AZ v FM [2021] EWFC 2 - Capitalisation of Child Maintenance, standard or indemnity costs.

This short article deals mainly with capitalisation of child maintenance (commutation), but other topics are dealt with in the judgement see footnote[1] below.

The parties had been married for 15 years.  They had one child M, now 19, at University but living with M out of term time.

In June 2011, the court made a final order in the financial remedy proceedings.

In October 2017, H applied to vary the court's child maintenance order, the hearing taking place in July 2018, with written judgement in January 2019.

The judgment  (i) refused H’s application to vary downwards periodical payments made for the benefit of M;  (ii) capitalised those periodical payments; (and dealt with cgt matters unrelated to child maintenance).

In January 2020, H was granted permission to appeal the commutation of child maintenance (and cgt matter).

In February 2020, H applied for an oral renewal hearing.

H failed, save for a correction of computation of the lump sum.

Mostyn J decided:-

Para 4.14 of Practice Direction 30A[2] (PD 30A) was a highly important provision and applied to self represented appellants. (para 25 judgement).

The commutation lump sum was not in favour of W, and was not within MCA 1973 s 31(7A) and (7B), but was in favour of child M (para 39).

Where a variation application related to a periodical payments order in favour of a child of the family the court had the power to discharge the order and to order a commutation payment. That was what MCA 1973 s 31(5) permitted (see (46).

The power to award a commutation lump sum in favour of a child of the family existed  where the court had made a previous lump sum award in favour of that child. MCA 1973 s 23(4) provided that the court could make an order for a lump sum in favour of a child on more than one occasion. That power was subject to the restrictions imposed by MCA 1973 s 29 in respect of a child who has turned 18, but those did not apply if the child was in full time education (see para 47).

In a capitalisation case difficulties in probabilistic assessments of what might or might not happen in the future were not of themselves anything to do with whether the power to commute existed. They might supply good reasons in a particular case why a capitalisation power should not be exercised, but they did not throw any light on the existence, or non-existence, of the power (see [52] of the judgment).

The Child Support Act 1991 (CSA 1991) did not apply as H was habitually resident in the USA. The combination of: (i) incessant litigation, on which the trial judge had found H thrived, (ii) repeated defaults on the part of H with the maintenance obligation, and (iii) the age of M and the relatively short period until the maintenance liability expired, all militated strongly in favour of a capitalisation and the ending of financial links between the parties (see [58] of the judgment).

In considering whether costs should be awarded in favour of W on an indemnity basis, the judge decided:-

H's pursuit of totally meritless grounds, and his failure to negotiate, amounted to 'conduct' for the purposes of rl 44.2(4) and (5) of the CPR. That conduct made an already strong case for an order for costs irrefutable (see [81] of the judgment).

Two grounds of the appeal were totally meritless (downward variation of M’s maintenance and  CGT aspect).  However, opposition of communication of M’s maintenance, was always going to be adverse to H given the words of the statute, but the court could not say that H's pursuit of that appeal had taken the case out of the norm (see [83] of the judgment).

The court had come very close to deciding that H's failure to negotiate took the case out of the norm. However, in the absence of any specific provision in Practice Direction 28A imposing a duty to negotiate in appeal proceedings, while the failure of H to negotiate reinforced his liability for standard costs, it did not elevate his liability to indemnity costs (see para 84).

H should pay the W's costs on the standard basis. It was appropriate to summarily assess them (see para 85).


[1] Capital gains tax

[2] 4.14 Where an appellant, who is represented, makes a request for a decision to be reconsidered at an oral hearing, the appellant’s advocate must, at least 4 days before the hearing, in a brief written statement –

(a) inform the court and the respondent of the points which the appellant proposes to raise at the hearing;

(b) set out the reasons why permission should be granted notwithstanding the reasons given for the refusal of permission; and

(c) confirm, where applicable, that the requirements of paragraph 4.17 have been complied with (appellant in receipt of legal aid).