District Judge Napier held that the best interests of the children were the first but not the only consideration in MRC 1973 s 25. The CAO had not specified ‘private’ education, and the FRC should not prioritise private education to the detriment of other emotional and physical needs of the children. The judge refused to make a school fees order to ‘encourage’ the trustees to pay school fees.

Facts

W’s application for financial remedies. 18 years of cohabitation and marriage. Two children, A and B. W diagnosed with an aggressive cancer; treatment available. W (40s) limited earning capacity (previous breadwinner) and no MRC. W living in FMH. Agreement FMH needed to be sold. H (40s) living in FMH, earning capacity in the medium term of £36,000 pa max £60,000, but no MRC as no significant capital assets in his name. Child arrangements determined by Peel J in the reported case of G v G [2022] EWFC 151. Under the CAO the children were to remain at their private school for 2022/2023 academic year and then remain there or another school as agreed. The ‘another’ school was not specified as fee-paying by either the arbitrator or Peel J.

The judge’s list of issues at [12] included: costs of sale, whether trust assets were an available resource, whether two specific properties were a financial resource for W, and how to treat four specified liabilities.

There were no SPP claims, the judge was concerned with capital distribution, a PSO for H and whether W’s legal fees should come off the top.

What priority to give school fees and what is the relevance of a CAO which orders a degree of private schooling on the distribution of capital?

Minor children and their welfare are the first consideration for the court, but they are not the only consideration. The court cannot abandon the obligation to make a fair distribution of the assets just to meet a school fee obligation. There comes a point at which deploying financial assets to meet the children’s educational needs will adversely affect their other emotional and physical needs. District Judge Napier would not allow the children’s housing needs nor their need to have a warm, loving and importantly equal relationship with each parent to be inappropriately compromised to pay school fees; [31]–[32].

H sought a school fees order as ‘judicial encouragement’ for the trustees to pay the school fees. H was unable to satisfy the judge that the trustees would make the assets available. The school fees order was refused. The court noted that W and H could still ask the trustees to pay the school fees; [35]–[56]

What % for the costs of sale (COS)?

In light of no fixed costs of sale rate at law and only a fleeting mention of 3% in the case law, DJ Napier used 2% where the COS were theoretical, and the actual COS where there were incurred costs of sale; [33]–[34].

PSO from W to H

H sought a PSO; he had earned markedly less during the 18 years and had very little pension provision. W relied on her cancer diagnosis, and as a result, she might need to use her pension ill health provisions. In the face of very little evidence and doing the best on the evidence he did have, the judge ordered W to transfer 25% of her pension to H. The reasoning was that H had 10-15 working years ahead; he would be living mortgage-free and working full-time; [112]. The judge found that W’s prognosis was not clear; she was being treated with curative intent, albeit the judge accepted her working life was likely to be reduced.

Legal fees

The district judge perceived the legal fees incurred at the FDA and FDR stages to have been wasteful, and the litigation costs to be eyewatering; [100]. He noted that at the final hearing, W’s costs (including CA proceedings) were £326,207 and H’s £135,514. DJ Napier referred to and agreed with HHJ Hess’s analysis in YC v ZC [2022] EWFC 137, [42]. DJ Napier found that W’s costs were grossly disproportionate. The judge noted that the costs would have been enough to fund the children’s private education, as both parties had wished. The judge allowed £154,752 to be deducted before distribution for W’s legal fees ([104]) and H’s litigation loan to be paid off the top; [113].