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Cite as: [2013] NICom 57
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MMcP-v-Department for Social Development (JSA) [2013] NICom 57
Decision No: C5/13-14(JSA)
SOCIAL SECURITY ADMINISTRATION (NORTHERN IRELAND) ACT 1992
SOCIAL SECURITY (NORTHERN IRELAND) ORDER 1998
JOBSEEKER’S ALLOWANCE
Application by the claimant for leave to appeal
and appeal to a Social Security Commissioner
on a question of law from a Tribunal’s decision
dated 4 October 2012
DECISION OF THE SOCIAL SECURITY COMMISSIONER
1. I grant leave to appeal and proceed to determine all questions arising thereon as though they arose on appeal.
2. The decision of the appeal tribunal dated 4 October 2012 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.
3. For further reasons set out below, I am unable to exercise the power conferred on me by Article 15(8)(a) of the Social Security (Northern Ireland) Order 1998 to give the decision which the appeal tribunal should have given. This is because there will be further findings of fact which require to be made and I do not consider it expedient to make such findings, at this stage of the proceedings. Accordingly, I refer the case to a differently constituted appeal tribunal for re-determination. In referring the case to a differently constituted appeal tribunal for re-determination, I direct that the appeal tribunal takes into account the guidance set out below.
4. It is imperative that the appellant notes that while the decision of the appeal tribunal has been set aside, the issue of his entitlement to jobseeker’s allowance (JSA) remains to be determined by another appeal tribunal. In accordance with the guidance set out below, the newly constituted appeal tribunal will be undertaking its own determination of the legal and factual issues which arise in the appeal.
Background
5. On 19 June 2012 a decision-maker of the Department decided that the appellant did not have an entitlement to JSA from and including 27 April 2012. The basis of the decision to refuse entitlement to JSA was that the decision-maker decided that the appellant had capital assets in excess of the prescribed capital limits for entitlement to JSA. On 25 June 2012 an appeal against the decision dated 19 June 2012 was received in the Department. On 28 June 2012 the decision dated 19 June 2012 was reconsidered but was not changed.
6. An appeal tribunal hearing took place on 4 October 2012. Prior to the appeal tribunal hearing the appellant had returned Form Reg2 (DEPT) to indicate that he was content for the appeal to proceed without an oral hearing. Accordingly, the appeal tribunal proceeded to determine the appeal on the basis of the papers which were before it.
7. The appeal tribunal disallowed the appeal and issued a decision notice to the following effect:
‘Claimant is not entitled to income-based JSA from 27 April 2012 as he is to be treated as having actual capital in excess of the statutory limit of £16,000’
8. On 31 December 2012 correspondence was received in the Appeals Service (TAS) from the appellant. The legally qualified panel member (LQPM) of the appeal tribunal has appeared to have accepted the correspondence received on 31 December 2012 as an application for leave to appeal to the Social Security Commissioner against the decision dated 4 October 2012 as, on 14 January 2013 he completed Form Comm 12 refusing leave to appeal.
Proceedings before the Social Security Commissioner
9. On 24 January 2013 a further application for leave to appeal was received in the Office of the Social Security Commissioners. On 14 May 2013 written observations on the application were sought from Decision Making Services (DMS) and these were received on 11 June 2013. In these written observations Mr Rutledge, for DMS, opposed the application on the grounds submitted by the appellant but supported the application on two further identified grounds. The written observations were shared with the appellant on 3 July 2013 but there has been no further reply from him.
What is an error of law?
10. 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.
11. 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.”
Why was the decision of the appeal tribunal in the instant case in error of law?
12. In the statement of reasons for its decision the appeal tribunal has stated the following:
‘… 3 a. In his claim, made 14th May 2012, claimant stated that he had a bank account containing £400. The claim form also included a question as to whether his savings had been more than £5500 during the last six months. To this question, Claimant answered ‘No’.
b. On 16th April 2012 Claimant had made a claim for Income Support. In the Claim Form for that Benefit he had given the amount in his Bank account as £2000.
4 a. On 23rd April 2012 the Department requested Claimant to forward details of his Bank account plus details on an inheritance which he was stated to have received from his late father.
b. Copy of Claimant’s account with Halifax was furnished. It showed on 5th December 2011 a balance of £17,782.77 and on 10th May 2012 a balance of £443.19. He also submitted statements in respect of a very small Bank of Ireland account.
c. Claimant was asked to explain the expenditure over the period of six months. He replied that he had been threatened and had to repay money to loan sharks, that he had purchased things for his children and that he had started to gamble following break-up of his marriage.
d. He was asked to document his withdrawals and to provide receipts. He responded with a letter summarising in general terms the areas of expenditure but he was not able to furnish any receipts.
e. It was later clarified that the initial capital sum in December 2011 came from the sale of Claimant’s late mother’s house.
f. Claimant was again, on 6th August 2012, asked for further information but he did not reply.
5. In light of the evidence before it, Tribunal records findings:
a. Notwithstanding Claimant’s statement in his claim form that he had not in the previous six months had capital in excess of £5500, it is clear that he did in fact have substantially more than that sum on 5th December 2011 and subsequently.
b. Claimant has not produced any verified evidence as to how the money was spent in the period subsequent to December 2011. Accordingly, that money cannot be disregarded.
c. There is clear evidence in the Bank statements furnished by claimant that at 5th December 2011 Claimant had capital of £17,782.77. He has failed to verify the expenditure of this money and it is therefore appropriate that he be treated as having actual capital over the prescribed limit of £16,000.’
13. In R2/09(IS), the then Chief Commissioner set out, at paragraph 17, the proper approach to be taken by decision-makers and appeal tribunals, to issues of capital relevant to benefit entitlement. He stated:
‘17. How ought a decision-maker or a tribunal on appeal deal with issues of capital relevant to benefit entitlement? While I do not wish to be too prescriptive, I suggest that a decision-maker or a tribunal on appeal in such circumstances should endeavour to seek the answers to certain questions, in a relevant and coherent order, and, if this is done, it is more likely that the correct decision will emerge. These are, in my view, the relevant questions:
(Questions (i) to (viii) relate to actual capital.)
(i) Is capital relevant to the rules of entitlement to the benefit at issue?
(ii) If so, what is the relevance of capital to the issues in the case eg if the capital is above a certain amount will the claimant’s potential benefit be affected?
(iii) Is the capital at issue in the case actual capital? and, if so, identify the actual capital.
(iv) What is the connection between the capital and the claimant eg sole owner or co-owner?
(v) If there is such a connection, does anyone else have a legal or other interest in the capital?
(vi) Can any or all of the capital be disregarded, under the disregard rules?
(vii) If not, what is the value of the actual capital?
(viii) Having established the value of the actual capital, taking into account the disregard rules, is entitlement to the benefit at issue affected?
(Questions (ix) to (xiv) will help clarify whether one is dealing with actual or notional capital and care should be taken not to ignore these questions on an assumption, often a wrong assumption, that the relevant capital is notional.)
(ix) Did the claimant ever have capital which might have affected entitlement to the benefit in question?
(x) Has it been established that the claimant still has that capital? ie is it still actual capital?
(xi) What is the connection between that capital and the claimant eg sole owner or co-owner?
(xii) If there is such a connection, does anyone else have a legal or other interest in that capital?
(xiii) Can any or all of that capital be disregarded, under the disregard rules?
(xiv) If not, what is that capital’s value?
(Questions (xv) to (xvi) relate to notional capital.
(xv) If no-one else has a legal or other interest in it, has the claimant deprived himself of the capital for the purpose of securing entitlement to benefit in line with the rules on deprivation? ie has it become notional capital?
(xvi) What is the value of the notional capital, taking into account the diminishing notional capital rule? ie has the value diminished over the passage of time?
The answers to these questions are not necessarily straightforward and, almost inevitably, rigorous and careful fact-finding will be required by decision-makers and tribunals.’
14. In PMcC-v-Department for Social Development (IS) ([2012] NICom 325, C7/12-13(IS)), I said the following, at paragraphs 22 to 25:
‘22. In my view, the approach taken by the appeal tribunal to the ‘capital’ issue is problematic in two ways. Firstly, it is arguable that the appeal tribunal has confined itself to addressing questions (i) to (iv) in R2/09(IS) and has concluded that the appellant, at the date of claim to IS, that is 9 March 2011, had actual capital of £275,467.43. It is clear that an adjudicating authority is entitled to conclude, after a rigorous examination of the relevant evidence, that a claimant retains a capital asset despite a submission by that claimant that the capital asset had gone. In such a case the capital asset remains actual capital. In the instant case, it is important to recall that the decision by the decision-maker dated 13 April 2011 makes reference to the applicability of regulation 45 of the Income Support (General) Regulations (Northern Ireland) 1987, as amended. What is required, however, for such a conclusion to be rational is that it is based on a thorough examination of the relevant evidence and is supported by that evidence and that primary facts found from the evidence justify the conclusion.
23. In this regard I am reminded of the judgment of Carswell LCJ in Chief Constable of the RUC v Sergeant A [2000] NI 261 at 273f as follows: -
‘A tribunal is entitled to draw its own inferences and reach its own conclusions, and however profoundly the appellate court may disagree with its view of the facts it will not upset its conclusions unless—
(a) there is no or no sufficient evidence to found them, which may occur when the inference or conclusion is based not on any facts but on speculation by the tribunal (Fire Brigades Union v Fraser [1998] IRLR 697 at 699, per Lord Sutherland); or
(b) the primary facts do not justify the inference or conclusion drawn but lead irresistibly to the opposite conclusion, so that the conclusion reached may be regarded as perverse: Edwards (Inspector of Taxes) v Bairstow [1956] AC 14, per Viscount Simonds at 29 and Lord Radcliffe at 36.’
24. In the instant case, the appeal tribunal had before it copies of statements relating to the appellant’s current account with the First Trust Bank. Those statements are in the file of papers which is before me. From those statements it is clear, as the appeal tribunal concluded, that the sum of £385,000 was deposited in the appellant’s current account on 8 November 2005. On 14 November 2005 the sum of £270,000 was transferred to a fixed term account. Statements relating to the fixed term account from 14 November 2005 are also in the file of papers which are before me. Returning to the current account, the transfer on 14 November 2005 of the sum of £270,000 to the fixed term account left a balance in the current account on 14 November 2005 of close to £40,000. There then followed a systematic dissipation in the funds within the current account, by various methods – cheques, withdrawals, direct debits – such that by 24 November 2005 the level of funds was reduced to just under £4000. On 24 November 2005 the sum of £10,000 was transferred into the current account and there is a parallel entry from the statement of the fixed term account to confirm that this was the source for the transferred-in funds. Thereafter a pattern emerged of regular dissipation of the funds in the current account followed by what I might term ‘top-ups’ from the fixed term account. The funds in the fixed term account were also dissipated by separate direct withdrawals. This pattern continued until by 25 March 2009 there were no remaining funds in the fixed term account. The last entry which I have for the current account is for 1 October 2008 when the available funds were just short of £5,000.
25. The only possible conclusion which can be drawn from the evidence set out in the preceding paragraph is that by March 2011 the bulk of the £385,000 was no longer in the appellant’s bank accounts. For the appeal tribunal to conclude, if that was its conclusion, that the appellant, as of the date of claim to IS, that is 9 March 2011, had actual capital of £275,467.43 would mean a finding, as a primary fact, that the basis of the actual capital, monies in the amount of £275,467.43, and which were no longer in the appellant’s bank accounts, were being retained or held elsewhere. I regard that to be highly improbable. It seems to me that by 9 March 2011 the bulk of the £385,000 was gone. Accordingly and to utilise the language of Carswell LCJ cited above, in the instant case ‘…the primary facts do not justify the inference or conclusion drawn but lead irresistibly to the opposite conclusion, so that the conclusion reached may be regarded as perverse …’. To that extent, the decision of the appeal tribunal is in error of law.’
15. It seems to me that in the instant case, the appeal tribunal has fallen into the same trap. In the file of papers which is before are copies of statements from the appellant’s current account with Halifax. Those statements show that as of 5 December 2011 the account was in credit to the sum of £17,782.77. At 27 April 2012, the date from which entitlement to JSA was disallowed, the account was in credit to the sum of £1,112.79. The diminution in the funds in the account is accounted for by a series of withdrawals, including on five separate occasions, daily withdrawals of £2500. Once again, the only possible conclusion to be drawn from that evidence is that by 27 April 2012 the bulk of the original £17,782.77 had gone. As in PMcC, for the appeal tribunal to conclude, if that was its conclusion, that the appellant, as of the date of disallowance to JSA, that is 27 April 2012, had actual capital of £17,782.77 would mean a finding, as a primary fact, that the basis of the actual capital, monies in the amount of £17,782.77, and which were no longer in the appellant’s bank accounts, were being retained or held elsewhere. Once again I would regard that as being highly improbable.
16. As in PMcC, to utilise the language of Carswell LCJ cited above, ‘…the primary facts do not justify the inference or conclusion drawn but lead irresistibly to the opposite conclusion, so that the conclusion reached may be regarded as perverse …’ To that extent, the decision of the appeal tribunal is in error of law.
17. There is a second aspect of the appeal tribunal’s reasoning which I find to be problematic. As was noted above the appeal tribunal concluded that the appellant had ‘… not produced any verified evidence as to how the money was spent in the period subsequent to December 2011.’ It is clear that the appellant had provided evidence as to how the funds in his current account had been dissipated. That evidence was given to the Department during the initial decision-making process. The evidence is contained within the record of a telephone call with an officer of the Department on 6 June 2012, attached to the original appeal submission as Tab No 6, in further correspondence with the Department attached to the appeal submission as Tab No 8 and in his letter of appeal, attached to the appeal submission as Tab No 1. In summary his evidence was that the money had been spent on repaying loan sharks, gambling and purchases for his children. That evidence may or may not have been the most compelling or persuasive but it was evidence nonetheless.
18. More significantly, it is unclear to me what the appeal tribunal means by ‘verified’ evidence. Although I cannot be certain, I suspect that the appeal tribunal reasoned that the appellant had not provided any further evidence – perhaps by way of written receipt - to corroborate his claimed expenditure. If that was the thinking of the appeal tribunal then it is clearly in error of law. In CIS/4022/2007, after analysing a series of authorities on the issue of the assessment of credibility, including R3/01(IB)(T), the Deputy Commissioner (as he then was) stated, at paragraph 52, as follows:
19. I have noted the following submission which was made by Mr Rutledge on behalf of DMS:
‘12. In its reasons for the decision the Tribunal have stated ‘it is possible that the claimant might have been able to give evidence which would have elaborated upon his problems’. This would indicate that the Tribunal may have accepted that the claimant had indeed disposed of the money as claimed, if this is the case the Tribunal should have considered deprivation of capital. The bank statements show that in the four weeks immediately before claiming benefit the claimant’s capital reduced from £18,502.77 to £1,112.79 and the timing of the disposal of this money should also have been considered. I submit that the failure of the Tribunal to investigate the issue of deprivation of capital was an error in law.
13. If the Tribunal accepted that the money had been spent then it should have carried out a full and rigorous investigation into each withdrawal in the period from 30 March 2012 to 27 April 2012. I submit that there has to be an investigation into each withdrawal during this period and a decision made on each withdrawal as to whether or not the claimant deprived himself of capital for the purpose of claiming benefit. There has been no consideration of deprivation and notional capital in this case.’
20. I agree with the gist of this submission. The sequential approach advocated in R2/09(IS) necessitates that if a decision-making authority concludes that a claimant once had capital which might have affected entitlement to the benefit in question but no longer has that capital then it must go on to decide whether the claimant has deprived himself of the capital for the purpose of securing entitlement to benefit in line with the rules on deprivation ie has it become notional capital. I am not sure whether there has to be, as is suggested by Mr Rutledge, an investigation into each withdrawal during the relevant period. Quite clearly there was a pattern to the series of withdrawals from the appellant’s current account. For example, there were five separate withdrawals of the sum of £2500. Further, the appellant’s evidence was that the funds were dissipated in a limited way. It seems to me that the answer to the deprivation question in this case could be gleaned from a combination of general and specific enquiry.
21. I have also considered the appellant’s cited grounds for seeking leave to appeal to the Social Security Commissioner. Having found that the decision of the appeal tribunal is in error of law on the basis of the analysis set out above, I do not have to consider those grounds in any detail.
22. I would add the following remarks. In a series of decisions the Social Security Commissioners have advocated that decision-making authorities follow the guidance in R2/09(IS) when addressing claims or decisions where issues of capital are relevant to benefit entitlement. The most recent example of that endorsement came in AJM-v-Department for Social Development (IS) ([2013] NICom 46, C8/11-12(IS) & C1/12-13(IS)). The decision in R2/09(IS) was reported because of the practical logical approach which was set out by the then Chief Commissioner. It seems to me that if the relevant steps are followed then a decision-making authority will be likely to avoid the errors which arose in the instant and other capital cases.
Disposal
23. The decision of the appeal tribunal dated 4 October 2012 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. I refer the case to a differently constituted appeal tribunal for re-determination.
24. The Department is to prepare a further submission which addresses the applicability of all of the capital rules as set out above and which addresses how they apply to entitlement to IS in the context of the appellant’s circumstances.
25. Given the complexity of the legal principles relating to the issues raised by the appeal, the appellant should give consideration to seeking expert advice and guidance from an appropriate representative, or organisation, notwithstanding his right to select the representative of his choice, or attend the appeal tribunal hearing on his own. The appellant is reminded that the newly constituted appeal tribunal will be undertaking its own determination of the legal and factual issues which arise in the appeal.
26. The appeal tribunal is to address the capital issues in the context of the guidance given by the Chief Commissioner in R2/09(IS).
(signed) K Mullan
Chief Commissioner
12 August 2013