9 1 (e) Trusts

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    Steve Anning

    I realise that the following is a bit of a minefield but any comments or thoughts on this scenario would be appreciated.

    Clmt has lived in property (as a single parent, on IS) since 2001 renting from firstly a private individual and then from 2004 the property ownership & hence the landlord changed to the (for anonymity) “the Mickey Mouse Trust”.

    No problem until February 2010, when clmt’s long estranged husband comes to join her as part of her household. Claim was terminated following the IS cancellation from Feb 2010. (I accept that in itself this should not have happened, but it did!)

    This caused a new claim form to be completed when they attempt to reclaim from May 2010. On this Claim form they answer NO to the question about renting from a trust! (Subsequent explanation, for this is that as husband had no direct beneficial interest in the property, so they answered No!)

    It only came to light after looking at the title deeds of the property that the husband is actually 1 of 4 named trustees of the “mickey mouse trust”.

    This claim was initially refused purely on the basis of the fact that he was a trustee.

    In July 2010 we receive correspondence to the fact that husband has NOW been removed as a trustee of the trust! They quite openly admit that this has been done because they didn’t realise the effect of him being a trustee had on HB entitlement. Subsequent Appeal which is where I am now.

    I have made further enquiries and the “trust” purports to have been set up to continue the charitable work of a particular (now deceased) individual. The trust “looks after the needy, providing clean water, shelter, medical care, education and helping disabled people. Husband is stated to have no beneficial interest in the property.

    Clearly the fact that they provided an incorrect answer on the claim form & husband since deliberately removed himself as a trustee are not in there favour but I still feel that I have to

    a) give FULL consideration of whether Para 9 (3) applies – was this done to take advantage of the scheme? The clmt had been living here alone since 2001, legitamately receiving HB, using the same tenancy agreement. Just because her partner comes to join her does this mean they are suddenly “taking advantage”. (There is a full record of rent payments made from 2004 to date)

    b) take 9 1 (e) out of the equation from July 2010 as he is factually now not a trustee from that date. I cannot see what other Reg 9 paras may apply – possibly only contrivance but can a legitimate tenancy suddenly become contrived in these circumstances??

    and lastly … are there any wider considerations about “ownership of the property” as a trustee & the husbands name needing to be removed from the title deeds?

    Kevin D

    On the narrow issue of HBR 9(3), the onus is on the claimant to show the liability was not to take advantage etc. The onus is on the LA where HBR 9(1)(l) is engaged.

    On the face of it, the sole reason for changing the arrangements was for the explicit purpose of obtaining HB. You’d think that was a slam dunk. But, I can foresee arguments to distinguish the term “liability” from “agreement” or “arrangements” and the “liability” wasn’t to take advantage (even if the “agreement” or “arrangement” was).

    Based on the info given, my decision would be that, at the point the trust arrangement was changed, the liability became created to take advantage etc. I’d have arguments prepared to counter any suggestion that “liability” should be read so narrowly that it literally meant that and that alone.

    In my view, HBR 9(1)(l) is not necessarily limited in its application to the outset of the creation of a liability, but this may well depend on the facts of each individual case. However, there is contradictory authority on this point: CH/3458/2002 found “contrivance” must be considered at the outset; CH/39/2007 (para 49) suggests otherwise – at least in the context of a rent increase. In my opinion, CH/3458/2002 addressed the legislation incorrectly and this directly led to concluding wrongly on the “outset” point.

    I have long since held a view that the provisions for “non-commercial” and “contrived” should be considerably tightened up to prevent precisely the kind of ambiguity that this type of case will inevitably engage. In the meantime, I guess we’re stuck with the inevitable appeal and the lean on resources this kind of case consumes.

    Steve Anning

    Many Thanks Kevin ….

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