PB CCS 574 2012
| Jurisdiction | UK Non-devolved |
| Judge | Judge J. Mesher |
| Judgment Date | 20 March 2013 |
| Neutral Citation | 2013 UKUT 149 AAC |
| Subject Matter | Child support |
| Respondent | Secretary of State for Work and Pensions (CSM) |
| Court | Upper Tribunal (Administrative Appeals Chamber) |
| Docket Number | CCS 574 2012 |
| Appellant | PB |
DECISION OF THE UPPER TRIBUNAL
ADMINISTRATIVE APPEALS CHAMBER
The parent with care's appeal to the Upper Tribunal is allowed. The decision of the Plymouth First-tier Tribunal dated 13 October 2011 involved an error on a point of law, for the reasons given below, and is set aside. It is appropriate for the Upper Tribunal to re-make the tribunal’s decision (Tribunals, Courts and Enforcement Act 2007, section 12(2)(b)(ii)). That decision as re-made is that:
(a) on the reference under section 28D(1)(b) of the Child Support Act 1991 of the parent with care’s application for a variation made on 14 January 2008, a variation is directed under regulation 18 of the Child Support (Variations) Regulations 2000 that the non-resident parent’s child support liability is to be calculated with the inclusion in his net weekly income of an amount calculated by reference to an asset (the house in France) with a value of £150,000 and to the following rates in place of the statutory rate of interest from the following dates:
(i) with effect from and including 10 January 2008, 7%; and
(ii) with effect from and including 6 November 2008, 3.5%;
(b) on the parent with care’s appeal against the decision dated 31 March 2010, the appeal is allowed and a variation directed that the maintenance calculation in effect from and including 5 November 2009 is to be calculated on the same basis as in (a) by reference to the rate of 3.5% in place of the statutory rate of interest.
REASONS FOR DECISION
1. In the language of the child support legislation the appellant is the parent with care of the qualifying children (Benjamin and Amy). From now on I shall call her the mother. I shall call the non-resident parent and second respondent the father. Most of the official action in this case has been taken by or on behalf of the Child Maintenance and Enforcement Commission (CMEC). CMEC was abolished with effect from 1 August 2012 by the Public Bodies (Child Maintenance and Enforcement Commission: Abolition and Transfer of Functions) Order 2012 (SI 2012 No 2007) and its functions transferred back to the Secretary of State for Work and Pensions (article 3(1)). The Secretary of State is therefore now the first respondent in the appeal.
2. In July 2012 I granted the father’s request for an oral hearing of the mother’s appeal and a date in November 2012 was fixed. In October 2012 the father withdrew his request, having weighed up his chances of success against the costs of legal representation, and indicated that he conceded one of the issues in the appeal. I then cancelled the hearing. Unfortunately, some delay has occurred while I have attempted to clarify just what the extent was of the father’s concession. The replies of the father and the mother were based on the assumption that there was to be a full re-evaluation of the evidence in the Upper Tribunal, and perhaps on a misunderstanding about the scope of what could be taken into account in a reconsideration of the mother’s appeal against CMEC’s decision of 31 March 2010. Initially I thought that the nature of the case put forward by the father meant that the only option, having set aside the decision of the tribunal of 13 October 2011, was to remit the case to a new tribunal for a rehearing. However, as explained below I have eventually concluded that, given the very strong wish of both parents for the earliest resolution of this particular case, the Upper Tribunal can properly substitute a decision.
The background
3. The tribunal of 13 October 2011 was initially concerned with the mother’s appeal against the CMEC decision of 31 March 2010 that it was unable to agree to a variation on the ground of assets on her application made on 10 February 2010. That had left the liability with effect from 5 November 2009 at the rate of £52.00 per week, according to CMEC’s written submission to the tribunal calculated in a decision of 3 March 2010, unaffected. However, in the course of further investigations in response to directions from a tribunal judge, it emerged that the mother had raised the issue of a variation on the same ground in January 2008 in relation to a calculation at the nil rate effective from 10 January 2008. CMEC’s supplementary submission recorded (page 72) calculations with effect from 10 January 2008 (nil), 7 February 2008 (£74.57), 5 March 2009 (£87.00), 20 August 2009 (£87.00, replaced on revision by nil) and 27 August 2009 (nil). The tribunal of 13 October 2011 took the view, not challenged by the father, that it was therefore required to consider the merits of a variation in relation to the calculation effective from 10 January 2008 and all the intervening calculations down to that effective from 5 November 2009. I explain in the substituted decision below why I consider that the tribunal was right to take that view.
The First-tier Tribunal’s decision
4. The tribunal allowed the mother’s appeal. It appears that the mother had not attended the hearing on 13 October 2011, but the father had. The tribunal found that the father had a beneficial interest in a property (a house in France) with a value of £150,000, which was not exempted from counting under regulation 18(3)(b) (asset retained to be used for a reasonable purpose or 18(3)(d) (asset used in the course of a trade or business) of the Child Support (Variations) Regulations 2000. The asset was therefore not exempted on the basis that the total value of assets that counted was less than £65,000 (regulation 18(3)(a)).
5. Then regulation 18(5) and (6) provide:
“(5) Where a variation is agreed on the ground that the non-resident parent has assets for which provision is made in this regulation, the Secretary of State shall calculate the weekly value of the assets by applying the statutory rate of interest to the value of the assets and dividing by 52, and the resulting figure, aggregated with any benefit, pension or allowance prescribed for the purposes of paragraph 4(1)(b) of Schedule 1 to the [Child Support Act 1991] which the non-resident parent receives, other than any benefits referred to in regulation 26(3), shall be taken into account as additional income under regulation 25.
(6) For the purposes of this regulation, the `statutory rate of interest’ means interest at the statutory rate prescribed for a judgment debt or, in Scotland, the statutory rate in respect of interest included in or payable under a decree in the Court of Session, which in either case applies on the date from which the maintenance calculation which takes account of the variation takes effect.”
The provisions about benefits etc in regulation 18(5) are not relevant in the present case. The amount prescribed for a judgment debt at all relevant dates is 8% per annum (article 2 of the Judgment Debts (Rate of Interest) Order 1993). At all relevant dates the basic functions of the Secretary of State under the child support legislation had been transferred to CMEC by section 13 of the Child Maintenance and Other Payments Act 2008.
6. The tribunal’s statement of reasons contained the following in its discussion of the application of the test in section 28F(1)(b) of the Child Support Act 1991 that “in all the circumstances of the case, it would be just and equitable to agree to a variation”:
“25. The statutory interest rate is 8% and has been in place since 1993. The tribunal did not consider making a calculation using a rate which was unobtainable in a world post the financial crisis was just and equitable when over the period from February 2008 to March 2009 the official Bank of England rate changed 8 times and fell from 5.25% to 0.5% where it remains. It considered that this was a burden that was too onerous to place on [the father].
26. The tribunal noted that in CCS/1296/2008 [RC v CMEC and WC [2009] UKUT 62 (AAC), reported as part of [2011] AACR 38, R (Cart) v Upper Tribunal (Administrative Appeals Chamber)], Lord Justice Carnworth and Upper [Tribunal] Judge Edward Jacobs considered that the legislation was designed to enable a fair result to be arrived at.
27. It spent some time considering how best this could be achieved and eventually decided that the only practical way was to apply a discount to the statutory interest rate at which the weekly value of the asset was calculated. It chose four separate dates when the interest rates changed, instead of the eight actual changes, to endeavour to balance the interests of all parties.”
The directions on the decision notice had specified the use of the Bank of England Official Bank Rate from the following dates: 5.5% from 10 January 2008; 4.5% from 8 October 2008; 1.50% from 8 January 2009; and 0.5% from 5 March 2009.
The appeal to the Upper Tribunal
7. The mother now appeals against the tribunal’s decision with my permission. In her application she made a number of points, including in particular that there had been no adequate consideration of the factors relevant to the “just and equitable” test before departing from the rate that was prescribed by the legislation and that the father had not been asked for any financial information to show that he could not pay the statutory rate. When giving permission to appeal, I said this:
“The grounds of the application are arguable. It is plainly arguable that the...
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