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Housing Benefit overpayment due to capital held in a fixed term Maturity Bond

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Gareth Morgan
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hbinfopeter - 10 January 2017 06:49 PM

The facts seem to be that the claimant had over 16K in capital which she did not declare

But that is the question - is it capital?  I tend to think not.

     
hbinfopeter
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Happy to agree to disagree….from an independent point of view and after having done a lot of tribunal hearings (too many!) right across the UK (as I am sure many of those on Rightsnet have).

I am minded of the recent decision CH/1815/2016 by Judge Jacobs where he said about property:  “I have read the commentary on regulation 51 in CPAG’s Housing Benefit and Council Tax Reduction Legislation (28th edition 2015/2016). It is, I think, rather too pessimistic about the possibility of placing a value on a part share when the joint owner does not wish to sell. Since the decisions cited, the Commissioners and subsequently the Judges of the Upper Tribunal have, through their experience of cases, become aware of markets that exist for investors in such shares”.

I think that comment rejects a lot of previous caselaw built up over many years. Similarly, in my view a guaranteed cash bond held for a limited period could easily be borrowed against….. either by an overdraft facility or commercial arrangement with someone like Metro Bank. My main point though is that the funds were apparently not declared. As such, it is at least arguable that an offence has occurred and in my experience pushing the LA very hard on what I think are some dubious issues (others on here do not agree) may likely get backs up and make the LA refer the case. Here a Tribunal rejection could be very dangerous for the claimant. There are cases to fight. I was trying to suggest that a softly approach and accepting the revised overpayment might well be a more appropriate decision…..but after 34 years in HB I really don’t mind anyone disagreeing with me!

     
ClairemHodgson
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hbinfopeter - 11 January 2017 09:12 PM

Similarly, in my view a guaranteed cash bond held for a limited period could easily be borrowed against….. either by an overdraft facility or commercial arrangement with someone like Metro Bank.

as i understood the original post, the relevant bond had a term that it could not be borrowed against.  Any lender would want to see the bond and its contractual terms, and if that is what it said, it would not lend against it as it would not provide security for its loan.

     
Elliott S
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Brian Fletcher - 10 January 2017 11:16 AM

Looking at the second bond which holds ‘money on account for her daughter, and this was given to her by her terminally ill mother-in-law (the daughter’s paternal grandmother) to give to the daughter when she came of age.’

To create an express trust, you must satisfy what are known as the three certainties. There must be: A certainty of intention, in that the words used must demonstrate an intention to create the trust; A certainty of the subject in that the property comprising the capital of the trust and the interests of beneficiaries must be clear: A certainty of objects, in that the beneficiaries must be identifiable (Knight v Knight)

Taking those in order. It is well settled that you can create a trust without actually using the word trust, the question is whether sufficient intention to create the trust has been manifested (Re Kayford). It is necessary that the settlor of the trust uses ‘imperative words’ in order to demonstrate an obligation under a trust, rather than precatory words which only create a discretionary power. An example of attempting to create a trust but failing is Re Adams and the Kensington Vestry where the terms of a will stated

‘I give devise and bequeath all my real and personal estate .. to my wife .. in the full confidence that she will do what is right as to the disposal thereof between my children, either in her lifetime, or by her will after her decease’.

The court held that the widow took the property absolutely and there was no trust.

In this case there was at least a trust instrument indicating an intention (notwithstanding that the intention was found lacking). Your client doesn’t have the benefit of any sort of document, and she says that she intends to give it to her daughter no earlier than when she turns 21 rather than 18, which is when of course she comes of age. This rather suggests that the settlor gave no real direction on the terms of the supposed trust or interest of the beneficiary, and that your client is setting terms by which the alleged trust operates. On the evidence, I don’t think that there is sufficient certainty to indicate the existence of an express trust for your client’s daughter.

This may not totally kill the argument though. There does not necessarily need to be any written evidence of a trust consisting of pure personality in respect of the operation of resulting, implied or constructive trusts (s.53(2) Law of Property Act 1925). If ‘A’ has transferred property to ‘B’ to create a trust and the exercise has failed and there is no trust to benefit ‘C’; is ‘B’ holding the property on resulting trust for the estate of ‘A’. You would of course need to show evidence that the transfer was made, and overcome the presumption that it wasn’t an outright gift

Thank you Brian for this really useful post. I think to further expand on when she intends to give this money to her daughter, she said the original intention was 18, but the daughter is suffering with mental health problems and for that reason she does not intend to give it to her until 21 when hopefully she has made some way of a recovery and has a job. Nevertheless it is still very much open to interpretation given the complete lack of paperwork and I think it would probably fall on whether she is found to be believable.

     
Elliott S
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hbinfopeter - 10 January 2017 06:49 PM

Got to say as an independent I found a lot of these arguments very tenuous. The facts seem to be that the claimant had over 16K in capital which she did not declare for many years and presumably she signed various claim and review forms without mentioning the accounts at all? Applied for a DHP payment and completed and signed those forms? The monies were discovered by a data match? Clearly the calculation o f the net overpayment may well be incorrect and can be reduced significantly. 

Am minded of a Tribunal involving undeclared capital where the rep rather got the Tribunal Judge’s back up by trying to argue some “blue sky thinking” and the latter pointedly asked me whether a “criminal prosecution” would be taking place following the hearing. Ouch.

You are correct in your assumptions, although not sure how many HB review forms she may have completed if any, and the DHP application form does not ask for any information about capital. Client explains she had completely forgotten the money existed. Whilst I am satisfied I believe her account her having said this to my face, I equally cannot imagine forgetting I had such a large amount of money. LA appear not to have referred it for investigation, or at least have not said anything to this effect, but I take your point that it might risk attracting unwanted attention and that is clearly something my client will need to consider.

hbinfopeter - 11 January 2017 09:12 PM

Happy to agree to disagree….from an independent point of view and after having done a lot of tribunal hearings (too many!) right across the UK (as I am sure many of those on Rightsnet have).

I am minded of the recent decision CH/1815/2016 by Judge Jacobs where he said about property:  “I have read the commentary on regulation 51 in CPAG’s Housing Benefit and Council Tax Reduction Legislation (28th edition 2015/2016). It is, I think, rather too pessimistic about the possibility of placing a value on a part share when the joint owner does not wish to sell. Since the decisions cited, the Commissioners and subsequently the Judges of the Upper Tribunal have, through their experience of cases, become aware of markets that exist for investors in such shares”.

I think that comment rejects a lot of previous caselaw built up over many years. Similarly, in my view a guaranteed cash bond held for a limited period could easily be borrowed against….. either by an overdraft facility or commercial arrangement with someone like Metro Bank. My main point though is that the funds were apparently not declared. As such, it is at least arguable that an offence has occurred and in my experience pushing the LA very hard on what I think are some dubious issues (others on here do not agree) may likely get backs up and make the LA refer the case. Here a Tribunal rejection could be very dangerous for the claimant. There are cases to fight. I was trying to suggest that a softly approach and accepting the revised overpayment might well be a more appropriate decision…..but after 34 years in HB I really don’t mind anyone disagreeing with me!

I am guessing the decision you quote is the one Peter Turville alluded to above so thank you for bringing it to my attention. That is actually rather disappointing. I personally have absolutely no idea how I would go about raising borrowing off a maturity bond should I have the good fortune to hold one. An Internet search appears to bring up nothing. I would want to challenge the assertion that because some experienced judges have come across ways to do this that it was not reasonable for someone to take the terms of their bond at face value and assume they cannot raise any value from it. However, I would be well out of my depth!!

I am certainly not intending to reject the principle of the over payment overall. Clearly my client should have notified the LA of the capital when originally claiming and when it matured; whilst I accept her reasoning as to why she did not and therefore that she did not knowingly fail to disclose, I am not qualified to deal with any criminal ramifications and if they do arise I have advised she should seek legal advice.

The three things I want to achieve are:

1) Get LA to accept the bonds had realisable value from the start of her claim until they matured
2) Get LA to accept the smaller bond is held on account for her daughter
3) Whether or not the above is achieved, get LA to apply Reg103 to reduce the value of the overpayment

Clearly there are question marks over 1 and 2, but hopefully 3 should be straight forward. Once I get to see extra evidence next week I will know where we stand and whether 1 and 2 are worth the bother.

Thanks again for everyone’s input; I will try to remember to feedback the result whenever that might be!