PB v The Secretary of State for Work and Pensions & Anor

An assets variation under regulation 69A of the Child Support Maintenance Calculation Regulations 2012 requires an objective valuation of the asset and ordinarily applies the statutory 8% rate. The just and equitable test is applied after valuation and is not itself a means of discounting or revaluing the asset. However, the Upper Tribunal confirmed that RC v CMEC (CSM) (“Cart”) remains binding in practice: a tribunal may agree a lower rate where the variation would otherwise be unjust and inequitable. A tribunal must address material submissions, including valuation discounts and relevant cash assets, and must give adequate reasons. Failure to do so is an error of law requiring the decision to be set aside and ordinarily remitted.

PB appealed against two decisions of the First-tier Tribunal concerning his child maintenance liability. The FTT had agreed assets variations based on his shareholdings, applying an 8% statutory interest rate, and had taken his income to the statutory maximum.

PB argued that the FTT had failed to consider minority discounts, the illiquidity and uncertain valuation of his shares, the absence of dividends, possible double counting, and whether it was just and equitable to apply the statutory rate. CB also argued that cash assets should have been considered. The Secretary of State invited the Upper Tribunal to depart from RC v CMEC (CSM) and adopt an all-or-nothing approach to regulation 69A variations.

1. The appeals were allowed. The FTT decisions involved material errors of law. They were set aside under section 12 of the Tribunals, Courts and Enforcement Act 2007 and remitted to a fresh FTT.

2. The statutory scheme requires a staged approach. First, the relevant asset must be valued objectively. If its value exceeds £31,250, regulation 69A requires the weekly value to be calculated by applying the statutory rate of interest and dividing by 52. The just and equitable test under section 28F(1)(b) is then applied to the proposed variation. It is not a power to give the asset a different value or to import the broad matrimonial-asset discretion under the Matrimonial Causes Act 1973.

3. Absent existing authority, the panel would have preferred the Secretary of State’s all-or-nothing interpretation of section 28F, Schedule 4B and regulation 69A. Nevertheless, RC v CMEC (CSM) had been consistently followed, including at the Secretary of State’s invitation. Applying the principles concerning departure from coordinate authority, and the Barras principle, the panel was not satisfied that Cart was wrong. Cart should therefore continue to be followed when considering regulation 69A variations.

4. The FTT erred by failing to address PB’s expressly raised argument for a minority discount. It also failed to address CB’s argument that cash in PB’s bank account constituted relevant assets. These omissions were potentially material. The FTT further failed to invite PB’s observations before reasoning that he could sell his shares to his parents, although this error was not independently material because the FTT had also found that he could raise funds against his home.

5. The absence of dividends did not prevent regulation 69A applying. Regulation 69A operates independently of variations for unearned income and attributes notional income even to assets that generate no actual income. The FTT was entitled to reject the double-counting argument because PB’s salary was remuneration for employment and no dividends had been declared.

6. The fresh tribunal must hold an oral hearing, exclude the previous panel members, consider only circumstances applicable at the dates of the original decisions, and consider the full forensic accountant’s report.

• Upper Tribunal (Administrative Appeals Chamber): appeals allowed; the First-tier Tribunal decisions dated 12 October 2023 were set aside and remitted to a fresh tribunal.
• First-tier Tribunal (Social Entitlement Chamber): appeals by CB allowed and assets variations agreed in respect of PB’s child maintenance liability.