CIS/1269/2010

DECISION OF THE UPPER TRIBUNAL

(ADMINISTRATIVE APPEALS CHAMBER)

Decision

1. This appeal by the claimant succeeds. A judge of the First-tier Tribunal having granted permission to appeal to the Upper Tribunal, in accordance with the provisions of section 12(2)(b)(ii) of the Tribunals, Courts and Enforcement Act 2007 I set aside the decision of the First-tier Tribunal sitting in Warrington and made on 20^th January 2010 under reference 065/09/01648. I remake the decision myself. This is to the effect that the amount of damages and the funds in the trust paid in respect of the professional negligence referred to below, are to be disregarded for the purposes of the claimant’s entitlement to income support

2. I refer to the Secretary of State questions relating to the calculation of entitlement on this basis and the payment of any arrears.

Background and Procedure

3. The claimant is a woman who was born on 28^th April 1953. She was awarded income support (on account of incapacity to work) with effect from 4^th August 2003 and disability living allowance (“DLA”) from 21^st January 2004. From that date the DLA consisted of higher rate mobility component and lowest rate care component, but from 18^th July 2007 the lowest rate care component was replaced by highest rate.

4. The claimant had not claimed either of the above benefits prior to becoming incapable of work in the following circumstances. On 22^nd June 1995 she had undergone a medical procedure for the removal of a cyst by a surgeon. This procedure led to a range of complications and ongoing complaints, including incontinence. In March 2004 the claimant instructed solicitors (“firm A”) to institute and conduct a claim for medical negligence.  The limitation period commenced in July 2001 and although firm A issued the claim form on 1^st July 2004, they did not serve it until 23^rd November 2004, outside the period. In the circumstances this was professional negligence on the part of firm A.

5. The claimant then instructed firm B to institute and conduct a claim for professional negligence against firm A. The claim was settled and the claimant received £170,000 on or about 27^th June 2008. On 6^th November 2008 a Personal Injury Trust was set up (with the claimant and her husband as trustees) with the bulk of these funds. The claimant is the sole beneficiary and the whole of the trust fund is held for her benefit absolutely. It is agreed that the claim against firm A was only for the damages that would have been awarded against or received from the surgeon if firm A had not been negligent. No additional damages had been sought in respect of any additional loss created by the professional negligence.

6. Those acting on behalf of the claimant informed the Secretary of State what had happened and on 1^st June 2009 the Secretary of State decided that the claimant was no longer entitled to income support as from 19^th June 2009 because she had capital in excess of the statutory limit of £16,000. On 13^th August 2009 she appealed to the First-tier Tribunal against this decision of the Secretary of State. The tribunal considered the matter on 20^th January 2010 in the absence of the parties and upheld the Secretary of State’s decision. On 6^th April 2010 the District Tribunal Judge gave the claimant permission to appeal to the Upper Tribunal against that decision, pointing out that there appears to be no authority on the issue, which is one of importance. The Secretary of State opposes the appeal and supports the decision of the First-tier Tribunal.

The Legal Provisions

7. Section 134(1) of the Social Security Contributions and Benefits Act 1992 provides that no person shall be entitled to an income-related benefit (this includes income support) if her capital or a prescribed part of it exceeds the prescribed amount. Regulation 45 of the Income Support (General) Regulations 1987 provides that for the purposes of income support the prescribed amount is £16,000. However, regulation 46(2) of those regulations provides that for the purposes of income support there shall be disregarded from the amount of a claimant’s capital any capital specified in Schedule 10.

8. Schedule 10 has a number of paragraphs specifying capital to be disregarded. They include the following:

12 Where the funds of a trust are derived from a payment made in consequence of any personal injury to the claimant … the value of the trust fund and the value of the right to receive any payment under that trust.

12A(1) Any payment made to the claimant …  in consequence of any personal injury to the claimant …

9. Paragraph 12A(1) applies whether or not a trust is involved, but in the absence of a trust the payment(s) may only be disregarded for 52 weeks from first receipt of the payment. In the present case the 52 weeks expired about a week after the effective date of the Secretary of State’s decision.

The First-tier Tribunal

10. The essence of the decision of the First-tier Tribunal was (paragraph 9):

“The tribunal considers that the payment of £170,000 was not made in consequence of any personal injury to the claimant (appellant) but in consequence of a claim for professional negligence. The chain of causation between the payment and the personal injuries sustained is too remote. The person responsible for causing the injury – or that person’s insurers – has not made the payment. The payment has been made by the solicitors – or their insurers – which were found to have been negligent”.

11. The Secretary of State simply adopts this reasoning of the First-tier Tribunal.

Conclusions

12. The compensatory element of damages for professional negligence are generally intended to put the claimant in the same position as they would have been in had the negligence not occurred. They are calculated by reference to the loss caused by the negligence. The claimant should not end up in a better financial position than if there had been no negligence.

13. In this case the First-tier Tribunal failed to give due weight to the meaning of the words “in consequence of”. I accept that the chain of causation does not go on for ever. Had the damages included an amount in respect of stress caused by the activities (or non-activities) of firm A, or an element of punitive damages, that might well not have been included in the disregards in paragraphs 12 and 12A. However, in the present case it is not disputed that the whole of the £170,000 amounted to damages in respect of what would have been claimed from the negligent surgeon. I simply do not see how in these circumstances the payment can be said not to be in consequence of the personal injury. Had the disregards referred to “payments made by the person causing the personal injury or their insurers” that would also have been different, but on the actual wording of the disregards, this appeal by the claimant succeeds.

H. Levenson

Judge of the Upper Tribunal

10^th March 2011