Pabari v Secretary of State for Work and Pensions & Anor

For the purpose of determining eligible housing costs under Child Support (Maintenance Assessments and Special Cases) Regulations 1992, costs must be necessarily incurred. That condition is stricter than a test of what is reasonable, sensible or justifiable, but it does not require absolute indispensability or proof that the cheapest possible mortgage was obtained.

The decision-maker must make a fact-sensitive judgment, taking account of the mortgage arrangement as a whole and the parent’s circumstances. On an appeal confined to law, a court cannot substitute its view for a commissioner’s evaluative conclusion unless it falls outside the bounds of reasonable judgment.

Following divorce, the absent parent re-mortgaged the former matrimonial home. He needed both to raise a lump sum payable under a consent financial order and to replace endowment policies transferred to the parent with care. The replacement repayment mortgage retained the earlier redemption date, which substantially increased the weekly payments.

Those payments were treated as housing costs when calculating exempt income for child maintenance. The parent with care contended that only payments referable to a longer mortgage term were necessarily incurred.

A tribunal rejected that part of her appeal. Mr Commissioner Edward Jacobs dismissed her appeal on a point of law. She appealed to the Court of Appeal. The central issue was whether the mortgage costs were necessarily incurred for the purpose of securing possession of the home within paragraph 4(1)(a) of Schedule 3 to the regulations.

1. Appeal dismissed unanimously. Holman J held, with whom Dyson LJ and Brooke LJ agreed, that the commissioner had made no error of law and that his conclusion was within the permissible field of judgment.

2. Paragraph 4(1)(a) of Schedule 3 to the Child Support (Maintenance Assessments and Special Cases) Regulations 1992 requires housing costs to be necessarily incurred for the specified purpose. “Necessarily” is an ordinary but context-dependent word. It is not satisfied merely because a cost is reasonable, sensible or justifiable. Nor does it mean absolutely essential, inescapable, or the lowest cost obtainable after exhaustive scrutiny of the mortgage market.

3. The condition applies to the purpose and extent of the mortgage costs, including the term and level of periodic payments. It calls for a realistic assessment of the mortgage transaction and the parent’s circumstances. The decision-maker may consider available lower-cost options, but may also consider normal features of a mortgage choice, such as certainty, redemption terms, and a parent’s rational wish to end mortgage liability by a particular date.

4. Applying Moyna v Secretary of State for Work and Pensions [2003] UKHL 44 and R v Monopolies and Mergers Commission, ex parte South Yorkshire Transport Ltd [1993] 1 WLR 23, the court held that the statutory criterion was inherently evaluative. Once the commissioner had correctly identified it, the court could interfere only if the application to the established facts was outside the bounds of reasonable judgment.

5. The commissioner was entitled to find that the costs were necessarily incurred. The re-mortgage enabled the absent parent to retain his home after the financial order, and the continued 2013 redemption date was a relevant feature of his circumstances. The court also confirmed that a parent must establish the primary facts, but that, once they are established, the decision-maker’s task is to apply the law rather than to resolve a separate burden-of-proof issue.

6. In addressing conflicting commissioner decisions, the court disapproved the view that paragraph 4(1)(a) concerns only the purpose of a mortgage and excludes its term or amount. Each case requires a careful assessment of its own facts and circumstances.

• Court of Appeal (Civil Division): dismissed the appeal in [2004] EWCA Civ 1480.
• Child Support Commissioner: Mr Commissioner Edward Jacobs dismissed the parent with care’s appeal on 1 September 2003.
• Tribunal: on 13 December 2002, allowed the appeal on an unrelated point but rejected the challenge to the mortgage housing costs.