UK Social Security and Child Support Commissioners' Decisions

 


[2005] UKSSCSC CH_1873_2005 (11 November 2005)

CH/1873/2005

DECISION OF THE SOCIAL SECURITY COMMISSIONER
1. I have to dismiss this appeal as the Appeal Tribunal came to the correct decision, although it gave inadequate reasons for it. I set the Tribunal's decision aside and substitute my own decision, which is that the claimant was not entitled to housing benefit or council tax benefit on 7 November 2003 as he either possessed or was to be treated as possessing capital in excess of £16,000.
REASONS
2. The claimant is a man born in 1933. He and his wife (who is his appointee) lived in a house which they owned. In 2002 the claimant suffered a stroke as a result of which he could no longer manage in the house. The couple sold the house and on 7 November 2003 moved into a rented flat. It appears from the top of page 30 that the sale was completed on 28 October 2003; I find that the claimant received the proceeds of sale on that date or shortly afterwards. They were £112,000 after expenses.
3. In February 2004 the claimant claimed housing benefit and council tax benefit. The Council knew that the couple had previously owned a house and asked about the proceeds of its disposal. The claimant's wife told the council what had been done with the proceeds; in summary, they had been used to make transfers of capital to the couple's four children (one of whom was a drug addict with large debts, who subsequently died) and to the couple's grandchildren and to pay for a car, for the fitting out of the new flat, to repay some borrowings and for some current expenditure (see pages 29-32). There is no detail in the papers as to the timing of the receipt of the sale proceeds or of the payments out, but it appears from page 33 that on 12 November the couple had some £2,000 in an account number 10358940 and on 24 November they had some £5,000 in an account number 40676683. I infer that this broadly represented what was left. By February 2004 the combined balances in the two accounts were some £3,400.
4. In February 2004 the claimant claimed housing benefit (HB) and council tax benefit (CTB): pages1E-21. The claim was retrospective to 7 November 2004 and the reason given for not claiming before was that the claimant was unwell. On 12 May 2004 the Council decided (page 40) that the claimant was not eligible for HB or CTB on the grounds that he had notional capital of £115,000, the sale price of the house; this exceeded the capital limit for entitlement to each of the benefits, which was £16,000. The decision was taken in application of regulation 42(1) of the Housing Benefit (General) Regulations 1997 and regulation 34(1) of the Council Tax Benefit (General) Regulations 1992, in both cases as those Regulations are modified by the Housing Benefit and Council Tax Benefit (State Pension Credit) Regulations 2003. Both of the regulations, as so modified, provide (in terms materially identical to regulation 51 of the Income Support (General) Regulations 1987) that "A claimant shall be treated as possessing capital of which he has deprived himself for the purpose of securing entitlement to" each of those benefits "or increasing the amount of that benefit".
5. In June 2004 the decision was reconsidered (pages 45-46); the decision-maker decided that the claimant had notional capital in the amount given to the children and grandchildren - £86,000; the outcome was the same. In August 2004 the claimant appealed to a Tribunal. The Tribunal (which consisted of a chairman sitting alone) considered the appeal without an oral hearing in January 2005. He "confirmed" the Council's decision that the claimant "had deliberately deprived himself of capital of £86,000" (page 59). The word "deliberately" appears to echo the Council's reconsideration letter (page 45) in which the Council wrote "where a large sum of money is given away then the Local Authority has to be satisfied that it has not been done deliberately to gain more benefit. Where it is decided there was deliberate deprivation you are treated as still having it for Housing Benefit and Council Tax Benefit purposes".
6. The claimant appeals, with the leave of a Commissioner, on the grounds (page 70) that (a) the Tribunal did not consider the words of each regulation "for the purpose of securing entitlement .. or increasing the amount of .. benefit"; (b) the Tribunal made no enquiries as to the reasons for the claimant's decision to share the majority of the sale proceeds equally between his four children and it was impossible to see why it reached the decision that the claimant had deliberately deprived himself of capital; and (c) that the Tribunal should have explored the possibility that the claimant's strokes and stress due to his son's drug problems could have affected his capability of making reasoned decisions; the Tribunal erred in law in not considering this possibility, if necessary adjourning to obtain further information.
7. The Commissioner granted leave (page 73) on the grounds of the Tribunal's failure to give reasons for its implicit conclusion that the claimant disposed of capital to his children and grandchildren in order to qualify for benefit. I agree that the decision is erroneous in law on that ground. The decision is defective both because it fails to state clearly enough the Tribunal's conclusion that the claimant disposed of capital for that purpose or to express any reasons for that conclusion.
8. In my view it is a good discipline for Tribunals to set out in their decisions the statutory question or questions they have to decide (not necessarily by extensive quotation where an accurate précis or paraphrase will suffice). This helps to ensure that they answer that question or those questions and also tends to prompt them to give a statement of their reasons for each relevant conclusion.
9. No party has asked for an oral hearing either before the Tribunal or before the Commissioner. I consider that I can make the findings of fact necessary to decide this appeal myself. I do not accept the claimant's submission that it is impossible without further information to decide whether he was capable of making reasoned decisions about the disposal of the capital.
10. The law requires me to be satisfied that in this case it was a 'significant operative purpose' in the claimant's mind to make himself eligible for benefit; it also requires me to be positively satisfied that that was the case; there is no legal presumption that the claimant has to disprove. On the other hand, I am entitled to draw inferences from the information in the papers.
11. I find that it was a significant operative purpose in the claimant's mind to make himself eligible for benefit for the following reasons.
12. First, I do not have to find that this was the claimant's main purpose, or that his motive was to receive benefit as an end in itself. Where a person has had capital adequate to cover his housing costs and council tax liability (as the claimant did when he received the net proceeds of the sale of his house - £112,000 – in October/ November 2003) but has disposed of a large part of that capital, it is in my view sufficient, in order for the regulations to apply, that when he disposed of that capital, he had it in mind that he would compensate for its absence by claiming benefit.
13. For this to be the case, it is necessary that the claimant should appreciate that having the capital would disentitle him to benefit but that without it he would (apart from the notional capital provisions) be eligible.
14. Secondly, I find that the claimant did appreciate those things, for the following reasons. The claimant had received CTB in 1999 but became ineligible on financial grounds in 2000 (page 1D). I agree with the Council that this supports an inference that he knew that CTB was means-tested. I consider that it is generally known that housing benefit is means-tested, and find on the balance of probabilities that the claimant knew that. I also consider that it is generally appreciated that possession of a large amount of capital disqualifies a person for means-tested benefits, and I find on the balance of probabilities that the claimant appreciated that possession of £66,000 of capital (which is the amount that I find he deprived himself of for the purpose of securing benefit entitlement – see below) would disqualify him.
15. I find on the balance of probabilities that when the claimant disposed of his capital, he had it in mind that he would claim benefit, because no other explanation of how he thought he would pay his housing costs and council tax has been put forward. I agree with the claimant that in order to make this finding I have to reject other possibilities, the other possibilities here being that the claimant thought he would have enough money to live on without claiming benefit and (as suggested in the grounds of appeal) that he was simply not thinking rationally about the consequences of disposing of the capital.
16. The reason given for making a claim in February 2004 that was retrospective to November 2003 was ill health. From that I infer that, but for ill health, the claim would have been made in November 2003. There is no suggestion that, for example, the claimant claimed in February because he realised that he had miscalculated his ability to live without the benefits. I therefore reject the possibility that when he disposed of the capital he thought wrongly that he could live without benefit.
17. I reject the suggestion that the claimant did not think rationally about the financial consequences of disposing of the capital. Though I accept that he was disabled by his previous stroke, and that his disabilities included loss of the ability to read or express himself in writing (he appears to have been able to sign his name on page 47), and I also accept that the discovery earlier in the year of the claimant's son's drug dependency and consequent financial problems will have been very distressing for the claimant and his wife and family, I find that the decision to distribute the capital among the family was taken carefully and thought through.
18. The claimant's wife has explained in a letter of November 2004 (pages 52-54) that after the claimant's stroke the couple had originally intended to buy a suitable flat. In May 2003 they learned of their son's drug problem and debts; they changed their plans from buying to renting and used part of the sale proceeds to pay off his debts and buy back things he had given to drug dealers as payment for drugs. They wanted to be fair to their other children; there is also reference elsewhere to the children having in the past helped their parents to meet their mortgage payments.
19. The payments were £20,000 to three of the four children (including the son I have just referred to) and £22,000 to another son. I suspect that this may have reflected his past financial help with the mortgage. At the same time, £500 was given to each grandchild (£4,000 in total). To my mind this has the hallmarks of a carefully planned distribution of the proceeds; I find it improbable that thought was not given to the couple's financial position resulting from it.
20. Thirdly, I have to consider whether there were other reasons for making the disposal which were so strong that securing an entitlement to benefit was not an operative factor. The test here is whether the claimant would have paid over the money even if the consequence was that he would have to live without the money and without benefit. I find that that was the case as regards the payments regarding the son with the drug problem. The claimant could reasonably think that getting him out of his financial difficulties was vital to his chances of recovery (which sadly was not successful). I therefore find that the claimant did not dispose of the £20,000 paid to, or to help, that son in order to secure entitlement to the benefits.
21. I now have to consider the payments to the other children and grandchildren. These are listed by the claimant's wife on page 30 under the heading 'repayment and inheritance'. No reason is advanced for the payments to the grandchildren (£4,000). As regards the payments to the other children (£62,000), the reason given is equal treatment as between them and the son who needed to be helped.
22. In view of the other expenditure that the couple were incurring on the car, the new flat and repayment of debts, I consider that the claimant would not have disposed of that £66,000 if the consequence would have been to leave the couple in the financial situation they found themselves in after November 2003 and without benefit. While dealing fairly as between the children was a laudable motive, I find that a reasonable person would not have passed down to children and grandchildren (who are not suggested to have been in financial need themselves) money which he needed to pay his housing costs and council tax. I find it probable that the claimant would have behaved reasonably and would not have disposed of the money if his intention had not been to claim the benefits.
23. I therefore find on the balance of probabilities that the claimant disposed of £66,000 for the purpose of securing entitlement to HB and CTB. It does not matter whether the disposal took place before or after 7 November 2003; prior to the disposal the claimant actually possessed the capital within the meaning of regulations 40 and 32 respectively of the applicable Regulations, and he continues to be treated as possessing it (subject to the diminishing notional capital rules in the Regulations) after the disposal.
24. Accordingly, on 7 November 2003 the claimant either possessed or is to be treated as possessing capital in excess of £16,000 and was not entitled to HB or CTB.

(signed on the original)

Nicholas Paines QC

Deputy Commissioner

11 November 2005