Peter Hilton and Hannah Gibbons, in our Family Law team, explain.
Following a recent ruling there has been a change to the law surrounding claims for cohabiting parties used to meet the needs of their children (commonly referred to as ‘Schedule 1’ claims). Schedule 1 of the Children Act 1989 permits the court to make orders for the financial provision for children, and is available to parents, guardians, or any person who a child lives with under a child arrangements order. The applicant under Schedule 1 must demonstrate that they require financial support to meet the needs of a child until the child turns 18. Schedule 1 claims are most often utilised in cases where the parents were not married and cannot pursue financial claims pursuant to a marriage.
The recent case of ZU v LT (sub nom Re A and B (Schedule 1: Arbitral Award: Appeal)) [2024] EWHC 778 (Fam) means cohabiting parties with children are increasingly rethinking the availability of claims under Schedule 1 of the Children Act. A full summary of the potential Orders available to cohabitees for the benefit of their children is outlined below, but, in summary, Schedule 1 allows a parent to make a claim for capital or income support, including obtaining a house for the benefit of the child and that parent until the child reaches age 18.
In the case of ZU v LT, the Court was presented with a more modest asset case, and was asked to consider whether the parties’ mortgage capacity should be considered in making an Order for housing provision for the child. The Court confirmed that mortgage capacity is a relevant resource, and the Court is empowered to make Orders which would require a party to obtain a mortgage in order to suitably house their child and former cohabiting partner if they are the primary parent.
This represents the latest decision in an ongoing sea change since the introduction of Schedule 1 to the Children Act in 1989. Previously only utilised by parties with significant assets, Schedule 1 is increasingly being used in cases with more modest assets to ensure that parents and children can be suitably housed and their needs met. The decision of the Judge in ZU v LT suggests that even in families where the parties do not have significant capital savings, but do earn at a sufficient level to utilise a mortgage capacity, this is something that can be relied upon by the Court in making a decision.
Procedure
If it is not possible for the parent seeking support to agree financial provision with the other parent directly or via solicitors, an application to the Court can be made. Before making an application, attending a Mediation Information and Assessment Meeting (‘MIAM’) will be required unless an exemption from the MIAM can be demonstrated. If an exemption can be demonstrated reflecting that mediation is not deemed an appropriate option, and other non-Court options would also not be appropriate, the applicant parent can file their application and a hearing will be listed.
Prior to the hearing both parties will be required to set out their financial positions with supporting evidence. At the first hearing, called a ‘First Appointment’ the Judge will make directions and set out the initial considerations for the case and the parties. The next hearing is a ‘Financial Dispute Resolution’ hearing, which is an opportunity for the parents to resolve the key considerations and settle matters. An indication will be provided by the Judge as to how they think the case she be settled and if matters still cannot be resolved, the case will progress to a ‘Final Hearing’. At this hearing, a different Judge will listen to the parties and their evidence and make a decision that is binding on the parties. The parents will be encouraged to settle and meet a resolution at every stage throughout this process. It is also possible to use a ‘fast track’ procedure if only claims for income are pursued.
Key Considerations
Although this procedure is similar to that available to divorcing couples trying to meet a financial settlement, under Schedule 1 proceedings the child’s welfare will be paramount and every option proposed will be reviewed in consideration of whether it is in the child’s best interests.
The primary focus of Schedule 1 cases is how best to meet the financial needs of the child with reference to the standard of living set by the parents prior to their separation taking place. This is then balanced against the practical considerations of the parent’s circumstances and their ongoing needs and financial resources.
The key factors for the court to assess includes the financial needs of the child and that of the parents, the parents’ respective incomes, earning capacities, and their access to capital and financial resource to meet the child’s needs. Specific case details will be considered, such as any disabilities, medical needs and so on.
Orders
Throughout the court process, a Judge has access to several orders depending on the facts presented in the case. The key options for resolution are:
- ‘Periodical payments’ also known as child maintenance. If the non-resident parent’s income exceeds the maximum rate for a child maintenance claim via the Child Maintenance Service, then a ‘top-up’ payment could be ordered to assist the parent requiring financial support to meet the child’s needs.
- ‘Lump sum orders’ to fund a parent’s legal fees, payment of debts and/or other capital needs such as medical bills or to purchase a vehicle to transport the child.
- ‘Transfer and settlement of property orders’ which require the respondent parent to permit the resident parent and child to live in the relevant property, which could either be the former family home or a new property purchased for the purpose of their residence, until the child reaches 18. Depending on the terms of the order, the property is generally held on trust so it would not be owned by the applicant parent and would revert to the non-resident parent once the child reaches 18 years of age.
It is crucial to seek specialist advice from a solicitor when considering a Schedule 1 application, as one party could be ordered to pay the other party’s costs due to the unique costs implications pursuant to applications under Schedule 1 Children Act 1989.
For further information or legal advice, please contact law@blandy.co.uk or call 0118 951 6800.
This article is intended for the use of clients and other interested parties. The information contained in it is believed to be correct at the date of publication, but it is necessarily of a brief and general nature and should not be relied upon as a substitute for specific professional advice.
