The High Court heard a case outlining the complexities of a financial provision case under Schedule 1 of the Children Act 1989 and an application to set aside transactions under Section 423 of the Insolvency Act 1986.
Background:
The parents and child are Czech nationals. The parents met in 2015, lived together in the Czech Republic until 2019, and their relationship ended in 2022. P is their only child. In August 2020, the mother and P moved to England with the father's financial support (initially £3,000/mth, thereafter £2,500/mth). After the relationship ended in 2022, the father reduced support to £400/mth. The mother and P returned to England in January 2023, with the father continuing sporadic £400/mth payments.
Following a dispute over the 2023 Christmas period, welfare proceedings were initiated in January 2024, with the mother seeking a "lives with" order and the father cross-applying to remove P permanently to the Czech Republic. These welfare proceedings are ongoing and have intensified the rancour between the parents.
The financial proceedings began in March 2024. The mother contends the father is a millionaire and that the T Trust was used to shield his assets from her claims. She seeks a substantial housing fund (£1,050,000), lump sums for liabilities, legal services (£150,000), rent, and £6,000 per month in child periodical payments, plus school fees.
The father claims that his resources are modest, denies he can meet the mother's claims, and accuses her of being financially driven. He relies on an "open proposal" from the paternal grandfather, offering to sell a London property to be held on trust for P until his 18th birthday. This offer is conditional on the mother allowing specific contact with P in the Czech Republic. The father also offers £1,000 per month in child maintenance and school fees from the T Trust if the mother cooperates in adding P as a beneficiary.
Decision:
The High Court ruled in favour of the mother. The Judge concludes that the father has failed to provide full and frank disclosure of his wealth. Despite this, based on available information and inferences, the Judge found the father's resources to run to the tens of millions of pounds in a form that was largely accessible and sufficiently liquid to easily meet the mother's claims.
Regarding the T Trust, the Court concluded that it was settled by the paternal Grandfather in March 2024 via a nominal sum. Less than a month later, all the BH s.r.o. shares were transferred into the T Trust. The Judge found that the share restructuring and trust creation were clearly linked and intended to conceal their true purpose.
The Court concluded that various transactions had been undertaken with the purpose (or sole purpose) of defeating creditors' claims, including the mother's. The Judge explicitly states that the mother is a "victim" of these transactions, as the father had "erected barriers to the mother's ability to enforce her claims" by placing assets in the names of others and in trust.
The Court considers P's needs, aiming to avoid a "too great a disparity" between the lifestyles in both parents' homes, and takes into account the father's substantial resources and standard of living. Both parents agree that P should be privately educated (though the father prefers that it not be before the age of ten), and the Judge considers it relevant that P will mix with children from affluent families and needs a home where he won't feel embarrassed. P's most significant need is a house. The Judge deems a three-bedroom property with a garden in a safe area in or around the mother's current town to be reasonable, at a cost of circa £960,000. The father is to pay a lump sum of £29,250 toward P's other capital needs, such as a car, bicycle, and piano, plus £173,500 for the mother's liabilities. The father must pay £1,500 per month towards the mother's rent until the new property is acquired.
Implications:
This judgement demonstrates the Court's willingness to make substantial capital and periodical payment orders under Schedule 1 to meet a child's needs, even when the parents were not married. This includes significant housing provision, education, and ongoing maintenance. The award of a £960,000 housing fund, along with other capital sums, and substantial monthly maintenance, highlights that the Court will ensure the child's needs are met appropriately, reflecting the paying parent's wealth.
The Judge explicitly considered the need to avoid "too great a disparity" in the lifestyle P experiences in both parents' homes. This means that a wealthy parent cannot simply provide a modest lifestyle for the child in one home if his standard of living is significantly higher.
While the Judge did not reject all of the father's evidence, the Court clearly made adverse inferences about his true income and expenditure, leading to a higher periodical payment order than he likely budgeted for. This reinforces the principle that any non-disclosure or provision of misleading information will not benefit a party and can lead to the Court making unfavourable assumptions.
