Upper Tribunal (Administrative Appeals Chamber)

IN THE UPPER TRIBUNAL Case No. CH/1916/2011

ADMINISTRATIVE APPEALS CHAMBER

 

Before Judge of the Upper Tribunal Miss E. Ovey

 

Decision:  The decision of the Appeal Tribunal given on 27^th April 2011 contained an error on a point of law.  Accordingly, the claimant’s appeal against the decision is allowed and I set aside the tribunal’s decision.

I decide that the claimant’s interest in the sums held in accounts with National Westminster Bank plc and forming part of his late mother’s estate should be valued at half the amount standing to the credit of those accounts from time to time and determine that the claimant’s entitlement to council tax benefit for the period 6^th September 2004 to 1^st April 2008 should be recalculated on the basis of that value. 

 

 

REASONS FOR DECISION

 

 

1. This is an appeal by the claimant against the decision of the First-tier Tribunal given on 27^th April 2011.  By its decision the tribunal dismissed the claimant’s appeal against the local authority’s decision given on 26^th September 2008 that he had been overpaid council tax benefit amounting to £4,397.97.  The claimant concedes that there was some overpayment but disputes the amount on the ground that certain sums were wrongly taken into account.  The local authority maintains that the calculation is correct.  My decision is set out above and is given for the reasons set out below.

 

2. The facts underlying the appeal are as follows.  The claimant was born on 13^th January 1937 and his wife was born on 11^th May 1936.  It is not disputed that the claimant has been claiming council tax benefit since at least 2001, although owing to the local authority’s former practice of destroying documents more than six years old the earliest claim form in the papers before me is a renewal claim dated 26^th March 2003.  That form shows that both the claimant and his wife were in receipt of the state pension and an occupational pension (of a small sum in the wife’s case) and the claimant was in receipt of both the care and the mobility component of disability living allowance.  They also had small sums of capital in Co-operative Bank and Nationwide Building Society accounts in joint names and the claimant’s wife had an HSBC account in her sole name.

 

3. The claim was reviewed in 2004 and a claim form dated 26^th November 2004 was completed to substantially the same effect.  As I understand it, the form was completed for the claimant by a visiting officer from the local authority, but it is clearly signed by him.

 

4. A further review was carried out in 2008 and a claim form dated 9^th July 2008 was completed, again to similar effect.  In addition it was stated that the claimant was expecting to receive £10,000 to £15,000 from the sale of his mother’s house, but there was a dispute and he was not sure when the money would be received.  Again the form was completed by a visiting officer and signed by the claimant.  He explained to the visiting officer that his mother had died four years previously.

 

5. On 23^rd July 2008 the claim was referred to the benefit fraud team after the Housing Benefit Matching Service identified possible discrepancies between the income and capital used in assessing the claimant’s council tax benefit and what appeared to be his actual income and capital.  As a result, the claimant was interviewed under caution on 8^th August 2008.  In the course of that interview the claimant admitted that:

 

(1) he had been receiving undisclosed pension payments from Scottish Widows since 2001;

 

(2) he had been receiving undisclosed pension payments from Standard Life since August 2007;

 

(3) he had another account with Nationwide into which those pensions were paid which again was undisclosed;

 

(4) he had an account with National Westminster Bank which had originally been an account in the joint names of the claimant’s mother and the claimant, but which had become an account in the claimant’s sole name on his mother’s death on 13^th August 2004.

 

6. As respects the National Westminster account, the claimant also said that the account was put into joint names on the advice of the Bank, because his mother was suffering from a degree of dementia.  He said that the money formed part of the estate and he did not touch it, except to pay bills relating to his mother’s house.  He explained that his brother was entitled to half of the money in the account and the distribution was affected by the disputes over his mother’s house.  He also said, however, that he was going to transfer, or just had transferred, money from that account into the Co-operative account and recognised that thereafter he would no longer be entitled to any council tax benefit. 

 

7. Following the interview, the claimant wrote to the local authority on 8^th August 2008 repeating that the money in the National Westminster account formed part of his mother’s estate.  He also stated that he had failed to disclose the fact that he had remortgaged his house in 2006 and paid “a large sum of money” into his second Nationwide account.  The statements for the second account have now been produced and show a payment in on 17^th June 2006 of £56,640.05.  Within a year the balance on the account had fallen to below £2,000 again, but I note round sum cheque payments of £7,500, £7,000, £1,500 and £7,000 had been made by 17^th July 2006 and there appears to be no information in the papers which might shed light on where those payments went.

 

8. The claimant does not dispute that the pension payments from Scottish Widows and Standard Life ought to have been disclosed.  The statements for the second Nationwide account show a payment from Scottish Widows of £80.03 on 21^st August 2001, a payment of £3,042.57 from Scottish Widows on 24^th August 2001 and further payments of £80.03 monthly thereafter, increasing slightly over time.  The statements also show payments of £92.66 and £4,708.70 from Standard Life on 20^th July 2007, a payment of £92.66 on 13^th August 2007 and further monthly payments from Standard Life thereafter, although in the reduced sum of £72.42.

 

9. The local authority supplied with its decision of 26^th September 2008 a number of schedules showing the calculations of the claimant’s entitlement (pages 53 to 76 of the bundle), together with a table showing the original award and the new award from 9^th July 2001 to 1^st April 2009.  There was no complete schedule of weekly overpayments and the total overpayments made for each distinct period of calculation, but that omission was subsequently made good (see page 350 of the bundle). 

 

10. The 2008 schedules show the following:

 

(1) the calculations from 9^th July 2001 onwards take account of both the pensions which the claimant was receiving in addition to the state pension.  The effect was to reduce the amount of the award from that date;

 

(2) there was a further change from 14^th January 2002 when the claimant became entitled to his state pension on attaining 65.  That entitlement replaced the claimant’s previous entitlement to incapacity benefit and led to an increase in income which reduced the entitlement further, but not as a result of any non-disclosure by the claimant;

 

(3) as from 6^th September 2004 the calculations included capital in the National Westminster account of such an amount that the claimant’s capital exceeded £16,000.  At all material times that was the amount prescribed under s.134 of the Social Security Contributions and Benefits Act 1992 possession of which disentitled the claimant to council tax benefit altogether.  If that capital had not been included, the claimant would have continued to be entitled to council tax benefit, although at a reduced level;

 

(4) the calculations from 16^th July 2007 onwards take account of all three pensions.  Even so, on the basis of those calculations, the claimant would still have been entitled to some council tax benefit if the amount in the National Westminster account had not been included;

 

(5) the second Nationwide account, and thus the money received as a result of the remortgage and the lump sum payments from Scottish Widows and Standard Life, appear never to have been included.

 

11. The claimant responded to the local authority’s decision by letter dated 7^th October 2008 stating, rightly, that it was clear to him that the main reason for the overpayment said to have been made was the discovery of the National Westminster account.  He repeated what he had said about that account and offered to produce any documentation which the local authority might request or to make himself available for interview.  He expressed the hope that the case would be reviewed and there would be a reduction in the amount of the overpayment.

 

12. The local authority replied by letter dated 15^th October 2008 stating, so far as material, that by the claimant’s own admission he had had access to the money in the National Westminster account at all times and as such the capital value was treated as his.

 

13. The claimant responded with an appeal said to have been made on 3^rd November 2008 (the letter at pages 1 and 2 of the bundle is undated) again on the grounds that the capital in the National Westminster account should not have been included.  I pause to remark that it had become evident that there was more than one National Westminster account and money has moved to and fro, but the same argument is raised in respect of each of them.

 

14. The appeal was listed for hearing on 21^st July 2009.  The claimant wrote to the tribunal by letter dated 9^th July 2009 explaining that he would be unable to attend for medical reasons and repeating his argument that the National Westminster accounts formed part of his mother’s estate and would eventually be shared with his brother, the co-executor under his mother’s Will.

 

15. The record of the proceedings before the tribunal shows that the presenting officer accepted that the money in the joint accounts was the mother’s prior to her death and said that the local authority had asked the claimant for proof that half the money was his brother’s or that the accounts were trust accounts but no proof was available “- no will, no probate, no nothing”.  The local authority’s contention was that the money in the accounts all belonged to the claimant and he treated the accounts as if they were his.  The tribunal accepted that submission, stating in the decision notice:

 

“… despite requests by the Council the appellant has never produced any evidence in writing to show the terms under which the estate monies are held, or a copy of the probate or of a will or of any claim of a brother in the matter.”

 

16. Upon receiving the tribunal’s decision, the claimant wrote by letter dated 27^th July 2009 asking for it to be set aside so that he could attend a rehearing and produce relevant documentation.  That application was rejected on 30^th July 2009 on the ground that the claimant had requested a decision without a hearing and there was no compelling reason why the decision should be set aside.

 

17. The claimant then, by letter dated 12^th August 2009, asked for permission to appeal, drawing attention to the part of the decision quoted in paragraph 15 above and stating that he had never been asked by the local authority to produce such documentation or to provide further information.  In a statement of reasons the tribunal said it had nothing to add to the decision notice and that the claimant had chosen not to attend the hearing and to take the opportunity of explaining his case further.  Permission to appeal was refused on 30^th September 2009 on the ground that no error of law had been identified.

 

18. The claimant renewed his application for permission to the Upper Tribunal and permission to appeal was given by Judge Lloyd-Davies on 2^nd December 2009.  In the course of its submission on the appeal the local authority agreed that the claimant had never been asked to provide the documents referred to by the tribunal and attributed the tribunal’s statement to a mistaken inference from the submission actually made.

 

19. I do not need to consider further the submission from the local authority or the submission from the claimant, except to note that the claimant produced further documents including:

 

(1) a letter dated 2^nd September 2004 from a firm of solicitors stating that the claimant’s brother said he wished to receive half of the money in the bank account “sooner rather than later”;

 

(2) a letter dated 16^th December 2008 from a different firm of solicitors, acting for the claimant, stating that in April 2008 the claimant decided that his brother would never allow probate of their mother’s will to be obtained and had therefore decided to withdraw the money from the National Westminster account, on the footing that his brother could recover his half share together with interest from the proceeds of sale of the house;

 

(3) a copy of the Will, which is dated 2^nd March 1989, and, if the testatrix’s husband has predeceased her, appoints her two sons executors and trustees and gives her entire estate to her trustees upon trust for sale and to hold the net proceeds of sale on trust to pay £1,500 to each of her grandchildren on their attaining 18 and to divide the remainder between the brothers.

 

20. On 7^th December 2010 Judge Lloyd-Davies allowed the appeal and remitted the matter for rehearing before a differently constituted tribunal on the ground that the original tribunal’s view of the claimant and his evidence was based on the false assumption that the claimant had not produced a copy of the grant of probate or of his mother’s Will despite having been asked to do so.  That was a false assumption and so fairness required the decision to be set aside and the matter to be remitted.

 

21. The file has acquired a further document (page 453) in the form of a statement dated 17^th November 2008 and not identified as addressed to any particular person by which the claimant asserts that it was in July 2008 that he decided to remove most of the money in the National Westminster account, on the ground that he thought that while such an account remained there would be no end to the conflict with his brother.  He asserts that he will pay his brother’s share from the proceeds of sale of their mother’s house.

 

22. The appeal came on for hearing the second time on 27^th April 2011 and the claimant was again unsuccessful.  The material parts of the statement of reasons are as follows:

 

“5. Prior to [the mother’s] death two accounts with National Westminster Bank which were in the deceased’s sole name were transferred into the joint names of the deceased and the appellant to enable the appellant to deal with the accounts for the benefit of his mother.  Shortly after her death on the 13.08.2004 the bank transferred the two accounts into the appellant’s sole name.  The money in the two bank accounts was subject to the terms of the deceased’s Will.

 

6. The presenting officer stated that only the applicant could access the money in the two accounts and the appellant was able to use the money without reference to his brother and co-executor.  The presenting officer also stated that the transactions detailed at page 354 of the appeal papers indicated that the appellant had considered the money to be part of his entitlement under the terms of his late mother’s Will and had utilised part of the money for his own benefit.

 

7. The appellant confirmed to the tribunal that he had treated the money in the accounts (which were subsequently transferred into a single account) as part of his entitlement under the terms of his late mother’s Will.  He confirmed that the several transfers made on the 12.08.2005 detailed on page 354 of the appeal papers were transfers into his own bank account.  The appellant also confirmed that a transfer of £7,918 made on the 11.10.2005 was a transfer back from his own account following an audit which he requested to be made by his own Solicitors and on their advice.

 

8. The appellant informed the tribunal that he transferred the sum of £27,000 from the National Westminster Bank account to his own bank account at Co-op Bank in July 2008 because he considered that he was entitled to the money as part of his entitlement under the terms of his late mother’s Will …

 

9. Based upon all the evidence, including the appellant’s own evidence, the tribunal was satisfied that the appellant had treated and had used the money from his late mother’s estate as part of his entitlement under the terms of her Will and consequently his capital exceeded £16,000 on the 29^th November 2004 …”

 

23. The claimant again sought permission to appeal, saying, in effect, that what he had meant by his evidence was that the money was part of his mother’s estate and therefore he was entitled to the money and his brother was entitled to the money.  He had tried in 2005 to put pressure on his brother by withdrawing money from the account, but the pressure failed to persuade his brother to apply for probate and on his solicitors’ advice he transferred money back to get the accounts “into balance”.  As to the transfer of £27,000 in 2008, the claimant said that he probably thought he was agreeing to the statement that he was entitled to move the money as part of his entitlement.

 

24. Permission to appeal was again refused by the tribunal judge on 28^th June 2011.  The claimant again renewed his application to the Upper Tribunal.  On 16^th November 2011 Judge Lloyd-Davies gave permission to appeal, stating as his reason:

 

“If, as the tribunal found, the money in the two accounts was subject to the terms of the deceased’s will, surely it should have considered the consequences of that finding and not what the claimant did with the money?”

 

25. The local authority’s submission on the appeal accepts the decision of the tribunal that the accounts formed part of the estate of the claimant’s mother but asserts that what the claimant did with the money demonstrates that he considers the capital in the account to be “his share” (perhaps that should be “part of his share”) of his late mother’s estate for him alone to use.  It is said that the evidence shows that the claimant has not acted as an executor or trustee would but, in effect, treated the money as his because of his difficulty in getting his share of the mother’s house.

 

26. The claimant’s response is that until probate has been granted no money will be paid to anybody.  (This of course ignores the fact that a substantial payment has already been made into the joint Co-operative Bank account, and subsequent movements on that account are unknown.)  His brother has continued to refuse to agree to a grant of probate and so proceedings are to be heard later in the current year.  The response does imply that the objection is to a joint grant of probate, since it is said that an offer of joint probate was made in October 2003, was refused and has been continually refused since.  In those circumstances the claimant maintains his contention that no part of the money in the account is to be regarded as his.  Incidentally, the claimant has also mentioned that his mother had seven grandchildren, so the total of the specific legacies under the will is £10,500.

 

27. The starting point, in the light of all the above, is that the local authority and the claimant are now agreed that the whole of the money in the National Westminster accounts at the date of the mother’s death formed part of her estate.  It follows that although the Bank transferred the accounts into the sole name of the claimant that was an administrative act which could not and did not affect the beneficial entitlement to the money in the accounts.

 

28. It is next to be noted that the claimant was under the usual duties of the executor of a Will.  Those duties are, in summary, to collect in the assets of the estate, to pay its liabilities and to distribute the remaining assets in accordance with the Will.  His duty as respects the money in the accounts, to which he had the sole legal title, was either to transfer the money into accounts in the joint names of himself and his brother, his co-executor, or, if he retained the money in accounts in his sole name, to apply it in accordance with his duties as executor.

 

29. This, however, does not answer the question whether the claimant had any beneficial interest in the money in the accounts.  As explained in Wilkinson v. Chief Adjudication Officer [2000] 2 F.C.R. 82, R(IS)1/01, in paragraph 28 of the decision of Mr. Commissioner Howells (as he then was), a residuary beneficiary under a Will acquires the right to have the estate duly administered rather than a right in any individual asset, since assets which are not specifically disposed of must first be applied, to the extent necessary, in discharging the debts and administration expenses of the estate.  Nevertheless that right is potentially a valuable right and is closely similar in practical effect to the right of a beneficiary under a trust.  A similar approach was taken by Mr. Commissioner Howells in his subsequent decision CIS/1189/2003, to which the second tribunal in this case was referred.

 

30. The question in the present case is therefore what value is to be attributed to the claimant’s rights in respect of the money in the accounts in his capacity as one of two beneficiaries equally entitled under the terms of the Will to the residuary estate.

 

31. That question was not addressed by the tribunal, as appears from the extracts from the statement of reasons set out in paragraph 22 above.  The fact that in practice the claimant was the only person with access to the accounts and was able to use the money without reference to his brother does not answer the legal question what was the value of his interest in the money.  The claimant could not increase the value of his beneficial interest by acting in breach of his duties as administrator.  The tribunal’s decision therefore involved an error on a point of law and must be set aside.

 

32. It does not, however, follow that the claimant is entitled to a substantial reduction in the overpayment claim.  The value of his rights in respect of the account during the relevant period has still to be determined.  Since the claimant accepts that he was liable to pay the full council tax bill from 1^st April 2008 and asserts that he has now done so (see page 340 of the bundle and the accompanying Post Office receipts), I take the relevant period to be 6^th September 2004 to 31^st March 2008.

 

33. I approach this question on the footing that the claimant was entitled to half the money in the accounts from time to time except to the extent that in the proper course of administration that money fell to be used for the purpose of discharging the debts and administration expenses of the estate or was required to pay the pecuniary legacies.  On the evidence, although it is somewhat sketchy, money in the accounts was used from time to time in payment of insurance premiums and gardening bills relating to the mother’s house.  Apart from such matters, it has not been used in discharge of any debts and administration expenses.  Since nearly eight years have now passed since the mother’s death, I infer that the usual debts and expenses (for example, utilities bills and funeral expenses) have been met from elsewhere.

 

34. I note also that:

 

(1) as long ago as 2^nd September 2008 the claimant’s brother was asking for payment of half the sums in the accounts, the implication being that the money belonged half to him and half to the claimant.  The claimant relies on that letter;

 

(2) when the 2008 claim form was filled in, the claimant was talking of receiving £10,000 to £15,000 after the probate issues had been resolved and the house had been sold.  This implies the prior discharge of any outstanding debts and expenses and the payment of the legacies;

 

(3) when the claimant decided to pay £27,000 from the National Westminster accounts into the Co-operative account, he asserted that the proceeds of sale of the house would be sufficient to enable his brother to recover a sum equivalent to his interest in the accounts from those proceeds of sale.

 

35. In all the circumstances of this case, I conclude that no injustice will be done to the claimant if his own assertions are accepted and his interest in the money in the accounts is taken as being equivalent in value to half the amount standing to the credit of the accounts from time to time and I so decide.

 

36. It will be for the local authority to recalculate the amount of the overpayment from 6^th September 2004 to 1^st April 2008 in the light of my decision as to the value of the claimant’s interest in the accounts.  There is nothing in this appeal which affects the calculation of the overpayment for the period 9^th July 2001 to 5^th September 2004, which I therefore confirm in the sum of £624.44, as shown on page 350 of the bundle. 

 

37. I should add that on the basis of the material before me it seems that in doing the recalculation the local authority:

 

(1) should have regard to the sums from time to time standing to the credit of the claimant and his wife on the second Nationwide account;

 

(2) should note the existence of the NatWest Millennium Bond acquired with money from the National Westminster account and held from 13^th November 2002 to 12^th November 2004, at which point the proceeds were paid back into the National Westminster account (page 277);

 

(3) as noted by Judge Lloyd-Davies on allowing the first appeal, should apply reg.73 of the Council Tax Benefit (Persons who have attained the qualifying age for state pension credit) Regulations 2006, S.I. 2006 No. 216.

 

 

(Signed) E. Ovey

Judge of the Upper Tribunal

 

(Dated) 2^nd May 2012