Mr Simon Colton KC sitting as a deputy High Court judge.

Summary

On W’s application, an interim changing order was made final in respect of sums to be paid to a third party/child of the marriage, with interest granted on the unpaid periodical payments. Held: that the fixed costs regime applied to final charging orders made in family proceedings, with consideration as to when that regime could be disapplied.

In reaching his decision, the judge determined three issues of relevance:

1. Whether a charging order can be made in respect of sums to be paid to a third party / child of the marriage. The court held that it can.
2. Whether interest had accrued on periodical payments ordered but unpaid. The court held that it had.
3. Whether the fixed cost regime in CPR Part 45 applies to the making of a final charging order in family proceedings, and if so, the circumstances in which the court can and should order otherwise. The court held that CPR Part 45 and fixed costs did apply, but that the circumstances of this case justified it to ‘order otherwise’ and disapply the fixed costs regime.

Background

On 10 December 2018, Roberts J made a final order by consent (‘the ‘Roberts J Principal Order’) which, among other matters, dealt with certain properties belonging to the parties defined as ‘Flat 5A’ and ‘Flat 5D’.

A lump sum order was made, for a payment of £1m within three months of the order. A further £1.1m was payable by 19 June 2023, secured by way of mortgage over Flat 5A (H’s home). In the event H failed to procure the Flat 5D Licences within three months of the transfer of Flat 5D to W, he was to pay W £60,000 on the date three months after the transfer of the property fell due with simple interest accruing.

A spousal periodical payment with a non-extendable term was made, such that from the first day of the month following the first lump sum payment, H should pay to W periodical payments of £50,000 pa payable three-monthly in advance, and which would cease on payment of the second lump sum.

There was also a child periodical payments order that, from the first day of the month following the first lump sum payment, H should pay to W periodical payments of £25,000 pa, payable three-monthly in advance, and ending upon the child ceasing her full-time tertiary education to first degree level.

H failed to pay the second lump sum by the due date. W issued a successful claim for possession of Flat 5A which was heard on 6 October 2023. H was ordered to give possession on or before 20 October 2023 and judgment was given in the sum of £1.1m. H sought unsuccessfully for permission to appeal. On 3 October 2023, H issued an ultimately unsuccessful application to vary the date of the second lump sum payment from 19 June 2023 to 30 June 2024, and then subsequently to 30 June 2025.

On 9 January 2024, W made an application for an order for such method of enforcement as the court may consider appropriate, pursuant to FPR 33.3(2)(b). On 17 April 2024, H sought to vacate the hearing on 22 April 2024 on health grounds. The judge rejected the application. On 18 April 2024, H served notice he would act in person, and then failed to attend the hearing on 22 April 2024, saying he was at hospital.

On 22 April 2024, the judge made an interim charging order, charging the interest of H in Flat 5A in the sum of £159,244.10. This did not include the second lump sum payment due but was made up of interest on the lump sum, unsatisfied costs orders and W’s costs to date of the enforcement application. A further hearing was listed which took place on 20 October 2024, which this judgment followed.

Issue 1: A charging order in respect of sums to be paid to the child of the marriage?

It was possible to grant a charging order in respect of sums which are ordered to be paid to a third party because:

1. The Charging Orders Act 1979 (the 1979 Act) does not prescribe who may apply for a charging order. Section 1(1) of the 1979 Act defines who constitutes a ‘creditor’, which would exclude W in respect of the sums to be paid to the child. However, the 1979 Act does not provide that only creditors, as there defined, may apply for a charging order.
2. FPR 40.3, which provides that it applies ‘to an application by a creditor for a charging order under s.1 of the 1979 Act’, may be interpreted so that the ‘creditor’ has the same meaning as it does within s 1 of the 1979 Act, and therefore applications may only be made by the person to whom a sum of money is to be paid. However, FPR 40.3 must be read in the context of FPR 40.2: ‘In this part… ‘creditor’ means the person to whom payment of a sum of money is due under a judgment or order or a person who is entitled to enforce such a judgment or order.’
3. As a matter of policy, there is good reason why W should be permitted to enforce debts owed pursuant to a court order she has obtained. It would be undesirable for such enforcement action to be brought by the child.

Issue 2: Interest on periodical payments

The sum sought for interest on arrears of spousal maintenance and child maintenance was a little over £3,100.

An issue arose after the hearing, as to whether the Roberts J Principal Order was made in the Family Court or the Family Division due to the way in which the orders had been headed, and their case numbers. If the former, and as held in TW & TM (Minors) [2015] EWHC 3054 (Fam), [2016] 2 FLR 1386 at [17]–[19], interest does not accrue on orders for periodical payments made in the Family Court. The judge determined the Roberts J Principal Order was made in the High Court. It followed that:

1. Section 23(6) MCA does not provide for late payment interest. Where a lump sum is ordered and goes unpaid on its due date, interest from that date accrues by virtue of s 17 of the Judgments Act 1838 (the 1838 Act).
2. TW v TM (Minors) decides only that, as set out in art. 2(4) of the 1991 Order, in the Family Court, ‘interest shall only be payable on an order for the payment of not less than £5000 as a lump sum whether or not the payment is by instalments’. Neither TW v TM (Minors) nor art. 2(4) of the County Courts (Interest on Judgment Debts) Order 1991 says anything about the position in respect of orders made in the Family Division.

As such, it was held that interest did begin to accrue at 8% per annum from when the periodical payments were due to be made from H to W. The judge declined H’s invitation to exercise judicial discretion to waive any interest on the accrued outstanding child and spousal maintenance.

Issue 3: Fixed costs

W sought her costs of the charging application in the sum of £23,165 plus VAT. The judge questioned whether by reason of FPR 28.2, W was limited to recovering fixed costs of just £110 in accordance with CPR Part 45.

Ultimately, the judge determined that the fixed amounts as contained in Tables 6 and 7 under CPR 45.22 and CPR 45.23 did apply to the making of a final charging order under FPR 40.8(2)(a), but noting also that this conclusion may not match common practice.

Counsel for W argued that even if the fixed costs regime applied in principle, this rule was subject to the general rule in FPR 28.1, such that: ‘The court may at any time make such order as it thinks just’. The court held that it cannot read FPR 28.1 as giving general, unfettered discretion to costs. Further, in most cases, a failure to pay will presumably be because the debtor is in financial difficulties rather than a disdain for court orders. Counsel for W went on to successfully argue that the circumstances of this particular case were such that it would be appropriate for the court to ‘order otherwise’ because:

1. This was a case of deliberate non-payment by H;
2. This was the third enforcement application that W had had to bring;
3. There was a history of last-minute attempts by H to avoid orders being made against him;
4. H had been obstructing W’s attempts to enforce the debts he owed in the context of the possession proceedings;
5. H had demonstrated a complete disregard for his financial obligations or the orders of this court and the court which granted the possession order.

Ultimately the judge considered that this was a case that was amply justified in making an ‘order otherwise’ to disapply the fixed costs regime.

Conclusion

The court ordered:

1. A final charging order in the sum of £245,569.07, plus interest accruing.
2. Costs assessed at £22,500 plus VAT to which the charging order also applies.