Ford, R (on the application of) v Inland Revenue [2005] EWHC 1109 (Admin)

Case No CO/6103/2004[2005] EWHC 1109 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
THE ADMINISTRATIVE COURT
Venue Royal Courts of JusticeDate Thursday, 19th May 2005
Strand
London WC2
B E F O R E:
MR JUSTICE RICHARDS
Between
THE QUEEN ON THE APPLICATION OF GRAHAM FORDClaimant-v-
Between
BOARD OF INLAND REVENUEDefendantPAULA SAYERSInterested Party
Computer-Aided Transcript of the Stenograph Notes ofSmith Bernal Wordwave Limited190 Fleet Street London EC4A 2AGTel No: 020 7404 1400 Fax No: 020 7831 8838(Official Shorthand Writers to the Court)
MISS S RAHMAN (instructed by Law Hurst & Taylor) appeared for CLAIMANTMR P JONES (instructed by the Treasury Solicitor) appeared for DEFENDANT for The INTERESTED PARTY did not attend and was not represented

J U D G M E N

[1]MR JUSTICE RICHARDS: The claimant, Mr Graham Ford, and the interested party, Mrs Paula Ford, married in 1987 and have two children of the marriage, Ryan and Michael. In 1998, Mr and Mrs Ford separated. They were subsequently divorced and Mrs Ford remarried. They have continued to share responsibility for the children. Child Benefit for both children was originally awarded to Mr Ford.[2]In April 2004, however, Mrs Ford made an application for Child Benefit in respect of the younger child, Michael. A decision was made in her favour with the result that although Mr Ford continues to receive Child Benefit for Ryan, Child Benefit for Michael is now paid to Mrs Ford. It is that decision which is challenged in these proceedings. Legislative Framework[3]Child Benefit is paid in respect of virtually all children under the age of 16, or up to their 19th birthday for those in full-time education. It is a non-contributory benefit, funded from general taxation and paid free of tax and irrespective of the means of the recipient. Its purpose is to make a contribution towards the costs incurred by every family in bringing up children, but it is not intended to meet the full costs of doing so. The present rate of Child Benefit is £16.50 for the first child and £11.05 for each subsequent child. It is relevant to note that there are other, means tested benefits, such as Income Support, directed to ensuring that a person has sufficient to live on and to bring up a family. Child Benefit, as I have indicated, has a different and more limited purpose.[4]The payment of Child Benefit is governed by the Social Security Contributions and Benefits Act 1992. Section 141 provides:
"A person who is responsible for one or more children in any week shall be entitled ... to a benefit (to be known as Child Benefit) for that week in respect of a child or each of the children for whom he is responsible."
Section 143 contains provisions for determining who is to be treated as responsible for a child in any week. It is common ground that both Mr Ford and Mrs Ford are persons responsible for Michael within the meaning of the relevant provisions.[5]Child Benefit is payable to only one person at any one time and cannot be split if more than one person is responsible for the child. This is dealt with expressly by section 144(3) which provides:
"Where, apart from this subsection, two or more persons would be entitled to Child Benefit in respect of the same child for the same week, one of them only shall be entitled and the question which of them is entitled shall be determined in accordance with Schedule 10 to this Act."
Paragraphs 1 to 4 of Schedule 10 contain a series of rules for determining which person is entitled to Child Benefit in such a case. It is common ground that none of those paragraphs is applicable here. Paragraph 5 contains a fall back position:
"As between persons not falling within paragraphs 1 to 4 above, such one of them shall be entitled as they may jointly elect or, in default of election, as the Secretary of State may in his discretion determine."
In the present case there was no election by Mr and Mrs Ford who have been unable to agree on the point. Central to the proceedings, therefore, is the residual discretionary power of determination conferred by paragraph 5 on the Secretary of State.[6]In fact, the functions of the Secretary of State in relation to Child Benefit were transferred to the Board of Inland Revenue by section 50 of the Tax Credits Act 2002 and, by virtue of other provisions of that Act, the reference in paragraph 5 to the Secretary of State is to be read as a reference to the Board. As a result of a recent merger between departments, the reference to the Board is now to be taken as a reference to Her Majesty's Revenue and Customs. I shall refer to it as "the Revenue".[7]It is the exercise of discretion by the Revenue, under paragraph 5 of Schedule 10, which is the subject matter of the present challenge. There is no right of appeal against such an exercise of discretion. Judicial review is therefore an appropriate procedure. The Guidance[8]There is no statutory guidance or published policy or guidance on the exercise of the discretion in paragraph 5. But the Revenue has placed before the court an internal document giving guidance to decision-makers on the exercise of the discretion. It is helpful to summarise, at this stage, the guidance applicable at the material time.[9]First, the document contains an explanation of paragraph 5 in these terms:
"These decisions are totally discretionary, that is no rules apply ... To try and apply any rules in a determination to be made by the Board restrains discretion and could lead to an unfair decision. The Board of Inland Revenue must look individually at each case on its own merits. Cases might appear similar, but each one is unique because -- the facts of each case are unique to that child and the people looking after them."
[10]There is then a section on establishing the facts. The guidance goes on to give examples of common relevant facts. The first concerns physical responsibility for the child. The headings of that section are:
"The number of hours each parent has responsibility for the child each week" and "
The existence of a court order specifying arrangements for the care of the child(ren)". The second example concerns the address of the child, including the recognised address for registration with the school and the doctor, the address where the child's possessions are mainly kept, and the address where the child stays when ill. The third example concerns contributions in relation to which it is stated that the actual costs incurred by each parent on food, clothing and other items of expenditure generally give some indication of the parental responsibility, though may not be conclusive since, for example, one parent may be able to afford to spend more on the child than the other parent.[11]The next section of the guidance relates to consequences of a disallowance, as to which it is stated:
"The main factor in considering shared care cases, is to decide whether one parent or the other has the greater responsibility of care. Where this is not clear it is important to consider the impact the decision will have on each parent. [Child Benefit] is not a means tested benefit but where one or both parents rely on [departmental] benefits or tax credits, a disallowance may have a potentially more adverse effect. The decision will not be seen in law as a 'fair' decision if this is not taken into account in the consideration. Consider who stands to lose most."
Various examples are then given. They include a statement that if a person's only source of income is Income Support, the impact of a disallowance may make it difficult to provide for the child's needs during the time they care for them.[12]The guidance then contains a section on considering the evidence, after which there is a concluding section headed "Reaching a reasonable decision". That section states:
"After considering the evidence ... it is quite possible to reach more than one reasonable decision. It is not a case of one decision being 'right' and the other 'wrong'. If the decision is challenged the court will look at two things: Is the decision a reasonable one and is it fair in the light of all the evidence available at the time (that is, would the ordinary man or woman in the street think it a fair and reasonable decision in the circumstances) ... Note: The decision-maker should ask, as a last check once a decision has been made, 'Taking all the evidence into account, is the decision to award [Child Benefit] to X rather than Y a fair and reasonable one? (And would any ordinary person think it is fair and reasonable?)."
[13]The evidence filed on behalf of the Revenue indicates that a discretionary decision under paragraph 5 of Schedule 10 is taken in approximately 3,000 cases a year, and refers to difficulties that can sometimes arise out of a conflict between partners following the breakdown of a relationship. It states that in order to guard against an exponential rise in administrative costs in such cases, decision-makers do not purport to carry out an exhaustive investigation into all matters which might affect the issue of responsibility for a child. A reasonable balance is struck, sufficient information being gathered in order to enable a reasonable decision to be made. The Facts[14]Following Mrs Ford's application to the Board, a decision was taken that Child Benefit in respect of Michael should be paid to her rather than to Mr Ford from 17th May 2004. That decision was in fact communicated to Mr Ford by a letter dated 10th July 2004. The letter stated:
"It is often very difficult to decide who we should pay the benefit to. There are no hard and fast rules governing this decision. Each case is decided on the known facts. In reaching the decision we look at these factors: • the pattern of care and living arrangements for the child; • any court orders in force covering arrangements for the child's care; • the child's official address; • where the child's personal possessions are kept; • where the child would stay if they were ill; • if it is not sufficiently clear that one person has the main responsibility, the effect on the level of financial support from other state benefits for the child if the Child Benefit claim was disallowed (such as the effect on Income Support) ... We have considered all the information provided. From 17th May 2004 we have decided to pay the Child Benefit for Michael to Ms Ford ..."
The factors referred to reflect some of those mentioned in the internal guidance to which I have referred, but the letter contained nothing in the way of detailed reasoning.[15]The Citizens Advice Bureau wrote on Mr Ford's behalf on 23rd July 2004 to request a reconsideration of the decision, stating:
"In 1999 Mr Ford was granted a Residence Order that his two sons Ryan and Michael Ford should reside with him and that their mother should have contact with the boys as directed. It means that the bulk of their time is spent in the home they share with their father. Mr Ford has the say in their schooling and they have been attending the school which is local to him in Thundersley. The boys are registered with his local GP and his local Dentist. Mr Ford claims Child Tax Credit for them in order to supplement his own claim as a single parent for Income Support. He has received [Child Benefit] for his sons since 1999. He buys his sons clothes and is responsible for all the bills at their family home. His ex-wife now remarried and is called Mrs Sayers, does not pay maintenance for either of her sons although we understand she is in employment. It does not appear that Mrs Sayers could have had priority under a 91 day ruling and with Mr Ford being in receipt of [Child Benefit] already, this should give him priority. He is the parent with priority and with 'primary' responsibility and costs."
[16]The outcome of the reconsideration, as communicated in a letter of 2nd September 2004, was a decision not to change the original decision. The reasons were stated to be as follows:
"In our letter to you on 10th July 2004 we explained that when two people claim Child Benefit for the same child both can be entitled to Child Benefit but only one of them can be paid. If the two people are parents of the child they can agree who should be paid. But if they do not, then the Board of Inland Revenue must decide who will be paid. You have told us that you look after Ryan and Michael following the pattern of care shown in the court order dated 24th November 1999. This says that during school term times you look after both children of eight days and nights while Mrs Ford looks after them for six days and nights. During the school holidays the balance of care is more even. You have also told us that you are the contact address for children's school and GP. You have told us that you were granted a Residence Order by the court in 1999. The Board of Inland Revenue have taken everything that you have told us into account when reviewing the decision. Although there is not complete agreement about the pattern of care for Ryan and Michael, the Board has decided to pay one parent Child Benefit for one child and the other parent Child Benefit for the other child because of the pattern of care shown in the court order. Because Mrs Ford claimed benefit for Michael we are going to pay her Child Benefit for Michael. The 1999 court order granted a residence order to you and a contact order to Mrs Ford. However, this is not necessarily a reason for being paid Child Benefit. The court cannot instruct the Board to pay a particular person Child Benefit and the decision is based more on the pattern of care and other factors. Some of the factors were listed in the letter we sent you on 10th July 2004. Although each child spends more time with you it is reasonable to pay you and Mrs Ford for one child each. This is because Mrs Ford has nearly half of the care of the children. The fact that you receive Income Support is not justification for changing the decision. The Board have accepted that the children are registered with the school and GP with your address. The Board have also accepted that was partly because keeping your address was the best for your children. This does not change the Board's decision. There are a number of factors that the board does not take into account. These include the receipt of Tax Credit, who has received Child Benefit in the past, whether a parent pays maintenance or is subject to an order from the Child Support Agency, how much the parents are paid and, when the pattern of care is clear, as it is in your case, who pays most of the bills. The Citizen's Advice Bureau have suggested that, because you are already being paid Child Benefit you should continue to be paid. However, this is not the case. In Child Benefit law you and Mrs Ford are both entitled to Child Benefit for Ryan and Michael but we can only pay one of you. The law does not provide rules that help us decide who should be paid. As you and Mrs Ford have not decided who should be paid Child Benefit the Board of Inland Revenue has made a discretionary decision that the fairest and most reasonable way to pay Child Benefit for your children is to pay each of you for one child ..."
[17]Judicial review proceedings were commenced on 2nd December 2004. There followed on 6th December a further reconsideration of the decision, leading to the same conclusion. This was an internal exercise but was disclosed as part of the Board's evidence in this case. The document contains a fuller analysis than either of the two letters to which I have referred. It concludes with a short section headed "Reasoning" in which it is stated:
"There is conflicting information held as to the pattern of care for Michael and Ryan which we are unable to resolve. Mr Ford has stated that he is responsible for both children 16 nights out of 28 nights. Mrs Ford has stated that both children spend 14 nights out of 28 nights with each parent. Essentially, the conflict surrounds every second Tuesday. Accepting that the court order is followed, this would provide Mr Ford with the care of both children for 16 nights out of 28 nights, and Mrs Ford with 12 nights out of 28 nights. This equates to Mr Ford having the care for 57.15% of the time and Mrs Ford 42.85% of the time. Both parents have weekend contact. It is safe to assume that additional costs for leisure activities will be incurred by both Mr and Mrs Ford for both Michael and Ryan. Due to the level of care and costs incurred by each parent for both children, it is fair and equitable for each parent to receive Child Benefit for one child. As Mrs Ford claimed Child Benefit for one child only, she is to be paid benefit for that child."
[18]Although throughout the decision-making process Mr Ford had taken issue with Mrs Ford's claim that the children spent an equal amount of time with each parent, he later accepted that for at least the previous year she had in practice had the children for 14 days out of 28. He said that that was contrary to the court order and he was evidently unhappy about it, but he decided, in the interests of the children, not to have a dispute about it. So the sharing of responsibility between the parents was, in practice, even more equal than had been taken as the basis of the Revenue's decision. The Issues[19]Miss Rahman, for Mr Ford, makes a number of overlapping submissions. She submits first that the decision was unlawful, in particular there was a failure to consider the greater impact on Mr Ford of not receiving Child Benefit, because he is on state benefits whereas Mrs Ford is in employment. She also says that if that matter was taken into account, then the decision was irrational. The second main submission is that the Revenue failed to follow its own policy or guidance in relation to the award of Child Benefit. Thirdly, it is submitted that the Revenue took into account irrelevant considerations or ignored relevant considerations. This is really another way of putting the first submission. Fourthly, it is submitted that the Revenue attempted to split Child Benefit in a way that is precluded by the legislation. Fifth, it is said that Mr Ford had a legitimate expectation that the Revenue would follow its own policy. That is closely related to the second submission.[20]Miss Rahman has taken me through the various specific factors referred to in the guidance and has submitted that consideration of those factors should lead to Mr Ford being awarded the benefit for Michael. While in practice Michael spends equal time with both parents, consideration of the care pattern ordered by the court favours Mr Ford being awarded the benefit. His home is the address used in the school's records and the doctor's records. The fact that Michael was registered with a GP near Mr Ford's home, and that Mr Ford is a full-time carer whereas Mrs Ford and her partner are in employment, make it likely that he would care for Michael if Michael were ill. Mr Ford is on Income Support and the impact of not receiving the Child Benefit would clearly be greater on him than on Mrs Ford.[21]In short, it is submitted that following the guidance leads to only one result: that Mr Ford should receive the Child Benefit for Michael. In reaching a contrary decision, the Revenue has failed to have regard to the factors set out in the guidance and has therefore failed to follow its own policy. Alternatively, if regard has been had to the factors set out in the guidance, the conclusion reached is irrational.[22]Miss Rahman has cited Gangadeen v Secretary of State for the Home Department [1998] Imm.App.R 106. At page 113 the judgment cites an earlier case where it is said, in relation to a published Home Office policy in the immigration field:
"If it became clear a particular officer had disregarded the guidance, that would be a valid reason for saying the decision was wrongly made. But if it appears that the guidance has been followed, the question then arises whether it can be said that following the guidance no sensible Home Secretary or officer on his behalf could properly ever arrive at the decision which has been made."
It is the same approach that Miss Rahman seeks to apply in the present case.[23]It is true that if one looks at Michael alone, the factors set out in the guidance would tend towards a decision to award the Child Benefit in respect of Michael to Mr Ford. Indeed, it is accepted by the Revenue in its evidence, and in the submissions made by Mr Jones on its behalf, that if Michael were an only child the Child Benefit in respect of him would probably have remained with Mr Ford. The Child Benefit for any one child would have to be given to one or other of the parents and could not be split between them; and in general, the person who appears to bear the greater responsibility will be awarded entitlement. It is likely that in those circumstances the benefit would have been given to Mr Ford, because responsibility for Michael was thought to lie somewhat more with him than with Mrs Ford. Mr Ford has now accepted that the information on which that was based was wrong and that the children in practice spent an equal time with each parent. But the Revenue concede that it is still possible that if Michael had been an only child the decision would have been to give the benefit to Mr Ford since he receives Income Support whereas Mrs Ford is in work, and the school and doctor had his address as the primary address for the children, all of which would have given him a slight advantage.[24]The Revenue's case, however, is that it did not look at Michael's position in isolation and that it was entitled not to do so. The decision took into account the fact that there were two children in relation to whom the parents were sharing almost equal responsibility. The view taken was that it was fair and reasonable in the circumstances to award Child Benefit in respect of one child to each parent.[25]In the light of all that, Mr Jones submits, and I accept, that the first main question in this case is whether the Revenue erred in law in looking at the wider picture in deciding how to award Child Benefit in respect of Michael. Miss Rahman submits that any other children are irrelevant and that a decision must be based only on consideration of the circumstances of the particular child. Mr Jones cited, as a hypothetical example, a family of six children where responsibility for all of them is split 60/40 between the parents. He says that the claimant's case would mean that the parent with the greater responsibility would receive the Child Benefit in respect of all six children and the other parent would receive none. He submits that that cannot be right. The Revenue cannot be required to look at each child with blinkers on and to ignore the other children.[26]In my judgment, there is nothing in the statute to prevent the Revenue from looking at the wider picture. The discretion conferred by paragraph 5 of Schedule 10 of the 1992 Act is in the widest of terms. There is a specific statutory provision that prevents Child Benefit in respect of any individual child being split between two people. There is an entirely sensible policy reason for that, in that it would entail undue complexity and administrative cost if a benefit that is relatively small in financial terms had to be divided up between different recipients. Thus the rules for determining which one person receives Child Benefit when more than one person is responsible for a particular child. None of that, however, is expressed to prevent Child Benefit being payable to one parent in respect of one child and to the other parent in respect of an another child, or to require the existence of other children to be left completely out of account when determining who is to receive the Child Benefit for one of them. All one has in the statute is the expression expressed in the widest of terms. I see no policy reason why that discretion should be cut down in the way that the case for the claimant would suggest. On the contrary, it seems to me that to cut down the discretion in that way would be liable to lead to unbalanced and unfair decision-making. That cannot have been the intention of Parliament. Accordingly, I take the view that the Revenue's approach was permitted by the statute.[27]The next question is whether it involved a departure from, or a failure to follow, the guidance. As Miss Rahman rightly stressed, the guidance says nothing to the effect that the position with regard to other children of the parents is a relevant consideration. It focuses on the particular child for which Child Benefit is being considered.[28]What is plain, however, is that the guidance is neither prescriptive nor exhaustive. It is an internal document guiding the exercise of discretion by those responsible for taking the relevant decisions. It goes out of its way to stress that such decisions are totally discretionary and that there are no fixed rules and that each case must be looked at on its own merits. It also stresses that the ultimate question, as stated on the last page of the guidance already quoted, is:
"Taking all the evidence into account, is the decision to award Child Benefit to X rather than Y a fair and reasonable one?"
But there is nothing in the guidance to prevent the decision-maker from taking into account the position with regard to other children, and there is everything to encourage the decision-maker to look at the case flexibly and with a view to achieving a fair and reasonable result.[29]In my view, it would undoubtedly be better if the guidance did deal in terms with situations such as the present, but the document is sufficiently open-ended to accommodate the present case. I am wholly unpersuaded that in reaching the decision in the present case there has been any departure from, or failure to follow, the guidance.[30]The next question, it seems to me, is whether in reaching the decision the Revenue ignored any of the specific factors that are mentioned in the guidance. In that respect, as I said, Miss Rahman places particular emphasis on the fact that Mr Ford is on Income Support and that non-receipt of the Child Benefit in respect of Michael will therefore have a greater impact on him. She submits that this factor was ignored. I reject that submission. I think it plain that the factor was taken into account. The letter of 2nd September 2004 stated in terms that:
"The fact that you receive Income Support is not justification for changing the decision."
It was considered but it was not regarded to provide a justification for making the payment to Mr Ford rather than to Mrs Ford. It featured again in the reconsideration of 6th December, which contained a section on consequences of disallowance and pointed out that Mr Ford was in receipt of Income Support and a number of other benefits, whereas Mrs Ford was not in receipt of benefits. Again, that was evidently not considered to justify payment to Mr Ford rather than Mrs Ford.[31]I am likewise satisfied that all of the other factors were taken into account. This means that the claimant's case has to come down to whether the decision reached in balancing those factors was an irrational one. In my judgment, it was plainly not irrational. It was well within the responses of a reasonable decision-maker to conclude that in circumstances where the parents had nearly equal responsibility for the two children, it was fair and reasonable for each parent to receive Child Benefit in respect of one child, notwithstanding the fact that one of the parents was on Income Support whereas the other parent was in employment. I would not go so far as to say that any other result would have been irrational, but I do take the view that no complaint can properly be made of the actual decision on grounds of Wednesbury unreasonableness.[32]The conclusions I have reached so far effectively dispose of the claimant's case. I think it is unnecessary to say anything separate about legitimate expectation, which falls away with my finding that there was no failure to follow the guidance. If I have failed to refer specifically to any other aspect of the submissions it is because I do not consider that aspect to add anything of substance.[33]For the reasons I have given, the claim is dismissed.[34]MR JONES: My Lord, the costs should follow the event. The claimant is publicly funded. We would ask for detailed assessment of the claimant's costs.[35]MR JUSTICE RICHARDS: So the claimant is to pay the defendant's costs, subject to the various standard provisos in relation to the --[36]MR JONES: Page 1331 of the White Book. It is a standard form.[37]MR JUSTICE RICHARDS: I do not think I need look at it. The associate will have it very much in mind.[38]MR JONES: It is detailed assessment and then an assessment as to how much the claimant should pay.[39]MR JUSTICE RICHARDS: And there will be detailed assessment for CLS funding purposes. Thank you both very much.

Cited in 4 later judgments