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UD v DN (Schedule 1, Children Act 1989; Capital Provision)
Factual and Procedural Background
The Appellant, referred to as the Father, appealed an order made under Schedule 1 of the Children Act 1989 ("the CA 1989") by Judge Williams ("the Judge") on 7 July 2020. The order required the Father to settle a property in London ("the family home") in trust for the benefit of the parties' two younger children, then aged 19 and 14. The trust was to last until the youngest child reached 18 or six months after completing full-time tertiary education. The challenged provision stipulated that at the end of the trust period, 6.5% of the gross sale price or market value of the family home would be held on trust absolutely for the children.
The relationship between the Father and the Mother spanned from 1996 to 2017/2018, with three children from their relationship. At the hearing below, the eldest child was 22, and the two younger children were 19 and 14. The Mother initiated proceedings under Schedule 1 of the CA 1989 in February 2018, when the children were aged 20, 17, and 12 respectively. The proceedings culminated in the Judge's judgment on 29 January 2020 and the order on 7 July 2020. The order included the settlement of the family home in trust for the two younger children, lump sum payments to the Mother, periodical payments for the children’s education, and school fees.
The Mother sought outright capital provision for the two younger children on the basis that they should be in the same financial position as the eldest child, who had received a property purchase gift from the Father. The claim was advanced on the premise that the Father's conduct justified protective orders and financial provision to enable the children to purchase their own homes. The Father appealed the settlement of the property order among other grounds, with permission granted only on the property settlement issue.
Legal Issues Presented
- Whether the court has jurisdiction under paragraph 1 of Schedule 1 of the CA 1989 to make an order for financial provision once the relevant child has attained the age of 18, if the application was made before the child turned 18.
- Whether the court has power to make a property transfer order or lump sum order to or for the benefit of a child who will be over 18 when the order takes effect or payment is made.
- Whether the Judge erred in making a capital provision order benefiting children as adults absent special or exceptional circumstances justifying such provision.
Arguments of the Parties
Appellant's Arguments
- The court has no jurisdiction under paragraph 1 of Schedule 1 to make an order after the child has attained 18 years of age, even if the application was made before the child turned 18.
- The court cannot make a property transfer or lump sum order to a person who is a child at the date of the order but will be over 18 when the order takes effect or payment is made.
- Absent special or exceptional circumstances, it is impermissible to make capital provision orders benefiting adult children who are not in full-time education or training.
- The Judge’s decision was based on speculative future conduct by the Father (a "financial ultimatum") without evidential support.
- There was no expert or medical evidence supporting the children’s long-term vulnerability or continuing financial need.
- Conduct of the Father is not a factor listed in Schedule 1, and the gift to the eldest child was a spontaneous gesture that does not justify similar provision for the younger children.
Respondent's Arguments
- Jurisdiction is triggered at the date of application, not the date of the order, so the court retains power to make orders after the child turns 18 if the application was made beforehand.
- The order made is a settlement of property order, which takes effect immediately, even though the children’s absolute interests are contingent on surviving the trust period.
- The court has power to make capital provision orders benefiting adult children in special circumstances, and the statutory scheme does not expressly limit capital provision orders to children under 18.
- The children suffer ongoing vulnerability and risk of financial control by the Father due to his abusive conduct, justifying exceptional circumstances for capital provision.
- The Judge properly exercised discretion based on evidence of the Father’s abusive behavior and the children’s resulting vulnerability, even if there was no specific expert evidence on the "financial ultimatum".
- High threshold applies before appellate interference with discretionary decisions.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Chamberlain v Chamberlain [1975] 1 WLR 1557 | Capital provision for children beyond education requires special circumstances; property should revert to parents absent such circumstances. | Confirmed the principle that capital settlements for adult children require special or exceptional circumstances; used to limit the scope of the order. |
| J v C (Child: Financial Provision) [1999] 1 FLR 152 | Removal of legal distinctions between marital and non-marital children; capital provision beyond education limited to exceptional circumstances. | Supported the statutory interpretation that capital provision for adult children is limited and must be justified by exceptional circumstances. |
| Re N (A Child) Financial Provision: Dependency [2009] 1 WLR 1621 | Dependency ceases at majority except in special or exceptional cases; capital settlements should terminate on majority or end of education. | Applied to affirm that capital provision orders extending beyond majority require exceptional circumstances. |
| A v A (A Minor: Financial Provision) [1994] 1 FLR 657 | Financial provision for children is limited to dependency and education unless special circumstances exist. | Reinforced the limitation on capital provision for adult children absent special circumstances. |
| Philips v Peace [1996] 2 FLR 230 | Special or exceptional circumstances needed for capital provision benefiting adult children. | Supported the general principle limiting capital provision orders for adult children. |
| Downing v Downing [1976] Fam 288 | Confirmed jurisdiction to make financial provision orders for children over 18 in divorce proceedings if the child is in education or special circumstances exist. | Used to support the conclusion that jurisdiction depends on the date of application, not the date of order. |
| Jones v Jones [2001] Fam 96 | Application for variation of periodical payments must be made before the expiry of the order term; jurisdiction triggered by application date. | Analogous reasoning used to support that jurisdiction under Schedule 1 is triggered at application date, not order date. |
| Lilford (Lord) v Glynn [1979] 1 WLR 78 | Capital provision for adult children limited to exceptional circumstances; court powers are restricted. | Confirmed limitations on court powers to make long-term capital provision for adult children. |
| Kiely v Kiely [1988] 1 FLR 248 | Financial provision for children is for dependency; capital provision beyond minority requires special circumstances relating to the child. | Reinforced the principle that capital orders for adult children require special circumstances related to the child. |
| T v S (Financial Provision for Children) [1994] 2 FLR 883 | The category of special circumstances is not rigidly limited and can be broader than disability. | Supported the proposition that special circumstances can be broadly interpreted in certain cases. |
| Griffiths v Griffiths [1984] 3 WLR 165 | Parents must meet responsibilities to children during dependency; failure to do so can justify financial provision. | Clarified the importance of parental responsibility in the context of financial provision orders. |
| Re P (Child: Financial Provision) [2003] 2 FLR 865 | Endorsed the limitation of financial provision to dependency and education unless exceptional circumstances exist. | Confirmed the established legal position regarding financial provision for children. |
Court's Reasoning and Analysis
The Court began by addressing the jurisdictional question of whether the court retains power under paragraph 1 of Schedule 1 of the CA 1989 to make financial provision orders after the child has turned 18 if the application was made before the child’s 18th birthday. The Court found that jurisdiction is triggered by the date of the application, not the date of the order, and accordingly the court retains power to make such orders even if the child attains 18 before the order is made. This interpretation avoids unfairness and practical difficulties that would arise if applications could be defeated by delays beyond the child’s 18th birthday. The Court supported this conclusion by reference to statutory language, the Law Commission’s reports, and analogous case law, including Downing v Downing and Jones v Jones.
Regarding the second ground, the Court considered whether the court can make a property transfer or lump sum order that takes effect after the child turns 18. The Court concluded that the order in this case was a settlement of property order, which took immediate effect, and that the court does have power to make capital provision orders benefiting children as adults in special or exceptional circumstances. The statutory scheme does not expressly limit capital provision orders to the child being under 18 at the time of benefit.
On the substantive ground, the Court examined whether the Judge was correct to make a capital provision order benefiting the children as adults absent special or exceptional circumstances. The Court reaffirmed the established principle that capital provision orders extending beyond dependency or education should only be made in special or exceptional circumstances related to the child’s needs, such as disability. The Court found that the Judge’s decision was primarily based on the Father’s prospective conduct and the children’s purported vulnerability to a "financial ultimatum," rather than a financial need or dependency arising from the children’s circumstances.
The Court held that vulnerability to financial pressure or manipulation by a parent does not constitute a special or exceptional circumstance justifying capital provision. The Judge’s reliance on general observations about the long-term effects of abuse without specific evidential support or expert evidence was insufficient. The Court noted that the expert reports available did not indicate any long-term vulnerability or need for financial provision. Consequently, the Court concluded that the capital provision order was not justified on the evidence and must be set aside.
Holding and Implications
The Court ALLOWED the appeal in part by setting aside the long-term capital provision order made in favour of the two younger children.
The Court held that:
- The court has jurisdiction under paragraph 1 of Schedule 1 of the CA 1989 to make financial provision orders even if the child has attained the age of 18 at the date of the order, provided the application was made before the child turned 18.
- The court may make capital provision orders benefiting adult children in special or exceptional circumstances related to the child’s needs.
- However, in the present case, the Judge’s order was not supported by evidence of special or exceptional circumstances relating to the children, but rather was based on speculative future conduct by the Father and general observations on vulnerability, which is insufficient.
The direct effect is that the capital provision order for the children’s benefit as adults was quashed. No new precedent was established beyond reaffirming existing principles regarding jurisdiction and the requirements for capital provision orders under Schedule 1.
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