Practitioners in England and Wales will be familiar with the idea of utilising Schedule 1 ‘hybrid’ proposals in Financial Remedy negotiations and proceedings. Of course, this is not a proposal that is widely used in your average FR case and requires careful application depending on the circumstances of the case. While Schedule 1 (of the Children Act 1989) has existed since its inception as a parallel jurisdiction to the Matrimonial Causes Act 1973, its integration into FR outcomes appears to be growing rather than subsiding.
Practitioners should keep this aspect in mind, especially when dealing with a case involving short marriages, high net wealth usually held by one party, and the needs of a child. These are the cases where orthodox FR principles can struggle to accommodate fairness – with conflicting circumstances such as a short marriage and little intermingling of wealth, yet the involvement of the minor still being a primary consideration for the Court.
It is correct that sometimes the parallel drawn between both areas of law can make practitioners uneasy. Generally, the party lacking high net wealth is likely to rely on the care of the minor child. In contrast, the party with high net wealth will say this not been intermingled or under a veil of marriage long enough to warrant equality. The Section 25 factors under the MCA deals with needs, sharing, contributions, and considers if at all possible the imposition of a clean break. Schedule 1 concerns financial provision for the child and is not concerned with general fairness between the parties, and in addition is not generally applicable on its own to married couples.
Where a child’s needs may not be met through a basic application of the factors insofar as the length of marriage and lack of intermingled wealth, a hybrid proposal can often be the answer that satisfies both parties.
A ‘hybrid’ proposal normally conflates both laws by way of a) dealing with the spouse’s entitlement and having regard to the MCA’s guidance in this regard, and b) also addressing any deficit that may impact the child – despite being fair between the parties – through a specific child-related provision such as lump sum payments or property adjustment.
The Court are able to approve any such arrangement under one Consent Order.
The starting ‘red flag’ for these types of hybrid proposals is generally a short marriage. Where a marriage has been brief, particularly where there are substantial pre-marital or non-matrimonial assets, the Court is often reluctant to endorse equal sharing or long-term spousal dependency where there has been none previously. The Court’s view on the sharing principle is generally to avoid sharing as a starting point just because there is wealth available on both sides.
Of course, the involvement of a child does raise concerns more than an adult-only case would. The parent absent high net wealth may still need appropriate housing and financial support in order to care for the child, even without this being provided as provision for them directly. Attempting to meet those needs purely through spousal provision can feel difficult, and may look to override the guidance provided about short marriages and intermingling.
One obvious reason why this works - is the limitation of the Child Maintenance Service. As practitioners will know, there is an approximate ‘top up’ jurisdiction of £156,000+ per annum where the CMS falls short. As a result, CMS cannot be used to reflect the financial reality of the family entirely. Schedule 1 permits the Court to bridge that gap – and at the same time as the FR issues are being dealt with to assess, in real time, the net effect and fairness on both parents.
In addition, where there are significant expenses such as private schooling, commitments abroad or luxury expenses that the child has benefitted from – a hybrid proposal enables provision to be made in excess of ‘fairness’ between spouses whilst making it clear that the additional monies are for the benefit of the child. This is not an acceptance of the other spouse having inflated needs directly.
The Family Court will generally consider it acceptable to settle an FR case using hybrid principles. Having said this, drafting is critical and the rationale for such an agreement needs to be made clearer than an ordinary FR case would require. Parties need to be clear about whether or not the lower net wealth parent still intends to proceed under a Schedule 1 route, and how jurisdiction is satisfied. How do the parents deal with evolving needs as the child ages? These features are not typically discussed in FR clean break situations.
It would be inaccurate to suggest that Schedule 1 hybrid proposals are frequent and appear before the Court as a standard first-port of call. However, they remain most common in fact-specific and high-value cases. Where there is a minor child with needs, wealth to accommodate this, but factors justifying FR guidance being insufficient (short marriage, no intermingling, no full financial dependence), this may be the appropriate outcome.
Hannah Newberry
Hannah Newberry is AJFL’s Co-Director and Solicitor, qualifying in 2022 after training with the practice.
Known for her calm and supportive approach, Hannah advises on all aspects of Family Law, including children and financial disputes, divorce and injunctions, draft agreements and unmarried couples.
Hannah has been recognised as a Rising Star finalist in the Cardiff and District Law Society awards. Hannah sits as Former Chair and Law Society Officer of Cardiff JLD, Professional Development Officer of Cardiff and District Law Society, and serves as a Board Member of the National Board for Wales (Law Society Wales).
