REF/2004/0547

ADJUDICATOR TO HER MAJESTY’S LAND REGISTRY
LAND REGISTRATION ACT 2002

IN THE MATTER OF A REFERENCE FROM HM LAND REGISTRY

BETWEEN
(1) HERTFORDSHIRE COUNTY COUNCIL

APPLICANT 

and

(1) STELLA WILSON
and
(2) ELAINE SOLOMON
and
(3) ABBEY NATIONAL PLC

RESPONDENTS

Property Address:  65 Heysham Drive, South Oxhey, Watford, Herts

Title Number: HD318211

Before: Mr. Michael Mark sitting as (Deputy) Adjudicator to HM Land Registry

Sitting at: Procession House, 110 New Bridge Street, London EC4V 6JL

Applicant Representation: Counsel
Respondent Representation: Counsel

DECISION
___________________________________________________________________________

Conditions for the exercise by a local authority of its power under section 22(7) of the Health and Social Services and Social Security Adjudications Act 1983 to create a charge over the property of a person for whom it provides accommodation under Part III of the National Assistance Act 1948 not satisfied.  Chief Land Registrar directed to cancel application by the local authority to register unauthorised charge.

1.	For the reasons given below, I find that the Declaration of Charge dated 12 December 2003 purportedly made by the Applicant (“the Council”) over 65 Heysham Drive, South Oxhey, Hertfordshire (“the property”) pursuant to section 22(7) of the Health and Social Services and Social Security Adjudications Act 1983 (“the 1983 Act”) was not authorised by that section and is of no effect.  Accordingly I shall direct the Chief Land Registrar to cancel the Applicant’s application dated 22 December 2003 to register that charge.  My decision as to costs and consequential directions are at paragraphs 29-30 below

2.	As this decision is given in respect of a preliminary issue, I assume certain facts asserted by the Council to be true for the purpose of this decision, and the following history is set out on that basis.

3.	  The registered proprietor of the property is Donald Ambrose Frederick Wilson (“Mr. Wilson”).  It would appear that in 2003 he was about 89 years old.  He had few, if any assets apart from the property.  His mental capacity and his ability to look after himself was, at the least, in doubt.  His daughter, the First Respondent (“Stella”), acted for him, apparently pursuant to an enduring power of attorney, and claimed to be beneficially entitled to the property on the ground that she had paid the mortgage instalments and for home improvements.

4.	On 12 August 2003, Mr. Wilson had been admitted to a nursing home.  The fees were met by the Council, but there was a statutory right of recourse to Mr. Wilson, to which I shall return, to obtain at least partial re-imbursement of the cost.  From time to time notifications of assessment were sent to Mr. Wilson care of Stella, who had made all contributions requested of her or her father at least up to and including December 2003.  

5.	After Mr. Wilson was admitted to the nursing home, there was a 12 week period during which his ownership of the property would be disregarded in assessing his liability to contribute to the cost of his upkeep.  The property was a former Council property which had been purchased by Mr. Wilson for £20,500 in 1994, a price which represented a 41% discount on its then estimated open market value.  This indicated to the Council that, with property inflation, Mr. Wilson had sufficient capital, and that there was no need to make a wider assessment of Mr. Wilson’s ability to pay for his residential care once the property disregard ended.

6.	The property had been placed on the market, presumably by Stella, and it was purchased in December 2003 by the Second Respondent (“Ms Solomon”) with the help of an advance by Abbey National plc (“Abbey”) secured on the property.  The purchase was an arm’s length purchase and was completed on 19 December 2003.  The same solicitors acted for both Ms Solomon and Abbey.  Mr. Wilson did not have solicitors acting for him.  The price was paid and the solicitors acting for Ms Solomon and Abbey applied to register the transfer.

7.	Meanwhile, however, the Council had become concerned to secure its entitlement to reimbursement and made the Declaration of Charge over the property on 12 December 2003, which it sought to register by an application to the Land Registry made on 22 December 2003.  The application was notified to Stella, who objected initially on the basis that she was beneficial owner of the property.  That issue was not resolved by the Land Registry which referred the matter to the Adjudicator on 16 July 2004.

8.	Statements of Case were initially exchanged between the Council and Stella.  In October 2004 a direction was made by the Adjudicator adding Ms Solomon as Second Respondent.  In April 2005, Mr. Wilson died, and soon afterwards Stella also died.  It appears that no representation was taken, or is likely to be taken in the near future, to Stella’s estate, and it is unclear what became of the proceeds of sale of the property.

The law
9.	Section 22(1) of the 1983 Act provides that

“Subject to subsection (2) below, where a person who avails himself of Part III accommodation provided by a local authority in England, Wales or Scotland-

(a)	fails to pay any sum assessed as due to be paid by him for the accommodation; and
(b)	has a beneficial interest in land in England and Wales,

the local authority may create a charge in their favour on his interest in the land.

10.	“Part III accommodation” is defined by section 21(8) of the 1983 Act in relation to England and Wales as accommodation provided under sections 21 to 26 of the National Assistance Act 1948 (“the 1948 Act”).  

11.	Subsection (2) of section 22 of the 1983 Act relates to where the person availing himself of the Part III accommodation has interests in more than one parcel of land.  Subsection (2A) provides that in determining whether to exercise the power under subsection (1) the local authority shall comply with any directions given to them by the Secretary of State as to the exercise of those functions.  Subsection (4) provides that subject to subsection (5), which limits the effect of the charge when it is over the interest of an equitable joint tenant in land, the charge should be in respect of any amount assessed as being due to be paid which is outstanding from time to time.  By subsection (8), in the case of registered land, except where the charge was on the interest of an equitable joint tenant, the charge was to be a registrable charge taking effect as a charge by way of legal mortgage.

12.	Mr. Wilson was provided with accommodation in the residential or nursing home under section 21 of the 1948 Act.  Under section 22(1) of that Act, subject to section 26 of that Act, the Council was to recover from Mr. Wilson “the amount of the payment which he is liable to make in accordance with the following provisions of this section.”  Section 22 continues:

“(2) Subject to the following provisions of this section, the payment which a person is liable to make for any such accommodation shall be in accordance with a standard rate fixed for that accommodation by the authority managing the premises in which it is provided and that standard rate shall represent the full cost to the authority of providing that accommodation.
  (3) Where a person for whom accommodation in premises managed by any local authority is provided… under this Part of this Act satisfies the local authority that he is unable to pay therefor at the standard rate, the authority shall assess his ability to pay… and accordingly determine at what lower rate he shall be liable to pay for the accommodation”.
 
13.	There follow in section 22(4)-(5A) provisions stating how a person’s ability to pay is to be ascertained.

14.	Section 26(1) of the 1948 Act provides that a local authority may make arrangements with others for the provision of accommodation.  That happened in the present case, as the accommodation was provided by BUPA.  Section 26(2) provides that such arrangements shall provide for the local authority to pay the other party for providing the accommodation at such rates as may be determined by or under the arrangements and “the local authority shall recover from each person for whom accommodation is provided under the arrangements the amount of the refund which he is liable to make in accordance with the following provisions of this section.”

15.	Section 26(3) provides that subject to subsection (3A), which has no application to the present case, 

“a person for whom accommodation is provided under any such arrangement shall, in lieu of being able to make payment therefor in accordance with section 22 of this Act, refund to the local authority any payments made in respect of him under the last foregoing subsection:
Provided that where a person for whom accommodation is provided, or proposed to be provided, under any such arrangements satisfies the local authority that he is unable to make a refund at the full rate determined under that subsection, subsections (3) to (5) of section twenty-two of this Act shall, with the necessary modifications, apply as they apply where a person satisfies the local authority of his inability to pay at the standard rate as mentioned in the said subsection (3).”

The preliminary issue
16.	On 25 November 2005, I held a pre-trial review of this reference, when I raised for the first time the question whether the Council had any power to make the declaration of charge on which it relied.  I was not satisfied that this matter had been properly dealt with in the Council’s Statement of Case and I therefore directed that the Council should provide by 6 January 2006 (i) a written statement of the facts on which it intended to rely and the allegations it intended to make and (ii) a summary of the arguments on which it intended to rely in support of its claim that Mr. Wilson had, at the date of its alleged charge (wrongly stated by me to be 18 December rather than 12 December 2003) failed to pay any sum assessed as due under section 22 of the 1983 Act.  I directed that the Council should identify every assessment relied on and state all facts relied on as amounting to a demand for or a failure to pay any such sum.  At the same time, I directed that the Council should provide the Adjudicator and Ms. Solomon with copies of any documents relied on which had not already been provided.  I gave Ms Solomon until 27 January 2006 to reply to the written statement and summary, and adjourned the pre-trial review.

17.	I went on to direct that at the adjourned hearing of the pre-trial review the Adjudicator would of his own motion determine as a preliminary issue whether the Council had established an arguable case that Mr. Wilson had by 18 December 2003 failed pay any sum assessed as due to be paid by him for the accommodation referred to in section 22 of the 1983 Act and if not then whether there is any valid charge and whether the Chief Land Registrar should be directed to cancel the Council’s application.

18.	The Council’s summary of arguments refers to sections 21 and 22 of the 1948 Act, but makes no reference to section 26 of that Act, although at the hearing of the preliminary issue counsel for the Council made it the mainstay of his case.  The Council went on to set out a statement of facts which confirms at paragraph 3 that Stella had, at all material times, made all contributions requested of her in the notifications of assessments that she had been sent.  It is plain from that statement of facts that although Stella had been concerned about the financial burden that would be placed upon her as a result of the contributions that would be called for, her response was not that she would not pay what was due, but that she would prefer to take her father home because of the financial burden the residential care would place her under.

19.	It is also the case that instructions had been given for a legal charge to be placed on the property on 31 October 2003 because Stella had refused to sign consent forms to secure the legal charge.  That was at a time when nothing was due from Mr. Wilson to the Council and it is not suggested that at that time anything had occurred to entitle the Council to declare a charge over the property.

20.	The statement of facts goes on to state that on 30 November 2003, BUPA rendered an invoice for the period from 1 November 2003 to 30 November 2003 in respect of residence by Mr. Wilson at the home.  The invoice was for £1514.14 and the due date for payment was 14 December 2003.  On the same date BUPA is said to have rendered a credit note for £216.77 in respect of the same period.  No explanation is offered in the statement of facts or the written summary of arguments as to the relevance of these facts, but it was contended by counsel that the effect of section 26 of the 1948 Act was that by receiving these invoices and entering them in its computer system, the Council accepted that is was liable for the net amount and that it effectively determined to recover the same amount from Mr. Wilson as a result.  It was said that that amounted to an assessment for the purposes of section 22 of the 1983 Act and that, although neither he nor Stella had any knowledge or means of knowledge of these facts, Mr. Wilson had still failed to pay the net amount, which was assessed as due from him.

21.	Not only was there never, at any relevant time, a notification of any such assessment, even if such an assessment had taken place, but there was late disclosure by the Council of copies of Notification of Assessments which were sent to Mr. Wilson care of Stella.  The first, dated 28 August 2003 states that Mr. Wilson will have to contribute £50.58 per week from 12 August to 3 November 2003.  The second, dated 2 March 2004 states that Mr. Wilson will have to contribute £50.58 per week from 20 January to 4 April 2004.  No notification has been produced for the period from 4 November 2003 to 19 January 2004, and no explanation has been offered as to why any notification there might have been should have been for any different weekly amount than £50.58.  Indeed, I note that in the final statement dated 9 December 2004, the client assessed contribution from income details for the period from 4 November 2003 to 19 January 2004 is stated as being £50.58.  There is no evidence that either Mr. Wilson or Stella was ever asked for any other sum, or told how much, even approximately, BUPA were charging.

22.	I also note that even in the final statement, BUPA’s charges are not passed on in full.  Instead credits are given of over £3000.  No explanation is offered for this and as to its part in the assessment of the liability of Mr. Wilson.  

23.	The right to create a charge under section 22 of the 1983 Act only arose if Mr. Wilson failed to pay any sum assessed as due to be paid by him for the accommodation.  In the ordinary use of the English language, I am unable to see how anybody can fail to pay a sum when they have no knowledge or in any real sense any means of knowledge, that it is due from them (if it was indeed due in the present case), and where they have been told that some other sum was due, which they paid.  I am also unable to see that the fact, apparently overlooked by the Council until the date of the hearing before me, that section 26 of the 1948 Act entitled the Council to recover, or may have entitled it to recover the whole of the sums paid by it to BUPA, meant that that amount had been assessed by anybody in December 2003 as due to be paid by Mr. Wilson.  By no stretch of the imagination can internal computer or book entries made by the Council in relation to the BUPA invoice and credit note amount to an assessment that the same net amount was due from Mr. Wilson.  Indeed, the evidence of the various statements is that the amount assessed at the time as due from Mr. Wilson was £50.58 per week which was paid.

24.	In addition, although it is not necessary for the purposes of this decision, I do not consider that a person can be said to have failed to pay a sum which is due until the time at which payment is due has passed.  In the circumstances of this case, I do not see how the time for payment can have passed when the charge was declared.

25.	It is also plain that in deciding to declare the charge, the Council was paying no attention whatsoever to the wording of section 22 of the 1983 Act, but was concerned to protect itself against future possible default by Mr. Wilson, and not against any current default.

26.	Accordingly, I find that, whether at 12 or 18 December, Mr. Wilson had not failed to pay any sum assessed as due to be paid by him for his accommodation, and that no circumstances had arisen that would have entitled the Council to declare this charge under section 22 of the 1983 Act.  Despite the best efforts of counsel for the Council, I regard the contentions to the contrary as plainly wrong.  I therefore determine the preliminary issue in favour of the Second and Third Respondents, and propose to direct the Chief Land Registrar to cancel the Council’s application to register the charge.

27.	I would add, that as the Council appears to have accepted that Stella had a beneficial interest in the property and that the only question was as to the extent of that interest, it is difficult to see how, even if there had been a failure to pay a sum assessed as due, the Council could properly create a charge over anything other than Mr. Wilson’s beneficial interest.  If the charge were only to be over Mr. Wilson’s beneficial interest, then it would not be registrable as a charge over the property as a whole, and on a sale to a purchaser in good faith, such as Ms Solomon, it would attach to the proceeds of sale.

Addition of Abbey as a party
28.	An application was made by Abbey at the hearing of the preliminary issue to be added as a party to the reference.  This was not opposed by the Council.   I acceded to the application and Abbey and Ms Solomon were represented at the hearing by the same counsel, although he was instructed by different solicitors for each of them.

Costs
29.	The Council must pay the costs of Ms Solomon and of Abbey of this reference to be assessed on the standard basis.  I have been asked that the assessment should be on the indemnity basis at least from last November because of the unreasonable way it has continued to pursue its claim since the preliminary issue was directed.  I am not impressed with the way that it purported to comply with my directions of last November and I do consider that its arguments are misconceived.  However, in my judgment the facts that its contentions are hopeless, and its pursuit of them sloppy, are not enough to merit an award of costs on the indemnity basis. 

30.	Ms Solomon and Abbey should provide a Statement or Statements of Costs in form N260 (as set out at the end of the Guide to Summary Assessment of Costs 2005 edition), or in a substantially similar form and should serve copies of the statement(s) on the Adjudicator and on the Council by 30 June 2006.  The Council should serve a written statement of objections, if any, on the Adjudicator and on Ms. Solomon and Abbey by 28 July 2006 and Ms. Solomon and Abbey should serve any reply to those objections on the Adjudicator and on the Council by 18 August 2006.  The Adjudicator will then either summarily assess the costs or give directions for a detailed assessment.

Dated this 22nd day of May 2006

 
By Order of The Adjudicator to HM Land Registry