HNW Divorce Year In A Review: A Year Like No Other

On Friday 26 February 2021, FLiP director James Pirrie presented at the Thought Leaders 4 HNW Divorce Year In A Review: A Year Like No Other event seeking to persuade the audience of professionals that “changes in schedule 1” was the most significant event of the year in family law. This was a tall order given that there have been few major changes and there were some inviting alternatives on the starting line-up (oh and one person sang her presentation to the backing of “I will survive” … how can you compete with that?).

In this blog, James outlines his argument as presented to the audience below:

In a few weeks it is Red Nose Day, when we hope to raise millions of pounds for children living in poverty.  I would like to look back on the last year to see whether the law in never married finance cases (otherwise known as “schedule 1”) is doing its bit.  Sadly, I am not sure that we can feel pleased with our performance. In short, we have seen more of the same; there is no strong signs of change; our law is arguably in crisis and we are surely now needing something new and more fit for purpose.

The cases which I squeeze into this year by sleight of hand (and because I am always behind in my reading) includes January 2020’s DN v UD (Sch 1 Children Act: Capital Provision) [2020] EWHC 627 (Fam) and can be divided into the good, the bad and the ugly.

The good:

These are DN v UD from Williams J – the outright award of capital to a child and its book end, Sir James Munby’s “oh no you don’t prodigal son” case RS v RS and JS.

The bad:

I am treating as “the bad” Cohen J’s LP v AE and Mr Justice Cobb’s X v Y re Z, which I so treat because of their approach to claims for provision for legal fees.

The ugly:

The ugly show schedule 1 cases in all their mysterious technicality, Williams J again in BSA v NVT looking at enforceability of orders, a technical decision from the upper tribunal which would take my entire five minutes to explain and perhaps Mostyn J’s “rare bird” capitalisation of maintenance case – admittedly matrimonial but of obvious relevance to our schedule 1 work.

DN v UD provided us with a startling extension to long-term provision for the child.  Here, there was exceptional wealth of the father (but that was specifically downplayed as the key factor), coercion and control by father from which, the judge concluded that the child should be protected through court-ordered and outright provision of a home of £650,000 … but what was seen by the judge as opening the door (para 85) is the absence of a parent playing any supporting role.

This is a seismic extension but one swallow does not a summer make and eight months later, Sir James Munby was very much trotting out the established rules that legal responsibility for provision stops at (or at least very shortly after) the date of completion of first degree.

So I say I say “the good, the bad and the ugly” because surely these show us that this area of law remains technical, expensive, fraught, uncertain and, despite the endeavours in DN v UD, … mean.

I see little encouragement here to the family solicitor promoting the theoretical opportunity of the schedule one claim to many claimants.  Unless there is some way around the funding issue, they are simply not going to be brought.  They are generally too technical and uncertain for the applicant to manage themselves (with frankly too little personal benefit at the end of the day, in terms of long-term security).  And too enormous and expensive for solicitors to run to trial against an intransigent respondent (which is probably the stance that the system subliminally encourages respondents to adopt).  The applicant who has significant funds will struggle to mount a case (because the applicant’s claim depends on a shortfall in provision to provide a home for the child) but the applicant with modest funds may well be spending real money simply to secure a loan of a greater sum – which is far from an enticing proposition:

“That is some catch that Catch-22,” he observed.  “It’s the best there is,” Doc Daneeka agreed.  Yossarian saw it in all its spinning reasonableness.  There was an elliptical precision about is perfect pairs of parts that was graceful and shocking…”

The cases that are brought seem to generate devastation all around.  As Charlotte Bradley and I say in our excellent book – 3^rd edition on its way – the only way to run a schedule 1 case is to settle it really quickly.

Why would all of this matter?

• Marriage is reducing 400,000 ish in 1973 and 236,000 now.
• Births outside marriage are increasing – under 10% until the late 70s, now at around 50%.
• Each year around 60,000 children experience the separation of their never-married parents – note much higher instability in the never married family (5.3% separate each year as against 1.3% in the married family).  And many are poor – CPAG tells us of the obvious reasons:

“Lone parents face a higher risk of poverty due to the lack of an additional earner, low rates of maintenance payments, gender inequality in employment and pay, and childcare costs”

The latest report summarising the problems is Scotland’s of January 2021 but the aspects are well known:

Children born into poverty are more likely to experience a wide range of health problems, including poor nutrition, chronic disease and mental health problems. Poverty puts an additional strain on families, which can lead to parental mental health and relationship problems, financial problems and substance misuse.

There are no clear statistics from the CMS as to how many cases relate to children of married and never married parents but if one assumes a broad 50% demarcation then of the 58,000 never-married separation cases a year, just under half turn to the CMS.  The problems with the CMS are increasingly side lined and unremarkable but

• Compliance is well under 70%
• The arrears are approaching 400m just in the period since the scheme went live in 2012; and
• For cases with any complexity the process is practically prohibitive.  Generally an appeal will be needed and they are generally taking two or three years or more to complete.

Little wonder that CMS take up is reducing.

Don’t worry you say – these cases can be resolved at court … well actually “no” and “they are not”:

• You can’t bring your case to court for maintenance without a maximum CMS assessment; and
• People just aren’t doing it … case applications run at around 180 per quarter, just 1.2% of the separating, never-married population.

Take up for a legal case might depend on a range of factors, including

• Knowledge
• Access
• Available alternatives
• Predictability of outcome

Have we progressed this year? Well not really.  ND v UD was a brave endeavour to push the boundaries … whether it is shoot that will grow or simply wither we don’t yet know.  But if it is non-economic for most to run bring a case and too difficult or technical to do so unaided, schedule 1 risks remaining a backwater and children will remain in poverty.  So I would say that Schedule 1 in 2020 might well be considered for your vote.  This year is significant because it shows more of the same.  And at some point with the rising tide of cohabitation and separation our law needs to offer us something better than this.