child’s dependency. The court simply could not see why this only applied after the father paid the capital lump sum. The obligation applied both before and after he...
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