[2007] UKSSCSC CSCS_07_2007 (04 September 2007)

DECISION OF CHILD SUPPORT COMMISSIONER

1.	My decision is that the decision of the tribunal given at Glasgow on 22 November 2006 is erroneous upon a point of law.  I set it aside.  I remit the case to a freshly constituted tribunal for a rehearing.

2.	This appeal came before me for an oral hearing on 30 August 2007.  The appellant, who is the absent father, represented himself.  The first respondent, who was the Secretary of State was represented by Mr Bartos, Advocate, instructed by Mr Brown, Solicitor of the Office of the Solicitor to the Advocate General.  The second respondent, who is the parent with care, did not appear.  It was she who had requested an oral hearing of the appeal.  That request was granted by the Legal Officer to the Commissioner.  The parties were given the opportunity of indicating any dates which were unsuitable to them.  The appellant did so.  The second respondent did not do so.  However, she indicated after the date for the oral hearing had been fixed that she would not be attending the oral hearing.  She said she had an important hospital appointment at Yorkhill Hospital with her son later that day.  She did not seek an adjournment of the appeal.  In these circumstances, under and in terms of regulation 22 of the Child Support Commissioners (Procedure) Regulations 1999, the second respondent, having been given the requisite notice of the hearing, I proceeded to determine the appeal in her absence.  

3.	The history of this case is that on the 18th of December 2005, on the requisite form CSA580(D), the second respondent made an application for a departure from the child maintenance assessment formula.  Only part of that form is produced and is recorded at pages 7 to 17.  Mr Bartos agreed that it appeared that in seeking the departure, the second respondent was seeking to establish cases under regulations 23 (page 10), 24 (page 11), 25 (page 12) and regulations 26 and 27 (pages 13 and 14).  The Child Support Departure Direction and Consequential Amendments Regulations 1996 made pursuant to the powers given to the Secretary of State by paragraph 5 of Schedule 4B of the Child Support Act 1991.  Mr Bartos submitted that in a memo recording the decision made, the Secretary of State made a departure direction only in relation to regulation 27.  However, in intimating the decision to the second respondent, it is apparent that the Secretary of State intimated that he had allowed the departure from the formula under both regulations 23 and 27.  His decision is recorded as follows:

“I have carefully considered all the available evidence and the circumstances of the case and have decided to refuse to give a Departure from the maintenance formula.  Although I am satisfied that there are grounds for giving a Departure, I am unable to direct the Officer to depart from the maintenance formula because it would not change the maintenance assessment by at least £1.00”.

However, he went on to say:

	“ASSETS CAPABLE OF PRODUCING INCOME OR HIGHER INCOME

I have allowed the application for a Departure from the maintenance formula on the grounds that [the appellant] has assets capable of producing income or higher income.

(Regulation 23 of the Child Support Departure Direction and Consequential Amendments Regulations 1996).”

He then indicated that he refused to make directions under regulations 25, 24 and 26.  He then said:

	“PARTNER’S CONTRIBUTION TO HOUSING COSTS

I have allowed the application for a Departure from the maintenance formula on the grounds of partner’s contribution to housing costs.

(Regulation 27 of the Child Support Departure Direction and Consequential Amendments Regulations 1996).”

“Subject to considering whether it would be just and equitable to give a Departure Direction, and the effect of the proposed direction on the maintenance assessment, I have decided that a direction effective from 22/12/2005 to attribute 100% of [the appellant’s] housing costs his partner [sic] would be appropriate, leading to a reduction in the exempt income of [the appellant’s] by the amount involved currently £185.56”.

4.	The second respondent appealed against the decision in a somewhat confused and diffuse letter of appeal, contained at pages 44 to 49.  It is difficult to ascertain from that letter what cases she was seeking to establish.  After an adjourned hearing when certain directions were given by the tribunal, the second respondent’s appeal was heard by a tribunal on the 22 November 2006.  The appellant in this appeal did not attend.  The second respondent is shown as having been present but in manuscript it is noted “no appearance by or for appellant/respondent”.  That tribunal gave the following decision:

	“The appeal is allowed.

The case is remitted to the Secretary of State to recalculate the amount of the child support assessment in accordance with the following directions:

The tribunal direct that the respondent, [the appellant], has assets capable of producing income of £1,660 per month.

Any party may apply to the tribunal, within one month of the issue of notification of the recalculation, for the tribunal to determine the correctness of the recalculation”.

5.	The findings in fact and reasons for the decision were set out by the tribunal as follows:

	II	Findings in Fact Material to Decision
	
1.	[The second respondent] is the parent with care of [T] born on 4.11.00 who resides with her and she is the appellant.

2.	The respondent is […], the absent parent and father of said child.

3.	The appellant made an application for a departure direction in respect of assets capable of producing income or higher income, diversion of income, lifestyle inconsistent with declared income, unreasonably high living costs and partner’s contribution to living costs.

4.	The Secretary of State determined the application on 10.1.06 and concluded that a departure could not be given on the basis that it would not alter the child support maintenance liability by £1.00 or more.

5.	The appellant appealed on 1.2.06 on the following basis which was before the tribunal.  She does not believe that [the appellant] has produced genuine accounts for his business and questions where he got the money from to set up the business.  [The appellant] owns a flat and has also purchased another house to renovate and sell.  He has also bought a new car since setting up the business, which he claims he has no income from.  [The appellant] is also able to socialise, have holidays and despite having no income seems to be able to afford lawyers when he takes her to court.  [The appellant] gave up a secure job in teaching because he would eventually have to support his child.

6.	The said respondent has outgoings of £874 per month as per his own figures at page 78 of the papers.

7.	According to page 77 of the papers he had remuneration of £9,600 from [R.R.].

8.	In addition [R.R.] show a loan from him of £42,560.  These are his assets capable therefore of producing an income of around £3,500 per year to him.

9.	In addition the said respondent has rented income from his property of at least £6,000 per annum.  At page 78 he himself indicates a figure of £4,800 which may conservatively be increased as at date of tribunal to £6,000.

10.	On a conservative basis accepting his own figures the said respondent has income of at least £20,000 per year or approximately £1,660 per month.

III	Reasons for Decision

The said respondent was not present and the tribunal had therefore to work on the basis of the financial information before it.  He had supplied certain figures and others were obtainable from the accounts.  It does appear he has a minimum income of £20,000 per annum or £1,660 per month.  He has income as a director, from rent and loan interest.  In the circumstances the appeal was upheld”.

6.	The appellant has appealed to the Commissioner against that decision.  The Secretary of State has submitted that the tribunal had erred in law.  The second respondent has made a submission which appears to deal with factual matters rather than state a position as to whether the tribunal erred in law.  

7.	I am satisfied that the decision of the tribunal does err in law and must be set aside.  I consider that the decision of the tribunal is inadequate.  I appreciate that it may have been difficult for the tribunal to ascertain from the application for a departure prepared by the second respondent and her letter of appeal to them, exactly what cases under regulations 23 to 27 of the Departure Regulations she wished to make.  Further, as indicated above, it is not at all clear from the record of proceedings whether she was in fact present before a tribunal, though the narrative of the proceedings suggest that she was not.  Whatever the position, it is quite apparent to me that the cases sought to be established were not adequately identified, nor were the statutory provisions relating to departure properly applied to the circumstances of the case.  

8.	It would appear from the text of the decision that the only decision that was made in relation to any of the cases for departure under Part V of the Child Support Departure Direction (Etc) Regulations 1996 was one under regulation 23.  No other additional case under Part V is referred to within the text of the decision itself.  

9.	Regulation 23, so far as material is in the following terms:

	“Assets capable of producing income or higher income

23.-(1) Subject to paragraphs (2) and (3), a case shall constitute a case for the purposes of paragraph 5(1) of Schedule 4B to the Act where-

(a)  the Secretary of State is satisfied that any asset in which the non‑applicant       has a beneficial interest, or which he has the ability to control-

(i)	is capable of being utilised to produce income but has not been so utilised:
(ii)	has been invested in such a way that the income obtained from it is less than might reasonably be expected;
(iii)	is a chose in action which has not been enforced where the Secretary of State is satisfied that such enforcement would be reasonable;
(iv)	in Scotland, is monies due or an obligation owed, whether immediately payable or otherwise and whether the payment or obligation is secured or not and the Secretary of State is satisfied that requiring payment of the monies or implementation of the obligation would be reasonable;
(v)	has not been sold where the Secretary of State is satisfied that the sale of the asset would be reasonable;

(b)	any asset has been transferred by the non-applicant to trustees and the non‑applicant is a beneficiary of the trust so created;  or

(c)	any asset has become subject to a trust created by legal implication of which the non-applicant is a beneficiary.

(2)  Paragraph (I) shall not apply where-

(a)	  the total value of the asset or assets referred to in that paragraph does not     exceed £10,000.00 after deduction of the amount owing under any   mortgage or charge on that asset;  or

(b)	  The Secretary of State is satisfied that any asset referred to in that    paragraph is being retained by the non-applicant to be used for a purpose    which the Secretary of State considers reasonable in all the    circumstances of the case.”

10.	It is apparent from regulation 23 that for it to be applied, it is necessary to identify a particular asset.  In finding in fact 5, assets in the form of a flat, a house, which the appellant was said to have bought for renovation and sale, and a car were referred to.  However, in respect of these assets, none of the conditions for the case as set out in sub‑paragraph (a), (b) and (c)  of paragraph (1) have been addressed.  Finding in fact 9 makes reference to a rental income from the property.  The only asset referred to, which was not the subject of the second respondent’s application for a departure, is the asserted loan of £42,560 referred to in finding in fact 8 to [R.R.].  There was no satisfactory evidence to demonstrate that the loan of £42,560 to [R.R.] was a loan from the appellant himself.  The company accounts before the tribunal described the sum as “directors’ loan accounts”.  There was more than one director and thus the source of the loan was not specifically directed to the appellant.  In the event that all or part of that asset could be attributed to the appellant, it has not been related to one of the type referred to in regulation 23(1)(a) and if it was, there was no indication that consideration was given as to whether regulation 23(2)(b) applied to it.  The question in respect of the loan made to [R.R.] was whether the capital used for such a loan was capable of being utilised to produce income but has not been so utilised or has been invested in such a way that the income obtained from it is less than might reasonably be expected.  No findings along these lines have been made by the tribunal.  Such findings were essential for a case to be made.  The calculation which is involved where a case under regulation 23 is established is set out in regulation 40 of the Departure Direction Regulations.  Findings in facts 7, 9 and 10 would not in themselves be sufficient to found a case under regulation 23.  

11.	The failings of the tribunal do not finish there.  Even if a case is made out under Part V, a departure direction can only be given if the Secretary of State, or in this case the tribunal, is satisfied that the case is one which falls within the cases set out in Part V of the Departure Direction Regulations and it is in their opinion that in all the circumstances of the case, it would be just and equitable to give such a departure direction.  In considering whether it was just and equitable to give a departure direction, the Secretary of State has to have regard to, in terms of Section 28F(2) of the Child Support Act 1991, the financial circumstances of the absent parent, the financial circumstances of the parent with care and the welfare of any child likely to be affected by the direction.  It is also necessary to take into account regulation 30 of the Departure Direction Regulations.  It is clear from the tribunal’s decision that no consideration was given by them whether, having determined that a case had been established under regulation 23 (erroneously in my view), it was just and equitable to give a departure direction.  There were no findings in fact in respect of the financial circumstances of the second respondent which is an essential part of the exercise.  I was told by Mr Bartos that, following enquiries from the Child Support Agency, on Form CSA580(D) that there is no space given for the financial circumstances of the parent with care to be inserted.  It was said that the income is available from other sources and indeed, I was referred to page 22 of the bundle which demonstrated that the tribunal had evidence in respect of the second respondent’s income.  However, financial circumstances include capital and in my view, it is essential when departure directions are under consideration, that a complete picture in respect of both the capital and income of both parents is disclosed.  This is particularly so having regard to the assertion by the appellant in his response to the second respondent’s submission that she has substituted income and capital.  Without findings in respect of the whole financial circumstances of both parents, then the Secretary of State/the tribunal cannot properly apply Section 28(F).  It is clear from the tribunal’s findings and reasons that they did not apply Section 28(F) in relation to whether it was just and equitable to make the direction.  In all these circumstances, the tribunal’s decision is erroneous in law for these reasons also.  

12.	In respect of disposal of the appeal, the only course open to me is to remit the case to a freshly constituted appeal tribunal for a rehearing.  That tribunal must ascertain from the second respondent which cases in Part V of the Departure Direction Regulations she is seeking to establish.  The tribunal must then make a determination in respect of all of these that are put in issue including regulation 27.  The statutory language for each of these cases is very precise and it is important that the tribunal pay proper regard to the terms upon which these cases can be established.  For example, as I have indicated in respect of regulation 23, it is important to identify the assets concerned and then relate them to the provisions in sub‑paragraphs (a), (b) and (c) of paragraph 1 of that regulation.  It is crucial and essential that if a case under Part V is made out and established, that Section 28(F) is properly applied.  That exercise does involve the establishment of the whole financial circumstances of both parents.  That includes capital as well as income.  The tribunal will also note that in addition to the provisions contained in Section 28(F), they should also have regard to the matters to be taken into account in Section 28(E).

The appeal succeeds.

					(Signed)
					D J MAY QC
					Commissioner
					Date:  4 September 2007