UK Social Security and Child Support Commissioners' Decisions

[2007] UKSSCSC CCS_265_2007 (09 August 2007)

CCS/265/2007

DETERMINATION OF AN APPLICATION TO APPEAL AND

DECISION OF THE CHILD SUPPORT COMMISSIONER

1. I grant permission to appeal and, having done so and with the consent of all parties, I decide the appeal. I dismiss it. For the reasons below, the decision of the tribunal is not wrong in law.
2. This is an application and appeal by the father and absent parent ("A") of qualifying children against the decision of the Manchester appeal tribunal. A is appealing with my permission against the decision of the appeal tribunal on 26 09 2006 under reference U 06 929 2006 02537. The tribunal allowed an appeal by the mother and parent with care of the children ("P") against a decision for the Secretary of State that A's liability to pay child support maintenance was £0.
3. An oral hearing of the application was directed by Commissioner Jupp at the request of both A and P. I held the hearing at Bury County Court on 26.07 2007. A and P were both present at the hearing and represented themselves. The Secretary of State was represented by Miss S Wise of the Office of the Solicitor to the Department for Work and Pensions. I thanked A and P at the hearing for the measured, clear and focussed ways in which both of them put their cases. It is clear from the appeal papers that A and P both considered that there were a considerable number of matters causing disagreement between them. There are also other issues outstanding about the actions, or otherwise, of the child support agency related to the assessments made for these children. As I commented to them, both A and P exercised commendable constraint in speaking only to the issues involved in this appeal. I am also grateful to Miss Wise for her contribution.

The application

4. I indicated at the hearing that, if the parties consented, I proposed to decide the appeal at the same time as the application, if I was minded to grant permission to appeal. In my view, it was clear from the hearing that A's submissions raised an arguable issue of law that should receive full consideration. I therefore grant permission for that reason and, with consent, consider fully in my reasons the arguments put by the parties.

REASONS FOR THE DECISION

The decision under appeal

5. P applied for child support maintenance from A for their two qualifying children in 2001. The child support agency ("CSA") notified her that A's liability to pay was £0. She did not appeal. She applied again in 2006. On 1 02 2006 the CSA notified her that A was liable to pay £47.82 a week from 11 01 2006. This was increased by a decision on 16 03 2006 to £71.42 from the same date. On 28 04 2006 it was reduced back to £67.77 from12 04 2006. On 3 05 2006 there was a recalculation of the assessment on A and it was confirmed to be £0 from 12 04 2006. Then on 4 05 2006 the CSA revised the decisions to reduce liability back to £0. P appealed on 25 05 2006.
6. P's appeal to the tribunal is therefore against the decision revising the various previous decisions to reimpose from 11 01 2006 the decision from 2001 (which she did not appeal) that A owed her nothing.

The issues in dispute

7. The issue at the heart of A's appeal to the Commissioner is captured by two letters sent from the CSA to A in June 2006. The first states in unequivocal terms:

"I am writing to confirm the details of the recent revision to your assessment effective from 11 01 2006.

I can confirm that under current legislation namely paragraph 2(h) of Schedule 1 of the Child Support (MASC) regulations 1992 the non taxable element of your Police pension has been disregarded for Child Support calculation purposes".

The other letter, sent three weeks later, offered A a consolatory payment of £50.00.

This was to

"reflect the gross inconvenience and distress you have suffered due to your full police pension being incorrectly included in an assessment following guidance that was received from the Agency's Monitoring and guidance Unit."

A told the tribunal that he had been subject of an attachment of earnings order in the past. He had challenged this before Stockport Magistrates' court and that court had ruled that the order was illegal and had quashed it. Further the CSA had repaid all the money deducted. It was this that led to the £50 payment.

8. A has been in receipt of a police pension for some years. He suffered a series of injuries at work, some leaving enduring disablement. His pension therefore included an additional payment that he was told formally.

"represents the reduction in your earning capacity resulting from the remaining effects from an injury received in the execution of your police duties."

9. The papers contain the pensions advice issued to A for various months during the period in dispute. That for the month when the revision took place (May 2006) shows that A's police pension was made up of several elements. Some were basic pension payments. To those were added an element called "injury basic" and another called "injury P1". The income tax details show that the basic pension elements were taxed but that the two injury-based elements were non-taxable. In round terms the injury-related and non-taxable elements formed a little less than half the total pension payable if the income tax deducted is set only against the basic pension elements.
10. A told me that he had raised the issue about the status of the injury elements of his pension when he was first approached about child support in 2001. He was told that this would not be included in the assessment of his income. He had enquired through the Police Federation about the position generally when this appeal started and he was told that there were no other cases in England and Wales of which the police authorities were aware where a retired police officer was facing deduction from the injury element of a police pension for payment of child support.
11. P's side of the story started when she raised with her member of Parliament the question why she was not receiving any child support from A for their children. This resulted in the assessments set out above. She described it in these terms in her letter of appeal:

"The CSA took up the issue on my behalf, and was satisfied that a misjudgement had occurred. The officers went to considerable lengths to establish the misinterpretation of the Act where in the error had occurred, and this error, I understand, was confirmed at a high level within the organisation. For this reason, the reversal of their decision, revealed to me in your communication of 4^th May, appalled and distressed me, and left me completely mystified, because there was no comprehendible explanatory text, and the assessment figures were so enigmatic as to be meaningless to me."

12. In other words, both A and P had been told by the CSA, more or less at the same time, that its decisions to the benefit of the other parent were wrong in law. Whatever the decision required by the law, I must record that I fully understand the strong language both of them used when faced with this official confusion. Miss Wise commented that she was embarrassed to have to make some of the submissions she was instructed to make when faced with the inconsistent correspondence in the papers. I record that I exempt her from any of the accusations of inconsistency or confusion.
13. I must also record one subsequent action of CSA that was technically not before the tribunal or me. I cannot comment on its validity because it is subject to a separate appeal. But it has clearly added to the confusion felt by the other parties in this appeal and that aspect of it cannot be ignored. The decision, taken in August 2006, was that the CSA was no longer acting for P. I mention that because it is important to clarify that in this appeal the Secretary of State is not "acting for" either P or A. Nor is the Secretary of State representing the tribunal in any way.

The tribunal decision

14. A submission from CSA to the tribunal indicates sources of the confusion in the various decisions leading to and including the revision decision under appeal. The explanation for the series of decisions is two-fold:

(1) CSA, it is implied but not expressly stated, erred in its initial interpretation of "Schedule 2(5) of Child Support (MASC) regulations 1992." This had at first led to the injury elements in A's police pensions being excluded from the assessment. This had then been reversed to include those elements.

(2) CSA, it is again implied but not expressly stated, at first failed to apply and had then applied "paragraph 2(h) of Schedule 1 of the Child Support (MASC) regulations 1992". The non-taxable part of A's pension had previously been left out of account because of the previous provision mentioned. So this point did not arise. When the pension was considered fully relevant, effect was given to this provision by removing the non-taxable part of A's pension from the assessment. The effect of this was to take back out of the assessment precisely those elements brought in by including the injury elements under the previous provision.

15. Solicitors acting for P made a submission for her to the tribunal. This drew attention to the case of Wakefield v Secretary of State for Social Security and Wakefield. The solicitors contended that it applied to A's pensions. The pension should be assessed in full. They also dealt with the issue of the non-taxable pension. This, the solicitors submitted, was also dealt with in Wakefield. The injury elements of A's pension were not "tax-exempt allowances" within the meaning of that provision. A's full pension should be taken into account in the assessment.
16. A made a submission to the tribunal including all relevant information about his pension and disabilities. His case was that nothing had changed since 2001 and that he could not understand why he was not faced with an assessment.
17. The tribunal record of proceedings shows that the presenting officer appearing for the CSA presented the tribunal with another change of opinion by the CSA. The officer contended that the written submission for the Secretary of State was wrong in invoking the provision about tax-exempt allowances. That should not have been applied by the CSA and the decisions applying it were wrong.
18. Despite the papers being incomplete and confusing, the tribunal's decision focussed on the two points of law. It dealt with both explicitly and unambiguously. With regard to issue (1) the tribunal accepted the submission from P's solicitors. The decision of the Court of Appeal in Wakefield applied. The provisions in Schedule 2 did not authorise any exclusion from A's pension as compensation for injury. With regard to issue (2), "tax-exempt allowances", the tribunal again agreed with the submissions of P's solicitors and also of the presenting officer for the Secretary of State. The provisions did not apply to the non-taxable part of P's pension.
19. The tribunal directed that A's assessment be recalculated to include the full pension with no exclusions. I understand from all three parties that the CSA has since undertaken that assessment and that there is no outstanding issue on the actual assessment. I am concerned in this appeal only with the issues of law raised by the tribunal's two rulings. I deal with them in turn, and then deal with another issue raised by A at the hearing of the application.

Assessing A's pension

20. The rules providing for the assessment of A's pension for the purposes of a child support maintenance assessment are in the Child Support (Maintenance Assessments and Special Cases) Regulations 1992 (SI 1992 No 1815) ("the MASC Regulations"). Regulation 7 provides for the inclusion of all forms of income identified by Schedule 1 to the Regulations, and then the disregard of any amounts referred to in Schedule 2. Schedule 1 to the MASC Regulations deals with the calculation of earnings and other income. Schedule 2 deals with amounts to be disregarded when calculating or estimating earnings or income.
21. Part of the confusion in this appeal appears to arise because quite a few of the amounts to be disregarded when calculating earnings are in Schedule 1 rather than Schedule 2. I deal separately with the different disregards below.
22. Another part of the confusion is the assumption, at least during part of this appeal, that A's pension was to be treated under the rules for "earnings of an employed earner" in Chapter 1 of Part 1 of Schedule 1. It is apparently for this reason that the references to tax-exempt allowances crept in.
23. The failure to recognise that A's pension was not earnings appears to have clouded much of the official thinking in this appeal. That concerns me because both Commissioner Angus in his decision CCS 3510 1997 in January 1999 and the Court of Appeal in its decision on appeal from him a year later in Wakefield (both reported as R(CS) 2/00) made the legal position crystal clear in an appeal where the parties apparently suffered from the same confusions as have appeared in this appeal.
24. Commissioner Angus drew the attention of the parties to paragraph 9 of Schedule 1. As the Court of Appeal observed (in paragraph 16 of the judgment of Wilson J), this was a central part of his decision. Further, the Court of Appeal clearly accepted that point notwithstanding argument for the Secretary of State that Commissioner Angus was wrong.
25. That view must apply here also. A's pension is an ordinary police pension. It is not earnings. This applies to all ordinary occupational pensions payable after retirement (including early retirement for ill-health or disablement), and not just to police officers or firefighters. Retirement pensions are not earnings from an employer. They are to be considered not under Part 1 Schedule 1 but under Part III (other income). Paragraph 9 of the Schedule expressly includes as "other income":

"9. Any periodic payment of pension or other benefit under an occupational or personal pension scheme or a retirement annuity contract or other such scheme for the provision of income on retirement."

Paragraph 8 states that the amount to be included is the aggregate of the amounts included under paragraph 9 with any of the other sums to be included under paragraphs 10 to 16.

(None other is relevant here.)

26. It follows that the disregards from earnings listed at paragraph 1(2) of Part 1 of Schedule 1, including the disregard about tax-exempt earnings, are totally irrelevant to A's pension. The tribunal reached the right decision on that point, although it gave the wrong reasons for doing so, as did both the solicitors acting for P and the presenting officer at the tribunal.
27. For the avoidance of doubt, there is nothing in Part III of Schedule 1, nor in Schedule 2, making any special provision for any part of any pension that is non-taxable. The exemption from income tax for the disability elements in police pensions arises from section 644 of the Income Tax (Earnings and Pensions) Act 2003. This is a general provision, and not specific to police pensions or those of the emergency services. (The official view that this applies to police and fire service pensions is stated at paragraph 74310 of the Employment Income Manual published as guidance to its officers by Her Majesty's Revenue and Customs.)
28. A argued that police officers have a special status in law, and are not employees. I do not need to consider his argument here because it is not relevant either to the application of child support maintenance assessments to his pension or to the tax status of his pension.

The Schedule 2 disregards

29. Paragraph 5 of Schedule 2 to the MASC Regulations directs that the following be disregarded in any child support maintenance assessment:

"Any compensation for personal injury and any payments from a trust fund set up for that purpose."

30. In Wakefield the Court of Appeal was asked to overturn a decision by Commissioner Angus that this did not apply to the pension of a fireman who had taken early retirement because of permanent injury. The firefighter concerned received a pension that consisted, as did that of A, in part of a basic pension and in part of a tax-free injury pension. Commissioner Angus took the view that the pension was within the scope of paragraph 9 of Schedule 1 and not within the scope of paragraph 5 of Schedule 2. That view was confirmed unanimously by the Court of Appeal. I do not need to set out any extended analysis of that decision here. Their lordships confirmed both the narrower ground for his decision of the interpretation of the statutory language put forward by Commissioner Angus, and also the broader ground of the purpose of the child support maintenance regulations and scheme.
31. Further, the point in Wakefield arose again in another decision of Commissioner Angus taken by him shortly after that one but before it went to the Court of Appeal. This was in CCS 3326 1997. That was later reported as R(CS) 5/00 after it had gone to the Court of Appeal on another issue as Secretary of State for Social Security v Maddocks. The Commissioner commented on the point at issue in R(CS) 2/00. He noted that his decision in R(CS) 5/00 was postponed pending an oral hearing in the other case. This was in part because the submissions made for the Secretary of State in the two appeals conflicted with each other. He went on to comment "Although CCS 3510 1997 concerned a fireman's pension the principle of that decision applies to any retirement pension…". The case went to the Court of Appeal on another ground and the Court did not comment on this issue. It should be noted, however, that this decision of the Court of Appeal was made after the other decision of that Court and therefore the failure to take the point in the later case suggests that the Secretary of State, in any event, accepted the Wakefield decision as of general effect.
32. At the hearing before me A strongly contended that Wakefield did not apply to police officers. His argument had three prongs. One was to examine the difference in the position of police officers as compared with fire officers. One was to look at differences in fact between his case and that of Mr Wakefield. And one, to which I return, was to argue that the CSA had taken a consistent view that the case did not apply to him or indeed to any other police officer so could not now argue otherwise.
33. Both Miss Wise for the Secretary of State and P, following the advice given her by her solicitors, argued that A was wrong. Wakefield did apply and should be applied.
34. I have no hesitation in taking the view that the CSA, the tribunal and the Commissioner are all bound to apply Wakefield to this case. And I respectfully endorse the view of Commissioner Angus that this applies generally to pensions. A's point about the status of a police officer is, as I have already stated, not relevant when considering a pension rather than earnings. His attempt to differentiate the cases on the facts fails because the essential facts for the decision are only those facts that identify the element of the pension in dispute. And, as Wilson J said in Wakefield, the tax position is irrelevant. And the views taken by CSA in other cases – assuming that those views were taken – are not a guide to the proper consideration of Wakefield in this case.
35. The one clear message to me from this appeal read with R(CS) 2/00 and R(CS) 5/00 is that CSA appeared confused about this issue of law in 1999 and still appears confused 8 years later despite the Court of Appeal decision and the following Commissioner's reported decision. Those two decisions together make the scope of the relevant rules entirely clear to any informed reader. If the results of A's enquiries by means of the Police Federation are correct – and I have no reason to doubt them as conscientiously made enquiries – then it unfortunately serves to illustrate yet another area of operation of the CSA that is seriously in error.
36. On this ground also I conclude that the tribunal was correct in law in its decision.
37. It follows that the decision of the tribunal was the correct decision on both points in issue, although its reasons were in part wrong in law. I see no point in setting aside the decision of the tribunal merely to reimpose it in identical terms. In the terms of section 24(2) of the Child Support Act 1991 I do not hold that the decision appealed against was wrong in law. It therefore stands. So therefore does the further assessment made by the CSA on the basis of that decision.

A's other arguments

38. I must deal with two other issues A raised.
39. The first is his argument that the CSA is estopped from changing its mind because of the doctrine of promissory estoppel. In general terms I have some sympathy with the factual basis for this argument. A has been told over several years that the injury element of his pension was not relevant to a child support maintenance assessment. I accept that he enquired specifically about this both with the CSA and with his own professional body. And even when the CSA did reverse its view, it promptly re-reversed it again in his favour. A put a case to me of the detriment he would suffer if CSA changed its mind yet again or the tribunal required it to do so. I did not examine that issue on the facts because A's argument about estoppel fails on two different but related grounds. First A's duty to pay child support maintenance arises not from a contract or property rights, but under general law. It is clear law that a statutory authority cannot be prevented from fulfilling its statutory duty by earlier mistakes. That links with the second point. It is the tribunal, and now the Commissioner, that has confirmed the position, not the CSA in isolation. The CSA's assessment of A is directly because of the decisions of the tribunal and now the Commissioner.
40. My sympathy with A's argument is not therefore with his attempt to import promissory estoppel into this appeal. Rather, it is with the effects of the inconsistent conduct of CSA. On that I have sympathy for P as well. On the facts before me she should have been awarded child support maintenance on her application in 2001 when their children were 9 and 8. Nothing relevant has changed in the law since then. But I do not have the power to revise the decision taken then that A did not have to pay her anything retrospectively as that decision is not under appeal before me.
41. The other argument advanced by A related to the decision of the Stockport Magistrate's Court annulling an attempt to impose an attachment on his pension in respect of a maintenance assessment. I agree with Miss Wise on this point, and reject A's argument. The scope of the enforcement procedures available to the Secretary of State are different to the scope of the forms of income liable for assessment for child support. I am prepared for current purposes to accept without more that the Magistrates' Court was right in annulling the attachment order. That does not assist A. The inclusion of a form of income within an assessment is not inconsistent with its exclusion from this method of enforcement. They are two different issues.
42. Finally, I confirm a point about P's solicitors' request in correspondence for costs. Neither a child support tribunal nor a child support commissioner has any power to award costs.

David Williams

Commissioner

9 08 2007

[Signed on the original on the date stated]