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[2008] UKUT 9 (AAC) (12 November 2008)

 


THE UPPER TRIBUNAL Appeal No. CH 2367 2008

ADMINISTRATIVE APPEALS CHAMBER [2008] UKUT 9 (AAC)

DECISION

The appeal is allowed. For the reasons below, the decision of the tribunal is set aside. I refer the appeal to a new tribunal to decide the appeal again in accordance with the following directions.

Directions for new hearing

A The new hearing will be at an oral hearing.

B The new tribunal should not involve any judge or other member who has previously been a member of a tribunal involved in this appeal.

C The parties are reminded that the tribunal can only deal with the appeal as at the date of the original decision under appeal.

D If either party has any further written evidence to put before the tribunal, this should be sent to the tribunal within one month of the issue of this decision. This is particularly relevant to any evidence that either party wishes to put before the tribunal of the value of the respondent's capital assets in the period before and as at the date of the original decision or of the interest in the property during that period of any person other than the respondent.

E If the parties wish to make any representations in writing to the tribunal on the question of any resulting trust or other equitable interest in the property in question they should make those representations by the same time as that in paragraph D above.

These directions are subject to any later direction by a tribunal judge. The judge may wish to consider directing a listing of this appeal before a judge with expertise in the disputed issues about the interests in the relevant property.

REASONS FOR DECISION

1. East Hampshire District Council ("the Council") is appealing against a decision of the Aldershot tribunal on 29 10 2008 under reference 167 07 00852.
2. The Council decided on 14 09 2007 that the Respondent ("Mr S") was not entitled to housing benefit and council tax benefit for a period from 18 08 2003. This was because he was shown to have purchased a property ("No 8") for a sum in excess of £40,000 at that time without a mortgage and that property was still owned by him. It was decided that he was in possession of capital in excess of £16,000 as a result, and therefore had capital in excess of the upper limit for those benefits.

This followed a separate decision by the local Jobcentre on behalf of the Secretary of State for Work and Pensions that he was not entitled to income support from 15 08 2003 for the same reason. This appeal concerns the decision by the Council, and not that by the Secretary of State.

3. The papers contain a copy of the entry on the Land Registry for No 8 confirming ownership from 30 10 2003 without encumbrance, and a purchase price of £40,674.
4. Mr S appealed against the decision because he did not think that the property should be treated as part of his resources. He had bought it "in good faith with the intention eventually (my emboldening) passing it to my daughters". He then stated that he had people living there and that its value would be much reduced as he had an agreement that they can stay there.
5. The appeal came before the tribunal for oral hearing on 29 01 2008. The Council was represented at the hearing and Mr S was present with a friend. There is a short record of proceedings. The record shows that the tribunal issued a decision notice containing its reasons dated as at 29 01 2007. The decision notice records that:

"At the hearing I reserved my decision as I was considering the need to adjourn for further evidence on valuation and for investigation of legal issues. However on further reflection I consider it appropriate to decide the case finally today."

There is nothing in the record of proceedings to show that the chairman gave any indication to the appellant or respondent about this. But as the chairman clearly did not give the decision to the parties at the hearing following normal practice and the Council formed the clear view that it was expecting to hear from the chairman about valuation following the hearing, I accept that some indication of this was given to the parties.

6. The chairman issued a statement of reasons a month later. As part of those reasons the chairman stated:

"9 The problem for the tribunal is that without establishing exactly what the nature of their [the occupiers] rights is, it is almost impossible to place any value in the interest retained by Mr S. The only way that the nature of the interest could be elucidated would be through litigation in the Chancery Division of the High Court. This would not be a quick or simple option (like enforcing a sale of land against a joint owner) and would probably be extremely expensive, since it is not a question to which there is an easy or obvious answer.

10 In the circumstances I conclude that Mr S's interest is effectively impossible to value without totally disproportionate expense. I also consider that this is a case in which even a willing buyer, who would have to accept that the purchase was highly speculative, would not be willing to pay more than a trivial amount – certainly nowhere near £16,000."

7. The Council responded that at the hearing the chairman told the parties that she was adjourning in order to obtain further information. The information was about the valuation of No 8. She said that she would write to the local authority with details of what was required. Instead, the Council received the decision notice. This was confirmed in a further letter to the Commissioner.
8. As I did not consider that that letter, or the details on the OSSC2 form, properly identified why the Council were seeking permission to appeal, I directed a proper submission on the grounds of appeal. In reply, the Council's solicitor submitted that the tribunal had made a decision in breach of natural justice. It had adjourned stating that it would approach the Council for a valuation of the property, but then had not done so. Further, it had then made its own decision on valuation without giving the Council an opportunity to comment on its view.
9. I considered that these grounds were clearly arguable and granted permission to appeal. I also suggested that the decision should be set aside on those grounds and the decision retaken by a new tribunal. The Council agreed with that suggestion. The solicitors representing Mr S did not. They represented that the tribunal had not made any error in law, and that I had no power to set aside a decision unless there was an error of law. The solicitors also drew my attention to the fact that the Department for Work and Pensions had accepted the tribunal decision and had not themselves pursued the matter to a tribunal. Because of these objections for Mr S I have reconsidered fully the reasons that I identified when granting permission to appeal in the light of the papers. But I have no jurisdiction over any decision taken by the Department for Work and Pensions and therefore cannot comment on that.
10. I confirm my provisional view given on the application. The Council's representations about the question of valuation are confirmed by the tribunal's decision notice. The record of proceedings is entirely silent on the issue. If the tribunal reached the view that it needed to consider further evidence from a party, and it indicated to both parties that it would ask for that evidence, then it acted unfairly in deciding the issue without giving the parties – both of them – a further opportunity to make representations on that point. This is a matter on which the tribunal record as a whole is inconsistent (in that the matter recorded in the decision notice is not recorded in the record of proceedings or the subject of explanation in the statement of reasons). And it is something directly relevant to the tribunal's decision as between the parties.
11. In those circumstances, and following the overriding objectives now laid down for this Tribunal in rule 2 of the Upper Tribunal Rules 2008, I consider it both fair and proportionate to refer the matter to a new tribunal without asking the chairman for views on the issue. I have in mind particularly rule 2(2)(d) which requires me to ensure "so far as practicable, that the parties are able to participate fully in the proceedings".
12. Had I not decided the case on that ground, I would have considered further two other aspects of the decision that are clearly arguable. I record my views on these as the matter is going to a new tribunal in any event.

Identifying the interests in No 8

13. The first is the adequacy of the tribunal decision with regard to the questions of law that arose with regard to property interests in No 8. If it was directly relevant to this decision to decide the precise nature of Mr S's property (including equitable) rights, or those of the occupants of the property, then it was the duty of the tribunal to decide them. There is no procedure in place to refer that question to the Chancery Division or to expect the parties to go to the Chancery Division to decide it. Nor need there be. The solution is much simpler and more cost effective than that. The tribunal makes the best decision it can in the circumstances. If one of the parties does not accept that decision then, as here, it should apply to appeal to the Upper Tribunal. There is, as the chairman should be aware, considerable jurisprudence in the reported decisions of the Social Security Commissioners about precisely the sort of questions that arose here.
14. The chairman was wrong to state that a Chancery Division action was the "only way" to "elucidate" the nature of the interest. It was the task of the chairman in this appeal to do this to the extent necessary to deal with the issues before the tribunal, and to do so fairly but effectively. The new tribunal to which this case is sent sits as the Social Entitlement Chamber of the First-tier Tribunal. In common with the Upper Tribunal, it is also governed by new rules: the Tribunal Procedure (First-tier Tribunal)(Social Entitlement Chamber) Rules 2008 (SI 2008 No 2685). These did not apply to the first tier tribunal that heard this appeal, but they will apply to the new tribunal. They provide the answer to the chairman's views about costs and complexity.
15. As it is new, I set rule 2(1) and (2) out in full:

"2 (1) The overriding objective of these Rules is to enable the Tribunal to deal with case fairly and justly.

(2) Dealing with a case fairly and justly includes –

(a) dealing with the case in ways which are proportionate to the importance of the case, the complexity of the issues, the anticipated costs and the resources of the parties;

(b) avoiding unnecessary formality and seeking flexibility in the proceedings;

(c) ensuring, so far as practicable, that the parties are able to participate fully in the proceedings;

(d) using any special expertise of the Tribunal effectively; and

(e) avoiding delay, so far as compatible with proper consideration of the issues."

This also applies to the comment of the tribunal about valuation that Mr S's interest "is effectively impossible to value without totally disproportionate expense" (paragraph 10). The new tribunal must address the issues before it as guided by these objectives.

Valuation at all relevant times

16. The second issue for further attention is that of valuation. One point is the failure of the tribunal to identify the evidence on which the tribunal decided Mr S's property "could be almost valueless" throughout the period relevant to its decision. I can see nothing in the papers giving evidence about (as against asserting) this. There is no evidence about the value of the property with or without any encumbrance to the title, and no evidence about the capital value at any time of the works done by the occupants, other than the Land Registry documents. Nor can I see any attention being paid to the fact that it is the continuing current value of the property over a period of several years that is in question, not the value at the time of the hearing. The statement of reasons itself records (in paragraph 5) that:

"It is very obvious that the unencumbered freehold value of the house is greatly in excess of the threshold: it was well over it when [Mr S] bought the house in 2003…"

If that was the view of the tribunal, then, given that the initial operative date for the decisions under appeal to the tribunal was 18 08 2003, on what evidence did the tribunal conclude that Mr S had an interest in No 8 at that time that was such that a purchaser "would not be willing to pay more than a trivial amount – certainly nowhere near £16,000" (paragraph 10)?

17. While it may be that the value at the time of the hearing was as the chairman stated, I do not see how that can have been so on the evidence in the papers on the day Mr S purchased the property. Valuation is precisely what the Council thought the tribunal would be considering further, but then later found it did not. So the issue of valuation merges with the issue of fairness on which I have decided this appeal.
18. Both parties are put on notice that the matter is being sent back to the tribunal because they have had no opportunity to comment on the issue of valuation. This gives both parties the opportunity to submit any evidence on value that they wish to submit. And they may, as this is a new hearing, offer any other evidence of relevance on the decision, provided the tribunal and the other party are given proper notice of the new evidence.
19. What evidence they offer to the new tribunal is of course for them, subject to any specific direction by the tribunal. But I note nothing in the papers to indicate the value of the freehold in the property at the date of decision or any date other than the date of purchase, and nothing to indicate the value of any interest that it might be argued that the occupiers have against Mr S because of work they have done at the property. While the Land Registry entries establish the market value of the property at the start of the period in dispute, that valuation will only be sound evidence for part of the period in issue. Both parties are reminded that for the purposes of this decision – which is a continuing decision applying over several years - it is the continuing current value of Mr S's interest in No 8 over the period up to and including the date of decision (not the date of hearing) that is in issue.
20. The current value is not directly relevant to that. The key question at any specific time is whether Mr S's interest either exceeds the upper capital limit (the decision under appeal) or the lower capital limit (the decision that stands to be made if the capital is under the upper capital limit but above the lower limit). For that reason precise valuations are not necessary save, if relevant, where the valuation is near or below the upper limit. If it is below the upper limit, then the tribunal must put a value to it because it is only if the value is below the lower limit that the capital can be ignored. That is another issue on which the tribunal made no findings.
21. I have therefore directed the parties to produce further evidence within a month of the issue of this decision. If the parties have problems with that, they will need to make application to a judge of the First-tier Tribunal to vary my directions.

General

22. From 3 11 2008 the work of the Social Security Commissioners has been transferred to a new court of record known as the Upper Tribunal. The Upper Tribunal is from that date dealing with all applications and appeals made to the Social Security Commissioners. The appeal will go to the new First-tier Tribunal (social entitlement chamber) to be decided under the new rules that apply to that tribunal

chamber. This replaced the previous tribunal from the same date.

Dr David Williams

Judge of the Upper Tribunal

12 11 2008

[Signed on the original on the date stated]