UK Social Security and Child Support Commissioners' Decisions

 


DECISION OF THE CHILD SUPPORT COMMISSIONER

Commissioner's Case No: CCS/1664/2001

1. My decision is that the decision of the tribunal is wrong in law. I set aside the decision of the tribunal and, since it is not expedient for me to make the findings of fact which are necessary to decide what decision the tribunal should have given, I refer the case for determination to a differently constituted appeal tribunal.
2. This appeal arises out of an application made by a parent with care for a departure direction on the grounds that the absent parent's life-style was inconsistent with his declared income, that his housing costs were substantially higher than necessary, and that his partner was contributing to those costs. The Secretary of State referred the application to an appeal tribunal for determination under section 28D(1)(b) of the Child Support Act 1991, and on 18 August 2000 the tribunal made a departure direction. The absent parent now appeals, with my leave, against the tribunal's decision, and in a submission dated 18 September 2001 the Secretary of State, as first respondent, has supported the appeal. The parent with care, as second respondent, has not responded to my directions of 30 July 2001 for her to make observations on the appeal.
3. The application for the departure direction alleged that the absent parent had given up a well paid managerial job and was working for his partner, with whom he had been living since March 1996. The application cited as evidence of life-style inconsistent with the absent parent's declared income the purchase of three cars, the private education of one of his partner's three children, the fitting-out of a new bathroom and re-decoration of a kitchen, the purchase of a new computer, the employment of an au-pair, frequent week-end trips and expensive meals out. The absent parent gave a detailed reply to the allegations, to the effect that his partner had started a business with money left by her father and bank borrowings secured on her house, that he decided to assist his partner in her business after his former employers were taken over, that his partner had employed au-pairs to enable her to work, that the costs of private education were met by maintenance payments from his partner's former husband, that work to the bathroom and kitchen was necessary to repair damage caused by the au pair, that the cars and computer had been purchased for the business, and that the couple had a frugal life-style.
4. The hearing of the reference was adjourned on 13 June 2000 to enable documentary evidence to be obtained relevant to the absent parent's means, including a company search of his partner's company, but shortly before the adjourned hearing, on 18 August 2000, the absent parent telephoned to say that he would not be attending. The hearing therefore proceeded with only the parent with care and a presenting officer present. Following the hearing, a decision notice was issued to the absent parent under cover of a letter 23 August containing a departure direction deeming the absent parent to have a gross income of £16,500.00 per annum on the basis of the mortgage borrowings of the absent parent and his partner and the wage costs of the business. The direction restricted housing costs to 75% in view of the respective earnings of the absent parent and his partner, but the tribunal found that the absent parent's housing costs were not unreasonable.
5. The absent parent telephoned the Appeals Service on receipt of the decision notice on 25 August in order to inquire whether the tribunal had decided that the gross annual income of £16,500 was to be treated as his income alone, or as that of himself and his partner. It is not disputed that he was advised to wait until the Child Support Agency had issued a revised assessment, and that as a result of a further telephone call on 1 September, a second copy of the decision notice was sent to the absent parent. On 17 November 2000 the absent parent received a revised assessment from the Child Support Agency, calculated on the basis that the gross annual income assessed by the tribunal was that of the absent parent alone.
6. In a letter dated 20 November, received on 21 November, the absent parent wrote to the Appeals Service inquiring whether the tribunal had omitted to take into account the fact that the wage costs of his partner's business were shared between himself and his partner and a further seven employees, and asking for a full statement of reasons if the tribunal had not made that error. The tribunal chairman had by that time retired and the signed record of the district chairman's decision dealing with the application for a statement of reasons reads as follows:

"Treat as late request for statement.

In view of (the tribunal chairman's) retirement I refuse late statement.

It is not a correction issue."

However, the district chairman is later recorded as having stated to a member of the Appeals Service customer service staff that, despite the wording of the decision, the retirement of the chairman was not a factor in the decision refusing a statement of reasons. On 8 December the absent parent wrote a courteous and restrained letter of complaint to the Appeals Service, and in a reply dated 21 December 2000 he was advised of his right of appeal to a Commissioner, although he was also wrongly advised that he could appeal against the tribunal's decision to the Child Support Agency. The error in the letter of 21 December was later corrected, and on 8 May 2001 the absent parent appealed to the Commissioner.

7. The basis of the absent parent's appeal was that the tribunal had erroneously treated the wages costs of his partner's business as his gross income, and he enclosed with his appeal form a P.60 showing his gross wages in the relevant period as £7,800.00. On 30 July 2002 I admitted the application for consideration and gave leave to appeal notwithstanding the absence of a statement of reasons for the tribunal's decision.
8. I agree with the Secretary of State's representative that, even in the absence of a statement of reasons, the decision of the tribunal must be held to be wrong in law. The accounts disclosed on the company search which the tribunal directed at the first hearing showed that the wage costs of the business were £31,018.00 in the twelve month period ending on 30 June 1998 and £46,529.00 in the period ending on 30 June 1999, during which periods the company made losses of £16,801.00 and £683.00 respectively. However, as the Record of Proceedings shows, the parent with care gave evidence to the tribunal that the company had a number of employees (corroborating the absent parent's statement to the same effect), but there was nothing in the accounts to suggest that any one employee had been paid wages of £16,500.00. The tribunal took into account the mortgage borrowings of the absent parent and of his partner in arriving at a deemed gross income figure, but there was again nothing in the evidence to cast doubt on the absent parent's assertion that his partner had borrowed £100,000.00 on the security of her house to finance the purchase of the business. The accounts showed that the company had indeed purchased a number of motor vehicles, and I agree that the evidence before the tribunal was in no way inconsistent with the absent parent's case that the assets which were relied on by the parent with care as evidence of the absent parent's life-style were, in fact, assets of his partner's business. I also agree with the Secretary of State's representative that the tribunal failed to deal with the specific areas of conflict between the parties on the basis of the evidence which was available to them, and instead made findings of fact which the evidence did not support. Their decision was therefore wrong in law, and must accordingly be set aside.
9. I have, however, also come to the conclusion, contrary to the Secretary of State's submission, that the decision was wrong in law because of the failure by the chairman to record a statement of reasons for the decision. Regulation 53(4) of the Social Security (Decisions and Appeals) Regulations 1999 imposes a duty on a tribunal chairman or single tribunal member to record and to send to the parties a statement of reasons for the tribunal's decision if an application for a statement is made within one month of the sending or giving of the decision notice. By regulation 53(1), that duty applies to every decision of an appeal tribunal, irrespective of whether the tribunal is dealing with an appeal or a reference. In CIS//2132/1998 it was held that the former power to give a statement of reasons for a tribunal's decision under regulation 23 of the Social Security (Adjudication) Regulations 1995 survived beyond the time when the chairman's appointment ceased. I consider that to be the position in relation to the corresponding duty under the Decisions and Appeals Regulations, since section 27(1) of the Judicial Retirements and Pensions Act 1993 provides:

"Notwithstanding that a person has vacated or otherwise ceased to hold an office to which this section applies-

(a) he may act as if he had not ceased to hold the office for the purpose of continuing to deal with, giving judgment in, or dealing with any ancillary matter relating to, any case begun before him before he ceased to hold that office; and

(b) for that purpose, and for the purposes of any proceedings arising out of any such case or matter, he shall be treated as being or, as the case may be, as having been a holder of that office;

but nothing in this subsection shall authorise him to do anything if he ceased to hold office by virtue of his removal from it."

The section applies to any "relevant office" and, following the Social Security Act 1998, the Judicial Pensions and Retirement Act 1993 (Addition of Qualifying Judicial Offices) Order 1999 amended Schedule 5 of the 1993 Act to add as a "relevant office":

"Member of a panel constituted under section 6(1) of the Social Security Act 1998."

10. The absent parent did not apply for a statement of reasons within the one month period provided for by regulation 53(4), but he did apply within the three month period within which a late application for a statement of reasons can be accepted under regulation 54 of the Decisions and Appeals Regulations if there are special circumstances and if it is in the interests of justice to grant the application. It has never been disputed that the claimant was wrongly advised by the Appeals Service to wait until he received a revised assessment from the Child Support Agency, and that as a result of that advice he did not apply for a statement of reasons for the tribunal's decision until after the expiry of the one month period. It also cannot be disputed that the absent parent applied for a statement of reasons very promptly once the revised assessment had been issued. In those circumstances, I consider that the district chairman was bound to hold that the conditions prescribed by regulation 54 of the Decisions and Appeals Regulations for accepting the late application were satisfied, and therefore bound to allow the application in the absence of any legitimate reason for not doing so. The retirement of the tribunal chairman was not such a reason by virtue of section 27 of the 1993 Act and, if that was not the reason for refusing the application, there is no indication of any other basis on which the application could properly be refused.
11. I am therefore satisfied that there was a duty in the circumstances of this case to provide a full statement of reasons. Although there is no right of appeal to a Commissioner against the refusal of an extension of time for making an application for a statement of reasons under regulation 54 of the Adjudication Regulations, it is clear from paragraph 8 of R(IS) 11/99 that the Commissioner in that case considered that a failure to provide a statement of reasons where there is a duty to do so renders a tribunal's decision erroneous in law. In considering whether reasons given in a decision notice could discharge a duty to provide a statement of reasons, the Commissioner said:

"On the other hand, a "summary of grounds" is not to be disregarded. The matters contained in it are reasons for the tribunal's decision, notwithstanding the fact that they are not intended to be a complete account of the reasoning. Therefore, if the "summary of grounds" in fact contains everything that the parties could properly have expected from a full statement of the tribunal's decision, as is often the case, a failure of a chairman to issue a document formally identified as a full statement where there is a duty to provide a full statement, will not in my view render the decision of the tribunal erroneous in point of law."

I also consider that a failure to provide a statement of reasons where there is an obligation to do so renders a decision erroneous in law and, accordingly, I allow this appeal on that ground also.

12. The Secretary of State's representative is clearly correct in saying that this case requires the resolution of hotly contested issues of fact. The case must therefore be referred to a tribunal for determination under section 24 of the Child Support Act 1991. Oral evidence will be vital in resolving the dispute between the parties, and the absent parent will gravely damage his prospects of success if he again decides not to attend.

(Signed) E A L Bano

Commissioner

3 May 2002