Upper Tribunal (Administrative Appeals Chamber)

IN THE UPPER TRIBUNAL Case No.  CIS/1694/2015

ADMINISTRATIVE APPEALS CHAMBER

Before: A. Rowley, Judge of the Upper Tribunal  

Decision:  I allow the appeal.  As the decision of the First-tier Tribunal (made on 8 April 2015 at St Helen’s under reference SC244/15/00056) involved the making of an error in point of law, it is set aside under section 12(2)(a) of the Tribunals, Courts and Enforcement Act 2007.  It is appropriate for me re-make the decision under section 12(2)(b)(ii) of the 2007 Act. 

My decision is that the claimant is entitled to a Social Fund Funeral Expenses Payment of £1396.00 to meet the funeral expenses of his late mother.

REASONS FOR DECISION

Introduction

1.    This is an appeal by the claimant from a decision of the St Helen’s First-tier Tribunal dated 8 April 2015.  The tribunal upheld the decision dated 14 January 2015 of the Secretary of State for Work and Pensions to the effect that the claimant was not entitled to a Social Fund Funeral Expenses Payment (which I will call a “funeral payment” in this decision) to meet the funeral expenses of his late mother (“the deceased”).  I granted permission to appeal to the Upper Tribunal.  The Secretary of State supports the appeal. 

The issues under appeal

2.    There are two substantive issues on this appeal.  First, are funds which are transferred from a deceased’s bank account to a transferee by way of internet transfer on a “non-business day” prior to the deceased’s death, but not credited to the transferee’s account until the following “business day” after the deceased’s death, “assets of the deceased” for the purposes of regulation 10(1)(a) of the Social Fund Maternity and Funeral Expenses (General) Regulations 2005?  I have decided that they are not.

3.    Secondly, is the motivation behind such transfer of funds relevant?  I have decided that it is not.

The law

4.    A funeral payment is payable where the conditions of regulation 7 of the 2005 Regulations are satisfied.  By regulation 9, a funeral payment shall be an amount sufficient to meet any relevant expenditure less any amount which falls to be deducted under regulation 10. 

5.    Regulation 10(1) sets out a list of amounts which are to be deducted from the amount calculated under regulation 9.  Regulation 10(1)(a) is relevant to this case.  It provides as follows:

“10(1) There shall be deducted from the amount of any award of funeral payment which would otherwise be payable-

(a) subject to paragraph (1A) the amount of any assets of the deceased which are available to the responsible person (on application or otherwise) or any other member of his family without probate or letters of administration, or (in Scotland) confirmation, having been granted.”

The background

6.    The deceased died during the afternoon of Sunday 30 November 2014.  A few hours before her death the claimant had transferred the sum of £2,500 from the deceased’s bank account to his own bank account using internet banking.  He said that he did so on the deceased’s instructions, as she owed him the monies.  The deceased’s bank statement showed the transfer as being paid on Monday 1 December 2014.

7.    The deceased’s funeral took place on 15 December 2014.  The claimant accepted responsibility for the deceased’s funeral expenses.  That meant that he was the “responsible person” for the purposes of regulation 10(1)(a) (see regulation 7(1)(b)).  On 30 December 2014 the claimant made a claim for a funeral payment in respect of the funeral expenses.

8.    If the sum of £2,500 had counted as the “assets of the deceased” pursuant to regulation 10(1)(a), the claimant would not have been entitled to a funeral payment, as the deceased’s assets would have exceeded the funeral payment amount.  Conversely, if the sum had not counted as the “assets of the deceased” the claimant would have been entitled to a funeral payment.

9.    On 14 January 2015 the decision maker determined that the sum of £2,500 did count as the “assets of the deceased” and so the claimant was not entitled to a funeral payment.

10. The claimant appealed to the First-tier Tribunal.  His appeal was heard on 8 April 2015.  The tribunal disallowed the appeal, and confirmed the Secretary of State’s decision. 

The appeal to the Upper Tribunal

11. As I indicated at the outset, two issues fall to be considered.  I will deal with each in turn.

The effective date of transfer of the funds

12. The tribunal dealt with the matter in this way:

“5. … was an electronic transfer of funds from one bank account to another effective when the buttons were pressed as in this case on a Sunday, or when the funds were removed from the outgoing account by the bank branch on a bank working day [?] …

6. Having taken all the evidence and read all the documentation the Tribunal concluded, first and foremost, that the bank transfer could only take effect on the date that the funds were removed from the bank account.  Although accepting that bank transfer and internet banking is the modern way of conducting banking business, the Tribunal likened it to the effect of a payment by cheque in the sense that funds are only removed from a bank account when payment is by cheque when the payer’s bank clears the funds in favour of the payee’s bank, which is frequently several days after the cheque is presented.  In this case, although the Tribunal accepted that an electronic transfer could be instantaneous, in this case because the electronic transfer was activated on a Sunday, it did not have any effect on the payer’s bank until the next working day, which was the day after the date of death.”

13. The Secretary of State’s representative, Ms Helena Thackray, acknowledges that the legislation does not specifically deal with situations such as the one arising in this case.  At best, the Decision Maker’s Guide (which is of persuasive value) sets out how cheque payments must be treated for the purposes of regulation 10(1)(a).  The parties agree that electronic transfers should be treated as analogous to cheque payments, and dealt with in the same way.

14. This is what the Decision Maker’s Guide says about cheque payments :

“Cheques cleared after death

39391 The DM should not include in the assets of the deceased the value of cheques

1. written by the deceased and

2. cleared from the bank or building society account after death.

39392 A bank is bound to pay cheques drawn on the bank by a customer. A bank is acting within its authority if it did not know the customer has died. Such monies cannot be recovered from a bank.

39393 A bank is acting without authority if cheques are cleared after they have been informed of the death. If the cheques were for payment of debts the monies cannot be recovered from a bank by the deceased’s estate.

39394 If there is a dispute with a bank the monies from the bank account are not available and cannot be deducted.

Example

On 19.10.01 a man wrote a cheque for £150 for electricity charges. He died on 21.10.01. The bank balance at the date of death was £1576. The bank cleared the cheque on 24.10.01. The balance is available to the responsible person on application without probate. The amount to be deducted is £1426 (£1576 less £150).”

15. It may be said that whilst the tribunal did not err in seeking to draw an analogy with payment by cheque, it did err in applying that analogy by failing to apply it in the way set out in the Decision Maker’s Guide.

16. I accept Ms. Thackray’s submission that where a transfer is ordered prior to death, notwithstanding that the transaction does not clear until after the death, the funds which are the subject of the transfer are, generally speaking, no longer “assets of the deceased” available to the responsible person. 

17. This proposition is subject to any provision to the contrary which may be included in the contractual arrangements between an individual and the bank.  There was no such contrary provision in the case.  Indeed, the evidence from the deceased’s bank supports the general proposition.  According to the deceased’s bank, when its customer  transferred funds using internet banking the funds would be applied to the payee’s account within minutes even if made on a non-business day, but the payment would only show on the customer’s statement as being paid on the next following business day.

18. In the circumstances, the tribunal erred in law by taking into account the funds transferred from the deceased’s account on 30 November 2014 prior to her death as assets of the deceased which were available to the responsible person. 

19. I readily concede that the facts of this case are somewhat out of the ordinary.  Nevertheless, they serve to show that the Decision Maker’s Guide appears to be in need of some amendment.  It is to be hoped that consideration will be given to making the appropriate amendments.

Motive

20. The other reason given by the tribunal for dismissing the claimant’s appeal was that it did not accept that the transfer of the funds represented a genuine reimbursement of money from the deceased to the claimant.  Rather, the tribunal viewed the transaction of 30 November 2014 as a means of reducing the deceased’s estate prior to her death.

21. On granting permission to appeal I asked whether the motivation behind the transfer of the funds was relevant for the purposes of regulation 10(1)(a).  I agree with Ms. Thackray’s submission that the  question to be determined is whether there were assets of the deceased that were available to the responsible person.  If the transfer was validly made, the motivation behind it was irrelevant.

Conclusion

22. For the reasons set out above the decision of the tribunal involved the making of an error in point of law, and I set it aside.  The parties agree that I should re-make the decision, and I consider that it is appropriate that I should do so. 

23. It is not in dispute that the conditions of regulation 7 of the 2005 Regulations were met in this case.  Nor is it in dispute that if regulation 10 were not to apply in this case, the amount of the funeral payment under regulation 9 would be £1396.00.  My decision, which is set out above, is made on the basis that regulation 10 did not apply.

24. For the sake of completeness I should add that the claimant makes the following request: “given the distress, length of time and hardship caused as a result of the out of date legislation adopted by the Secretary of State that I be compensated for loss of interest on the sum owed at the rate of 8% per month or as the judge deems fitting.”  However, that is not an issue arising on this appeal, and I do not have the jurisdiction to consider it. 

1. Rowley, Judge of the Upper Tribunal

(Signed on the original)

Dated: 21 October 2015