UK Social Security and Child Support Commissioners' Decisions

[2005] UKSSCSC CCS_3868_2004 (22 July 2005)

CCS/3868/2004

DECISION OF THE CHILD SUPPORT COMMISSIONER

1. I allow this appeal. I set aside the decision of the Preston appeal tribunal dated 3 September 2004 and I restore the decision of the Secretary of State dated 12 December 2003.

REASONS

2. This appeal raises a short but not entirely straightforward point arising out of the transition from the old child support scheme to the new one that is being phased in under the Child Support, Pensions and Social Security Act 2000 ("the 2000 Act"). I held an oral hearing in Burnley at which the appellant appeared in person, the Secretary of State was represented by Mr Huw James, solicitor as agent for the Solicitor to the Department for Work and Pensions, and the second respondent was represented by his wife.
3. The appellant and second respondent are respectively the mother and father of the qualifying children in respect of whom the Secretary of State decided on 12 December 2003 that the father was liable to pay £57 pw child support maintenance from 7 July 2003. The father appealed on a number of grounds but, materially for the purpose of this appeal, he contended that his liability for child support maintenance should have been calculated by reference to an application he made on or about 10 April 2003 rather than on the basis of an application made by the mother on 16 May 2003. The tribunal, sitting on 3 September 2004, accepted that argument and allowed the appeal. The mother now appeals with the leave of the tribunal chairman.
4. It would usually be disadvantageous to a person liable to pay child support maintenance to have the amount of the liability determined by an earlier application rather than a later one but in this case the assessment based on the later application has been made under the new scheme and the father submits that, if the assessment is based on the earlier assessment it will be made under the old scheme, which appears to be more favourable to him for reasons that I need not investigate.
5. The father had been paying child support maintenance for nine years through the Child Support Agency by standing order on the first day of each month. On 5 February 2003, the Secretary of State received a request from the mother to cancel the maintenance assessment and he duly did so from that date. I understand that the father appealed against that decision but was unsuccessful.
6. On 3 March 2003, the 2000 Act was brought into force. That is the "commencement date". The Child Support (Transitional Provisions) Regulations 2000 (S.I. 2000 No. 3186, "the Transitional Regulations") provide for the phasing in of the new system where there were existing assessments under the old rules. There will be a "conversion date" when all assessments will be converted. Meanwhile, a conversion decision may be made under regulation 3 of the 2000 Regulations. That may result in a transitional amount being paid under regulations 9 to 25 and it is through this mechanism that the new system is gradually phased in over a considerable period of time. Applications for child support maintenance made on or after 3 March 2003 are dealt with under the new scheme, without any phasing, subject to the effect of regulation 28 of the Transitional Regulations.
7. Regulation 28(1) of the Transitional Regulations provides:

"Subject to paragraph (2A), where, after the commencement date but before the conversion date, an application for a maintenance calculation is made or treated as made and within the relevant period a maintenance assessment was in force in relation to the same qualifying child, non-resident parent and person with care –

(a) the application shall be treated as an application for a maintenance assessment; and

(b) any maintenance assessment made in response to the application shall be an assessment to which regulations 9 to 28 apply."

The distinction between a "maintenance assessment" and a "maintenance calculation" is that the former is made under the old scheme and the latter under the new scheme. By regulation 28(3), "the relevant period" means "13 weeks prior to the date that the application for the maintenance calculation is made or treated as made". Thus, the effect of regulation 28(1) is that, where an application for a maintenance assessment is made or treated as made after 3 March 2000 but within 13 weeks of there having been in force a maintenance assessment under the old scheme, another assessment under the old scheme is made instead of a calculation under the new scheme.

8. The father, having been informed of the cancellation of the maintenance assessment and suspecting that the mother intended to make an application for a maintenance calculation under the new scheme after 13 weeks had elapsed, sought to make his own application for an assessment within that period. It appears that the Agency was informed of his desire to do so on 12 February 2003 and he was told he needed to complete a form. One was sent to him and he completed it and returned it by recorded delivery. Delivery was recorded on 10 April 2003, although the Agency claims to have received it on the following day. On 8 May, 13 weeks and a day after the previous maintenance assessment had been cancelled, the mother informed the Agency that she wished to make an application for child support maintenance. She, too, was told to complete a form and she returned it on 16 May 2003. On 7 July 2003, a maintenance enquiry form was sent to the father, which he immediately returned so that the Child Support Agency had it back on 10 July 2003. It appears that he did not complete it on the ground that the Agency should have been processing his own application. On 12 December 2003, the Secretary of State made his decision on the mother's application. The Secretary of State's initial submission to the tribunal in response to the father's appeal made no mention whatsoever of the father's application and instead claimed that he had completed the maintenance enquiry form sent to him following the mother's application.
9. However, in a subsequent submission, the Secretary of State stated that the father's application had been lost but that it had in any event been correct to proceed on the mother's application. He relied on paragraph 3 of Schedule 3 to the Child Support (Maintenance Calculation Procedure) Regulations 2000 (S.I. 2001 No. 157, "the Procedure Regulations"), which provides –

"(1) Where the Secretary of State receives more than one application for maintenance with respect to the same person with care and absent parent or non-resident parent, he shall, if no maintenance assessment under the former Act or maintenance calculation under the Act, as the case may be, has been made in relation to any of the applications, determine which application he shall proceed with in accordance with sub-paragraphs (2) to (11).

(2) Where an application by a person with care is made under section 4 of the former Act or of the Act, or is made under section 6 of the former Act or is treated as made under section 6 of the Act, and an application is made by an absent parent or non-resident parent under section 4 of the former Act or of the Act, as the case may be, the Secretary of State shall proceed with the application of the person with care."

"The former Act" is the Child Support Act 1991 and "the Act" is that Act as amended by the 2000 Act.

10. The Secretary of State's submission was that, although it was regrettable that no action had been taken on the father's application, once the mother's application was received the Secretary of State was bound to proceed with her application rather than the father's. The tribunal rejected that argument but referred to paragraph 3(2) of Schedule 2, rather than Schedule 3. Paragraph 3(1) and (2) of Schedule 2 provides –

"(1) Where the Secretary of State receives more than one effective application for a maintenance calculation with respect to the same person with care and non-resident parent, he shall, if no maintenance calculation has been made in relation to any of the applications, determine which application he shall proceed with in accordance with sub-paragraphs (2) to (11).

(2) Where an application by a person with care is made under section 4 of the Act, or is treated as made under section 6 of the Act, and an application is made by a non-resident parent under section 4 of the Act, the Secretary of State shall proceed with the application of the person with care."

The tribunal considered that Schedule 2 applied only where two applications had been received more or less at the same time, because it was inequitable to apply it where the Secretary of State had failed to act on an application by the father received five weeks before the mother's application.

11. On this appeal, the mother and the Secretary of State again rely upon paragraph 3(2) of Schedule 3 to the Procedure Regulations. The father relies upon the tribunal's reasoning and also refers me to some robust criticisms of the Agency made by the Independent Case Examiner.
12. The tribunal gave no reason for referring to Schedule 2 to the Procedure Regulations rather than Schedule 3. The difference, of course, is that Schedule 2 is concerned with cases where there are multiple applications under the new system and Schedule 3 is concerned with cases where there are applications under both systems. It is possible that the tribunal simply overlooked the fact that Schedule 3 had been added by regulation 7(8) of the Child Support (Miscellaneous Amendments) Regulations 2003 (S.I. 2003 No. 328) and thought that the Secretary of State's reference to it was a mistake. On the other hand, it is certainly arguable that this case does bring Schedule 2 into play rather than Schedule 3 on the basis that regulation 28(1) of the Transitional Regulations should be applied to a case after Schedule 2 has been applied to it, rather than before Schedule 3 is applied. It is unnecessary for me to resolve that issue because both Schedules have the same effect in this case, notwithstanding the father's reliance on regulation 4(3) of the Procedure Regulations, which provides –

"Where, under the provisions of paragraph 1, 2 or 3 of Schedule 2, two or more applications are to be treated as a single application, that application shall be treated as an application for a maintenance calculation to be made with respect to all of the qualifying children mentioned in the applications, and the effective date of that maintenance calculation shall be determined by reference to the earlier or earliest application."

Regulation 4(3) has no counterpart in relation to Schedule 3 but it also has no application to this case even if Schedule 2 applies. It applies only where the Schedule provides that "two or more applications are to be treated as a single application" and the Schedule does that only where multiple applications have been made by the same person (see paragraphs 1(1), 1(2), 2 and 3(6)). Therefore, regulation 4(3) does not apply where the Schedule is concerned with applications by different people and the Schedule merely determines which of the applications should be proceeded with, as is the case in paragraph 3(2). The clear implication is that in those cases the effective date of any maintenance calculation (or maintenance assessment if regulation 28(1) of the Transitional Regulations applies) is determined by applying the normal rules to the application with which the Secretary of State proceeds. Furthermore, it is plain from the similarity between Schedule 2 and Schedule 3 that the same construction must be given to Schedule 3, notwithstanding the lack of any counterpart to regulation 4(3).

13. The tribunal implied a limitation on the effect of paragraph 3(2) of the Schedule because of the perceived unfairness in the circumstances of this case. Although I am not entirely clear as to all the policy considerations lying behind paragraph 3(2) of Schedule 2, it is at least abundantly clear that it is intended to lay down a rule of universal application that allows a person with care to stop the processing of an application by a non-resident parent at any time before its determination by the simple act of making an application of her own. I presume that the fear is that there may be occasions when a non-resident parent will make an application because he knows that a calculation will be more favourable to him if it is made sooner rather than later, due to an expected change of circumstances, and I presume that it is not thought desirable that the person with care's entitlement to child support maintenance should be determined by such an application. Indeed, paragraph 3(2) of Schedule 3 seems designed specifically to prevent a non-resident parent for whom the new system was comparatively unfavourable to achieve any advantage by making an application for a maintenance assessment before it came into force where a person with care wished to wait until the commencement date. If the general intention is that the person with care should be able to make an application more advantageous to her than an undetermined application made earlier by the non-resident parent, I do not see how the tribunal's qualification can properly be implied into paragraph 3(2) of either Schedule.
14. If, on the other hand, the Secretary of State had wished to provide that an application by a non-resident parent should be effective whether or not the person with care made a subsequent application, it would have been very easy to provide in paragraph 3(2) of Schedule 2 that the effective date of the maintenance calculation would be the date of the non-resident parent's application and presumably paragraph 3(2) of Schedule 3 would have provided for the person with care's application to be treated as an application for a maintenance assessment, effective from the date of non-resident parent's application in a case where the latter application was made before the commencement date of the 2000 Act. If the present case then arose under Schedule 2, the tribunal's construction of the Schedule would have been reasonable. However, as the legislation stands, the tribunal's construction creates anomalies rather than avoiding them. It also creates uncertainty because it is difficult to know what was meant by applications being received "more or less" at the same time.
15. It follows that this appeal must be allowed.
16. Nonetheless, I understand why the tribunal sympathised with the father. Regulation 28(1) of the Transitional Regulations appears to leave a curious loophole. It would be foolish to think that there are no persons with care who have the knowledge and intelligence to work out that, if the new system would result in twice the liability being imposed on the non-resident parent than the old system, the loss incurred through the liability being removed for 13 weeks could be made up within a further 7 weeks (assuming that the Agency does not cause an extra loss by just sitting on the application for 7 weeks before issuing a maintenance enquiry form, as happened in this case). It would be naïve to think that there are no persons with care willing to take advantage of that way of increasing the medium-term liability of the non-resident parent. Regulation 28(1) of the Transitional Regulations is, of course, a transitional provision and the father in this case is treated no less favourably than a non-resident parent who never had any liability under the old system. However, it does seem very odd that there should be such elaborate provisions phasing the new system in over some years for those with an existing liability for child support maintenance, based on a perception that it is unfair for the liability suddenly to be increased due to the new system coming into force, and for there then to be a loophole allowing a person with care to avoid the phasing at relatively little cost. It is in the cases where the phasing is most necessary that the incentive to exploit the loophole is greatest.
17. The mother in this case has in fact denied that, when she asked for the original maintenance assessment to be cancelled, she intended to wait 13 weeks and then make an application under the new system. There is some evidence to contradict that denial but no-one has suggested that she was not entitled to take the action she did even if she did intend to exploit the obvious loophole that regulation 28(1) leaves open, although the Independent Case Examiner, who plainly considered in the light of information provided by the Agency that the mother did intend to exploit the loophole, said –

"19. [The mother] contacted the Agency on 5 February to request that her case was closed. She explained that she wished to do this and then apply after 13 weeks as she had been advised that her case would then be dealt with under new rules. She was aware that this would mean a significant increase in her maintenance. As far as I can tell, no attempt was made to dissuade her from this course of action, which was clearly against Agency policy. I have found no evidence of telephone conversations, letters or internal memorandum discussing the implications of case closure for these purposes. The Agency simply closed the case. I am highly critical that the Agency made no attempt to tell [the mother] that it was inappropriate to apply to close her case in these circumstances, as it was clear that it would have an immediate deleterious affect on [the father] and would unfairly 'jump the gun' in moving her case to new rules."

I have doubts about the justice of that criticism because I do not see on what basis the Agency could properly try to persuade the mother not to exercise rights conferred on her by legislation or, indeed, on what basis the Agency could properly have a policy that contradicted the policy of the Secretary of State (on whose behalf it acts) as expressed in the legislation. If the Agency considered that the legislation did not promote a sensible policy, it was open to the Agency to suggest to the Secretary of State that the legislation should be amended.

18. If it was open to the mother to try exploit the loophole created by regulation 28(1), it was, of course, equally open to the father to try to close the loophole by making his application and having it determined before the 13 week period had elapsed. The Independent Case Examiner criticised the Agency for not advising the father to return his form quickly and for not dealing with his application as a matter of urgency. It seems to me to be debateable whether the Agency was required to take special action with a view to frustrating the mother's plans, assuming that she did have the intention ascribed to her. Happily, I do not have to resolve the issue. The Agency is clearly in a difficult position when the provision of information – or, perhaps more exactly, deciding whether or not to provide information – is not a neutral act. However, it is quite clear that, once the father's application was received, the Agency was not entitled deliberately to refuse to process it with a view to assisting the mother. The father suspects the Agency of being partial and deliberately ignoring his application because it knew that the mother intended to make an application the following month. His suspicions are given some force by the Agency's inconsistent responses to his complaints. Initially it denied having received the application. It then claimed to have lost the application but it also blamed an unspecified computer problem. He has also referred to internal Agency documents that have been revealed. Furthermore, he has pointed out that the mother's apparent unwillingness to co-operate with his application should not have been a bar to the making of a maintenance assessment because an assessment could have been made on the basis that her income was deemed to be nil because, as the Agency already knew or could have discovered, she was entitled to working families' tax credit. The tribunal clearly considered that the Agency had been at fault.
19. However, it is unnecessary for me to determine exactly what did happen within the Agency. I do not consider it possible to construe the legislation in the way the tribunal did. The fact of the matter is that the father's application had not been determined by the time the mother's application was received and, in those circumstances, the legislation required the Agency to process the mother's application only. If the father has suffered as a result of maladministration by the Agency, whether deliberate or not, the remedy is not to deprive the mother of part of the maintenance to which she is entitled under the legislation but for the father to obtain compensation from the Agency equal to the difference between what he has to pay and what he would have had to pay had the Agency acted properly.

(signed on the original) MARK ROWLAND

Commissioner

22 July 2005