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 SC900/11/00021 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 mother’s appeal against the decision of the Secretary of State (formerly the Child Maintenance and Enforcement Commission) dated 04 January 2011. It therefore follows that the mother’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 SC064/11/00412 (see CCS/124/2012).

 

(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 38-49 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/359/2012 in summary

1. The mother’s appeal to the Upper Tribunal is allowed, but not for the main reason that she argues. The decision of the Liverpool First-tier Tribunal (“the FTT”) on 5 July 2011 nonetheless 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, and the wrong set of accounts had been used and so the resulting maintenance calculation should be changed. The father’s appeal had the FTT reference SC064/11/00412. It now has the Upper Tribunal reference CCS/124/2012. I have dealt with that case separately, allowing the mother’s appeal against the FTT’s decision on the father’s original appeal. That aspect of the case will need to be re-heard at the same time as the present appeal.

 

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 now has the Upper Tribunal reference CCS/359/2012. This decision deals with that appeal.

 

The First-tier Tribunal’s decision on the mother’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 mother’s appeal was to dismiss that appeal and confirm the Secretary of State’s decision of 4 January 2011 (not to carry forward the departure direction).

 

6. In its reasons, the FTT explained that it had dismissed the mother’s appeal for two reasons, namely: (i) there was no statutory provision to carry forward a departure direction from a closed old scheme case to a new scheme case; and (ii) there was no evidence in the new scheme case to justify a variation.

 

The proceedings before the Upper Tribunal

7. The mother applied for permission to appeal to the Upper Tribunal against the FTT’s decision on her own appeal. Her argument, in summary, was that the previous departure direction was in effect binding and should have been carried forward into her new scheme case. I gave her permission to appeal, while indicating that I regarded the appeal as more problematic than the related appeal CCS/124/2012. I did, however, point out that there appeared to be some possible gaps in the documentation before the FTT.

 

8. S A Powell, on behalf of the Secretary of State (formerly the Child Maintenance and Enforcement Commission or the CSA), has provided two helpful submissions on the case. The first submission, dated 26 July 2012, resists the mother’s appeal in CCS/359/2012 on the basis that there is no power to carry forward a departure direction in a case such as this. The second submission, dated 7 December 2012 and filed in response to my Observations dated 9 November 2012, takes a different approach. The second submission argues that the FTT erred in law in relation to the mother’s appeal against the Agency’s decision for two other reasons, unrelated to the narrow question of the departure direction. That later submission accordingly now supports the mother’s appeal to the Upper Tribunal, but for different reasons to her original ground of appeal.

 

9. The father has responded to the Secretary of State’s submission in this part of the case (although not on the other appeal). He argues that his self-employed earnings are all duly declared on his tax returns, that the mother has no evidence to support her claims that his lifestyle is allegedly inconsistent with his income and that he is not hiding any other funds (why else, he asks perhaps not unreasonably, would he be having to run up interest charges on an overdrawn account?).

 

10. The mother has also replied, making various points about her variation application and taking issue with the father’s arguments.

 

11. In the light of the parties’ submissions, it makes sense to deal with the points that arise in the following order:

 

(1) the mother’s ground of appeal – the old departure direction;

(2) the issues identified in the Secretary of State’s second submission;

(3) the consequences for the First-tier Tribunal’s decision; and

(4) the Upper Tribunal’s guidance for the new First-tier Tribunal.

 

(1) The mother’s ground of appeal – the old departure direction

Introduction

12. This has unfortunately been a bitter and protracted case. It is not clear from the file when the parents separated but their three daughters are now aged 20, 18 and 17. The father’s child support liability was originally assessed under the “old scheme” in operation before 2003.

 

The former departure direction

13. On 7 June 2007 a FTT (then known as an appeal tribunal) allowed the mother’s then appeal and made a departure direction on the basis that the father’s lifestyle was inconsistent with his declared income (p.47). That tribunal’s decision was that he would have needed £20,000 net of tax and national insurance to support the actual lifestyle.

 

14. This appears to have led to a decision taken on 3 July 2007 by the Agency to the effect that the father’s liability was £115.38 a week with effect from 5 July 2006 (see p.135).

 

15. On 12 February 2008 a further supersession decision was taken, presumably in response to an application by the father. The new assessed liability (under the formula) was nil, as from 24 October 2007 (p.135). This seems to be because the father had high housing costs. The mother subsequently appealed that decision unsuccessfully (see FTT decision of 13 January 2009, p.48, and paragraph 17 below).

 

16. However, on 11 November 2008 a further supersession decision was made, with a new liability of £24.95 a week with effect from 24 October 2007 (p.135). S A Powell states that this was (apparently) a decision to carry forward the departure direction made by the tribunal on 7 June 2007 (see also p.6).

 

17. On 13 January 2009 the FTT heard but dismissed the mother’s appeal against the nil formula assessment dated 12 February 2008. However, District Tribunal Judge Clarke’s decision notice stated that “The Tribunal did not consider the departure direction which remains in force effective from 24/10/07.”

 

Closing the old scheme case and opening the new scheme case

18. In January 2009 the mother asked for the old scheme case to be closed; the Agency notified both parents on 16 February 2009 that the old case had been closed as from 7 January 2009 (p.33).

 

19. On 8 April 2009 the mother made a fresh application for child support maintenance under section 4 of the 1991 Act (see p.19). This reapplication was made (1 day) after the period of 13 weeks had expired as from the date of closure of the old scheme case. Accordingly it was an application made under the new scheme rules.

 

20. It appears that the mother took this action as she had been advised by the Agency (see p.37) to shut down the old case, due to the father’s high housing costs resulting in a significant reduction in his child support liability (whereas, of course, the new scheme formula makes no special provision for housing costs). I return later to the issue of whether that was sound advice.

 

The effect of closing the old scheme case on the departure direction

21. The nub of the Secretary of State’s submission on this point is straightforward. S A Powell argues that the effect of waiting 13 weeks before opening the new scheme case was that the departure direction was lost.

 

22. The Secretary of State’s representative accepts that departure directions in old scheme cases can, in principle, translate directly into variation directions in new scheme cases without the need for a separate application. However, this only applies in so-called conversion cases. These are where an old scheme maintenance assessment is in force and a decision is made under the new scheme in a related case (for example, involving the same non-resident parent but a different ex-partner). In such circumstances the old scheme case converts into a new scheme case and any departure direction may carry forward automatically (Child Support (Transitional Provisions) Regulations 2000 (SI 2000/3186), regulations 15 and 17).

 

23. The present case is not a conversion case. It is a case where an old scheme assessment was closed and a new scheme case subsequently opened. As the new application was made (just) outside the 13-week period, the so-called linking rule which would have preserved it as an old scheme case did not apply (Child Support (Transitional Provisions) Regulations 2000, regulation 28). It was therefore a new scheme case and the departure direction was lost with the closure of the old scheme case.

 

24. The mother essentially has three arguments to counter this submission, but none of them is convincing.

 

25. Her first argument turns on the FTT’s decision of 13 January 2009, and in particular DTJ Clarke’s statement that “The Tribunal did not consider the departure direction which remains in force effective from 24/10/07” (paragraph 17 above). However, this statement does not have the effect that the mother claims. All that DTJ Clarke was saying was that although the tribunal had dismissed the mother’s appeal against the formula assessment, the tribunal’s decision had no affect on the existing departure direction imposed by the previous tribunal on 7 June 2007. This was because under the old scheme the respective decisions on the formula-based maintenance assessment and on any related departure direction were, legally and conceptually, different decisions (see reported decision R(CS) 9/02). DTJ Clarke was not saying, as the mother seeks to argue, that the departure direction could only be removed by the tribunal judge. There is, quite simply, no way in which a tribunal judge could “future-proof” a decision to give it some sort of enhanced status so that it could not be modified or possibly cancelled in the light of subsequent events (see section 20(7)(b) of the 1991 Act and regulation 32F of the Child Support Departure Direction and Consequential Amendments Regulations 1996 (SI 1996/2907)).

 

26. Secondly, the mother points out that the father never appealed the FTT decision of 13 January 2009. That is true, but it does not follow that the tribunal’s decision must stand for all time. That tribunal’s decision dealt with the particular appeal at the particular time. This is really just another way of putting the first point. The FTT’s decision of 13 January 2009 could get overtaken and effectively made redundant by future changes in circumstances or other events, such as the start of the new scheme.

 

27. The mother’s third argument is that she was misadvised by the Agency when it was suggested to her that she should shut down the old scheme case, wait 13 weeks and then re-apply under the new scheme. She says that she was never informed that one side-effect of such action would be that she would lose the benefit of the departure direction “which had taken a lengthy process to achieve” (p.37). It is also right to point out that there were then problems in implementing the new scheme case, causing further delays. There is considerable force in this argument on the facts. Indeed, the Agency has conceded that it should never have advised her to close down the old scheme case when she had the benefit of a departure direction secured at the tribunal (see report of investigation at p.145). This argument is highly relevant to any complaint of maladministration by the Agency. However, it does not affect the legal consequences outlined above. There is, for example, no “get out” clause whereby an old scheme case remains an old scheme case even where an assessment is closed and a new application is made outside the 13-week rule but where the parent with care has been misadvised by the Agency.

 

Conclusion on the mother’s ground of appeal

28. My decision accordingly is that the mother’s principal ground of appeal fails. The departure direction expired when the old scheme maintenance assessment was closed. It is too late now to claim the continued benefit of that direction.

 

(2) The issues identified in the Secretary of State’s second submission

29. The Secretary of State’s second submission addresses two points raised in my further Observations on the appeal.

 

30. The first point concerned my comment that the Secretary of State’s first submission had included a copy of a variation application from the mother dated 1 October 2009 and received by the Agency on 6 October 2009. This document included an outline of the mother’s case that the father’s lifestyle was inconsistent with his declared income (p.132). For reasons that are not clear, this application had not been included in the papers for the FTT. The FTT was shown only what seems to have been a duplicate application form dated 20 October 2009 and received on 28 October 2009 (pp.26-31), which did little more than refer to the previous tribunal hearings in June 2007 and January 2009. It is therefore perhaps understandable why the FTT on this occasion said that there was “no evidence” in the new scheme case to justify a variation.

 

31. The Secretary of State’s representative now submits that the FTT was inadvertently misled by the Agency’s submission and the supporting documents. It is noted that where information is withheld from the tribunal, this may mean that the decision arrived at, through no fault of the tribunal, involves a breach of natural justice (see R(CS) 1/99 and CCS/375/2007). The result is the decision is flawed by an error of law. I should also refer to the specific requirement in rule 24(4)(b) of the Tribunal Procedure (First-tier Tribunal) (Social Entitlement Chamber) Rules 2008 (SI 2008/2685), which provides that “The decision maker must provide with the response… copies of all documents relevant to the case in the decision maker’s possession, unless a practice direction or direction states otherwise”. As Judge Wright noted in ST v Secretary of State for Work & Pensions [2012] UKUT 469 (AAC) (at paragraph 25):

 

‘The key word here is “relevant”. The use of the word “must” also makes clear that the Secretary of State’s decision maker is under a legal obligation to provide the Fist-tier Tribunal with copies of all documents relevant to the case that he has in his possession...’

 

32. The second point was whether or not the FTT had properly carried out its inquisitorial function. This was a case in which DTJ Jones had previously issued detailed case management directions for the production of further evidence (pp. 44, 98 and 100). There was at least a question mark as to whether both parents had fully complied with those directions. Putting that to one side, there was an express direction to the Agency to provide details of the father’s known bank accounts (p.100, at [5]). There is no evidence that the Agency replied to that direction. Nor is there any evidence that the FTT considered the issue any further.

 

33. There was also evidence, by way of a bank statement entry for a transfer in May 2009 from a separate joint account co-owned by the father (p.73), of another account, which was not explored by the FTT. There may be an entirely innocent explanation for this, as the father asserts. However, the point is that the FTT failed to ask the appropriate questions.  The father mentions in his response that the account was no longer open by the time of the tribunal hearing. That may well be right, but DTJ Jones’s direction was that any account, including joint accounts, held between January and June 2009 should be disclosed (p.100 at [3]). On the face of the evidence, that was not done, at least not complied with in full.

 

34. The failure to adopt a sufficiently inquisitorial approach is a second error of law.

 

(3) The consequences for the First-tier Tribunal’s decision in CCS/359/2012

35. I agree with S A Powell that the FTT’s decision was correct to find that the departure direction could not be carried over to the new scheme case. However, I also agree with the Secretary of State’s representative that the FTT’s decision on the mother’s appeal involves an error of law for the two reasons identified in paragraphs 30-34 above and so should be set aside.

 

36. On that basis – but not for the original reason put forward by the mother – I allow the mother’s appeal to the Upper Tribunal and send the matter back for re-hearing before a new tribunal.

 

37. 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.

 

(4) The Upper Tribunal’s guidance for the new First-tier Tribunal

Introduction

38. The first thing the new FTT must do is to decide when the mother made her variation application in relation to her new scheme application.

 

The law

39. The relevant law was helpfully summarised by Judge Jacobs in DB v CMEC (CSM) [2010] UKUT 356 (AAC) at paragraph 15 (references to sections are to those in the Child Support Act 1991 and to ‘regulations’ are those in the Child Support (Variations) Regulations 2000 (SI 2001/156)):

 

‘There must be an application for a variation: sections 28A(1) and 28G(1). The application need not be in writing, but it must state the grounds on which it was made: section 28A(4). If the application is not made in writing, it is treated as made on the date when the applicant notifies the desire to make one: regulation 4(2). If an application is made in writing at the applicant’s initiative, it is treated as made on the date when it is received: regulation 4(3).’

 

The evidence: when did the mother make her variation application?

40. The Agency’s case, as set out in the original submission to the FTT, was somewhat confused. First, it stated that the mother had made an application for a variation, on the basis of the father’s lifestyle, on 29 September 2009 (“sequence of events” at p.7). Second, it stated that the matter was discussed on the telephone on 23 September 2009, that a form was sent out and returned on 28 October 2009 (p.14; see also p.26). Third, it reverted to the position that the application was first made by telephone on 29 September 2009 (p.16). The case records also suggest that the telephone discussion took place on 29 September 2009, this being “the first recorded date of a request for a Variation”, with an effective date of 23 September 2009 (p.35).

 

41. The Secretary of State’s first submission to the Upper Tribunal confirms 29 September 2009 as the date of a telephone conversation (p.122). This appears to be confirmed by the contemporaneous screen print (p.134). That first submission reveals that a variation form was returned on 6 October 2009, having been signed on 1 October 2009 (pp.130-133). It then acknowledges that a further application form was received on 28 October 2009.

 

42. The mother’s case is different. In her letter of appeal dated 8 January 2011 she stated that when her old scheme case was closed and the new scheme case opened she had requested a variation on the basis of the evidence before the earlier tribunal (p.36). The inference from this is that she made the request at about the same time as making the new scheme application. That was also her evidence to the FTT that held an adjourned hearing on 11 April 2011. She told DTJ Jones “I closed down old rules case. It became a new rules case. I asked for variation, April ’09 – but that didn’t happen” (p.41). Her letters of 7 July 2011 and 27 September 2012 also refer to the variation request having been made in April 2009 (pp.106 and 139). In her most recent letter (dated 23 January 2013) she states that the variation application was first made on 13 April 2009 (i.e. a few days after the initial new scheme formula-based maintenance calculation) by telephone to a named member of CSA staff at the Falkirk office (p.156). The detail of that last statement suggests that the mother may have kept a contemporaneous note of the telephone call. The new FTT may also consider it plausible that a parent with care who had spent a long time getting a departure direction, and who had then closed down her old scheme case and re-applied under the new scheme, might respond quickly when receiving notice of a new scheme maintenance calculation dated 9 April 2009 that made no reference to any departure or variation component.

 

43. The new FTT will need to resolve this conflict of evidence. It should remember that a variation application can be made orally. It may need to explore further what the mother said when and to whom about her request for a variation. The fact that the CSA has no record of an oral application having been made is not conclusive. The FTT will also note that the mother’s account about the timing of her variation application has been essentially consistent throughout.

 

Why is it important to decide when the variation application was made?

44. It is important to decide when the variation application was first made as this goes to 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 first submission dated 26 July 2012 and considered in more detail in CCS/124/2012.

 

45. In short, there are two possibilities. 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).

 

46. The first possibility 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 this is the case, then the decision-maker and FTT could consider all relevant circumstances up until 14 October 2010, being the date of the first decision on the variation application. 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.

 

47. The alternative possibility is that the mother did not make her variation application before that key date but rather after 9 April 2009. This might have been on 13 April 2009 or, depending on the view the new FTT takes, might have been in the course of the later telephone conversation in September 2009. Under either scenario the variation application would have been made within a month of the original decision, or a revision of the original decision. As such, it would then follow that the tribunal could only consider circumstances up until the date of that original decision, namely 9 April 2009.

 

What basis was the variation application made on?

48. The FTT will have to consider all the evidence. This will include the mother’s account of the telephone conversation and the basis on which she made the application orally. It will also include the matters referred to in the two written application forms, which seem to relate to lifestyle and assets. The new FTT will also need at least to bear in mind the basis of the original departure directions. It now also has some of the father’s bank statements for the relevant period and his tax returns for the years ending April 2009 and April 2010. It is clear that the father owns a number of rental properties. The tax returns refer to 3 properties rented out (pp.86 & 96) but the figure 3 appears to have been written over the number 5. The bank statements refer to several different loan repayments, although one of these presumably relates to his home (apparently the Woolwich mortgage – see p. 104).

 

49. This may well be an appropriate case for a financially qualified panel member to sit with a tribunal judge, but I leave that to the good judgement of the District Tribunal Judge who issues re-listing directions.

 

Conclusion

50. 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