A recent judgment has illuminated multiple points of interests for family law practitioners, including whether a charging order can be made in respect of sums due to a third party as well as issues of interest on outstanding periodical payments and the application of the fixed costs regime in CPR Part 45.

In the recent case of GH v H [2024] EWHC 2869 (Fam), the High Court made a charging order over a husband’s property in respect of periodical payments due to the parties’ child. The court also considered the correct costs regime to apply in relation to the wife’s application for her costs of the charging order application. Associate Amy Wills reviews the case in this article.

Background

In a final hearing in 2018, Mrs Justice Roberts made a final order by consent, which provided, among other things, for:

1. Two lump sum payments to the wife (the second being payable by June 2023).
2. A spousal periodical payments order of £50,000 per annum payable quarterly in advance (which was to end on payment of the second lump sum due in June 2023).
3. A child periodical payments order of £25,000 per annum, payable until the child completes tertiary education.

The husband failed to pay the second lump sum in June 2023, which resulted in the wife obtaining an order for possession of the flat upon which that lump sum was secured. The husband then failed to pay the spousal and child periodical payments provided for in the order, so the wife applied for an order for such method of enforcement as the court considered appropriate.

The issues

The three key issues in GH v H, heard by Mr Simon Colton KC sitting as a deputy High Court judge, were:

1. Whether a charging order can be made on the application of a party to the marriage in respect of sums due to be paid to a third party (ie, the child of the marriage, who was due to receive a portion of the child periodical payments directly while in tertiary education). This was relevant, as one possible method of enforcement was a charging order over the husband’s flat as security for payment of the child periodical payments order.
2. Whether interest had accrued on periodical payments that had been ordered but were unpaid.
3. Whether the fixed costs regime in Part 45 of the Civil Procedure Rules (“CPR”) applies to the making of a final charging order in family proceedings and, if so, the circumstances in which the court can and should order otherwise. (The fixed costs regime limits or “caps” the amount that can be recovered in respect of legal representatives’ costs.)

Can a charging order be made in respect of sums due to a third party?

The wife’s counsel relied on the following, family law specific, rules in arguing her case:

1. Family Procedure Rule (FPR) 40.2 defines a “creditor” as “the person to whom payment of a sum of money is due under a judgment or order or a person who is entitled to enforce such a judgment or order”.
2. The “Red Book” (the Family Court Practice, a bible for family lawyers) states that where a party fails to comply with the order(s) that have been made, “the other party” may apply to the court to enforce that order.

The wife’s counsel then argued that, as a matter of policy, it would be undesirable for a daughter to have to enforce against her father. During the hearing, the judge agreed with this, but subsequently did his own, wider, research ahead of drafting the written judgment, including reviewing the definition of creditor across a wide spectrum of legal texts. While his research led him to conclude that a “creditor” is more restrictively defined in other spheres, it led him to conclude that the ability to enforce an order does not lie only with a creditor.

Therefore, a final charging order could extend to sums due to be paid by the husband to the parties’ child, and the judge duly made such an order.

Can interest accrue on outstanding periodical payments?

The wife claimed around £3,000 in interest in respect of the outstanding spousal and child periodical payments. The judge assumed that these had accrued under the Judgments Act 1838 and counsel did not correct this assumption.

Following the hearing, however, the judge again undertook additional research. He considered, in particular, the judgment of Mr Justice Mostyn in TW & TM (Minors) [2015] EWHC 3054, in which it was held that “interest does not accrue on orders for periodical payments made in the Family Court”.

The question, therefore, became whether this case was being heard in the High Court or the Family Court sitting at the Royal Courts of Justice, as interest would only be applicable if it were heard in the High Court. After analysing the facts (there being some confusion on this point), the judge concluded that this case had been heard in the High Court. He said that the variable headings on the documents (as to whether the case was heard in the Family Court or the Family Division of the High Court) within the proceedings were “an unfortunate lack of attention to the matter by the parties and their legal representatives”.

This case should, therefore, be a lesson to family lawyers that clarity on this point throughout proceedings is crucial and can affect enforcement later down the line.

Does the fixed costs regime in CPR Part 45 apply to the making of a final charging order in family proceedings? If it does, in what circumstances can and should the court order otherwise?

In a helpful and detailed analysis of the law on costs, the judge concluded that the fixed costs regime does apply to charging orders in family proceedings. However, this is always subject to FPR 28.1, which states that the court may at any time make such order as to costs as it thinks just.

The judge surmised that there is limited authority on when it is just to make an order other than in accordance with the fixed costs regime and said any decision to disapply the fixed costs regime must be respectful to the policy to which those rules give effect. He said the regime ought to provide certainty and prevent arguments over costs, and a court should not be too ready to disapply such regime.

Despite this, the judge concluded that the husband’s conduct in this case justified an “order otherwise” than in accordance with the fixed costs regime and ordered the husband to pay the wife’s costs on an indemnity basis.

Concluding comments

Partner Richard Hogwood says: “This multi-faceted judgment considers a variety of procedural points concerning enforcement of which practitioners should be aware. It shows the interaction between the civil and family cost regimes and highlights the importance of consistent and accurate drafting of court documentation throughout proceedings.”