UK Social Security and Child Support Commissioners' Decisions

[1996] UKSSCSC CCS_5079_1995 (08 November 1996)


 


DGR/SH/LB/3

Commissioner's File: CCS/5079/95

CHILD SUPPORT ACT 1991

APPEAL FROM A DECISION OF THE CHILD SUPPORT APPEAL TRIBUNAL

ON A QUESTION OF LAW

DECISION OF THE CHILD SUPPORT COMMISSIONER

1. My decision is that the decision of the child support appeal tribunal given on 21 April 1995 is erroneous in point of law, and accordingly I set it aside. I direct that the appeal be reheard by a differently constituted tribunal, who will have regard to the matters mentioned below.
2. This is an appeal by the person with care, brought with my leave, against the decision of the child support appeal tribunal of 21 April 1995. Owing to the complexity of the matter, I directed an oral hearing. At that hearing the person with care, who was the mother of the relevant children, and who accordingly will be referred to as the "parent with care", was not present, but she was represented by Miss K Goulding from the Cambridge Citizens' Advice Bureau, whilst the child support officer appeared by Mr L Scoon of the Solicitor's Office of the Department of Social Security. The absent parent was present, but unrepresented.
3. On 5 August 1993 the parent with care applied for child support maintenance. On 1 November 1993 the child support officer decided that the absent parent was liable to pay in respect of the children Kristian, Scott, and Jake, child support maintenance at the rate of £85.72 per week from 25 April 1993. A review was sought, and on 24 October 1994 a second child support officer decided that the absent parent was liable to pay maintenance at the rate of £92.73 per week. The second child support officer also took the opportunity of taking into account the revised legislation effective from 7 February 1994, but concluded that this did not affect the amount of maintenance payable. In due course, the absent parent appealed to the tribunal, who in the event overturned the child support officer, and remitted the case to the Secretary of State to arrange for the child support officer to make a recalculation on the basis that the bonus payment made to the absent parent should not be taken into account. The parent with care contends that, in adopting the course they did, the tribunal erred in point of law.
4. In March 1993 the absent parent received a bonus, which in fact related to the profits of 1992. It would not appear to be in dispute that this was entirely a one-off payment, and there has in fact been no repeat payment. However, bonuses have to be treated as earnings pursuant to paragraph 1(1)(a) of Schedule 1 to the Child Support (Maintenance Assessments and Special Cases) Regulations 1992 [S.I. 1992 No. 1815]. How a bonus payment fits into the general structure of earnings is set out in paragraph 2(2), which provides as follows:-

" (2) Where a person's earnings include a bonus or commission which is paid during the period of 52 weeks ending with the relevant week and is paid separately from, or, in relation to a longer period than, the other earnings with which it is paid, the amount of that bonus or commission shall be determined by aggregating such payments received in the 52 weeks ending with the relevant week and dividing by 52."

5. The child support officer made a calculation of the absent parent's income for the two months ending with the relevant week, the relevant week being that from 21 September 1993 to 27 September 1993, and he included in the earnings for that period the bonus paid in March 1993, which he treated in the manner called for by paragraph 2(2).
6. When the tribunal came to consider the matter, they were not satisfied that the earnings figure arrived at by the child support officer fairly reflected the normal amount of the absent parent's earnings, and accordingly had resort to paragraph 2(4), which provides as follows:-

" (4) Where a calculation would, but for this sub-paragraph, produce an amount which, in the opinion of the child support officer, does not accurately reflect the normal amount of the earnings of the person in question, such earnings, or any part of them, shall be calculated by reference to such other period as may, in the particular case, enable the normal weekly earnings of that person to be determined more accurately and for this purpose the child support officer shall have regard to -

(a) the earnings received, or due to be received, from any employment in which the person in question is engaged, has been engaged or is due to be engaged;

(b) the duration and pattern, or the expected duration and pattern, of any employment of that person."

The tribunal took the view that the bonus payment distorted the normal earnings of the absent parent, and decided, allegedly pursuant to paragraph 2(4), to exclude it.

7. However, in simply disregarding the bonus, the tribunal erred in point of law. They had to take it into account, pursuant to paragraph 1(1)(a) and paragraph 2(2), if it was paid "during the period of 52 weeks ending with the relevant week". The bonus payment was in fact made during the aforesaid period, and accordingly the tribunal were not at liberty to disregard it. However, the question arises as to whether the tribunal might indirectly achieve their object, not by disregarding the bonus, but by fixing, as a more appropriate period for calculating the earnings of the absent parent, some other period in which the bonus payment did not fall eg. a period commencing after the relevant week. To answer this question, it is necessary to consider carefully the whole operation of paragraph 2, particularly paragraph 2(2).
8. Prima facie the earnings of an absent parent are to be calculated by applying the formula set out in sub-paragraphs (1) to (3). Sub-paragraphs (1) and (3) read in the form, in which they were at the relevant time, as follows:-

" (1) Subject to sub-paragraphs (2) to (4)-

(a) where a person is paid weekly, the amount of those earnings shall be determined by aggregating the amounts received in the 5 weeks ending with the relevant week and dividing by 5;

(b) where a person is paid monthly, the amount of those earnings shall be determined by aggregating the amounts received in the 2 months ending with the relevant week, multiplying the aggregate by 6 and dividing by 52;

(c) where a person is paid by reference to some other period, the amount of those earnings shall be determined by aggregating the amounts received in the 3 months ending with the relevant week, multiplying the aggregate by 4 and dividing by 52.

(3) Subject to sub-paragraph (4), the amount of any earnings of a student shall be determined by aggregating the amount received in the year ending with the relevant week and dividing by 52 or, where the person in question has been a student for less than a year, by aggregating the amount received in the period starting with his becoming a student and ending with the relevant week and dividing by the number of complete weeks in that period.

Sub-paragraph (2) has already been set out.

But if the calculation to which the formula gives rise distorts the normal amount of the earnings of the person in question, another period than the relevant one specified in sub-paragraph (1) can be taken. For sub-paragraph (1) is made expressly subject to sub-paragraph (4), set out earlier. However, sub-paragraph (4) cannot operate to override sub-paragraph (2). For sub-paragraph (2), unlike sub-paragraph (1) (or, for that matter, sub-paragraph (3)) is not made subject to sub-paragraph (4). Accordingly, although a different period for calculating earnings from the relevant one set out in sub-paragraph (1) can be substituted by reason of sub-paragraph (4), the bonus payment still has to be dealt with in accordance with provisions of sub-paragraph (2). In other words, sub-paragraph (2) is unaffected by the new period of earnings substituted by sub-paragraph (4), and if there was a bonus payment falling within the 52 weeks ending with the relevant week, that has to be included in the earnings of the absent parent. It cannot be excluded, nor can it be attributed to a different period nor can it be dealt with in any other way than that provided for by sub-paragraph (2).

9. In her submissions to me, Miss Goulding sought to contend that sub-paragraph (2) could subsist in isolation as an independent provision. It was not made subject to sub-paragraph (4), and accordingly had a life of its own. This contention clearly cannot succeed. Sub-paragraph (2) is an integral part of paragraph 2, and has to be construed as part of that provision. However, when construed as part of paragraph 2, it still cannot, for the reasons given above, be overridden by the application of a different earnings period from the relevant one specified in sub-paragraph (1). Accordingly, it is not possible to disregard the bonus payment by taking a period for calculating earnings commencing after the relevant week. Any bonus payment for calculating earnings made during the 52 weeks ending with the relevant week still has to be included (after having been divided by 52) in the absent parent's weekly earnings. In other words, no selection of any new period for the calculation of the earnings in question pursuant to sub-paragraph (4) can result in the exclusion of a bonus payment if it falls within the period specified in sub-paragraph (2).
10. It follows from what has been said above that I must set aside the tribunal's decision as being erroneous in point of law, and direct that the appeal be reheard by a differently constituted tribunal. If they take the view that the relevant period specified by sub-paragraph (1) presents a distortion of the absent parent's earnings, they can, pursuant to sub-paragraph (4) select another period which they consider more suitable. However, they cannot disregard the bonus payment, which having been made in March 1993, clearly fell within the period specified in sub-paragraph (2).
11. I allow this appeal.

(Signed) D.G. Rice

Commissioner

(Date) 8 November 1996