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	UK Social Security and Child Support Commissioners' Decisions
You are here: BAILII >> Databases >> UK Social Security and Child Support Commissioners' Decisions >> [2005] UKSSCSC CCS_557_2005 (29 July 2005) URL: http://www.bailii.org/uk/cases/UKSSCSC/2005/CCS_557_2005.html Cite as: [2005] UKSSCSC CCS_557_2005

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[2005] UKSSCSC CCS_557_2005 (29 July 2005)

CCS/557/2005

DECISION OF THE CHILD SUPPORT COMMISSIONER

1. My decision is that the decision of the tribunal is wrong in law. I set aside the tribunal's decision and refer the case for rehearing before a differently constituted tribunal.
2. This is an appeal by the non-resident parent against the decision of the tribunal allowing the appeal of the parent with care against a decision of the Secretary of State assessing the absent parent as liable to pay maintenance in respect of two children at the flat rate of £5.00. The appeal has been brought with the leave of a district chairman and has been supported by the Secretary of State in a submission dated 31 March 2005.
3. The non-resident parent carries on business as a tiling contractor through the medium of a limited company of which he is the sole director. In the relevant assessment period he received annual earnings of £4,800.00, and also share dividends amounting to £28,800. The tribunal held that the dividends were to be treated as earnings for the purposes of paragraph 4(1)(a) of the Schedule to the Child Support (Maintenance Calculations and Special Cases) Regulations 2000, on the basis that the dividends were a bonus derived from the non-resident parent's employment.
4. Following the issue of the decision notice, an application was made to set aside the tribunal's decision on the ground that the legally qualified panel member who had constituted the tribunal was a consultant in a firm of solicitors which the non-resident parent had consulted in connection with the case. It appears that the chairman had been asked by a solicitor in the firm to give advice about the case, although the chairman was not told the name of the firm's client and there is no reason to suppose that he was aware that he had been consulted about the case when dealing with the appeal. The Secretary of State's representative has submitted that there is no indication that the chairman was in fact biased against the non-resident parent, but accepts that the position is nevertheless unsatisfactory, and that the appeal should be allowed for that reason.
5. I take the view that it is not necessary to consider whether there is a possibility that the discharge of the chairman's judicial functions were affected in any way by his previous involvement in the case. It is axiomatic that a person discharging judicial functions should be wholly independent. I consider that a person who has previously been involved in a case, albeit unwittingly, in his professional capacity as a solicitor has a sufficiently direct personal connection with the case for it to be unnecessary to show that there is a real possibility of actual bias in order for the decision to be held to be unlawful.
6. I also agree with the Secretary of State's representative that the tribunal erred in law in treating the dividends received by the non-resident parent as earnings. In CCS/2433/2004 it was held by Mr Commissioner Mesher that payments which are truly paid as dividends on shares must be regarded as derived from the ownership of the shares and the company's decision to pay a dividend, rather than from being an employee or holding the office of director. It is, of course, open to a tribunal to investigate whether the payment of dividends is a sham, but the tribunal did not do so, and in any case it would be difficult to hold that the dividend payments were not genuine in view of the fact that dividends were also paid to the other shareholders. There was therefore no basis for the tribunal's finding that the amounts paid to the non-resident parent by way of dividends were derived from the non-residents parent's position as an employee of the company, rather than as a shareholder.
7. For those reasons, I consider that the tribunal's decision is wrong in law, and I allow the appeal accordingly. Since there appear to be a dispute about shared care issues, I refer the case for rehearing before a differently constituted tribunal.

(signed on the original) E A L BANO

Commissioner

29 July 2005