In G v S [2017] EWHC 365, the court confirmed that parties cannot be held to an agreement if the terms fetter its ability to adjudicate on a child’s best interests.

The parties had been in a relationship for two years, during which they had a daughter who was two and a half at the time of the proceedings. The mother was a Swedish national based in London. She worked as a pilot, and had worked part time since the birth of the child. The father was a US citizen of Swedish background and at the time of the proceedings lived in Switzerland. The mother brought proceedings under Schedule 1 of the Children Act 1989 (pursuant to which financial provision is made for children of unmarried parents).

The father was from a wealthy family and used the ‘millionaire’s defence’ available in cases based on a ‘needs’ rather than ‘sharing’ assessment, ie that he could afford to pay whatever was ordered. This meant that he provided minimal financial disclosure.

Heads of agreement were reached between the parties at a round table meeting and it was agreed that they were subject to Xydhias principles, ie a binding agreement had been reached that was enforceable once translated into a court order. The court was asked to adjudicate specific drafting points in relation to that order.

In this respect, there were a number of issues the court had to decide. The main issue of interest was a term that restricted the mother from obtaining a replacement property, (property provision having been agreed by the father), other than in England and Wales, until the daughter had completed her primary education. The father argued that the parties should be bound by the heads of agreement they had signed, which contained this provision. The mother argued that restricting her in this way was “inappropriate in principle”.

The court agreed with the mother and held that the court should not approve a term of an agreement that fetters its ability to deal in the future with decisions regarding the child’s welfare. Such welfare decisions would include the jurisdiction in which the child should live. This was especially relevant as (i) the nature of the mother’s work meant that relocation could not be excluded as a possibility; (ii) the father did not live in England and Wales; and (iii) the mother was Swedish. The judge observed that it was not correct to conflate a settled address with “stability and security” for the child. In summary, the court should be able to adjudicate, if asked to do so in the future, on the jurisdiction in which the child should live. Such adjudication should be on the basis of the welfare considerations relevant at that date and the court should not be restricted from doing so by the terms of a financial settlement reached between the parties.

The case also highlights the risks of running a ‘millionaire’s defence’. The father sought an order that the costs of acquiring a replacement property (and costs of sale of the previous property) should be met from the proceeds of sale of the home being sold rather than having to be funded separately. The court held this was not correct where the father had access to significant resources and had run the ‘millionaire’s defence’ as there was no issue of affordability.

Emma Hatley, partner in Stewarts’ Divorce and Family department said of the decision:

“This case highlights the importance the court places on preserving its jurisdiction to make decisions in a child’s best interests in line with the welfare principle, mindful that family circumstances and a child’s needs may change over time. It also serves as a warning of the consequences of relying on the millionaire’s defence in order to mitigate the stringent and wide ranging disclosure obligations in the Family Division.”

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Media contact: Lydia Buckingham, Senior Marketing Executive, +44 (0) 20 7822 8134, lbuckingham@stewartslaw.com