The Child Maintenance and Enforcement Commission has begun using tough new powers to halt or reverse the sale and transfer of assets by parents attempting to dodge financial responsibility for their children.
In the first case of its kind, a father in the northwest of England has been prevented from selling a house he was advertising on a popular property website. The man, who cannot be named for legal reasons, owes over £78,000 in unpaid maintenance. He has paid nothing to his former partner for almost twelve years while failing to respond to letters or phone calls from the Child Support Agency- now part of the Commission.
The Commission applied for a ‘freezing order’ after the man put his house on the market, raising fears he would try to put the proceeds beyond the Agency’s reach. The particulars of sale for the four-bedroom property boasted of numerous costly improvements, including a luxury fitted kitchen and home cinema. It noted there was “no chain” to hold up a quick sale.
In the first case to be brought under powers introduced by the latest child maintenance legislation, the High Court has now imposed an order preventing the sale. The reforms also allow the courts to reverse the sale or transfer of property by parents who have unpaid maintenance arrears. These ‘setting aside’ orders are designed to stop parents putting valuable assets in the names of new partners and relatives in order to evade both the CSA and their duty to provide for their children.
This case sends a clear message to all parents who have run up substantial maintenance arrears,
said Dame Janet Paraskeva, Chair of the Child Maintenance Commission.
Step-by-step the Commission is closing the escape routes for parents who think they can cheat their children out of money from which they are entitled to benefit. No longer can houses, cars and other valuable assets be sold off quickly to prevent the CSA taking possession of them. Those who cynically transfer the legal ownership of property into the names of their new partners risk having those transactions reversed.
James Pirrie, Chair of the Child Maintenance Committee of Resolution, the family lawyers’ association, welcomed the new measures. Although not involved in this case, Resolution has long campaigned for a more effective child maintenance system.
Our 5500 members are committed to putting children first in any financial settlement when parents part, so when the Child Maintenance and Other Payments Bill was before parliament we worked hard with MPs to ensure that the Bill had powers to deal effectively with those who sought to evade their financial commitments to their children.
The sooner people realise that payment of their child maintenance obligations is non-negotiable the better. Everyone can then focus on making sure that the calculation of how much has to be paid is accurate and appropriate, said James Pirrie.
The arrival of these orders is part of a stepped-up enforcement effort that has seen the Commission commence Order for Sale proceedings against almost 500 properties around Britain. These actions are proving particularly effective at persuading indebted parents to settle their arrears. Well over £2 million in arrears has been recovered so far but fewer than 15 properties have had to be taken into possession and sold off.
Lump Sum Deduction Orders forcing banks to hand over money held in the accounts of indebted parents have also been introduced. More than 400 orders have been imposed with sums of up to £40,000 being deducted in some cases.
What is a Freezing Injunction?
A Freezing Injunction, more commonly known as a Freezing Order, effectively freezes the defendant’s assets until the claimant’s action comes to trial.
When can a Freezing Injunction be sought?
Claimants can apply for a Freezing Injunction where there is a risk that the defendant will dispose of his property or move his assets out of the jurisdiction in order to prevent a Court Order being enforced.
Such an injunction is usually restricted to the defendant’s property / assets within the jurisdiction and will be limited to the likely value of the judgment amount.
What is the effect of a Freezing Injunction?
If a Freezing Injunction is granted, the defendant will be prohibited from dealing with his property / assets. However, the defendant will be allowed a specific weekly amount to meet his day-to-day living expenses. The defendant will also be able to claim a specified weekly sum to pay for business expenses and legal costs. If the defendant is a smaller business, the Order will usually allow the defendant sufficient monies to discharge trade debts.
What are the penalties for breaching the Injunction?
Anyone who has been notified of the Injunction will be in contempt of court if he helps the defendant to break it.
What steps can a defendant take?
A defendant may apply to set-aside or vary the Injunction. If the Injunction is set aside, the claimant could be ordered to pay compensation under the claimant’s cross undertaking.