Neutral Citation Number: [2011] EWCA Civ 682
Case No: C1/2010/2803
IN THE HIGH COURT OF JUSTICE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM QUEEN’S BENCH DIVISION
HH JUDGE BIDDER QC
[2010] EWHC 3065 (Admin)
Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 09/06/2011
Before :

PRESIDENT OF THE QUEEN'S BENCH DIVISION
LORD JUSTICE JACKSON
and
LORD JUSTICE TOMLINSON
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Between :

	THE QUEEN ON THE APPLICATION OF KM (BY HIS MOTHER AND LITIGATION FRIEND JM)	Appellant	
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	CAMBRIDGESHIRE COUNTY COUNCIL	Respondent	

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Mr Ian Wise QC and Mr Stephen Broach (instructed by Scott- Moncrieff & Associates LLP) for the Appellant
Mr Jonathan Auburn and Mr Benjamin Tankel (instructed by Cambridgeshire County Council) for the Respondent

Hearing dates : 17th and 18th May 2011
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Judgment

President of the Queen’s Bench Division
This is the judgment of the Court 
Introduction
1.	By section 29(1) of the National Assistance Act 1948, a local authority is obliged to make arrangements for promoting the welfare of adults ordinarily resident in their area who are substantially and permanently handicapped by illness, injury, or congenital deformity or by other prescribed disabilities.  Section 2 of the Chronically Sick and Disabled Persons Act 1970 provides that the duty under section 29 of the 1948 Act extends to a wide variety of services designed to help those who are owed the duty with a range of aspects of their lives and well being.  Section 47(1) of the National Health Service and Community Care Act 1990 requires the local authority to assess the needs of those for whom they may provide or arrange for the provision of community care services, and to decide in the light of that assessment whether they should provide such services to cater for the assessed needs.  Directions have been issued under section 47(4) of the 1990 Act requiring a local authority to consult the person being assessed and to take all reasonable steps to reach agreement with them as to the required services.
2.	Statutory guidance under section 7 of the 1970 Act entitled Fair Access to Care Services provided for the local authority to match services to eligible needs to be identified by evaluating an individual’s presenting needs.  More recent guidance of February 2010 may be found in Prioritising Need in the Context of Putting People First: a whole system approach to eligibility for social care.  This provides (unsurprisingly) that an appropriate community care assessment should be based on an individual’s needs; and that decisions as to who gets local authority support should be made after an assessment centred on the person’s aspirations and support needs.  Services for individuals with eligible needs are to be set out in a support plan.
3.	Historically, local authorities discharged their obligations under this legislation by providing or themselves arranging for the provision of the assessed services.  But section 57 of the Health and Social Care Act 2001 enabled a local authority instead to make direct payments.  If there are to be direct payments, section 57(4)(a) requires them to be made at such a rate as the authority estimates to be equivalent to the reasonable cost of securing the provision of the services concerned.  The guidance allows the local authority to adopt a Resource Allocation System, which should provide a system for the allocation of resources “linking money to outcomes while taking account of the different levels of support people need to achieve their goals”.  It allows people a choice as to how they spend the money they have available, the corollary of which is that the local authority does not dictate what services the money is spent on.
4.	These statutory provisions and guidance appear in greater detail in paragraphs 10 to 24 of the judgment of 26th November 2010 of HH Judge Bidder QC sitting as a deputy High Court Judge, from which the present appeal is brought.  The judgment may be found at [2010] EWHC 3065 (Admin) and reference may be made to it.  The deputy judge refused the claimant permission to bring these judicial review proceedings against the community care assessment and decision made by Cambridgeshire County Council in his case.
5.	The essence of the legislation and guidance is that the local authority has to make an assessment of an eligible person’s eligible needs and then has to provide for the needs thus assessed.  This may be done by making direct payments and leaving it to the person and his principal carer to decide how in detail the money is to be spent.  It is obvious that the assessment of the money must relate to the assessed cost of the assessed eligible needs.  The appellant contends that the amount of Cambridgeshire’s assessed direct payment does not fulfil that obligation; that they have not given adequate reasons; and that the resulting assessment is irrational.
Facts
6.	KM is a young man, aged 26, with a range of serious physical and mental disabilities.  He was born with no eyes or optic nerves, has learning difficulties and an autistic spectrum disorder.  He has other medical problems including a growth hormone deficiency, spinal disease, lung and hearing problems and a rare condition known as septo-optic dysplasia.  Despite all this he has many abilities.  He can use Braille.  He can communicate.  Despite a disrupted education, he has obtained GCSE’s in French and music.  He has a certificate in drumming.  He plays the piano and the clarinet.  He is keen on jazz and composes his own rhythm and blues music.  But he needs significant support in, for instance, feeding and self care and other aspects of living, and he needs a guide outside his home.  He struggles to tell the difference between hot and cold and has a fear of burning himself.  He has a heightened sense of smell and asks for changes of clothes during the day.  He lives at home with his mother and younger brother and sister.  He derives his huge need for emotional support almost entirely from his mother, whose devotion to him (with her other children) is to be admired.  She understandably asked us to prepare and deliver this judgment as soon as may be.
7.	Cambridgeshire have assessed the direct payment required to provide for his assessed needs as £84,678 per annum.  This is a very substantial amount in the context of sums provided for community care to other people in Cambridgeshire.  The process of arriving at and explaining that amount was tortuous and took a long time, as we shall shortly explain.  But essentially it was calculated with reference to Cambridgeshire’s Resource Allocation System (“RAS”), with the addition of an assessed sum for special care because KM’s needs were above the top of the RAS scale.
The Resource Allocation System
8.	Cambridgeshire’s RAS and its use are explained at length in the evidence of Clare Bruin, Tracy Flack, Tracy Gurney and Charlotte Kirin.  In essence we understand it to be a synthesis of the amounts paid to 260 people who receive or have received community care direct payments in Cambridgeshire, with amounts for payments set against a progression of points.  Points are attributed for various aspects of need and an amount for payment thus arrived at.  The maximum number of points on the scale is 55 for which the maximum annual payment is £61,000.  The synthesis does not include amounts paid to those few people in Cambridgeshire with very serious and therefore very expensive needs.  If, as in KM’s case, an eligible person is assessed to have needs beyond the top of the scale, an addition to the £61,000 is assessed to reach the total.  This assessed addition is referred to as an “Upper Banding Calculator”, which gives it a somewhat misleading impression of accuracy.  As will be seen, the assessed addition is an accurate calculation of what it is, but the £61,000 to which it is added cannot be directly related mathematically to the assessed addition.
The assessment
9.	The relevant process of assessing and explaining KM’s community care needs and the appropriate direct payments to provide for them was tortuous.  An assessment was made on 14th April 2009 which concluded, among other things, that he could not be left unsupervised and that the necessary support would incorporate all aspects of personal care, access to the community and health problems.  On 19th May 2009, Cambridgeshire assessed the annual cost of the assessed care to be £67,206.  This comprised the £61,000 from the top RAS band, plus an addition of 2 hours a day of specialist care at £4 per hour and half an hour a day of 2 to 1 specialist care at £18.10 per hour.  Subsequent explanation showed that the £4 per hour was an additional payment for hours already notionally included in the £61,000 and that the half an hour 2 to 1 specialist care at a full rate was when one carer was handing over to another.  A possible implication is that £18.10 was taken as the appropriate full hourly rate for the specialist care provider.  However, £61,000 per annum does not mathematically equate with full care at £14.10 per hour, that is the £18.10 less the £4 addition.
10.	In a pre-action protocol letter before action dated 22nd July 2009, those representing KM complained, among other things, that Cambridgeshire had failed to carry out a proper community care assessment; failed to complete a care plan; failed to ensure appropriate interim provision; and failed to show how the £67,206 was reached, so that it appeared arbitrary.  Cambridgeshire’s response, dated 5th August 2009, accepted some of the matters complained of; understood that KM’s needs had not changed since an assessment made in 2006; gave an explanation of the £67,206 together with a copy of the calculation; and proposed that there should be a reassessment funded by the local authority to be carried out by an independent social worker.
11.	This last offer was accepted on behalf of KM on 6th August 2009.  Accordingly, Ian Crompton carried out an assessment and reported on 30th September 2009.  This report contained a detailed account of KM’s care needs and found that his current care package was inadequate.  This assessment was accepted by Cambridgeshire to stand in place of their own assessment.  On 26th October 2009, Cambridgeshire agreed that Mr Crompton should provide recommendations for the type and level of support that should be provided.  Mr Crompton did this in an addendum report dated 10th December 2009, which estimated that the total annual cost of supporting KM was £157,060.  This addendum report also included details of the support KM needed for maintaining and developing increased social, leisure and therapeutic activities.  There was a list of such activities which KM was then currently undertaking including music, swimming and various therapies.
12.	By letter dated 5th January 2010, Cambridgeshire agreed with Mr Crompton’s assessment in his addendum report of KM’s needs, and agreed that he needed 1 to 1 support.  They did not, however, agree that they were under a duty to fund the entire list of recommended activities.  They gave reasons why some of the costs were in their view unrealistic.  They stated that the hourly rate of £18.00 was inflated and that they would expect hourly rates for a private carer in Cambridgeshire to be between £10 and £17.  The hourly rate offered for Cambridgeshire’s direct payment was £14.68 which would be sufficient.  They stated that they had calculated that KM’s indicative amount should be £84,678.  They said that his assessed need for 1 to 1 care could be fully met at an hourly rate of £14.68 at a maximum total of £75,015, which would allow KM to use the remaining £9,663 on social, leisure and therapeutic activities of his choice.  It is evident that the £9,663 is simply the balance of £84,678, but the £84,678 was itself unexplained.  By letter dated 18th January 2010, KM’s solicitors made detailed criticisms of the letter of 5th January 2010, and asked for payments at the annual rate of £84,678 to be made on a without prejudice basis.
13.	On the 11th February 2010, KM’s solicitors suggested mediation.  On 26th February 2010, Cambridgeshire wrote with extended comments on Mr Crompton’s addendum report and in further explanation of the amount of £75,015.  The mediation progressed.  On 26th March 2010, Cambridgeshire wrote saying that £84,678 was a final amount which they believed was sufficient to meet KM’s assessed needs in full including social, leisure and therapeutic activities.  On 14th April 2010, KM’s solicitors said with reference to the mediation that they needed to know how the £84,678 was capable of meeting KM’s needs.  On or about 15th April 2010, the mediation did not proceed because Cambridgeshire had not provided an explanation of the £84,678.  On that day, KM’s solicitors wrote a letter before action giving Cambridgeshire a week in which to explain how they had calculated the £84,678.  On 28th April 2010, Cambridgeshire sent a copy of their proposed support plan for KM which was said to provide a detailed breakdown of how the £84,678 should fully meet KM’s assessed needs which, as is now apparent, is not the same as provision of an explanation as to how that amount had been calculated.  The attached breakdown in fact produced a total of £56,928.75 and no explanation was provided to us as to how this related to or explained the £84,678, as KM’s solicitors also pointed out in their letter of 14th May 2010.  At a mediation meeting on 20th May 2010, Cambridgeshire agreed to provide information about how the figures were arrived at.  Finally, by letter of 3rd June 2010, Cambridgeshire sent a response to the mediation agreement which explained the RAS and the use of the Upper Band Calculator and then stated:
“Having received the assessment by the Independent Assessor, Ian Crompton, which the County Council accepts, he was asked to prepare a care plan/support package, which he provided as an addendum to his report, with a cost of £157,000, which the County Council does not accept, and has set out the reasons for this position in the letter dated 26/02/2010.  However, in the spirit of trying to resolve the current situation, the LDP Team undertook to relook at the Personal Budget allocation in light of this additional piece of work.  In reviewing Ian Crompton’s care plan, the LDP Team recognised the provision of 1:1 support from a specialist provider for 14 hours a day.  In using the Upper Banding Calculator to generate a higher allocation to the overall Personal Budget, the LDP Team increased the amount of care from a specialist provider from 2 hours a day to 14 hours a day, so the additional allocation over and above £61,000 from the score of 55 points was determined as follows:
•	2:1 care for half an hour each day to allow handover between staff = £2,566
•	14 hours each day of specialist staff = £20,384
•	The extra cost for 2:1 care with a specialist provider for half an hour each day i.e. during handover = £728
This produced a Personal Budget of £84,678.”
The £20,384 in this calculation represents £4 per hour.  This calculation is therefore a replication of the 19th May 2009 calculation which amounted to £67,206 with 14 hours a day of specialist care at £4 per hour substituted for the 2 hours in the earlier calculation.  Thus the amount of £84,678 represents full time 1 to 1 specialist care costed at a rate embedded in the £61,000 plus £4 per hour.  It would have been helpful, to say the least, if this explanation of the £84,678 had been forthcoming on or soon after 5th January 2010 when the amount was first advanced and by when it must have been calculated.
The proceedings
14.	These judicial review proceedings were issued on 15th July 2010.  They originally included a claim for adapting or enlarging the family accommodation, but the family has since moved to more suitable accommodation.  The claim is now advanced on the basis (a) that Cambridgeshire have failed to give adequate reasons, being obliged to do so, and (b) that the decision to provide direct payments of £84,678 is irrational.  Underlying these submissions is the contention that the amount is palpably inadequate to meet KM’s assessed needs.
15.	The judge in his detailed judgment refused permission to bring the judicial review proceedings.  Arden LJ gave permission to appeal to this court.  The judge referred at length to this court’s decision in R (Savva) v Royal Borough of Kensington and Chelsea [2010] EWHC 414 (Admin) and [2010] EWCA Civ 1209 to which we shall refer later in this judgment.  He noted that the system of direct payments enabled individuals to decide how they wished to spend the money provided.  The funding is directed to the assessed needs rather than calculating the cost of providing specific services.  The RAS system as explained in the evidence is moderated by assessing whether the funds provided in the cases used in the synthesis have proved to be sufficient to meet the needs of those receiving them.  The type of RAS used in the present case was in effect identical with that considered in Savva.  It was appropriate to use the RAS in this case as an indicative starting point as in Savva.  Cambridgeshire had accepted Mr Crompton’s assessment of KM’s needs, but not how they should be provided nor his assessment of cost.  Mr Wise QC for KM had not attacked the use of the RAS.  The judge considered that the reasons challenge misunderstood the system of self-directed support in requiring an account of the services to be provided rather than the needs.  The self-directed support system was designed to provide a sufficient sum to meet the claimant’s needs, but it was up to the claimant and his advisers to determine how to spend that sum.  Much of the correspondence had been at cross purposes.  The cost of services proposed by Mr Crompton was unnecessarily high and Cambridgeshire were not irrational in taking that view.  There was ample material on which Cambridgeshire could reach the figure advanced in the letter of 5th January 2010, that is £84,678.  The reasons advanced in Cambridgeshire’s letter of 26th March 2010 were adequate and achieved what Lord Brown of Eaton-under-Heywood said was required in South Buckinghamshire District Council v Porter [2004] 1 WLR 1953 at 1964.  In the judge’s judgment, the RAS calculation and Cambridgeshire’s explanation were compliant both with the FACS guidance and the prioritising need guidance.  Subsequent explanation was more than Cambridgeshire needed to do.  The reasons challenged failed.
16.	As to the rationality challenge, the use of the RAS was permissible and had been approved as a starting point in Savva.  It was an appropriate way of estimating the reasonable cost of meeting assessed needs.  It was essential to take resources into account.  The upper band calculator was used by experienced social workers in assessing the reasonable costs of providing for KM’s needs.  It was for the claimant to decide on and organise the actual services.  The assessment process operated by experienced staff was an exercise of judgment which could not be the subject of a disguised merits challenge.  The rationality challenge failed.
Savva
17.	In Savva, the local authority had assessed an amount for direct payments to a woman eligible for community care under the legislation using a RAS comparable with that in the present case as a starting point and adding to the amount derived from the RAS a further sum to accommodate her personal needs.  They had given no explanatory reasons, contending that they were not obliged to do so.  This court dismissed the woman’s appeal which contended that the assessment using the RAS was unlawful, and also dismissed the local authority’s cross appeal which contended that reasons were not required.  A first instance finding that the decision was not irrational was not pursued on appeal.
18.	Maurice Kay LJ gave the substantive judgment, with which Longmore and Patten LJJ agreed.  Maurice Kay LJ said at paragraph 7 that it is axiomatic that local authorities do not have a bottomless pit of funds at their disposal.  It is permissible for them to take account of the relative severity of individuals’ needs and the availability of resources when determining whether it is necessary to make arrangements to meet an individual’s needs.  However, once a local authority has decided that it is necessary to make such arrangements, it has an absolute duty to provide the individual with the services or the personal budget with which to meet the assessed needs.  He referred for this to R v Gloucestershire County Council ex party Barry [1997] AC 584.
19.	The ground of appeal in Savva which attacked the use of the RAS was that the judge was wrong to decide that the local authority were entitled to rely on a figure generated by the RAS based on Mrs Savva’s need for community care services in relative terms as a starting point, because section 2 of the 1970 Act and Regulation 14 of the 2009 Regulations required an individual’s eligible needs to be met in absolute terms.  Maurice Kay LJ did not accept this submission.  The figure generated by the RAS was not used as anything other than a starting point or indicative allocation.  Witness evidence had described how the assessed amount was reached.  It could not be said that the local authority ever lost sight of the fact that, once Mrs Savva’s eligible needs had been assessed, it was under an absolute duty to provide her with the services that would meet those needs or a personal budget with which to purchase them.  The local authority were entitled to use the methodology recommended by the Department of Health, which did not have the effect suggested on behalf of Mrs Savva.  It was not suggested that the guidance was unlawful.  The deputy judge had been correct to refuse a declaration that the RAS is an unlawful basis for determining a personal budget.
20.	In rejecting the cross appeal as to the giving of reasons, Maurice Kay LJ said at paragraph 21:
“In many cases, the provision of adequate reasons could be achieved with reasonable brevity.  In the present case, I would consider it adequate to list the required services and assumed timings (as was actually done in the FACE assessment), together with the assumed hourly cost.  That would not be unduly onerous.  I appreciate that some recipients require more complicated arrangements which would call for more expansive reasoning but if that is what fairness requires, it must be done.  In the course of these proceedings it seems to have been suggested on behalf of Mrs Savva that the provision of adequate reasons would extend to every decision having to include an explanation of the Council’s RAS.  That suggestion goes too far.  Recipients and their advisers are entitled to know about the RAS but, as the Association’s guidance recommends, this can be achieved by publishing the RAS on the Council’s website in a user-friendly format.”
The appeal
21.	The present appeal has close similarities with Savva and the submissions made on behalf of KM are closely related to those advanced in Savva.  Mr Wise submits that the judge in the present case misunderstood and misapplied Savva.  He submits that the judge wrongly relied on the earlier offer of £67,206 made in Cambridgeshire’s letter of 19th May 2009 which was arrived at before Mr Crompton’s assessment.  Cambridgeshire did not give adequate reasons as required by Maurice Kay LJ in paragraph 21 of his judgment in Savva which we have quoted.  There was no proper calculation of assumed timings and hourly costs with reference to a list of services, and this was a case which called for more expansive reasoning.  It was not explained how the £84,678 could pay for the required services, and it should be regarded as inadequate and irrational when it was significantly less than the cost of a full time 1 to 1 specialist carer costed at £18.10 per hour, and where no allowance was included for leisure, social and therapeutic costs such as Mr Crompton had listed as necessary.  The deputy judge misunderstood and failed to apply the statutory requirement for direct payments to meet the assessed eligible needs.  Without a proper link between the amounts allocated and the services, the amount of direct payments would be arbitrary and was so in the present case.  The guidance requires a transparent system linking money to outcomes.  Here, although the use of the RAS as a starting point may be legitimate, there was no explained link between £61,000 and an upper band calculator and what is required to meet KM’s needs.  The deputy judge failed to deal with the eventual explanation of the £84,678 in the letter of 3rd June 2010.  The respondents are wrong to contend, in the face of Savva, that they are not obliged to set out a list of services.  Mr Wise submits that Cambridgeshire were obliged to arrive at a figure which will actually meet the assessed needs; and they are obliged to explain the whole amount by showing that the necessary specialist care can be provided for that amount.
Discussion
22.	We have some general sympathy with the submission that Cambridgeshire did not give adequate reasons, since the process by which they eventually arrived at an intelligible explanation of the £84,678 was, as we have indicated, tortuous.  There was however an intelligible eventual explanation in the letter of 3rd June 2010, which was before proceedings were started.  The question for us is whether that explanation was sufficient, coherent and rational and whether in the result it demonstrated that the £84,678 met the statutory requirements.  We have some general sympathy also with Mr Wise’s criticism of the deputy judge’s judgment, in that it did not squarely address the main issue with reference to the explanation in this letter.  However the explanation did eventually arrive.
23.	In our view, the assessment of needs was adequate.  It consisted essentially of Cambridgeshire’s accepting Mr Crompton’s assessment of KM’s needs, although not of course his assessment of the services required nor their costings.  There has of course to be a rational link between the needs and the assessed direct payments, but, in our judgment, there does not need to be a finite absolute mathematical link.  This is because (a) the local authority, whose funds are not limitless, are both entitled and obliged to moderate the assessed needs to take account of the relative severity of all those with community care needs in their area – see paragraph 7 of Savva; (b) the local authority are not obliged to meet an individual’s needs in absolute terms – see paragraph 18 of Savva, where the submissions in paragraphs 16 and 17 are rejected; (c) the use of the RAS as a starting point is lawful and the decision does not have to extend in every case to explaining the RAS in detail – see paragraph 21 of Savva; so that (d) as Mr Wise accepted, it was not necessary in this case to provide a mathematical justification of the indicative £61,000.  This last derives from the nature of the RAS, which is, as the evidence explains, a synthesis of Cambridgeshire cases, leaving out those few of the greatest severity.  The starting point of £61,000 is therefore legitimate and provides a starting indication of the appropriate amount required to cover the community care needs of those who score 55 points on the scale.
24.	For those who are above the top of the scale, an appropriate assessed addition is required.  But since the £61,000 is not the product of a finite mathematical calculation of the kind under discussion, neither can the addition nor the result constitute a finite mathematical calculation, such as in substance Mr Wise’s submission requires.  We do not consider that the list of required services, the assumed timings with the assumed hourly costs referred to in paragraph 21 of Savva require such a finite mathematical conclusion or result.  This is because the nature of the RAS, which it is legitimate to use as a starting point, does not admit of such a calculation or result.  Nevertheless, the required services, assumed timings and assumptions as to the hourly cost are referred to in the explanation in the letter of 3rd June 2010.
25.	What then of these explanations of the £84,678?  Previous correspondence had sufficiently defined the eligible needs as being those assessed by Mr Crompton.  The £61,000 was a legitimate starting point.  The addition of an amount for specialist care for 14 hours a day predicates 1 to 1 specialist care daily throughout the year.  It was not suggested to us that this was not a proper means of meeting KM’s main care needs.  The additional rate of £4 per hour is an assessment which is not exact, but which predicates a total rate of the order of  the £14.68 per hour which the council’s evidence supported as reasonable, and which is not traduced by an assertion on KM’s behalf that it should have been £18.10.  It is important to note, as pointed out at paragraph 9 above, that the £61,000 starting point is not consistent with an acceptance by Cambridgeshire that care would cost £14.10 per hour, for that is not the nature of the RAS.  No specific sum or hourly rate for care is contained within the RAS.  Moreover, Cambridgeshire have never accepted that specialist care will cost £18.10 per hour.  Such an acceptance cannot be spelled out of their assessment that a further sum calculated at £4 per hour for 14 hours a day should be added to the Personal Budget, for the Personal Budget as it stood contained no specific hourly allowance for 1 to 1 care.  This is the basic reason why the rationality challenge fails – Cambridgeshire have not accepted that the provision of specialist 1 to 1 care will cost £92,000 per year.  Furthermore, as explained at paragraph 3 above, local authorities do not dictate upon what precise services the Personal Budget should be spent.  However, assuming that specialist care will cost £14.68 per hour and that it will in fact be needed for 14 hours per day, 365 days of the year, an expenditure of £75,015, the Personal Budget of £84,678 will still leave upwards of £9,500 per annum over for social, leisure and therapeutic purposes, as earlier correspondence had shown.  Further, the nature of the RAS must predicate that elements in addition to straight care costs are taken into account.
26.	In the result, in our judgment, the explanation of the £84,678 in the letter of 3rd June 2010 was rational.  It properly showed how that sum had been reached, and sufficiently demonstrated that direct payments of that assessed amount would meet KM’s assessed needs.  This in substance addresses the grounds of appeal and for this reason the appeal fails.