[2006] UKSSCSC CPC_1928_2005 (18 May 2006)
CPC/1928/2005

DECISION OF THE SOCIAL SECURITY COMMISSIONER
  
1.	I dismiss the claimant’s appeal against the decision of the Leeds appeal tribunal dated 22 March 2005.

REASONS

2.	I held an oral hearing of this appeal, at which the claimant was represented by Mr Stephen Clark of the City of Bradford Social Services Department and the Secretary of State was represented by Mr Huw James, solicitor, as agent for the Solicitor to the Department of Health and the Department for Work and Pensions.

3.	On 30 December 2003, the claimant claimed state pension credit.  However, the claim was withdrawn, apparently because she thought that she did not qualify.  She and her husband had recently moved to rented accommodation and were selling their previous home.  On 31 March 2004, the claimant made another claim and sought benefit from 6 October 2003, when state pension credit was first introduced.  The form was dated 26 March 2004.  In Part 4 of the form, the claimant ticked the box marked “yes” in answer to the question whether she owned any property other than her home but she neglected to provide details in Part 11, as the form requested her to do.  In Part 9 of the form she said that her husband had entered a care home – in fact, I think, a hospital – on 15 March and expected to stay there for two weeks.

4.	On 1 April 2004, the claimant was awarded state pension credit.  The award was made without taking account of the capital value of the claimant’s former home.  The “assessed income period”, which is a period in respect of which the calculation of “retirement provision” of the claimant, including income from capital, is fixed so that increases in that provision do not affect entitlement and so do not need to be reported (see section 7 of the State Pension Credit Act 2002), was set by a computer and adopted by the Secretary of State.  It ran from 6 October 2003 to 9 March 2010.  I presume that the computer is involved so as to set a random period of between 5 years and 7 years (see regulation 37 of the State Pension Credit (Consequential, Transitional and Miscellaneous Provisions) Regulations 2002 in order to avoid all periods fixed for those becoming entitled to state pension credit from the date it was introduced ending on the same day.

5.	On 22 April 2004, the claimant’s husband, who had not returned home since 15 March 2004, moved permanently to a care home.  On 19 May 2004, she and he received the proceeds of sale of their former home, amounting to £95,059.95.  It appears that the Pensions Service only became aware of these facts in September 2004.  On 12 October 2004, the Secretary of State made a decision with a view to taking account of these facts.  He superseded the decision made on 1 April 2004 and determined that the claimant should be treated as a single person with effect from 22 April 2004 and should be treated as possessing additional capital of £47,529.97 with effect from 19 May 2004.  He took the view that the value of the former home should be disregarded in respect of the period before then, initially because it was the claimant’s actual home until 29 December 2003 and then because she was taking reasonable steps to dispose of it.  He considered that he was able to take account of the capital from the date the proceeds of sale were received because he was able to revise the assessed income period on the ground of “official error” because it should not have been set in the light of regulation 10(1)(c) of the State Pension Credit Regulations 2002 (SI 2002/1792).

6.	The claimant, acting through Mr Clark, appealed against that decision on the ground that the assessed income period should not have been revised.  The appeal was disallowed.  The claimant now appeals against the tribunal’s decision with the leave of a district chairman.

7.	Unsurprisingly in view of the terms of the decision under appeal, there was some discussion before the tribunal as to whether the decision on 1 April 2004 to fix an assessed income period from 6 October 2003 was made in error, having regard to regulation 10(1)(c) of the 2002 Regulations, and could be revised.  However, it was common ground before me that that was irrelevant because, even if an assessed income period was set, it came to a premature end on 22 April 2004 by virtue of section 9(4)(b) of the 2002 Act, which provides that “[a]n assessed income period shall, except in prescribed circumstances, end at any time at which … (b) the claimant ceases to be a member of a married or unmarried couple”  Upon the claimant’s husband entering a care home permanently on 22 April 2004, she and he were treated as no longer living in the same household (see regulation 5(1)(b) of the 2002 Regulations) and therefore ceased to be “a married couple” as that term is defined in section 17(1) of the 2002 Act.  Whether no assessed income period had been set from 6 October 2003 or whether one had been set and it had come to an end makes no difference.  In either event, it would have been necessary for the Secretary of State to consider whether an assessed income period should be set from 22 April 2004 when a new award of benefit from that date was made on 12 October 2004.  

8.	Under section 6 of the 2002 Act, the duty to fix an assessed income period arises upon the making of a relevant decision awarding state pension credit.  Thus the duty to set an assessed income period from 22 April 2004 arose when an award of state pension credit from that date was made on 12 October 2004.  Section 9(1) and (2) of the 2002 Act provides –

“(1)	An assessed income period shall (subject to subsections (2) to (4) be the period of five years beginning with the day on which the relevant decision takes effect.

“(2)	If the Secretary of State considers that the particulars of the claimant's retirement provision as determined for the purposes of the relevant decision are not likely, after taking account of any assumed variations under subsection (3), to be typical of the claimant's retirement provision throughout the period of 12 months beginning with the day on which that decision takes effect –
   (a) 	he need not specify a period under section 6(1); and
   (b) 	if he does so, he may specify a period shorter than 5 years (but beginning as mentioned in subsection (1)).”

9.	Mr Clark argued that a fresh assessed income period should have been set from 22 April 2004 with the result that the claimant’s capital did not fall to be taken into account from 19 May 2004.  He referred to official guidance given to decision-makers in Memo DMG SPC 29, which is to the effect that, when setting an assessed income period for a backdated claim to benefit, they should ask themselves whether, had they been making the judgment at the date the decision will take effect, they would have decided that the retirement provision was likely to be typical over the succeeding 12 months or not.  He argued that the same approach should apply to a retrospective supersession.  I agree that the same approach is required for backdated claims and retrospective supersessions, but I do not consider that that helps the claimant.

10.	As is made plain in the Memo, the approach suggested there is taken so that claimants whose decisions are made retrospectively are treated in the same way as those whose decisions are made prospectively.  That seems to me to be a proper approach to the legislation.  Section 9(2), by the use of the words “need not” in paragraph (a), confers considerable discretion on the Secretary of State, but he must exercise the power fairly.  It is that discretion and need for fairness that entitles him to make a decision on the basis of what was predictable at the date the decision takes effect rather than necessarily taking into account all increases in income and capital since that date.  However, there is no statutory bar on him having regard to changes of circumstances since the date the decision takes effect.  Thus, if receipt of money would have been expected when the award started but the date on which it would be received could only have been guessed at then, the Secretary of State is perfectly entitled to use his knowledge of what has in fact happened in order to determine the date on which a short assessed income period should end, rather than fixing an artificial date as would have had to have been done at the time if any assessed income period was to be fixed at all.  Even-handedness with other claimants is a desirable goal but the setting of assessed income periods itself results in unequal treatment between claimants with similar incomes, so that using hindsight and therefore making more accurate decisions is not necessarily less fair than not using hindsight.  Each case must be considered on its merits.  Moreover, as is assumed in the second worked example in the Memo, where a decision-maker makes a decision awarding benefits at different rates for different periods before the date of decision, he must be treated as making a number of separate decisions so that, if he sets no assessed income period from the beginning of the first period, or sets an assessed income period that ends at the end of the first period, he is entitled to set an assessed income period from the beginning of the second period.  

11.	In this case, by the time the Secretary of State came to make his decision, it was not just likely, it was certain, that the retirement provision existing on 22 April 2004 was not going to be typical for the 12 months beginning on that date.  However, in considering whether to exercise his power not to set a five-year assessed income period from 22 April 2004, the Secretary of State had to consider what could have been anticipated on that date had he been aware of all the facts as they stood at that date.  Mr Clark submitted that the length of time it would take to complete the sale would have been uncertain.  I suspect that there would have been an anticipated completion date by then but, even if there was not, it could reasonably have been expected that the sale would take place within a relatively short time.  The standard period for disregarding the value of property that is being sold is 26 weeks (see paragraph 7 of Schedule V to the 2002 Regulations) and it is reasonable to take that as a starting point.  It seems to me that the sale of the property within a few months of 22 April 2006 was certainly to be expected and that the Secretary of State would not have set an assessed income period had he been making the decision at that date.  I accept that he could, in the proper exercise of his discretion had he been making a decision on 22 April 2004, have set a short fixed income period until, say, 30 June 2004 when the question of extending the period for disregarding the capital value of the property up for sale would have had to be considered, but there is nothing in the Memo to suggest that that would have been the usual practice.  Where a substantial sum is expected on an uncertain date, not setting an assessed income period will generally be preferable to setting a short one, in the absence of other considerations such as likely minor variations of other income that the decision-maker considers should be ignored.  

12.	Accordingly, I am satisfied that no assessed income period should have been set from 22 April 2004.  If, as was the case, the effect of the capital was that the claimant was not entitled to state pension credit from 19 May 2004, no assessed income period fell to be set from that date either (see section 6(2)(d)).  If she had been entitled to state pension credit from 19 May 2004, a standard five-year assessed income period from that date would have been appropriate.

13.	The tribunal’s reasoning was erroneous.  Regulation 10(1)(c) of the 2002 Regulations, upon which it placed much weight, had no bearing on this case.  However, in substance, the tribunal reached the correct conclusion because it found that there should be no assessed income period from 22 April 2004.  

14.	The Secretary of State submits that the tribunal’s decision was erroneous in point of law because it treated the claimant as possessing capital from 19 May 2004, when the relevant sum of money was paid into the bank account she and her husband held jointly, whereas, he submits, it should have been taken into account only when it became available to her, which was when the cheque cleared.  He relied on CSB/598/1987 for that proposition.  However, it does not follow that the claimant in the present case did not possess the relevant sum from 19 May 2004.  First, if cleared funds had been transferred to her, her bank might have allowed her to draw on her account immediately.  Secondly, it is quite possible that the money paid by the purchaser of her former home was paid to solicitors acting for the claimant and that it was paid to her a few days later after fees and disbursements had been deducted.  Money held by a claimant’s solicitor may be treated as money held by the claimant (Thomas v. Chief Adjudication Officer (reported as R(SB) 17/87 and actually the decision refusing leave to appeal against CIS/296/1985 which was cited in CSB/598/1987), which I considered in R(IS) 15/96).  It is possible, therefore, that the claimant actually had capital before 19 May 2004.  In these sorts of cases, I do not consider that a tribunal errs in taking a pragmatic approach and adopting the date money appears on a bank statement as the date it is received, unless a day or two one way or the other is going to make a great difference or one or other of the parties wishes greater precision and produces some material evidence.  Here, the parties were quite content to act on the basis that 19 May 2004 was the correct date, further investigation would have required an adjournment and disproportionate cost and delay and the result of further investigation could have been favourable to either of the parties.  I am not satisfied that the tribunal’s decision is erroneous in point of law in this respect.  However, if either party wishes the question of the date from which the capital was possessed to be the subject of further investigation, that can be dealt with when a decision is made as to the recoverability of the overpayment that has arisen.

15.	Whether or not any sum is recoverable from the claimant will depend on whether the overpayment was due to a failure on her part to disclose any material fact and, in particular, her receipt of the proceeds of sale of her home.  I express no view on that issue, save to point out that the setting of the original assessed income period from 1 April 2004 will have had an impact on her duty to disclose such facts and there is a question whether the failure to provide all the details requested on the claim form can be said to have been a cause of the overpayment when the Secretary of State had proceeded to award benefit in circumstances in which he could have seen that something was missing because the claimant had declared in general terms that she did have other property.  I draw attention to CIS/222/1991 but also to Duggan v. Chief Adjudication Officer (reported as an appendix to R(SB) 13/89).

16.	As the substance of the tribunal’s decision was correct, even if the reasoning was not, I dismiss this appeal.

(signed on the original)

MARK ROWLAND
Commissioner
18 May 2006