UK Social Security and Child Support Commissioners' Decisions

[2003] UKSSCSC CIS_2641_2002 (16 January 2003)

 
DECISION OF THE SOCIAL SECURITY COMMISSIONER
1. My decision is as follows. It is given under section 14(8)(b) of the Social Security Act 1998.
2. 1. The decision of the Harrow appeal tribunal under reference U/04/035/2001/01440, held on 18^th January 2002, is erroneous in point of law.
3. 2. I set it aside and remit the case to a differently constituted appeal tribunal.
4. 3. I direct that appeal tribunal to conduct a complete rehearing of the issues that arise for decision in accordance with my directions in paragraph 14 to 23.

The appeal to the Commissioner

5. This is an appeal to a Commissioner against the decision of the appeal tribunal brought by the claimant with my leave. The Secretary of State does not support the appeal.

The history of the case

6. This issue in this case is the amount of the claimant's capital (actual and notional under regulation 51 of the Income Support (General) Regulations 1987) at the date of her claim for income support on 28^th June 2001.
7. The claimant had sold her home for £137,000. From that sum she discharged: (a) the mortgage; (b) a sum charged on the property in favour of her former husband; and (c) minor incidental expenses. This left a balance of £58,043.47. I take this information from the solicitor's revised completion statement for June 2000 on pages 48 and 49.
8. A further statement on pages 50 and 51, also for June 2000, shows some other minor incidental expenses plus two substantial payments: (a) £15,000 paid to the claimant; and (b) £12,500 paid to a man (JR). That left a balance owing to the claimant of £31,279.77.
9. The claimant's evidence was that she had had a relationship with JR and owed him money. There is a short note from him at page 53 stating that he had received £22,500 from the claimant in repayment of money loaned to her between 1985 and 1998.
10. There is also a joint note from two other people (DB and LM) stating that they loaned the claimant £3,000, most of which she had repaid regularly, leaving £250 owing.
11. The £15,000 paid to the claimant appeared on a bank statement on page 52. Within 10 days almost all of it had been withdrawn in cash. She says it was used to repay JR.
12. The claimant's account of the disposal of the proceeds of sale is that she: (a) paid the debts to JR and DB; (b) bought a car for £1,500; (c) repaid £3,000 on her credit card; and (d) spent the bulk of the rest to satisfy her addiction to cannabis.

Did the tribunal go wrong in law?

13. Yes, it did. I have come to this conclusion with reluctance. The tribunal's decision was heavily influenced by the chairman's view of the credibility of the claimant's evidence. That was a judgment that he was entitled to make. I have found it difficult to follow the tribunal's reasoning on the precise figures, but given the amounts involved any error that the tribunal may have made could not have affected the outcome of the appeal.
14. I am, however, satisfied that the tribunal did not deal with one relevant argument. The claimant's solicitor originally argued that the effect of the claimant's mental state and addiction was that she lacked the ability to form an intention relevant to regulation 51. The tribunal rejected that argument. However, the tribunal did not deal with a different, but related argument. This was that the claimant's mental condition was such that she behaved irrationally and in a self-destructive manner. In not dealing with that argument, the tribunal went wrong in law.

The legal arguments of the claimant's representative

15. The claimant's representative has presented detailed arguments on the approach to notional capital. They rely on two decisions. One is the decision of the Extra Division of the Inner House of the Court of Session in Scotland in Yule v Lanarkshire Council [2000] SLT 1249. The other is the decision of Mr Justice Richards in the Administrative Court in R (on the application of the personal representatives of Beeson) v Dorset County Council and the Secretary of State for Health [2001] EWHC Admin 986. Both cases concerned elderly persons who transferred their homes to relatives and then were provided with residential accommodation by a local authority. The relevant legislation is 25(1) of the National Assistance (Assessment of Resources) Regulations 1992, which is similar to regulation 51.
16. Regulation 51 has been the subject of a number of Commissioners' decisions. The decisions cited do not take a different approach on any issue relevant to this case. The only difference I can find is that both the Inner House (paragraph 29) and Mr Justice Richards (paragraph 11) were prepared to accept that it was not necessary to show that the claimant had knowledge of the capital limit rule. In an appropriate case, that issue may have to be revisited under regulation 51. However, it does not arise in this case, because the claimant admitted that she knew of the capital limit rule. The other point emphasised by the claimant's representative is that the intention has to be a subjective one, albeit that it may be proved by reference to the objective and observable facts. That is the position under the Commissioners' authorities on regulation 51.

Directions for the rehearing

17. I direct the tribunal to proceed as follows at the rehearing.

Actual capital

18. First the tribunal must determine the claimant's actual capital at the date of her claim for income support. This must be identified and found as fact.
19. The starting point in this case is the money obtained by the claimant from the sale of her home. She alleges it was disposed of. The tribunal must determine whether each alleged disposal of capital occurred. If it did not, the amount that is not proved is part of the claimant's actual capital.
20. Next, the tribunal must determine whether any amount of notional capital is to be added to the claimant's actual capital under regulation 51 of the Income Support (General) Regulations 1987 (the notional capital rule).

Knowledge of the capital threshold

21. The claimant has admitted that she knew of the capital limit.

Notional capital

22. The tribunal must then determine (a) how much money was disposed of and (b) for what purpose or purposes.
23. The claimant's representative no longer argues that she lacked any capacity to form an intention. However, the tribunal must investigate the effect of her mental state and addiction and take this into account in deciding whether she formed the necessary intention.
24. The tribunal must determine why the claimant spend the money she did. If a significant operative purpose of the expenditure was to secure entitlement to benefit, the amount must be treated as her notional capital.

Disregarded capital

25. Having determined the amount of the claimant's capital (actual and notional), the tribunal must determine whether any part of it is to be disregarded under Schedule 10. No argument has yet been presented that any head of disregard applies.

Diminishing notional capital

26. The claim was made on 28^th June 2001 and refused on the same day. Given the amount involved and the effect of section 12(8)(b) of the Social Security Act 1998, it will be unnecessary for the tribunal to concern itself with this.

Signed on original

Edward Jacobs Commissioner 8th January 2003