Decision No: C5/97(IS)

SOCIAL SECURITY ADMINISTRATION (NORTHERN IRELAND) ACT 1992

SOCIAL SECURITY CONTRIBUTIONS AND BENEFITS
(NORTHERN IRELAND) ACT 1992

SOCIAL SECURITY (CONSEQUENTIAL PROVISIONS)
(NORTHERN IRELAND) ACT 1992

INCOME SUPPORT

Appeal to the Social Security Commissioner
on a question of law from the decision of the
Armagh Social Security Appeal Tribunal
dated 7 February 1997

DECISION OF THE SOCIAL SECURITY COMMISSIONER

1.	This is an appeal on behalf of the claimant against a decision of a Social Security Appeal Tribunal which upheld the decision of an Adjudication Officer relating to a reduction in claimant's Income Support.  

2.	I arranged an oral hearing at which the claimant, now deceased, was represented by Mr T..., Solicitor of L..... T... and O’N...... and the Adjudication Officer was represented by Mrs Findlay of Counsel instructed by Mrs Fitzpatrick, Solicitor, of the Department of Health & Social Services.  

3.	The claimant who was born in January 1907 was at the time of the Adjudication Officer's decision, 90 years of age and a patient in a private nursing home in A. She was a tenant for life of her former home which she had transferred to her son, but reserving to herself a life interest.  When she went into the nursing home her home was vandalised.  By virtue of an order dated 31 December 1992 by the Master of the Office of Care and Protection, Family Division of the High Court, Messrs L..... T... and O’N...... Solicitors were authorised to:-

		(a)	continue to operate the account they hold on behalf of the patient as trustees for her benefit;
		(b)	to receive the sum of one thousand two hundred and forty pounds and four pence or other amounts outstanding for the credit of the patient in the Court Funds Office and to lodge the same in the account referred to above; 

		(c)	to pay any shortfall in maintenance to the R Private Nursing Home in A; 

		(d)	to collect, receive and give in effect of discharge for all other properties or income to which the patient may be or may become entitled, the  applicant informing the Master of such entitlement within 21 days from ascertaining the existence thereof.

4.	The Solicitors were invested with general power of Management in respect of her former home.  They were authorised to see that the dwelling house was kept in good order, repair and condition and fully insured in respect of buildings and contents.  In addition, they were to discharge all outgoings properly payable in respect thereof, and to collect the rent from the letting and to lodge the proceeds into a nominated account.

5.	The total costs of repairs to the property was £3325.  Premises were let from 1 May 1996 at a  monthly rent of £200 and the first month's rent was waived to allow the tenants to redecorate and erect a security fence.  No money was received from the insurance policies as the property was vacant at the time of damage.  Repairs were financed by a relative of Mrs M on the understanding that the debt would be repaid out of any rent received from the premises.  In fact, in a letter of 16 July 1996 from the Solicitors, it was explained that the rent was paid direct to the person who paid for the repairs.

6.	While it is not possible on the papers provided to me to see how the claimant's Income Support was assessed or amended, nevertheless, there is a letter from the Social Security Office in A which states:- 

		"In connection with Mrs M's income support, the rent which the tenant pays to a third party for living in property at 21 D Road, A is to be treated as actual income received in E's income support assessment.  

		The amount of income support that she receives at present will therefore remain unchanged."  

7.	The claimant appealed against the assessment to a Social Security Appeal Tribunal.  The Adjudication Officer argued:-

		"... in accordance with Commissioner's Decision R(SB)23/83 Miss M is no longer the 'beneficial owner' of the property but merely the 'legal owner'.  As she is not the beneficial owner she does not possess a capital sset."

8.	The Tribunal made the findings of fact as follows:-

		"1. There has been no dispute about the basic facts of the case as set out at Paragraph 5 of the submission, and those are accepted and adopted by the tribunal."

	The Tribunal upheld the Adjudication Officer's decision and gave reasons for its decisions as follows:-

		"The tribunal did not accept the argument made on behalf of the claimant that article 22(1) of Schedule 9 of the Income Support (General) Regulations (Northern Ireland) 1987 applies to this case.  The Tribunal took the view that Article 22(1) applies only to income from capital jointly held or treated as jointly held.  The Tribunal therefore did not consider it necessary to make any finding as to whether or not the claimant was the 'beneficial owner' or the 'legal owner', of the property in question.

		The Tribunal decided that Schedule 10, article 13 did not apply to the present case.  It refers to the capital value of a right to receive income, not to the income itself." 

9.	Claimant appealed that decision and her grounds of appeal are as follows:-

		"1.	The Adjudication Officer, Mrs B in her decision, ref.no. HM    B makes an erroneous determination at 6.3 of said decision, where she states Mrs M... is "No longer the Beneficial Owner" of the property merely the "legal owner".  As authority for her decision she cites Commissioner decision RSB 23/85.  This case has an entirely different set of circumstances and facts to Mrs M...'s and is not therefore an appropriate precedent.

			Mrs M... transferred her home to her nephew B McW in 1988 but retained a life interest in the property.  She therefore remains the beneficial owner of a capital asset for the duration of her natural life.  Mrs M... therefore meets part of the criteria set out in Article 22(1) of Schedule 9 of the Income Support General Regulations 1987 No 459 in that the claimant must be beneficially entitled to a capital resource.

			The Chairman at Sec.3 of his decision Ref No. AR///S dated 7/2/1997 did not consider the necessity to make a decision on this matter.  We would argue that a life interest in property is a beneficial interest and would ask the Commissioner to make a decision on this point.

		2.	Article 22(1) of the said Schedule read as follows "any income derived from Capital to which the claimant is or is treated under regulation 52 (capital jointly held) as beneficially entitled but,........"

			We would argue this article has been drafted     to include income from Capital held individually as well as jointly.  The Chairman has made an error in his interpretation of the article where he states at 3 of his findings "Article 22(1) applies only to income from Capital jointly held or treated as jointly held."

			In our opinion it is clear from the wording of this Article and by the inclusion of the disjunctive or in the sentence "... to which the claimant is or is treated under Regulation 52 (capital jointly held) as beneficially entitled but, ...." that the Article should apply to a claimant who receives income from Capital either by virtue of his sole ownership of that capital asset or by his joint ownership.

			We would ask the Commissioner to make a decision as to whether or not Article 22(1) applies to claimants who have a beneficial entitlement to a capital asset which is held in an individual capacity."

10.	The relevant law is to be found in the Income Support (General) Regulations (Northern Ireland) 1987 Schedule 9, 22(1) which deals with sums to be disregarded in the calculation of income other than earnings and 22(1) reads as follows:-

		"22.-(1)  Any income derived from capital to which the claimant is or is treated under regulation 52 (capital jointly held) as beneficially entitled but, subject to sub-paragraph (2), not income derived from capital disregarded under paragraph 1, 2, 4, 6, [12 or 25 to 28] of Schedule 10."

	Schedule 10 deals with capital to be disregarded and Schedule 10(1) reads:-

		"1.  The dwelling occupied as the home but, notwithstanding regulation 23 (calculation of income and capital of members of claimant's family and of a polygamous marriage), only one dwelling shall be disregarded under this paragraph."

11.	Also relevant is regulation 40(1) which reads:-

		"40.-(1)  For the purposes of regulation 29 (calculation of income other than earnings) the income of a claimant which does not consist of earnings to be taken into account shall, subject to paragraphs [(2) to (3A)], be his gross income and any capital treated as income under regulations [...] 41 and 44([...] capital treated as income and modifications in respect of children and young persons)."

12.	At the hearing before me it was accepted that the Tribunal erred in thinking that Article 22(1) of Schedule 9 quoted above, only applies to property jointly held.  Clearly that is incorrect.

13.	Mr T... argued that it was quite clear that the tenant for life had a capital asset and that the powers of the tenant for life were wide, including the power of selling the life interest.  Consequently he argued that any income derived from that capital asset should be disregarded under paragraph 22(1) of Schedule 9.

14.	He then submitted that Schedule 10(3)(a) stipulated that the following capital was to be disregarded:-

		"Any sum directly attributable to the proceeds of sale of 

		(a)	any premises formerly occupied by the claimant as his home or ..."

	He argued that the claimant's life interest was saleable and therefore was a disregarded amount under paragraph 3(a) and it was not open to the Adjudication Officer to argue otherwise.  Therefore, claimant did not have a capital asset to which she was beneficially entitled.  He then argued that Schedule 10 also included capital to be disregarded as "the value of the right to receive any income under a life interest" and submitted that the value of the capital asset should not be taken into account.  He further continued that under the Order of the Master of the High Court, the estate of the claimant was obliged to keep the house in repair.  He stated that the money which was advanced by a relative to carry out the repairs was repaid out of the rent which was paid direct to the lender and consequently did not come into either the hands of the claimant or the Solicitors by virtue of the Order of the Master.  Consequently it could not be regarded as part of claimant's income.

15.	Mrs Findlay accepted that the Tribunal erred in thinking that regulation 22(1) only dealt with jointly held property.  She submitted that Schedule 10 dealt with capital to be disregarded and said if one looks at Schedule 9 which deals with interest derived from capital, she argued that the house was the "capital" and the nephew, who was the remainder man, held the capital.  In any event, she argued that under regulation 40 the gross income of the claimant should be taken into account in assessing her Income Support.

16.	I have considered all that has been said and I have read all the documents in this case.  I am quite satisfied that the Tribunal erred as was accepted.  I therefore allow the appeal and set aside the decision of the Tribunal.

17.	Mrs M... was at a very advanced age when she went into the nursing home and unfortunately, subsequently died.  It would be unfair to refer this matter back to be reheard by a different Tribunal and I am satisfied that I have sufficient information to make the decision which the Tribunal should have given.

18.	I accept the argument on behalf of the claimant that the life interest was a capital asset.  I think that cannot be disputed and I reject the argument that the capital asset was the house and that it was vested in the remainder man.  I accept therefore that paragraph 22(1) of Schedule 9 is relevant in this case, but I think what has been overlooked in the argument on behalf of the claimant is that paragraph 22(1) talks about income derived from capital but not income derived from capital disregarded under paragraph 1 of Schedule 10, which I have quoted above.  Having accepted that the life interest is a capital asset, I am satisfied that it is one of the matters exempt or excepted in paragraph 22(1) as it is the dwelling house occupied as the home.  One must look at the two provisions together, ie Schedule 9 and Schedule 10.  The claimant's argument is that the claimant is entitled to the benefit of both a disregard of income and a disregard of capital.  However, if it is capital then it must be disregarded under Schedule 10(1), and if it is disregarded under 10(1) then Schedule 9, 22(1) does not disregard the income.  I am satisfied therefore, that the income which the claimant receives must be taken into account.

19.	I now turn to regulation 40 which I have also quoted above which concerns gross income.  It is quite clear from the Order of the Master of the High Court that Messrs L..... T... & O’N...... were obliged to see that the said dwelling house is kept in good order, repair and condition.  The money to carry out the repairs was borrowed and in a letter from the Solicitors to the Social Security Office dated 16 July 1996 confirmed: 

		"Mrs M does not receive the £200.00 per month.  The rental will be paid direct into an account of the person who carried out the repairs ... until all the money expended has been recouped."

20.	I am satisfied that when one reads regulation 40 which refers to gross income, that until the money advanced to carry out the repairs has been repaid the claimant has no income because no money was paid to claimant or into her account.

21.	I am satisfied therefore that the amount of assessment of Income Support is wrong and it should be reassessed taking into account the amount of the repairs which are stated to be £3325.  After that amount has been discharged then the income from the letting must be taken into account in assessing the claimant's Income Support, bearing in mind the obligations placed upon the claimant's representatives by the Order of the Master of the High Court.

22.	This is a matter for the Adjudication Officer to calculate in accordance with this decision and in the event of any dispute between the parties as to the final amount, I direct that the matter be relisted before a Commissioner.

(Signed):  C C G McNally

COMMISSIONER

26 April 1999