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Home > Judgments > 2008 archive

Humphries & Ors v Secretary of State for Work & Pensions [2008] EWHC 1585 (Admin)

Application for judicial review arising seeking reconsideration of compensation offered following maladministration by the Child Support Agency. The judge found that the compensation should have been reconsidered but that the claimant should have first applied to the Independent Case Examiner rather than seek judicial review and the Secretary of State had applied his policy correctly

The principal issue in the case was that the claimant was seeking to recover arrears of maintenance stretching back to 1992. She had a court order for maintenance but when the CSA came into force in 1993 she made an application but the agency did not make an assessment until 2005. The assessment would have ended the court order, which she had been told she could not enforce while the CSA was involved, so she was seeking the arrears from the Secretary of State from the time of the application to the time of the assessment, when the husband did start to pay (£27,000). The Secretary of State calculated an award under the scheme set out in the Financial Redress For Maladministration Guide and made an award of £748. The claimant then put in this claim for judicial review of that decision and also the basis of the calculation in that there had been no assessment of the husband’s earnings in the relevant backdated period.

 

In this judgment Goldring J reviews the ambit of the redress scheme, the role of the independent complaints examiner and the methods of making the assessment. He concludes that the Secretary of State erred in his decision regarding the earnings of the husband but not in how he treated the court ordered maintenance. He also concludes that the claimant should have first approached the Independent Complaints Examiner before resorting to costly judicial review.

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Neutral Citation Number: [2008] EWHC 1585 (Admin)
Case Nos: CO/5053/2006; CO/6200/2006; CO/607/2006; CO/8345/2006
IN THE HIGH COURT OF JUSTICE
ADMINISTRATIVE COURT

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 09/07/2008

Before :

THE HON. MR JUSTICE GOLDRING
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Between :

(1) RITA HUMPHRIES
(2) DAWN ROBERTS
(3) LOUISE MCCARTNEY
(4) SANDRA ENGSTROM (Claimants)

 - and - 

THE SECRETARY OF STATE FOR WORK AND PENSIONS   (Defendant)
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(Transcript of the Handed Down Judgment of
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Rembert de Mello and Adrian Berry (instructed by Forshaw Solicitors LLP) for the Claimants
Clive Sheldon  (instructed by Seema Barker, Solicitor ) for the Defendant

Hearing dates: 20 May 2008
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Judgment
 
The Hon Mr Justice Goldring :

Introduction
1. The Child Support Act 1991 (“the Act”) vested in the Secretary of State responsibilities for assessment, review, collection and enforcement of maintenance payments in respect of children.  Those responsibilities are discharged on his behalf by the Child Support Agency (“the Agency”): see paragraph 1 of Lord Justice Dyson’s judgment in Rowley v Secretary of State of Work and Pensions [2007] 1 WLR 2861 at page 2865. 

2. The Child Support Pensions and Social Security Act 2000 significantly amended the 1991 Act for new applications in respect of which the decision took effect on or after 3 March 2003.  These four applications for judicial review are under the 1991 Act; the “old scheme.”

3. In each application, the claimant is the mother of a child or children.  Each alleges maladministration by the Agency.  In each case, the Secretary of State accepts maladministration.  By their applications the claimants seek to quash decisions taken by the Secretary of State arising from that admitted maladministration. 

4. Permission to bring the applications was granted by Mr. Justice Walker following a day’s hearing.  Before the present hearing began, Mr. de Mello on behalf of each claimant sought leave to re-amend the grounds for judicial review.  Although the Secretary of State formally opposed the applications, Mr. Sheldon on his behalf realistically accepted that it would be desirable for me if at all possible to deal with every aspect of these applications, raising as they do matters of general importance to the Secretary of State.  I gave leave to amend the grounds, subject to any later argument on costs.   During the hearing Mr. de Mello effectively abandoned three of the four cases subject to argument on costs.  The case remaining was that of Mrs. Humphries.

The relevant legal provisions
5. By section 1 of the Act:

“(1)…each parent of a qualifying child is responsible for maintaining him.
(2)…an absent parent…[now called a non resident parent (“NRP”)] shall be taken to have met his responsibility to maintain…by making periodical payments of maintenance with respect to the child…”

6. By section 2:

“Where, in a case which falls to be dealt with…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.”

7. By section 4:

“(1) A person…with care…may apply to the Secretary of State for maintenance assessment [now maintenance calculation] to be made under this Act…
(2) Where a maintenance assessment…has been made in response to an application…the Secretary of State may…arrange for-
(a) the collection of the…maintenance payable in accordance with the assessment;
(b) the enforcement of the obligation to pay…
(3) Where an application under subsection (2) for the enforcement of the obligation mentioned in subsection (2)(b) authorises the Secretary of State to take steps to enforce that obligation whenever he considers it necessary to do so, the Secretary of State may act accordingly.”

8. Section 6 deals with the position of a parent with care who receives benefit.  Under the old scheme such a person:

“…shall, if
(b) [if] she is required to do so by the Secretary of State,
authorise the Secretary of State to take action under this Act to recover child support maintenance from the…[non resident parent]…
(5) That authorisation shall be given without unreasonable delay, by completing and returning to the Secretary of State an application-
(a) for the making of a maintenance assessment…and
(b) for the Secretary of State to take action under this Act to recover, on her behalf, the amount of child support maintenance so assessed.
(6) Such an application shall be on…a maintenance assessment form…provided by the Secretary of State.”

9. By subsection 9, the parent with care is required to provide certain information to the Secretary of State to enable the absent parent to be traced and the amount of child support maintenance to be assessed.

10. Section 10 deals with the relationship between maintenance assessments and court orders.  By subsection 1:

“Where an order of a kind prescribed for the purposes of this subsection is in force with respect to any qualifying child with respect to whom a maintenance assessment…is made, the order-
(a) shall, so far as it relates to the making or securing of periodical payments, cease to have effect to such an extent as may be determined in accordance with regulations made by the Secretary of State;
(b) where the regulations so provide, shall so far as it so relates, have effect subject to such modifications as may be so determined.”

11. By Regulation 3(2) of the Child Support (Maintenance Calculation) Procedure Regulations 2000:

“…where a maintenance assessment is made with respect to
(a) all the children with respect to whom [an order of the court is in force];
that order shall, so far as it relates to the making or securing of periodical payments to or for the benefit of the children with respect to whom the maintenance assessment…has been made, cease to have effect…
(5)…where a maintenance assessment is made with respect to children with respect to whom [an order of the court] is in force, the effective date of that assessment shall be two days after the assessment is made.”

12. By section 11 (under the old scheme):

“Any application for a maintenance assessment made to the Secretary of State shall be [dealt with by him] in accordance with the provision made by or under this Act.”

13. Sections 29 to 41 deal with the wide powers the Secretary of State has to enforce payment. 

14. A failure by the Secretary of State to perform his functions under the Act does not give rise to an action in negligence for any loss suffered by a claimant.  He does not owe a common law duty of care to avoid economic loss or personal injury: see Rowley v Secretary of State for Work and Pensions (above).

The Financial Redress Maladministration Guide
15. The statutory scheme does not oblige the Secretary of State to compensate an aggrieved parent where there has been maladministration.  The Secretary of State has however introduced a compensation scheme.  It is set out in the Financial Redress For Maladministration Guide (“the Guide”).  The authors and producers of the Guide are members of a group within the Department for Work and Pensions called DWP Viewpoint.   As Mr. Smith, Head of DWP Viewpoint puts it:

“DWP Viewpoint provides advice on the most complex…contentious cases…[Its] responsibility [is] to endeavour to find a solution that provides appropriate redress when services go wrong…
…Any financial redress, if awarded, is intended to be fair, reasonable and proportionate but is not intended to allow the recipient to obtain a greater financial advantage than they would have received had there been no service failure.”

16. Central to the issues in each case is the way in which the Secretary of State applied the provisions of the Guide.

17. Paragraph 3 of the Guide states that it is intended for staff when dealing with complaints and considering making special payments.  Under the heading “How to use this guide,”, paragraph 4 states:

“The guide contains a description of the circumstances under which special payments can be made and provides advice on the considerative (sic) process, including methods of calculating payments.  The guide should not be read as a rigid set of rules.  Whilst it indicates key principles, it cannot and does not seek to provide a blueprint for every situation.  Each case must be considered on its merits, in the light of the particular circumstances of the case.  However, as the Department aims to provide similar remedies for similar injustices, the principles must be applied to every case.”

18. Paragraph 9 states that there is no right of appeal from a refusal to make a special payment.  Paragraph 10 states that:

“A customer who is dissatisfied with handling of [the] complaint or with any redress given may make a complaint to the Parliamentary Commissioner for Administration or the Independent Case Examiner where the complaint is against the [Agency].  Details about this and contact details are contained in Annex B.”

19. An issue is whether it was appropriate in three of these four cases to seek judicial review without having first sought redress through the Independent Case Examiner (“ICE”).

20. “Seven basic principles” are set out in paragraph 15:

“Where maladministration has occurred, seven basic principles should be followed when considering redress.  These are that…redress is fair and reasonable…as far as possible, redress restores the customer…to the position that he or she would have been in but for the official error…due account is taken both of the need to provide a suitable remedy for the customer and the need to protect the public purse…where it is possible to remedy by statutory means that option must be used rather than resorting to an extra-statutory or ex gratia payment.”

21. Maladministration occurs when there has been an “Official error.”  Paragraph 17 defines an official error.  Given that there is no dispute but that in each case there was such an error, it is unnecessary to set out paragraph 17.  In each case it is clear that “inadequate action” was taken. 

22. If there is a dispute as to whether such an error has occurred, it is decided on the balance of probabilities: paragraph 29.  That paragraph further provides:

“If an error is accepted, the customer should be afforded redress which, as far as possible, restores him or her to the position he or she would have been in but for the error.”

23. Paragraph 41 requires that special payments be categorised.  Ex gratia payments may fall under one of three heads: “actual financial loss” or “delay” or “consolatory payments.”

24. Paragraph 53 defines “actual financial loss” as applying:

“…to cases where maladministration has directly caused the customer to incur additional expenditure that would not otherwise have been incurred…”

25. “Actual financial loss” must be distinguished from “financial disappointment:” see paragraph 55.

26. Under the heading “What to pay,” paragraph 68 states:

“The emphasis should be on trying to restore the customer to the position that he or she would have been in had the error not occurred…Any special payment made must not exceed the amount of…child support maintenance that was expected…”

27. It is unnecessary to set out the detailed provisions regarding payment for delay or consolatory payment.  There is provision to pay interest in respect of the first and, in the case of “very exceptional circumstances where the maladministration has had a direct adverse effect on the life of the customer,” provision to pay the second.  The amounts of consolatory payment payable are not high.

28. Child support cases are dealt with in a discrete section.  The categories of special payment are more widely defined: see paragraph 161.  One category is “…court order cases-delay in assessment of liability resulting in loss of child support maintenance- paragraphs 184-187…” 

29. A court order existed in Mrs. Humphries’ case.

30. Paragraphs 184-7, under the heading, “Court Order cases- delay in assessment of liability resulting in loss of child support maintenance,” state:

“184. When at the time a [parent with care] applies for child support maintenance a court order for child maintenance is already in place, the effective date for liability for child support maintenance is two days after the date that the assessment is completed.  Thus, in court order cases, any unreasonable delay in the maintenance process will put back the effective date of the maintenance assessment…and may lead to loss of opportunity to receive maintenance…

185. In court cases the Agency is allowed 20 weeks to make an assessment beginning from the issue of a MAF to the [parent with care].  It anticipates that barring delays or non-co-operation of the [parent with care]…most cases will be assessed within that time.  Where this is exceeded and the Agency accepts that the delay in assessing the case was due to its failings, a special payment will be considered.

186. Any special payment is paid at a rate equivalent to the difference between the level of the court order and the maintenance assessment…made by the Agency:
• If the maintenance assessment…would have been higher that the court order, payment is made to the [parent with care] in recognition of her lost opportunity to receive higher support for her child(ren)…”

31. Paragraph 187 states that payment is:

“…subject to adjustment to take into account any benefit that would not have been made had [the assessment been made] sooner.”

32. Paragraph 187 gives an example of such a case.  In the example given, the non resident father was paying under the court order.  As will become apparent, Mr. Humphries was not. 

33. A notional assessment was made in Mrs. Humphries’ case. Under the heading “Notional assessments,” paragraphs 202 and 203 state:

“202. Normally an ex gratia payment is based on the rate of maintenance assessment that applies at the effective date.  However, in some cases either

203. In these cases, in assessing any financial loss, use of the maintenance assessment rate may not be appropriate.  In these circumstances, the Agency may use a notional assessment based on the best evidence available.”

 The independent case examiner (ICE)
34. Mr. Hanlon is the present independent case examiner.  He sets out a little of the history of the office in his statement.  It was set up in April 1997 following a recommendation of the then Parliamentary Commissioner for Administration (the Ombudsman).  The ombudsman had been receiving a large number of referrals from Members of Parliament on behalf of constituents who were dissatisfied with the service they received from the Agency.  He recommended an additional level of independent review for complaints.  The ICE’s role was later extended to other “customers” of the Department.

35. Although criticisms are made of the ICE by the claimant’s solicitor, Mr. Hanlon’s statement and the Annual Report for 2006-7 suggest that in general when dealing with complaints ICE acts independently and effectively.  Mr. Hanlon is an independent office holder appointed by the Permanent Secretary of the Department on a two year contract.  He is not a civil servant.  He is not part of the Department’s management team.  He states:

“6…My role is to provide an impartial view of whether a complaint…is justified.  Where a complain is upheld, I am free to make such recommendations as I feel are appropriate to resolve the complaint.

7…I am supported by an office staffed by approximately 110 civil servants…ICE has a budget of £3.383 million.

8. As the annual report indicates, my office’s main business purpose is to act as an independent referee if a complainant feels that the Agency has not treated them fairly or has not dealt with their complaints in a satisfactory manner.  The service is free, effective and impartial.  Once my office has agreed to accept a case, the matter is examined thoroughly and proactively…Between 2006/2007 we received 3823 cases…

9…complaints are currently taking an average of 21.57 weeks…to be cleared.”

36. The Annual Report for 2006-7 states that the aim of ICE is to provide:

“…a free, effective and impartial complaints review and resolution service for Agency customers…”

37. Mr. Hanlon explains the process.  A case officer is appointed.  If the complaint cannot be settled by agreement, evidence relevant to the case is obtained from both the Agency and the complainant.  If agreement cannot be reached on the basis of proposals then made by ICE, a report will be prepared and sent both to the Agency and the complainant.  As appropriate, it identifies areas of maladministration, offers criticism and makes recommendations about what needs to be done to put matters right and/or provide appropriate redress.

38. As to the ICE’s powers, Mr. Hanlon states:

“15…I can make recommendations about what I consider needs to be done.  This can include an apology, an explanation, an assurance (eg as to future steps to be taken), a recommendation that financial redress be offered or a combination of these.

16 Redress recommendations are made in accordance with the…guide and can include;

17  In accordance with the…guide, financial loss recommendations are aimed at putting a complainant in the position they (sic) would have been had maladministration not occurred.”

39. In paragraph 17 Mr. Hanlon makes the important point that it does not automatically follow that where there has been maladministration the parent with care would receive a special payment.  In many cases the non-resident parent deliberately evades his legal obligation to maintain his children.  In such a case Mr. Hanlon often finds that irrespective of the maladministration, the parent with care would not have received payments due to them.

40. In paragraph 19 Mr. Hanlon illustrates that some of the cases he considers can lead to substantial awards.  There have been eight cases since 1 April 2007 in which there were awards greater than £10,000.  One case involved an advance payment of maintenance of some £45,000.  There was an award for financial loss of some £17,000 in another case.

41. In paragraph 20 Mr. Hanlon deals with the fact he does not have legal powers of enforcement.  He states that:

“…the Agency has agreed that it will comply with my recommendations in all but exceptional cases.  In a straightforward case…this arrangement has not presented any difficulty.”

42. He goes on to state (in paragraph 21) that difficulties have arisen in some cases in the last twelve months.  He has agreed with the Agency that “botheration payments” will be made to the complainant where there has been a significant service failure which impacted on the progression of the case or where the Agency has failed to implement any recommendations made.  Should the Agency fail to implement the recommendations within six weeks of the date the final action was due to be completed, Mr. Hanlon will write a letter to the complainant indicating that he is withdrawing from the case and stating the complainant has the right to approach the Parliamentary and Health Service Ombudsman.  In such a case it seems to me an application for judicial review of the Department’s failure to implement the Guide and/or the ICE recommendation would lie.

43. In paragraph 38 Mr. Hanlon sets out why he considers the ICE service to have a number of advantages over court proceedings.  They are that:

“The service is free to complainants…relatively fast…informal…inquisitorial…Easy to use…allows complainants to be resolved amicably…Through casework, patterns of complaint can be identified…It is less stressful than court proceedings for many complainants.”

Mrs. Humphries claim
44. By her amended particulars of claim Mrs. Humphries was seeking to challenge the Secretary of State’s decision of 10 April 2006 not to pay arrears put at £27,612 by way of financial redress.

45. By her re-amended particulars of claim Mrs. Humphries seeks to challenge the Secretary of State’s revised decisions of 25 September 2007 and 19 December 2007 offering her £748.17 by way of financial redress.

The background to Mrs. Humphries’ claim
46. Mr. and Mrs. Humphries were divorced in 1992.  On 3 September 1992 by consent, Mr. Humphries was ordered to pay £12.50 per week maintenance in respect of each of their two children.  Decree absolute was granted on 18 September 1992.  On 16 August 1993 Mrs. Humphries applied to the Agency for maintenance under the scheme.  She completed a maintenance application form.  She said that the children received child benefit.  She gave Mr. Humphries last known address.  She made it clear she knew nothing regarding Mr. Humphries’ work or income.  She said she had “a court order for the payment of maintenance” by Mr. Humphries and set out its amount.

47. Mrs. Humphries received income support between August 1993 and 20 September 1996.  Because she was a parent with care who was receiving benefit, she was obliged, if required by the Secretary of State to do so, to authorise him to recover child support maintenance: see section 6 (paragraph 8 above).  By completing the maintenance application form Mrs. Humphries was authorising the Secretary of State to recover child support maintenance: see section 6(5). 

48. The Agency should then have issued a maintenance enquiry form without delay.  It appears to have done so.  That should have been followed by a maintenance assessment.  It was not.  That assessment would have been effective two days after being made: see Regulation 3 of the Child Support (Maintenance Arrangements and Jurisdiction) Regulations 1992 (paragraph 11 above).  From then Mr. Humphries’ liability to pay child support under the scheme would have arisen.  His liability to pay under the County Court order would have ceased.  

A brief history of events leading to the claim
49. In a letter of 2 July 2004, Mrs. Humphries’ then solicitor set out what he understood the facts to be.  He wrote that Mrs. Humphries had been as supportive to the Agency as possible, but had been “fobbed off.” 

“Eventually…[on 20] September 1996, [Mrs. Humphries] came off income support.  She endeavoured to secure maintenance from the Court, but having confirmed to the Court that the Agency was dealing with her case, the Court therefore refused jurisdiction…[She] endeavoured to verify the situation with the Agency.  The Agency did not tell her that she had to pursue matters with the court at that stage but also did not pursue the information that [Mrs. Humphries] had provided so as to conclude their own involvement in the case with the assessment that would have brought the court’s jurisdiction to a close.”

50. The solicitor stated that in consequence the court order remained in force; that the court was unlikely to give leave to enforce the arrears and that Mrs. Humphries, as a result of what he described as the Agency’s failures, has suffered loss.

51. In a letter of 28 March 2006 the Agency’s operations director, south, set out the position as understood by the Agency. 

“On 16 August 1993, Mrs. Humphries applied…to receive maintenance…At the time we were unable to confirm an address for Keith Humphries, and so we began specialist tracing action on 10 July 1994.  On 14 July, Mrs. Humphries supplied an address…and on the same day we sent a maintenance enquiry form to him.  [He] returned the form on 20 September 1994, but it is unclear from our computer records if he supplied enough information to allow us to complete an assessment.

Regrettably, I can find no evidence that we took any action until 6 August 1998, when we suspended the case, pending further tracing action.  At the time we could not confirm that the address we held…was correct.  From September 1994…to August 1998…our case records show that Mrs. Humphries contacted us by telephone on one occasion, 21 September 1994, with no further contact…until January 2000, when she telephoned for an update.  In March 2002, we noted that Mrs. Humphries was no longer in receipt of Income Support, but this does not seem to have prompted any further action by us.

On 20 October 2003…Mrs. Humphries enquired about reopening her case…[and] provided a new address…on 27 November [2003] we received a letter of complaint…

On 28 January 2004, we noted there was a court order…We explained to Mrs. Humphries that the order would mean any maintenance calculation made would have an effective date set in the future…

On 24 August 2005, we completed the maintenance calculation of £59 per week, effective from 26 August 2005…We cancelled the court order on 25 August 2005…

It is clear that Mrs. Humphries has not received the level of customer service to which she is entitled, and I apologise unreservedly.  In recognition, I have referred Mrs. Humphries’ case to the…Special Payments Team, who will consider making a consolatory payment…”

52. In its “summary of the case,” the Agency said that Mrs. Humphries had written on 27 November 2003 asking for her claim to be backdated to the original claim date and for compensation.  She said that she had approached the court to enforce maintenance but they would not consider acting as the Agency had an active and open case. 

53. On 18 March 2004 Mrs. Humphries wrote to the Agency formally instructing them that the court order was to remain active and no maintenance assessment made.

54. By a letter of 10 April 2006 the Agency informed Mrs. Humphries she would receive a consolatory payment of £100.  The Agency could not,

“yet consider any financial redress for possible loss of opportunity to receive child maintenance until a pattern of at least three payments has been established.”

55. On 23 May 2006 Mrs. Humphries issued her claim.  She sought to quash the decision of 10 April 2006.  She sought payment of the arrears which were said to be £27,612: in other words, £59 per week from 20 September 1996 to 1 September 2005.  One of the grounds was the Agency’s decision to wait for at least three payments so that a pattern could be seen to have been established.

56. As justification for the claim of £27,612, it is said (and I summarise) that the maintenance arrears under it cannot now be claimed, that had the Agency acted without delay the court order would have been “cancelled” and that in consequence Mr. Humphries would have paid child support maintenance which  the Agency could have enforced.

57. In February 2007 Mr. Humphries first began to pay pursuant to the Agency’s assessment. 

58. On 16 July 2007 Mr. Justice Walker granted permission.

59. Sufficiently frequent payment was made by Mr. Humphries for the Agency to be satisfied that a pattern of payment had been developed for it to consider financial redress in respect of arrears.  The basis of calculation and quantum of financial redress had then to be decided.  It is the decisions regarding two elements regarding the arrears which now form the basis of the applications: first, the manner in which court orders were dealt with and, second, the basis of the calculation of Mr. Humphries’ notional income.

60. On 21 September 2007 the Secretary of State set out his response to Mrs. Humphries’ solicitor’s request for a full review of the case.  As to the court order he said:
“…I cannot find any evidence that prior to November 2003, your client raised the issue of when the Agency resumed responsibility for collecting maintenance in (sic) court order.  Therefore [the Agency] would not have been aware this was an issue.”

61. There was reference to Mrs. Humphries’ solicitor’s letter of 2 July 2007 concerning the court refusing jurisdiction: see paragraph 49 above.  It is said;

“[That] infers (sic) that [Mrs. Humphries] was already aware that she still had to approach the courts for the maintenance.

Also, it appears she may have been given misleading advice about when the Agency took over full control of the case in terms of securing maintenance…by the courts or her legal representatives…it does not mean that the Agency should now take responsibility for any financial loss due to non payment of the court order…

In accordance with paragraph (sic) 184-7 [paragraph 30 above], the potential redress for the period 24/09/96-25/08/05 will therefore be based on the difference between the maintenance assessment rate and, the court order rate that was in place at the time (£25 per week).”

62. In a further letter of 5 December 2007, the Secretary of State said:

“Consideration also needs to be given to the court order that was in place…Whilst I accept that [Mrs. Humphries] may have been given misleading advice either by the courts or her legal representatives at that time, and that she did not challenge the decision, it does not mean that the Agency should now take responsibility for any financial loss due to non payment of the court order, she may have incurred as a result (paragraph 4 of the [Guide].”

63. As to the proposed basis of the calculation Mrs. Humphries’ solicitor said in a letter of 26 November 2007:

“…We understand that you are considering making a “notional assessment” utilising the principles set out in paragraph (sic) 202/203 of the…Guide [paragraph 33 above].

We write to ask that our client be given a formal opportunity to participate in that decision making process.  We make these comments particularly against the position set out in the Guide…that the agency may use a notional assessment based on the “best”…evidence available…[a reference to paragraph 203 set out at paragraph 33 above].  We understand that the [Agency] has little evidence about [Mr. Humphries] and it may therefore be difficult to come up with an accurate assessment.  It should however be possible to make an assessment on the limited information available- in particular…The [Agency] will no doubt want to take account of the fact that [Mr. Humphries] is now assessed as paying over twice the national average assessment rate…[It] will reflect on the fact that [Mr. Humphries] had sufficient means to be assessed by the Court to make a maintenance payment that was above a nominal assessment.  [He] was apparently rich enough to sell his previous property and move to his current property in 1997.  His previous property was a terraced property whereas his current property is a semi-detached property with a garage…[He] was driving a new BMW in 1996/1997.  [He] was able to afford family holidays in Australia and America at that time.

We realise that our client’s evidence is not full evidence- but we submit that (unless there is other evidence available) it is the “best” evidence- upon which to allow the [Agency] to formulate an assessment.”

64. In his decision letter of 5 December 2007, the Secretary of State stated:

“…I [previously informed] you that as a payment pattern had now been established on (sic) your client’s case and, as the initial liability of £59.00 per week could not be considered reflective of his circumstances in September 1996, the Agency issued letters to [Mr.] Humphries…asking him whether he was willing to provide his details for the period 1996-2005 to allow notional assessments to be calculated…

As he has failed to respond to these letters…and, in the interest of progressing your client’s case, it has been decided to base financial redress on the average Maintenance Assessment…rates for the old rules scheme.  This approach is in accordance with paragraph 203 of the…guide [see paragraph 33 above].

…you state that redress should be based on the average salary rate.  If [the non resident parent] failed to give information about his housing costs [you say that]…“these should not be deducted from the assessment

However…you acknowledge that since 1997, [Mr. Humphries] owned a property.  As such he would have had housing costs…by awarding redress at a rate which assumes that [his] housing costs were £nil, one would be breaching paragraph 15 [paragraph 20 above] of the…Guide…we would be restoring your client to a better position than she would have been in, but for maladministration.

I have taken note of the comments you raised about [Mr. Humphries] in your letter dated 26 November 2007.  However, no information is provided upon which to calculate an assessment.”

65. Finally, dealing with both aspects, it is said:

“…redress will be based on the difference between the average maintenance assessment rate for the old scheme (if the delays had not occurred the case would always have been assessed under the old rules scheme) and the court order rate that was in place at the time…This approach is in accordance with paragraphs 15 [paragraph 20 above], 202-203 [paragraph 33 above] and 184-7 [paragraph 30 above] of the [Guide].”

66. The resulting calculation is then set out.  The weekly loss is calculated by deducting from the average weekly Maintenance Assessment rates the £25 per week court order.  That amounts to £530.86 for the period.  In addition, an interest payment of £530.86 is added: a total of £748.17.

67. By her re-amended grounds for judicial review, Mrs. Humphries:

“…challenges the Defendant’s…decision refusing to pay her compensation under the [Guide]:-

…revised decision (sic) 25 (sic) September…; 19 December 2007 (sic) offering the Claimant £748.17.”

68. The challenge in fact is to the decisions set out in the letters of 21 September and 5 December 2007.

How the Guide should be approached
69. Mr. Sheldon rightly submits that there is no obligation upon the Secretary of State to compensate at all.  When he in his discretion prepared a scheme, its content was a matter for him.

70. Mr. Sheldon further submits that the court should be slow in intervening in the exercise of the Secretary of State’s discretion when he makes a decision on an individual application in an ex gratia scheme such as the present.  He relies upon part of what was said by Auld LJ in the Divisional Court in R (Raissi) v Secretary of State for the Home Department [2007] EWCA Civ 243 at paragraph 21:

“…whilst decisions of the Home Secretary under the scheme are susceptible to judicial review, both as to matters of general interpretation and individual application, intervention by the courts in either respect should…be highly guarded.”

71. Mr. de Mello submits that in the light of the Court of Appeal’s decision allowing the appeal of Raissi  [2008] EWCA Civ 72, the observations of Auld LJ are not good law.  Both as regards general interpretation and individual application, the court should decide what the reasonable and literate man’s understanding in the circumstances would be.

72. The important passages for present purposes in the Court of Appeal, as it seems to me, are set out in paragraphs 107, 108, 123 and 124 of the judgment of the court given by Hooper LJ:

“107 We start with the issue of how policy statements such as this ex gratia scheme should be interpreted.

108 In The Queen (on the application of Daghir and Ors v SSHD [2004] EWHC Admin 243…[it] was said:

“…It is agreed that the appropriate test…is to be found in a passage in the judgment of Lawton LJ in R v Criminal Injuries Compensation Board, ex parte Webb [1978] QB, 74, 78…

“The government has made funds available for the payment of compensation without being under a statutory duty to do so.  It follows…that the court should not construe this scheme as if it were a statute but as a public announcement of what the government was willing to do.  This entails the court deciding what would be a reasonable and literate man’s understanding of the circumstances in which he could under the scheme be paid compensation for personal injury caused by a crime of violence…”

…123 We have reached the conclusion that…this court [should decide what the policy means].  To that extent we disagree with the Divisional Court.  We shall use the Webb text, whilst accepting that it could be worded in a more modern way.

124 What does the scheme mean?  What was its purpose and scope?  Who was the Minister intending to compensate?...”

73. It is therefore for me to decide how this scheme should be interpreted.  In doing so, it is for me, in the light of what the scheme says, to decide its purpose and scope.  When having regard to its application in an individual case, I have to ask myself whether in the light of its purpose and scope, it could reasonably have been intended to compensate an individual such as Mrs. Humphries in the manner proposed by the Secretary of State.  If it could, then I should not interfere.  If it could not, then I should.  Further than that it is unnecessary to go.

The court order
The argument

74. Mr. de Mello submits that Mrs. Humphries falls within the scope of the policy.  He accepts that paragraph 186 in terms states that any special payment must be calculated on the basis of the difference between the court order and the Agency’s maintenance assessment.  Such a calculation will recognise the opportunity lost as consequence of the maladministration.  He submits however that the Secretary of State cannot rely on paragraph 186 where the Agency has not acted diligently.  Paragraph 186 must not be applied rigidly.  Paragraph 4 (see paragraph 17 above) states that the Guide should not be read rigidly or be slavishly followed.  Paragraph 15 (see paragraph 20 above) states that Mrs. Humphries should be restored to the position she would have been in but for the error.   Paragraph 68 (see paragraph 26 above) says the same.  Were Mrs. Humphries put into the position she would have been in had the error not occurred, the maintenance assessment would have been issued and the Agency taken over responsibility for the payments and their enforcement. 

75. Moreover, although it could not be said that in terms that Mrs. Humphries proceeded on the basis of wrong advice (as contemplated by part of paragraph 68 (see paragraph 26 above)), the effect of the Agency’s maladministration was that she was misled.  What I think Mr. de Mello was suggesting was this: the issuing of a maintenance assessment form was something done internally by the Agency.  Mrs. Humphries would not know.  She would not know whether the Agency had by issuing the form assumed responsibility for the children’s maintenance.  All she knew, at least until September 1996, was that she was receiving income support.  Thereafter she received no payment.  She, at least for some time, did not know whether the court order was in place or not.   

76. The Secretary of State should not have taken into account the letter of March 2004.  In doing so, he was ignoring his own original error.

77. Mr. Sheldon submits that the words of the Guide are clear.    While he accepts that the Guide should not rigidly be applied, its principles have to be applied in each case.  What is said about court orders amounts to such a principle.

78. The correspondence and summaries prepared by the Agency show that what Mrs. Humphries said was considered.  The facts were not entirely one way.  She knew that the court order was in effect.

My view
79. First, as paragraph 3 of the Guide states (see paragraph 14 above), it should not be read as rigid set of rules.  It indicates key principles.  While the facts of each case must be considered on their merits, the principles must be consistently applied.

80. Second, as far as possible the customer should be restored to the position she would have been in but for the error: paragraphs 15, 29 and 68 (paragraphs 17, 20 and 26 above).  That seems to me a general principle. 

81. The maintenance enquiry form was promptly sent to Mr. Humphries.  He returned it.  The error was the failure then to issue a maintenance assessment.  Had a maintenance assessment been issued as it should have been, the court order would have ceased to have effect.  The Secretary of State would have had sole responsibility for its enforcement, including of any arrears.  Had he enforced the order, Mrs. Humphries would not have suffered financial loss.  She would not have had to support her children (once she ceased to receive income support).

82. In short, absent any argument based upon its later paragraphs, it seems to me the Guide contemplates a special payment in such circumstances as the present, which, provided it does not result in a sum greater than would have been received without any error, takes no account of unpaid court orders for maintenance.

83. Third, the later paragraphs which specifically concern Agency cases cannot be ignored.  Paragraph 161 (paragraph 28 above) states in terms that paragraphs 184-7 apply when there has been delay in assessing liability in court order cases.  I agree with Mr. Sheldon that in those paragraphs, the Secretary of State is setting out a principle. 

84. Fourth, the rationale behind paragraphs 184 to 186 seems to me this.  If the Secretary of State’s unreasonable delay has resulted in a loss of opportunity to receive maintenance, there should be compensation.  If there has been in place a court order, there has been no loss of opportunity as far as the amount of the court order is concerned.  For either the non resident parent paid under the order or the parent with care could have sought to enforce it. 

85. Fifth, it is necessary, when in any given case seeking to reconcile the principle that the “emphasis should be on trying to restore the customer to the position that…she would have been in had the error not occurred,” (paragraph 68)” with the principle that account must be taken of the court order (paragraph 186), to have close regard to the facts of that particular case.  Are the facts such as to mean that what are on their face clear words in paragraph 186 could not reasonably be applied by the Secretary of State?

86. Sixth, in Mrs. Humphries’s case, it seems to me the important facts are these. 

87. Mr. Humphries never paid under the court order.

88. Mrs. Humphries for some time did not know that the maintenance assessment had not been issued.  She was on income support at that time.  There came a time when Mrs. Humphries sought to enforce the order through the court.  When she did, the court wrongly told her that it did not have jurisdiction.  She and her solicitor appear to have accepted that.  It is not clear when that was.  The Secretary of State has taken that into account when deciding whether to disapply the clear wording of paragraph 186.  It seems to me he was entitled to. 

89. When Mrs. Humphries contacted the Agency in January 2000 it apparently did not tell her to pursue the court order.  There is nothing to suggest it misled her.  The Agency told Mrs. Humphries in terms that the court order was in place on 28 January 2004.  She did nothing to enforce it.  Her letter of 18 March 2004 makes it clear she was fully aware of the court order and its implications by then.  Again, she did nothing to enforce it.  It seems to me on any view that from January 2004 the Secretary of State was entitled not to disapply paragraph 186.

90. Mr. de Mello does not seek to impugn the Secretary of State’s decision on the basis that paragraph 186 should have been disapplied for that seemingly short period between September 1996 (when Mrs. Humphries ceased to receive income support) and the time that she approached the court to enforce the order and was misled.  

91. In short, I have come to the conclusion that the Secretary of State was entitled to conclude that there was no reason to depart from the very clear wording of those paragraphs 184-7.  In doing so, he was not failing to have regard to the policy or the facts of the case.

The notional assessment
The argument
92. The argument can be shortly stated. 

93. Mr. de Mello submits that the Secretary of State in his notional assessment failed to have regard to the best evidence available as he was obliged to under paragraph 203 of the Guide.  He merely applied the average assessment rates.  He failed to have regard to a number of features about Mr. Humphries.  He was a plasterer.  That would result in an above average income.  He took no account of Mrs. Humphries’ evidence which suggested Mr. Humphries had means at his disposal considerably greater than the national average.  £59 per week could not reasonably be the basis of any assessment of maintenance.

94. Mr. Sheldon submits that when a notional deduction is made (as it is agreed it has to be under the old scheme) to reflect Mr. Humphries’ probable housing costs, the Secretary of State was reasonably entitled to apply the national average assessment rate.  That could, in the round, reasonably be said to be the best evidence. What Mrs. Humphries says about his expenditure is no more than speculation.  He had re-married.  It is impossible to know how much contribution his partner was making to the apparent expenditure referred to by Mrs. Humphries.

My view
95. It seems to me there is substance in some aspects of Mr. de Mello’s submissions.  While the resultant figure might be the same, the best evidence requires at least consideration of the likely earnings of a plasterer for the period in question.  Only when that is known will it be possible to know how much is being set off in the notional assessment for housing costs.  It is, as I understand it, agreed that there are available statistics which could enable the Secretary of State to make the calculation.  It does not seem to me that simply to take a basic national average without more, and assume that will reflect the best evidence of the pay of a plasterer after housing costs is good enough.  It could not reasonably be said to be a notional assessment based on the best available evidence.  I agree with Mr. Sheldon that the general comments regarding Mr. Humphries’ lifestyle are of limited value.  To that limited extent, Mr. de Mello’s argument succeeds.  It is unfortunate, as Mr. de Mello accepts, that no evidence has been produced as to the probable earnings of a plasterer.  It means that I cannot say whether it would be other than an academic exercise to quash the decision.
Was it appropriate to apply for judicial review?

96. Mr. Sheldon submits that the Secretary of State has established the ICE.  Mrs. Humphries (as every aggrieved claimant), should first have explored that process before embarking on judicial review proceedings.  He rightly emphasises that this was not a matter considered in detail by Walker J when granting permission.  The statement of Mr. Hanlon to which I have referred was not available.  Moreover, Walker J never considered the re-amended grounds which formed the basis of Mrs. Humphries’ present application. 

97.   Mr. Sheldon submits that if (as will shortly become apparent is the case) I conclude that the application should first have been considered by the ICE, that can go to relief.  However, again realistically, he has agreed on behalf of the Secretary of State to be bound by my findings in Mrs. Humphries’ case.

98. I shall briefly summarise Mr. de Mello’s submissions. 

99. There is no rule that judicial review is not available when there is an alternative remedy by way of appeal.  I agree.  It is a matter of my discretion in the particular case.

100. The policy does not require there should first be a complaint to ICE.  Complaints to ICE take a very long time to determine.  Without going into the detail, it is clear to me they take no longer than applications for judicial review at the present time; indeed, they are dealt with quicker.

101. Going to the ICE will achieve nothing if he arrives at the same decision on the application of the Guide as the Secretary of State.  It is clear to me from Mr. Hanlon’s witness statement he does not invariably do so.

102. The ICE has no statutory powers to undertake an investigation and cannot compel witnesses to attend.  The agreement between the ICE and the Agency is not enforceable.

103. Statements taken from witnesses whose cases were considered by the ICE reveal deficiencies in the procedure.  The case of Miss Kennedy is particularly referred to.  In that case the Agency, it is said, did not reconsider Miss Kennedy’s case as ordered to by the ICE.  It only did so when judicial review was sought. 

104. The ICE is too close to the Agency according to the witness statement of Mrs. Humphries’ solicitor.

105. There is a procedural gap if the Agency fails to respond within the time limits set by Mr. Hanlon (see paragraph 42 above).  That could leave a claimant without a remedy.

106. In my view, as Mr. Sheldon submits, there are good reasons why a claimant such as Mrs. Humphries should normally first go the ICE.  I say that for the following reasons.

107. There are a very large number of these cases.  The ICE has an expertise in dealing with them.  They frequently involve detailed consideration of facts (as in part does Mrs. Humphries’).  The ICE is well able to apply the policy of the Guide as he is required to.  He is well able to consider its application in an individual case.  If he errs legally or the Agency fails to follow his recommendation, judicial review will lie.  It is not shut out by first going to the ICE.  In Mrs. Humphries’ case, it would, for example, have been a straightforward exercise for the ICE and the Agency between them to agree a likely figure for a plasterer’s earnings.

108. I do not accept, based upon summaries of other cases on different facts, that the ICE is not independent.  I have set out the structure of his organisation at paragraph 35 above.  It is self evidently independent and well resourced.  Its powers are wide: see paragraph 38 above.  It has significant advantages over judicial review: see paragraph 43 above.

109. Many of the large number of cases do not involve substantial sums of money.  To apply first for judicial review with its substantial costs would not seem to me proportionate.  I have no doubt that it will only be in the exceptional case that judicial review should be sought as a first resort.  Mrs. Humphries’ case does not fall within that category.

Mrs. Humphries: conclusion
110. I have concluded the Secretary of State erred in respect of his earnings’ decision: that it should be reconsidered.  He did not in respect of the court order decision.  Mrs. Humphries should first have gone to the ICE.  Had she, among other things, the factual issue regarding a plasterer’s earnings could easily have been resolved.  Mr. Sheldon has agreed that the Secretary of State (subject, of course, to any possible appeal) will abide by my ruling in Mrs. Humphries’ case.

111. I shall hear submissions as to the appropriate order in Mrs. Humphries’ case.

The other cases
112. In view of Mr. de Mello’s (correct) decision not to pursue them, it is unnecessary to go into any detail.  Only in one case (Mrs. Engstrom’s) did the claimant first go to the ICE.  In all of them, in broad terms, following the granting of permission, events moved on and the Agency re-considered the position.  By the time of Mr. de Mello’s skeleton arguments in those cases the only live issue in each case was that of costs.

113. As I understand it, written submissions will be made on the issue of costs in those cases once this judgment has been received by the parties.