Child maintenance – when capital assets outweigh income

Posted by Rachel Giles on
Child maintenance is payable for the benefit of the children when parents separate, and the children live primarily with one parent and spend some time with the other. A recent child maintenance case has highlighted the difficulties parents face when the paying parent appears to have very little or no income, but substantial capital assets.

In the case of EG v CA [2017] EWFC 52, the paying parent (the father) had assets worth approximately £5.2 million, and his affairs were organised in such a way as to minimise his income. He was therefore required to pay child maintenance of £7 per week (the "flat rate"), reflecting that his gross income is below £100 per week.

Various schemes setting out the amount payable have been in force, but parents separated after 2013 may be aware of the statutory maintenance scheme, introduced by the Child Maintenance and Other Payments Act 2008. This sets out the amount of child maintenance that should be paid, in accordance with a statutory formula using the paying parent's gross weekly income. Parents on the older schemes are gradually being moved across to this scheme, which is overseen by the Child Maintenance Service. There are various deductions made for any shared care (in practical terms, the time that the children spend overnight with the paying parent) and any other children that the paying parent may live with, but a percentage of the paying parent's gross income is assessed as child maintenance.

When the current scheme was introduced, it abolished the possibility of the receiving parent seeking a variation of a child maintenance assessment on the basis that the paying parent has capital assets. This focused on such parents as the father in EG v CA, and would allow such parents as the mother to request that the father's assets were taken into account in any calculation of the maintenance payable. This had been possible under previous schemes.

Without this option for variation, the only option available to the mother, in this case, was to apply to the Court under Schedule 1 to the Children Act 1989. The difficulty with this course of action is that the mother was only able to apply for a capital sum for the child (in other words, singular expenditure). Whilst some might consider this to be more than adequate (the child could, for example, be provided with a home, with private schooling, a car and driving lessons etc), this does not account for the everyday expenditure designed to be captured by child maintenance. It was the view of the Court in EG v CA that an increasingly expansive view of what constituted singular expenditure would become apparent should the hole in the statutory scheme not be plugged.

This is promising where there is a nominal amount of child maintenance payable by a wealthy parent, but does not get past the fact that an expensive and time-consuming Court application will be required to be made, should the maintenance not be forthcoming.

It will be interesting to review any further cases that deal with this issue.
Should you have any queries on child maintenance or any other family law issues, please contact a member of the Family team at Blake Morgan.

About the Author

Photograph of Rachel Giles

Rachel is a Senior Solicitor in the Family team and is based in the Southampton office.

Rachel Giles
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023 8085 7222

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