Is it ‘game on’ for strategies to side-step liability?

Family analysis: James Pirrie, director at Family Law in Partnership, gives an overview of the possible consequences of the decision in Hakki in relation to child support.

Background

Hakki v Secretary of State for Work and Pensions [2014] EWCA Civ 530, [2014] All ER (D) 05 (May)

The Upper Tribunal (Administrative Appeals Chamber) (UT) found that the claimant professional gambler was obliged to pay child support maintenance on the First-tier Tribunal’s (Social Security) factual findings that he was ‘gainfully employed’ as a ‘self-employed earner’. The claimant appealed. The Court of Appeal, Civil Division, in allowing the appeal, held that, on the facts, it could not be said that the claimant had had a sufficient organisation in his poker playing to make it amount to a trade or a business. However, it noted the Secretary of State’s comment that there might be a way to compel him to make such contribution by making a ‘departure direction’.

What is the significance of the decision in Hakki?

This is an early straw ‘in the wind’ as to the difficulties that the reforms to the Child Support Act 1991, that are now fully in place, will throw up. We are likely to see increasing numbers of applicants who fall between the stools of:

• maintenance provision through the Child Maintenance Service (CMS), and

• more general provision from the courts

It was that gap that forced amendment of the early scheme in 1995 and it is depressing to see, in effect, an about-turn as a result of a drive to reduce administrative cost and burdens on the new CMS.

The Court of Appeal decision applies a clear logic. However, it is difficult to see the result as just where the applicant has no means by which to access a share of this resource as the child’s needs might dictate. While the court can operate flexibly and can ‘see’ and make provision from these resources, case-law prohibits applicants from seeking maintenance or anything to substitute for the absence of maintenance other than educational costs or costs of disability in the absence of agreement or a maximum CMS calculation. That is the application of the principle in Phillips v Peace [1996] 2 FCR 237:

‘I have concluded that Mr Singleton’s submission is well founded; that is to say that the undoubted power which I have to make a lump sum award should not be exercised in such a way as to provide for the regular support of the child, which would ordinarily have been provided by an order for periodic payments...’

‘I hold that in a case to which the Child Support Act 1991, and in particular s 8(1), applies, then in exercising its remaining jurisdictions under Sch 1 to the Children Act 1989, here to award a lump sum, a court should do so only in order to meet the need of a child in respect of a particular item of capital expenditure.’

That is why the lifestyle inconsistent safety net in child support cases was so important in terms of avoiding children from falling into relative poverty and why cutting that away means that a whole series of these more unusual sorts of case are going to drop straight into the dark place that we can only label ‘wrong’ or ‘unjust’. More worrying still, it is the sort of case that grabs headlines and has, one can imagine, a new generation of avoidant (potential) paying parties assume that it is ‘game on’ with the strategies to side-step liabilities again.

Interviewed by Kate Beaumont.

The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor.

 

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