Case No: A1/2002/2476
Neutral Citation Number: [2003] EWCA Civ  964
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE SOCIAL SECURITY COMMISSION
(MR COMMISSIONER  JACOBS)
Royal Courts of Justice
Strand, 
London, WC2A 2LL

Thursday 10 July 2003
Before :

LORD JUSTICE SCHIEMANN
LORD JUSTICE BUXTON
and 
LORD JUSTICE DYSON
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Between :

	VERNA JONES	Appellant	
	- and -		
	THE SECRETARY OF STATE FOR WORK AND PENSIONS	Respondent	

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(Transcript of the Handed Down Judgment of
Smith Bernal Wordwave Limited, 190 Fleet Street
London EC4A 2AG
Tel No: 020 7421 4040,  Fax No:  020 7831 8838
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Donald Broatch (instructed by Lamberts) for the Appellant
Jeremy Johnson (instructed by Department for Work and Pensions) for the Respondent

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Judgment
As Approved by the Court

Crown Copyright ©

Lord Justice Schiemann : 
1.	Mrs Verna Jones claimed income support. Her claim was refused as from 9 October 1999. She appealed to an appeal tribunal (“the Tribunal”) who, so far as presently relevant, dismissed her appeal on 26 June 2001. She appealed to a Social Security Commissioner, Mr Commissioner Jacobs, who then dismissed her appeal by decision dated 17 July 2002. She now, by leave of this court, appeals from that decision. 
2.	The chief presently relevant issue which those various decision makers had to decide was whether Mrs Jones had on 1 December 1999 artificially reduced her capital by £13,250 so as to make herself eligible for income support. On that date £12,250 was paid by her to purchase a motor car (“the car”).
3.	 Mrs Jones, who is disabled, has been represented in this matter hitherto by her husband Mr Alan Jones who has had a general Power of Attorney for her since 1994. He appeared on her behalf before the Tribunal. It was agreed on all sides that the two could for all present purposes be treated as one.
Background
4.	The facts are not really in dispute. Mrs Jones had been in receipt of income support since 1994. The present dispute relates to her entitlement to that benefit for the period from 13 October 1999 onwards.
5.	She had sold off a parcel of land from her garden. This disposal caused her on 13 October 1999 to receive £57,000 (“the Sum Realised”) which is in excess of the limit of £8000 which is prescribed as the maximum permissible for the purposes of a claim for income support. 
6.	Although the Jones family now had the Sum Realised, they were heavily indebted. Their debts included mortgage arrears which had been demanded of £65,000 and debts to assorted friends. Eventually, the mortgagees agreed that they would only insist on receiving £33,000 forthwith and assented to the Jones using the remainder of the Sum Realised to pay off some of their other debts. Before the Tribunal was a letter to her dated 1 May 2001 from the mortgagees. It was clearly written for the purpose of being produced to the Tribunal but no one suggests that it was misleading in any way.  
“I have been asked to supply further information relating to the payment of arrears in October 1999 and the requirements surrounding repayment, with regard to the above mortgage account.
On or around 1st September 1999 Alan Jones had discussions with Mrs Mehmood from our Collections Department. The discussions were relating to the proceeding sale of part of your garden and the requirement of £65,836.51 from the proceeds. Mr Jones explained that they had considerable debts to friends and were under pressure for repayment and to credit card companies that they could not continue to fund. He asked us if they [sc.we] would consider just clearing the arrears of some £33,000 and to allow the surplus to be used to clear the debts to friends and credit cards. [We] agreed to vary the condition and informed the solicitors handling the sale … 
“This agreement was only reached on the understanding that the monies allowed would be put to the repayment of the debts to [Mrs Jones’] friends and to clear credit card debts. It was understood that we would not have agreed to a reduction if the monies were to be used for any other purpose. 
I hope that this information is useful.”
7.	It is now accepted on behalf of the Secretary of State that, in so far as the creditors were pressing for immediate payment, these debt repayments were effective in properly reducing her capital for the purposes of assessing her continuing entitlement to income support. It follows that had the Jones used all of the Sum Realised to pay the mortgagees that would also have been effective in properly reducing her capital and the present problem would never have arisen. However they did not do that. Instead, with the permission of the mortgagees, they used the excess over the £33,000 which they paid to the mortgagees to deal with their other creditors.
8.	It is common ground that the Jones used most of the Sum Realised to repay part of the mortgage debt, and all of their credit card debts and many of their debts to their friends. It is now accepted that all of these debt repayments were made in circumstances where the creditors were pressing for repayment and were effective in properly reducing her capital for the purposes of assessing her entitlement to income support. 
9.	Only one problem remains and it is this which has given rise to the present appeal. The Jones family used £13,500 to purchase the car. The car was purchased with some of the Sum Realised in the following circumstances.
10.	The Jones had in the past borrowed the sum of £17,000 from a friend of theirs, a Mr Mike Smith, and were indebted to him in this sum at all material times.

11.	The Jones received the following letter from Mr Smith prior to their sale of the land:-
					16th June 1999
Dear Alan,
I trust that you and Verna are doing well especially with everything that has been going on; we will have to get together for a drink some time soon. 
The main reason for me writing however is I feel that I need to safeguard the monies that you owe me in case you end up in a position that you would be unable to repay me.
Is there any chance that you are going to be able to repay me the loan sometime in the near future?
Alternatively are you able at this time to offer any security for it?
I really do dislike having to ask you this but I feel that I need to protect my interests.
Either call me or drop me a line and let me know what you propose.
All the best
Yours sincerely
Mike
12.	The Jones thereupon discussed matters with Mr Smith. In due course, after they had received the Sum Realised, they received this letter from Mr Smith:-
					24th November 1999
Dear Alan
It was good to hear from you again and that you and Verna are bearing up under the strain.
Regarding your proposal to repay me the bulk of the monies owing to me.
I am willing to accept your proposal to purchase the vehicle that we discussed.
I would appreciate you registering the vehicle in your name as you will obviously be liable for all and any costs concerning the upkeep and maintenance of the vehicle i.e. Tax; Insurance; Road Fund Licence and day-to-day costs.
You would hold the vehicle for me in good condition until I require it back from you or alternatively until you repay me the monies owed.
I believe that this arrangement will benefit both of us. If you find this acceptable please sign the attached form of agreement and return it to me as soon as the car has been purchased.
All the best.
Yours sincerely
Mike
13.	Attached to this letter was a draft agreement in the following terms which was eventually signed on 1 December 1999:-                      
Agreement
This agreement is made today 1-12-99 between yourself Alan Jones of …. and me Mike Smith of ….
You are to purchase:
Vehicle Make 		BMW
Model			850i
…
This vehicle will be held as security for £17,000 of monies owed to me by you.
You will keep this vehicle in good condition and you will be liable for any costs associated with it. I can ask for the vehicle’s return by giving you 1 months notice at any given time.
Alternatively you can repay this debt at any time.
14.	On 1 December 1999 the price of the car was paid by Mrs Jones.
15.	Also before the Tribunal was a letter written after the event by Mr Smith. It read as follows:-					
	23rd March 2001
Dear Alan
I refer to your recent telephone call regarding the DSS Appeal Tribunal.
You have asked me to confirm, in greater detail, the Agreement relating to the BMW…
I can confirm that the car is my property. You purchased it for me as repayment of monies I had loaned to you and Verna over the last several years.
Our Agreement, dated 1st December 1999, is that you can have full use of it on the condition that you are liable for all and any costs associated with it.
I can take the car back on giving you one month’s notice                       
…
The Agreement has distinct advantages for both of us.
I hope the above is sufficient for your purpose.
All the best.
Mike
Relevant legislation
16.	Section 134(1) of the Social Security Contributions and Benefits Act 1992 (“the 1992 Act”) states:
“No person shall be entitled to an income-related benefit if his capital or a prescribed part of it exceeds the prescribed amount.”
17.	Regulation 45(a) of the Income Support (General) Regulations 1987 (“the Regulations”) provides that the prescribed amount is £8,000.
18.	Regulation 49(a)(ii) of the Regulations states:
“Capital which a claimant possesses in the United Kingdom shall be calculated-
(a) …at its current market or surrender value, less- 
…
(ii) the amount of any incumbrance secured on it;
…”
19.	Section 136(6)(a) of the 1992 Act states:
“Circumstances may be prescribed in which-
(a) a person is treated as possessing capital or income which he does not possess…”
20.	Regulation 46 of the Regulations states:
“(1) …the capital of a claimant to be taken into account shall, subject to paragraph (2), be the whole of his capital calculated in accordance with this Part …
(2) There shall be disregarded from the calculation of a claimant’s capital under paragraph (1) any capital, where applicable, specified in Schedule 10.”
21.	Paragraph 10 of Schedule 10 of the Regulations states:
“Capital to be disregarded
…
10. Any personal possessions except those which had or have been acquired by the claimant with the intention of reducing his capital in order to secure entitlement to supplementary benefit or to increase the amount of that benefit.”
22.	Regulation 51 of the Regulations states:
“(1) A claimant shall be treated as possessing capital of which he has deprived himself for the purpose of securing entitlement to income support or increasing the amount of that benefit…”
23.	I shall hereafter refer to the purpose referred to in Regulation 51(1) as “the Prohibited Purpose”.
The Tribunal Proceedings
24.	The Tribunal took evidence from Mr Jones who stated that the car belonged to Mr Smith. The Tribunal’s decision letter contains the following.
6. The Tribunal accepted that there was another loan owed to Mr Mike Smith. … of some £17,000. He also learnt of the sale of the plot of land and asked if the Appellant was able to repay his loan or provide some sort of security for it. Mr Jones … agreed with Mr Smith on 1 December 1999 that the car belonged to him but Mr and Mrs Jones would have “full use of it on the condition that you are liable for all any [sic] costs associated with it.” Mr Smith also said that he considered he could take the car back on giving one month’s notice or alternatively Mr and Mrs Jones could keep it on repayment of the debt.
11. The decision maker … states … “paying off” the required amount to Mortgage Express has been accepted as reasonable expenditure because there is sufficient evidence to show that the mortgage company were pressing Mrs Jones for payment against the accumulating arrears”. This also occurred as far as the £320,000 to Mr and Mrs Carrington repayment of loan was concerned, and furthermore also the £21,240 paid to credit card companies because of the arrangements with the mortgagees.
12. The position is not the same as far as the loan to Mike Smith is concerned. He agreed that a car could be purchased for the use of Mr Jones. There is no doubt that this was some form of security. The Tribunal did not enquire whether the car registration document was in the name of Mr Smith but that is immaterial. The Tribunal accepted that Mr Smith was entitled to the car but he was not pressing for repayment of his loan because it was transferred into the motor car. He was not in the same category as Mr and Mrs Carrington. Therefore the acquisition of the motor car was not reasonable expenditure.
13. Therefore, the claimant did deprive herself of capital. She should have known the capital limits and the Tribunal agrees with the decision maker that when on 1 December 1999, £13,520.0 was withdrawn from Mrs Jones’ account resulting in [the] capital amount held falling below the £3,000 limit, the intention to remain on income support was, if not the whole purpose, a significant operative purpose of the disposal of the capital for the purchase of a motor car. Mr and Mrs Jones may consider a motor car is important to their way of life. However, they could exist, as many people do, who are on income support without the use of a motor car. As far as they are concerned it was a luxury item that they could ill afford. It has not been shown to the satisfaction of the Tribunal on the balance of probabilities that Mr Smith would have required the immediate return of the capital if he had not had his motor car.”
25.	Because there was subsequently a question as to why Mr Smith had not given evidence the Chairman of the Tribunal wrote to the Commissioner in these terms which the Commissioner accepted were an accurate account. It does not differ significantly from the account given by Mr Jones.
Mr Jones did say that Mr Smith was available in the waiting room to give evidence if I so required. I enquired whether he would be saying anything different to what was in his letter. He indicated that he could not have anything further to add. I remember saying, “well, you can call him if you want, I do not see any point if he is not going to say anything further”.
26.	The reasoning of the decision maker referred to in the Tribunal’s decision was as follows:-
“The Claimant and her partner already have 2 cars. They do not require another car i.e. you can only drive one car at a time! If Mr Smith really required security for the monies he had lent, why did Mr and Mrs Jones not repay him. In fact the claimant and her partner still owe Mr Smith £17,500. There appears no legitimate reason why the car was purchased.”
27.	The decision of the Tribunal was as follows:-
The claimant is not entitled to Income Support from 13 October 1999 to 30 November 1999 because she has (sic) actual capital in excess of the prescribed amount of £8,000. The claimant is not entitled to Income Support from 1 December 1999 because she is treated as possessing capital of £14,649.44 which exceeds the prescribed amount of £8,000.
	The precise arithmetic which led to £14,649.44 is of no significance.
Commissioner’s Decision
28.	The Commissioner’s approach to the substantive issue between the parties was as follows:-
8 The issue for the Tribunal was: did the claimant have as a significant operative purpose of this arrangement the retention of entitlement to income support? The Tribunal decided that she did. As so often, this issue became linked with the different, but potentially related issue: was the debt due for repayment? On this the Tribunal found that the friend was not requiring the immediate return of his capital. That finding is certainly supported by the letter I have quoted (that quoted in paragraph 11 of this judgment). Allowance has to be made for the relationship between the parties. The formal use of the language of immediate repayment, default and so on would not have been appropriate. It is, no doubt, appropriate to read between its lines. However, even taking that approach, the Tribunal was entitled to find that the friend was not, on the basis of that letter, pressing for security or immediate repayment. The claimant’s husband argues that the friend was present at the venue of the hearing and, if allowed to give evidence, could have made clear that he really did want immediate repayment or security.
29.	In paragraph 13 of his decision the Commissioner sets out his reasoning:
“… The car is a personal possession and, therefore covered by paragraph 10 of Schedule 10 of the …regulations. However, it is not disregarded because of the claimant’s intention in relation to her benefit entitlement. That leaves the valuation of the asset. … It would not be appropriate to take account of the incumbrance in valuing the car, because the incumbrance as much as the purchase of the car was the deprivation which supports the notional capital calculation. Any loss in value as a result of the incumbrance forms part of the notional capital.”
30.	He dismissed the appeal. It is noticeable that the Commissioner makes no reference to the later letters which might be regarded as germane to the question which he had to decide. Nor does he refer to the letter from the mortgagees referred to in paragraph 6.
Discussion
31.	Mrs Jones has been denied income support as from 13 October 1999. At that stage, while she did have the Sum Realised, the car had not in fact been bought. The money was part of monies to which in principle the mortgagees had been entitled. They had admittedly agreed to its use for the purpose of clearing debts including the debt to Mr Smith. However, it had not yet been used for that purpose. It therefore, as it seems to me, is at least arguable that at that point it remained incumbered for the purposes of Regulation 49(a)(ii). However that position only appertained for a few weeks and we have not heard argument upon it. It seems proportionate and sensible to look at the situation as from 1 December 1999 and to let the decision about the preceding 5 weeks stand or fall with the remainder of the period.
32.	It is common ground that on 1 December 1999 £13,250 was taken from Mrs Jones’ account and the car was purchased with that money. 
33.	From paragraph 6 of its decision it appears that the Tribunal accepted that there had been a genuine loan to Mr Smith, that this was repayable on demand, that Mr Smith wished it to be repaid or alternatively for him to be given some sort of security, that an agreement was reached whereby a car would be purchased out of the Sum Realised, that the car would belong to Mr Smith but that Mr Jones could have the use of it on certain conditions. This was precisely Mr Jones’ case and accorded with what Mr Smith in the letter quoted at paragraph 15 above had indicated was his understanding of the position. If that is the proper analysis of the position and the Tribunal accepted that the parties were telling the truth then the attitude adopted by the Tribunal towards the desirability of calling Mr Smith seems understandable.
34.	Paragraph 12 indicates that it was because [the loan] had been “transferred into the motor car” that Mr Smith was not pressing for repayment of the loan. That implies that he was pressing for repayment until that “transfer” had taken place. That also indicates that the Tribunal was accepting the parties as truthful and is in accord with the analysis referred to in the preceding paragraph of this judgment.
35.	In my judgment the analysis of the transaction adopted by the Tribunal was one which was open to it. There is much to be said for this analysis. It accords with what the mortgagees had authorised could be done with the money. But if that analysis be right then no separate question arises in relation to the disposal of that capital – it would be Mr Smith’s capital. It follows that, once it had adopted that analysis and decided that the car belonged to Mr Smith the conclusion then adopted by the Tribunal was not open to it.
36.	It has been common ground before us and was before the Tribunal that where a creditor is pressing for repayment of a sum repayable on demand and the debtor repays that debt then this repayment cannot be regarded as the debtor depriving himself of capital for the purpose of securing entitlement to income support. The debtor has no choice about repayment of the debt. It is because of this that it has been decided that the repayment of the debt to other creditors such as the credit card companies and the Carringtons has no impact on the income support position. 
37.	For my part I am afraid I do not understand the remainder of the reasoning of the Tribunal. It was common ground that once the loan had been “transferred into the motor car” Mr Smith was not pressing for the repayment of the loan. However, on the basis of the analysis adopted by the Tribunal, namely that it was Mr Smith’s car, it is clear that the loan had been repaid and so it would not be appropriate for Mr Smith to press for its repayment. The question which the Tribunal had to address was whether Mrs Jones at the time of the purchase of the car had deprived herself of the price of the car for the Forbidden Purpose. Whether or not Mr Smith was pressing for payment after the purchase of the car does not bear on the crucial question. 
38.	Further, given that the car belonged to Mr Smith, whether or not the car was a luxury item in the Jones household was irrelevant. As for the finding that they could ill afford it that is accurate but irrelevant if it was Mr Smith who is to be taken as having purchased the car with money which had been repaid to him by the Jones. 
39.	As it seems to me, once one accepts that what happened on the 1 December 1999 was that the debt which the Jones owed to Mr Smith was repaid, the fact that Mr Smith was content that the monies should be used to buy him a motor car is irrelevant. So is the fact that Mr Smith was content for Mr Jones to use Mr Smith’s car. 
40.	In my judgment the Commissioner fell into error when he stated that “the Tribunal was entitled to find that the friend was not … pressing for security or immediate repayment”. It is not clear whether the Tribunal made any such finding – see paragraph 34 above. Had it made such a finding – which arguably it did in the last sentence of paragraph 13 of its decision and then proceeded to base its decision upon that finding then I consider that Mrs Jones would have at any event a strongly arguable case that the Tribunal should have indicated that it was not minded, in the absence of further evidence, to take the letters from Mr Smith and Mr Jones’ evidence as indicating that Mr Smith was pressing for payment. Mr Smith would then no doubt have been called.
41.	I record that I am not presently persuaded that a debtor who repays a debt repayable on demand but which has not in fact been demanded, e.g. a bank overdraft, must by virtue of Regulation 51 necessarily be treated as possessing that sum as capital.  
42.	I recognise that some of the wording in the letters and the agreement points to a different analysis of the car transaction from that apparently adopted by the Tribunal. The alternative analysis is that Mr Smith has never been repaid. On that basis, when the money was handed over to the seller the Jones were indeed parting with capital, albeit in breach of their obligations to the mortgagees. 
43.	Treating the Jones as the present owners of the car and the value of the car as capital is, however, of no assistance to the respondent. Subject to what I say in the following paragraphs, given that the car was expressly made subject to a charge by way of security in favour of Mr Smith for £17,000 the effect of regulation 49(a)(ii) is to cause this sum to be subtracted from the value of the car. No one has suggested that this exceeds £17,000. 
44.	The Commissioner sought to meet this point in the rather compressed reasoning in paragraph 13 of his decision which I have quoted in paragraph 29 above.  If one tries to fit that reasoning into the wording of the Regulations I believe one arrives at the following:- 
i)	The claimant owns the car;
ii)	This is part of her capital and is thus, on the face of it, to be taken into account pursuant to regulation 46(1);
iii)	Regulation 46(2) has no relevance since the car was acquired by Mrs Jones with the intention of reducing her capital in order to secure entitlement to income support or to increase the amount of that benefit and that transaction falls foul of the concluding words of paragraph 10 of Schedule 10 to the Regulations;
iv)	When one comes, pursuant to Regulation 49(a), to calculating the value of this element of her capital one takes its current market or surrender value and this is in excess of £8000;
v)	Regulation 51 makes it impermissible to deduct the amount of any incumbrance secured on the car because
a)	The car can be regarded as part of Mrs Jones’ capital,
b)	In creating the charge on the car, Mrs Jones deprived herself of this part of her capital,
c)	She has done so for the purpose of securing entitlement to income support or increasing the amount of that benefit,
d)	Therefore she is to be treated as still possessing it.
45.	Even if one accepts this reasoning in principle, as to which I express no view, it seems to me that on the facts of this case it would be perverse to find that the charge was created for the purpose of securing entitlement to income support. It seems manifest that the charge was created because it was the only way in which Mr Jones could secure use of the car. Without it, the deal would simply not have gone through and Mr Smith would have asked for his repayment.
Conclusion
46.	I am conscious that this is a field where the Tribunal has a lot of experience, must have seen a lot of claimants engaged in a lot of artificial schemes devised for the Forbidden Purpose and may have a more sensitive nose for this sort of thing than members of this court. However, in the present case the reasoning of the Tribunal is defective for the reasons which I have endeavoured to explain. The Commissioner has proceeded on the basis that the Tribunal was entitled to make a finding of fact which it neither made nor was entitled to make.
47.	In those circumstances I would allow the appeal. As for the precise form of order if the parties cannot agree then I would ask them to send their submissions to us in order that we may decide whether or not it is necessary to have oral submissions.

Lord Justice Dyson :

48.	I agree that this appeal should be allowed. The Tribunal did not make a clear finding as to the nature of the car transaction. There were two obvious candidates: (a) Mr Jones purchased the car for Mr Smith on the footing that it was to be owned by Mr Smith; and (b) Mr Jones bought the car and became its legal owner, but subject to Mr Smith’s right to call for ownership to be transferred to him on one month’s notice, unless the debt of £17,000 was paid in the meantime.  On balance, I think that (b) more accurately reflects the true position in the light of the terms of the letter of 24 November 1999 and the attached draft agreement. But in my judgment, the outcome of this appeal does not depend on a determination of the true nature of the transaction. The critical question is whether the transaction, however it is analysed, was made for the purpose of securing an entitlement to income support. If the car was properly to be regarded as Mr Jones’ personal possession, the question is whether the acquisition of it was “with the intention of reducing his capital in order to secure entitlement” (para 10 of Schedule 10 of the Regulations). If the car was Mr Smith’s property, then the question is whether Mr Jones deprived himself of the purchase price of the car “for the purpose of securing entitlement” (Regulation 51(1) of the Regulations).

49.	It seems to me that it is obvious on the facts of this case that the reason for the car transaction was that Mr Smith was pressing for his money. That is clear from the letters dated 16 June and 24 November 1999. It is true that the tribunal does not explicitly state this at paragraph 12 of their decision. But, as Schiemann LJ points out at para 34 of his judgment, the Tribunal impliedly found at paragraph 12 of their decision that Mr Smith was pressing for repayment of his loan until “it was transferred into the motor car”. There was a clear and direct link between the transaction and long-outstanding debt of £17,000.
50.	The reason why the Tribunal found that the transaction was for the forbidden purpose is given in the last sentence of paragraph 13 of their decision, which was in these terms:

“It has not been shown to the satisfaction of the Tribunal on the balance of probabilities that Mr Smith would have required the immediate return of the capital if he had not had his motor car”.
51.	It is this finding that the Commissioner held (at para 8) that the Tribunal was entitled to make. Para 13 of the Tribunal’s decision suggests that they regarded the decisive question as being whether the purchase of the car was made under the shadow of a demand for immediate repayment of the debt: if it was, then the purchase was not made for the Forbidden Purpose; but otherwise it was. 
52.	In my judgment, it is a question of fact whether a person acquiring a personal possession (para 10 of Schedule 10) or depriving himself of capital (Regulation 51(1)) does so for the Forbidden Purpose. If the payment is made in satisfaction of a debt, the fact-finder will not usually conclude that, in making the payment, the debtor’s purpose was to secure an entitlement to income support, rather than simply to repay the debt. 
53.	The phrase “an immediately repayable debt” has assumed some significance in the jurisprudence in this area. In R(SB) 12/91, Mr Commissioner Rice sought to give some guidance. He said:

“13. … A person has to pay his debts. He has no choice in the matter and if he has no choice, then any divesting of capital resources in pursuance of the reduction or discharge of his indebtedness cannot be for the purpose of securing supplementary benefit or any increase thereof. Such a motive cannot direct or influence his course of action. There can only be one purpose governing his conduct, namely the need to meet his indebtedness.
14. Of course, the above principle only applies where the relevant debt is immediately payable. If the obligation to repay does not mature for several years, or, as in the case of the usual mortgage of house property, there is no need to repay the sum borrowed, provided the agreed interest and capital repayments are kept up, then any premature repayment of indebtedness will be voluntary act constituting a deliberate choice. And if there is a choice then the question will arise as to whether a significant operative purpose albeit not necessarily the predominant purpose, was to secure supplementary benefit or any increase thereof (R(SB) 38/85; R (SB) 40/85).
15. In the present case, if the Tribunal find as a fact that the claimant was genuinely indebted to his daughters, and they must be satisfied that there was a legal debt capable of enforcement in the courts, and if they are satisfied that such debt was immediately repayable, then as regards any sum employed in reduction or discharge of that indebtedness, regulation 4(1) will have no application. But if the new Tribunal are not so satisfied, and consider that there was no such indebtedness enforceable at law, or, if there was, that it was not immediately repayable, they must then go on to consider whether a substantive reason for the payment to the daughters was to secure supplementary benefit.”
54.	As Mr Broatch points out, this passage addresses the legal nature of the debt, rather than the particular creditor’s subjective intention in relation to its enforcement. If an immediately repayable debt is repaid, the fact-finder will almost always conclude that the payment was not made for the Forbidden Purpose. But I cannot agree with Mr Commissioner Rice that, even in such a case, the payment “cannot be for the purpose of securing supplementary benefit or any increase thereof”. It will be a question of fact in every case. Thus, for example, there might be evidence that the debtor thought that the creditor would not call in an immediately repayable debt for some time, and that he repaid the loan when he did for the purpose of becoming entitled to income support. Conversely, and perhaps more realistically, even if the debt is not immediately repayable, the repayment of it by a debtor will not necessarily have been made for the forbidden purpose. This is the point made by Mr Commissioner Rice at paragraphs 14 and 15, and I agree with him.  As I say, it is a question of fact in every case.
55.	In the present case, the loan was immediately repayable.  Mr Smith could have issued proceedings for the £17,000 at any time. In my judgment, there was no evidence which could reasonably justify the finding that the car transaction (however it is characterised) was made for the Forbidden Purpose. Although the fact that the loan was immediately repayable was not, as a matter of law, conclusive, it was very cogent evidence that the transaction was not made for that purpose. There was no evidence going the other way. The only point relied on by the Commissioner is that the Tribunal was entitled to find that it was not satisfied that Mr Smith would have required immediate return of the debt but for the transaction. But it seems to me that, in the light of the correspondence, it is clear that Mr Smith was requiring immediate, or at least early, repayment of the debt. In reaching the opposite conclusion, the Tribunal became distracted by the unusual nature of the transaction and, in particular, the fact that Mr Jones was permitted by Mr Smith to use an expensive car, a luxury item which Mr Jones could not afford. But Mr Jones did not acquire the car for his own use. He acquired it for Mr Smith, who permitted him to use it. In my judgment, in the unusual circumstances of this case, the fact that Mr Jones was permitted by Mr Smith to use the car could not reasonably be regarded as relevant to the question of whether the transaction was entered into for the Forbidden Purpose.
56.	For these reasons, as well as those given by Schiemann LJ, I would allow this appeal.
Lord Justice Buxton:
57.	I agree with both judgments.
Order: Application for permission to appeal allowed; appeal allowed; the appellant is entitled to benefit for the periods 13 October 1999 to 30 November 1999 and 1 December 1999 onwards; the respondent do pay the appellant’s costs of the appeal and of the application for permission to appeal, such costs to be subject of detailed assessment in default of payment, community funding assessment of appellant’s costs in accordance with the appropriate regulations.
(Order does not form part of the approved judgment)