Upper Tribunal (Administrative Appeals Chamber)

IN THE UPPER TRIBUNAL Appeal No.  CIS/2319/2011

ADMINISTRATIVE APPEALS CHAMBER

Before Judge S M Lane

This decision is made under section 12(1) and (2)(a) and (b)(i) of the Tribunals, Courts and Enforcement Act 2007.

The decision of the tribunal heard on 10 June 2011 under reference SC013/10/06152 is SET ASIDE because its making involved an error on a point of law.

The appeal is REMITTED to a fully reconstituted tribunal for a complete rehearing.

REASONS FOR DECISION

1     The appellant brought this appeal with my permission.  It is supported by the Secretary of State for the reasons I gave when granting permission to appeal. 

2     The appeal relates to a new claim for Income Support where the issue in dispute was whether the appellant was the legal and beneficial owner of a house other than the one in which she lived.  If she was, the value of the house took her over the prescribed amount of capital she was entitled to have without preventing her entitlement to Income Support under regulation 45(a) of the Income Support (General) Regulations 1987.  The Secretary of State decided on 28 October 2010 that the appellant was the legal and beneficial owner of the property. 

The evidence:

3     In her claim form (p13) she gives details of 3 children of which two are sons: Jabed (born in 1996) and Minahj, born in 2007, and a daughter born in 2000.  She wrote in the box relating to her own assets [‘money or property held in trusts, including trusts set up for your children’] that she held ‘money for disabled son’s future’.  She did not specify which son or which assets were so held.  She wrote next to her husband’s name and assets ‘money for son’ but did not specify which money, asset or which son.  In her appeal letter, she states ‘‘I need the money for him [her disabled son Minahj] in the future.’  She does not mention the house specifically and does not mention a trust of it.  The appellant states that the house was originally bought as a family home, subject to a tenancy beginning in 2006.  She gets £500 per month from the letting.  She further states in the claim form (p15) that she does not intend to sell the property, but ‘is not sure yet’ of the reason for not selling it.  Again, there is no mention of any trust affecting the property as a reason for not selling it.  The claim form mentions that Minahj receives the care component of DLA, but not the rate.  She did not produce any documentary evidence of a declaration of trust.

4     In form A64A (relating to the property) the appellant wrote that she was not taking steps to live in the property, did not intend to live in it, was the freeholder and had a mortgage, that the only restriction is that she ‘cannot extend for 15 years from the building date’, and that there would be no other beneficiaries entitled to a share in the proceeds if the house were sold (p28).  There is no mention of a trust.  (No TR1, on which trusts are generally declared to the land registry, was produced.)  She gives no details of who paid for the purchase, or about any agreements between the ‘owners’ about selling.  At p16 she ticks ‘no’ to whether there is anything else that may affect the value of the property. 

5     On p38, the decision maker gives information relating to the appellant’s husband’s previous two claims which were revised, thereby removing entitlement for the periods in question, when it came to light that he had savings in excess of the prescribed amount of capital, and a property in excess of the prescribed limit for his first and second claims respectively.  He then bought the property in question in his wife’s name.  No mention is made of any trusts affecting the purchase in his wife’s name. 

6     At the hearing, the appellant did not attend, but was represented by her husband, who also gave evidence.  He disagreed with the tribunal judge about his wife being the legal and beneficial owner of the property, and also said he would not allow his wife to dispose of the house, if she wished to do so.

What the Tribunal decided

7     The Tribunal found that the husband agreed that his wife was the legal and beneficial owner of the property.  The Tribunal decided that there was not a trust because there was no trust deed. 

Errors of Fact and Law

8     The Secretary of State supported the appeal on the two grounds I raised when giving permission to appeal.  I identified two errors.  The first was a significant and prejudicial mistake about the evidence which stopped the hearing dead in its tracks.  The Tribunal mistakenly though that the husband agreed that his wife owned the property in law and equity, whereas the judge wrote in the Record of Proceedings that the husband disagreed with this.  This error was so significant that it amount to an error of law.

9     The Tribunal’s second error was clearly one of law:  the Tribunal stated that, there could be no trust because there was no trust deed. Although the Tribunal did not cite section 53(1)(b) of the Law of Property Act 1925, it probably had it in mind: 

‘a declaration of trust respecting any land or any interest therein must be manifested and proved by some writing signed by some person who is liable to declare such trust or by his will’. 

10 However, section 53(1)(b) only applies to how a trust is to be evidenced.  Absence of the written evidence makes the trust unenforceable but not void:  Snell’s Equity para 22-036, (32^nd edition, Sweet and Maxwell); Underhill and Heyton, Law of Trusts, para  15^th edition, 1995).  There is no modern authority on the point, but cases decided under section 7 of the Statute of Frauds 1677, the predecessor to s. 53(2)(b), make the point.  Underhill cites Gardner v Rowe (1828) 5 Russ 258, Rochefoucauld v Boustead [1897] 1 Ch 196 at 206; Re Holland [1902] 2 Ch 360.

11 The error of law led to the Tribunal’s failure to investigate and make findings of fact on whether there had been a the declaration of trust, whether it scope was certain, the trust property, the objects/ persons intended to benefit from any such trust and, (in the absence of any documentation) whether the surrounding circumstances were consistent with the existence of a trust. 

12 The closest we get to a declaration of any sort is the appellant’s statement that she needs ‘the money’ for ‘her son’ or ‘her disabled son’ ‘for the future’.  Did this relate just to the house?  To the couples’ other capital?  Which son was to benefit?  Did she really mean to exclude her other two children from their inheritance?  What did she do with the rental money, which appear to be profits arising from the trust property?

13 Another matter which needed to be investigated is whether the appellant had any standing to declare a trust at all.  The evidence shows that the husband used the money to buy the property in the appellant’s name.  As a matter of trust law, this would generally give rise to a resulting trust in favour of the husband.

14 This was t

15 he very point made in R(SB)49/83, which the appellant cited.  I cannot see how it assists her.  In the cited case, the claimant asserted that he did not own the property because it was his son who was paying for it.  The Commissioner held, on general equitable principles that if this was true, it meant that there was a resulting trust in favour of the son, and that the property could not be treated as the claimant’s.

16  This is entirely different from the present case. The appellant’s son did not pay for the property.  Her husband did.  Since he paid for it, there might be a resulting trust in his favour.  Since they are a couple, the value of the property is treated as belonging to them jointly.  This would also bring into question whether the appellant could declare a trust in favour of her son, since she had nothing but a bare interest in the property.  R(SB)4/85 also involved a resulting trust in favour of a third party.  Again, this would not assist the appellant since the ‘other person’ is, in her case, her husband.  R(SB)4/85 deals with the difference between business and personal assets which are not in issue in this appeal.  I am unable to find any references to Barclays v Asquith Investments and cannot, therefore, comment on it.

What happens next?

17 I am unable to substitute a decision because the First-tier Tribunal has not made sufficient findings of fact.  The case must therefore be remitted to a freshly composed First-tier Tribunal for full finding of facts and a decision on whether an express or other trust in favour of the son can be established; and how that fits with any resulting trust that might arise in favour of the husband.

18 The appellant should be aware that her success before the Upper Tribunal is no indication that she will be successful at the rehearing.

[Signed on original] S M Lane

Judge of the Upper Tribunal

[Date] 3 July 2012