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value of capital (former matrimonial home)
My client got divorced in 2001 when she left the property she owns with her husband. She has recently lost HB/ IR-ESA because her share of the capital has been valued at £20,700 (ESA) and £33,000 (HB). She accepts that none of the disregards apply and that she is a joint tenant.
My submission is built around undermining the valuation (same old thing - no indication of how they reached the figures, no regard to fact that former husband lives there and isn’t willing to sell, she has no access to Legal Aid to force a sale, etc.) and relying on caselaw to support the fact that the value of her share is negligible. I’ve used R(JSA)1/02, CH/4417/2013, PE v SSWP (SPC) [2014] UKUT 387.
I don’t want to write a tome because I think the arguments are obvious and we’ll submit orally as well, but could anybody point me in the direction of recent or really important cases on this? As well as being brief, I want to be thorough. I’ve been through older threads so anything that’s recent is really what I’m looking for.
Thanks in advance…
was no order made re finances on the divorce? should have been, to meet both party’s housing needs but as you say if she can’t enforce any order for sale that might have been made
also find out what the outstanding mortgage is as any valuation has to be net of mortgage repayment as well
oh, and presumably the DWP and LA were aware of all this when she first applied for benefit and nothing has changed? is it worth seeing what documents they have from then in terms of what they knew then?
Thanks, both. My client has mental health problems and it appears that no financial order was made in the divorce - from what I can gather, my client did everything herself without legal advice. Ex-husband was abusive for years and she has been too frightened and too ill for most of the last fifteen years to do anything (six kids taken into care, hospital admissions, etc.).
[ Edited: 15 Apr 2016 at 10:09 am by adele ]i think the point has to be that she doesn’t have the capital at all, not that she’s had it from any particular date.
as you know you need to major on the house having no value as she can’t force a sale; also major on the abusive nature of the relationship and the difficulties of trying to force sale now
surprised no one gave her any advice during the care proceedings - solicitors who deal with those are normally in their firm’s family departments and should have been able to at least give some advice even if they couldn’t sort it.
wondering if it would be worth getting a valuation from a local estate agent, if one will do it for free, on the basis that a sale can’t be forced and ex husband is living there (that would be good evidence of lack of value).
i think the point has to be that she doesn’t have the capital at all, not that she’s had it from any particular date.
as you know you need to major on the house having no value as she can’t force a sale; also major on the abusive nature of the relationship and the difficulties of trying to force sale now
surprised no one gave her any advice during the care proceedings - solicitors who deal with those are normally in their firm’s family departments and should have been able to at least give some advice even if they couldn’t sort it.
wondering if it would be worth getting a valuation from a local estate agent, if one will do it for free, on the basis that a sale can’t be forced and ex husband is living there (that would be good evidence of lack of value).
In these matters I’ve argued that the capital issue is the valuation of the clients share of the property.
Typically the valuation is looked at as a simple one of House value/shares (50%?) less encumbrances - less other costs etc.
Unfortunately, in my experience the valuations are accurately completed by the Valuation Office when completing form A64A(PC) 04/10 (this may have been updated since I last looked at one of these.)
Typically it is Part 2 completed erroneously and in particular at sections;
e. The valuation confirms that where other owners would not buy the share or agree to the sale the attitude of the courts, the length of time to get a possession order and the potential legal costs have been taken into account.
j. Sales of similar share interests have been used.
k.There is a market for the share.
k is the most interesting bit. Everything has a value - the trick is to pay the right amount for the share.
Here’s a sample from an old sub below that may explain things
There is, however, a value to be placed on Mr X’s share of the property. We submit that the share is likely to be more than £1.00 but less than £16000.00.
The relevant factors to include would have to be;
Likely legal action from the joint owner under the matrimonial finance legislation;
The likely share of the joint property;
The length of time to release the share from the property;
The age and health of the joint owner.
We submit that there is nothing special about 1 Another Avenue and it is a very average house in the surroundings.
R(JSA) 1/02 is the precedent in this case and the ratio decidendi mirrors that of Mr X.
Likewise CH/1953/2003 is also helpful to Mr X.
We understand from Mr X that his wife is unwilling to relinquish her occupancy and/or share of the property and due to age and health reasons would be unable to purchase the other interest.
An investor knowing the full circumstances of the case would only make a speculative investment as the risk/reward ratio would be high risk/low reward. Any initial investment would require significant funds to obtain the necessary freehold to market the property and realise its full value.
It is difficult to see an investor paying a significant sum to invest in purchasing Mr X’s share of 1 Another Street
We submit that the value of Mr X’s share on the open market is likely to be significantly less than £16000.00 to a speculative investor, if indeed there is one.
It is highly unlikely a mortgage could be obtained with a mainstream lender and the purchaser would be reliant upon cash funds to complete purchase of Mr X’s share.
The investor would also require cash funds and patience to pursue the present occupying tenant owner through the courts and likely eviction proceedings. A local solicitor has offered an opinion as to this.
As 1 Another Street is an average house in an average area it is unlikely to be at the centre of any ground breaking legal action to release to the shareholder any potential equity held within.
We are unaware of a vibrant market for throwing good money after bad.
Mr X is suffering financial hardship and without assistance with legal costs is unable to pursue the matter through the courts.
Mr X may be able to obtain assistance through mediation as this is eligible for Legal Aid funding – however, there would be costs for any transfer of equity and he has explained that his former wife is unwilling to negotiate or to attend mediation.
Mr X does not have the funds to pursue matters post medication in any case.
Thank you all. Your comments have helped clarify things and I feel more confident about the direction I’ve taken in my submission. Much appreciated.
and re this bit of john’s submission
it is highly unlikely a mortgage could be obtained with a mainstream lender
you could add, ” because the mainstream lender would not be able to protect it’s interest by way of charge in preference to the person in occupation” - worth spelling it out if your tribunal judge knows nothing about land law
Welcome back Claire!
cheers.
You might want to cite R(IS)1/03 where Mr Deputy Commissioenr (as then was) Mark held at paragraphs 13- 17
13. In my judgment, the claimant’s rights under the Matrimonial Causes Act are not such as to give her any equitable interest in any particular property. She has a right, contingent on her applying for, and obtaining, either a judicial separation or a decree of divorce, to seek maintenance payments, a lump sum payment and a property adjustment order. Between them, these might be expected, all else being equal, to result in her having either or both of an income and a capital sum which, on the facts of this case, might well be in excess of £8000.
14. I do not consider, however, that this contingent right can properly be regarded as capital at all. It appears to me that it is no more a capital asset than a spouse’s legal right to be supported by the other spouse, which has never been treated as capital. I do not see how it can be legally sold or charged, especially as the sale would have to contain provision for the claimant to take proceedings for judicial separation or divorce against her husband, a provision which, it seems to me, would be against public policy. Also, the court, if the transaction were otherwise lawful, would have to take the fact of the sale or charge into account in determining what order to make, bearing in mind that any order it made might not benefit the claimant at all.
15. If, contrary to my judgment, the right is capital, then it is to be valued under Regulation 49 of the Income Support (General) Regulations 1987 at its current market or surrender value less certain possible deductions. In the absence of any evidence of a market or surrender value for such a right, or of anybody ever having purchased such a right (the question of surrender does not seem to arise unless it can be shown that it can lawfully be surrendered in advance of a divorce or judicial separation, and that somebody would pay for such a surrender), I do not consider that any assumption can be made as to that value based solely on the value of the husband’s assets even if it were possible to form any clear view as to these.
16. As it is not a capital asset, no question of the claimant depriving herself of the asset can arise, although this point has been raised by the Secretary of State on this appeal on the basis that by failing to take legal proceedings she has deprived herself of her interest. In any event, the case is unlike the example of the unpresented cheque in CSB/598/1987. That was not a case which arose for decision, but was merely a comment by the commissioner that if a claimant did not pay the cheque into his account regulation 4 of the Supplementary Benefit (Resources) Regulations 1981 would be likely to apply, so that he would be likely to be found to have deprived himself for the purpose of securing supplementary benefit. The case here, as set out by the adjudication officer in the submissions to the tribunal, was that the claimant had left the matrimonial home following physical and verbal abuse at the hands of her husband, that she had no contact with her husband, that because of her religion, divorce was not an option for her, and that her solicitor had contended that the claimant could not make application for her share of the matrimonial home because she would first have had to petition for divorce. That advice was wrong, in that it overlooked the possibility of judicial separation, but there is no reason to suppose that the claimant, whose first language was Punjabi and who could not read English, could be expected to know that. In the oral submissions, the claimant’s fear of her abusive husband was also given as a reason for not bringing any proceedings.
17. All of this indicates that the claimant’s reasons for not bringing proceedings were not to deprive herself of an asset to obtain income support. This is all the more the case if, as is suggested, the value of the asset she might have obtained was far more than the income support she was seeking. I have no hesitation in finding as a fact that the claimant was not acting as she did for the purpose of securing entitlement to income support or increasing the amount of that benefit.