CA v The Secretary of State & Anor (CSM)

A discretionary beneficiary may have a beneficial interest in the assets of a discretionary trust for the purposes of regulation 18(1)(a) of the Child Support (Variations) Regulations 2000. The scope of that interest does not make an assets variation unworkable. The decision-maker must instead decide what notional income, if any, is just and equitable, taking account of the likelihood that trust capital or income will be applied for the non-resident parent.

A tribunal acts unfairly if it makes a material finding about a co-trustee's likely compliance with one trustee's wishes without giving that party a fair opportunity to obtain relevant evidence. Where that error affects interconnected aspects of the maintenance calculation, the decision should be set aside and remitted for a fresh rehearing.

The non-resident parent appealed against a First-tier Tribunal decision fixing child support maintenance after an assets variation. The tribunal had treated one fifth of the assets of a discretionary will trust as relevant assets. It reasoned that, although the parent had no beneficial interest, he could control the trust through his co-trustee.

The appeal raised whether a discretionary beneficiary has a beneficial interest in trust assets under regulation 18(1)(a) of the Child Support (Variations) Regulations 2000, and whether the tribunal had acted fairly in making its finding about control. It also raised the appropriate scope of any remittal.

1. Appeal allowed. The First-tier Tribunal’s decision was wrong in law, was set aside, and the appeal was remitted to a differently constituted First-tier Tribunal for a complete rehearing.

2. The tribunal acted procedurally unfairly. It found that the co-trustee would probably follow the non-resident parent’s wishes without giving the parent a proper opportunity to obtain and adduce evidence from that co-trustee. The Upper Tribunal also expressed substantial doubt that trust assets could be treated as controlled by a trustee or beneficiary absent evidence that the trustees would not properly perform their fiduciary obligations.

3. A discretionary beneficiary has a beneficial interest in the whole of the trust assets over which trustees may apply income or capital for that beneficiary under regulation 18(1)(a). This construction is workable because the decision-maker must decide, under section 28F of the Child Support Act 1991, whether and to what extent adding notional income is just and equitable. That assessment may reflect the likelihood of actual distributions, the past history of the trust, and the likely response if the beneficiary sought a benefit.

4. The distinction drawn in Gartside v IRC for estate-duty legislation did not require a narrower construction. Unlike an interest in possession for estate duty, a discretionary interest need not be precisely valued before trust assets can fall within regulation 18; the just-and-equitable assessment supplies the necessary safeguard.

5. The Upper Tribunal could not formally set aside only part of the First-tier Tribunal’s reasoning. Although it could direct a limited reconsideration where an error affected a self-contained issue, that course was unsuitable here. The trust-assets issue was connected with the tribunal’s treatment of lifestyle and company assets, and the whole decision therefore required redetermination.

• Upper Tribunal (Administrative Appeals Chamber): allowed the non-resident parent’s appeal, set aside the First-tier Tribunal decision, and remitted the matter for a fresh rehearing.
• First-tier Tribunal: allowed the appeal against the maintenance calculation in part and fixed liability at £57.14 per week, including an assets variation under regulation 18 of the Child Support (Variations) Regulations 2000.