UK Social Security and Child Support Commissioners' Decisions

[2007] UKSSCSC CSIS_639_2006 (23 March 2007)

THE SOCIAL SECURITY COMMISSIONERS

Commissioner's Case No: CSIS/639/06

SOCIAL SECURITY ACT 1998

APPEAL FROM THE APPEAL TRIBUNAL UPON A QUESTION OF LAW

COMMISSIONER: D J MAY QC

Oral Hearing

Appellant: Abdul Rehman Respondent: Secretary of State

Tribunal: Glasgow Tribunal Case No: U/05/100/2005/00830

DECISION OF SOCIAL SECURITY COMMISSIONER

Decision

1. My decision is that the decision of the tribunal given at Glasgow on 21 June 2006 is not erroneous upon a point of law. The appeal fails. I dismiss it.
2. This appeal came before me for an oral hearing on 22 March 2007. The claimant was represented by Mr Craig, a Welfare Rights Officer of the Queens Cross Housing Association Ltd. The Secretary of State was represented by Mr Bowie, Advocate, instructed by Mr Matheson of the Office of the Solicitor to the Advocate General.
3. Mr Craig had sought by email sent to the office of the Commissioner at 3:47 p.m on 21 March 2004 to postpone the hearing today to allow more time for the claimant's legal aid application to be finally determined. He made the motion to me orally. I refused the motion to postpone. The appeal before the tribunal was heard on 21 June 2006. The claimant did not attend the Solicitor for the purposes of making a legal aid application until 1 February 2007. The motion to postpone came very late in the day after the Secretary of State had instructed Counsel to appear. The claimant had the benefit of representation from Mr Craig who is an experienced Welfare Rights Officer who has represented him throughout the proceedings, both before the tribunal and before the Commissioner.
4. The decision appealed against to the tribunal was one refusing a claim for income support from 29 June 2005 upon the basis that the claimant had capital over £8,000. That capital consisted of a house at 25 Parkbrae Avenue, Glasgow. The claimant's appeal to the tribunal was unsuccessful in that it was disallowed and the decision of the Secretary of State issued on 11 July 2005, was confirmed. The claimant before the tribunal had relied upon a submission that he was not the beneficial owner of the property. It was not a matter of dispute that if he were the beneficial owner of the property, the decision in the respect of income support was correctly made.
5. The tribunal found as a fact:

"3. The case presented on behalf of the claimant by his representative is that the claimant was not the beneficial owner of the above property. It is freely conceded that he held title to it as being the registered proprietor in the Land Register. However, it is submitted on his behalf that he holds that title in trust for his son. I understand that the claimant's son at the date of the decision maker's decision was aged around 19 or 20. The claimant's case as presented therefore, on the issue of trust, was that he himself was both the trustor and the sole trustee of the alleged trust of which the subject was 25 Parkbrae Avenue and that the beneficiary of that trust was his son referred to above.

4. There is no formal deed or declaration of trust along the lines described in para 3 above. Also there is no informal document which is an explicit declaration of trust along the lines described there."

6. It was apparent that before the tribunal were writings by the claimant which it was asserted to them constituted a trust. The first and principal foundation for the assertion of a trust was an affidavit signed by the claimant subsequent to the refusal of his claim for income support. It is in the following terms:

"At Glasgow on the Twenty Ninth day of July Two Thousand and Five, in the presence of Pravin Jain, Notary Public, Glasgow compered Abdul Rehman residing at Flat 2/1, 3 Windsor Street, Glasgow, G20 7NA, whom being solemnly sworn depones as follows:

"1. My full name is [claimant]. I presently reside at Flat 2/1, 3 Windsor Street, Glasgow, G20 7NA. I was born on the second day of April 1953 and am presently 52 years of age.

2. I confirm that I purchased the property at 25 Parkbrae Avenue, Glasgow on around December 2001. This property was purchased for the benefit of my son [AR], due to the fact that he was unable to obtain a mortgage at that time. Whilst no formal agreement was made at the time of purchase, I received and continue to receive no benefits from the property and it has been agreed between me and my son that if the house were to be sold in the future, that I would not receive any monies from the house sale. The monies received would be applied to repay the mortgage and thereafter would fall to benefit my son. No formal documentation recording this was ever made, however it is an agreement between myself and my son.

3. I can confirm that my son [AR], is in contact with Financial Advisors which will enable the said property to transferred to him.

ALL OF WHICH IS THE TRUTH AS THE DEPONENT SHALL ANSWER TO GOD."

7. The second document is the claim form in which page 28 in answer to the question:

"Apart from your home, do you, your partner, or anyone else you are claiming Income Support for, own any other property or land in this country or abroad? If the property or land is on a mortgage or loan, still tick YES.

Do you, your partner, or anyone else you are claiming for, have a share in any other property or land in this country or abroad?"

8. He supplied the answer "yes" and gave the address of the property as 25 Parkbrae Avenue, Glasgow.
9. He had on the previous page indicated the following:

"In name, I own a house, which is held in trust for my son [AR] who lives in the house. I do not know the value of the house at present. – see page 16."

10. It appears to me that the tribunal correctly identified, following upon what was said by Mr Commissioner Walker QC in R(IS)10/99, that for the constitution of the trust asserted, in which the claimant would be both trustor and sole trustee, two elements would require to be established, namely:

"Firstly, delivery or equivalent of the property which is the subject of the trust has to be effected. Secondly, the relevant provisions of the Requirements of Writing (Scotland) Act 1995 have to be fulfilled."

11. Neither Mr Craig nor Mr Bowie dissented from that statement of the law though as will be seen, Mr Craig substituted that the tribunal did not consider the provisions in sections 1(3) and (4) of the Act, which he subsequently argued they should have. The tribunal reached the conclusion that neither of these conditions had been fulfilled.
12. In respect of the first of these conditions, the tribunal said:

"I am not satisfied, having regard to the terms of paragraph 11 of R(IS)10/99 that it has been established that there has been delivery or equivalent here in respect of 25 Parkbrae Avenue. I have held in fact in para 4 above that there is no trust deed in this case whether formal or informal. Further no letter or other document has been produced addressed to the claimant's son at the time when the claimant took title to 25 Parkbrae Avenue or at any subsequent time prior to the date of the decision maker's decision, intimating to the claimant's son the existence of the trust over that property which the claimant's representative asserts existed and of which the claimant's son was the sole beneficiary. Given the absence of any of the documentation just referred to, either a trust deed, whether formal or informal, or a letter or other document described, I am not at all satisfied that there ever was any irrevocable divestiture of the property at 25 Parkbrae Avenue by the claimant. That as is emphasised in para 11 of R(IS)10/99 is an essential element in the constitution of a trust at common law where the same person is both the trustor and sole trustee. Thus in my view no trust which is valid under Scottish Private Law was created by the claimant in this case. In consequence, the value of 25 Parkbrae Avenue falls to be assessed as part of the calculation of the claimant's capital under Regulations 46 and 49 of the above regulations. This has the inevitable effect that capital is well in excess of £8,000 for the purposes of Regulation 45 of the above regulations. My decision on the issue discussed in this paragraph is sufficient to dispose to the case and on the basis of it, I uphold the decision maker's decision under appeal."

13. In respect of the second condition:

"For the sake of completeness, I consider it appropriate to also consider the matters which arise under the Requirements of Writing (Scotland) Act 1995. Those issues are referred to briefly by Mr Commissioner Walker QC in para 12 of R(IS)10/99. Under Section 1(2)(a)(iii) of that Act, a trust whereby a person declares himself to be the sole trustee of his own property requires to be constituted in writing. What is needed for that purpose under Section 2(1) of the above Act is simply a document subscribed by the person who is the trustor, ie. the grantor of the trust. I hold that doc 10 is not sufficient for these purposes. Although it is clearly subscribed by the claimant, I do not consider that it is in sufficiently explicit terms to be construed as a declaration of trust of which the claimant is the sole trustee. Even if I am wrong in that however, the document is dated 29 July 2005 and this even at the best it establishes the constitution of a trust in favour of the claimant's son on that date. That date is later than the date of the decision maker's decision thus even taking the most favourable view of document 10, it does not establish the constitution of a trust prior to that date. The appellant's representative also drew my attention to doc 27, part of the IS claim form and submitted that the statement made on that document read along with the reference to 25 Parkbrae Avenue on doc 28 would satisfy the statutory requirements under discussion in this paragraph, given the subscription by the claimant of the IS claim on doc 53. I reject that submission. I do not consider that the statement on doc 27 is sufficiently explicit to be considered to constitute a trust along the lines suggested by the claimant's representative. Even if I am wrong in that conclusion, however, the claimant's case fails for the reasons relating to delivery of alleged trust property laid out in detail above. Nonetheless for the sake of completeness I hold that in my view the relevant conditions of the 1995 Act have not been fulfilled in this case."

14. Essentially Mr Craig's submission was that the affidavit of 29 July 2005 was a trust deed, which had the essential elements of delivery contained therein. His secondary position was that if this did not constitute a trust deed, then what is contained in the claim form at page 28, constituted a trust deed with the essential element of delivery. If I accepted either of these propositions, then the tribunal would have erred in law. If I was not prepared to accept these propositions, then it was Mr Craig's submission that in relation to the constitution of a trust, the tribunal erred in law by a failure to consider whether the requirements of Section 1(3)(4) of the Requirements of Writing (Scotland) Act, 1995 applied in this case.
15. Mr Bowie's submission in response was, that for a number of reasons neither the affidavit nor the statement in the claim form could be documents which constituted a trust. The submission was that both the affidavit and the claim form were no more than a record of what the claimant said had already taken place. He said that in any event, what was contained in the affidavit might constitute an obligation in favour of the claimant's son in respect of the proceeds of the property if it was sold, but it did not have the necessary elements to constitute a trust. It was further in his submission that there was no restriction contained within the affidavit on the claimant's rights to do what he wished with it. He also had pointed out to me, that in a further statement in the enquiry form at page 73, the claimant said:

"The property was bought for my son, it was going to be given to my son as a gift of deed."

That document was and was not consistent with the existence of a trust.

16. In his submission he referred me to Clark Taylor & Co.Ltd. and Quality Site Development Ltd. (Edinburgh Ltd.) 1981, Session Cases at page 111. He referred me to what was said by the Lord President at page 118 of the report, where he said:

"The result of this analysis of the ruling authorities is that in order to complete the successful constitution of a trust recognised as such by our law, where the trustor and trustee are the same persons, there must be in existence an asset, be it corporeal or incorporeal or even a right relating to future acquirenda; there must be a dedication of the asset or right to demand trust purposes; there must be a beneficiary or beneficiaries with defined rights in the trust estate; and there must also be delivery of the trust deed or subject of the trust or a sufficient and satisfactory equivalent to delivery, so as to achieve irrevocable divestiture of the trustor and investiture of the trustee in the trust estate."

17. He then referred me to what the Lord President said later on:

"What on this argument is said to be "equivalent to delivery" is not intimation of action taken in relation to existing assets or rights in favour and for the benefit of the beneficiary, but the acceptance of a obligation to hold in trust certain monies which may be paid to the assumed trustor at some unspecified, and at the time unknown, date. This, however, is far from being "some overt extraneous and ostensible act which involves acceptance of the trust and marks definitely the character of the trustee's possession" in words of Lord Kyllachy."

18. It was Mr Bowie's submission that what is contained in the affidavit is a long way short of the requirements set out in these passages and is not something of the description in the words of Lord Kyllachy quoted by the Lord President. The same applied to the answer to the question in the claim form.
19. I am persuaded by Mr Bowie's argument and I consider that the tribunal in these circumstances were entitled to come to the conclusion which they did. Both the affidavit and the answer in the claim form fell well short of what was required to constitute a trust in the circumstances of the case having regard to what was said in the opinion of Lord President Emslie quoted above. I also accept that the two documents can be regarded as a narration of what the claimant claimed was the existing state of affairs. What was said therein was also inconsistent with the statement in the enquiring form quoted at paragraph 15. It follows then that I can find no error in law in what is contained in paragraphs 6 & 7 of the tribunal's statement.
20. Mr Craig then sought to submit that the tribunal erred in law by virtue of a failure to consider whether the exception to the rule contained in Section 1(2)(a)(iii) applied. That section provides:

"1(2) Subject to subsection 3 below, a written document complying with Section 2 of this Act, shall be required for –

(a) The constitution of –

….

(iii) A trust were a person declares himself to be sole trustee of his own property or any property which he may acquire…"

21. Subsections 3 and 4 are in the following terms:

"(3) Where a contract, obligation or trust mentioned in subsection (2)(a) above it not constituted in a written document complying with section 2 of this Act, but one of the parties to the contract, a creditor in the obligation or a beneficiary under the trust ("the first person") has acted or refrained from acting in reliance on the contract, obligation or trust with the knowledge and acquiescence of the other party to the contract, the debtor in the obligation or the trustor ("the second person") –

(a) the second person shall not be entitled to withdraw from the contract, obligation or trust; and

(b) the contract, obligation or trust shall not be regarded as invalid, on the ground that it is not so constituted, if the condition set out in subsection (4) below is satisfied.

(4) The condition referred to in subsection (3) above is that the position of the first person –

(a) as a result of acting or refraining from acting as mentioned in that subsection has been affected to a material extent; and

(b) as a result of such a withdrawal as is mentioned in that subsection would be adversely affected to a material extent."

22. It was Mr Craig's submission that the effect of these subsections was that if they applied, then the requirement of writing to constitute the trust did not apply and a trust could be constituted other than in writing. He accepted that this was not an issue which was raised before the tribunal. However, he said that by failing to deal with this, they erred in law. Mr Bowie's submission was that as the exception was conditional upon the actings of the beneficiary, in these circumstances that was a matter that would require to be established by the claimant if he wished to assert the exception were to apply. I accept his submission in that regard. There was no submission to me or the tribunal by Mr Craig that it did apply. If it was to be relied upon, then it would have been necessary to place before the tribunal evidence that the claimant's son had acted or refrained from acting in reliance of the trust. There was no such case put before the tribunal or myself. The claimant was represented by an experienced representative before the tribunal. As no such evidence was presented to the tribunal by Mr Craig they cannot be said to have erred in law by not considering this issue. I also consider that it was not an issue in any event which the tribunal needed to have considered by virtue of the operation of section 12(8)(a) of the Social Security Act 1992.
23. Mr Bowie also relied upon the fact that even if the affidavit had constituted a valid trust the constitution of that trust would have post dated the date of the decision and that accordingly, the tribunal were correct when they stated in paragraph 7 that it could not establish a trust at the date of the decision and accordingly as there was no trust in existence the decision made by the decision maker was sound. Mr Craig did not persuade me otherwise and I accept this.
24. Whilst Mr Craig accepted that I was entitled to refuse the motion to postpone, he asked me to defer writing and issuing this decision until after the claimant's application for legal aid has been determined. This I am not prepared to do.
25. The appeal fails.

(signed)

D J MAY QC

Commissioner

Date: 23 March 2007