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UK Social Security and Child Support Commissioners' Decisions |
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You are here: BAILII >> Databases >> UK Social Security and Child Support Commissioners' Decisions >> [1992] UKSSCSC CIS_18_1990 (04 September 1992) URL: http://www.bailii.org/uk/cases/UKSSCSC/1992/CIS_18_1990.html Cite as: [1992] UKSSCSC CIS_18_1990 |
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[1992] UKSSCSC CIS_18_1990 (04 September 1992)
R(IS) 14/93
Mr. D. G. Rice CIS/18/1990
4.9.92
Notional capital - deprivation of capital before income support was introduced - whether deprivation capable of being "for the purposes of securing entitlement to income support"
In November 1987 the claimant received £38,777.45 from the sale of the matrimonial home. On 19 November 1987 he deposited £28,000 in his bank. He withdrew various sums including £8,000 on 30 November 1987 and £18,500 on 3 December 1987. On 21 December 1987 his account was overdrawn. On 16 December 1987 he claimed supplementary benefit. On 15 March 1988 the adjudication officer disallowed the claim. On 1 February 1989 the social security appeal tribunal dismissed his appeal on the basis that he possessed actual capital in excess of the prescribed limit of £3,000. They did not believe the claimant's statement that he had paid £18,500 to his creditors. On 13 February 1989 he claimed income support. On 20 March 1989 the adjudication officer disallowed the claim on the basis that he possessed actual capital in excess of the prescribed limit of £6,000. On appeal the tribunal found that the claimant had not actual capital and intimated that they wished to consider the difficult question whether the claimant had notional capital under regulation 51(1). They refused the adjudication officer's application for an adjournment. They decided by majority that he had deprived himself of a considerable capital sum for the purposes of obtaining supplementary benefit but found unanimously that that did not affect his claim for income support. On appeal the adjudication officer conceded in his written submission to the Commissioner that the claimant, at the relevant time, had no actual capital.
Held that:
- the Commissioner has inquisitorial jurisdiction and has to consider every point relevant to the issue, whether put forward by the parties or not and he was not bound by any concession made by either party (para. 7);
- the adjudication officer was expected to deal with the question whether or not the claimant had actual capital in excess of the prescribed limit. When the tribunal concluded that he had not, an extremely difficult point of law (whether he had any notional capital) arose. In those circumstances the adjudication officer should have been given an adjournment to consider his arguments on the issue (para. 8);
- it is puzzling why it was that regulation 51(1) was not drafted with the words "supplementary benefit or" between the words "to" and "income support". Without such express words there is a strong case for saying that the legislature never intended regulation 51(1) to embrace the deprivation for the purposes of securing entitlement to supplementary benefit (para. 13);
- regulation 51(1) was not a new provision. It came into existence with the income support legislation which conferred benefits, and the regulation posed a restriction on such benefits. This was not a case where, after income support had come with its concomitant benefits into operation, the regulation was subsequently brought into existence operating in response to events which had previously taken place (Yew Bon Tew v. Kenderaan Bas Mara (PC) [1983] AC considered) (paras. 15-16);
- there is nothing to prevent regulation 51(1) operating retrospectively if its provisions are relevant to the facts in question. At the time the claimant divested himself of the property income support did not exist. It is difficult to see how a person could deprive himself of property for the purposes of obtaining income support, if such benefit at that time was non-existent (Secretary of State for Social Security and Another v. Tunnicliffe [1991] 2 ALL ER 712 followed [R(G) 4/91]; unreported decision CIS/259/1990 not followed) (paras. 15-16);
- when the claimant divested himself of capital in November/December 1987 he simply could not have done it with the intention of obtaining income support because that was a benefit which, not withstanding that the Royal Assent had been given to the Social Security Act 1986, at that time still did not exist. Nor could it be said that the description "income support" only meant the means tested benefit which previously went under the name "supplementary benefit". Although the income support scheme and the supplementary benefit scheme have characteristics in common, including means testing, they are in no sense identical. The benefits are differently calculated and the income scheme was drafted afresh as a wholly new scheme (para. 16).
DECISION OF THE SOCIAL SECURITY COMMISSIONER
"But [the claimant] overstrained our credulity in saying that he withdrew £18,500 with the intention of using it to pay his creditors, and gave it to his son Kevin to 'mind' for him, at the beginning of December while he 'sorted himself out'; and that he left the £18,500 with Kevin for a month before using it to pay off some of his debts (totalling even without Malcolm's debt, £20,950) in January. We could see no conceivable reason for this manoeuvre, connected with repaying [the claimant's] creditors. The only reason which we could infer, from the timing, of the manoeuvre was to deplete [the claimant's] capital so that when he claimed supplementary benefit on 16 December 1987 his bank account was almost empty.
Since we were unable to accept [the claimant's] evidence on this matter or at all we found that at least £18,500 was available to him when he claimed supplementary benefit. He had merely moved it from his bank account to his son's care.
This was enough to defeat [the claimant's] claim of 16 December 1987 to supplementary benefit …
It was therefore not necessary for us to make the findings of fact appropriate to reg. 4(1) Resources Regs. …"
"Having had the advantage of seeing [the claimant] and questioning him the tribunal were entirely satisfied that he had no actual capital as at 13 February 1989."
Unfortunately, Mr. Butt has argued before me, the tribunal failed to explain why they reached the conclusion they did. It was not enough merely to say that they had seen the claimant and questioned him. A fuller explanation was called for as to why they accepted his statement that he had no capital. Mr. Butt further argued that even a reference to the chairman's note of evidence afforded insufficient explanation. The relevant part of the chairman's note of evidence reads as follows:
"[The claimant] in reply to Chairman said he handed £18,500 to his son, Kevin, as he was drinking and gambling heavily having lost his home, his business and his family.
The adjudication officer questioned [the claimant] as to evidence of various loans and [the claimant] replied that they were all from friends he had in the building business and it was always understood they would be repaid out of the proceeds of sale of the house. Some of the repayments were made by Kevin.
Mrs. Viinikka (tribunal member) asked [the claimant] what money was still held by Kevin for him and he replied there was none.
Mrs. Sainsbury (tribunal member) suggested to [the claimant] that he had been extravagant and [the claimant] did not dispute this.
The tribunal then asked the parties to withdraw and after a short deliberation re-called the parties and the Chairman announced that the tribunal were satisfied that [the claimant] had no actual capital at 13 February 1989."
"By a majority the tribunal thought there was overwhelming evidence that he had deprived himself of considerable capital for the purposes of obtaining supplementary benefit but in the unanimous view of the tribunal this did not affect his claim for income support."
The effect of a claimant's depriving himself of capital resources, at a time when supplementary benefit alone was in operation, on his right to income support raises problems of great complexity and difficulty, and the adjudication officer has been left in the dark as to how the tribunal reached the conclusion they did. Accordingly, on that ground also I must set aside the tribunal's decision as being erroneous in point of law.
"51.- (1) A claimant shall be treated as possessing capital of which he has deprived himself for the purposes of securing entitlement to income support or increasing the amount of that benefit …"
A similar provision operated under the supplementary benefit legislation. The relevant regulation was regulation 4(1) of the Supplementary Benefit (Resources) Regulations 1981 [SI 1981 No. 1527]. Mr. Shrimpton's contention was that, even if the act of deprivation in this case served to bring into effect regulation 4(1), so as to render the claimant disentitled to supplementary benefit, such act of deprivation did not activate regulation 51(1). The question of notional capital did not arise. The claimant remained entitled to income support. He had no actual capital, or at any rate, insofar as he had actual capital, it was well below the maximum limit, and he could not be deemed to be possessed of the capital of which he had deprived himself.
"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 income support or to increase the amount of that benefit."
Clearly, he argued, if the legislature intended regulation 51(1) to bite on acts of deprivation undertaken to enable the claimant to obtain supplementary benefit it could have been expressly so provided. I see the force of that submission, and find it puzzling why it was that regulation 51(1) was not drafted with the words "supplementary benefit or" between the words "to" and "income support". Without such express words there would seem to me a strong case for saying that the legislature never intended regulation 51(1) to embrace deprivations for the purposes of securing entitlement to supplementary benefit.
"Apart from the provisions of the interpretation statutes, there is at common law a prima facie rule of construction that a statute should not be interpreted retrospectively so as to impair an existing right or obligation unless that result is unavoidable on the language used. A statute is retrospective if it takes away or impairs a vested right acquired under existing laws or creates a new obligation or imposes a new duty, or attaches a new disability, in regard to events already passed [my emphasis]. There is, however, said to be an exception in the case of a statute which is purely procedural, because no person has a vested right in any particular course of procedure, but only a right to prosecute or defend a suit according to the rules for the conduct of an action for the time being prescribed."
Mr. Shrimpton contended that, in the present instance, the "events already passed" were the deprivation that took place in November/December 1987, and the disability imposed by regulation 51(1) was a new disability impinging on such events. I disagree. Regulation 51(1) was not a new disability. It came into existence with the income support legislation. The income support legislation conferred benefits, and regulation 51(1) posed in effect a restriction on such benefits. This was not a case where, after income support had come with its concomitant benefits into operation, regulation 51(1) was subsequently brought into existence operating in response to events which had previously taken place.
"In these circumstances one has here a section which on any view has, and must have been intended to have, some retrospective effect. As to the aspects of the regime now in controversy, it is true that if the Secretary of State is right they depend to some extent on things which happened before the appointed day. But this is not fatal to the argument (see R v. Inhabitants of St. Mary, Whitechapel [1848] 12 QB 120 at 127, 116 ER 811 at 814 per Lord Denman CJ). True, there may be a presumption against allowing the statute to operate on conduct of the beneficiary before the new standard of conduct was set. But the force of the presumption is not invariable, and it must in my view be fixed by reference to the unfairness which would stem from giving the statute a retrospective effect. Bearing in mind that we are concerned here with a claim to recover money to which Mrs. Tunnicliffe was not entitled and which she wishes to keep, the presumption must be weak and, if one looks at s. 53 in isolation from s. 119, is in my view clearly rebutted by the opening words of the section."
Mr. Butt argued that it was likewise not unfair to apply regulation 51(1) retrospectively. Had supplementary benefit still been in existence, the claimant would not have succeeded in claiming that benefit. He should be in no better a position now that supplementary benefit had been replaced by income support. I agree with Mr. Butt's submission that there is nothing to prevent regulation 51(1) operating retrospectively if its provisions are relevant to the facts in question. But are they?
"Mr. Underwood's submission that it was impossible for the claimant to have any knowledge of income support as a means-tested benefit is based on the false proposition that the Social Security Act 1986 was not already law at the date of deprivation. The date on which the prescribed scheme came into force is not material."
17. I regret that I must disagree with this approach of the learned Commissioner. In my judgment, the date on which the prescribed scheme came into force is very much material. Unless and until the scheme took effect, it was non-existent. It was
always open to the Government to change their views and never introduce the scheme at all; it was always possible that the Government might fall and be replaced by another Government of a different political persuasion with different attitudes towards social security legislation. Mr. Shrimpton, in support of this view, drew to my attention the case of Croxford v. Universal Insurance Company [1936] 2 KB p. 253. Where it was held that an insurance company could not rely on a particular provision of an Act which had received the Royal Assent until such provision had come into force. He pointed out what Slesser LJ said in that case at page 270:
"I must now refer to an observation made by Horridge J in the case of Croxford (1) on this point. Horridge J said this: 'in the case, however, the Act of Parliament was known, as it received the Royal Assent on July 31, 1934, and I cannot see why the defendant could not have taken proceedings under sub-s. 3 to obtain protection under that section'. With every respect to the learned judge, I cannot understand quite what the learned judge means by that sentence or what conclusion he intends to draw from it; but, in my opinion, it is impossible to say that for any purpose at all affecting the legal position between the parties s. 10 can be regarded as having any legal existence before the time that it is put into operation by the Minister under s 42 sub-s. 3, of the Act. Either s. 10 of this Act is part of the law or it is not, and it is clear to my mind that before January 1, 1935, the Road Traffic Act 1934, or at any rate such parts of it as the Minister had already brought into force by earlier Orders under s. 42, must be read as if s. 10 did not exist and, reading s. 10 as having no existence before January 1, 1935, important consequences arise in the present case."
Date: 4 September 1992 (signed) Mr. D. G. Rice Commissioner
