JPMcN-v-Department for Social Development (IS) [2012] NICom 291
Decision No:  C2/12-13(IS)

SOCIAL SECURITY ADMINISTRATION (NORTHERN IRELAND) ACT 1992

SOCIAL SECURITY (NORTHERN IRELAND) ORDER 1998

INCOME SUPPORT

Application by the claimant for leave to appeal
and appeal to a Social Security Commissioner
on a question of law from a Tribunal’s decision
dated 25 July 2011

DECISION OF THE SOCIAL SECURITY COMMISSIONER

1.	This is an application for leave to appeal from the appeal tribunal sitting at Belfast on 25 July 2011.

2.	An oral hearing of the application has been requested.  However, I consider that the proceedings can properly be determined without a hearing.

3.	I grant leave to appeal.

4.	For the reasons I set out below I allow the appeal and I remit the appeal to a newly constituted tribunal for reconsideration in accordance with my directions.

REASONS

	Background

5.	The applicant claimed income support (IS) on 23 February 2006.  In his claim he stated that he was residing with a friend in Belfast and did not own property or land and had no savings.  However, it subsequently transpired that he had been the owner of a property in Craigavon from 22 May 2003, having purchased it by way of a mortgage, and that he had re-mortgaged this property on a number of occasions since, most recently for £139,466 on 1 May 2007.

6.	The applicant was asked by the Department for evidence of what he had done with this money.  He sent in a list of expenses totalling £67,000.  As he had not fully provided the information sought, his IS was suspended from 7 January 2010.  He subsequently made a statement on 7 April 2010.  He stated that, of £53,000 net capital received from the loan of £139,466 (left after paying off the previous mortgage debt), he had lent £30,000 to a Dublin businessman who absconded with it.  The Department disallowed IS from 1 May 2007 on the basis that the applicant’s capital was probably in excess of the prescribed amount of £16,000. He appealed.

7.	A tribunal sitting at Belfast on 25 July 2011 heard the appeal.  The appeal was disallowed.

8.	The applicant requested a statement of reasons for the tribunal’s decision on 3 August 2011.  This was issued to him on 22 September 2011. On 20 October 2011 the applicant sought leave to appeal from the decision of the tribunal to the Social Security Commissioner.  This was refused by a decision issued to the applicant on 22 November 2011.

9.	The applicant then renewed his application for leave to appeal directly to the Office of the Social Security Commissioner by an application dated 14 December 2011 and received on 16 December 2011.  His grounds were:

(i)	there was only one member of the tribunal when there should have been three;

	(ii)	he got the dates and amount of sums of money he borrowed wrong but had provided the relevant documents with the right dates and amounts;

(iii)	he has provided a letter from his general practitioner (GP) which the tribunal did not have.

10.	The Department was invited to make observations on the appeal.  Mr W responded for the Department.  Mr W observes that:

11.	Mr W therefore does not support the applicant’s appeal for the grounds given.  However, he raises another matter.

12.	Mr W submits that the documents given to the tribunal by the applicant “cast doubt on all the previous information given by the claimant in relation to the two re-mortgages and also raise the issue of further loans”.  He submits that the tribunal should have investigated these documents further and, by failing to do so, that it has failed in its inquisitorial role.  In particular, Mr W surmises that the applicant has another bank account which may need further investigation.

13.	The applicant was not given an opportunity to respond to Mr W’ observations but, in light of the decision I was minded to make, I did not consider that circumstances required this.

	Assessment

14.	It is plain that there is no merit in the grounds advanced by the appellant.  No point of law arises from these and I agree with the Department’s submission to that effect.

15.	The tribunal was properly constituted in accordance with regulation 36(1) of the Decisions and Appeals Regulations.  The tribunal was entitled to reach a view that the applicant was not a credible witness.  The letter of the GP was not before the tribunal and was not relevant to the issue of possession of capital in any event.

16.	Mr W, however, says that the tribunal has failed in its inquisitorial role by failing to look into the documents provided by the applicant on the day of the hearing.  He says that the tribunal has erred by not giving reasons for rejecting the documents.

17.	In analysing the merits of this submission, it is necessary to focus on the findings of the tribunal.

18.	The tribunal found that the applicant had capital in excess of the prescribed limit on 1 May 2007.  The applicant made an admission to the Department that on 1 May 2007 he received a sum of £53,000 upon re-mortgaging his house in Craigavon.  His signed statement to this effect in a document dated 7 April 2010 appears at Tab 19 in the evidence before the tribunal.  The tribunal based its decision on the admission.

19.	The difficulty identified by Mr W, although without referring to specifics, is that the document dated 25 April 2007 produced by the applicant to the tribunal on the day of hearing, which purports to be an internal memorandum within McCartan, Turkington Breen (solicitors), indicates that the applicant did not receive £53,000 in respect of this re-mortgage, but rather £13,433.30, with additional amounts being allocated to pay off outstanding loans of £3,000 and £2,186.77 to third party companies.  On this basis it is arguable that the tribunal has erred in law by finding that the applicant had capital in excess of the prescribed amount of £16,000, and I grant leave accordingly.

20.	It should be recalled that claims for benefit are required (by regulation 4 of the Social Security (Claims and Benefits) Regulations (NI) 1987) to be made on a form approved by the Department.  This is to enable the Department to ensure that relevant information is elicited from a claimant.  Claimants are also under an obligation arising from regulation 32 of the Claims and Benefits Regulations to give information and evidence required by the Department.

21.	When he first claimed IS in February 2006, the prescribed capital limit was £8,000.  The applicant at that time owned a property in Craigavon which he was not occupying as his home.  This therefore was a capital asset. He did not declare it.

22.	The applicant says that he re-mortgaged in early 2006, receiving £9,113.87 net from the transaction, as well as paying off a loan of £32,517.61.  The evidence of this is in the form of an undated document appearing to be a cash statement relating to the transaction prepared by Wilson Nesbitt (solicitors).  It is clear, therefore, that in 2006 the applicant owned a capital asset in the form of the house in Craigavon and that prior to re-mortgaging it had an equity value of over £41,000.  This, as stated above, was not declared when claiming IS.

23.	On the basis of the McCartan Turkington Breen document, it is seen that in May 2007, the applicant again re-mortgaged, receiving £13,433.30 net.  He also paid off loans of £3,000 and £2,186.77 from the proceeds of re-mortgaging.  The house in Craigavon, which was again used as security for the re-mortgage, therefore again had an equity value, prior to re-mortgage in May 2007, of at least £18,619 more than the outstanding mortgage figure.  Again nothing was declared in relation to any of this property, while the figure of £18,619 would have exceeded the prescribed capital limit, which rose to £16,000 in April 2006.

24.	When required to complete forms or upon being interviewed by the Department for his account of events, it is clear that the applicant consistently gave inaccurate or untruthful information.  For example in the review form of 23 May 2008, he denies owning a property.  When claiming for IS housing costs on 25 June 2009 the applicant states that he acquired the house in 2007 and moved in on 1 May 2007.  When evidence of mortgage liability required by the Department reveals that the mortgage is in fact a re-mortgage, the applicant then admits that he bought the house four years earlier in May 2003.

25.	The applicant claims to have received £53,000 net upon re-mortgaging in May 2007, but to have given £30,000 by way of a gentleman’s agreement loan to a Dublin businessman, who subsequently absconded.  He then produces documents showing, for example, a Bank of Ireland transfer of a sum of €15,000 to Super Rifle Jeans in Florence, Italy in October 2004 as evidence of this, but this predates the event described by over two years.  Whatever the truth of the matter, this evidence casts doubt on the reliability of the applicant’s account of the relationship with a Dublin businessman.

26.	Further inconsistencies arise throughout the evidence supplied by the applicant.  For example, in the “My statement” document of 21 July 2011, the applicant says that he used the £7,000 of the £9,113.87 received in early 2006 to make 14 monthly payments towards his mortgage.  However, the documents indicate that by May 2007 the mortgage debt had increased from £104,336 to £120,047.43, rather than decreased, suggesting that this was not a truthful statement.

27.	The tribunal had regard to many alterations in the applicant’s version of events when rejecting his credibility.  I entirely share the tribunal’s misgivings about the applicant’s credibility.  Nevertheless, the documentary material gives rise to serious doubt about the basis on which the tribunal decided the appeal.  The McCartan Turkington Breen document would strongly suggest that the applicant did not receive £53,000 on 1 May 2007 as found by the tribunal, but rather a net figure of £18,619, out of which £5,186.77 was immediately paid to creditors.  The resulting figure would be below the prescribed capital limit.

28.	It seems to me that the applicant in this case has used an undeclared capital asset, the house in Craigavon, to take advantage of the property “bubble” as the value of the asset has increased.  In this way he has financed a lifestyle, based upon loans and re-mortgaging of the property, which would not have been open to someone solely reliant upon IS.  It seems to me that the real issue in assessing his capital is the calculation of the value of the property in Craigavon.  This is because it does not fall to be disregarded as a capital asset under Schedule 10 of the Income Support (General) Regulations (NI) 1987 as the applicant was not living in it between 2003 and 2009.  At various times, such as on the dates immediately prior to re-mortgaging, it seems to me that the net value clearly exceeded the prescribed limits.

29.	Instead, however, the Department has focused on the value of the money released to the applicant upon re-mortgaging in the assessment of capital.  The original Departmental decision has been based on the same evidence as considered by the tribunal, namely the statement of the applicant that he received £53,000 in May 2007.  The representative of the Department now involved in the case is clearly placing doubt not only on the factual premise relied upon by the tribunal, but on the factual premise relied upon by the Department when the decision under appeal was made.

30.	Because the documentary evidence before the tribunal indicated that there was not a sum of £53,000 released on the re-mortgage in May 2007, it does seem to me that the tribunal was not justified in accepting that version of facts without at least addressing and rejecting the contrary evidence in the documents provided at hearing, giving reasons.  I therefore allow the appeal.

31.	I direct that the appeal should be remitted to a newly constituted tribunal.  For the purposes of the newly constituted tribunal, I direct that: 

	(i)	the Department shall prepare a new submission for the tribunal dealing with all the material evidence, and in particular the evidence provided by the applicant at hearing;

(ii)	in preparing the new submission, the Department shall make any further enquiries and obtain any further evidence arising from the evidence provided by the applicant at hearing as it shall consider necessary;

(iii)	in particular, it should seek evidence relating to all bank accounts held by the applicant and the balance in those accounts at the material date of 1 May 2007.

(signed):  O Stockman

Commissioner

31 May 2012