Upper Tribunal (Administrative Appeals Chamber)

IN THE UPPER TRIBUNAL Case No. CPC/2352/2009

ADMINISTRATIVE APPEALS CHAMBER

1. This is an appeal by the Claimant, brought with my permission, against a decision of a First-tier Tribunal sitting at Rochdale on 3 July 2009. For the reasons referred to below that decision was in my judgment wrong in law. I allow the appeal, set aside the Tribunal’s decision, and remit the matter for redetermination by a differently constituted First-tier Tribunal. I draw the Secretary of State’s attention to the Direction in paragraph 12 below.

2. The Claimant was born on 20 November 1943, and is therefore now aged 66. The Tribunal’s decision was to dismiss the Claimant’s appeal against a decision, made on 10 December 2008, that she was not entitled to state pension credit from the date of her claim, which was made on 24 July 2008.

3. The ground on which the claim had been refused was that the Claimant had income from notional capital, the amount of the notional capital being some £70,000.

4. The Claimant had been the registered proprietor of a property, worth in excess of £100,000 in 2003, which she had transferred without payment to one of her sons (James) on 4 April 2005. The property had been purchased for £26,000 in 1996 and conveyed into her name at the time of purchase. When the Secretary of State discovered those facts, a decision maker superseded and removed the Claimant’s then award of state pension credit on the ground that she had transferred the property to her son with the intention of securing continued entitlement to state pension credit, and therefore had notional capital of some £90,000. The Claimant appealed, contending that the property had been held on trust for James. However, on 3 March 2006 an appeal tribunal dismissed that appeal, finding that the Claimant had not established that she had held the property on trust for James. An appeal to a Commissioner on a point of law was dismissed by Mr Commissioner (as he then was) Jacobs (CPC/1759/2006) on 11 September 2006. The Claimant also appears to have pleaded guilty to a charge of benefit fraud by reason of her ownership of the property not having been disclosed.

5. The First-tier Tribunal’s decision in the case now before me was in consequence of a further claim to state pension credit which was made by the Claimant, as I have said, in July 2008. The figure of £70,000 notional capital which the Secretary of State and the Tribunal found the Claimant still to have by the date of claim was arrived at by applying the diminishing notional capital rule in reg. 22 of the State Pension Credit Regulations 2002 to the original figure of £90,000.

6. The Claimant’s evidence to the Tribunal on 3 July 2009 was that the purchase price of £26,000 had been paid by means of monies in her bank account. However, her evidence was that £14,000 of those monies had been paid by her husband into her (the Claimant’s) account by way of gift to James, and £12,000 had been paid into her account by James because he had no bank account of his own. The Claimant is recorded as having said that the Property “was put into my name for safe keeping.”

7. The Tribunal rightly recognised that it was not bound by the previous tribunal’s findings that the property had not been held on trust for James, and that the Claimant’s transfer of the property to James in 2005 had been made with the intention of securing continued entitlement to state pension credit: see, for example, my own decision in CIS/2540/2004, a copy of which is to be found in the papers.

8. The Tribunal stated in the Statement of Reasons that “the Tribunal note that the reason for the son providing capital to his mother was to prevent, she said, a girlfriend obtaining an interest.” Then in the critical paragraph of the Statement the Tribunal said:

“Given the above the Tribunal find, on balance, bluntly not believing the appellant’s evidence that the most likely explanation for the provision of her husband’s payment was a gift to her with a view to perhaps equalising assets. The only explanation for her son providing cash as stated was to deny monies obtained illicitly to the revenue or that the sums were obtained from some illegal sources. The appellant did not present as a stupid person and on balance must have been aware. In the event her son would have been estopped from denying that the capital belonged entirely to the appellant. This is because a claimant is unable to utilise the equitable jurisdiction of the court for relief if they are tainted with some form of illegality.

9. In my judgment the statement that, on the footing (as found by the Tribunal to be “the only explanation for her son providing cash”) that James provided money for the purchase in order in effect to hide money from the Revenue, or to hide money which had been obtained illegally, James would have been estopped from asserting that he contributed to the purchase, was wrong as a matter of law. The principle which the Tribunal appears to have had in mind is the principle which in certain circumstances prevents a person putting forward evidence of his own wrongdoing in order to support a resulting or constructive trust in his favour. However, it was held by the House of Lords in Tinsley v Milligan [1993] 3 All ER 65 that that principle only applies where a claimant needs to put forward his own unlawful conduct in order to rebut the presumption of advancement or the presumption of resulting trust. It does not apply where the claimant is not seeking to rebut a presumption which would otherwise arise in favour of someone else, but rather is able to rely on one of those presumptions which arises in his favour: see Snell’s Equity, 31^st edition, para. 23-11. In other words, the principle does not apply where the claimant does not need to assert the illegality and needs to do no more than establish that he paid or contributed to the purchase price, with the consequence that the presumption of resulting trust arises in his favour. In the present case no presumption of advancement applied to the payment of monies by James into the Claimant’s account, or to his permitting the money to be used to purchase the property in the Claimant’s name. He would have been able to rely on the presumption of resulting trust without asserting any illegality.

10. That is not to say, however, that the Claimant’s representative is right to assert (as she does in the grounds of appeal) that the Tribunal was wrong to look at the likely motive of James in contributing money towards the purchase (as the Tribunal appears to have accepted that he did). Such an inquiry was relevant in order to determine (i) whether it is likely that any of the purchase price was in fact contributed by him at all and (ii) whether his intention may have been to make a gift to his mother.

11. The new tribunal will consider the appeal entirely afresh. It is not of course bound by any of the findings of fact made by either the appeal tribunal in 2006 or the tribunal which sat on 3 July 2009. However, that does not of course mean that what happened in the course of those appeals is irrelevant. If and to the extent that the Claimant asserts something different from what she has previously said, that may impact on her credibility. The new tribunal will need to consider whether the Claimant has established that the funds for the purchase of the Property were provided by someone other than her. In so far as they were provided by the Claimant’s husband, the presumption of advancement arises (i.e. the presumption is that the husband intended to make a gift to the Claimant), and the question will be whether the Claimant has established that there was no such intention. In so far as they were provided by James, the presumption of resulting trust in his favour arises, but again the question is whether it is more likely that he in fact intended to make a gift to the Claimant.

12. I note that not all the evidence which appears to have been before the appeal tribunal in 2006 is in the present papers. For example, there is a reference to transcripts of interviews with the Claimant, which are not in the present papers. If the Secretary of State has been selective in what has been included, that seems to me to be unfortunate in a case of this type. I therefore DIRECT that, within 21 days from the date of issue of this decision, the Secretary of State is to send to the Tribunals Service (Liverpool), for inclusion in the papers, copies of any further documents which are held by the DWP and which may bear upon the intention with which the property was purchased.

Charles Turnbull

Judge of the Upper Tribunal

2 February 2010