UK Social Security and Child Support Commissioners' Decisions

[2005] UKSSCSC CCS_1813_2004 (14 February 2005)

CCS/1813/2004

DECISION OF THE CHILD SUPPORT COMMISSIONER

1. I allow the mother's appeal. I set aside the decision of the Bolton appeal tribunal dated 12 February 2004 and I substitute the decision the tribunal should have given, which was to give a departure direction on the basis that it is reasonable for the mother's partner to pay half her housing costs from 4 February 2003 but not to give any departure direction on the ground of diversion of income.

REASONS

2. The father and mother were formerly married to each other. Their two children live with the mother. The present appeal arises out of an application by the father for departure directions. The Secretary of State refused to make give departure directions but, on the father's appeal, the tribunal gave departure directions on the ground that the mother's current partner could reasonably be expected to pay half her housing costs and on the ground of diversion of income. The mother now appeals with my leave, challenging the departure directions based on the diversion of income. The Secretary of State supports that appeal and also submits that the tribunal erred in making the departure direction based on the mother's partner's ability to contribute to housing costs. The father agrees with the Secretary of State that the tribunal erred in making the direction in respect of the mother's partner's housing costs but also challenges the tribunal's decision on the ground that it was based on out-of-date financial information.
3. The tribunal decided that income had been diverted because it was unhappy about two items claimed as expenses in the mother's business accounts, notwithstanding that the chairman said:

"I am not saying that there is anything improper in their being treated in the way in which they are or that the accounting is wrong."

First, both depreciation and running costs of the mother's car were shown in the accounts as business expenses and the tribunal considered that that gave the mother a personal benefit. Secondly, the cost of repairs to the mother's shop and the flat above it (which was let by her to a third party) were shown in the accounts as business expenses and the tribunal again considered that that gave the mother a personal benefit because it enhanced the capital value of the premises.

4. I am at a loss to see how any income was diverted away from the mother. There is only diversion for the purposes of regulation 24 of the Child Support Departure Direction and Consequential Amendments Regulations 1996 (S.I. 1996 No. 2907) where a person reduces the amount of income he or she receives "by diverting it to other persons or for purposes other than the provision of such [assessable] income for himself". The tribunal appears to have been concerned that the mother's true income was actually higher than was shown by the accounts. As the Secretary of State submits, if there was any substance in the tribunal's concerns, those concerns required a revision or supersession of the basic maintenance assessment and were not matters to be dealt with by way of a departure direction.
5. The father's case is that, contrary to the tribunal's view, the expenses were improperly included in the accounts. He also submits that accounts in respect of the wrong period were used. Again, neither of those matters is relevant to the departure directions given by the tribunal. Nor is the question as to the date from which a new maintenance assessment should be effective following the mother ceasing to be entitled to working families' tax credit. All those issues relate to the underlying assessment, which was not before the tribunal and is not before me. The tribunal were concerned only with the application for departure directions.
6. The Secretary of State submits that the tribunal erred in finding that the mother's partner could reasonably be expected to contribute half of their housing costs when the tribunal had no evidence as to the amount of his earnings. He refers to R(CS) 3/01 in which the Commissioner pointed out that regulation 40(7) of the Child Support Departure Direction and Consequential Amendments Regulations 1996 (S.I. 1996 No. 2907) requires a tribunal to have regard to the income of both the relevant parent and the partner and held a tribunal to have erred in assuming that a partner could reasonably be expected to pay half the parent's housing costs when the parent's income was three times as great as his partner's. The Secretary of State also relies on that part of R(CS) 3/01 where the Commissioner referred to section 28F(3) of the Child Support Act 1991, which requires a tribunal to consider whether it is just and equitable to give a departure direction having regard to the financial circumstances of the person with care and the other parent and the welfare of any children likely to be affected. He submits that the tribunal erred in giving the departure direction without obtaining evidence as to the income of the mother's partner and as to the effect on the assessment of maintenance that the departure direction would make.
7. I consider that R(CS) 3/01 can be distinguished from the present case. What R(CS) 3/01 decides is that it is not appropriate to assume that a 50% contribution is appropriate in a case where there is evidence of the partner's income and there is a huge disparity between the partner's income and that of the relevant parent. Here there was no evidence of disparity. Furthermore, in R(CS) 3/01, the partner had the smaller income and a tribunal is likely to be more ready to decide that a partner on a smaller income should be expected to pay less than half of the joint expenses than to decide that a partner with a larger income should pay more than half of the joint expenses, particularly where the parent concerned has the care of the qualifying children.
8. In the present case, neither the mother (who had unsuccessfully applied for a postponement) nor any representative of the Secretary of State attended the hearing before the tribunal. In relation to the mother's partner's income, the tribunal knew that he was a salesman in a managerial position and that he had another home and there was also some evidence that he and the mother enjoyed a comfortable lifestyle, but no details of his finances appeared in the papers. The Secretary of State had not investigated his income because he had not considered him to be a partner. The mother had therefore not been asked to provide details of his income and there was no reason to draw an adverse inference to the effect that his disposable income was particularly large. On the other hand, she had failed to attend, or be represented at, the hearing without giving any compelling reason and so it was her own fault if she had lost the opportunity of giving evidence that his disposable income was particularly low. In those circumstances, there here was really no evidence upon which any contribution other than 50% could have been justified. There was evidence of a substantial income justifying an inference that he should pay his share of the housing costs but no evidence suggesting that he should pay more than that.
9. The information the Secretary of State now says the tribunal needed could have been obtained only if the tribunal had adjourned. I do not consider that the tribunal was bound to adjourn. The mother had not availed herself of the opportunity to suggest that her partner could be expected to contribute less than half of the housing costs in the event that he should be found to be a partner. The father had merely asked that the mother's partner be assumed to pay "a contribution" and had not argued it should be more than half and had not asked for an adjournment for further evidence to be obtained. The amount at stake was not huge and the tribunal was entitled to proceed on the available evidence rather than delay matters and seek further evidence when that might well turn out to make no difference.
10. As to section 28F(3)(c), it is true that the tribunal chairman said that she was unable to calculate the effect of the departure directions she was making but I do not consider that that meant that she was unable properly to form the view, as she did, that it was just and equitable to make a direction. An experienced chairman will have some idea of the effect of a departure direction, especially when it relates to housing costs which affect only the "exempt income" of a person with care. In this case, the housing costs were fairly small and the evidence as to the mother's means and lifestyle did not suggest that the departure direction would cause financial hardship. The mother had not attended to give evidence that any children would be so adversely affected by decreasing the amount of child support maintenance paid to her as to make it unjust or inequitable to give a departure direction and, as the tribunal chairman observed, there was simply nothing to suggest that the departure direction would cause any hardship to anyone. On this appeal, the Secretary of State has not produced any figures in order to persuade me that the tribunal should have realised that giving the departure direction would cause any financial hardship. The mother has not complained about the direction at all and neither the Secretary of State nor the father appealed against it; they merely raised the issue in their responses to the mother's appeal against the other departure direction.
11. I am not persuaded that the tribunal erred in law in making the departure direction in respect of the mother's partner's contribution to her housing costs and I see no reason to disturb that direction. The departure direction based on the diversion of income ought not to have been made and I can see no evidence upon which it could conceivably be appropriate to make any new departure direction on the ground of diversion of income or any other ground. Accordingly, I give the decision set out in paragraph 1 above.

(signed on the original) MARK ROWLAND

Commissioner

14 February 2005