Secretary of State for Work and Pensions v Hourigan

Income Support (General) Regulations 1987, regulation 52, applies only where a claimant and others hold a single beneficial interest jointly. It does not apply where they are tenants in common with separate, independently disposable beneficial shares.

In a joint tenancy, the regulation deems the unity of interest severed and attributes an equal share of the whole beneficial interest to each holder. Clear language would be required to extend that artificial rule to tenants in common, since such a construction could produce arbitrary and unfair capital assessments. Administrative convenience does not justify that result.

The claimant’s deceased mother had bought her home with substantial financial assistance from her son. The Social Security Appeal Tribunal held that they owned the beneficial interest as tenants in common in shares of one sixth and five sixths, but treated the mother as owning half the house under regulation 52 of the Income Support (General) Regulations 1987. It therefore found that her capital exceeded the income-support limit.

A Social Security Commissioner allowed her appeal and substituted a finding that her capital was below £8,000. The Secretary of State appealed to the Court of Appeal. The central issue was whether regulation 52 deemed a tenant in common with an unequal beneficial share to own an equal share of the whole property.

Appeal dismissed unanimously. Lord Justice Brooke gave the principal judgment. Lord Justice Sedley agreed with the result on partly different reasoning, and Lord Justice Auld agreed with both the outcome and the essential construction.

1. Regulation 52 of the Income Support (General) Regulations 1987 concerns persons who are jointly entitled to one beneficial interest in a capital asset. In a joint tenancy, unity of interest means that the holders are together invested with the whole equitable interest. The regulation therefore operates by deeming that unity severed and by attributing an equal share of the whole beneficial interest to each person.

2. A tenancy in common is materially different. Each tenant in common has a distinct beneficial share which is separately disposable. Such persons are not, in the relevant sense, beneficially entitled jointly to the property for the purposes of regulation 52. The claimant’s one-sixth interest and her son’s five-sixths interest were separate capital assets. Regulation 52 did not deem her to own half the house.

3. The construction was consistent with the valuation approach described in Chief Adjudication Officer v Dowell: where regulation 52 applies, the deemed equal share is valued under regulation 49 at its current market value. It was also supported by the legal distinction between co-ownership by joint tenants and by tenants in common.

4. The deeming power in section 136(5) of the Social Security Contribution and Benefits Act 1992 did not compel a construction that would create arbitrary results. The court held that much clearer language would be needed to require a claimant to be treated as possessing capital which he or she did not in fact own. Administrative convenience did not supply a sufficient reason for that reading.

5. As regulation 52 did not apply, the Commissioner’s conclusion that the claimant’s capital was below £8,000 stood. It was unnecessary to decide the alternative submission that the regulation would be ultra vires if it applied to tenancies in common.

• Court of Appeal: dismissed the Secretary of State’s appeal and upheld the Commissioner’s determination: [2002] EWCA Civ 1890.
• Social Security Commissioner: allowed the claimant’s appeal from the tribunal and substituted a determination that her capital was less than £8,000.
• Social Security Appeal Tribunal: held that the claimant should be treated as owning an equal half-share and therefore did not qualify for income support.