Upper Tribunal (Administrative Appeals Chamber)

[2009] UKUT 87 (AAC) (14 May 2009)
Income support and state pension credit
other: income support

 


IN THE UPPER TRIBUNAL Appeal No. CIS/3335/2008 and CIS/3337/2008

ADMINISTRATIVE APPEALS CHAMBER

Before Judge S. M. Lane

Decisions

CIS/3335/2008: The decisions of the First-tier Tribunal (Social Entitlement Chamber) involved the making of an error on a point of law. The decision is SET ASIDE and RE-MADE under section 12(2)(a) and (b)(ii) of the Tribunals, Courts and Enforcement Act 2007. The substituted decision is to the same effect as the tribunal's decision.

The appellant is not entitled to Income Support from and including 05/02/02 because he possesses capital in excess of the prescribed amounts of £8000, and from 20/04/06, £16,000. He possessed a minimum of £18,898.74 from 5/2/02 and a minimum of £28,898.35 from December 2003.

CIS/3337/2008: There was no material error of law to justify the setting aside of the decision.

The appellant is not entitled to Income Support from and including 04/04/08 because he a possesses capital in excess of the prescribed amounts of £16,000. As of that date, he possessed a minimum of £35,755.35.

REASONS FOR DECISION

1. From 3 November 2008, the functions of the Social Security Commissioners were transferred to the Upper Tribunal (Administrative Appeals Chamber). Accordingly, cases which would previously have been heard by the Commissioners are now heard by judges of the Upper Tribunal. This makes no difference to the appeal process for social security appeals such as the appellant's.
2. The appellant appeals with my permission against the decision of the Wakefield tribunal heard on 1 September 2008, under references 008/08/01503 and 01728. The tribunal dismissed his appeal against the Secretary of State for Work and Pensions' decisions of 10/09/07 and 30/04/08 that he was not entitled to Income Support because he was in possession of capital in excess of the prescribed amount at all material times.
3. In dismissing the appeal, the tribunal confirmed that the sum of £18,898.74 received by the appellant in February 2002 as compensation for the destruction of his home in a gas explosion could not be disregarded under paragraph 8(a) of that Schedule for any period. It also treated a sum of £10,000 received by the appellant in December 2003 in respect of the sale of the land upon which his home formerly stood as falling within regulation 8(a) of Schedule 10 of the Income Support (General) Regulations 1987.
4. In relation to the question of whether the capital paid in consequence of the destruction of the home could be disregarded, the tribunal decided that paragraph 8(a) was not applicable because

'...[paragraph 8(a)] envisages circumstances that delay the appellant in carrying out that intention. He does not have 6 months to decide whether to utilise the money. That intention is assumed and the time limitation relates to putting the intention into effect....'

'In the present case the appellant had gone about 4 – 5 years, not putting his intention into effect but suspending any action whilst he lives elsewhere.'

'...I cannot interpret the legislation as allowing a long delay to be reasonable having regard to altered intentions as to whether or when the capital will be utilised.'

5. In his appeal to the Upper Tribunal, the appellant submitted that the tribunal did not take into account the extent of his caring responsibilities and was unclear in explaining why it did not find it reasonable to extend the 26 week period during which the possession of capital could be disregarded under paragraph 8(a) of Schedule 10. I did not accept that the tribunal failed to take into account the extent of the appellant's caring responsibilities. Indeed, they referred to the appellant's evidence of caring for his cousin 24/7. However, neither the Secretary of State nor the tribunal allowed any period at all during which the capital could be disregarded. .
6. In giving permission to appeal, I observed that there was arguably an error of law in the tribunal's decision that the £10,000 received by the appellant in respect of the land upon which his home formerly stood could be treated as falling within paragraph 8(a) of Schedule 10, but that in any event, the tribunal's reasoning amounted to a finding that the appellant did not have the intention to use the money in a way that fell within the disregards in Schedule 10, and the capital exceeded the prescribed limits at all material times, in any event. The Secretary of State's submission to the Upper Tribunal concurs with both grounds upon which I granted permission to appeal. He invited me to substitute my own decision, which would be to the same effect as that of the tribunal. The appellant's representative had no comments.
7. The facts are not in dispute. The facts of CIS/3335/2008 are that the appellant made a claim for Income Support on 23 August 2001. At this time, he was living with his elderly, disabled cousin in her home and acting as her carer, his own house having been destroyed about a year earlier in a gas explosion. He stated in his claim form that he had £2,198.78 in savings. He maintains that he told the department that he was expecting an insurance payment relating to the destruction of his home.
8. He received £18,898.74 on 5 February 2002 representing the value of the house alone (i.e. excluding the value of the land, which he continued to own) and invested it in a capital investment bond on 14 February 2002. He did not inform the Secretary of State when he received this money. This investment had grown to £23,608.90 as of 13/10/06. In or around December 2003, he received an additional sum of £10,000 from the sale of the land upon which his house had stood. He did not declare the receipt of this money to the Secretary of State.
9. On 03 January 2007, the Secretary of State became aware of the appellant's capital holdings through data obtained from the Generalised Matching Service, and interviewed the appellant on 06 March 2007. At the interview, he explained his living arrangements, as set out above. He had not yet bought a property with the proceeds of his insurance claim because his cousin's caring needs made that impracticable. However, he meant to look for a property when his caring role ended.
10. The Secretary of State superseded the original award of Income Support from 05/02/02, the date upon which the appellant received the £18,898.74, on the basis that the appellant was in possession of capital in excess of the prescribed amounts from that time. The decision maker considered that the capital could not be disregarded under Schedule 10, paragraph 8(a) of the Income Support (General) Regulations 1987 because the appellant had had the capital since 05/02/02, had not taken any steps to replace the property or possessions and could not say when he would be able to do so, as it would happen only when his caring role ended.
11. The appeal in CIS/3337/2008 arises from the Secretary of State's refusal to award the appellant Income Support on a fresh claim made on 4 April 2008 because the appellant's capital, which had by this time grown to £35,755.35, was in excess of the prescribed amount. The capital comprised £23,608.90 in the investment bond, £11,755.35 in two ISAs (£9,878.35 and £1,877.00) and 250 shares. The appellant informed the Secretary of State shortly thereafter that his ISAs exceeded the amount shown by the Secretary of State, but did not reveal the actual figure. He repeated that he would not buy a property of his own until his caring responsibilities ended. The Secretary of State applied the same reasoning in refusing to disregard the capital.
12. Paragraphs 1 – 3 and 8 of Schedule 10 require the Secretary of State to disregard capital deriving from certain aspects of, and transactions involving, home ownership for limited periods. Although paragraph 8(a) was the only provision of direct relevance in this appeal, I set out all four paragraphs because case law on the meaning of words used in one provision are relevant to other paragraphs. The emphasis is added.

Paragraph 1: disregards the value of the dwelling occupied as [the claimant's] home;

Paragraph 2: disregards the value of a premises he has acquired for occupation and which he intends to occupy within 26 weeks from the date of acquisition or such longer period as may be reasonable in the circumstances to enable him to obtain possession and commence occupation of the premises;

Paragraph 3: disregards any sum directly attributable to the proceeds of sale of any premises formerly occupied by the claimant as his home and which is to be used for the purchase of other premises intended for such occupation within 26 weeks or such longer period as is reasonable in the circumstances to enable the claimant to complete the purchase; and

Paragraph 8(a): disregards (a) any sum paid to the claimant in consequence of damage to, or loss of the home or any personal possession and intended for its repair or replacement,… and which is to be used for the intended purpose, for a period of 26 weeks from the date on which it was so paid or acquired or such longer period as is reasonable in the circumstances to enable the claimant to effect the repairs, replacement or improvements.

13. The capital to be disregarded is differently defined in the paragraphs cited. Paragraph 1 disregards 'the dwelling occupied as the home'. 'Dwelling' is defined in section 137 of the Social Security Contributions and Benefits Act 1992 as

'any residential accommodation, whether or not consisting of the whole or part of a building and whether or not comprising separate and self-contained premises.'

14. 'Dwelling occupied as a home' is defined in regulation 2 of the Income Support (General) Regulations 1987 as

'the dwelling [i.e. residential accommodation] together with any garage, garden and outbuildings...including any premises not so occupied which it is impracticable or unreasonable to sell separately...'.

15. Paragraph 1 therefore encompasses the home and any land it stands on while paragraphs 2 and 3 relate to premises occupied as the home. 'Premises' is an ordinary word which encompasses a house, building and land upon which it stands (Concise Oxford English Dictionary). It would not, in my view, be apt to describe land in the absence of any buildings, for example, an empty field.
16. Paragraph 8, on the other hand, relates only to sums paid in consequence of damage to or loss of the home or personal possessions. A home can be damaged or lost without reference to land. A home may comprise, for example, a boat or caravan. If a house is destroyed by some misfortune, the land remains as a separately saleable asset. In my view, the land was an asset separate from the home itself, and did not fall to be disregarded under paragraph 8(a).
17. Because of the way paragraph 3 of Schedule 10 is worded, it might be argued that the £10,000 received in respect of the land represented a 'sum directly attributable to the proceeds of sale of premises (viz. the house and land on which it stood) formerly occupied by him as a home' for the purposes of paragraph 3. The appellant's intention to use the sum to buy other premises to live in within a reasonable timescale would then have been relevant. However, the tribunal's views on the appellant's lack of the necessary intention to use the money for the replacement of the home under paragraph 8 would have been equally relevant under paragraph 3.
18. In relation to paragraph 3 of Schedule 10, the phrase 'to be used' has been held to require an examination not only of the claimant's subjective state of mind but also to the practical or reasonable certainty that he will do use the money for the purpose envisaged: CIS/8475/1995. R(IS)7/01 restated the test by substituting reasonable certainty for practical certainty. Finally CIS/685/1992 (paragraph 16) states that 'it cannot be the law that an indefinite holding on to the proceeds of sale of a home with a mere hope or aspiration that the proceeds of sale may be used at some future date for another home renders such proceeds of the sale subject to the disregard'.
19. These cases make it quite clear that the appellant's subjective intent is not determinative to the applicability of paragraph 3, and the practical or reasonable certainty that the claimant will use the sum received for the intended purpose within a reasonable timescale, is a further relevant factor. In my view, the reasoning in this strand of case law is equally applicable to paragraph 8(a).
20. At the hearing, the appellant stated that there was no need to look for housing until his caring duties ceased or changed in extent, thereby confirming his earlier evidence that he had not taken action because of his caring responsibilities, that he was living with the disabled person and would not use the money to buy a house until his caring role ended, the date of which was uncertain. The situation had already gone on for some 5 years. The tribunal found that the appellant did not put his intention into effect but instead suspended any action whilst living elsewhere, that there was no evidence (or more accurately, perhaps, no credible evidence) that he was unable to arrange another home, and that he had forgone the opportunity to replace his home.
21. Although my initial view that the tribunal had decided that the appellant did not have any relevant intention, the reasoning could be clearer on whether the appellant had an intention at the time of receipt of the payment to use the money to buy a home, but then changed his mind; or that he had not made up his mind at all; and does not deal with the issue of reasonable or practical certainty at all, although that was a relevant consideration. I consider, however, that on the evidence before them, there was only one view that that the tribunal could have taken of the appellant's intention and only one decision that the tribunal could have made, as I made plain in giving permission to appeal.
22. Section 12(2)(b)(ii) of the Tribunals, Courts and Enforcement Act 2007, gives a judge of the Upper Tribunal the power to remake the First-tier Tribunal's decision, while section 12(4)(a) and (b) allows an upper tribunal judge to make any decision the First-tier Tribunal could have made if the First-tier Tribunal were remaking the decision, and to make such findings of fact as the upper tribunal judge considers appropriate.
23. Insofar as the tribunal's findings may have been defective, I find on the evidence before me that the appellant did not have an intention sufficient in law to use the money for the purpose envisaged by paragraph 8(a). He already had a place to live when he received the payment and did not see how he could buy a replacement house to live in while his cousin needed his care. He did not envisage a change in his caring role. Although he subjectively had an intention to use the money to buy a replacement house, it amounted to no more than an aspiration to use the money at some uncertain time in the future. In the circumstances, there was no practical or reasonable certainty that he would fulfil the requirements of paragraph 8 from the outset. This situation did not change throughout the time he had the money. As a result, the appellant was not entitled to the disregard of his capital for any time from its receipt.
24. Accordingly, the decision in CIS/3335/2008 was technically wrong in including £10,000 from the sale of the appellant's land in the sums potentially to be disregarded under paragraph 8(a). This makes no difference to the outcome, because the compensation money alone exceeded the prescribed limits of £8000 and £16,000 (pre-April 2006 and post-April 2006 respectively), and to that the appellant's savings had to be added.
25. In CIS/3337/2009, the appellant's capital had increased to £35,755.35, none of which could be disregarded under paragraph 8(a). The compensation money of nearly £19,000 could not be disregarded, from the date on which it was paid in February 2002 and the £10,000 received for the sale of the land did not fall to be disregarded under this paragraph at all. The question of extension did not arise on the findings, but it should be added that it cannot have been reasonable to extend the period for which a disregard might have been found in light of the lack of any practical or reasonable certainty that the appellant would use the money for the intended purpose.
26. It is not necessary on the facts of these appeals to consider the application of the disregards where there has been a clear change of intention. However, it appears to me that the application of the disregard depends on the continuing intention to use the money for the purpose envisaged. A change of intention will, therefore, terminate the applicability of the disregard.

[Signed]

S M Lane

Judge of Upper Tribunal

14 May 2009