Northern Ireland - Social Security and Child Support Commissioners' Decisions

[2003] NISSCSC CSC4/03-04 (9 March 2004)

 


Decision No: CSC4/03-04

THE CHILD SUPPORT (NORTHERN IRELAND) ORDERS 1991 AND 1995
Appeal to a Child Support Commissioner on a question of law from the decision of a Child Support Tribunal dated 29 August 2002 DECISION OF THE CHILD SUPPORT COMMISSIONER
1. This is an appeal, leave having been granted by me, by the father and non-resident parent of the relevant children against a decision dated 29 August 2002 of an Appeal Tribunal sitting at Newry. The Tribunal had given a decision that the father's lifestyle was inconsistent with his declared income and that the mother and parent with care was entitled to a departure direction. The Tribunal directed the Department to recalculate the child support maintenance payable by the father on the basis that his net earned income was £200 per week. The father appealed to me.
2. A Legal Officer to the Commissioners, in a Direction dated 9 October 2003, designated the Department as the first respondent and the mother as the second respondent. Throughout this decision I refer to the appellant as the father and the second respondent as the mother.
3. The father's grounds of appeal were set out on an OSSC1 form received in the Commissioners' Office on 30 May 2003. The grounds were that the father had not received a fair hearing because the Tribunal had believed the evidence of the mother who had made false accusations against him and had made findings which were incorrect as regards his income and that of his partner.
4. The Department made observations on the appeal by letter dated 18 August 2003 from Mr Conlon of the Decision Making and Appeals Unit. I have found this letter extremely helpful and am grateful to Mr Conlon for it.
5. The mother has taken no part in the proceedings before me though she has been furnished with the correspondence.
6. The Department supported the appeal but not on the grounds set out by the claimant. Indeed the Department states, quite correctly, that the assessment of evidence is a matter for the Tribunal. Its support for the appeal was on different grounds.
7. I am also of the view that the grounds set out by the father do not have merit. The Tribunal was entitled to reject the father's evidence and accept the mother's. The assessment of evidence is a matter for the Tribunal. However, I do consider that the Tribunal did err in law in several ways.
8. It would, it seems to me, be the most practical approach if I deal in some detail with Mr Conlon's observations and in particular with the ways in which, he submits, the Tribunal erred in law.
9. The first matter relates to the grounds on which the mother made the application for the departure direction. She alleged that the father was diverting income in that she considered that his employer paid him cash in hand so that he did not declare that income for CSA assessment purposes. Diversion of income can constitute a case for the purposes of paragraph 5(1) of Schedule 4B to the Child Support (Northern Ireland) Order 1991. This paragraph gives the Department or the Tribunal discretion to depart from the standard formula for the assessment of child support in certain specified cases. The case in question as regards diversion of income is set out in regulation 24 of the Child Support Departure Directions and Consequential Amendments Regulations (Northern Ireland) 1996 (hereinafter referred to as "the Departure Regulations"). Regulation 24 provides: -

"A case shall constitute a case for the purposes of paragraph 5(1) of Schedule 4B to the Order where –

(a) the non-applicant has the ability to control the amount of income he receives, including earnings from employment or self-employment and dividends from shares, whether or not the whole of that income is derived from the company or business from which his earnings are derived; and

(b) the Department is satisfied that the non-applicant has unreasonably reduced the amount of his income which would otherwise fall to be taken into account under regulations 7 or 8 of the Maintenance Assessment and Special Cases Regulations by diverting it to other persons or for purposes other than the provision of such income for himself."

10. As Mr Conlon has submitted the manner of diversion alleged by the mother in her application for departure is not a diversion of income at all in that, if the mother is correct, the father has not either reduced the income nor diverted it, he has simply failed to declare it. This is not in fact a diversion of income based application though it is described as such. It is in fact a lifestyle inconsistent application. The Tribunal dealt with it as such and while I would have preferred some general comment on the lines of the immediately preceding sentences I do not consider that the Tribunal actually erred in law in that it is clear from the reasons that it did consider whether or not the father had income in excess of that which he declared.
11. As regards the application being based on the father having a lifestyle inconsistent with his declared income, this is a matter which is dealt with under regulation 25 of the Departure Regulations which provides as follows: -

"(1) Subject to paragraph (2), a case shall constitute a case for the purposes of paragraph 5(1) of Schedule 4B to the Order where the Department is satisfied that the current assessment is based upon a level of income of the non-applicant which is substantially lower than the level of income required to support the overall life-style of that non-applicant.

(2) Paragraph (1) shall not apply where the Department is satisfied that the life-style of the non-applicant is paid for –

(a) out of capital belonging to him; or

(b) by his, partner unless the non-applicant is able to influence or control the amount of income received by that partner.

(3) Where the Department is satisfied in a particular case that the provisions of paragraph (1) would apply but for the provisions of paragraph (2)(b), it may, whether or not any application on that ground has been made, consider whether the case falls within regulation 27."

12. Regulation 27 provides as follows: -

"A case shall constitute a case for the purposes of paragraph 5(1) of Schedule 4B to the Order where a partner of the non-applicant occupies the home with him and the Department considers that it is reasonable for that partner to contribute to the payment of the housing costs of the non-applicant."

13. I am in agreement with Mr Conlon's observations that the reasons for the decision record that the Tribunal considered -

"whether [the father] the non-resident parent has a lifestyle which is inconsistent with his declared income."

That, with relation to the lifestyle inconsistent case was not the correct question. The Tribunal should have considered whether the declared income was substantially lower than that required to support the lifestyle. In other words the size of the inconsistency between the two must be considered and it must be deemed that the declared income was substantially lower that than required to support the lifestyle. The Tribunal erred in this respect. This error alone might not have vitiated the decision. However there are other errors in the decision.

14. Mr Conlon submits that the Tribunal did not make any determination on those lifestyle items which formed the basis of the mother's application for a departure direction and in particular the expensive car and the caravan but instead confined itself to the items in the check-list. I consider Mr Conlon to be correct. This check-list is in a form which I understand is used as a matter of course by Tribunals in relation to lifestyle inconsistent cases. The mother's contention was that the lifestyle as evidenced by the building of a new home, the purchase of a motor vehicle and a caravan was inconsistent with the declared income. I am in agreement with Mr Conlon that the Tribunal should have investigated the above matters and decided if they were true and whether they could be funded from the declared income. It erred in not so doing. Mr Conlon submits that the Tribunal was entitled to come to the conclusion that the father's mortgage was out of proportion to his declared income, given that most lenders will lend only 3 or 3.5 times the main income and 1 or 1.5 times the second income. I agree. However, he submits that the Tribunal should have asked the father how he managed to obtain the mortgage on the declared income. On perusing the statement of reasons it does appear that there may have been some questioning in this respect. However, the Tribunal should, if it intended to take into account the size of mortgage obtained, have made the above inquiry and clearly recorded the explanation given. Whether or not it accepts same is, of course, a matter for the Tribunal.
15. As regards the check list, I am in agreement with Mr Conlon that the list as used appears to have led the Tribunal into error. One of the amounts pre-typed on the check-list is that for

"personal allowance in PI [protected income] calculation".

This appears to be the part of the protected income of the father which is attributable to the amount of his personal allowance. The child support personal allowance is, as Mr Conlon has observed, based on the rates of income support personal allowance for a single person or a couple and the figure for a couple at the relevant time was £80.95. The Tribunal appears to have assumed that the personal allowance was all spent on food and clothing. I consider that it erred in making this assumption. It should have made enquiries as to the actual amount spent on these items. I would emphasise that I do not consider that the Tribunal is bound to accept either parent's evidence in that respect. If any evidence appears unreasonable or improbable the Tribunal is perfectly entitled to reject it even though there is no directly contradictory evidence. Such contradictory evidence could be extremely difficult to obtain in a case of this nature. However, the Tribunal cannot simply assume that the entire personal allowance is spent on food and clothing and then add on all the other items in the check-list to indicate the total expenditure. Some part of the personal allowance may be spent on items other than food and clothing. Equally a sum greater than the allowance may be spent on these items. There is no error in law in the use of a check-list but same must be properly used. The list of items on the check-list is useful as a guide to possible items of expenditure but the personal allowance is not itself an item of expenditure. The check-list appears to require amendment.

16. Mr Conlon has also submitted that the Tribunal erred in relation to its application of regulation 40(5) of the Departure Regulations. That provision is as follows: -

"In a case to which regulation 25 (life-style inconsistent with declared income) applies, the net income of the non-applicant who is a parent of a child in respect of whom the current assessment is made shall be increased by the amount specified in that departure direction, being the whole or part of the difference between the two levels of income referred to in paragraph (1) of that regulation."

The two levels of income are that upon which the current assessment was made and that needed to support the overall life-style of the father.

17. The Tribunal's decision stated that the father's net earned income should be set at £200 per week. It is somewhat unclear how it reached this figure. The Tribunal should have made findings as to the two levels of income. It should also have clearly specified the "whole or part of the difference between the two levels of income referred to in paragraph (1)" of regulation 25 and directed that the net income should be increased by whole or part of that amount. It erred in law in not so doing.
18. I consider, as Mr Conlon has submitted, that the Tribunal also erred in relation to its application of Article 28F of the 1991 Order which at the relevant time provided: -

"(1) The Department may give a departure direction if –

(a) the Department is satisfied that the case is one which falls within one or more of the cases set out in Part 1 of Schedule 4B or in regulations made under that Part; and

(b) it is the Department's opinion that, in all the circumstances of the case, it would be just and equitable to give a departure direction.

(2) In considering whether it would be just and equitable in any case to give a departure direction, the Department shall have regard, in particular to -

(a) the financial circumstances of the absent parent concerned,

(b) the financial circumstances of the parent with care concerned, and

(c) the welfare of any child likely to be affected by the direction."

19. Mr Conlon submits, basing his submission on decision R(CS)3/01, that in this case and indeed in most cases it is not possible to decide what effect a departure direction will have on the relevant parties unless the Tribunal is aware what the change in the maintenance will be. He submits further that the financial circumstances of the parent and the welfare of any child living with the father would have to be considered in this case. He submits that the Tribunal erred in deciding that the giving of a departure direction was just and equitable when it did not know what the effect of the direction would be.
20. I agree with Mr Conlon though wish to emphasise that I do not consider that it is desirable to lay down any general legal rule as to when the Tribunal can be said to have adequately applied Article 28F. However, in this case there does not appear to be any indication of any enquiry being made as to the effect of a departure direction. This may be, as I suspect to be the case, because the Tribunal considered that the father actually had a much greater income than he had declared. However an enquiry should have been made as to the welfare of any child likely to be affected. In the absence of such inquiry I cannot conclude that the Tribunal correctly complied with Article 28F.
21. It does not appear to me that the Tribunal, having reached a preliminary view that it may give a departure direction leading to a revised amount of child support maintenance and giving the parties an opportunity to make representations and produce evidence as to the effects of giving that direction, is then bound to either give or not give a direction leading to that particular amount of child support maintenance. In lifestyle inconsistent cases the Tribunal has some discretion over the amount by which the net income is to be increased (regulation 40(5)). The Tribunal, having heard representations and evidence (which it may or may not consider reliable), may revise its preliminary views as to the amount by which the net income is to be increased. It does not necessarily have to take yet further representations before making its decision, though there may be cases where this will be necessary. The initial representations and evidence may supply sufficient information to enable the Tribunal to comply with its duty under Article 28F(1)(b) and (2).
22. For the above reasons I set the decision aside as in error of law. I do not consider that this is a case where I can give the decision which the Tribunal should have given. I remit the matter to a differently constituted Tribunal for rehearing and redetermination.
23. I direct the new Tribunal: -

(1) To determine whether at the effective date there was a case for a departure direction within regulation 25(1) of the Departure Regulations. In so doing it should investigate: -

(a) the actual expenditure of the non-resident parent including whether payments were being made for the car and the caravan referred to by the mother;

(b) the question of how the mortgage was obtained and paid for. The Tribunal should record its findings as to the income declared and the income required to fund the relevant lifestyle.

(2) If the Tribunal is satisfied that the lifestyle of the non-applicant is paid for in accordance with regulation 25(2) it should not apply regulation 25(1).

(3) If regulation 25(1) would apply but for the provisions of regulation 25(2)(b) (paid for by the partner where the father cannot influence or control the partner's income), the Tribunal should decide whether or not to consider if the case falls within regulation 27.

(4) To decide (if there is a case for a departure direction) whether or not to give such a direction and in particular to consider Article 28F(1)(b) and (2).

(5) If considering Article 28F to decide if an adjournment is necessary to enable the parties to make representations on whether it would be just and equitable to give a departure direction bearing in mind particularly Article 28F(2)

24. Each parent should be prepared to produce to the Tribunal such evidence as is wished to support their respective submissions.
25. I would wish to add that the fact that the appeal in this case has been successful is not an indication of the eventual outcome of this case.

M F Brown

Commissioner

9 March 2004