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TW v Secretary of State for Work & Pensions and Another (Child support: variation/ departure directions: other) [2015] UKUT 440

Child support variation appeal in which the Upper Tribunal considers the relationship between receipt of working tax credit and the ability of the Secretary of State / First-Tier Tribunal to agree a variation.

Background
The decision the father (the non-resident parent) had appealed to the First-Tier Tribunal ("FTT") followed a successful application for a variation made by the mother (the parent with care). The decision was to the effect that the father was liable to pay child support maintenance of £47 pw and was based on his income and income from assets (as valued on variation).

The FTT valued the father's assets as slightly higher than the original decision and found that his income was significantly more than had previously been assessed (£280 pw (including working tax credits) rather than £101.54 pw). The tribunal confirmed the variation. The father sought to appeal this decision.

Permission to appeal the FTT's decision was granted on two grounds:

(1) Did the tribunal apply KN v CMEC [2009] UKUT 139 (AAC) correctly to the facts?

(2) Did the tribunal follow the correct procedure in confirming a variation without knowing the result of the maintenance assessment calculation before deciding it was just and equitable to do so?

The appeal
The appeal was heard in the Upper Tribunal before Judge Stewart Wright. The essential question before the court was whether, by virtue of the Child Support Act 1991 ("CSA 1991") and The Child Support (Variations) Regulations 2000 ("the Variations Regs") the receipt of working tax credit by the non-resident parent precluded a variation application being agreed by the Secretary of State / First-Tier Tribunal.

In his judgment, Judge Wright sets out the relevant sections and regulations of CSA 1991 and the Variation Regs, respectively. In particular, it is set out that the Secretary of State may reject variation applications on a preliminary consideration if, inter alia, it appears to him that one of the other prescribed circumstances applies (s28B(2), CSA 1991). If the application is not rejected at the preliminary consideration stage, the Secretary of State shall either agree to a variation or not, or refer the matter to the FTT (28D(1), CSA 1991). The Secretary of State shall not agree to a variation if 'other prescribed circumstances apply' (s28F(3)(b), CSA 1991). One of the "prescribed circumstances" is where the non-resident parent or a partner of his is in receipt of working tax credit (reg.7(5)(b), the Variation Regs). Importantly, reg.30, the Variation Regs provides:

"The circumstances prescribed for the purposes of section 28F(3) of the Act [CSA 1991] (Secretary of State shall not agree to a variation) are –

(a) the prescribed circumstances in regulation 6(2) or 7; and

(b) where the Secretary of State considers it would not be just and equitable to agree to the variation…" (my emphasis)

Judge Wright then also sets out the decision in KN v CMEC (above), in which the Upper Tribunal interpreted the above sections and regulations as stating that the Secretary of State has a discretion whether to reject a variation application at the stage of preliminary consideration, i.e. he is not required to reject the application at that stage even if the condition in regulation 7(5)(b) of the Variation Regs (non-resident parent or partner in receipt of working tax credit) is met.

The Judge asks himself how the discretion, said to exist in KN, could ever be lawfully exercised if the effect of the receipt of the working tax credit was that any application not rejected at preliminary consideration would have to fail at the agreement stage because of the mandatory wording (i.e. "shall not agree to a variation" (s28F(3)(b), CSA 1991), see above).

Ultimately, Judge Wright finds that the critical provision is regulation 30 of the Variation Regs (above). He finds that the consequence of regulation 30 is that the receipt of working tax credit is not an automatic basis, or 'trump card', preventing a variation to be made: regard must still be had to whether it is just and equitable to agree the variation. In other words reg.30(a) and reg.30(b) are not mutually exclusive; they represent  a two-stage cumulative test.

The net result, Judge Wright finds, is that the receipt of working tax credit by the non-resident parent (or their partner) does not automatically defeat a variation application being agreed.

As for the appeal itself, Judge Wright holds that the only error of law by the FTT was in considering that KN was authority for the application of a 'just and equitable' test, when it is not. The authority is regulation 30 of the Variation Regs. However, the error was not material to the decision made. Judge Wright does not consider that there is any serious argument that it was not just and equitable to make a variation on the facts as the tribunal found them to be on the evidence.

Judge Wright declines to give any guidance on the second ground upon which permission to appeal had been granted (above), as it had not been argued before him. He was satisfied nonetheless that the tribunal did not fall into any material error of law in not having the result of the maintenance assessment calculation before it (if indeed that was the case).

The appeal was dismissed and the FTT's decision stood as the final decision. 

Summary by Oliver Woolley, barrister, 1 Garden Court Family Law Chambers
___________________________

IN THE UPPER TRIBUNAL   Appeal No: CCS/3909/2014

ADMINISTRATIVE APPEALS CHAMBER

Before: Upper Tribunal Judge Wright

DECISION

The Upper Tribunal extends the time for this appeal to be brought but disallows the appeal of the appellant.

Although the decision of the First-tier Tribunal sitting at Fox Court on 1 October 2013 under reference SC132/11/02011 involved an error on a point of law that error was not material to its decision and therefore the decision is not set aside.

This decision is made under section 12(1) and 12(2)(a) of the Tribunals, Courts and Enforcement Act 2007

REASONS FOR DECISION
Introduction
1. This late appeal is brought by the father who, in child support language, is the "non-resident parent" of the child concerned and was the appellant in the appeal below. I will refer to him simply as "the father". The first respondent is the Secretary of State, and I shall refer to him as that.  The second respondent here and in the appeal below was the mother.  In child support language she is the "parent with care" of the child. I will refer to her simply as "the mother".

Background
2. The decision the father had appealed to the First-tier Tribunal was dated 20 June 2011 and was to the effect that he was liable to pay child support maintenance of £47.00 per week in respect of his daughter from the effective date of 30 September 2010.  This maintenance figure was based on the father having a weekly earned income of £101.54 and income from "assets" (on a variation) of £210.77 per week. The latter was based on the father having a half beneficial share in a property in Nottingham worth £137,000 (see pages 119 and 121). The decision of 20 June 2011 had followed an application for variation made by the mother on 1 October 2010. Prior to that the father had been liable to child support maintenance of only £5 per week.  It is thus fair to say that the impetus for the father's appeal was the variation based on assets aspect of the decision. 

3. The appeal was eventually heard and decided by the First-tier Tribunal on 1 October 2013 ("the tribunal").  It is instructive to note that the assets value the tribunal determined did not vary significantly from that which had underpinned the decision under appeal. The decision under appeal had fixed the father with assets of £68,500 comprised solely in his beneficial half share in the property in Nottingham. The tribunal in fact valued this asset at a slightly lower figure of £67,435 but added to it further assets the father held at the relevant time in the form of a cash ISA, shares and money the father held in a savings account.  That gave a total for assets of £74,165.78 from which it deducted a credit card debt to arrive at a final assets figure of £73,224.59.

4. What increased much more dramatically on the appeal was the father's income under the maintenance calculation (pursuant to the Schedule to the Child Support (Maintenance Calculations and Special Cases) Regulations 2000).  In addition to his earned income of £5712.00 per annum the tribunal also found the father to have undeclared gross income of £5428.00 per annum and working tax credit of £66.12 per week. That gave a weekly total for income - absent the assets variation – in the order of £280 per week instead of the £101.54 weekly earned income of the decision under appeal. It is important to bear in mind this increased weekly income of the father when considering the adequacy of the tribunal's decision that it was "just and equitable" to order a variation based on assets.                                                  

Permission to Appeal

5. District Tribunal Judge Turrell gave the father permission to appeal against the tribunal's decision on 27 June 2014 on two specific grounds.  First, did the tribunal apply KN-v-CMEC [2009] UKUT 139 (AAC) correctly to the facts?  Second, did the tribunal follow the correct procedure in confirming a variation without knowing the result of the maintenance assessment calculation before deciding it was just and equitable to do so?  Expanding on this second ground. Judge Turrell went on:

"In cases where there is no Presenting Officer or the Presenting Officer is not able to calculate the Maintenance Assessment should a Tribunal make a decision in principle with liberty to apply, adjourn the hearing until the Tribunal has the necessary information or decline to hear an appeal of this nature without a PO present that is capable of carrying out a calculation".

Delay
6. Judge Turrell's grant of permission to appeal was issued to the parties on 2 July 2014. That meant that any appeal had to be lodged with the Upper Tribunal by 2 August 2014. As that date was a Saturday, the next effective (i.e. working) date was the following Monday, 4 August 2014. In fact, the appeal was not received until 6 August 2014 and so it was two days late. The reason for this short delay was because the First-tier Tribunal did not send the father the necessary UT1 application form until 22 July 2014.  In my judgment that amounts to a good reason for the short delay and taken with the potential importance of the issues raised on the appeal, I formally extend time to admit this late appeal.

7. The Secretary of State positively invites me to take this course and extend time so as to admit the late appeal. The mother does not. She objects to the late appeal being admitted but does so only on the basis that the father should not receive any special treatment. (She did not press the point in the hearing before me.) I do not consider I am favouring the father with any special treatment. All I consider I am doing is assessing why the appeal was late (in part due to the late issue of the UT1 form) and determining whether on the basis of the reasons for lateness, the period of delay and the legal issues arising on the appeal, it would be fair and just to admit the late appeal, which I consider it would. That is not favouring the father with any special treatment: it is the same treatment by way of legal principle I would accord to any late appeal. In any event, as the appeal has not been successful, my admitting it becomes irrelevant.                  

The Issue
8. In giving directions on the late appeal on 20 October 2014 I said this:

"Before going any further, however, the views of the respondents, the Secretary of State for Work and Pensions and [the mother], need to be sought on whether time ought to be extended and on whether the First-tier Tribunal erred in law in the decision to which it came (either on the specific grounds suggested by Judge Turrell or otherwise).

As to KN –v- CMEC [2009] UKUT 139 (AAC) (a copy of which should be attached to the Secretary of State's submissions when made), is its effect that receipt of working tax credit by [the father] is irrelevant to whether a variation on the ground of "assets" may be made, or that its effect varies (in which way may be unclear) depending on which variation ground is in issue, or is its effect limited to when a variation may be rejected at the stage of preliminary consideration?  Further, and this may raise an issue as to whether KN was correctly decided, is not the effect of receipt of working tax credit by a non-resident parent that no variation may be made (even assuming the application may have passed preliminary consideration) on "additional cases" grounds, including "assets" (however lacking in logic that may or may not seem)?"   

The Arguments
9. In a submission made by Kevin O'Kane on behalf of the Secretary of State on 1 December 2014 the Secretary of State supported the father's appeal.  He did so on the basis that, having referred to the relevant legislation (to which I will return below) and the decision in KN, in light of that legislation payment of working tax credit to the father meant that a variation could not be agreed in the present case.  The submission continued (at paragraph 20):

"In considering KN –v- CMEC [2009] UKUT 139 (AAC), it is submitted that in that decision Upper Tribunal Judge Jacobs appears to have overlooked the provisions in section 28F(3) and variation regulation 30, which meant that a variation CANNOT [my emphasis] be agreed where these circumstances apply (even if the application has passed preliminary consideration and proceeded to contest). Accordingly, in deciding to follow KN –v- CMEC [2009] UKUT 139 (AAC), and to award a variation on the ground of an asset that is capable of producing income, it is my submission the First-tier Tribunal erred in law."               

10. The Secretary of State's submission concluded by noting that the father had, since the hearing before the tribunal, produced evidence that he began receiving working tax credit on 25 July 2010 after the (corrected) effective date of 8 July 2010, and so a variation would not have been precluded at the effective date even on the Secretary of State's main argument above. However it was submitted that as this evidence was not before the tribunal at the time made its decision, it could not be said to have erred in law in it having regard to that evidence.  
           
11. The mother in her written observations in reply mainly argued the case on the facts.  She sought an oral hearing of the late appeal.

12. The father in his observations in reply did not seek an oral hearing. He addressed issues of lateness and said he did not feel qualified to argue on the validity of the variation based on his receipt of working tax credit.

13. Given the requests of the mother, I held a hearing of the late appeal in London on 30 March 2015. Both the father and the mother attended and represented themselves.  Mr Cooper, solicitor, attended and represented the Secretary of State. 

14. Neither the father nor the mother, understandably, felt qualified or able to comment on the main issue arsing on the appeal, namely the relationship between receipt of working tax credit and the ability to make a variation on the ground of assets.

15. Mr Cooper, for the Secretary of State, at first made submissions in line with those of Mr O'Kane. However his submissions became more equivocal when the full extent of the relevant legislation was considered.

The Law
16. The legislative basis for variations within the child support scheme is found in the Child Support Act 1991 (the "CSA 1991").  There are identical section numbers in the CSA 1991 split between "departure directions" and "variations". I refer only to the section numbers applying to variations.
 
17. Section 28A of the CSA 1991 deals with the application for a variation, which may be made either by the parent with care or the non-resident parent. Nothing turns on this provision on this appeal.
 
18. Section 28B of the CSA 1991 is more material as it deals with rejecting variation applications at the preliminary consideration stage. It was this provision, and this stage, which KN was concerned with. It provides as follows:

"28B- (1) Where an application for a variation has been duly made to the Secretary of State, the Secretary of State may give it preliminary consideration.
 
(2) The Secretary of State may on completing such a preliminary consideration, reject the application (and proceed to make a decision on the application for a maintenance calculation without any variation) if it appears to the Secretary of State-

(a) there are no grounds on which a variation could be agreed to;

(b) that the Secretary of State has insufficient information to make a decision on the application for the maintenance calculation under section 11 (apart from any information needed in relation to the application for variation), and therefore that the Secretary of State's decision would be under section 12(1); or

(c) that other prescribed circumstances apply."   

19. Section 28D of the CSA 1991 then deals with the Secretary of State's determination of applications which have not been rejected at the preliminary consideration stage. It provides, so far as is relevant, as follows:

"28D.—(1) Where an application for a variation has not failed, the Secretary of State shall, in accordance with the relevant provisions of, or made under, this Act–

(a) either agree or not to a variation, and make a decision under section 11 or 12(1); or

(b) refer the application to the First-tier Tribunal for the tribunal to determine what variation, if any, is to be made.

(2) For the purposes of subsection (1), an application for a variation has failed if–

(a) it has been withdrawn; or

(b) the Secretary of State has rejected it on completing a preliminary
consideration under section 28B; or

(c) the Secretary of State has refused to consider it under section 28C(5)."

20. Pausing at this point, it is noteworthy that section 28B vests a discretion in the Secretary of State to reject a variation application at preliminary consideration stage (by using the word "may"), whereas if not rejected at that stage section 28D imposes a duty on the Secretary of State to either decide the variation application or refer it to a First-tier Tribunal to be decided.
 
21. Section 28E of the CSA 1992 sets out the maters to be taken into account in determining a variation application (that is, for the purposes of this appeal, one that has not been rejected at the preliminary consideration stage). Section 28E provides:

"28E.—(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.

(3) In determining whether to agree to a variation, the Secretary of State shall take into account any representations made to the Secretary of State-

(a) by the person with care or absent parent concerned; or

(b) where the application for the current assessment was made under
section 7, by either of them or the child concerned.

(4) In determining whether to agree to a variation, no account shall be taken of the fact that–

(a) any part of the income of the person with care concerned is, or would be if the Secretary of State agreed to a variation, derived from any benefit; or

(b) some or all of any child support maintenance might be taken into
account in any manner in relation to any entitlement to benefit.

(5) In this section "benefit" has such meaning as may be prescribed."

22. In terms of the role, if any, receipt of working tax credit may have on agreeing to a variation, regard has to be had to section 28F of the CSA 1991 and the enabling powers it contains. Section 28F provides, so far as is relevant, as follows:

"28F.—(1) The Secretary of State] may agree to a variation if–

(a) the Secretary of State 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 the Secretary of State's opinion that, in all the circumstances of the case, it would be just and equitable to agree to a variation.

(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 the Secretary of State did agree to a variation; and

(b) must, or as the case may be must not, take any prescribed factors into account, or must take them into account (or not) in prescribed
circumstances.

(3) The Secretary of State shall not agree to a variation (and shall proceed to make a decision on the application for a maintenance calculation without any variation if satisfied that–

(a) the Secretary of State has insufficient information to make a decision on the application for the maintenance calculation under section 11, and therefore that the decision would be made under section 12(1); or

(b) other prescribed circumstances apply.

(4) Where the Secretary of State agrees to a variation, the Secretary of
State] 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; and

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

(6) In determining whether or not to agree to a variation, the Secretary of State shall comply with regulations made under Part II of Schedule 4B."

23. The crucial issue for the purposes of this appeal is identifying the prescribed circumstances which preclude the Secretary of State pursuant to section 28F(3)(b) of the CSA 1991 from making a variation. It is uncontroversial that an 'assets' variation falls within the Additional cases upon which a variation may be made in Part I of Schedule 4B to the CSA 1991 (see paragraph 4(2) of the said Schedule 4B), and therefore may lead to a variation being agreed to by the Secretary of State under pursuant to section 28F(1)(a) of the CSA 1991 provided (a) it is just and equitable to do so (s. 28F(1)(b)), and (b) no prescribed circumstance precludes agreement to a variation (s.28F(3)(b)).
 
24. The Child Support (Variations) Regulations 2000 (the "Variations Regs) set out more of the detail of the statutory scheme governing variations and the prescribed circumstances referred to in the CSA 1991 above.  The relevant parts of the Variations Regs are set out below. The key provisions are regulation 6(2)(a), regulation 7(1)(c) and (5)(b), and regulation 30(b)    :

"Rejection of an application following preliminary consideration
6
.—(1) The Secretary of State may, on completing the preliminary consideration, reject an application for a variation (and proceed to make his decision on the application for a maintenance calculation, or to revise or supersede a decision under section 16 or 17 of the Act, without the variation, or not to revise or supersede a decision under
section 16 or 17 of the Act, as the case may be) if one of the circumstances in paragraph (2) applies.

(2) The circumstances are–

(a) the application has been made in one of the circumstances to which regulation 7 applies;

(b) the application is made–

(i) on a ground in paragraph 2 of Schedule 4B to the Act (special expenses) and the amount of the special expenses, or the aggregate amount of those expenses, as the case may be, does not exceed the relevant threshold provided for in regulation 15;

(ii) on a ground in paragraph 3 of that Schedule (property or capital transfers) and the value of the property or capital transferred does not exceed the minimum value in regulation 16(4); or

(iii) on a ground referred to in regulation 18 (assets) and the value of the assets does not exceed the figure in regulation 18(3)(a), or on a ground in regulation 19(1) or (1A) (income not taken into account) and the amount of the income does not exceed the figure in regulation 19(2);

(c) a request under regulation 8 has not been complied with by the applicant and the Secretary of State is not able to determine the application without the information requested; or 

(d) the Secretary of State is satisfied, on the information or evidence available to him, that the application would not be agreed to, including where, although a ground is stated, the facts alleged in the application would not bring the case within the prescription of the relevant ground in these Regulations.

Prescribed circumstances
7.—(1) This regulation applies where an application for a variation is   made under section 28A or 28G of the Act and–

(a) the application is made by a relevant person and a circumstance set  out in paragraph (2) applies at the relevant date;

(b) the application is made by a non-resident parent and a circumstance set out in paragraph (3) or (4) applies at the relevant date;

(c) the application is made by a person with care, or a child to whom section 7 of the Act applies, on a ground in paragraph 4 of Schedule 4B to the Act (additional cases) and a circumstance set out in paragraph (5) applies at the relevant date; or

(d) the application is made by a non-resident parent on a ground in paragraph 2 of Schedule 4B to the Act (special expenses) and a circumstance set out in paragraph (6) applies at the relevant date.

(2) The circumstances for the purposes of this paragraph are that–

(a) a default maintenance decision is in force with respect to the non-resident parent;

(b) the non-resident parent is liable to pay the flat rate of child support
maintenance owing to the application of paragraph 4(1)(c) of Schedule  1 to the Act, or would be so liable but is liable to pay less than that amount, or nil, owing to the application of paragraph 8 of Schedule 1 to the Act, or the Transitional Regulations; or

(c) the non-resident parent is liable to pay child support maintenance at a flat rate of a prescribed amount owing to the application of paragraph 4(2) of Schedule 1 to the Act, or would be so liable but is liable to pay less than that amount, or nil, owing to the application of paragraph 8 of Schedule 1 to the Act, or the Transitional Regulations.

(3) The circumstances for the purposes of this paragraph are that the non-resident parent is liable to pay child support maintenance–

(a) at the nil rate owing to the application of paragraph 5 of Schedule 1  to the Act;

(b) at a flat rate owing to the application of paragraph 4(1)(a) of Schedule 1 to the Act, including where the net weekly income of the non-resident parent which is taken into account for the purposes of a maintenance calculation in force in respect of him is £100 per week or less owing to a variation being taken into account or to the application of regulation 18, 19 or 21 of the Transitional Regulations (reduction for relevant departure direction or relevant property transfer); or

(c) at a flat rate owing to the application of paragraph 4(1)(b) of Schedule 1 to the Act, or would be so liable but is liable to pay less than that amount, or nil, owing to the application of paragraph 8 of Schedule 1 to the Act, or the Transitional Regulations.

(4) The circumstances for the purposes of this paragraph are that the non-resident parent is liable to pay an amount of child support maintenance at a rate–

(a) of £5 per week or such other amount as may be prescribed owing to the application of paragraph 7(7) of Schedule 1 to the Act (shared care); or

(b) equivalent to the flat rate provided for in, or prescribed for the purposes of, paragraph 4(1)(b) of Part 1 of Schedule 1 to the Act owing to the application of–

(i) regulation 27(5);

(ii) regulation 9 of the Maintenance Calculations and Special Cases
Regulations (care provided in part by a local authority); or

(iii) regulation 23(5) of the Transitional Regulations.

(5) The circumstances for the purposes of this paragraph are that–

(a) the amount of the net weekly income of the non-resident parent to which the Secretary of State had regard when making the maintenance calculation was the capped amount; or

(b) the non-resident parent or a partner of his is in receipt of working tax credit under section 10 of the Tax Credits Act 2002.

(6) The circumstances for the purposes of this paragraph are that the amount of the net weekly income of the non-resident parent to which the Secretary of State would have regard after deducting the amount of the special expenses would exceed the capped amount.

(7) For the purposes of paragraph (1), the "relevant date" means the date from which, if the variation were agreed and the application has been made into section 28G of the Act, the decision under section 16 or 17 of the Act, as the case may be, would take effect and if the variation were agreed, and the application had been made under section 28A of the Act, the decision under section 11 of the Act would
take effect.

PART VI

FACTORS TO BE TAKEN INTO ACCOUNT FOR THE
PURPOSES OF SECTION 28F OF THE ACT

Factors to be taken into account and not to be taken into account
21
.—(1) The factors to be taken into account in determining whether it would be just and equitable to agree to a variation in any case shall include–

(a) where the application is made on any ground

(i) whether, in the opinion of the Secretary of State, agreeing to a variation would be likely to result in a relevant person ceasing paid employment;

(ii) if the applicant is the non-resident parent, the extent, if any, of his liability to pay child maintenance under a court order or agreement in the period prior to the effective date of the maintenance calculation; and

(b) where an application is made on the ground that the case falls within regulations 10 to 14 (special expenses), whether, in the opinion of the Secretary of State–

(i) the financial arrangements made by the non-resident parent could have been such as to enable the expenses to be paid without a variation being agreed; or

(ii) the non-resident parent has at his disposal financial resources which are currently utilised for the payment of expenses other than those arising from essential everyday requirements and which could be used to pay the expenses.

(2) The following factors are not to be taken into account in determining whether it would be just and equitable to agree to a variation in any case–

(a) the fact that the conception of the qualifying child was not planned by one or both of the parents;

(b) whether the non-resident parent or the person with care of the qualifying child was responsible for the breakdown of the relationship between them;

(c) the fact that the non-resident parent or the person with care of the qualifying child has formed a new relationship with a person who is not a parent of that child;

(d) the existence of particular arrangements for contact with the qualifying child, including whether any arrangements made are being adhered to;

(e) the income or assets of any person other than the non-resident parent, other than the income or assets of a partner of the non-resident parent taken into account under regulation 20(3);

(f) the failure by a non-resident parent to make payments of child support maintenance, or to make payments under a maintenance order or a written maintenance agreement; or

(g) representations made by persons other than the relevant persons.

Reg. 21Circumstances for the purposes of section 28F(3) of the Act
30.
The circumstances prescribed for the purposes of section 28F(3) of the Act (Secretary of State shall not agree to a variation) are–

(a) the prescribed circumstances in regulation 6(2) or 7; and

(b) where the Secretary of State considers it would not be just and equitable to agree to the variation having regard to any of the factors referred to in regulation 21."

(I have not set out section 28G of the CSA 1991 above.  Section 28A of the CSA 1991 deals with, and enables, an application for variation to be made before the Secretary of State has decided the maintenance application. Section 28G simply empowers a variation application to be made once the maintenance calculation has been decided and is in force, with the variation taking effect either as a revision or supersession of the maintenance calculation decision.)                          

25. The material part of the decision in KN concerned whether an application for variation had to be rejected at the preliminary consideration stage because the non-resident parent was in receipt of working tax credit.   The appeal tribunal (as it then was) considered it was bound by CCS/1885/2007 to hold that the application for variation had to be rejected at the preliminary consideration stage.  Upper Tribunal Judge Jacobs decided that the appeal tribunal had been wrong so to conclude. His reasoning (in paragraphs 14-17) was as follows:

"An application for a variation may be made at the same time as the application for child support maintenance or when a calculation is in force. For convenience, I will refer only to the former, which is governed by section 28B of the Child Support Act 1991. Equivalent provision is made for the latter by section 28G and regulation 6 of the Child Support (Variations) Regulations 2000.

The first issue when an application is presented is whether it has been duly made. If it has, section 28B allows the Child Maintenance and Enforcement Commission to reject it on preliminary consideration. This is a summary procedure that allows the Commission to dispose of what may loosely be called 'hopeless cases'. Section 28B(2) identifies two cases in which the application would be destined to fail: (a) if it does not contain grounds on which a variation could be agreed; and (ii) it does not contain sufficient information to make a maintenance calculation. It then provides for other circumstances to be prescribed by legislation. Those other circumstances are prescribed by regulation 7 of the Regulations. Regulation 7(5)(b) applies if 'the non-resident parent or a partner of his is in receipt of working tax credit under section 10 of the Tax Credits Act 2002.'

Most of the circumstances set out in regulation 7 are ones in which a variation could not be of any effect. However, regulation 7(5)(b) is different. As Mr Blewitt [the tribunal chairman/judge] noted, the significance of an award of working tax credit may vary according to the ground of variation that is being considered. It may be reasonable when considering whether the non-resident parent has a life-style inconsistent with her declared income to know that her income has been assessed by Her Majesty's Revenue and Customs and an award made of working tax credit. That was the position in CCS/1885/2007. However, the position is different when assets capable of producing income are being considered. The award of tax credit is no indication of a claimant's capital position.

Mr Blewitt went on to note that, if his tribunal had not been bound by CCS/1885/2007, it would have relied on the fact that both section 28B and regulation 6 use the word 'may', not 'shall'. His interpretation was that the Commission had a power to reject an application if the conditions are satisfied, but was not under a duty to do so. As I have said, I do not read CCS/1885/2007 as deciding otherwise. I agree with Mr Blewitt's interpretation. As this case involved capital, it was not appropriate to exercise the power. It was appropriate to consider the application on its merits."

26. In very short summary, KN is therefore founded on the proposition that as the Secretary of State has a discretion whether to reject a variation application at the stage of preliminary consideration, he is not required to reject the application at that stage even if the condition in regulation 7(5)(b) of the Variations Regs (non-resident parent or partner in receipt of working tax credit) is met.

27. The decision of Mr Deputy Commissioner (as he then was) Wikeley in CCS/1885/2007 was set out in paragraph 1 of his decision and relevantly was to the effect that:

"I send the case back to the Secretary of State under section 24(3)(d) of the Child Support 1991 to revise the maintenance calculation by implementing the variation ordered by the tribunal with effect from 23 October 2003 but terminating it from the precise date that the father began receiving working tax credit (which appears to be 14 December 2004)."

That gives rise to the question why did Judge Wikeley decide that the receipt by the non-resident parent (the father) of working tax credit ought to lead to the variation ceasing to have effect?
     
28. The answer to this question lies in paragraphs 25 to 29 of that decision, where the Commissioner reasoned as follows.

"The working tax credit issue
25. For the reasons given in the preceding paragraphs I am not satisfied that the father has made out any of his "natural justice" grounds of appeal against the tribunal's decision.  However, the Commissioner's jurisdiction is inquisitorial rather than adversarial.  In his Response to Direction, the Secretary of State's representative makes a different point on behalf of the father.  He notes that the father, in his submission of 18 January 2008 (doc 303), writes that he has been in receipt of working tax credit (WTC) since 2004 and so should not be subject to a variation direction.  The Secretary of State's representative agrees, referring to section 28G(3) of the 1991 Act and regulation 7(5) of the Child Support (Variations) Regulations 2000 (SI 2001/156).  He also points out that the Agency's supplementary submission at doc 76 states that the first payment of WTC was made on 14 December 2004.

26. This is clearly in conflict with the tribunal's decision, which found that the variation ceased to have effect from a date just over a year later, as the father received JSA as from 15 December 2005.  If WTC was indeed in payment to the father as from December 2004, this would undoubtedly make the tribunal's decision wrong in law.

27. The tribunal of 18 August 2006 clearly appreciated the significance of WTC (see its direction 5b at doc 70).  The decision maker's supplementary submission then listed the father's WTC payments, which amounted to £2,2166.67 in the 2004/05 tax year (doc 76).  The tribunal of 20 December 2006 noted this figure in its Record of Proceedings (doc 183), converting it to a weekly income of £42.62.  It also recorded this in its Decision Notice (doc 187) in respect of the effective date of 5 April 2005.  It is then repeated in the Decision Notice for the final hearing on 15 February 2007 (doc 256).  The source of this figure seems to be the recalculation at doc 217 of the bundle.

28. One of the many unsatisfactory aspects of this case is that there is little hard evidence of the father's receipt of WTC.  We have his own statement that he has received WTC since 2004.  The information provided by the Agency (doc 76) is based on a telephone call to the Tax Credits Helpline – but there is no HMRC document to support those figures to be found in the papers.  
 
29. Be that as it may, the tribunal not unreasonably seems to have accepted at face value the evidence about tax credits contained in the decision maker's supplementary submission at doc 76.  The tribunal must therefore have accepted that the first WTC payment was made on 14 December 2004.  It follows inexorably that the variation should have ceased as from that date, and not as from the date a year or so later when JSA came into payment.  This is an error of law that means that I must set aside the tribunal's decision.  I deal with the disposal of this appeal at paragraphs 55 and 56 below."

29. It would seem, therefore, that this aspect of the decision in CCS/1185/2007, with its reference only to regulation 7(5) of the Variations Regs, proceeded on the basis that the law automatically required a variation to end at the date from which the non-resident parent (or their partner) started to receive working tax credit, and excluded any consideration of whether the variation was or was not just and equitable.

Discussion and Conclusion
30. I confess that in my time sitting as a judge of the First-tier Tribunal dealing with child support variation appeals I, too, took the position to be that receipt of working tax credit by the non-resident parent (or their partner) acted, so to speak, as a 'trump card' to defeat any variation being agreed to on Additional cases grounds (i.e. the grounds set out in Part V of the Variations Regs: assets (as in this case), income not taken into account and diversion of income, and lifestyle inconsistent (as in CCS/1185/2007)).

31. That then led to puzzlement on my part as to the ultimate correctness and practical utility of Judge Jacobs' decision in KN. As matter of law the terms of section 28B(2) of the CSA 1991 and regulation 6(1) of the Variations Regs plainly vest a discretion in the Secretary of State as to whether to reject a variation application on additional cases grounds even if the non-resident (or their partner) is in receipt of working tax credit, however how could that discretion ever be lawfully exercised if the effect of the receipt of the working tax credit was that any application not rejected at preliminary consideration would have to fail at the agreement stage?

32. It was that perspective that informed the last of the questions I raised in my directions of 20 October 2014.  It is also a perspective which seemed to be shared by the Secretary of State in his submissions on this appeal.

33. I am now satisfied, however, that this perspective is wrong as a matter of law. The critical provision is regulation 30 of the Variations Regs. The Secretary of State drew my attention to this provision but it does not, in my judgment, have the effect for which he contends.  The consequence of regulation 30, in my view, as explained below, is that receipt of working tax credit is not an automatic basis, or 'trump card', preventing a variation to be made on Additional cases grounds (including 'assets'): regard must still be had to whether it is just and equitable to agree the variation. 

34. This provides a logic to the system of variations adjudication that I originally thought was lacking. It also provides a consistency with KN: there is a point in not rejecting an application for variation on the ground of, say, assets where the non-resident parent is in receipt of working tax credit because that receipt does not as a matter of law preclude a variation being agreed. To the extent that CCS/1885/2207 takes an opposing view then I respectfully decline to follow it as I consider it was wrongly decided.

35. If the starting point taken is the application for variation and its preliminary consideration, KN is (correctly) authority for the proposition that the application need not be rejected at the preliminary consideration stage if the non-resident parent (or their partner) is in receipt of working tax credit.  The route by which receipt of working tax credit is a relevant consideration at this stage is provided by section 28B(2)(c) of the CSA 1991 and regulations 6(1) and (2)(a) and 7(1)(c) and (5)(b) of the Variations Regs. Stitching the language of those statutory provisions together provides:

"The Secretary of State may….reject the parent with care's application if it appears [to him] that one of the other prescribed circumstances set out in regulation 7 applies, that prescribed circumstance being that the non-resident parent or a partner of his is in receipt of working tax credit" (my underlining).  

36. However these particular legal provisions only apply at the preliminary consideration stage.  Moreover, and importantly in my judgment, they are provisions which provide a content for the "other prescribed conditions" which section 28B(2)(c) of the CSA 1991 enables.  In other words, as a matter of statutory construction the terms of regulation 6(1) and (2)(a) and regulation 7(1)(c) and 5(b) of the Variations Regs need not be the prescribed conditions arising under section 28F(3) if a more specific prescription is made elsewhere in the Variations Regs, as those regulations usefully have an application elsewhere (under s. 28B(2)(c)).

37. The mother's application for variation in this case had passed the preliminary consideration stage. The next relevant stage was, therefore, whether a variation on the ground of assets could be agreed by the tribunal standing in the shoes of the Secretary of State on the father's appeal.  That brings in section 28F of the CSA 1991, and more particularly subsection (3)(b) of that section and its injunction that the Secretary of State (or tribunal on appeal) "shall not agree a variation if other prescribed circumstances apply".

38. What are those prescribed circumstances?

39. If the prescribed circumstance are those set out in regulation 6(1) and (2)(a) and regulation 7(1)(c) and 5(b) of the Variation Regs then it seems inescapable that a variation on Additional cases grounds would have to be refused. This would be because, to use the stitched together statutory language from the end of paragraph 35 above, but with one crucial underlined amendment:

"The Secretary of State shall….reject the parent with care's application if it appears [to him] that one of the other prescribed circumstances set out in regulation 7 applies, that prescribed circumstance being that the non-resident parent or a partner of his is in receipt of working tax credit".

And this would then take us back to the lack of logic in the statutory scheme and the problem with KN giving rise to a pointless discretion.

40. However, in my judgment the prescribed circumstances arising under section 28F(3)(b) of the CSA 1991 must instead be the more specific and directly linked circumstances in regulation 30 of the Variations Regs.  That must be the case because (i) otherwise regulation 30 is devoid of any meaningful application, and (ii) it gives effect to the Parliamentary intention as expressed in the language of regulation 30, namely that it, and it alone, is setting out what the "circumstances prescribed for the purposes of section 28F(3) of the Act (Secretary of State shall not agree to a variation) are…." (my underlining added for emphasis). 

41. Regulation 30 of the Variations Regs then applies a two stage, cumulative test for deciding if a variation shall not be made.

42. First, the prescribed circumstances (or one of them) in regulation 6(2) or 7 of the Variations Regs apply. That is satisfied here because regulations 6(2)(a) and 7(1)(c) and 5(b) apply on the facts as found by the tribunal. (If the father was not in fact in receipt of working tax credit at the relevant date then the legal issue with which this appeal is concerned (working tax credit as a trump card against a variation being agreed) falls away.  However, I agree with the Secretary of State that the tribunal's decision cannot be set aside for error of law because of evidence which was not, but could have been, put before it.)  

43. Second, and in addition (and most importantly for the purposes of this appeal), the Secretary of State (or the tribunal on appeal standing in his shoes as at the date of the decision under appeal) considers it would not be just and equitable to agree to the variation.   

44. The legal effect of the statutory scheme, therefore, is that receipt of working tax credit by the non-resident parent (or their partner) does not automatically defeat a variation application being agreed.  A variation application can be agreed even where the non-resident parent (or their partner) is in receipt of working tax credit at the relevant date(s) if the Secretary of State or tribunal on appeal considers it would be just and equitable to agree to such a variation notwithstanding the non-resident parent (or partner) receiving working tax credit  (It seems to me that this positive stating of the just and equitable test flows from the double negatives set out under section 28F(3) of the CSA 1991 – shall not agree to a variation…. unless considers it would not be just and equitable to agree to a variation.)                 

45. The tribunal therefore did not err in law in considering a variation could be made or agreed even though the father was (on the evidence before it) in receipt of working tax credit at the relevant date(s). Nor did it err in law in applying a just and equitable test to whether a variation ought to be agreed. It did err in law in considering that KN was the authority for the application of a just and equitable test.  It was not. The authority was regulation 30 of the Variation Regs. KN is irrelevant to how a just and equitable test applies under section 28F of the CSA 1991. However, this error was not material to the tribunal's decision as it still (correctly) applied a just and equitable test.

46. Moreover, for the reasons I have already referred to, I do not consider there is any serious argument that it was not just and equitable to make a variation on the facts as the tribunal found them to be on the evidence before it. I therefore do not consider any material error of law arose in terms of the tribunal failing to particularise why it was just and equitable to agree the variation. As I have set out above, the variation agreed by the tribunal only increased the level of assets by a small sum.  Of itself that increase was unlikely to increase the child support maintenance payable by any significant amount. On the other hand, the father's income as found by the tribunal had increased quite significantly. Plainly that (larger) increase in income could have been used to meet the overall level of the maintenance payable attributable to the variation agreed (including the small increase arising from the increase in the assets figure to be taken into account), and the Secretary of State had given reasons (on page 15 of his appeal response to the tribunal) addressing why the original assets variation was just and equitable.

47. These considerations are also relevant, in my judgment, to the second basis on which DTJ Turrell gave permission to appeal.  I decline, however, to give any guidance on this issue generally – in effect, whether a tribunal must always have in front of it the revised maintenance calculation which the non-resident parent will be liable to pay before it decides if the proposed variation is just and equitable – as it was not the subject of any argument before me.  I suspect the answer is "It all depends on the facts of the case". I am satisfied, however, for the reasons given in the immediately preceding paragraph, that the tribunal here did not fall into any material error of law in not having that figure before it (if indeed that was the case).

48. For the reasons set out above, this appeal is dismissed and the tribunal's decision of 1 October 2013 stands as the final decision on the father's liability for child support maintenance in respect of his daughter as at the (corrected) effective date of 8 July 2010. 

                                                                                                                                                                                                                          
Signed (on the original) Stewart Wright
Judge of the Upper Tribunal
                                                                                   
Dated 31st July 2015