Casewell v Secretary of State for the Home Department [2008] EWCA Civ 524

Case No C3/2007/1818[2008] EWCA Civ 524
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE SOCIAL SECURITY COMMISSIONERS
(COMMISSIONER CHARLES TURNBULL)
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate Tuesday, 11 th March 2008
Before
LORD JUSTICE TUCKEYLORD JUSTICE RIXSIR ROBIN AULD
Between
CASEWELLAppellantTHE SECRETARY OF STATERespondentFOR THE HOME DEPARTMENTRespondent
(DAR Transcript ofWordWave International LimitedA Merrill Communications Company190 Fleet Street, London EC4A 2AGTel No: 020 7404 1400 Fax No: 020 7831 8838Official Shorthand Writers to the Court)
Mr D Kolinsky (instructed by the Child Poverty Action Group) appeared for Appellant.Mr M Chamberlain (instructed by the Solicitor to the Department of Work and Pensions) appeared for Respondent.
Judgment

Sir Robin Auld:

[1]A local authority may, instead of itself providing community care to a person in need of it, make community care service payments to that person with a view to him or her utilising them to secure care from a third person or persons who may, if the authority is satisfied that it is necessary, be a close relative such as a spouse. So much is evident from the scheme set out in section 57(1) of the Health and Social Care Act 2001 (“the 2001 Act”) and section 47 of the National Health Service and Community Care Act 1990 (“the 1990 Act”), coupled with Regulations 4 and 6 of what I shall call the 2003 Direct Payments Regulations The Community Care, Services for Carers and Children’s Services (Direct Payments) (England) Regulations 2003. .[2]The question raised by this appeal turns on two main provisions: 1) paragraph 58 of Schedule 9 to the Income Support Regulations 1987 (“the 1987 Regulations”), which provides for the disregard of a community care payment under the 2001 Act, and/or; 2) section 136(1) of the Social Security Contributions and Benefits Act 1992 (“the 1992 Act”), which provides for the treatment of a family as a single assessment unit for the purpose of entitlement to, and calculation of, income support. The question in the light of those provisions is whether, and in what circumstances, such a payment is to be taken into account for the purpose of determining entitlement to or calculation of income support. As section 136(1) of the 1992 Act is said by Mr Daniel Kolinsky on behalf of the appellant, Mr Casewell, to be at the heart of the case, I had better set it out straight away but will return to it as the judgment progresses. It provides:
“Where a person claiming an income-related benefit is a member of a family, the income and capital of any member of that family shall, except in prescribed circumstances, be treated as the income and capital of that person.”
[3]This is Mr Casewell’s appeal, with leave, from Mr Commissioner Turnbull’s decision of 14 March 2007 holding that direct payments of £73.50 a week from his local council to his severely disabled wife for payment to him under the 2001 Act and Regulations 4 and 6 of the 2003 Direct Payments Regulations for his care of her should be treated as earnings to be taken into account in calculating his entitlement to income support under that Act.[4]Mr Casewell’s case is that the weekly payments of £73.50 to him should not be treated as his earnings for that purpose, as they are to be disregarded under section 57 of the 2001 Act and Regulation 40 of, and Schedule 9, paragraph 58 to, the 1987 Regulations. Those provisions require disregard “from the calculation of a claimant’s gross income other than earnings” of “any payment made under” the 2001 Act.[5]Put shortly, the appeal raises the question whether the combined effect of the 1987 Regulations and section 136(1) of the 1992 Act is to preclude the payments to Mr Casewell from being taken into account in calculating his entitlement to income support.[6]Mr Kolinsky suggests that the question raises a fundamental point about the way in which income is assessed within the income support statutory scheme, namely by the pooling of the income of the relevant family unit -- here, Mr Casewell and his wife.

The Facts

[7]The facts are reasonably straightforward. I say “reasonably” for a reason that will appear in a minute. Mrs Casewell has received for some time a number of allowances in respect of her severe disability, including a disability living allowance at the higher rate for both care and mobility components, child benefit and severe disability allowance. Mr Casewell, who has also for some time been in receipt of income support, has cared for his wife.[8]Prior to moving within the administrative area of Staffordshire Council in 2004, Mr and Mrs Casewell had lived within the administrative area of Stoke-on-Trent City Council, each of them receiving direct payments from that council. Mr Casewell’s payment, which was paid direct to him as a carer to give him support in that capacity as carer for his wife, was payable under section 2(1) of the Carers and Disabled Children Act 2000 and was not regarded as earnings for the purpose of calculating his entitlement to income support.[9]On Mr and Mrs Casewell’s move in 2004 to the administrative area of Staffordshire Council that council undertook responsibility for their community care requirements, which remained the same, or much the same. However, the council undertook a new community care assessment, as a result of which it introduced a new care plan for Mrs Casewell. Among other provisions for her, the new plan provided under the different regime of section 57 of the 2001 Act for direct payment to her of £73.50 a week to meet the cost of Mr Casewell providing care for her for some 11.5 hours a week.[10]The mechanics of the accounting for the payment were undertaken by an organisation called The Rowan Organisation, which provided a payroll service for the council for direct payments. The council made the various payments due to Mrs Casewell direct into her bank account, including the sum of £73.50 referable to Mr Casewell’s care of her, and instructed her to pay the appropriate sum to him weekly against a payslip in his favour issued by The Rowan Organisation. As the Commissioner observed in paragraph 17 of his determination, whether Mrs Casewell did in fact make over discrete payments to Mr Casewell or whether it all went into the family pool is unclear but immaterial. This is how he expressed his findings of fact on this aspect of the matter in response to his own question:
“Did Mrs Casewell engage Mr Casewell to provide care services in exchange for payment? 17. I find, on the basis of the evidence referred to above, that £73.50 per week was paid to…[Mrs Casewell] by the local authority to enable her to purchase care services which were to be provided by…[Mr Casewell], and that the Rowan Organisation, with the knowledge of…[Mrs Casewell] and…[Mr Casewell], prepared wage slips showing the amount which she should pay to…[Mr Casewell]. …[Mr Casewell] did provide the services in question. Whether…[Mrs Casewell] formally actually made the payments to…[Mr Casewell] does not appear from the papers, although I suspect that she did not. I do not think that it matters for the purposes of this appeal. I do note, however, that…[Mr Casewell] said in his grounds of appeal to the Tribunal that they were told by the local authority that ‘they [i.e. the local authority] would pay it into…[Mrs Casewell’s] Direct payments bank account and she would then have to write me a cheque each week’. 18. In my judgment the only conclusion which it is possible to reach, on the above findings, is that…[Mrs Casewell] did engage…[Mr Casewell] to provide care services for her in consideration of payment equal to the amount of the direct payments.”
[11]The effect of this arrangement, if the payment of £73.50 per week did fall to be treated as his earnings in assessing Mr Casewell’s entitlement to income support, was to reduce his income support award by £53.50 per week pursuant to the provisions in paragraph 6A of Schedule 8 to the 1987 Regulations. That is, the £73.50 was treated as earnings and income of Mr Casewell, subject to a disregard of £20.

The Tribunal’s Decision

[12]The Stoke-on-Trent Appeal Tribunal before which Mr Casewell challenged that outcome had upheld his appeal, finding in its decision notice that the payments made by the council to cover the cost of Mr Casewell’s care of his wife were essentially payments to Mr and Mrs Casewell as a family unit, not under the 2001 Act, and therefore did not occasion any reduction in his income support. “…The facts in this case are not in dispute... [Mrs Casewell] receives Community Care payments from Staffordshire County Council. The payments are made to her. There are no other payments from sources outside the family in respect of Community Care. For some inexplicable reason Mrs Casewell is provided with a pay slip for her husband from the Rowan Organisation for the same amount as the Community Care payment. The money is a Community Care payment. It is not earnings. It is not a job which Mr Casewell does. He cares for his wife and payments are made so that he can have a break from that care. It is axiomatic that the situation should be taken as a whole and not split up so that it gives a different and incorrect picture. The Council may use Rowan Organisation for its own purposes but that does not affect the position of the money in the hands of Mr and Mrs Casewell. It is not earnings derived from employment as an employed earner.” Its brief Statement of Material Facts and Reasons were to like effect: “It is suggested that…[Mr Casewell] is an employed earner. The situation should be looked at in the round. He is doing exactly what he has done before. He is not employed by his wife. The…[Secretary of State] has not shown that they have an employer/employee relationship.

The Commissioner’s Decision

[13]The Commissioner took a different view, holding, pursuant to the power given to him in section 14(8)(a)(iii) of the Social Security Act 1998, that the Tribunal’s conclusion that Mr Casewell was not in receipt of “earnings” from Mrs Casewell was not one to which it could, on the evidence before it, permissibly have come. He said that, for that reason, its decision was erroneous in law and it was therefore appropriate for him to substitute his own decision for that of the Tribunal on the basis of his findings of fact.[14]The Commissioner held that: 1) Mr Casewell was in receipt of earnings from Mrs Casewell because he provided his services to her in consideration of a payment equal to part of the direct payment to her, as provided under the 2001 Act and the 2003 Direct Payments Regulations; and 2) those earnings were not to be disregarded by virtue of section 136(1) of the 1992 Act.[15]As to the £73.50 being Mr Casewell’s earnings, the Commissioner referred to section 57(1) of the 2001 Act which, as I have said, coupled with Regulations 4 and 6 in the 2003 Direct Payments Regulations, enables a responsible authority to authorise a person in need of care to whom it makes a direct payment to pay a carer, if necessary a spouse or close relative, “such payments as the authority may determine in respect of his securing” inter alia a community care service to him or her.[16]The Commissioner’s findings of fact, which I have summarised above, were squarely within those provisions, namely that Mrs Casewell paid Mr Casewell £73.50 weekly in consideration for his services as a carer to her, services in respect of which that sum had been provided by the council to her for payment to him. This is how the Commissioner put it in paragraphs 24 and 25 of his decision:
“24. When one takes into account in addition the fact that Rowan Organisation, with the knowledge of…[Mrs Casewell] and…[Mr Casewell], prepared wage slips showing the amount paid to…[Mr Casewell], as the person who was to provide the care services which the direct payments were intended to purchase, the irresistible inference is in my judgment that…[Mrs Casewell] must be taken to have engaged…[Mr Casewell] to provide the care services in consideration of payment equal to the amount of the direct payments. It is not in my judgment possible to conclude that…[Mrs Casewell] simply retained the direct payments and did not utilise them to purchase care services provided by…[Mr Casewell] (i.e to regard…[Mr Casewell] as having provided all his care voluntarily and without payment). So to conclude would amount to saying that…[Mrs Casewell] did not use the direct payments for the purpose for which they were paid to her, and would fly in the face of the evidence emanating from the Rowan Organisation. (It would further mean that the direct payments would be recoverable by the local authority). 25. It matters not whether…[Mr Casewell] is regarded as an “employed earner” (within regulation 29 of the 1987 Regulations) or as a “self-employed earner” (within regulation 30). In either case the sums paid to…[Mr Casewell] are in my judgment “earnings” which, subject to the argument considered under (2) below, fall to be taken in to account in calculating the amount of his income support entitlement. Even if the Tribunal was technically correct in saying that…[Mr Casewell] and…[Mrs Casewell] did not have an ‘employer/employee relationship’, …[Mr Casewell] was in my judgment certainly engaged by…[Mrs Casewell] to provide care services for reward.”
[17]As to whether the direct payments should be disregarded under section 136(1) of the 1992 Act, the Commissioner’s response was much the same as that to section 57 of the 2001 Act and the 2003 Direct Payments Regulations, namely that there were two payments here, not one: the first from the council to Mrs Casewell, which fell to be disregarded in computing their joint income, and the second from her out of her receipt to him, which were, on his findings of fact, his earnings. “27. The argument presented on behalf of…[Mr Casewell] in response to this appeal is that the effect of s.136(1) is that the direct payments received by…[Mrs Casewell] were treated as received by…[Mr Casewell] in the form of direct payments (and were therefore required to be disregarded under para. 58 of Schedule 9), so that there is no scope for treating that income as having then been paid to him a second time, but this time by…[Mrs Casewell] in the form of ‘earnings’. 28. If there had been no exemption for direct payments in para. 58 of Schedule 9 it would very arguably have been wrong to treat…[Mr Casewell], for income support purposes, as having been in receipt of both(a) the direct payments and(b) the sums paid by…[Mrs Casewell] to…[Mr Casewell] in order to purchase the care services. To do so would have involved an unfair element of double-counting. 29. In my judgment, however, the short answer to…[Mr Casewell’s] contention is to be found in regulation 23(1) of the 1987 Regulations, which provides that ‘the income and capital of a claimant’s partner which by virtue of section 136(1)… is to be treated as income and capital of…[Mr Casewell], shall be calculated in accordance with the following provisions of this Part in like manner as for…[Mr Casewell] …….. 30. Regulation 40 (which imports Schedule 9) is in the same Part of the 1987 Regulations as regulation 23. The effect of reg. 23 is therefore that the direct payments were to be disregarded in computing…[Mrs Casewell’s] income, and were therefore not to be treated as included in…[Mr Casewell’s] income under s.136(1). There is therefore in my judgment no obstacle, arising from s.136(1), in including in…[Mr Casewell’s] income the payments which must be taken to have been made by…[Mrs Casewell] to him.”[18]All this was of a piece with the Commissioner’s central point that, if some third person had been the carer instead of Mr Casewell, the payments would have been payable to that third person, and therefore not capable of becoming a contribution to the family income. “31. It cannot be correct to say that. s.136(1) necessarily prevents payments made by one spouse to the other ( where they are living together) being treated as part of the latter’s income for income support purposes. If, for example, a self-employed man employs his wife in the business, the latter’s salary would in principle be taken into account in determining his income for income support purposes. 32. The conclusion which I have reached does not seem to me to conflict with the policy which is likely to underly the exemption for direct payments in para. 58 of Schedule 9. That policy is presumably that direct payments are intended to be spent in purchasing from a third party care services which would otherwise have had to be provided by the local authority, and therefore do not represent a real net increase in the family’s income. But if (as here) the money is not spent in purchasing care from a third party, there is a real increase in the family’s net income”.

Submissions

[19]Mr Kolinsky, as he frankly acknowledged, has but one point: that the payments, first to Mrs Casewell and then in the case of the £73.50 care payments to Mr Casewell, were, in fact, all part of one pot and fell to be dealt with in the same way, both on her receipt of the money and on her payment to Mr Casewell of his care service payment. He submitted that the Tribunal’s decision is to be preferred as one of common sense analysis, untrammelled by the confusing and artificial bureaucracy of The Rowan Organisation and payslips, and as one consistent with the statutory scheme of treating wife and husband as part of the same unit for income support purposes. He submitted that the Commissioner’s approach overlooked the way in which income is assessed within the income support scheme, namely that the income of the relevant family unit -- here, Mr and Mrs Casewell -- should be pooled. For this purpose he relied heavily on section 136(1) of the 1992 Act, and drew attention to the definition of “family” in section 137(1) of the Act as including a married couple, and to the provisions for disregarding income other than earnings in particular in respect of direct payments to carers under section 2 of the 2000 Act as well as to those in need of care under section 57 of the 2001 Act.[20]He submitted that it makes no sense and is inconsistent with that statutory scheme, of which section 136(1) of the 1992 Act is part, to conclude that any transfer of funds between members of a family unit should be treated as the earnings of the recipient. He suggested that the Commissioner went wrong in law in concluding that the payment or deemed payment by Mrs Casewell to Mr Casewell was “earnings” since that payment was simply one within the family. To that extent, he suggested, it amounted to double-counting, because the money in question was, he maintained, income of Mrs Casewell when she received it, albeit that it fell to be disregarded as her income by virtue of Schedule 9, paragraph 58 to the 1987 Regulations.[21]Mr Martin Chamberlain, for the Secretary of State, submitted that: 1) the Commissioner correctly regarded the payments as Mr Casewell’s earnings, as they were made from monies paid to Mrs Casewell by the council as a substitute for services that it would otherwise have had to provide for her direct or which she would have had to secure from some other person; and 2) payment by her, whether in specie or by cheque or for practical purposes through the family housekeeping from which Mr Casewell also benefited, was a necessary part of compliance by her with the direct payment scheme, including the requirement that the council should be satisfied that Mr Casewell was a suitable person to provide those services and the obligation on Mrs Casewell to inform The Rowan Organisation of the hours of care he provided, the evidencing of his services by payslips, and the fact that if he did not or could not provide the services she would have to engage and pay some other person to do so.[22]In short, Mr Chamberlain submitted that the payment by the council to Mrs Casewell was earmarked for payment by her to Mr Casewell for the services that he provided and was thus not to be regarded as “within the family” (to borrow Mr Kolinsky’s turn of phrase) from the time of her receipt of the money.[23]Mr Chamberlain submitted that the same considerations apply to the operation of section 136(1) of the 1992 Act, since it does not require consideration of the payments only at the time of receipt by Mrs Casewell and before their required disbursement by her to Mr Casewell in payment for his care services, but also of her accountability to the council thereafter for putting the money to proper use by paying him for care services she needed. Conclusions[24]As far as I can see from the labyrinth of primary and delegated legislation that covers this area of the law, there are at least three ways in which the state, through responsible authorities provide for those in need of care. They are: 1) services provided direct by the responsible authority to the person in need; and/or two, direct payments to the person in need in order to enable him or her to secure the necessary services, as provided under section 57(1) of the 2001 Act and the 2003 Direct Payment Regulations; and/or three, direct payments to carers under section 2(1) of the 2000 Act. As is plain, the mode in play here is the second: direct payments to the person in need of care, Mrs Casewell.[25]The power of a responsible authority to provide for direct payment to a person in need of care, as provided by section 57 of the 2001 Act, is exercisable where the authority decides that a person require community care services that he or she can secure through engagement of, and payment to, a third party or parties. Importantly - and as I have indicated - the statutory scheme excludes provision for direct payments to close relatives of the person needing the care “unless the responsible authority is satisfied” that securing the service from such a person is “necessary to meet satisfactorily that person’s need for that service” – see Regulation 6(1) of the 2003 Regulations. The making by that person where authorised by the responsible authority, of a direct payment to a spouse or other close relative to secure the service does not, in my view, render it any the less earnings in the relative’s hands so as to bring it within the notion of the family income for the purpose of the section 57 regime or that of section 136(1) of the 1992 Act. As Mr Kolinsky noted, there is no statutory definition of earnings or income in this context. Not surprisingly, the approach of commissioners and tribunals to date has been to give those terms their ordinary and natural meaning as payment by one to another.[26]Before continuing, I should return to the scheme of the 1992 Act in providing income support. Income support, as the term indicates, is designed to stand in place of income by way of earnings where there is no such income, or to supplement it where it is inadequate, as provided by the Act. The scheme of section 136 of the Act, including section 136(5b), is to provide a machinery for identifying and calculating income and capital for the purpose, including in section 136(5)(b) what is to be disregarded. Provision for what is to be disregarded is, as I have said, to be found in section 57 of the 2001 Act and Schedule 9, paragraph 58 to the 1987 Regulations, which logically enough has the effect of disregarding any direct community care payments in the calculation of income for this purpose. Section 136(1) lumps together all the income and capital of members of a family where one or more of them claims income support but which, as community care payments, are to be disregarded fully or partially. Thus, community care payment to Mrs Casewell is disregarded for the purpose of assessing income support for Mr Casewell.[27]It follows that when Mrs Casewell pays the money, or is deemed to pay the money, to Mr Casewell for her care, she is disposing of what has no relevance to his entitlement to income support, save that, in his hands, it is not a community care payment so as to qualify for disregard under paragraph 58. It is earnings which go to his income and that of himself and Mrs Casewell under section 136(1). Mr Chamberlain, in his helpful speaking note, put the matter well. He said that the purpose of section 136 is to aggregate spouses’ income for the purpose of assessment.[28]There is no double-counting of the £73.50. It is disregarded in the wife’s hands as income other than earnings but it is taken into account for the purposes of the assessment of the family unit as earnings of the husband, a proposition which is of a piece with the Commissioner’s own conclusion in paragraph 32 of his decision. Here, the Commissioner has found, on the facts and consistently with the statutory framework under which the direct payments were made to Mrs Casewell, that Mr Casewell’s £73.50 a week was just that -- payment to him by his wife by way of earnings for services rendered, payment that she would have had to make to another if he had not been available to provide the care required or by the local authority if it had not been satisfied that he could provide it -- see Regulation 6(1) of the 2003 Regulations. As the Commissioner and Mr Chamberlain have emphasised, that provision restricts the application by her of the money to the purpose intended for it by the local authority, payment to another for necessary care service whether that other is a relative or not.

(b) of the 2003 Regulations a correlative obligation:

“[t]o provide such information to the responsible authority as they consider necessary in connection with the direct payment.”
Failing such proper accounting, the responsible authority may require repayment of the money -- see Regulation 9 of the 2003 Regulations.[29]It follows, in my view, that the ruling of the Commissioner and the submissions of Mr Chamberlain should prevail. They are of a piece with the policy of Regulation 40(2) of, and paragraph 58 of Schedule 9 to, the 1987 Regulations as to what should be disregarded in the calculation of income other than earnings for the purpose of determining income support: namely, a direct payment by the responsible authority to - in this case - the person in need of care, not to the carer as part of a community service provision. The weekly payment by Mrs Casewell of £73.50 to Mr Casewell, if disregarded for the purpose of calculating his income support, would have represented an increase in the family income, as well as a means of paying him for his services in meeting Mrs Casewell’s needs. As the Commissioner observed in paragraph 32 of his decision, if he had not provided such services they would have either have had to be provided by the council or from another third party without a correlative increase in the family income.[30]For those reasons, I would uphold the Commissioner’s decision and would dismiss the appeal.

Lord Justice Rix:

[31]I agree. At one time I thought that there was a factual element to this appeal based upon Mr Kolinsky’s support for what he termed the common sense factual approach of the income support Appeal Tribunal to which my Lord, Lord Justice Auld has referred in the course of his judgment. Nevertheless in the course of argument it became clear that Mr Kolinsky did not maintain his factual opposition to the Commissioner’s decision but rather accepted that there was one single point on this appeal, and that a point of law, based essentially on section 136 of the 1992 Act. On that point of law, for reasons given by my Lord, Lord Justice Auld, with which I am in full agreement I agree that this appeal must be dismissed. Lord Justice Tuckey:[32]I also agree that this appeal should be dismissed for the reasons given by Lord Justice Auld in his judgment.

Order

Appeal dismissed.