IN THE UPPER TRIBUNAL Case No  HS/2334/2010

ADMINISTRATIVE APPEALS CHAMBER

Before:

His Honour Judge David Pearl sitting as a Judge of the Upper Tribunal

Attendances:

For the Appellant:  Mr A.M.Phillips of Education Law

For the Respondent: Mr C Rawlings of Counsel

Decision:  The Appeal is dismissed

REASONS FOR DECISION

Introduction

1. The Appellants in this case are the parents of C, who is now 16 years of age and who attends The Quest School. This school is an independent special school for children aged 5 – 19 with a primary diagnosis of Autistic Spectrum Disorder. The First-tier Tribunal, whose decision is the subject of this appeal, states that the school was founded by a group of parents and Applied Behaviour Analysis (ABA) professionals in 2003. C’s mother is in fact the Head of The Quest School, and C’s father sits on the Board of Trustees. It is a small school, and the First-tier Tribunal states that at the date of the hearing before it in June 2010, there were 13 pupils at the school. The school uses an approach to teaching known as the ABA approach.
2. C has a diagnosis of ASD, severe communication and general learning difficulties. The Respondent’s Response to the Notice of Appeal states that C’s development is significantly delayed in the areas of social communication, speech and language, and independence.
3. It is relevant to set out some of the background to this appeal. As long ago as March 2005, the Respondent (Kent County Council) had identified Milestone School as an appropriate placement to meet C’s needs. Milestone School is a maintained special school for pupils with severe and complex learning difficulties for pupils aged 2 years to 19 years. It has a capacity for 250 pupils.
4. In May 2005, the Respondent named Milestone School in Part 4 of the Statement with respect to C. The parents appealed, arguing that The Quest School should be named in Part 4. There was a hearing before the Special Education Needs Tribunal in January 2006. The appeal was dismissed and the Tribunal directed that Milestone School remain as the named school in Part 4.
5. C continued to attend The Quest School, although the parents made further applications for Part 4 to be amended. The request was considered by the relevant Panel, but the Statement was not amended. On 27^th November 2009, the Respondent issued a new Statement naming Milestone School in Part 4.
6. The parents appealed, and the First-tier Tribunal heard the appeal on 23^rd June 2010, the decision being issued by the Tribunal on the 2^nd July 2010. The appeal was dismissed, and it is against this decision  that the Appellant sought permission to appeal to the Upper Tribunal. I gave permission to appeal on 1^st October 2010.
7. I issued a Direction that “Skeleton arguments to be submitted not later than 48 hours from the hearing date.” The Appellant did not comply with this Direction, his skeleton being submitted sometime the day before the hearing, and only being available to me and to Counsel for the Respondent on the morning of the hearing. Although I have decided that in this case I shall give consideration to the Skeleton Argument, I wish to make absolutely clear that Directions made by the Tribunal must be complied with. The Upper Tribunal has extensive powers in Rule 7 of the Rules, which includes the power to strike out a party’s case and (except in mental health cases) to restrict a party’s participation in the proceedings. There are good reasons for skeleton arguments to be submitted not later than 48 hours from the hearing date, in that it enables the Tribunal to properly prepare for the hearing, ensures that the other side is not caught unawares, and enables the hearings to be conducted in a timely fashion.

Grounds 1 and 2

8. The Appellant’s Grounds of appeal are developed in the skeleton argument, and are five-fold. Ground 1 states that the Tribunal failed accurately to take into account the cost of the placement at Milestone School and the additional cost of providing 1:1 support for C. Ground 2 is that the Tribunal made a factual error in stating that the Head of Milestone School had said in her evidence that she would not need to employ additional staff to support C at Milestone School.
9. On this aspect of the appeal, I have to say that I agree with Mr Rawlings for the Respondent when he submits that these are matters of fact on which the First-tier Tribunal heard evidence and reached findings of fact. These findings of fact can be challenged only where the findings are so perverse as to amount to an error of law.
10. Paragraphs 6 – 8 of the Decision of the First-tier Tribunal sets out very clearly indeed the findings of fact that were made relating to the provision in Milestone School if C were to attend there. In particular, it is said that the LA has agreed to provide C with 1:1 support throughout the school day from teaching assistants, and that the School would not need to employ additional teaching assistants as “there needs to be flexibility to support the pupils some of whom may require varying amounts of support throughout the year.” The Tribunal was told that there was sufficient capacity within the school to redeploy staff to support C, and this was accepted by the Tribunal. In addition, and on the evidence, the Tribunal accepted that there was provision in the existing budget to employ additional teaching assistants should the need arise. The Head is able to carry over £80,000 a year from her unspent budget.
11. I agree with Mr Rawlings when he submits that the Tribunal has made rational and valid findings of fact, and these findings of fact cannot be challenged as amounting to an error of law.
12. The real thrust of the Challenge in Grounds 1 and 2 turns on the approach taken by the First-tier Tribunal in its consideration of the test laid down by the Education Act 1996 s 9, (as amended by the School Standards and Framework Act 1998 s 140(1), Sch 30, para 61 and SI 2010/1158, art 5(1), Sch 2, Pt 1, para 7(1), (3)). This section states:

“In exercising or performing all their respective powers and duties under the Education Acts, the Secretary of State, and local authorities shall have regard to the general principle that pupils are to be educated in accordance with the wishes of their parents, so far as that is compatible with the provision of efficient instruction and training and the avoidance of unreasonable public expenditure”.

13. Mr Phillips conceded that the law in this area is governed by Oxfordshire County Council v GB and others [2001] EWCA Civ 1358. In this respect, the object of s 9 is to prevent parental choice from placing an undue or disproportionate burden on the education budget. Sedley LJ said:

“But as a matter of purposive construction of the section, it seems to us that what Parliament has called for in the ordinary run of cases is a consideration of the burden which the respective placements will throw on the annual education budget when matched against their educational advantages and drawbacks for the child in question. Costs which either the private provider or the LEA would be incurring with or without the proposed placement are accordingly not in general relevant.”

14. Mr Phillips conceded also, correctly in my view, that the principle laid down in Oxfordshire has not been altered by a more recent Court of Appeal decision where the judgement was again delivered by Sedley LJ, namely Slough v SENDIST [2010] EWCA Civ 668. In particular, Mr Phillips conceded that the ‘marginal cost’ approach as set out in the Oxfordshire case is the correct approach to adopt.
15. Thus, the First-tier Tribunal has to calculate the cost to public funds of a placement in the maintained sector. These are always matters of fact, and in this case, I consider that the Tribunal was perfectly justified in deciding that as Milestone School is pre-funded with a budget for 250 pupils and only 243 in attendance that any additional cost of C attending is nil.
16.  Coventry City Council v SENDIST and Browne [2008] ELR 1 was also referred to by Mr Phillips in the context of this ground of challenge. The School in that case was an ordinary maintained school, and therefore the facts were very different to the facts as they presented themselves in this case, which is a pre-funded special school.  The delegated arrangements that apply in an ordinary maintained school are clearly of a different order to the arrangements that exist in Milestone School.
17. I agree with the observation of Judge Williams in B v Worcestershire [2010] UKUT 292 (AAC) when he said that “these are questions of fact, and therefore of evidence.”
18. I agree also with the approach taken by Judge Leverson in EH v KCC (SEN) [2010] UKUT 376 (AAC). He said as follows:

“33. I do not accept the distinction that the appellant is seeking to make between the Court of Appeal decisions in Oxfordshire and Slough. The former decision sets out the approach that is to be adopted in all cases and gives a clear policy explanation. Slough was about the application of that general approach in a particular case…”

19. I consider that the First-tier Tribunal, on the evidence that it heard, was fully entitled to assess the cost to the public purse as nil in relation to Milestone School, and in consequence Grounds 1 and 2 are bound to fail.

Grounds 3 and 4

20. Grounds 3 and 4 relate to the Tribunal’s findings in relation to the costs of the placement at The Quest School. Ground 3 states that the Tribunal misinterpreted the facts of the case when reaching its decision regarding the costs of the placement at The Quest School. Ground 4 develops this argument and states that the Tribunal was wrong in law to conclude that the Staff Discount Scheme was a deliberate attempt to reduce costs of The Quest School for the purposes of s 9.
21. Having found that the Tribunal was entitled to assess the costs at Milestone School as nil, it is strictly not necessary for any analysis to be undertaken of the Tribunal’s approach to the costs at The Quest, for the simple reason that on any analysis, the costs are going to be in excess, whether they be the full cost of £40,000 or the discounted costs of £20,000. Thus when carrying out the exercise required by s 9, the Tribunal made no error of law, and indeed any other conclusion would have been difficult if not impossible to justify.
22. Given the prominence given by Mr Phillips to the Slough decision, it is important to quote the extract from Sedley LJ’s judgement in some detail. He said:

17. The difficulty of Mr Hyams' interpretation is self-evident: it would require a public authority to pay the full amount of a school's fees even if they have been reduced for the child in question. As Mr Hyams eventually accepted, that makes no sense. Among other things it would shut out bursaries offered by a charity or from the school's own funds for the benefit of children of, say, service personnel which had no manipulative purpose or character but which rendered the fees for a particular child more economical than those of a comparable school.

18.The converse, however – that parents can secure the school of their choice for a child with special needs by paying enough of the fees to make the alternative uneconomical – may well subvert the purpose of s.348. It would permit parents with means, by striking a private bargain, to compel a public authority to part-fund schooling which the parents would otherwise have had to fund in full. The counter-argument is that, while s.348(2) manifestly forbids an education authority to require parents to pay part of the fees at a non-maintained school, it does not prevent parents from voluntarily doing so, even if their purpose is to bring an otherwise uneconomic placement within the s.9 objective; nor therefore should it prevent a local education authority from advising parents that this can be done.

19.We are indebted to both counsel for research which they have undertaken at the court's request to trace the genesis of s.348 in case this casts light on its intent. In brief, s.348 of the 1996 Act re-enacted s.190 of the Education Act 1993, which was itself a partial re-enactment of s.6 of the Education (Miscellaneous Provisions) Act 1953. This (like s.348 of the 1996 Act) provided that the local education authority "shall … pay the whole of the fees payable in respect of" special educational provision. The innovation was that it turned a power created by s.81 of the Education Act 1944 into a duty.

20.Both the formulation of the successive provisions and the ministerial  explanations in both Houses which Mr Hyams has extracted for us make it evident that the present question had – perfectly understandably – not occurred to the drafter or the movers of the legislation. The same is apparent from the notes on clauses which my judicial assistant has traced in the National Archives. The concern was to ensure that where special education had to be outsourced (though the word had probably not yet been invented), the local education authority must bear the full cost of it and was not entitled to look to the child's parents for a contribution. The possibility that the full cost might be driven down by the parents themselves in order to render economical a choice of school which would otherwise be excluded by the condition in s.9 of the 1996 Act or its predecessor, s.76 of the 1944 Act, was not contemplated either then or, so far as we know, until this case.

21.The implications of the question, starting but by no means ending with the policy of the successive statutes themselves, are considerable. But it is a question which this court does not have to decide, because the facts of the present case, so far as they have been ascertained, do not raise it. They are set out in the opening paragraph of the Tribunal's decision:

In a letter from Ms Last, the Pace Centre confirmed that it had agreed to a one off, exceptional funding arrangement for a limited two-year period. It stated that in view of the successful fundraising undertaken by Mr and Mrs Suri, the Centre had reduced the fee for Simran's placement for the academic years 2008 to 2009 and 2009 to 2010. The total costs for each of these years would be £10,000, to include all therapies and required teaching and additional classroom support. Mr and Mrs Suri confirmed that they would undertake the transport costs for the next two years.

22.Although Mr and Mr Suri both gave evidence to the Tribunal on the review hearing, as did Ms Last, the director of the PACE centre, none of them was apparently asked, and no document showed, what form the fundraising had taken. If it had emerged that the family had simply made a payment of the order of £25,000 or £30,000 to the school and the school, in response, had offered to take their daughter at a reduced fee of £10,000, the problematical issue I have described would have arisen for decision. If, however, the school was doing no more than making a reciprocal gesture in return for fundraising work done on its behalf, it does not necessarily follow that the fundraising should be regarded as a disguised part-payment of fees designed to compel the local education authority to expend public funds on a school of the parents' choice which would otherwise have fallen foul of s.9.

23.If the child were not now the subject of a new statement and about to move to a new school, it might well have been appropriate to remit the case for a fuller investigation of the facts than was undertaken here. In future cases of this kind one would expect such an investigation. If it results in a finding of overt or covert voluntary parental funding (and I do not mean this to be an exhaustive description of the problematical class of contribution), the Tribunal, and if need be an appellate court, will have the necessary foundation on which to address and resolve the legal issue. The argument may need to extend to some of the related provisions to which Mr Friel's research note has drawn our attention.

24.The evidence and the findings as they now stand, however, are insufficient to raise the issue. They establish only that, in recognition of a subvention to the school which the Suris have helped to collect, their daughter's fees were to be £10,000 a year for her remaining two primary years. This was therefore the amount to be compared, initially by the authority and then by the Tribunal, with the cost of providing a place for her at Arbour Vale. For reasons I have given, the Tribunal were entitled to conclude that, whatever the computed cost of the latter was, it was bound to exceed the special fees asked by the PACE Centre.

23.  The First-tier Tribunal made findings in relation to the discounted scheme in this case by saying that the scheme was a deliberate attempt to reduce the costs of The Quest School for the purposes of s 9. The Tribunal said that it had arrived at this decision because the parents told the Tribunal that if the Tribunal found that Milestone School could not meet C’s needs, the cost to the LA would be £40,000 whereas if the Tribunal found that her needs could be met at either school the costs would be £20,000.
24. Although Mr Phillips sought to urge on me the proposition that this finding was a perverse one, the document headed “Discounted School Fee Scheme for Employees”, which is attached to the decision, provides documentary support to the Tribunal’s conclusion. The third bullet point of the Scheme states that one of the criteria that applies to applications for discounted fees is that “the school fees are not paid fully by a local authority.”  On that basis, the Tribunal was entitled to make a finding that the costs to be paid by the LA would be £40,000 rather than £20,000. Put another way, the Tribunal was entitled to decide on the evidence, as a matter of fact, that this case fell within the mischief identified in the first two sentences to paragraph 18 of the Slough judgement, namely to prevent parents with the opportunity of securing the school of their choice by paying enough of the fees to make the alternative uneconomical. Conversely, the Tribunal was entitled on the evidence to conclude that this was not a case which fell within paragraph 17 of Sedley LJ’s judgement in Slough.

Ground 5

25. The final ground of appeal was that the Tribunal did not give adequate reasons. As I understand it, this ground was rightly abandoned by Mr Phillips. I have absolutely no doubt that this decision of the First-tier Tribunal cannot be challenged on the basis of inadequacy of reasons. The decision fulfils fully the approach as set out by Waller LJ in H v East Sussex and others [2009] EWCA Civ 249.

26. The Appeal in this case is dismissed.

His Honour Judge David Pearl

Sitting as a Judge of the Upper Tribunal

4^th February  2011