My PHP is version 5.4.7. By the way, when using the Paypal sandbox option I can carry out a payment but am not led back away from the Paypal site back to mine. Is this intentional?

Thanks for the info. I'm convinced that the problem is json_decode. OK, here is a solution.
Open web/include/CJson.inc.php. Replace line 33-35

static function decode( $json )
{
	return json_decode( $json, true );
}

with

static function decode( $json )
{
	if ( empty($json) ) return array();
	return json_decode( $json, true );
}

That's it. Now, it should run without the error message.

>but am not led back away from the Paypal site back to mine.

The HTML code generated by the first page of Checkout Simulator is a minimalist code to accept payments. There are more options you can add to the code. The return URL to your site is one of them. Check out this page!

Returning Buyers to Your Website After They Check Out
https://developer.paypal.com/webapps/developer/docs/classic/paypal-payments-standard/integration-guide/buynow_buttons/#id089UI0M0IL7