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[2007] UKSSCSC CCS_4070_2006 (03 August 2007)

CCS/4070/2006

DECISION OF THE CHILD SUPPORT COMMISSIONER

1. My decision is that the decision of the tribunal given on 16 October 2006 under registration No:U/01/007/2006/01157 was erroneous in law. Accordingly, I set it aside under section 24(2) of the Child Support Act 1991 and under section 24(3) I make the decision which I consider the tribunal should have made, namely:

"The decision of 9 January 2006 revising a decision of 27 January 2005 is itself revised under section 16 of the Child Support Act 1991 and regulation 3A(1)(c) of the Social Security and Child Support (Decisions and Appeals) Regulations 1999. The mother's claim for benefit, following which the Secretary of State purported to use his powers under Section 6 of the Child Support Act 1991, was fraudulently made, and the Secretary of State's decision was therefore made in error. In the light of the decision of the Court of Appeal in R. v. South Ribble Borough Council, exp Hamilton [(2001) 33HLR 9] Section 6 of the Child Support Act 1991 cannot apply and the Secretary of State had no jurisdiction to make the maintenance calculation".

2. Following divorce proceedings between the parent with care (the mother) and the non-resident parent (the father), on 21 August 2002 the district judge made a consent order in the County Court that the father should make periodical payments to the mother for the benefit of the two qualifying children, their daughter born on 14 December 1991 and their son born on 28 February 1996, until they attain the age of 17 respectively or cease full-time secondary education or a further Order, at the rate of £81.50 per calendar month per child. It was also ordered that save as provided in the Order, neither party should be entitled to make any further application in relation to their marriage under the Matrimonial Causes Act 1973 nor under the Inheritance (Provision for Family and Dependants) Act 1975. As I understand it, the father has made payments under this Order (the Consent Order).
3. The mother claimed, and was awarded, income support from 24 August 2004 as a result of which under section 6 of the Child Support Act 1991 ("the 1991 Act") the Secretary of State required her to be treated as having made an application for child support maintenance for the qualifying children. Section 6, as presently in force and applicable to this appeal, provides:

" 6. (1) This section applies where income support … or any other benefit of the prescribed kind is claimed by or in respect of, or paid to or in respect of, the parent of a qualifying child who is also a person with care of the child.

(2) In this section, that person is referred to as "the parent".

(3) The Secretary of State may –

(a) treat the parent as having applied for a maintenance calculation with respect to the qualifying child and all other children of the non-resident parent in relation to whom the parent is also a parent with care; and

(b) take action under this Act to recover from the non-resident parent, on the parent's behalf, the child support maintenance so determined.

….."

4. On 27 January 2005 the decision maker decided the father was liable to pay child support maintenance of £73.00 per week in respect of the two qualifying children from the effective date of 4 December 2004. That decision was revised on 9 January 2006 because of an error in the effective date. Under the decision as revised, the father became liable to pay £73 per week in respect of his children from the effective date of 29 January 2005. He appealed the decision of 9 January 2006, which is the decision under appeal. The decision maker reconsidered but did not revise the decision and the appeal proceeded.
5. In the meantime, the mother's income support award had been terminated on 1 February 2005. She subsequently pleaded guilty to charges of having falsely claimed income support and housing and council tax benefit by failing to inform the Department for Work and Pensions and the local authority that she had capital (which came from the divorce settlement) exceeding the amount allowed for benefit entitlement. She was conditionally discharged and ordered to repay the benefit, which, I am told, has been done.
6. The father's grounds of appeal were, inter alia, that as the mother had made a false claim for income support, section 6 of the 1991 Act should not have applied. In his grounds of appeal, his representative referred to the mother as being in breach of her undertaking in respect of the Consent Order. He disputed the CSA's right to "cancel the Order" and substitute its decision of a higher maintenance assessment.
7. Further submissions were made, and documentation supplied, including a copy of the Consent Order, and a copy of the Court of Appeal's decision in Secretary of State for Social Security and Another v. Harmon, Carter and Cocks [1999] 1 WLR 163 where it held that what was relevant to trigger action by the Secretary of State in section 6 of the 1991 Act was whether the resident parent was being paid a benefit rather than establishing entitlement. A copy was also provided of the decision in CCS/3744/1998, where Mr Commissioner Levenson refused to distinguish the decision in Harmon on the grounds that fraud had been proved in the appeal before him, not simply alleged, as in his view the decision in Harmon (although it overturned Commissioners' decisions) is clear and unambiguous and thus binding on him and the tribunal.
8. The tribunal was first held on 31 July 2006. The father attended with his present wife and was represented. That tribunal adjourned, directing that as the submissions of both parties had been noted, the tribunal was prepared to make a decision without an oral hearing following production of the Secretary of State's revision or supersession decision with regard to the mother's income support award.
9. Evidence that the mother's income support award had ended was produced, though not a copy of the actual decision, and the matter then proceeded as a paper hearing. The appeal was disallowed. The decision notice, which was intended to stand as a statement of reasons, noted that under the Consent Order the father's liability was £1,950 per annum but under the maintenance assessment it was £3,796. It also noted the mother's conviction for fraud in connection with her income support claim and recorded that it understood the father's incredulity that as a result of that fraud the mother had become a "recipient of nearly double the amount of child support than was agreed to be fair and the [father] had budgeted to pay". Nonetheless, the tribunal found that it was very reluctantly bound to dismiss the appeal because "the central requirement is an application for, or receipt of income support", relying on both Harmon and CCS/3744/1998 "as confirm[ing] that it is the receipt of the benefit, not entitlement to it which underpins the validity of the calculation or assessment".
10. The father appealed with leave of the tribunal chairman on the grounds that the tribunal had failed to explain why the issue of public policy, specifically in the cases cited by his representative, R(G) 2/79 and R(G) 1/83 did not take precedence over the Commissioner's decision in CCS/3744/1998. Further the tribunal had not adequately explained why the principle of public policy (ex turpi causa non oritur actio) did not apply in this case.
11. In issuing case management directions I observed that it appeared that the relevant question was whether the Harmon decision, which is binding on tribunals and Commissioners, remains valid in the light of section 3 of the Human Rights Act 1998. The Secretary of State accepts this observation but does not support the appeal. In view of the complexities, and as requested by the father, I directed an oral hearing of the appeal which took place in London on 9 July 2007.
12. The father attended the hearing together with his wife and Mr Finnigan, his local Councillor who has represented him throughout. The mother had already indicated that she would be unable to attend. The Secretary of State was represented by Mr Leo Scoon of the Office of the Solicitor for the Department for Work and Pensions. I am grateful to them all. At the hearing both parties amplified their previous submissions, and these, together with points which arose during the hearing, focused consideration on the following issues.
13. One of the main bases of the father's argument was that he and the mother had come to an agreement as embodied in the Consent Order. He had paid reliably under the terms of that Order and believed it was unfair that, having agreed the position in August 2002, the mother had then falsely claimed benefit with, as he saw it, a view to securing the intervention of the Child Support Agency (CSA) under section 6 of the 1991 Act.
14. In his view it was likely that the mother had taken this step as she was precluded under section 4(10) of the 1991 Act from making a claim herself. Section 4(10), also as currently in force and applicable to this appeal provides:

"(10) No application may be made at any time under this section with respect to a qualifying child or any qualifying children if –

(a) there is in force a written maintenance agreement made before 5 April 1993, or a maintenance order made before a prescribed date in respect of that child or those children and the person who is, at the time, the non-resident parent; or

(aa) a maintenance order made on or after the date prescribed for the purposes of paragraph (a) is in force in respect of them, but has been so for less than the period of one year beginning with the date on which it was made; or,

(b) benefit is being paid to, or in respect of, a parent with care of that child or those children."

The prescribed date for the purposes of 4(10)(a) is 3 March 2003. I now accept that, as submitted on behalf of the claimant at the hearing, this would have precluded the mother from making any application under section 4 for so long as the Consent Order was, or is, in force. There is no indication as to the mother's motives in seeking an award of benefit. Strictly, following the making of the maintenance calculation, the Consent Order should been closed but it appears to have been regarded as still in force at 25 April 2006 (see page 32), and in the light of my decision it is to be treated as having continued in force (see paragraph 24 below.)

15. The second issue arose from the decision in Harmon as expressed by Millett L.J. that:

"As appears from the extract of his decision which I have read, [one of the Commissioners whose decisions were under appeal] was of opinion (i) that the primary meaning of the word "paid" is lawfully "paid" and (ii) that in the context of the Act of 1991 the word "paid" could have no other meaning.

I respectfully disagree with both those conclusions. In my judgment, the primary meaning of the word "paid" is "actually paid." but I acknowledge that this primary meaning will readily yield to the context. In my view however, the statutory context demonstrates that the word "paid" in section 6(1) … means "actually paid." …".

16. Millett LJ gave five detailed reasons for this conclusion. Mr Scoon relied on this reasoning at the hearing. In the circumstances it is not necessary to consider it in detail here because, as was discussed at the hearing, in the course of his reasoning Millet L.J made one reference only to the making of a fraudulent claim, when at the end of his consideration of the first reason he gave he stated:

"But, unless she has made a fraudulent claim, she cannot state whether she is entitled to benefit, though if she has acted honestly she will consider that she is."

There was no further reference to the position following the making of a fraudulent claim. In CCS/3744/1998, the Commissioner said:

"The father seeks to distinguish the Court of Appeal's decision on the grounds that in the present case fraud has been proven not just alleged, that lawful authority cannot derive from a fraudulent application, that family credit was no longer being claimed by the time the maintenance enquiry form was examined and that there had been a court order. In my view the decision of the Court of Appeal (although it overturns decisions by Commissioners) is clear and unambiguous and is binding on me and on the tribunal. The wording of the decision is of such width that none of the points raised by the father can suffice to distinguish the present case so as to enable me to depart from the rule laid down by the court."

That decision was relied on by the tribunal, but not referred to by the Secretary of State in his written submission in the appeal to the Commissioner, which was limited to consideration of the correctness of the Harmon decision after the Human Rights Act 1998 came into force.

17. However, at the hearing we discussed further the Court of Appeal decision in R v. South Ribble Borough Council, ex parte Hamilton, 33HLR 104 which was decided on 24 January 2000, less than three weeks after the Commissioner's decision was given in CCS/3744/1998. In that case, a claimant had applied to the respondent Authority for housing benefit in respect of a property, having already made a claim for income support which was subsequently allowed. The Authority refused housing benefit on the basis that the claimant had assets that he had not disclosed to the Benefits Agency. Ultimately the claimant appealed to the Court of Appeal, which held that legislation should not be construed so as to enable a person to profit from his own fraud, that the provisions relating to overpayment in the Housing Benefit (General) Regulations 1987 showed that Parliament did not intend the recipient of housing benefit to profit from his fraud or misrepresentation. Scott Baker J, giving the leading judgment said:

"18. We were referred to a number of authorities dealing with the effect of fraud. In Lazarus Estates v. Beasley [1956] 1QB 702 at 712, Denning L.J. (as he then was) said this:

"No judgment of a court, no order of a Minister, can be allowed to stand if it has been obtained by fraud. Fraud unravels everything. The court is careful not to find fraud unless it is distinctly pleaded and proved; but once it is proved it vitiates judgments, contracts and all transactions whatsoever."

"[The claimant's representative's] response to this was that there was a good deal of machinery for unravelling any fraud through the legislation dealing with income support, and that any person is entitled to apply for a review (see sections 25 and 26 of the Social Security Administration Act 1992). In summary, his case is (1) that, on a reading of the regulations without any implication of the word "lawful" the appellant was clearly entitled to housing benefit; (2) there is no necessity to imply the word "lawful" in order to make the regulations or the empowering Act work. You were referred to two other authorities with regard to the effect of fraud. [The claimant's representative] sought to distinguish both of these. [Counsel for the Secretary of State] relied on the words of Lord Scarman in R v. Barnett LBC, ex parte Shah [1983] AC 309 at 343 he said:

'If a man's presence in a particular place or country is unlawful, e.g. in breach of immigration laws, he cannot rely on his unlawful residence as constituting ordinary residence … But even without this guidance, he would conclude that it was wrong in principle that a man could rely on his own unlawful act to secure an advantage which could [? Not check] have been obtained if he had acted lawfully.' "

Millett LJ, (who also heard the Hamilton case) concluded his judgment:

"26. Having considered the submissions and the authorities, my conclusion is as follows. There are two reasons why this appeal should fail. First, it accords both with commonsense and the intention and structure of the legislation, that where, as here, entitlement to housing benefit is dependent on receipt of income support, that income support must have been lawfully obtained; that is, lawfully in the sense of neither by fraud, nor dishonestly. Secondly, the principle apparent from cases such as [R v. Barnet LBC ex Shah [1983] AC 309 to 343] dictates that legislation should not be so construed as to enable a man to profit from his own fraud. I would therefore dismiss the appeal."

18. It appears to me that the Harmon decision did not address the position when there was known fraud. In the present case, as soon as the father appealed against the decision under appeal, the revision decision of 9 January 2006, the CSA was on notice of the position. Whether or not the mother should be taken as having received income support for the purposes of section 6(1) of the 1991 Act, given that those monies had or were being repaid, (on which I do not find it necessary to make a decision), following the Hamilton case, which the Commissioner may well not have had before him in CCS/3744/1998, I do not consider I can overlook the effect of the mother's conviction in respect of her claim for income support. The CSA cannot be criticised for instituting the procedure under section 6 of the 1991 Act on the information available to it at the time it made the decision under section 6, but where, as here, the position was plainly before the CSA at least by the time of the father's appeal, this should have been taken into account, and the tribunal was in error of law in not doing so.
19. The written submission on behalf of the Secretary of State concluded:

"26. Once a maintenance calculation has been made [under section 6 of the 1991] the Secretary of State can only cease acting when requested to do so by the parent with care; and even if the calculation could be treated as having been in error, and so effectively cancelled ab initio, the Secretary of State would have to consider such an action very carefully, given that child support maintenance is intended to maintain the children, rather than the parent with care. Any decision to cancel, given that the court order should have ceased to have effect, and presumably effectively has, could have serious adverse consequences for the children and therefore render the Secretary of State potentially in breach of his obligation under section 2 of the [1991] Act and under the Human Rights Act 1998"

At the hearing Mr Scoon resiled from that submission because there is no provision for cancelling ab initio – and in his submission there had been no official error nor contribution to any error by the mother. I do not accept that submission. In the light of the information which became available to the CSA on the submission of the father's appeal, in my judgement it should have made a further revision under section 16 of the Social Security (Disability Living Allowance) Regulations 1991 Act and regulation 3A(1)(c) in conjunction with regulation 4 of the Social Security and Child Support (Decisions and Appeals) Regulations 1999, as I have done.

20. In my observations in giving case management directions, I referred to the impact of the Human Rights Act 1998, and the Secretary of State in his written submission dealt largely with that aspect, submitting that none of Article 1 of Protocol 1, Article 8, Article 14 nor Article 6 of the European Convention on Human Rights assisted the father. In the event, the human rights issue was not pressed at the oral hearing, indeed, the claimant's representative expressly confirmed that the father had no argument with the need to maintain his children and had continually acted under his obligations under the Consent Order. Mr Scoon emphasised the previous written submission on behalf of the Secretary of State that whilst only a persuasive authority, the decision of the Northern Ireland Court of Appeal in The Department of Social Development v MacGeagh [2005] NICA 28(1) was persuasive in that it considered the human rights position and particularly Article 6. In his view, given the way that the Court in MacGeagh had construed the Harmon case, the position remained the same after the passing of the Human Rights Act 1998 and on that basis it would be wrong to import the word "lawfully" into section 6 and Harmon remains good law. However, MacGeagh had no need to consider fraud.
21. In Mr Scoon's submission, the Hamilton case is also distinguishable from Harmon because in child support the parent with care is not the main beneficiary. The qualifying children are the main beneficiaries and the context is different. The procedure under section 6 is triggered by the claim or the payment. That is all that is required. I accept that the children are, or should be, the main beneficiaries, and the context is different, but the whole basis of section 6 is that the parent with care has claimed or is in receipt of a benefit, I do not see that any other aspect, such as the children's benefit can be taken into account in its operation.
22. As to the fundamental basis of the father's appeal as originally stated that it was contrary to public policy for the mother to benefit specifically in view of the reported decisions in R(G) 2/79 and R(G) 1/83, Mr Scoon submitted that the principle of public policy of ex turpi causa non oritur actio could be dislodged by legislation, as, in his submission was the case here. In particular, the principle should apply where a benefit is sought by the person claiming the benefit. Under the legislation, the primary beneficiary is the qualifying child. Section 74A of the Social Security Administration Act 1992 applies in respect of recoupment, and the maxim has no application in this case. It is not plain to me how section 74A has application in this case, given that section 74A(1)(a) refers to a person who is entitled to a benefit which includes income support. In this case the mother was not so entitled, but in any event the point is overtaken by my finding in paragraph 19. I may perhaps mention that the simple answer to the point raised on behalf of the father is that had I not distinguished the decision in Harmon it would have otherwise been binding also on me, notwithstanding other Commissioners' decisions.
23. Mr Scoon submitted that it is also relevant to take into consideration that the Consent Order provided for a certain amount had been agreed between the parties and the move away to assessment only gave the children what Parliament had provided for. It may be that if she now qualifies, the mother may be able to claim additional benefits, possibly working families tax credit. Thus, it is likely some responsibility may fall on the benefits system and the taxpayer, rather than on the father whose assessment under the "new scheme" - on the assumption that the figures were correctly calculated (any challenge on this has not been pressed) would be considerably higher than it presently is under the Consent Order.
24. The Consent Order provides that it is only the sections of the Matrimonial Causes Act 1973 set out there (sections 23(1) (a) or (b), 24 (a) (b) or (c) and 25(d)) which may not be the subject of further proceedings, and applications in respect of maintenance for the children under section 23(1) (d) (e) and (f) are not so excluded. By regulation 8(1) of the Child Support (Maintenance Arrangement and Jurisdiction) Regulations 1992, where the Secretary of State revises a decision as to the maintenance calculation under section 16 of the 1991 Act and decides that no child support maintenance was payable, on the ground that the previous decision was made in error, the order (the Consent Order in this case) shall be treated as having continued in force. As it continues in force, no other steps having been taken with regard to it so far as I am aware, it would therefore be open to the mother to make an application for variation of the Consent Order in so far as it relates to maintenance for the children. Alternatively, she might seek its revocation in so far as it relates to the maintenance of the children, and if she were successful, that would leave her free to make an application under section 4 of the 1991 Act, from which she is otherwise precluded by section 4(10). I do not make any comment on the likely prospects of success of either course of action, which would be dealt with by the Court having jurisdiction.
25. The consequence of my finding is that the tribunal's decision is set aside as having been in error of law by relying solely on the Harmon case and the Commissioner's decision in CCS/3744/1998. I therefore make the decision that the Secretary of State should have made as indicated in paragraph 20 above and set out in full in paragraph 1.

(Signed on the Original) E A Jupp

Commissioner

3 August 2007