Chief Adjudication Officer v. Palfrey and Others CIS 391 1992
| Jurisdiction | UK Non-devolved |
| Judge | Three-Judge Panel / Tribunal of Commissioners |
| Judgment Date | 08 February 1995 |
| Court | Upper Tribunal (Administrative Appeals Chamber) |
| Subject Matter | Capital |
| Docket Number | CIS 391 1992 |
| Appellant | Chief Adjudication Officer v. Palfrey and Others |
R(IS) 26/95
(Chief Adjudication Officer and Anor. v. Palfrey, Dowell (deceased),
McDonnell and Others)
Judge K. Machin QC, Mr. V. G. H. Hallett, and CIS/391/1992
Mr. J. G. Mitchell QC CIS/417/1992
20.5.93 CIS/85/1992
CA (Nourse and Hobhouse LJJ and Sir Ralph Gibson)
8.2.95
Capital - jointly owned asset - whether claimant is to be treated as possessing an equal share
Capital - freehold interest in property subject to a lease or tenancy - whether a “reversionary interest”
Three appeals, concerning the valuation provisions and the validity of regulation 52 of the Income Support (General) Regulations 1987, were heard by a tribunal of Commissioners. In all three cases, social security appeal tribunals had decided that income support was not payable because the claimant’s capital exceeded the prescribed amount (£8,000) on account of the tribunal’s valuation of the claimant’s interest in property. CIS/85/1992 also raised a question as to the construction of paragraph 5 of Schedule 10 to the Income Support (General) Regulations 1987
CIS/391/1992 (Palfrey) concerned an elderly widower on income support who had been forced by increasing disability to leave the family home and go into residential care. His daughter, who had paid for the house, held it as beneficial joint tenant with her father and was accordingly entitled to the whole property if she survived him. He was in his eighties. She was unwilling to move or to join in any sale of the house. She had no intention of purchasing her father’s interest, which in the normal course of events would accrue to her by survivorship. The claimant’s interest in the house was her only asset.
CIS/417/1992 (Dowell) concerned a claimant who, with her daughter and son-in-law had purchased a freehold property as a family home. At the time of the decisions of the adjudication officer and the appeal tribunal it was thought that she had a 1/4 share, although it subsequently transpired that she had a 1/3 share. They all lived in the property. Later, the claimant went into a residential home and claimed income support.
CIS/85/1992 (McDonnell) concerned a claimant who was separated from her husband and was taking proceedings for divorce. She was in receipt of rents from a tenanted property, the beneficial ownership of which was in dispute. Her solicitors anticipated that her husband (who had made the only cash contribution other than that provided on the mortgage) would claim the entire beneficial interest in the property. The claimant contested his claim. An estate agent advised that while divorce proceedings were going on, and ownership was in dispute, the property was not marketable. The claimant claimed income support.
Held, by the tribunal of Commissioners, that:
CIS/391/1992
1. regulation 52 treats a claimant, who is one of two beneficial joint tenants, as possessed of an equal one half share of the relevant capital asset and it is that share of the beneficial interest that is to be valued when calculating the claimant’s capital for income support purposes (paras. 38 to 43);
2. it is the market value of the deemed share that is to be ascertained (para. 38);
3. the Commissioners have jurisdiction to determine whether a regulation is ultra vires on the ground of irrationality if this is necessary for the determination of the issue which arises before them. Such an issue is only likely to arise on rare occasions but when it does the Commissioner has a positive duty to rule on ultra vires (para. 45);
4. regulation 52 is not irrational and is valid (para. 46);
CIS/417/1992
5. where a claimant is entitled to an actual equal beneficial share of a capital asset, it makes no difference whether or not regulation 52 applies: for a deemed equal share falls to be valued as if it were actual capital and at current market value (paras. 23 to 24);
CIS/85/1992
6. a freehold interest in property subject to a lease or tenancy is a “reversionary interest” within the meaning of paragraph 5 of Schedule 10 to the Income Support (General) Regulations 1987 and accordingly is exempt from valuation as capital (paras. 26 to 33 and 36) (R(SB) 3/86 not followed);
7. the capital value of any right to receive rent must be disregarded by virtue of paragraph 24 of Schedule 10, and the rents themselves must be treated as the claimant’s capital, and not income, when received by virtue of regulation 48(4) and paragraph 22(1) of Schedule 9 (para. 36).
The Chief Adjudication Officer and the Secretary of State appealed to the Court of Appeal against the decisions of the tribunal of Commissioners and in two other appeals raising similar issues, contending that the correct construction of regulation 52 required that the whole beneficial interest in the asset must be valued and then divided into the same number of equal shares as there are persons entitled to the beneficial interest in possession, the claimant being debited with his share of that value. They also argued that a freehold interest in property subject to a lease or tenancy is not a “reversionary interest” within the meaning of paragraph 5 of Schedule 10.
Held, by the Court of Appeal, unanimously dismissing the appeals, that:
1. in the case of a freehold or leasehold property the persons beneficially entitled in possession are to be treated as if each of them are tenants in common holding equal shares and regulation 52 requires the claimant’s deemed (or actual) beneficial interest in an equal share to be taken into account (per Nourse and Hobhouse LJJ);
2. regulation 52 provides that the preceding provisions of Chapter VI, in these cases regulation 49(a), shall apply for the purposes of calculating the amount of capital which the claimant is treated as possessing. That means his interest must be valued at the current market value (per Nourse LJ);
3. there is no limitation on the words “any capital asset”: they include, but are not limited to, real property such as a dwelling house. The words apply to money, to shares in a company, and to an enforceable claim (per Sir Ralph Gibson);
4. regulation 52 does not expressly provide that the division into equal shares shall follow upon the presumption of equality and after valuation of the capital asset and in the context of this legislation it is safer to proceed upon the basis that clear language would be used to express that intention. To the extent that the wording of the provision is consistent with an applicant being treated as possessing a capital asset having the real value of that asset at the material time rather than a larger value, which in his hands it does not have, to that extent the provision should be construed as requiring or permitting the applicant to be treated in accordance with the true facts (per Sir Ralph Gibson);
5. a freehold interest in property subject to a lease or tenancy is a “reversionary interest” for the purposes of paragraph 5 of Schedule 10 to the Income Support (General) Regulations 1987.
[Note: The effect of the decision of the Court of Appeal was reversed by regulation 6(6) and (10) of the Income-related Benefits Schemes and Social Security (Claims and Payments) (Miscellaneous Amendments) Regulations 1995, SI 1995 No. 2303, which amended the relevant provisions in the Income Support (General) Regulations 1987 with effect from 2 October 1995]
decision of the tribunal of commissioners in cis/391/1992
Arrangement of paragraphs in this decision Paragraph
Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Representation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Nature of the appeals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 - 9
The period in issue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
The relevant law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
The adjudication officer’s decision. . . . . . . . . . . . . . . . . . . . . . . . . . . 12 ‑ 14
The appeal tribunal’s decision. ...
To continue reading
Request your trial