Upper Tribunal (Administrative Appeals Chamber)

IN THE UPPER TRIBUNAL Case No. CCS/2305/2009

ADMINISTRATIVE APPEALS CHAMBER

1. This is an appeal by the parent with care, Mrs A, brought with the permission of a Judge of the First-tier Tribunal, against a decision of a First-tier Tribunal sitting at Oxford on 8 July 2009. For the reasons set out below that decision was in my judgment wrong in law. I allow the appeal, set aside the Tribunal’s decision and remit the matter for redetermination by an entirely differently constituted First-tier Tribunal. I draw attention to my Direction in para. 28 below.

2. Mrs A and the non-resident parent, Mr H, were married in 1978 and have a son, Sam, who was born in 1993. They separated in 2001, and a divorce decree absolute was granted on Mr H’s petition in May 2004.

3. On 4 June 2004 an ancillary relief order was made by consent in the County Court which included a provision that Mr H should pay to Mrs A periodical payments for Sam at the rate of £1300 per month until such time as he attained 17 or ceased full time education if later “or further order or earlier assessment by the Child Support Agency.”

4. On 6 December 2007 Mr H made an application for the amount of child support maintenance to be assessed.

5. On 9 April 2008 a decision was made by the Secretary of State that Mr H was liable to pay £7.71 per week from the effective date of 8 February 2008 by way of child support maintenance. That had the effect of terminating the Court Order for Sam’s maintenance.

6. On 21 April 2008 the CSA received from Mrs A an application for a variation, on grounds of Mr H’s lifestyle being inconsistent with his income, diversion of income, and income not taken into account. (I assume that the pages of the variation application form which were included by CMEC in the written submission to the Tribunal were the only relevant ones – i.e. that Mrs A did not complete the page which related to an application for a variation on the ground of assets). Mrs A enclosed with the form a statement commenting further on the lifestyle and circumstances of Mr H. This included assertions that Mr H “has had many investments in stocks and shares some of which are overseas” and that he had “accounts at HSBC banks and First Direct.” It also referred to enclosed “financial summary HSBC, investment certificates etc”, although copies of those were not in the Tribunal papers, nor are they before me.

7. On 29 July 2008 the CSA sent the application to Mr H, and invited his representations.

8. On 20 August 2008 Mrs A appealed against the Secretary of State’s decision of 9 April 2008. It was accepted by the CSA out of time.

9. On 2 October 2008 Mr H made representations in relation to Mrs A’s variation application. He was careful to note at the beginning of the representations that the variation application had been made on the three grounds which I referred to above. He stated in the course of his representations that he was “living from his savings and as a result made a considerable reduction in his lifestyle”. He later stated: “[Mr H] does have investments, some of them overseas. It is these he has been living off over the last two years.” “[He] does have accounts with First direct. He does not have HSBC accounts. ….” He enclosed a full copy of his 2006/7 tax return. That was not copied in the papers before the Tribunal, and so is not before me, but a full copy of the 2007/8 tax return was before the Tribunal, and (as the Tribunal noted) showed a total of £23,753 by way of interest received from UK banks and building societies. The 2006/7 return presumably indicated a similar figure.

10. On 4 November 2008 the CSA made a decision that a variation could not be agreed to on any of the three grounds on which Mrs A had applied, and in notifying Mrs A of the decision stated that her appeal would now proceed to an appeal tribunal, and would be treated as an appeal against both the initial decision and the refusal of the variation application.

11. Interlocutory directions were made by a First-tier Tribunal Judge for (among other things) a statement by Mr H of his assets. The statement appears at p.105. The total is £1,225,000, which includes £365,000 in cash, and amounts totalling £105,000 in ISAs, shares and premium bonds. In an accompanying letter he stated that approximately 40% of his assets were in a pension scheme, 35% of his assets (i.e. some £425,000) were earmarked for moving into a slightly larger property (3 bedrooms) when market conditions allowed, and “the remaining 25% I hold to finance my current lifestyle as I am not in receipt of any income or are assets used in day to day living e.g. car, furniture etc.”

12. On 29 June 2009 Mr H made a written submission to the Tribunal in which he was again careful to note that Mrs A’s variation application had been made on 3 grounds, to each of which he responded.

13. The Tribunal held an oral hearing, at which CMEC was represented and Mr H appeared and gave evidence. Mrs A did not appear, having notified the Tribunal that she would not be doing so.

14. The Tribunal decided that neither of the three grounds on which Mrs A had applied for a variation were satisfied, and added the following in its Decision Notice:

“The Tribunal considered whether they could consider the assets of [Mr H] as producing income (Reg 18) but as the application for variation was only under Regs 19 and 20 and the application has been determined the Tribunal are precluded from doing so under Reg 5 of Variations Regs 2000. There is of course no reason why a further application cannot be made to include an assets variation under Reg 18.”

15. Mrs A’s appeal, for which First-tier Tribunal Judge gave permission, is on the ground that the Tribunal could and should have considered whether to direct a variation under Regulation 18.

16. CMEC supports the appeal on that basis, citing in support a statement of my own at para. 20 of CCS/2219/2008 that on an appeal an appeal tribunal has jurisdiction to exercise the power in reg. 9(8) of the Child Support (Variations) Regulations 2000:

“The Secretary of State may, if he considers it appropriate, treat an application for a variation made on one ground as if it were an application made on a different ground, and, if he does intend to do so, he shall include this information in the notice and invitation to make representations referred to in paragraphs (1), (4) and (7).”

17. Mr H, in his written submission in reply, accepts that the Tribunal could have considered whether a variation ought to be directed under Reg. 18, but submits that it did not go wrong in law in deciding not to consider that ground. He relies primarily on the fact that Mrs A had had plenty of opportunity to apply (or to amend her application so as to apply) under reg. 18, but had not done so.

18. It would of course be possible for Mrs A now to apply for a variation under reg. 18, or for the Secretary of State to treat her as having made such an application when she applied to the First-tier Tribunal, on 6 August 2009, for a set aside on the ground that reg. 18 should have been considered. The practical difference which taking that course would make, as compared with a variation under reg. 18 being made in or by virtue of the present appeal, is that the date from which the variation could take effect would be substantially later. If the Tribunal’s decision were to be set aside on the ground that it should have considered the reg. 18 ground, and if a new tribunal were to direct a variation on that ground, such a variation would have effect as from 8 February 2008 (p.23 of the papers). A variation pursuant to a fresh application made now would only take effect from approximately the current date.

19. If (as Mr H accepts in his submission) the Tribunal had jurisdiction to consider whether a variation ought to be made under reg. 18, it is in my judgment clear that it erred in law in not doing so. Mr H’s submission that the Tribunal was entitled to take the view that it was not in the particular circumstances appropriate to consider reg. 18 does not hold water, because that was not the basis of the Tribunal’s decision. The Tribunal’s view was that it could not (i.e. did not have jurisdiction to) consider reg. 18, not that it did have power to do so but that it was not appropriate in the particular circumstances to exercise that power.

20. In my judgment, for essentially the reasons which I set out in para. 20 of CCS/2219/2008, the Tribunal did have power to consider whether to direct a variation under reg. 18. What was under appeal to the Tribunal was the Secretary of State’s decision of 9 April 2008 that the amount of child support maintenance payable was £7.71 per week. Mrs A’s application for a variation had been made, under s.28G of the Child Support Act 1991, within a month of that decision, and was therefore an application for a revision of that decision: reg. 3A(1)(a)(ii) of the Social Security and Child Support (Decisions and Appeals) Regulations 1999.

21. The Tribunal was therefore considering an appeal against a decision assessing child support maintenance, wrapped up in which was a refusal to direct a variation on any of the grounds for which Mrs A had applied.

22. In considering whether to allow the appeal the Tribunal was in my judgment entitled and bound to consider, on all the evidence before it, whether it was appropriate to exercise the power, in reg. 9(8) of the Variations Regulations, to treat an application made on one ground as if it were an application made on a different ground. Although that power is in terms conferred on the Secretary of State, it is in my judgment by implication also conferred on an appeal tribunal when deciding an appeal from a decision of the Secretary of State on a variation application. The reasoning of the Tribunal of Commissioners in R(IB) 2/04 as regards the nature of an appeal to an appeal tribunal is in my judgment generally applicable in relation to child support, the structure of the adjudication and appeal system being essentially the same. I would refer in particular to paragraphs 18, 25 and 55(9) of R(IB) 2/04. The Tribunal referred, by way of justification for its decision, to the power in reg. 5 of the Variations Regulations for a person who has made an application for a variation to amend or withdraw it at any time before a decision on the application is made. However, I do not think that that carries any implication that an appeal tribunal cannot, in making the decision which the decision maker should have made, consider whether to exercise the power in reg. 9(8). (Still less does it carry the implication that the appeal tribunal cannot consider whether the Secretary of State ought to have exercised the power in reg. 9(8)).

23. A difference between the structure of the child support adjudication provisions and those in respect of social security is that s.28D(1) of the Child Support Act 1991 provides that, instead of determining a variation application himself, the Secretary of State may refer it to an appeal tribunal for determination, and s.28D(3) provides that in dealing with a referred application an appeal tribunal “shall have the same powers, and be subject to the same duties, as would the Secretary of State if he were dealing with the application.” However, I do not think that it follows from that that on an appeal from a decision in respect of a variation application, as opposed to a reference to it, an appeal tribunal cannot exercise the reg. 9(8) power.

24. I therefore do not think that it is necessary, before the appeal tribunal can exercise the power in reg. 9(8), that it finds that the Secretary of State should on the material before him have exercised it. It is sufficient that, on the evidence before the tribunal, it is appropriate to exercise it.

25. But even if it were necessary, before an appeal tribunal could allow an appeal on this ground, for it to find that the Secretary of State ought, on the evidence before him, to have exercised (or considered exercising) the reg. 9(8) power, in my judgment the Tribunal undoubtedly did err in law, in the present case, in not considering whether the Secretary of State ought to have exercised the power. Had the Tribunal considered that, it could in my judgment only have concluded that the Secretary of State ought to have treated Mrs A’s application as also comprising an application under reg. 18, and to have notified Mr H of that and to have invited his representations. The material which I referred to in para. 9 above gave a clear indication that Mr H had substantial assets which might be the subject of a variation under reg. 18. The case cried out, even on the evidence before the Secretary of State, for consideration of whether there should be a variation under reg. 18.

26. Of course the Tribunal would have had to ensure that Mr H was properly forewarned that it was going to consider reg. 18, and that he had a proper opportunity to prepare and present his case in relation to it. In the situation which the Tribunal found itself in on 8 July 2009 (i.e. where no prior notice had been given to Mr H that Mrs. A’s application would or might be treated as encompassing an application under reg. 18) that would in practice have meant adjourning the hearing. It would by no means necessarily have been perverse for the Tribunal to have decided, by that late stage, and reg. 18 not having been raised by Mrs A herself, that fairness to Mr H required that reg. 18 should not be considered. However, I emphasise again that that was not the basis of the Tribunal’s decision. Its decision was that it had no power to consider reg. 18.

27. The assertions by Mr H (see para. 11 above) as to his intentions in relation to the assets will require the new tribunal to consider, in particular, the exception in reg. 18(3)(b) of the Variations Regulations. That exception would seem almost certainly to apply to the pension scheme assets.

28. As I am remitting the matter to a new tribunal, there will be some delay before the matter is reheard. That will give Mr H time to prepare his case in relation to reg. 18, and to make a further written submission to the appeal tribunal if he so wishes. I therefore direct that the new tribunal is to treat Mrs A’s variation application as having also encompassed an application under reg. 18. However, I do not think that it need reconsider the three variation grounds which were refused by the Secretary of State, unless further material evidence comes to light. The Tribunal’s decision was undoubtedly right in relation to those grounds. In particular, although the cost of Mr H’s lifestyle was undoubtedly substantially in excess of his declared income, it was being financed out of income which could not be taken into account under the maintenance calculation and/or out of assets, and therefore within the exceptions in reg. 20(3)(a) and (c) of the Variations Regulations.

29. Mr H requested an oral hearing of this appeal. However, in my judgment he has in his very clear written submission said everything which could be said in opposition to the appeal. As I have said, his point that the Tribunal’s decision was not wrong in law because the Tribunal was entitled to decide not to invoke the power in reg. 9(8) is untenable, because that was clearly not the basis on which the Tribunal dismissed the appeal.

Charles Turnbull

Judge of the Upper Tribunal

4 March 2010