PJ-v-Department for Social Development (CS) [2011] NICom 194
Decision No:  CSC2/11-12

THE CHILD SUPPORT (NORTHERN IRELAND) ORDERS 1991 AND 1995

Application by the applicant for leave to appeal
and appeal to a Child Support Commissioner
on a question of law from a Tribunal’s decision
dated 15 September 2009

DECISION OF THE CHILD SUPPORT COMMISSIONER

1.	Having considered the circumstances of the case and any reasons put forward for the request of a hearing, I am satisfied that the application can properly be determined without a hearing.  I grant leave to appeal and proceed to determine all questions arising thereon as though they arose on appeal.

2.	The decision of the appeal tribunal dated 15 September 2009 is in error of law.  The error of law identified will be explained in more detail below.  Pursuant to the powers conferred on me by Article 15(8) of the Social Security (Northern Ireland) Order 1998, I set aside the decision appealed against.

3.	For further reasons set out below, I am unable to exercise the power conferred on me by Article 25(3)(a) of the Child Support (Northern Ireland) Order 1991, as amended to give the decision which the appeal tribunal should have given.  This is because there is detailed evidence relevant to the issues arising in the appeal, to which I have not had access, and there may be further findings of fact which require to be made.  Further I do not consider it expedient to make such findings, at this stage of the proceedings.  Accordingly, I refer the case to a differently constituted appeal tribunal for re-determination.  In referring the case to a differently constituted appeal tribunal for re-determination, I direct that the appeal tribunal takes into account the guidance set out below.

4.	It is imperative that the appellant notes that while the decision of the appeal tribunal has been set aside, the issue of his child support liability remains to be determined by another appeal tribunal.  In accordance with the guidance set out below, the newly constituted appeal tribunal will be undertaking its own determination of the legal and factual issues which arise in the appeal.

	Background

5.	This appeal has a detailed and complicated background.

6.	On 23 January 2007 the Department made a supersession decision which determined that the appellant’s child support liability was nil from the effective date of 8 August 2006.

7.	On 29 June 2007, the parent with care (the PWC), applied for a variation on the grounds of assets and income not taken into account.  This application was treated as being effective from 26 June 2007.  On 10 October 2008, and following exchange of relevant information, the Department refused the PWC’s application for a variation. Notification of this decision was issued to the PWC on 13 October 2008.

8.	The PWC’s appeal against the decision dated 10 October 2008 was received in the Department on 28 October 2008.  In the letter of appeal, the PWC referred to the original grounds for seeking the variation and referred to issues concerning diversion of income and lifestyle inconsistent with declared income.  On 14 January 2009 a decision-maker reconsidered the decision not to award a variation but did not change that decision.

9.	The substantive oral hearing of the appeal took place on 15 September 2009.  The appeal tribunal allowed the appeal and determined that the appellant possessed personal assets worth £182,500 at the effective date of 26 June 2007.  The appeal tribunal directed the Department to calculate child support liability based on those findings with respect to assets.

10.	On 18 January 2010 an application for leave to appeal against the decision of the appeal tribunal was received in the Appeals Service.  On 16 February 2010 the application for leave to appeal was refused by the legally qualified panel member (LQPM).

	Proceedings before the Child Support Commissioner

11.	On 19 February 2010 a further application for leave to appeal was received in the Office of the Social Security Commissioners and Child Support Commissioners.  On 30 April 2010 further information in connection with the application was received which was shared with the PWC on 24 May 2010.  Also on 24 May 2010 written observations on the application for leave to appeal were sought from Decision Making Services (DMS).

12.	On 26 May 2010 initial observations on the application for leave to appeal were received from the PWC.  Initial written observations on the application were received from Mr Crilly, on behalf of DMS, on 11 June 2010 and were shared with the appellant and the PWC on 18 June 2010.  On 12 August 2010 written observations in reply were received from the PWC.  On 4 October 2010 an e-mail was received from the PWC with an attachment from the Child Maintenance and Enforcement Division.  The e-mail and attachment were shared with Mr Crilly on 1 December 2010, together with a request to provide additional submissions on the issues which had been raised.  A further submission in response was received from Mr Crilly on 16 December 2010 which was shared with the appellant and the PWC on 5 January 2011.  Further correspondence from the PWC was received on 24 January 2011.

	Errors of law

13.	A decision of an appeal tribunal may only be set aside by a Child Support Commissioner on the basis that it is in error of law.

14.	In R(I) 2/06 and CSDLA/500/2007, Tribunals of Commissioners in Great Britain have referred to the judgment of the Court of Appeal for England and Wales in R(Iran) v Secretary of State for the Home Department ([2005] EWCA Civ 982), outlining examples of commonly encountered errors of law in terms that can apply equally to appellate legal tribunals.  As set out at paragraph 30 of R(I) 2/06 these are:

“(i)	making perverse or irrational findings on a matter or matters that were material to the outcome (‘material matters’);
(ii)	failing to give reasons or any adequate reasons for findings on material matters;
(iii)	failing to take into account and/or resolve conflicts of fact or opinion on material matters;
(iv)	giving weight to immaterial matters;
(v)	making a material misdirection of law on any material matter;
(vi)	committing or permitting a procedural or other irregularity capable of making a material difference to the outcome or the fairness of proceedings; …

Each of these grounds for detecting any error of law contains the word ‘material’ (or ‘immaterial’).  Errors of law of which it can be said that they would have made no difference to the outcome do not matter.”

	Was the decision of the appeal tribunal in the instant case in error of law?

	The submissions of the appellant

15.	In the application for leave to appeal to the Child Support Commissioner, the appellant submitted that the decision of the appeal tribunal was in error of law on the basis that:

(i)	It was not possible for the tribunal to have made a valid determination as to whether his property dealings could be construed as being part of his business, J….. E………., or were a personal asset.  This was because the tribunal was not in possession of all of the necessary information and documents to allow it to have determined that these assets were not business assets.

To support this submission, the appellant referred to guidance provided by Her Majesty’s Revenue and Customs as to what is a property business in the United Kingdom.  He also provided information to the effect that the rental income generated by the property concerned had been properly and correctly reported in his self-assessment tax return.  The manner in which the rental income was reported in the tax return was one of the factors in influencing the tribunal to make the determination that his property was a personal rather than a business asset.  The appellant also provided evidence to show that the Land and Property Services considered the properties in his possession to be part of a business as well as furnishing information as to his registration as a self-employed earner from the beginning of August 2006.  The appellant also provided evidence to outline that he had registered J….. E………. with the Federation of Small Businesses from 6 November 2006.

(ii)	The appellant also submitted that the day of the appeal hearing was the first time that a question concerning the status of his property dealings had come to the fore.  As a result he had not been given the opportunity to prepare and provide an adequate, informed response to support his contention that the property he owned represented a business asset.

(iii)	In addition, the appellant submitted that the tribunal incorrectly took into account the assets of another business, J….. and S… Limited, as personal assets and included these accordingly in the variation award that it made.

	The response of the PWC

16.	In response to the application for leave to appeal, the PWC submitted that:

(i)	It was not correct that the appellant’s first knowledge that the status of his properties as either personal or business assets would be scrutinised was at the appeal tribunal hearing.  The PWC had advised the Child Maintenance and Enforcement Division of this issue on several occasions.

(ii)	The appellant had come to the appeal tribunal hearing with voluminous documentation and was clearly well prepared.  He could not, however, produce any documentation in response to the request by the appeal tribunal to produce evidence that his property was a business operating under the name of J….. E……….

(iii)	The appeal tribunal looked at the appellant’s eligible expenses set against the rental income in respect of both rental properties.  These were minimal and consistent with the appeal tribunal’s conclusion that the appellant’s involvement was peripheral and consistent with an independent disposable asset.

(iv)	The decision of Commissioner Goodman in R(FC) 2/92 supports a submission that the rental property was not a business.  Further, the appellant did not conduct his business from the rental property.  If the rental property is not where he conducts his business activity from, it follows again that the property is an asset with a disposable value.

(v)	The appeal tribunal did not err in law when it concluded that a nominal sum of £22,500 was, when all things were considered, a fair amount to attribute to the appellant as his share of the disposal of J….. and S… at the effective date.

(vi)	The appeal tribunal covered all the aspects that she had raised at the appeal tribunal hearing and it did so in detail and did not err in law.

(vii)	The tax declaration of the appellant’s rental property therefore does not determine its business status or its personal asset status and, therefore, there cannot be an error in law on this issue.

	The response of the Department

17.	In written observations on the application for leave to appeal, Mr Crilly, for DMS, has submitted that:

‘Tribunal’s failure to consider all of the grounds of appeal

On 28.10.08, (the PWC) appealed against the Department’s decision to refuse her application for a variation.  In her letter of appeal she stated that (the appellant’s) net and exempt income had been incorrectly assessed.  She also stated that the NRP possessed assets worth more than £65,000, that he was diverting income and that his lifestyle was inconsistent with his declared income.

I submit that the LQM did not address all of the grounds raised in (the PWC’s) appeal in outlining the decision of the tribunal.  Rather, the decision notice referred only to the ground of assets.  I submit that the record of proceedings and the statement of reasons confirm that the tribunal considered this ground only and that no reference was made to the other grounds of income not taken into account, diversion of income and lifestyle inconsistent with declared income.  The tribunal did not make any findings of fact with regard to these issues.  I respectfully submit that the tribunal’s failure to do so represents an error in law.

Natural justice

(The appellant) has submitted that the question of whether or not the property at … was a business asset was only raised for the first time on the day of the appeal hearing on 15.09.09.  As a result, he had not been given the opportunity to prepare an adequate response beforehand to allow him to provide the same at the appeal hearing.  The NRP went on to state in his application to the Commissioner for leave to appeal:

“Therefore, the Tribunal did not have, before it, the information, documents and evidence necessary to make a valid determination of whether J….. E………. was a business or not and was therefore was unable to correctly apply the law with regard to the business assets.”

I submit that there is nothing untoward in an issue being raised for the first time at an appeal hearing as appears to have happened in this instance.  However, I respectfully submit that the NRP was not given the opportunity to support his comments made during the hearing by being allowed to provide a full response as to why the property at … fell to be regarded as part of his business along with all of the relevant and necessary evidence to support the same.  I respectfully submit that, in the interests of natural justice, the tribunal in this case should have adjourned to allow this to take place.  Accordingly, I submit that the failure to provide (the appellant) with the opportunity to furnish a full and detailed response represents an error in law.

If the Commissioner disagrees with either of the submissions put forward in paragraphs …, I respectfully submit that there are other pertinent questions to be considered in relation to the tribunal’s decision.

Can possession of single property form a business?

This issue was considered at length in a Northern Ireland Commissioner’s decision, C1/04-05(TC).  In paragraph 21, Commissioner Brown held that in the context of the relevant legislation pertaining to tax credits the letting of one dwelling house to a single tenant could not be categorised as a business.  However, the Commissioner also referred to GB Commissioner’s decision CCS/2128/2001.  Commissioner Mesher held in paragraph 8 of this decision:

“Commissioner's decision R(FC) 2/92, although it is about the question of whether a house that was let constituted a business asset, does give helpful guidance.  The mere ownership of property and the receipt of rent and payment of expenses or liabilities would not constitute employment as a self-employed earner.  That situation is more properly looked at as the ownership of a capital asset, which produces income.  But there will come a point, depending on the circumstances of individual cases, at which the amount of administration and/or activity involved even in the letting out of a single property would amount to the carrying on of self-employment.”

This matter was further considered in GB reported Commissioner’s decision, R(CS) 2/06 when it was stated in paragraph 49:

“I respectfully agree with Mr Mesher.  It is possible that in this case the rental of the properties and the related powers and duties constituted a business.  The tribunal went wrong in law by not dealing with this issue.  The tribunal must investigate this issue at the rehearing.  The authorities relied on by Mr Goodman show that the issue is one of the proper use of language: is what the non-resident parent does within the normal signification of the word “business”?  It is not just a matter of the number of people that are involved, or the number of properties that are owned, or of the number of units that are let.  The tribunal must consider all the relevant circumstances of the case.”

CCS/2128/2001 and R(CS) 2/06 are concerned with child support matters and legislation.  I submit that, whilst the letting of one dwelling house to a single tenant cannot be categorised as a business under the tax credits regime, it can be so regarded in a child support context as in the present case.  I further submit that, in determining whether the letting of one property represented a business, a decision maker would be required to consider all of the relevant evidence in any given case.  In particular, I submit that regard would have to be given in such circumstances to the amount of administration and the level of activity involved in the process of letting the property.

As noted previously, the tribunal in the present case found that the property at … did not form part of a business but was actually a personal asset of the NRP with a value of £150,000.  The LQM noted that there was no legally recognised entity entitled J….. E………. or a bank account by that name.  The LQM also stated that reference to the property did not appear on (the appellant’s) business tax return but turned up in “……the property schedule to the accounts which the other party explains as resulting from advice from his accountant.”

It is unfortunate that the Departmental presenting officer was not aware of either CCS/2128/2001 or R(CS) 2/06 and so was not in a position to advise the tribunal to consider those decisions.  It is understandable, therefore, that the tribunal did not apply the tests as set out in these decisions and so did not consider all of the relevant circumstances in this case.  That being so, however, I respectfully submit that this nevertheless continues to represent an error in law on the part of the tribunal.

...

Recording of rental property in the NRP’s tax return

(The appellant) completed the pages relating to UK property in his 2007-08 self-assessment tax return in relation to providing financial details relating to the 2 properties that he had purchased in the course of 2007.  The tax return showed that in 2007-08 the properties generated rental income totalling £8,200.  Offset against this were eligible expenses of £1,652, repairs of £1,028, payments in respect of loan interest amounting to £8,866, legal fees of £250 and a 10% allowance in relation to wear and tear of £722.  This resulted in an overall loss of £4,318.

As referred to in paragraph 24 of these observations, the tribunal appears to have attached weight as to how the NRP’s rental income and property details were recorded in his 2007-08 tax return to arrive at the conclusion it did in relation to the property at … .  (The appellant) responded to this in his applications to both the LQM and the Commissioner for leave to appeal when he stated:

“My research since the tribunal has confirmed that the rental income of J….. E………. is reported exactly how the HMRC requires it to be reported for a UK Property Business.

The method of tax reporting changed in 2005.  Prior to 2005 the Tribunal would have been correct in its understanding that a Property Business had to report income on Schedule A.  I had not done this which I believe led the Tribunal to determine that I was not operating J….. E………. as a business.

However, since 2005, a UK Property Business is to report its rental income on the UK Property Schedule, which is exactly how I have reported it to HMRC.”

In both his applications to the LQM and the Commissioner for leave to appeal, (the appellant) provided documentation obtained on-line from HMRC to substantiate this and to support his contention that the letting of his property constituted a rental business.

The decision of the Upper Tribunal, [2010] UKUT 83 (AAC) MG v CMEC (CSM) (CCS/571/2009), was concerned with the interpretation to be afforded to regulation 18(3)(d) of the Variations Regulations arising from a child support case involving rental income and self-employed earnings.  However, the Commissioner also considered the amendments introduced to the tax system from April 2005 as well as changes in how details of rental income were recorded in tax returns from this time onwards:

“22.	I agree with Judge Wikeley in GD v SSWP that the incorporation into the MCSC Regulations of the social security definition of self-employed earner in section 2(1)(b) of the Social Security Contributions and Benefits Act 1992 means that a parent who is engaged in a business of letting and/or managing property means that that parent is a self-employed earner for the purposes of Part III of the Schedule to the MCSC Regulations.  The definition covers a "person who is gainfully employed in Great Britain otherwise than in employed earner's employment" and "employment" and "employed" include "any trade, business, profession, office or vocation".  It seems to me inescapable in the present case that the father was gainfully employed in a business otherwise than in employed earner's employment.

23.	However, that does not in itself require the conclusion that whatever are the total taxable profits of that business must go into the calculation of net weekly income by virtue of paragraph 7(1) of the Schedule to the MCSC Regulations.  I agree with Judge Turnbull in CD v SSWP that it is necessary to look with great care at the way in the gross earnings to be taken into the calculation are identified.  In particular, it must be asked what the requirements of the Inland Revenue were as to the submission of information.  Judge Turnbull pointed out in paragraph 22 of his decision that:

	"even if a person is carrying on, as a self-employed person, a business of letting property, income from such a business is not generally taxed as income from self-employment, but rather as income from property.  With limited exceptions, the property pages of the self-assessment tax return, and not the self-employment pages, are completed in respect of income derived from letting land, whether the letting is in pursuance of a business or not. ... So far at any rate as the primary method of calculation under para 7 of Schedule 1 to the [MCSC Regulations] [is] concerned (ie by reference either to the return submitted to HMRC, or to the tax calculation notice), income from letting property will therefore not be included in the maintenance calculation under the formula."

The judge returned to the point in paragraph 43, where after saying that income from letting property was generally taxed under Schedule A, he noted that:

	"The Guidance Notes issued by HMRC in respect of the UK property pages [of the self-assessment tax return] advise that the property pages should in general be completed in respect of `rental income and other receipts from UK land and property' and that the self-employment pages should be used in certain specific cases, for example hotels and guest houses, and `letting furnished accommodation in your home that amounts to a trade'."

24.	Judge Turnbull also dealt with the potential argument that the terms of paragraph 8(1) of the Schedule to the MCSC Regulations (and in particular I think head (c)) might require the adoption of the position taken by Judge Wikeley, that all earnings from self-employment of a parent who is within the terms of those regulations a self-employed earner have to be brought into the calculation of net weekly income.  He pointed out that the operation of paragraph 8(1) is expressly limited to bringing in gross receipts "of a type which would be taken into account under paragraph 7".  Thus the scope of paragraph 7 cannot be widened through the operation of paragraph 8(1).

25.	I agree with Judge Turnbull's analysis on those points, subject to one small qualification, which if anything adds support to his conclusion.  The system of schedules was completely abolished for income tax purposes with effect from 6 April 2005, having been abandoned for profits previously chargeable under Schedule E (salaries, annuities and pensions) from April 2003.  That is one of the overall effects of the rewriting of the tax legislation in Income Tax (Trading and Other Income) Act 2005 (ITTOIA).  So the reference to Schedule A in GD v SSWP was somewhat out of date.  In the present case, the father's net weekly income had to be calculated for some dates prior to 6 April 2005.  Prior to 6 April 2005, Cases I and II of Schedule D referred to tax in respect of any trade or any profession or vocation not contained in any other Schedule (Income and Corporation Taxes Act 1988, section 18).  Schedule A referred to the annual profits arising from a business for the exploitation, as a source of rents or other receipts of any estate, interest or rights over land in the United Kingdom.  Thus, the concept of self-employment or of a self-employed earner did not as such feature in the income tax legislation as setting up a dividing line between Schedules.  It seems to me then that what is required by the Inland Revenue to be submitted to them as total taxable profits from self-employment can only be identified by what their (now Her Majesty's Revenue & Customs (HMRC)) administrative requirements in the structure of the self-assessment tax return and the accompanying Guidance Notes.”

I submit that the content of paragraphs 22 to 25 of MG v CMEC (CSM) is relevant to this appeal.  I further submit that the decision explains that, in accordance with the guidance issued by HMRC, details of rental income obtained from the letting of a house should only be recorded in the UK property pages of the self-assessment tax return.  The same guidance outlines that property details should be included in the self-employment pages of the tax return in specific cases only such as, for example, those involving hotels and guest houses.

I further submit that paragraph 25 of MG v CMEC (CSM) validates the point made by the NRP in his application for leave to appeal in relation to the abolition of Schedule A in the tax return from April 2005.  With this in mind, I submit that (the appellant), in completing the UK property pages of his 2007-08 tax return, was doing so in accordance with instructions issued by HMRC.  I further submit that one of the factors in the tribunal’s reasoning that the property at … was a personal rather than a business asset of the NRP lay in its consideration of how details of the rental income were recorded in his tax return.  Given that this was properly carried out in accordance with HMRC guidance, I respectfully submit that the tribunal’s reasoning concerning this matter was flawed and this represents an error in law on its part.

…

Assets of J….. and S… Limited

The tribunal determined that the amount of £22,500 paid to the NRP upon the closure of the business owned by him and the PWC was a personal asset which fell to be taken into account under regulation 18 of the Variation Regulations.  In his application for leave to appeal (the appellant) stated the following in relation to this matter:

“At the tribunal, in the final assessment of my assets, the figure of £22,500 (approximately £30,000 before tax) was included.

This was an amount of money held by the limited company, J….. & S… limited, which was owned by Ms B……. and myself.

There is no issue or doubt that J….. & S… Limited is a business (it is registered as a legal entity at Companies House in Belfast).  And it was never raised as an issue at the Tribunal or at any other time.

Enclosure 6 is a bank statement showing J….. & S…’ company bank account in 2007.  On or around the effective date, the company had £110,000 in the account.

Therefore, this £110,000 is clearly a business asset held by the company.

As shown on the bank statement, in November 2007 (outside the relevant period) the account was closed and approximately £50k of this was paid as corporation tax, approximately £30,000 was paid to (the PWC) and approximately £30,000 was paid to myself.

At that point (November 2007), the £30,000 (valued at £22,500 after tax liability) did become my personal asset.  However up until that time it was clearly a business asset.

I believe that at the tribunal, in the various discussions about J….. E………. business assets either being or not being business assets, there was confusion which caused the Tribunal to also determine that the £22,500 was a personal asset.”

I respectfully submit that (the appellant’s) analysis concerning this issue is correct and that the funds within the Northern Bank account ... represented the assets of J….. & S… Limited.  I also submit that these assets would have fallen to be disregarded under regulation 18(3) of the Variation Regulations at the effective date of 26.06.07.  I further submit that the nature of these assets did not change until the company was closed on 12.11.07 and the resulting proceeds were divided between the PWC and the NRP.  It is my respectful submission that the tribunal erred by attributing the amount of £22,500 to the NRP as a personal asset at 26.06.07 when this was not the case.’

	Analysis

18.	I am in agreement with Mr Crilly that the appeal tribunal did not address all of the issues arising in the appeal.  It is clear that the appeal tribunal had formed the view that it could dispose of the appeal, as a whole, without considering all of the individual issues arising in the appeal.  There are situations where that approach is permissible.  For example, in an appeal involving incapacity benefit or employment and support allowance, where an appeal tribunal determines, after consideration of one or two activities, that the appellant reaches the legislative threshold score for satisfaction of the personal capability assessment or for limited capability for work it need not necessarily make findings in fact or reach conclusions on other activities even though those activities may have been raised by the appeal.  There are certain categories of appeal, however, and child support is one such category, where individual issues are so closely related that consideration has to be given to each individual issue when determining the appeal.  The failure by the appeal tribunal in the instant case to address each individual issue, make findings in fact concerning those issues are reaching conclusions on them, renders its decision as being in error of law.

19.	I do not agree with Mr Crilly, however, that there has been a breach of natural justice on the basis that the question of whether or not the property at … was a business asset was only raised for the first time on the day of the appeal hearing.  It is clear to me, from all of the paperwork which has been made available from both the proceedings before the appeal tribunal and before the Child Support Commissioner that the appellant is more than capable of addressing the issues which arise in those proceedings.  Further, his capability is such that even if he had been taken by surprise by the issue being raised at the appeal tribunal, he would have had sufficient knowledge of the proceedings to make an application to the LQPM for an adjournment of the appeal tribunal hearing either briefly on the day so that he could formulate his response, or more generally to another day, in order that he could prepare an appropriate response perhaps backed up by additional evidence.  I do not find, therefore, that the decision of the appeal tribunal is in error of law on the basis of this cited ground.

20.	Mr Crilly is correct when he submits that it is unfortunate that there was not a more complete and substantive submission on the specific issue of whether possession of single property can amount to or form a business either in the appeal submission which was prepared for the oral hearing of the appeal or through oral submissions by the Departmental presenting officer on the day of the hearing.  As Mr Crilly correctly points out, there are two decisions of the Child Support Commissioners - CCS/2128/2001 and R(CS) 2/06 – which give guidance on this question which was at issue in the instant appeal and the appeal tribunal was not referred to either case at any stage.  While accepting that the appeal tribunal was not alerted to the relevant jurisprudence by the Department, the failure to take the case-law into account as part of its decision-making process on the specific questions renders the decision of the appeal tribunal as being in error of law.

21.	I am also in agreement with Mr Crilly that the appeal tribunal, in considering the form and content of the appellant’s income tax return, did not consider the principles set out in MG v CMEC (CSM) ([2010] UKUT 83 (AAC) CCS/571/2009) and in failing to consider and apply those principles, its decision is in error of law.  Finally I also agree that the appeal tribunal erred in by attributing an amount of income to the appellant as a personal asset at the effective date when this was not the case.

	Additional matters arising

22.	As was noted above, on 4 October 2010 an e-mail was received from the PWC with an attachment from the Child Maintenance and Enforcement Division.  The e-mail and attachment were shared with Mr Crilly on 1 December 2010, together with a request to provide additional submissions on the issues which had been raised.  A further submission in response was received from Mr Crilly on 16 December 2010.  In this further submission, Mr Crilly has submitted that:

‘2.	(The PWC) has provided a copy of a notification letter dated 30.09.10 issued to her by the Child Maintenance and Enforcement Division (CMED).  This letter informed (the appellant) that CMED had reconsidered her original application for a variation which had been made on 20.09.06 and had decided that a variation should be awarded from 19.09.06.  The correspondence goes on to refer to a number of relevant periods during which the variation has effect.

3.	I contacted CMED and requested a copy of the decision papers in relation to the awarding of a variation from 19.09.06 onwards.  ...  Pages 16 to 22 and 29 to 32 of the Appendix refer to the decisions made by CMED in this case which were notified to (the PWC) and (the appellant) on 30.09.10 and 03.11.10 respectively.  I shall outline each of the periods in question for each decision, clarify how the variation was arrived at in each instance and detail its effect on the maintenance calculation.

	MAINTENANCE ORDERS AND RELEVANT PERIODS

	19.09.06 – 27.11.06

4.	The first relevant period in relation to (the PWC) original application for a variation is that from 19.09.06 to 27.11.06.  On 29.09.10, the decision maker in CMED determined that (the appellant) had assets with the value of £167,192.68.  This total was made up of the following:

Asset							Value - £

Intelligent Finance Account:			6,086.36
Northern Bank Current Account:		26.11
Safe Deposit Box: 				9,465.06
ISA 99-00 Fidelity Investment: 		7,504.57
ISA BNP Paribes:				31,326.62
ISA 04-05 Fidelity Investment:	 		1,804.21
Caterpillar shares AESOP:			65,418.98
Caterpillar share Options: 			211,437.48
Cahoot Internet Account:			2.15
Northern Bank:					156.61
Navy Credit Union Savings: 			399.71
Navy Credit Union Checking: 			230.38
		Travellers Cheques:				527.12

		Total:  £334,385.36

	The decision maker determined that the above assets were jointly owned by both (the appellant) and (the PWC).  Accordingly, the total amount of £334,385.36 was divided by 2 to arrive at the value of £167,192.68 for (the appellant’s) personal assets to be taken into account for the purposes of regulation 18 of the Child Support (Variations) Regulations (Northern Ireland) 2001 (“the Variations Regulations).

	The decision maker then applied the following formula to convert the amount of £167,192.68 into a weekly income:

	£167,192.68 x 8% = £13,375.41

	£13,375.41 ÷ 52 = £257.21 weekly variation income

	The amount of £257.21 was then taken into consideration in (the appellant’s) maintenance calculation to arrive at a child support liability of £29.14 per week for the period from 19.09.06 to 27.11.06.

	28.11.06 – 25.06.07

5.	(The appellant) and (the PWC’s) divorce was finalised on 04.12.06.  In taking this into account, the decision maker in CMED subtracted the amount of £9,465.06 from the overall total of £334,385.36.  This figure represented assets that had been contained in a safe deposit box and when it was deducted from original amount of £334,385.36, a new total of £324,920.30 was obtained which was then divided by 2 to establish that (the appellant) had assets worth £162,460.15.  Again, this was converted to a weekly amount.

£162,460.15 x 8% = £12,996.81

£12,996.81 ÷ 52 = £249.93 weekly variation income

This was taken into consideration in (the appellant’s) maintenance calculation.  The result was to reduce (the appellant’s) weekly child support liability from £29.14 to £28.57 from the effective date of 28.11.06 up to and including 25.06.07.

26.06.07 – 15.10.07

6.	This period represents that which was dealt with by the tribunal and which forms the basis of (the appellant’s) appeal to the Commissioner.  The tribunal found that (the appellant) had personal assets worth £182,500 which converted into a weekly variation income of £280.77.

£182,500 x 8% = £14,600

£14,600 ÷ 52 = £280.77 weekly variation income

When this amount was applied to (the appellant’s) maintenance calculation, his child support liability increased from £28.57 to £32.00 from the effective date of 26.06.07 up to and including 15.10.07.

16.10.07 – 24.12.07

7.	(The appellant) purchased a second property at … on 22.10.07 which the decision maker determined was a personal asset to be taken into account in the variation in place in his case.  The property cost £245,000 to buy, £100,000 of which was met by a mortgage secured on it.  The remaining £145,000 was taken into account along with the sum of £150,000 in respect of his property at …, £22,500 in capital from J….. and S… as well as £10,000 in other assets.  This provided a total of £327,500 which was converted into a weekly variation income.

£327,500 x 8% = £26,200

£26,200 ÷ 52 = £503.84 weekly variation income

When the figure of £503.84 was impacted on to (the appellant’s) maintenance calculation, his weekly child support liability increased from £32.00 to £57.71 from the effective date of 16.10.07 up to and including 24.12.07.

25.12.07 – 29.12.08

8.	The basis of the supersession in relation to this period lay in the decision maker’s determination that the weekly net income from (the appellant’s) self-employed business stood at £51.94 per week.  This was added to the unchanged variation income of £503.84 to produce a weekly child support liability of £63.43 from the effective date of 25.12.07 up to and including 29.12.08.

30.12.08 – 28.12.09

9.	The decision maker originally decided that (the appellant) was liable to pay child support maintenance of £70.86 for the period of 30.12.08 to 25.01.10.  However this decision was revised on 03.11.10 and a new period ranging from 30.12.08 to 28.12.09 was established.  This was to take into account updated valuations in relation to (the appellant’s) 2 properties at … and … . The decision maker accepted that the combined figure to be taken into account for these was £140,000.  This was added to the existing amounts of £22,500 and £10,000 to provide a new assets figure totalling £172,500.

The figure of £172,500 was converted into a weekly income.

£172,500 x 8% = £13,800

£13,800 ÷ 52 = £265.38 weekly variation income

10.	The decision maker also determined that (the appellant’s) net weekly income derived from his self-employed business had increased to £118.37.  This was added to the variation income to provide a total of £383.75 per week which reduced (the appellant’s) weekly child support liability from £63.43 to £44.00 from the effective date of 30.12.08 up to and including 28.12.09.

29.12.09 – 25.01.10

11.	(The appellant) provided evidence to show that he had received no income from self-employment for the trading year ending on 31.12.09.  This meant that from the effective date of 29.12.09 onwards, the only weekly income to be taken into account in his maintenance calculation was that of £265.38 derived from his assets.  The removal of (the appellant’s) self-employed income reduced his child support liability from £44.00 to £30.29.

26.01.10 to present

12.	(The appellant) provided another updated valuation to CMED on 29.01.10 which detailed that the combined value of his 2 properties to be taken into consideration was £124,742.47.  This was added to existing amounts of £22,500 and £10,000 to provide a new total of £157,242.47 which was converted into a weekly variation income.

£157,242.47 x 8% = £12,579.40

£12,579.40 ÷ 52 = £241.91 weekly variation income

13.	Originally, the decision maker had taken this into account along with weekly self-employed income of £118.37 to determine that (the appellant) was liable to pay child support maintenance of £41.14 per week.  However, for reasons outlined above in paragraph 11, (the appellant) did not have any self-employed earnings from 29.12.09 onwards so this decision was revised accordingly on 03.11.10.

14.	When the amount of £241.91 only was taken into account in his maintenance calculation, (the appellant’s) weekly child support liability was reduced from £30.29 to £27.43 from the effective date of 26.01.10.  This is the maintenance calculation that is currently in place.

DEPARTMENT’S OBSERVATIONS

15.	The Legal Officer has also queried if my previous observations dated 11.06.10 are to be altered or amended.

16.	The tribunal in this case found that (the appellant) had assets worth £182,500.  These were made up of £150,000 from his property at …, £22,500 arising from his former business, Jensen and Sons, as well as a further £10,000 in other assets.

Department’s observations dated 11.06.10

17.	I submitted in paragraphs 19 and 20 of my previous observations that the tribunal erred in law by not addressing all of the grounds raised in (the PWC’s) appeal against the decision by CMED to refuse her application for a variation.  I further submitted in paragraphs 21 and 22 that an issue of natural justice had arisen in connection with the tribunal’s determination that the property at … could not be regarded as part of (the appellant’s) business.

18.	In paragraphs … of my observations dated 11.06.10, I also submitted that the tribunal erred in law as it did not apply the appropriate tests and relevant considerations as to whether or not (the appellant’s) ownership of a property could form a business, as outlined in GB Commissioners’ decisions CCS/2128/2001 and R(CS) 2/06.

19.	I also considered the issue of how details pertaining to (the appellant’s) property at … had been recorded in his self-assessment tax return for the financial year of 2007-08.  In paragraph 29 of my earlier comments, I submitted that the tribunal erred in reaching the conclusion that it did in relation to this issue.  I further submitted in paragraph 30 that the tribunal incorrectly attributed the amount of £22,500 to (the appellant) as a personal rather than a business asset at the effective date of (the PWC’s) application for a variation on 26.06.07.

CMED’s consideration of (the appellant’s) assets

20.	As noted in paragraphs 4 to 12 of this document, the decision maker in CMED had regard to 8 separate effective dates.  The first 2 effective dates, 19.09.06 and 28.11.06 referred to periods before that which was dealt with by the tribunal in this case.  The latter considered the period beginning with the effective date of 26.06.07 and ending on 15.10.07.  Thereafter, the decision maker considered a further 5 effective dates of 16.10.07, 25.12.07, 30.12.08, 29.12.09 and 26.01.10.

21.	I submit that the amounts of £167,192.68 and £162,460.15 relating to the total value of (the appellant’s) personal assets at the effective dates of 19.09.06 and 28.11.06 were arrived at by the decision maker taking into account different considerations from those adopted by the tribunal for the period of 26.06.07 to 15.10.07.  As noted in paragraphs 4 and 5, the decision maker took into account the value of investments and shares as well as the contents of several bank accounts in arriving at the conclusions he did.

22.	In the five decisions made after the period with which the tribunal was concerned, I submit that the decision maker based the award of the variation on the tribunal’s considerations as outlined above in paragraph 16; namely, the value of (the appellant’s) properties along with the amounts of £22,500 and £10,000.

23.	I wish to advise that I do not wish to alter or amend any of the comments made in my previous observations.  I continue to submit that the tribunal erred in this case for the reasons outlined above.  Consequently, and notwithstanding the decisions in respect of the effective dates of 19.09.06 and 28.11.06, if the Commissioner agrees with my analysis in relation to the tribunal’s decision, I submit that this could have implications surrounding the correctness of CMED’s decisions for each of the effective dates that occurred after the period which the tribunal was concerned with.’

23.	These developments can, at best, be described as unfortunate.  It is unclear to me why a decision-maker from the Child Maintenance and Enforcement Division would purport to adopt and implement the findings and conclusions of the decision of the appeal tribunal when that decision was the subject of further appellate action before the Child Support Commissioners.  I can understand how the PWC was more than perplexed by these developments. In the middle of further proceedings before the Child Support Commissioners, in connection with the conclusions and findings of the appeal tribunal below, she learns from the Child Maintenance and Enforcement Division that further decisions have been made arising from the proceedings before the appeal tribunal.  In addition the further decisions made by the Child Maintenance and Enforcement Division may have direct implications for the appellant.

24.	Regrettably, however, the further decision-making action undertaken by the Child Maintenance and Enforcement Division cannot impact on the decision which I have made in connection with the appeal which is before me.  The task of the Child Support Commissioner is to decide whether the decision of the appeal tribunal was in error of law.  The issue of the further decision-making process undertaken by the Child Maintenance and Enforcement Division will form part of the issues to be decided by the differently constituted appeal tribunal on remittal of this case to it.

	Disposal

25.	The decision of the appeal tribunal dated 15 September 2009 is in error of law.  Pursuant to the powers conferred on me by Article 15(8) of the Social Security (Northern Ireland) Order 1998, I set aside the decision appealed against.

26.	For further reasons set out below, I am unable to exercise the power conferred on me by Article 25(3)(a) of the Child Support (Northern Ireland) Order 1991, as amended to give the decision which the appeal tribunal should have given.  This is because there is detailed evidence relevant to the issues arising in the appeal, to which I have not had access, and there may be further findings of fact which require to be made.  Further I do not consider it expedient to make such findings, at this stage of the proceedings.  Accordingly, I refer the case to a differently constituted appeal tribunal for re-determination.

27.	I direct that a further appeal submission is prepared for the further hearing of the appeal before the differently constituted appeal tribunal and that DMS assists in the preparation of that submission.  That further submission is to address the issues considered by me in this decision and as set out above.  In addition the further submission is to address the further decision-making undertaken by the Child Maintenance and Enforcement Division, indicate both to the appellant and the PWC the implications of that further decision-making on them and outline their rights arising from that process.  It will be for both parties to the proceedings to make submissions, and adduce evidence in support of those submissions, on all of the issues relevant to the appeal.  It will be for the appeal tribunal to consider the submissions made by the parties to the proceedings on these issues, and any evidence adduced in support of them, and then to make its determination, in light of all that is before it.

(signed):  K Mullan

Chief Commissioner

15 August 2011