I have a case under appeal which I am struggling to find an argument for. My client, in her late 50's had a balance of £12000 to pay off her mortgage. She accumulated approx £15000 and then paid off her mortgage in full. She saved this money specifically to pay off her mortgage. The account was a normal savings account.

This occurred before the increase in capital limits and as a result, my client has been overpaid £10000 (because she had savings in excess of £8000). She now has about £2000 in the bank, has paid off her mortgage but has a £10000 overpayment.

Can anyone suggest an argument or any caselaw that I can use to assist my client at appeal?

(My client has the support of her Councillor and I have suggested that if unsuccessful at appeal, we ask for the overpayment not to be recovered. We can use the argument that she genuiunely saved to pay off her mortgage. She only finds herself in this position because she did not place her savings in the correct investment (ie in trust etc)).

Any help would be appreciated.

Steve.

I don't know what you mean by "in trust etc". I can't think of a form of investment that would not have been treated as capital in her hands and still be available uniquely to her to pay off her mortgage.

Have they done a diminishing captial calcualtion on the overpayment?

Thanks for your reply.

A diminishing capital calculation has been completed.

The capital could be placed in trust and specifically intended to pay off the mortgage. If the capital was not available to the client for any other purpose, it should be disregarded. Alternatively, she could have paid into an endowment or an investment specifically designed to pay off the capital element of the mortgage.

But I don't think it could be put in trust for this purpose by her: it would in fact be an unenforceable purpose trust which she could revoke at any time as there would be no-one else involved. As she is in effect the sole beneficiary as well as creator of this trust she would have the right to the money unaffected and would in legal terms be doing nothing at all. You don't create a trust just by calling it one: equally (though try telling this to DWP) the word "trust" and written evidence is not normally necessary to creat what is in legal terms a trust.
It would be different if someone else had given her the money for the express purpose as it they would have the right to recover it from her if not used for that purpose, on the basis of a Quistclose-type resulting trust.

The only real exception to the above being where the funds that comprise the trust derive from personal injury compensation - ie if you decide to set up a trust with such funds, the trust is disregarded as capital.