LC v Bournemouth Borough Council (HB)

Capital which a claimant could obtain only by applying for its release is not treated as possessed immediately. Under Housing Benefit Regulations 2006, regulation 49(2), it is treated as notional capital only from the date when it could reasonably be expected to be acquired after such an application.

Proceeds of a matrimonial-home sale held by solicitors pending agreement or a court order are not capital jointly held under regulation 51. The parties are not beneficially entitled in possession while neither can require distribution alone. A local authority must assess the likely distribution and allow a reasonable period for negotiations, any necessary court application, and acquisition before treating the claimant as having capital above the threshold.

The claimant received housing benefit and council tax benefit with her partner, Mr M. Following the sale of Mr M’s former matrimonial home, solicitors held the net proceeds in a client account pending agreement between Mr M and his wife or an order of the court.

The local authority revised entitlement from 17 December 2012 on the basis that the claimant’s aggregated capital exceeded £16,000, and raised overpayments. The First-tier Tribunal confirmed those decisions. The claimant appealed with permission to the Upper Tribunal.

The central issue was when disputed sale proceeds could be treated as capital available to Mr M, and thus to the claimant, under the corresponding benefit regulations.

1. Appeal allowed. The First-tier Tribunal erred in law by applying regulation 49(2) of the Housing Benefit Regulations 2006 without determining when the capital could reasonably be expected to be acquired if Mr M applied for it. Its decision was set aside.

2. Regulation 51 did not govern the sale proceeds. Funds in a solicitor’s client account, distributable only by both parties’ agreement or a court order, were not an asset to which the parties were beneficially entitled in possession. An equal-share presumption was also unsuitable where matrimonial proceedings could produce many different divisions.

3. The applicable provision was regulation 49(2). It addresses a person with potential access to capital who has not acted promptly to obtain it. The local authority must assess the likely distribution, the reasonable time for negotiations and, if needed, an application to the court, and the time before the resulting capital could be acquired.

4. The proceeds became available to the solicitors on 14 December 2012. Treating the claimant as possessing capital above £16,000 from 17 December was plainly premature. The entitlement decision was therefore set aside. As the overpayment decision depended on a valid decision removing or varying entitlement, it also fell.

5. The prior award decision of 19 September 2012 was revived as the operative decision. The local authority could revise or supersede it prospectively, but there was no basis to make a recoverable overpayment decision for the period in issue.

• Upper Tribunal (Administrative Appeals Chamber): allowed the claimant’s appeal, set aside the First-tier Tribunal’s decision, and remade the matter by setting aside the local authority’s entitlement and overpayment decisions.

• First-tier Tribunal: on 12 May 2014 confirmed the local authority’s decisions that entitlement ended from 17 December 2012 and that the housing benefit and council tax benefit overpayments were recoverable.

• Local authority: on 15 March 2013 revised the prior award to find no entitlement from 17 December 2012 and raised overpayments.