Upper Tribunal (Administrative Appeals Chamber)

IN THE UPPER TRIBUNAL File No: CPC 2582/09

Administrative Appeals Chamber

6 May 2010

TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007

SOCIAL SECURITY ACTS 1992-2000

APPEAL FROM DECISION OF FIRST-TIER TRIBUNAL

Appellant: [the claimant]

Respondent: Secretary of State for Work and Pensions

Claim for: State Pension Credit

First-tier Tribunal: Birmingham

Tribunal Case Ref: 024/08/08308

Tribunal date: 8 June 2009 (reasons issued 01.08.09)

DECISION OF THE UPPER TRIBUNAL

The claimant’s appeal is allowed. The tribunal’s decision is set aside as erroneous in law and the case is remitted to the First-tier Tribunal under section 12(2)(b) of the Tribunals, Courts and Enforcement Act 2007 for redetermination as directed below.

REASONS

Mr P L Howell QC:

1. The decision of the Birmingham tribunal sitting on 8 June 2009 is conceded to have involved the error in law identified in the grant of leave dated 1 December 2009 at page 120 and agreed in the written submission of Mr J Tattersall on behalf of the Secretary of State dated 10 February 2010 at pages 122-4, namely that the tribunal misdirected itself in confirming the method of valuation used by the Secretary of State’s decision under appeal to determine that the claimant had to be treated as having income from capital of £56,250 for the purposes of assessing his entitlement to pension credit.

2. I accept that concession as rightly made, but in order to explain its relevance and why it means the tribunal decision has got to be set aside and the case remitted for rehearing under section 12(2)(b) of the 2007 Act I must first summarise the facts. The claimant is a 74 year old married gentleman who has for some years been living separate and apart from his wife, who is also elderly and in poor health. According to the findings of the tribunal which were properly based on the evidence before it, there is no likelihood of their getting back together again to live as a couple although there seems to be no hostility between them and no question of a divorce. He lives in single accommodation provided by the council and she remains living with their adult daughter in the former family home, which is a freehold property owned by the claimant and his wife jointly. He is content for his wife to go on living there as she has done since the separation some years ago and he will take no steps to sell the property or realise his interest so long as she does so, as he is concerned to act honourably towards her.

3. The appeal to the tribunal was against a departmental decision of 2 October 2007 that for the purposes of assessing his (undisputed) entitlement to state pension credit from 30 April 2007 one half the value of the property, less a standard allowance of 10% for sale expenses, had to be brought into account as capital from which he was to be treated as receiving a weekly income of £1 per £500 by virtue of regulation 15(6) State Pension Credit Regulations 2002 SI No 1793. Based on the claimant’s own estimate of the value of the whole at £125,000 (which the Secretary of State accepted though the tribunal though it almost certainly too low), he was therefore assessed as having “tariff income” on capital of £56,250 which had the effect of eliminating any guarantee credit and reducing his savings credit substantially. He appealed to the tribunal on the ground that his interest in the house should be disregarded and not brought into account as capital at all. The tribunal affirmed the Secretary of State’s decision including the valuation of his interest at £56,250.

4. The main issue dealt with by the tribunal was whether any of the statutory “disregards” under Schedule 5 to the regulations applied and on this I have concluded despite the arguments put forward by and on behalf of the claimant that no error of law was made. In particular it seems to me that as Mr Tattersall submits there can be no ground in law for challenging the tribunal’s conclusion that the provision in paragraph 4(b) of Schedule 5 for disregarding “premises occupied ... by the former partner of the claimant as h[er] home” could not apply, since the finding that the claimant and his wife were “estranged” so as to bring him within the express exception in the following words was a proper and reasonable one on the evidence, having regard to R(IS) 5/05 and other authorities on the meaning of “estranged” in this context. None of the other disregarding provisions was applicable either, since as the tribunal rightly held the claimant's wife was not within the specified class of “close relatives” protected under paragraph 4(a) and nor could she be within paragraph 6(a), as they had already been separated for a lot longer than 26 weeks and she was not a “lone parent” since their daughter was grown up.

5. On that basis the method of valuation used to assess the claimant’s joint capital interest in the house becomes of direct relevance; and on this Mr Tattersall must also be correct in saying that the decision as confirmed by the tribunal involved a material error. What has to be assessed, in accordance with regulation 19 of the Pension Credit regulations, is the current market value of the claimant’s capital interest (which is actually a joint one, but treated by regulation 23 as if it were a half beneficial share) less the 10% for expenses of sale of that interest. For the reasons explained in decision R(IS) 5/07 which was of course binding on the tribunal, the market value of such an interest in circumstances such as these is not by any means the same thing as half the entire value of the freehold with vacant possession: see in particular paragraphs 27-30 ibid. To assess it that way is quite unrealistic as it disregards the rights, and the effect on the market value, of the other joint tenant in continuing occupation: as in that case, living there as of right, not in a position to either buy the claimant’s interest out or sell her own, with no litigation in prospect and both of them in poor health. Those factors do not of course make the claimant’s interest valueless but they must equally obviously have a depressive effect on its realisable market value as a potential income producing capital asset which is the point of its having to be brought into the reckoning for his pension credit under regulation 15.

6. Despite the claimant’s reluctance to have the case sent back for yet another tribunal hearing that is in my judgment the better course to take as I do not have the evidence or the local experience to redetermine such a question of valuation, which will be far better done at the first tier with each side having the opportunity to submit any further evidence it thinks fit as well as question that relied on by the other. I therefore give the decision set out above and remit the whole case to either the same or a differently constituted first-tier tribunal which I direct to reconsider and redetermine the claimant’s appeal against the original decision of 2 October 2007 setting his pension credit award from 30 April 2007. That will mean that it is open to the claimant to present any further evidence and argument he thinks fit on the question of “estrangement” at the rehearing in the hope of getting a different result on that too, but I direct the tribunal redetermining the case that it may quite properly take the findings of 8 June 2009 as its starting point on that issue and apply the same approach to the law as affirmed above.

P L Howell

Judge of the Upper Tribunal

6 May 2010

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