BDL-v-Department for Communities (IS) [2017] NICom 28

Decision No:  C4/16-17(IS)

SOCIAL SECURITY ADMINISTRATION (NORTHERN IRELAND) ACT 1992

SOCIAL SECURITY (NORTHERN IRELAND) ORDER 1998

INCOME SUPPORT

Appeal to a Social Security Commissioner
on a question of law from a Tribunal's decision
dated 6 April 2016

DECISION OF THE SOCIAL SECURITY COMMISSIONER

1.	The decision of the appeal tribunal dated 6 April 2016 is in error of law.  The error of law identified will be explained in more detail below.  Pursuant to the powers conferred on me by Article 15(8) of the Social Security (Northern Ireland) Order 1998, I set aside the decision appealed against.

2.	For further reasons set out below, I am unable to exercise the power conferred on me by Article 15(8)(a) of the Social Security (Northern Ireland) Order 1998 to give the decision which the appeal tribunal should have given.  This is because there is detailed evidence relevant to the issues arising in the appeal, including medical evidence, to which I have not had access.  Further, there may be further findings of fact which require to be made and I do not consider it expedient to make such findings, at this stage of the proceedings.  Accordingly, I refer the case to a differently constituted appeal tribunal for re-determination.

3.	In referring the case to a differently constituted appeal tribunal for re-determination, I direct that the appeal tribunal takes into account the guidance set out below.

4.	It is imperative that the appellant notes that while the decision of the appeal tribunal has been set aside, the issue of his entitlement to Income Support (IS) remains to be determined by another appeal tribunal.  In accordance with the guidance set out below, the newly constituted appeal tribunal will be undertaking its own determination of the legal and factual issues which arise in the appeal.

	Background

5.	On 19 August 2015 a decision maker of the Department decided that the appellant was not entitled to IS from and including 28 July 2015.  An appeal against the decision dated 19 August 2015 was received in the Department on 8 September 2015.  On 24 September 2015 the decision dated 19 August 2015 was reconsidered but was not changed.  Further details of the decision-making process are set out below.

6.	Following an earlier adjournment, the substantive appeal tribunal hearing took place on 6 April 2016.  The appellant was present and was represented.  There was no Departmental Presenting Officer present.  The appeal tribunal disallowed the appeal and confirmed the decision dated 19 August 2015.

7.	On 25 May 2016 an application for leave to appeal to the Social Security Commissioner was received in the Appeals Service (TAS).  On 22 July 2016 the application for leave to appeal was refused by the Legally Qualified Panel Member (LQPM).

	Proceedings before the Social Security Commissioner

8.	On 19 August 2016 a further application for leave to appeal was received in the office of the Social Security Commissioners.  On 16 September 2016 observations on the application were requested from Decision Making Services (‘DMS’).  In written observations dated 11 October 2016, Mr Crilly, for DMS supported the application.  Written observations were shared with the appellant and his representative on 11 October 2016.

9.	On 21 March 2017 I granted leave to appeal.  In granting leave to appeal I gave, as a reason, that an arguable issue had arisen as to the manner in which the appeal tribunal had addressed the issue of deprivation of capital.  On the same date I directed that an oral hearing of the appeal would not be required.

	Errors of law

10.	A decision of an appeal tribunal may only be set aside by a Social Security Commissioner on the basis that it is in error of law.  What is an error of law?

11.	In R(I) 2/06 and CSDLA/500/2007, Tribunals of Commissioners in Great Britain have referred to the judgment of the Court of Appeal for England and Wales in R(Iran) v Secretary of State for the Home Department ([2005] EWCA Civ 982), outlining examples of commonly encountered errors of law in terms that can apply equally to appellate legal tribunals.  As set out at paragraph 30 of R(I) 2/06 these are:

“(i)	making perverse or irrational findings on a matter or matters that were material to the outcome (‘material matters’);

(ii)	failing to give reasons or any adequate reasons for findings on material matters;

(iii)	failing to take into account and/or resolve conflicts of fact or opinion on material matters;

(iv)	giving weight to immaterial matters;

(v)	making a material misdirection of law on any material matter;

(vi)	committing or permitting a procedural or other irregularity capable of making a material difference to the outcome or the fairness of proceedings; …

Each of these grounds for detecting any error of law contains the word ‘material’ (or ‘immaterial’).  Errors of law of which it can be said that they would have made no difference to the outcome do not matter.”

	The error of law in the instant case

12.	In his very comprehensive and constructive written observations on the application for leave to appeal, Mr Crilly made the following submissions:

‘Determination dated 18.08.15 and decision dated 19.08.15

In the Department’s determination dated 18.08.15, the decision maker outlined that the claimant had received a compensation payment of £120,000 on 23.02.12.  The decision maker also had regard to a bank statement relating to the claimant’s … account … for the period 02.09.13 to 02.12.13.  It was noted that the balance of this account at 02.09.13 was £25,348.61 and that this had dwindled to £3.55 at 02.12.13.  The decision maker made the following comment in relation to the claimant concerning this fact:

“He has not supplied any evidence of how this money was spent apart from saying that he has a gambling habit.”

The decision maker was also in possession of bank statements for the claimant’s … current account … for the period 26.04.12 to 19.01.15.  She outlined that a total of £53,011.04 had been deposited into the account and had been spent during this time, leaving a balance of £7.73 on 19.01.15.  The decision maker went on to state that the claimant had failed to provide details as to the balance in his … Account into which his carer’s allowance was paid.

After taking all of the above into account, the decision maker determined:

“I consider that as (the appellant) cannot explain what has happened to this large sum of money he must be charged with unaccounted for actual capital of £120,000 and as a result disallowed income support.

This was given effect in an outcome decision dated 19.08.15.

Reconsideration dated 24.09.15

The decision dated 19.08.15 was reconsidered on 24.09.15.  The decision maker noted the following in the reasons for the determination:

“Customer received a compensation payment of £120,000 on 23/02/12 as verified by his Solr.  A statement for his … Account showed his balance at 02/09/13 was £25,348.61 and at 02/12/13 it was £3.55.  Customer has not supplied any evidence of how his money was spent other than to say he has a gambling habit.  His … current account on 19/01/15 showed his balance as £7.73 - £53,011.04 having been deposited and spent between 26/04/12 – 19/01/15.  No statements have been provided for his … account.  I consider that there is no change to decision dated 18/08/15.”

As a result of the above considerations, the decision maker went on to state:

“I have looked again at all the facts and evidence used to make this decision and at the points raised by the claimant and have decided that there is no change to the outcome decision.  As a result of the decision dated 18/08/15 (the appellant) is deemed as having unaccounted for actual capital of £120,000 and as a result is disallowed Income Support.”

I submit that the decision maker’s conclusion is somewhat confusing in that it appears to have been accepted that the claimant had disposed of the capital concerned yet reference is made to him possessing unaccounted for actual capital.  In addition, it is stated that the claimant is deemed or treated as having actual capital.  I submit that this represents a blurring of the issues surrounding actual and notional capital which, as shall be outlined below, the tribunal was required to clarify.

I further submit that this ambiguity was carried over into the Department’s appeal submission where the following was stated in section 3 of that document:

“The decision under appeal is the decision dated 18/08/15 in which the decision maker decided that (the appellant) is not entitled to Incomer Support from and including 28/07/15 as (the appellant) is treated as possessing unaccounted for actual capital of £120,000.”

The tribunal’s decision

The LQM presented the facts of the case in the statement of reasons, outlining that the claimant had come into possession of £120,000 on 23.02.12 as a result of a compensation payment for a personal injury.  The statement also noted that this sum had been spent by the claimant.  The LQM also referred to medical evidence which had been provided by the claimant.

After considering the evidence above, the LQM arrived at the following conclusion:

“Entitlement to Income Support depends on whether a claimant’s capital exceeds the prescribed amount, namely £16,000 and it also makes provision that the claimant can be treated as possessing such capital if he has deprived himself of this capital for the purpose of securing this entitlement by increasing the amount of Income Support.

The appellant accepted that he received the payment of £120,000 on the 28th February 2015 (sic).  He did not use the capital to pay off a debt such as goods and services which would have been allowable under the rules.

He further accepted in evidence that he has a gambling habit and spent all the money on gambling.

Therefore it is accepted that the appellant has dissipated the same and that he deprived himself of the capital of £120,000.

The tribunal is therefore satisfied that the appellant is not entitled to Income Support from the date of his claim on the 28th July 2015 because he is treated as possessing capital of £120,000 and therefore his capital exceeds the sum of £16,000 from the 28th July 2015”.

As a result, the tribunal’s decision notice stated:

“Appeal refused.

The decision dated 18/8/15 that the appellant is not entitled to I/S from 28/7/15 is correct and is upheld.”

It should be pointed out at this stage that, whilst the outcome of the tribunal’s decision that the claimant was not entitled to benefit from 28.07.15 was the same as the Department’s decision under appeal dated 19.08.15, the substance of the decisions was different.  This is because the Department’s decision appears to have been concerned with the claimant’s ownership of actual capital whilst the tribunal’s decision was clearly made in terms of the latter possessing notional capital.

…

The Department’s response

Notional or actual capital?

As noted previously in these observations, the decision under appeal dated 18.08.15 was made in relation to the claimant’s possession of actual capital.  However, both the decision itself and its reconsideration dated 24.09.15 appeared to incorporate considerations and language which would normally apply to the issue of notional capital only.  As a result, I submit that the decision under appeal was unclear and ambiguous

In the reported Northern Ireland decision, R2/09(IS), the former Chief Commissioner addressed the issue of the treatment of capital by decision makers and tribunals.  In particular, he posed a series of questions in paragraph 17 of that decision …

I submit that, in addressing the nature of the claimant’s capital, the tribunal applied the correct approach as outlined in questions (ix) to (xiv) in paragraph 17 of R2/09(IS).  The statement of reasons clearly shows that, after considering the evidence in the claimant’s bank statements, the LQM referred to the claimant dissipating his money and that, having done so, he had deprived himself of the amount of £120,000.  The LQM was therefore in no doubt that the claimant had disposed of the capital by the time that he made his claim for income support on 28.07.15.  I submit that the tribunal correctly and properly dealt with the claimant’s appeal on the basis that notional capital and not actual capital was the relevant issue to be addressed.

Tribunal’s treatment of the issue of deprivation

Whilst I am submitting that the tribunal correctly determined that the claimant’s capital was notional in this instance, I respectfully submit that, for the reasons outlined below, it erred in law in relation to its treatment of the question of deprivation.

The Commissioner in R(SB) 40/85 stated that the securing of entitlement to benefit must be a significant operative purpose.  In other words, if the obtaining of benefit was a foreseeable consequence of the disposal of the capital concerned then, in the absence of other evidence, it may be concluded that this was the claimant’s purpose behind that disposal.  However, it was further held in R(SB) 9/91 that a positive intention to obtain benefit must be shown to be a significant operative purpose: it is not sufficient for a decision maker or a tribunal merely to prove that the obtaining of benefit was a natural consequence of the disposal.  In GB reported decision, R(SB) 12/91, it was held that a positive finding of fact, based upon sufficient evidence, was necessary that the claimant had a knowledge of the capital limit.

GB reported decision, R(H) 1/06, addressed the issue of notional capital under the housing benefit equivalent of regulation 51 of the IS Regulations.  In R(H) 1/06, the claimant had suffered from schizophrenia for a number of years and had difficulty coping on his own.  He had claimed and was paid housing benefit from March 2001.  The claimant then inherited a considerable sum from his late aunt towards the end of 2001 which was in excess of the prescribed amount for capital purposes.  He contacted his local authority on 02.01.02 to advise of this development.  As a result, his award of housing benefit was terminated with effect from 03.12.01.  He then made a new claim for housing benefit at the beginning of May 2002 in which he declared capital of approximately £14,000.  This claim was eventually disallowed on the basis that the claimant had deprived himself of £68,845 for the purpose of claiming benefit.

In allowing the appeal, the Commissioner held the following in paragraph 13 of R(H) 1/06:

“In my judgment there is no doubt that the test of whether a claimant is shown to have deprived himself of capital “for the purpose of” securing entitlement to housing benefit so as to fall within the notional capital provisions of regulation 43 Housing Benefit (General) Regulations 1987 (SI 1987/1971) is a subjective one, depending on the evidence about the particular claimant in question.  It does not in my view adequately address or answer the point to say as the chairman did that, because a person is not completely incapable of managing his affairs or of realising he was spending his money imprudently, it follows as a matter of course and without further analysis that all such spending is done for the purpose of securing entitlement to benefit.  Such a jump is impermissible as it omits any real consideration of the actual purpose of the particular person involved.”

In paragraphs 15 to 18 of the decision, the Commissioner held that the tribunal had also erred in failing to provide any breakdown or analysis of the actual amounts or occasions in respect of which the claimant was being found as a fact to have deprived himself of capital and to have done so for the purpose of obtaining benefit.

The Commissioner went on to hold in paragraph 22 of the decision:

“Whether the securing of entitlement to benefit was, in this sense, among the purposes which led any particular claimant to act as he did is a question that must be determined by the tribunal of fact in the circumstances of each individual case, the test as already noted being one of subjective purpose: see in the housing benefit context R (Beeson) v Dorset County Council [2001] EWHC Admin 986, 30 November 2001, per Richards J at paragraphs 9, 37 (not challenged on this point in the Court of Appeal).  In the great majority of cases this must be a matter of drawing such inferences as the tribunal of fact thinks fit from the surrounding circumstances, such as the claimant’s state of knowledge of the rules, the nature and timing of the disposals he makes and the timing and manner of his claims for benefit; since direct evidence to show such a purpose is in the nature of things unlikely.  Such a task is however a perfectly normal one for a tribunal of fact to have to undertake, and this is of course by no means the only instance in the law when the purpose for which a thing is done may not be express, and has to be ascertained “as a matter of substance and of fact”: re South African Supply and Cold Storage Company [1904] 2 Ch 268, per Buckley J at p282.  In using the word “significant” Mr Monroe may perhaps have had in mind what was said by Lord Morris of Borth-y-Gest in Sweet v Parsley [1970] AC 132, 155A:

“In my opinion, the words ‘premises … used for the purposes of …’ denote a purpose which is other than quite incidental or casual or fortuitous: they denote a purpose which is or has become either a significant one or a recognised one though certainly not necessarily an only one.”

It is to that end that a tribunal must assess all the evidence and determine whether such a purpose on the part of the particular claimant before them can be inferred.”

The issue of deprivation was further considered in another GB Commissioner’s decision relating to housing benefit, CH/264/2006.  The Commissioner held in paragraph 6 of that decision:

“The assessment of purpose is usually established by inference, which involves an assessment of (a) the claimant’s actions, (b) the reasonableness of those actions and (c) the claimant’s character and credibility.  (This list is not necessarily comprehensive.)  The tribunal went wrong in law because (i) there is a gap in its logical assessment of the evidence relevant to the purpose of the transactions the claimant undertook and (ii) it did not give appropriate significance to the reasonableness of some items of expenditure.  I must now explain and justify these conclusions.”

The Commissioner went on to state later in the decision:

“13.	The tribunal also went wrong in law by deciding that the reasonableness of the claimant’s expenditure was irrelevant.

14.	The legal test is that set by regulation 43(1).  Reasonableness is not a constituent legal part of that test and the tribunal was correct to remind the local authority of this.  However, it was unnecessary to do so as it made no difference in this case.  The local authority only had to consider the amount of the claimant’s capital between the date of claim and the date of decision.  That amount was always well above the £16,000 throughout that period whether or not the items of expenditure disregarded by the local authority were taken into account.

15.	Not only was the tribunal’s decision on reasonableness unnecessary, it was also wrong in that it treated reasonableness as irrelevant.  Reasonableness is not decisive as a matter of law, but it is relevant as an evidentiary consideration.  As I have said, the necessary purpose for regulation 43(1) can usually only be proved by inference.  The reasonableness of a particular item of expenditure is relevant to whether that inference can be drawn.  A claimant who uses part of an inheritance to replace a car that has just failed its MOT may be able to use the state of the car and the need for a replacement as evidence that the securing of entitlement to benefit was not a significant operative purpose of the expenditure.  In contrast, a claimant who spends large sums of money on multiple purchases of the same luxury items will not be able to use reasonableness in that way.  But, just as reasonableness is not decisive in a claimant’s favour, unreasonableness is not decisive against a claimant.  As I have said, inference must depend on all the circumstances of the case.

16.	The parties have not referred in their observations to the decision of Mr Commissioner Rowland in CJSA/1425/2004.  However, I must mention it as it is relevant.  The Commissioner was there concerned with the equivalent provision to regulation 43(1) in the jobseeker's allowance legislation.  He decided that the test was whether it was reasonable for the claimant to act as she did in depriving herself of capital.  With respect to my colleague, I consider that his reasoning is based on a misreading of the authorities and that his decision erroneously converts an evidentiary factor of reasonableness into a legal test and a subjective test of purpose into an objective test of reasonableness.”

Paragraphs 6 and 13 to 16 of CH/264/2006 make it clear that the consideration of reasonableness in the context of deprivation is relevant.

I submit that the tribunal in the present appeal failed to properly address the question of deprivation in accordance with the principles expounded in the caselaw as referred to in paragraphs 26 to 29 above.

A copy of CH/264/2006 is attached to these observations for the Commissioner’s convenience.

The medical evidence referred to by the claimant in the application for leave to appeal appears to support his assertions in relation to his gambling addiction.  The LQM accepted that the claimant had a gambling problem when he acknowledged in the statement of reasons that the claimant had received his compensation payment in February 2012 and that the latter had then gone on to dispose of this money as a result of that addiction.  The medical evidence was also referred to in the statement of reasons.  With that in mind, I do not agree with the claimant’s representative’s submission that the medical evidence was discounted by the tribunal in this instance.

However, it appears that the LQM did not then go on take into account other relevant considerations such as the nature and timing of the disposal, the claimant’s knowledge of the capital rules or the manner and timing of his claim for income support from 28.07.15.  In addition, I submit that, whilst the LQM noted in the statement of reasons that the claimant had a gambling addiction, he did not appear to go on to consider the possible effect this may have had on the manner of the claimant’s disposal of the money as well as the latter’s intentions behind its dissipation.  Furthermore, I respectfully submit that the claimant’s assertions with regard to the spending of his money were credible and were supported by the evidence contained in the bank statements which showed regular and substantial withdrawals over a sustained period from March 2012 up to the closing months of 2013.

I submit that the tribunal did not take into account the relevant other factors that it was required to when assessing whether or not the claimant had deprived himself.  It did not explain why the claimant had deprived himself but rather appears to have merely assumed that the significant operative purpose behind the disposal of the capital was to secure entitlement to income support.  I respectfully submit that this represents an error in law.’

13.	I agree with and accept this detailed and careful analysis by Mr Crilly and, for the reasons which he has set out agree that the decision of the appeal tribunal is in error of law.

	Disposal

14.	The decision of the appeal tribunal dated 6 April 2016 is in error of law.  The error of law identified will be explained in more detail below.  Pursuant to the powers conferred on me by Article 15(8) of the Social Security (Northern Ireland) Order 1998, I set aside the decision appealed against.

15.	I direct that the parties to the proceedings and the newly constituted appeal tribunal take into account the following:

	(i)	the decision under appeal is a decision of the Department, dated 19 August 2015 in which a decision maker of the Department decided that the appellant was not entitled to IS from and including 28 July 2015;

	(ii)	the Department is directed to prepare a further submission for the appeal before the differently constituted appeal tribunal which should draw on the detailed analysis undertaken by Mr Crilly in his written observations prepared for the proceedings before the Social Security Commissioner:

	(iii)	it will be for the appellant to make submissions, and adduce evidence in support of those submissions, on all of the issues relevant to the appeal; and

	(iv)	it will be for the appeal tribunal to consider the submissions made by the parties to the proceedings on these issues, and any evidence adduced in support of them, and then to make its determination, in light of all that is before it.

(signed):  K Mullan

Chief Commissioner

31 May 2017