District Judge Roger Bird examines Court of Appeal guidelines for financial provision applications relating to illegitimate children

We all know that children are expensive.

Quite how expensive they can be was demonstrated by the recent decision of the Court of Appeal in Re P (Child) [2003] EWCA Civ 837; (2003) LTL 24 June.

The facts were fairly simple.

The mother, who was aged 28 and divorced, was of modest income and earning potential.

The father was 48 and 'fabulously rich'.

The subject of the application was L, who was born on 14 July 2000, for whom the mother applied for financial provision under schedule 1 to the Children Act 1989, having already obtained a Child Support Agency assessment of 152.43 per week.

The father lived in a house in central London valued at more than 10 million.

He also had a house in South Africa and a large staff.

In his judgment in the Court of Appeal, Lord Justice Thorpe commented that 'he is well-known in the fashionable nightclubs and he has many women in his life'.

When the mother's application was heard at first instance, a circuit judge, sitting as a deputy High Court judge, awarded her 450,000 for a house (on the usual terms, to revert to him eventually), 30,000 for furnishings, 20,000 for a car (to be replaced at the father's expense every four years) and periodical payments of 35,360 per annum to be reduced on L's seventh birthday and to terminate on the conclusion of secondary education.

The father undertook to pay school fees.

The mother appealed.

Lord Justice Thorpe first gave guidelines as to how cases of this kind, that is to say, those involving the very rich (who he observed were less likely to be deterred by the cost of litigation), were to be decided.

The starting point for the judge should be to decide, at least generically, the home that the respondent should provide for the child; the value, size and location of the home all bore on the reasonable capital cost required to furnish and equip it, as well as on future income needs.

The appropriate legal mechanism for providing the house was a settlement of property order, and the respondent should have some right to veto an unsuitable investment.

The choice of home should introduce 'some useful boundaries' because the lump sum would be calculated with reference to it and would include the cost of furniture etcetera and of a family car.

Having settled those issues, the judge should proceed to determine what budget the mother reasonably needs to fund her expenditure on the home and in paying school fees, routine travel expenses, holiday costs, entertainments etcetera.

As Lord Justice Thorpe pointed out, the judge is likely to be 'assailed by rival budgets that family lawyers are adept at producing', which would range from the generous to the parsimonious.

The court should discourage undue bickering; what was required was a 'broad, common sense assessment'.

In Lord Justice Thorpe's view, the court must recognise the responsibility, and often the sacrifice, of the unmarried parent (generally the mother) who is to be the primary carer.

In order to discharge that responsibility, the carer must have control of a budget that reflects her position and the position of the father, both social and financial.

She should not be burdened with unnecessary financial anxiety, but, on the other hand, what is provided is there to be spent by the end of the year for which it is provided; there can be no slack to use for other purposes.

Against that background, Lord Justice Thorpe considered the instant case and concluded that the appeal must be allowed, a conclusion with which the other judges agreed.

He observed that he was not critical of the judge below and thought they parted company because he had more professional experience of the 'exceptionally affluent cosmopolitan society' from which the parties came.

His conclusion was that the house required for the child would cost 1 million, with 100,000 allowed for decorations and furniture.

As to periodical payments, Lord Justice Thorpe took 'a broad brush figure of 70,000 per annum from which the father is entitled to deduct the amount of state benefits the mother receives for L'.

He concluded that the court had the power to backdate these payments to the date of the application (22 months) and settled on arrears of 40,000.

The father was entitled to see receipts and to monitor the expenditure.

In reviewing the matter in the round, Lord Justice Thorpe said that 'L will need to feel at ease in the surroundings that her father inhabits and with the company he keeps'.

He regretted that these money issues had had to be fought out and recommended that such applications should in future have the benefit of a financial dispute resolution appointment, as in an application for ancillary relief.

Apart from the fact that this judgment provides an insight into a world with which few of us are familiar, are there any lessons which might be learned from it for those engaged at the more routine end of the market? Although all the judges remarked that this was a most unusual case and the guidelines laid down apply to very big money cases, it is suggested that in fact the guidelines can be applied to schedule 1 cases of much less monetary value.

Where the application is for a home for a child and its mother, it would be necessary to go through the same process of determining what class of house was appropriate and affordable.

After this had been done, the question of periodical payments would be unlikely to arise, since the father's net earnings would have to be in excess of 100,000 per annum to escape the jurisdiction of the Child Support Agency.

However, if periodical payments were an issue, they would be decided according to the same principles.

The case might also have a bearing on some ancillary relief applications.

In K v K (Ancillary Relief: Prenuptial Agreement) [2002] Fam Law 877 (see [2003] Gazette, 31 July, 33), the marriage had only lasted for 14 months and the judge decided that the wife should be held to a prenuptial agreement in respect of her capital application.

However, he made an award of periodical payments for her, which at 15,000 per annum was modest in view of the husband's means (25 million of assets) and, which is most relevant in the present context, made an order for the child of the marriage.

The husband was ordered to settle 1.2 million for the purchase of a home and furnishings and to pay 15,000 per annum for the child (the absence of reference to the Child Support Agency is not explained).

It may be that P (A child) will be prayed in aid when considering cases of a short marriage and provision for a child in ancillary relief.

District Judge Roger Bird sits at Bristol Combined Court Centre