Chandler v Secretary of State for Work and Pensions & Anor

For child-support purposes, a periodical drawdown or repayment from a parent’s capital is not income merely because it is received regularly. Paragraph 15 of Part III of Schedule 1 to the Child Support (Maintenance Assessments and Special Cases) Regulations 1992 is a sweep-up provision for other income, not a power to convert capital into income. The statutory scheme maintains a clear distinction between capital and income. Analogies from differently framed benefits legislation cannot displace that context. Any genuine anti-avoidance issue must be addressed under the specific anti-avoidance provisions, not by extending paragraph 15. The appeal was allowed and the matter remitted for determination afresh.

An absent parent, who was the sole director and majority shareholder of a company, raised capital by mortgaging his home and lending the money to the company. The company repaid him at £2,500 per month. He received no remuneration for his work.

Commissioner Turnbull, in CCS/2806/2006, held that the regular payments were income for child-support purposes and set aside the Southampton Appeal Tribunal’s decision. The appeal concerned whether the payments fell within paragraph 15 of Part III of Schedule 1 to the Child Support (Maintenance Assessments and Special Cases) Regulations 1992. The separate question whether anti-avoidance provisions applied was left for fresh determination.

1. Appeal allowed. Lord Justice Jacob gave the leading judgment. Lord Justices Dyson and Latham agreed. The matter was remitted for a determination entirely afresh.
2. The Child Support Act 1991 and the associated regulations draw a clear distinction between income and capital. The maintenance-assessment scheme is based on income. The express power in Schedule 1, paragraph 9(e) and (f), to treat income as capital or capital as income reinforces the conclusion that such treatment requires specific provision.
3. Paragraph 15 of Part III of the Child Support (Maintenance Assessments and Special Cases) Regulations 1992 is a sweep-up provision for kinds of income not otherwise included. Its reference to other periodical payments or amounts is confined to receipts in the nature of income. A regular drawdown of capital, including repayment of a loan from a director’s loan account, is not brought within paragraph 15 merely because it is periodic.
4. The Court distinguished the reasoning in Morrell v Secretary of State for Work and Pensions [2003] EWCA Civ 526, R v West Dorset DC ex parte Poupard [1988] RVR 40 and Longsdon v Minister of Pensions and NI [1956] 2 WLR 176. Those decisions arose under different statutory schemes and did not concern a person taking regular repayments from his own capital. Statutory language must be construed in the context of the statute and regulations in which it appears.
5. The conclusion on paragraph 15 did not prevent consideration of anti-avoidance provisions, including provisions concerning unpaid remuneration or intentional deprivation of income or capital. The Court expressed no view on whether the particular arrangements engaged those provisions.
6. Because the Commissioner had set aside the tribunal’s decision, simply allowing the appeal would leave no determination. A fresh determination was therefore required.

1. Court of Appeal (Civil Division) — Allowed the appeal and remitted the matter for an entirely fresh determination.
2. Child Support Commissioners — Commissioner Charles Turnbull, in CCS/2806/2006, held that the regular payments were income and had set aside the Southampton Appeal Tribunal’s decision.