CPC/0166/2010

DECISION OF THE UPPER TRIBUNAL
(ADMINISTRATIVE APPEALS CHAMBER)

Decision

1. This appeal by the Secretary of State succeeds. In accordance with the provisions of section 12(2)(b)(ii) of the Tribunals, Courts and Enforcement Act 2007 I set aside the decision of the First-tier Tribunal (Social Entitlement Chamber) sitting at Eastbourne on 5th June 2009 and made under reference 171/09/00240. I make my own decision. This is to the effect that as from 2nd April 2007 the claimant was not entitled to an award of state pension credit. 
 
Background and Procedure

2. This appeal by the Secretary of State relates to whether deemed income from a property jointly owned by the claimant but in which she did not reside at the relevant time should be taken into account for the purposes of calculating her entitlement to state pension credit. 

3. The claimant is a woman who was born on 23rd February 1938. She married but separated from her husband and left the matrimonial home (where her husband remained living) in about April 2006. She remained a joint owner (with her husband) of the former matrimonial home. I refer to this property as “number 64”. In April 2007 the claimant retired from work and moved into accommodation rented from a housing association.

4. On 16th March 2007 the claimant made an application for state pension credit, which is a means tested benefit. It appears that on 3rd May 2007 the Secretary of State made an award of £49.09 weekly as from 26th March 2007 and £51.77 as from 9th April 2007 on the basis of the information about her means given by the claimant. This was for an assessed income period of five years. 

5. Meanwhile the claimant had also claimed housing benefit. This appeal is not concerned with that benefit but the significance is that in considering that claim the local authority took account of the fact that the claimant was still the joint owner of number 64. On 9th May 2007 the local authority informed the Secretary of State of this fact (of which it seems the Secretary of State was unaware until that point). There was correspondence between the claimant and the Secretary of State’s Department and on 5th August 2008 the Department received a form from the claimant disclosing that number 64 is a 3 bedroom bungalow, that she did not intend to live there again, that she was taking no steps to dispose of her interest in it, that it had an estimated value of £200,000, that there was no mortgage on it, and that she received no income from the property or from her husband.

6. The claimant’s husband is a few years older than she is and was in receipt of industrial injuries benefit (although not of disability living allowance), had problems arising from his pelvis having been crushed, refused to get medical help or the assistance of the Social Services Department, and was “fiercely independent”. He could not manage the large garden or afford the upkeep of number 64. Accordingly, on 19th September 2008 the claimant and her husband, using the services of solicitors, exchanged number 64 for a property which I call “number 22”, previously owned by the claimant’s brother. The claimant and her husband now became joint owners of number 22.

7. The District Valuer valued number 64 as at 21st October 2008 at £200,000 with vacant possession, but reduced by 5% to £190,000 to reflect the fact that claimant’s husband still resided there. This was on the basis of what the position would be if the court ordered a sale. The Secretary of State seems to have accepted at one stage a valuation of £175,000 as at 1st October 2008, although I cannot discern from the evidence the basis of that figure. In a series of decisions, some of the details of which remain obscure, the Secretary of State decided that the value of number 64 could not be disregarded, that the claimant had capital of £91,363 to be taken into account and that she should never have been entitled to state pension credit. The capital amount was reached by taking the value of number 64 as £200,000, the claimant’s share as £100,000, deducting 10% on account of expenses of sale and adding other capital of £1,363 declared by the claimant. This is inaccurate. The District Value’s figure of £190,000 should be the starting point. The claimant’s share would be £95,000. Deduct 10% expenses leaves £85,500. Add other capital of £1363 gives a total of £86,863.

8. The final date given for the series of decisions of the Secretary of State was 5th November 2008 and on 26th November 2008 the claimant appealed to the First-tier Tribunal against that decision of the Secretary of State. That tribunal considered and allowed the appeal on 5th June 2009 and decided that number 64 was not to be treated as an asset of the claimant. It mentioned number 22 only in passing. The Secretary of State applied for permission to appeal to the Upper Tribunal against the decision of the First-tier Tribunal. On 30th November 2009 the District Tribunal Judge refused permission but the Secretary of State renewed his application and on 16th February 2010 I granted permission to appeal. The claimant opposes the appeal and supports the decision of the First-tier Tribunal.

The Relevant Legal Provisions – State Pension Credit

9. Entitlement to state pension credit depends on a comparison between the claimant’s relevant income and the weekly appropriate amount of guaranteed credit. The claimant and her representatives have not challenged the Secretary of State’s latest calculation that the weekly appropriate amount of guaranteed credit in the present case is £114.05 and that, apart from income from capital, the relevant weekly income is £64.96 (page 53 of the file). I adopt these calculations. There is a potential issue involving service charges which might add £22.23 to the weekly appropriate amount of guaranteed credit, but it is not necessary to resolve this.

10. So far as is relevant, regulation 15(6) of the State Pension Credit Regulations 2002 provides as follows:

15(6) … a claimant’s capital, other than capital disregarded under Schedule V, shall be deemed to yield a weekly income – 

(a)	…
(b)	… of £1 for each £500 in excess of £6000 and £1 for any excess which is not a complete £500.

11. If the claimant has capital of £86,863 (see above) this is deemed to yield a weekly income of £162 (£86,863 less £6,000, divided by 500, then add £1 to the whole number ignoring the fraction). This would far exceed the weekly appropriate amount of guaranteed credit of £114.05 (or £13628 including the service charge). If the claimant has capital of £1363 (disregarding the value of number 64 and number 22) this is deemed to yield no weekly income because it is below the £6000 threshold. 

12. On the facts of the present case (where the claimant had no intention of moving back into number 64 or ever moving into number 22) the only possible disregard under Schedule V is to be found in paragraph 7:

7. Any premises where the claimant is taking reasonable steps to dispose of the whole of his interest in those premises, for a period of 26 weeks from the date on which he first took such steps, or such longer period as is reasonable in the circumstances to enable him to dispose of those premises.

The Relevant Legal Provisions – Revising the Decision of 3rd May 2007

13. In general terms section 9 of the Social Security Act 1998 allows the Secretary of State to revise a decision with effect from the date when the original decision took effect, and regulation 3(5) of the Social Security (Decisions and Appeals) Regulations 1999 allows such a revision of a decision that was made in ignorance of, or was based on a mistake as to some material fact and as a result that decision was more advantageous to the claimant than it would otherwise have been.

14. Thus, in the present case, there being no dispute that at the time of the decision of 3rd May 2007 the Secretary of State was unaware of the claimant’s interest in number 64, if that interest was not to be disregarded, the decision was liable to be revised. In fact the paperwork from the Secretary of State in this case totally confuses the concepts of revision and supersession (which is a different procedure in different circumstances). I cannot find in the file any document appearing to be a revision decision and I am dismayed (as on several previous occasions) at his Department’s sloppy paperwork and record keeping. Nevertheless the First-tier Tribunal has the power to carry out such a revision itself and this is what it should have done in the present case.

Should the Value of the Real Property be Disregarded?

15. In addition to findings of fact referred to above, and to some which are not really relevant, the First-tier Tribunal also found that the claimant “has tried to pressure her husband into either maintaining the property properly or selling that property and that as well as many discussions with him she has twice instructed valuers to value the property with a view to marketing the property, which did not proceed due to his opposition” (paragraph 4 of its statement of reasons). It concluded that since April 2006 she had been taking reasonable steps to dispose of the property, could not sell against his wishes and that her share was not realisable.

16. However, those conclusions were unsupported by the facts. Taking the position as at 5th November 2008, the date of the decision under appeal to the First-tier Tribunal, it had been over two and a half years since the claimant had moved out of number 64. She had already been moved out for nearly a year when she made the original claim for state pension credit. There is no evidence that she had been taking any steps, let alone reasonable steps, beyond asking her husband to sell and seeking valuations. For example, here is no evidence that she had sought legal advice on what she could do to realise her assets, even though she consulted solicitors over the exchange for number 22. That exchange took place on 19th September 2008, six weeks before the decision under appeal to the First-tier Tribunal, and demonstrated that in fact the claimant’s husband was able and prepared to move – and there is no reason why he could not have agreed to sell number 64, if the claimant had approached him through solicitors with a proper explanation of the legal position, and to move into rented accommodation. 

17. The grounds of appeal and the statement of reasons also refer to the attitude of the claimant and her husband towards divorce. I fail to see the relevance of this. A claimant of a means tested benefit cannot increase entitlement because she and her separated husband do not wish to divorce.

Conclusions

18. For the above reasons this appeal by the Secretary of State succeeds. I make the decision which the First-tier Tribunal ought to have made, which is to revise the decision made by the Secretary of State on 3rd May 2007 and replace it with the decision in paragraph 1 above. The claimant’s share in the value of number 64 should have been taken into account right from the date of her claim for state pension credit. This would have given her a relevant weekly income of £64.96 plus deemed income of £162. The total of £226.96 would far exceed the weekly appropriate amount of guaranteed credit. 

H. Levenson
Judge of the Upper Tribunal
25th May 2010