DECISION OF THE CHILD SUPPORT COMMISSIONER
1.	My decision is that the decision of the Southampton appeal tribunal, held on 13 September 2002 under reference U/03/203/2002/00059, is not erroneous in point of law.

The appeal to the Commissioner
2.	The case concerns the child support maintenance payable with respect to Devini and Ishani. In the terminology of the child support legislation, the appellant is their parent with care under the assessment, and the second respondent is their absent parent under the assessment. I shall refer to them in those terms.
3.	The case comes before me on appeal to a Commissioner against the decision of the appeal tribunal brought with the leave of Mr Commissioner Lloyd-Davies. The Secretary of State does not support the appeal. Both parents have made observations on the appeal.
4.	The case was transferred to me for decision. Shortly before the case came before me, a Commissioner in Northern Ireland gave a decision that is relevant to this appeal: CSC4/02-03. I directed that it be added to the papers and allowed the parties a chance to comment on it. Having received the written submissions on that case, I directed an oral hearing so that, if necessary, I could substitute a decision for that of the appeal tribunal without the need for a rehearing before an appeal tribunal.
5.	The oral hearing was held before me in London on 27 August 2003. The parent with care attended and was represented by her brother, Mr Jariwala. The absent parent attended and spoke on his own behalf. The Secretary of State was represented by Miss S Topping of the Office of the Solicitor to the Department for Work and Pensions. I am grateful to all those who spoke for their arguments.
The key issue
6.	The key issue raised by this appeal is how to interpret and apply the requirement that, in order to be eligible for child support purposes, an absent parent’s housing costs must be necessarily incurred under paragraph 4(1)(a) of Schedule 3 to the Child Support (Maintenance Assessments and Special Cases) Regulations 1992.
The history of the case
7.	The absent parent’s liability for child support maintenance was assessed at £106.53 a week on and from the effective date of 29 June 2001. This was a considerable reduction from the assessment that was in force at the time of the parents’ divorce. The reduction is attributable to an increase in the absent parent’s eligible housing costs. 
8.	The parent with care exercised her right of appeal against that decision. She argued that the absent parent’s housing costs were too high and that he had savings that had not been taken into account. The latter is no longer in issue.
9.	The absent parent’s mortgage arrangements are these. Before he and the parent with care separated, they had a joint endowment mortgage supported by two policies. One had been taken out by the absent parent before he married and the other had been taken out after the marriage. They were due to mature in 2012 or 2013. As part of the financial provision on divorce, the absent parent transferred his interest in both those policies to the parent with care and she transferred to him her interest in the home. 
10.	After the separation and divorce, the absent parent remained in the former matrimonial home. He took out a repayment mortgage. He had to change lenders in order to raise sufficient funds. However, he wanted to retain the same redemption date. He told me that this was his choice. He was under no pressure from the lender or anyone else. So, he took out a short repayment mortgage rather than one for 25 years. 
11.	For the purposes of the financial provision proceedings, both the absent parent and the parent with care had to provide the court with evidence of the maximum amount of capital that they could raise. This they did by providing quotations for 25 year repayment mortgages. That information was before the court. 
The tribunal’s decision
12.	The appeal was heard by a tribunal consisting of a legally qualified panel member as chairman and a financially qualified panel member. Both parents attended and gave evidence. The tribunal allowed the appeal. The chairman completed a decision notice, but headed it with the words: ‘This is a full decision.’ I take that to mean that she had written a statement of the reasons for the tribunal's decision on the form provided for decision notices. 
13.	The parts of the tribunal’s reasoning that deal with the absent parent’s housing costs read:
‘(3)	In relation to housing costs it was argued by the appellant in respect of MASC regs. 3(6)(a) and (b) and 4(1)(a) that the decision by the respondent to take a repayment mortgage to terminate in 2013 was not necessary and as such payments made in excess of the level necessary to repay the mortgage over 25 years should be disallowed.
‘We interpret these sections as relating to voluntary payments in excess of the mortgage repayment contractually required. The evidence accepted is that on divorce an endowment mortgage was replaced by a repayment mortgage expiring on the same approximate date (we are unable to take account of negotiations which occurred at the time of the breakdown of the marriage, which proposed a 25 year mortgage). We have rejected this argument based on the evidence and our interpretation of the regulations. 
‘(4)	In relation to MASC Regulations paragraph 27 it was argued that taking out a mortgage for a shorter period was an intentional deprivation of income or capital. Again we reject this argument. We find that [the absent parent] has not deprived himself of income but simply spent it.’
Paragraph 27
14.	Paragraph 27, to which the tribunal referred, is paragraph 27 of Schedule 1 to the Child Support (Maintenance Assessments and Special Cases) Regulations 1992. 
15.	At the hearing before the tribunal, the parent with care argued that the absent parent had deprived himself of income by making mortgage payments that were higher than necessary. The tribunal correctly rejected that argument for the reason it gave. The absent parent had not deprived himself of his income. What he had done was commit himself to spending part of that income in a particular way. 
16.	At the hearing before me, Mr Jariwala argued that the absent parent was depriving himself of capital, because by every mortgage payment he reduced the amount of capital outstanding on the mortgage. Mr Jariwala is correct that each monthly mortgage payment reduced the capital outstanding. But there is a flaw in his argument, as I believe he accepted at the hearing. Although the mortgage payment reduces the amount of capital borrowed, the absent parent was paying the mortgage from his income and not from his capital. So, for the purposes of paragraph 27 the absent parent was not depriving himself of capital. he was using his income to reduce the capital outstanding on his mortgage. 
The mortgage quotations
17.	The parent with care has made much of the information provided by the absent parent in the course of the divorce proceedings. As I indicated at the oral hearing, this is really beside the point. The court needed to know how much capital each parent could raise. That information was relevant to how they could house themselves and how much one of them could pay to the other as a lump sum. Given the purposes for which the information was required, the quotations were naturally for the usual maximum period of a mortgage, 25 years, because the longer the period the higher the amount that could be borrowed. The court did not order either parent to take out a mortgage for at least 25 years. That provision cannot be implied into the court order for the simple reason that, as far as I know, the court had no power to make such an order. Nor can a 25 year mortgage in any way underlie the court’s order or calculation. The court was not concerned with how the parents raised the money, only with how much they could raise.
18.	The parent with care argued that if she and her advisers had known that the absent parent would reduce his child support maintenance liability by taking out a mortgage for less than 25 years, they would have sought an order for child maintenance from the court. As I pointed out at the oral hearing, I am not sure that the court would have power to make such an order in the circumstances of this case, although it might perhaps have increased the spousal maintenance to reflect the reduction in the absent parent’s child support liability. 
19.	For child support purposes, the tribunal was correct that the mortgage evidence used in the divorce proceedings was irrelevant.  
The housing costs legislation
20.	I now come to the key issue in the appeal.
21.	Some, but not all, housing costs are eligible to be taken into account in determining an absent parent’s liability for child support maintenance. The eligibility of housing costs is governed by regulations 15 and 18 of, and Schedule 3 to, the Child Support (Maintenance Assessments and Special Cases) Regulations 1992. 
22.	Regulation 18 deals with excessive housing costs. It provides for these to be capped in specified circumstances. Capping does not apply in this case, because the absent parent has remained in the former matrimonial home: see regulation 18(2)(b).
23.	The provisions relevant to this appeal are in Schedule 3. 
24.	Paragraph 3(6) provides:
	‘(6)	For the purposes of subparagraphs (2) and (3), housing costs shall not include-
		(a)	any payments in excess of those required to be made under or in respect of a mortgage, charge or agreement to which either of those subparagraphs relate …’
25.	The only other provisions I need set out are from paragraph 4:
	‘4.-(1) Subject to the following provisions of this paragraph the housing costs referred to in this Schedule shall be included as housing costs only where-
		(a)	they are necessarily incurred for the purpose of purchasing, renting or otherwise securing possession of the home for the parent and his family, or for the purpose of carrying out repairs and improvements to that home;
		…
	(4) Where a loan has been obtained only partly for the purposes specified in sub-paragraph (1)(a), the eligible housing cost shall be limited to that part of the payment attributable to that purpose.’ 
The authorities on paragraph 4
26.	There are two relevant authorities on the issue raised by this appeal.
CCS/2742/2001
27.	This is a decision of a Commissioner in Great Britain, Mr Commissioner Williams.
28.	This case concerned the reduction of the term of a mortgage. The facts were these. The absent parent had shortened the length of his mortgage term from 25 years to 10 years. It seems to me that he remained with the same lender, but that is not expressly stated. There was no pressure on the absent parent from the lender to shorten the term. 
29.	The tribunal decided that the increase in the absent parent’s housing costs was not necessary for the purpose of paragraph 4(1)(a). It directed that the absent parent’s eligible housing costs were limited to those payable on a 25 year term. The Commissioner decided that the tribunal did not go wrong in law in reaching that decision. The tribunal had been entitled to limit the amount of the housing costs under paragraph 3(6), which applies if payments are made ‘in excess of those required to be made under or in respect of a mortgage’: see paragraph 19 of the Commissioner’s decision.
CSC4/02-03
30.	This is a decision of a Commissioner in Northern Ireland, Mrs Commissioner Brown. It was decided under the Northern Ireland legislation, which is equivalent in all respects to that which applies in Great Britain. In R(SB) 1/90, a Tribunal of Commissioners considered the authority of a decision of the Court of Appeal in Northern Ireland. The Tribunal did not deal with the authority of decisions of the Commissioners in Northern Ireland. But, by parity of reasoning with the Tribunal’s, a decision of a Commissioner in Northern Ireland on identical legislation should be treated as having the same authority before me as a decision of a Commissioner for Great Britain. I have approached Mrs Brown’s decision on that basis. 
31.	This case concerned the reduction of the term of a mortgage on remortgage. The facts were these. The absent parent had a mortgage with the Halifax. For a period, the rate of interest payable was discounted. At the end of that period, the absent parent replaced the Halifax mortgage with one from the Alliance and Leicester. In legal terms, he redeemed the mortgage with the Halifax, using the capital raised by the new mortgage with the Alliance and Leicester. The Alliance and Leicester mortgage was for a shorter term than the Halifax mortgage. This had the effect of increasing the absent parent’s repayments. 
32.	The tribunal decided that the absent parent’s eligible housing costs should be those that he would have paid under his Halifax mortgage for the remainder of the term once the period of discount was over. The issue for the Commissioner was whether those new and increased housing costs were eligible for the purpose of calculating the absent parent’s liability for child support maintenance. 
33.	Mrs Brown’s reasoning is in paragraph 30 of her decision:
‘It appears to me that paragraph 4(1)(a) relates to purpose, i.e. in this case the purpose of purchase. If mortgage interest was necessarily incurred for the purpose of purchasing the home then the amount of that mortgage interest is to be included as a mortgage cost subject only to the other provisions of paragraph 4. Paragraph 4(4) limits eligible costs to that part of the payment attributable to the purposes set out in paragraph 4(1)(a) and reinforces my view that paragraph 4(1)(a) relates to purpose rather than to amount.’
34.	Mrs Brown disagreed in paragraph 31 with the reasoning and conclusion in CCS/2742/2001. She also commented in paragraph 32 that the Commissioner might not have considered regulation 18, which was not cited to him or mentioned by him.
35.	The parent with care expressed concern at the risk that an absent parent might manipulate liability to child support maintenance by increasing the amount of housing costs payable. Mrs Brown considered that argument, but concluded in paragraph 32 that the legislation made safeguard against this by providing for a cap on housing costs in regulation 18. She might also have added a reference to the possibility of a departure direction on the ground of unreasonably high housing costs under regulation 26 of, what is in Great Britain, the Child Support Departure Direction and Consequential Amendments Regulations 1996.
My analysis of the legislation
36.	The housing costs provisions in the child support legislation contain a number that are, at least in part, anti-avoidance in their effect. Regulation 18 and paragraphs 3(6) and 4 are among them. They are not limited to cases of actual, deliberate abuse, but they do cover circumstances in which there is a risk of abuse. It is appropriate to interpret them so as to achieve their effect of preventing abuse of the allowance for housing costs in order to affect an absent parent’s liability for child support maintenance.
37.	Each of the provisions is aimed at a particular risk of abuse. So, regulation 18 is aimed at the risk of a parent taking out a mortgage that is disproportionately large in relation to income. With respect to Mrs Commissioner Brown, there is no reason to interpret this provision as the exclusive safeguard against unnecessary housing costs. A cost can be unnecessary without being disproportionate to income. And the risk of abuse exists as much whether or not disproportionality is an issue.
38.	Given the range of provisions, there is no need to subvert one to cover circumstances that more naturally fall within another. So, paragraph 3(6)(a) deals with payments in excess of those ‘required to be made’. The tribunal in this case referred to ‘voluntary payments in excess of the mortgage repayment contractually required.’ That is the natural meaning of the wording of that provision. In so far as the tribunal was referring to that provision, its analysis was correct. With respect to Mr Commissioner Williams, I see no justification for interpreting those words to extend to repayments that are required under a new contractual arrangement, whether with the same lender or a different one. 
39.	Miss Topping argued that paragraph 4(1)(a) set a ‘high threshold’. I accept that submission. It is appropriate given both the wording (‘necessarily incurred’) and the purpose (anti-avoidance) of the provision. 
40.	Nevertheless, it must be interpreted and applied sensibly, with appropriate regard to the realities of property acquisition and of the mortgage market. In particular, it is not appropriate to interpret paragraph 4(1)(a) to disallow all housing costs that are not absolutely essential. If this were so, each year absent parents would have to extend their mortgage terms to the maximum attainable in order to ensure that payments were kept to the minimum. Nor would it be appropriate to reduce the amount of eligible housing costs simply because the other parent was able to point to a more advantageous mortgage deal that could have been obtained elsewhere in the present extensive mortgage market. Legislation could have that effect, but it would require clearer wording than this provision to attain it. 
41.	I find some support for this approach to necessity, although it is from a very different context, in the decision of the European Court of Human Rights in The Sunday Times v The United Kingdom (1979) 2 European Human Rights Reports 245 at paragraph 59:
	‘… whilst the adjective “necessary” … is not synonymous with “indispensable”, neither has it the flexibility of such expressions as “admissible”, “ordinary”, “useful”, “reasonable” or “desirable” …’
42.	The opening words of paragraph 4(1) have this effect. Every reference to housing costs in Schedule 3 are to be read as subject to the conditions set out in that paragraph 4. Or, to put it another way, the conditions in paragraph 4 are to be read into every reference to housing costs in the Schedule. 
43.	All references to housing costs elsewhere in Schedule 3 can only refer to actual housing costs. So, the first step is to identify those costs.
44.	The conditions in paragraph 4 must then be applied to those costs. Paragraph 4(1)(a) imposes a condition by reference to the purpose for which the costs were incurred. That is clear from the wording. To that extent, I agree with Mrs Commissioner Brown. However, Mrs Brown distinguished between the purpose for which the housing costs were incurred and their amount, which is affected by their duration. With that, I respectfully disagree. The paragraph does not expressly draw that distinction. Can it be found by interpretation of that paragraph in its context? I find no justification in drawing that distinction as a matter of interpretation. Indeed, quite the reverse. 
45.	When a purchaser is looking for a mortgage with which to acquire a property, a number of factors will influence the choice of lender from among those willing to finance the purchase. The purchaser will want to obtain a favourable rate of interest compared with other lenders, or certainty of commitment for a period, or a combination of those considerations. On remortgaging, those factors are likely to be paramount in the owner’s mind. So, the immediate purpose on remortgage can only meaningfully be identified in terms of the rate of interest, which together with the period of the loan determines the amount of each repayment. Those matters are often inextricably linked as part of a package of purposes for which the finance is obtained. Trying to isolate them involves an artificial analysis. It also fails to give effect to the anti-avoidance purpose of the provision by allowing a parent to enter into a transaction that reduces, or even eliminates, a child support maintenance liability. 
46.	So, returning to the application of paragraph 4, the second step is to investigate and identify the purpose or purposes for which the costs were incurred. There are three possibilities.
•	The purpose may not have been related to acquiring the home.
•	The purpose may have been solely to acquire the home.
•	The purpose may have been partly to acquire the home and partly something else.
47.	If the purpose did not relate to acquiring the home, the whole of the housing costs are ineligible for child support purposes under paragraph 4(1)(a). No further consideration is needed. For example, taking out a mortgage solely to raise a capital sum in order to set up a business or to pay a lump sum on divorce is not a purpose that is covered by paragraph 4(1)(a). It is, therefore, not an eligible housing cost. 
48.	If the purpose was solely to acquire the home, the costs are eligible for child support purposes, provided they were necessarily incurred for that purpose. Typically, they will be necessary. But it is possible that they may not be. For example, a parent may have had sufficient capital to purchase the home outright.
49.	If the purpose was partly, but not solely, to acquire the home, the costs are apportioned under paragraph 4(4). That part of the costs that does not relate to acquiring the home is not eligible under that provision. The remainder of the costs are eligible, provided they were reasonably incurred for the purposes of paragraph 4(1)(a).
50.	How does this analysis apply if the absent parent is alleged to have incurred costs that are too high by reason of the rate of interest or the length of the mortgage term? These circumstances could be presented in either of two ways. 
•	One way is to argue that, to the extent that the costs are higher than they need be, the costs were incurred for a purpose other than acquiring the home. That purpose would be to reduce the parent’s liability for child support maintenance.
•	The other way is to argue that, to the extent that the costs are higher than they need be, the costs were not necessarily incurred for the purpose of acquiring the home. 
51.	On the first analysis, paragraph 4(4) applies and the payments have to be apportioned. This way of presenting the argument is difficult to sustain in practice. It involves providing what has motivated a parent to take out a mortgage on particular terms. Motivation and purpose can be proved by inference from the circumstances. And it is easy to construct a set of hypothetical circumstances in which it could be inferred that the parent had taken out a longer mortgage than necessary for the purpose of both acquiring the home and reducing the amount of child support maintenance that will be payable. But those circumstances are not so easily established in real life. It is more likely in practice that the evidence will only allow the case to be presented on the second analysis.
52.	On the second analysis, paragraph 4(4) does not apply. The only issue is whether the costs were, in their amount, necessarily incurred. If they were, they are eligible housing costs. If they were not, they are not eligible. In practice, the focus is likely to be on the sequence of events that led to the mortgage arrangement that is under scrutiny and the reasons the parent gives for making that decision. A parent will need a more persuasive reason to explain some decisions than others. So, a decision to cut the mortgage term by half, thereby substantially increasing the mortgage repayments, will have to be explained. But a decision in the present economic climate to move from an endowment mortgage to a more expensive repayment mortgage is readily explained as reducing the risk that is inherent in endowment policies. 
53.	This analysis produces a sensible and workable interpretation of the housing costs provisions that takes account of their anti-avoidance aspects without producing unrealistic outcomes. 
How does this analysis apply to the facts of this case?
54.	In strict legal terms, following his divorce the absent parent redeemed one mortgage and took out another. However, that is an unrealistic way of looking at the matter. For practical and economic purposes, the absent parent found a new way of financing his existing ownership of his home. This is reflect in common parlance. It is not unusual to speak of moving a mortgage to another lender rather than of redeeming and taking out a new mortgage. Seen in that way, it is not surprising that he decided to keep to the same redemption date as before. 
55.	There is no evidence at all to suggest that the absent parent had in mind any purpose other than retaining his home. If he had not raised the money, he would have had to sell the home in order to honour the court order it. The parent with care has referred to the divorce documents, but I have already explained why they do not assist her argument. 
56.	Nor does the history of the case suggest that the costs were not necessarily incurred. Taking a realistic and practical approach to necessity, leads me to this analysis. The absent parent needed finance in order to remain in his home. He lost the means of financing his purchase of the home, because the endowment policies were transferred into his wife sole name. And the economic climate did not favour taking out new endowment policies, regardless for how long a period. So, he had to take out a repayment mortgage for an increased amount. But what about the period of the mortgage? The decision was certainly taken in the context of continuity of occupation of the same home. And there was, as a matter of substance if not of legal form, continuity in the mortgage arrangement, subject only to the adjustments required by the absent parent’s changed circumstances following his divorce. In those circumstances, for the purposes of paragraph 4(1)(a) I consider that the costs were necessarily incurred. 
Conclusion
57.	I have come to the same conclusion as the tribunal, but on different reasoning. I could set its decision aside and substitute a decision to the same effect. But that would be an empty exercise. The outcome of the appeal before the tribunal was correct. I dismiss the appeal against its decision. 

Signed on original	Edward Jacobs
Commissioner
1 September 2003