DECISION OF THE UPPER TRIBUNAL

(ADMINISTRATIVE APPEALS CHAMBER)

 

The DECISION of the Upper Tribunal is to allow the appeal by the appellant (“the mother”).

 

The decision of the Liverpool First-tier Tribunal dated 05 July 2011 under file reference SC064/11/00412 involves an error on a point of law. The tribunal’s decision is therefore set aside.

 

The Upper Tribunal is not in a position to re-make the decision on the appeal by the father against the decision of the Secretary of State (formerly the Child Maintenance and Enforcement Commission) dated 04 January 2011. It therefore follows that the father’s original appeal against the Secretary of State’s decision is remitted to be re-heard by a different First-tier Tribunal, subject to the Directions below.

 

This decision is given under section 12(2)(a) and 12(2)(b)(i) of the Tribunals, Courts and Enforcement Act 2007.

 

DIRECTIONS

 

The following directions apply to the re-hearing:

 

(1) The re-hearing should be at an oral hearing and the case should be heard together with appeal SC900/11/00021 (see CCS/359/2012).

 

(2) The new tribunal should not involve the tribunal judge who sat on the last tribunal on 5 July 2011.

 

(3) The District Tribunal Judge responsible for listing should consider whether the appeal should be heard by a tribunal judge sitting with a financially qualified panel member.

 

(4) If either parent has any further written evidence to put before the tribunal, this should be sent to the regional office of HM Courts and Tribunals Service in Liverpool within one month of the issue of this decision. 

 

(5) The Child Maintenance and Enforcement Commission, now the Secretary of State, should be represented at the new hearing by a presenting officer.

 

(6) The new tribunal should take into account the guidance and directions at paragraphs 17-24 below.

 

(7) The new tribunal must consider all the evidence afresh and is not bound in any way by the decision of the previous tribunal. 

 

These directions may be supplemented as appropriate by later directions by a District Tribunal Judge in the First-tier Tribunal (Social Entitlement Chamber). 

 

 

 

 

REASONS FOR DECISION

 

The Upper Tribunal’s decision in CCS/124/2012 in summary

1. The mother’s appeal to the Upper Tribunal is allowed. The decision of the Liverpool First-tier Tribunal (“the FTT”) on 5 July 2011 involves an error on a point of law.  The FTT’s decision is therefore set aside. There will have to be a re-hearing.

 

The context of this appeal: a tale of two cases

2. The FTT which heard this case at Liverpool on 5 July 2011 was actually hearing two appeals. By way of background, the mother had closed her “old scheme” case in January 2009 and had some time later made an application under the post-2003 “new scheme” rules. A series of maintenance calculations then followed. The Secretary of State’s decision-maker in the Child Support Agency had then made a decision about the father’s child maintenance liability on 4 January 2011. That decision was that the father’s liability was £43 a week as from 8 April 2009, the effective date.

 

3. The father appealed that decision on the ground that his net income was incorrect. He argued that the calculation had been based on his 2008/09 accounts, which were nearly three years old, but that he had in the meantime supplied his 2009/10 accounts, which he said should be used for the year from April 2010. That appeal had the FTT reference SC064/11/00412 and now has the Upper Tribunal reference CCS/124/2012. These reasons relate to that decision.

 

4. The mother had independently also appealed the Agency’s decision of 4 January 2011. She argued that there should have been a variation applied, and in particular that the departure direction on her previous (but now closed) “old scheme” case should have been carried forward to her “new scheme” case. The mother’s appeal had the FTT reference SC064/11/00021 and the Upper Tribunal reference CCS/359/2012. I have dealt with that decision separately as the issues are different. Unfortunately, both aspects of the case need to go back to the FTT for a re-hearing. It will obviously make sense for the two matters to be dealt with together again.

 

The First-tier Tribunal’s decision on the father’s appeal

5. The FTT issued separate decision notices on the two appeals but a combined statement of reasons. That approach was, in itself, perfectly reasonable. The FTT’s decision on the father’s appeal was to allow that appeal and remit the matter to the Secretary of State for recalculation. The FTT specified the following two directions:

 

“1. CMEC should now use tax return for 2008/09 to recalculate assessment as at the effective date of 08/04/2009.

2. CMEC should treat letter from [the father] leading to decision of 04/01/11 as notification of a change of circumstances and recalculate using his tax return for 2009/10.”

 

6. In its reasons, the FTT noted that in fact the 2007/08 accounts had been used by the Agency to calculate his income as at the effective date of 8 April 2009, but that the 2008/09 accounts had now been made available. These “reflected his actual income at 8 April 2009”. The FTT also accepted that the father had applied to the Agency for a change of circumstances before the decision of 4 January 2011 (the decision notice referred to a “letter” to this effect), and that the 2009/10 tax return should now be used to recalculate the assessment. The FTT also accepted that the father’s tax returns were an accurate statement of his income.

 

7. From the further correspondence on file, it seems that the effect of the Agency’s implementation of the FTT’s decision of 5 July 2011 on the father’s appeal was to result in a nil maintenance calculation with effect from 29 December 2010. The father was (unsurprisingly perhaps) content with the £0 assessment but wanted the date pushed back to 1 June 2010 or 23 September 2010. He made an application to the FTT to that effect. On 13 December 2011 District Tribunal Judge Rocke in effect rejected that application, but at the same time she cast considerable doubt on the lawfulness of the FTT’s decision of 5 July 2011.

 

The proceedings before the Upper Tribunal

8. The mother meanwhile applied for permission to appeal to the Upper Tribunal against the FTT’s decision on the father’s appeal. In short she argued that the FTT had used the wrong set of accounts in relation to the effective date, and that the father had not in fact made the application purportedly relied on by the FTT as a notification of a change in circumstances.

 

9. When giving the mother permission to appeal on this point (and so addressing her as “you”), I commented in part as follows, noting (as mentioned above) that the father had applied to the FTT after the hearing for the effective date to be changed:

 

‘The first appeal (the maintenance calculation, net income and the effective date)

7. The first appeal is further complicated by the fact that the father appears to have asked for the effective date to be changed to an earlier date. The father’s application seems to have been treated under the liberty to apply procedure but his application was refused by District Tribunal Judge (DTJ) Rocke in her decision dated 13 December 2011 under FTT reference SC064/11/02914. In her decision notice, DTJ Rocke describes the FTT decision of 5 July 2011 in SC/164/11/00412 as “incoherent”. She also suggested that the CSA might apply for it to be set aside. The CSA duly made such an application although the fate of that application is not known.  It may, for example, have been “put on hold” by the FTT if it was known that you were making the present application to the Upper Tribunal.

 

8. DTJ Rocke’s carefully reasoned decision notice of 13 December 2011 rather puts in doubt her earlier short refusal of permission to appeal (dated 31 October 2011) following your application.

 

9. I am therefore giving you permission to appeal in CCS/124/2012. I also note that the FTT decision notice states that the CSA should “treat letter from [father] leading to decision of 04/01/11” as a notification of a change in circumstances. This appears to be reflected in para [14] of the statement of reasons.  However, my understanding from the file is that the 4 January 2011 decision was in fact a revision of a decision of 20 October 2009, which in turn resulted from your application under the new rules in April 2009.’

 

10. S A Powell, on behalf of the Secretary of State (formerly the Child Maintenance and Enforcement Commission or the CSA), has provided a detailed and full submission on the case. This supports the mother’s appeal in CCS/124/2012 and argues that the FTT erred in law in relation to the father’s appeal against the Agency’s decision. S A Powell’s submission identifies two errors of law in the FTT’s decision.

 

11. The first relates to the mother’s argument that the father’s 2008/09 tax return should not be used for assessing maintenance as from 8 April 2009. This turns on paragraph 7(6) of the Schedule to the Child Support (Maintenance Calculations and Special Cases) Regulations 2000 (SI 2001/155) and the definition of “relevant week” in regulation 1(2). In this case, the relevant week was from 1 April 2009 to 7 April 2009; it followed that accounts ending on 5 April 2009 did not (by a whisker) fall wholly into the 24 months before the relevant week as required by regulation 7(6). Rather, as a matter of law, the correct accounts to use were those for the 2007/08 year. Indeed, I see from the file that those were the accounts supplied by the father to the Agency on 16 September 2009. Indeed, an Agency inspector had to call at the father’s home address to collect those accounts (see p.116).

 

12. The second point concerns the FTT’s treatment of the father’s letter. There was no actual evidence on file of any letter from the father that prompted the Agency’s decision of 4 January 2011. In effect the Secretary of State’s representative says that the FTT had misunderstood the (admittedly rather confusing) decision-making history of this case. It is now plain that the 4 January 2011 decision was in response to the mother’s request for a revision, not in response to any application by the father for a supersession. In addition, the Secretary of State submitted, and as DTJ Rocke had previously noted, the FTT’s second direction was imperfect as it stipulated no effective date for the new decision to take effect. As such, it could not properly and lawfully be implemented.

 

13. The father has not responded to the Secretary of State’s submission in this part of the case.

 

14. The mother has replied, repeating her point that the FTT had no evidence to support its finding that the father had made an application which led to the 4 January 2011 decision. She also points out that DTJ Rocke ruled on 13 December 2011 that the effective date (29 December 2010) selected by the Agency in its decision implementing the FTT’s decision on the father’s appeal was wrong, being made on the basis of assumptions and not findings of fact.

 

The errors in the First-tier Tribunal’s decision in CCS/124/2012

15. I agree with both the mother and S A Powell that the FTT’s decision involves an error of law for the two reasons identified in paragraphs 11 and 12 above and so should be set aside. The Secretary of State’s representative suggests that I allow the mother’s appeal to the Upper Tribunal and send the matter back for re-hearing before a new tribunal. I agree.

 

16. Ideally, given the time that has elapsed, I would much have preferred to resolve the underlying appeal as well, so that everyone can move on. However, for reasons that will become apparent that is not possible. However, I provide some analysis of the issues below in the hope that this guidance will be of assistance to the new tribunal that re-hears both appeals.

 

The Upper Tribunal’s analysis of the underlying appeal

17. It is clear that the maintenance calculation made on 4 January 2011 and effective as from 8 April 2009 was a formula assessment with no variation applied. The father had then appealed against the way in which his net income had been assessed. However, for the reason explained at paragraph 11 above, that formula calculation was correctly based on the father’s 2007/08 accounts. The effect of the child support rules governing which accounts are to be used for which period for self-employed parents is that there is inevitably a “time lag” before changes in income get translated into adjustments of child support liabilities. There has been no challenge to the underlying arithmetic in that calculation. In principle, therefore, the new FTT may take the view that it can simply dismiss the father’s appeal against the Agency’s decision of 4 January 2011, if that decision was properly based on the 2007/08 accounts. If it takes that view, it will then confirm the formula assessment as being a liability of £43 a week, subject of course to the mother’s appeal in the parallel matter being re-heard by the FTT on the variation point (see CCS/359/2012).

 

18. However, it is not that quite straightforward, for the reasons explained by the Secretary of State’s representative. 

 

19. The problem is the question of jurisdiction, and in particular the FTT’s powers to make a decision and with effect from which date. This is dealt with by S A Powell at paragraphs 11-17 of the submission dated 26 July 2012. That submission canvasses two possibilities. By way of context, it should be noted that the new scheme application was first made on 8 April 2009 and decided (remarkably and admirably promptly) the day after on 9 April 2009 (see pp.19-24). The answer to the jurisdictional question turns on whether the mother made an application for a variation before or after the initial decision on the maintenance application (i.e. the decision dated 9 April 2009).

 

20. In this decision I deal just with the legal implications that flow from whether the variation application was made before or after that date. I deal with the actual evidence on that issue in the other decision, on appeal CCS/359/2012.

 

21. The first possibility then is that the variation application was made before 9 April 2009. In practice this must presumably mean that the variation application was made at the same time as the main application the day before. If so, then sections 11, 12(2), 28A and 28F(3)(a) of the Child Support Act 1991 Act would apply. In this situation, then the original decision by definition did not deal with the variation issue. Accordingly, that decision could only have been an interim maintenance decision under section 12(2). Any subsequent decision on the variation application would have been made under section 11 and replaced the interim maintenance decision by virtue of section 28F(5). The effect of all these rules, taken together, would be that the decision-maker could then consider all relevant circumstances up until 14 October 2010. This is because 14 October 2010 was the date of the first decision on the variation application, refusing the mother’s request. As the tribunal stands in the shoes of the decision-maker, then in this situation the tribunal could consider making a “stepped” assessment if appropriate. For example, in these circumstances a staged (or stepped) series of calculations could be made, based on the information in the father’s 2008/09 and 2009/10 tax returns (see further S A Powell’s submission at paragraphs 11-15).

 

22. The second, and alternative, possibility is that the mother did not make her variation application before that key date but rather after 9 April 2009. In this scenario the variation application would technically have been made under section 28G of the 1991 Act, as there would have been a maintenance calculation made under section 11 already in force. If any such (later) variation application were made either within one month of the original decision of 9 April 2009 or within a month of any decision revising that original decision, it would then follow that the tribunal could only consider circumstances up until the date of that decision, namely 9 April 2009 (see section 20(7)(b) of the 1991 Act and regulation 3A(1)(a)(ii) of the Social Security and Child Support (Decisions and Appeals) Regulations 1999 (SI 1999/991)). If the tribunal could only consider the father’s circumstances up until 9 April 2009, then for the reasons explained above it could not make a decision involving the recalculation of the father’s net weekly income based on his 2009/10 tax return. Such a decision would simply not be within the tribunal’s jurisdiction.

 

23. In reaching this view I have applied the analysis set out by Judge Jacobs in DB v CMEC (CSM) [2010] UKUT 356 (AAC) at paragraphs 9-11 (and see also reported decision R(CS) 1/03).

 

24. It follows from all this that the new tribunal will need to consider all the evidence (see CCS/359/2012) and then make a finding as to the date on which the mother first made her variation application. If that was before 9 April 2009, then the new FTT can consider all the relevant circumstances up until 14 October 2010 and if necessary make a stepped formula calculation (see paragraph 21 above). If the variation application was after 9 April 2009, but within one month of that decision or any decision revising that original decision, then the new FTT can only consider the father’s circumstances up until 9 April 2009 (see paragraph 22 above).

 

Some unfinished business?

25. For completeness, I should mention that there may also still be some unfinished business which is not strictly part of the present proceedings. In his original letter of appeal to the FTT (p.38), dated 10 January 2011, the father stated that he had supplied his 2009/10 accounts in response to an Agency letter of 25 September 2010. He wanted those accounts to be used to assess his liability from April 2010.

 

26. DTJ Jones had identified this point in his adjournment notice dated 11 April 2011 (p.44). This prompted a further submission from the decision-maker (p.45 onwards) detailing the recent chronology of the case and stating that there was no record of the father submitting 2009/10 accounts, just those from 2007/08 (received 16 September 2009 – see paragraph 11 above). That submission concedes (at p.46) that on 19 October 2010 the Agency had received a letter from the father, but assumes that it was only in relation to payments – because “a copy [of the father’s letter] is not held on file.” It also points out that an inquiry to HMRC on 27 August 2010 revealed no chargeable income for 2009/10.

 

27. It is plainly not satisfactory that the Secretary of State appears unable to produce the father’s letter of 19 October 2010, which would presumably confirm one way or another whether he did indeed send in his 2009/10 accounts at that time. The fact that the inquiry to HMRC revealed nothing may tell us little, as of course it is entirely possible that the 2009/10 accounts were finalised and submitted to HMRC between August and October 2010. In this context I note that the original submission to the FTT stated that the 2010 enquiry to HMRC had revealed the latest filed accounts to be those for 2007/08 (see pp.10 and 25). That does not appear to be accurate, as according to the supplementary submission the latest filed accounts were for 2008/09 (see pp.46 and 51).

 

28. I simply raise this point as, at some stage, it may be necessary for the Secretary of State to consider whether there is an as yet undetermined application for a supersession by the father dated 19 October 2010. However, there may well, of course, be other decisions made after January 2011 (e.g. in response to what appears to have been a further letter by the father dated 19 January 2011; see the mention of this at p.66). Any such decisions will doubtless need to be revisited after the new FTT deals with these appeals. This is because the new FTT’s decision at the re-hearing of the appeals will in effect set a new benchmark for the decision of 4 January 2011 as regards the formula maintenance calculation and (if appropriate) any variation.

 

Conclusion

29. For the reasons explained above, the Upper Tribunal allows the mother’s appeal. The decision of the First-tier Tribunal is set aside and the Upper Tribunal directs a re-hearing of the decision under appeal as set out above. 

 

Signed on the original Nicholas Wikeley

on 15 February 2013 Judge of the Upper Tribunal