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IS/ESA Overpayment due to capital
Client has been overpaid £81,092.22 from 26.02.04-09.07.14 due to undeclared ownership of 5 properties. She has had two IUC’s and her appeal is next week.
Her father had all of the properties transferred to her as a child in the 70’s. She was unaware that the properties were in her name until 28.01.04. She was getting married on 29.01.04 and her father had her sign all of the properties to her children. He has since passed away but it seems like he did this to prevent his daughter’s new husband staking a claim on the capital. It is also suggested he did this due to his daughter’s drug dependency at the time. The DWP are now arguing that the overpayment is recoverable from this date as she knew the properties were in her name (as guardian of the children).
Facts of the case:
She lived in fear of her father and was mentally and physically abused by him from a young age.
Her partner in 2002 tried to drown her and he was sent to jail.
The claimant was a Heroin addict from 2002 - 2007.
She has 4 kids and each has a disability.
She received counselling due to childhood trauma and PTSD (following the drowning incident) from 2007- 2010.
The DWP have searched every bank account and found no financial gain from any property.
She has never been in any of the properties or had any dealings with them whatsoever.
My argument is going to be that my client is not a beneficial owner. The properties were always managed by her father and she has never had any gain from any property. She did exactly what her father said to avoid violence. I will also argue that when she found out the properties were in her name in 2004, her circumstances had not changed as she received no benefit from them. In addition, she was a drug addict at the time.
I am getting evidence from her counsellors and support worker. Any advice, case law or opinion would be greatly received.
Cheers
Allan
Also, is there an argument that she is holding the properties as a trustee for her kids, on the instruction of her father on 28.01.04 and it should not be treated as her capital (page 352 of CPAG)?
When you say the properties were “signed over” to the children, presumably a trust was created with the claimant still the legal owner - is that right? I know there are some big differences between Scottish property law and English/Welsh property law and my small amount of knowl;edge is mainly concerned with England and Wales, but I would guess that it is also the case in Scotlanmd that a chiold cannopt legally own property so iof any of the kids was still under 18 in 2004 they would only have their beneficial interst recognised by way of a trust.
If it’s all in writing it should be easy enough to prove that the claimant did not own any beneficial stake in the properties from 2004 onwards and held thek as a trustee only. The only question then would be whether she deprived herself of the beneficial interest in order to preserve entitlement to IS. That sounds highly unlikely.
If there is documentary evidence of the trust, I am sure the Tribunal will accept the reasons for its creation had nothing to do with claiming benefits. But just to be sure, can you say exactly who is the legal owner and how the children’s beneficial interest is documented?
Thanks for your reply.
All I have is extracts from the Scottish Land register which basically read as follows:
03/06/77 - disposed of by XXXX Properties Ltd to the claimant (DOB 04.01.1974)
28/01/04 - disposed of by the claimant to the guardian of her children (which is the claimant)
As my client had no idea what was going on, and she was signing documents without being able to read them, she would have no formal notifcation or understanding of any trust.
Thanks again
Allan
According to the CAB info system, in Scotland there is no lower age limit for owning property (though under 18s may have difficulties in entering into transactions).
28/01/04 - disposed of by the claimant to the guardian of her children (which is the claimant)
Not sure I follow this .. the transfer was from the claimant to .. herself..?
Client has been overpaid £81,092.22 from 26.02.04-09.07.14 due to undeclared ownership of 5 properties. She has had two IUC’s and her appeal is next week.
There are some things you need to establish;
Obviously who are/is the beneficial owner of the properties, or more importantky can it be shown your client was the beneficial owner;
‘her father had her sign all of the properties to her children. He has since passed away but it seems like he did this to prevent his daughter’s new husband staking a claim on the capital.’ ‘It is also suggested he did this due to his daughter’s drug dependency at the time.’
What proof have you of the late fathers intention?
R(SB) 1/85 deals with grand parents, parents, children and grandchildren gifting and beneficial ownership. Page 469 Sweet Maxwell Vol II. Not clear if this fits this case.
Arguably she never had the beneficial interest in them before 2004 and if correct it could it not be the father simply transferred his beneficial interest to the grandchildren?… or did he simply retain his beneficial interest in yet another name? He initially did this with the properties with his daughter and this could be simply repeating previous behaviour for what ever reason .
‘She has never been in any of the properties or had any dealings with them whatsoever.’
So how were these properties managed with repairs, council tax, possible tenants etc after 2004? This could indicate who the real beneficial owner was.
Did anything change after the father died?
You also need to address possible deprivation and ideas of notional capital if it is found your client was/is the beneficial owner at some point.
This is where you client’s difficult circumstances could play strongly on her intentions and actions and support her appeal but again you will need evidence, and historical medical evidence would greatly help to substantiate your clients case.
The potential trust issues in this case sound far too complex to be wholly addressed on here. For one thing, from what you say it sounds like she was coerced into signing away her legal ownership (if, indeed, she was, in fact, at any stage the legal owner). I’d refer her to a solicitor (preferably a trust specialist) straight away to help get the trust issues resolved.
That said, if she’s never contributed to the purchase price of the properties or paid for improvements to them and did not inherit them (either on testacy or intestacy), or was not gifted them, then it’s likely that she doesn’t have any beneficial interest in them whatsoever, or ever has.
Client has been overpaid £81,092.22 from 26.02.04-09.07.14 due to undeclared ownership of 5 properties. She has had two IUC’s and her appeal is next week.
There are some things you need to establish;
Obviously who are/is the beneficial owner of the properties, or more importantky can it be shown your client was the beneficial owner;
‘her father had her sign all of the properties to her children. He has since passed away but it seems like he did this to prevent his daughter’s new husband staking a claim on the capital.’ ‘It is also suggested he did this due to his daughter’s drug dependency at the time.’What proof have you of the late fathers intention?
R(SB) 1/85 deals with grand parents, parents, children and grandchildren gifting and beneficial ownership. Page 469 Sweet Maxwell Vol II. Not clear if this fits this case.
Arguably she never had the beneficial interest in them before 2004 and if correct it could it not be the father simply transferred his beneficial interest to the grandchildren?… or did he simply retain his beneficial interest in yet another name? He initially did this with the properties with his daughter and this could be simply repeating previous behaviour for what ever reason .‘She has never been in any of the properties or had any dealings with them whatsoever.’
So how were these properties managed with repairs, council tax, possible tenants etc after 2004? This could indicate who the real beneficial owner was.
Did anything change after the father died?
You also need to address possible deprivation and ideas of notional capital if it is found your client was/is the beneficial owner at some point.
This is where you client’s difficult circumstances could play strongly on her intentions and actions and support her appeal but again you will need evidence, and historical medical evidence would greatly help to substantiate your clients case.
We have no proof of the late father’s intentions. It’s just a suggestion based on the timing of the transfer (the day before she was meant to get married), the family’s omission of his ‘dodgy dealings’ and the claimant recollection that he mentioned her drug use when she had to sign documents.
As for the properties, the DWP are focusing on the 3 she still legally owns (as guardian of the children). The other two were transferred to her other sisters and have not been included as capital (I only realised this late yesterday). One has lay empty for about 6 years. The other has her disabled brother living in it (rent free) which is being disregarded. The other has a friend of her father living in it (rent free) as they had ‘an agreement’. Nothing changed once her father died, as there’s no rental income coming from any property and my client has always believed these are her kids properties. The will took 7 years to complete and was finalised late last year. Her father had many properties and would often have them put in the names of my client’s sisters, nieces and nephews. He had a reputation for violence and it was very much ‘no questions asked’.
The DWP have accepted no beneficial interest prior to 2004. They contend beneficial interest from 2004 - present.
I’m confident we can argue no beneficial interest. The argument that they are held in trust is just another bite at the cherry but I will seek specialist advice.
Many thanks to all
According to the CAB info system, in Scotland there is no lower age limit for owning property (though under 18s may have difficulties in entering into transactions).
28/01/04 - disposed of by the claimant to the guardian of her children (which is the claimant)
Not sure I follow this .. the transfer was from the claimant to .. herself..?
In the light of this I’d be looking into whether in fact the 3 properties are legally owned by the children, with her being responsible for the assets during their ‘minority’.
So you would have the same aim (having an adult look after a child’s assets) achieved in two different ways legally. In English law you have trusts where the adult is the legal owner of the asset but is also legally bound to deal with it in certain ways in accordance with the wishes of the settlor and for the benefit of the beneficiary. It seems to me that in Scottish law it is possible for assets to be transferred directly to the child, who becomes the legal owner of the asset, but whose affairs are managed by their guardian.
The DWP have accepted no beneficial interest prior to 2004. They contend beneficial interest from 2004 - present.
You need to be careful to be sure of exactly what the DWP are accepting. From the facts as you have set them out it seems to me more likely that they have decided that she has always had a beneficial interest and was being overpaid but that it only became recoverable from 2004 when they believe she became aware of her assets. Even this seems a bit weird as from what you are saying prior to 2004 she was the legal owner of the assets not the beneficial owner.Given that the Land Registry evidence seems (to me) to be fairly clear that in 2004 she transferred her interests in the assets to her children maybe the DWP are arguing that she had a beneficial interest as the intention of the father at least was to get the properties out of her name and away from her husband (as opposed to the intention being that the assets pass permanently to the children). I would also be double checking that the DWP are not arguing that she deliberately deprived herself and are treating her as having notional capital.
If your client has the resources it is probably worth seeking specialist advise from a property solicitor on who should have been treated as the legal owner(s) of the properties and who they think had beneficial interests over the period.
Tell you what though- if nothing else, the response to the OP backs up the client’s case if only on the basis that the situation is about as clear as mud. And if the geniuses on here can’t figure out the progress of events or who is the beneficial owner of what, it’s hardly likely that the client had any idea of what was going on.
The DWP have never mentioned deprivation of capital (just beneficial ownership). However, if the matter does arise we now have very good evidence from her Psychologist and her CPN. Both confirm serious childhood trauma at the hands of her father and the also describe him as a bully and a tyrant. This backs up our claim that she was simply following instructions to avoid a beating when signing over the properties in 2004.
Thanks again.
Hi
I attended the appeal today…
The PO conceded on the grounds the DWP had taken a simplistic view on the appellant being a beneficial owner and they did not fully consider all of the facts. The PO showed genuine sympathy for the appellant.
After an investigation spanning 1 year and 5 months I did not see this coming!
Thanks to all who contributed.
Allan
Brilliant .... thanks for letting us know Allan
Cheers - Shawn
Good outcome Allan, but what a waste of everyone’s time & money (not to mention the stress it must have caused your client).