August 3, 2016 Admin

Variation of child maintenance on the grounds of assets

Family analysis: The child support maintenance case of SM v Secretary of State for Work and Pensions shows that the infinite variety of family arrangements will always create fresh litigation despite the efforts of legislators to provide a comprehensive code, says James Pirrie, director of Family Law in Partnership Ltd.

Original news

SM v Secretary of State for Work and Pensions and BM (Child support: variation/departure directions: just and equitable) [2016] UKUT 245 (AAC)

The Upper Tribunal (UT) allowed a father’s appeal against a First-tier Tribunal (FTT) decision that payments he had made for his son’s extra-curricular activities such as music lessons and sport at school would not be taken into account when deciding the amount of child support maintenance he should pay.

What were the background facts?

There were two applications for a variation of child support maintenance seeking an adjustment to the formula figure:

  • an application for an increase by the mother, as the parent with care, on the basis of the father’s ‘underused’ assets
  • an application for a reduction by the father, as the non-resident parent, on the basis that he was paying school fees

The Child Support Agency (CSA) granted both applications. But the father appealed to the FTT, arguing that the variation did not pass the required test of being ‘just and equitable’, within the meaning of section 28F of the Child Support Act 1991 (CSA 1991), as regard should be had to the sums he paid as voluntary contributions towards his school extras for his son such as music lessons, school trips, bus fares, school uniform, school clubs and sports activities.

The FTT rejected the father’s argument, and he appealed to the UT.

What did the UT decide?

The UT found that the CSA and the FTT had correctly decided that the sums paid by the father were not simply to be lumped together as, within the meaning of CSA 1991, s 8(7)(b), ‘expenses incurred in connection with the provision of the instruction or training’ of his son and treated as generating an adjustment on the father’s application for a variation.

However, it considered that it was legitimate to consider whether those contributions were of such a size as to lead to the refusal of the mother’s application on the basis of underused assets (ie whether he was paying enough voluntarily and so a further uplift to the formula figure to reflect his assets was not just and equitable). The CSA had not considered this angle, which the UT found a material error.

The UT remitted the case to the FTT for fresh consideration.

What is the significance of this case?

It is a paradox that a detailed code will always spawn vastly more litigation than might be expected. I remember looking around the House of Lords in 2006 on one of the early visits of the state department to our Supreme Court (Smith v Secretary of State for Work and Pensions [2006] UKHL 35, [2006] All ER (D) 161 (Jul)) and thinking that the 27 lawyers then wrestling with another short phrase in the statute did not bode well for the administrative scheme. This case is a further illustration of the infinite variety of family arrangements that generates challenges for the administrative scheme.

The drafters of the scheme aimed to remove discretion from the system and provide clear rules for its officers to pinpoint clear outcomes. Unfortunately, family circumstances have always been able to create ambiguity in even the most clear-seeming phrase. An ‘arms race’ has ensued of increasing definition and increasing complexity which has created a legal labyrinth so extensive as to be beyond the understanding of all but the most motivated specialists.

Just to locate this conundrum. There have been three schemes. This case involves the second scheme (live from 2003) and while it has now been overtaken by the third scheme, there are similar provisions in the current scheme, so this case is not of historical interest only. Each scheme permits a variation direction to be given to take into account certain additional expenses, such as educational costs, where this is just and equitable (and thus reduce the level of payment). The schemes also permit an increase in the level of the award in certain circumstances, and here the mother had applied for an increase on a ground no longer permitted, namely assets that were held by the father that should be treated as generating a notional income.

The decision in this case was being made by the UT at the second layer of appeal from the state agency’s decision-maker. Here Gwynneth Knowles QC, judge of the UT, tells us that:

  • educational costs are taken account of as a variation ground, and thus accommodated they cannot found a ‘just and equitable’ argument
  • extras may not be educational costs if they are not directly connected to the education, eg Duke of Edinburgh activities would be extra-curricular at a state school and so should be regarded as such at a private school
  • it is possible that enough of those costs might incline the CSA to decide that the parent is paying enough and therefore not order an increase on the grounds of that parent’s various other assets

Although how it might go about making that decision is anyone’s guess. In all likelihood, the teenagers in the instant case are surely going to see ongoing litigation between their parents as the poor CSA scheme seeks to come up with a rational way of making that decision. One suspects that the cost to the CSA of hosting this contest will be considerably more than the adjustment that would result from either taking account of or excluding the extras payments from the calculations.

Interviewed by Robert Matthews.