UK Social Security and Child Support Commissioners' Decisions

[2006] UKSSCSC CIS_624_2006 (22 December 2006)

DECISION OF A TRIBUNAL OF SOCIAL SECURITY COMMISSIONERS

1. We allow the claimant's appeal. We set aside the decision of the Dundee appeal tribunal dated 26 August 2005 and substitute the following decision. From 1 August 2002, the claimant possessed capital amounting to £7,650 in respect of an interest in a flat. We leave the Secretary of State to calculate the amount of her other capital and income and to give a final decision as to her entitlement (if any) to income support from that date.

REASONS

Introduction

2. The Chief Social Security Commissioner directed that this appeal be heard by a Tribunal of Commissioners following a request by the Secretary of State, who sought an authoritative ruling as to whether a tribunal hearing an appeal against an "outcome" decision is obliged to substitute another "outcome" decision.
3. We held an oral hearing of the appeal in London. The claimant was present and was represented by Mr Roger Gibson, a friend. The Secretary of State was represented by Mr Daniel Kolinsky of counsel, instructed by the Solicitor to the Department of Health and the Department for Work and Pensions.
4. We record that, at the beginning of the hearing, there was some discussion as to whether Mr Commissioner Rowland should recuse himself because Mr Gibson had referred to a written observation made earlier in the proceedings by Mr Commissioner Rowland as "nonsense". We decided that he was not required to recuse himself. Commissioners make observations during the course of proceedings precisely so that the parties have the opportunity to indicate whether or not they agree with them and the mere fact that disagreement is expressed in robust terms does not give rise to a reasonable apprehension of bias on the part of a Commissioner. In In re Lonrho Plc. [1990] 2 A.C.154, 177, Lord Bridge of Harwich said –

"It is a curious quirk that a litigant which has engaged in conduct capable of being regarded by an objective observer as of such a nature as to be likely to affront or antagonise the tribunal before which the litigant is appearing should be in a position to rely upon that conduct, whether it is deliberate or resulting from administrative inefficiency, as a ground for having the matters in issue referred to another tribunal. Fortunately those who administer justice in this country are not prone to feeling affront or antagonism."

The substantive law

5. Income support is a means-tested benefit. Although it is described in legislation as "income-related", capital is also relevant. Until April 2006, section 134(1) of the Social Security Contributions and Benefits Act 1992 ("the 1992 Act") and regulation 45 of the Income Support (General) Regulations 1987 (S.I. 1987/1967 – "the 1987 Regulations") had the effect that possession of capital amounting to £8,000 or more disentitled a claimant from income support. The threshold is now £16,000. By virtue of regulation 49(a) –

"Capital which a claimant possesses in the United Kingdom shall be calculated –

(a) except in a case to which sub-paragraph (b) applies, at its current market or surrender value, less –

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

(ii) the amount of any encumbrance secured on it".

Sub-paragraph (b) is concerned only with National Savings Certificates. Regulation 53 had, until April 2006, the effect that capital amounting to between £3,000 and £8,000 was deemed to produce income, which resulted in a reduced amount of income support being payable. The thresholds are now £6,000 and £16,000.

6. Regulation 51, which is headed "Notional capital", provides that, in certain circumstances, a person who does not actually have capital shall nevertheless be treated as having it. In particular, regulation 51(1) provides –

"A claimant shall be treated as possessing capital of which he has deprived himself for the purpose of securing entitlement to income support or increasing the amount of that benefit …"

The term "notional capital" is thus used to denote capital that a person does not actually possess but is deemed to possess. It is usually contrasted with "actual capital".

The procedural law

7. Section 8 of the Social Security Act 1998 ("the 1998 Act") provides that it is for the Secretary of State both "to decide any claim for a relevant benefit" and, except where decisions fall to be made by the Revenue and Customs, "to make any decision that falls to be made under or by virtue of a relevant enactment". It also provides that a "relevant enactment" includes the 1992 Act. Section 9 provides that the Secretary of State may revise a decision he has made and section 10 provides that he may supersede a decision that he, a tribunal or a Commissioner has made. The grounds upon which a decision may be revised or superseded are set out in the Social Security and Child Support (Decisions and Appeals) Regulations 1999 (S.I. 1999/991 – "the 1999 Regulations") in regulations 3 and 6 respectively. Regulation 3(4A) provides that a decision of the Secretary of State may be revised when an appeal has been brought against it. By virtue of regulation 6(2)(a)(i) and (c)(i), a decision of a tribunal may be superseded on the ground of change of circumstances occurring "since the decision had effect" or of ignorance of, or a mistake as to, a material fact. Section 12 makes provision for appeals. So far as is material, it provides –

"(1) This section applies to any decision of the Secretary of State under section 8 or 10 above (whether as originally made or as revised under section 9 above) which –

(a) is made on a claim for, or on an award of, a relevant benefit, and does not fall within Schedule 2 to this Act; or

(b) is made otherwise than on such a claim or award, and falls within Schedule 3 to this Act.

(2) In the case of a decision to which this section applies, the claimant and such other person as may be prescribed shall have a right to appeal to an appeal tribunal, …

…

(8) In deciding an appeal under this section, an appeal tribunal –

(a) need not consider any issue that is not raised by the appeal; and

(b) shall not take into account any circumstances not obtaining at the time when the decision appealed against was made.

…"

The facts

8. The claimant had been in receipt of income support from 26 December 1999. She was a single parent. Her ex-husband was not supporting his youngest son, who was living with the claimant, despite maintenance assessments having been made under the Child Support Act 1991. On 1 May 2002, the Child Support Agency gave the claimant's local social security office information to the effect that she had capital of between £15,000 and £25,000. Two officers visited her home on 16 May 2002 and left a message asking her to attend the office the next day for interview. That she did. She explained that some £15,000 had been paid to her as a divorce settlement and that she had paid to her parents £13,000 "when I received my settlement" because they had helped financially when she needed a car and moved to her current home. Payment of benefit was suspended from 11 June 2002. It subsequently transpired that a building society account had been opened on 12 November 2001, with a deposit of £15,063.05 and that the only subsequent transaction on the account had been the withdrawal of £13,000 on 16 May 2002. On 21 May 2002, the social security office received a letter from the claimant in which she said –

"It was decided that, rather than give them a settlement in cash, a property could be purchased for rental from the capital along with a buy to rent loan whereby the rental would pay the loan, the balance being used to reimburse them. This was agreed with them and that once they were reimbursed, the flat would be available for [the claimant's son] in that he would then be of age. Any subsequent rental (or income from [the claimant's son]) could provide me with a modest income to then free me to work and not depend on the state as I am being forced to do. My solicitor was instructed on 14^th May to put a note of interest on a property we had viewed on the 6^th May which we consider suitable."

The Secretary of State accepted that the claimant had paid the £13,000 to her parents on 16 May 2002 but did not accept that she had had any liability to pay it. On 11 July 2002, he decided that the claimant was not entitled to income support from 12 November 2001 on the ground that she had capital in excess of £8,000 in her building society account from 12 November 2001 to 16 May 2002 and thereafter had notional capital in excess of £8,000 because she had disposed of £13,000 for the purpose of gaining entitlement to income support.

9. On 22 July 2002, the claimant made a new claim for income support, which was treated as effective from 18 July 2002, when the claim form was issued. On the claim form, she wrote –

"I expect to take joint possession (with my parents) of a flat … on 2^nd August 2002. This is intended to be held in trust for [the claimant's son], but will be rented. I have contributed to this by way of a mortgage on my home (…). The payments being £122.79 per month payable from the rental income. The balance will provide retirement income for my parents, trust for [the claimant's son]."

On 2 August 2002, an officer from the social security office, Mrs Johnston, spoke to the claimant by telephone. At the conclusion, she recorded –

"I feel that customer has deliberately deprived herself of capital to gain income support initially but is now joint owner of a property valued at [about] £38,000."

The Secretary of State disallowed the claim. The computer record of the decision says

"[Customer] still in possession of £15,000 capital rec'd from divorce settlement".

Neither party has been able to produce a copy of the decision in the form in which it was issued to the claimant but Mr Gibson, in a submission written in January 2004, says that it said that benefit was being disallowed because the claimant had "savings of more than £8,000", which is not inconsistent with the computer record. Moreover, the blank copy of the standard form of clerical decision (B03B) suggests that that is the form of words that would have been used as it does not seem designed for notional capital cases.

10. The claimant appealed against both the decision of 11 July 2002 and the decision of 2 August 2002. In respect of the second decision, the tribunal was told in the Secretary of State's written submission that the decision had been made on the ground that the claimant still had notional capital because of the circumstances of the disposal of the £13,000. However, the tribunal was also told about the telephone conversation on 2 August and specifically that the claimant "was the joint owner of a property valued at £38,000". This figure of £38,000 is supported by no evidence and appears to have been based on an arithmetical error. The Secretary of State probably meant to suggest that the value of the property was £28,000, based upon an understanding that the whole of the £13,000 given to the claimant by her parents and the whole of the £15,000 raised by way of the mortgage had been used to purchase the flat.
11. On 21 February 2003, the appeals came before the Dundee appeal tribunal, which issued two decision notices. On the first, it dismissed the appeal against the decision dated 11 July 2002 and confirmed the Secretary of State's decision. The second reads –

"Appeal is allowed.

The decision of the Secretary of State issued on 2/8/02 is revised.

The claimant is not deemed to have notional capital from 17.5.02."

The effect of that decision is hotly disputed by the parties before us. However, neither party obtained a statement of reasons for the decision at the time.

12. On the claimant's side, this appears to have been because, perhaps understandably, she and Mr Gibson thought that the effect of the appeal having been allowed would be that the award of benefit that was suspended on 11 June 2002 would be reinstated. The social security office, however, thought otherwise. It accepted the tribunal's decision in respect of notional capital but took the view that the tribunal had not considered the question of the claimant's joint ownership of the flat purchased on 2 August 2002 and, on 13 March 2003, it issued a document seeking information about that property.
13. The claimant replied on 4 May 2003, stating that her parents had purchased the property with the help of £15,000 borrowed by the claimant by way of a mortgage on her own home. The flat itself was unmortgageable. It had been let from 1 October 2002 at a rent of £380 per month. The claimant estimated its value at £23,000. On 4 June 2003, Mr Gibson reiterated that the claimant did not own the property but that it was owned by her parents. Mrs Johnston said that that had not been her understanding and she would investigate the matter further. The next day, she wrote to the Registers of Scotland, who did not respond immediately to either that letter or a follow-up letter. On 11 July 2003, Mr Gibson again spoke to Mrs Johnston on the telephone and when she said she was awaiting a reply from the Registers of Scotland, he told her that the claimant's name was on the title deeds but that that had only been done as she had borrowed £11,000 (sic) in order to give the money to her parents. He said that she would not give permission for the property to be valued and wished the claim to be disallowed so that the claimant could appeal. The district manager then wrote to the claimant to tell her that a valuation was needed and that if she did not respond, it would be assumed that she had capital in excess of £8,000. He declined to accept a response from Mr Gibson and, on 8 July 2003, the claimant wrote –

"I gather from Mrs Johnston, that contrary to my representative having contacted your offices again and, in writing as requested, you will not make a decision in respect of my circumstances without me writing this letter.

I advised as early as May last year that I was committed to repay my parents, for their ongoing support due to the failure of my marriage, from my divorce settlement. The benefit agency did not answer my correspondence.

The settlement was less than I hoped for and the only way open to me to make up that deficit was to borrow on my own home to facilitate their purchasing a property whereby they could make up the difference from rent. This I entered into having tried to consult with the benefit agency and my involvement was to provide a loan and my being named in the title was advised for security purposes only. I am therefore not able to agree with you that I somehow came by capital, which I require valued and on that basis cannot agree to a valuation as you continue to pursue."

On 17 July 2003, the Registers of Scotland confirmed that the property was owned by the claimant's parents and the claimant (in her maiden name).

14. On 2 September 2003, it appears that a decision was issued to the effect that the claimant was not entitled to income support from 17 May 2002 on the ground that she had capital in excess of £8,000. She appealed, pointing out that the property had not been purchased until after 17 May 2002. It was subsequently ascertained that the mortgage was taken out on her property on 1 August 2002 and so the decision was revised on 8 October 2003, it being decided that the claimant had capital in excess of £8,000 only from 1 August 2002. Arrears of benefit in respect of the period from 17 May 2002 to 31 July 2002 were paid. (There appears to have been an overpayment in respect of the period from 17 May 2002 to 10 June 2002, as benefit had already been paid in respect of that period before it was suspended. It is also odd that the payment was apparently made without any thought having been given to whether the overpayment in respect of the period up to 16 May 2002 was recoverable and should be recovered out of the payment for the later period or as to whether the claimant's total capital exceeded £3,000.) Eventually, the claimant was persuaded to allow the property to be valued and it was confirmed on 14 November 2003 that the open market value of the entire property had been £28,000 as at 1 August 2002, the undivided share the Secretary of State had deemed her to have being valued at £8,500 as at 1 August 2002. (We assume the date was mistyped the third time it appears on the valuation.)
15. Meanwhile, the claimant's appeal against the decision dated 2 September 2003 continued in relation to the period from 1 August 2002. For reasons that remain unclear, the heading of the submission to the tribunal identified the decision under appeal as having been given on 2 August 2002 but notified on 2 September 2003. The submission explained that the claimant had been taken to have capital at 1 August 2002 of £8,834.09 (her share of the property, less 10% deducted under regulation 49(a)(i), plus £1,184.09 she had had in a bank account). However, it was also submitted –

"… there is no evidence to suggest that she has no beneficial interest in the property. Indeed, she claims to have £15,000 of her own capital secured upon it. Accordingly, she would receive at least £15,000 from the sale of the said property and, as a result, has a beneficial interest."

We will return below to the various points made by Mr Gibson in reply to this and other submissions made by the Secretary of State as to the substantive merits of the Secretary of State's decision. Unfortunately, the appeal became bogged down in procedural points.

16. The claimant's appeal came before the Dundee appeal tribunal on 27 April 2004. The tribunal queried whether the decision under appeal could really be the same decision as had been appealed to the earlier tribunal and the Secretary of State's representative and Mr Gibson submitted that the appeal was in fact against the decision given on 8 October 2003. The tribunal then decided that the decision on 8 October 2003 was incompetent because it purported to supersede the decision of the tribunal dated 21 February 2003 on the ground of a change of circumstances that had taken place some seven months before the tribunal's appeal. On that basis, the tribunal allowed the claimant's appeal and decided that she "remains entitled to income support with effect from 1/8/02".
17. The Secretary of State appealed on the ground that regulation 6(2)(a)(i) of the 1999 Regulations had been amended with effect from 5 May 2003 so that a decision of a tribunal could be superseded on the ground of a change of circumstances that had occurred since the decision took effect, which, it was submitted, was 18 July 2002, the effective date of the claim for benefit. Mr Gibson, however, argued that there had been no change of circumstances justifying supersession because the tribunal sitting on 21 February 2003 had been well aware of the purchase of the flat.
18. On 20 April 2005, a Deputy Social Security Commissioner allowed the Secretary of State's appeal (CSIS/629/04). He accepted counsel's submission as to the effect of regulation 6(2)(a)(i) and a further submission that the decision under appeal to the tribunal sitting on 27 April 2004 had in fact been the decision dated 2 September 2003. He set aside the decision of the tribunal and referred the case to yet another tribunal with directions to consider whether the decision of 2 September 2003 was a proper supersession decision, made on the basis that there had been a relevant change of circumstances in the claimant's position since 18 July 2002, and he also suggested that there should be a valuation, apparently overlooking the valuation already in the papers.
19. In fact, the Secretary of State was unable to produce any more evidence, except the blank form B03B. The tribunal, sitting on 26 August 2005, found that the decision of 2 September 2003 had been a proper supersession decision "made in order to correct the original award of income support" on the ground that there had been a change of circumstances since 18 July 2002 in that the claimant had acquired an interest in the flat on 1 August 2002. On that basis, the tribunal dismissed the claimant's appeal against the Secretary of State's decision dated 2 September 2003. It is against that decision that the claimant now appeals with the leave of Mr Commissioner Rowland.

The claimant's capital before 1 August 2002

20. This is no longer in issue and it is accepted on both sides that the tribunal sitting on 21 February 2003 settled the dispute that there had been. Reading the two decisions of the tribunal together against the background for the material before the tribunal, it is plain that, although the tribunal expressed itself as having dismissed the appeal against the decision dated 11 July 2002, it had in fact allowed that appeal in respect of the period from 17 May 2002.
21. The claimant accepts that, until 16 May 2002, she possessed capital in excess of £8,000 in the form of the money in her building society account. We note that it appears to have been assumed in her favour that the money she had received from her ex-husband was derived from a disposition of property and was not to be considered as income under Part VII of the 1987 Regulations.
22. Equally, the Secretary of State accepts the tribunal's decision that, from 17 May 2002 to 31 July 2002, the claimant's capital was less than £8,000 because she had given £13,000 to her parents and had not deprived herself of that sum for the purpose of gaining entitlement to income support.

The claimant's capital from 1 August 2002

23. The decision that the claimant should not be treated as having notional capital as a result of the transfer of the £13,000 to her parents continues to have effect after 1 August 2002. The dispute there has been as to the claimant's entitlement to income support from 1 August 2002 has been concerned with an entirely different capital asset. The value of the claimant's home was disregarded under paragraph 1 of Schedule 10 to the 1987 Regulations but, when, on 1 August 2002, the claimant borrowed £15,000 on the security of that home, that was capital that did not fall to be disregarded. When, on the following day, she used that money to pay part of the purchase price on the flat, which was then transferred to her and her parents, the Secretary of State's case is that she acquired a capital interest in that flat in exchange for the purchase price. His submission to the tribunal was that regulation 52 of the 1987 Regulations applies in this case so that that she was deemed to possess a one-third share in the property, notwithstanding that she had provided a greater proportion of the purchase price, and that the value of that share was £8,500 although, by virtue of regulation 49 of the 1987 Regulations, £850 fell to be deducted so that the amount to be taken into account was £7,650.
24. We gave Mr Gibson every opportunity to argue a contrary case before us but, despite our pressing him, he declined to do so on the ground that we had no jurisdiction to consider the question. We will consider the jurisdictional argument below but there are good reasons for considering the substantive position before looking at the jurisdictional argument. First, if we were to decide that the Secretary of State's approach to the substantive issue was wrong, it might be unnecessary to determine the jurisdictional issue. Secondly, we take the view that it is appropriate to have regard to the substantive merits of a case when determining procedural issues. Procedural law ought generally to serve justice and procedural arguments that have the effect of giving a person either more or less benefit than other claimants in the same position for no clear administrative reason should not too readily be accepted.
25. Mr Gibson's approach may have been due to his appreciating the difficulties he faced in justifying the tribunal's decision if it did find that the claimant had no capital as a result of the purchase of the flat. In the past, he has raised a number of points.
26. He has placed emphasis on the flat being of a type of construction that makes financial institutions unwilling to lend money by way of a mortgage on it. That, however, is irrelevant. If the flat had had no value because it was unmortgageable, the claimant and her parents would not have had to pay for it. Mr Gibson has also suggested that the claimant having her name on the property was an "encumbrance" for the purposes of regulation 49 of the 1987 Regulations and has implied that that reduces the flat's value. That, too, is plainly wrong. There is an encumbrance on an asset when a debt is secured on it and would have to be repaid out of the proceeds of sale. That was not the position here, where the loan taken out by the claimant had been secured on her own home. The claimant did have security as a result of having her name on the title deeds but the form of security she had was joint ownership.
27. This leads to what was perhaps the main thrust of Mr Gibson's submissions to the tribunals which was that the claimant had intended the property to be held for the benefit of her parents and her son and had only had her name on the title deeds because her solicitor suggested that it was desirable as security. The claimant was, of course, liable to make the mortgage payments in respect of the £15,000 she had borrowed on her own home. It is clear that she always intended, quite reasonably, to ensure that she was not actually left out of pocket. She needed to have sufficient income from the property to cover her mortgage payments and, until the mortgage had been paid off, a capital interest in the property equal to her outstanding mortgage. There is no evidence that it was ever the claimant's intention that she should not retain such an interest in the property and we have been shown no document whereby she purported to divest herself of the interest she had in the property by virtue of having contributed the bulk of the purchase price. Whatever other agreement there may have been between the claimant and her parents, her solicitor presumably thought that her being registered as a joint owner of the property was desirable. It is clear that the registration was not intended to be a sham. The reason the claimant needed the security of having her name on the title deeds is that she really did have a current interest in the property.
28. In the absence of any evidence to the contrary, we are content to accept that regulation 52 of the 1987 Regulations is applicable in this case. We are therefore satisfied that the Secretary of State was right to regard the claimant as possessing capital amounting to £7,650 in respect of her interest in the flat. As the claimant also had £1,184.09 in a bank account on 24 July 2002 and there was no evidence that most of that money had been withdrawn by 2 August 2002, the Secretary of State was also entitled to infer that the total amount of capital that the claimant possessed on 2 August 2002 exceeded £8,000. Whether he was entitled to give a decision to that effect is the issue raised by Mr Gibson's procedural arguments.

The procedural arguments

29. Mr Gibson's case is that, even if we consider that the claimant ought not to have been awarded income support, the tribunal sitting on 21 February 2003 did make such an award and the Secretary of State has not demonstrated any grounds for not giving effect to that decision. Consideration of that argument requires us clearly to identify the decision that is being challenged before us and to determine what it was that the tribunal on 21 February 2003 did decide.

The decision being challenged before us

30. It appears now to be common ground that the decision under appeal to the tribunal sitting on 26 August 2005 was the decision of 2 September 2003 and that it is therefore the correctness of the decision of 2 September 2003, as revised on 8 October 2003, that was in issue before the tribunal and is now in issue before us. The reference to the decision of 2 August 2002 in the heading of the submission to the tribunal (originally made to the tribunal sitting on 27 April 2004) was clearly a mistake. The appeal could not have been against the decision of 8 October 2003, partly because the appeal was in fact brought before that decision was given but also because the terms of section 12(1) of the 1998 Act mean that no appeal lies against a revision under section 9. Where there is a revision, an appeal may be brought only against the original decision as revised, but the revision extends the time for appealing (see regulation 31(2) of the 1999 Regulations).
31. No-one appears to have considered whether the decision of 8 October 2003 caused the appeal against the decision of 2 September 2003 to lapse, but the intuitive view that the appeal continued was, in our view, correct. It is true that section 9(6) of the 1998 Act provides that an appeal lapses if the decision under appeal is revised save where regulations otherwise provide and that regulation 30 of the 1999 Regulations provides that an appeal does not lapse only where the revised decision is not more advantageous than the original decision. It is also true that regulation 30(2)(a) provides that decisions that are more advantageous include those where "any benefit paid to the appellant is greater or is awarded for a longer period in consequence of the decision made under section 9". However, where a period before the date of the original decision is in issue and a revision affects only part of that period, it seems to us that there are many circumstances in which it can be appropriate to regard the decision as being more advantageous to the appellant only in respect of that part of the period and not the remainder of the period. This is particularly so where the Secretary of State knows very well that the revision does not deal with the main issue raised by the appeal and that it would be a waste of time to treat the appeal as having lapsed and to require the appellant to start all over again.
32. Regrettably, the Secretary of State has been unable to produce a copy of the decision of 2 September 2003. Mr Gibson suggests that that is fatal to the Secretary of State's case and refers to R(IB) 2/04, where the Tribunal of Commissioners said, at paragraph 53 –

"The identification of the decision under appeal is vital because, in deciding the appeal, the appeal tribunal cannot take into account circumstances arising after the date of that decision (section 12(8)(b) [of the 1998 Act])".

However, the reference to section 12(8)(b) makes it clear that what was vital in that case was that the date of the decision under appeal should be identified. As will be seen below, there are circumstances in which it is also necessary to know the terms in which a decision was issued, but it is not always necessary to know the exact terms of a decision under appeal. Indeed, we consider that the Deputy Commissioner erred in directing the tribunal to whom he referred the case to decide whether the decision of 2 September 2003 was a proper supersession decision. In R(IB) 2/04, the Tribunal of Commissioners held that, on an appeal from the Secretary of State, a tribunal has the power to cure any defects in the decision of the Secretary of State and to give the decision the Secretary of State should have given. Therefore, the task for the tribunal in this case was not to consider the nature of the decision actually given by the Secretary of State but was simply to decide what decision the Secretary of State should have given, taking account of any new evidence available to the tribunal. We suggest that it was unnecessary for the Deputy Commissioner to refer the case to a tribunal and that it would have been preferable had he determined the issue himself.

What did the tribunal sitting on 21 February 2003 decide?

33. It is necessary in this case to determine what the tribunal sitting on 21 February 2003 decided. The terms of the decision are known but their meaning is in dispute. The tribunal expressly found that the claimant "is not deemed to have notional capital from 17.5.02." Given the background, that was plainly based on a finding that she did not give the £13,000 from her building society account to her parents for the purpose of obtaining entitlement to income support. However, Mr Gibson argued that the tribunal also decided that the purchase of the flat did not give rise to notional capital and he went further and argued that "notional capital" meant "the notion of capital" and so the decision also entailed a finding that the claimant had no actual capital as a result of purchase of the flat.
34. There is no doubt that the tribunal knew about the purchase of the flat. It was mentioned in the submissions to the tribunal and we have no reason to doubt Mr Gibson's assertion that the transaction was explained to the tribunal. However, it does not follow that the tribunal made any decision on the point. There are, in theory, four possibilities: either (1) the tribunal did, as Mr Gibson submits, make a decision to the effect that the claimant held no capital as a result of the purchase of the flat, or (2) the tribunal made a decision to the effect that the claimant did hold capital as a result of the purchase of the flat but failed to record such a decision, or (3) the tribunal did not make any decision as to the effect of the purchase of the flat but awarded income support or (4) the tribunal did not make any decision as to the effect of the purchase of the flat and did not award income support.
35. The tribunal sitting on 26 August 2005 clearly rejected the suggestion that the tribunal sitting on 21 February 2003 had considered whether the claimant held capital as a result of the purchase of the flat. We consider that it was entitled to do so and we too would reject the first and the second of the possibilities we have mentioned above. In the absence of anything in the decision notice, there is simply no evidence that the tribunal made a decision that the claimant either did or did not possess actual capital. On the contrary, it seems extremely unlikely that, if the tribunal had made a decision as to the claimant's possession of actual capital, it would not have recorded it, given the express reference to notional capital in the decision notice. Mr Gibson's argument that "notional capital" includes the notion of any capital, including actual capital, is based on a misunderstanding of the word "notional" in ordinary English and, in any event, any tribunal would be well aware that "notional capital" has a specific meaning in social security law and is distinguishable from "actual capital". Mr Gibson has also placed weight on the reference to regulation 49 of the 1987 Regulations in the Secretary of State's submission to the tribunal, which he suggests shows that the issue of the possession of "actual" capital was before the tribunal. However, regulation 49 is as relevant to the valuation of notional capital as to the valuation of actual capital and the submission states clearly that the decision under appeal was that the claimant possessed notional capital arising out of the transfer of the £13,000 to her parents. The purchase of the flat was mentioned only as part of the background and there was no documentary evidence before the tribunal relating to that purchase other than communications from the claimant and the note of the telephone conversation on 2 August 2002. It must have been clear that the Secretary of State had not investigated the issue. All these circumstances suggest to us that it is unlikely that the tribunal considered the implications of the purchase of the flat, notwithstanding that it heard evidence about it from the claimant and Mr Gibson.
36. Neither party has contended that the tribunal made a decision that the claimant did in fact possess actual capital. Just as that cannot be spelled out of the decision notice, neither can a decision to the effect that the claimant did not possess actual capital. Moreover, if the tribunal did make a decision to the effect that the claimant did not possess actual capital, the decision was wrong for the reasons we have given above. Commissioners and other decision-makers should be slow to find a tribunal to have erred in the absence of evidence that it did so.
37. For all these reasons, we are satisfied that the tribunal did not make any decision, one way or the other, as to whether, as a result of the purchase of the flat, the claimant possessed, or was to be treated as possessing, capital. The choice, then, is between the third and fourth possibilities we have identified: by stating that the appeal "is allowed", did the tribunal purport to award income support to the claimant notwithstanding that no decision had been made in respect of actual capital? Not only does Mr Gibson argue that benefit was awarded by the tribunal, but so also did the Secretary of State until he responded to this appeal.
38. It was because the Secretary of State considered that the tribunal sitting on 21 February 2003 had awarded benefit that he argued before the Deputy Commissioner that the decision of 2 September 2003 had to be considered to be a supersession of the tribunal's decision. We see considerable force in Mr Gibson's submission that, if the tribunal awarded income support, the Secretary of State has not shown grounds for supersession. The tribunal knew about the purchase of the flat. There is clearly no ground for saying that its decision was based on ignorance of, or a mistake as to, a material fact. We appreciate that regulation 6(2)(a)(i) of the 1999 Regulations appears to permit the Secretary of State to supersede a decision of a tribunal on the ground that there has been a change of circumstances since the decision of the tribunal took effect, but we have some difficulty in seeing how the Secretary of State can properly supersede a decision of a tribunal on the ground of a change of circumstances when the claimed change of circumstances occurred before the decision under appeal to the tribunal and the tribunal was well aware of those circumstances and could therefore have taken them into account notwithstanding section 12(8)(b) of the 1998 Act. The Secretary of State should abide by a tribunal's decision in such circumstances. As Mr Gibson has submitted, if the Secretary of State thought that the tribunal in the present case either had awarded benefit without having regard to the purchase of the flat or had wrongly awarded benefit despite having regard to the purchase, his remedy was to appeal.
39. The tribunal sitting on 26 August 2005 did not accept Mr Gibson's argument, because it was bound by the Deputy Commissioner's decision, but it may have thought the argument had some merit. Notwithstanding the Deputy Commissioner's decision, the tribunal appears to have regarded the decision of 2 September 2003 as a supersession of the original award of income support rather than as a supersession of the decision of the tribunal sitting on 21 February 2003. It is certainly implicit in the decision of 26 August 2005 that it did not regard the earlier tribunal as having awarded income support to the claimant and, in our judgment, that is correct. The decision dated 21 February 2003 does not record any determination that the claimant was entitled to income support and we again consider that we should not presume a tribunal to have erred in the absence of evidence to that effect. The Secretary of State's submission to the Deputy Commissioner appears to have been based upon an assumption that the tribunal was bound to determine the claimant's entitlement to income support. However, even if we considered that the tribunal ought to have given a decision in terms of entitlement, the error of failing to do so would have to be balanced against the clearer error of awarding benefit when the claimant possessed too much capital as a result of the purchase of the flat. We would presume the tribunal to have made the less serious error and to have failed to complete its decision. As it is, for reasons we shall now explain, the tribunal sitting on 21 February 2003 was under no obligation to determine the claimant's entitlement to income support and we are not satisfied that it erred at all, although its decision notice lacked clarity.

Is a tribunal hearing an appeal against an outcome decision obliged to substitute another outcome decision?

40. The question whether a tribunal allowing an appeal against a decision as to entitlement to benefit is obliged to substitute another decision as to entitlement to benefit is important. It obviously has implications for the way tribunals make decisions but it also has implications for the Secretary of State because his power to make further decisions following a decision of a tribunal depends on the scope of the tribunal's decision. This is evident in the present case, where the tribunal sitting on 21 February 2003 neither considered whether the claimant possessed capital as a result of the purchase of the flat nor whether she was entitled to income support. If the tribunal ought to have given made a decision as to entitlement to benefit, its decision was incomplete and the Secretary of State ought merely to have referred the case back to the tribunal for completion. That would also be the only decision we could give on this appeal. If, on the other hand, the tribunal was not bound to give a final decision as to the claimant's entitlement to benefit, the Secretary of State and the tribunal sitting on 26 August 2005 were entitled to give one and we can also consider doing so.
41. Although section 8 of the 1998 Act requires the Secretary of State to make all sorts of decisions, the terms of section 12(1) make it plain that only decisions "made on a claim for, or on an award of, a relevant benefit" carry any right of appeal, except where the decision falls within Schedule 3 to the Act, or regulations made under paragraph 9 of Schedule 3, or a specific right of appeal is conferred by some other provision. In R(IB) 2/04 at paragraph 55(1), the Tribunal of Commissioners therefore accepted that, in the majority of cases, only "what might be termed an 'outcome decision', that is to say a decision which directly determines the claimant's entitlement to benefit, either on an initial claim or subsequently" could be the subject of an appeal.
42. The two decisions under appeal to the tribunal that sat on 21 February 2003 were undoubtedly outcome decisions, one being a supersession of an award of benefit and the other being a refusal of a claim and both being to the effect that the claimant was not entitled to income support. The question that arises for consideration is whether the tribunal, having disagreed with the Secretary of State as to whether the claimant was to be treated as possessing notional capital as a result of giving £13,000 to her parents, was obliged to substitute outcome decisions. One decision would have been to the effect that the claimant was entitled to income support from 17 May 2002 to 31 July 2002 at the same rate as had been in payment before the suspension of benefit. The second decision would have dealt with entitlement from 1 August 2002.
43. In CH/2673/2003, Mr Commissioner Turnbull faced a situation very much like the one in this case, where a tribunal had allowed an appeal and had not been explicit as to whether it had dealt only with the issue on which the local authority had originally disallowed the claim or whether it had awarded benefit. He decided, with some hesitation, that it had awarded benefit and this was in part because he took the view that it had been under a duty "to decide not simply the issue whether the Claimant was disentitled by reason of being an owner, but to decide whether the Claimant was entitled to housing benefit or not, and if so in what amount." He acknowledged that it was common practice to remit matters but said –

"… if a tribunal decides a particular issue or issues and purports to 'remit' other matters which either may or do arise to the Secretary of State (or the local authority in housing benefit cases), what the tribunal must be regarded as doing is deciding a preliminary issue only, and indicating that if, after further consideration by the Secretary of State or local authority, there are other issues on entitlement that arise, those may be referred back to the tribunal [for] decision so that it can make the outcome decision on appeal."

He was not explicit as to who made the entitlement decision if no other issues in fact arose but the implication seems to be that the tribunal would be taken to have made it when deciding the preliminary issue.

44. The Secretary of State originally supported that approach in this appeal but Mr Kolinsky resiled from it in his skeleton argument. He points out that, as was observed in R(IB) 2/04, section 12 is silent as to the powers of an appeal tribunal. There is no express requirement on a tribunal to substitute an outcome decision for the decision under appeal and there is no express prohibition on remitting a case to the Secretary of State. He also points out that section 12(8)(a) provides that a tribunal "need not consider any issue that is not raised by the appeal". He submits that a tribunal is required only to address the live issues to which submissions before it have been directed. Other issues and the outcome decision may, he submits, be remitted to the Secretary of State and there is no duty on the tribunal to retain jurisdiction.
45. The facts of the present case illustrate the practical problems extremely well. The Secretary of State identified two live issues – the claimant having £13,000 notional capital following the transfer of money to her parents and her having actual capital following the purchase of the flat – but made a decision in respect of the first of the issues only. He plainly did that for two reasons. First, because notional capital of £13,000 was sufficient to disentitle the claimant from benefit whether she had any actual capital or not and, secondly, because he did not have a valuation of the flat or documentary evidence as to the claimant's interest in it. Once the tribunal had allowed the appeal in respect of the first issue, the second issue assumed a significance it had not previously had. The tribunal could not make an outcome decision, either awarding or refusing income support, without determining the second issue, which it could not do immediately unless it was prepared to proceed without obtaining a valuation. An adjournment would then have been required.
46. Adjourning does not really create a difficulty if the case would have to come back to a tribunal anyway because the adjourned issue is hotly contested, although there can be listing problems if it is desired to have the same tribunal. The greater difficulty arises when the adjourned issue need not be placed before the tribunal because the parties are agreed as to the outcome. Must the case be put before the tribunal for the final outcome decision to be made? That is wasteful in time and resources. Deeming a tribunal's decision to be completed when the parties reach an agreement on other issues is all very well, but it implies a necessity to obtain a claimant's agreement to a proposed decision, which is also wasteful in time and resources. That is because if there is no agreement the case must be referred back to the tribunal for determination. The Secretary of State cannot issue a decision that can be the subject of a separate appeal. This is a problem that was not considered in CH/2673/2003.
47. Section 12(8)(a) of the 1998 Act does not provide a complete answer. It provides that, in deciding an appeal, a tribunal need not consider any issue that is not raised by the appeal. The implication is that a tribunal must consider every issue that is raised by the appeal and, as a tribunal has an inquisitorial or investigative function, that includes any issue that is "clearly apparent from the evidence" (Mongan v. Department for Social Development [2005] NICA 16 (reported as R3/05 (DLA)). Therefore, what a tribunal must not do is ignore an issue that is clearly apparent from the evidence. However, it does not follow that the tribunal must make a decision on every issue raised by the appeal if there is a more appropriate way of dealing with one or more issues.
48. It is well established that a tribunal allowing an appeal because the decision under appeal was made without jurisdiction is entitled simply to set aside the decision without substituting another. So too may a tribunal when allowing an appeal on the ground that the original decision was not made against the correct parties and in such a case it is plainly open to the Secretary of State to make another decision in place of the one that has been set aside (R(H) 6/06). In our judgment, the same approach can be applied where an issue first arises in the course of an appeal. When an appeal against an outcome decision raises one issue on which the appeal is allowed but it is necessary to deal with a further issue before another outcome decision is substituted, a tribunal may set aside the original outcome decision without substituting another outcome decision, provided it deals with the original issue raised by the appeal and substitutes a decision on that issue. The Secretary of State must then consider the new issue and decide what outcome decision to give. In that outcome decision, he must give effect to the tribunal's decision on the original issue unless, at the time he makes the outcome decision, he is satisfied that there are grounds on which to supersede the tribunal's decision so as, for instance, to take account of any changes of circumstances that have occurred since he made the decision that was the subject of the appeal to the tribunal. Because his decision is an outcome decision, the claimant will have a right of appeal against it.
49. This approach is less cumbersome than that suggested in CH/2673/2003 and we consider that it is the preferable approach. We are therefore satisfied that a tribunal allowing an appeal against an outcome decision is not always obliged to replace the decision under appeal with another outcome decision.

Conclusion

Analysis

50. In the present case, the tribunal sitting on 21 February 2003 set aside the decisions of the Secretary of State dated 11 July 2002 (insofar as it related to the period from 17 May 2002 until that date) and 2 August 2002. It did not set aside the decision of 11 July 2002 in respect of the period before 17 May 2002 and it did not substitute any outcome decision in respect of the period from that date. The decision of the Secretary of State of 2 September 2003, as revised on 8 October 2003, gave a substitute outcome decision to the effect that the claimant was entitled to income support from 17 May 2002 to 31 July 2003 but not from 1 August 2003. On a proper analysis, that did not involve any supersession of the tribunal decision. It was a replacement of the decisions of 11 July 2002 (in part) and 2 August 2002 that had been set aside by the tribunal. The decision of 11 July 2002 had been a supersession of a very much earlier award of income support and the decision of 2 August 2002 had been a determination of the new claim. The decision of 2 September 2003 as revised completed the supersession of 11 July 2002, which had been partly upheld. Because benefit was awarded up to 31 July 2002 and the decision was not made until 2 September 2003, the new claim effective from 18 July 2002 could be treated as having lapsed and all issues could be dealt with in one decision. The decision of 2 September 2003 as revised gave effect to the tribunal's decision that the claimant was not to be treated as possessing notional capital as a result of giving her parents the £13,000 and it also gave effect to the Secretary of State's finding that the claimant held actual capital exceeding £8,000 from 1 August 2002 as a result of borrowing money and then purchasing an interest in the flat.
51. The analysis of the tribunal sitting on 26 August 2005 may have been less detailed than ours but nonetheless it appears to have been broadly to the same effect. However, what the Secretary of State and the tribunal both neglected to do was enquire whether there had been any change of circumstances between 1 August 2002 and 2 September 2003 which, given the length of time that had elapsed and the likelihood of the claimant having had to draw on the capital in her bank account in the absence of any income support, is something we consider they should have done. In the tribunal's case, this may have been because it failed to notice that the capital attributable to the claimant in respect of the flat was only £7,650 after the 10% deduction required by regulation 49 of the 1987 Regulations, so that the Secretary of State's decision had been dependent on his finding that she possessed other capital.
52. We have made enquiries and Mr Gibson has provided bank statements showing that the claimant had less than £350 in her current account at 2 September 2003 and had done so since 21 October 2002, save for very short periods. The Secretary of State has indicated that he is prepared to accept that the value of the flat remained unchanged from 1 August 2002 to 2 September 2003. If the claimant had no other capital besides her current account bank balance and her interest in her flat, she had less than £8,000 for much of the period from 21 October 2003 onwards, contrary to the decision of the tribunal. We must therefore allow the claimant's appeal.

Delay

53. Mr Gibson argued that there had been excessive delay in this case, where more than four years have elapsed since the claimant's payments of income support were suspended, and that the claimant's rights under Article 6 of the European Convention on Human Rights have therefore been infringed. Mr Kolinsky referred us to Salesi v. Italy (1998) 26 E.H.H.R. 187 but distinguished it on the ground that, in the present case, there has been no specific stage in the proceedings where the time taken to deal with the case has been excessive and the length of time it has taken to reach a conclusion is simply a result of the parties reasonably exercising their rights of appeal, whereas, in Salesi, the case had been dormant for one period of two years and there had also been delays of eight months and ten months in giving reasons for decisions at various stages. We observe that Mr Kolinsky's approach is supported by the admissibility decision in Bullerwell v. United Kingdom (no. 48013/99), given in the context of a social security case. However, it is unnecessary for us to decide whether or not there has been an infringement of the claimant's rights under Article 6 because, even if we were satisfied there had been, we cannot award income support to the claimant on the grounds of delay in circumstances where she would not otherwise be entitled to it. We also have no jurisdiction to award damages.

Decision

54. The Secretary of State has not seen the bank statements supplied by Mr Gibson and he may wish to carry out further investigations as to the claimant's capital and income from 1 August 2002. We are told that the claimant made a further claim for income support on 16 December 2003, which was rejected on the ground that she had too much capital. It is possible that she still had capital in a building society account. We note that Mr Gibson has not explicitly asserted that the claimant's capital apart from her interest in her flat had been reduced to less than £350 by 2 September 2003. In these circumstances, we give the decision set out in paragraph 1 above, which deals with the capital value of the claimant's interest in the flat but leaves other issues for determination by the Secretary of State. It will be more efficient and more appropriate for the Secretary of State to carry out the necessary investigations than it would be for us to do it. The claimant will have a right of appeal against the Secretary of State's decision. However, our decision as to the capital attributable to the claimant in respect of her interest in the flat is final, subject to any appeal against our decision or any supersession of our decision on the ground of, for instance, a change in the value of her interest.

Guidance

55. The Secretary of State invited us to give guidance to tribunals. We do not wish to be too prescriptive but we offer the following observations.

(1) In order to assist tribunals, the Secretary of State's submission to the tribunal should indicate whether it is considered that, if the appeal is allowed, there are any outstanding issues that need further consideration and whether the Secretary of State wishes the tribunal to deal with them. We do not expect the Secretary of State to spend a great deal of time and effort considering issues that may turn out to be academic if his decision is upheld. However, there are cases where a quick read through a claim form may satisfy the Secretary of State that, for instance, if a tribunal accepts that a claimant is habitually resident in the United Kingdom, he or she will be entitled to income support at a rate equal to his or her applicable amount. On the other hand, if the claimant in such a case has declared part-time work, the Secretary of State might wish the claimant to provide verifiable evidence of the amount of his or her earnings before any outcome decision is given. Stating that in the submission to the tribunal might encourage the claimant to produce the evidence at or before the hearing. The Secretary of State and the President of the Appeal Tribunals may wish to discuss what can reasonably be expected in submissions.

(2) Where a tribunal, having dealt with the issues originally raised in an appeal, is not able immediately to give an outcome decision, it must decide whether to adjourn or whether to remit the question of entitlement to the Secretary of State. The technical difficulty of the outstanding issues and the likelihood of a further appeal if the entitlement question is remitted will be relevant considerations. The tribunal should consider whether the Secretary of State would be in a better position to decide the issue and to seek further information from the claimant. It may have to balance the desirability of a decision being made as quickly as possible against the desirability of it being made as accurately as possible, given that an appeal on a point of fact will not lie against a decision of the tribunal on any fresh issue. The wishes of the parties should be taken into account.

(3) The tribunal's decision, as recorded on the decision notice issued at the conclusion of the hearing, should explicitly record what has and has not been decided. In particular, the decision notice should make it absolutely clear whether the tribunal has made an outcome decision (subject, in some cases, to the precise amount being calculated by the Secretary of State) or has remitted the final decision on entitlement to the Secretary of State. The President may wish to consider whether the current form of decision notices issued in income support and similar cases should be altered to assist chairmen with that task. (We also suggest that the use of the word "revised" in the current form is unhelpful, given the technical meaning of that term in the 1998 Act.)

Late skeleton arguments

56. Finally, we wish to record our disapproval of the Secretary of State's representatives' cavalier attitude to the Chief Commissioner's direction to file a skeleton argument not less than fourteen days before the oral hearing in this case.
57. The point of directing that a skeleton argument is submitted before the day of a hearing is not just to ensure that the Commissioners have the document at the hearing. It is primarily to ensure that the opposing party and the Commissioners are able properly to prepare for the hearing. In this jurisdiction, where Commissioners may well wish to consider points not raised by the parties, it is particularly important that they have the skeleton arguments in good time.
58. Here, the Chief Commissioner's direction was given when he directed that the case be heard by a Tribunal of Commissioners, three and a half months before the hearing. We were told at the hearing that the reason that the skeleton argument was delivered late was that a major policy meeting had had to be convened and that the meeting had had to be held on a date after the skeleton argument was due because relevant people had been away over the summer. The skeleton argument was eventually delivered to the Commissioners' Office by email two days before the hearing, with an apology and a request for an extension of time. There was no explanation for its lateness, which betrays an assumption that an extension of time would be granted without any questions being asked. The Commissioners' Office had previously made enquiries about the skeleton argument and had been told simply that it was not possible to produce it any earlier. No request had been made then for an extension of time for filing the skeleton argument or for a postponement of the hearing.. Unsurprisingly, Mr Gibson was unable to assimilate the contents of the skeleton argument at the hearing, even though we rose for some time while he read it. The result was that we were obliged to give him an opportunity to make further written submissions after the hearing. We observe that not only members of this Tribunal of Commissioners but also other Commissioners have had recent experience of the late submission of skeleton arguments.
59. It was particularly unsatisfactory that the skeleton argument was delivered late in the present case because the Secretary of State had known both that he might be taking a radically different approach to the case from that taken in his previous submissions and that the claimant's representative was neither a lawyer nor experienced in social security matters.
60. In future, if it becomes apparent that there will be difficulty in meeting a deadline for filing a skeleton argument, a formal application for an extension of time should be made before the deadline has expired and it should be accompanied by an explanation for the expected delay. This applies to claimants' representatives as well as the Secretary of State's.

MARK ROWLAND

Commissioner

EDWARD JACOBS

Commissioner

ANDREW LLOYD-DAVIES

Commissioner

22 December 2006