The most recent statistics available suggest that 40.6 percent of all births in the UK are to unmarried parents. While the law is well known for children of married couples, it is often unclear what financial remedies are available to unmarried parents, should their relationship breakdown.
Here I aim to present a simple and straightforward guide to what unmarried parents, going through a relationship breakdown, need to know.
What is a 'Schedule 1'? Schedule 1 is the term used to describe applications for financial provision for children. The terminology comes from its place in Schedule 1 of the Children Act 1989. The Child Maintenance Service (CMS) has the primary jurisdiction for assessing and enforcing child maintenance but the court has residual powers to make financial provisions for children over and above this in certain circumstances i.e. mother or father has a substantial income over and above what the CMS can award. In such circumstances, the parents can make the 'Schedule 1 application' on behalf of their child. Who can apply? Any parent, guardian, special guardian or person who has a Child Arrangement Order in their favour can apply for a financial order from the courts. The right to apply for a financial order extends to adult children, who are in education, training or where other special circumstances exist, for example an adult child with a disability. Whilst it is uncommon, it is possible for an adult child to make an application against either parent themselves, if their parents are not living together. What can the court award? The court can award any of the following remedies:
- Periodical payments
- Secured periodical payments
- Lump sum
- Settlement of property
- Transfer of property.
Housing is often an essential issue for unmarried parents on the breakdown on their relationship. Frequently, the parents will have lived together in property not jointly owned, leaving one parent in a substantially worse off position. If an application is made under Schedule 1, the court can award a parent to purchase a property on trust for their child for them to live in with the other parent until that child reaches 18. At which point, the property would revert back to the parent to deal with as they choose. In the alternative, the court can also award that the other parent pay the cost of renting a suitable property to house parent and child until that child is 18. Whilst this is not a permanent solution for the parent and child’s housing needs, it considerably reduces the burden of suitable accommodation during a child’s developmental years, offering stability and consistency which is so very important. In addition to solving accommodation issues, financial remedies will be awarded to cover an agreed percentage of the child’s household expenditure. Such expenditure may include:
- Clothing and footwear
- School / nursery fees
- Books and other educational tools
- Medical bills
- Nappies and toiletries
- Babysitting fees
- Travel costs
- Eating out
- Holidays and weekend trips
In addition to the child’s household expenditure, it is also possible for the court to award financial provisions for the primary carer’s own household expenditure. Whilst it is a little controversial, it is possible for a court order to include provision for food, clothing, holidays, a car, and even decorating budgets for the parent living with the child. The idea being that if the child’s primary carer is happy and healthy, this will reflect well on the child. Anything awarded must be for the benefit of the child, even if these cases it is indirectly. The most controversial indirect benefit of all is legal fees. I will deal with this below. What is the Court likely to award? Whilst the court has an array of powers to make various orders, much depends on individual circumstance. In coming to its decision, the Court will take into account all the circumstances of the case, including those set out in the Schedule at Paragraph 4(1) (a)-(f):
- The income, earning capacity, property and other financial resources which each parent/guardian has or is likely to have in the foreseeable future;
- The financial needs, obligations and responsibilities which each parent/guardian has or is likely to have in the foreseeable future;
- The financial needs of the child;
- The income, earning capacity (if any), property and any other financial resources of the child
- Any physical or mental disability of the child; and
- The manner in which the child was being, or was expected to be educated or trained.
As can been seen from this list, the Court weigh up a number of factors and therefore it is not possible to say with any certainly what the likely outcome would be. After careful review and analysis, your solicitor will advise you on the likelihood of success and any risks involved, especially as to the costs involved. What if I cannot afford the legal fees? Schedule 1 is more or less exclusively used by the wealthy, since CMS take responsibility for the child’s needs up to a certain level of income. That said, often the wealth is unequally allocated between parents of a child, with one parent owning all or the vast majority of the assets. As such, funding a Schedule 1 application can seem impossible for the non-wealthy parent. However, the law has developed in such a way as to make it clear that you can make an application against the wealthy parent for provision for legal fees at an early stage. The legal principle for this comes from the case of Re S (Child: financial provision) 2 FLR 94 when Thorpe LJ said that that the term “for the benefit of the child” should be given a wide meaning and could (in limited circumstances) include a parents’ legal fees. Further, and in the case of MT v T EWHC 2494 (Fam) it was held that the court has the jurisdiction to make an interim payment by way of a lump sum to cover the applicant’s legal costs. It is important to stress, however, that there is no guarantee the court will award legal costs to be paid and inevitably there will be a cost of making that application in the first instance. As ever, the court’s decision will be dictated by individual circumstances. How long does it take? Any application to the court is at the mercy of the court’s efficiency and available timetable. That said, under the Family Procedure Rules the court must timetable the First Appointment no more than 8 weeks from the date of the application. It is also possible to agree to use that first court hearing (normally reserved for establishing the issues and providing court directions) as the Financial Dispute Resolution (FDR) hearing. The FDR is a private settlement hearing and provides a very good opportunity for the case to settle. A judge will hear the FDR but they will not make any final order at the hearing unless it is agreed by both parties. The judge’s role is limited to assisting the parties with an indication as to how they consider the case would be determined at Final Hearing (a full trial). Not surprisingly, often the indication is broad or takes a “split the difference” approach to settlement. Much will depend on the individual judge and they do vary in nature and quality. That judge, however, cannot be involved in the process again if it does not settle as a result of the private nature of that specific hearing. There is no obligation to reach a settlement and if one is not reached, the case will proceed to a full trial. It is at this point that parties will be required to give oral evidence in court and for a judge to make a decision as to what is to be awarded. This decision is final and binding on both mother and father.
This note offers a brief summary of Schedule 1 applications. Each case will undoubtedly have its nuances that will be dealt with by an experienced professional. It is hoped that this offers a clear guide to those considering making such an application.
If you would like to know more about the issues covered in this article, Vardags offers a free consultation to qualifying individuals.
For high net worth and ultra high net worth individuals or their companies, our confidential enquiry line is staffed 24 hours. Call 020 7404 9390 today.