Upper Tribunal (Administrative Appeals Chamber)

DECISION OF THE UPPER TRIBUNAL

(ADMINISTRATIVE APPEALS CHAMBER)

 

 

The DECISION of the Upper Tribunal is to dismiss the appeals by the appellant (“the father”).

 

The decisions of the Enfield First-tier Tribunal dated 29 September 2011 under file references 921/09/01215 and 132/09/00240 do not involve an error on a point of law.  The tribunal’s decisions therefore stand.

 

This decision is given under section 11 of the Tribunals, Courts and Enforcement Act 2007.

 

 

 

REASONS FOR DECISION

 

Introduction

1. The father’s appeals to the Upper Tribunal are dismissed. The decisions of the Enfield First-tier Tribunal do not involve any errors on any point of law. The tribunal’s decisions therefore stand. 

 

2. The issues raised by this complex appeal are various. They include: the assessment of child support liabilities where a non-resident parent has substantial assets; the treatment of pension contributions by a self-employed person; the jurisdiction of the Child Support Agency (and its successors) to make an assessment where there is a court order in place; and the purpose of child support maintenance.

 

3. The non-resident parent is the Appellant before the Upper Tribunal; the Secretary of State and the parent with care are the First and Second Respondents. For simplicity I call them the father, the Agency and the mother respectively.

 

The background to the appeals to the First-tier Tribunal

4. There is a long history to this appeal which need not be rehearsed in detail here. For present purposes, the following summary will suffice.

 

5. The father is (now) a retired accountant and Lloyds underwriter. Doubtless through a combination of hard work, careful husbandry and astute investment decisions he has built up a considerable portfolio of assets. The mother described herself to me at the oral hearing, doubtless unfairly, as “just a mum”. Their daughter, P, was born in 1991.

 

6. The parent separated in 2004. In the divorce proceedings that followed they were each represented by well-known firms of solicitors that specialise in what are often described (at least by lawyers) as “big money” cases. In 2007 the parents, with the benefit of that advice, agreed a “clean break” settlement, which was confirmed by the court in a consent order. The mother received a house, free of any mortgage, and a capital payment of nearly £½ million. It was also stated that the father would make payments of child maintenance for P in line with the Agency’s formula, and that pending resolution of the exact amount he would pay the mother £413 a month for P.

 

7. About 3 months later the mother applied to the Agency. She also made an application for a variation based on the father’s assets. The Agency then took two relevant decisions.

 

8. The Agency’s first decision, on 28 February 2008, was to grant the assets variation with the effect that the father became liable to pay £243 p.w. in child support (as from the effective date of 18 October 2007). This was on the basis that his formula income was nil, but that his deemed income, derived from his assets amounting to just over £1 million, was £1,617.85 a week.

 

9. The Agency’s second decision, made on 4 November 2008, was made in response to the father’s application for a supersession. He had argued that the value of his various assets had decreased. The Agency accepted that the total value of the assets had declined to just under £800,000 by October 2008. The net result was a staged series of assessments, with the child support liability reducing over time to £179 p.w. with effect from 23 October 2008.

 

10. I should also mention here that P ceased being a qualifying child on 30 April 2009. This means that these appeals are actually concerned only with a period of approximately 18 months.

 

11. Both parents appealed the Agency’s first decision (although the father later withdrew his appeal). The mother also appealed against the Agency’s second decision. Her argument all along, in short, is that the father’s assets had been under-valued and that he could afford to pay more by way of child maintenance.

 

The two sets of proceedings before the First-tier Tribunal

The “first time around” proceedings

12. There have been two sets of proceedings before the First-tier Tribunal (FTT). The FTT first heard both of the mother’s appeals on 14 December 2009. Both those appeals succeeded. The father appealed (the appeal relating to the FTT’s treatment of the Agency’s first decision was CCS/2869/2010, and that concerning the Agency’s second decision CCS/2868/2010). Mrs S A Powell, for the Secretary of State, supported both his appeals to the Upper Tribunal. I allowed both appeals on 21 July 2011. The main reason for allowing both appeals was that the FTT had failed to explain its reasoning on the application of the “just and equitable” principle in making a variation. I sent the cases back to the FTT for rehearing.

 

13. In doing so, I commented as follows:

 

“4. It is normal for the Upper Tribunal to order a re-hearing to take place before a differently-constituted tribunal. I am by no means sure that is necessary in this case. The parents obviously have issues between themselves but there are no significant criticisms of the conduct of the previous tribunal. This is a highly complex case and the previous tribunal with be familiar with the factual background. It may therefore be a more effective and proportionate use of judicial resources if the case is listed in front of the same tribunal judge and financially qualified panel member. However, the judge and/or financial member may or may not be available to sit, and the District Tribunal Judge responsible for issuing listing directions for the re-hearing will have a much better sense of what is viable. As stated above, it would be wrong for me to fetter his or her discretion.”

 

14. On reflection, it would have been more accurate to say simply that “there were no criticisms of the conduct of the previous tribunal”. They had described the father as a “witness of truth” and the mother had made no complaint about the tribunal members. The District Tribunal Judge subsequently directed that the re-hearing take place in front of the same tribunal. For the reasons indicated above, I see no difficulty with that.

 

The “second time around” proceedings

15. The re-hearing took place on 29 September 2011. The FTT again allowed both of the mother’s appeals, but with some different reasoning and with different consequences to the first hearing.

 

16. On the mother’s appeal against the Agency’s first decision, the FTT calculated that the father’s total assets were £861,247 (a figure that included 25% of a one-off pension fund contribution in 2006/07), giving a weekly maintenance liability of £199 (as against the Agency’s assessment of £243 p.w.) as from 18 October 2007.

 

17. On the mother’s appeal against the Agency’s second decision, the FTT undertook its own analysis of the changes in the value of the father’s income and assets through 2008. In doing so the FTT treated part of the father’s pension fund contribution in 2007/08 as a diversion of income under regulation 19(4) of the Child Support (Variations) Regulations 2000 (SI 2001/156; “the Variations Regulations”). The effect was to add further weekly net income into the child support maintenance calculations at the relevant dates. The FTT, like the Agency, produced a staged series of calculations, ending with a weekly liability of £234 (not the Agency’s £179) with effect from 23 October 2008.

 

The proceedings before the Upper Tribunal “second time around”

18. The father applied for permission to appeal against both FTT’s “second time around” decisions. His main arguments were that the FTT had erred in its treatment of his pension fund contributions in respect of both 2006/07 and 2007/08 and that the FTT had unfairly applied the 8% statutory interest rate in the process of calculating the income derived from his assets. Not without some hesitation, given the lengthy history, I again gave the father permission to appeal in both matters. The case involving the Agency’s first decision became CCS/825/2012, and that concerning the Agency’s second decision became CCS/824/2012.

 

19. All parties made written submissions on the appeal. The written submission on behalf of the Secretary of State, by Mrs S A Powell, supported the father’s appeals (again) and suggested that the matters be sent back for re-hearing. Mrs Powell’s view was that the FTT had failed to consider regulation 18(3)(b) of the Variations Regulations when dealing with the 2006/07 pension fund contribution. However, she also argued that the FTT may have erred in law by failing to have regard to the father’s total pension pot (amounting to just over £½ million) as part of his assets. If that was right, of course, the effect would have been disadvantageous to the father. The result of including that asset would, almost certainly, have been to take the father’s net weekly income to the cap, and so have fixed his child support liability at the maximum of £300 a week.

 

20. I held an oral hearing of the father’s appeals at Field House in London on 5 June 2013. The father attended and carefully developed the points he had made in writing. The mother (and P) also attended; the mother’s main point (perhaps understandably) was her bemusement that the matter should have taken so long to get this far and still not be sorted out. As I indicated at the hearing, I was grateful to both parents for the calm and clear way that they made their respective cases.

 

21. The Secretary of State was represented at the hearing by Mr Stephen Cooper, Solicitor. He indicated that, on reflection, he was not persuaded by all of Mrs Powell’s arguments in the written submission. In legal language, he was resiling from her main submission. In plain English, he was abandoning the Secretary of State’s previous position and not supporting the appeal; rather, he was now supporting both of the second FTT’s decisions.

 

Analysis: the points raised by the father

Introduction

22. The father has raised a number of challenges to the second FTT’s decisions. He readily admitted that, whatever his professional expertise as an accountant, he is not a lawyer. A number of the points he raised, whilst perhaps understandable from the perspective of a non-lawyer, did not actually raise any potential error of law. For example, as Mr Cooper explained at the hearing, it was perfectly open to the second FTT to come to a different decision and (certainly as regards the Agency’s second decision) one that involved a higher child support liability. This was a complex case, involving a great deal of documentary material and some highly complicated legislation. New points had also emerged in the course of the second hearing which had affected the outcomes.

 

23. Similarly, there was nothing unlawful in the FTT being constituted in the same way as at the first FTT hearing. Thus, although it may be usual to direct a re-hearing in front of a new tribunal, it is not necessary to do so. The Upper Tribunal has a discretion in this matter (see Tribunals, Courts and Enforcement Act 2007, section 12(3)). As seen above, I gave my reasons for declining to make that standard direction (see paragraph 13 above).

 

The treatment of the 2006/07 pension fund contribution

24. The father made a payment of £92,589 into his pension fund in 2006/07, at least six months before he was aware of any Agency involvement. This was exactly the same amount as his self-employed income for that tax year. The FTT accepted that the father had made this contribution for three reasons (see paragraph 27 of its second decision on the first appeal): tax efficiency, a concern about the level of his overall pension provision and the fact that he had other significant unearned income (e.g. rents and investment income). In other words, the FTT accepted that at that time the child support implications of such a transfer were not a factor in the father’s thinking.

 

25. The FTT included 25% of this pension contribution as part of the father’s assets when calculating the variation due on the Agency’s first decision. It summarised its reasoning as follows:

 

“29. In the Tribunal’s view, however, the pension policy is a chose in action and does fall within regulation 18(2)(d). Therefore it can, and, in the Tribunal’s view, should be treated as an asset. It is a trite point of pension law that up to 25% of a pension fund may be withdrawn as a lump sum, This is often referred to as the ‘lump sum element’. It would be both unfair and unrealistic to assess [the father’s] pension contribution as an asset at any greater level than was available to him as an asset and therefore the Tribunal was satisfied that the contribution should be treated as an asset to the extent of 25% or £23,417. Although £92,589 reduced his cash assets by that amount, only 25% could be withdrawn from that amount as a lump sum after the payment was made and it was not premeditated as explained in paragraph 27 above.”

 

26. The father makes three criticisms of the FTT’s approach to this issue.

 

27. First, he argues that his pension contributions should have been deducted from his self-employed earnings in accordance with paragraph 7(3)(c) of the Schedule to the Child Support (Maintenance Calculations and Special Cases) Regulations 2000 (SI 2001/155). Mrs Powell had previously referred to this provision in her written submission on the appeal against the first time around FTT decision. However, this argument is to miss the point. The child support calculation was based solely on the assets variation – it was accepted that the father had no self-employed income for the purposes of the standard child support formula. It followed that paragraph 7(3)(c) did not come into play. Instead, the FTT treated a proportion of the pension fund contribution as an asset under regulation 18(2)(d), which was a course open to it.

 

28. Second, he says that the FTT did not take this approach at its first hearing (this argument is addressed at paragraph 22 above); moreover, in its statement of reasons following the first hearing, the FTT had cited the statement by Judge Jacobs in Child Support: the Legislation (see now 10th edition, 2011/12, at p.633) to the effect that a pension pot is “an obvious example of an asset which will be excluded under this exception”. However, this statement was not binding on the FTT for the following reasons. First, the statement was not made in the course of an Upper Tribunal decision but rather in commentary (and, however authoritative, such commentary is not conclusive). Second, the statement needs to be read in context. The first FTT had referred to that passage when explaining why the regulation 18(3)(b) exception applied to the property in which the father’s late mother then lived. Furthermore, there is every reason why a tribunal might well conclude that an existing pension pot is an asset which is being retained “to be used for a purpose which the Secretary of State considers reasonable in all the circumstances of the case” within regulation 18(3)(b). However, the FTT here was concerned with a further contribution to an existing pension pot, where different considerations may apply. In addition, as Judge Jacobs also made clear in his commentary, the assessment of such issues is ultimately a question of fact for the FTT.

 

29. Third, the father argues that in treating 25% of his pension contribution as an asset the FTT has erred, as apportionment is not possible. Again, he refers to Judge Jacobs’s commentary to the effect that regulation 18((3)(b) “confers a discretion on the Secretary of State to disregard an asset. It is an all or nothing exception. Only the whole of the asset can be disregarded; there is no scope for apportionment” (p.633). Mrs Powell’s submission, however, was that money held in a pension policy is divisible and so the FTT was free to apportion it when considering whether any of it was being held for a reasonable purpose. She argued that it is only in relation to indivisible assets, such as a house or a Ming vase, which are either retained for a reasonable purpose in their entirety or are not (citing CSCS 1/05, paragraph 14.7). Where the asset is divisible, it is possible “to divide up the property into parcels and take a particular parcel as being the ‘asset’ for the particular purpose” (paragraph 14.4). I follow CSCS 1/05 on this point, which is a fully reasoned decision. Thus the FTT was entitled to treat 25% of the contribution as a chose in action within regulation 18(2)(d).

 

30. For the most part, this also answers the other point on which I gave permission to appeal. This was whether or not the FTT had erred by failing to make express reference to regulation 18(3)(b) in its statement of reasons. I agree with Mr Cooper’s analysis on this. Reading the FTT’s decision as a whole (which also incorporated, as necessary, its fact finding and reasoning on the first time around appeal), it is clear to me that the FTT was alive to regulation 18(3)(b) and its significance. Its reasoning for the 25%/75% split is testimony to that.

 

The treatment of the 2007/08 pension fund contribution

31. In 2007/08, the father made a further payment into his pension fund, this time of £86,933 (slightly more than his self-employed income for that tax year). The FTT took a different approach to this contribution to that adopted for the 2006/07 payment. The 2007/08 payment was not treated as a chose in action. Instead, it was treated as (in part at least) a diversion of income under regulation 19(4) of the Variation Regulations. The FTT took 50% of the value of the transfer and deducted tax liabilities, resulting in additional weekly net income of £613.93. The FTT then fed this increased income into its calculations for the staged maintenance calculations with effective dates in 2008.

 

32. The father again makes three criticisms of the FTT’s approach to this issue.

 

33. First, he argues that he adopted the same tax efficient practices in both years (and indeed has done ever since 2005/06) and yet the FTT has treated the payments made in each year differently – the first as a chose in action and the second as a diversion of income. However, each year has to be assessed on its own merits, and there is no reason in law why a tribunal cannot adopt different treatments for different years, especially where it finds the circumstances are different. In the appeal against the first decision, where the transfer predated any Agency involvement, the FTT explained why it viewed part of the pension contribution as an asset. In the appeal against the second decision, the FTT found that regulation 19(4) provided a better “fit” to the facts that it found, and explained why.

 

34. Second, the father says that he was simply unaware that making a full pension payment equal to his self-employed income would significantly reduce his liability to child support maintenance. He states that it was only when he received Mrs Powell’s submission on the first time around appeal in 2011 that he became aware of paragraph 7(3)(c). There was, he also argues, no intention to divert income. There are several answers to these arguments. The FTT’s finding that the father made the transfer in 2007/08 both for reason of the “significant tax advantages” but also for a “considerable advantage in relation to his child support maintenance” was a finding of fact, inferring an intention from all the evidence. I cannot interfere with such a finding of fact where the appeal is confined to points of law. As Mr Cooper put it, the fact that the father strenuously disagrees with the FTT’s assessment does not make it an error of law. Moreover, the fact that the tribunal only took into account 50% of the 2007/08 payment indicates its acceptance that there were mixed motives for the transfer. Whether it was a payment that “unreasonably reduced the amount” of his income was again a question of fact. The fact that the father was unaware of paragraph 7(3)(c) when the payment was made does not assist in the face of the FTT’s clear finding of fact. The FTT expressly stated that there had been no deceit or dishonesty on the father’s part, but it also concluded that he was aware, by the time of the 2007/08 transfer, that making a pension contribution would reduce his child support liability.

 

35. Third, the father points out that the payments in question were made in the course of the 2007/08 tax year. The Agency’s maintenance calculations at the time were based on him having a nil income under the formula. There was, accordingly, the father argues, no income to divert. This misses the point. True, the father had a nil income for the purposes of the child support formula-based assessment. That reflected in part the very narrow way in which income is defined under the new child support scheme. As the FTT explained, regulation 19(4) is, in effect, an anti-avoidance measure, designed to catch payments which would otherwise fall outside the child support scheme. On any basis the father had money coming in which he had the power to divert; to rely on the fact that he had a nil income for the purposes of the formula as an answer to that is to play with words.

 

The statutory interest rate and the “just and equitable” test

36. Once the total value of the father’s assets had been calculated, the FTT had to derive a weekly income figure from these assets to feed into the child support maintenance calculation. In dealing with the appeals against both of the Agency’s decisions, the FTT had uniformly applied 8% as the relevant rate in all its calculations.

 

37. The father’s point, quite simply, was this rate of interest was wholly unrealistic. The great majority of his assets, he argued, were not producing an income anywhere near 8%. The statutory interest rate applied by the FTT was four or five times the actual rate of interest being generated by these assets. Thus, he said, by definition the application of such an interest rate to arrive at a deemed weekly income figure could not be “just and equitable”. He relied on the decision of Judge Jacobs in CCS/1844/2009, criticising a tribunal which had “simply applied the statutory interest rate of 8%. That is unrealistically high, given the current level of interest rates obtainable. The tribunal had power to give a direction at a reduced rate” (at paragraph 9).

 

38. Mr Cooper, agreeing with Mrs Powell’s written submission on this issue, argued that the statutory interest rate is a deeming rule, and is not intended to reflect the actual rates available in the open market. In the Secretary of State’s submission this tribunal had exercised its discretion properly, considered the matter in the round and adequately explained its reasoning.

 

39. The legislation itself makes it clear that the presumption is that the 8% figure applies. Thus “the Secretary of State shall calculate the weekly value of the assets by applying the statutory rate of interest to the value of the assets and dividing by 52” (regulation 18(5) of the Variations Regulations, emphasis added, with the “statutory rate of interest” defined by reference in regulation 18(6)). However, as Judge Jacobs noted in CCS/1844/2009, the application of the “just and equitable” test meant that in deciding how to apply a variation, a tribunal has a discretion which it may exercise so as to reduce that rate.

 

40. In the appeal against the Agency’s first decision, the FTT approached this issue as follows (the same reasoning was also used by the FTT, with necessary adjustments, in the other appeal):

 

“32. The Tribunal considered the relevant elements. It was satisfied that the Appellant retained substantial income, as evidenced at page 390 [a reference to the 2006/07 tax calculation notice], where he has, in addition to his assessable income, further income of some £54,000. It is also apparent from details of the assets, that he had assets to the value of £1m, of which over £500,000 were either in cash or stocks and shares and therefore easily realisable.

33. On assessment at 8% of the asset value, the tribunal calculated the maintenance assessment as being £199 a week. That comes to £10,348 a year. That is obviously easily affordable by [the father]. It would still leave him with realisable assets in excess of £500,000 and amounts to just over half the cash that he holds. Whilst it is a substantial amount of maintenance, and would no doubt afford P an above-average standard of living, the mere size of the sum is not, in itself, a reason for diminishing it. It is, after all, just under two-thirds of the maximum maintenance possible in a child support assessment, and therefore well within the limits of what the legislation allows.

34. The Tribunal reminded itself that the 8% figure is not intended to represent an interest rate achievable on the assets. It is rather a contribution from those assets. It is what is considered to be a fair amount to be taken from the assets, which themselves will grow, either through capital accrual if property, the earning of interest, or, indeed, growth in stocks and shares, so any assessment will always be less than 8% of the current value in reality. Bank base rate at the effective date of 18 October 2007 was 5.5% and still 5.25% at the decision date of 29 February 2008.

35. Is it right that an amount that is entirely affordable by [the father] should be discounted, or is it just and equitable that he should pay the proper assessment if he can do so without impacting on his standard of living or, indeed, his financial wellbeing, in any significant way?

36. The Tribunal’s firm belief is that this assessment of 8% is appropriate. It is affordable, it will not diminish [the father’s] financial standing and P will benefit.

37. The Tribunal has to be satisfied that the award is just and equitable. It considered all matters including those set out in reg. 21. This Tribunal was entirely satisfied that this decision was an award that it would be just and equitable to make.”

 

41. I have quoted from the FTT’s statement of reasons at some length because in many ways this passage is a model of how to explain a decision to apply the statutory rate of interest without any reduction. It took into account relevant factors and ignored irrelevant considerations. As it happens, my own view would have been the same. However, strictly speaking, as I explained when giving permission to appeal, my personal view on the appropriate rate of interest in this case is irrelevant. What matters is whether or not this FTT’s approach involves any error of law. Giving permission, I indicated my provisional thinking as follows:

 

“4. The other issue was the FTT’s treatment of the statutory rate of interest point, an issue which arose on both appeals. In CCS/1844/2009 Judge Jacobs certainly accepted that 8% was ‘unrealistically high’, as indeed would be the experience of any saver on the high street. However, this is all a matter of discretion within the just and equitable requirement. In my earlier decision ‘first time around’ I certainly did not say that the 8% figure must be reduced; the point is the FTT must look at the picture in the round as a matter of discretion. It may well be arguable that the present FTT did just that – see e.g. [31]-[37]. I might or might not agree with their conclusion, but that is not the point – if they have a discretion, and it has been properly exercised, it may be difficult to identify an error of law, even if other tribunals might possibly have reached a different result on that question.”

 

42. For the reasons above, in my view it is not difficult, but rather impossible, to identify any error of law by the FTT in this respect. I therefore dismiss this ground of appeal.

 

The purpose of child support more generally

43. Underlying the father’s concerns appeared to be his belief that the child support maintenance calculations arrived at by the Agency and the FTT were unrealistically high, given both the substantial divorce settlement that the mother had received and the actual cost (although he did not put it in quite such stark terms) of providing a roof over P’s head, clothes on her back and food on the table. However, that clean break settlement finally resolved the competing claims of the two parents. It did not conclusively determine the father’s child support liability as regards P. Instead, the consent order left this to be resolved according to the Agency’s rules (I return to this matter below).

 

44. The starting point of the first child support (“old scheme”) formula, as set out in the original Child Support Act 1991, was undoubtedly the actual or assumed cost of supporting children, based in turn on means-tested benefit rates. However, the “new scheme” formula, introduced in March 2003 (under the Child Support, Pensions and Social Security Act (CSPSSA) 2000), abandoned the idea of relating child support liabilities to the actual or assumed costs of raising children. Instead, the principle underpinning the new scheme is that qualifying children should benefit from a proportionate share in both parents’ incomes. So, in the typical case, new scheme liabilities are based on a fractional slice (15%, 20% or 25%) of the non-resident parent’s net income (as defined by child support legislation, not tax law), depending on whether there are 1, 2 or 3 children involved. Thus to ask the question implicit in the father’s thinking – namely “how can child support in the order of £200 a week or more than £800 a month be justified for one child where the mother is living in a mortgage-free home?” – is to ask the wrong question. Parliament has provided otherwise.

 

Analysis: the further points raised by the Secretary of State’s representatives

The written submission: the father’s existing pension fund

45. Mrs Powell’s written submission raised a new point, namely that the FTT may have erred in law by failing to bring into account the father’s existing pension pot when calculating the value of his assets for the purposes of a variation (see paragraph 19 above). If this argument had any merit, it would necessarily result in a further increase in the child support liability on both appeals. However, I am satisfied that there is nothing in this point for two reasons.

 

46. First, I take the view that this was not a matter raised by the mother’s appeal (see Child Support Act 1991, section 20(7)(a)). Plainly, her case was that the father had substantial assets that had not properly been drawn into the child support equation. However, the father’s substantial pension pot was no secret – it had been properly disclosed on the Form E in the context of the ancillary relief proceedings and there was further evidence given at the FTT oral hearing. However, the mother’s original written submission to the FTT, settled by counsel, was a detailed, cogently argued case for an assets-based variation that made no reference to any claim to include the pension pot as part of the overall amount.

 

47. Second, as Mrs Powell conceded, there was, in any event, obviously an argument that if the father’s existing pension pot had been considered as potentially part of his overall assets, the FTT may well have concluded that the existing pension fund should be wholly disregarded under regulation 18(3)(b) of the Variations Regulations. In those circumstances the FTT cannot be criticised for omitting to deal in any detail with the existing pension fund in its statement of reasons.

 

The oral submissions: the possibility of double counting

48. At the hearing Mr Cooper made two further points on behalf of the Secretary of State which had not been previously raised. The first was the possibility, and Mr Cooper put it no higher than that, that there might be an element of double-counting if both the divorce settlement and the Agency’s maintenance calculations had taken into account pension provision. I am satisfied this is not a live issue. The mother helpfully explained that the advice she had been given at the time, given her young age, was to the effect that the father’s pension assets were, in effect, “off limits”. That account is confirmed by the consent order, which refers to all claims for pension sharing being dismissed (paragraph 4).

 

The oral submissions: the jurisdictional issue

The 12 month rule – might it apply?

49. Mr Cooper also raised a potentially far more significant point at the hearing. He noted that the consent order was dated 11 July 2007 and that the mother’s application to the Agency had been made in October 2007. This raised a possible jurisdictional issue: did the Agency have the legal power to make the maintenance calculations that it did? As Mr Cooper explained, the underlying point is that, since the statutory changes made in 2003 (by CPSSA 2000), the basic rule (in broad terms) has been that where there is a court order in place, an application cannot be made to the Agency for a period of 12 months. The application in the present case was obviously made well within the 12 months.

 

50. I considered whether I should give the parties further time to make any further submissions on this highly technical point. I have decided not to do so, partly because at the time that the application was made to the Agency both parties had professional representation, and so the point could have been taken then, and partly because of the need now to bring finality to these proceedings.

 

The relevant legislation

51. The relevant law is contained in the Child Support Act 1991 (as amended). Section 4(10)(aa) of the Child Support Act 1991 provides as follows:

 

(10) No application may be made at any time under this section with respect to a qualifying child or any qualifying children if—

...

(aa) a maintenance order made on or after … [3 March 2003] … is in force in respect of them, but has been so for less than the period of one year beginning with the date on which it was made”.

 

52. Section 8(11) of the same Act then defines a maintenance order “in relation to any child” as meaning “an order which requires the making or securing of periodical payments to or for the benefit of the child” (emphasis added) and which is made under one or more various statutes.

 

The structure and terms of the consent order

53. It is important to consider the precise terms of the consent order (in which the mother was the applicant and the father the respondent). It comprised six paragraphs by way of recitals or undertakings (under the heading “UPON the parties agreeing:”). Paragraphs 5 and 6 of the undertakings read as follows:

 

“5. That the Respondent should make provision for P by making maintenance payments to the Applicant in line with the formula in the CSA 1991 (as amended by the CPSSA 2000) and that pending settlement as to the sum required, he will pay the sum of £413 on the 1^st July 2007 and at monthly intervals thereafter until she shall complete full time secondary education or until she attains the age of 17, whichever is later.

 

6. That the Petitioner shall repay the Respondent any sums paid to her or to P by him pursuant to paragraph 5 above in the event that the CSA assessment is lower than the monthly sum paid by the respondent to P or for her benefit pursuant to paragraph 5 above.”

 

54. This was then followed by the seven paragraphs in the Order (under the heading “BY CONSENT AND SUBJECT TO DECREE ABSOLUTE IT IS ORDERED THAT:”). The seven paragraphs in the Order made no reference to P, or to child maintenance payments, other than indirectly by way of the general clause dismissing all other claims to financial provision as between the parents.

 

55. So the question is whether this consent order is a “maintenance order” within section 8(11), such that the section 4(10)(aa) exclusion applies. If so, then on its proper interpretation the mother was barred from applying to the Agency until July 2008. In my view this exclusion did not apply and so the Agency had jurisdiction. My reasons are three-fold and concern (i) the construction of the consent order; (ii) the underlying agreement of the parties; and (iii) the policy of the legislation.

 

The construction of the consent order

56. Typically, undertakings (e.g. to pay specified sums of money) relate to matters as to which the court has no jurisdiction to make an order (see Livesey (formerly Jenkins) v Jenkins [1985] 1 AC 424 at 444F-H, per Lord Brandon). As a general principle, therefore, undertakings which are referred to in (or, more precisely in the preamble to) a court order do not become legally part of the order itself; indeed, “the giver of the undertaking assumes thereby an obligation to the court but to nobody else” (Re Hudson (deceased) [1966] Ch 209 at 214E, per Buckley J.). Those principles from the family courts have also been applied in the child support jurisdiction (see e.g. CCS/8328/1995, CCS/316/1998 and especially R(CS) 6/99). As Mr Commissioner Mesher (as he then was) held in R(CS) 6/99 (at paragraph 22):

 

“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… 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”.

 

57. In the present case the provision for child support maintenance was part of the recital or preamble, and in the form of an undertaking given to the court. It was not part of the court order as such. Thus the consent order was not an order “which requires the making … of periodical payments”. Accordingly, it was not covered by section 8(11) and the mother was able to apply to the Agency, as section 4(10)(aa) did not apply so as to exclude her.

 

The underlying agreement of the parties

58. The nature of the underlying agreement between the parties is clear from the undertakings. There was no conclusive agreement as to the actual amount of child support. Liability for child support maintenance was a separate matter to be determined according to the Agency’s rules. Pending settlement or other resolution of the actual amount, the father would pay £413 monthly, as it were on account (undertaking (5)). If the Agency’s assessment was lower, he was entitled to a refund representing the difference (undertaking (6)). If it was higher, then of course by implication that would ultimately be a matter for the Agency’s enforcement regime. The fact that the father says that he would never have agreed to this arrangement had he been aware that the Agency would make a maintenance calculation based on income assumed from his assets, rather than from his “ordinary” income, does not undermine that agreement. It may do no more than suggest that on this particular issue the mother got better legal advice than the father.

 

The policy of the legislation

59. The policy of the legislation points in the same direction, namely that the maintenance calculations were validly made. The general rule, of course, is that where the Agency has jurisdiction, the role of the courts, if not excluded together, is very limited (see section 8, especially section 8(3)). If parents can agree a finalised amount by way of child support, and that is required by the court order (rather than simply by way of an undertaking), then that private arrangement should be respected and left in place for at least 12 months, after which there can be an application to the Agency (section 4(10)(aa)). Failing that, however, the parent with care has a right to apply immediately for child support; indeed, her (and it is usually her) right to do so cannot be ousted by “agreement” (see section 9(4)).

 

Conclusion on the jurisdictional issue

60. Although Mr Cooper was quite right to fly this particular kite, as it relates to the question of jurisdiction, for the reasons given above I am more than satisfied that the Agency had the power to make the maintenance calculations in question.

 

Conclusion

61. For all the reasons explained above, the Upper Tribunal dismisses both of the father’s appeals (Tribunals, Courts and Enforcement Act 2007, section 11). The decisions of the First-tier Tribunal involve no error of law and therefore stand. 

 

 

 

 

 

Signed on the original Nicholas Wikeley

on 13 June 2013 Judge of the Upper Tribunal