Upper Tribunal (Administrative Appeals Chamber)

Decision of the Upper Tribunal
(Administrative Appeals Chamber)

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

The decision of the Bristol appeal tribunal under reference 186/07/01237, held on 22 October 2007, did not involve the making of an error on a point of law.

 

Reasons for Decision

1.           These are the reasons for the Upper Tribunal’s decision, to which we have both contributed.

A.          The appeal and the parties

2.           This case concerns the child support maintenance payable in respect of Georgia. Her father is, in the language of the child support legislation, her non-resident parent and her mother is her parent with care.

3.           The case began as an appeal by the parent with care to an appeal tribunal followed by an appeal by the non-resident parent to a Child Support Commissioner with the leave of Mr Commissioner Jacobs (as he then was). The proceedings were transferred to the Upper Tribunal under the Transfer of Tribunal Functions Order 2008 (SI No 2833 of 2008). This has not affected our decision.

4.           Originally, the Secretary of State was a respondent to the appeal. However, the function of the Secretary of State was transferred to the Child Maintenance and Enforcement Commission under the Child Maintenance and Other Payments Act 2008. For convenience, we refer to this body as the Commission.

B.          The hearing

5.           We held a hearing of this appeal on 30 January 2009. The non-resident parent did not attend, but was represented by Mr David Burrows, a solicitor advocate. The Commission was represented by Mr Leo Scoon on behalf of the Solicitor to the Department for Work and Pensions. The parent with care did not attend, but made some short written submissions. We are grateful to Mr Burrows for his detailed written submission on the law and to both him and Mr Scoon for their arguments at the hearing.

C.          History and background

6.           The parents have five children. They were married in 1984 and separated in 2000, when the parent with care left. A divorce petition was filed in 2002 and the couple were divorced in 2003.

7.           There was  a consent order dealing with child maintenance in October 2003. However, in October 2004 the parent with care applied for a child support maintenance calculation under the Child Support Act 1991 as amended by the Child Support, Pensions and Social Security Act 2000. The non-resident parent’s liability for child support maintenance was fixed at £80 a week from the effective date of 9 March 2005. The parent with care then applied for a variation on the ground that the non-resident parent had income that had not been taken into account. The appeal tribunal found that the application had first been made by telephone within one month of the date of notification of the maintenance calculation. Thereafter in 2006, she raised the matter three times and completed two application forms for a variation.

8.           It was not until June 2006, after the parent with care had sent in her first application form, that the Secretary of State (acting at that stage through the Child Support Agency) wrote to the non-resident parent inviting him to make representations on the application. However, the wrong form was used and it was, apparently, sent to him at the parent with care’s address, where the Agency knew he was no longer living. The result was that the non-resident parent did not make representations on the application.

9.           The Secretary of State agreed to a variation, increasing the non-resident parent’s net weekly income figure for the maintenance calculation by £2596.15. This was capped, so that the non-resident parent’s liability was calculated on the basis of a net weekly income of £2000.

10.        Meanwhile, other maintenance issues were the subject of ancillary relief proceedings in the County Court. There was a hearing before District Judge Julie Exton, who delivered a detailed judgment on 10 March 2006. The judge did not deal with child support maintenance, but her judgment is relevant because she made a finding that the company of which the non-resident parent was a director ‘is likely to generate an income for [him] over the coming years of at least £70,000 per annum.’ The judge’s order has not concluded the proceedings, because it is said that the parent with care did not inform the judge that she had applied for a variation of the child support maintenance calculation. This has led the non-resident parent to apply both to set aside the judge’s order and, under Barder v Caluori [1988] AC 20, for permission to appeal out of time against it. 

11.        Returning to the variation, the non-resident parent exercised his right of appeal to an appeal tribunal. The case was heard by Mrs Martha Street (now District Tribunal Judge Street) on 22 October 2007. Her ‘Decision Notice’ with ‘Summary Reasons’ ran to 13 pages. It was followed by a ‘Statement of Reasons for Decision’ running to 22 pages, which according to the heading was ‘to be read with the decision notice …’ Her consideration of the issues was fairly described in the written submission by the officer acting for the Commission as ‘an extremely thorough/exemplary decision’. We have been much assisted by it, even though our analysis of the law differs on some points. We would only comment that, where unusually the initial decision is as fully reasoned as this, there is no reason why it should not stand also as the statutory statement of reasons. If, on the other hand, it is thought necessary to provide a fuller statement, the subsequent statement should be in a form which can stand on its own, without the need to refer back to the earlier decision notice.

12.        The tribunal decided that the non-resident parent’s net weekly income was £44.36 from 9 March 2005. However, from 30 April 2005 (the date when regulation 19(1A) of the Child Support (Variations) Regulations 2000 (SI No 156 of 2001) came into force), an annual dividend of £150,000 gross was to be taken into account. As before, this resulted in the net weekly income being capped at £2000. This confirmed the Secretary of State’s decision, but on a different basis.

13.        On the just and equitable requirement, Mrs Street directed herself that this imposed an all or nothing test, as ‘neither the Act nor the regulations provide for part only of the figure prompted by the grounds for variation to be used.’ However, she went on:

‘Even if there is an implied power to reduce the figure where it is not just and equitable to direct the full amount, that does not apply here. On the simple principle that parents should be responsible for maintaining their children whenever they can afford to do so, it is equally fair that the liability should reflect the means. Mr Cart’s means include his dividend, in full.’

14.        On issue estoppel, the tribunal refused to accept Judge Exton’s finding on the non-resident parent’s income. Mrs Street wrote that:

‘estoppel cannot apply here. That is simply because of the wholly different statutory basis for the findings in the County Court ancillary relief proceedings and those necessary to meet the terms of the child support legislation. Neither the Tribunal nor the Secretary of State can be bound by findings made in different proceedings under different legislation to which the Secretary of State was not a party.’

15.        On the non-resident parent’s control over his income from the company, Mrs Street found that an analysis of the dividends received by him showed that he owned 55% of the shares and, therefore, a controlling interest. However, she went on:

‘Were that to be wrong, and it is suggested that his share ownership is only as to half the shares, the Tribunal is nonetheless satisfied that in practice given his substantial contribution to the company he has the effective ability to control the amount of income he receives from the company. Again, the strongest evidence for that is the manipulation carried out as between salary and dividend which implies control. It is clear that he controls income and the manner of payment; that is the way small private companies work. They are typically controlled by shareholding directors whose work in the business is fundamental to profitability. [The non-resident parent] is such a director. The regulation does not require sole control or legal control: it requires effective control. He has that.’

16.        The non-resident parent applied for leave to appeal to the Child Support Commissioner. His application came before Mr Commissioner Jacobs at an oral hearing in Cardiff on 25 June 2008. He gave leave on three issues: (i) whether the just and equitable requirement was an all or nothing test; (ii) whether issue estoppel applied to child support proceedings; and (iii) whether joint control was sufficient to found a variation. He refused leave to appeal on two issues: (iv) the effect of the failure by the Secretary of State to notify the non-resident parent of the application for a variation; and (v) whether the tribunal had correctly identified the effective date for the variation and the decision under appeal. On (iv), he wrote:

‘21.   I have not given leave on the failure by the Secretary of State to serve [the non-resident parent] with notice of the application for a variation. The modern approach to procedural deficiencies is to focus on the effect of the failure rather than on the particular language of the legislation. In this case, [the non-resident parent] has not suffered any prejudice as a result. Whatever the failings in terms of procedure, [the non-resident parent] is no worse off.’

D.          The legislation

17.        This case concerns the scheme under the Child Support Act 1991 as amended by the Child Support, Pensions and Social Security Act 2000. The scheme contains a basic maintenance calculation that is subject to variation on a limited number of closely defined grounds. We set out the legislation as it applied at the time and, therefore, without reference to the Commission.

18.        Applying across the basic calculation and the permissible variations are two general principles.

19.        One general principle concerns the responsibility of parents to maintain their children. Section 1 provides:

‘(1)   For the purposes of this Act, each parent of a qualifying child is responsible for maintaining him.’

Section 28E contains a similar provision that is limited to the variation scheme, but not limited to the qualifying child:

‘(1)   In determining whether to agree to a variation, the Secretary of State shall have regard both to the general principles set out in subsection (2) and to such other considerations as may be prescribed.

(2)     The general principles are that-

(a)     parents should be responsible for maintaining their children whenever they can afford to do so;

(b)     where a parent has more than one child, his obligation to maintain any one of them should be no less of an obligation than his obligation to maintain any other of them.’

20.        The other general principle is the duty imposed on decision-makers to consider the welfare of children affected by the use of discretionary powers under the Act. Section 2 makes general provision:

‘Where, in any case which falls to be dealt with under this Act, the Secretary of State is considering the exercise of any discretionary power conferred by this Act, he shall have regard to the welfare of any child likely to be affected by his decision.’

Section 28F makes similar provision that is limited to the just and equitable issue:

‘(2)   In considering whether it would be just and equitable in any case to agree to a variation, the Secretary of State-

(a)     must have regard, in particular, to the welfare of any child likely to be affected if he did agree to a variation; …’

21.        The basic maintenance calculation is made under section 11 of the 1991 Act (as substituted by the 2000 Act), supplemented by Schedule 1 and the Child Support (Maintenance Calculations and Special Cases) Regulations 2000 (SI No 155 of 2001).

22.        The variation scheme operates under sections 28A-28F, Schedules 4A and 4B and the Child Support (Variations) Regulations 2000.

23.        The Secretary of State may reject an application on preliminary consideration under section 28B. Otherwise, the Secretary of State, subject to certain exceptions, has to follow the procedure set out in regulation 9, under which the Secretary of State ‘shall  give’ notice to the non-resident parent, informing him of the grounds of the application and ‘may invite representations’ within a specified time period. Section 28E(3)(a) imposes a duty on the Secretary of State to take any representations into account.

24.        Section 28F provides:

‘(1)   The Secretary of State may agree to a variation if-

(a)     he is satisfied that the case is one which falls within one or more of the cases set out in Part I of Schedule 4B or in regulations made under that Part; and

(b)     it is his opinion that, in all the circumstances of the case, it would be just and equitable to agree to a variation.’

By section 28F(4):

‘(4)   Where the Secretary of State agrees to a variation, he shall-

(a)     determine the basis on which the amount of child support maintenance is to be calculated in response to the application for a maintenance calculation (including an application treated as having been made); and

(b)     make a decision under section 11 on that basis.’

Part II of Schedule 4B provides:

‘5(1) The Secretary of State may by regulations make provision with respect to variations from the usual rules for calculating maintenance which may be allowed when a variation is agreed.

(2)     No variations may be made other than those which are permitted by the regulations.’

25.        There are three categories of case in which a variation may be agreed under Schedule 4B: ‘Special expenses’, such as contact costs; ‘Property or capital transfers’; and ‘Additional cases’, which may be prescribed by regulations. This case concerns an additional case under regulation 19(1A):

‘(1A) Subject to paragraph (2), a case shall constitute a case for the purposes of paragraph 4(1) of Schedule 4B to the Act where-

(a)     the non-resident parent has the ability to control the amount of income he receives from a company or business, including earnings from employment or self-employment; and

(b)     the Secretary of State is satisfied that the non-resident parent is receiving income from that company or business which would not otherwise fall to be taken into account under the Child Support (Maintenance Calculations and Special Cases) Regulations 2000.’

If those conditions are satisfied, regulation 19 provides:

‘(5)   Where a variation on this ground is agreed to-

…

(c)     in a case to which paragraph (1A) applies, the additional income taken into account under regulation 25 shall be the whole of the income referred to in paragraph (1A)(b).’

Regulation 25 provides:

‘25  Effect on maintenance calculation – additional cases

Subject to regulations 26 and 27, where the variation agreed to is one falling within regulations 18 to 20 (additional cases), effect shall be given to the variation in the maintenance calculation by increasing the net weekly income of the non-resident parent which would otherwise be taken into account by the weekly amount of the additional income except that, where the amount of net weekly income calculated in this way would exceed the capped amount, the amount of net weekly income taken into account shall be the capped amount.’

E.          The failure to notify the non-resident parent

26.        In his written argument for the hearing of this appeal, Mr Burrows presented a detailed argument that the tribunal should reconsider Mr Jacobs’ refusal of leave on the effect of the failure by the Secretary of State to notify the non-resident parent of the application for a variation. (Reconsideration is permissible: R v Cripps, ex parte Muldoon [1984] QB 686 at 695.) He argued that the legislation was mandatory and that the non-resident parent was both prejudiced and worse off as a result of not being consulted. As to the correct procedure:

‘Had a variation direction been made as H’s advisers anticipated and submitted to DJ Exton then there is every likelihood that W would have accepted it, there would have been no appeal and none – or few – of the arrears now alleged.’

As to being better off, the non-resident parent would have saved the costs (itemised by Mr Burrows) of the hearings before the appeal tribunal, the Commissioner and the Upper Tribunal, before magistrates on a liability order, before the Administrative Court to quash a deduction from earnings application, and before the County Court to appeal against and set aside Judge Exton’s order. As to prejudice, although the appellant in these proceedings, the burden was on the non-resident parent to persuade this tribunal that this issue could be raised.

27.         We confirmed the refusal of leave to appeal on this issue. The effect of procedural failings no longer depends on whether the legislation is analysed as mandatory or directory. The focus is on the impact of the failure and on presumed statutory intention (see, for example, Lord Steyn, in R v Soneji [2006] 1 AC 340 paragraph 23).

28.        In this case, the tribunal undertook a fresh consideration of the application for a variation. The non-resident parent had the advantage  of being represented before the tribunal by Mr Burrows. He is a specialist family practitioner and well-known for his knowledge and experience of child support legislation. As a result, every aspect of the case was thoroughly investigated and the non-resident parent had the opportunity to make any representations on both the evidence and the law.

29.        Moreover, the points made by Mr Burrows do not support his argument. As to the alleged effect on the ancillary relief proceedings, this is pure speculation. As to the costs and stress, the defects identified by Mr Burrows could only secure a further reconsideration by the Secretary of State (now the Commission), which would add to the time, cost and stress for both parents. Defective procedures might render proceedings ineffective. They might render the decision made following those proceedings of no force or effect. But what they could not do is render the parent with care’s application a nullity. The application was properly made. If the proceedings following, and the decision on, the application were not effective, the application survives or revives and has to be decided. The defects in the procedure or the decision cannot affect the existence of the application itself.

30.        Mr Burrows applied to us to stay our decision while he considered applying for a judicial review of Mr Jacobs’ refusal of leave on this issue. We have not done so, as we reached a clear view on this point, and we see no purpose in further delaying our decision on the substantive issues. Nor is it necessary or appropriate for us to enter into the question whether the Upper Tribunal, as a “superior court of record” (section 3(5) of the Tribunals, Courts and Enforcement Act 2007), can be subject to judicial review (see e.g. R v Manchester Crown Court, ex parte DPP [1993] 1 WLR 1524 at 1528).

F.           Just and equitable

31.        Does the just and equitable requirement allow the Commission (previously the Secretary of State) and tribunals to vary the amount that would otherwise be agreed to as a variation or does it allow them only to agree, or refuse to agree, to a variation of that amount? For convenience, we refer to these alternatives as the all or nothing and flexible approaches. This issue was decided, in favour of the all or nothing approach, by Mr Commissioner Angus in CCS/2018/2005. However, he later accepted that his reasoning was defective. As has been seen, the tribunal in this case decided that an all or nothing approach was required, but went on to find that it was ‘just and equitable’ to agree the full amount. Assuming that conclusion to be tenable on the facts, the legal issue may be seen as academic. However, it is an issue of general importance, on which we have had full argument. It is therefore right that we should express our conclusion on it.

32.        Mr Burrows argued for the flexible approach, seeking an outcome equivalent to the broad discretion given by section 25(3) of the Matrimonial Causes Act 1973:

‘(3)   As regards the exercise of the powers of the court under section 23(1)(d), (c) or (f), (2) or (4), 24 or 24A above in relation to a child of the family, the court shall in particular heave regard to the following matters-

(a)     the financial needs of the child;

(b)     the income, earning capacity (if any), property and other financial resources of the child;

(c)     any physical or mental disability of the child;

(d)     the manner in which he was being and in which the parties to the marriage expected him to be educated or trained;

(e)     the considerations mentioned in relation to the parties to the marriage in paragraphs (a), (b), (c) and (e) of subsection (2) above.’

We refer to some of his more detailed arguments later.

33.        Mr Scoon argued for the all or nothing approach, although he conceded that the legislation was susceptible to either construction. He relied on the written submission on behalf of the Commission. He argued that the all or nothing approach represented the policy intention and that this was based on a need for simplicity. Again, we refer to some of his more detailed arguments later. 

34.        We reject Mr Scoon’s argument (based on internal Departmental documents) of the alleged policy intention behind the legislation. That material is not admissible as an aid to the interpretation of the legislation. Without the support of any statements that would be admissible under Pepper v Hart [1993] AC 593, this argument is impossible to sustain.

35.        Mr Burrows rightly emphasised the basic duties and principles under the Child Support Act that parents should maintain their children and that decision-makers should consider the welfare of children affected by the exercise of a power.

36.        There is no dispute that the just and equitable requirement is discretionary. The issue is the scope of the discretion. The terms in which the Act imposes the requirement support Mr Burrows’ argument for the flexible approach. Section 28F(1)(a) provides that ‘The Secretary of State may agree to a variation if it is his opinion that, in all the circumstances of the case, it would be just and equitable to agree to a variation.’ Those terms, especially the words we have emphasised, indicate a broad discretion that is not limited to any particular form of variation. If Mr Scoon’s argument were correct, we would expect the section to have referred to agreeing to the variation rather than a variation.

37.        The existence of a broad discretion is consistent with the Secretary of State’s duty under section 28F(4) to determine how the variation is to be given effect and feeds it directly into the calculation decision under section 11.

38.        The Act does not limit the specific duty under section 28F(4) by reference to the provisions of regulations. However, section 28F(6) does impose a general duty to comply with regulations made under Part II of Schedule 4B, specifically under paragraph 5. These are the only provisions of the Act that are capable of supporting Mr Scoon’s argument for an all or nothing approach. He relied in particular on regulation 19(5) under which the ‘additional income’ to be taken into account where paragraph (1A) applies ‘shall be the whole of the income…’; and regulation 25 under which ‘shall be’ given to the variation by increasing the net weekly income by the weekly amount of the additional income. On this interpretation of the provisions, they require the Secretary of State to agree to a variation in the terms stipulated in the regulations or not to agree to one at all.

39.        Unless driven to it, we would regard such a rigid interpretation as contrary to the spirit of the general requirement that a variation should only be agreed if it is ‘just and equitable’. This appears designed to enable the Secretary of State to arrive at a fair result on the facts of the case. More specifically, it appears inconsistent with the duty to maintain that is recognised by sections 1(1) and 28E(2)(a) and the duties to take account of the welfare of all children likely to be affected under sections 2 and 28F(2)(a). This can be illustrated by two examples.

40.        Assume first that the parent with care applies for a variation on the ground that the non-resident parent possesses assets of at least £65,000 (regulation 18). The regulations provide for attributing to that parent income at the judgment debt rate, which has not changed since 1993 and is currently 8%. The all or nothing approach puts the Secretary of State in the unenviable position of either agreeing to a variation at that unrealistic and unattainable rate or agreeing to nothing. The effect is even starker if the non-resident parent has another child in a new relationship. He is under a duty to maintain all his children and the welfare of all of them has to be considered. But on the all or nothing approach this can be achieved only if by chance it happens to be compatible with the maintenance calculation either remaining unaffected or being increased by the whole amount.

41.        Assume second that the parent with care applies for a variation on a number of grounds and the conditions for all of them are satisfied. Mr Scoon argued that there was a single application for a single variation, so that they could not be severed with a variation agreed on some grounds but not on others. The effect is that the more grounds that are satisfied the more likely it is that their overall effect will not be just and equitable. The Secretary of State is again in an unenviable position, this time by having to decide whether to impose hardship on the non-resident parent or to deprive the parent with care and their children of any benefit from a variation.

42.        These examples, which are not unrealistic and are taken from cases currently before the Upper Tribunal, show that the all or nothing approach changes a test of what is just and equitable into a crude instrument that is incapable of producing that effect and can cause the opposite. Mr Scoon argued that the benefit of his approach was simplicity. In the context of the examples we have given, it produces simplicity at the cost of what is fair and equitable.

43.        We do not think this approach is excluded by paragraph 5(2). It prevents the Secretary of State from agreeing to a variation in circumstances other than those permitted in the regulations, or to a greater effect than so allowed (as Mr Commissioner Williams decided could not be done in R(CS) 5/06). But it does not detract from the general requirement that no variation may be agreed save to the extent that it is ‘just and equitable’.

44.        For completeness we should note two arguments by Mr Burrows based on the regulations. His first argument relied on the wording of regulation 19(5)(c). He argued that it provided only that the income had to be ‘taken into account’, not for the extent to which it was to be included in the maintenance calculation. The ambiguity on which this argument relied was neatly captured by Lord Hewart CJ in Metropolitan Water Board v Assessment Committee of the Metropolitan Borough of St Marylebone [1923] 1 KB 86 at 99:

‘It is quite evident that confusion has arisen in the past between the ambiguous meanings of the word “account.” “To take into account” in the sense of including figures in a mathematical calculation is one thing; “to take into account” in the sense of paying attention to a matter in the course of an intellectual process is quite another thing.’

He suggested that the second meaning should be adopted, thus allowing scope for a discretion as to the extent to which the amount was used to increase a parent’s income. We could understand the argument if regulation 19(5) stood alone. However, it  refers in turn to regulation 25. Together they  imply to our mind that the ‘additional amount’ arrived at under regulation 19 is a specific sum, arrived at by calculation rather than discretion.

45.        Mr Burrows’ second argument relied on the terms of regulation 25, which refers to ‘net weekly income’, which is defined by regulation 27(7):

‘(7)   For the purposes of regulations 23 and 25 “net weekly income” means as calculated or estimated under the Maintenance Calculations and Special Cases Regulations.’

This ultimately leads, in the case of an employed earner, to paragraph 6(4) of the Schedule to those Regulations:

‘(4)   Where a calculation would, but for this sub-paragraph, produce an amount which, in the opinion of the Secretary of State, does not accurately reflect the normal amount of the earnings of the person in question, such earnings, or any part of them, shall be calculated by reference to such other period as may, in the particular case, enable the normal weekly earnings of that person to be determined more accurately, and for this purpose the Secretary of State shall have regard to-

(a)     the earnings received, or due to be received from any employment in which the person in question is engaged, has been engaged or is due to be engaged; and

(b)     the duration and pattern, or the excepted duration and pattern, of any employment of that person.’

Mr Burrows argued that this provided the appropriate basis for determining the amount of income to be used for the maintenance calculation.

46.        We reject this argument. Paragraph 6(4) is concerned with earnings, which are fixed by reference to a period. It allows a different period to be chosen. Regulations 18 to 20 identify amounts that either are not earnings as defined by the Schedule or have not been proved as such. Regulation 25 provides for the amount identified under those regulations to be added to the net weekly income in the calculation. It does not provide that it becomes earnings. Rather it operates in a way akin to a deeming provision. It is merely a convenient way of feeding the effect of a variation into the provisions for the basic maintenance calculation. As such it should not be given a wider effect than is necessary to achieve that purpose. Moreover, it is difficult to see how choosing a different period, even if it makes sense in the context of all aspects of regulations 18 to 20, would allow the just and equitable requirement to be operated flexibly rather than on an all or nothing basis. It would have no effect if the parent’s circumstances have not changed. And if they have changed, it would merely allow the all or nothing approach to be tested in relation to different periods in order to find one that better produces a fair and equitable outcome.

47.        Although we reject these two arguments, we do not consider that the statutory scheme needs to be read as imposing an all or nothing approach. As we have indicated, there is sufficient scope for flexibility in the overriding provisions of the statute. The regulations must be interpreted in a way that is consistent with the legislation as a whole.

48.        In conclusion on this point, the tribunal misdirected itself that the just and equitable requirement imposed an all or nothing test. However, the tribunal gave an alternative reason for its decision on just and equitable, which we consider is sound. The starting point is the treatment of the dividend payment received by the non-resident parent. This issue was not discussed at the hearing, but it was subsequently the subject of the decision of the Court of Appeal in Secretary of State for Work and Pensions v Wincott [2009] EWCA Civ 113. When the judgments were given, we allowed 14 days for comment. In the event, although various points were raised by way of comment on the judgment, neither party argued that the way Mrs Street dealt with the attribution of the payment was inconsistent with the Court of Appeal’s analysis. It is unnecessary therefore for us to say anything more about it.

49.        With regard to the tribunal’s alternative reasoning, Mr Burrows argued that Mrs Street failed to take account of the parent with care’s circumstances relative to those of the non-resident parent. We reject this argument, because the focus of the legislation is on the non-resident parent’s financial position to the exclusion of the parent with care’s. The Child Support Act 1991, as amended by the Child Support, Pensions and Social Security Act 2000, contains no provision that the parent with care’s circumstances to be taken into account and regulation 21(2)(e) of the Child Support (Variations) Regulations 2000 provides that only the ‘income or assets’ of non-resident parent and their partners may be taken into account. This is what we would expect. The maintenance calculation scheme introduced by the 2000 Act does not take any account of the parent with care’s circumstances. As the variation scheme operates to adjust the maintenance calculation, it is only to be expected that it takes no account of the parent with care’s financial circumstances. The position was different under the maintenance assessment scheme in the Child Support Act 1991 as originally enacted. There the circumstances of the parent with care were taken into account and it was natural that they were also relevant to the departure direction scheme under the original version of section 28F(2)(b).

50.        Mr Burrows also argued Mrs Street had failed to take account of the non-resident parent’s financial position. He argued that his client was probably insolvent by June 2006 as a result of Judge Exton’s order and the arrears of child support maintenance. He provided no formal evidence for this, but that aside we reject his argument. We have held that the just and equitable discretion allows a tribunal to take a broad view of what is appropriate, but that decision has to be made within the context of the child support scheme. The non-resident parent’s liability should be fixed within the statutory framework. If the non-resident parent is unable to meet all his liability, the issue of priority as between claims must be resolved under the insolvency legislation. If the non-resident parent is able to meet all his liabilities but experiences hardship in doing so, some adjustment may have to be made to one or more of those liabilities, but there is no reason why that adjustment should take place as part of the child support scheme simply because that happens to be the last liability that is fixed, especially in view of the duties to maintain that underpin that scheme.

G.         Issue estoppel

51.        Was the appeal tribunal bound by the finding of District Judge Exton that the non-resident parent’s income was ‘not less than £70,000’?

52.        The appeal tribunal refused to rely on that finding as showing the non-resident parent’s income and we consider that it was right to do so. The judge was careful not to make a specific finding, finding only the lowest threshold of the parent’s income. We cannot accept that, as Mr Burrows argued, the judge meant that the non-resident parent’s income was ‘not less, ie only slightly more, than £70,000 gross.’ That is simply not what she found. Even if issue estoppel does apply to child support proceedings, it does not apply to that finding. In those circumstances, we limit ourselves to some limited comments, mindful of the risks of offering guidance on issues not requiring formal decision (see e.g.  Office of Communications v Floe Telecom Ltd [2009] EWCA Civ 47 paragraph 21).

53.        In fact, as it turned out, there was little dispute on the principle. The parties’ arguments developed in the course of the hearing. By the end, they were broadly agreed that, while issue estoppel did not formally apply to child support proceedings, it was appropriate for decision-makers and tribunals to take account of, and pay proper respect for, the findings of another court.

54.        Any discussion of this issue in the present context would need to start from the special characteristics of the child support scheme, in which there is little room for a strict application of the rules of ‘issue estoppel’. ‘Finality’ is the subject of section 46A of the Child Support Act 1991:

‘46A Finality of decisions

(1)     Subject to the provisions of this Act, any decision of the Secretary of State or an appeal tribunal made in accordance with the foregoing provisions of this Act shall be final.

(2)     If and to the extent that regulations so provide, any finding of fact or other determination embodied in or necessary to such a decision, or on which such a decision is based, shall be conclusive for the purposes of—

(a)     further such decisions;

(b)     decisions made in accordance with sections 8 to 16 of the Social Security Act 1998, or with regulations under section 11 of that Act; and

(c)     decisions made under the Vaccine Damage Payments Act 1979.’

Moreover, as Mr Scoon pointed out, the legislation contains powers for decisions to be revised or superseded for mistake or ignorance of material fact: regulations 3A(1)(c) and 6A(2)(b) and (4) of the Social Security and Child Support (Decisions and Appeals) Regulations 1999, made under sections 16 and 17 of the Child Support Act. This allows the Secretary of State to replace the findings of fact made by the First-tier Tribunal or the Upper Tribunal. These provisions show a clear legislative intent that the facts on which decisions within the child support scheme are based should be updated to reflect the best available evidence at any time. Any findings made on the basis of an issue estoppel would immediately become subject to the terms of the scheme.

55.        The legislation takes account of the reality and practicality of fact-finding in the child support scheme, which was already known before the Child Support, Pensions and Social Security Act 2000 was passed. Many respondent parents before tribunals either fail to co-operate or only provide limited information about their financial and other circumstances. Such evidence as there is often emerges piece-meal over the course of a number of proceedings. In such circumstances, issue estoppel would favour most those who co-operated least. That would be a strange outcome for a form of estoppel that is, as Diplock LJ explained in Mills v Cooper [1967] 2 QB 459 at 468, an expression of public policy.

56.        It appeared to be common ground that the most useful analogy was with the practice of the family courts, as explained by Hale J (as she then was) in Re B (Children Act Proceedings) (Issue Estoppel) [1997] Fam 117. She analysed the authorities to show that issue estoppel did not operate in proceedings in which the court or tribunal had to take an inquisitorial approach. It is sufficient for present purposes to refer to the summary in the headnote:

‘(1) There is no strict rule of issue estoppel binding any of the parties in cases concerning children.

(2) Children proceedings are inquisitorial in nature and the court has a discretion as to how it conducts its inquiry.

(3) Where findings of fact are challenged in subsequent proceedings, the court would wish to be informed not only of the findings, but also of the evidence upon which the findings were based. It would then be for the court to decide whether or not to allow any issue of fact to be tried afresh.

(4) The following factors, amongst others, were to be considered: there was a public interest in bringing litigation to an end; a matter should not be tried twice unless there was a good reason for doing so; and any delay in determining the outcome of a case was likely to be prejudicial to the welfare of the child concerned. On the other hand, the welfare of the child was not likely to be served by relying upon findings which turned out to be erroneous and the court's discretion had to be applied so that there was justice, not injustice.

(5) Moreover, the importance of the previous findings had to be considered in the context of the current proceedings: if they were so important that they were bound to affect the outcome, the court might be more willing to consider a rehearing than if the findings were of a lesser or peripheral significance.

(6) Above all, the court would consider whether there was any reason to think that a rehearing of the issue would result in any different finding and so the court would want to know whether the previous findings were made after a full hearing (in which the evidence was tested) and if so, whether there was any ground upon which the accuracy of the finding could be attacked at the time and, if so, why there was no appeal. The court would also want to know whether there was any new evidence or information casting doubt upon the findings.’

57.        Hale J’s advice needs some adjustment for application in the child support scheme. Tribunals must make the best findings they can on the information and evidence available to them. The information may include findings made by previous tribunals and family courts. The significance of those findings will depend on their reliability and relevance. In assessing their reliability, tribunals must consider: (i) the evidence on which they were based; (ii) the nature of the fact-finding process (for example, whether the parent was subject to cross-examination); and (iii) the evidence now available. If there is no evidence to the contrary, tribunals may be entitled to conclude that the findings previously made are sufficient and reliable in the child support context. Whether or not this is so will depend on their relevance in the particular case. In assessing the relevance of previous findings, tribunals must consider: (iv) the facts that are relevant to the issue before the tribunal; (v) the precision with which they have to be found in order to apply the legislation; (vi) whether the previous findings relate, or can be related by other evidence, to the time now in issue; and (vii) the extent to which the issues in the previous proceedings affected the evidence that was obtained or the facts that were found.

58.        The First-tier Tribunal has powers to give case management directions that can assist it in the exercise of its inquisitorial approach to child support cases. In particular, rule 15 of the Tribunal Procedure (First-tier Tribunal) (Social Entitlement Chamber) Rules 2008 provides:

‘15    Evidence and submissions

(1)     Without restriction on the general powers in rule 5(1) and (2) (case management powers), the Tribunal may give directions as to—

(a)     issues on which it requires evidence or submissions;

(b)     the nature of the evidence or submissions it requires;

…

(e)     the manner in which any evidence or submissions are to be provided, which may include a direction for them to be given—

(i)     orally at a hearing; or

(ii)    by written submissions or witness statement; and

(f)     the time at which any evidence or submissions are to be provided.’

These powers can be exercised constructively to assist the parties in understanding what evidence is required as well as how and when it should be provided, a practice commended by Mr Commissioner Jacobs in CCS/2785/2005 at paragraph 5. The response, or lack of it, may allow the tribunal to limit the issues on which it will hear evidence or submissions under rule 15(1)(a) or to draw inferences adverse to the party in default. Both processes will allow it to give appropriate significance to previous findings. If the directions cause a party difficulty, the proper course is not to ignore them but to apply to the tribunal either to extend the time for complying under rule 5(3)(a) or to amend, suspend or set aside the direction under rules 5(2) and 6(5).

H.         Control

59.        What form of control is required for regulation 19(1A)? Is joint and effective control sufficient?

60.        Neither Mr Burrows nor Mr Scoon was able to explain how the tribunal had found that the non-resident parent had 55% ownership. However, that did not affect the outcome, because the tribunal also dealt with the case on the basis that he had only 50% ownership. On that basis, the tribunal found that he had effective control because he had been able to secure the restructuring of the payments he received from the company. After the hearing, Mr Burrows produced a letter from the company’s accountant saying that this was done on his advice. However, that letter was not before the tribunal. The tribunal cannot be faulted for failing to investigate that possibility, as his representative (Mr Burrows) was aware that the non-resident parent’s control over the company was clearly in issue and could have obtained this evidence.

61.        Mr Burrows argued that control was used in different senses in the Child Support (Variations) Regulations 2000 and that, in regulation 19(1A), it meant sole control. Mr Scoon argued that the tribunal was entitled to decided as it did. Control was a question of fact and meant effective control, which could vary from time to time.

62.        We agree with Mr Burrows that control may have different meanings, or different nuances of meaning, in the various places it is used in the Regulations. We confine ourselves to its meaning in regulation 19(1A).

63.        The language and context of regulation 19(1A) indicate that control means effective rather than legal control. It is concerned with income that the non-resident parent ‘has the ability to control’. The focus of that language is on the reality and practicality of control, which is a matter of fact. There is no reason to restrict control to sole control. If two or more directors are able to control the payments they receive from their company for their mutual benefit, they each have effective control through their co-operation. It would be wrong to lay down hard and fast rules. The practicalities of control within a company will vary according to the personalities involved and their capacity to influence the decisions made by the company on particular matters in the circumstances obtaining at particular times. That is something to be decided as a question of fact in an individual case.

64.        Even if we were to take account of the accountant’s letter, it only shows that the directors acted on his advice. It does not show that the non-resident parent did not have the ability to control the amount of income he receives from the company. He demonstrated his ability to do so by acting on the advice. The tribunal was entitled to find that he had control for the purposes of regulation 19(1A).

65.        Mr Burrows argued that the non-resident parent’s behaviour in agreeing to the decision to pay dividends in preference to salary was entirely proper. We accept that argument, but it does not affect the outcome of this case. Regulation 19(1A) contains no judgment on the parent’s behaviour or implication of improper use of control. It is concerned exclusively with what has occurred. This is in contrast to regulation 19(4), which applies if ‘the non-resident parent has unreasonably reduced the amount of his income … by diverting it to other persons’.

I.            Disposal

66.        We dismiss the appeal.

 

Signed on original on 1 April 2009

Lord Justice Carnwath, Senior President Edward Jacobs, Upper Tribunal Judge