Big money and periodical payments in Schedule 1 cases | LexisNexis Blogs (2024)

In A v V [2022] EWHC 3501 (Fam), the court was concerned with a claim made by a mother under Schedule 1 to the Children Act 1989 (ChA 1989). With the parties spending in excess of £5m legal fees between them, this big money Schedule 1 case was considered by Mr Justice Francis to be 'one of the most shameless pieces of litigation' he had experienced. Describing Re P (Financial Provision) [2003] 2 FLR 865 as the 'seminal case' for ChA 1989, Sch 1 applications, Francis J reiterated that the guidance set out in the Court of Appeal’s judgement in Re P (Financial Provision), particularly in relation to the approach to be taken when quantifying periodical payments, is just as applicable today as it was in 2003.

Practical implications

The judgment in this case reaffirms the framework set out in Re P (Financial Provision) [2003] 2 FLR 865 in relation to cases where one party falls into the bracket of ‘affluent to fabulously rich’. That landmark case introduced the concept of the ‘carer’s allowance’ when quantifying periodical payments, which has been followed by family law practitioners throughout the last 20 years. Within that case Thorpe LJ stated the need for a ‘broad brush assessment’ when quantifying such periodical payments, striking a balance between under provision (which would see the child and parent struggling to live on the funds available) and over provision (which would provide the parent with excess funds to fund a pension or endowment policy or pump into savings).

In this case Francis J considered the balancing act required, stating that while the periodical payments should not fund the mother’s savings, she must have enough to live on. When determining the level of funds required by the mother to ensure she had enough to live on, Francis J highlighted the need to give consideration to all the circ*mstances of the case including the standard of living enjoyed by the couple during their relationship and further confirmed the need to adopt a broad-brush approach to quantifying periodical payments when carrying out this balancing act, stating that it is not appropriate to go painstakingly through the parent’s budget in order to do so.

Francis J reiterated that the guidance set out in the Court of Appeal’s judgement in Re P (Financial Provision) is just as applicable today as it was in 2003.

Background

Described as 'a relatively straightforward' ChA 1989, Sch 1 application, yet a case which resulted in 'bitter and acrimonious litigation' between the parents, A v V concerned the mother’s application for financial relief in respect of the parties’ son (age seven at the time of judgement).

The parties, who met in 2004, enjoyed a 'remarkably lavish lifestyle' throughout the course of their long relationship, often relocating between countries. The father was extremely wealthy and fell into the bracket of ‘affluent to fabulously rich’, similar to Re P (Financial Provision), and was thought to be able to comply with any order the court saw fit to make. The mother made allegations of coercive control against the father.

The parties had drawn up a deed in 2007, some seven years before the child was even born, providing that the mother had no claim against the father on the child’s behalf, save for the payment of €845 per month which would increase in line with inflation.

The parties moved to Singapore in May 2017 before entering into a religious ceremony of marriage on the 21 December 2017, albeit not a ceremony which was legally formalised as per the father’s request. The parties’ cohabitation following their move to Singapore proved to be disastrous and they separated in October 2018 with the mother and child returning to London at that point. Between October 2018 and November 2020, the father failed to pay any maintenance to the mother for the benefit of the child, behaviour which was considered by Francis J to be 'disgraceful conduct'.

1980 Hague Convention proceedings were subsequently commenced, with the father applying for the child to be returned to Singapore. Those proceedings came before Francis J on the 21 December 2018, where the matter was assessed on a summary basis without consideration of the welfare principle (as is standard in 1980 Hague Convention proceedings). It was determined that the child was habitually resident in Singapore at the date on which the mother brought him to London and an order was made for the return of the child to Singapore on the basis that the mother had wrongfully retained the child in England.

Litigation in Singapore commenced thereafter, with the mother making an application seeking permanent leave to remove the child to England and Wales and the father making an application for ‘sole care and control’. Throughout those proceedings the father made a total of 19 applications, 30 affidavits and six appeals, but lost at every stage. His legal fees in Singapore amounted to £1.5m. The Singapore litigation concluded on the 3 October 2019, when the court concluded that shared care would not be in the child’s best interests, granting the mother ‘sole care and control’ and permission to relocate with the child to the UK. The mother’s legal team described the proceedings as 'a year of hellish litigation’.

The mother returned with the child to London in July 2020, which prompted the father to purchase a 56-year lease to a nearby property in the UK at a cost of £6.25m. The mother and child lived in a two-bedroom property (referred to as the ‘E Square Property’) in Central London, costing £2.125m.

The litigation did not cease following the parties’ move to the UK, with the father making an urgent application seeking a child arrangements order on 5 October 2020. That application concluded in February 2022, with it being determined that the child was to remain living with the mother, with contact between the father and child to take place.

Schedule 1 proceedings

Proceedings under ChA 1989, Sch 1 commenced when the mother issued her application on the 17 November 2020. It was not until shortly after this point that the father started paying child maintenance, albeit at the rate of only £920 per month (which was thought to be based on the figures within the 2007 deed).

In light of his immense wealth, the father ran the ‘Millionaire’s defence’, arguing that he should not be required to disclose the full extent of his assets on the basis that his wealth will enable him to meet any order the court saw fit to make. The father’s wealth was clear, having earned $82m in this century alone and having purchased the E Square Property at a cost of £6.25m, described by the father as a ‘pied-a-terre’ for the purpose of facilitating contact with the child. As such, he was not required to provide full details of his wealth.

At an interim hearing the father was ordered to pay the mother the sum of £130,000 pa, plus arrears of just under £50,000. The father’s solicitors referred to this decision as 'plainly wrong' and 'flawed and unfair', yet made no appeals in response.

By the time the proceedings reached the pre-trial review stage, the father had already put in an offer of £3.5m to purchase a property (referred to as the ‘P Street Property’) for the benefit of the mother and child. The father failed to inform the judge or any parties of this at the time, failing to utilise the pre-trial review as an opportunity to seek to bring the case to a resolution.

Despite the father being represented throughout the majority of the prior proceedings, he attended the final hearing as an unrepresented litigant in person and despite the father being considered to be 'a man of considerable intellectual capacity, of business acumen and of financial success', he was described as someone who showed almost a complete absence of emotional intelligence or understanding in terms of the litigation (para [6]), arriving at the final hearing without having so much as read the provisions of ChA 1989, Sch 1, which would guide Francis J in his judgment.

A number of offers were made by the father throughout the proceedings, including at the final hearing. He initially offered periodical payments for the benefit of the mother and child in the sum of £115,000 pa, which was subsequently considered by Francis J to be 'in the right ball-park'. However, upon reaching the final hearing the father only offered £12,000 pa, an offer which was considered to be derisory, before changing his position part-way through the final hearing and offering a slight increase to £60,000 pa. The father’s position disputed the assertion that he should be required to fund the purchase of a property for the benefit of the mother and child, despite having already indicated a willingness to purchase the P Street Property.

The parties’ 2007 deed was considered throughout the proceedings, with no weight being placed on the document in terms of the mother’s application.

Throughout the litigation, described by Francis J to be 'one of the most shameless pieces of litigation' he had experienced in his time as a full-time judge of the Family Division (para [6]), the parties incurred an extraordinary level of costs between them in the total sum of £5,535,584 (that being £3,817,603 incurred by the father and £1,717,981 by the mother). This equated to £61,000 being spent on legal fees per month since the child was born.

Court’s decision

Despite the father protesting that he should not be directed to do so, Francis J ordered the father to purchase a property for the mother and child to live in until the child turned 21 or finished tertiary education, at a cost of up to £4m. That property was to be held in trust (run by professional trustees), with the cost of setting up the trust and the trustee’s fees to be paid by the father. A lump sum of £150,000 was directed to be paid by the father initially to cover the trustee’s costs, building insurance and other items which may be required. The father was also directed to pay the stamp duty fees and conveyancing fees relating to the purchase of that property.

Francis J took a broad-brush approach when considering the level of periodical payments to be made for the benefit of the mother and child, indicating that it was not necessary to consider in detail the mother’s yearly budget, confirming that the decision in Re P (Financial Provision) applies just as much today as it did in 2003. The father was directed to make periodical payments of £125,000 pa (which included an annual variation linked to the CPI).

The father was also directed to pay a lump sum of £200,000 for building and refurbishment works and another lump sum of £100,000, both of which were to be held in trust. A further £100,000 lump sum was directed to be paid by the father in order to equip and furnish the property and a £60,000 lump sum was directed to be paid to purchase a car, with the funds being held in trust and released in instalments. A school fees order including tertiary education costs was also made.

The father was directed to make a further lump sum payment of £92,000 which included a shortfall in the funds the father was directed to pay as per the earlier court order together with the mother’s costs of the ChA 1989, Sch 1 and ChA 1989, s 8 proceedings, with Francis J commenting on the litigation as being 'fuelled by the father’s unreasonable and remarkable conduct' (para [63]).

Unsurprisingly, in light of the substantial litigation between the parties, an order was made under ChA 1989, s 91(14) preventing either party from making an application relating to financial relief for the child (under ChA 1989, Sch 1 or otherwise) without leave of the court for a period of five years, with Francis J making a plea to the parties to put an end to the proceedings.

Emily Minton is a solicitor at Sternberg Reed LLP.