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GF v CMEC [2011] UKUT (AAC)

Father’s appeal against a child maintenance formula assessment and against a departure direction in relation to child support for his daughter, now aged 14.

The Upper Tribunal heard the appeals brought by the non-resident parent (the father) in respect of two decisions made by the First-tier tribunal.  The father and the parent with care have a daughter now aged 14.  On 27/3/08 a decision was made that the father was to pay child support in respect of the child of £55.36 per week from 17/10/07.  From 28/1/08 the father started work in Afghanistan but was employed by a company based in Jersey.

He appealed against the decision of 27/3/08 on the ground of jurisdiction and on 23/10/09 the First-tier Tribunal decided that appeal and that he was habitually resident in England and Wales for the purpose of the Child Support Act.  The tribunal also decided that there had been a change of circumstances on 28/1/08 in that the father had changed from a UK based job to a job based abroad.  The Agency was directed to conduct a re-assessment.  On 19/1/10 a decision was made that the amount of child support was nil from 23/1/08. The ground for the decision was that the father was employed by a company based in Jersey and the company's payroll was non-UK based and out of jurisdiction of the Agency.

The mother appealed that decision on 1/2/10 and applied for a departure direction on the ground of lifestyle inconsistent with declared income.  On 10/5/10 the application was refused and the mother appealed against that decision.

The First-tier Tribunal heard both appeals on 19/10/10 and allowed the appeal with a direction that the case be remitted to CMEC to recalculate the amount of the child support assessment on the basis that the father's income was to be assessed at 23/1/08 at £45,000 per annum and was not subject to tax and stating that the father's payments were assessable earnings and that there was nothing in Schedule 1 of the Child Support (Maintenance Assessments and Special Cases) Regulations 1992 to say that they are not.  In addition, it was noted that in the regulations there is a provision that payments made outside the UK where there is a restriction against transfer to the UK shall be disregarded but that to the tribunal's knowledge there has never been the case with Jersey and in any event the father must have been able to withdraw funds to live during his furloughs and maintain his wife and child.  The appeal on the departure direction on the ground of lifestyle and income being inconsistent was dismissed because the cost of the father's lifestyle was not greater than would be funded by the income directed to be taken into account.

The Upper Tribunal held that it was clear that the father's employment in Afghanistan was not employment in Great Britain and that his salary was not earnings.  CMEC submitted that the First-tier Tribunal reached in substance the right result, because the earnings in Afghanistan fell to be taken into account under para. 15 of Schedule 1.  It was held that CMEC were correct and rejected the father's argument that amounts which fall within the ordinary meaning of "earnings", but are not within Part I of Schedule 1, cannot be "other income" falling within Part III.  The father also argued that because he had been advised by CMEC that his earnings in Afghanistan did not fall to be taken into account, he had spent those earnings for the purchase and renovation of his current home and they were therefore no longer available for the payment of child support.  This was rejected by the upper Tribunal and noted that although the First-tier Tribunal's reasoning was incorrect, it reached in substance the right result.  On the departure direction appeal, it was held that the decision was plainly correct.

Summary by Richard Tambling, barrister, 1 Garden Court


__________________________

IN THE UPPER TRIBUNAL                                     
ADMINISTRATIVE APPEALS CHAMBER                       

Appeal Nos.  CCS/389/2011
CCS/390/2011


1. These are appeals by the non-resident parent (Mr F), brought with my permission, against two decisions made by a First-tier Tribunal sitting at Bolton on 19 October 2010. For the reasons set out below my decisions are as follows:

(i) In relation to the appeal (CCS/390/2011) against the formula assessment decision, the First-tier Tribunal's decision was wrong in law and must be set aside. In exercise of the power in s.12 of the Tribunals, Courts and Enforcement Act 2007 I re-make the First-tier Tribunal's decision in the same terms as that made by the First-tier Tribunal in its Decision Notice dated 19 October 2010.

(ii) In relation to the appeal (CCS/389/2011) against the departure direction decision, the appeal is dismissed.

2. Mr F and the parent with care (Ms K) have a daughter, Lauren, now aged 14.

3. On 27 March 2008 a decision was made that Mr F was liable to pay child support maintenance in respect of Lauren at the rate of £55.36 per week from 17 October 2007.

4. As from 28 January 2008 Mr F had started to work in Afghanistan, employed by a company based in Jersey. He apparently appealed against the decision of 27 March 2008 on that ground. On 23 October 2009 a First-tier Tribunal decided that appeal. Its Decision Notice reads as follows:

"[Mr F's] appeal on jurisdiction was unsuccessful. The tribunal decided that he was habitually resident in England and Wales for the purpose of the Child Support Act.

The tribunal also decided that there had been a change of circumstances on 28 January 2008 in that [Mr F] had changed from a UK based job to a job based abroad.

The Agency is directed to obtain appropriate evidence of earnings and family circumstances and conduct a re-assessment."

5. On 19 January 2010 a decision was made, pursuant to that direction of the Tribunal, that the amount of child support maintenance was nil from 23 January 2008. The ground for that decision was stated in CMEC's submission to the First-tier Tribunal in the formula appeal to have been that Mr F "was employed by a company based in Jersey, Channel Islands and the company's payroll was non-UK based and therefore, out of jurisdiction of the Agency."

6. Ms K appealed against that decision on 1 February 2010.

7. On 19 April 2010 Ms K applied for a departure direction on the ground of lifestyle inconsistent with declared income.

8. By a decision made on 10 May 2010 that application was refused. Ms K appealed against that decision also.

9. The First-tier Tribunal heard both appeals on 19 October 2010.

10. The First-tier Tribunal's Decision Notice in respect of the formula appeal reads as follows:

"The appeal is allowed.

The case is remitted to the CMEC to recalculate the amount of the child support assessment in accordance with the following directions:

[Mr F's] income is to be assessed as at effective date 23 January 2008 at £45,000 per annum i.e. £865.38 per week. For the avoidance of doubt, this payment is not subject to tax.

CMEC is to recalculate assessment upon this basis."

11. The evidence showed that Mr F's salary from his employment in Afghanistan was at the rate of £45,000 per annum, and that it was not subject to deduction of tax or national insurance. Those facts are not disputed. The material paragraphs in the Statement of Reasons were as follows:

"15. The tribunal are clear that [Mr F's] payments are assessable earnings- there is nothing in Schedule 1 of the [Child Support (Maintenance Assessments and Special Cases) Regulations 1992] ("the MASC Regulations") to say that they are not.

16. In Schedule 2 Para 4 there is a provision that payments made in a country outside UK where there is a restriction against transfer to the UK shall be disregarded. However, this has to the tribunal's knowledge never been the case with Jersey and in any event [Mr K] must have been able to withdraw funds to live during his furloughs and maintain his wife and child."

12. The First-tier Tribunal dismissed the departure direction appeal on the ground that, in the light of its decision in respect of the formula appeal, the cost of Mr F's lifestyle was not greater than would be funded by the income directed to be taken into account.

The formula appeal
13. By reg. 7 of the MASC Regulations:

 "(1) ……………for the purposes of the formula in paragraph 5(1) of Schedule 1 to the [Child Support Act 1991], the amount of N (net income of non-resident parent) shall be the aggregate of the following amounts –

(a) the amount, determined in accordance with Part I of Schedule 1, of any earnings of the non-resident parent;

(b) ……………………………………

(c) the amount, determined in accordance with Part III of Schedule 1, of any other income of the non-resident parent;

(d) ……………………………………."

14. In Schedule 1 to the MASC Regulations, Part I deals with "earnings", and Chapter 1 is headed "earnings of an employed earner". Para. 1(1) of Schedule 1 begins as follows:

"…………… "earnings" means in the case of employment as an employed earner, any remuneration or profit derived from that employment and includes ……."

15. Part III of Schedule 1 is headed "other income", and paras. 8 and 15 provide:

"8. The amount of the other income to be taken into account in calculating or estimating N or M shall be the aggregate of the following amounts determined in accordance with this Part.

15. Any other payments or other amounts received on a periodical basis which are not otherwise taken into account under Part I, II, IV or V of this Schedule except payments or other amounts which –

(a) are excluded from the definition of "earnings" by virtue of paragraph 1(2);

(b) ……………………….."

16. By reg. 1(2) of the MASC Regulations ""employed earner" has the same meaning as in section 2(1)(a) of the [Social Security Contributions and Benefits Act 1992]." It is defined there as

"a person who is gainfully employed in Great Britain either under a contract of service, or in an office ……"

17. In my judgment it is clear that Mr F's employment in Afghanistan was not employment "in Great Britain." The First-tier Tribunal therefore erred in law in holding that Mr F's salary in respect of his work in Afghanistan was "earnings" falling within para. 1 of Schedule 1 to the MASC Regulations.

18. However, CMEC submits in this appeal that the First-tier Tribunal reached in substance the right result, because the earnings in Afghanistan fell to be taken into account under para. 15 of Schedule 1. The response to that on behalf of Mr F is as follows:

"under the rule of statutory interpretation "expressio unius exclusio alterius", "other income" cannot include any element of earnings. The expression "other income" must surely be reserved for other receipts of money, for example payments made under a trust arrangement or deed. The appellant has had no revenue from "other income" if the logic of the previous sentence is accepted."

19. CMEC is in my judgment right in submitting that the earnings in Afghanistan fell within para. 15. I do not accept the argument on behalf of Mr F that amounts which fall within the ordinary meaning of "earnings", but are not within Part I of Schedule 1, cannot be "other income" falling within Part III. I think that the better construction, looking at reg. 7 of the MASC Regulations, and Parts I and III of the Schedule, as a whole, is that items which fall wholly outside Part I, by reason of the way in which "earnings" are defined, are capable of falling within para. 15 unless expressly excluded from it. The key provision is really reg. 7 of the MASC Regulations. The argument on behalf of Mr F has to be that reg. 7(1)(c), in referring to "other income", is not intending to include amounts which are in the nature of "earnings", dealt with by reg. 7(1)(a). However, that argument in my judgment fails by reason of the fact that by reg. 1(2) "earnings" (including therefore the use of that expression in reg. 7(1)(a)) "has the meaning assigned to it by paragraph 1, 2A or 3, as the case may be, of Schedule 1". If, therefore, something does not fall within para. 1 (e.g. because it is from an employment abroad) it is not "earnings" for the purposes of any of the provisions of the MASC Regulations, and there is therefore no reason why it cannot fall within para. 15, unless expressly excluded.

20. That conclusion also seems to be indicated by the fact that para. 15(a) expressly exludes payments or other amounts which are excluded from the definition of "earnings" by virtue of paragraph 1(2). If the argument put forward on behalf of Mr F were correct, para. 15(a) would appear to have been strictly unnecessary, although I accept that it could still have been included for the avoidance of doubt and because many of the express exclusions in para. 1(2) are very arguably not within the ordinary meaning of "earnings" in any event. If the result contended for on behalf of Mr F had been intended, one would expect para. 15(a) to have been worded along the lines: "are in the nature of remuneration from employment or self-employment but do not fall within Part I of this Schedule."

21. It is further submitted on behalf of Mr F that, in reliance on advice from the CSA that his earnings in Afghanistan did not fall to be taken into account, he expended those earnings for the purchase and renovation of his current home, and they are therefore no longer available for the payment of child support maintenance. The First-tier Tribunal made a finding that "the failure of [Mr F] to pay child support arises solely from advice given by CMEC." However, there is no basis on which arguments based on estoppel or hardship, or wrong advice given by the CSA, can be considered by a First-tier Tribunal on an appeal in relation to the amount of child support maintenance payable under the formula. The First-tier Tribunal (and therefore the Upper Tribunal in re-making the First-tier Tribunal's decision) must apply the provisions of the 1991 Act and the MASC Regulations as it finds them, without regard to arguments based on estoppel or broad considerations of equity: see, for example, CCS/265/2007 at para. 39.

22. In my judgment, therefore, although the First-tier Tribunal's reasoning was incorrect, and it is therefore appropriate to set aside its decision, it reached in substance the right result, and I should therefore substitute a decision to the same effect.

The departure direction appeal
23. In view of my decision on the formula appeal, the First-tier Tribunal's decision in respect of the departure direction appeal was plainly correct.

Charles Turnbull
Judge of the Upper Tribunal
30 August 2011