Northern Ireland - Social Security and Child Support Commissioners' Decisions

GB -v- Department for Social Development (JSA) [2015] NICom 62

Decision No:  C8/13-14(JSA)

 

 

 

 

SOCIAL SECURITY ADMINISTRATION (NORTHERN IRELAND) ACT 1992

 

SOCIAL SECURITY (NORTHERN IRELAND) ORDER 1998

 

 

JOBSEEKERS ALLOWANCE

 

 

Appeal to a Social Security Commissioner

on a question of law from a Tribunal's decision

dated 30 April 2013

 

 

DECISION OF THE SOCIAL SECURITY COMMISSIONER

 

 

Directions

 

1. Following my interim decision on 10 August 2015, I directed each of the parties to provide such evidence to me, within 28 days, as it considered would enable me to determine the market value of the claimant’s half-interest in the property at “........” as of the date of the Department’s decision of 22 October 2012.

 

2. I directed that such evidence should have regard to the factors considered relevant by Deputy Commissioner Mark in R(JSA)1/02 and to the other relevant jurisprudence referred to in the interim decision.

 

3. I further directed each of the parties to place before me any evidence of a relevant comparator within the past three years, where a half-interest in a similar property, with an occupier unwilling to sell, was sold for value and to specify the sale price achieved for such a half-interest.

 

4. The Department replied on 7 September 2015.  On 8 September 2015 the appellant’s representatives asked for a further 28 days to comply with the direction.  This was granted.

 

5. On 29 September 2015 the appellant’s representatives wrote to indicate that a request for a further extension might be required.  The appellant was given until 12 October 2015 to submit his evidence.

 

6. On 12 October 2015 the appellant’s representatives sought a further extension, blaming the appellant’s valuer for misunderstanding the nature of the request.  This application was refused.  However, the appellant was advised that a late-submitted report might still be considered if received before a concluded decision had been reached.  By 2 November 2015, no valuation report had yet been submitted by the appellant.

 

Relevant legislation

 

7. The relevant provisions are to be found in the Jobseekers Allowance Regulations (NI) 1996.  The capital limit is set by regulation 107, which provides:

 

107. For the purposes of Article 15(1) and (2A) of the Order (no entitlement to an income-based jobseeker’s allowance if capital exceeds a prescribed amount), the prescribed amount is £16,000.

 

8. The types of capital which fall to be taken into account, or disregarded, are provided for in regulation 108, which reads:

 

108.—(1) Subject to paragraph (2), the capital of a claimant to be taken into account shall be the whole of his capital calculated in accordance with this Part and any income treated as capital under regulation 110.

 

(2) There shall be disregarded from the calculation of a claimant’s capital under paragraph (1) any capital, where applicable, specified in Schedule 7.

 

9. However, no capital disregards were claimed in this case.

 

10. Calculation of capital in the United Kingdom is provided for in regulation 111, which reads:

 

111. Capital which a claimant possesses in the United Kingdom shall be calculated at its current market or surrender value less—

 

(a) where there would be expenses attributable to the sale, 10 per cent.; and

 

(b) the amount of any encumbrance secured on it.

 

11. Another relevant provision is regulation 115 which provides:

 

115. —(1) Subject to paragraph (2), except where a claimant possesses capital which is disregarded under regulation 113(4) (notional capital), where a claimant and one or more persons are beneficially entitled in possession to any capital asset, they shall be treated as if each of them were entitled in possession to the whole beneficial interest therein in an equal share and the foregoing provisions of this Chapter shall apply for the purposes of calculating the amount of capital which the claimant is treated as possessing as if it were actual capital which the claimant does possess.

 

(2) Any premises or land not wholly owned by the claimant shall be disregarded for such period as is reasonable in the circumstances to enable the collection of such information as is necessary to determine the treatment of capital in accordance with paragraph (1).

 

12. One final relevant provision is the rule relating to tariff income arising from capital.  This provides:

 

116. — (1) Except in a case to which paragraph (1B) applies, where the claimant’s capital calculated in accordance with this Part exceeds £6,000 it shall be treated as equivalent to a weekly income of £1 for each complete £250 in excess of £6,000 but not exceeding £16,000.

 

The question before me

 

13. The question which I have to decide is the capital value to be attributed to the claimant’s share in a dwelling house jointly owned and occupied by his wife from whom he separated in 2004.

 

14. By the accepted interpretation of regulation 115(1), the capital of the claimant has to be assessed as the market value of an equal share of the property – not, that is to say, half of the market value of the entire property, but rather the market value of the claimant’s half-share of the property.

 

15. By regulation 111, the market or surrender value of the capital has then to be calculated in terms of its market value less 10 per cent for the expenses of sale and less the amount of any encumbrance secured upon it.

 

Findings

 

16. I asked two specific questions in my request for valuation.  The first was addressed to the market value of the claimant’s half-interest in the property as of the date of the Department’s decision of 22 October 2012, having regard to the factors considered relevant by Deputy Commissioner Mark in R(JSA)1/02 and to the other relevant jurisprudence referred to in the interim decision.

 

17. The second question requested any evidence of a relevant comparator within the past three years, where a half-interest in a similar property, with an occupier unwilling to sell, was sold for value and to specify the sale price achieved for such a half-interest.

 

18. The Department’s valuation addressed two possible scenarios – namely, the value based on a Court being likely to order a sale, and the value where a Court was unlikely to order a sale in the future.  This latter valuation in particular was premised on a willing purchaser being prepared to pay £10,000 for a half-interest in the property worth £28,061 which would be realisable in 21 years.

 

19. However, the Department’s valuer further advised that, although unable to confirm that these types of sales do not exist, in 12 years working for Land and Property Services she had no evidence of sales of half share interests on the open market.

 

20. It appears to me that the market value of the claimant’s half-share in the property is not something that can be derived from a notional or theoretical calculation, but must be derived from its real world market value.  I have no evidence that there is any real world market for a half-share in dwelling houses with the co-owner in occupation.  It seems to me that, in a case such as the present one, if the Department cannot establish evidence of a real world market for such interests, then the value of such interests in the real world must be nil.

 

21. It follows that I find that the appellant must be assessed as having capital below the prescribed limit for regulation 107, but also below the prescribed limit for regulation 116.  I find that he is entitled to jobseekers allowance on that basis from 21 September 2012.

 

 

(signed)  O Stockman

 

Commissioner

 

 

 

17 November 2015

Decision No:  C8/13-14(JSA)

 

 

 

 

SOCIAL SECURITY ADMINISTRATION (NORTHERN IRELAND) ACT 1992

 

SOCIAL SECURITY (NORTHERN IRELAND) ORDER 1998

 

THE SOCIAL SECURITY COMMISSIONERS (PROCEDURE) REGULATIONS

(NORTHERN IRELAND) 1999

 

 

JOBSEEKERS ALLOWANCE

 

 

Appeal by the Department to a Social Security Commissioner

on a question of law from a Tribunal's decision

dated 30 April 2013

 

 

INTERIM DETERMINATION OF THE SOCIAL SECURITY COMMISSIONER

 

 

This is an appeal by the Department for Social Development from the decision of an appeal tribunal sitting at Armagh on 30 April 2013.

 

For the reasons I give below, I allow the appeal.  I set aside the decision of the appeal tribunal under Article 15(8)(a)(ii) of the Social Security (NI) Order 1998.  Rather than remit the appeal to a newly constituted tribunal for determination, I consider it expedient to make my own findings and to give the decision I consider appropriate.  I shall receive such further evidence as I direct below and I shall determine the appeal on the basis of the evidence received.

 

REASONS

 

Background

 

The claimant made a claim for jobseekers allowance (JSA) from the Department for Social Development (the Department) from 21 September 2012.  He indicated that he was residing alone in a mobile home.  He stated that he was joint owner of a neighbouring property with his wife, that he had separated from his wife in 2004 and that she was currently living at the property.  The claimant indicated that he was not taking any steps to dispose of his share in the property and declined to have the property independently valued by the Department.

 

On 3 October 2012 the Department considered all the evidence and determined that the claimant possessed capital in excess of the prescribed limit of £16,000.  On 22 October 2012 the Department decided that he was not entitled to JSA.  The claimant appealed.  The appeal was considered by a tribunal consisting of a legally qualified member (LQM) sitting alone.  The tribunal allowed the appeal.  The Department requested a statement of reasons for the tribunal’s decision and this was issued on 16 September 2013.

 

On 2 October 2013 the Department applied to have the decision of the tribunal set aside under Article 14 of the Social Security (NI) Order 1998 (the Order), while also applying to the LQM for leave to appeal from the decision of the appeal tribunal under Article 15(10)(a) of the Order.  The claimant was invited to make representations on the application and did so through his solicitors, McNamee, McDonnell, Duffy, who submitted that there was no error of law in the tribunal decision.

 

By a determination issued on 7 November 2011 the LQM granted leave to appeal.  The Department suspended the applicant’s payment of JSA pending appeal.  However, the claimant brought judicial review proceedings, in the course of which a valuation of the property was conducted for the Department by Land and Property Services (LPS) with the claimant’s consent.  On 13 November 2013 the Department’s appeal was received in the Office of the Social Security Commissioners.

 

Grounds

 

The Department, through Mr Crilly of Decision Making Services, submits that the tribunal has erred in law on the basis that:

 

(i)        there was insufficient evidence of the value of the claimant’s share of the property occupied by his wife for the tribunal to determine the appeal;

 

(ii)       the tribunal did not make a finding on the specific amount of capital possessed by the claimant.

 

The claimant was invited to make observations on the Department’s grounds.  He responded through his solicitors to submit that no point of law had been properly identified.

 

The tribunal’s decision

 

The Department did not send a representative to the tribunal hearing.  The tribunal found that the claimant was the joint owner of a property which he did not reside in.  The tribunal was provided with a valuation report by the claimant on the day of the hearing, estimating the value of the property at £60,000.  There was evidence that there was an outstanding mortgage balance on the property of £33,877.90.

 

The tribunal reasoned that the claimant was half owner of the property.  On the premise that the claimant’s share in the property should be calculated as £60,000 less £33,877.90 and divided by two, the tribunal estimated the resulting figure to be below the prescribed limit of £16,000 without quantifying the exact figure.  It decided that the claimant did not have capital in excess of the prescribed limit.  As a result, it allowed the appeal.  It did not address any other aspects of entitlement.

 

Relevant legislation

 

The relevant provisions are to be found in the Jobseekers Allowance Regulations (NI) 1996.  The capital limit is set by regulation 107, which provides:

 

107. For the purposes of Article 15(1) and (2A) of the Order (no entitlement to an income-based jobseeker’s allowance if capital exceeds a prescribed amount), the prescribed amount is £16,000.

 

The types of capital which fall to be taken into account, or disregarded, are provided for in regulation 108, which reads:

 

108.—(1) Subject to paragraph (2), the capital of a claimant to be taken into account shall be the whole of his capital calculated in accordance with this Part and any income treated as capital under regulation 110.

 

(2) There shall be disregarded from the calculation of a claimant’s capital under paragraph (1) any capital, where applicable, specified in Schedule 7.

 

However, no capital disregards were claimed in this case.

 

Calculation of capital in the United Kingdom is provided for in regulation 111, which reads:

 

111. Capital which a claimant possesses in the United Kingdom shall be calculated at its current market or surrender value less—

 

(a) where there would be expenses attributable to the sale, 10 per cent.; and

(b) the amount of any encumbrance secured on it.

 

One other relevant provision is the rule relating to tariff income arising from capital.  This provides:

 

116. — (1) Except in a case to which paragraph (1B) applies, where the claimant’s capital calculated in accordance with this Part exceeds £6,000 it shall be treated as equivalent to a weekly income of £1 for each complete £250 in excess of £6,000 but not exceeding £16,000.

 

Oral hearing

 

I directed an oral hearing of the appeal.  Mr Crilly of Decision Making Services appeared for the Department.  Mr Fegan of counsel appeared for the claimant.  I am grateful to both of the representatives for their careful and realistic submissions.

 

The essence of Mr Crilly’s first submission was that the tribunal had erred in law by accepting evidence of valuation which fell short of what was required under current case law.  He referred to the Department’s systems for obtaining valuation through LPS.  This would involve a referral, accompanied by a request to complete a Departmental A64 form.

 

Mr Crilly submitted, and it was not contested, that the valuation of a half-share of property was not simply half the market value of the whole asset, but the market value of a half-share of the property in the light of there being another joint owner.  Part 2 of the A64 form dealt with cases of joint ownership.  On the form the Department directed a valuer to consider specifically relevant issues, which included any rights of occupation possessed by occupants who are not owners; whether the other owners would agree to the sale of the asset as a whole; whether the other owners would be willing and able to buy the share; the occupation of the property by other owners; and whether they would be willing to vacate it.

 

In circumstances where the other owners would not buy the share or agree to the sale of the asset as a whole, or are not prepared to vacate the property, the valuation would also assess matters such as the attitude of the courts – whether they would order the sale of the property as a whole, as a partition, or some other order, the length of time a purchaser may have to wait before obtaining possession of the asset, and the potential legal costs of a buyer.  Other factors to take into account included sales of similar share interests in property, and whether there was a market for the share.

 

Mr Crilly referred to Great Britain Commissioner’s decision R(JSA)1/02, which was endorsed in C23/02-03(IS), a decision of former Chief Commissioner Martin QC.  Chief Commissioner Martin had said:

 

“Any proper valuation requires a consideration of all those matters referred to and, in the circumstances, I doubt whether any Tribunal could come to a proper decision without taking into account those matters set out by Mr Deputy Commissioner Mark in Great Britain decision R(JSA)1/02, at paragraph 13 and, in addition, not only evidence of the valuer’s expertise in relation to such valuation but also evidence of relevant comparators.”

 

Mr Crilly submitted that the tribunal had accepted a valuation by an estate agent which had not properly addressed the implications of the claimant’s wife being in occupation of the property, and had erred by dividing the global sum by two in order to assess the claimant’s share.  Furthermore, the tribunal had not addressed the application of regulation 111(a) which provided for the reduction of the value of the capital asset by 10 per cent for the expenses of sale.

 

Mr Crilly further submitted that the tribunal has erred in law by failing to assess the specific amount of capital held by the claimant.  He submitted that this had been considered by Deputy Commissioner Parker in C5/07-08(IS), a case involving the diminishing notional capital rule.  He submitted that a similar principle applied in the present case, where the tribunal should have addressed the actual amount of capital held by the claimant for the purposes of applying the tariff income rule.  Mr Crilly referred to the valuation conducted by LPS which produced a different valuation to that provided by the claimant and asked for the matter to be remitted to a newly constituted tribunal for determination.

 

Initially, those representing the claimant had argued that the Department had not taken issue over a point of law but was seeking to challenge a finding of fact.  Mr Fegan, now appearing for the claimant, accepted that there was a point of law arising in the appeal.  Mr Fegan conceded that the issue should be revisited by a tribunal.  He referred to Part 2 of the A64 form.  He submitted that if the factors in the A64 form had been applied to the valuation before the tribunal, there could only have been a depressive effect on value, taking it well below the prescribed capital limit.  He asked for the appeal to be remitted with a sole direction to the tribunal that a new valuation should be arrived at only on the basis of the evidence accepted by the tribunal below.  In particular, he questioned the adequacy of the valuation in the LPS report, which had not been before the tribunal, but was now relied upon by the Department.  If remitted to a fresh tribunal, he submitted that only the valuation evidence which was before the previous tribunal should be considered.

 

In the course of the hearing, Mr Fegan changed his position with regard to the tribunal’s decision.  He submitted, relying upon Article 13(8)(a) of the Social Security (NI) Order 1998, that the tribunal need not determine any matter which is not raised by the appeal.  He submitted that it had sufficient evidence to decide the issue before it, namely, the question of whether the claimant had capital in excess of the prescribed limit, on the basis of the evidence before it.

 

Assessment

 

The issue in the appeal was to determine the market value of the claimant’s half interest in the property.  The valuation placed before the tribunal by the claimant only addressed the total value of the asset.  It is established by previous Commissioners’ decisions, such as R(IS)5/07, that the value of the claimant’s half-interest must be assessed - what a third party might expect to pay for that half-interest - as opposed to half of what a third party might expect to pay for the whole house.

 

The tribunal in the present case accepted the valuation of the whole house which had been obtained by the claimant, deducted the outstanding mortgage debt and divided by two.  Therefore, it arrived at a value for the claimant’s half share in the proceeds of the prospective sale of the whole house.  The valuation led the tribunal to a figure below the prescribed threshold of £16,000, but it did not address the rather more elusive issue of the value of the claimant’s half-interest in the property.  Mr Crilly submits that by doing so it has materially erred in law.

 

In relation to the evidence of valuation, I was referred to C23/02-03(IS) where Chief Commissioner Martin QC had endorsed the decision of Great Britain Deputy Commissioner Mark.  C23/02-03(IS) is a case dealing with jointly held capital, not dissimilar to the present one.  Chief Commissioner Martin said that he “doubted whether any Tribunal could come to a proper decision without taking into account those matters set out by Mr Deputy Commissioner Mark in Great Britain decision R(JSA)1/02”.

 

In R(JSA)1/02, Deputy Commissioner Mark was similarly dealing with a case where a claimant had a half-interest in a property and, allowing the appeal, had said that:

 

1.         “it is not a sufficient explanation of a decision for a tribunal to accept the opinion of a valuer as to the value of an interest in property, even where the valuer is shown to be an expert, without some reasons being given for adopting the value put forward (para.10);

 

2.         there is no rule of law that, where a wife and children are still living in the former matrimonial home, the value of a claimant's share in that home must be regarded as nil (para.11);

 

3.         the value of the claimant's share must be considered on the evidence in each case but, where a property is of modest value and none of that value can be realised by the claimant or any person acquiring his interest for a lengthy or unascertainable period, it is unlikely that anybody would be prepared to pay very much for that interest and it may have little or no value (para.11);

 

4.         proper valuation evidence should include:

 

(i) grounds on which the valuer is held out as having appropriate expert knowledge, including, where the value of a share in property is at issue, the valuer's experience relating to such shares and their sale;

 

(ii) details of the property, including its location, size and condition, sufficient to provide a basis for the valuation;

 

(iii) in the case of leasehold property, details of the length of the lease and any special terms in it;

 

(iv) where the value of a share in property is in issue, an explanation of the factors considered relevant to the valuation and how they affect it;

 

(v) evidence of actual sales of comparable properties or interests, or an explanation of why these are not available,

 

but where this is not possible and the valuer has had to proceed on the basis of assumptions because of the lack of any relevant information, the report should state what is missing and the assumptions upon which the report is based (paras.13 and 14); …”.

 

Deputy Commissioner Mark made the observation at paragraph 14 of his decision that “I appreciate that, in cases of this kind, this will on occasions be a counsel of perfection which cannot be realised”.  I think that this is a realistic qualification of his decision.  Nevertheless, it is very clear that the valuation given to the tribunal by the claimant would not meet the standards set by R(JSA)1/02.

 

The Department did not provide a valuation for the tribunal.  It has now provided its own valuation through LPS.  However, the reason why this could not have been prepared for the tribunal is not fully clear to me.  Mr Crilly explained that the Department did not provide a valuation to the tribunal because the claimant had declined his consent to this.  Departmental instructions at paragraph 120 state that:

 

“Valuers cannot carry out a valuation without the customer’s written permission, and the claimant’s current address, unless the valuation is needed for a fraud action.  In these cases the Data Protection Act allows the valuer to value a property without the claimant’s permission”.

 

In light of these instructions, the Department was precluded from providing its own valuation to the tribunal hearing the claimant’s appeal.  I confess that I do not fully understand the legal basis of the Department’s policy of seeking the claimant’s consent to the valuation, when he did not even live in the house in question.  Further, when the valuation was done by LPS with consent, the valuer involved did not go to the house and no visual inspection, either external or internal, was carried out.

 

I consider that the Department’s valuation falls short, in a number of respects, of the standards proposed by Deputy Commissioner Mark.  In particular, at paragraph 6 of his decision Commissioner Mark criticises a report on the basis that no attempt had been made to inspect the property, even externally.  The approach advocated by Deputy Commissioner Mark is not a binding standard, being described as a “counsel of perfection”, but I consider that it represents best practice.  Ultimately, as Deputy Commissioner Mark said, the issue must be considered on the evidence in each case.

 

There is force in Mr Crilly’s submission that the tribunal has adopted an incorrect approach to the valuation of the claimant’s half interest in the property, in light of the relevant jurisprudence.  By assessing a starting point for a valuation of the property as the market value of the property overall, the tribunal has erred in its approach to the valuation of a jointly held property.  It has further omitted to deduct 10% from the figure to represent the expenses of sale as required by regulation 111(a).  These are errors of law.

 

Nevertheless, there is also force in Mr Fegan’s submission that – on the logic of the tribunal’s approach – a more correct valuation would be lower than which would be reached on the figures on which the tribunal’s calculation was based.  He fairly points out that the valuation supplied by the claimant was the sole evidence of the value of the property before the tribunal.  The Department tied its own hands by not providing evidence.  The claimant’s evidence was the best - and only - evidence available.

 

However, it seems to me that the issue then becomes whether the tribunal is able to make a sustainable finding on the evidence which it had.  The tribunal did not make a precise finding as to the property’s value.  If a precise finding was pursued by a calculation along the (erroneous) lines followed by the tribunal, it would have equalled £13,064.55.  The tribunal reasoned that the value of the claimant’s share of the capital asset was under £16,000.  In fact, had the tribunal followed the correct approach of first deducting the figure of 10% for the expenses attributable to sale as required by regulation 111(a), although the calculation would still be erroneous, the starting point for the value of the house would have been £54,000, and the resulting capital figure less again.

 

Mr Fegan submits that the tribunal had arrived at a value which overestimated the value of the claimant’s half interest.  I accept that Mr Fegan’s submission is correct in principle.

 

Bearing in mind that the value of a half-interest would inevitably be less than half the market value of the whole property, I consider that the tribunal would have been entitled to the view that the value of the claimant’s joint share of the property was less than £16,000, as submitted by Mr Fegan.  If the sole issue before the tribunal was the question of whether the claimant possessed capital in excess of the prescribed limit of £16,000, that would most likely end matters, as the error of law could not be said to be a material error.

 

However, the second submission of Mr Crilly is that the tribunal was required to make a finding as to the actual amount of capital which should be attributed to the claimant.  The necessity of this is not restricted to the question of whether the claimant had capital in excess of the prescribed limit.  The fact that the claimant might have capital below the prescribed limit is sufficient to establish that he is not precluded from entitlement for that reason.  However, in order for the amount of JSA to which he might be entitled to be calculated correctly, it was necessary to take the tariff income rule into account.  This rule arises from regulation 116, set out above, and the effect is that for every £250 or part of £250 which a claimant has in excess of the lower capital threshold of £6,000, £1 is deducted from the amount of his JSA entitlement.

 

Mr Crilly submits that the tribunal has erred in law by not deciding the issue of precisely how much capital value should be attributed to the claimant’s half interest in his property, in order to decide whether a tariff income figure should be applied.  Despite Article 13(8)(a) of the Social Security (NI) Order 1998 which provided that the tribunal “need not consider any matter which is not raised by the appeal”, he submitted that the issue on the appeal was the entitlement of the claimant to JSA, rather than simply the issue of the prescribed capital limit.

 

I observe that, ironically, in the case of R(JSA)1/02 relied upon by Mr Crilly, Deputy Commissioner Mark takes the approach that there was no evidence upon which any tribunal would be entitled to rely that the capital of the claimant exceeded £8,000 – which was then the prescribed limit - and that in the absence of such evidence his capital did not exceed £8,000.  He made no precise finding as to the amount of any capital the appellant in that case possessed, and therefore did not apply the tariff income rule.

 

Nevertheless the tariff income rule affects the amount of benefit which can properly be paid.  It is a condition of entitlement which needs to be addressed.  The only bodies with the jurisdiction to address it are the Department, perhaps on a reference of this issue to it by the tribunal, or the tribunal by making its own determination.  Mr Fegan relied upon Article 13(8)(a) of the Social Security (NI) Order 1998.  Where a condition of entitlement is determined by the Department and is not in dispute, I consider that the particular provision applies, and that a tribunal need not consider that issue.  Here, as the Department decided that the claimant’s capital was in excess of £16,000, the tariff income aspect had not been considered and there was no determination as to how it might apply.  In those circumstances, I consider that Article 13(8)(a) did not apply as the issue of tariff income was raised, by necessary implication, on the appeal.

 

There were two options for a tribunal in these circumstances: to refer the issue to the Department for determination or to determine the issue itself.  I consider that there is a difficulty with a tribunal referring back to the Department for a decision on tariff income.  In order for the Department to determine such a reference, a tribunal would need to give a precise figure for the amount of capital held by the claimant.  If the tribunal had adopted an incorrect approach to the valuation of the capital, as in the present case, I consider that it cannot be correct that the Department would be required to accept the tribunal’s assessment of capital value and to have to accept an erroneous calculation upon a reference back.

 

The alternative is that the tribunal would have to determine the issue of tariff income itself and in doing so to state a precise figure for the claimant’s capital.  I consider that this is the correct approach.  However, again, the present tribunal has adopted an erroneous approach to its calculation.  It is also questionable whether the tribunal had enough evidence to make a calculation of the capital on a correct basis at all.  It would have needed evidence which would have clearly enabled an assessment of the value of the claimant’s half-interest in the property.  In my view the tribunal did not have enough evidence to make such an assessment.

 

The Department was bound by guidance which prevented it from putting evidence to the tribunal.  The claimant has not provided a valuation which can assist the tribunal.  In the words of Deputy Commissioner Mark, in the present case the valuation provided by the claimant is so unsatisfactory as to be worthless.  I consider that the tribunal has erred in law in this case by failing to make findings on the issue of tariff income.  Yet at the same time, I am not unsympathetic to the plight of the tribunal, as the tribunal clearly has not been provided with sufficient evidence to make all necessary findings.

 

Equally I consider that the LPS valuation now placed before me by the Department does not meet the standard necessary to determine the issue.  Chief Commissioner Martin had doubted “whether any Tribunal could come to a proper decision without … evidence of relevant comparators”.  This is the “elephant in the room” in cases such as the present one.  The question of whether there was any sort of market for half-interests in property was discussed but none of the representatives was aware of such a market.  This factor has led some Commissioners in the past to assess the capital value of such half-interests as nil.

 

As explained above, I consider that the tribunal has erred in law in its approach to calculating the capital held by the claimant.  By regulation 111, the issue which must be addressed is quantifying the market value of the capital.  It took the wrong approach to identifying the market value of the claimant’s half-interest, and in the method of calculation it adopted.  It further erred in law by not making a specific finding as the value of the capital held by the claimant.  This in turn led to error in not addressing the tariff income rule.

 

As I find that the tribunal has erred in law, I must set aside its decision.

 

Disposal

 

In this case, I am reminded on the speech of Baroness Hale at paragraph 61-62 of Kerr v. Department for Social Development [2004] UKHL 23 (also reported as an annex to R1/04(SF)), where she reiterates the point that the process of benefits adjudication is inquisitorial rather than adversarial.  In determining entitlement to benefit, both the claimant and the Department must play their part.  The Department is the one which knows what questions it needs to ask and what information it needs to have in order to determine whether the conditions of entitlement have been met.  The claimant is the one who generally speaking can and must supply that information.  But where the information is available to the Department rather than to the claimant, then the Department must take the necessary steps to enable it to be traced.  Lord Hope in Kerr v. Department for Social Development has said at paragraph 15:

 

“in this situation there is no formal burden of proof on either side.  The process is essentially a fact-gathering exercise, conducted largely if not entirely on paper, to which both the claimant and the Department must contribute”.

 

Facts which may reasonably be supposed to be within the claimant’s own knowledge are for the claimant to supply at each stage of the appeal.  However, the claimant must be given a reasonable opportunity to supply them.

 

In this case I do not consider that either party has provided sufficient evidence to enable a tribunal to determine the issue before it.  However, in the light of the fact that a tribunal will consist of a LQM sitting alone, and in the light of the likely delay and cost involved, I do not consider that there is merit in referring this matter back to a new tribunal for determination.  Rather, I intend to determine the appeal myself.  As I consider that the evidence which was before the tribunal is insufficient to determine the issues in the appeal, I make the following directions:

 

Directions

 

1.         I direct that each of the parties shall provide such evidence to me, within 28 days, as it considers will enable me to determine the market value of the claimant’s half-interest in the property at “........” as of the date of the Department’s decision of 22 October 2012. 

Such evidence shall have regard to the factors considered relevant by Deputy Commissioner Mark in R(JSA)1/02 and to the other relevant jurisprudence referred to in this decision.

 

2.         I further direct each of the parties to place before me any evidence of a relevant comparator within the past three years, where a half-interest in a similar property, with an occupier unwilling to sell, was sold for value and to specify the sale price achieved for such a half-interest.

 

I will finalise my decision upon receipt of the evidence.

 

 

(Signed):  O Stockman

 

Commissioner

 

 

 

(Dated):  10 August 2015