Child support: Secured loan no longer for family debts

Family Law|August 11th 2015

I rather enjoy reading the odd child support decision. I don’t know why this is: perhaps I am just a masochist, or maybe it is that, as they so often involve the interpretation of legislation, there just seems to be more law in them than many other cases I read. Anyway, I seem to be accumulating a number of posts here on the subject of child support decisions – for previous examples, see here and here, amongst others.

The latest decision to catch my eye goes by the lengthy but explanatory name of PR v Secretary of State for Work and Pensions and & Anor (CSM) (Child support : variation/departure directions: other). As you might guess, the case involved an application by the non-resident parent (NRP) for a child support variation. The decision, as we shall see, was actually very straightforward, even if it might seem somewhat unfair for the NRP.

The particular variation here was in respect of previous family debts. Regulation 12 of The Child Support (Variations) Regulations 2000 provides that the NRP can seek a downward variation in the amount of child support that they should pay if they are still repaying debts that were incurred for the benefit of the family, whilst they and the parent with care (PWC) were still a couple. This provision does not apply to any mortgage or loan taken out on the security of any property, except where that mortgage or loan was taken out to facilitate the purchase of, or to pay for repairs or improvements to, any property which is the home of the PWC and any qualifying child (I shall call this ‘the secured loan exclusion’).

Here, while the NRP was still living with the PWC and their children, debts were incurred for the benefit of the family. However, as so often, it became sensible for those debts to be consolidated and, as part of the finance package, for them to be secured on the family home. The NRP remains liable for that loan, and therefore sought a downward variation of the child support he was required to pay.

The Secretary of State refused to agree to a variation and the NRP appealed to the First-tier Tribunal. That appeal was refused, and the NRP appealed again, to the Upper Tribunal.

The Upper Tribunal dismissed the appeal. The NRP’s liability clearly fell within the secured loan exclusion, despite that loan being used to pay the debts (as a matter of law the debts ceased to exist when they were repaid, and were replaced by the secured loan). Whilst it is perfectly possible for a replacement loan to be for the benefit of the family and therefore qualify for the family debt variation, that only applies if the loan does not fall within one of the exclusions, including the secured loan exclusion.

As the Upper Tribunal Judge pointed out, if the NRP had left before the debts were consolidated by the secured loan, regulation 12 would apply to them and there could be a variation. However, he had left after they were consolidated, and therefore the secured loan exclusion applied.

The NRP tried to make use of regulation 12(5), which says that where the applicant incurs a debt partly to repay a family debt, the repayment of that part can be used for the purpose of a downward variation. However, here the family debts had not survived the separation of the family. The debts had already been discharged, and regulation 12(5) cannot be used to resurrect debts that have already been discharged.

OK, that’s my child support decision fix for now. If you need one yourself, you can read the full report of the case here.

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