LM v The Secretary of State for Work and Pensions & Anor (CSM)

A joint mortgage incurred while parents were a couple may be a prior debt and thus a special expense under regulation 65 of the Child Support Maintenance Calculation Regulations 2012. The exclusion for an asset retained for the non-resident parent’s own use and benefit requires distinct findings about use, benefit and the purpose of retention. A retained legal or equitable interest, and an eventual share of sale proceeds, do not by themselves establish present use.

Regulation 67 does not provide an exclusive code for mortgage payments. It addresses a different situation and does not apply to a joint mortgage taken out by the non-resident parent. Regulation 65 may apply where regulation 67 does not, including where the non-resident parent retains an interest in the property.

LM, the parent with care, appealed against a First-tier Tribunal decision upholding the Child Maintenance Service’s special-expenses variation to NM’s child-maintenance liability. LM and NM had jointly bought the former family home and entered a joint mortgage before their separation. LM and the qualifying child remained in the property, while NM retained a legal and equitable interest and paid half the mortgage.

The principal issue was whether the payments could be allowed under regulations 65 or 67 of the Child Support Maintenance Calculation Regulations 2012. LM also alleged procedural unfairness and relied on a later Family Court order concerning mortgage payments.

1. Appeal dismissed. The First-tier Tribunal made no error of law in upholding the special-expenses variation.

2. The tribunal was required to apply the governing legislation, rather than the Child Maintenance Service’s incorrect or misleading public guidance. It was entitled to continue the hearing despite earlier non-compliance with directions. The parties had agreed to proceed, the presenting officer was given time to consider the papers, and the tribunal had sufficient material to decide the appeal.

3. Under section 20(7) of the Child Support Act 1991, the First-tier Tribunal could not take account of a Family Court order made after the decision under appeal. The remaining complaints of procedural unfairness disclosed no error of law.

4. The joint mortgage was a prior debt within regulation 65(1) and (2). It had been incurred before NM became a non-resident parent and for the parents’ joint benefit. Regulation 65(3)(a) did not exclude it. The words “use” and “benefit” have distinct meanings, and the provision requires examination of the purpose for which the asset was retained. Although NM retained an interest in the property, it was retained so that LM and the child could live there; NM did not retain it for his own use. The possible future proceeds of sale did not establish that purpose. The mortgage also fell within the exception in regulation 65(3)(h), because it financed the home that LM and the child continued to occupy.

5. Regulation 67(2)(a)(i) did not apply. Its ordinary meaning requires that the non-resident parent was not involved in taking out the mortgage, so it excludes a joint mortgage. In any event, NM’s legal and equitable interest prevented reliance on regulation 67(2)(a)(iv).

6. Regulations 65 and 67 govern different mortgage situations. Nothing makes regulation 67 the exclusive route for mortgage payments, and regulation 65(3)(h) expressly contemplates mortgages. Regulation 65 may therefore apply to a joint mortgage notwithstanding that regulation 67 does not.

• Upper Tribunal (Administrative Appeals Chamber): dismissed LM’s appeal and upheld the First-tier Tribunal’s conclusion that the special-expenses variation was lawful.
• First-tier Tribunal (Social Entitlement Chamber): dismissed LM’s appeal against the Child Maintenance Service decision allowing NM a mortgage-payment special-expenses variation.