Terms & Conditions

[churdle]

We have a case that I would like some opinion on please.
Our customer received a personal injury compensation payment in 2003 and had a court appointed deputy to look after the funds for them. £100K was used to buy a house for them to live in and £236K was invested in Court Funds for their future.
In 2018 the house was sold as it was no longer suitable to our customers needs. They moved to a rented bungalow a short distance away. The proceeds from the sale of the house were paid into a normal current account held for the customer in the name of the deputy; this was in excess of £100,000. As I said, this appears to be a normal current account with payments made from it to utilities, SKY TV etc and has DWP benefits paid in to. As ESAIR was in payment HB was awarded from 2018 when the customer moved to the bungalow as all capital disregarded.
In august 2022 the DWP decided to end ESAIR from 2018 when the sale proceeds were paid into the current account as they appear to be saying it is no longer money from a personal injury payment that is administered by a deputy for the Court of Protection. We have reassessed the HB awarded for the bungalow from 2018 when ESAIR has been ended from for the same reasons.
The house sale was declared to us at the time, not sure when it was declared to DWP. As ESAIR was in payment at the time there was nothing we could do. Just found out today there is £30K in NS&I bond throughout the overpayment period from 2018 – money invested from the compensation payment.
The argument being put forward is that all the capital in various places, NSA&I, current account all stems from the personal injury payment and should therefore being disregarded forever more.
What about the increase on the £100K invested in the house from its increase in value? The house sold for £120K (£117K after costs). Is the additional £17K derived from a personal injury compensation payment and should forevermore be disregarded?

[John Boxall]

I might start by asking was a trust fund set up at the time of the award.

If it was then it seems to me that the proceeds of the sale of the house belong to the fund.

I might be asking your Deputyship team for some advice on what the Deputy has been doing with the funds

Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery. The blossom is blighted, the leaf is withered, the god of day goes down upon the dreary scene, and—and in short you are for ever floored.

Wilkins Micawber, Ch12 David Copperfield

[churdle]

No trust was ever established. And the duputy’s were solicitors.
If there had been a trust fund but the proceeds of the sale of the house had sat in a current account (controlled by the deputy) for a period of time would it have been disregarded until it was returned to the trust fund?

[John Boxall]

Oh Dear……

Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery. The blossom is blighted, the leaf is withered, the god of day goes down upon the dreary scene, and—and in short you are for ever floored.

Wilkins Micawber, Ch12 David Copperfield

[peterdelamothe]

My understanding and accepted by a FTT is that the original capital is disregarded but any profit made is not. I am not aware of any HB caselaw on this but I remember there is on other Welfare Benefits albeit from some years ago.

That approx £330,000 from twenty years ago could be worth millions now if well invested in property or bonds so I suspect money might pop up everywhere. There has been a huge increase in house prices since the start of the century; a couple of years saw nearly 25% increase in a year.

[churdle]

I thank you all for your input but have another issue to through into the mix.

I am at loss at finding it but am sure I read it somewhere long ago. If a person is awarded a compensation payment for an injury and an initial payment is made to them the amount is disregarded for HB purposes. If a subsequent payment is made in respect of the same compensation award and injury that is NOT disregarded is it?

I ask as the original court order says –
The claimant may accept £336,000 in satisfaction of the claim.
The defendant to pay the sum of £236,000 into the Court Funds Office on or before 16/9/2003.
The defendant to pay the claimant’s solicitors £100,000 to be used for the purchase of a property …

There is no date given as to when this should be paid by.

[Mike Hughes]

See https://www.rightsnet.org.uk/welfare-rights/caselaw/item/whether-funds-derived-from-personal-injuries-compensation-held-in-a-joint-account-are-held-in-a-trust-for-the-purposes-of-paragraph-17-of-schedule-8-to-the-jobseekers-allowance-regulations-1996

[churdle]

Unfortunately we don’t have a rightnet login. From what I can glean from the title of the link it relates to amounts held in a joint account. Our customers capital is not. It is held in accounts in the name of the COP deputy, a solicitors.

[Mike Hughes]

Doh. I always forget this.

CJSA/2628/2017 and CJSA/1192/2019
Whether funds derived from personal injuries compensation held in a joint account are held in a ‘trust’ for the purposes of paragraph 17 of Schedule 8 to the JSA Regulations 1996
[2020] UKUT 49 (AAC)

Background

The claimant (Q) received income-based jobseeker’s allowance (JSA) from January 2008 until December 2010 (Period 1) and from November 2011 to April 2013 (Period 2). Throughout Period 1, and for at least the first five months of Period 2, Q had capital in various bank accounts that exceeded either the upper JSA capital limit of £16,000 or the lower limit of £6,000. Q did not declare that capital when she claimed JSA.

After becoming aware of the accounts, the DWP decided that Q was not entitled to JSA in both periods and had been overpaid £8,288.84 JSA for Period 1 and £5,577.36 for Period 2.

Q’s appeals against the entitlement and overpayment decisions were dismissed by the First-tier Tribunal (save for the tribunal reducing the amount of recoverable overpayment in Period 1 in light of the Department conceding that it could not prove that Q had misrepresented the level of her capital in her original claim in 2008).

The tribunal’s reasons for dismissing the appeals included that –

Q had received personal injuries compensation at least 52 weeks before the overpayment periods in question, of which substantially in excess of £16,000 remained at the time of her JSA claims (which had not been placed in a ‘personal injuries trust’);
compensation monies had been moved around between various bank accounts held jointly by Q and her parents, while a further transfer of a substantial sum was made to an account with the Yorkshire Building Society in the joint names of Q’s parents (the tribunal also decided that Q was named on the account), and there was no evidence to indicate that Q ceased to be beneficially entitled to the money moved around in this way; and
a specified sum of money, used by Q to purchase her home, was transferred from the Yorkshire Building Society account to an account in Q’s sole name immediately before being withdrawn to make the purchase.
The claimant appealed to the Upper Tribunal.

Issues before the Upper Tribunal

Whether the claimant was the beneficial owner of sums held in her parent’s joint bank account / whether capital possessed by the claimant derived from personal injuries compensation fell to be disregarded during any period when it was deposited in an account jointly held by her and her parents.

Decision

Judge Poynter allows the appeal, sets aside the decision, and directs the Secretary of State to recalculate the claimant’s entitlement.

Reasons

Judge Poynter identifies a number of errors of law in the tribunal’s decision, principal of which was that the tribunal made findings of fact in relation to Q’s beneficial ownership of capital in the Yorkshire Building Society account that were contrary to the evidence –

‘The finding that Q was one of the names on the Yorkshire Building Society Account was contrary to all the evidence and also the express concession made by the presenting officer. It was a finding of fact for which there was no evidence and, therefore, an error of law.

That error is material. The schedule of capital shows that, if the amount credited to the Yorkshire Building Society Account is removed from the calculation, Q’s capital fell below £6,000 on a date in March 2012. That would mean that … Q was not disentitled to JSA from approximately that date and had not been overpaid JSA thereafter.’ (paragraph 33 and 34)

Having set aside the decision on the grounds that the tribunal incorrectly concluded that Q was the beneficial owner of the sums held in the Yorkshire Building Society Account, Judge Poynter directs the Secretary of State to recalculate the claimant’s entitlement.

In addition, Judge Poynter considers the effects of the capital disregard rules under paragraph 17 of Schedule 8 to the Jobseeker’s Allowance Regulations 1996, which includes –

17. – Where the funds of a trust are derived from a payment made in consequence of any personal injury to the claimant or the claimant’s partner, the value of the trust fund and the value of any right to receive any payment under that trust.

Highlighting that paragraph 17 does not require the trust to be in any particular form or even that there be an express trust (contrary to the tribunal’s reliance on needing evidence of a ‘personal injuries trust’), Judge Poynter holds that a trust was in fact created whenever money derived from Q’s personal injuries compensation was held in a joint account with one of her parents –

‘Given that Q and one of her parents were named on the account but the money in the account was Q’s alone, Q and the parent must have been jointly holding the capital represented by the account on a bare trust for Q in her sole capacity.

In those circumstances, the tribunal should have held that paragraph 17 of Schedule 8 was satisfied to the extent that the money derived from Q’s personal injury compensation was held in a joint account. Its conclusion that paragraph 17 did not apply was wrong in law.‘ (paragraph49 and 50)

Accordingly, Judge Poynter directs the Secretary of State, when recalculating the claimant’s entitlement, to disregard any capital possessed by her derived from personal injuries compensation during any period in which it was held in a joint account.

[churdle]

I thank you for the input Mike. I can’t really see how that helps me with the question of the disregard of the initial payment of injury compensation but not subsequent payments.

[Mike Hughes]

… because there’s an assumption the subsequent payments are neither connected to the original nor in a trust and both assumptions are potentially incorrect.

[Author]

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