Cobb J. Enforcement of Schedule 1 Order: freezing order, capitalisation of periodical payments for the benefit of the child, and Hadkinson order made against F who resides in the USA.

In March 2023, Cobb J made a substantive Schedule 1 CA 1989 award against F, who lives in the USA, for the benefit of the child, Zoe, which is considered here. Having failed to make the payments due under the order, M applied to enforce and sought a global freezing order, capitalisation of periodical payments, and a Hadkinson Order.

Freezing order

The court made a worldwide freezing order for £8.6m on a without notice basis in autumn 2023, providing for F to apply to vary or set aside the order and for a return date on 20 December 2023. The return date was ineffective owing to issues with service and the matter was relisted for 16 February 2024 which F did not attend. By the time of the hearing in February 2024, the freezing order had been ‘domesticated’ by the local Superior Court in the USA and the order had been served on F and his bank. Given the history of the matter and F’s refusal to engage with the proceedings and order, Cobb J determined it was just and convenient for the order to continue to restrain F from avoiding justice by disposing or concealing assets.

Capitalisation of periodical payments

In March 2023, Cobb J declined to capitalise periodical payments for Zoe, instead allowing F a chance to comply with the orders, and in recognition that adjustments might be needed over time.

Now in enforcement proceedings, M argued this is one of the very rare cases which Mostyn J considered in AZ v FM [2021] EWFC 2 at [95]⁠(iii) justifying the capitalisation of periodical payments. M proposed professional administrators manage the fund, with the residue being returned to the F at the conclusion of Zoe’s period of need. Cobb J agreed, and considered the following factors supporting the application for capitalisation:

1. F’s unwillingness and failure to recognise the order and authority of the court over a prolonged period of time;
2. F’s residence overseas taking him outside the usual scope of enforcement mechanisms;
3. M’s American attorneys pointed to enforcement being complicated in the US, and a single order for a capital lump sum defined as child support would assist with enforcement and in recovering the sums owed in the US; and
4. Zoe’s individual health needs could not adequately be met by the NHS or state education, and F’s expectation that these needs could be met without recourse to bespoke treatment and education were unrealistic.

M argued the ‘true’ multiplier should be used for computation, multiplying the actual years of support needed by the annual award, rather than using the Ogden tables or Duxbury method. The ‘true’ multiplier was preferred because it accounts for realistic investment growth, unlike the Ogden tables’ discount rate, and avoids potential shortfalls from investment risk in Duxbury. Cobb J agreed and the ‘true’ multiplier should be used for capitalisation.

Hadkinson order

Applying the test set out by Peter Jackson LJ in De Gafforj v De Gafforj [2018] EWCA Civ 2070 (at [11]), the court made a Hadkinson order preventing F being heard on any issues in respect of the Schedule 1 order, freezing order and capitalisation order without first paying into court c.£8.6m, the amount frozen by the freezing order.

Cobb J noted the Hadkinson order is being made after the final order in the substantive proceedings, and agreed with Moor J’s analysis in Young v Young [2013] EWHC 3637 (Fam), more recently affirmed in Williams v Williams [2023] EWHC 3098 (Fam, that such an order has no place in proceedings until such time a final order has been obtained.

Costs

M was awarded costs on an indemnity basis, per CPR 44.3(3) (M v M & Others [2013] EWHC 3372 (Fam) considered). The court deemed the circumstances of the case to be out with the norm, due to the significant expenses incurred for enforcement. These costs were largely attributed to difficulties in identifying US attorneys to act and the necessity to seek US litigation funders, exacerbated by F's intentional failure to fulfil his obligations under the Schedule 1 order.

Accordingly, Cobb J ordered:

1. The freezing order shall continue;
2. The provisions for maintenance for the benefit of Zoe shall be capitalised on the basis of the ‘true’ multiplier;
3. F should be subject to a Hadkinson order in respect of the substantive Schedule 1 proceedings, the freezing order, and capitalisation order, and shall pay £8.6m into court before being heard in respect of each or any of the applications; and
4. M’s costs shall be awarded on an indemnity basis assessed at c.£89K.