Capitalising child maintenance: AZ v FM (Rev 1)  EWFC 2
- This case concerned a husband’s (“H”) appeal against the dismissal of his application for a variation of child maintenance payments, and the capitalisation of that sum.
- H and his wife (“W”) were successful architects, who had been married for 15 years. Both had professorships at universities in the USA, though W lived in London. The parties had one child (“M”), who studied at a London university and lived with M outside of term-time at the time of the application.
- The parties had engaged in protracted and expensive litigation since their separation, in both the Family Court and Chancery Division (relating to the division of their architects’ practice).
- On 23 June 2011, Moylan J made a final order (“the Final Order”) in the financial remedy proceedings which provided, among other things, that H would make periodical payments to W for M’s benefit at the rate of £1,700 pcm until the later of M attaining the age of 18 or ceasing full time tertiary education.
- On 20 October 2017, H applied to vary the Final Order, seeking to reduce the periodical payments from £1,700 to £800 pcm (“the Variation Application”).
- On 29 January 2019, DDJ Butler handed down written judgment on the Variation Application. The consequential order was perfected on 1 October 2019 (“the Order”). The Order provided, among other things, that ():
- The parties agreed the terms of the Order were intended to meet M’s maintenance needs and that they would not make any other further application for financial provision beyond the terms of the Order.
- W agreed and undertook that if she sought further additional child maintenance for M, any such payment would be repayable in full by W to H within 14 days.
- H was to pay W a lump sum of £52,104 (“the Lump Sum”) in discharge of his obligation to pay periodical payments for the benefit of M.
- DDJ Butler explained the atypical decision to order the Lump Sum in lieu of monthly payments on grounds that: (i) there had been almost constant litigation between the parties since the Final Order; (ii) the parties had incurred costs of £124,586.68 in determining the Variation Application; and (iii) H “thrive[d] on litigation” and that it was right for the court to seek to bring proceedings between the parties to an end ().
- On 30 January 2020, HHJ Everall QC granted H permission to appeal on the ground that the court had no jurisdiction to capitalise periodical payments for child maintenance. Permission to appeal on two further grounds was refused: these grounds were renewed orally at the hearing by H and permission to appeal was again refused by Mostyn J who determined them totally without merit ( – ).
- The key issue in the case was whether the court had jurisdiction under the Matrimonial Causes Act 1973 (“MCA 1973”) to capitalise child maintenance.
- Mostyn J noted that the Lump Sum had not been ordered under ss.31(7A) – (7B) MCA 1973 as “a lump sum under those subsections can only be made in favour of a party to the marriage and only following the discharge of a periodical payments order”, whereas the Lump Sum had been made in M’s favour, though it was paid to W ().
- Mostyn J then provided a historical analysis of the insertion of ss. (7A) – (7H) MCA 1973 by the Family Law Act 1996:
- He noted that these sections were intended to “give the court power to capitalise a periodical payments order and thus to bring about a clean break” ().
- The prior legal position on an application for a variation of a periodical payments order was that such applications were faced with the barrier of s.31(5) MCA 1973 ():
"No property adjustment order shall be made on an application for the variation of a periodical payments or secured periodical payments order made (whether in favour of a party to a marriage or in favour of a child of the family) under s. 23 above, and no order for the payment of a lump sum shall be made on an application for the variation of a periodical payments or secured periodical payments order in favour of a party to a marriage (whether made under s. 23 or under s. 27 above).”
- Mostyn J determined, however, that those words had “a very clear literal meaning” which was that on an application to vary a periodical payments order the court cannot make a lump sum order in favour of a party to the marriage “but there is no prohibition on it doing so in favour of a child of the family” ().
- He noted that the subsequent amendments to s.31(5) had not amended the “key phrase” which limited the court’s jurisdiction to make lump sum orders only in cases where the periodical payments sought to be capitalised were in favour “of a party to a marriage” ().
- Mostyn J dismissed H’s appeal, holding there was jurisdiction under MCA 1973 on an application for variation to discharge a child maintenance order and instead award a lump sum as “the clear words of s.31(5) … permit such an order to be made” ().
- In dismissing the appeal, Mostyn J noted that though he was “satisfied the jurisdiction exists [to make such an order] … it will remain a very rare bird indeed”. Generally, where the Child Support Act 1991 did apply “it would not be a proper exercise of the court's powers to capitalise periodical maintenance” as a party had a right to apply for a statutory assessment once 12 months had expired following the making of the order. Capitalisation was justified in this case due to: (i) H’s residence in the USA meaning the Child Support Act 1991 did not apply; (ii) the incessant litigation, on which H thrived; and (iii) the short period until the maintenance liability expired ().
- Mostyn J further made some corrections to identified errors in the computation of the Lump Sum ( – ) and ordered H to pay W’s costs on the standard basis, on grounds that he pursued two meritless grounds of appeal and refused to negotiate .