May 2002

BUTTERWORTHS FAMILY AND CHILD
LAW BULLETIN

Bulletin No 58
Butterworths Family and Child Law Bulletin  – May 2002

Bulletin Editor
Jonathan Montgomery, BA, LLM
Professor of Law, University of Southampton

Butterworths Family and
Child Law Bulletin provides an immediate updating
service for the main text of Butterworths Family Law
Service and Clarke Hall and Morrison
on
Children. The Bulletin is published every month and sent to
subscribers to those publications.

References to BFLS and CHM above each
case are to the relevant paragraphs in Butterworths Family Law
Service and Clarke Hall and Morrison on Children.

Marriage
Social Security Tribunal not bound by immigration officials’
assessment of marital status

BFLS 1[1504]; Rayden 4.2
R (on the application of Nahar) v Social Security
Commissioners
[2001] EWHC Admin 1049, [2002] 1
FLR 670, QBD

In R (on the application of Nahar) v Social Security
Commissioners [2001] EWHC Admin 1049, [2002] 1 FLR 670, QBD,
Munby J held that a decision by immigration officers that parties
were married did not prevent a social security appeal tribunal from
considering the status of the parties independently and reaching a
different conclusion. There could be no issue estoppel because the
parties were not the same; different state agencies should not be
seen as a single entity. The determination of the immigration
adjudicators did not have the status of a court making a decision
in rem on the parties’ legal status. The doctrine of
legitimate expectations did not apply because this was not a
further administrative decision by the same public authority.

Informal Hindu ceremony not ‘void marriage’ but
non-marriage

BFLS 1[1505.1]; Rayden 4.11
Ghandi v Patel
[2002] 1 FLR 603, Ch
D

In Ghandi v Patel [2002] 1 FLR 603, Ch D, Park J held
that a ceremony held in a London restaurant according to Hindu
wedding traditions did not constitute a ‘void
marriage’, so as to enable a claim to be brought under the
Inheritance Act 1975 where it was entered into in good faith, but
instead was a non-marriage with no legal effects. He applied the
decision in A-M v A-M [2001] 2 FLR 6.

Comment: This decision provides an indication
that the judicial attitude to informal marriage ceremonies is
hardening. Muslim (A-M v A-M) and now Hindu ceremonies
have been found to be sufficiently far removed from the proper
formalities as to constitute non-marriages rather than
‘marriages’ rendered void by their defects. Such
‘void marriages’ bring with them some legal
consequences in relation to financial provision. It is not clear
whether the acceptance of an irregular Coptic Christian ceremony in
Gereis v Yacoub [1997] 1 FLR 854 should now been seen as
anomalous (as Park J implies in the latest decision at para [40]).
It would be unfortunate if a distinction between Christian
ceremonies and those of the other main world religions were to
emerge. Some hope that this could be avoided is found in the
judgment of Evans LJ in holding that a Sikh ceremony was a marriage
in Chief Adjudication Officer v Bath [2000] 1 FLR 8.
However, the majority of the Court of Appeal regarded the issue as
one of public policy in the face of long cohabitation and it was
this that Park J emphasised in his comments on the decision. It is
perhaps best to observe that the presumption in favour of the
validity of a marriage established by long cohabitation provides
the courts, as in the Bath case, with the ability to
mitigate the harshness of the firm line on the need for at least
approximate formalities of marriage before the matrimonial
legislation can be engaged.

Financial provision
Relevance of prenuptial agreement

BFLS 4[755]

M v M (prenuptial agreement)
[2002]
1 FLR 654, FD

In M v M (prenuptial agreement) [2002] 1 FLR 654, FD,
Connell J considered the impact of a prenuptial agreement on
proceedings for financial provision on divorce. The agreement had
been signed after receipt of legal advice by both parties. It was
accepted that the husband would not have married the wife without
the agreement. It was also notable that the wife was pregnant and
anxious to marry. Connell J expressed the view that it would be
unjust to the husband to ignore the agreement and its terms, but
unjust to the wife to hold her to them exactly. He held that the
agreement was one of the circumstances to be taken into account in
achieving fairness between the parties, along with the fact that
the marriage had been short (five years) and that the family wealth
had been created by the husband. He ordered a lump sum to be
provided to enable the wife to purchase a house so that she and the
child could continue to live in Surrey and to provide for her
income needs for five years. This matched the length of the
marriage and the period for which the parties had intended to stay
in England. After that period, the child would be less reliant on
the wife and she would be less handicapped in the labour
market.

Comment: Under the agreement, the wife would
have received a lump sum of £275,000. Under the court order,
she received £575,000 to cover the costs of securing a home
and a lump sum of £300,000, representing £60,000 per
annum for five years. This compares to the husband’s net
worth of some £7.5 million and her claim for £1.3
million. Although the court drew attention to the fact that the
circumstances of the agreement indicated some pressure on the wife
to sign the contract, little seems to have been made of this fact.
The wife had been advised not to sign the agreement because her
lawyer thought it was fundamentally unfair to her. She nevertheless
was determined to sign in order to be able to marry. She had
initially considered aborting her pregnancy, but the husband was
adamantly opposed to this course of action. Accordingly she
insisted on marriage. She was anxious not to cancel the wedding
after invitations had been sent out, but the agreement was signed
only three days before the ceremony. In those circumstances, it
might have been argued that the agreement was not freely made and
disregarded on that ground. In fact, it is difficult to say
precisely what impact the agreement had on the quantification of
the settlement. Connell J says that he took it into account but the
order that he made might have been exactly the same without it. In
a way, this could be seen both as reinforcing the view expressed by
Wilson J in S v S [1997] 2 FLR 100 that prenuptial
agreements should be regarded as significant and also illustrating
the dictum with which his approach is usually contrasted that they
are of very limited importance (F v F [1995] 2 FLR 45,
Thorpe J as he then was).

Importance of business acumen

BFLS 4[821.12]; Rayden
21.33
L v L (financial provision: contributions)
[2002]
1 FLR 642, FD

In L v L (Financial Provision: Contributions) [2002] 1
FLR 642, FD, Connell J awarded the wife approximately 37%
(£7.5 million) of the spouses’ total net assets of
£20.2 million. The wife sought a half share on the basis of
White v White [2001] 1 All ER 1. The husband contended
that the wealth was the result of his exceptional business
contribution so that a lesser share would be a fair outcome
(relying on Cowan v Cowan [2001] 2 FLR 192). Although not
a genius, the husband showed innovative visions and the ability to
develop them. He was not merely a successful businessman but an
exceptionally active, determined and innovative one. This brought
him within the category of Cowan. The wife had made a full
business contribution and a modest business one, but it could not
properly be described as exceptional.

Comment: The percentage awarded to the wife in
this case was very similar to that awarded in Cowan (where it was
38%). It could be suggested that this pattern is likely to be
repeated in most big money cases that concern wealth generated in
business (as opposed to inherited). Connell J accepted that there
was nothing more that the wife could have done to justify a half
share, but still accepted that the husband’s contribution was
exceptional because it was innovative and delivered on the visions
that he had. This is likely to be the case for most business people
whose commercial activities result in the accumulation of
significant wealth, for it is the ability to exploit a gap in the
market that is the root of most commercial success. It is becoming
hard to see how outstanding success in business will not itself be
evidence of an exceptional circumstance justifying departure from
equality in the interests of fairness.

Taxation

Contributed by Philip Wylie, tax editor of
BFLS

The following is a summary of the principal changes affecting
taxation of the family which were either announced or confirmed in
the Budget on 17 April 2002, and those contained in the 2002
Finance Bill, published on 24 April 2002. The substantive change
that will impact most on family taxation is the abolition of the
working families’ tax credit and children’s tax credit,
and their replacement by a new working tax credit and child tax
credit. These new credits are computed under different principles
to those governing the credits which they replace. However, the new
credits do not take effect until 6 April 2003. Detailed analysis of
them will be included in Butterworths Family Law Service
prior to that date. The remaining changes detailed below have
effect in the current tax year, 2002/03.

Income Tax

1 Rates for 2001/02 and 2002/03

2001/02
starting rate     10% on the first £1,880 of taxable
income
basic rate         22% on taxable income from £1,881 to
£29,400
higher rate       40% on taxable income over £29,400

2002/03
starting rate     10% on the first £1,920 of taxable
income
basic rate         22% on taxable income from £1,921 to
£29,900
higher rate       40% on taxable income over £29,900

The rate of tax on dividend income plus the related tax credit
is 10% for a taxpayer who is not liable to higher rate income tax,
and 32.5% for a taxpayer who is. The rate of tax on certain other
savings income, mainly interest, is 10% if the income is wholly
within the starting rate band, 20% (rather than 22%) if the income
is within the basic rate band, and 40% for a taxpayer who is liable
to higher rate income tax.
The trust rate of tax, payable mainly by discretionary and
accumulation trusts, remains unchanged at 34%, and the Schedule F
(dividends) trust rate also remains unchanged at 25%.

2 Personal reliefs for 2002/03 (2001/02 reliefs in
brackets)

Personal allowance
under 65      £4,615 (£4,535)
65–74          £6,100 (£5,990)
75+               £6,370 (£6,260)

It was announced that, for 2003/04, the ordinary personal
allowance will be frozen at £4,615. The personal allowance for
those aged 65–74 will be increased to £6,610, and for
those over 75 it will be increased to £240 above statutory
indexation.

Married couple’s allowance for those over 65 before 6
April 2000 (restricted to tax relief at 10%)
65–74                            £5,465
(£5,365)
75+                                £5,535 (£5,435)
minimum allowance  £2,110 (£2,070)

The married couple’s allowance for the over 65’s is
reduced by one half of excess of total income over £17,900
(£17,600 in 2001/02), but it can never be reduced below the
minimum allowance of £2,110 (£2,070 in 2001/02).

The blind person’s allowance has been increased from
£1,450 to £1,480.

3 Children’s tax credit

For 2002/03 the allowance on which the credit is based is
£5,290 (£5,200 in 2001/02), and the tax credit is 10% of
that allowance, or £529 (equivalent to £10.17 a week). If
a qualifying child is born in 2002/03, the allowance is increased
to £10,490 (the increase in the allowance did not apply in
2001/02). The credit is withdrawn by £2 for every £3 of a
claimant’s income which is liable to higher rate income tax.
For 2002/03 that means that, for a taxpayer who is only entitled to
the personal allowance, the credit starts to be withdrawn when the
taxpayer’s income, before deducting the personal allowance,
exceeds £34,515 (£33,935 for 2001/02), and, unless the
£10,490 baby tax credit applies, no credit can be claimed if
the income exceeds £42,450 (£41,735 for 2001/02). If a
taxpayer is entitled to the baby tax credit, the upper income
threshold is increased from £42,450 to £50,250.

From 6 April 2003 the children’s tax
credit will be withdrawn. It will be replaced by a new child tax
credit, amalgamating the child tax credit elements of working
families’ tax credit, disabled person’s tax credit,
income support/jobseeker’s allowance, and children’s
tax credit. The new tax credit will be paid directly to the main
carer. Withdrawal of the new credit will be based on household
income and not, as currently applies to children’s tax
credit, on the income of the highest earner in the household.

4 Working families’ tax credit

The available credits for 2001/02 and 2002/03 are set out as
follows in a Revenue press release published on 28 November
2001:

(net weekly income at the time of the claim in excess of the
threshold results in a 55p reduction in working families’ tax
credit for every £1 of excess income)

5 Maintenance payments

For those few maintenance payments which continue to qualify for
income tax relief (a pre-condition is that one spouse must have
been over 65 before 6 April 2000), the maximum amount on which a
10% tax credit can be claimed is £2,110 (£2,070 in
2001/02).

Capital gains tax

For 2002/03 the annual exemption is increased from £7,500
to £7,700. The capital gains tax rates remain unaltered at
10%, 20%, and 40%.

For disposals of business assets on or after 6 April 2002, 75%
taper relief can be claimed on business assets which have been held
for two or more years, and 50% taper relief can be claimed on
business assets which have been held for at least one year. As a
result of the change, the maximum effective rate of capital gains
tax on gains on the disposal of business assets which have been
held for at least two years (previously four years) is 10%.

There is no change to the taper relief holding periods for
non-business assets.

Under TCGA 1992, s 62(6) beneficiaries under the will of a
deceased person are entitled, within two years of the
deceased’s death, to vary a disposition so that the
disposition, as varied, takes effect for capital gains tax as if it
had been made by the deceased person. Currently, under TCGA 1992, s
62(7), the variation is only effective for capital gains tax if a
notice of election is given to the Revenue within six months of the
variation.

For variations made on of after 1 August 2002, assuming the
provisions in the Finance Bill 2002 are enacted, it will no longer
be necessary to send a notice of election to the Revenue. Instead
the Finance Bill 2002, cl 51 provides that the variation will not
be effective for tax purposes ‘unless the instrument contains
a statement by the persons making the instrument to the effect that
they intend the subsection [TCGA 1992, s 62(6)] to apply to the
variation’.

Inheritance tax

The inheritance tax threshold is increased from £242,000 to
£250,000 for tax charges arising on or after 6 April 2002.

The Inheritance Tax Act 1984, s 142(1) allows dispositions made
by a deceased person to be varied within two years of his death,
with the varied disposition taking effect for inheritance tax
purposes as if it had been made by the deceased person. Currently,
under IHTA 1984, s 142(2), the variation is only effective for
inheritance tax if a written notice of election to that effect is
given to the Revenue within six months of the variation. The
election must be made by the beneficiaries whose interest is varied
and, if additional tax becomes payable as a result of the
variation, by the personal representatives provided they have
sufficient assets to pay the additional tax.

For variations made on or after 1 August 2002, the Finance Bill
2002, cl 117, removes the requirement to notify the Revenue, and
substitutes a requirement that the deed of variation must contain a
statement to the effect that the relevant parties intend the
subsection [IHTA 1984, s 142(1)] to apply to the variation. As
under the current legislation, the relevant parties will include
the personal representatives if additional tax becomes payable and
they have sufficient funds to pay it. However, if additional tax
becomes payable as a result of the variation, the relevant parties
(or one of them) must also notify the Revenue, and provide a
statement of the additional tax payable. There will be penalties
for non-compliance.

Human rights
Uncle-nephew blood relationship did not engage Art 8

BFLS 5[4189]

R (on the application of Banks) v Governor of Wakefield
Prison [2001] EWHC Admin 917, [2002]
1
FCR 445, QBD

In R (on the application of Banks) v Governor of Wakefield
Prison [2001] EWHC Admin 917, [2002] 1 FCR 445, QBD, Harrison
J held that a prisoner’s rights under Art 8 of the European
Convention on Human Rights were not engaged by a decision to
prevent his nephew visiting him. There had been no relationship
between the prisoner and the nephew prior to the former’s
detention in custody because the latter had been born during the
prison sentence. There had been some accompanied visits during the
first four years of the nephew’s life, but they had been by
their nature short visits. The court did not accept that any
relationship falling within Art 8 could be established indirectly
via the prisoner’s sister (the boy’s mother). The judge
expressed the view that, even if Art 8 had been engaged, the
interests of child protection justified restricting visits.

Comment: This decision reinforces the view
expressed in R (on the application of L) v Secretary of State
for Health [2001] 1 FCR 326 that the blood tie between uncle
or aunt and nephew or niece could not automatically establish
‘family life’ within the meaning of Art 8. In many ways
the ties were stronger in the earlier case than in the current one.
Nor on the strength of this decision would strong family links with
a child’s parents give rise to family life in the absence of
an actual relationship with the child.

No right to die, but issue about respect for freedom to
choose

BFLS 3[903], 5[4401]

Pretty v UK (2002) Application No 2346/02,
Judgment 29 April, ECtHR

The European Court of Human Rights in the case of Pretty v
UK Application No 2346/02, judgment 29 April 2002, rejected
the claim of the late Dianne Pretty that her rights under the
European Convention on Human Rights had been breached by the
refusal of the English law to permit her husband to end her life at
her request. The reasoning followed in most respects the
conclusions of the House of Lords ([2002] 1 All ER 1, [2002] 1 FCR
1). The ECtHR agreed that no right to die could be derived from Art
2 of the Convention (right to life). In relation to Art 3 (freedom
from torture and inhuman and degrading treatment) the ECtHR held
that there had been no ‘treatment’ by the UK government
so as to engage the article and further that it would be impossible
to derive from Art 3, which had to read in conjunction with Art 2,
an obligation to sanction actions intended to terminate life.
However, the ECtHR rejected the finding of the House of Lords that
Art 8 (respect for private and family life) was not engaged by the
case. It took the view that, in the light of the Convention’s
commitment to respect for human dignity and human freedom, matters
relating to the quality of life came within this article. It was
‘not prepared to exclude’ that there had been an
interference with Mrs Pretty’s right to respect for family
life. However, the court found that the need to protect vulnerable
people who are terminally ill justified a blanket prohibition on
assisting suicide and satisfied the threshold of ‘necessary
in a democratic society’. The fact that Mrs Pretty herself
could not be said to be vulnerable did not remove the force of the
argument that the prohibition was imposed to protect the rights and
freedoms of others within Art 8(2) of the Convention.

Comment: Like the House of Lords, the European
Court of Human Rights was reluctant to resolve an issue on which
there is considerable debate by reference to the Convention rather
than democratic decision making within individual nation states.
However, the acceptance by the court that legislation restricting
the choices of individuals required justification may have broader
significance. It could open up challenges to legislation that
enforces prevailing morality, such as the prohibition on the
reproductive use of human cloning or the posthumous use of sperm
without consent and even abortion. If the court is correct, such
intrusions on the ability of citizens and health professionals to
use processes that they regard as ethical but others reject require
justification under Art 8. However, there are two reasons to be
cautious about these possibly wide ranging implications. First, the
court’s finding that Art 8 was engaged was expressed in
extremely tentative terms: ‘not prepared to exclude’
rather than clearly in issue. Second, the acceptance that the
limitations imposed on Mrs Pretty’s freedom were justified
within the Convention was reached without consideration of
empirical data. This implies that general policy arguments are
likely to be sufficient to minimise the impact of the extension of
Art 8.

Statutory Instruments
Child Support (Miscellaneous Amendments) Regulations 2002, SI
2002/1204

These Regulations provide for the amendment of regulations
relating to child support. The powers exercised to make these
Regulations are those in the Child Support Act 1991 and the Child
Support, Pensions and Social Security Act 2000. Of those in the
1991 Act, some of the powers are those prior to the amendments made
to that Act by the 2000 Act, in so far as those amendments are not
yet fully in force, and others are those following amendments made
to that Act by the 2000 Act.

Regulations 6, 7, 8 and 9 amend the following Regulations and
their provisions will take effect when those Regulations come into
force, which is at different times for different cases as
determined by commencement order made under s 86(2) of the 2000
Act:

— the Child Support (Maintenance Calculation Procedure)
Regulations 2000;
— the Child Support (Maintenance Calculations and Special
Cases) Regulations 2000;
— the Child Support (Transitional Provisions) Regulations
2000;
— the Child Support (Variations) Regulations 2000.

Regulations 2 and 4(a) amend the Social Security and Child
Support (Decisions and Appeals) Regulations 1999 and the Child
Support (Information, Evidence and Disclosure) Regulations 1992,
respectively and will come into force at different times for
different cases as determined by commencement order made under s
86(2) of the 2000 Act.

Regulation 2 amends the Decisions and Appeals Regulations.
Paragraph (2)(a)(i) inserts a new ground for revision under reg 3A
of the Decisions and Appeals Regulations. Paragraph (2)(a)(ii)
provides for revision of certain (maintenance calculation)
decisions where a person was not the parent of a relevant child;
para (2)(c) inserts a new para (5A) into reg 3A of the Decisions
and Appeals Regulations to provide for certain decisions to be
revised at any time. Paragraph (4) provides dates when a
supersession takes effect in a case where a flat rate liability is
being paid, will become payable or will cease to be payable, at a
different rate in accordance with para 4(2) of Sch 1 to the 1991
Act, when non-resident parents become or cease to become partners
and certain other consequential and incidental provisions as to
supersession and time limits for appeals.

Regulation 3 amends the Child Support Departure Direction and
Consequential Amendments Regulations 1996 to provide that certain
payments in respect of variant Creutzfeldt-Jakob disease may not be
taken into account for the purposes of a departure direction.

Regulation 4 amends the Information Regulations to add to the
categories of persons under a duty to furnish information and reg 5
amends the Child Support (Maintenance Assessments and Special
Cases) Regulations 1992 so that an income support enhanced
disability premium can be included in the calculation of exempt
income.

Regulation 6 specifies the period of notice for the purposes of
s 46(6) of the 1991 Act, makes provisions for the effective date of
maintenance calculations in specific cases and clarifies that the
transitional provisions in reg 31(4)–(7) are to apply where s
6 of the 1991 Act prior to its amendment by the 2000 Act applied
immediately before the commencement date.

Regulation 7 amends the Maintenance Calculations and Special
Cases Regulations as to how disabled person’s tax credit is
to be taken into account in calculating the income of a
non-resident parent and clarifies the type of income from
self-employment which will be relevant for a maintenance
calculation.

Regulation 8 amends the Transitional Regulations to provide for
the time within which an appeal must be brought against a
conversion decision to be either within the time from the date of
notification of the conversion decision to one month after the date
on which that decision takes effect, or as determined under the
Decisions and Appeals Regulations, whichever is the later.
Regulation 8 also amends the Transitional Regulations to clarify
which cases are within the conversion provisions in reg 15(2) of
those Regulations, to provide for the transitional amount to be
payable in certain flat rate cases and its apportionment between
persons with care, to make provision for the effect on a conversion
calculation where there is more than one relevant property
transfer, or a combination of relevant property transfers and
relevant departure directions, to provide for case conversion date
provisions to apply to all maintenance assessments, to provide
additional cases where the subsequent decision amount is payable
and to provide that the linking provisions in reg 28 do not apply
in certain circumstances.

Regulation 9 makes a similar amendment to the Variations
Regulations to that made by reg 3 and makes other minor changes to
those Regulations. It also amends reg 7 of those Regulations so the
preliminary consideration provisions apply to an application made
under s 28A of the 1991 Act and amends reg 18 of those Regulations
to provide that in certain circumstances land or property held as a
business or trade asset is not excluded from the definition of
‘asset’.

Recent articles on family and child law

Parental Alienation Syndrome and UK Family Courts Tony Hobbs
[2002] Fam Law 182
Beneficial entitlement—do indirect contributions suffice?
Professor Mark Pawloswski [2002] Fam Law 190
Child support update James Pirrie [2002] Fam Law 195
Do children have human rights? Allan Levy QC [2002] Fam Law
204
Case planning in a care case Derek Winter & Janet Hyde [2002]
Fam Law 210
SERPS—the forgotten asset Tim Costley-White [2002] Fam Law
222
Experts, witnesses and proce