IN THE UPPER TRIBUNAL	Case No.  CPC/1957/2009
ADMINISTRATIVE APPEALS CHAMBER

Before Upper Tribunal Judge: E A Jupp

Decision:  	At the request of the claimant I held an oral hearing of this appeal.  The decision of the First-tier Tribunal given on 19 May 2009 under registration No 004/09/00176 was erroneous in law.  However, in the event, this does not assist the claimant.  As the outcome is the same as the decision given by the tribunal, under section 12(2)(a) of the Tribunals Courts & Enforcement Act 2007, I do not set aside the decision of the First-tier Tribunal.

REASONS FOR DECISION

1.	The claimant is a married woman aged over 60.  She and her husband decided to move permanently to Spain, sold their property in England and moved to Spain in January 2005.  The claimant maintained her links with England, visiting her mother and other family members several times a year.  She and her husband did not settle abroad and they sold their Spanish property, receiving the sale proceeds in March 2007.  They allocated £50,000 towards the purchase of a new property in England, but they did not return immediately, 

2.	In the event, the claimant and her husband returned to England on 18 March 2008, moving into rented accommodation.  The claimant applied for state pension credit (SPC) on 19 June 2008, her claim being received on 24 June 2008.  

3.	For reasons not relevant to this appeal, it was only on 11 November 2008 that the decision maker decided that the claimant should be treated as habitually resident from 18 June 2008, that is three months after she returned to the United Kingdom.  The decision maker also decided that the sum of £50,000 earmarked for the purchase of a property in the United Kingdom could only be disregarded for SPC purposes for 52 weeks from her receipt of the funds in March 2007.  Paragraph V of the State Pension Credit Regulations 2002 (the Regulations) sets out the capital to be disregarded for the purpose of calculating a claimant's weekly income.  The relevant paragraphs are 17 and 19 which provide:

	17. Any amount specified in paragraphs 18 to 20 - 
(a) in a case where there is an assessed income period, until the end of that period or until the expiration of one year from the date of payment, whichever is the later; or

(b) in any other case, for a period of one year beginning with the date of receipt.
19. So much of any amounts paid to the claimant or deposited in the claimant's name for the sole purpose of - 
(a) purchasing premises which the claimant intends to occupy as his home; or

(b) effecting essential repairs or alterations to the premises occupied or intended to be occupied by the claimant as his home.

The decision maker decided that under this legislation this sum of £50,000 fell to be included in the claimant’s SPC assessment as capital in June 2008.

4.	The claimant appealed through her representative, Mr. Andrew Young, who has argued strongly on her behalf throughout.  He asked that the disregard of 52 weeks in respect of the capital allocated to the purchase of a new property should not be applied from March 2007 to March 2008, as at that time the claimant was not within the jurisdiction, but should only be applied from the date of her arrival in England in March 2008.  Further, there was guidance to state that the disregard could be extended beyond the period of 52 weeks, as set out in the Child Poverty Action Group Handbook 2008 to 2009 which states:

	“Any amounts paid to you or deposited in your name for the sole purpose of buying a home for you to live in or carrying out essential repairs or alterations to your home or the home you intend to occupy are ignored for a year from the date you were paid them, or for Pension Credit only, until the end of the assessed income period, if there is one, if this is longer.

	When considering whether to increase the period of any disregard, all the circumstances should be considered – particularly your and your family’s personal circumstances, any efforts made by you to use or dispose of the home (if relevant) and the general state of the market (if relevant).  In practice, periods of around 18 months are not considered unusual.”

This paragraph remains in the two subsequent editions of the handbook.

5.	Further, Mr Young submitted that as the entitlement decision was delayed, it would be appropriate in this case for a disregard of more than 15 months to be given.  Finally, he challenged the award having been made with effect from June 2008.  Further evidence of the financial position of the claimant and her husband was submitted.  The decision was reconsidered but not revised and the appeal proceeded. 

6.	In a written submission to the tribunal, Mr Young also made comparisons with other benefits where capital is to be disregarded if it is intended for the purchase of another property.  He explained the claimant's difficulties in purchasing a new property while the matter remained unresolved, as she would need a mortgage.  He submitted that following the decision in Nessa v Chief Adjudication Officer [1999] 4ALL E.R.677 the claimant should be considered as having been habitually resident from an earlier period and thus entitled to have her claim backdated.  There were other challenges to the submission writer’s submission for the tribunal, which need not now be considered in detail.  

7.	The tribunal was held on 19 May 2009, the claimant being present but not represented; there was no presenting officer on behalf of the Secretary of State.  According to the record of proceedings, the tribunal’s questioning concentrated largely on the circumstances of the claimant's return to England with her husband, and how they established themselves as resident on their return.

8.	The tribunal revised the Secretary of State’s decision stating:

“1.	 The appellant became habitually resident in the UK as a returning former resident with effect from 19/3/08.

2.	The appellant sold a property in Spain in March 2007.  Of the proceeds of sale a sum of £50,000 was earmarked for the purchase of premises intended to be occupied as her home.  Under the State Pension Credit Regulations 2002 Schedule V para 17 & 19 as amended provides that such capital is to be disregarded to a period of one year beginning with the date of receipt of the capital.  In this case the capital was received 12 months prior to 18/3/08 and therefore cannot be disregarded for the purposes of State Pension Credit.”

9.	Through Mr Young the claimant applied for the tribunal’s decision to be set aside on the grounds that at the time she received capital from the sale of the Spanish property she was not residing in United Kingdom and her eligibility to apply for SPC began only when she returned to England in March 2008.  The State Pension Credit Act 2002 applies only to England Wales and Scotland and at the time the claimant received the capital she was residing in a country outside the jurisdiction.  Mr Young referred again to the guidance in the Child Poverty Action Group Handbook 2008/9 and made further suggestions as to what should be a reasonable extension.

10.	Also, there were procedural irregularities during the tribunal hearing as the claimant had not been given an opportunity at the outset to give a brief outline of her argument for the case, in line with the information on the Tribunals Service website but the tribunal had questioned her as to her previous occupation and her financial situation regarding the property occupied in England and other aspects prior to the departure from England; many of the questions had not appeared to her to be relevant to the issues under consideration.  Further, although she had tried to bring up the matter of the disregard of capital, the tribunal judge had not dealt with this.  Finally, the hearing having exceeding the allocated time, she was asked to wait outside for five minutes without being told that the hearing had ended.  She had not been given her opportunity to sum up her arguments for the case before the hearing finished. 

11.	The First-tier tribunal judge refused to set aside the decision and the claimant applied for permission to appeal, on essentially the same grounds.  This was refused, the Tribunal Judge dealing with the application noting that, notwithstanding the claimant’s criticism of the conduct of the hearing, he was satisfied that the Judge had all the arguments before him, had considered them and engaged with the claimant in addressing the issues that needed to be decided.  

12.	The claimant sought permission to appeal to the Upper Tribunal and I directed the Secretary of State to make observations on the claimant’s application.  The Secretary of State supported the application for leave to appeal.  There is no dispute that £50,000 of the claimant’s capital held at the date the claimant made a claim for SPC was for the sole purpose of purchasing a home for the claimant and her husband nor is it disputed that the claimant and her husband had received that money in March 2007 nor that the provisions of the State Pension Credit Act 2002 applied to the claimant at the date she claimed the benefit.  

13.	However, the Secretary of State submitted, paragraph 17 of Schedule V to the State Pension Credit Regulations 2002 “applies to disregard capital only from the date it was received, and makes no provision for any different date to be used”, citing in support the views of Lord Reid in Pinner v Everitt [1969] 3All ER at 258 that:

	“in determining the meaning of any word or phrase in a statute, the first question to ask always is what is the natural or ordinary meaning of that word or phase in its context in the statute?”  

Therefore the tribunal did not err in law in deciding that the date of receipt means the date the claimant had received the money whether or not she satisfied the other conditions for entitlement to SPC at the date the payment was received.  Notwithstanding the claimant’s submission that there is provision for extending the period of disregard for more than one year, paragraph 17 of Schedule V to the Regulations fixes the disregard given under paragraph 19 of that Schedule to a period of one year; it provides no discretion to extend the period for which the disregard can be applied.

14.	However, the Secretary of State concluded, the precise date at which the claimant had received the payment of £50,000 had not been established, only that it was sometime in March 2007.  Whilst it was unlikely that it had been received less than one year before 28 March 2008, the date from which the claimant wished her claim to begin, this was not certain.  The tribunal should have made the appropriate finding of fact, given its decision that the claimant became habitually resident in the United Kingdom with effect from 19 March 2008.  In failing to make adequate findings of fact from this point, it erred in law as to whether the one year disregard specified in paragraph 17 of Schedule V still applied at the date from which the claimant became entitled to SPC.

15.	The Secretary of State also supported the claimant’s appeal regarding her contention that she did not have a fair hearing and that there were procedural irregularities during the hearing, noting the guidance as to how a tribunal would proceed given on the Tribunals Service website did not appear to have been followed in regard to allowing the claimant both to outline and sum up her case.

16.	I then gave permission to appeal indicating that I was not persuaded by the merits of the submissions with respect to procedural irregularity but that in my judgment there was merit in the submission that the tribunal failed to make adequate findings of fact as to whether the one year disregard period still applied at the date when the claimant became entitled to SPC.  At that stage I suggested that if the appeal were to be remitted, as suggested by the Secretary of State, it would only be necessary for me to give a brief decision.  This was with the intention of expediting the hearing, given the long period of delay to which the claimant has been subject.  However, unfortunately I did not make this plain and understandably the claimant was anxious that she would not have an opportunity to express her argument fully.  I therefore amended my directions to ask her to produce evidence of the date when she received the funds, in the hope that the appeal could be decided by the Upper Tribunal.  At Mr Young’s request, I directed that there should be an oral hearing.  

17.	Shortly before the hearing Mr Young advised that the claimant could not attend because of a long awaited hospital appointment and made a further written submission reiterating the grounds of appeal.  He added that in his submission the Pension Credit Act 2002 is unlawful in that it does not make provision for any extension of a disregard period in respect of capital set aside for the purpose of purchasing a new home after the expiry of the period specified in the Regulations as do the regulations dealing with income support and jobseekers allowance, but sets a maximum of one year.  He submitted:

	“If my client was under the age of 60, and she was awarded IBJSA or IS, then the Capital she received from the sale of her home, that was intended to purchase a new property would have been disregarded for 26 weeks, and then for as long as was necessary.  However for the simple reason that she is over the age of 60, this extension has been removed.  I fully appreciate that the original disregard period is shorter on IS/IBJSA however the guidance states that the disregard can continue for as long as is reasonably possible.”

In support, he cited several Commissioners’ decisions.

18.	The hearing took place before me in London on 9 June.  Mr Young represented the claimant and Mr Matthew Sabey, solicitor, on behalf of the Office of the Official Solicitor, represented the Secretary of State.  I am grateful to them for their assistance throughout.  

19.	Mr Young reiterated that the disregard should only start to run from the claimant’s return to United Kingdom and that she was not bound by anything in the legislation until she did so.  He emphasised what he submitted is an unlawful element in the Regulations with regard to the finite period for the operation of the disregard of funds allocated for a property purchase when compared with other benefits.  The Pension Credit Act only applies to England Scotland and Wales, could it be applied where the claimant was not within the jurisdiction?  The claimant also felt that there was an element of discrimination in that she was penalised because she was over 60.  

20.	In response, Mr Sabey submitted that this is a fundamental misunderstanding of the application of the legislation.  Whilst the Act itself, together with the Regulations, applies only within the jurisdiction, the underlying relevant facts cannot be ignored simply because of events which occurred whilst the claimant was not within the jurisdiction.  The claimant had applied for benefit once she was within the jurisdiction, at which time she satisfied section 2 of the Act as to habitual residence in the United Kingdom.

21.	On the alleged discrimination, the provisions of the Regulations should be compared with the Income Support (General) Regulations 1987 and the Jobseeker’s Regulations 1996. The claimant was not treated less favourably in claiming SPC on the basis that there is a fixed period of one year allowed for the disregard under Schedule V paragraph 17 to 19 of the State Pension Credit Regulations.  Both paragraph 3 of Schedule 10 to the Income Support (General) Regulations and paragraph 3 of Schedule 8 to the Jobseekers Allowance Regulations 1996 limit the disregard to:

	“Any sum directly attributable to the proceeds of sale of any premises formerly occupied by the claimant ………………which is to be used for the purchase of other premises intended for such occupation within 26 weeks of the date of the sale or such longer period as is reasonable in the circumstances to enable the claimant to complete the purchase.”

22.	In the case of SPC, the funds being allocated for the purchase of a property were not necessarily limited to the proceeds of sale of the previous property.  Further, Mr Sabey produced a copy of the decision maker’s guide relating to capital disregarded for 26 weeks or longer:

	 29545	The DM may decide to disregard the money for a longer period if people have 

			1.	tried but not found premises which are suitable for their or a member of their family’s needs, in particular, if one of them is disabled and needs a certain type of accommodation or

			2.	found premises and the

				2.1	sale has not been completed or

				2.2	seller later decides not to sell.

In Mr. Sabey’s submission, the effect of this guidance is that the disregard could extend to the purchase of a property where there are particular difficulties in finding a suitable property if the claimant particularly if a family member is disabled.  Alternatively it might apply if the legal formalities for the purchase of the property in question are on the verge of completion at the expiry of the 26 week period, or there has been a withdrawal from a proposed purchase of a property intended for the claimant's home, and that withdrawal is not the claimant’s fault.   These are not common situations. 

23.	A claimant for SPC has a further advantage in that under paragraph 19 of Part V of the Regulations the amounts deposited are not limited to proceeds of sale.  Overall, the conditions for disregard of capital linked to the purchase of premises involving income support and jobseekers allowance are more stringent despite the finite period of the disregard.

24.	I accept that the tribunal erred by no making further enquiry into the precise date in March 2008 when the proceeds were received, and that as submitted by the Secretary of State it was just possible that the full one year disregard had not expired at the date the claimant became entitled on 28 March 2008.  In the event, in response to my Direction, the claimant has been able to confirm that the funds were received into her husband’s Spanish bank account on 8 March 2008. 

25.	Whilst sympathising with the situation in which the claimant unfortunately finds herself, in my judgment the words in paragraph 19 of Schedule V to the Regulations can only be taken as referring the actual receipt of those proceeds of sale.  That must be the natural meaning of paragraph 17(b) of Schedule V to the Regulations.  I can see no justification for proceeding on any other basis other than the actual date of receipt.  The claimant’s husband received those funds on 8 March 2008 and they allocated them towards the purchase of a property.  Thus she is excluded from the benefit of the disregard.  The fact that she was not in the United Kingdom at that date cannot affect this finding.  The Regulations themselves are not drafted to distinguish betweens claimants returning to United Kingdom and those who have remained here throughout, as they could have been had this been intended.  If the claimant were to be given the benefit of a longer period whilst she and her husband actually held the funds, that in itself might possibly discriminate against those who had remained in United Kingdom throughout the period.  Mr Sabey’s submission that whilst the Act itself can only apply within the jurisdiction, the underlying facts cannot be ignored is correct.

26.	With regard to Mr Young’s submission that the claimant has been subject to discrimination compared with claimants for income support or jobseeker’s allowance, I accept Mr Sabey’s submission that a claimant for SPC is not treated less favourably than claimant s for these two benefits, for the reasons he gives.  In some respects it is plain a claimant for SPC is treated more favourably.

27.	Neither the claimant nor the Secretary of State took any point on the tribunal having revised the Secretary of State’s decision so that the claimant is to be treated as being habitually resident from 19 March 2008.  The tribunal made diligent and detailed enquiries into the situation in the hearing, and I agree that, in the light of the Nessa decision, as affecting parties returning to take up habitual residence, that was entirely the right decision to be made.

28.	In his written submission, the Secretary of State supported the claimant’s grounds of appeal on the basis of irregular procedural irregularities by the tribunal.  As I said in the hearing, had that been the only ground of appeal, I should not have granted permission to appeal.  The website information, of which a copy is at page 132 to 163, makes it quite plain that when hearing evidence, the tribunal itself will take the lead in asking questions (pages 156 and 157).  As I noted when giving permission to appeal the final comment on the record of proceedings was “- nothing else to say – except not clear if 52 weeks correct”.  The Secretary of State assumed that this had been a comment made by the tribunal chairman.  Because it is prefaced by a dash, in the same way as every other part of the evidence, I had assumed that the remark was made by the claimant in response to questioning.  Mr Young has taken the trouble to write since the hearing to explain that the claimant has confirmed that these were not her words, and that she gave no indication that she had nothing else to add; they were the words of the tribunal judge who then asked the claimant to leave the room.  I accept that may reflect what happened, but it cannot affect the outcome. 

29.	I appreciate that it was confusing and frustrating for the claimant to be asked to wait and that she would be asked to return, and then to be told that she was not needed.  It may be that the tribunal judge had been able to resolve the point(s) on which he had initially wished to make further enquiries.  If so, it would have been helpful for the claimant to have been advised so that she was not left unsure of the position, but of itself, this is not enough to justify the setting aside of the decision, given the inevitable outcome, and overall I agree with what is said by the Tribunal Judge who refused permission at first instance as recorded in paragraph 11 above.  Because of the legislation the tribunal made the only decision it could properly make in the circumstances, subject to clarification of the exact date when the sale proceeds were received by the claimant, which has now been done.  That clarification confirms the correct outcome of the appeal.  Nothing else she might have wished to add could have resulted in a decision favourable to the claimant.

30.	It is very unfortunate that the wording in the Child Poverty Action Group Handbook is not clear.  As I raised in the oral hearing, I take it to mean only that where there is already a claim in being, the disregard period will be extended to the end of an assessed income period which falls outside the one year period; this is borne out by the wording of paragraph 17(a) of the Regulations.  It may be that this point could be clarified in future editions of the Handbook, to which many look for guidance and help, as it has of course given rise to an unfounded hope for this claimant.

31.	Disappointing as this must be for her, in the circumstances, for the reasons given, the claimant's appeal cannot succeed.

(Signed on the original)						  E A Jupp

							Judge of the Upper Tribunal		

(dated)					       21 June 2010