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Forum Home  →  Discussion  →  Decision making and appeals  →  Thread

Deprivation of Capital

SClark01
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Welfare Rights, Drumchapel Citizens Advice Bureau, Glasgow

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Hi there

I represented a client at an ESA appeal today.  He had an ESA claim beginning from June 2016 but this ended in November 2017 because he had failed to tell them about capital exceeding £16,000.  This was money left to him by his late wife who passed away in Jan 2017.  He was asked to repay £2,000+ and did so.  But just days after the compliance interview at the end of November, he used pretty much all of the money to purchase his former marital home (this is a long story) and then reclaimed ESA.  The DWP rejected his claim saying that the significant operative purpose of the house purchase was to obtain benefit entitlement. 

I checked two discussion threads on this website, specifically about using capital to buy another asset - one a funeral plan (in the other benefit issues thread) and the other a home (in the benefits for older people thread).  I am aware of the unfavourable case law (R(IS)13/94 etc) but tried to argue that it would be reasonable for him to buy his former marital home, particularly as he was staying in temporary council accommodation.  The reason for the delay is due to cultural/family issues and a family dispute after his wife’s passing. 

He showed me a bank statement prior to the hearing which confirmed an amount far exceeding £16,000 being in HIS account before she passed away and remaining there pretty much untouched until he bought the house.  I didn’t submit this to the tribunal because for me, the issue of the amount of capital was never in dispute.  Also, the DWP’s submission focused more on his intentions in buying the house which is why his NEW claim for ESA was rejected, rather than the circumstances surrounding the ending of his previous claim and overpayment. 

Unfortunately the client referred to the bank statement being in my possession AFTER contradicting the evidence contained within it saying that he gave half the capital sum to her remaining family and HIS family pooled together to replenish it so he could buy the house.  He then went on to contradict this again, putting his credibility into serious doubt.  Yet, in the statement, the amount remains static with only minor credits or withdrawals. 

He was unsuccessful which I’m not surprised at because he didn’t make for a good witness but I do have one niggle; I feel that the tribunal may have focused too much attention on the capital sum itself and what happened to it prior to buying the house and not so much on my client’s intentions at the actual time of buying the house and making the new claim for ESA which I tried to emphasise in my closing submission (knowing already that he had probably blown it).  I guess I will need to wait and see what the SoR says and I know that credibility is a big issue but I wondered if I was on the right track. 

Thanks!

Dan Manville
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Mental health & welfare rights service - Wolverhampton City Council

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These cases are primarily about intention, there is rarely any direct evidence about intention; it must usually be inferred on the evidence before the Tribunal. However in your case there is prima facie evidence of his intentions; he claimed ESA, knowing he would not have the means to exist otherwise when he purchased the house. That is a significant operative purpose.
.

I wouldn’t have bothered with a SOR request on that; even if you were to get the appeal remitted, knowledge of the withheld statement would be before the new Tribunal in the SOR leaving you an even steeper hill to climb before the new Tribunal. That Tribunal knows that there is more evidence material to the decision in your possession, they will probably direct that you provide it and it will throw not only your client’s credibility into question before the hearing but also yours.

Spurious statement requests simply serve to vex Judges and Judges have long memories…

[ Edited: 10 Oct 2019 at 12:31 pm by Dan Manville ]
ROBBO
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Welfare rights team - Stockport Advice

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“Spurious statement requests simply serve to vex Judges”


And the prize for best tongue twister of the day goes to Dan Manville.

John Birks
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Welfare Rights and Debt Advice - Stockport Council

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“...he didn’t make for a good witness…”

You may wish to revisit rule 2(4)

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Elliot Kent
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This sounds like it was quite a weak case on the papers and only became weaker at the hearing. I agree with Dan that your client probably doesn’t need a statement of reasons to know why he lost.

All I would say is that there is a recent case on the cultural context and its role in credibility assessments as you say that was a factor in the case. UA v HMRC (TC) [2019] UKUT 113 (AAC). Whether that will help you I don’t know.

The good news is that you might get to try out my UC notional capital argument! Essentially the point is that reg 50 UC Regs defines notional capital as “capital of which the person has deprived themselves for the purpose of securing entitlement to universal credit or to an increased amount of universal credit.

Your client, we assume, will on the Judge’s findings have deprived himself of capital with the goal of securing an ESA entitlement, so can it be said that reg 50 applies?

Brian JB
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Advisor - Wirral Welfare Rights Unit, Birkenhead

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I had a not dissimilar case with ESA disallowed from August 2016 on notional capital after the client had given a large sum of money to her sister just after being notified about a compliance interview. When I came to the case in early 2018 (after the first hearing was adjourned for her to get a representative) I decided that the ESA decision was sound and advised her to claim UC, precisely for the reasons Elliott has suggested. Although she was initially reluctant (and then DWP said that she had to close her “ESA claim” - see various threads about DWP confusing ESA claim with system record of NI credits award), UC claim was made and was successful as she could not conceivably have had UC in mind when the deprivation occurred, not least because she was barred from making a UC claim at that time by Gateway conditions

Dan Manville
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ROBBO - 10 October 2019 12:37 PM


And the prize for best tongue twister of the day goes to Dan Manville.

/me bows

Brian Fletcher
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Welfare Rights, Wigan & Leigh Carers Centre, Wigan

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Brian JB - 11 October 2019 08:37 AM

I had a not dissimilar case with ESA disallowed from August 2016 on notional capital after the client had given a large sum of money to her sister just after being notified about a compliance interview. When I came to the case in early 2018 (after the first hearing was adjourned for her to get a representative) I decided that the ESA decision was sound and advised her to claim UC, precisely for the reasons Elliott has suggested. Although she was initially reluctant (and then DWP said that she had to close her “ESA claim” - see various threads about DWP confusing ESA claim with system record of NI credits award), UC claim was made and was successful as she could not conceivably have had UC in mind when the deprivation occurred, not least because she was barred from making a UC claim at that time by Gateway conditions


Playing devil’s advocate on this, and if i’d been playing for the other team, I would have refused the claim because of the deprivation, and I would have been confident of winning had it been appealed at both levels.

The maxims of equity apply since the Judicature Acts of 1873-75 when the systems of law and equity were fused. They are not treated as separate jurisdictions and both legal and equitable remedies can be provided by all the courts.
As one legal scholar said (Edward Coke)

“ Equity is a construction made by the judges, that cases out of the letter of a statute, yet being within the same mischief, or cause of the making of the same, shall be within the same remedy that the statute provideth; and the reason hereof is, for that the law-makers could not possibly set down all cases in express terms.”

It cannot have been in the mind of of the legislature, to include deprivation as reason to disallow someone from one income related benefit, whilst allowing them to claim another. The courts have developed a number of rules of statutory interpretation (The Mischief Rule, the Golden Rule, the Literal Rule, and the Purposive Approach). In this case and in my opinion, the golden rule of statutory interpretation should be applied where an application of the literal rule would lead to an absurdity.

Elliot Kent
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Equity is not what we are looking at here, it is a question of statutory interpretation.

Whilst in some cases, the courts will look to the purposes of a provision to understand it’s meaning, and in some cases may even go behind the clear wording of a provision in order to achieve its purposes, this is all in the goal of establishing what the legislator intended.

There’s no ambiguity of language in reg 50, so your devil’s advocate would need to invite the Tribunal to disregard the clear wording of the reg in favour of the imputed broader intention to create a much wider category of “notional capital” than is actually provided for. One assumes that, generally, the drafter chose their words advisedly and there was obviously nothing to stop them giving a broader definition.

I suppose it isn’t impossible that a Tribunal would find that this intention should be read into the regs but I think it is more likely than not that a literal reading would be taken.

There were apparently some cases on this during the switchover from supplementary benefit to income support although Sweet and Maxwell doesn’t suggest that a firm conclusion was reached and I can’t say I’m familiar with these cases.

Brian Fletcher
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Statutory interpretation is born out of the maxims of equity Elliot. It is the courts equitable jurisdiction to interpret legislation to reflect the will of the legislature. Otherwise, all you are left with is the literal interpretation- which is what Coke was saying - ergo the quote. It supplements strict rules of law where their application would operate harshly (against either side) in order to achieve a just result.

There needs be no ambiguity in the language; which would in any event require application of the mischief rule, and not the golden rule I was advocating. The purpose of both sets of legislation is to prevent someone from depriving themselves of capital, in order to claim an income related benefit. It is absurd that someone can claim an income related benefit with impunity under one set of Regulations, whilst excluded under the other set through exactly the same set of circumstances.

The golden rule of statutory interpretation may be applied where an application of the literal rule would lead to an absurdity. The courts may then apply a secondary meaning. (River Wear Commissioners v Adamson) (1876-77) L.R. 2 App Cas 743.

I would be very confident arguing that position if I were not on the side of the angels.

 

Mike Hughes
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Two obvious questions which don’t appear to have been asked:

1 - did he know/does he know the ESA capital limit? Nothing can be inferred from re-claiming ESA if he had no real idea whether he was entitled for example.

2 - what were his alternatives had he not purchased the home at that time?