Feature

posted 3 Aug 2005 in Volume 10 Issue 5

ECA Course: Part 13
Protecting the interests of older clients

David Coldrick, partner at Wrigleys Solicitors, examines the capital disregard relating to the family home. Capital that is disregarded is not taken into account by local authorities in respect of the cost of long-term care applicable to a resident.

The disregard of the resident’s former home upon entry into permanent residential care if it is occupied by their partner, a specified relative or other family member: NA(AR) Regs1 Schedule 4 Paragraph 2

This disregard applies subsequent to the end of the application of the disregard for the resident’s former dwelling during periods of temporary residence in care and the first 12 weeks of permanent entry into residential care (NA(AR) Regs Schedule 4 paragraph 1 and 1A). It can apply indefinitely depending upon the circumstances.

NA(AR) Regulations Schedule 4 paragraph 2 states the contents of the disregard. It covers the resident’s former home upon entry into permanent residential care if it is occupied by a partner or specified relative as their home. If it is empty then the disregard will not apply to it. It incorporates IS(G)2 Regs Schedule 10 paragraph 4 by reference, while making certain adjustments to it. The result is that IS(G) Schedule 10 paragraph 4, as adjusted by NA(AR) Regs Schedule 4 paragraph 2, should be read as follows:

a) “2. Any premises occupied in whole or in part by – A partner or relative of a single claimant or any member of the family as his home where that partner or relative is aged 60 or over or is incapacitated or is a child whom the resident is liable to maintain by virtue of section 42(1) of the National Assistance Act 1948 (liability to maintain wife or husband or children);

b) The former partner of a claimant as his home; but this provision shall not apply where the former partner is a person from whom the claimant is estranged or divorced.”

This raises various questions of interpretation. The Charging for Residential Accommodation Guide (CRAG) does not give the fullest possible interpretation of the scope of the disregard. It is very wide. The CRAG appears to assume that the contents of disregard should be obvious and that all residents will have lived in something akin to a house, bungalow or flat, perhaps with the benefit of a modest garden or window box. This is not always the case. Many older people have lived in their property for many years. They may even have inherited it from their parents or other long-deceased relatives. As a result, the property might have unique features. It may share little with the average suburban semi so beloved of those seeking to average out what constitutes ‘the common man’ and to regulate him accordingly.

It is important to note that it is not the resident’s former occupation of the property as their home that is the relevant factor in the application of this disregard, although it may help paint the overall factual picture. It is its occupation as a home by their partner, specified relative or family member. It is not good enough that it was the resident’s home. It is vital that it is someone else’s home.

The CRAG paragraph 7.003 states: “Where the resident no longer occupies a dwelling as his home, its value should still be disregarded where it is occupied in whole or in part by:

The resident’s partner/former partner (except where the resident is estranged or divorced from the partner/former partner);
A lone parent who is the claimant’s estranged or divorced partner;
A relative of the resident or member of his family who:

- Is aged 60 or over;

- Is aged under 16 and is a child who the resident is liable to maintain;

- Is incapacitated.”

What is the meaning of “any premises occupied in whole or in part by [a partner, specified relative or family member] as his home”?

NA(AR) Regulation 1 includes a definition by reference to the Social Security Contributions and Benefits Act 1983 (SSCBA) of a ‘dwelling’ but not one of “premises occupied … as … home”. Dwelling is submitted to be a useful starting point because it imports the same substance. It is also a key word used in the CRAG guidance. ‘Home’ is not a word that is defined in benefits legislation. NA(AR) Regulation 1 states: “‘Dwelling’ has the meaning prescribed in Section 137(1) of the Contributions and Benefits Act”

The SSCBA Section 137(1) states: “‘Dwelling’ means any residential accommodation, whether or not consisting of the whole or part of a building and whether or not comprising separate and self-contained premises.”

The IS(G) Regulation 2 definition of dwelling, however, also adds “occupied as the home” to its description of that word, which renders it virtually the same as “premises occupied in whole or in part by [the partner/specified relative/family member] as his home” which is the expression in the NA(AR)Regs. IS(G) Regulation 2 states: “‘Dwelling occupied as the home’ means the dwelling, together with any garage, garden and outbuildings, normally occupied by the claimant as

his home, including any premises not so occupied, which it is impracticable or unreasonable to sell separately, in particular, in Scotland, any croft land on which the dwelling is situated.”

‘Premises’ are arguably rather wider in definition than a dwelling. Otherwise why do the regulations refer to ‘dwellings’ and ‘premises’ and not just to dwellings? This was argued in the case of R(IS)3 3/96. In that case, the claimant was a farmer’s wife. She entered long-term residential care. She was co-owner of the farmhouse and the associated farmland. The expression ‘premises’ did not, however, extend beyond the ‘dwelling’. The farmland she owned, which was not part of the dwelling itself, was therefore assessable capital. The use of the word premises (at least in the context of this particular disregard) may perhaps be explained by accepting that some older people may not live in what might be traditionally considered to be a dwelling. ‘Premises’ therefore ensures that all the circumstances can be taken into account in decisions as to what falls within the scope of the disregard.

Looking at the various definitions given, the premises that may potentially be covered by the disregard appear to include:

Any form of residential accommodation, being a house, flat, flatlet, maisonette, bungalow, specialised sheltered accommodation or otherwise. There is no restriction as to its construction, size or value;
Any garage or parking space for private motor vehicles, which belong to the person living in the residential accommodation. It should not be assumed that this is restricted to garages adjacent to the house or gardens. Garages and private parking spaces are frequently sited apart from the residential accommodation, especially in areas of especially high or low population density. That does not make the garage or private parking space any the less part of the facilities of the residential accommodation. There is no automatic restriction as to size or value;
Gardens used by, or available for the use of, those living in the residential accommodation. This is whether or not that garden may contain some development potential enabling part to be sold off to realise that potential. This is even if the garden is disconnected from the residential accommodation. For instance, many properties have a private garden across a road or beyond a driveway, which separates the residence from it. A garden or allotment some way away may, however, be harder to justify as being within the disregard. There is no automatic restriction as to size or value;
Outbuildings. These are submitted to include outside toilets, coal houses, sheds, summerhouses and other structures with reasonable proximity to the residential accommodation, which have never been or are no longer used for commercial or agricultural purposes, such as greenhouses, barns, oast houses, threshing floors, kennels, dovecotes and stables. This is whether or not there may be some development potential. There is no automatic restriction as to size or value;
Adjacent land may or may not have the benefit of the disregard. If it can be said to be occupied as part of the ‘home’, it may fall within the disregard. It should not be hard to argue that a vegetable plot bought from a neighbour should be disregarded. As to other land, see CIS4 427/1991 where fields adjacent to the garden itself were disregarded because the claimant’s mentally-ill wife needed access to them for health reasons. If land is not adjacent to the residential accommodation or its garden, then it is less likely to fall within the disregard as it is less likely to be part of ‘home’. Once more, there is no automatic restriction as to size or value;
Caravans and houseboats. Not all older people live within bricks and mortar or even on dry land. Increasing numbers inhabit alternative residential accommodation, which constitutes their ‘dwelling’. In some situations, the disregard may, for example, cover residential caravans, but usually caravans are a ‘home from home’ and not the home. It is submitted that a resident’s caravan may usually be classified as part of their personal possessions, which are disregarded under NA(AR) Regs Schedule 4 paragraph 8 if they own one and it is not a main residence. But in the case of any plot of land that may be rented long-term by the resident from the site owner, the value of those caravan mooring rights may potentially be assessable capital if the disregard for the caravan as the dwelling does not apply. In that situation those rights are not disregarded unless the local authority can be persuaded to apply NA(AR) Schedule 4 paragraph 18, which enables them to disregard such ‘premises’ as it considers reasonable. The assessable value of the interest in the site owner’s land (if any) will depend upon the usual principles of valuation applicable to interests in land. A variant of these observations can be applied to situations where residents lived on houseboats.

The scope of the premises potentially covered by the NA(AR) Regulations Schedule 4 paragraph 2 is submitted to be much wider than the CRAG might initially suggest. Common sense applied to the facts will usually supply the answer as to whether or not the premises in question fall within or without the disregard. But if the situation is not so obvious then an analogy, with some practical hints, might be found in tax law. For agricultural property relief to apply to a residential property, it must be a ‘farmhouse’ rather than simply a dwelling on or near agricultural land. The case of Lloyds TSB (personal representatives of) Rosemary Antrobus deceased v IRC [2002] WTLR 1435 indicated that the tax office should take notice of the commonsense test but also:

Whether or not the ‘farmhouse’ is proportionate in size and nature to the needs of the farming activity being conducted;
Whether the alleged farmhouse is appropriate as to size, content and layout with the farm buildings and the size of the relevant agricultural land;
What the educated rural layman would think;
Whether or not the house was historically associated with the agricultural land.

Addressing the issue of what constitutes the dwelling, it might therefore appear reasonable to ask questions such as:

Would the premises argued to be part of the dwelling apart from the residence seem to be in proportion with the needs of those who would tend to inhabit such a house? To answer this, local comparables should be considered. In the tax case, aerial photographs proved very revealing. These are sometimes available at little cost;
What would the educated person from that area/locality/region think? The author suggests that this is not really a matter of education. It is akin to the ‘arbitrium boni’ or common-sense test of old. That was updated to found the basis of Greer LJ’s ‘man on the Clapham omnibus’ test in Hall V Brooklands Auto-Racing Club [1933] 1KB 205, in the context of what is reasonable in the law relating to negligence;
Is that old barn a recent purchase or has it always been an integral part of the property in question? If it was always part of the property, then is should be considered to be part of the dwelling.

It is important to remember that all the premises that may potentially fall within the disregard must be occupied by the partner, specified relative or family member as part of their home. Potentially, the occupancy of that resident’s partner, specified relative or family member, will not be quite the same in scope as the occupancy of the resident when they lived there. For example, the partner left at home may never enter the greenhouse or store anything in the garage or old barn. They may not be able to get up the stairs of the former family home or be interested in sitting in the neat Victorian summerhouse at the end of the garden. They may hate the incessant cooing of the woodpigeons that have taken up residence in the old dovecote. However, the disregard applies to “any premises occupied in whole or in part”, which seems to make some allowance for partial occupancy of certain elements of the whole, while still allowing that whole the benefit of the disregard. That is as opposed to its only extending to those parts actually occupied.

It is submitted that once the occupied premises, potentially relevant to this disregard have been ascertained then, unless it would be both practicable and reasonable to sell any unoccupied part separately, the unoccupied part should be accepted as falling within the ambit of the disregard. This is different from suggesting that upon discerning that there might be a market for that unoccupied land or buildings or that it has development potential, it must fall outside the disregard.

The issues of practicability and reasonableness will be a question of fact in each case. Some examples may be helpful:

If a resident’s partner occupies the house and garden, walks the dog in an adjacent field belonging to the resident ‘like we always did’, uses that field for family picnics and other functions ‘as we always have’, and ensures a local farmer keeps it mown for this purpose, then it may fall within the disregard. That is because that field was and continues to be part of the overall premises occupied as ‘home’. It might be harder to suggest this if the partner considers that ‘Now the old man is in care I can use the field as I always wanted to while he never let me set foot in it…’ But even then it is the perspective of the current occupier and not the resident that appears to be most important for the purposes of the disregard;
If a resident’s partner occupies the house and garden but does not occupy the quaint little stone barn at the foot of the garden that is ripe for development, then it may or may not fall within the disregard. If a sale would involve engaging in an expensive planning-permission application to ensure a reasonable price, if a large swathe would need to be cut off the garden for a driveway, if an entrance must be carved out of the neat curtailage wall for access and if the garden would be overlooked by the new occupants, it would not seem reasonable to require this; it should fall within the disregard. But, if the barn has its own rights of access and existing planning permission for residential conversion, then the position might be different;
If a resident’s partner occupies the house and garden but does not occupy the neighbouring land that used to be a small quarry now filled with water, but which has development potential as a Coy Carp fish farm, then that would not normally fall within the disregard. However, should the resident have mental-health problems that are soothed by talking to the local fishermen currently using the former quarry, it would not appear reasonable to insist it was not part of their home. ‘Home’ naturally implies some degree of security and psychological benefit.

Whose occupancy can trigger the NA(AR) Regs Schedule 4 paragraph 2 disregard?

It is necessary to carefully define who may trigger the NA(AR) Regs Schedule 4 paragraph 2 disregard of the resident’s former dwelling. The regulation (words in square brackets added by the author) states it is the: “Partner or relative of a single claimant or any member of the family...[Who is the relevant occupier of the resident’s dwelling for the disregard to apply].”

But the regulation also adds: “Where that partner or relative is aged 60 or over or is incapacitated or is a child whom the resident is liable to maintain by virtue of section 42(1) of the National Assistance Act 1948 (liability to maintain wife or husband or children).”

This wording is submitted to be open to misinterpretation, especially where it repeats the expression ‘partner or relative’ and also misses out the word ‘family’ in the same context, whereas the IS(G)Regs simply use the word ‘person’ in the second instance. The IS(G)Regs are therefore clearer that the proviso as to age is not applicable to the partner of the resident, but just to the relatives or the family of the resident. This confusion is very unhelpful, but the CRAG paragraph 7.003 applies the correct interpretation as follows (words in square brackets added by the author):

“The resident’s partner/former partner (except where the resident is estranged or divorced from the partner/former partner) [No age requirement];
“A lone parent who is the claimant’s estranged or divorced partner [for which see NA(AR) Regs Schedule 4 paragraph 2A];
“A relative of the resident or member of his family who

- Is aged 60 or over [or]

- Is aged under 16 and is a child whom the resident is liable to maintain; or

- Is incapacitated.”

‘Partner’ is not subject to an age qualification. However, the word has a specific legal meaning and its modern colloquial usage as practically ‘anything goes’ is somewhat tempered by this. The CRAG appears to assume an appropriate partnership is something that is likely to be obvious. It is submitted that from a statutory /regulatory perspective, this is quite far from the truth. It is not a mere technicality. NA(AR) Reg 1 states: “‘Partner’ has the same meaning as in the income-support regulations.”

IS(G) Regulation 2 states: “‘Partner’ means where a claimant:

a) “Is a member of a married or an unmarried couple, the other member of that couple;

b) “Is married polygamously to two or more members of his household, any such member.”

The SSCBA Section 137(1) provides the remaining definitions of the expressions referred to. It states:

“‘Married couple’ means a man and a woman who are married to each other and are members of the same household.
“‘Unmarried couple’ means a man and woman who are not married to each other, but are living together as husband and wife…”

Partners for the purposes of the NA(AR) Regs (as with other benefits regulations) must be male and female and not same sex partners. The exclusivity of heterosexual relationships under the current regulations may pass into history. In the meantime, same sex partners will usually have to rely on the local authority’s discretion to disregard the dwelling, under NA(AR) Regs Schedule 4 paragraph 18, if their same sex partner, who owns the dwelling, enters care. However, if necessary it may be worth challenging an adverse decision on the application of paragraph 2 itself on the basis of the Court of Appeal decision in Ghaidan v Mendoza [2002] 4 All ER 1162. That involved the issue of the succession of a secure tenancy under the Rent Act 1977. That succession occurred in the event that the deceased and the survivor were “living together as his or her wife or husband”. The court held that “living together as his or her wife or husband” should be construed as ‘as if they were his wife or husband’. It is not hard to see how this might be applied to the SSCBA definition of an unmarried couple.

Sociology teaches that a dwelling may include several separate ‘households’ operating independently of one another. Having a marriage certificate is not sufficient to trigger the benefit of the disregard applicable to ‘married couples’. Those who are legally married must also be “members of the same household”. The mere fact of living together under the same roof is not enough to trigger the disregard applicable to an ‘unmarried couple’, nor are shared resources, sexual relations, shared children, a stable relationship, emotional support or similar arrangements individually sufficient to determine that the nature of the relationship is one constituting a household or parties living together as husband and wife. The situation must be addressed upon the facts.

The implicit mutuality of relations indicated does not always fit easily with situations involving older persons. One party may have gradually deteriorated before entry into permanent care, so that the relationship has become one-sided. It may even be the case that old age has made that relationship reliant on outside input for any existence at all. However, in practice, a local authority taking on board the spirit of the disregard will not usually argue about the underlying nature of a marital or partnership situation. Thus, the fine details of whether or not an ‘estrangement’ has taken place for whatever reason are unlikely to undermine the availability of the disregard. That is at least if the parties have lived together under the same roof. Where they do raise questions of a more intimate nature, the partner or carer being interviewed may be advised to respond with a firm rebuff, irrespective of the reason for that question or its possible answer. That advice is submitted to be quite reasonable as the preservation of the dignity of old age, which includes privacy in respect of the resident’s relationships, is an avowed part of the National Service Framework for Older People and the single assessment process into which the financial assessment is integrated.

References to ‘spouse’ and ‘unmarried partner’ are also made as part of the definitions of relatives and family. These should also be considered with reference to the observations made above in connection with marital partners operating as households and unmarried couples living together as husband and wife. However, depending upon the actual relationship the fact of another person, such as a child, forming part of a household will naturally be constituted by a different set of facets.

‘Relative’ and ‘family’ are widely defined in the CRAG paragraphs 7.004 and 7.004A. They are not so widely defined in the IS(G) Regs and in the SSCBA. The definitions therefore appear to be a product of pragmatic policy expansion enshrined in the CRAG rather than strict statutory or regulatory definition.

The CRAG paragraph 7.004 lists the ‘relatives’, as below:

A. Parent (including adoptive parent);
B. Parent-in-law;
C. Son (including adoptive son);
D. Son-in-law;
E. Daughter (including adoptive daughter);
F. Daughter-in-law;
G. Step-parent;
H. Step-son;
I. Step-daughter;
J. Brother;
K. Sister;
L. Grandparent;
M. Grandchild;
N. Uncle;
O. Aunt;
P. Nephew;
Q. Niece;
R. The spouse or unmarried partner of A-Q inclusive

The CRAG paragraph 7.004A states that ‘family’ includes: “A. A married or unmarried couple and any person who is:

A member of the same household; and
The responsibility of either or both members of the couple; or

“B. A person who is not a member of a married or unmarried couple and who is:

A member of the same household; and
The responsibility of the resident.”

Just about any family member living in the resident’s former dwelling may trigger qualification for the disregard of the resident’s former dwelling but, apart from partners, they must satisfy the additional requirement of either being aged 60 or over, dependent child or incapacitated.

The CRAG considers the definition of ‘incapacitated’ (which is not defined in the regulations) in a similarly pragmatic fashion, as with the definition of relative and family. The CRAG paragraph 7.005 indicates: “…It will be reasonable to conclude that a relative is incapacitated if either of the following conditions applies:

“The person is receiving one (or more) of the following social security benefits: incapacity benefit, severe
disablement allowance, disability living allowance, attendance allowance, constant attendance allowance, or an analogous benefit; Or
“The person does not receive any of the benefits [above] but the degree of incapacity is equivalent to that required to qualify for any one of those benefits. Medical or other relevant evidence may be needed before a decision is reached.”

Summary of the practical application of NA(AR) Regs Schedule 4 paragraph 2

The author suggests that the process of applying the disregard NA(AR) Regulations Schedule 4 paragraph 2 may be considered by the reader as involving a number of consecutive questions and answers. In most simple cases, only points 1 to 4 will apply. In more complex cases, the remaining points may also apply:

Assuming the resident owns a dwelling, have they entered permanent residential care? If not, then the resident’s dwelling will be disregarded under NA(AR) Schedule 4 paragraph 1;
If the answer to point (1) is yes then has that full-time care exceeded 12 weeks? If not, then the resident’s dwelling will be disregarded under NA(AR) Schedule 4 paragraph 1A;
If the answer to (2) is yes are the premises involved of the type that might potentially fall within the disregard? If not, then the disregard will not apply;
If the answer to (3) is yes, are any of those premises occupied by the resident’s partner, specified relative or specified family member? If so, those premises will be disregarded. If, however, the occupant is not within one of the relevant categories, then it will be necessary to apply to the local authority to exercise its discretion under NA(AR) Regs Schedule 4 paragraph 18. That allows it to disregard the value of premises it considers it would be reasonable to disregard;
If the answer to (4) is yes, are there any premises that, while falling within (3) as potentially relevant premises and within (4) because some of those premises are occupied by a relevant person, are not actually occupied?
If the answer to point (5) is yes and there are unoccupied premises falling within point (3), would there be a market for them if they were to be put up for sale? If not, then the value will (following the principles contained within chapter 8) be nil and the questions may be terminated. If something has a nil value, it will not affect the amount of the resident’s capital for assessment purposes. Issues of the valuation of jointly-owned land may be relevant at this point;
If the answer to point (6) is yes, which means there would be a value, what would be the likely value on sale? This question runs only to the issue of the reasonableness of any sale and it does not determine that there should be a sale because there is a value. If the resident would not be likely to exceed the lower capital limit with the amount estimated as realisable being added to their other assessable capital, it would not be reasonable to require sale. That is because a sale would make no difference to the amount of the resident’s assessable capital;
Taking into account all the circumstances, would it be both practicable and reasonable, from the point of view of the resident, the resident’s partner, specified relative or family member and the local authority to dispose of the unoccupied premises? If yes from all these perspectives, then the unoccupied premises in question should be both assessed and also disposed of. If not then the local authority should disregard the premises under NA(AR) Regs Schedule 4 paragraph 18.