Friday, 1 June 2012

Contraception anybody? Or, if you're not married, how do you get your hands on his money?

I recently had my attention drawn to a case reported in 2010 about an unplanned pregnancy.  Of course there are any number of these happening all the time.  This one, however, ended up with the parents facing each other in the High Court.

DE v. AB

It's pretty hard to have sympathy for either parent here.  As Baron J explained: " It would seem that the mother was convinced that she was in love and that the father's intentions were honourable. He, on the other hand, considered the relationship to be casual and merely sexual."  Nothing too striking there then.  Just another commonplace story of a naive mother and uncaring father, it would seem.

"The mother, once pregnant, was anxious to have the child whereas the father was shocked when he learned about the impending birth. He advised her to obtain a termination."  And that's par for the course too.

Now there's an interesting freudian slip in the next line of the judgment, where Baron J, who was hearing the father's appeal against an order of a District Judge, refers to the mother as the wife - she wasn't!  That's very important.  She was entitled to be paid by the father solely for the benefit of their child - not in her own right.  So what happened first, unsurprisingly, was an application to the CSA.  It doesn't seem to have yielded very much though.  Apparently less than £300 per month was being paid at the time the High Court was dealing with the father's appeal.  Now I appreciate that plenty of parents would be delighted to receive child maintenance measured in the low hundreds each month but the other circumstances of the case rather change one's perspective on this.

The mother

Well, she had had a good job - she was 37 and had been earning £60,000 p.a. gross.  Trouble is, she had lost that job and was evidently struggling to find a new one.  Her mortgage, get this, had been £570,000 when she bought her house and she had increased it after losing her job and it now stood at £600,000.  Interest only, the mortgage cost £30,000 p.a., equivalent to the first £42,000 of income in its entirety.

By the time of the appeal, the mother also had credit card debts of over £83,000 and overdrafts of almost £28,000.  She had kept herself above water only with help from her family.  For myself, I should have thought that bankruptcy would have come as a relief, if only she had been advised to petition for it.

The father

The father was 39 at the time of the appeal.  He too had had a good job, from which he had been made redundant.  The redundancy payment, in 2004, was over £950,000, but it was a little unclear whether this was net or gross.  The father had a London house with a mortgage on it of £600,000.  Use the redundancy money to pay off the mortgage?  Nah - take a three year sabbatical from working instead!  Then have unprotected sex with mother at the end of the period and presto!  Furthermore, the father instead of paying off the mortgage, increased it to invest in a business!  By the time of the appeal, it looked as if the business had effectively failed, there would be no capital return and father was looking for a job.

Good grief!  It's not as if the parents weren't old enough to know better either.  They were in their mid thirties when all this was going on. Despite the realities of the situation, both of them told the judge that they wanted to keep their respective houses, though Lord alone knows how the mortgages were supposed to be paid.

The application

The mother applied to the court for provision under Schedule 1 of the Children Act.  Because she wasn't married to the father, she had no other claim in law.  So what can the court order?

1.  Maintenance, but only if the father (in this case) has income of more than £104,000 net p.a.
2.  A lump sum, or several lump sums.
3.  A transfer of property  to the child or to the Applicant.
4.  The settlement of property in trust for the child.

The whole point of this legislation is that it is not intended to do fairness between the parties - it is solely to make proper provision for a child. Unlike the Matrimonial Causes Act, there is no power to order the sale of property.  In the context of this case, that's quite important.

So what happened?  Well at first instance, the District Judge ordered:
1. Father to settle £250,000 on trust for the child for housing purposes.  This would revert to the father when the child reaches 18;
2. Father to pay mother a lump sum of £85,000.  £40,000 would repay her legal costs and the rest would go to reduce her debts.

Now the effect of this was that the father would have to sell his own house to be able to make the payment ordered.  The court couldn't make an order for sale, but the order to make a settlement effectively did the same.  The net proceeds of sale would amount to just £358,000, so the order would wipe most of his capital or put it beyond his reach for years to come.  So he appealed.

To a limited extent he was successful.  The High Court trimmed £45,000 off the total lump sum. This is how the High Court put it: "Assuming no further payment, the total sum which the father will have to pay from the £358,000-odd equity in his home is a total of £290,000. This will leave him with capital of £68,000 less his costs. That sum will provide him with a modest deposit for a flat for himself. Given his superior earnings and his current supposed wish to pursue work abroad, that, as I perceive it, is fair." (emphasis added).

So even when he was not married to the mother, the father is deprived of the use of the overwhelming majority of his capital for at least 16 years.  He won't recover it until he himself is 55 years old.  Still, unlike in a divorce case, he will at least be assured of recovering it one day.  By contrast, the mother finds herself guaranteed a modest house to live in until she is about 52 or so and then she has to rehouse using only her own resources.  Put it another way, she has 16 years or so to save up £250,000 to repay the father and given her saving habits up to now, that's more than a radical change of approach to life.

All this for want of a very basic precaution!

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  1. This comment has been removed by a blog administrator.

  2. Your affect is totally appreciative and newsy.
    I was reading this

  3. Well it's a good thing you decided to read my infinitely more interesting blog instead, Neil!

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