BM-v-Department for Social Development (IS) [2011] NICom 165

Decision No:  C13/10-11(IS)

 

 

 

 

SOCIAL SECURITY ADMINISTRATION (NORTHERN IRELAND) ACT 1992

 

SOCIAL SECURITY (NORTHERN IRELAND) ORDER 1998

 

 

INCOME SUPPORT

 

 

Appeal to a Social Security Commissioner

on a question of law from a Tribunal's decision

dated 8 May 2009

 

 

DECISION OF THE SOCIAL SECURITY COMMISSIONER

 

 

1. The decision of the appeal tribunal dated 8 May 2009 is in error of law.  The error of law identified will be explained in more detail below.  Pursuant to the powers conferred on me by Article 15(8) of the Social Security (Northern Ireland) Order 1998, I set aside the decision appealed against.

 

2. I am able to exercise the power conferred on me by Article 15(8)(a)(i) of the Social Security (Northern Ireland) Order 1998 to give the decision which I consider the appeal tribunal should have given as I can do so having made fresh or further findings of fact with respect to the appellant’s capital.

 

3. My revised decision is that the appellant is not entitled to income support (IS) for the period from 19 March 2008 to 18 August 2008 as he had actual and/or notional capital which was over the prescribed statutory capital limit for entitlement to IS throughout this period.  The Department is to re-calculate the appellant’s entitlement to IS from 19 August 2008 on the basis of the formulation of notional capital set out in the submissions from Mrs Rush, and on the basis of his actual capital as set out in his bank statements.  I am unaware if the appellant has made any claim to IS since 19 August 2008.  If he has, and an award of IS has been made, then that award is treated as having been made on account of this award.

 

Background

 

4. On 14 October 2008 a decision-maker of the Department decided that the appellant was entitled to a reduced award of IS from 18 March 2008 to 4 April 2008 and was not entitled to IS from 5 April 2008.  A letter of appeal against the decision dated 14 October 2008 was received on 23 October 2008.  The decision dated 14 October 2008 was reconsidered on 25 February 2009 and was changed.  The revised decision was the appellant had capital of £48996.82 from 19 March 2008 and from 14 October 2008 was to be treated as having capital of £18419.28.  Accordingly, as his capital was in excess of the prescribed capital limit he was not entitled to IS from 19 March 2008.  On 27 February 2009 the appellant was informed that his appeal would continue against the new decision.

 

5. The appeal tribunal hearing took place on 8 May 2009.  The appellant was present although the relevant Form AT3D’SSAT is not annotated to note this.  The appeal was disallowed and the appeal tribunal confirmed the decision dated 25 February 2009.  On 20 August 2009 an application for leave to appeal was received in the Appeals Service.  On 28 August 2009 the application for leave to appeal was refused by the legally qualified panel member.

 

Proceedings before the Social Security Commissioner

 

6. On 10 September 2009 a further application for leave to appeal was received in the Office of the Social Security Commissioners and Child Support Commissioners.  On 5 January 2010 written observations on the application for leave to appeal were sought from Decision Making Services (DMS).  The initial written observations were received on 4 February 2010.  In these initial written observations, DMS opposed the application for leave to appeal on the grounds cited by the appellant but identified another basis upon which it was agreed that the decision of the appeal tribunal was in error of law.  Written observations were shared with the appellant on 18 February 2010.

 

7. On 19 October 2010 I granted leave to appeal giving the following reasons:

 

‘It is arguable that the tribunal were wrong to treat the applicant as having notional capital of £18268.74 from 14 October 2008.

 

It is arguable that a tariff income should have been applied for the period 22 April 2008 to 13 October 2008.

 

It is arguable that the diminishing notional capital rule should have been applied.’

 

8. On 19 October 2010 the legal officer requested DMS to make further comments on a specific question.  The further comments were received on 9 November 2010.  On 24 November 2010 a further request for comments was made to DMS and the final set of comments was received on 3 December 2010.  These final comments were shared with the appellant on 4 January 2011.

 

Errors of law

 

9. A decision of an appeal tribunal may only be set aside by a Social Security Commissioner on the basis that it is in error of law.

 

10. In R(I) 2/06 and CSDLA/500/2007, Tribunals of Commissioners in Great Britain have referred to the judgment of the Court of Appeal for England and Wales in R(Iran) v Secretary of State for the Home Department ([2005] EWCA Civ 982), outlining examples of commonly encountered errors of law in terms that can apply equally to appellate legal tribunals.  As set out at paragraph 30 of R(I) 2/06 these are:

 

“(i) making perverse or irrational findings on a matter or matters that were material to the outcome (‘material matters’);

(ii) failing to give reasons or any adequate reasons for findings on material matters;

(iii) failing to take into account and/or resolve conflicts of fact or opinion on material matters;

(iv) giving weight to immaterial matters;

(v) making a material misdirection of law on any material matter;

(vi) committing or permitting a procedural or other irregularity capable of making a material difference to the outcome or the fairness of proceedings; …

 

Each of these grounds for detecting any error of law contains the word ‘material’ (or ‘immaterial’).  Errors of law of which it can be said that they would have made no difference to the outcome do not matter.”

 

The error of law in the instant case

 

11. In the proceedings before the Social Security Commissioner, DMS has been represented by Mrs Rush who has provided detailed, helpful submissions which have been very valuable in resolving the issues in this appeal.

 

12. In the initial written observations on the application for leave to appeal, Mrs Rush opposed the application on the grounds submitted by the appellant.  As was noted above, however, Mrs Rush supported the application on another identified ground, as follows:

 

‘The date of the decision under appeal was 14 October 2008 as revised by a decision on 25 February 2009 (not 25 February 2008 as stated in both the revised decision and the appeal submission).  The revised decision was that (the claimant) had capital of £48,996.82 from 19 March 2008 and should be treated as possessing capital of £18,419.28 from 14 October 2008 (£150.54 actual capital and £18,268.74 notional capital).

 

I submit that the revised decision was correct in deciding that (the claimant) had capital of £48,996.82 from 19 March 2008 as at this date, although he had only received £10,000 from the solicitor, the balance owed to him was held by the solicitor who was acting as an agent for the claimant.  The Commissioner in C5/05-06 (IS) at paragraph 8 has stated-

 

The question for decision by the tribunal (as for me), therefore was simply whether the capital held by the solicitors was the claimant’s capital for purposes of the said Regulations.  The claimant’s contention is that because her solicitor held the capital she did not possess it and it was not therefore her capital.

I am in agreement with the Department that the capital held by the solicitors on the claimant’s behalf was the claimant’s capital.

 

(The claimant) did therefore have capital of £48,996.82 from 19 March 008.  However, I submit that the revised decision was incorrect to treat the claimant as having notional capital of £18,268.74 from 14 October 2008.

 

If (the claimant) was only to be treated as possessing notional capital from 14 October 2008 this would result in him being entitled to income support, albeit with a tariff income applied, for the period from 22 April 2008 to 13 October 2008 as the actual capital held by him was less than the prescribed limit of £16,000.  I submit that (the claimant) should be treated as having notional capital from the dates he deprived himself of that capital i.e.; £3,371.79 from 28 March 2008, £4,371.79 from 19 April 2008, £9,371.79 from 21 April 2008, £14,371.79 from 22 April 2008 and ££19,371.79 from 25 April 2008.  I further submit that the diminishing notional capital rule should have been applied to the notional capital from the date prescribed in regulation 51A.

 

Regulation 51A of the Income Support General Regulations provides that the diminishing notional capital rule applies from the week subsequent to the ‘relevant week’ where a person has been disallowed benefit because he or she was determined to have notional capital.  The ‘relevant week’ is defined in regulation 51A(7)(b) of the General Regulations as

 

“(b) “relevant week” means the benefit week or part-week in which the capital in question of which the claimant has deprived himself within the meaning of regulation 51(1)—

 

(i)              was first taken into account for the purpose of determining his entitlement to income support, or

 

(ii) was taken into account on a subsequent occasion for the purpose of determining or re-determining his entitlement to income support on that subsequent occasion and that determination or re-determination resulted in his beginning to receive, or ceasing to receive, income support,

 

In this case the first week in which the notional capital should have been taken into account in determining income support was that which included 22 April 2008 as this is the first week that income support would not have been paid because of the notional capital.  Prior to this income support was not payable due to actual capital.  I submit, therefore, that the diminishing notional capital rule should apply from the week following this week and not from 16 September 2008 as carried out in the revised decision.’

 

13. I agree with the submission made by Mrs Rush particularly in her application of the decision of Commissioner Brown in C5/05-06(IS).  In that case, the claimant’s solicitors had received, on her behalf, the sum of £50000.  In the instant case, correspondence from the appellant’s solicitors, dated 5 August 2008, indicate that ‘… cleared funds became available on 11^th March 2008 … After specific accounts were raised (the claimant) received the sum of £48996.82 as a final payment.’  The statements from the appellant’s bank current account, which were made available as part of the appeal submission, indicate that the sum of £10000 was lodged in the appellant’s current account on 19 March 2008 and £38996.82 was lodged on 5 April 2008.  The solicitor’s statement that ‘… cleared funds became available on 11^th March 2008’ and the fact that the funds which were due to the appellant were not released until 19 March and 5 April 2008 respectively, demonstrates to me that, as in C5/05-06(IS), the funds were capital held on the appellant’s behalf and was, accordingly, the appellant’s capital.  As was noted by the appellant’s solicitors in the correspondence dated 5 August 2008 the funds were being held while other specific accounts were being raised.  I have also noted other correspondence from the appellant’s solicitors, dated 30 January 2008 in which it was indicated that funds would be held on ‘… joint solicitors deposit account pending agreement being reached’.  The agreement related to the distribution of the proceeds of sale of the appellant’s former matrimonial home between the appellant and his spouse.

 

14. DMS was subsequently requested to provide a detailed calculation of the benefit, if any, which it was submitted should have been awarded, setting out the dates for each change in award as necessary and calculating any net benefit or loss to the appellant.  In response, Mrs Rush submitted that:

 

‘In order to show the effect of treating the claimant as having notional capital from the various dates I have prepared a table to show how this impacts on (the claimant’s) entitlement to income support.  In the table (the claimant’s) actual capital has been taken from the copy of his bank statement which details his transactions from 07.03.08 to 07.08.08.  I have included only those transactions which are relevant to the deprivation decision.

 

 

Date	Actual Capital £	Notional Capital £	Income Support due £	Tariff Income £
19.03.08	49,183.11	Nil	Nil	N/A
28.03.08	43,443.59	3,371.79	Nil	N/A
21.04.08	21,420.43	8,371.79	Nil	N/A
22.04.08	15,320.43	14,371.79	Nil	N/A
25.04.08	8,843.43	19,371.79	Nil	N/A
28.04.08	8,259.55	19,371.79	Nil	N/A

 

 

As can be seen from the table the first time that (the claimant’s) actual capital falls below the £16,000 capital threshold limit is 22.04.08.  This date falls in the benefit week ending 28.04.08.  By the end of this benefit week (the claimant’s) actual capital had fallen to £8,259.55 (this figure does not include the payment of income support made on that date).  At this point (the claimant) would normally have been entitled to income support, with a tariff income of £10 applied, however, once the notional capital amounting to £19,371.79 is taken into account this brings (the claimant) over the capital limit and extinguishes entitlement to income support.

 

Regulation 51A of the Income Support General Regulations provides that the diminishing notional capital rule applies from the week subsequent to the ‘relevant week’ where a person has been disallowed benefit because he or she was determined to have notional capital.

 

The amount that the notional capital is to be reduced by is provided for in regulation 51A (3) which states that

 

(3) Subject to paragraph (4), for the purposes of paragraph (1)(b) the condition is that the claimant would have been entitled to income support in the relevant week, but for regulation 51(1), and in such a case the amount of the reduction shall be equal to the aggregate of—

 

(a) the amount of income support to which the claimant would have been entitled in the relevant week but for regulation 51(1); and for the purposes of this sub-paragraph if the relevant week is a part-week that amount shall be determined by dividing the amount of income support to which he would have been so entitled by the number equal to the number of days in the part-week and multiplying the quotient by 7; and

 

(b) the amount of housing benefit (if any) equal to the difference between his maximum housing benefit and the amount (if any) of housing benefit which he is awarded in respect of the benefit week, within the meaning assigned to it in regulation 2(1) of the Housing Benefit Regulations (interpretation), which includes the last day of the relevant week.

 

The ‘relevant week’ is defined in regulation 51A(7)(b) of the Income Support General Regulations as

 

“(b) “relevant week” means the benefit week or part-week in which the capital in question of which the claimant has deprived himself within the meaning of regulation 51(1)—

 

(i) was first taken into account for the purpose of determining his entitlement to income support,

 

Therefore, the relevant week in this case is the benefit week from 22.04.08 to 28.04.08 as this is the first time that the notional capital affects (the claimant’s) entitlement to income support.  The diminishing notional capital rule should, therefore, apply from 29.04.08 and (the claimant’s) notional capital should be reduced at a weekly rate of £210.61.  This figure is arrived at by adding the amount of income support which would have been paid to (the claimant) (£136.70 minus £10 tariff income = £126.70) and the maximum amount of housing benefit which would have been paid to (the claimant) (£76.50 rent and £7.41 rates).

 

If (the claimant’s) notional capital is reduced in accordance with the diminishing notional capital rule at a weekly rate of £210.61 then it would take 17 weeks from 29.04.08 to reduce the notional capital to £15,791.42 which is below the £16,000 capital limit.  This would result in (the claimant) possibly becoming entitled to income support again from 19.08.08 provided his actual capital (if any) when combined with the notional capital at this time does not take him back over the limit of £16,000.

 

…

 

In conclusion, I submit that (the claimant) was not entitled to income support for the period from 19.03.08 to 18.08.08 as he had actual and/or notional capital which was over the £16,000 limit throughout this period.  However, I am unable to state definitively that (the claimant) would be entitled to income support from 19.08.08 as I only have a record of his actual capital up to 07.08.08 and a further bank statement would be required in order to determine entitlement.’

 

15. Mrs Rush was then asked, in further correspondence, whether she wished additional evidence, in the form of bank statements. Mrs Rush’s reply was as follows:

 

‘The last date on the copy of the bank statement is 07 August and at that point the actual capital held is £511.77.  However, on 04 August income support amounting to £263.40 was paid into the account and on 05 August £250.40 disability living allowance was paid into the account.  Neither of these payments can be included as capital until the period for which each payment was made has expired.  In addition on looking back through the account the only lodgements to the account are the fortnightly income support and the four weekly disability living allowance payments (apart from some credits from B&Q etc).  I would, therefore, think now that it is unlikely that the claimant had any further capital which when combined with the reducing notional capital would affect his entitlement to benefit.

 

Taking the above into account and given that the period in question is less than two weeks I do not think it is necessary to get any further bank statements.’

 

16. I agree with this submission made by Mrs Rush and agree that it is unlikely, on the balance of probabilities that the claimant has any further capital, which, when combined with the reducing notional capital, would affect his entitlement to benefit.

 

The appellant’s grounds for seeking leave to appeal to the Social Security Commissioner

 

17. Having found that the decision of the appeal tribunal was in error of law on the basis of the submissions made by Mrs Rush, I do not have to consider the appellant’s other grounds for appealing.  I would indicate, however, that I would not have found the decision of the appeal tribunal to be in error of law on the other grounds cited by the appellant.  The appellant’s cited ground relates to the application by the appeal tribunal of the principles involved in the ‘predominant operative purpose’ test.  The appeal tribunal’s application of the applicable legal rules and principles was wholly accurate, and its decision could not be said to be in error of law on the basis of the ground submitted by the appellant.

 

Disposal

 

18. The decision of the appeal tribunal dated 8 May 2009 is in error of law.  Pursuant to the powers conferred on me by Article 15(8) of the Social Security (Northern Ireland) Order 1998, I set aside the decision appealed against.

 

19. I am able to exercise the power conferred on me by Article 15(8)(a)(i) of the Social Security (Northern Ireland) Order 1998 to give the decision which I consider the appeal tribunal should have given as I can do so having made fresh or further findings of fact concerning the appellant’s capital.

 

20. My revised decision is that the appellant is not entitled to IS for the period from 19 March 2008 to 18 August 2008 as he had actual and/or notional capital which was over the prescribed statutory capital limit for entitlement to IS throughout this period.  The Department is to re-calculate the appellant’s entitlement to IS from 19 August 2008 on the basis of the formulation of notional capital set out in the submissions from Mrs Rush, and on the basis of his actual capital as set out in his bank statements.  I am unaware if the appellant has made any claim to IS since 19 August 2008.  If he has, and an award of IS has been made, then that award is treated as having been made on account of this award.

 

 

(signed):  K Mullan

 

Commissioner

 

 

 

20 April 2011