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03 NOV 2015

Re TW and MW (Minors) [2015] EWHC 3054 (Fam)

Re TW and MW (Minors) [2015] EWHC 3054 (Fam)
(Family Division, Mostyn J, 24 July 2015)

Financial remedies – Child maintenance – Order made for maintenance at double the rate proscribed by the Child Support Act 1989 – Whether the judge had justified such a departure

The case in relation to child maintenance was remitted upon the basis that the judge had provided no justification for imposing maintenance at double the rate prescribed by the Child Support Act 1991.

The father of the two children was a well-known professional footballer. An order was made under Sch 1 of the Children Act 1989 in respect of maintenance for the children. Pursuant to the Child Support Act 1991 calculation of child support was by way of a formula applied to gross income. For two qualifying children the rate was 16%.

At first instance the judge formed a poor impression of the father and found that he put his own expenditure above his obligations towards his children. He was found to have income of approximately £190,000pa and that he should pay £30,000pa per child. That amounted to 31.5% of his income which was double the rate prescribed by the formula. The father appealed.

The appeal was allowed. In making a child maintenance order the appropriate stating point was the amount proscribed by the Child Support Rules. Consistency of approach was desirable, particularly where so many people were now unrepresented.

Under s 4 (10)(aa) of the 1991 Act after an order had been in force for a year, either parent could apply for a maintenance calculation. If that took place the original order would cease to have effect once the calculation was taken.

In this instance in the absence of the judge identifying any good reason why she departed from the formula, she had erred in principle and the order would be set aside. Although it would be open to the father to apply for a calculation a year after the order was made it was necessary for the matter to be remitted to the judge for her to consider whether on the facts a departure from the formula was justified.

In the interim orders were made for maintenance to be paid of £15,000pa per child, payable monthly.
No. FD14P04019
Neutral Citation Number: [2015] EWHC 3054 (Fam)


Royal Courts of Justice
Friday, 24th July 2015


(In Private)

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Re: TW & TM (Minors)

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Transcribed by BEVERLEY F. NUNNERY & CO. (a trading name of Opus 2 International Limited) Official Court Reporters and Audio Transcribers 5 Chancery Lane, London EC4A 1BL Tel: 020 7831 5627 Fax: 020 7831 7737 info@beverleynunnery.com

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MR. T. TYLER (instructed by Huggins & Lewis Foskett) appeared on behalf of the Applicant
THE RESPONDENTS appeared in person

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[1] This is the hearing of the appeal by the appellant father against orders made by DDJ Drew on 19th May 2015 sitting in the Central Family Court, the orders being made under Sch.1 of the Children Act 1989. They concern child maintenance for two children, TW who was born on 24th May 2005 and who is now ten, and TM who was born on 6th August 2010 and who is therefore nearly five years old. The father is a well-known footballer who is now aged 32 and who is, on any view, in the autumn of his career. He has recently been playing for a club which was in the championship but which, at the end of last season, was relegated, under a four month contract which expired on 30th June 2015. He has been offered a contract at a lower rate by the same club which would not be enough to meet his outgoings and obligations and he, through his agent, is hoping to negotiate a better contract either with that club or another club. However, as things stand at the moment he is out of contract and is not earning any money.

[2] The judgment of the deputy district judge varied pre-existing orders for child maintenance. So far as TM is concerned the earlier order was dated 19th February 2014. So far as TW is concerned the earlier order was made on 16th April 2012. Both of those orders – and indeed orders prior to that – have been made by consent.

[3] The first ground of appeal mounted by the father was that in the light of the decision of Dickson v Rennie [2014] EWHC 4306 (Fam) the court had no jurisdiction to make its orders on 19th May 2015. That is the date of the order which is being appealed. That argument is, with respect, completely wrong. Dickson v Rennie decides that the court has no power to make a contested order for periodical payments unless there has been, pursuant to s.8(6) of the Child Support Act 1981, an antecedent calculation by the secretary of state or his predecessor, the Child Support Agency, in the maximum amount as provided for in para.10 of sch.1 of that Act. However, the order here in question was not an originating order; it was an order varying an earlier consent order. The earlier consent orders were unquestionably validly made for they were made by consent and in those circumstances, by virtue of s.8(5)(b) of the 1991 Act the court is empowered to make a maintenance order which is in all material respects in the same terms as a prior agreement. In his well-known decision of V v V (Child Maintenance: Periodical Payments) [2001] 2 FLR 799, Wilson J, as he then was, decided that it was perfectly acceptable for a court to conflate the requirement of a prior agreement and the making of the order into one exercise. He said in para.21 that he had no problem, provided that the words “by consent” appear above the order, in finding that that document supplied the necessary written agreement for the purposes of s.8(5). In such circumstances it simply cannot be gainsaid that the prior orders were validly made. Indeed, in order perhaps to make assurance doubly sure, it should be recorded that in the case of TM the earlier orders recorded that the Child Support Agency had carried out a maintenance calculation in the maximum amount thereby entitling the court to make an order topping up that calculation under s.8(6). There can be no doubt at all that there were in existence valid prior orders capable of variation and the suggestion that the learned deputy district judge did not have jurisdiction to vary her order is legally devoid of any merit. That ground, ground 1 of the appeal against the orders – there were two orders made on 19th May, one for each child – is dismissed.

[4] However, ground 2 is, in each instance, phrased that it was wrong for the deputy district judge to order the father to pay such a high proportion of his net income. In order to understand this ground it is necessary to examine the findings that were made by the deputy district judge. In her judgment she stated at para.14 that she had formed an adverse view of the father. I should say that at the hearing before the deputy district judge each of the parents was self-represented. This demonstrates yet again the difficulty that the court is often placed in these days by the throng of litigants in person that the recent Legal Aid reforms have caused to enter the courtrooms. As has recently been pointed out by Aikens LJ in Lindner v Rawlins [2015] EWCA Civ 61 the presence of so many unrepresented litigants runs the risk of the courts making legally erroneous decisions. It is my opinion that in two respects, because of the lack of legal representation, the court has in this case reached legally erroneous conclusions.

[5] I have mentioned that in her judgment the deputy district judge first recorded her poor impression of the father. She stated in para.14,

“The impression I formed was that he was a man who was determined to put his own expenditure and enjoyment first and his obligations to his children came a very poor second.”

In para.19 she made factual findings about the father’s financial position. She recorded the rate of the contract which was then in being at the club with which he was playing in May 2015 at £3000 a week which would mean a basic wage of £156,000 per annum. She recorded that there were bonuses to be paid in addition to that basic wage referable to goals scored and she concluded that his overall earning capacity was £190,000 per annum. She did not say in para.19 whether that was gross or net although when reading it I clearly infer that she meant it to be a gross figure. It would be a curious use of language for someone to describe their earning capacity in net terms. The only doubt in that regard has been dispelled by an email that has been received from the deputy district judge today which confirms that the figure of £190,000 was a gross figure. That figure of £190,000 is more than the maximum income of £156,000 which is provided for in the Child Support Act sch.1 and the regulations made thereunder.

[6] Under the Child Support Act as reformed by the Child Maintenance and Other Payments Act 2008 calculation of child support is now done under a formula which is applied to gross income. If there are two qualifying children the rate is 16 per cent for a gross income up to £41,600 and then 12 per cent on the next £114,400. The effective rate for someone earning the maximum chargeable income of £156,000 is 13.06 per cent. If there are two children living in separate homes with different mothers then the percentage rate will be apportioned equally between them. So, if the gross income is £41,600 the payment for each child is 8 per cent; if it is £156,000 it is 6.53 per cent. The maximum income for the purposes of the formula of £156,000 was found by the deputy district judge to correspond to the father's basic wage at the time she heard the case. In my decision of GW v RW [2003] 2 FLR 108 at para.74 I suggested that in circumstances where a court makes a child maintenance order the appropriate starting point should almost invariably be the amount arrived at by application of the Child Support Rules. In the 2015/2016 edition of At a Glance at p.7 it is stated that, “Now that the 2008 regime has been fully implemented for new cases, it is reasonable to assume that the court will use the new calculation rules.”

[7] There are at least two reasons why this principle should be maintained and reaffirmed. The first is this. It would be an example of arbitrary law-making if the computation of child maintenance were radically different depending on whether it was done by the secretary of state under the 1999 Act or whether it was done by a court under sch.1 of the Children Act or s.23 of the Matrimonial Causes Act. Consistency of approach is obviously desirable in order to satisfy the need for the law, particularly in these days when so many people are unrepresented, to be predictable and accessible. Arbitrariness is to be avoided wherever possible. However, there is a second very important reason which is that once an order has been in force for a year then pursuant to s.4(10)(aa) of the 1991 Act either parent may apply for a maintenance calculation. If the maintenance calculation is made then by virtue of s.10(1)(a) of the Act and reg.3(2) and (3) of the Child Support (Maintenance Arrangements and Jurisdiction) Regulations 1992, SI 1992 No.2645 the order, upon the making of a fresh calculation, shall cease to have effect; and that would include an earlier order made for top-up under s.8(6) of the Act, it being provided that in reg.3(3) that the only orders that remain untouched by the making of a fresh calculation are orders made under s.8(7) or (8) of the Act which are orders that provide for child support for school fees or to meet disability expenses.

[8] It follows that in May of next year in this case it will be open for the father to apply for a calculation and on the making of the calculation this order will cease to have effect for all time and be incapable of revival. If the calculation is made on a maximum income basis then it will be open to the mothers to apply for fresh top-up orders under s.8(6). Bearing in mind that the father’s income now, he being out of contract, is on any view less than it was when the deputy district judge heard the case; and given what I heard about him being offered a lower rate of contract than he had hitherto, it must be anticipated that any calculation made in this case after May 2016 would not be a maximum calculation, with the result that the mothers would be unable to approach the court for a top-up under s.8(6). That, in my view, is another very good reason why the principle in GW v RW should be reaffirmed. It would be an exercise in futility for orders very much in excess of the formula laid down by Parliament to be made if it was open to the paying father to have the orders abrogated in the way I have described after they have been in force for a year.

[9] My decision in GW v RW makes it clear that where a court is considering issues of child maintenance the formula is not, so to speak, written in marble but supplies only a starting point. There may be in a case a very good reason why there should be departure from the starting point of the formula. In my opinion the formula should apply even where the earnings of the father are in excess of the £3000 per week maximum provided for in the Act and the Regulations. If the earnings of the father were very much in excess of that then there would be a good reason to depart from the formula downwards, but if the income of the father is not unadjacent to the maximum then to my mind, subject to other factors, that of itself is not a good reason to depart from the formula.

[10] In this case it may well be that the evidence would justify departure from the formula. The problem with the decision of the learned deputy district judge is that she does not recognise the formulaic result as a starting point. Indeed, her judgment is strikingly silent about the Child Support Act in any respects. I do not blame her for that because it is clear from the transcript that she was not addressed about it, although I cannot forebear from observing that table 6 in At a Glance would, if it had been looked at, directed the deputy district judge clearly to the formula.

[11] In my judgment, in the absence of the deputy district judge having identified any good reason why she was departing from the formula, I am driven to conclude that her judgment errs in principle and should be set aside. However, I am not in a position in my judgment to exercise the discretion afresh. There was before the deputy district judge a wealth of documentary material and she had oral evidence as well which is not before me. In my judgment the matter needs to be remitted to the deputy district judge for her to consider whether, on the facts as they will be when the matter is before her again, this is a case where departure from the formula is justified.

[12] The decision that was made in this case, which I have already found to have been on an incorrect legal basis, was that the father should pay £2500 per month per child or £30,000 for each child, a total of £60,000 in child maintenance. £60,000 is, as a percentage of her finding of the father’s gross income of £190,000, 31.5 per cent, which is more than double the rate of 13.05 per cent prescribed by the formula for someone earning £156,000. A departure to that extent from the formula does, in my judgment, need to be clearly justified by reference to other resources that are available to the father but the judgment here does not do so beyond saying this:

“He also has a number of properties that he has bought and some of which he says he is in the process of selling but I have seen no evidence to support that contention. He also has the advantage of being able to borrow money from his agent on a fairly regular basis which means he has financial resources which are not usually available to other people. In short, he is in a relatively comfortable position and if he wished to do so he could begin to pay his debts off with a sensible financial plan. I do not think that his financial position is nearly as dire as he would have the court believe.”

[13] Those findings would perhaps, if fleshed out and considerably expanded by reference to documentary evidence and oral testimony, justify an award that the district judge made. However, I would point out that in order to justify an award that she made the deputy district judge would in effect have to find that this was a man who was living a lifestyle that was comparable to somebody earning £400,000 a year gross. In my judgment those lines in her judgment do not justify the departure of the scale which I have mentioned so the matter, in my view, has to be looked at afresh by the deputy district judge.

[14] In the meantime, I propose that para.1 of the orders shall be set aside and they will be replaced by interim orders in the sum of £15,200 per annum per child payable monthly in the sum of £1266 per child per month. This is 16 per cent of £190,000, which is a reasonable percentage having regard to the formula figure of 13.05 per cent and the deputy district judge's limited findings. This will commence on 1st September, in advance, giving the father a small breathing space in this period when he is out of work. The order will go on to provide that my interim orders will be reconsidered by DDJ Drew on current evidence on a date to be fixed after 1st October 2015 in the Central Family Court before her.

[15] Between now and that hearing I would ask the parties to reflect very carefully on whether my interim order should not be accepted as a final order. I hope that before they leave the building today they will engage in conversations which may be facilitated by Mr. Tyler, counsel, who is representing the father today. If they cannot reach any agreement I would urge them to engage in mediation and I have suggested that perhaps an approach should be made to Mr. Pirrie of Family Law in Partnership, who is an acknowledged expert of the Child Support Act and who may be amendable to a suggestion that he should act as a mediator in this case. It is not economical either in terms of time or money, let alone stress and anxiety, for this case to go on any longer. I personally regret not being able to deal with the matter finally but I simply do not have the evidential material before me today to enable me to do so.

[16] The third ground of appeal relates to para.2 of the orders made in respect of each child. This remits the arrears in each case save for the sum of £12,500 which was to be paid by 19th May 2015 and in default of payment was to be charged on the father’s interest in the homes which had been provided by earlier orders for each of these children. The order goes on to provide that in default of payment the quantified arrears of £12,500, the balance having been remitted, shall carry interest at 8 per cent per annum until such time as the amount is paid.

[17] The imposition of interest is a legally complex issue. If the case had been decided under the Matrimonial Causes Act then by virtue of s.23(6) the court may award interest at such rate as may be specified but only where the court has made an order under this section for the payment of a lump sum. The order made here, which quantifies the arrears in the sum of £12,500 and remits the balance, is not an order for a payment of a lump sum under s.23 of the Matrimonial Causes Act nor, for that matter, is it an order for payment of a lump sum under para.1(2)(c) of sch.1 of the Children Act. I observe that there is no comparable provision to s.23(6) of the Matrimonial Causes Act within sch.1 of the Children Act 1989. The order made here was in the Family Court at the Central Family Court. The Family Court replaced all courts which previously exercised family jurisdiction. The orders that had been made previously in this case had been made in the Principal Registry of the Family Division sitting as a county court. If the Family Court had not arrived in existence and the old regime had been continued then this order would have been made or treated as having been made in the county court. In those circumstances interest on a judgment debt is payable pursuant to s.74 of the County Courts Act 1984 and art. 2 of the County Courts (Interest on Judgment Debts) Order 1991, SI 1184. That provides in art.2(4) as follows:

“Where the relevant judgment makes financial provision for a spouse or a child, interest shall only be payable on an order for the payment of not less than £5000 as a lump sum whether or not the sum is payable by instalments.”

It also provides that “For the purposes of this paragraph no regard is to be had to any interest payable under s.23(6) of the Matrimonial Causes Act 1973.”

[18] Therefore, by reference to that provision, interest would not be payable on this order automatically because the order here is not the payment of a lump sum but is a quantification of arrears of periodical payments. Article 2(5), as recently amended, provides that, “A judgment debt under a relevant judgment of or registered in the Family Court does not carry interest under this order if, by virtue of any other enactment, it does not carry interest.” That seems to suggest that judgment debts in the Family Court do not carry interest but that begs the question as to whether an order made in the Family Court attracts entitlement to interest under s.17 of the Judgment Acts 1838. Section 17 of the Judgments Act 1838 provides that “Every judgment debt shall carry interest” and I believe that the Judgments Act 1838 goes on to provide that for the purposes of the Judgments Act 1838 decrees of courts of equity would constitute judgment debts for the purposes of the entitlement to interest. The interest rate is set in the Judgments Act at 8 per cent per annum.

[19] The Judgments Act 1838 has been interpreted in the White Book at para.40.8.2 as being applicable to High Court proceedings and in a decision of the House of Lords in Thomas v Bunn [1991] 1 AC 362, Lord Ackner states, “This judgment debt can only arise where the judgment quantifies the sum which the judgment debtor owes to the judgment creditor and can only apply to a single judgment which constitutes the judgment debt.” The Judgments Act 1838 refers laconically to “every judgment debt” and a literal reading of those words would suggest that it does apply to the Family Court. Moreover, s.31(E) of the Matrimonial and Family Proceedings Act 1984 provides that in any proceedings in the Family Court the court may make any order which could be made by the High Court, which suggests perhaps that an order made in the Family Court is caught by the 1838 Act. This is difficult territory. It seems to me that the draftsmen of the amendment to article 2(5) of the County Courts (Interest on Judgment Debts) Order 1991 contemplated that a Family Court debt would not carry interest. It would be very strange, however, if the entitlement to interest on a lump sum which was available under the order in respect of an order made in ancillary relief or Children Act proceedings in the County Court had lost the right to carry interest. On the other hand, it would be a step too far, I think, to interpret the 1838 Act as applying to this order for payment of this sum in circumstances where it is clear to me that before the advent of the Family Court interest was only payable on lump sums. In my judgment, although the position is murky, the orders made here which remit some of the arrears and quantify the balance do not qualify as orders which attract interest under the Judgments Act 1838. In those circumstances, inasmuch as para.2 of the orders specifies that they shall carry interest at 8 per cent, that order was made ultra vires and that part of the order should be revoked. However, I do not revoke the quantification of the arrears under each order and indeed there is no appeal against that; those orders remain extant.

[20] The mothers have pointed out to me that the provision which provides for the orders to be charged on the father’s interest in the properties which provide the homes for the children is illusory in a sense because it puts no money into their pockets at all but simply puts money into their pockets in years to come when the properties are eventually sold. I emphasise that the father will have some explaining to do if he does not discharge these arrears in the near future.

[21] That concludes this extempore judgment.

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