UK Social Security and Child Support Commissioners' Decisions

 
R(CS) 6/02


Mr. C. Turnbull CCS/2820/2000

12.7.01

Departure direction – life-style inconsistent with declared income – life-style paid for by partner - whether part-contribution by partner towards life-style can be included in departure direction increase

An application by the parent with care for a departure direction was refused. The applicant appealed to a tribunal. The tribunal made a departure direction in respect of life-style inconsistent with declared income, and determined an amount by which the non-applicant's declared income was to be increased. The applicant appealed to the Commissioner on the grounds that the increase should be more. The Secretary of State supported the appeal because 'there was insufficient evidence for the tribunal to arrive at the conclusion which they did', and also because the tribunal had incorrectly applied regulations 25(1) and (2), and 40(5), of the Child Support Departure Direction and Consequential Amendments Regulations 1996.

Held, allowing the appeal, that:

the tribunal's reasons for reaching its decision were insufficiently expressed;

the condition in regulation 25(2)(b), that the life-style of the non-applicant is paid for by his partner, is satisfied only if his partner pays the entirety of the difference between actual income, and income required to support overall life-style;

if that condition is not satisfied, a departure direction can be made;

if a departure direction is then made, regulation 40(5) has the effect that the non-applicant's income need not be increased to the whole amount required to support the overall life-style;

there is no absolute prohibition against including in an increase any part paid for by the non-applicant's partner, although that would have to be justified by some special factor.

DECISION OF THE CHILD SUPPORT COMMISSIONER
1. This is an appeal by the parent with care, brought with the leave of a legally qualified panel member, against a decision of the Nottingham Appeal Tribunal made on 2 February 2000. For the reasons set out below that decision was in my judgment erroneous in law. I allow the appeal, set aside the Tribunal's decision and remit the case for redetermination by a differently constituted tribunal in accordance with my directions in paragraphs 10, 15 and 16 below.
2. On 7 January 1998 a child support officer made a maintenance assessment requiring the absent parent to pay the sum of £9.16 per week with effect from 17 November 1997.
3. On 28 September 1998 the parent with care applied for a departure direction in respect of the cases specified in Regs. 24 (diversion of income) and 25 (life-style inconsistent with declared income) of the Child Support Departure Direction and Consequential Amendments Regulations 1996. That application was refused on 21 December 1998.
4. The result of the parent with care's appeal to the Tribunal was set out in its Decision Notice:

"Appeal is allowed. The amount of child support must be recalculated in accordance with the findings of the tribunal, which are set out below. If the parties are unable to accept the recalculation they may apply to the tribunal (but only on the question of recalculation) within 3 months of the decision. Any such application to be referred to the chairman. A Departure Direction is made on the Ground of Lifestyle inconsistent with Declared Income as follows:

£24.64 per week is to be added to the Net Income of [the absent parent]. The effective date of the Departure Direction is the first day of the Maintenance Period in which falls 28.09.98.

It is just and equitable that a Departure Direction be made taking into account the financial circumstances of either party and the welfare of the children affected and excluding those factors not to be taken into a/c in accordance with the Regulations."

5. The Tribunal's Statement of Facts and Reasons reads as follows:

"Facts

6. [The absent parent] is the father of K who lives with her mother [the parent with care].
7. A departure application was made by [the parent with care] on 28 09 98.
8. The current assessment is £9.16 effective from 17 11 97.
9. The net income of [the absent parent] is £75.36 per week.
10. [The absent parent] lives in a 3 bedroomed house on mortgage and has use of a car. He has a bicycle and uses an American Express card. His lifestyle is comfortable.
11. The net income required to support [the absent parent's] lifestyle is £175.00 per week.
12. [The absent parent] was at the effective date supported by his wife, in the provision of a motorcar, holiday in Crete and contribution towards household expenses. The amount of support is £75.00 per week.
13. The increase of [the absent parent's] income for Child Support purposes from £75.36 to £100.00 is substantial.
14. There was no evidence of Diversion of Income.

Reasons

On 01 11 99 the District Chairman decided that no further directions were required for this hearing, however both parties attended and the tribunal was able to question [the absent parent]. The answers he gave were evasive.

The evidence produced by [the parent with care] was that [the absent parent] lived in a 3 bedroomed house and she produced copies of newspaper advertisements and reports which indicated that [the absent parent] was working.

It was however difficult for the tribunal to obtain a clear view of [the absent parent's] lifestyle and how much this was supported by his present partner. There was little documentary evidence and [the absent parent's] answers were designed to be unhelpful.

In these circumstances the tribunal made an assessment of lifestyle and the part being played by [the absent parent's] partner. It appears the circumstances of [the absent parent] may now have changed."

15. The parent with care's grounds of this appeal are as follows:

"I am asking to appeal against the tribunals decision on the point that [the absent parent] had no evidence to support the fact that he says his partner was supporting him.

If you read the statement of reasons for decision it clearly states it was difficult for the tribunal to obtain a clear view of [the absent parent's] lifestyle, that [the absent parent's] answers were designed to be unhelpful.

Without any evidence to support [the absent parent's] theories how could the tribunal reach the decision of only £100.00 per week net income (it must be more). The evidence is there to show that he was working and that his name was on the land registry of his home. I believe that the tribunal did not observe the rules of natural justice. Please read the Statement of Reasons and you will clearly agree that there is a mistake on the point of law."

16. The Secretary of State supports the appeal. His first ground for doing so is that "there was insufficient evidence for the tribunal to arrive at the conclusion which they did."
17. I accept that the Tribunal's reasons for reaching its decision were insufficiently expressed. The Tribunal made no real attempt to justify, by reference to the evidence, the figures at which it arrived. I am further of the view that there was a breach of natural justice in that the sole member of the Tribunal ought to have considered adjourning the hearing and requiring the absent parent to produce documents relating to his lifestyle which might well have enabled a more informed assessment of the matters relevant to Reg. 25 of the Departure Direction Regulations to be made.
18. On 1 November 1999 a decision had been made, on a referral to him for directions, by a legally qualified panel member that there should be an oral hearing but that further directions were not required. The Record of Proceedings records the representative of the Secretary of State saying at the hearing:

"There was a Direction made on 1 November 1999 by a Chairman. I would like to have seen the mortgage application form in June 1998 to buy the house:"

It looks from that and from the first sentence of the Reasons as though the Chairman of the Tribunal did not at the hearing reconsider the question whether the absent parent should be required to produce further documents. In the light of his conclusion that the absent parent's answers were designed to be unhelpful, that question ought in my judgment to have been reconsidered. Had it been, there must have been every chance that production of further documents would have been required.

19. The errors of law which I identified in paragraph 8 above require me to allow the appeal and set aside the Tribunal's decision. Before the re-hearing a legally qualified panel member should reconsider whether (a) to make a direction under Reg. 38(2) of the Social Security and Child Support (Decisions and Appeals) Regulations 1999 requiring the production by the absent parent of further specified documents relevant to his lifestyle and (b) to issue a summons under Reg. 43(1) requiring any other person (e.g. the absent parent's partner) to appear at the hearing with documents.
20. The Secretary of State supports this appeal on an additional ground on which I should comment for the assistance of the new tribunal.
21. In order to understand that ground it is necessary to set out Regs. 25(1) and (2) and 40(5) of the Departure Direction Regulations.

"25.–– (1) Subject to paragraph (2), a case shall constitute a case for the purposes of paragraph 5(1) of Schedule 4B to the Act where the Secretary of State 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 Secretary of State 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.

22. (5) 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."
23. The Secretary of State's additional ground is as follows:

"In their decision the tribunal has stated that £175 per week was required to support [the absent parent's] life-style but that £75 of this was contributed by his wife. In my submission this is wrong in law. Regulation 25(2) of the DD Regulations provides:

...........

As there is no evidence that [the absent parent] is able to influence or control the amount of income received by his partner, the tribunal should have decided either that no departure direction should be made because of the above provisions or that [the absent parent's] net income should have been increased to £175 per week to support his life-style in accordance with regulation 40(5). Either way I submit that the tribunal's decision was wrong in law."

24. The Secretary of State's submission thus appears to be that, in a case where the condition in Reg. 25(1) is met but where the non-applicant is supported financially to some extent by a partner whose receipt of income is not influenced or controlled by the non-applicant, there are only 2 possibilities:

(a) "the life-style of the non-applicant is supported by the partner", so that the case is taken out of Reg. 25(1) by Reg. 25(2) and no departure direction can be made; or

(b) the life-style of the non-applicant is not supported by the partner, so that Reg. 25(1) applies, and the non-applicant's net income must be increased by the entirety of the difference between the net income of the non-applicant used in the current assessment and the income necessary to support his lifestyle.

25. However, the correct analysis is in my judgment as follows:

(1) The first step is to decide whether the case is taken outside Reg. 25(1) by Reg. 25(2) – i.e. whether "the life-style of the non-applicant is paid for.......by his partner". In my judgment that condition will be satisfied if, but only if, the partner pays the entirety of the difference between (a) the net income of the non-applicant used in the current assessment and (b) the level of income required to support his overall life-style. (It is not, in my judgment, necessary that the partner pays the entirety of (b)).

(2) If the answer to (1) is 'yes', no departure direction can be made under Reg. 25.

(3) If the answer to (1) is 'no', a departure direction can be made if it would be just and equitable in all the circumstances to do so: S. 28F(1)(b) of the Child Support Act 1991.

(4) If a departure direction is made, it need not (contrary to what appears to be the Secretary of State's submission) increase the non-applicant's net income to the amount required to support his overall lifestyle (regardless of the amount of that net income which is paid by his partner). That is because Reg. 40(5) expressly provides that the net income is to be increased by "the whole or part of" the difference between the two levels of income. Further, in deciding by how much to increase the non-applicant's net income the part of the difference in the two levels of income which is paid for by the non-applicant's partner is plainly a highly material factor; but there is no absolute prohibition against that part being included in the departure direction increase. A decision to include the part paid for by the non-applicant's partner in the departure direction increase, would, however, in my view, given the existence of Reg. 25(2), have to be justified by some special factor.

26. In short, therefore, if a departure direction is made under Reg. 25 in a case where part of the difference between the net income of the non-applicant used in the current assessment and the income required to support his life-style is paid for by the applicant's partner, the terms of Reg. 25(2), although not covering that situation, provide strong reason for the decision maker not to include that part of the difference in the departure direction increase. I would think that a decision to include that part of the difference in the departure direction increase ought in practice to be justified by reference to some exceptional circumstances.

Date: 12 July 2001 (signed) Charles Turnbull

Commissioner