Archer, R (On the Application Of) v Odgers

HIS HONOUR JUDGE COTTER Q.C.: This is a claim brought by the Applicant by which she seeks to challenge decisions made by the Respondent specifically, three decisions to grant a succession of a non-residence parent child maintenance contributions on 10th October 2012, 26th November 2013 and 30th April 2014.

The Respondent has powers and obligations under the Child Support Act 1991. It is a creature of statute. By that I mean it operates solely under a discrete statutory scheme with a specific function. It is in essence an administrative scheme. It does not guarantee payments as its role is to assess the non-resident parent's income and, if requested, collect maintenance from them which it passes to the parent with care. The amount received by the parent with care is dependent on the income of the non-resident parent declared or inputted as determined under the legislation, together with the ability of the Agency to collect those sums.

The challenge to the decisions to which I have referred as set out in the grounds is based upon arguments that

In short, the response on behalf of the Respondent is, firstly, that there was an adequate alternative remedy, an appeal again to the First-tier Tribunal, as indicated on the decision letters and, secondly, that all decisions were made were validly made given the relevant facts.

When this matter first came before me in the run up to the hearing I indicated in an order, to which I shall shortly refer, that I wished the first issue of adequate alternative remedy to be addressed as the first issue. Argument on that matter has taken much of the time of the court today. Sadly, we were not able to start much before 12 o'clock by reason of the Applicant’s inability to print out her skeleton argument.

I shall briefly deal with the procedural history of the claim because it is important in the context of my determination of this, in effect preliminary, issue of the extent to which there is an alternative remedy available. The claim was filed on 11th June 2014. His Honour Judge Lambert gave permission on 9th July 2014. He gave an extension of time in relation to the first two decisions, stating:

There was in due course a disclosure application which I need not deal with for the purposes of this judgment and also an application also for a lump sum by way of costs and for a protective costs order. I refused those applications and made an order of 21st October.

I now turn briefly to the facts. The relevant child for the purposes of the payments here under consideration was born on 28th February 2003. There was a maintenance application on 13th August 2004. The non-resident parent, Mr Odgers, was employed as a chief technical officer and owner to the extent of 45% of shares of a software company. In April 2007 that company was purchased. He was bought out and received well over £2 million, plus other payments and shares in the purchasing company known as Sonus Networks. He also continued to be employed. It seems that matters did not progress too successfully with the new company because there was a buy back in due course for as little as $1 with Mr Odgers being a substantial shareholder, director of the company that purchased back the company he originally owned.

The Respondent made decisions during 2009 and 2011, the effect of which was to gradually reduce the amount that Mr Odgers was required to pay from £296 per week to £122 per week. Included in that was a variation based on Mr Odgers removing some £248,688 from the calculation.

On 19th June 2012 the First-tier Tribunal heard four consolidated appeals by the applicant against those decisions. It was found that Mr Odgers had been diverting his income and it was directed that the Respondent recalculate his liability. There was a thorough and comprehensive decision, impressive in its analysis of the finances. The conclusion was that the up-to-date position was such that the Respondent could consider assets consisting of cash, cash ISA, Sonus shares and an endowment policy. Those assets, totalling £413,992 at the date of the Tribunal hearing, were also to be considered as generating income at 4% which was added to the net income in the calculation, the reason being that it was found that there had been a diversion in income particularly in regard to a failure to declare a dividend in any sum from the Sonus shares. In fact the Tribunal reached a view that there was a diversion to the extent of £104,000 taken over a year, i.e. income that Mr Odgers could have received but did not.

The applicant had therefore been successful in the appeal. On 6th August the respondent determined that Mr Odgers pay arrears of £19,129.08 pence and continue to pay at a rate £300 per week. A very substantial financial difference for the applicant to the position she previously faced.

However, less than three weeks later, on 23rd August, Mr Odgers applied for a variation. He made an application for a variation although, as I shall set out in due course, it can properly been seen as a supersession. In any event, in simple terms he wanted a reduction on the basis that his financial circumstances have changed. He supplied documentation to support that. As set out in the detailed grounds of resistance he supplied (and I take this from paragraph 34) his P60 for the tax years 2011 to 2012, a summary of his Natwest bank accounts and credit cards, a letter from Fidelity Investments dated 15th May 2012 showing the value of his ISA, a Yahoo finance printout dated 31st August showing the value of shares in Sonus Networks and dividend voucher dated 25th May 2012.

By letter dated 17th September the applicant was informed that an application for a variation had been made because it was said that assets and income had changed. It was stated:

What then transpired was a decision was taken and that was communicated by letter of 10th October 2012. That Decision Letter is, it is now accepted on behalf of the Respondent, unsatisfactory and inadequate. It gave details that were very difficult to interpret, stating that the net weekly income had been previously £2000 and the adjustment to weekly income had been to reduce by £2000 and at the end result was that Mr Odgers had to pay £49 per week.

The applicant did however have the benefit of guidance in the letter under the rubric: "If you want to know to more about the decision or you think it is wrong" it is stated:

The applicant chose to phone up and was given information as to the calculation. She noted it down on the letter at page 72 in the bundle. It has her handwritten comments in line with the information that was given. That information ,Mr Cannings, counsel for the respondent, submits, was correct. Specifically that the net weekly income was said to be £135.96 on the Tax Return that he had then supplied, that being a further Tax Return to the one subject of the Tribunal hearing. There was an adjustment of £190.32, by virtue of the Tribunal's findings. The result was £326.28 which at 15% gave £48.94 which is rounded up to the figure.

The applicant complained and an independent case examiner started to investigate the matter. It is said that she was urged to start the appeals procedure again. Mr Odgers had by this stage applied for permission to appeal the fast-track Tribunal and permission had been refused. It was conceded by letter of 10th December 2012 that there had been mistakes in the approach of the Child Support Agency, as found by the independent case examiner. But the applicant did not accept the consolatory payment of £150 for the failure to discuss matters with her.

In relation to the progress of matters she then wrote on 26th February asking that there be reconsideration of the matter. She made a number of points which were deemed as a matter of complaint by the Respondent

By letter of 4th March 2013 the complaint had progressed onto a new manager. On 18th August 2012 it was stated;

However, it appears that the applicant had made a decision not to appeal but to seek to persuade the Respondent to change its mind. In a letter of 20th March 2014 she stated as follows:

It seems clear that the Applicant was very well aware of her right of appeal but had taken a decision not to exercise it.

On 30th May 2013 Mr Odgers applied for yet a further reduction. He again provided supporting information. He provided a summary of his Natwest accounts, a pay slip from Quarters Ltd, dated 31st March 2013 and then a current share price of the shares in Sonus Networks.

However, matters do not seem to have been addressed before there was a letter to the Respondent from the Applicant as regards the purchase of a yacht by Mr Odgers. She had come across information that he had purchased a yacht with the liquidated shareholding, in other words he had decided to cash in the shares and to use the money to buy a yacht. It was a straightforward use of the value of the Sonus shares i.e. the shares the Tribunal had ruled should be considered as an asset.

Mr Odgers did not hide this fact of the yacht purchase. Indeed on 1st October 2013 he sought a further supersession on the basis that he had purchased a yacht for £254,000. It is clear that he had sought guidance and whatever guidance had been given to him had provoked him to claim that this meant that sum should be disregarded. On 26th November 2013 by the second decision the subject of this challenge in this claim, payments were reduced to £33 per week. Not content with that, on 21st February 2014 Mr Odgers then applied for a further reduction. He again supplied further evidence and on 30th April the payments were yet further reduced to £31 per week. This is the third decision.

So within 9 months of the First-tier Tribunal decision the continuing payments had been reduced from £300 to £31.

On 9th May the Applicant again complained to the Respondent alleging that Mr Odgers had substantial business and personal assets. On 16th May she wrote stating that Mr Odgers had intentionally deprived himself quoting Part 1 paragraph(9)(b) of the Child Support Act 1981 and also pointing out that he was still the sole owner of the business Sonas Ltd. On 19th May she provided a letter before action.

The case was then referred to the Financial Investigation Team and the applicant was informed of this on 21st May. The current position is that the Financial Investigation Team is still investigating this matter. No time frame has been provided to me as to when that investigation is likely to reach a result and thereafter communicate such result to the applicant.

On 11th June the applicant lodged her application for judicial review, setting out the grounds to which I have referred.

Turning to the evidence before me I have the statement from the Applicant, and statements from Mr McCauley and Margaret Vasey MBE of the Respondent.

It is not necessary for me to deal with the surrounding as the duties and powers of the respondent in any great detail. As I have indicated, the liability of the non-resident parent is calculated by reference to a statutory scheme, specifically under section 11 in Schedule 1 to the Act. This contains a formulae by which the calculation is made: in general terms it is based on the weekly income as opposed to capital assets determined in accordance with the provision of the Child Support Maintenance Calculation and Special Cases Regulations. A calculation is made and payment set and due unless a variation is made as permitted in section 11(6) and section 11(7) of the Act. Variations can be made on certain defined grounds. It is clear that the Agency can depart from the standard Schedule 1 formulae, which is based on the assessment of income, and take into account other factors such as assets and other income which are found to have been diverted. The variation may only be agreed by the Tribunal if it falls within Part 1 of Schedule 4B to the Act of Child Support Variations Regulations 2000 and in all the circumstances it is just and equitable to agree to such a variation.

So a variation is still a calculation under section 11 of the Act but one that has been calculated differently from the usual formulae used. A decision under section 11 can however be revised or superseded by virtue of sections 16 and 17 of the Act respectively. An example a situation when this might occur is where there has been a change of circumstances of the non-resident parent. The revision under section 16 will occur where the original decision being challenged is found to be wrong and therefore changed from the effective date of that decision. A supersession, as opposed to revision, relates to a new decision which is made from a later effective date. Income is reduced to take effect from the date upon which the new information which has been provided.

Importantly a right of appeal attaches to a decision made by the Agency to make, supersede or revise a maintenance calculation or refuse to do any of these. So whichever it is there is the same right of appeal. An appeal must be made within one month of the notification of the decision in question. However the Tribunal has a broad discretion to extend time to a maximum of 13 months for bringing an appeal if it has reasonable prospects of success and it is in the interests of justice to extend time.

As I have already set out I required arguments to initially concentrate upon the availability of an alternative remedy and the failure in this case to appeal. His Honour Judge Lambert appreciated that this would ordinarily provide an insurmountable hurdle to a claim for Judicial review, but allowed the matter to proceed to a hearing. The Applicant has set out her reasoning in regard to her failure to appeal. To quote from a statement that she has submitted:

In a later statement which was attached to the application which eventually resulted in my order of October and the applicant stated as follows:

The Applicant set out her arguments in her skeleton in relation to alternative remedy She submits that she faced exceptional circumstances in that she had just gone through an appeal procedure and that she then found that the appeal procedure and the Tribunal's results were not being adhered to or honoured by the Respondent. She submits that there was a variation with no added "evidence" or proper reasoning. This, she says, amounts to exceptional circumstances and indeed entitles, indeed obliges this court to interfere. She views matters as raising important constitutional issues in relation to the way that this Respondent operates.

The Respondent’s case is that the Applicant had a right to appeal the decisions under section 20, indeed still has an ability to appeal one of the decisions, and that the First-tier Tribunal is a specialist Tribunal that has the power to make findings of fact. This a statutory scheme and there are no exceptional features here that mean this court should involve itself its workings. Further reference is made to the right to complain to an independent case examiner or ombudsman.

Miss Archer has developed her arguments orally today in relation to the basis of her claim. She sees this as a claim based on a wider picture in that, put simply, the Respondent is, if not fit for purpose, as this case shows, not following the law in an adequate way. She says that she does not wish to appeal against the merits of the decisions and is not seeking to circumvent the Tribunal route but rather seeks to attack the decision to allow a variation and argues that the Respondent did not fully consider the relevant factors.

The applicant accepts that she would get a fair decision from a Tribunal on appeal, but does not accept that it is the correct route.

She set out eight points, or to be more accurate I have distilled her submissions into eight points which I have repeated to her and I think she accepts as adequately setting out her submissions. I will deal with the eight points as she set them out.

The first point is that the Respondent should not have considered the variations as routine variation applications and in so doing, and applying the ordinary rules of calculation to which I have referred, the Respondent has fettered its discretion to properly consider this application in its historical context. Secondly, the case worker, as is set out in internal guidance, had a power to refer the decision on and should indeed have done that, i.e. should not proceeded with a consideration rather should have passed it onto the Central Appeal Unit, who may then have passed it on to an Accountancy Investigation Unit. There should have been the exercise of a discretion to use a different process other than simply proceeding on to calculate as the case worker did in line with the information provided.

Thirdly, the Applicant argues that her representations should have been taken into account. She makes a general assertion that the matters before the case worker were simply not adequately explored. Documents were not properly read and considered. There was a clear lack of training and understanding. She submits that if there had been then the decision reached would not have been reached as it is not a rational decision. The case worker or anyone else considering the matter had to consider if there had been a change in circumstances and there had not been since the First-tier Tribunal decision.

The fourth point is that the failure to take into account her representations meant that she did not have a fair hearing. Fifthly she states there were no adequate reasons given in the letter to which I have referred of October, or indeed any subsequent letters. She did not know, for example, of the percentage applied being 4% instead of 8%. She had no adequate knowledge to determine whether or not she should properly appeal given the paucity of information in the letter. Sixthly, she says the outcome of this whole procedure has not been one intended by Parliament. Seventh, that the decision was irrational because it was not lawful. There had been no change to the circumstances and this was a bizarre and irrational decision. He eighth point is that there was a legitimate expectation that the First-tier Tribunal decision would be honoured so close to the change

Finally the Applicant argues there was bias and the bias being in effect prepared to apply 4% as opposed to 8% and selectively approaching the matter to the benefit of Mr Odgers as opposed to her benefit.

I turn to my analysis. The first point to make is that that, as stated by Mr McCauley in his statement, this was a supersession under section 17 of the 1991 Act rather than a variation. This notwithstanding that correspondence to the Applicant referred to a variation. This was unfortunate, but it seems to me it has not made a material difference to the progression of this matter. The reality is that what was sought was a reduction in payments and what the Applicant states in broad terms is that there were never any adequate reasons, grounds or indeed supporting evidence to allow any such reduction having regard to the recent First-tier Tribunal decision. The appeal route was available and the same whether it strictly be one or the other.

Secondly, it appears to me that if there is an application for a supersession it has to be considered by the Respondent. Here, as I have set out, Mr Odgers provided information. It was incumbent upon the respondent to consider that information, notwithstanding the fact that the Tribunal had heard recently appeals against a number of decisions up to 2011. Whilst I accept the point that that variation remained in place and its spirit and letter had to be construed and adhered to, it does not in any way, it seems to me, prevent there being a duty to consider whether the information provided properly supported a supersession. Importantly, the tax details provided were for a different year form that previously considered and there was also evidence of a dividend. It seems to me that the unarguable position is that the Respondent was duty bound to consider that information. It simply could not refuse to consider the application as the Applicant’s contends that it should have.

Once through that door of consideration the issue becomes the adequacy of the decision-making process. In terms of the adequacy the Applicant has attacked the general operation of the respondent, its efficiency, training and expertise. That is what underpins her submission that there is a constitutional element to her claim. However, the only evidence upon which I can proceed in this claim is the evidence of the individual claim as processed. There is no evidence before me of generalised inefficiency or lack of training. There is no doubt that there was an inadequate letter which subsequently had to be augmented by a telephone call but that does not support a generalised inefficiency in the handling of matters.

There is no doubt that further information was supplied. It seems clear on the basis of the evidence and information before me, that whoever undertook the casework decision had before them the information to which I have referred, including the representations made by the applicant and the Tribunal decision. Indeed on the screen shot which is provided of the analysis reference is made to the Tribunal's decision.

The applicant submits that the reality is that the person taking the decision will not have read or understood the whole of the Tribunal decision and could not have done to have reached the decision that they did. However, I cannot accept that on the evidence before me. There was reference to the Tribunal decision and the information was available. Rather, I am of the clear view that what has happened is the case worker has followed what the applicant refers to as the ordinary analysis

A decision was taken. I can see no rule or legitimate entitlement that meant that the matter had to be passed on beyond the case worker to a separate individual or department. Such guidance as provided was not a set of regulations. If the case worker considered it necessary there was clearly an ability to pass the case on but I do not think it anywhere amounted to an obligation. In my view, it is clear that the case worker was entitled to consider the matter in line with the statutory requirements and ordinary rules.

The most powerful and in my view worrying aspect of the Applicant's submissions is the failure to give adequate and proper reasons in the letter. As I have stated, the letter was accepted as being unfortunate, confusing and perhaps inadequate by the respondent. However, as the letter promised would happen, further information and correct information was then given over the telephone. So there is no doubt that the applicant was after that well aware of the relevant information and the right to appeal.

The reality is that this is a challenge to the decisions that were reached by the case workers having regard to the substance of the information provided to them. The decisions here challenged are ones reached on evidence which it is said was insufficient to allow the case worker to proceed. But that is a challenge to the merits of a decision and to the facts as assessed. Pre-eminently, it seems to me, such matters are better before the First-tier Tribunal which is the fact-finding body.

As for the submission that there was not a fair hearing, this has to be seen in light of the operation of the statutory scheme as a whole and the right of appeal. It seems clear that there an opportunity to make representations was afforded and as a result representations were before the case worker. The reality is that the challenge is here to what the case worker decided having regard to the information before him or her. I also see no evidence or basis for a bias allegation.

As I set out within the discussion during submissions, I was and am concerned about the decision that was taken by a case worker at the time of the second supersession that the asset, the yacht purchased for £254,000, should be ignored for the purposes of calculation. Whilst reliance was placed upon the definition of "an asset" for the purpose of the scheme, what concerns me is the fact that, as the applicant submits, there is a section that refers to the extent to which there has been an unreasonable and intentional act by the non-resident parent to deprive himself of a source of income, as set in 9B Schedule 1 Part 1 of the Child Support Act 1991.I find it difficult to understand how that decision can be easily reached. Put simply, here the Tribunal found that there was an asset (the shares). That was the subject of analysis of the Tribunal decision and thereafter there is a clear intentional and disclosed decision by Mr Odgers to cash in those shares and buy a yacht instead. However, although it is tempting to descend into critical analysis the principle of alternative remedy steers firmly away from this path. This is a test which has a reasonableness issue and is a factual decision. I am not a Tribunal of fact.

Mr Cannings submits that the straightforward position is that the Applicant’s challenge is to a factual finding and as such should be before the First-tier Tribunal. I think that he is right, but I think that it is right that I record that I reach this view despite very considerable concern as to how this decision could in fact have been reached as a matter of fact.

Judicial review is not the sole or immediate protection against legal wrongs by public authorities, rather as a very well-settled principle judicial review is a remedy of last resort. It is a broad but well settled statement of principle that where a statute lays down a comprehensive system of appeals, it will only be in exceptional circumstances, for example, an abuse of power that the courts will entertain an application of judicial review of a decision that has not been appealed.

So are there exceptional circumstances in this case ? Whilst the applicant argues that there are constitutional issues, for the reasons that I have outlined it seems to me they are in reality simply a challenge to the decision of a case worker on the merits. As with the majority of factual issues, Tribunals or courts of first instance in appropriate matters, are the places for such issues to be determined.

In Falmouth v Truro Port Health Authority [2001] QB 445, it was said not only that permission will only be exceptionally given but that the critical hearing in an alternative remedy case is the permission hearing. I respectfully agree that the issue should ordinarily be determined at that stage as in many cases it will be relatively clear cut. However, in this case, as I have set out, His Honour Judge Lambert took the view that it should be at the substantive hearing. I accept of course that there are exceptional cases where that is right and proper course ; see e.g. R (on the application of) C v Financial Services Authority [2012] EWHC 1417 (Admin). In that case Silber J stated, when considering permission on paper, that he would normally have resolved the issue whether the claimant had a suitable alternative remedy at the permission stage. But in that case because the claim reached the threshold for granting permission, because it was linked to the decision notice that was being challenged, it was over to the substantive hearing.

In R (on the application of) C v Financial Services Authority Silber J found that the applicant, was substantially prejudiced because, as a result of inadequate reasons, he could not make a properly informed decision as to whether to appeal to the Upper Tribunal. Although the Financial Services Authority had given undertakings there were serious risks for him in taking matters to the Upper Tribunal because the Authority was not precluded from relying on new facts and matters in relation to his conduct so seek a higher penalty or make more serious allegations. There remained the risk that the penalty imposed would be increased - see paragraphs 58 to 64, 67, 69, 72, 75 and 76 of the judgment. Judicial review, the learned judge concluded, would not be granted where there was an alternative remedy available which was equally effective and convenient or suitable to determine the issue but it would be granted where the alternative remedy was nowhere so convenient beneficial or effectual.

In this case there were no risks to the Applicant of appealing this matter to the Tribunal. She had gone down that path before. She had been successful and, as I have indicated, she concedes that she would have had a fair hearing had she appealed. Whilst, as I have set out there was, in my view, clear inadequacy in the letter giving the reasons a subsequent telephone call rectified matters that and as a result she was well aware of the basis upon which a decision had been reached and what it was.

The reality here is that I do not see any exceptional grounds that require deviation from the principle that proper procedure is that her remedy was to appeal to the First-tier Tribunal. In the case of Townsend v Department of Work and Pensions [2012] EWCA Civ 1711. Mummery LJ, giving the approved judgment of the court, stated as follows:

The reality in this case is that there was and is a statutory procedure of appeals that enables the Claimant’s dispute to be resolved. The remedy obtained by way of judicial review would simply return the parties to their original positions and certainly would not enable this court to determine the merits of the dispute. An Act of Parliament created a right that removed the dispute from the sphere of the respondent to be determined afresh by an expert Tribunal exercising a judicial function. That Tribunal is pre-eminently well placed to do so ; this court, whatever its misgivings about a decision, is not.

I have carefully considered all of the grounds but I see no reason to deviate from this well-settled principle. The fact that the applicant has now lost through expiration of time limits a right to appeal some of the decisions can be of no avail. That was her choice, as I set out in the judgment it was a choice that she clearly made.

For the reasons that I have articulated it seems to me that this claim must fail. The Applicant was concerned with matters within a discrete statutory scheme which provided an ability to pursue an appeal when she was dissatisfied with the decision taken on the merits and facts of her case. She chose not to do so. If this court were to interfere it would drive a coach and horses through the statutory scheme and well-settled principles to which I have referred.

For those reasons the claim fails.

MR CANNINGS: One point of clarification if I could my Lord. When you talked about the "screen shots", the screen shot that your Lordship was a reference to the second decision.

HIS HONOUR JUDGE COTTER: Not the first, the second, yes.

MR CANNINGS: I am obliged of that. The defendant seeks his costs and I accept that this is necessarily the most attractive of applications but the Agency works under a scheme whereby it has a limited amount of resources and had to attribute a large amount of resources to this matter given the approach taken by Miss Archer. There was also an offer letter made which I will hand up for your Lordship's information. It was as recently as 1st October and in simple terms it was: if you withdraw within 7 days or 6 days, I suspect we will not pursue for any costs. So up to a month ago Miss Archer --

HIS HONOUR JUDGE COTTER: The ordinary costs rules 44.3 apply in judicial review as they applying anything else. On a general rule unless there is some reason by virtue of conduct offer or other factor to depart from that normal rule, you are entitled to your costs.

The position is that Miss Archer has had, and I have taken a view in relation to my judgment and has left the court, she is not in a position to respond to it. That is her choice. So this will be the subject of detailed assessment if not agreed.

MR CANNINGS: I was instructed to seek your Honour's summary assessment of it because otherwise it is going to be more letters to Miss Archer.

HIS HONOUR JUDGE COTTER: Having regard to the size of this claim I do not think that would ... if it were a small amount of money then, yes. But I think the figures are going to be sufficiently large that I do not think that is appropriate. I do not think it is Mr Cannings. It may well be that the pursuit of those costs (inaudible) over expectation in any event. But that is a matter for your client.

MR CANNINGS: Yes, my Lord.

HIS HONOUR JUDGE COTTER: Thank you.