A final order was made in relation to the parties' financial claims in 2011. That order included an order for periodical payments by way of child maintenance in relation to the parties' daughter, who, by the time the matter returned to court, was 19. In 2017, the husband, based in the US, applied to vary the periodical payments order downwards. The Deputy District Judge (DDJ) refused the husband's variation application and made an order capitalising the periodical payments. Mostyn J, hearing the appeal, referred to a lump sum which capitalises and replaces future payments of periodical payments in favour of a child as a "commutation lump sum". There had been a history of difficulty in enforcing the periodical payments, and a long history of litigation between the parties since the 2011 order.
Mostyn J noted that the "commutation lump sum" was not ordered under s.31(7A) or (7B) of the Matrimonial Causes Act 1973 (MCA), as a lump sum under those subsections can only be made in favour of a party to the marriage and only following the discharge of a periodical payments order. The lump sum order made by the DDJ was in favour of the child. Mostyn J traced the history of the relevant provisions of the MCA. He considered the wording of those provisions to be such that on an application to vary a periodical payments order, the court cannot make a property adjustment order either in favour of a party to the marriage or a child of the family. Further, on an application to vary the court may not make a lump sum order in favour of a party to the marriage but could do so in favour of a child of the family. S.31(5) therefore permitted the court to discharge an order for periodical payments in favour of a child and to instead order a "commutation payment". This would be so even where the court has made a previous lump sum award in favour of that child.
He further stated that "In my judgment, where the court has made a capitalisation of child maintenance it would need a change of circumstances of exceptional magnitude before the court would augment what was intended to be a one-off commutation payment."
He noted that the making of a commutation order by the court would be "a very rare bird indeed" and that, where the Child Maintenance Service (CMS) had jurisdiction, the court could not prevent an application to the CMS. In the circumstances, he considered that capitalisation could only properly be considered where the Child Support Act 1991 didn't apply.
Antonia Felix says:
This case is of huge interest to family practitioners who have long advised that maintenance for children cannot be capitalised. Whilst Mostyn J described it as "a very rare bird indeed" and there were exceptional circumstances in this case (primarily the history of the litigation, breaches by the paying father and the fact he lived abroad so the CMS did not have jurisdiction) there is little doubt that there will be further cases that seek to use this as a springboard for future "commutation lump sums" in favour of a child.