UK Social Security and Child Support Commissioners' Decisions

R(CS) 6/99

Mr. J. Mesher CCS/13462/1996
13.5.98


Application for maintenance - undertaking in preamble of court order to make maintenance payments to children - whether a 'maintenance order' is in force

The parent with care (PWC) made an application under section 4 of the Child Support Act 1991 which resulted in an interim maintenance assessment. That was cancelled when a maintenance assessment was made. The PWC appealed against the cancellation and against the basis of the assessment to a tribunal, which found inter alia that a court order had been made on 15 June 1993 but that it had no bearing on the effective date of the assessment. On application by the PWC, the Commissioner granted leave to appeal to consider the effect of the court order and contemporaneous undertakings, and specifically whether there was in force a "maintenance order" within the meaning of section 8(11) of the Child Support Act 1991 so that an application under section 4 of the Act was precluded by paragraph 2 of the Schedule to the Child Support Act 1991 (Commencement No. 3 and Transitional Provisions) Order 1992. Section 8(11) defines a maintenance order as "an order which requires the making or securing of periodical payments to or for the benefit of the child" and is made under specified legislation.

In the preamble to the court order of 15 June 1993 it was recited that the absent parent undertook to continue to pay periodical payments of £10 per week to each child of the family.

Held, allowing the appeal, that:

undertakings may for some purposes be treated in the same way as orders, especially where the undertaking is an integral part of the order, although there are important differences in their nature (e.g. the requirement to carry out an undertaking stems from the undertaking, not the order) (paragraphs 8 to 19);

section 8(11) of the Act, however, reflects the distinction between undertakings and orders so as to exclude obligations arising out of undertakings, even where the undertaking is an integral part of the order;

the tribunal did not therefore err in law by failing to find that no valid application for maintenance had been made by reason of the existence of the court order.

The Commissioner thereafter identified errors of law relating to the basis of the assessment and cancellation of the interim maintenance award and remitted the case to a fresh tribunal.

DECISION OF THE CHILD SUPPORT COMMISSIONER

1. The parent with care's appeal is allowed. The decision of the Leeds child support appeal tribunal dated 12 December 1995 is wrong in law, for the reasons given below, and I set it aside. The case is referred to a differently constituted child support appeal tribunal for determination in accordance with the directions given in paragraph 28 below (Child Support Act 1991, section 24 (3)(c)).
2. The child support officer's second-tier review decision which was before the appeal tribunal was to make an assessment of child support maintenance against the absent parent from 22 October 1993. The assessment was for varying amounts from succeeding dates, finally from 8 July 1994. That assessment replaced one for a smaller amount from 6 January 1994.
3. The course of events had been that a maintenance enquiry form (MEF) had been sent by the Child Support Agency (CSA) to the absent parent, according to conflicting computer records either on 23 October 1993 or on 25 October 1993. That was sent to the address for the absent parent given to the CSA by the parent with care. As the MEF had not been returned, the CSA on 19 November 1993 sent a notice to the absent parent that if the required information was not received before 11 December 1993 an interim maintenance assessment would be made. The absent parent has said that this was the first he knew of the involvement of the CSA and that he had not received the MEF. He had moved from the address to which it had been sent in early October 1993. The absent parent telephoned the CSA some time in December 1993, bringing to their attention the existence of a court order dated 15 June 1993, but that was not before an interim maintenance assessment at the rate of £98.49 per week had been made on 13 December 1993. I am not sure from the records what effective date was initially set for the interim maintenance assessment, but on 31 December 1993 it was said to be incorrect and was changed to 11 December 1993. Following further communication from the absent parent, another MEF was sent to him on 6 January 1994. This was completed and returned. A child support officer (CSO) cancelled the interim maintenance assessment and on 21 April 1994 made the maintenance assessment with the effective date of 6 January 1994, which was then revised on second-tier review on 12 December 1994. The difference in the effective dates reflected which of the MEFs was used.
4. The parent with care appealed against the second-tier review decision. The points she raised were that she disagreed with the withdrawal of the interim maintenance assessment, she disagreed with the calculation of the absent parent's income and housing costs, which she said had been manipulated by him in his favour, and that the absent parent had a partner who was living with him.
5. Both parents attended the hearing before the appeal tribunal on 12 December 1995. The appeal tribunal allowed the parent with care's appeal, but only to the extent of remitting the case with directions that an undisputed error in apportioning her housing costs should be corrected and that the effective date of the maintenance assessment should be 25 October 1993 rather than 23 October 1993.
6. The appeal tribunal's findings of fact were as follows:

"1. There is a conflict of evidence as to whether the original MEF was received by [the absent parent]. The CSO has investigated and has taken the view that it was received. The assessment has been conducted on that basis.

There is some evidence that [the absent parent] may have sought to maximise his housing costs. The CSO has not challenged this, but housing costs are capped under regulation 18(1) MASC Regulations 1992.

[The absent parent] has received £20,500 in respect of his share in the former matrimonial home. Some of this has been spent on refurbishment of his house. He has paid £205 off his mortgage."

Its reasons for decision were as follows:

"1. The MEF could not have been "given or sent" to [the absent parent] on Saturday, 23 October 1993.

The CSO has previously obtained a P60 in respect of [the absent parent] and the calculation of wages is based on this, following the review conducted on 12 December 1994.

The CSO, having made an investigation has concluded that [the absent parent] received the original MEF. The effective date is now therefore 25 October 1993. There is no basis on which to alter this decision. Equally the CSO has now seen fit to cancel the interim assessment from 6 January 1994, when sufficient information about [the absent parent's] financial circumstances was available. This was within the regulations (regulation 9(3) CS(MAP) Regulations). Following a section 18 review the CSO has back-dated the revised assessment to the effective date (presumably under regulation 31(9) MAP Regulations). Again there is no basis for a contrary direction.

Regulation 18(1)(e) MASC Regulations is inapplicable. The fact that [the absent parent] has not used the substantial sum received in April 1995 in respect of his interest in the former matrimonial home in order significantly to reduce his present mortgage creates an inference that his present housing costs are not inflated "by virtue" of the previous unavailability of that lump sum. Regulation 18(1) should continue to apply.

The court order (made on 15 June 1993) is not specified for the purposes of section 10(1) CSA and regulation 3 MAJ Regulations 1992. Accordingly its existence does not have a bearing on the effective date."

7. The parent with care applied for leave to appeal to the Commissioner. The grounds put forward were that there should be a full re-assessment of the absent parent's housing costs, weekly earnings and cohabitation status and that payment of the amount of the interim maintenance assessment should be made. The chairman of the appeal tribunal refused leave. However, I granted leave on 26 April 1996 because it seemed to me that it was arguable that a different error of law had been made.
8. The major issue in the appeal is the effect of the court order found by the appeal tribunal to have been made on 15 June 1993. It is of crucial importance because, if there was in force "an order which requires the making or securing of periodical payments to or for the benefit of" a child made under specified legislation including Part II of the Matrimonial Causes Act 1973 (definition of "maintenance order" in section 8(11) of the Child Support Act 1991) , there would not merely be an effect on the effective date of the first maintenance assessment, as seemed to have been assumed before the appeal tribunal. It would have the effect that no valid application for a maintenance assessment could be made under section 4 of the Child Support Act 1991, so that no maintenance assessments could validly be made following such an application.
9. That follows from paragraph 2 of the Schedule to the Child Support Act 1991 (Commencement No. 3 and Transitional Provisions) Order 1992 ("the Commencement Order"). This was in force until 4 September 1995 and provided:

"2. Subject to paragraph 4 below, during the transitional period no application under section 4 of the Act (applications for child support maintenance) in relation to a qualifying child or those qualifying children may be made at any time when-

(a) there is in force a maintenance order or written maintenance agreement (being an agreement made before 5th April 1993) in respect of that qualifying child or those qualifying children and the absent parent; or

(b) benefit is being paid to a parent with care of that child or those children."

The "transitional period" was the period from 5 April 1993 to 6 April 1997 (paragraph 1(1)). Paragraph 4 allowed an application under section 4 to be made from certain dates from 8 April 1996 onwards. The application in the present case was made well before that date and so fell within the general rule of paragraph 2. From 4 September 1995, the newly inserted section 4(10) of the Child Support Act 1991 has re-enacted the general rule set out above, without the exception formerly provided by paragraph 4 of the Schedule to the Commencement Order.

10. The recognition of this potential effect has led to a considerable exchange of written submissions and a regrettably long delay while the outcome of another appeal to the Commissioner (CCS/8328/1995) was awaited. In view of the decision in that case and the difficulty of the issue, I directed an oral hearing of the appeal. The parent with care did not attend the hearing, but was represented by her husband. The absent parent did not attend and was not represented. The CSO was represented by Mr. Leo Scoon of the Office of the Solicitor to the Department of Social Security. I am grateful to all present for their assistance.
11. The court order in issue was made in divorce proceedings between the parent with care, who was the petitioner, and the absent parent, who was the respondent. The order appears to have been made in York County Court and was a consent order. It recited that counsel for both parties had been heard and that the order was made upon the petitioner undertaking to indemnify the respondent against any claims relating to the mortgage on the matrimonial home and related endowment policies and upon:

"the Respondent undertaking to continue to pay periodical payments for each child of the family at the rate of £10 per week until such time as the appropriate rate is assessed by the Child Support Agency."

Then there were orders for the sale of the matrimonial home and division of the proceeds of sale; the transfer of endowment policies to the petitioner; the dismissal of the petitioner's claim for periodical payments for herself; and the dismissal of all other claims on the distribution of the proceeds of sale and the transfer of the policies.

12. At the hearing before the appeal tribunal the presenting officer, for the CSO, appears to have said that the provision for child maintenance was not part of the order itself, so that it was not a "qualifying" court order and could not affect the effective date of the maintenance assessment. The appeal tribunal in its reasons for decision said that the court order was not specified for the purposes of section 10(1) of the Child Support Act 1991 and regulation 3 of the Child Support (Maintenance Arrangements and Jurisdiction) Regulations 1992. Since the order must have been made under Part II of the Matrimonial Causes Act 1975, which is prescribed for the purposes of section 10(1) in regulation 3, I think that the appeal tribunal must have reached its conclusion for the reason put forward by the presenting officer. The central question of law is whether, in view of the undertaking recited at the beginning of the court order, the making of periodical payments for the children was required by an order made under Part II of the Matrimonial Causes Act 1975.
13. Mr. Scoon submitted that the order did not have that effect and that I should follow the decision of Mr. Commissioner Rowland in CCS/8328/1995. That decision concerned an undertaking to make payments given by an absent parent on the parent with care's application for interim maintenance for herself and interim periodical payments for the children. Following negotiation at the court, the application was adjourned, with liberty to apply, on the absent parent's undertaking to make the payments. The Commissioner held that the undertaking was not a maintenance order, but was a written maintenance agreement. In the case which he was considering, the effects of a written maintenance agreement to make periodical payments for the children was the same as a maintenance order to do so. However, in the present case there is a critical difference, because if the undertaking recorded on 15 June 1993 were treated as a written maintenance agreement, it would not be an agreement made before 5 April 1993 and would not by itself prevent an application being made under section 4 of the Act (paragraph 2(b) of the Schedule to the Commencement Order).
14. The Commissioner in CCS/8328/1995 relied on the decision of a first instance judge in In re Hudson [1966] Ch. 209. There, an order was made by the court in 1935 for the husband to pay maintenance to his wife at a specified rate. In 1939 the court suspended the order on the husband's undertaking to pay a proportion of his income to the wife. The question was whether, after the husband's death, the wife could claim arrears of maintenance from his estate. The answer to that question depended on whether there was a court order to pay maintenance. It was held that the undertaking did not have the same effect as an order to pay. The giver of an undertaking to the court assumed an obligation to the court, but not to anyone else. But the judge suggested that if an undertaking formed part of a bargain between the parties, there could be a contractual obligation between them. It was that suggestion which was taken up by the Commissioner to decide that the undertaking in his case was a written maintenance agreement.
15. The Commissioner in CCS/8328/1995 did not follow two other cases. In Gandolfo v Gandolfo [1979] 1 QB 359 a court order for the husband to make periodical payments to the wife and a child was made on the basis of the husband's undertaking to pay the child's school fees. The Court of Appeal held that the undertaking could be enforced by garnishee proceedings under court rules applicable to judgments or orders. It was said that in appropriate cases an undertaking could be equivalent to an order for those purposes. Relevant factors were that the undertaking was an integral part of the order and that it was plain that if the undertaking had not been given the periodical payments ordered would have been larger. In Symmons v Symmons [1993] 1 FLR 317 a court order for the husband to pay interim periodical payments to the wife and children was made on his undertaking to pay the wife a monthly supplement and be responsible for certain expenses. The question was whether the husband could be committed to prison for breach of the undertaking under legislation which applied to orders for periodical payments. The Deputy High Court Judge held that this was another case where it was appropriate to treat the undertaking as equivalent to an order. It was said that the order and the undertaking were inseparable.
16. The undertaking which was before the Commissioner in CCS/8328/1995 was different from those considered in Gandolfo and in Symmons. No order for any kind of payment was made except for the undertaking. That was one reason why the representative of the CSO there argued that those two cases were not relevant to the circumstances in CCS/8328/1995. It was also, I think, recognised by the Commissioner when he said in paragraph 12 that "for many purposes an undertaking has precisely the same effect as an order and may be treated as an order". But, because the undertaking could be treated as a written maintenance agreement, which would have the same effect as an order, he did not have to decide in what circumstances the approach of Gandolfo and Symmons can be applied in the child support context. He did, though, say that he would not hesitate to follow those cases "if it would create injustice or difficulty were an undertaking not to be treated as an order for the purposes of child support legislation". In those circumstances, I have felt it right to re-examine the family law authorities on the status of undertakings.
17. I had referred to a number of other cases in my direction for an oral hearing: H v H (Financial Provision) [1993] 2 FLR 35, Atkinson v Castan (1991) The Times, 17 April, and M v M (Enforcement: Judgment Summons) [1993] Family Law 469. I say no more about the first two cases, because in H v H the judge relied on the decision of the Court of Appeal in Atkinson v Castan for a rule which it does not in fact support. However, M v M is favourable towards the argument for the absent parent in the present case. A consent order was made by a court in proceedings for ancillary relief, which included provision for the petitioner to buy some shares owned by the respondent. In a preamble to the order, the petitioner gave an undertaking to discharge any capital gains tax payable by the respondent as a result of the transaction. The petitioner failed to pay the tax and the question was whether the undertaking could be enforced (by committing the petitioner to prison) in the same way as an order. The county court judge applied the approach in Gandolfo and Symmons. The significance is that this was done where the undertaking was clearly separated in the preamble to the order.
18. These cases clearly establish that an undertaking to the court recited in a preamble to an order can be treated as the equivalent of an order for the purposes of enforcement under the relevant legislation. But they turn to a large extent on the interpretation of that legislation in the family law context. And they do not decide that an undertaking is the same as an order. They decide only that it can sometimes be treated as equivalent. That is confirmed by the approach to the use of undertakings in some other family law contexts. The most important of those is to do with the matrimonial home and domestic violence. Undertakings are often offered instead of orders in such cases (see Rayden and Jackson on Divorce and Family Matters (17th ed), para. 32.96). Section 46(4) of the Family Law Act 1996 now specifically provides that an undertaking to the court under subsection (1) is enforceable as if it were an order of the court. That recognises the difference between undertakings and orders, as had previously been emphasised by the courts. In Hussain v Hussain [1986] Fam 134, Sir John Donaldson MR made this important statement:

"Let it be stated in the clearest possible terms that an undertaking to the court is as solemn, binding and effective as an order of the court in the like terms and that the contrary has never been suggested . ... Undertakings may be recorded in an order of the court, as occurred in this case, but it is the undertaking and not the order which requires the giver of the undertaking to act in accordance with its terms. If he fails to do so, he acts in breach of the undertaking, but cannot be said to refuse or neglect to act in accordance with the order which happens to record the undertaking or to disobey that order and it is to those offences alone that these two rules [on committal to prison] apply."

19. My conclusion on the general law is that there are important differences in the nature of undertakings and orders, but for some purposes undertakings may be treated in the same way as orders, especially where the undertaking is an integral part of the order, as where it is part of the consideration for the making of the order in particular terms. However, whether there can be equivalent treatment is a matter of the interpretation of the legislation in relation to which the issue arises.
20. I must therefore look specifically at the Commencement Order and at the definition of "maintenance order" in section 8(11) of the Child Support Act 1991. Section 8 is concerned with the powers of courts to make maintenance orders, but the definition in subsection (11) is for all the purposes of the Act, and regulations made under it (Interpretation Act 1978, section 11). The purpose of the Commencement Order, when it was made, was to provide a timetable for the take-on of cases where the application could only be made under section 4 (ie non-benefit cases). No application could be made before 8 April 1996 where there was in force a written maintenance agreement, made before 5 April 1993, or a maintenance order. Then there was planned to be a short period over which applications could be made at dates depending on the letter of the applicant's surname. It was not until the amendments made by the Child Support Act 1995 from 4 September 1995 that the timetable was abandoned and the exclusion of section 4 applications made indefinite.
21. It could be argued for the absent parent that the purpose of the Commencement order was to identify cases where access to the child support scheme was less urgent and could wait for a few years. So, for parents with care who were not on benefit, it could be said that the line was drawn between those parents who had some currently legally enforceable right to receive periodical payments for children and those who had not. Therefore, as an undertaking given to a court as an integral or inseparable part of an order in matrimonial proceedings and recorded in the document containing the order would be enforceable by the court, the definition of maintenance order for child support purposes should be held to include orders containing such an undertaking.
22. That would have been a sensible and reasonable rule to have been put into the Commencement Order, but I must consider whether it was that or a different rule which was in fact adopted. I have come down, after careful thought, against the argument for the absent parent. The definition of maintenance order in section 8 (11) of the Child Support Act 1991 refers specifically to an order requiring the making of periodical payments. As was made clear by Donaldson MR in Hussain v Hussain, even where an undertaking is recorded in a court order, the requirement to carry it out stems from the undertaking and not from the order. The form of words used in section 8(11) seems to me calculated to reflect that distinction and to exclude obligations stemming from undertakings, even where the undertaking is an integral part of a court order. Even the cases most in favour of the absent parent have recognised the distinction between undertakings and orders. Although some forms of enforcement applicable to orders may apply also to undertakings, there are differences between orders and undertakings. For instance, it would seem that the terms of the undertaking itself cannot be varied in the absence of consent by the person who gave the undertaking, although the court can release the person from the undertaking. Undertakings may also deal with matters on which the court has no jurisdiction to make an order (see paragraph 11 of CCS/8328/1995). It is an equally sensible and reasonable rule that what was at the time intended as a temporary bar on access to the child support scheme should not be applied where a parent merely had the protection of an undertaking to the court by the other parent. For those reasons, I reach the same conclusion as did Mr. Commissioner Rowland in CCS/8328/1995 and apply it to undertakings and orders in the form used in the present case.
23. Accordingly, the appeal tribunal did not go wrong in law in failing to find that no valid application for child support maintenance had been made, because of the existence of the undertaking to make periodical payments for the children recorded in the court order of 15 June 1993. The order did not require the absent parent to make periodical payments for the children. Arguably, the appeal tribunal did err in failing to investigate the legal situation in more detail, but I do not need to explore that, as I am satisfied that there are three other matters which should have been dealt with and were not. I can identify those matters relatively briefly.
24. The first relates to the parent with care's allegation that the absent parent had manipulated his housing costs. The appeal tribunal dealt with this by saying that, although there was some evidence that the absent parent had sought to maximise his housing costs, these were capped under regulation 18(1) of the Child Support (Maintenance Assessments and Special Cases) Regulations 1992 (the MASC Regulations) and the absent parent was not exempt from the capping under regulation 18(1)(e). This is hard to understand, because the calculation of the absent parent's exempt income by the second CSO on page B17 shows no capping of the housing costs of £89.07. That is presumably because the amount did not exceed half of the absent parent's net income, even though the second CSO's decision suggested that it did. However, the housing costs allowed included a monthly premium of £164.85 on an endowment policy. Page G3 shows that this was a with profits policy. It appeared to be a policy "obtained and retained for the purposes of discharging a mortgage or charge . . . and also for the purpose of accruing profits on the maturity of the policy" (paragraph 3(5) of Schedule 3 to the MASC Regulations). As paragraph 3(5) stood until the amendments effective on 7 February 1994, the full amount of the premium should not have been allowed as a housing cost. The appeal tribunal should have dealt with this point and the effect of the legislative change from 7 February 1994.
25. The second matter is that an issue arose from the receipt by the absent parent in April 1995 of the sum of £20,500 as his share in the proceeds of sale of the former matrimonial home. As the appeal tribunal was remitting the case for revised maintenance assessments to be made, the period from April 1995 onwards would then seem to be before the new child support officer, so that known changes of circumstances would be taken into account under section 18(10) of the Child Support Act 1991. In those circumstances, I think that the appeal tribunal should have investigated or given some direction for the gathering of information on the income earned on that capital sum. Only income derived from such part of capital divided after divorce or separation as is intended to be used to acquire a new home or furnishings for the home is disregarded under paragraph 45 of Schedule 2 to the MASC Regulations.
26. The third matter concerns the question of the cancellation of the interim maintenance assessment and its replacement by the ordinary maintenance assessments with effect from 22 October 1993. That was something about which the parent with care complained in her letter of appeal. The appeal tribunal merely suggested that the cancellation of the interim maintenance assessment when sufficient information about the absent parent's financial circumstances became available was within regulation 9(3) of the Child Support (Maintenance Assessment Procedure). Regulations 1992 (the MAP Regulations). That seems unlikely, because the power under regulation 9(3) only arises on a written application to cancel the interim assessment. It seems more likely that the interim assessment terminated under regulation 8 of the MAP Regulations, possibly regulation 8(9). Such a termination is not subject to the usual procedure for review and appeal (in contrast to decisions under regulation 9(3)). However, there may then be a question about the effective date of any ordinary maintenance assessment in view of the form of regulation 30(2) of the MAP Regulations until the amendment with effect from 18 April 1995. I consider that the appeal tribunal needed to identify more precisely the power under which the interim maintenance assessment was cancelled (in order to determine what issues could be considered in the appeal) and to investigate the consequences for the provisions on the effective date of a fresh maintenance assessment.
27. For the reasons given above, the appeal tribunal's decision was wrong in law and must be set aside. As there are still issues in dispute, the case is remitted to a differently constituted child support appeal tribunal for determination in accordance with the following directions.
28. There must be a complete rehearing of the parent with care's appeal against the decision of the second CSO on the submissions made and evidence produced to the new appeal tribunal. The new appeal tribunal must adopt the conclusion of law reached above, that at the date of the application for child support maintenance there was not in force a maintenance order (within the meaning of section 8(11) of the Child Support Act 1991) in respect of the qualifying children. Otherwise, the new appeal tribunal must consider afresh the matters in dispute between the absent parent and the parent with care in the appeal and the ways in which the CSO now submits that the second CSO went wrong. The CSO must include in the written submission submissions on the points raised in paragraphs 24 to 26 above. Although no point was taken about this in the appeal, the new appeal tribunal must bear in mind that under regulation 30(2)(a) of the MAP Regulations (on the effective date of maintenance assessments) the date on which a MEF is sent is the date on which it is despatched and that evidence that it was not received does not necessarily show that it was not sent within regulation 30(2)(a) (see decision CCS/12682/1996).

Date: 13 May 1998 (signed) Mr. J. Mesher

Commissioner
 


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