All your resources at your fingertips.Learn More
(Court of Appeal, Moore-Bick, McFarlane LJJ, Proudman J, 17 March 2014)
Financial remedies - Child maintenance - CSA comparison - Bonus sharing
The child was conceived as a result of a brief relationship between the parents who were work colleagues. The father had no involvement in the child's life and paid no maintenance. The mother was a full-time mother and was dependant on State benefits. A CSA assessment and court order were in place but due to the father moving to France she was unable to enforce either for several years. Eventually the mother contacted the father and sought maintenance under the reciprocal enforcement of maintenance arrangements. The father agreed to pay £1,200 pm and three lump sum payments of £10,000. The mother applied to the English court seeking enforcement of that arrangement pursuant to Sch 1 of the Children Act 1989.
During proceedings the mother claimed that she needed £85,000 to conduct repair works on her home, £19,000 pa for the child's reasonable needs and £28, 000 to meet her reasonable expenditure.
The father earned £6,400 net pm plus additional commission and bonuses twice a year. He had funds of £137,000 in bank accounts and £60,000 in long-term investments. He was now married and had three further children.
The judge awarded the mother a lump sum payment of £44,620 for her to discharge her debts, periodical payments of £1,000pm and further periodical payments made up of 15% of the father's bonus. The mother appealed seeking an increase in both the lump sum and periodical payments. The father cross appealed challenging the award in relation to his bonus and sought to set aside that provision or a lowering of the percentage and an upper limit to his potential liability.
The Court of Appeal found that the judge had been entitled to regard many aspects of the mother's budget as a wish list rather than a reflection of her true outgoings. In determining what provision to make the court had to consider to what extent the child should be brought up in circumstances which bore some relationship to the father's current resources.
The court could in some circumstances make a capital provision for housing for the parent where there were appropriate resources available and no other claims to those resources. The father's income was relatively modest and the award of £44,620 equated to a third of the father's available liquid capital. The lump sum clearing the mother's debts could not be characterised as wrong.
In line with the reasoning in GW v RW  EWHC 611 (Fam) and SW v RW  EWHC 73 (Fam) the court had to take into consideration the CSA level of maintenance which would be awarded. As he had other children his liability would be 11.25% of his net income or £720 pm. Given that an additional £280 pm had been awarded the judge had in effect made provision for the father receiving additional payments of £30,000 pa. Therefore payments to the mother of the father's bonus should only be made once the bonus exceeded £30,000 pa. Further the percentage should not have exceeded the 11.25% set by the CSA. The mother's appeal was dismissed; the father's appeal was allowed in part.
Neutral Citation Number:  EWCA Civ 276
Case No: B6/2013/2480; B4/2013/2665
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE PRINCIPAL REGISTRY OF THE FAMILY Y DIVISION
HHJ HUGHES QC
Royal Courts of Justice
Strand, London, WC2A 2LL
LORD JUSTICE MOORE-BICK
LORD JUSTICE McFARLANE
MRS JUSTICE PROUDMAN
- - - - - - - - - - - - - - - - - - - - -
Re: M-M (A child)
- - - - - - - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - - - - - - -
The Appellant Mother appeared in person
The Respondent Father appeared in person
Hearing date: 21 February 2014
- - - - - - - - - - - - - - - - - - - - -
Lord Justice McFarlane :
 On 2nd August 2013 Her Honour Judge Hughes QC, sitting in the Principal Registry of the Family Division, concluded a two day hearing by making an order for financial provision under Children Act 1989, Schedule 1, with respect to a ten year old girl, O, who was born on 5th January 2003.
 The order contained three elements:
i) Payment by the father to the mother of a lump sum of not more than £44,620.94, such money to be used to discharge debt that the mother had accrued to various financial institutions. The order provided for the father to make the payments himself directly to the various institutions;
ii) Periodical payments from the father to the mother for O's maintenance in the monthly sum of £1,000 until the child is eighteen, or finishes her secondary education, whichever be the later;
iii) Additional periodical payments paid annually representing 15% of the gross amount of any bonus received by the father from his employers, less tax.
In addition HHJ Hughes reserved any further applications with respect to O to herself, if available.
 Neither the father nor the mother was satisfied by the dispositions made within the judge's order. We have now heard their cross-appeals, permission to appeal having been granted to each of them on a previous occasion.
 In simple terms, the mother's appeal seeks to achieve an additional lump sum payment, she argues for £120,000, and an increased level of periodical payments of £1,700 per month on the basis that, if this latter figure is awarded, the additional requirement on the father in the current order to pay 15% of his bonus would fall away. Conversely, the father accepts the present lump sum order, which he has paid, and accepts the rate of periodical payments set at £1,000 per month. His appeal focuses upon the additional 15% payable from his annual bonus. He submits that that requirement should be set aside in its entirety, but, if it is not set aside, he argues that the percentage rate is unjustifiably high and, in any event, the court should impose an upper limit, or cap, on his potential liability.
 In 2002 the mother and the father were colleagues in the same office. Following a brief liaison, during which O was conceived, their relationship did not endure. During the pregnancy the father decided that he did not wish to play any direct part in O's life and my understanding is that he has neither met O nor communicated with her. That, of course, was his choice. What was not his choice was to walk away from any liability that he may have to provide financial support for O. Despite an assessment by the Child Support Agency ("CSA") and, later, a court order in 2004, he made no payments. He then left the jurisdiction of England and Wales and has not returned to live here since 2004. It was not until 2010 that the mother, through the authorities in France, was able to contact him and seek to obtain financial support under the arrangements for reciprocal enforcement of maintenance.
 Once he had been contacted the father co-operated with the French authorities and agreed to make monthly payments thereafter of £1,200 per month and three lump sum payments in December 2010, July 2011 and January 2012 of £10,000 on each occasion.
 The parties were advised that the arrangements made by the French authorities were not legally binding and, as a result, the mother commenced proceedings in England under CA 1989, Schedule 1.
 Throughout the ten years of O's childhood thus far the mother has been a single parent. At no stage has she gone back to work and, as a result, she has been entirely dependent upon benefits, support from her own parents and, once payments began, such payments as the father has made since 2010. She owns her own property, which has an equity of around £120,000, but she claims that it is in a state of some disrepair. She has been unable to undertake any maintenance work during the ten years that she has lived there. She estimates that some £85,000 is needed simply to place the premises into an adequate state of repair. She has no car, having sold her previous car some years ago, and is dependent for transport upon borrowing her parents' car.
 On the mother's account, which I have no hesitation in accepting, O is a bright and talented young girl. She has been offered a place at a local High School. She is keen upon, and is successful in, horse riding and dressage. This latter hobby is apparently funded by the maternal grandparents. In addition, O engages in a range of out of school activities, each of which, of course, incurs some cost.
 On the mother's estimate she needs £19,000 per year simply to meet O's reasonable needs. In addition she claims to incur reasonable expenditure as O's parent of an additional £28,000 per year.
 The father works for an investment company based in Geneva. The judge understood that he received net payments of "salary" of £6,400 per month, in addition to which he received bonus payments every six months. The husband has explained to this court that the monthly payments are made by his employers not as salary but as regular staged payments on account of commission. Were his commission to fall below a figure that supported payment at the rate of £6,400 per month he would, technically, be liable to re-pay the over payment to his employers. In reality, when spread over the course of a number of months or a year, the commission that he has earned on sales has always been sufficient to justify regular monthly payments at this rate. If the level of commission that he earns is above that represented by the regular monthly payments, then any top up is paid to him from time to time. In addition bonus is declared twice each year, however, no such bonus declarations were made during 2013 as a result of a decline in the business.
 The father is married and there are three children born within that family who are now aged five, three and one.
 A schedule of assets produced for the first instance hearing shows that, at that stage, the father had some £137,000 in a bank account together with a further £60,000 on long term investment.
 The mother's case, both before the judge and before this court, is that the documents disclosed show that the father's family enjoys a high standard of living, taking four holidays a year and regularly pursuing expensive interests such as skiing. The mother draws a stark contrast between the lifestyle enjoyed by the father's other children and that experienced in England by her daughter O.
The first instance hearing
 The hearing before HHJ Hughes was spread over two court days and the transcript indicates that the judge, together with the mother and father, each of whom acted as litigants in person, traversed the detail of the case in a comprehensive and thorough manner. The judgment, which was produced by the judge in writing during the afternoon of the second day, is comparatively short. However, having read the full transcript of the hearing, and noting the observations that the judge made, one way or the other, about the merits of the detailed issues in the case as they were raised during the hearing, one readily obtains a sound understanding of the judge's thought processes which are then mirrored in the judgment and in her order.
 One ground of appeal raised by the mother is that the judge displayed bias against her and cut short her ability to give information and make representations to the court. Having read the transcript, I do not consider that that criticism is substantiated. It may be a matter of perception. It is certainly the case that the judge did not agree with all of the points being made by the mother. The mother's case was, in my view, pitched at a very high level. Many of the judge's comments, which are likely to have been perceived by the mother as indications that the judge was "against her" were, in my view, no more than the judge robustly communicating her view, from time to time, on the merits. There is a difference between a judge who disagrees with the points being made by a litigant, and a judge who is biased against that litigant. Noting the mother's criticism, I have read the transcript carefully to identify any indication of true bias. I have found none. I respect the mother's perception of what went on in the courtroom, but the reality is that the judge was questioning the validity of the points being made. Conversely, it is the case that the judge found the father's case to be more reasonable, with the result that he was not exposed to the same degree of critical analysis as that applied to the mother.
 In terms of the judge cutting the mother short in her submissions, I do not consider that that criticism can be made out. It is correct that there came a stage during the mother's explanation of her case at the opening of the hearing when the judge indicated that the time had come to hear what the father had to say. However, thereafter, as the length of the hearing shows, both parents were given full rein to develop their respective cases before the judge and make whatever points they chose to make.
 One theme which developed early on in the hearing, and was maintained throughout, was an expression of concern by the judge, and echoed by the father, over the level of credit card debt that had been accumulated by the mother. Annual rates of interest in the order of 36% were being levied and, given the levels of income involved, it was simply not possible for the court to understand how the mother was to extract herself from a situation which would simply see the level of debt rise and rise as each monthly interest payment was added to the pile. At a relatively early stage the judge indicated that she considered a monthly periodical payment of £1,000 may be justified, but, at that stage, the interest on the credit card debt was running at over £1,000 per month; something additional was plainly needed.
 In addition to the credit card debt the mother claimed to owe her parents £23,000 simply with respect to expenditure on O. There was further indebtedness to her parents in relation to other matters.
 The mother's case before the judge was that she sought periodical payments of £24,000 per annum together with a lump sum of £180,000.
 During the course of the hearing the father came to make a firm offer of £1,000 per month periodical payments and he accepted the judge's suggestion that any lump sum payment should be targeted upon the mother's credit card debt. Thus, during the forensic process, he came to accept the two key elements of the current order in relation to which he raises no appeal. However, his offer to pay £1,000 per month was intended, by him, to include an element over and above the appropriate proportion of his ordinary income to reflect his potential bonus. He did not agree to a further periodical payments order based upon a percentage of his bonus.
 It is not necessary to offer any further summary of the hearing itself, which amounted to a detailed consideration of each of the key elements of the parents' finances to which I have already made reference.
HHJ Hughes's judgment
 Having summarised the background and the respective financial positions of each of the two parties the judge drew her conclusions together in the following two key paragraphs:
"8. Whilst the father has resources to pay a lump sum the mother has a roof over her head and that of the child. He has not got the resources she seeks namely £180,000. I must take into account the recent payments which he has made. In reaching my decision that he should pay a lump sum it seemed to me that the father needed to help the mother get out of the debt so that she could spend her future income on her own improvements to the house or buying herself a car. I was not satisfied that the father could afford more than the costs of the debts while keeping his own mortgage payments up to date and supporting his wife and young family. So, I ordered him to pay a lump sum amounting to the costs of the hard debts which are set out in Bundle 2 at Tab C6 19. I believe that he should pay the debts directly to the lender so that the mother is not tempted to leave the debts in place and spend the money. In my judgement the mother should not be obliged to repay the sums to him and nor can she claim any more lump sums from him.
9. While the father's basic salary remains at £6,400 per month I believe that the fair order is that he pay £1,000 per month to the maintenance of O. That must be paid each month and the first such payment will be on the 10th August 2013 when his next payment is due. Of course the salary has two elements: the basic salary and the bonus payments. The father says he will know by 1st August each year what his net bonus payment has been for the previous year and he has not received payments this year. So I oblige him by 1st August 2014 and each subsequent year in which he is paying maintenance for O to notify the mother of the amount of the net bonus payment. He must also account to he mother for 15% thereof. The mother agreed that there should not be a variation of the basic level of maintenance if the father earned the equivalent of £7,000 or less per month. If his basic pay is more than £7,000 each month I would hope the parties could agree a commensurate level of increase in O's monthly maintenance. If they cannot agree they may have to return to the Court". "
Arguments on appeal
 The mother makes the following key points in support of her appeal:
a) The amount of maintenance ordered does not cover the child's overall needs;
b) The amount of maintenance ordered takes no account of the disparity of lifestyles as between the two households;
c) The judge was wrong to focus on the fact that the father had already paid £60,000 to the mother for O's maintenance, without taking into account the years prior to 2010 during which no payment was made. When spread evenly throughout O's life, the maintenance payments made by the father amounted only to £550 per month;
d) The judge was wrong to consider that the father's income was limited to £6,400 per month, when, normally, each year he received further payments of commission and bonus;
e) Whilst the mother does not need to seek provision under Schedule 1 for housing, she is entitled to look to the father to assist in the maintenance of the property in which his daughter lives.
 The father's appeal is only focussed upon the element of the order relating to his bonus. The central points that he makes are:
a) The CSA figure that is appropriate to these circumstances is based upon a starting point of 15% being payable for one child, but this figure is then discounted by 25% to reflect the fact that the father is also responsible for three other children. The resulting percentage from that equation is 11.25%. If that percentage is applied to a monthly net figure of £6,400 the resulting CSA figure is £720 per month;
b) The father therefore argues that the additional £280 necessary to bring that CSA figure up to £1,000 is sufficient to represent his varying potential to receive bonus and commission over and above his ordinary monthly payments and is therefore to be seen as a top up;
c) He therefore argues that there is no justification for yet a further top up by requiring additional payments out of any bonus he receives;
d) In any event, a rate of 15% on his bonus is well above the CSA rate of 11.25%
e) The relevant ceiling on the CSA scheme in place at the time of the first instance hearing was £104,000 net per annum. This is well in excess of the father's current annual net income of £76,800. The father is outside the CSA scheme because he lives abroad. However, had he been in the CSA scheme, there would be no jurisdiction to order top up payments.
 A reading of the full transcript of the two days of hearing before HHJ Hughes, a consideration of the relevant documents within the substantial court bundles and now having heard the oral submissions of the parties, provides a clear view of the issues in this case and the judge's approach to each one of them. It is not the business of this court to provide a complete re-hearing from scratch of the mother's application. Her apparent surprise during submissions, when the requirement to indicate where she submits the judge was in error was drawn to her attention, indicates that she may have been under a misunderstanding as to the appeal process. The scale of the orders for which she argues has certainly not been moderated by the process before the judge, or any of the judge's findings. She therefore maintains a need for an income to meet O's reasonable expenditure of £19,000 and to contribute to her own reasonable expenditure of £28,500.
 Without descending to detail, it was plain as we were taken through the specific elements within her schedules that a number of the entries were projected estimates, rather than being necessarily based upon actual expenditure. The father's response that these schedules were "a wish list rather than a needs list" has some merit. For example there are elements for O's clothing £2,450, hobbies (excluding riding) £1,600 and additional pocket money of £480. Again, if one adds up the sums claimed for outings, trips, summer holiday courses and holidays for O alone the total is £6,250. Provision for the purchase of Christmas presents for O is put at £1,000.
 On the other side of the equation, although the father is in good employment in the finance industry, his expected remuneration is within the relatively moderate bracket of £70,000 - £120,000 per year. This is by no means a "big money" case. He is a salesman and his income is susceptible to variations with the ebb and flow of the market. His financial resources have a limit to them, albeit that he and his family are able to maintain a reasonable standard of living and quality of life.
 The mother is right to point to the father's abdication of his financial responsibility towards O in the early years. He accepts the criticism. She is also right to invite the court to view his more recent payments in the context of O's life as a whole. But, as the years of non-payment move further into the past and the track record of consistent payment becomes more and more established, the weight to be attached to that argument steadily diminishes.
 In terms of the lump sum element of the judge's order, payable under CA l989, schedule 1, paragraph 1(2)(c), the judge's decision to target the father's resources to paying off the mother's credit card debt is not challenged on this appeal. That order, and the requirement that the father should make the payment direct to the various finance houses, was, if I may say so, a wise and sensible decision by the judge. Equally, it is of note that the father readily saw the sense in this proposal and accepted it. That sum (£44,600) having now been paid, the mother seeks an additional £120,000 on the basis that the judge's original lump sum order should have been £165,000.
 In looking at the mother's claim regard has to be had to the provision of housing for O. In cases where the finances permit, it is not unusual for the court, under CA l989, Schedule 1, to require the funding parent to make substantial capital provision so that a house may be purchased for the other parent in order to provide a roof over the child's head. However, such provision is typically made by a settlement which provides for the property, or the capital, to revert to the donor once the child achieves a certain age. Here there is no need to establish such a settlement as the mother owns the house in which she and O live. The mother's case is, however, that the property urgently requires repair and maintenance and she looks to the father to fund some or all of this.
 In a different case, where the father's financial resources were greater, and where there were no other calls of a capital nature on him under Schedule 1, the claim for contribution to house repairs may well have succeeded. However, here his finances were not unlimited. The capital that was more readily available totalled £137,000. However, the evidence was, that from time to time, the father had had to draw on capital to supplement current expenditure on his family. And, in making that observation, I have regard to the fact that in recent years his expenditure has included the regular payments made for O's maintenance together with the three lump sum payments totalling £30,000 between December 2010 and January 2012. The judge, rightly, considered that further capital payment was required. There was, however, a need to prioritise the reduction or eradication of the mother's credit card debt and, as I have indicated, the judge cannot be criticised for her decision in that regard. The only question on appeal is whether the judge was wrong in limiting the father's contribution to the credit card debt and whether the lump sum order should, therefore, have been higher.
 In cases under Schedule 1 the court will have regard to the degree in which the child in question is entitled to be brought up in circumstances which bear some sort of relationship to the father's current resources and the father's present standard of living. (Re P (Child: Financial Provision)  EWCA Civ 837,  2 WLR 865). It is recognised that the exercise of this jurisdiction is highly discretionary and involves, in the words of Thorpe LJ in Re P "an essentially broad-brush assessment to be taken by Family judges with much expertise and experience in the specialist field of ancillary relief". In that context this court will pay due respect both to the scope of judicial discretion and the experience of the judges who are called upon to exercise it. In the course of his judgment in Re P Bodey J offered a summary of the relevant considerations (paragraph 76) culminating in the following umbrella statement: "the overall result achieved by orders under Schedule 1 should be fair, just and reasonable taking into account all the circumstances".
 The judge was required to have some regard to the husband's financial resources and the standard of living of his family and the three children who live with him. Equally, his capital resources had a limit to them. In exercising her discretion, and in seeking to achieve an outcome which was fair, just and reasonable, the judge had to balance these factors. She did so by targeting the entirety of her order at the credit card debt with no additional payment of a lump sum directly to the mother. The payment made, however, represented almost exactly a third of the capital that was readily available to the father at the time.
 In addition, for reasons to which I will shortly turn, I consider that the monthly periodical payment fixed by the judge contained an element of "top up" over and above the CSA rate and to that, relatively modest, extent, the lump sum payment that has been ordered can be seen as part of an overall balanced provision.
 In the circumstances it is, in my view, impossible for this court to hold that the judge was wrong in making the choice that she did. Indeed, for my part, I consider the judge's order to be well targeted in the circumstances of this case; that that is so, is a consequence of the way in which the judge immersed herself in the detail of the finances of these two parties during the course of the vigorous to and fro of submissions that took place over two days in her court. I would therefore dismiss the mother's appeal with respect to the lump sum payment.
 Turning now to the periodical payments order I consider that the father was correct to draw this court's attention to two High Court decisions namely GW v RW  EWHC 611 (Fam), a decision of Mr Nicholas Mostyn QC, sitting as a deputy High Court judge and SW v RW  EWHC 73 (Fam), a decision of Singer J, which established that "the appropriate starting point" (per Mr Mostyn) or "broad regard...paid to ...a useful rule of thumb in many routine cases" (per Singer J) describe the approach to be taken to the CSA assessment figure.
 In this case the child support scheme has no direct application as the father lives abroad. However, in my view, it is informative to consider what the position would be were he to be resident in England and Wales. In such a case the court only has jurisdiction to make a maintenance order in accordance with Child Support Act l991, s 8(6) which reads:
"(6) This section shall not prevent a court from exercising any power which it has to make a maintenance order in relation to a child if-
(a) a maintenance assessment is in force with respect to the child;
(b) the amount of the child support maintenance payable in accordance with the assessment was determined by reference to the alternative formula mentioned in paragraph 4(3) of Schedule 1; and
(c) the court is satisfied that the circumstances of the case make it appropriate for the absent parent to make or secure the making of periodical payments under a maintenance order in addition to the child support maintenance payable by him in accordance with the maintenance assessment."
 The reference to Schedule 1, paragraph 4(3) is a reference to a case where the absent parent's weekly income exceeds the maximum level set by the scheme, which is currently set at £2,000 net per week. The father in this case does not fall within section 8(6) and the court would therefore have no jurisdiction to make any provision for O by way of court order, were he to be resident in England and Wales. As I have already explained, the CSA figure relevant to his regular monthly remuneration is £720.
 It is, of course, correct that any CSA assessment would take account of his overall remuneration including any additional commission paid in excess of the regular monthly payments and any bonus. The judge's order makes some account for this, albeit that there is no overt reference to the CSA calculation in her judgment. The judge's order provides for an additional £280 per month which is £3,360 per year. The father's CSA calculation is for 11.25% of his net income to be apportioned for O. The figure of £3,360 is 11.25% of a total net income of just under £30,000 per year. Thus, the judge's order for monthly payments of £1,000 accommodates there being additional net income to the father, over and above his regular monthly receipts, of £30,000 per year.
 Account obviously has to be taken of O's reasonable needs. For the reasons that I have already summarised, it is not possible to feel confident that the schedule produced by the mother accurately predicts her daughter's needs. There is, to my eye, an element of exaggeration in a number of the key categories.
 Standing back, and with particular regard to the fact that the mother would be ineligible to claim any maintenance via the court in addition to the rate paid to her through the child support scheme were the father to be resident in England, I consider that the judge's figure for a monthly payment of £1,000 is not properly open to challenge. Further, insofar as the judge's figure accommodates remuneration of up to £30,000 net per annum in addition to the £76,800 per annum that the father receives on a monthly basis, I do not consider that the element of the judge's order providing for a proportion of the father's bonus should kick in until the additional bonus and excess commission level has exceeded £30,000.
 It is to be contemplated, and no doubt hoped, that the father's remuneration in some years will exceed £106,800, being the total of his monthly payments plus £30,000. If that does occur then, having regard to the need to keep some measure of parity between the household in which O lives and the household in which the father's other children live, O's maintenance provision should include some additional payment to reflect the enhanced remuneration. The judge set the percentage at 15%. In doing so I consider that she was in error. No submission may have been made to her, but the judge does not seem to have had regard to the fact that the relevant percentage for this father is 11.25% for CSA purposes and not 15%. I would therefore allow the father's appeal in relation to the element of the order dealing with his bonus and replace the judge's order with the requirement for the father to pay 11.25% of any remuneration he receives in a year which exceeds the level of £106,800. The mechanism for calculating that payment should remain the same as the judge's order. If that does occur then, having regard to the need to keep some measure of parity between the household in which O lives and the household in which the father's other children live, O's maintenance provision should include some additional payment to reflect the enhanced remuneration; in those circumstances, I do not consider that an upper limit on the sum payable, by way of a cap, is appropriate.
 In conclusion, therefore, I would dismiss the mother's appeal but allow the father's appeal to the limited extent that I have explained.
 I agree
 I also agree
"the principal (monthly) periodical dealing with contemporary issues" Sir Mark Potter P