James v Seymour [2023] All ER (D) 28 (May)
https://www.bailii.org/ew/cases/EWHC/Fam/2023/844.pd
Mostyn J takes the opportunity to consider at length the approach to child maintenance that falls outside the jurisdiction of the Child Maintenance Service (CMS) and the application of the CMS formula in such cases, setting out extensive guidance in an Appendix to the judgment, including reference tables and strongly endorses the approach of the judge at first instance as to the principles governing a claim for costs which should be “printed out and handed to all financial remedy litigants at the very beginning of every case”.
Case summary by Carla Dougan-Bacchus, Barrister for Lexis PSL
In 2010, the appellant (the mother), aged 50, and the respondent (the father), aged 47, married. The marriage lasted for 2 years. The parties had two children, aged 12 and 10. In 2013, the mother petitioned for divorce, which was granted. The father lived in London with his new wife and their two children. The mother lived with her new husband (J), whom she married in August 2022.
The mother applied for financial remedies which were settled by a consent order. The parties’ total assets comprised a house with equity of £700,000. The order provided for the mother to receive a total of £525,000 in cash, which the father was to pay in instalments. The father was to pay child maintenance of £10,000 per annum per child, and spousal maintenance of £52,000 per annum until 2024, thereafter decreasing to £40,000 per annum payable until the younger child reached the age of 18 or finished her full-time secondary education if earlier.
A consent order, dated 17 July 2015, varied the dates on which the father was to make payments to the mother. The mother applied to vary that consent order, contending that the existing child periodical payments were insufficient to meet their needs; that there was a disparity of lifestyle between her and the father; and that she had accrued substantial debt. She contended that ‘the Mostyn formula’ should apply to the calculation of child maintenance, so that she should receive child maintenance of £2,184 per child per month, a substantial increase of the existing order of £833 per month per child. The father offered to increase that to £1,100 per month per child, as well as to pay school fees and extracurricular activities.
Prior to the hearing, the father applied: (i) under s 33 of the Matrimonial Causes Act 1973 (MCA 1973) for repayment of £48,000 of spousal maintenance; (ii) to enforce an indemnity given in the 2014 order; and (iii) for costs and the enforcement of the costs order made against the mother on 3 March 2022.
The judge: (i) held that the children’s needs had not substantially changed since the previous orders had been made; (ii) adopted the father’s proposal and ordered him to pay the mother child maintenance of £1,100 per month per child, amounting to £26,400 per annum; (iii) ordered the father to pay the children’s school fees as well as school travel and other extras; (iv) held the mother to her indemnity given on 3 July 2014 in the sum of £3,598; (v) ordered the mother to pay half of the father’s costs, summarily assessed at £66,627.70; and (vi) did not order the mother to repay to the father any spousal maintenance.
The mother sought permission to appeal against the judge’s decision.
Issues and decisions
(1) Whether the judge had failed to follow the approach set down in leading authorities that the ‘starting point’ for a child maintenance calculation should be the figure given by the CMS formula up to incomes of £650,000.
In the light of the earlier authorities, ground 1 was plainly arguable. However, it could not be said that the judge’s refusal to take into account the result of the formula had been wrong. Accordingly, permission to appeal on ground 1 would be granted, but the appeal would be dismissed (see [43], [64] of the judgment).
Twenty years ago, in GW v RW [2003] 2 FLR 108, the present court had suggested that, where it had jurisdiction, a useful starting point (and normal finishing point) in assessing the quantum of child support maintenance (CSM) to be paid by the father would be the figure given by the statutory formula. The Court of Appeal, Civil Division (in authority), had approved that suggestion. The present court had expressed the view that, even where the father’s income, for child support purposes, had exceeded the statutory ceiling, but was not ‘unadjacent’ to it, the formula would continue to provide useful guidance. The formula would be irrelevant where the claim was for the type of CSM award described as a Household Expenditure Child Support Award or HECSA, but it would continue to provide useful guidance in a case seeking a conventional assessment of the contribution that the father should make to the children’s direct and indirect costs (where the indirect costs comprised a fair proportion of utility bills, council tax and other infrastructural expenses referable to the children’s primary residence). The formula provided a useful and logical starting point in a child maintenance case, whether heard under MCA 1973 or under Sch1 to the Children Act 1989 (ChA 1989), where: (i) the income of the father for child support purposes was more than the statutory ceiling of £156,000, but less than £650,000; but
(ii) the application did not seek a HECSA, but a conventional assessment of the quantum of CSM; and (iii) it was not a variation application (see [28]-[30], [34] of the judgment).
On reflection, Justice Moor’s criticism in CMX v EJX (French Marriage Contract) [2022] All ER (D) 53 (Nov) at [86] was accepted (see [36] of the judgment).
While the formula did make adjustments for the number of children, its primary driver was the percentage of the father’s adjusted gross income to be paid in child support maintenance. That led to the per capita anomalies identified by Justice Moor. The amount that would be payable under the formula where the father’s income was £650,000 (and there was no shared care, and no other child living with him) was (when rounded to the nearest £1,000) £60,000 for a single child, £40,000 for each of two children, and £33,000 for each of three children. While it was true that there would be economies of scale where there was more than one child in a family unit, it was obvious that a single child did not cost anything like 50% more to rear than each of a pair of children, let alone 80% more than each of a trio of children (see [37] of the judgment).
The second, and arguably more important criticism was that the amounts generated by an extension of the formula to incomes up to £650,000 were consistently higher than the levels of awards typically made by the court, whether by consent or otherwise, in conventional (i.e., non-HECSA) cases. It was true that the figures would be reduced if there was a degree of shared care, but that mitigation did not alter the fact that the headline figures produced by an extension of the formula to incomes in the range £156,001-£650,000 were unrealistically high and unhelpful as starting points. In the Appendix to the present judgment, the court included a table (Table 1) which gave the full range of figures produced by the application of the formula to that range. That showed that, at every level, the figures produced were plainly excessive and that the calculation for a single child was not reasonably proportionate to the calculation for a child in a sibling duo or trio (see [38] of the judgment).
The reconciliation of those criticisms with the ‘beauty’ (as Justice Moor had put it) of having a formula-based starting point was achieved by making an adjustment to the functioning of the formula for the income range £156,001-£650,000. The adjustments and how they might work were set out in the Appendix to the present judgment. That Appendix described an Adjusted Formula Methodology (or AFM) to give a Child Support Starting Point (CSSP). That AFM, or something like it, might be used to help settle, or to help decide what might be an increasing number of child support cases where the income of ‘F’ lay between £156,001 and £650,000 (see [39], [40] of the judgment).
However, if (i) there were four or more children for whom CSM was to be paid, or (ii) E was more than £650,000, or (iii) F’s income was largely unearned, or (iv) F lived on capital, then use of the AFM was not apt. Any figure thus calculated could be misleading as a starting point. In such circumstances, CSM should be worked out by reference to the statutory provisions, without using the AFM and without the benefit of a CSSP (see [41] of the judgment).
If the application was for a variation of an existing child maintenance order, the AFM should not be used. The terms of MCA 1973 s 31(7), and of ChA 1989 Sch para 6(1), required identification of the changes of circumstances since the original order was made. That meant that the value of the original order adjusted by inflation should normally be used as the CSSP (see [42] of the judgment).
Child support could only lawfully be awarded if the discretionary balancing exercise mandated by MCA 1973 s 25(3) or Sch 1 para 4(1) had been undertaken. Every child maintenance case, whether it was formulated as a claim for a HECSA or for a conventional award, required a budget, which the court would consider carefully, holding in mind a relevant CSSP. At its highest, the AFM produced a loose starting point which a decision-maker could summarily choose to accept or reject without fear of appellate review. That was what the judge had done in the present case. She had dismissed the mother’s reliance on the figure produced by the formula as ‘misconceived’. She had been completely entitled to do so, and her decision to have no regard to the formula result had been within her unfettered discretion (see [43] of the judgment).
(2) Whether the assessment of the quantum of child maintenance had been too low and insufficient (or no) weight had been placed on the inevitable disparity of lifestyle as a consequence.
Permission to appeal under ground 2 would be refused (see [57] of the judgment).
The mother’s argument was that, as a result of the level of child maintenance ordered by the judge, the lifestyle of the children, living with their mother and stepfather, would be out of kilter to that enjoyed by the father and his new family. Generally speaking, that comparison was only meaningful where the child maintenance claim was for a HECSA. The variation sought in the present case had not been for a HECSA, but for a conventional assessment of CSM. The judge had held that: ‘The argument that there should be an increase in maintenance to reflect the ‘disparity of lifestyle’ is ill-founded. Firstly, it is questionable whether there is any real disparity. If anything, the wife now enjoys a significantly more luxurious lifestyle than the husband and his wife. She does not work whereas they are both working and incurring childcare costs. Secondly, this was an exceptionally short marriage and there is no obligation upon the husband to continue to account to her for any share of his income or for there to be parity. If either of them were to inherit large sums of money or win the lottery they would not be required to account to the other for a share, and nor do they need to in the event of an upturn in income’. The present court agreed with that and would add that it would have been invidious for the judge to have attempted a detailed comparison of lifestyles of the two households in circumstances where very little had been known about the mother’s new husband, other than that he was clearly of means, being a successful figure in the aviation world, and the owner of a fine country house where he lived with the mother and the children. The judge had impeccably undertaken the MCA 1973 s 25(3) exercise. It was not arguable that her decision had been wrong (see [52]-[56] of the judgment).
(3) Whether the order as to costs had been wrong.
Ground 3 was not arguable and permission to appeal would be refused on it (see [63], [64] of the judgment). The judge had exhaustively analysed the principles governing a claim for costs. She had formulated the following summary of the principles, which she had then applied to the litigation conduct of the mother. The court agreed with those principles and strongly endorsed them. They should be printed out and handed to all financial remedy litigants at the very beginning of every case. In the present case, the judge had found the mother guilty of breach of all of those principles. The father’s costs amounted to £133,253.40. The judge had considered that the mother’s conduct, which had had the effect of stymying settlement and drove the parties into a two-day final hearing, had to be marked by an order for costs. Her decision, which might be regarded as merciful, had been that the mother should pay only half of those costs namely £66,627. The judge had been satisfied that the mother had the means to pay those costs (see [58]-[62] of the judgment).
