HHJ Vincent. Schedule 1 matter determined in light of the child’s needs and the strict remit of Schedule 1, notwithstanding the significant disparity between the parents’ respective economic positions and standards of living.

Background

The applicant M and respondent F had been in an 11-year relationship, separating in September 2019. They had an 11-year-old child (‘C’) together. During the relationship, F worked, and M was principally at home caring for C, although she did work as a nanny for a time when C was small.

On separation, M and C moved out of the family home. F made an application for a child arrangements order on 3 July 2020 which was unresolved at the time of this hearing; the current arrangements saw C spending five nights a fortnight in term time with F, with holidays being shared equally between the parents.

In July 2020, F paid M £572,000 to settle M’s application in respect of the family home under TLATA and M transferred her interest to F.

In February 2021, M purchased a property (‘the flat’) outside London, in the area she hoped to relocate to, for £350,000. However, M withdrew her relocation application when a s 7 report in the Children Act proceedings did not endorse the move. This meant she had never lived there and instead moved with C to a rented flat within London, which is where they lived at the time of this judgment.

Law

The court may make a number of orders for the benefit of a child under Schedule 1:

1. periodic payments where a maximum child assessment has been made by the Secretary of State or where the parties agree the court should have jurisdiction;
2. lump sum orders, which must be for housing or other singular items of a capital nature and not disguised capitalised maintenance payments; and/or
3. property adjustment orders or property settlement orders, which can only be made on one occasion pursuant to para 1(5)(b) of Schedule 1 and which must be drafted so that the provision reverts to the payer once the child reaches the age of 18 or completes full-time education (Stacey v McNicholas [2022] EWHC 278 (Fam)).

In deciding whether to make an order under Schedule 1, the court must have regard to all of the circumstances of the case, including the list of factors at paragraph 4(1) of Schedule 1.

Regarding housing, the question for the court is, as summarised at [26]:

‘What accommodation is reasonable for the child in the context of available resources[?]’

The welfare of the child is relevant in that it will have, ‘in the generality of cases, a constant influence on the discretionary outcome’. The child is ‘entitled to be brought up in circumstances which bore some sort of relationship to the father's current resources and the father's present standard of living’ with the caveat that ‘the court must guard against unreasonable claims made on the child's behalf but with the disguised element of providing for mother's benefit rather than for the child’; Re P (a Child: Financial Provision) [2003] EWCA Civ 837. The court is not required to aim for parity between the parents’ standards of living.

The circumstances of the case

F had £2.9m in non-pension assets:

1. sole ownership of the FMH, which had equity of £1.25m;
2. interests in property and land inherited from his father, with equity totalling £710,000;
3. cash in bank accounts of around £40,000;
4. investments/shares of £640,000;
5. unvested share options with his current employer with an estimated value of £230,000; he would lose his entitlement to these unvested share options if he were to leave his job; and
6. a company he founded in 2019 for offering ad hoc consultancy services, with a nominal value.

F also had a pension of £630,000 and an income of £107,000 gross/£68,000 net per annum in his main job and earned a further £10,000 yearly from his consultancy work. F also received dividends from investments and rental income from his farmland in the region of £8,000 per annum.

M owned the flat mortgage-free; it had a likely net equity of £380,000. She had no other savings or investments. Her annual income comprised of £6,500 in child maintenance, £1,000 in child benefits and a few hundred pounds from her work overseeing a junior cricket camp.

M was found, in light of her mental health difficulties and other evidence regarding her capacity to work as well as her skillset, to have an immediate earning capacity of £16,000–18,000 per year which would bring her income to £23,000–£25,000 a year and which would increase with time. In light of M’s liabilities, which amounted to c.£17,000, it could not be ascertained whether she would be able to evidence a good credit history. Therefore, her mortgage capacity was not factored into the outcome.

M’s housing need was found to be in the region of £450,000–£500,000 for a two-bedroom property for her and C within reasonable distance of C’s school, friends and activities, and F.

Outcome

The following lump sum orders were made:

1. F to pay £150,000 to be used to bridge the gap between the equity available from the flat (some of which might be used to meet M’s liabilities) and M’s housing need, with the £150,000 paid to revert to the father either on the completion of C’s secondary education or his 18th birthday, whichever is the later date; and
2. a further £20,000 to be paid outright to cover expenses relating to moving and the purchase of a car.

In relation to the £150,000, a charge was to be placed on any property purchased by M, expressed as a percentage of the gross purchase price as a means of (i) protecting F from the inflationary reduction in the real value of a lump sum and (ii) building in fairness where the sale price is higher or lower than the purchase price.

M sought lump sums which were not ordered as they were disguised capitalised maintenance payments and/or were sums sought to meet costs for which F should not be considered liable.

It was ordered by consent that F would pay school fees and reasonable extras and F was directed to pay for extracurricular clubs, music lessons and school trips which are part of the curriculum. In respect of additional school trips where both parents were agreed that C should take part (e.g. French exchange, school skiing trip, cricket tours), the starting point would be an equal contribution from each parent.

M sought a lump sum of £14,000 to meet the costs of C’s school uniform and other expenses at £2,000 for seven years but lump sums for these were considered (i) maintenance by another name and (ii) not to relate to matters that fall within the remit of Schedule 1. F’s later agreement to pay two-thirds of the costs of C’s school uniform and half of his sports equipment was instead recorded.