UK Social Security and Child Support Commissioners' Decisions

[1996] UKSSCSC CIS_6908_1995 (09 January 1996)


 


MR/SH/6

Commissioner's File: CIS/6908/1995

SOCIAL SECURITY ACT 1986

SOCIAL SECURITY ADMINISTRATION ACT 1992

APPEAL FROM DECISION OF SOCIAL SECURITY APPEAL TRIBUNAL ON A QUESTION OF LAW

DECISION OF THE SOCIAL SECURITY COMMISSIONER

[ORAL HEARING]

1. This is an adjudication officer's appeal against a decision of the Coventry social security appeal tribunal dated 20 March 1995. At the oral hearing of the appeal, the adjudication officer was represented by Mrs S Rabas of the Office of the Solicitor to the Departments of Social Security and Health and the claimant was represented by Mr Reilly of Coventry Law Centre. I am grateful to both advocates for their helpful submissions.
2. There is no substantial dispute of fact in this case. The claimant owns two properties. At first, he and his family lived at 145 Broad Street, Coventry, and the other property was let to tenants. On 11 December 1994, after the claimant had gained possession of the second property and had carried out repairs to it, he and his family moved into that second property. 145 Broad Street had already been on the market and the claimant continued to offer it for sale after he had moved. On 23 December 1994, the adjudication officer decided that the claimant was not entitled to income support from 11 December 1994 because 145 Broad Street fell to be taken into account as capital and its value exceeded £8,000. Before 11 December 1994, the claimant had been receiving income support because 145 Broad Street had been disregarded under paragraph 1 of Schedule 10 to the Income Support (General) Regulations 1987 (being his home) and the other property had fallen to be disregarded under paragraph 27 of Schedule 10 (because he was at

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first trying to obtain possession of it and was then making it ready for occupation).

3. The claimant appealed against the adjudication officer's decision on the ground that 145 Broad Street should be disregarded in the calculation of his capital from 11 December 1994 under paragraph 26 of Schedule 10 to the 1987 Regulations which provides for there to be disregarded -

"Any premises where the claimant is taking reasonable steps to dispose of those premises, for a period of 26 weeks from the date on which he first took such steps, or such longer period as is reasonable in the circumstances to enable him to dispose of those premises."

4. It is not disputed that the other property, in which the claimant now lives, falls to be disregarded under paragraph 1. The adjudication officer argued that the claimant was not taking reasonable steps to sell 145 Broad Street and that regard had to be had to the fact that the property had been on the market since 1992. However, the tribunal allowed the claimant's appeal, deciding to "discount the efforts for sale .... prior to 11 December 1994" and finding that, in all the circumstances, the claimant had taken reasonable steps to dispose of the property from 11 December 1994. They took the view that the 26 weeks mentioned in paragraph 26 of Schedule 10 could not run during a period when the value of the property fell to be disregarded under some other paragraph of Schedule 10. They said:-

"The tribunal considered that paragraph 26 is meant to cover the other property which is not the claimant's home. If this were not the case a situation could arise that where a person owned just one property and occupied that as their home and decided to sell that property and put it on the market, if it was held they were not taking reasonable steps to dispose of it (for example they might be only gently pursuing a sale and not aggressively) and no purchaser was found within a length of time then it could be argued that paragraph 26 should come into play and that person would then not have the benefit of paragraph 1 whereby the dwelling house occupied as a home can be disregarded. The tribunal did not consider that this was the intention of the legislation."

The chairman granted the adjudication officer leave to appeal. The appeal was served late but on 10 November 1995 I accepted it for consideration and directed that it be expedited.

5. I was informed by Mrs Rabas that benefit had been suspended under regulation 37 of the Social Security (Claims and Payments) Regulations 1987 pending the appeal. It appears that the appropriate notice was sent out within a month of the tribunals decision and it seems that regulation 37 is so worded that the suspension remains effective even though the appeal itself was late. However, Mrs Rabas also informed me that the claimant had placed the sale in the hands of new estate agents in May 1995 and

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had also reduced the price and that it was now accepted that he was taking reasonable steps to dispose of the property. Interim payments have been made under regulation 2 of the Social Security (Payments on Account, Overpayments and Recovery) Regulations 1987 since 8 June 1995, pending the outcome of the appeal.

6. The grounds of appeal are that, in considering paragraph 26 of Schedule 10, "the tribunal should have made findings as to the date on which they considered that the claimant first took steps to dispose of 145 Broad Street, and in doing so should have taken into account the fact that the property was put up for sale by the claimant on 22 January 1992, and had been continuously on the market since that time" and, having made such findings, "the tribunal should then have gone on to consider whether the initial period of 26 weeks from that date had elapsed, and if so, whether it was reasonable in the circumstances to allow a disregard for a longer period, to enable him to dispose of the property". Mrs Rabas adopted that submission. Mr Reilly argued that the period of 26 weeks mentioned in paragraph 26 should be taken to have started only when the value of the property ceased to be disregarded under any other paragraph of Schedule 10. Otherwise, he argued, there could be unfairness. He relied on the tribunals reasoning.
7. As a matter of construction, neither submission is entirely correct. I agree with Mrs Rabas that the 26 week period mentioned in paragraph 26 may run during a period when the property is also be disregarded under another paragraph of Schedule 10. There is no reason in principle why more than one paragraph of the Schedule should not be applicable at any one time. The tribunals example was misconceived. If a claimant puts his home up for sale, the fact that paragraph 26 might apply to the case for 26 weeks would not mean that paragraph 1 ceased to apply either during that period or subsequently. However, the 26 weeks runs, not from the date when the claimant first took some steps to dispose of the property, but from the date when he first took reasonable steps to dispose of it, which is not necessarily the date when it was first placed on the market. With that minor qualification, I accept Mrs Rabas, submission.
8. The tribunals decision is therefore erroneous in point of law because they took the view that the statutory 26 week period could not start until 11 December 1994. In fact, the period may well have started earlier. Strictly, the tribunal were required to make a finding as to when reasonable steps to dispose of the property were first taken. However, there is force in Mr Reilly's suggestion that allowing the 26 weeks to run while the property is disregarded under another paragraph of Schedule 10 may give rise to unfairness. If a claimant takes no reasonable steps to dispose of a property while it is disregarded under, say, paragraph 1, he will be entitled as of right to the benefit of paragraph 26 for 26 weeks after it ceases to be disregarded under paragraph 1 - provided, of course, that he then takes reasonable steps to dispose of it. It would, I think, often be unfair if the claimant were to lose the benefit of paragraph 26 merely because he had not only taken reasonable

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steps to dispose of the property after he had ceased to live in it but had also been taking reasonable steps to dispose of it while it was still his home. Such unfairness is not a ground for giving paragraph 26 anything other than a literal construction. However, it is, in my view, a ground for exercising the broad discretionary power to extend the 26 week period. It will often, perhaps usually, be right to extend the period to a date 26 weeks after the property has ceased to be disregarded under some other paragraph of Schedule 10.

9. As I have indicated, Mrs Rabas accepted that the claimant had been taking reasonable steps to dispose of the property since May 1995. However, she argued that the tribunal had erred in law in finding that he had been taking reasonable steps before then. I do not accept that submission. It is true that the local adjudication officer had strong grounds for arguing that the steps taken by the claimant to dispose of his property were not adequate, but I do not consider that the tribunal, who gave careful consideration to this point, erred in law in having regard to the claimant's own personal circumstances and concluding that in the circumstances of the particular case the claimant had taken reasonable steps to dispose of the property since 11 December 1994. Mrs Rabas made it clear that she did not argue that the decision was perverse. I think that I should adopt the tribunals finding of reasonableness and I shall determine this case on the basis that the claimant has been taking reasonable steps to dispose of his home ever since 11 December 1994, whether or not he was taking such steps before then.
10. I turn therefore to the question whether or not the statutory period of 26 weeks should be extended in this case. In my view, if it began before 11 December 1994, it should clearly be extended to a date 26 weeks from that date. I do not think that, in this case, the claimant should be deprived of any of the benefit of paragraph 26 merely because he may possibly have taken some steps to dispose of the property before he was able to move out of it. As the tribunal's decision was made only in respect of the 26 weeks from 11 December 1994, that decision of mine would be sufficient to dispose of the appeal (the adjudication officer largely succeeding on the construction point but being unsuccessful in the result). But as no subsequent determination has been made by an adjudication officer (the decision to make interim payments having been made by the Secretary of State) I think it right to consider the application of paragraph 26 in respect of the period after 11 June 1995. I am entitled to do so by virtue of section 36 of the Social Security Administration Act 1992.
11. The question whether there should be any further extension of the statutory 26 week period seems to me to depend upon a considerable number of factors. Such an extension must be reasonable in the circumstances to enable [the claimant] to dispose of [the] premises". However, while the amount of effort being put by the claimant into the disposal of the property is one factor that must therefore be taken into account, I do not

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consider that it is in all cases the overriding factor. It will not always be reasonable for an unlucky claimant who has been unable to dispose of a property within what might be regarded as the usual period to continue to have the advantage of paragraph 26. The claimant's intentions so far as dealing with the proceeds of sale are concerned may also be relevant. Thus, if the claimant were living in rented accommodation and was proposing to use the proceeds of sale of the property he owned in order to pay off a debt or buy a home into which he would move, it might be thought consistent with the general purpose of the legislation that he should be allowed to preserve the value of the asset he had. On the other hand, it must be borne in mind that the general rule, subject to Schedule 10, is that possession of capital in excess of £3,000 affects entitlement to income support. In many circumstances, there is no particular reason why a person who has a valuable property should be entitled to income support for a period exceeding 26 weeks merely because the property has not been sold. A person owning such a property will not usually have must difficulty borrowing money to provide him with at least the modest standard of living attainable by those dependent on income support, either from his family and friends or commercially, and the fact that interest may be payable on such a loan will not necessarily make it unreasonable for a relatively wealthy claimant to obtain it. The value of the claimant's interest in the property that is for sale may also be a relevant consideration. Not all these factors will be relevant in all cases and I do not intend to suggest that other factors cannot also be relevant. Each case will depend on its own facts. I merely wish to point out that the efforts made by the claimant to sell the property are not the only relevant factor.

12. In the present case, the value of 145 Broad Street is, for income support purposes, now £19,350. That is substantially more than £8,000 but it is not an enormous sum. It is common knowledge that the housing market is flat and, whereas 26 weeks used to be a period within which property was likely to be sold if reasonable efforts were made, it is quite usual for properties to be on the market for very much longer now. I know very little of the claimant's other circumstances. However, bearing in mind the value of the property and the state of the housing market and also bearing in mind the history of this case and the fact that the guidance I have sought to give in paragraph 11 above would otherwise be retrospective in its effect, I think it right that I should determine that the 26 week period referred to in paragraph 26 of Schedule 10 to the 1987 Regulations should be extended in the present case to 8 March 1996 and that the question of any further extension should be considered by the local adjudication officer after he or she and the claimant have had the opportunity of considering what I have said in this decision. Accordingly, my decision is that, provided the claimant continues to take reasonable steps to sell 145 Broad Street and the other conditions for entitlement remained satisfied, he continues to be entitled to income support

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from 11 December 1994 to 8 march 1996. The interim payments made by the Secretary of State will, of course, be set off against the benefit awarded under this decision.

(Signed) M. Rowland

Commissioner

(Date) 9 January 1996

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