denotes premium content | Jan 9 2009 Feature
posted 1 May 2000 in Volume 5 Issue 4
Robertson v Fife Council: Is Notional
Capital Otherwise Available?
This decision by the Scottish Court
of Session is of considerable importance, both for local authorities and for
older people who may need residential care. It has two strands.
First, it confirms the
hard line approach adopted by the same court in Yule v South Lanarkshire Council
1 in relation to financial assessments
based on notional capital.
Secondly, it illustrates the (possibly
unforeseen) impact of the Community Care (Residential Accommodation) Act (CCRA)
1998, which amended the National Assistance Act (NAA) 1948 after the Sefton
decision2. Robertson now indicates that,
as regards residential care, the 1998 Act has overturned what was previously a
defining principle of the post 1993 community care regime, namely that services
should be provided on the basis of need alone, and that charging, and the
recovery of care fees is a separate, and secondary issue.
Facts
Mary Robertson has lived
all her life in a house in Fife, which was originally owned by her mother. When
her mother died the house was physically divided between Mrs Robertson, who took
the ground floor flat, and her brother who took the two upper floors. Later he
sold these to his nephew, Graham, Mrs Robertson's second son.
Mary Robertson
lived in the lower flat with her daughter, who died in 1995. Shortly afterwards
Mrs Robertson herself suffered a minor stroke, and although she made a good
recovery, she decided to grant a power of attorney to her youngest son, Gavin,
in order to be relieved of the stress of managing her own financial
affairs.
By
October 1995 Mrs Robertson's brother had spent the proceeds of sale of his flat,
and he began to pester his sister to let him come and live with her. Shortly
afterwards, Mrs Robertson transferred her flat to her three surviving sons. The
evidence considered later on by the Court of Session was that she took this
course of action following discussion of the situation with her family, and in
order to put an end to her brother's pestering.
Following the transfer Mrs Robertson
continued to live in the flat and to look after herself as before. Sometime
later, however, she began to suffer from dementia and her condition gradually
deteriorated. In 1997 she received short periods of respite care, and in April
1998 she entered a residential care home in Dunfermline. In November 1998 she
was assessed by Fife Council as needing nursing care, and was moved to a nursing
home, apparently under a respite/emergency arrangement, which was due to end on
18th December. The Council carried out a financial assessment in respect of Mrs
Robertson, and refused to enter into any permanent funding arrangement for her
nursing home fees. Its decision was that Mrs Robertson's transfer of her flat in
1995 was carried out 'for no consideration or legal obligation' and that its
value could therefore be assessed as notional capital. In conjunction with her
actual savings, the notional capital brought Mrs Robertson's total assets above
the £16,000 threshold for residential care, and the local authority was not
required to make provision for her.
The Issues
Gavin Robertson, Mary
Robertson's attorney, brought an application for judicial review against the
Council. The issues were as follows:
i. That the Council acted ultra vires
in withholding the provision of residential care on the basis of a financial
assessment which centred around a finding of notional capital. It was argued
that Mrs Robertson's liability to pay care fees should have been considered only
after the Council had made a decision in relation to her need for nursing
care.
i. That
the Council's approach to the application of regulation 25 of the
National Assistance (Assessment of Resources) Regulations (the 'notional capital rule')
was unreasonable. This was the question which had previously been addressed by
the Court of Session in Yule v South Lanarkshire Council.
The background legislation in Scotland is the Social Work
(Scotland) Act 1968. Section 12A is equivalent to Section 47 of the National
Health Service and Community Care Act 1990, which requires local authorities to carry
out an assessment of need before determining service provision. Section
87(3) states that '...accommodation provided under this Act... shall be regarded
as accommodation provided under Part III of the National Assistance Act 1948,
and Sections 22(2) to (8) and 26(2) to (4)...shall apply accordingly'. Section
12 was amended by the CCRA 1998, which therefore applies in Scotland, as do
the NA(AR) Regulations 1992 (the 'charging regulations'). There is, however, no
exact equivalent of section 21 of the NAA 1948 in Scottish law. In Scotland
there is a duty to make suitable and adequate provision for residential care.
Section 21 of the NAA requires local authorities in England and Wales to make
arrangements for providing residential accommodation for adults who are in
need of care and attention 'which is not otherwise available to them'.
Resources and the Duty to Provide Residential
Care
Since 1993, as demand for long-term care services has outstripped
available public funding, two separate questions about the relevance of
available resources to decision making by local authorities have had to be
tested by the courts:
On the first point, the present case law indicates that, in relation to certain statutory responsibilities, 'need' is to be regarded as a relative concept, and that local authorities may operate eligibility criteria to enable them to determine, by reference to their available resources, what level of need they must meet 3.
On the second point, there is still very little authority, but the Policy Guidance which 'must' be followed, has always emphasised that the provision of services should not be related to users' ability to pay, and that 'the assessment of financial means should follow the assessment of need and decisions about service provision'4.
However, pressure on local authority budgets has forced the adoption of a rationing process which hinges on the argument that a residential or prospective resident who has capital assets may be expected to go out into the market place and make arrangements independently of the local authority. Care is considered to be 'otherwise available' to that person (NAA 1948) so that the local authority is not obliged to provide a service, however urgent the need may be (and, indeed, whatever the risk to the individual's safety or well being).
In the writer's view, linking 'otherwise available' with the resources of the person needing residential care is a fundamental misreading of the NAA 1948, given its context and purpose. Section 22(3) of the NAA supports this position. It says that where a person for whom accommodation is provided, or proposed to be provided demonstrates that he or she is unable to pay the 'standard' (full economic) cost of the accommodation then the local authority must determine a lower rate, applying the means test specified in the charging regulations. It applies to provision made by local authorities in their own Part III accommodation and to arrangements made with independent sector residential care homes or nursing homes under section 26 of the NAA. Nothing in section 22(3) suggests that the duty to provide or arrange residential care is contingent on whether the prospective resident can or cannot afford to pay for that care out of his or her own pocket.
It is also difficult to accept the economic argument for not meeting manifest need. Obviously a local authority incurs some administrative costs when it makes residential care arrangements, but wherever a resident has capital above £16,000 it can recover the full economic cost of the placement under section 22(3). Once capital dips below £16,000 a means tested contribution must be assessed. On the face of it a local authority gains little by holding back and, as explained below, the cost to residents in terms of stress, anxiety or even disruption of placements can be considerable.
Nevertheless there is now no doubt at all that local authorities in England and Wales (and, it seems, in Scotland) routinely decline to make residential care arrangements for older people with assets even only marginally in excess of £16,000.
The Sefton Decision
Sefton council had been purporting to force older people to make their own residential care arrangements for as long as they retained capital assets above £1,500. The Court of Appeal ruled that the levels of capital prescribed in the charging regulations (£10,000 and £16,000) must be disregarded, wholly or partly, in the financial assessment, and that care and attention is not to be regarded as 'otherwise available' where the person concerned is unable to pay for it under the statutory means test regime. However, the wider issue of whether care may be considered 'otherwise available' to a person with capital above £16,000 was not directly addressed.
After Sefton a Department of Health letter was sent out to local authorities (LASSL(97)13), quoting the following paragraph from the judgment:
'the statutory scheme rests on the assumption that care and attention is not to be regarded as 'otherwise available' if the person concerned is unable to pay for it according to the means test regime provided for in section 22. Section 22(5) requires Sefton to give effect to the regulations and this Sefton has not done....any other approach is incompatible with the language of the relevant statutory provisions'.
The letter went on to say that 'there may be a case for amending the National Assistance Act to ensure the situation is made clear in the legislation itself'.
Again there was no direct reference to the position of an older person with capital above the £16,000 threshold specified for the means test.
The CCRA originated as a private members bill, which was intended to incorporate the Sefton ruling into primary legislation. The Government gave it full backing, as LASSL (97)13 makes clear. From 11th August 1998 subsections 21(2A) and 2(B) were added to section 21 of the NAA. At the same time, new subsections (3A) and (3B) were inserted into section 12 of the Social Work (Scotland) Act. Section 21(2A) states that, in determining 'whether care and attention are otherwise available to a person, a local authority shall disregard so much of the person's capital as does not exceed the capital limit for the purposes of section 22 of this Act'. As will be seen, the equivalent provision in Scottish law has significantly different wording. Section 21 (2B) then says that, for the purposes of subsection (2A), a person's capital is to be calculated in accordance with the charging regulations, as prescribed by section 22(3) of the NAA.
The drafting of the new subsections 21(2A) and (2B) appears to reflect the legislative intent, which was to ensure that people with assets below £16,000 are not denied residential care by cash-strapped local authorities. However the first part of section 21(2A) offers a hostage to fortune, in suggesting that the test of whether or not care is in fact 'otherwise available' is a financial one.
New Guidance
The main catalyst to what is a discernible change in practice since before 1998 has been Circular LAC(98)19, which was issued as the CCRA came into force. Its purpose was 'to advise' local authorities about the Act, and to provide further guidance on the provision of residential care. Para 3 paraphrases section 21(2A) of the NAA. Para 10 then states that 'it is the Department's view that having capital in excess of the upper limit of £16,000 does not in itself constitute adequate access to alternative care and attention'. It is clear, therefore, that 'otherwise available' is now assumed by the DoH to be primarily a financial criterion. The remainder of the guidance focuses on what are to be regarded as exceptional situations where older people with assets above £16,000, who are particularly vulnerable, or who lack mental capacity are to be regarded as not having care otherwise available to them. Para 12 makes it clear that where a resident, who has been placed by a local authority, subsequently realises capital through the sale of a property, it may be appropriate for the local authority to terminate its arrangements with the care provider and make the resident 'self funding '.
In addition, contemporaneously with implementation of the CCRA, some amendments to the charging regulations were brought into force. In the DoH's view, as stated in para 5 of LAC(98)19, the amendments will enable local authorities to apply the charging regulations in respect of individuals who are 'prospective residents', so that where they are determining whether care and attention are 'otherwise available' to such people, any capital or other resources they have can be 'taken into account' before placement.
England and Scotland Compared
In the Robertson case, the Judge, Lady Cosgrove, considered section 22 of the NAA and the amendments made by the CCRA in conjunction with the petitioner's contention that the Council was not entitled to refuse to provide a community care service, which Mrs Robertson manifestly needed, on the basis of its view as to the extent of her resources. The petitioner maintained that the Council should have followed a two stage process by:
(i) determining provision for Mrs Robertson, based on the assessment of her needs, and then
(ii) assessing her ability to pay for her care under the charging regulations.
Without question this was the accepted approach before the CCRA came into force. As counsel for the petitioner pointed out, it is emphasised in guidance which Fife Council was not entitled to ignore 5.
However the Council argued that the plain wording of the amendments made by the CCRA to section 12 of the Social Work (Scotland) Act (equivalent to section 21(2A) and (2B) of the NAA) indicates that capital not only can but must be taken into consideration by a local authority when determining whether to provide or arrange for residential or nursing care.
The new section 12(3A) of the SWSA is drafted differently from section 21(2A) of the NAA because, as noted earlier, the duty in Scotland to make residential care arrangements does not contain the proviso 'not otherwise available'. Section 12(3A) therefore states that 'in determining for the purposes of this section whether to provide assistance by way of residential accommodation to a person, a local authority shall disregard....' The judge held that the effect of construing section 12(3A) according to its plain meaning is that the 'local authority is entitled to apply the [charging] regulations at the time of making its decision as to 'whether to provide' the particular accommodation in implementation of its general duty'. Unless this ruling is reversed on appeal (which is at present being considered) the legal position in Scotland is now that a local authority may carry out a financial assessment either before, or at the same time as an assessment of need, and may then decide not to provide residential accommodation if the person under assessment is considered to have resources in excess of £16,000.
As already explained, the concept of 'otherwise available' in English law makes the position more complex, but it seems clear enough that, subject to the exceptional circumstances outlined in LAC(98)19, current practice reflects the Robertson ruling.
Why does it matter if 'otherwise available' is a financial criterion?
Older people with plenty of money will not be troubled by LAC(98)19 or the Robertson decision. However, from the perspective of vulnerable older people like Mary Robertson, who have little capital, the CCRA has proved to be anything but protective. The reasons are as follows:
(i) where an older person who has modest capital (perhaps less than £20,000), is forced to go out into the market place to purchase his or her own care, there is a considerable risk that the assets will be depleted below £16,000 before local authority funding can be secured. 'Lost' capital will not be recoverable, and advisers who allow this to happen may be negligent. In practice, however, achieving a seamless transition between self funding and local authority support requires considerable skill and knowhow.
(i) There is evidence that homes charge higher fees to individual purchasers of residential care than to local authorities, who wield considerable economic power. In addition, notwithstanding the basic requirement for independent sector homes to be registered and inspected, local authority contracts provide additional levels of protection and quality assurance for service users who come within their scope.
(i) Where an older person who is able to self fund is in fact placed under a local authority contract, attendance allowance is available to that person for as long as the local authority is not providing financial support. This means that he or she has the benefit of the local authority negotiated fee plus the attendance allowance 6.
(i) As Robertson demonstrates, imposition of the means test before a local authority has committed itself to arranging care can be highly problematic. The assessment of capital is not always straightforward, and the local authority's decision may be contentious, or downright wrong. The absence of a right of appeal against important financial decisions is bad enough, but it is wholly unacceptable for a vulnerable person to be denied the care he or she needs on the basis of an error by the local authority.
In many situations it makes no sense to inflict the 'otherwise available' criterion on a prospective resident when he or she will qualify for financial support, perhaps within a few months. Readers are reminded that LAC(98)19 does acknowledge that care will not be otherwise available to certain vulnerable people who have assets above £16,000. We must, all, therefore, try to ensure that, whatever the circumstances of the transition to publicly funded care, it is managed so as to cause the least possible disruption for our clients.
Notional Capital
The decisions by the Court of Session in Yule v South Lanarkshire Council have been explored, in some detail, in previous editions of this journal. An appeal is pending, and is due to be heard this summer.
In Robertson the Court was content to endorse Yule without exhaustive discussion. Lady Cosgrove ruled that, since there is no right of appeal against a financial assessment made under the charging regulations, when it comes to notional capital, and regulation 25 of the charging regulations, the weight given to particular pieces of evidence, and the inferences to be drawn as to the purpose of a gift are entirely a matter for the local authority, and are not open to challenge.
Regulation 25 states: 'A resident may be treated as possessing actual capital of which he has deprived himself for the purpose of decreasing the amount that he may be liable to pay for his accommodation...'. In its decision letter Fife Council referred to the 1995 transfer by Mrs Robertson to her three sons, and stated that 'as this was carried out for no consideration or legal obligation', it was entitled to include the value of the property as notional capital in the financial assessment. In a subsequent letter the Council said that it was still 'not satisfied that the property was not transferred, least in part, for the purposes of avoiding board charges. In particular it does not appear to have been necessary for Mrs Robertson to have transferred the property to her family simply to prevent her brother from moving in with her'.
In her decision Lady Cosgrove did not comment on the evidence which was made available to Fife Council by the Robertson family, although she did say that, in seeking to operate regulation 25 local authorities are likely to meet with 'denials' that the purpose of a transfer was to avoid care fees.
As in Yule, the issue for the Court on the judicial review application was whether Fife Council's decision on notional capital was wholly unreasonable, and Lady Cosgrove made it very clear that it was not the Court's job to second guess a decision which was 'essentially the responsibility of the respondents' or grant relief on any other basis.
However it may be argued that, by any standards, Fife Council had put itself beyond the pale of reasonableness and that the Court of Session got it wrong. Space does not permit an exhaustive discussion of the issues; they have already been rehearsed in the articles on Yule referred to earlier. However, Fife's position appears to have been more extreme than that adopted by South Lanarkshire, in that
(i) More time elapsed between the gift and Mrs Robertson's admission to the nursing home than was the case in Yule, and
(ii) The reasons stated by the Council for applying regulation 25 are suggestive of a very flawed understanding of the legal position.
In summary, it is clear from the correspondence that the Council was requiring Mrs Robertson to show that she had not transferred her property in order to avoid care fees. Quite apart from the fact that proving a negative may be a virtual impossibility, this interpretation of regulation 25 is inconsistent with its plain wording, with the CRAG (or SWSG 8/96 in Scotland) and with social security case law based on an equivalent notional capital rule. It is unarguable that, where a person exercises a fundamental right associated with the ownership of property 'namely disposition' the burden of proof must fall on whoever seeks to undermine (or, as regards the notional capital rule, effectively expropriate) that disposition.
In her judgment Lady Cosgrove referred to 'the notoriously disorientating effect of a change of accommodation on an elderly, confused individual'. Her comments serve as a reminder of the real implications of this decision. Fife Council agreed to maintain the status quo for Mrs Robertson pending the Court of Session's ruling. Thereafter it gave no commitment. It may be, therefore, that Mary Robertson's attorney will be forced to use up her residual free capital, some £7,000, on maintaining her placement. After that he and his brothers must consider whether they are able to support their mother. Otherwise either the nursing home must bear the loss in fees or Mrs Robertson will have to be removed elsewhere. She is in a catch 22 situation in that she is assessed as having capital which she has no means of recovering.
'Otherwise Available'
Mary Robertson's position highlights the serious consequences of falling foul of the notional capital rule. We shall never know exactly what went on in Mrs Robertson's mind when she transferred her property, but readers are reminded that, even in the unlikely event that she fully expected to go incur residential care fees, and planned to reduce them, she was still far from committing an unlawful act. It is suggested, therefore that the sanction was extreme.s Fife Council, in its wisdom does not appear to have heeded the fact that regulation 25 does not require it to consider notional capital at all.
In the final analysis, however, it appears that the outcome for Mrs Robertson may have been different under English law. Even if she was assessed as having notional capital in excess of £16,000, it would have been difficult to argue that she was in a position to purchase her own care. Because she had given her property away she had no comeback against her family, and so no means of meeting her fees in full for more than a short period of time. Care was therefore not 'otherwise available' to her.
Postscript
If readers are ever confronted with a set of similar circumstances, lateral thinking may useful.
Note:
