[2005] NISSCSC C5_05_06(IS) (8 November 2005)

Decision No:  C5/05-06(IS)

SOCIAL SECURITY ADMINISTRATION (NORTHERN IRELAND) ACT 1992

SOCIAL SECURITY (NORTHERN IRELAND) ORDER 1998

INCOME SUPPORT

Appeal to a Social Security Commissioner
on a question of law from a Tribunal's decision
dated 21 March 2005

DECISION OF THE SOCIAL SECURITY COMMISSIONER

1.	This is an appeal, leave having been granted by the tribunal chairman, by the claimant against the decision dated 21 March 2005 of an appeal tribunal sitting at Strabane.  That tribunal disallowed the claimant’s appeal against a Departmental decision and decided that the claimant was not entitled to income support (IS) from 21 October 2002 to 12 December 2003 because her capital exceeded the then cut off point for IS of £8,000.

2.	The background facts of the case indicated below do not appear to have been in dispute and it appears to have been accepted (in my view correctly) that if the claimant’s capital exceeded £8,000 she could not be entitled to IS.  The claimant and her husband separated. The husband had owned a property which had not been the matrimonial home.  The matrimonial home had been a Northern Ireland Housing Executive house. The husband’s property was sold.  On 3 August 2001 a court had ordered the claimant’s former husband to pay her the sum of £50,000 on or before 10 September 2001.  On 21 October 2002 the claimant’s solicitors received on her behalf the sum of £50,000 from her former husband’s solicitors.  On 12 December 2003 the claimant, through her solicitors, paid a builder the sum of £41,280 (out of the £50,000 received) for a new dwelling which was being built for her.  The Department decided that the claimant had access to this capital and that she consequently had capital in excess of £8,000 and was not entitled to IS for the period mentioned above. 

3.	The claimant’s grounds of appeal to me are contained in a letter dated 13 May 2005 to the legally qualified panel member and are as follows:

1	There was an issue about costs and interest being held over which prevented her solicitors from releasing money to her when it came into their possession.

2	While the tribunal accepted that her ex-husband was already beyond the reach of his solicitors in December 2002 her solicitors still had to exhaust all channels to recover outstanding money owed by her former husband.  The claimant did not stipulate what monies were meant but it appears from the papers that this may have been interest owed by the husband for delay in payment of the £50,000 and some money which the former husband owed to the claimant’s solicitors.

4.	By a helpful letter of 14 September 2005 from Ms O’Higgins of its Decision Making Services branch the Department opposed the appeal.  Ms O’Higgins relied on the decision of the Court of Appeal in England and Wales in the case of David Edward Thomas v The Chief Adjudication Officer reported as appendix to R(SB)17/87 in which the court upheld the decision of a Great Britain Commissioner.  In particular Ms O’Higgins mentioned paragraphs D and E at page 427 where Russell LJ held:

“In my judgment, the possession of this money by the solicitor as the agent for the claimant was, in every sense of the term, possession by the claimant, and regulation 4 has no application to a situation where a solicitor holds funds on behalf of his client.  In his decision the Commissioner drew a parallel - in my view, a perfectly legitimate parallel - between the position of a solicitor holding funds for a client and the position of a bank holding funds for a customer.  For my part, I am abundantly satisfied that this £12,000, from the moment it came into the hands of the solicitor until he parted with it in purchasing the house, was a capital resource which it was the obligation of the claimant to disclose and was an actual resource within the meaning of regulation 5 as opposed to regulation 4.”

5.	Ms O’Higgins submitted that the circumstances of this case were similar to that of Thomas in that the £50,000 payment received by the claimant’s solicitors was received by the solicitors as agents acting on her behalf.  The solicitors held onto the money (with the exception of £8,720 paid directly to the claimant on 27 November 2003), until they parted with it in purchasing the new house.  Ms O’Higgins submitted that the tribunal was correct in determining that the claimant had capital from 21 October 2002 in excess of the prescribed amount. 

6.	With regard to the matter of cost and the claimant’s assertion that it was normal practice for a solicitor to withhold money pending payment of his costs Ms O’Higgins submitted that there was nothing to stop the solicitor from taking his costs and paying the remainder of the monies to his client. Ms O’Higgins did not dispute that it might be normal practice for a solicitor to withhold monies pending any outstanding issues, in this case the pursuance of further payment of interest to be made by the claimant’s former husband.  However she respectfully submitted that the normal practice of solicitors did not vitiate the findings of the Court of Appeal’s decision extracted above.

7.	The legislation under which I have to consider this matter is contained in sections 130(1) and 132 of the Social Security Contributions and Capital Benefit (Northern Ireland) Act 1992 which states that unless specific circumstances apply the capital cut off for IS shall be £8,000.  It appears that none of the specific circumstances applied (indeed it has not been contended to me that any did apply) and therefore if the claimant had capital of £8,000 or above she was not entitled to IS.

8.	The question then arises as to what capital is to be taken into consideration.  Regulation 46(1) of the Income Support (General) Regulations (Northern Ireland) 1987 provides that the capital to be taken into account shall, subject to prescribed disregards, be the whole of the claimant’s capital calculated as prescribed.  Regulation 46(2) sets out the disregards from the capital and these are as specified in Schedule 10 to the said Regulations.  It does not appear that any of the disregards are applicable in this case and indeed no contention has been made that any are so applicable.  The question for decision by the tribunal (as for me), therefore was simply whether the capital held by the solicitors was the claimant’s capital for purposes of the said Regulations.  The claimant’s contention is that because her solicitor held the capital she did not possess it and it was not therefore her capital.  

	I am in agreement with the Department that the capital held by the solicitors on the claimant’s behalf was the claimant’s capital.  The decision in the Thomas case was based on the Supplementary Benefits Act 1976 and the Regulations made under it which were the Supplementary Benefit Resources Regulations 1981.  The court in that case decided that capital held by the claimant’s solicitors on her behalf was her actual capital under regulation 5. Regulation 5 of those Regulations provided that except where capital was to be disregarded in accordance with the regulations the amount of the claimant’s capital resources to be taken into account was to be the whole of that claimant’s capital resources.  In both the legislation on which the Thomas case was decided and in the legislation applicable to the present case (regulation 46(1) mentioned above) the whole of the claimant’s capital is to be taken into consideration.  I consider, as did Russell LJ in the Thomas case that the possession of the capital by the claimant’s solicitors as agent for the claimant was in every sense of the term possession by the claimant.  The claimant was a beneficial owner of the capital as was indeed evidenced by the interest that was paid to her thereon after the capital was paid out and after, of course, the solicitors’ proper deduction of their costs.  The fact that the solicitors might have a rightful claim on part of that capital for costs purposes does not mean that the capital was not the claimant’s.  In any event the capital in this case was extremely substantial and there would have been absolutely no difficulty in the substantial bulk of it being put into the claimant’s hands with an estimated sum being held over for costs.  It appears that the arrangement was that the solicitors would hold onto the money pending the claimant’s purchase of another property.  That does not take this capital out of the claimant’s possession.   The solicitors were holding it as agents for the claimant.

9.	Based therefore on the Thomas case I dismiss the claimant’s appeal.

(signed):  M F Brown

Commissioner

8 November 2005