England and Wales High Court (Administrative Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		10 February 2017

MS NATHALIE LIEVEN QC :

1. This is an application by Mr Dalton "the claimant" for judicial review of the decision by the Secretary of State, made through the Child Support Agency "CSA" not to reimburse him for overpaid child support in the sum of £43,617.72 "the overpayment". The decision in question was made under s.41 B of the Child Support Act 1991 on 14 December 2015.
2. Mr Dalton was assisted at the hearing by a McKenzie Friend, Mr Pape, who presented his case in a very clear and concise manner and I was much assisted by his submissions. Mr Dalton raised two grounds. The first ground was that the overpayment could not properly or lawfully be analysed as "child support", and therefore the CSA had no power to retain that money. The second ground was that the decision not to reimburse was an unlawful exercise of the power in s.41B.
3. In order to deal with these grounds, and in particular the second ground it is necessary to set out the factual history in some detail. Where appropriate I will use the terminology of the Child Support Act.

The factual background

4. The Qualifying Child, Joanne, was born on 25 February 1997. Her mother, the Parent with Care, "PWC", submitted a maintenance application form. Mr Dalton disputed paternity, and a declaration of parentage was made at Bedford County Court on 2 October 1998. On that day a Maintenance Enquiry Form was issued to Mr Dalton, the Non Resident Parent (NRP). That form was never returned.
5. There then followed a very long period when the CSA say that Mr Dalton failed to supply any information, and failed to make any child support payments, save possibly for some very small amounts. Mr Pape said to me, on instructions that Mr Dalton said that he had sought to engage with the CSA. However, I have seen no documents to support that suggestion, and Mr Dalton has not made a witness statement in this matter. The evidence before me suggests very strongly that Mr Dalton provided minimal if any information to the CSA before the meeting I will refer to below on 21 April 2005, and only provided significant amounts of information once Mr Pape was first involved in 2007. The evidence also shows beyond any doubt that for a very long period Mr Dalton made no, or minimal payments of child maintenance.
6. Mr Dalton's failure to complete the Maintenance Enquiry Form resulted in the making of an Interim Maintenance Assessment, "IMA" on 1 November 1999 in the sum of £113.70 per week effective from 5 November 1999. An IMA is deliberately set under the statutory scheme at a punitive rate in order to encourage the NRP to co-operate in supplying the required information. A warning letter was sent to Mr Dalton before the IMA was made.
7. In September 2003 Mr Dalton wrote to the CSA disputing the IMA and requesting that it be converted into a Final Maintenance Assessment "FMA". A meeting was set up which eventually took place on 21 April 2005 to seek information from Mr Dalton. Mr Dalton attended that meeting with his partner and two officials were present from the CSA. Mr Dalton gave various information at that meeting about his finances.
8. On 18 October 2005 the CSA decided that it had sufficient information and the IMA was converted into an FMA. Mr Dalton appealed the level of the FMA and on 11 December 2005 the CSA revised the FMA. The Parent with Care then appealed the revised decision on the basis that Mr Dalton's purported income was inconsistent with his lifestyle.
9. It should be noted that from April 2000 onwards a series of liability orders had been made against Mr Dalton in respect of unpaid child support. A series of charging orders were also made in respect of Mr Dalton's property known as Innswood House, Bedford. Despite these orders Mr Dalton continued to make no, or no significant, payments of child maintenance.
10. On 18 April 2006 Judge Gray of the First Tier Tribunal issued a series of directions in respect of the appeal. At para 8 of the directions Judge Gray said that the Tribunal would consider whether the CSA had had sufficient information to displace the IMA. She also directed that Mr Dalton should provide a series of documents in order to establish his costs of living between 1998 and January 2006 and how they were funded.
11. The Tribunal allowed the PWC's appeal on 9 November 2006 and issued the reasons for its decision on 4 May 2007. Mr Dalton had attended the Tribunal with his accountant. The decision notice stated that the CSA had been wrong to replace the IMA with the FMA, and it restored the IMA with effect from 5 November 1999. In its reasons the Tribunal raised a large number of issues with the information that Mr Dalton had provided, and with his oral evidence. They said at para 21;

"Given all of the written and oral evidence, the tribunal was compelled to the conclusion that Mr Dalton had not (?)presented an honest picture to the tribunal."

At para 22 they said that there were so many questions arising from the information that they could not make findings of fact and at para 23 that "Mr Dalton had failed to present credible information about his finances to the CSA…"

12. On 20 January 2007 the CSA informed Mr Dalton that the previous IMA of £113 per week was restored.
13. Mr Pape of Child Support Solutions was instructed by Mr Dalton after the First-tier Tribunal hearing. On 30 November 2007 he wrote requesting that the IMA be converted again to an FMA and submitting some further information. On 15 December 2008 Mr Pape wrote again and sought to set out information in respect of each of the categories in Judge Gray's directions from April 2006. There is no doubt that a significant amount of information was provided with that letter. However, the CSA on 19 December wrote stating that the evidence did not cover Mr Dalton's current situation. On 23 January 2009 the CSA wrote saying that there was insufficient information to convert the IMA to an FMA and referred in particular to disparities between Mr Dalton's declared income and his expenditure. There is also reference in that letter to the fact that the 2007 Tribunal had found that Mr Dalton was not a reliable witness.
14. Importantly on 13 February 2009 the CSA, having maintained its refusal to convert, wrote stating that the decision as to whether to convert the IMA into an FMA in the circumstances of this case did not give rise to a right of appeal. This matters because subsequently the CSA changed its position in this regard, and now accepts that this advice was wrong. Mr Dalton places great reliance on this, as I will explain below. Further information was submitted on 16 March 2009.
15. It should be noted that on 9 October 2008 Mr Dalton was sentenced to 42 days imprisonment for failing to pay the requisite child support. Mr Pape on behalf of Mr Dalton at that time requested a supersession of the IMA on the grounds that Mr Dalton was in prison.
16. On 14 July 2009 the CSA again stated that the IMA was not to be converted to an FMA and refused to supersede the IMA for the period that Mr Dalton had been in prison, referring to the earlier finding that Mr Dalton was not credible. The refusal to supersede did undoubtedly give rise to a right to appeal, and Mr Dalton appealed on 3 August 2009. This appeal was eventually heard in May 2013. The very long delay was largely as a result of delays that existed within the Tribunal system at that time.
17. Meanwhile in October 2008 the CSA had decided to apply for an order for sale of Innswood House pursuant to the various charging orders that had been made. In September and October 2009 Mr Dalton paid the CSA £50,681.45, which was then passed on to the PWC. The order for sale was not actually made, but there is little doubt that the threat of the order was operative in Mr Dalton finally deciding to pay a significant amount of child maintenance.
18. The 2013 Tribunal issued its decision on 13 August 2013 and its reasons on 11 October 2013. It recorded that the PWC had used the payments made to her to pay off her mortgage. The Tribunal found that Mr Dalton had provided sufficient information to the CSA and had given a reasonable explanation of his losses. They said at para 37-9

"37. The tribunal considered the Court of Appeal decision R (CS) 6/08 as to the correct construction of regulations 8D and 30A of the CS (Maintenance Assessment Procedure) 1992. Here it was held that if the Secretary of State has sufficient information to make a full maintenance assessment covering the entire period of an interim maintenance assessment from the first effective date, the Secretary of State is obliged to revise the assessment and to convert the interim maintenance assessment to a full maintenance assessments for the entire period.

38. …

39. The tribunal took the view that the correct construction of the regulations did not prevent them from revising the assessment for the entire period back to the effective date of 05/11/1999. The previous tribunal in 2006 did not revise the interim assessment as there was insufficient credible evidence to do so. However, the present tribunal has found that sufficient credible information had been provided by December 2008 to enable the CSA to do so and therefore they should have done so."

19. The CSA did seek permission to appeal parts of this decision, but permission was refused.
20. On 22 October 2013 Mr Dalton's liability was reassessed in line with the Tribunal's decision. The result of the reassessment was that Mr Dalton had paid £43,671.72 more than his child maintenance liability.
21. Mr Dalton asked the CSA to reimburse the overpayment and a decision was made not to reimburse on 27 February 2015, but this decision was subsequently quashed by consent. The decision the subject of this challenge was made on 14 December 2015. The decision itself is a lengthy document of 44 paragraphs. It sets out the history in considerable detail and the relevant parts of section 41B. The most important passages are as follows;

i) Para 38

"NRP was clearly determined from the outset of this case not to meet his duty under section 1 of the Child Support Act which places a duty on a parent to maintain his child. He consistently failed to co-operate with the Agency which resulted in a higher assessment…."

ii) Para 39 where reference was made to the 2006 FTT conclusion that Mr Dalton had not provided credible evidence;

iii) Para 42 where the fact that appeal rights had been wrongly refused in 2009 is referred to, and then said;

"The creation of the overpayment was down to NRP's determined efforts to refuse to cooperate and to avoid paying child maintenance over a very long period. All monies – collected via enforcement measures- were paid for the benefit of the QC. It is very likely that without enforcement action this child would not have benefited from any child maintenance."

The Law

22. I have taken this summary of the relevant legal framework from the Defendant's Skeleton Argument. I do not understand any of it to be in dispute.
23. Section 1 of the 1991 Act as originally enacted provided that:

"(1) For the purposes of this Act, each parent of a qualifying child is responsible for maintaining him.

(2) For the purposes of this Act, an absent parent shall be taken to have met his responsibility to maintain any qualifying child of his by making periodical payments of maintenance with respect to the child of such amount, and at such intervals, as may be determined in accordance with the provisions of this Act.

(3) Where a maintenance assessment made under this Act requires the making of periodical payments, it shall be the duty of the absent parent with respect to whom the assessment was made to make those payments."

24. The term "absent parent" was replaced by "non-resident parent" in the 2003 amendments and the latter is used generally by the CSA, including in relation to cases to which the pre-2003 scheme continues to apply.
25. At the time of Mr Dalton's application in this case, section 4 of the 1991 Act provided:

"(1) A person who is, in relation to any qualifying child or any qualifying children, either the person with care or the absent parent may apply to the Secretary of State for a maintenance assessment to be made under this Act with respect to that child, or any of those children.

(2) Where a maintenance assessment has been made in response to an application under this section the Secretary of State may, if the person with care or absent parent with respect to whom the assessment was made applies to him under this subsection, arrange for—

A) the collection of the child support maintenance payable in accordance with the assessment;

B) the enforcement of the obligation to pay child support maintenance in accordance with the assessment."

26. The application for a maintenance assessment was required by section 11 of the 1991 Act to be dealt with by the Secretary of State in accordance with the provisions made by and under that Act, and the amount of child support maintenance to be fixed by any maintenance assessment was to be determined in accordance with the provisions of Part 1 of Schedule 1 to the 1991 Act.
27. Section 14 of the 1991 Act empowers the Secretary of State to make regulations requiring any information or evidence needed for the determination of any application made under the Act. The Child Support (Information, Evidence and Disclosure) Regulations 1992 were made under section 14 and enabled the Secretary of State to require, inter alia, information or evidence from a NRP to enable the amount of support payable by a non-resident parent to be assessed. By regulation 5 of those Regulations, the information or evidence was required to be furnished as soon as reasonably practicable.
28. Under section 12 of the 1991 Act, if the Secretary of State was required to make a maintenance assessment but did not have sufficient information to enable him to do so, he was empowered to make an IMA after serving notice as required by that section. The amount of an IMA was fixed by regulation 8A of the Child Support (Maintenance Assessment Procedure) Regulations 1992 ("the MAP Regulations"): in this case, at 1.5 times the maintenance requirement for the QC ("maintenance requirement" being one factor that would feed in to a FMA under Part 1 of Schedule 1 to the 1991 Act).
29. By regulation 8D(1) of the MAP Regulations, where a FMA is made following an IMA, the amount of child support maintenance payable in respect of the period during which the IMA was in force is that fixed by the FMA, i.e. the FMA replaces the IMA. The Secretary of State is under a duty to "convert" the IMA to a FMA where there is sufficient information to make a FMA from the first effective date: see R (CS) 6/08, also known as Secretary of State for Work and Pensions v Boyle [2008] EWCA Civ 210.
30. Section 41B of the 1991 Act provides that:

"1) This section applies where it appears to the Secretary of State that a non-resident parent has made a payment by way of child support maintenance which amounts to an overpayment by him of that maintenance and that— "

a) it would not be possible for the non-resident parent to recover the amount of the overpayment by way of an adjustment of the amount payable under a maintenance calculation; or

b) it would be inappropriate to rely on an adjustment of the amount payable under a maintenance calculation as the means of enabling the non-resident parent to recover the amount of the overpayment.

…

2) The Secretary of State may make such payment to the non-resident parent by way of reimbursement, or partial reimbursement, of the overpayment as the Secretary of State considers appropriate.

3) Where the Secretary of State has made a payment under this section the Secretary of State 8 may, in such circumstances as may be prescribed, require the relevant person to pay to the Secretary of State the whole, or a specified proportion, of the amount of that payment."

31. The discretion that arises under section 41B (2) is uncircumscribed by any other legislative provision. The Secretary of State has produced guidance to assist the caseworkers responsible for making such decisions on his behalf.
32. That Guidance states the following being the criteria to apply in determining whether to make a reimbursement.

"Using discretion

it is not an automatic right for a non-resident parent to receive a reimbursement as we no longer hold the funds, if they have been paid to the parent with care.

Section 41B (2) Child Support Act 1991 allows the Secretary of State to make such reimbursement as he considers appropriate. This means we can consider reimbursing some, all or none of the overpayment.

…

Who was responsible for the overpayment occurring?

Was is the non-resident parent, us, the parent with care or a combination of these?

The balance of responsibility will be a factor to consider when determining whether a reimbursement is appropriate and if so how much.

The degree of responsibility on the part of the non-resident parent should be reflected in any decision made as to how much, if any, reimbursement is considered appropriate:

If it was entirely our responsibility it is likely a reimbursement would be appropriate. Who the money was paid to etc is unlikely to alter this view (although you would need to be alert to cases where it might).

If it was entirely the non-resident parent's responsibility it is likely that a reimbursement would not be appropriate.

If multiple parties contributed, it may be appropriate to consider a partial reimbursement for any period of overpayment not contributed to by the non-resident parent.

Who was overpaid

Was it the parent with care, the Secretary of State, or both?

Again, the individual circumstances must be considered but in general:

Any maintenance overpaid to the Secretary of State should be returned.

If both the Secretary of State and parent with care were overpaid, these are two separate decisions. The money retained for the Secretary of State should be returned. This does not mean you have to reimburse the amount paid to the PWC. You should only reimburse this if you consider it appropriate.

Has the maintenance gone to benefit the Qualifying Child(ren)?

This is linked to point 2 (above) and is also covered in more detail within the section The Purpose and Basic Principles of the Act in Online Procedures: Recording Discretionary Decisions and Welfare of the Child Consideration.

A parent's responsibility to support their children is essentially a private matter. The role of the statutory scheme is to assist those parents who cannot resolve maintenance issues between themselves.

Where we have administered the case correctly and passed maintenance on to the parent with care for the benefit of the non-resident parent's child(ren) a reimbursement may not be appropriate."

33. By regulation 10A of the Child Support (Arrears, Interest and Adjustment of Maintenance Assessments) Regulations 1992, the circumstances in which the Secretary of State may require the relevant person (i.e., in this case, the PWC) to pay part or all of a reimbursed overpayment to the Secretary of State are where the overpayment arose "in respect of the amount payable under a maintenance assessment calculated in accordance with Part 1 of Schedule 1 to the [1991] Act" and where the relevant person was not in receipt of a relevant benefit. As the overpayment in this case arose from an IMA calculated under the MAP Regulations, the PWC could not be required to refund the Secretary of State.

Ground One

34. Mr Dalton's first ground is that the decision not to reimburse is ultra vires because the Agency is not entitled to retain money that is not child support. His argument is that because the sum that Mr Dalton was ultimately found liable to pay was some £43,000 less than what had been paid, the excess could not properly be considered as "child maintenance"
35. Mr Dalton relies on s.41B to argue that it was intended only to allow the Secretary of State to postpone a rebate against future maintenance due. He argues that s.41B was not intended to have a "confiscatory" effect. He did refer to a Hansard extract relating to the introduction of s.41B, however if it is admissible, I could not see that it had any material bearing on the issue. Section 41B is clear on its face.
36. In my view Mr Dalton's argument fails essentially for the reasons given by Ms Ward. Firstly, an "overpayment" of child maintenance is necessarily going to be a sum which was in excess of the NRP's liability. If that sum which had been paid was not child maintenance for the purposes of the statutory scheme, then section 41B would make no sense because the Secretary of State would always have to repay it regardless of the statutory provisions.
37. Further, Mr Dalton's analysis does not accord with section 41B (1) and (2). Section 41B(2) gives the Secretary of State a discretion to make reimbursements of overpayments. Section 41B(1) limits the application of that discretion to cases where it would not be possible for the NRP to recover by way of adjustment to future amounts payable, or it would be inappropriate to rely on such an adjustment. In this case s.41B(1) undoubtedly did not arise because by the time the issue of the reimbursement arose the Qualifying Child had left full time education and no further amounts were payable.
38. The very nature of s.41B(2) is therefore that the Secretary of State has a discretion not to reimburse. Mr Dalton's analysis would rob this provision of any effect.
39. I therefore reject Mr Dalton's first ground.

Second Ground

40. Mr Dalton's second ground, as put by Mr Pape, is that the Secretary of State exercised his discretion unlawfully. There are two limbs to the ground. Firstly, that the 2013 Tribunal had revised the assessment back to 1999 and found there was credible evidence by 15 December 2008 to enable the CSA to convert the IMA into an FMA. Therefore not to reimburse the overpayment that was made after that date was perverse and acted to frustrate the Tribunal decision. Secondly, that the CSA error in February 2009 that there was no appeal right in respect of the refusal to convert the IMA, effectively gave rise to the overpayment and this was not acknowledged or taken into account in the decision.
41. I will deal with the correct approach to the discretion in s.41B and then Mr Dalton's two arguments. Section 41B is on its face an unfettered discretion; it does not set out any specific factors that must be taken into account. Plainly in exercising the discretion, the Secretary of State must take into account all relevant matters, and must exercise the discretion in accordance with the statutory purpose. As I have set out above, s.41B necessarily contemplates that there will be overpayments which the Secretary of State lawfully decides are not to be reimbursed.
42. The Secretary of State in exercising his discretion must take into account the Guidance referred to above and in particular the three considerations set out, namely; Who was responsible for the overpayment occurring?; Who was overpaid? and; Has the maintenance gone to the Qualifying Child? In this case the second and third considerations are not really in issue. The overpayment went to the PWC and not to the Secretary of State. The PWC used the overpayment to pay off her mortgage, and as such Mr Pape accepted that it was at least in part for the benefit of the Qualifying Child.
43. In terms of who was responsible for the overpayment occurring, on the facts of this case it is highly relevant to have regard to the history. Mr Dalton had gone to very considerable lengths not to engage with the child support system, and not to pay child maintenance for the child over a very long period of time. He had chosen to ignore numerous warnings and then enforcement steps. Most importantly he had chosen not to make payments for the child who in law he had financial responsibility for. If he had not deliberately chosen to take this course over many years the overpayment, certainly in the form it occurred, would not have happened.
44. The other aspect of the history which is particularly relevant are the findings of the 2006 Tribunal. That Tribunal had found that the CSA should not have converted the IMA to an FMA in 2005, and that Mr Dalton's information was not credible and he was not a credible witness. I think that in those circumstances the CSA was justified in being extremely cautious in seeking to verify the information that Mr Dalton and those acting on his behalf provided.
45. There is also evidence that even in 2007-8, after Mr Pape had become involved and Mr Dalton was engaging in the process to a greater extent, he was still providing misleading information. In the letter of 15 December 2008 Mr Pape said that the Innswood House property was only worth approximately £240,000 and therefore there would be only minimal equity if it was sold. The property was sold the following year for £655,000. In the light of the history of this matter it is not reasonable to suggest, as Mr Pape did, that that was an innocent mistake by someone who did not follow the property market.
46. In these circumstances I have no doubt that the principle operative cause of the overpayment was Mr Dalton's own behaviour over a very long period. The decision letter sets out that history in meticulous detail and the decision maker took it into account in making his decision.
47. In respect of the first limb of Mr Dalton's second ground, the position of the Tribunal, it is important to understand the respective roles of the Tribunal and the CSA. The discretion under s.41B is one for the Secretary of State and not the Tribunal. The decision refers to the 2013 Tribunal decision and has regard to its conclusions about there being sufficient evidence in December 2008. Therefore it cannot be argued that the Secretary of State did not have regard to this matter.
48. In any event I accept Ms Ward's submission that the Secretary of State in December 2008 had simply taken a different view on the accuracy and credibility of Mr Dalton's information than the 2013 Tribunal did subsequently. In my view it cannot be argued that the Secretary of State's view was irrational or unlawful in the light of the previous history and the findings of the 2006 Tribunal on credibility. As I have said the Secretary of State was acting reasonably in treating information provided by Mr Dalton with considerable care. Although the effect of the Tribunal's decision was to backdate the change in the maintainance assessment to 1999 that does not remove Mr Dalton's responsibility for not having either engaged with the CSA properly, or paid some level of child maintenance over the previous years.
49. I therefore reject Mr Dalton's argument that the Secretary of State erred in law in his consideration of the 2013 Tribunal decision when making his s.41B decision.
50. The second limb of the argument is that if the Secretary of State had not wrongly advised Mr Dalton in February 2009 that he had no right of appeal, Mr Dalton would have appealed the refusal to convert to an FMA, and would then have relied on that appeal to argue that no order for sale should be applied for or made. Mr Dalton's argument partly rests on the decision of the House of Lords in Farley v Secretary of State for Work and Pensions 2006 1 WLR 420. In Farley Lord Nicholls at para 33 said;

"I wish to note only that when faced with an application for a liability order where an appeal is pending against the validity of the underlying maintenance calculation the magistrates should consider wither it would be oppressive to make a liability order."

51. Mr Dalton argues that the same analysis would apply in respect of an order for sale, so if he had an appeal pending he would and could have argued that it would be oppressive to make such an order.
52. I accept that it is relevant in this regard that the CSA in effect stands as the gatekeeper to the ability of an NRP to appeal. Mr Dalton could not appeal the decision of the CSA in February 2009 that he had no right of appeal, his only possible course would have been judicial review, but his prospects of success would have been by no means clear. It may be that if he had been properly advised by the CSA he might have argued that the principle in Farley applied, and persuaded the CSA not to proceed to an order for sale. I accept that although Lord Nicholls' comment is in respect of a liability order there is no obvious reason why the same approach would not be taken to an order for sale.
53. However, it is important to note that Lord Nicholls was not saying that the CSA could not seek a liability order in those circumstances; he was merely saying that they and the Magistrates should consider whether it would be oppressive to proceed on the facts of the case. Given Mr Dalton's long history of non-compliance, and the comments of the 2006 Tribunal, it would not have been at all unreasonable for the CSA to have decided to proceed with an order for sale even if an appeal had been on-going. As with the first limb, the decision letter does take into account the error in the advice in February 2009, at para 42 of the decision. In my view there was nothing unlawful in the Secretary of State still deciding not to reimburse.
54. For these reasons I dismiss the application for judicial review.
55. I direct that any application for costs should be made within 7 days to today's date, with the other party having 7 days to respond.
56. I have received an application for permission to appeal, but if Mr Dalton wishes to do so he must apply in writing within 7 days of today's date.