Upper Tribunal (Administrative Appeals Chamber)

DECISION OF THE UPPER TRIBUNAL

ADMINISTRATIVE APPEALS CHAMBER

The appeal to the Upper Tribunal on behalf of the claimant’s estate is allowed. The decision of the Southampton appeal tribunal dated 19 May 2009 involved an error on a point of law and is set aside. The case is remitted to a differently constituted tribunal within the Social Entitlement Chamber of the First-tier Tribunal for reconsideration in accordance with the directions given in paragraph 18 below and further procedural directions to be given by a district tribunal judge (Tribunals, Courts and Enforcement Act 2007, section 12(2)(b)(i)).

REASONS FOR DECISION

1. The representative of the Secretary of State for Work and Pensions accepted in the fully reasoned submission dated 6 January 2010 that the tribunal had gone wrong in law and suggested that the case be remitted to a new tribunal for determination. The solicitors for the personal representative of the claimant’s estate agreed with that in their reply dated 21 January 2010. A large part of the subsequent delay occurred while there was a possibility that this case might be linked with another case to be heard by a three-judge panel of the Administrative Appeals Chamber, in which it is hoped that some of the legal difficulties in this complex area will be resolved. In the end no direction was made for the present case to be heard by such a panel. An oral hearing has taken place in that other case (CDLA/1340/2009), but further written submissions have been directed. I have concluded that it is better not to wait any further for the outcome of CDLA/1340/2009. If anything is decided there that bears on the present case that can be taken into account by the new tribunal (and by the Secretary of State). I apologise for not having kept the parties informed of the causes of the delay, but at least current payment of benefit is not in issue.

2. The tribunal of 19 May 2009 was concerned with the decision dated 22 October 2008 superseding the decision dated 21 October 2005 on the ground of relevant change of circumstances to the effect that the attendance allowance to which the claimant had throughout been entitled was payable to her from and including 4 August 2008. The decision of 21 October 2005 had superseded the then operative awarding decision dated 26 August 2003 on the ground of relevant change of circumstances (that the claimant’s accommodation in a residential home was being met by the local authority from 30 March 2005, whereas previously she had been self-funding). The superseding decision was that attendance allowance was not payable from and including 2 May 2005. There was no appeal against that decision. The appeal against the decision of 22 October 2008 was brought by the claimant’s daughter in her capacity as attorney for her. The claimant, who was born on 18 January 1915, died on 10 February 2009. It was wrongly assumed that the claimant’s daughter continued to have authority to act under the power of attorney (see Commissioner’s decision R(IS) 3/04 for why that was wrong). No-one was appointed by the Secretary of State under regulation 34(1) of the Social Security (Claims and Payments) Regulations 1987 to carry on the appeal. However, probate of the claimant’s will had been granted on 17 April 2009 to a person as executor (I think her son) who has become involved in the appeal to the Upper Tribunal through solicitors. I am satisfied, for the reasons fully set out in the Secretary of State’s submission of 6 January 2010, that the executor as personal representative of the claimant’s estate has ratified all the actions taken by the claimant’s daughter in relation to this case after the claimant’s death, so that the tribunal’s decision is not to be declared a nullity on the ground that there was no valid appeal before it on 19 May 2009.

The factual background

3. I do not know when the claimant went into a residential home, but on 6 June 2005 her grandson telephoned the Disability Benefits Directorate (DBD) and apparently said that she was no longer self-funding from 30 March 2005. The DBD sent out a questionnaire to the local authority which was returned signed on 18 October 2005 by a senior finance officer of the local primary care trust. The answers included that the claimant did not pay the full costs for living in the home, that the health authority was funding the accommodation from 30 March 2005, that the local authority was not funding the accommodation and that there was no agreement to repay the local authority. An officer of the DBD telephoned what was recorded as the local authority’s social services adult team finance department on 21 October 2005 and apparently spoke to the person who had signed the questionnaire (it was noted that that department shared an office with the PCT). The information given was that the accommodation was not funded by the health authority, but by the local authority, from 30 March 2005 and that there was no agreement to re-pay. It was on that evidence alone that the decision of 21 October 2005 was made.

4. So far as the DBD was concerned the matter rested there until the claimant’s daughter contacted them on 30 July 2008 to say that the claimant was in the course of selling her house and asking for the position about payment of attendance allowance to be looked at. An officer did not telephone the named contact in the local authority’s finance department, Mr Little, until 7 October 2008. The note of the conversation was as follows:

“Confirmed LA made a decision back in 2005 to put a charge on the property which customer had part share in, they agreed 12 week disregard initially and then told family they would part pay fees until house sold, the family disputed this decision regarding sale of property for a long time but LA had already made decision to put charge on. The family have only recently put the property up for sale and accepted they have to repay the LA. Charge on property was put on from 30.3.2005.”

In a further telephone call on 22 October 2008 Mr Little “confirmed” that the claimant had been aware that a charge had been placed on the property since 30 March 2005, having been informed by letter, although no copy was held on file.

5. The decision of 22 October 2008 was then given, making attendance allowance payable only from 4 August 2008 on the basis that the supersession for relevant change of circumstances (said to be the placing of a charge on the property) to the advantage of the claimant could take effect only from the date of notification of the change to the Department. On being informed of the decision, the claimant’s daughter telephoned to dispute it, saying that there had never been a charge on the property, as she was the co-owner, although there had been a loan in 2005. In a further telephone call on 20 November 2008 she suggested that there had been a deferred payment arrangement. An appeal was lodged on 19 December 2008.

6. An officer of the DBD telephoned Mr Little again on 7 January 2009. This time the following was recorded:

“[Mr Little] confirmed that the LA had intended to put a charge on [the claimant’s] property back in 2005 but they were unable to do so because the property was jointly owned between [the claimant and her daughter]. The family originally denied that [the claimant] had a property asset and there was never an agreement to repay the LA. The family only started to co-operate with the LA last April and agreed to put the house on the market. The property has been valued at £750,000 and [the claimant] has a 50% share in the property. [The claimant] will be fully self funding from 30/03/2005 once the LA have been repaid.”

7. That was the state of the evidence that the tribunal had on 19 May 2009. The following letter dated 30 April 2009 from Mr Little to the solicitors then acting for the family was not produced before the tribunal sat in a “paper hearing”, for reasons that I do not now need to go into. But it is convenient to set out the fuller explanation of the circumstances here:

“At that time [March 2005] as a result of [the claimant] having joint ownership of a property in Looe, her grandson was in dispute with the Council as to the value the Council had placed on her share of the property. He argued that as the property was jointly owned and the other owner was not interested in purchasing her share, the value of her interest was in effect nil as indicated in guidance provided by the Department of Health (CRAG). However the Council was not of the opinion that the value of her interest was nil, and in order to resolve the matter obtained an independent valuation of her share in the property through Messrs Bradley’s, Chartered Surveyors of Plymouth, who confirmed the Council’s position that there was a significant value of her share in the property in Looe. This information was forwarded to the grandson but despite a number of attempted communications to proceed by way of a deferred payment agreement this was unsuccessful.

In March 2006 the Council attempted to register a charge under the Health and Social Services and Social Security Adjudication Act 1983 to secure our interest but this was not possible as such a charge was a restriction, and as there was already a restriction on the property a second could not be made.

For the whole of the period from the 30th March 2005 until her death on the 10th February 2009 the Council has funded the care by means of a `loan’ with the expectation that this would be repaid in full on the sale of the property. Therefore we were never able to enter into an agreement to repay the Council as seems to have been a requirement by the Department for Work and Pensions but in practice [the claimant] was liable for the full cost of her care and the Council is expecting full settlement of the sum outstanding on the sale of the property from her estate.”

8. It is now known that payment was made on behalf of the claimant’s estate of the outstanding fees of £81,046.71 (subject to the calculation of additional interest) on 9 June 2009. That circumstance was of course a long time after the most recent date (22 October 2008) that could be considered by the tribunal of 19 May 2009 or by any new tribunal or the Upper Tribunal on the appeal against the decision of 22 October 2008 (Social Security Act 1998, section 12(8)(b)). It would be different if the Secretary of State becomes able to consider a revision of that decision.

The decision of the tribunal of 19 May 2009

9. The tribunal disallowed the appeal against the decision of 22 October 2008. It rejected the argument made by the family’s solicitors that on 22 October 2008 the decision of 21 October 2005 should have been revised on the ground that it arose from official error (Social Security and Child Support (Decisions and Appeals) Regulations 1999, regulation 3(5)(a)). It found that the information provided to the Department by the local authority at the time was correct, in that there had been not yet been agreement to repay, so that the decision to make attendance allowance not payable from 30 March 2005 was correct. It considered that at that time the issue of funding and repayment was not finalised and that the local authority was not then anticipating a repayment. It was not until the co-operation of the family began in April 2008 that the position changed. It was accepted that a supersession could only take effect from the date of the application on 30 July 2008.

The appeal to the Upper Tribunal

10. The claimant’s estate now appeals against that decision with my permission. When giving permission to appeal, apart from asking whether there had been a valid appeal before the tribunal, I mentioned some of the case-law about the circumstances in which a decision such as that of 21 October 2005 here can be altered by a subsequent decision with effect from the effective date of the earlier decision, including my decision in DA v Secretary of State for Work and Pensions [2009] UKUT 214 (AAC), in the papers under file number CA/313/2009. The Secretary of State's representative, Mr Spencer, supported the appeal in the submission of 6 January 2010, agreeing that the decision of 21 October 2005 arose from official error and so should on 22 October 2008 have been revised on that ground. The official error was not so much in the carrying out of a supersession, rather than taking an administrative decision merely to suspend the making of payments of benefit, as I had suggested when giving permission, but in the approach to evidence gathering prior to the decision being inadequate. Paragraph 5 of the submission included the following:

“The questions asked by the Secretary of State before a decision was made appear to have been poorly calculated to elicit a full statement of the relevant facts. In particular, his enquiries appear to have been narrowly and tersely focused on the matter of whether an agreement to repay the local authority’s funding had [been] entered into, a focus that was not likely to bring to light that the local authority wished to place a charging order against the claimant’s former home but was being resisted by the family. … In the event, the evidence he had sought and obtained was unlikely to reveal the full facts of anything other than the most straightforward of cases. That being so, his reliance on that evidence rendered his decision precipitate and flawed. No-one else contributed to these particular deficiencies in the decision-making process.”

The solicitors for the personal representative of the estate agreed with that analysis.

11. I agree that the tribunal went wrong in law by failing to identify that the decision of 21 October 2005 fell to be revised on the ground that it arose from official error. If the tribunal had done that it should have gone on to consider whether on that date the circumstances were such that no supersession of the existing awarding decision was appropriate, so that there should at the most have been an administrative decision, to be made by the Secretary of State, not the tribunal, suspending actual payment. It could also have considered whether the circumstances required a supersession at some later date down to 22 October 2008. Mr Spencer’s description of the inadequacy of the information gathering before 21 October 2005 could have gone on to include the following. First, all the complications of the legislation on the powers of local authorities to recover payments to the providers of accommodation under Part III of the National Assistance Act 1948 or to secure future recovery (some of which are mentioned briefly below), especially in the not uncommon situation where the claimant has an interest in a property or some other capital asset, point up the need for much better directed enquiries to local authorities. The focus on current payment and the existence or otherwise of an agreement to repay is inappropriate. And as this case illustrates, the information provided by local authorities is often confused or vague as to the legal basis of what they have done, so that initial replies may need careful following up. Second, in a case like the present, especially where the initial information from the claimant’s side came from a person with no authority to act on behalf of the claimant in social security matters, it would seem necessary to check and double-check with the claimant personally or with anyone authorised to act for them or to represent them (ie in the present case the claimant’s daughter as attorney) before acting on an assumption about the nature of the arrangements in place and their legal basis.

12. There was a further ground of official error in the decision on 21 October 2005 that I did not notice until I came to draft this decision. Even if it were accepted that there could properly have been a supersession on the ground of relevant change of circumstances on that date, the decision could not as the legislation then stood have taken away the payability of attendance allowance from any date prior to 21 October 2005. It was therefore an error of law for that decision to purport to take away the payability with effect from 2 May 2005. I do not need to go into any detail. That result follows from regulation 7(2)(c) of the Social Security and Child Support (Decisions and Appeals) Regulations 1999 as it was prior to 10 April 2006. As the decision awarding the claimant attendance allowance was a “disability benefit decision” and the change of circumstances relied on to supersede that decision not to the claimant’s advantage did not relate to the medical conditions of entitlement, the superseding decision could not take effect from the date of the change of circumstances but only from the date of the superseding decision itself. Regulation 7(9)(c) did not allow any different result, because that only applies to supersessions to the advantage of a claimant.

13. For those reasons, the decision of the tribunal of 19 May 2009 is set aside. The claimant's appeal against the Secretary of State's decision of 22 August 2008 must then be remitted to a First-tier Tribunal for reconsideration in accordance with the directions in paragraph 18 below. I am not in a position to substitute a decision on that appeal on the evidence currently before the Upper Tribunal and disregarding circumstances obtaining after 22 October 2008 as required by section 12(8)(b) of the Social Security Act 1998.

14. However, it is possible that that process can be short-circuited to the advantage of the estate in a way hinted at in paragraph 7 of Mr Spencer’s submission for the Secretary of State. Since the decision of the tribunal of 19 May 2009 has been set aside, what is left as the currently operative decision is the Secretary of State’s decision of 22 October 2008 subject to the outstanding appeal now continued by the claimant’s estate. Regulation 3(4A) of the Decisions and Appeals Regulations allows the Secretary of State to revise at any time, and without the need to find any other ground, a decision against which an in-time appeal is pending, but has not been determined. The restriction in section 12(8)(b) of the Social Security Act 1998 does not apply to that process. So here the Secretary of State could take into account that in June 2009 full repayment was made to the local authority of all payments made by it to the home under Part III of the National Assistance Act 1948. The decision of the Court of Appeal in Northern Ireland in Chief Adjudication Officer v Creighton and other appeals, R1/00 (AA), to be followed and applied in Great Britain, makes it clear that where:

“a health board or trust [in Great Britain a local authority] enters into an arrangement with the provider of accommodation and pays the costs, but is ultimately reimbursed by or on behalf of the claimant, the case falls within Regulation 8(6) [of in Great Britain the Social Security (Attendance Allowance) Regulations 1991] and the claimant does not lose his or her entitlement to payment of attendance allowance. The cost is borne out of public funds in the first instance when the [local authority] makes the payments, bringing Regulation 7 into play; but when the refund is made that cost is met out of the claimant’s own resources and Regulation 8(6) operates to make Regulation 7 inapplicable. We do not consider that it makes a difference whether reimbursement is agreed in advance between the [local authority] and the claimant or his representative or whether it is subsequently arranged, if it is in fact made.”

The principle is that, once reimbursement of all payments is made for the whole period, a claimant is to be regarded as having met the whole cost of the accommodation for the whole period. If that principle can be applied, further investigation of the precise arrangements in operation from 30 March 2005 and their legal basis would be unnecessary. It seems to me that the Secretary of State might well consider that the simplest way of disposing of this case is to revise the decision of 22 October 2008 under regulation 3(4A) of the Decisions and Appeals Regulations so as in turn to revise the decision of 21 October 2005 for official error and to give the revised decision that the decision dated 26 August 2003 awarding attendance allowance does not fall to be superseded so as to remove payability. If such a decision were given, the appeal against the decision of 22 October 2008 would lapse under section 9(6) of the Social Security Act 1998.

Further observations

15. I make a few very brief provisional observations about some of the legislation assisting local authorities to enforce their rights under Part III of the National Assistance Act 1948. The observations are only provisional because I have had no submissions about them and it is possible that something to the contrary might be said by the three-judge panel in CDLA/1340/2009. It is important to recall that the default position where a local authority makes payments for accommodation to the provider under section 26(2) of that Act is that the person for whom the accommodation is provided is liable to refund to the local authority the amount of any payments made (section 26(3)). But if the local authority is satisfied, after a financial assessment under regulations, that the person accommodated is unable to pay at that rate, the liability may be reduced or removed. If a local authority in the financial assessment considers that the person has a capital asset of sufficient value to prevent any reduction in liability, liability will continue to accrue even if the financial assessment is being disputed and no payments in refund are actually being made at the time and there has been no agreement to make refunds after the asset has been sold..

16. Section 22 of the Health and Social Services and Social Security Adjudications Act 1983 allows a local authority to create a charge over any beneficial interest in land in England and Wales where a person fails to pay any sums due under section 26(2) of the 1948 Act after a financial assessment. That power extends to the interest of an equitable joint tenant in land (section 22(5)), in which case on the death of the person the charge transfers to the surviving joint tenant(s). The charge is created by a declaration in writing. It is not clear to me, in the absence of assistance from submissions, that a charge on the interest of an equitable joint tenant in land is made registrable under the Land Charges Act 1972 or otherwise (section 22(8)). But even if it is not or cannot be registered, I do not see why it is not valid and enforceable against the person accommodated and the surviving joint tenant(s). The 1983 Act was mentioned by Mr Little in his letter of 30 April 2009. That first of all implies that a financial assessment had been carried out under which the claimant was liable to refund all payments to the local authority. Then it seems to me that, even though the local authority’s attempt to register a charge was unsuccessful, a valid charge binding on the claimant and on her daughter as (apparently) the other equitable joint tenant of the property in Looe could have been in existence. If it was, that might have affected the question of whether the claimant was “meeting” the costs of accommodation before reimbursement was actually made. As at present advised, I do not read the decision in Creighton or the subsequent British decisions as meaning that actual reimbursement to the local authority is the only trigger for concluding that regulation 8(6) of the Attendance Allowance Regulations has operated from the outset. The coming into existence of a charge over an asset whose value far exceeded the arrears might be among circumstances having the same effect. That indeed seems to have been the view of the Department in the present case when the decision of 22 October 2008 was made, although it was thought that the decision could not have effect before 4 August 2008.

17. A more recent provision is section 55 of the Health and Social Care Act 2001. This does not require any arrears to have built up, but it allows the local authority to enter into a deferred payment agreement with the person accommodated. The agreement is that the person does not have to make any refunds to the local authority while the agreement is running, but that the total amount of liability will be paid after the person’s death. The person must also agree to grant a charge over any land in which she has a beneficial interest to secure the payment to the local authority. The charge may be terminated by notice prior to the person’s death on full payment of the amount allowing. In the present case, the evidence does not suggest that any such formal agreement was ever reached. When the family began to “co-operate”, the local authority appears to have been content with its expectation of payment on the sale of the property. But it is important to recall that although the charge under section 55 of the 2001 Act can only come into being as part of an agreement between the person accommodated and the local authority, a charge under section 22 of the 1983 Act is created by the unilateral act of the local authority.

Directions to the new tribunal

18. If the appeal against the decision of 22 October 2008 does not lapse as a result of action as mentioned in paragraph 14 above, there must be a complete rehearing of the appeal on the evidence produced and submissions made to the new tribunal, which will not be bound in any way by any findings made or conclusions expressed by the tribunal of 19 May 2009. No-one who was a member of that tribunal is to be a member of the new tribunal. Before any rehearing the Secretary of State is to make a fresh written submission, having taken steps to obtain the necessary detailed evidence from the local authority taking into account what is said in paragraphs 10 and 11 and 15 to 17 above (preferably in consultation with Mr Spencer). The solicitors for the claimant’s estate are then to have the opportunity before the hearing to consider that fresh submission and whether to seek to obtain any further evidence. The district tribunal judge who will give directions as to the rehearing in this case should make a direction setting out a timetable for the production of such submissions and evidence and also for the Secretary of State to indicate in advance either that the decision under appeal has been revised to the

advantage of the claimant’s estate or that such action will not be taken. The new tribunal must follow the general approach of law set out above, subject to anything that might be said by the three-judge panel in CDLA/1340/2009, and must not take into account circumstances obtaining only after 22 October 2008 (Social Security Act 1998, section 12(8)(b)).

(Signed on original): J Mesher

Judge of the Upper Tribunal

Date: 30 June 2010