Scottish Court of Session Decisions

In this application for judicial review the petitioner is Mrs Rhoda Yule, aged 81 years, on whose behalf the petition has been presented by her son, David Yule, acting under a Power of Attorney granted by her dated 27 February 1995. The petition seeks the reduction of a decision of the respondents, South Lanarkshire Council, dated 12 March 1997 to the effect that the petitioner is not entitled to public funding in respect of the costs of the accommodation provided for her at Kirknowe Nursing Home, Wishaw, on the ground that she is in possession of notional capital in excess of £16,000, represented by the value of heritable property at 195A Stonelaw Road, Rutherglen, by virtue of the provisions of regulation 25 of the National Assistance (Assessment of Resources) Regulations 1992.

The factual background to the matter is that by disposition dated 27 February and recorded 3 March 1995, the petitioner disponed heritable property owned by her at 195A Stonelaw Road, Rutherglen, for love, favour and affection to her granddaughter, Miss Deborah Yule, retaining for herself a liferent of the subjects. On the same date, 27 February 1995, she executed a Power of Attorney in favour of her son, David Yule. The petitioner avers that at the time of the execution and recording of the disposition, she was in good health and lived independently of her family. On 6 January 1996, she fell and broke her arm. She was admitted to hospital and her health subsequently deteriorated to the point that she was unable to look after herself. After her discharge from hospital in or about April 1996, she was looked after by her son and his wife, but her mental and physical condition deteriorated further and an application was made to admit her to Kirknowe Nursing Home. An application form provided by the respondents' Department of Social Work was completed by David Yule on behalf of the petitioner in order that her financial contribution to the cost of her nursing home accommodation might be determined. The form sought details of inter alia any property, land or capital disposed of in the previous six months. In the light of the date of the disposition already referred to, no details were given. The petitioner took up residence in Kirknowe Nursing Home on 13 June 1996 and made partial payment of the relevant charges from her own income, which came from various pensions, the balance being paid by the respondents. The respondents aver that, when the petitioner was undergoing a community care assessment in May 1996, David Yule reported that there had been a gradual change in the petitioner over the past six to seven years and that she had harboured paranoid ideas regarding a neighbour for a number of years. By the time of the assessment the petitioner had been diagnosed as suffering from a moderate degree of dementia.

After an exchange of correspondence between the respondents and solicitors acting for Miss Deborah Yule, the respondents decided that, having regard to the terms of the National Assistance (Assessment of Resources) Regulations 1992, the petitioner was not entitled to public funding in respect of the balance of the nursing home charges. This decision was intimated in a letter dated 12 March 1996. The petitioner contends that that decision was ultra vires of the respondents. She also contends that it was unreasonable, in respect that there was no evidence which would have entitled the respondents to reach it.

When the matter originally came before me for first hearing, I heard argument on the question of vires, leaving argument on the question of reasonableness to be heard later, if necessary. In an Opinion dated 4 February 1998 I decided the question of vires in favour of the respondents. Parties then presented arguments on the question of reasonableness at a continued first hearing and this Opinion contains my decision on that question.

As I have indicated, the decision letter of 12 March 1997 represented the culmination of an exchange of correspondence between the respondents and Miss Deborah Yule or her solicitors. The arguments of both parties involved a consideration of the terms of that correspondence, and I set out its contents in some detail. The correspondence began with a letter of 1 November 1996 from the respondents' Head of Conveyancing, Contracts and Litigation to Miss Deborah Yule in which the effect of the relative legislative provisions was explained and reference was made to the transfer of Mrs Yule's property for no consideration. The letter then went on:

That letter was replied to by solicitors acting on behalf of Miss Yule in a letter dated 12 November 1996 which was in the following terms:

The respondents responded in a letter dated 29 January 1997 in the following terms:

This was replied to by Miss Yule's agents in a letter dated 4 February in the following terms:

There then followed the respondents' decision letter dated 12 March, in these terms:

It is agreed that the accommodation occupied by the petitioner is provided under the Social Work (Scotland) Act 1968. In terms of section 87(2) of that Act persons for whom accommodation is provided under the Act are required to pay for it in accordance with the subsequent provisions of section 87. Section 87(3) provides that accommodation provided under the 1968 Act is to be regarded as accommodation provided under Part III of the National Assistance Act 1948, and that sections 22(2) to (8) of the 1948 Act are to apply.

Section 22(2) of the 1948 Act provides that the basic obligation of the person provided with accommodation "the resident", is to pay the full cost of the accommodation provided, "the standard rate". Section 22(3) provides that where a person satisfies the local authority that he is unable to pay for the accommodation provided at the standard rate, the local authority is to assess his ability to pay and determine at what lower rate he is liable to pay. In terms of section 28(5) the local authority is required, in assessing a person's ability to pay, to give effect to the regulations made under that subsection, the National Assistance (Assessment of Resources) Regulations 1992. Regulation 20 of those Regulations provides that no resident shall be assessed as unable to pay for his accommodation at the standard rate if his capital exceeds the prescribed amount. It is agreed that when the heritable property disponed by the petitioner in 1995 is taken into account, her capital exceeds the prescribed amount. Regulation 25 provides that a resident may be treated as possessing actual capital of which he has deprived himself for the purpose of decreasing the amount that he may be liable to pay for his accommodation.

Mr Mitchell for the petitioner argued that the decision under review was unlawful in respect that the respondents were only entitled to make it if clear evidence existed that the petitioner's purpose in transferring the property was to decrease the amount that she might be liable to pay for nursing home accommodation. He submitted that, once it was established that a claimant for means tested benefit had ceased to possess a capital asset, the onus was on the person so asserting to establish that the claimant's purpose in depriving himself of the asset was illegitimate. That was a matter which must be the subject of evidence. The person so asserting could not establish such a purpose without demonstrating (a) that the claimant knew of the existence of a capital limit, and (b) that he had foreseen an application for the relevant benefit being made. Reference was made to Ogus & Barendt, The Law of Social Security, 4^th Edition page 590, to decisions of the Social Security Commissioner numbered R(SB)38/85, CIS/124/1990 and R(SB)12/91, and also to R v Legal Aid Assessment Officer ex parte Saunders, Queen's Bench Division, 10 November 1989, unreported. There was no evidence that, as at March 1995, the petitioner's purpose in transferring her property was to decrease the amount that she might be liable to pay for nursing home accommodation. A suspicion was not enough. Nor was there evidence that the petitioner was aware of the capital limits applicable to the means test or that she foresaw the likelihood of a future application for funding for nursing care. The respondents appeared to take the view that it was for the petitioner's granddaughter to prove otherwise. The decision should be reduced and the matter remitted back to the Council.

On behalf of the respondents, Mr Davidson submitted that the petition was irrelevant in respect that there was sufficient material before the respondents to enable them to decide that the petitioner's purpose was to decrease the amount that she might be liable to pay for nursing home accommodation. In making this decision, the respondents did not require to hold it proved that the petitioner was seeking to deprive herself of assets in order to decrease the amount that she might be liable to pay. This was an administrative decision, not a judicial one. The official concerned had no power to require the production of information, but had to proceed on the basis of such information as was available. In that situation there was no requirement for the official to hold facts proved before he could make a decision. Cases relating to other forms of means tested benefit were of no assistance because the provisions relating to those benefits incorporated an appeal procedure. It was not argued that the petitioner had not deprived herself of capital, standing her retention of a liferent.

I find it helpful to begin consideration of the arguments by identifying the precise function which the respondents were exercising when they made the decision under review. In terms of section 22(3), before the local authority's obligation to assess a resident's ability to pay arises, it is for the resident to satisfy the local authority that he is unable to pay the standard rate. In practical terms however, it seems to me that the local authority's task of deciding whether they are satisfied of the claimant's inability to pay, and the task of assessing his ability to pay merge into a single exercise. The 1992 Regulations seem to me to be designed to deal with both aspects. Regulation 20 is concerned with the question upon which the local authority requires to be satisfied, that of the claimant's inability to pay the standard rate, and provides that no resident shall be assessed as unable to pay for his accommodation at the standard rate if his capital exceeds the prescribed amount. Regulation 25 also seems to me to be concerned with that question and provides that a resident may be treated as possessing actual capital of which he has deprived himself for the purpose of decreasing the amount that he may be liable to pay for his accommodation. In my view the decision that the petitioner brings under review in this case is a decision of the local authority that they were not satisfied that the petitioner was unable to pay for the accommodation provided at the standard rate.

The second matter which requires to be made clear is the nature of the ground on which the decision is challenged. As I understood the petitioner's pleadings and the argument advanced on her behalf, the ground of review fell within the category of "irrationality" as explained by Lord Diplock in C.C.S.U. v The Ministry for the Civil Service 1985 1 A.C. 374. The petition contains an averment that the decision was contrary to natural justice, a ground which falls under Lord Diplock's category of "procedural impropriety", but I did not understand this to be advanced as a separate ground of review. The question for me then is, was the decision so unreasonable that no reasonable authority could ever have come to it, or, more particularly, was there material before the local authority on which the decision could reasonably have been reached? To answer this I have to consider the facts as they were before the local authority as the result of their enquiries.

The petitioner was 78 when she disponed the fee of her dwellinghouse to her granddaughter. She retained the liferent of the house and continued to live in it until her accident. She could have achieved the same practical result by making a will in favour of her granddaughter. No clear explanation was provided to the respondents as to why the petitioner chose to give the house to Miss Yule by inter vivos transfer rather than by will. For instance, there was no suggestion of pressing need on the part of Miss Yule. At the same time as executing the disposition the petitioner executed a power of attorney in favour of her son. Her son informed social workers carrying out a community care assessment in May 1996 that there had been a gradual change in her over the past six to seven years and that for a number of years she had harboured paranoid ideas regarding a neighbour. In their letter of 12 November 1996 Miss Yule's solicitors informed the respondents that, as at 3 March 1995, the petitioner's health was excellent.

The respondents were entitled to draw inferences from the information received by them. The execution of the power of attorney indicated that the petitioner's affairs required to be managed by others. It is reasonable to draw from that the inference that the petitioner's health was not perfect at the time of execution. It is a fact of life, which the respondents were entitled to take into account, that persons in their late seventies are increasingly likely to require nursing home accommodation. The avoidance of the requirement to meet the full cost of nursing home accommodation provided a motive for making the gift by inter vivos transfer of the property rather than by will. In so far as any other motive or explanation was provided to the respondents, they were entitled to reject it. In my view no satisfactory motive or explanation was in fact proffered. The provision of conflicting information as to the petitioner's health provided a justification for drawing an adverse inference from information which was capable of affording such an inference.

The decision on matters of fact is left to the respondents and there is no appeal. Accordingly the weight given by the respondents to particular pieces of evidence is entirely a matter for them and not open to challenge. I do not accept the petitioner's submission that the respondents could only make the decision which they did if there was evidence that the claimant knew of the existence of a capital limit, and that she had foreseen the making of an application for the relevant benefit. In seeking to operate Regulation 25 local authorities are unlikely to be met with ready admission that the purpose of a transfer of a capital asset of an elderly person was to decrease the amount that he or she might be likely to pay for accommodation provided under the 1968 Act. There will cases in which the elderly person is incapable of forming any intention to transfer or of understanding the nature and purpose of any arrangement. In such cases he or she may be assisted by relatives or advisers. There is no power to compel the provision of information, and the local authority must determine the purpose of the transfer from the information which has been provided to it. In such circumstances the true purpose of any transfer may be ascertained or inferred without any specific finding as to the state of knowledge or intention of the elderly person.

In the light of all these considerations I am unable to conclude that, on the basis of the material before them, the respondents were not entitled to take the view that the purpose of the transfer of the petitioner's house was to decrease the amount that she might be liable to pay for the nursing home accommodation provided to her. Accordingly there was material entitling the respondents to conclude that the petitioner was not unable to pay for the accommodation provided at the standard rate. I do not therefore consider that the decision was so unreasonable that no reasonable authority could ever have come to it. Accordingly I shall sustain the pleas-in-law for the respondents and repel the pleas-in-law for the petitioner.