CCS/1443/2004

DECISION OF THE CHILD SUPPORT COMMISSIONER
 
1.	This appeal is unsuccessful.  The decision of the Liverpool appeal tribunal dated 11 March 2004 is erroneous in point of law and I set it aside.  I substitute a decision to the effect that the mother’s housing costs should properly have been assessed at £274.48 per month from 23 April 2003 but I am told that that makes no difference to the assessment of child support maintenance.

REASONS

2.	This case turns out to be about nothing of substance.  The father of the qualifying children has appealed on a question concerning the calculation of the mother’s housing costs but it is common ground that it makes no practical difference to the amount of child support maintenance whether I accept his arguments or the arguments of the Secretary of State or the approach of the tribunal.  However, I will express a view as the issue might be of some significance in other cases and I have heard argument on it from the father and from Mr Jonathan Moffett of counsel on behalf of the Secretary of State, the mother not appearing at the hearing or being represented.  Plainly, in these circumstances, the view I express cannot be regarded as binding but, if the Secretary of State is not persuaded by my reasoning, he may wish to consider amending the legislation in order to make it clear how it is to be applied.

3.	The facts are straightforward and not materially in dispute.  The parents had a joint repayment mortgage under which they were required to pay £548.95 on the 3rd day of each month.  After they separated in June 2001, the father continued paying that sum in full until December 2001, after which he ceased making any payments.  The mother paid half that sum in January 2002 and then negotiated an arrangement with the lender under which the lender agreed not to take proceedings provided she paid £200 per month, which she did from February 2002.  In the divorce proceedings, it was agreed that the property would be sold and the proceeds of sale would be shared between them, subject to deductions to be made from the father’s share and paid to the mother in respect of, inter alia, half the mortgage interest payments made by her from 16 December 2001 until the date of sale, which was in June 2003.  

4.	The mother claimed child support maintenance in January 2002.  Initially, her housing costs were taken to be £548.95 per month but that was adjusted to £200 per month.  However, in the light of the agreement – or proposed agreement – in the divorce proceedings, the father sought a further adjustment to £100 per month on the basis that he would eventually be repaying the mother half of her payments.  That was refused.  The father appealed but was unsuccessful.  Indeed, the tribunal appears to have misunderstood the Secretary of State’s submission and, although purporting simply to dismiss the appeal, it held that the correct amount of housing costs was the £548.95 contractually due under the mortgage.  The father now appeals with my leave, given when I did not realise that nothing of substance turned on the issue between the parties.  The reason why nothing of substance turns on the dispute is that housing costs are material only to the calculation of exempt income and protected income and in this particular case it is the father who has the much lower income and, moreover, an income that makes his own protected income level of significance so that moderate adjustments to the amount of the mother’s income simply have no effect on his liability. 

5.	The father says, however, that it is important that the record be straight.  He may have a slightly optimistic belief in the extent to which the Child Support Agency keeps detailed records but, in any event, it is not usually the role of tribunals or Commissioners to make decisions on questions that have no practical importance in respect of the case in hand.  The Secretary of State might like to consider whether, particularly in cases concerning disputes about housing costs, he should check whether an appellant’s submissions would make any difference to the outcome of the case and, if not, draw a tribunal’s – and the other parties’ – attention to that fact at the outset.  A tribunal is entitled to determine an appeal without ruling on an issue that is not of practical importance and, perhaps more importantly, an appellant may decide not to pursue an appeal if nothing of financial significance will be achieved.

6.	By virtue of paragraph 1(b) of Schedule 1 to the Child Support (Maintenance Assessments and Special Cases) Regulations 1992, housing costs include “amounts payable by way of mortgage interest”.  By virtue of paragraph 3(2) capital repayments for which a “parent is liable to make periodical payments” are also included for the purposes only of calculating exempt income, subject to regulation 3(6), which excludes, perhaps unnecessarily, “any payments in excess of those required to be made”.  Regulation 15(3) has the effect that, where a parent has eligible housing costs and another person who is not a member of the family is also liable for the same housing costs, the parent’s costs are his or her share.  However, by virtue of paragraph 4(2)(a) of Schedule 3, a person is treated as responsible for a former partner’s share of the housing costs if “because the person liable to meet those costs is not doing so, he has to meet those costs in order to continue to live in the home”.

7.	The tribunal was quite right to take the view that the mother was liable to pay the whole contractual amount of the mortgage because she was jointly and severally liable and the father, who was also jointly and severally liable to pay that sum, had not been a party to any agreement for a reduced liability.  In any event, as the tribunal also noted, there was not, in truth, any reduced liability because it is obvious that the lender merely deferred payments and expected to obtain the full contractual amount in due course, including, no doubt, interest on the late payments.  However, the tribunal overlooked regulation 15(3), which had the effect that the mother’s housing costs were to be taken to be only her share of the amount due, unless paragraph 4(2) of Schedule 3 applied.  Paragraph 4(2) did not apply because the mother was able to continue to live in the house by persuading the lender to accept reduced payments while the property was being sold and so she did not in fact have to meet the father’s share of the costs.  Thus, at first sight, the housing costs should have been £274.48 per month.

8.	Mr Moffett, however, argued that the housing costs should have been taken to be £200 per month because that was what was actually being paid.  He cited CIS/636/92 which involved type of mortgage agreement for elderly borrowers that did not require any payment of either interest or capital to be made as long as the principal amount outstanding, including any accrued interest, did not exceed 75 per cent of the value of the property.  The property was valued every three years. Interest became payable if the sum outstanding exceeded 75 per cent of the value of the property but otherwise any payments of interest or capital were voluntary.  The claimant in fact paid nothing and the Commissioner held that she was not entitled to have housing costs in respect of her mortgage included in her applicable amount.  He placed much weight on the words “costs”, “payments” and “expenditure”.  Apparently, the claimant applied for leave to appeal and the Court of Appeal dismissed her application (Brain v. Chief Adjudication Officer, 2 December 1993) but neither the Secretary of State nor the Office of the Social Security and Child Support Commissioners has a copy of any judgment.

9.	Much of this part of child support legislation is derived from income support legislation and weight must be given to income support cases, even if the language of the legislation is not always quite the same.  However, it may be noted that paragraph 7(6)(c) and (6A) of Schedule 3 to the Income Support (General) Regulations 1987, as in force at the time material to CIS/636/92, made specific provision for deferred mortgages whereas there is no such provision now in either income support or child support legislation.  I also observe that CIS/636/92 was not reported, despite having been “starred” and that may reflect some uncertainty as to the extent to which the reasoning might be applied in other cases.  Thus, for instance, it appears that the Commissioner’s decision would have been the same if the claimant had in fact been making interest payments which raises the question whether a claimant may be compelled to take a mere option to defer payments.

10.	In any event, in my judgment, CIS/636/92 can be distinguished from the present case because the arrangement to make reduced payments was not part of the original contract.  It was negotiated by the mother subsequently and, as the tribunal observed, without reference to the father who was a party to the original contract.  It was not a variation of the contract but was a separate agreement under which the lender agreed with the mother not to enforce the original contract by bringing possession proceedings.  (The tribunal was wrong to rely on this as the reason for holding paragraph 3(6)(a) of Schedule 3 to be irrelevant, but nothing turns on that.  The provision was irrelevant because it is concerned only with cases where payments are being made in excess of those required under, or in respect of, a mortgage.  Here the payments were less than those required under the original contract.)

11.	The father says that the mother did not need to enter into an agreement to make reduced payments because she could afford her share of the full payments.  Even if that was so, it seems to me to be immaterial.  In the absence of any signs of an agreement with the father to the contrary, it must be presumed that her share of the full amount of payments due under the mortgage was one half.  This is not even a case like R(IS) 19/95 where other family members had stepped in to pay part of the mortgage.  In the present case, the father’s share and part of the mother’s share simply were not being paid.  There was no rescheduling of the mortgage.  This was a short-term expedient and if it was felt that it resulted in any unfairness, that could have been taken into account by a further adjustment to the agreement for the splitting of the proceeds of sale.

12.	It also seems to me to be important to bear in mind two practical matters.  First, although in this case there is no suggestion that the father has not paid all the child support maintenance due, there are other cases where a person with care of a child may be forced into an arrangement to pay less than the amount contractually due under a mortgage by the non-resident parent’s failure to pay child support maintenance and it would be surprising if that had the effect of reducing the amount of the parent with care’s eligible housing costs with a possible consequent reduction in the non-resident parent’s liability for child support maintenance.  Secondly, it is not obvious why a person who is unable to pay the full amount of a mortgage should be placed at a disadvantage because he or she enters into a short-term arrangement with the lender rather than simply failing to make the payments due.

13.	For all these reasons, I do not accept Mr Moffett’s submissions.  Save for its failure to attribute to the mother only her half share of the housing costs, the tribunal’s approach was correct.  

14.	Even if I did accept that the amount of mortgage payments due had been reduced to £200 per month, I would not accept the father’s submission that the mother should be treated as liable to pay only half of that sum merely because he had agreed to reimburse her out of his share of the proceeds of sale of the home to the extent of half of her payments.  That is because, although regulation 15(3) would have had the effect that prima facie only half of the payments due would have been attributable to her, she had to make the full payments by herself until the house was sold in order to remain living there, because the father was not paying his share at that time.  Therefore, paragraph 4(2) of Schedule 3 would have applied.  The promise of a future capital payment could not have affected the position.  Again, if there was any unfairness, it could have been met by a further adjustment in the allocation of capital.

	(signed on the original)	MARK ROWLAND
		Commissioner
		1 February 2005