KW v Secretary of State for Work and Pensions (IS) [2012] UKUT 350 (AAC)

UKUT-AAC
KW v Secretary of State for Work and Pensions (IS)
[2012] UKUT 350 (AAC) · 2012-09-27
[1]The appellant’s appeal to the Upper Tribunal is allowed. The decision of the First-tier Tribunal i nvolves an error on a point of law. For that reason, and that reason alone, I set aside the tribunal’s decision.[2]The case now needs to be reheard by a new First-tier Tribunal (FTT). I cannot predict what will be the outcome of the re-hearing. The fact that this appeal to the Upper Tribunal has succeeded on a point of law is no guarantee that the re-hearing of the appeal before the new FTT will succeed on the facts .[3]The previous tribunal may or may not have got to the right decision on the facts, although of course it did not hear evidence direct from the appellant. So the new tribunal may reach the same, or a different, decision to that of the previous tribunal. It all depends on the findings that the new tribunal makes. The hearing before the First-tier Tribunal[4]The appellant’s appeal was against the decision that he was not entitled to income support as from 17 October 2011 because he was to be treated as having capital in excess of the maximum limit of £16,000. He had previously been claiming income support until September 2010. He then received a £40,000 inheritance on his father’s death, but reclaimed income support a few months later in January 2011, stating that he had less than £6,000 in capital (although it appears that the true figure at that time may have been about £11,000). The FTT hearing on 27 October 2011 was not attended by the appellant or by his representative. The tribunal dismissed the appeal against the Secretary of State’s decision. The proceedings before the Upper Tribunal[5]In giving permission to appeal, I observed as follows: ‘1. This case has unfortunately become unnecessarily complex. The First-tier Tribunal (FTT) heard the appellant’s appeal in his absence on 27 October 2011 in Cheltenham (doc 64), confirming the Secretary of State’s decision. On 19 November 2011 District Tribunal Judge (DTJ) Riley in Exeter refused an application to set aside that decision (doc 66). On 28 March 2012 DTJ Riley issued a statement of reasons for his decision of 19 November 2011. Subsequently DTJ McLachlan refused an application for permission to appeal the 19 November decision (doc 75). 2. DTJ Riley took his decision because, in short, the appellant had opted for a hearing on the papers and the FTT in Cheltenham was entitled to proceed on that basis. 3. There is no statement of reasons by the Cheltenham tribunal of 27 October 2011 on file. Nor is there any refusal by the FTT of permission to appeal against the decision of 27 October 2011. 4. However, I have the power under the Rules to waive (or disregard) any failures to comply with the procedural rules where it is just and fair to do so. I do so in this case; I am therefore giving permission to appeal e.g. despite the absence of a statement of reasons by the Cheltenham tribunal and a FTT refusal of permission as regards that decision. The appellant’s case in essence is that there was a breach of natural justice and that if his representative’s letter asking for an oral hearing (doc 65, dated 25 October 2011) had been received before the “paper hearing” on 27 October (rather than the actual date of receipt, 28 October), then an oral hearing would probably have been allowed. 5. In actual fact I think the appellant’s case is stronger than that might suggest. I have been able to interrogate the GAPS computer record held by the FTT. The representative’s letter refers to a telephone discussion with a tribunal clerk on 24 October 2011, but without giving clear details of the contents of that conversation. The GAPS record shows that on 24 October 2011 at 10:23;51 the clerk made the following entry: “Telephone call rec'd from the applt's support worker Mr Binnie West Country Housing Association. The above is going to act as a representative on the case and the applt is now requesting an oral hearing. Advised them to write in with a ltr of authority from the applt. (Please note showing as paper case date listed 27th October 2011). Refer to Cardiff.”[6]Despite the reference “refer to Cardiff”, the GAPS record shows no further action in the case between that telephone call and the receipt of the letter on 28 October, the day after the paper hearing. On the face of it this reinforces the argument that there was an (inadvertent) breach of natural justice.[7]Arguably that contention is reinforced by the standard letter which the appellant had received indicating that it was unlikely that his case would be heard before 1 December 2011.’ 6. Mr Mike Watson, the appellant’s CAB representative, and Mr David Bell, the Secretary of State’s representative, have both agreed that the FTT erred in law in its decision for the reasons set out above. I can therefore be brief and allow this appeal to the Upper Tribunal without extensive reasons. I find that the procedural error in this case means that the appellant was denied a fair hearing. I therefore allow his appeal and set aside the FTT’s decision of 27 October 2011. What happens next: the new tribunal 7. There will need to be a complete re-hearing in front of a new tribunal. That tribunal will have to start afresh.[8]However, I must also stress that the fact that this appeal to the Upper Tribunal has succeeded should not be taken as any indication of the possible or likely outcome of the re-hearing. That will be entirely a matter for the good judgement of the new tribunal, applying the relevant law to the facts it finds. Those facts may be a little unusual in this case, and so some further guidance follows.[9]The nub of this case concerns the fact that the appellant managed to dispose of approximately £30,000 of his inheritance in less than four months. He has provided limited documentary evidence as to how that money was spent. He has, however, stated that the money was spent in various other ways, as summarised on documents 51 and 56, including the purchase of bonds and a repayment of an informal debt.[10]He also stated that he spent “£40 to £100 per day on one or two females out of four doing some fetish things for me. This has been going on since I received my money from my dad.” He conceded (understandably enough perhaps in the circumstances) that he has no proof by way of receipts for this expenditure. The decision maker commented that this item “is remarkable in that this is described as daily expenditure. On the whole, however, the item is simply too vague to constitute a satisfactory explanation for a potentially significant amount of expenditure” (document 58).[11]The fact that expenditure is remarkable does not mean that it did not happen. The new tribunal will have to form its own judgment on that issue (and indeed the other matters in dispute). I am not entirely sure what the decision maker is suggesting by stating that the appellant’s explanation was “simply too vague”. He does not appear to have been asked for further and better particulars. The tribunal will have to decide for itself whether some of the money was spent in the way described and, if so, approximately how much. The burden, of course, is on the appellant to show on the balance of probabilities that such expenditure took place. The absence of any receipts is certainly not conclusive of the matter, especially given the nature of the alleged expenditure. The tribunal should bear in mind the helpful guidance given by Mr Commissioner (now Judge) Williams in CIS/515/2006, where (in a slightly different context, the issue there being whether expenditure was from capital or income) he stated (at paragraph 45) that:
‘It is in my view inherently improbable that a claimant … will be able to produce receipts for day to day expenditure for a period several years in the past. She is under no legal duty to keep receipts, or accounts, for past years or at all. She can be asked to produce the records she has, and she can be expected to keep the sort of records reasonable people in her position actually keep.’
[12]In the present case the tribunal, if it accepts the appellant’s evidence, may well take the view that these were cash transactions. The learned Commissioner added in CIS/515/2006 that the appellant was “fully entitled to ask that general conclusions be drawn from her oral evidence and from the actual amounts that she holds in all her assets at any particular time, and from time to time.” It will, therefore, ultimately come down to a question of credibility.[13]The tribunal will also have to bear in mind the well-known principles on the deprivation of capital set out in the decision of Mr Commissioner Hallett in R(SB) 38/85. In particular, the deprivation must have been for the purpose of securing benefit, or increasing the amount of such benefit, although that purpose need not be the predominant motive. Mr Commissioner Hallett gave the following example:
‘Suppose a claimant on supplementary benefit inherits a large sum of money and proceeds to gamble with it and incur losses. Someone warns him that if he continues in this way he will be back on supplementary benefit and he replies “If I lose, that is my idea”. His predominant purpose in gambling with the money would obviously be to win at gambling. But it would be open to the adjudicating authority to decide on the facts that another purpose was to obtain supplementary benefit.’
[14]So, in relation to the alleged item of expenditure on sexual services in the present case, the tribunal will first have to decide whether – unlike the decision maker – it accepts that the appellant’s account is true. If so, the tribunal might well – and, of course, fact finding is quintessentially a jury question for the tribunal – take the view that the appellant’s predominant motive in paying for fetish services was sexual gratification. It may still be open to the tribunal to conclude that a significant operative purpose was to re-qualify for benefit. However, the tribunal must remember that the reasonableness or prudence (or otherwise) of the expenditure in question is not the test. Rather, the appellant’s significant operative purpose(s) must be identified, which is a subjective question (see R(H) 1/06 at paragraph 13).[15]Each case, inevitably, turns on its own facts. However, the tribunal may well find the guidance in R(H) 1/06 of particular assistance given that there is some similarity in the factual background. In R(H) 1/06 the appellant suffered from schizophrenia and had difficulty in managing by himself. He had also spent nearly £70,000 of an inheritance in a matter of five months before reclaiming housing benefit. There was, however, psychiatric evidence that the appellant was unlikely to have fully appreciated the potential implications of his behaviour. In the present case the appellant states that he has a personality disorder and had always relied on his father to control his expenditure. There is no other direct evidence of any diagnosis on file, but the appellant has clearly had assistance from a mental health support worker in bringing his appeal in the first place. His new representative may well wish to obtain expert evidence for the new tribunal as to the appellant’s mental health diagnosis and its implications. Conclusion[16]I conclude that the decision of the First-tier Tribunal involves an error of law. I allow the appeal and set aside the decision of the tribunal (Tribunals, Courts and Enforcement Act 2007, section 12(2)(a)). The case must be remitted for re-hearing by a new tribunal subject to the directions above (section 12(2)(b)(i)). My decision is as set out above. Signed on the original Nicholas Wikeley on 27 September 2012 Judge of the Upper Tribunal

Cited in 2 later judgments