R(IS) 22/95
(Chief Adjudication Officer v. Ellis)

Mr. M. J. Goodman	CIS/815/1992
2.11.93 
CA (Bingham MR and Kennedy and Millett LJJ)
15.2.95
Remunerative work - retail shop trading at a loss - whether attendance in shop was paid for or was in expectation of payment
The claimant was refused income support by the adjudication officer because his wife was in remunerative employment within the meaning of section 20(3) of the Social Security Act 1986 and regulation 5(1) of the Income Support (General) Regulations 1987. The claimant appealed to a social security appeal tribunal which allowed the appeal because the claimant’s wife had been working without remuneration and had very little expectation of receiving remuneration. On appeal by the Chief Adjudication Officer the Commissioner upheld the tribunal’s decision on the facts. The Chief Adjudication Officer appealed to the Court of Appeal.
Held, dismissing the appeal, that:
1.	it is the time at which the work is done that is relevant;
2.	it is the character of the work that is decisive;
3.	profitability may become relevant if no payment is made and the question of expectation of payment arises;
4.	Perrot v. Supplementary Benefits Commission [1980] 1 WLR 1153; [1980] 3 All ER 110 has to be adapted to a retail trade in that neither the price of goods sold nor the mark-up for profit is remuneration for work done;
5.	a partner who receives drawings by way of wage or salary is engaged in remunerative work;
6.	a broad view must be taken as to payments made from takings;
7.	work done in realistic expectation of a share of the profits is remunerative work;
8.	on the facts the claimant and his wife were carrying on the business without remuneration.

decision of the social security commissioner

1. 	I dismiss the adjudication officer’s appeal against the decision of the social security appeal tribunal dated 1 July 1992 as that decision is not erroneous in law: Social Security Administration Act 1992, section 23.
2. 	This is an appeal by the adjudication officer against the unanimous decision of the social security appeal tribunal dated 1 July 1992 which allowed the appeal of the claimant, a married man living with his wife in premises which are a combined general shop and home, against the decision of the local adjudication officer issued on 13 February 1992 as follows:
“The claimant is not entitled to income support from 3 February 1992. This is because his partner [i.e. his wife] is engaged in remunerative work.”
The tribunal substituted as its decision:
“The appeal succeeds. The appellant’s partner is engaged in work which is not remunerative and he is entitled to income support from 3 February 1992.”
The work in which the claimant’s wife was engaged was looking after the shop during the hours that it was open i.e. 8.30am to 6.30pm Mondays to Fridays, inclusive. The claimant’s wife did not work in the shop on Saturday but had an assistant there.
3. 	At the claimant’s request, the appeal was the subject of an oral hearing before me on 2 June 1993, when I adjourned the hearing (see below) and a further oral hearing on 2 September 1993. At both hearings the claimant was present and addressed me. The adjudication officer was represented by Mr. L. Varley of the Office of the Solicitor to the Departments of Health and Social Security. On the second occasion i.e. on 2 September 1993, the claimant’s wife was present and gave evidence to me as to the number of hours she actually spent serving customers etc. in the shop. I am indebted to all those persons for their assistance to me at the hearing.
4.	The tribunal’s findings of fact were as follows:
“The claimant’s wife works in a shop which is owned by the two of them. For several months she has worked without remuneration, certainly since September 1991; she has no expectation of receiving remuneration either, because the business is making a loss. She is therefore not in remunerative work.”
5.	The tribunal’s reasons for decision were as follows:
“The appellant’s wife has been running and working in a small shop; the shop has been gradually over the past 18 months making a loss and she has been working with no expectation of remuneration. Although the accounts for year ending August 1989, August 1990 and August 1991 show net profits, this does not allow for mortgage costs, drawings, etc. Since August 1991 to          31 May 1992 the net profit is reduced to £1,945 which does not take mortgage repayments, or drawings into account; also other items of expenditure are not contained in the weekly ledger produced to the tribunal. There is no expectation of payment for the claimant’s wife’s work now or in the future. Regulations 5 and 6 of the Income Support (General) Regulations 1987.”
6.	The adjudication officer’s appeal was on the basis:
“ …   that the tribunal have applied the wrong test in limiting the definition of remunerative work to work that is profitable.”
The adjudication officer cites a Commissioner’s decision on file CIS/270/1991 (now reported as R(IS) 1/93), at paragraph 11 of which the learned Commissioner said:
“In my judgment work carried out in expectation of payment means in realistic expectation of such payment. In my view that in fact accords with the words used by the Commissioner in R(FIS) 1/83 “the desire, hope and intention of claiming a reward” and it will be noted that the words are to be read conjunctively.”
It should be noted that that case was dealing with a person who wrote “literary” works in the hope (unfulfilled) of their publication.
7. 	The adjudication officer also cites an unreported Commissioner’s decision on file CSB/413/1984, where the learned Commissioner said (at para. 9):
“The claimant’s garage business was a commercial venture and was carried on for or in the expectation of payment by its customers for any work carried out. The claimant hoped to derive a profit from his business but the fact that he failed to do so is of no consequence so far as the relevant statutory provisions are concerned. The claimant’s work was “remunerative” although it might have been unprofitable. The claimant’s arguments are based on the assumption that the words “payment” and “profit”, “remunerative” and “profitable” are synonymous. This is not so. In Perrot v. Supplementary Benefits Commission [1979] SB21 (upheld by the Court of Appeal: SB24) Judge Stabb stated in the final paragraph of his judgment “I think that the appeal tribunal quite correctly interpreted section 6 [of the Supplementary Benefits Act 1976] and as the appellant’s work was undoubtedly paid for, although the business unhappily did not show a net profit at the end of the year, the employment was accordingly remunerative, and section 6 must accordingly apply.’”
However, in my view, this decision (CSB/413/1984) is distinguishable on its facts (see below).
8. 	As a matter of interest, the Court of Appeal’s decision in Perrot v. Supplementary Benefits Commission is reported in [1980] 3 All England Reports at page 110. When I examine that decision (on which Mr. Varley also relied at the hearings before me), I find that it is based on the then wording of section 6(1) of the Supplementary Benefits Act 1976 which of itself provided for non‑entitlement to supplementary benefit “for any period during which a person is engaged in remunerative full‑time work”. The Court of Appeal based their decision on an interpretation of the word “remunerative” in section 6(1) and there is no reference to any definition (“expectation of payment”, see below) such as that that now exists in regulation 5(1) of the Income Support (General) Regulations 1987, SI 1987 No.1967. However, the section 6 of the 1976 Act that was being considered in the Perrot case was repealed and replaced by paragraph 6 of Part I of Schedule 2 to the Social Security Act 1980. The new section 6 provided that regulations could make provision as to the circumstances in which a person was or was not to be treated as engaged in remunerative work. In pursuance of that power, regulation 9(1) of the Supplementary Benefit (Conditions of Entitlement) Regulations 1981, SI 1981 No.1526, introduced the “expectation of payment” test, now to be found in regulation 5(1) of the Income Support (General) Regulations 1987, providing as follows:
“Persons treated as engaged in remunerative work
5.– (1)	... for the purposes of section 20(3)(c) of the [Social Security Act 1986, now replaced by section 124(1)(c) of the Social Security Contributions and Benefits Act 1992] (Conditions of Entitlement to Income Support), remunerative work is work in which a person is engaged, or, where his hours of work fluctuate, he is engaged on average, for not less than 24 hours [now 16 hours as from 7 April 1992, SI 1991 No. 1559] a week being work for which payment is made or which is done in expectation of payment.”
However, whatever the legal status of the Perrot decision now, I prefer to base my decision on the factual elements of the present case.
9. 	In my judgment in many respects the problem in relation to e.g. small shopkeepers is indeed a question of fact rather than law. The Perrot case concerned a person running a freelance translation agency. The case on file CSB/413/1984 concerned a garage business where the proprietor was drawing £52 a week from the business as a wage employing a mechanic at a weekly wage of £90 and a boy on a Government Youth Training Scheme. In the present case the claimant’s wife was receiving no financial reward from the shop. Moreover, it was explained to the tribunal (chairman’s notes of evidence) that the “drawings were for shopping taken by my wife; stopped drawings at beginning of March [1992] because he could afford nothing.” “Wife’s drawings are not shown in account but are taken out of net profits along with mortgage repayments on the shop.”. The claimant’s wife was not rendering services for reward, as were the claimants in the Perrot case and CSB/413/1984.
10. 	In a decision on file CFC/3/1989, another case of an aspiring but unsuccessful writer, the Commissioner put forward what has been described as “a rule of thumb, not a binding principle, that for work to be done in the expectation of payment some payment must be expected within 26 weeks of the relevant date.”  (see Mr. Mesher’s annotations to regulation 5 in the 1993 edition of the Income Support Legislation.) In CIS/270/1991 (now reported as R(IS) 1/93) the Commissioner insisted that there should be an expectation of payment according to the test of commonsense and an appreciation of the realities of the situation.
11. 	Here the tribunal using its commonsense and assessing the realities of the situation came to a conclusion of fact that the claimant’s wife “has no expectation of receiving remuneration either, because the business is making a loss.” That is a finding of fact which in my judgment the tribunal could properly reach and it is not inconsistent with the legal tests that have been laid down in the case law (reviewed above). I consider therefore that the tribunal’s decision was not erroneous in law.
12.	I should now deal with a separate point. This arose first at the hearing before me on 2 June 1993. As a result, I issued a direction dated 2 June 1993 in the following terms:
“1. 	I adjourn this hearing to enable the claimant’s wife to give evidence to me at a subsequent hearing as to the number of hours per week she actually worked in the shop and the number of hours per week she actually regarded herself as on call.
2. 	At that hearing, the adjudication officer should be prepared to cite any relevant authorities on the question of whether being on call constitutes work.”
13. 	At the adjourned hearing on 2 September 1993, the claimant’s wife gave evidence to me that the actual hours she spent in the shop itself (as distinct from being in the residential part of the house) amounted to no more than three hours a day, Mondays to Fridays inclusive (she did not work on Saturdays) i.e. 15 hours a week. She might also have spent up to three hours a week in interviewing representatives answering telephone calls etc. However, on his original claim for income support, the claimant had stated that his wife was working in the shop for 42½ hours per week. It emerged at the hearing before me on 2 June 1993, however, that that figure was based on the opening hours of the shop, not the wife’s actual hours spent in the shop part of the premises.
14. 	At the adjourned hearing on 2 September 1993, Mr. Varley did not refer to any specific case law on this subject but submitted to me that the claimant must be regarded as working throughout the time that the shop was open because she was always ready to go into the shop if the shop bell should ring because a customer had come in. She was therefore so to speak always “on duty”. I note that, in his annotations to regulation 5 in the 1993 Edition of the above cited book, Mr. Mesher says:
“For the self‑employed the test is not of hours costed and charged to a client, but of hours of activities which are essential to the undertaking (R(FIS) 6/85). Thus time spent in preparation, research, doing estimates and accounts, travel for the purposes of the undertaking, keeping a shop open etc. must all count. But activities carried on merely in the hope, rather than expectation, of payment are not remunerative.” (my emphasis)
15. 	The view of Mr. Mesher as to “keeping a shop open” is not of course binding on me. I have indicated above that I consider that many of these matters are in fact ultimately questions of fact in each case. At the hearing on 2 September 1993, I drew to the parties’ attention the decision of the House of Lords in Suffolk County Council v. Secretary of State for the Environment [1984] Industrial Cases Reports at page 882, which concerned the question whether a “retained fireman” was entitled to a pension under the relevant superannuation regulations. They referred to pensionable employment needing to be “contractual minimum hours of employment regularly or usually [amounting] to 30 hours or more in each week”. The fireman contended that all the hours that he was on call, even though free to do his own activities including running a shop of his own as it happened, came within the computation of the 30 hours. The fireman was obliged to answer any call but, provided he held himself ready so to do, he otherwise could do as he pleased. The House of Lords held that his hours “on call” could not constitute hours of employment within the superannuation regulation. Of course the wording of the regulation is different but in my view the principle is much the same. There may be a situation where a person is only “on call” in a small shop (as here) with very little stock and fewer customers, that person being able to carry on her own domestic activities in the house until such time as the shop bell rang. The hours on call in that sense might not be hours of work. However, I would not wish it to be thought that the normal position is that a shopkeeper is to be regarded as working only when serving customers or dealing with representatives etc. In many cases all the hours that the shop is open must be regarded as hours of work by anyone looking after the shop. To that extent Mr. Mesher’s annotation is in my view correct.
16.	But the facts of the present case were rather special. It may well be that the claimant’s wife here could be said to be working only during the hours that she was actually employed in the shop itself as distinct from doing domestic or other duties in the house. Certainly if that were the correct basis of calculation, then she would have been working less than 24 hours a week and possibly less than the 16 hours a week which is now the test. I do not express a final opinion on that. I merely record the law applicable, in case it becomes necessary at any future time.
17. 	The tribunal’s decision was to hold the claimant entitled to income support. Whether it is payable is now of course a matter for the local adjudication officer, depending on an assessment of the claimant’s income, capital etc. That assessment should be carried out forthwith. Any difficulty can, if necessary, be referred back to me.

Date: 2 November 1993	(signed) Mr. M. J. Goodman	Commissioner

The Chief Adjudication Officer appealed to the Court of Appeal. The decision of the Court of Appeal follows.

Decision of the Court of Appeal

Mr. M. Kent (instructed by the Solicitor to the Department of Social Security, London WC2A) appeared on behalf of the Appellant.
The Respondent did not appear and was not represented.

LORD JUSTICE MILLETT: This is an appeal brought with the leave of the Commissioner from a decision of a social security Commissioner given on                 2 November 1993 that an appeal by the Chief Adjudication Officer on a point of law against the decision of the social security appeal tribunal given on 1 July 1992 be dismissed. The Chief Adjudication Officer seeks an order setting aside the orders of the Commissioner and the tribunal and restoring the decision of the adjudication officer given on 13 February 1992 that the respondent, Mr. Royston Ellis, was not entitled to income support after 3 February 1992 because his wife was engaged in remunerative work. 

The respondent succeeded before the	Commissioner and his claim to income support has since been paid. The Department of Social Security have indicated that they will not seek to recover the money if the appeal succeeds and, indeed, it is doubtful whether they have the power to do so. So far as the respondent is concerned, therefore, the appeal is now entirely academic and he has played no part in the proceedings before us. The Chief Adjudication Officer, however, wishes to proceed with the appeal because he has a statutory duty to advise adjudication officers on the performance of their functions under this, or any other, Act: see section 39(2) of the Social Security Administration Act 1992.

The statutory provisions to be construed in this appeal remain the same despite the reenactment of the provisions in question. The Chief Adjudication Officer now finds it difficult to give clear guidance pursuant to his statutory duty on the question raised in the appeal because of apparent inconsistencies in the conclusions reached by different Commissioners on apparently similar facts. In the circumstances we have thought it right to entertain the appeal, which does not raise merely academic questions of private right, but questions of public law which need to be decided if the administration of the Social Security system can proceed in an orderly manner.

The legislation which is under consideration is to be found in the Social Security Act 1986 section 20(3) which provides:
“A person in Great Britain is entitled to income support if‑
…
(c)	he is not engaged in remunerative work and, if he is a member of a married or unmarried couple, the other member is not so engaged.”
Subsection 12:
“Regulations may make provision for the purposes of this Part of this Act 
…
(c)	as to what is or is not to be treated as remunerative work or as employment.”

The Income Support (General) Regulations 1987 (which I will call “the 1987 Regulations”) provide by regulation 5(1):
“For the purposes of section 20(3)(c) of the Social Security Act 1986 (Conditions of Entitlement to Income Support), remunerative work is work in which a person is engaged, or, where his hours of work fluctuate, he is engaged on average, for not less than 24 hours a week being work for which payment is made or which is done in expectation of payment.”

The respondent claimed income support from 3 February 1992. The adjudication officer decided that he was not entitled to income support because his wife was engaged in remunerative work. The social security appeal tribunal allowed the respondent’s appeal on the ground that the work in which his wife was engaged was not remunerative. The Commissioner dismissed the Chief Adjudication Officer’s appeal.
	
Before turning to the facts I should refer to the decision of this Court in Perrot v. Supplementary Benefits Commission [1980] 3 All ER 110 in which it was held that the expression “remunerative work” in section 6 of the Supplementary Benefits Act 1976, which was the statutory predecessor of section 20(3)(c) of the Social Security Act 1986, meant work which is paid for and not work which is profitable. In that case the claimant was self‑employed. She carried on the business of a translation agency from her home on her own account. She carried on the business at a loss. She claimed supplementary benefit and contended that since the business was carried on at a loss she was not engaged in remunerative work and was not excluded from benefit by section 6. This Court held that she was engaged in remunerative work because she was being paid for the work she did; it was irrelevant that the business was unprofitable because her expenses exceeded her income. Two factors which weighed with the court were: (1) calculations of benefit were made on a weekly basis so that it was inappropriate to judge the question by reference to an annual profit and loss account; (2) it was impossible to conclude that Parliament had intended that entitlement to supplementary benefit should depend on whether the business made a profit of £1 or a loss of £1 in the course of a full year. 

The 1976 Act contained no statutory definition of the expression “remunerative work”. Section 6 of that Act was repealed and replaced by paragraph 6 of Part I of Schedule II to the Social Security Act 1980, but provided that regulations could make provision as to the circumstances in which a person was or was not to be treated as engaged in remunerative work. Paragraph 6 was in turn repealed and replaced by section 20(3) of the 1986 Act. The definition of “remunerative work” is now to be found in regulation 5(1) of the 1987 Regulations, which I have already read, and which has been kept in force despite the repeal and reenactment of the Social Security Act 1980. 

The definition in the 1987 Regulations by using the words “being work for which payment is made” gives statutory effect to the decision of this Court in Perrot and by adding the words “which is done in expectation of payment” extends and widens the meaning of the expression “remunerative work”. Accordingly remunerative work means work which is paid for, or which is done in the expectation of payment, rather than work which is profitable. 

The facts of the present case are not in every respect altogether clear, but for the purposes of this appeal I take them to be as follows. The respondent and his wife were joint owners of a grocery business trading as “The Corner Shop”. The respondent had other employment which terminated in or about the beginning of February 1992. He and his wife lived on the premises. His wife ran the shop. They employed a part‑time assistant. The respondent’s evidence was that his wife worked in the shop for more than 24 hours a week. The Commissioner doubted this, but he did not reject the evidence and I take it that she did. The respondent’s evidence was that the business had been rapidly going down hill for the previous two years and was only kept going by his salary from his employment. The business overdraft had been increasing at an alarming rate. The business had been up for sale for over two years.

The tribunal referred to the business accounts for the years ended         31 August 1989, 1990 and 1991. These showed net profits before mortgage payments and drawings were taken into account. From August 1991 to May 1992 the net profits were only £1,945, but this figure was before mortgage payments or drawings were taken into account and also left out of account some items of business expenditure which ought properly to have been included. 

The tribunal found that the respondent’s wife had worked in the shop without remuneration since at least September 1991. The Commissioner recorded the evidence of the respondent before the tribunal that:
“‘Drawings were for shopping taken by my wife’; stopped drawings at beginning of March 1992 because he could afford nothing ... wife’s drawings are not shown in accounts but are taken out of net profits, along with mortgage repayments on the shop.”

By March 1992 the respondent and his wife were in arrears with their mortgage payments and according to his evidence:
”With neither of us earning any money we are living off our stock on our shop shelves, again reflected in our takings.”
I take	that evidence to mean that from September 1991 to March 1992 the respondent and his wife were living off the stock and the takings in the till, against the background of an increasing overdraft and mortgage arrears. Had their drawings been taken out of the bank account, instead of directly out of the money in the till, it would have been still more apparent that they were in fact living off borrowed money rather than from the takings of the business. 

The tribunal concluded that the respondent’s wife had been working without remuneration since at least September 1991 and that	she had very little expectation of receiving remuneration. She was not, therefore, in remunerative work. The Commissioner, who rightly pointed out that the question was essentially one of fact for the tribunal, upheld its decision.	In my judgment he was right to do so. The conclusion that the respondent’s wife was in remunerative work, in circumstances which I have described,  would really defy common sense. It is, however, not easy to formulate rules for the guidance of adjudication officers on what must be a question of fact in every case. That is particularly so with cases of the kind which come before them which are likely to concern small businesses, like that of The Corner Shop, particularly when they are run by a husband and wife as a partnership, where the legal character of  payments and disbursements may not be at all clear, and where they tend to short circuit the proper procedure when dealing with their funds. In the hope that the following may be of some assistance I propose to set out what I perceive to be the correct approach.

(1)	The question is whether “the work is paid for or done in the expectation of payment”. That falls to be decided at the time that the work is done, not at the end of a year or other period of account, but periodically and probably on a weekly basis, since that is the period with reference to which income support is calculated.

(2)	It is the character of the work and not its economic result which is decisive. The work is not required to be commercial activity or work of a kind which is normally paid for; it must be work which is in fact paid for or which is in fact done in expectation of payment.

(3)	If the work is actually paid for, the enquiry need proceed no further. It is only when it is not paid for that the question of expectation arises and it is in that context that, in my judgment, the question of the profitability of the business may become relevant. 

(4)	Remuneration may take many forms. It may be paid by the customer by way of fees for a service, by an employer by way of wages or salary, or be received by a trader by way of profits or a share of the profits. Perrot was a case of a self‑employed sole trader who provided a service to customers for reward. It was held that she was engaged in remunerative I work even though her expenses exceeded her fee income. She was plainly being paid for the services which she was providing. The decision cannot be applied without adaptation to the person who carries on a retail trade, whether alone or in partnership. The price which a retailer is paid for the goods which he sells is not remuneration for his work, but the price of the goods sold. If it were remuneration for his work then the voluntary worker who without remuneration caused religious leaflets or booklets to be published and distributed them to the public at cost would be engaged in remunerative work. That would be absurd. Nor in my view can it be right to regard any mark‑up as remuneration since there can be no justification for singling out one item of expenditure, that is to say, the cost of the goods being sold, as deductible from the sale price in order to ascertain whether the retailer is in remunerative work and not other items of expenditure.

(5)	In the case of a partnership business, a working partner may be paid a wage or salary in addition to a share of the profits. As a matter of strict legal analysis, a partner is not remunerated directly by the customer, since payments by the customer are received by the partner as agent for the partnership and not beneficially. His only legal entitlement is to a share of the profits on the taking of the partnership accounts. Had Mrs. Perrot been a partner in the business her claim could not have been so easily disposed of. In the case of a small family business, especially one run by husband and wife, however, I would accept that the issue should be looked at more broadly. It will often be appropriate to treat the partnership as a single economic unit just as if it were carried on by a sole trader.

(6)	Drawings by a working partner may be by way of wage, or salary, in which case they are not repayable if the business makes a loss and they are deducted together with other partnership expenses from the profits of the business before division. Drawings may however be made by way of advances against the partner’s ultimate share of the profits, in which case they are repayable if they exceed the amount found to be due on the trading of the partnership account at the end of the year. In the case of a small family business it may be impossible to ascertain the true character of the drawings. But a partner who receives them in either capacity is plainly engaged in remunerative work, since they must either represent payment for the work or an advance against the payment which the partner expects to receive for her work.

(7)	Drawings may be in cash or in kind. Where the partners live on the premises and pay the mortgage payments out of the takings, these should ordinarily be treated as drawings. But this will not always be so. It may be found that the true source of the mortgage payments is the partner’s overdrawn account at the bank. Again, the position must be looked at broadly. Even if the partners make no drawings, they will be engaged in remunerative work if they are carrying on the business in the expectation of receiving payment by way of a share of the profits. This does not depend on nice calculations nor on the state of the annual accounts. It depends on whether they expect to be paid by way of a share of the profits and whether that expectation is realistic. If they are engaged in an ordinary commercial activity, there will be a presumption that they are engaged in remunerative work. If the work is unremunerative, why are they working for nothing?

In the present case the answers to that last question, however, are clear. The respondent and his wife had put the business up for sale. They were continuing to carry on the business in the meantime in order to preserve the goodwill. There came a time, probably in about September 1991, when they could not carry on business except at a loss, and could no longer make drawings against future profits. Thereafter they continued to live off the stock. While such conduct must not be allowed to be a camouflage for genuine drawings, it must be borne in mind that the stock belongs to the partners. In consuming it the respondent and his wife were consuming their own capital. In my view the respondent and his wife can properly be regarded as carrying on the business with a view to its sale, doing so without remuneration, and at least for some period before March 1992 doing so without making any drawings from the business against future profits. They were living at the expense of their mortgagees and the bank, and were by‑passing the payment of the takings into the overdrawn bank account by taking them directly out of the till.

At the end of the day adjudication officers must apply a very broad brush. The question that they must answer is a question of fact. It is very much a jury question. The first question in the present case was, was the respondent’s wife being paid for the work she did? She was working in the shop as a shop assistant. After September 1991 she cannot be said to have been drawing a wage or salary for the work that she was doing. Did she expect to be paid? Again, against the background of the facts that I have described the only possible conclusion is that she neither expected to be paid, nor if she did was there any realistic expectation that she would be. On the contrary, she and her husband were carrying on the business without remuneration in the hope of disposing of the goodwill and in the meantime were living off their own assets and an increasing bank overdraft and mortgage arrears.

I turn to the decisions of the Commissioners which have been described as conflicting. We have been provided with a number of them. I can go through them fairly quickly. The first is CSB/413/1984. That case concerned a garage. The claimant was the sole proprietor. He carried on the business of a garage providing services to customers in payment for the work carried out. He drew £52 per week, but the business was being carried out at a loss. He was found to be engaged in remunerative work. That case appears to me to have been correctly decided. The claimant was drawing £52 per week which in the absence of any other explanation must have been payment for the work. Since the claimant was a sole proprietor, the case was probably within the scope of the decision in Perrot since he was providing services to customers for payment so that it was I irrelevant whether or not business was being carried on profitably.

In CIS/662A/1991 the claimant was a sole proprietor carrying on the business of a grocery shop. The takings were being used to pay half the rent of the shop and living accommodation, together with the cost of running a car. No monetary drawings were made. The business made no profits in the course of the year. Again, it was held that the claimant was in remunerative work. The Commissioner accepted a submission of the adjudication officer to the following effect:
“I further submit that while it is true that the business has not produced profit, the work [the claimant’s wife] carried out in the course of running her business was done in	the expectation that payment would ensue. This would be in the form of selling goods with an appropriate mark upon their wholesale price. With this in mind the work generated financial gain for the claimant. On an objective analysis this gave rise to an expectation of payment. Approached from this perspective, the contention that the work done by the [the claimant’s wife] was not	remunerative within the meaning of regulation 5 because it was not done in the expectation of payment is untenable.”
That reasoning is an attempt to adapt the decision of this Court in Perrot to the case of the retail trader by extracting the mark up of the goods being sold as the equivalent to payment for services rendered by the trader to the customer. I, for my part, would not accept that reasoning. On the facts of the case, however, where the business was providing half the rent, together with other living expenses, for the proprietor it is very difficult to conduct that the work was not paid for, so that there was no need to consider whether or not it was being done in expectation of payment.

The third case is that of CSIS/39/1994. The claimant was a sole proprietor of a rental shop. It was trading at a loss. There were no drawings of any kind. The evidence was that the proprietor had been given advice by her solicitor that it would be better to carry on business with a view to its sale, and in the meantime to run it down, rather than to close it down immediately. The Commissioner held that to be a case where the sole proprietor was engaged in remunerative work. I regard that case as properly decided.

Other cases to which our attention has been drawn are all cases of freelance writers, self‑employed authors, a pop agent, and other persons providing services, or intending to provide services, but not receiving payment because they were not in fact being paid for the work they did. They hoped that they would eventually begin to earn money from their activities. In each case it was held to be that the claimant was not being paid 	and had no realistic expectation of being paid. The work must be done in expectation of payment for that work, not merely in the hope of striking it rich one day. I regard all those cases as correctly decided.  

For the reasons I have endeavoured to state, I would dismiss this appeal.

LORD JUSTICE KENNEDY: I agree.

THE MASTER OF THE ROLLS: I also agree. As I read section 20(3)(c) of the Social Security Act 1986, and regulation 5(1) of the Income Support (General) Regulations 1987, “remunerative work” is work which (a) is done for a given number of hours and (b) is either (i) work for which payment is made or (ii) work which is done in expectation of payment. (a) (the number of hours) is not an issue in this appeal. (b)(ii) in my numeration covers cases where persons are not paid for the work they do at the time they do it, but for which at the time of doing the work they realistically expect to be paid. This provision accordingly covers cases where workers realistically expect to be paid, but not until the end of the job, or until the work is sold, as well as cases in which workers realistically expect to be paid, but in the event are not.

In order to decide whether a case falls within (b)(i) in my numeration it is necessary to ask a simple and everyday question. Is the relevant work done by the claimant work for which payment is made? In the case of Mrs. Perrot, to which my Lord has referred, the answer given by the Court of Appeal was, as I respectfully think, clearly correct. She received fees and accordingly the work that she did was work for which payment was made. It mattered not that her outgoings exceeded her receipts.

In the case of the garage owner, Commissioners decision CSB/413/1984 of                  3 January 1985, again, the answer was correctly given that the work was work done by the claimant for which payment was made since he drew money from the business week by week, although the business was losing money.

When	one turns to consider the position of a retail shop, the situation in my judgment requires a little more analysis. It is plain that anyone working in a shop is engaged in remunerative work within the above definition if they are paid a wage, or receive any benefit by way of indirect payment, or payment in kind. The position is the same if the business is the claimant’s, or the business of the claimant’s spouse, and they, or either of them, draw money from the business as a reward for work done in it. If the business is that of the claimant, or the claimant’s spouse, and neither of them draw any wage or benefit from it, it may, nonetheless, be a case falling within (b)(ii) if they, or either of them, have an expectation of reward at the end of the year or when the accounts are finalised.
		
On what appear to be the facts here this was a partnership business from which neither the claimant, nor the claimant’s spouse, drew any wage or benefit of any kind and from which neither expected any reward at the end of the year or when the accounts were finalised. It is not in my view correct to hold, as was held in the Commissioner’s decision CSIS/39/1994 of October 1994, that the activity of selling goods across the counter is necessarily to be regarded as work for which payment is made, since the payment made by the customer is payment for the goods bought and not for the work of the salesman, whose work is the same whether sales are effected or not. 

I agree that on the facts of this appeal the Commissioner and the tribunal were right to find that Mrs. Ellis’ work in the shop was not work for which payment was made or work done in expectation of payment. From that it follows that Mr. Ellis’ claim was rightly upheld.

Order: Appeal dismissed.