[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]
	UK Social Security and Child Support Commissioners' Decisions
You are here: BAILII >> Databases >> UK Social Security and Child Support Commissioners' Decisions >> [2002] UKSSCSC CCS_4242_2002 (17 January 2002) URL: http://www.bailii.org/uk/cases/UKSSCSC/2002/CCS_4242_2002.html Cite as: [2002] UKSSCSC CCS_4242_2002

[New search] [Printable RTF version] [Help]

 
DECISION OF THE CHILD SUPPORT COMMISSIONER
1. My decision is as follows. It is given under section 24(2) and (3)(d) of the Child Support Act 1991.
2. 1. The decision of the Cambridge appeal tribunal under reference U/42/140/2000/00627, held on 21^st February 2002, is wrong in law.
3. 2. I set it aside and remit the case to a differently constituted appeal tribunal.
4. 3. I direct that appeal tribunal to conduct a complete reconsideration of the application for a departure direction.

The appeal to the Commissioner

5. This case concerns an application for a departure direction. It was referred by the Secretary of State to an appeal tribunal. In the terminology of the child support legislation, the appellant is the absent parent and the non-applicant for the direction, and the second respondent is the parent with care and the applicant. I shall refer to them in those terms.
6. The case comes before me on appeal to a Commissioner against the decision of the appeal tribunal brought with my leave. The Secretary of State supports the appeal. The parent with care has commented that she has no observations on the appeal and the absent parent has agreed with the Secretary of State's recommendation of a rehearing.

The history of the case

7. The parent with care applied for a departure direction under a number of heads. The Secretary of State referred the application to an appeal tribunal. The tribunal gave a departure direction under two heads: life-style inconsistent and diversion of income.

Diversion of income

8. This is governed by regulation 24 of the Child Support Departure Direction and Consequential Amendments Regulations 1996. It is set out on pages 270 and 271.
9. The absent parent was one of two directors in a 'deadlock' company. It made profits which it retained in order to support and expand the business. In order to justify giving a direction under this head, the tribunal had to find that the absent parent had the ability to control the amount of income that he received from his company, but had unreasonably diverted it for other purposes.
10. As to the control issue, the tribunal found that the co-director had never been asked to agree to release funds for the maintenance of the absent parent's children, that it was unlikely that he would have refused and that if he had the absent parent could have taken court action to secure the funds he needed. In other words, the tribunal decided that the absent parent had practical control, and perhaps ultimately legal control, over the amount of income he received. Was it entitled to come to those conclusions?
11. In the absence of any evidence from the co-director that he opposed releasing money for the maintenance of the absent parent's children, the tribunal was entitled to find as a fact that the money would be forthcoming. The tribunal made that findings and did not go wrong in law.
12. However, the tribunal's alternative analysis was not correct in law. It found that the money could be obtained by court order even against the co-director's wishes. If that was possible, it would nonetheless almost certainly prevent the directors working together. That could only have an adverse effect on the business and even on the company's existence. In those circumstances, the tribunal was not entitled to find that it was unreasonable for the absent parent to use the profits as he did.
13. I believe that the absent parent may now have evidence from his co-director. I have not seen it. I assume that it says that he would not agree to the release of the funds. If that is what it says, the tribunal at the rehearing must first decide whether that truly reflects what the co-director would actually do. If it does not, the tribunal will ignore it. If it does, the position will be that action to enforce release of funds would effectively destroy the company and it would not be unreasonable for the absent parent to maintain the company's existence under regulation 24. To put the matter differently, the real issue in this case is whether the absent parent has practical control through his co-director's co-operation rather than legal control through court action.
14. As to the diversion issue, the tribunal analysed the company's accounts with the help of a financially qualified panel member. Her view was that the company could have afforded to declare a dividend without jeopardising the future of the business. That was a matter of fact and judgment for the tribunal, especially for the expertise of the financially qualified panel member. The tribunal did not go wrong in law.

Life-style inconsistent

15. This is governed by regulation 25 of the Child Support Departure Direction and Consequential Amendments Regulations 1996. It is set out on page 271.
16. In order to justify giving a direction under this head, the tribunal had to find that the absent parent had a particular life-style and that the level of his declared income was substantially lower than that needed to support the life-style. The tribunal made some findings about the more extravagant aspects of the absent parent's life-style. It then concluded that the absent parent needed a particular level of income to support it. The tribunal went wrong in law by not setting out a sufficient foundation of findings of fact to explain the level of income needed to support the life-style. I do not underestimate the difficulties for a tribunal in a regulation 25 case. There must inevitably be a broad brush approach. A detailed, itemised and costed budget is impossible to provide. However, the items put to the tribunal will usually be the more extravagant items and some general indication of the overall life-style and of how it could be funded is necessary.

Interrelation of heads of directions

17. When the case came before me as an application, I was concerned about the interaction of the two heads on which the tribunal gave a departure direction. I wrote:

'I wonder if there is a contradiction in the tribunal's reasoning. It gave two directions. One was based on diversion of income. The other was based on inconsistent life-style. The latter presupposes that the absent parent has access to funds that have not been declared. Was not the existence of those funds relevant to the diversion of income head? Might it not be reasonable for the absent parent to keep money in his business in view of the other funds? The tribunal reasoned that the money in the company could have been released to support his children. Why could not the funds that supported his life-style have been diverted to supporting his children instead? At the least, the tribunal did not consider the interaction of its two directions.'

18. As I have set the tribunal's decision aside on other grounds, I do not need to deal with this point, although I remain concerned that the tribunal's reasoning may be inconsistent between regulation 24 and 25.
19. I draw it to the attention of the tribunal at the rehearing as a warning to make a consistent decision and not to overlook the interaction between different heads if it gives a departure direction under more than one head.

Signed on original

Edward Jacobs Commissioner 17th January 2003