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The case of N v F  EWHC 586 (fam) is primarily about the treatment of non-matrimonial assets - here assets of over £2m brought into the marriage by the husband. Mostyn J summarises the authorities clearly and applies the two stage test considering to what extent if at all to exclude such assets from the sharing principle, how they should be valued now and (having usually divided the matrimonial assets equally) cross checking for fairness by way of overall percentage division. This always being subject to needs of course.
What really caught my attention about this case however was the handling of child maintenance. The husband was left with capital of just over £5.2m. After attributing £1.75m of that to a housing fund, the remaining sum of just under £3.5m was treated as a Duxbury fund. The appropriate CSA percentage was then applied to the annual income the husband was deemed to receive on a Duxbury basis (£184,000) as well as his earned income from teaching (£36,000 net). Taking into account the time the two children spent with the husband, he was to pay £15,750 per child per year.
One problem that I see with this is that child maintenance is, as a rule, based on a percentage of income. The Duxbury calculation is intended to use up the capital fund to coincide with life expectancy. So using the Duxbury income to calculate child maintenance means a substantial element of capital is being used to pay child maintenance. While of course you might say ‘he can afford it', the principle is surely wrong. Incidentally these particular children had capital funds of over £200,000 each set aside for their education. Both parents were left with substantial capital funds. In my view the husband's earned income and an assumed income from his capital investments (bearing in mind current interest rates) should have been used as the basis for the calculation - ie actual income.
The CSA can take account of assets over £65,000 and apply a notional income rate of 8% to them, up to an annual income of £104,000 (ie £1.3m of assets). That is extremely high compared with today's interest rates, and applied to this husband's capital of £3.5m amounts to an assumed income of £280,000 - nearly £100,000 more than the income provided by the Duxbury calculation.
The issue of child maintenance was clearly within the court's discretion - the husband's assumed income exceeding £104,000. So perhaps Mostyn J was doing the husband a favour in taking a percentage of the Duxbury income rather than applying the statutory rate to the whole of the husband's qualifying capital. The issue is rather academic, the amount of child maintenance is small in the context of the other sums in the case and it is hardly worth an appeal. The result itself does not feel particularly unfair or disproportionate, but I still think using the Duxbury income is wrong in principle. In conducting its discretionary exercise the court could have applied different reasoning.
I'd be interested to hear peoples' experiences of this; happily in many of the reported cases where capital is in issue, child maintenance is one of the few matters that parties seem to be able to agree.
Hayley Trim is a Family Law PSL at Jordan Publishing and was formerly a family solicitor practising in London.
She works on the Family Law online major works providing updating notes on cases and other relevant developments as they happen for The Family Court Practice, Children Law and Practice and Matrimonial Property and Finance online.
This work provides commentary, checklists, procedural guides and precedents on the subject in a...