What is Schedule 1 to the Children Act 1989?

Schedule 1 to the Children Act 1989 enables financial orders to be made for the benefit of children. An applicant is usually a parent not married to their partner and therefore unable to seek financial remedy upon divorce under the Matrimonial Causes Act 1973.

The majority of reported case law on Sch1 applications involves claims made by a separated parent (usually mother) on behalf of children against their very wealthy ex-partner (usually father), where the scale of financial provision (however generous) is dwarfed by the father’s remaining resources. These types of applications are therefore traditionally regarded as the domain of footballers or the super-rich.

What Orders are available?

1.        Child Periodical Payments (PP Order)

A PP “top up” order against a parent can only be made when the Child Maintenance Service (CMS) have made a maximum assessment, i.e. the non-resident parent has a gross weekly income exceeding ￡3,000 per week (￡156,000 per annum) and the Court is satisfied that the circumstances of the case make it appropriate for the payer to pay more than the CMS assessment.

If an applicant feels that the non-resident parent earns a sufficient amount to fit into the top up jurisdiction and there is no CMS maximum assessment in place, a successful challenge to the CMS tribunal will be required before an application for a top up order under Sch1 can be made.  It is possible to claim a lump sum order against a parent for legal fees, to cover the costs of a CMS tribunal.

A PP order can also include an order made solely to meet a child’s educational expenses or expenses in relation to a child’s disability.

A PP order can be varied (backdated to the date of the application) or discharged and upon variation, the Court can made an order for the payment of a lump sum.

An order for PP usually runs until a child’s 18th birthday or otherwise when a child ceases full time tertiary (university) education (however, the term could extend to a gap year). It will end on the death of the payer, or if the parents live together for a period of six months, or if a maintenance calculation is subsequently made by the CMS.

2.        Settlement of a Property Order

This is a claim made against a parent on behalf of the child for a sum of money to purchase a property which reverts to the payer on the child’s 18 birthday or when the child finishes tertiary education (however, the term could extend to a gap year before or after university).

There is usually a possibility for the applicant to purchase the property at market value at the end of the term.

The reasonableness of housing and other capital provision under Sch1 is invariably considered in the context of traditionally the father’s resources.

Requests to limit the mother’s future occupation of the property or for an earlier reversion of the property are to be resisted. The settled property is for the benefit of the child and as long as the child lives with the mother, her cohabitation or remarriage ought not to affect a settlement of property.

3.        Lump sums

A claim can be made against a parent for a lump sum to enable the applicant to meet any liabilities or expenses incurred in connection with the birth of a child or in maintaining the child.

A claim for a lump sum against the affluent to the super rich parent usually covers the expense of singular items of a capital nature, including a home, provision for moving costs/costs of furnishing a home, or a car all of which are to be paid to the applicant for the child’s benefit.

The Court has a wide discretion and lump sums can be obtained for a more specific purpose, for example, to cover an applicant’s debts, repairs to property or even trips abroad.

How Much? What Does the Case Law Say?

When considering whether to make an order under Sch1, the Court shall take into account all of the circumstances and each case turns on its own facts.  The exercise of the Court’s jurisdiction is highly discretionary.

The Starting Point

Guidance from Thorpe LJ in Re P (Child: Financial Provision) [2003] 2 FLR 865 established that the starting point for the Judge should be to decide the home that the parent must provide for the child (value, size, location, cost of furnishing and equipping) plus external expenditure, such as travel, education and holidays.

Once the choice of home decision has been taken, the amount of the lump sum is easier to determine for the Judge, as is the budget of reasonable expenditure required by the applicant in maintaining the home, its contents and in meeting other expenditure external to the home, such as school fees, holidays, routine travel expenses, entertainment and presents etc.

In more modest cases, where the payer is not incredibly wealthy, the guidance from case law is that the starting point for the level of the PP order should be the amount payable under the CMS formula.

A departure from the rate prescribed by the CMS formula must be clearly justified by reference to other resources that are available to the father.  However, a CMS equivalent calculation is not a straight jacket and will be more easily displaced when a payer’s income far exceeds the CMS threshold. In such circumstances, the needs of the child in the light of the available resources, will be the determining factor.

Approach of the Court to PP Order

Thorpe LJ in Re P recognised the inevitable tension between those periodical payments specifically for the child, incapable of benefiting the applicant, for example school fees or the child’s clothing (which are often accepted by the payer) and those lifestyle payments which are seen more for the benefit of the applicant than the child, (such payments are usually bitterly resisted by the payer).

Thorpe LJ summarised that the approach of the Court to this tension should be to recognise the responsibility and often the sacrifice of the unmarried parent (generally a mother) who is to be the primary carer for the child.  On the one hand, a mother should not be burdened with unnecessary financial anxiety when the other parent chooses to live high on the hog and on the other hand, whatever is provided is there to be spent and there can be no slack to enable the recipient to pay money into a pension, an investment or to put money away for a rainy day.

In Re A (A Child) [2014] EWCA CIV 1577, the Court of Appeal highlighted that the guidance in Re P remains good law.  Macur LJ offered some further guidance on the issue of quantum in a big money case. Macur LJ said that the extent of the non-residential parent’s wealth may still inform reasonableness of budgetary claims, as well as ability to pay; that is, for example the child of a wealthy man may well expect to be dressed in designer, rather than high street store clothes.  However, the Judge said the financial support must be appropriate and not simply a lavish lifestyle devoid of context to the relevant child’s circumstances.

The guidance from authorities is that a child may be entitled to be brought up in circumstances which bear some relation to the non-resident parent’s resources and standard of living and that assessment of need will be handled with a broad brush.

Applications Against the Affluent to Fabulously Rich Only?

A review of the case law has highlighted a real lack of judicial guidance in relation to those cases where there is no wealthy parent against whom to make a claim.  It is however argued that Sch1 applications should not be regarded as only the domain of footballers’ girlfriends or the ultra-wealthy, but as a powerful tool for meeting children’s needs in more modest cases, involving more modest assets.

In more modest cases, orders can still be made but no doubt the nature and size of the award reflects the more limited pot that is available. 

Costs

It also must be borne in mind that the super wealthy are more likely to be able to afford to litigate Sch1 proceedings through the Court, in contrast to those cases involving more limited finances.

Costs Allowances

Costs allowances are of significant importance in Sch1 proceedings; as an applicant has no entitlement to a capital award for herself, she is unlikely to be able to secure third party litigation funding and will look to the other party to pay her legal fees. The Court acknowledges that there are advantages flowing from competent representation and equality of arms, which would be of benefit ultimately to the child.

The scope of Sch1 does extend to the Court making an order against the parent to pay the applicant’s interim costs (which can be funded either via a lump sum or periodical payments). However, to be successful in a claim for interim costs against the other party, an applicant must demonstrate that she cannot reasonable procure legal advice and representation at the appropriate level of expertise by any other means.

Costs Orders

Sch1 is excluded from the general rule of no order for costs set out in Family Procedure Rules 2010, r.28.3 and costs may therefore follow the event. However, it is by no means a given that an applicant will recover all of her costs at the conclusion of a Sch1 case and there remains a risk that she may have to fund at least part of her own legal fees.