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	Upper Tribunal (Administrative Appeals Chamber)
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[2009] UKUT 1 (AAC)

CJSA/4355/2006

DECISION OF THE UPPER TRIBUNAL

ADMINISTRATIVE APPEALS CHAMBER

The claimant's appeal to the Upper Tribunal is allowed. The decision of the Bristol appeal tribunal dated 30 May 2006 involved errors on points of law, for the reasons given below, and I set it aside. The claimant's appeal against the Secretary of State's decision dated 31 July 2005 is remitted to a differently constituted tribunal within the Social Entitlement Chamber of the First-tier Tribunal for reconsideration in accordance with the directions given in paragraphs 84 to 86 below and further directions to be given by a district tribunal judge (Tribunals, Courts and Enforcement Act 2007, section 12(2)(a)(i)).

REASONS FOR DECISION

1. As from 3 November 2008 cases that were previously being dealt with by Social Security Commissioners are to be dealt with by the new Upper Tribunal (Administrative Appeals Chamber).
2. This appeal arises from one of four linked cases heard together by the appeal tribunal of 30 May 2006, which issued a combined statement of reasons (having produced one decision notice for the three jobseeker's allowance (JSA) cases and one for the housing benefit case). I am giving four separate decisions, of which this is the lead decision on the main questions of law involved. It concerns the decision dated 31 July 2005 that the claimant was not entitled to JSA for the period from 24 December 1997 to 4 August 2004. The other cases are as follows. CJSA/4354/2006 concerns the appeal against the decision dated 5 December 2005 that the overpayment of JSA for the period from 24 December 1997 to 4 August 2004 was recoverable from the claimant under section 71 of the Social Security Administration Act 1992 (appeal tribunal registration no 00759). CJSA/4353/2006 concerns the appeal against the decision dated 15 November 2004 that the claimant was not entitled to JSA from and including 5 August 2004 (appeal tribunal registration no 00927). CH/4356/2006 concerns the appeal against the decision dated 25 April 2005 that an overpayment of housing benefit had been incurred in the period from 30 March 1998 to 24 April 2005 and was recoverable from the claimant (appeal tribunal registration no 01069).
3. There was an oral hearing of the four appeals to the Commissioner on 18 February 2008. The claimant attended with his ex-partner (who I shall call Ms B). The Secretary of State was represented by Mr Henry Hendron of the Office of the Solicitor to the Department for Work and Pensions. Bristol City Council was represented by Mr Thomas Regan. Very unfortunately, Mr Hendron only had the file for one of the appeals with him and had somehow not realised that there were three other appeals for hearing on 18 February 2008. I refused his request for an adjournment, the claimant and Ms B having travelled specially from Bristol with all the papers for all four appeals. Mr Hendron was able to fetch the additional three files from his office. Some new issues arose in the course of the hearing on which I gave all parties the opportunity to make written submissions. Those submissions were complete by the end of May 2008. I regret that there has been very long delay since, exacerbated by the complexity and difficulty of the legal and factual issues involved and by the pressure of other work. In addition, I had hoped very much to be able to substitute decisions on the claimant's four appeals, but have in the end concluded that I cannot do so except, for rather technical reasons, in the housing benefit case.

The background in outline

4. The reason for the Secretary of State's decision that the claimant was not entitled to income-based JSA for the period from 24 December 1997 to 4 August 2004, and the basis of the other decisions, was that the claimant had capital exceeding the limit in regulation 107 of the Jobseeker's Allowance Regulations 1996 (£8,000 at all relevant dates). Although many assets had been considered in the course of investigations and taken into account in some decisions, the appeal tribunal accepted that only three assets counted towards the limit. The claimant's interest in other assets was either to be disregarded or had been transferred to Ms B when there was no question of an intention to secure entitlement to benefit. The first asset counted by the appeal tribunal was the amount in a NatWest current account, for which statements were available when the initial awarding decision was made covering the period from 22 December 1997 (£2,317.03) to 24 March 1998 (£990.13), with a balance of £5,147.65 on 30 December 1997. A later statement covering the period from 24 October 2002 to 7 November 2002 showed the payment-in of a cheque for £4,272.74 on the latter date, taking the balance to £4,796.09. The second asset was a house, 170 C Road, that the claimant had bought with his brother in 1986 (although, as will be seen, the beneficial ownership is a matter under dispute). The third asset was a beach hut or chalet situated in a hut field on Portland Bill, that was apparently acquired by the claimant in September 1998. There are particularly difficult issues of law surrounding that last asset.
5. On the claim form signed on 21 December 1997, the claimant had declared savings of about £2,000 and ownership of 170 C Road. On a B16 form signed on 30 December 1997 he gave his brother's name in answer to the question about other beneficial owners. He estimated the value of the property at £28,000, subject to a mortgage from his mother and father with £14,000 outstanding, but said that the value of his own interest was in dispute. On 14 January 1998 the district valuer put the open market value with vacant possession of the whole at £40,000. After a visit and consideration of some of the complicated pattern of property owned by the claimant's ex-partner, a decision was apparently given disallowing the claim for JSA on the ground of possession of capital of £8,300. The claimant asked for a review, providing evidence that a firm of solicitors (Sharples) had a lien on his share in 170 C Road in respect of a debt for legal costs in excess of £30,000 and held the title deeds (presumably the Land Registry Land Certificate). I shall have to come back below to the nature in law of a solicitor's lien, but this was accepted as reducing the value of the claimant's interest in 170 C Road to nil and JSA was apparently awarded from 24 December 1997. There was a subsequent period when entitlement was removed, but later restored, because of doubts about another property. Although it was far from clear in the papers that JSA had been awarded and paid for all of the period from 24 December 1997 onwards, the claimant confirmed at the oral hearing that his recollection was that that had been so.
6. A caution was placed by Sharples on the Proprietorship Register for 170 C Road at the Land Registry on 27 November 2000 to protect its lien and removed on 3 October 2001. The claimant's solicitors wrote to him on 29 October 2001 to inform him of Sharples' application to remove the caution. The claimant had been successful in an action against Sharples for negligence in their advice in the proceedings in which the costs relevant to the lien had been incurred. As described in the letter dated 5 November 2002 to the claimant from his solicitors (page 84 of CJSA/4353/2006) the claim was concluded on the basis that Sharples paid him £18,285 and relinquished all claims for fees against him. What that letter does not state and I do not know is when the claim was concluded. The letter of 5 November 2002 was to confirm that "all costs matters have finally been resolved". £13,285 had been sent to the Legal Services Commission (LSC) in full and final settlement of its claim for costs arising from the litigation in which Sharples had acted and the solicitors deducted £731.48 for their irrecoverable costs, leaving £4,268.52 due to the claimant, plus a payment of £4.22 for a period when the LSC held "certain sums on account". That was the £4,272.74 paid in to the claimant's NatWest account on 7 November 2002.
7. On 4 January 2002 Ms B applied to the Land Registry for a caution to be registered in relation to 170 C Road, on the ground that she had an interest in such part of the proceeds of sale as was attributable to the claimant "in regard to unpaid loans and disbursements". A letter dated 9 January 2002 from the Land Registry said that that application could not proceed, as it did not establish a cautionable interest. Merely being owed money did not give a person a cautionable interest. It would be different, the letter continued, if the person had a charge over or a beneficial interest in the debtor's property. There is then a copy in the papers of the original application with the addition of an assertion of an interest in connection with a trust deed dated 14 February 1986 between Ms B and the claimant in relation to 170 C Road. I can find no copy of any Land Registry documents in the papers to show that a caution was entered as a result, but the solicitors' letter mentioned in paragraph 9 below indicates that one was. In the papers before the appeal tribunal was a copy of a document signed by the claimant on 14 February 1986, and witnessed, in which he declared that he was purchasing 50% of 170 C Road on trust for Ms B in lieu of money owed for the purchase of 56 N Road. He further declared that he would hold the property as trustee for Ms B until such time as she wished to sell it and that, after taking out any moneys owed to him for work carried out at the property, he would pay the remaining money to her. As far as I can tell, that document was first produced to the benefit authorities by the claimant in support of a written submission for his appeals in late 2005 or early 2006 (page 302 of CJSA/4353/2006). I shall have to come back to what the claimant has said at different times about his ownership of 170 C Road.
8. There had been some further investigation in 2000 of which only scant details remain in the papers (for instance, many statements taken then are not in the current papers). I do not know how the Department became aware that the claimant had taken over the beach hut from his father or his father and mother. But the claimant put the value of the hut at £2,000 to £3,000, which was accepted without further investigation. At that time there was still a lien on 170 C Road, the claimant seemed to have little money in the bank and there was a coherent reason for disregarding the value of all the other capital assets. It was accepted that the claimant's capital was below £3,000, the level at which tariff income from capital would begin to be calculated (see the letter dated 20 November 2000 from an officer in the Department to the claimant's solicitors: page 94). I shall have to come back in detail below to the nature of the beach hut as a capital asset of the claimant and its valuation, as well as to the relevant evidence.
9. Further investigations, including in-depth interviews with the claimant, started in December 2003. At the first interview on 1 December 2003 he said that 170 C Road was going up for auction shortly and that he had a mortgage offer from a bank to enable him to buy out his brother's half-share. It emerged that the brother had started court proceedings to require the sale of the property, culminating in an order in Bristol County Court dated 18 September 2003 for sale by auction. There had been an earlier order apparently settling how the proceeds of sale were to be divided. The claimant made the successful bid of £162,000 at the auction. The Proprietorship Register shows that date of the transfer and of a charge in favour of the bank as 7 January 2004 and the price paid as £81,000. A letter dated 5 January 2004 to the claimant from his solicitors with a completion statement (pages 114 and 115 of CJSA/4353/2006) said that the claimant's share of the net proceeds of sale would be £79,943.37. From that, the solicitors had been authorised to retain £2,275 "which is to be paid to [Ms B] for the removal of the caution in accordance with the Order of 18th July 2003" and £5,182.56 in respect of the costs of the court proceedings leading to the order for sale. There were some later adjustments to take account of a reduction in the auctioneers' fees and there was a question over whether the claimant was liable for all the costs of the court action. I do not know how that question was finally resolved. At any rate, an HSBC bank account statement for the claimant (page 181 of CJSA/4353/2006) shows the paying in of £71,485.81 on 7 January 2004 and a transfer out on 12 January 2004 of £51,252.20, leaving a balance of £20,136.59. A statement of the HSBC mortgage account (pages 124 and 125 of CJSA/4353/2006) shows the original mortgage draw-down of £97,000 reduced to £77,000 on 16 January 2004. There was a payment-off of capital of £5,000 on 3 February 2004 (which from a handwritten note may have been from a contribution to costs from the claimant's brother). Interest began to be debited from 1 March 2004.
10. On 13 January 2004 the claimant signed an A64A questionnaire about 170 C Road. He ticked no to the question whether he jointly owned it with anyone else and said there was about £77,000 outstanding on the mortgage. He said that he intended to live in the property and to move in as soon as possible, but that it was currently uninhabitable. He estimated the value at £150,000. In an accompanying letter he said that his brother had not yet signed the transfer and was holding up the registration of the property. He referred to the disregard of the capital value of premises acquired with the intention of occupation, but not yet occupied, for six months or as long as seems reasonable. He also said that as from 1 December 2003 he was holding the beach hut in trust for his children until they were old enough to take over responsibility.
11. The claimant was interviewed under caution on 12 August 2004 and 1 February 2005. Payment of JSA was suspended from 5 August 2004. During the first interview there was discussion of, among many other things, the terms on which the claimant was able to obtain the mortgage for purchase of 170 C Road. The interviewing officers had obtained notes from HSBC, which are not in the papers before me or the appeal tribunal, indicating that it was on the basis of Ms B, as a long-standing customer, having provided a full personal guarantee that was going to be backed by purchase of an investment bond to be subject to a charge. The claimant was asked why Ms B would be prepared to do that, but did not wish to offer any comment.
12. Following that interview, an open market valuation of 170 C Road was provided by the Valuation Office on 14 September 2004, of £160,000 as at 16 August 2004 and of £150,000 as at 31 January 2004. The decision was given on 15 November 2004 that the claimant was not entitled to JSA from and including 5 August 2004 because he had capital valued at over £8,000. That was based on the valuation of 170 C Road as at 16 August 2004, less 10% for the expenses of sale and £72,000 as the amount outstanding on the mortgage. In addition, the beach hut was said to have been valued at £20,000, so that that asset on its own, after the appropriate deductions, would take the claimant well over the £8,000 limit even if 170 C Road was ignored. I shall deal specifically with the decision of 15 November 2004 in CJSA/4353/2006.
13. The interview on 1 February 2005 followed a valuation of the beach hut by the Valuation Office on 6 January 2005 at £20,000 on 16 August 2004 and at £10,000 as at December 2000. It covered many aspects of the claimant's affairs. On 31 July 2005 the decision was given that the claimant was not entitled to JSA for the period from 24 December 1997 to 4 August 2004 because he had capital over £8,000. There is not a copy of the actual decision in the papers, and in the written submission to the appeal tribunal the subsequent overpayment recoverability decision was by mistake transcribed into box 3. However, that submission asserted that the decision awarding JSA from 24 December 1997 had been revised under regulation 3(5)(b) of the Social Security and Child Support (Decisions and Appeals) Regulations 1999 on the ground that it was made in ignorance of or under a mistake as to a material fact and as a result was more advantageous to the claimant than it would otherwise have been. The decision-maker took the view that the claimant had notional capital of £83,000 as at 21 December 1997, increasing to £108,000 from 1 February 1998, derived from his disposal of property in 1996. The precise identification of the amount of the claimant's actual capital was perhaps then not thought vital. But, apart from the amounts in the NatWest account at the beginning, the value of the beach hut was taken into account from 11 September 1998 (using the valuation above as from December 2000 and the claimant's suggestion of £2,500, that had been accepted without investigation in 2000, from 11 September 1998) and the claimant's interest in 170 C Road was counted from the date of the removal of Sharples' caution.
14. By 31 July 2005 the claimant's appeal against the decision of 15 November 2004 had been in being for some time. Indeed, there had been an initial hearing on 14 June 2005 that produced directions for substantial submissions from both parties. The claimant had already put in an advance written submission with several documents including a detailed valuation report on the beach hut by a firm of chartered surveyors from Weymouth, dated 29 April 2003, prepared in connection with Inheritance (Provision for Family and Dependants) Act 1975 proceedings brought by the claimant's mother in respect of her late husband's estate. The valuation was of £7,000.
15. The claimant's appeal against the decision of 31 July 2005 was lodged on 27 February 2006 and an extension of time allowed.

The decision of the appeal tribunal of 30 May 2006

16. The appeal tribunal's decision was to allow this appeal and to determine that the claimant's entitlement to JSA and any consequent overpayment was to be calculated in accordance with the following directions:

"1. On 30/12/97 the appellant had actual capital of £5,147.65 reducing as shown on the bank statements, pages 110 and 11, until the capital fell below £3,000 on 10/2/98.

2. On 11/9/98 he obtained actual capital, namely the beach chalet of a value of £5,500, and he retained ownership of this asset throughout the period in question. The value is to be reduced by 10% to take account of the site owner's commission.

3. On 7/11/2002 he received capital of £4,272.74.

4. He disposed of such interest as he had in [several properties] in April 1996 and did not do so intending to secure entitlement to benefit. He therefore had no notional capital.

5. From 3/10/01 the appellant's half share of [170 C Road] is to be taken into account up to 6/1/04. The property is valued at £80,000 at that time. His half share is therefore £40,000 less selling expenses. There is a 10% discount for a half share, but even if this is increased because of the differences the appellant had with his brother to say 25%, the value of this asset is in excess of £8,000.

6. The value of [170 C Road] is to be ignored for 26 weeks from completion of the purchase, which the tribunal fixed at 7/1/04, the date on the legal charge as recorded at the Land Registry, as the appellant intended to occupy the premises as his home. He did not do so and therefore the value is to be taken into account at the end of the 26-week period, the value being £90,000."

The matter, including the calculation of the recoverable overpayment (see CJSA/4354/2006), was remitted to the Secretary of State to carry out the necessary calculations, with a right for the claimant to apply to the appeal tribunal in the event that he did not agree to the calculations when he was notified of the revised decision. I was told at the oral hearing that no decisions incorporating such calculations had been issued by the Secretary of State.

17. I shall not set out here all the appeal tribunal's findings of fact or all of its reasons, but concentrate on the reasons in relation to the beach hut and 170 C Road. In essence, paragraph 60 on money in bank accounts merely confirmed what had been said on the decision notice.

The beach hut

18. The statement of reasons contained the following:

"58. So far as the beach chalet is concerned that was given to the appellant on 11 September 1998. It affected entitlement from that date. Its acquisition was not disclosed to the Secretary of State, who only became aware of it in 2000. The appellant gave it a value of £2,500 which was at that time accepted. The tribunal considered that that was an undervalue. The tribunal considered that the value which was eventually attributed to the chalet by the Secretary of State was excessive as it was based on a beach chalet which the tribunal did not consider was equivalent. The tribunal considered that the most reliable valuation was that which had been obtained for the Inheritance Act proceedings when in March 2003 it was valued at £7,000, and the tribunal accepted that as the basis for valuation. Assuming inflation of 5% per annum a valuation of £5,000 in 1998 would have resulted in a value in 2003 of £6,300, and a valuation of £6,000 would have produced a value of £7,650 by 2003. These were either side of the valuation of £7,000 and the tribunal therefore fixed a value of £5,500 for the chalet at the date the appellant acquired it in 1998. The site owner was entitled to a commission of 10% on any sale which should be taken off its value. (For the avoidance of doubt, as this was not expressed in terms in the decision notice, the valuation will also be reduced by the statutory 10% for selling expenses.)

59. The tribunal concluded that the appellant had throughout been the owner of the chalet. It was held on a licence and therefore in legal terms would be classed as personal property and not an interest in land. The appellant had stated on various occasions that he was the owner. In 2000 he did not state that he held it as trustee for his children. He said that he had put it in trust for his children in December 2003. However, in his interview under caution in 2003 he said that he had just acquired it (not correct) and that he would not sell it because it had been passed on to him following the death of his father. He said that he did not regard it as capital. He also said that he could give it away if he wanted to. If he had put it in trust in December 2003 (which was not found) this would have been done immediately after the interview, when he would have been well aware of the implications of capital on his benefit entitlement. If there had been such a declaration then that would in any event have amounted to a deprivation of capital intended to secure entitlement to benefit and the capital value would have been taken into account in any event as notional capital. However, in his statement to the court in January 2004 he said that he owned the beach hut which had been left to him by his father. He said he did not wish to sell it as it had sentimental value and he would like to give it to his children. The tribunal considered that that statement accurately set out the position. It did not state that there was a trust. It might have been the family's wish that in due course the chalet should go to the children but a wish of that kind was far from being sufficiently binding to establish a trust. The tribunal did not consider that there was a trust of the beach chalet and that throughout the period in question the chalet had been owned by the appellant."

170 C Road

19. The statement of reasons contained the following:

"61. The other asset which had to be considered was the appellant's interest in [170 C Road]. Originally a decision was taken to leave this out of account because of the solicitor's lien. Given the value of the property, and the fact that there was a lien, if the lien had been enforced the appellant would have received little if any of the proceeds and in any event the existence of the lien in the Secretary of State's view meant that it could be left out of account. The tribunal did not wish to dissent from that view.

62. However the situation changed radically on 3 October 2001 when the caution protecting the lien was cancelled and the lien ceased to have effect. That meant that any justification there may have been for leaving the appellant's interest in [170 C Road] out of account ceased. In July 2001 the appellant had stated in a review form that the property was worth £80,000 and the tribunal accepted that as a realistic valuation, given the earlier and subsequent values. The appellant's half share would be £40,000 less 10% for selling expenses. As he had a half share the value would be discounted, the conventional figure being 10%. As there was a dispute between him and his brother a greater percentage might be considered appropriate but the terms on which the property was held would not have prevented a sale. No-one was living there, the property had been acquired as an investment and the tribunal did not consider that there would have been any problem in obtaining an order for sale under the Trusts of Land and Appointment of Trustees Act - which is what in due course happened. Even allowing for a reduction of say 15% the value of his share would be £30,000. The value of his half share was therefore well in excess of the capital limits for either jobseeker's allowance or housing benefit.

63. The appellant purchased [170 C Road] at auction, and the tribunal fixed the day of completion as 7 January 2004 which was the date when the legal charge was dated as recorded at the Land Registry. The appellant had bought the property for £162,000 at auction and that had to be taken as the value. There was a mortgage of £72,000 and the value was therefore £90,000 (less expenses). However, the appellant at that time expressed the wish to renovate the property and live there, using rent from part of the property as an income. This was his stated intention in the statement of resources to the court in January 2004. The tribunal considered that as he intended to occupy the premises as his home, the value could be left out of account for 26 weeks. At the end of that time there was no realistic prospect of him occupying it, he did not complete the work, having lost interest and the value was therefore to be taken into account fully at the end of the 26 week period (Para 2 of Schedule [8] to the [Jobseeker's Allowance Regulations 1996]).

64. The net effect of this is therefore that the appellant's half share of [170 C Road] as valued above was to be taken into account for the period 3 October 2001 to 7 January 2004, and his interest in the whole of the property was to be taken into account for the period commencing after 26 weeks from 7 January 2004.

65. The other issue was the extent to which the appellant was not in fact the beneficial owner of [170 C Road], and this had to be considered in the light of the trust deed of February 1986. This stated that he purchased the property on trust for [Ms B] in lieu of moneys owed for the purchase of [56 N Road]. However, in the judgment in the Inheritance Act proceedings the appellant's case was summarised as being that his father paid the purchase price of [N Road] but he repaid him in full and contributed the whole of the purchase price. The district judge doubted that he had repaid his father in full. Nevertheless in his financial statement to the court in January 2004 the appellant stated that he had paid the whole of the purchase price to his father. That was not consistent with the assertion that [Ms B] had funded that purchase.

66. In his statement of resources to the court he stated with no qualification that he had purchased [170 C Road] and he was buying his brother's share. It was agreed that they had owned the property in equal shares. He gave the impression that [170 C Road] belonged to him and was to be his home.

67. Thus in the litigation with his brother and presumably in his legal aid application there was no suggestion that he was anything other than beneficially entitled in his own right. The tribunal considered that he would only have been granted legal aid if he had an interest to defend and that it was not likely that he would have been granted legal aid if he had put forward the contention now advanced that he had no beneficial interest. [Ms B] had registered a caution stated to be in respect of debts and the trust deed which was paid off in 2003/4 when the appellant purchased [170 C Road]. The tribunal was not prepared to find that the 1986 trust deed was determinative of the issue and did not accept that the appellant had no beneficial interest in the property. The appellant throughout his dealings with all authorities including the DWP in his applications, review forms and interviews had never raised the suggestion that he was anything other than the beneficial owner. He had never raised the issue that [Ms B] was the beneficial owner."

I do not need to set out what was said in paragraphs 68 and 69 about the claimant's evidence not being reliable and about preferring the notes of the HSBC official about what the claimant and Ms B had said when applying for the mortgage for 170 C Road.

The appeal to the Upper Tribunal

20. The claimant now appeals against the appeal tribunal's decision with my leave. In his application to the Commissioner the claimant had put forward five grounds: (i) that appeal tribunal was wrong about the continuing effectiveness of the trust deed of 14 February 1986, in the light of his transfer on 26 September 2006 of the entire legal and beneficial interest in 170 C Road to Ms B for £77,500; (ii) 170 C Road was in dispute from December 2001, when he first approached a solicitor to try to force a sale, until January 2004, so that it was unfair for its value to be taken into account; (iii) some of the money held in the NatWest account on 30 December 2007 was for outstanding debts and some was rent collected for Ms B and belonging to her; (iv) the true figure for the site-owner's commission on sale of the beach hut (15%) should have been used, and it was also in dispute in the inheritance proceedings from May 2002 to June 2003; and (v) the hearing was rushed as there was so much to go through on four cases and the claimant did not have the opportunity to answer points which the appeal tribunal later regarded as going against him. At the oral hearing the claimant adopted those points as the ones he wished to pursue.
21. When granting leave to appeal I said this (omitting one point that was based on a misunderstanding):

"In the amended decision notice, as corrected on 13 September 2006, the appeal tribunal stated that the claimant obtained actual capital in the form of the beach chalet on 11 September 1998, with a value of £5,500 on that date, subject to a reduction of 10% to take account of the site-owner's commission. In paragraph 58 of the statement of reasons it was said that, for the avoidance of doubt as the point had been omitted from the decision notice, the valuation would also be reduced by the statutory 10% for selling expenses. The claimant has submitted that the evidence before the appeal tribunal showed that the commission taken by the site-owner under the licence agreement on a market sale was 15%. The precise value of the beach hut could be important for many months of the period, on the overall approach taken by the appeal tribunal. It is arguable that the appeal tribunal erred in law by failing to explain why the 15% figure was not adopted and by leaving too much uncertainty as between the precise directions in the amended decision notice and paragraph 58 of the statement of reasons and as to whether the `statutory' 10% reduction was to be applied to the full market value or that value as reduced by the site-owner's commission. The ultimate result might not be to the claimant's advantage, as it is not clear how the site-owner's commission should be treated under regulation 111(a) of the Jobseeker's Allowance Regulations 1996. The commission would not seem to affect the market value of the hut, ie what a willing purchaser would be prepared to pay. And if it is an `expense attributable to sale', the limit of the reduction is 10% whatever the actual extent of the expenses. Nor does it seem to be an encumbrance secured on the beach hut: the obligation to pay the commission was simply one of the rules of the licence to occupy the site and the hut was not charged with any security.

In the amended decision notice the appeal tribunal directed the Secretary of State to calculate the claimant's entitlement to JSA on the basis that, in addition to the value of the beach hut from 11 September 1998, he had actual capital of £5,147.65 in his NatWest account, reducing as shown on the bank statements until the capital fell below £3,000 on 10 February 1998. That direction left it unclear whether the Secretary of State was meant to assume that the claimant continued to have the amounts shown in the bank statements in the papers down to 24 March 1998 and the £990.13 balance on that date on a continuing basis. That uncertainty arguably involved an error of law, as for many months the claimant's capital would, on the appeal tribunal's conclusions, be very close to significant limits.

It may also be arguable that the appeal tribunal left too many matters, such as the identification of periods of entitlement to JSA at the rate actually paid, of entitlement at a reduced rate and of no entitlement, to the Secretary of State for it to be said that these were simply matters of calculation remitted to be carried out in accordance with the appeal tribunal's directions of principle. Was it an error of law for the appeal tribunal not to have adjourned for the Secretary of State to put forward new submissions and calculations in accordance with the principles decided on 30 May 2006 or was it within the appeal tribunal's discretion to choose to make a final decision and remit matters of calculation to the Secretary of State, with a right to the claimant to take matters back to the appeal tribunal if he disagreed with any calculation?"

22. In the written submission dated 12 June 2007 the representative of the Secretary of State supported the appeal, but only to the extent of agreeing that the appeal tribunal's reasoning was inadequate in two respects. That was in explaining what deductions were to be made from the market value of the beach hut and why it was concluded that the claimant did not hold his half-share of 170 C Road in trust for Ms B. It was submitted that the appeal tribunal did not have to produce an outcome decision (applying the approach of the Tribunal of Commissioners in CIS/624/2006, now reported as R(IS) 2/08), so that remission of the calculations was proper. It was suggested that the Commissioner should substitute decisions on the four appeals. Because of that suggestion and the complication of the case I granted the claimant's request for an oral hearing. The Secretary of State's further submission dated 19 March 2008 did not add any other grounds of support of the appeal. In particular, in response to issues that I had raised at the oral hearing, it was submitted that the appeal tribunal had not erred in law in not considering the disregard of the value of personal possessions (JSA Regulations, Schedule 8, paragraph 15) in relation to the beach hut, because it was either real property or, if not, the claimant had associated rights as against the site-owner that had a market value. It was also submitted that the claimant could not have been said to have been taking reasonable steps to dispose of his interest in 170 C Road, within the terms of the disregard in paragraph 6 of Schedule 8, on any days between 4 October 2001 and 7 January 2004.
23. I am satisfied that the appeal tribunal did err in law in ways that require its decisions in the present case to be set aside. I deal first below with the points made in the claimant's application for leave to appeal, as set out in paragraph 20 above. Then, in the light of my conclusions on those issues, I deal first with the general nature of the appeal tribunal's decision and the extent of the matters left for calculation or determination by the Secretary of State. Next I deal with the treatment of the value of the claimant's interest in 170 C Road, broken down into separate periods: while the solicitors' lien was in effect; after the lien ceased to have effect and before the claimant's purchase of the entire legal estate on 7 January 2004; and from that date onwards down to 4 August 2004. Then I deal with the nature of the claimant's interest in the beach hut, its market value at relevant dates and what deductions fell to made from that value in accordance with regulation 111(a) of the JSA Regulations. Finally, I mention a point that would not on its own justify setting aside the appeal tribunal's decision at the instance of the claimant - that the appeal tribunal took no account of the receipt by the claimant of his share of the proceeds of sale of 170 C Road in January 2004.

(i) The continuing effectiveness of the trust deed of 14 February 1986

24. In so far as the claimant is relying on the evidence of the Land Registry documents and Ms B's solicitor's letters dating from October 2006 about his transfer of 170 C Road to Ms B in September 2006 (in which the solicitor stated that the transfer was in accordance with the declaration of trust), that cannot indicate any error of law by the appeal tribunal. That evidence did not exist at the date of the hearing, so that the appeal tribunal cannot be faulted for not taking it into account. The claimant had said in his letter of appeal dated 24 February 2006 that he had sold 170 C Road to Ms B, who he described as the "other shareholder" on 22 February 2006. He also said that he had lost any influence or interest in the property. As part of his oral evidence on 30 May 2006 he said, as recorded by the chairman (pages 296 and 312) that he had "lost interest in it". I return below to the possible misunderstanding of that evidence, but for the moment it seems to me that the evidence of the claimant's sale of 170 C Road added nothing of significance to the evidence that the appeal tribunal expressly considered in paragraphs 65 to 69 of its statement of reasons. Even if the appeal tribunal had known of what the solicitor had stated, that would merely reflect what he had been told by Ms B, which he would have had no reason to dispute in the absence of any challenge by the claimant.
25. Although the appeal tribunal expressed some doubts, I shall assume in favour of the claimant that it accepted the initial validity and effectiveness of the declaration of trust. There is therefore no need for me to consider the evidence from the witness to the declaration. Once a beneficial interest has been disposed of by way of a declaration of trust it cannot simply be undisposed of by the lapse of time or by a change of mind on the part of the settlor. However, in my judgment the appeal tribunal was entitled, on the above assumption, to conclude by inference from the way that the claimant had described his interest in 170 C Road at many stages that something must have happened between the claimant and Ms B to bring the trust relationship created by the document of 14 February 1986 to an end.
26. I can see why at the time the claimant and Ms B may have wished to keep secret from the rest of the family the financial contribution that she had made to the purchase of 56 N Road (which was the claimant's parents' council house), but I cannot see why that was still the case by the dates of the statements regarded as significant by the appeal tribunal. This is not the place for anything like a full analysis of the evidence, but it was undisputed that in 1996 the claimant had transferred his interest in several jointly-owned properties to Ms B. And the judgment of 9 June 2003 of District Judge Bird in the Inheritance (Provision for Family and Dependants) Act action described evidence of complicated transactions between the claimant's father, the claimant and Ms B in 1998, not long before the claimant's father's death in January 1999. Some of the transfers from the claimant to Ms B could clearly have been regarded as fulfilling the obligation that had led to the trust being declared in relation to 170 C Road, such that there was an agreement between them bringing that trust relationship to an end. It also seems to me significant, if Ms B's caution placed on the register in relation to 170 C Road was to protect her interest stemming from the declaration of trust, that the claimant only needed to pay £2,275 to her for the removal of the caution prior to the sale of the property in January 2004 (see the evidence described in paragraphs 7 and 9 above). The claimant has said that the caution was only in relation to extra loans and disbursements put into 170 C Road by Ms B during its renovation, but no renovation took place in the years before January 2004 and it is clear that the Land Registry would not accept the mere existence of debts as a cautionable interest. And I can see no reason why, if the true position in equity then had been that the claimant still held the whole of his half-share of 170 C Road in trust for Ms B, the solicitor should not have paid over the proceeds of sale of that share to Ms B instead of to the claimant. Overall, I am satisfied that on this aspect of the case the appeal tribunal reached a conclusion of fact within the area of reasonable judgment allowed to it and gave a sufficient explanation. There was no error of law.

(ii) 170 C Road was in dispute from December 2001 and not to be taken into account

27. The mere fact of the existence of a dispute between the claimant and his brother about what ought to be done with 170 C Road does not bring the circumstances within any of the categories in Schedule 8 to the JSA Regulations requiring the disregard of the value of premises. It might possibly have an effect on the market value of the claimant's interest, but not enough to make any practical difference in the present case. However, I return in paragraphs 40 to 48 below to the question of whether any of the disregards, in particular that where a claimant is taking reasonable steps to dispose of premises, could apply between October 2001 and January 2004.

(iii) Some of the money in the NatWest account on 30 December 1997 should not count as capital

28. The first part of the claimant's submission was that the payment out of his account on 19 January 1998 (£151.55) was to pay an Access credit card bill dated 16 December 1997 and that from 15 December 1997 to 28 December 1997 he had spent a further £1,733.34 on Access. He said that both these represented debts that were repayable, so that the amounts should not have counted as his capital as at 30 December 1997. In his reply dated 24 July 2007 he referred to a principle that money in a bank account can only be treated as capital once all relevant debts and tax liabilities had been deducted and to what had been stated in paragraph 6.8 of the Secretary of State's written submission to the appeal tribunal (that decisions R(IS) 5/[99] and R(IS) 6/03 held that amounts that a claimant is under a "certain and immediate liability to repay" should not be treated as his capital).
29. A misunderstanding is involved in both those propositions relied on by the claimant. The principle about deduction of debts and tax liabilities is relevant only to the question of when a payment received as income ceases to have the character of income and turns into capital. The principle in relation to amounts that have acquired the nature of capital is that for the purposes of the specific legislation on means-tested benefits capital means the gross amount of capital, not the amount that would remain after taking account of liabilities (Tribunal of Commissioners' decision R(SB) 2/83, paragraph 12). The major exception to that, which is in effect a confirmation of the general principle, is the statutory rule (in regulation 111(a)(ii) of the JSA Regulations) for deduction from the current market or surrender value of any capital asset of the amount of any encumbrance secured on it. If a claimant has capital assets and an immediately payable debt that is not secured on the assets the way to reduce the amount of capital taken into account is to pay the debt.
30. There is a small further complication caused by the cases mentioned in a rather confusing way in paragraph 6.8 of the written submission to the appeal tribunal. R(IS) 5/99 is the decision of the Court of Appeal in Leeves v Chief Adjudication Officer. R(IS) 6/03 is the decision of the Court of Appeal in Morrell v Secretary of State for Work and Pensions [2003] EWCA Civ 526. One of the principles established by those cases, particularly Leeves, is that a sum received under a certain obligation of immediate repayment does not amount to income. The Court of Appeal did not need to say anything about whether a similar principle applies to capital and, if so, how that relates to the long-established principle for which R(SB) 2/83 stands. That nettle has recently been grasped by Mr Commissioner Jacobs in CIS/2287/2008. He held there that Leeves does apply to the classification of an asset as capital, but only at the moment of receipt or attribution of the asset in question. The principle only operates where, outside trust relationships, there is a certain obligation of immediate repayment or return of the asset to the transferor. It does not bite in cases where the recipient is under some liability to a third party. That is the case here. The principle of R(SB) 2/83 remains, that once an asset has become part of a claimant's capital, the mere existence of unpaid liabilities, even if payment is due, does not affect the calculation of the amount of capital for benefit purposes.
31. The second part of the claimant's submission was that some of the balance in his NatWest account as at 30 December 1997 did not belong to him, but represented payments of rent collected on behalf of Ms B as the landlord of the properties in question. At the oral hearing there was mention of housing benefit payments having been made into the wrong account (which had been used before the claimant and Ms B split) by mistake. The claimant said that the cheque for £1,507.94 debited from the account on 2 January 1998 was a payment over to Ms B of what was due to her, so that that amount should not have been counted as capital in the preceding period. If accepted, that could have led to a conclusion that the amount was not to be treated as ever having been the claimant's capital, either under trust principles or Leeves. However, the difficulty for the claimant is that, although the appeal tribunal certainly had copies of the bank statements before it, I cannot see that it had the copies with the annotations in pen or pencil that have been put in later. Nor can I see that this particular point was ever raised before the appeal tribunal. Indeed, the claimant's initial complaint in his application to the chairman for leave to appeal had been that the matter was not discussed at the hearing. In the absence of anything to show that the issue had been raised, the appeal tribunal cannot be faulted in law for failing to deal with it. I come back below to the general point about lack of time at the hearing.

(iv) Site-owner's commission of 15% should have been deducted from the value of the beach hut

32. I agree that the appeal tribunal's decision notice and statement of reasons were fatally confused on this point, for the reasons given when I granted leave to appeal (see paragraph 21 above). Whatever the proper treatment of the commission should be, the appeal tribunal did not give either the claimant or the Secretary of State an adequate explanation of what it was deciding and how that related to the terms of regulation 111(a) of the JSA Regulations. That was a material error of law. It is simplest then to deal with the application of regulation 111(a) in the particular circumstances as part of the general discussion below of the nature and valuation of the claimant's interest in the beach hut.

(v) The hearing was too rushed to allow the claimant to make his case properly

33. There may well be something in this ground. I accept that the hearing before the appeal tribunal was very complicated and confusing, with four appeals listed and with representatives both from the Department for Work and Pensions and the local authority. The difficulty that I have had in sorting out the legal issues to be addressed, even with the great assistance of the appeal tribunal having put a number of potential capital assets out of play, is testimony to that. An appeal tribunal without the luxuries of time allowed in further appeals may have to take steps to keep submissions and evidence within reasonable bounds. That is perfectly proper and consistent with a judicial process, but must always be subject to the right of parties to a fair opportunity to state their case. However, I do not need to decide whether that line was crossed in the present case, since I have concluded that there are other errors of law requiring me to set the appeal tribunal's decision aside.

(vi) Did the appeal tribunal make an acceptable decision or did it leave too much to be calculated or decided by the Secretary of State?

34. As noted in paragraph 22 above, the Secretary of State relies on the decision of the Tribunal of Commissioners in R(IS) 2/08 for the proposition that on an appeal against an outcome decision (ie a decision that an claimant is not entitled to benefit for a period or is entitled to benefit at a specified rate) an appeal tribunal is not obliged to substitute another outcome decision. The Tribunal of Commissioners did indeed decide in paragraph 48 that, in the light of section 12(8)(a) of the Social Security Act 1998 (appeal tribunal need not consider an issue not raised by the appeal), when:

"an appeal against an outcome decision raises one issue on which the appeal is allowed but it is necessary to deal with a further issue before another outcome decision is substituted, a tribunal may set aside the original decision without substituting another outcome decision, provided it deals with the original issue raised by the appeal and substitutes a decision on that issue. The Secretary of State must then consider the new issue and decide what outcome decision to give."

In that case, the Tribunal of Commissioners accepted that that principle applied when an appeal tribunal decided that the claimant did not have notional capital, on which the disallowance of benefit had been based, but did have actual capital, which had not been valued because that had not previously seemed necessary to the Secretary of State. But part of its general guidance to appeal tribunals was as follows (paragraph 55(3):

"The tribunal's decision, as recorded on the decision notice issued at the conclusion of the hearing, should explicitly record what has and has not been decided. In particular, the decision notice should make it absolutely clear whether the tribunal has made an outcome decision (subject, in some cases, to the precise amount being calculated by the Secretary of State) or has remitted the final decision on entitlement to the Secretary of State."

35. In the present case, it was in my view clear enough that, although the appeal tribunal used the misleading word "revised" that was printed on standard form decision notices, rather than "set aside", it was remitting the final decision on entitlement for the whole period from 24 December 1997 to 4 August 2004 to the Secretary of State. However, the decision notice and the statement failed the test of explicitness at some points.
36. Working through the period (and leaving aside for the moment whether and how far the appeal tribunal went wrong in its valuation of particular assets) produces the following results. The appeal tribunal made clear that the only capital to be taken into account at the beginning of the period was the balance from time to time in the claimant's NatWest account, which was not enough on its own to exceed the £8,000 limit. It was therefore acceptable to leave to the Secretary of State the mere calculation of the tariff income from capital over £3,000 week by week and the resulting amount of entitlement to income-based JSA. It was also clear enough that the appeal tribunal had determined that the capital from that source fell below £3,000 from 10 February 1998, so that tariff income would cease. The next change was on 11 September 1998 when the appeal tribunal decided that the claimant gained the beach hut as a capital asset. Taking its market value then at £5,500 and increasing that market value at 5% per year, as I think that the appeal tribunal can be taken to have impliedly directed, would, after the minimum deduction of 10% for the expenses of sale, have left the amount of capital from that source to be counted well below £8,000 for the whole of the period in question, but enough to generate tariff income. However, the addition of amounts of capital in the claimant's NatWest account in themselves well below £3,000 could have taken the total over £8,000 or over a threshold or thresholds making a difference to the amount of tariff income to be taken into account. Did the appeal tribunal intend to direct that the claimant should be regarded as having nothing in the bank account before 7 November 2002 or did it intend to allow the Secretary of State to gather evidence of the balances in the account from 11 September 1998 onwards (or to use existing evidence if he already had a complete run of statements)? I think that the latter operation would have been within the principle of R(IS) 2/08, but the appeal tribunal should have made clear what it was leaving to the Secretary of State.
37. The next major change as found by the appeal tribunal was the lifting of the solicitors' lien on 170 C Road on 3 October 2001, which required the market value of the claimant's interest to be counted as capital. The value of that interest, on the basis adopted by the appeal tribunal, was plainly enough on its own to take the claimant's capital well over £8,000, so that there was no entitlement at all to JSA. For the periods in which that value was not to be disregarded, the identification of other capital assets might not be so important (although it might become relevant in computing the amount of any recoverable overpayment, through the diminishing capital principle). However, for the period of 26 weeks from 7 January 2004 for which the appeal tribunal directed that the value of 170 C should be disregarded, what was the Secretary of State meant to do about other capital in addition to the value of the beach hut? The appeal tribunal had found that the claimant had received a payment of a capital nature on 7 November 2002 (the £4,272.74 left over from the compensation paid by Sharples), but that could not simply be treated as part of the claimant's capital over a year later. In a statement of resources prepared for other purposes signed on 19 January 2004 the claimant said that he had £1,473.77 in savings in a NatWest bank account (page 193 of CJSA/4353/2006), but the accompanying statement has not been copied and the evidence stands in isolation. Again, if the Secretary of State was to be allowed or required to investigate the amount of capital in bank accounts in that period, there should have been a specific direction. There was a particularly big hole in relation to that period, in that the claimant had received the proceeds of sale of his interest in 170 C Road, £71,485.81 having been paid into his HSBC account on 7 January 2004, with over £20,000 remaining on 12 January 2004. The financial position then is difficult to sort out, but the amounts are so large that I have discussed this further below under a separate heading.
38. Overall, I conclude that the appeal tribunal erred in law by failing to give sufficiently clear directions about what matters were being left to the Secretary of State and on what basis.

(vii) The value of the claimant's interest in 170 C Road and disregards

39. I have already decided above that the appeal tribunal cannot be faulted in law for finding that at the relevant dates the claimant did not hold his half-share in 170 C Road on trust for Ms B. In considering whether there was any further error of law I must proceed on that basis.
40. The Secretary of State had been content to accept that from 24 December 1997 the claimant's interest had no value because of Sharples' lien exercised over the Land Certificate and other deeds. It was apparently accepted that the lien had been in existence from that date, rather than some later date, and that it had the effect just described. The appeal tribunal did not wish to differ on those points and no challenge to that position has been made by the Secretary of State in the appeal to the Commissioner/Upper Tribunal. There is therefore no need to explore quite how a solicitor's lien over a Land Certificate and other deeds, ie a right to retain possession of those documents until a debt is paid, affects the value of the owner's interest. A lien does not give the solicitor any charge over the property to which the Land Certificate relates, even when protected by the placing of a caution on the register, and an inability to produce a Land Certificate would not in principle make it legally impossible to sell the property. However, it could be accepted that the existence of such a situation and the inability to produce deeds that are the source of, for example, rights of way or rights of entry attached to the property (as in the present case) would tend to put off prospective purchasers. There is therefore no need to explore whether there might have been any grounds for disregarding the value of 170 C Road prior to 3 October 2001. I can then see no reason why Sharples would remove their caution from the Register in October 2001 if their lien was still in effect. Therefore, it can be assumed that by then they had abandoned any claim against the claimant for their costs, so that there was no longer any debt to support the lien.
41. The appeal tribunal was therefore entitled to conclude that from 3 October 2001 onwards the claimant's interest was to be valued as in paragraph 62 of the statement of reasons. The appeal tribunal applied that value down to 6 January 2004. However, there was evidence before the appeal tribunal of the claimant having wanted in that period to get 170 C Road put up for sale or to buy out his brother. A question arises whether the terms of the disregards in paragraphs 6 or 7 of Schedule 8 to the JSA Regulations were met for any part of that period:

"6. Any premises where the claimant is taking reasonable steps to dispose of those premises, for a period of 26 weeks from the date on which he first took such steps, or such longer period as is reasonable in the circumstances to enable him to dispose of those premises.

7. Any premises which the claimant intends to occupy as his home, and in respect of which he is taking steps to obtain possession and has sought legal advice or has commenced legal proceedings with a view to obtaining possession, for a period of 26 weeks from the date on which he first sought such advice or first commenced such proceedings, whichever is earlier, or such longer period as is reasonable in the circumstances to enable him to obtain possession and commence occupation of those premises."

42. On 16 January 2002 the claimant's solicitors wrote to his brother (page 90 of CJSA/4353/2006) saying that he would like to market 170 C Road for sale immediately and asking whether he was agreeable (acknowledging that there would need to be discussion about the division of the proceeds of sale). According to his brother's witness statement dated 27 May 2003 (pages 85 to 87 of CJSA/4353/2006), prepared for the purposes of the later application to the court, he replied that he would first like to consider buying the claimant's share and asked the solicitors to provide a valuation. The solicitors replied in February 2002 that they were taking instructions, but according to the claimant's brother nothing was heard in the next year. The claimant does not, I think, deny that, but his explanation is that in May 2002 his mother began her Inheritance (Provision for Family and Dependants) Act litigation against the executor of his father's will and himself and Ms B. Action on 170 C Road therefore stopped until that litigation was finished. Judgment was not given by District Judge Bird in that litigation until 9 June 2003.
43. Could those circumstances come within paragraph 6 of Schedule 8? It has been held that the steps that can count can start prior to putting the premises up for sale to the public (R(IS) 5/05 and CIS/1915/2007). In R(IS) 5/05 the claimant had separated from her husband and moved out of the former matrimonial home, which appeared to be jointly owned. At some date she had started divorce proceedings. Most of the decision was about the terms of the specific disregards relating to former matrimonial homes, but Mr Commissioner Rowland said this in paragraph 15:

"I agree with [the representative of the Secretary of State] that the tribunal took too narrow a view of the phrase `reasonable steps to dispose of those premises', given the evidence that divorce proceedings were on foot at the date of the hearing and it was unclear when they had been started. The bringing of ancillary relief proceedings within a divorce suit may have been a necessary preliminary step before the matrimonial home was put on the market and there also seems to me to be no reason why [the income support equivalent of paragraph 6] should not apply while arrangements are being made for a former partner to buy the interest of the claimant, which avoids putting the home on the market at all. (If the claimant is proposing to buy out the former partner and move back into the matrimonial home herself, [the income support equivalent of paragraph 7] may be applicable instead)."

In paragraph 16 the Commissioner pointed out that the first relevant steps might have been taken before the divorce proceedings were issued, for instance when correspondence with the claimant's husband about disposal of the home started.

44. In CIS/1915/2007 Mr Deputy Commissioner Mark applied the same approach, saying in paragraph 15:

"for this purpose, the Secretary of State appears to be proceeding on the basis that the claimant has an undivided share in the matrimonial home, which constitutes premises. Those premises are to be disregarded, and therefore the claimant's undivided share in the premises is to be disregarded, for a reasonable period, provided that the claimant is taking reasonable steps to dispose of them. The only practical way of disposing of the premises in the context of a break up of the marriage, and with a husband who will not co-operate, is through matrimonial proceedings."

He went on to apply an eminently practical and sensible approach to regarding a claimant in such circumstances as continuing to act reasonably through temporary suspensions of proceedings, eg in an attempt to achieve reconciliation or because of family pressures or threats of violence.

45. Here, the premises were held under a tenancy in common outside a matrimonial relationship and relations between the tenants were frosty, but I do not see why making a genuine approach to the other tenant to agree to a sale does not count as taking steps to dispose of the premises. That is a reasonable first step, as it may turn out that agreement will avoid the need for court action (as seemed not a practical possibility in R(IS) 5/05 and CIS/1915/2007). But the disregard can only continue to apply while the claimant continues to take reasonable steps, subject to the limit at 26 weeks. The brother's reply did not bring the steps to an end, because the transfer of the premises into the brother's sole name would have been a disposal, nor did the mere taking of time by the claimant to think about his reply and/or produce a valuation. However, it seems to me that at the point when everything to do with 170 C Road was put on hold, because of the action brought by the claimant's mother, the claimant probably ceased taking reasonable steps to dispose of the premises. But, even though only a few weeks were involved, there was enough of a case raised by the evidence before the appeal tribunal that it erred in law by failing to deal expressly with the disregard in its statement of reasons.
46. It was the claimant's brother who brought the action, apparently towards the end of May 2003, that produced the order dated 18 September 2003 for sale of the premises by auction. The appeal tribunal and I have limited information about the course of the action. The claimant has said that the person who was developing 168 C Road paid the claimant's brother £500 to start the action. The brother in the witness statement mentioned above describes the bringing of proceedings as simply following from the claimant's lack of response for a year and lack of response to an offer dated 22 April 2003 to buy his half-share or alternatively to put the premises on the market. The claimant has said that at that time he intended to buy his brother's share, so that he could live there after carrying out the necessary works, but was advised to let the action continue so that his brother could not back out as he had before. The claimant has also said that at the first hearing in June 2003 his brother refused to sell, but that the judge decided that the proceeds of sale should be divided 50/50. There is no record of any judgment or order from that hearing in the papers before me (although an order dated 18 July 2003 was mentioned in the solicitors' letter of 5 January 2004: see paragraph 9 above). Following the order for sale at auction, the claimant plainly co-operated in the arrangements for appointing an auctioneer and also took active steps to obtain mortgage funding to enable him to buy the property at the auction.
47. Could it be said that at some point in the events mentioned in the previous paragraph the circumstances fell within paragraph 6 of Schedule 8 to the JSA Regulations? In the submission of 19 March 2008 the representative of the Secretary of State says no, in effect because the claimant did not intend to dispose of his share of the property, but to increase his share by purchasing the entire property. That submission could be regarded as supported by the final bracketed sentence of paragraph 15 of R(IS) 5/05, with its suggestion that the equivalent of paragraph 6 would not apply when arrangements were being made for the claimant to buy out the former partner. I am sure that Mr Commissioner Rowland did not intend that isolated sentence to be the last word on the subject. I doubt whether it has a universal application in the light of the precise words of the disregard, but I do not express a definite view. I tend to think that the Secretary of State's submission does not work in the present case, because although the claimant's intention was to buy out his brother, what was being sought in the proceedings was the sale, ie disposal, of the premises in which he had an interest. That would happen whether or not the claimant succeeded in his intention. The disregard is not in terms of a particular person's intention, but in terms of the outcome to which steps are directed.
48. The problem from the claimant's point of view lies more, down to the date of the judge's order for sale (18 September 2003), in the claimant's appearing not to be taking any positive steps himself to dispose of the premises. Although he has put forward a reason for his allowing the court proceedings to take their course, rather than seeking an agreement with his brother and avoiding all the costs of legal action, the fact remains that all that he apparently did was not to oppose the outcome sought in his brother's action. There is not enough evidence currently available to say that anything to do with the first hearing in June 2003 meant that the claimant had taken positive steps to dispose of 170 C Road. However, it seems to me that the position was different after 18 September 2003. The judge's order was for the claimant and his brother to agree the identity of an auctioneer and a conveyancer by 3 October 2003 or in default to submit names to the court. Agreement was reached and the taking of those steps by the claimant could properly be regarded as reasonable steps within the terms of paragraph 6 of Schedule 8. The appeal tribunal accordingly erred in law by failing to consider that possibility.
49. Could it also be argued that in the period before 18 September 2003, from May 2003, if the circumstances did not fall within paragraph 6 of Schedule 8, they fell within paragraph 7. It seems plain that in paragraph 7, "possession" means actual possession, so that the mere fact that the claimant has a right to possession of the premises does not exclude the operation of the disregard. An obvious example would be where squatters have occupied premises and the owner has to take legal action to get them evicted so as to be able to take up occupation. Similarly, looking again at the final bracketed sentence of paragraph 15 of R(IS) 5/05, the claimant's right to possession of the whole of the matrimonial home as (apparently) a beneficial joint tenant or tenant in common would not exclude the operation of the disregard when the claimant's husband was in fact in sole occupation of the former matrimonial home. However, in the present case, although, as I understand it, 170 C Road had been left blocked up and unfit for immediate habitation for many years, there does not seem to have been any reason why the claimant should not have exercised his right of possession. In addition, the disregard only applies where steps are being taken to obtain possession and at least legal advice has been sought. There is the same problem whether, in the context that the claimant had a right of possession that could have been exercised without legal action, he could in the relevant period be said to have been taking any positive steps towards obtaining possession merely by not opposing his brother's action. I conclude that on the evidence that the appeal tribunal had, the potential application of paragraph 7 of Schedule 8 was not so plainly raised that the appeal tribunal erred in law by failing to deal with it.
50. From 7 January 2004, circumstances changed radically. I am satisfied that the appeal tribunal was entitled to conclude that that was the proper date from which to take account of the claimant's acquisition of the whole of the legal title in 170 C Road and, on its findings, the whole of the beneficial title as well. Two more disregards in Schedule 8 then potentially came into play, paragraphs 2 and 8:

"2. Any premises acquired for occupation by the claimant which he intends to occupy as his home within 26 weeks of the date of acquisition or such longer period as is reasonable in the circumstances to enable the claimant to obtain possession and commence occupation of the premises.

8. Any premises which the claimant intends to occupy as his home to which essential repairs or alterations are required in order to render them fit for such occupation, for a period of 26 weeks from the date on which the claimant first takes steps to effect those repairs or alterations, or such longer period as is reasonable in the circumstances to enable those repairs or alterations to be carried out and the claimant to commence occupation of the premises."

51. The appeal tribunal decided that paragraph 2 of Schedule 8 applied from 7 January 2004, but only for 26 weeks from that date (paragraph 63 of the statement of reasons), apparently considering that only the claimant's intention at the beginning of the period was relevant. The claimant does not complain about the allowance of the 26 weeks, but submits that the appeal tribunal ought to have continued to apply the disregard for longer or at least failed to give adequate reasons why it did not do so. However, to deal with that submission I have to look at what seems to me a misinterpretation of paragraph 2 by the appeal tribunal.
52. The form of paragraph 2 of Schedule 8 is different from that of some other disregards of the value of premises. It does not provide that it applies for a period of 26 weeks or such longer period as is reasonable. Instead, it makes it a condition of its application week by week that the claimant intends to occupy the premises as his home within 26 weeks of its acquisition or such longer period as is reasonable. Thus in my judgment the commentary to paragraph 2 of Schedule 10 to the Income Support (General) Regulations 1987 in Volume II of Social Security Legislation 2008 (para 2.784) is wrong in saying that the value of the premises must be disregarded for the first 26 weeks after the acquisition (and has been wrong since I originally wrote that in 1988). There is no such automatic period. The test is the claimant's intention to occupy the premises as his home and whether he intends to do that within 26 weeks of acquisition or such longer period as is reasonable to enable him to both obtain possession and commence occupation. If, within the first 26 weeks, the claimant loses the intention to occupy the premises as his home at all or changes his intention to a longer time-scale which goes beyond the reasonable, paragraph 2 should cease to apply immediately. The appeal tribunal therefore seems to have applied a rule that was more generous to the claimant than it should have been, but that may not have made any practical difference and in any event does not justify setting aside the decision at his instance.
53. It was not in the circumstances necessary for the appeal tribunal to spell out whether it was saying that it was not reasonable to take account of an intention to occupy the premises within a longer period than the initial 26 weeks or whether it was saying that the claimant no longer had a genuine intention to occupy them as his home. On either alternative the disregard would no longer apply. However, I agree with the claimant that the appeal tribunal failed adequately to explain how it reached its conclusion that at the end of the 26 weeks the claimant had no realistic prospect of occupying 170 C Road.
54. In his witness statement dated 19 January 2004, prepared for the purposes of an appeal following the Inheritance (Provision for Family and Dependants) Act litigation (pages 190 to 198 of CJSA/4353/2006), the claimant said that he thought that it would take about two months to complete the necessary works at a cost of about £5,000. He would live there and rent out parts to pay the mortgage. The claimant has said that that statement was prepared by his then solicitors and was not accurate, but that he was persuaded to sign it on the basis that amendments could be made later as necessary. Certainly, the statement seems out of date on the completion of the purchase and what the claimant found when he picked up the keys and inspected the house. He has said consistently that his brother had removed the bathroom suite, kitchen, radiators and fittings and electrical fittings and had put in evidence confirmatory photographs. On the A64A form signed on 13 January 2004 he said that he intended to move in to live as soon as possible, but that the house was uninhabitable.
55. The claimant set out the sequence of events in his chronological statement received by the Department on 19 July 2005 (pages 55 to 59 of CJSA/4353/2006, with many pages of copies of supporting documents). On page 57 he said that in January 2004 he immediately started trying to get the stolen items returned or to obtain compensation as part of his brother's appeal against the refusal of a costs order on 1 October 2003. He supplied a copy of a letter dated 14 January 2004 from the developer of 168 C Road offering help on cost savings where they were carrying out similar work and a list of materials he said he had bought between April and August 2004. In July 2004, when his brother's solicitors notified him that the appeal had been withdrawn, he was able to start working on 170 C Road in his spare time. However, when his JSA was suspended and then withdrawn from August 2004, the work had to stop. He had no money coming in to pay the mortgage and was not in a position to borrow more to buy more materials or pay off the rent arrears he was running up with Ms B. He produced a list as at July 2005 of works that had been carried out, much with the help of the developer of 168 C Road, but leaving 170 well short of being fit for occupation, and of what remained to be done if his income was restored.
56. In his letter of appeal dated 24 February 2006 against the decision of 31 July 2005 the claimant wrote this:

"Due to DWP's actions in suspension of JSA and Housing Benefit, I have now lost any influence and or interest in [170 C Road] and am now unable to borrow any more money from the Bank, because my income has stopped I am unable to continue with my mortgage.

The property has been sold to the other share holder [Ms B] on 22 Feb 2006. My circumstances are now that I have no money to live on or pay rent with. Please reinstate my JSA and Housing Benefit as soon as possible."

57. The claimant is recorded as having said at the hearing on 30 May 2006 that he had not done any work on the house since July/August 2004. The chairman then wrote "No money to finish it off Lost interest in it". After some other points, the claimant is recorded as saying that Ms B had let his rent run up before he paid the arrears from the proceeds of a party wall agreement, that he paid the mortgage for eight months of so, but then could not afford it and arrears began to mount up, which the bank said it would take from Ms B's savings. They discussed the options and she bought him out of 170 C Road, paying off the mortgage and paying him an amount calculated on her receiving her half-share. I am satisfied, especially after taking account of the way that he had put things in the letter of appeal, that "Lost interest in it" referred to the position as at the date of the hearing, when the claimant had transferred his entire legal and beneficial interest in 170 C Road to Ms B. He did not mean that as at July/August 2004 or in the following months he became uninterested in whether or not the house was going to be made fit for occupation.
58. On that understanding of the evidence, I consider that in so far as the appeal tribunal found as a fact that the claimant had lost interest in 170 C Road in the sense of having become uninterested by early July 2004, there was insufficient evidence to support that finding. As a result of that and more generally the appeal tribunal failed to give an adequate explanation of why it concluded that by that date there was no realistic prospect of his occupying the house. The claimant's evidence was that then he was working on the house with materials already acquired and that it was not until the payment of JSA stopped that the real problems arose. There was a case to be made that prior to 5 August 2004, although the time within which the claimant could expect to occupy the house had been extended by its being in a much worse state than he had expected and the delay in unsuccessfully trying to get items or their value back from his brother, there was a realistic prospect of the works continuing to completion and he genuinely intended to occupy the house. And it could be argued that in all the circumstances it was reasonable to take account of an intention to occupy at a date after the expiry of 26 weeks from acquisition, given that the appeal tribunal was only concerned with a few more weeks down to the beginning of August 2004. The appeal tribunal did not identify that case or explain why it was rejected. That was an error of law.
59. The appeal tribunal ought also to have considered expressly whether paragraph 8 of Schedule 8 could have assisted the claimant from the date on which it had directed that paragraph 2 was not to be applied. If the appeal tribunal considered that at that date and down to 5 August 2004 the claimant intended to occupy 170 C Road as his home at some point, then essential repairs were certainly required to make the house fit for occupation. He was on that basis entitled to a 26-week disregard starting from the date on which steps were taken to effect the repairs. That would be a later date than the date of acquisition, so that 26 weeks might well have taken the claimant to 5 August 2004 and beyond. The stumbling-block for the claimant would have been the appeal tribunal's finding that in early July 2004 there were no realistic prospects of his occupying 170 C Road, but that could only be relevant as leading to the further conclusion that at that date he did not have a genuine intention to occupy it. That further step cannot be inferred from what the appeal tribunal actually said in its statement and in any case the finding about no realistic prospects was not adequately supported or explained.

(viii) The value of the beach hut

60. First, I am satisfied that on the evidence before it, the appeal tribunal was entitled to conclude that the beach hut came into the claimant's ownership on 11 September 1998, although there was confusing and conflicting evidence about just how and from whom that transfer came about. In his judgment dated 9 June 2003 District Judge Bird stated that on that date the claimant's father had transferred the beach hut to Ms B, but that seems merely to reflect what he had been told on behalf of the claimant's mother in her Inheritance (Provision for Family and Dependants) Act claim. The appeal tribunal was entitled to accept other evidence pointing against that conclusion. I can see nothing else in District Judge Bird's judgment about the beach hut. The order made did not require anything to be done about the beach hut. In particular, I cannot read the judgment as the claimant has argued, as accepting that the beach hut was held on trust for his and Ms B's children. I am also satisfied that the appeal tribunal was entitled, in the light of the different ways in which the claimant had expressed how he regarded his interest in the beach hut, to conclude that he did not hold it on trust, but was merely following the family's wishes that it should go to the children in due course. I proceed on that basis in considering whether the appeal tribunal erred in law in other respects.
61. The chartered surveyor's report of 29 April 2003, whose valuation was accepted by the appeal tribunal, gave very helpful detail of the precise location of the beach hut, in a field with many other huts with access by a shared unmade road. The description of the hut on an external inspection was as follows:

"The subject Beach Hut is a timber hut with a felt covered flat roof. The external cladding is covered with felt to which what appears to be bitumastic based paint has been applied. The timber floor is supported on various stone blocks laid on bare earth.

The overall floor area of the Beach Hut measured externally is approximately 11.36 sq metres (122 sq ft). Attached to the western side is a small timber-clad lean-to store with an overall floor area of approximately 1 sq metre (11 sq ft). At the rear is a small poor low level timber bunker also used for storage."

The general condition was described as follows:

"We are not sure of the exact age of the Beach Hut but it does appear to have been there for a considerable number of years. It is one of the poorer quality Beach Huts in the area, probably nearing the end of its useful life."

Accompanying photographs showed the location on a sloping and fairly rough field, and the hut supported on blocks at the front with the back cut into the slope. There were no services attached to the hut and water was obtained from a communal stand-pipe. Overnight sleeping was prohibited and there was no question of any of the beach huts being used as residential dwellings.

62. I have obtained from the Internet a copy of Weymouth & Portland Borough Council's Revised Supplementary Planning Guidance for Portland Beach Huts, dated February 2006. This interesting document was not before the appeal tribunal and dates from after the period under consideration and the parties have not had the chance to comment on it. It could of course form part of the evidence at a rehearing. I merely quote two sentences from the general criteria as part of the background:

"In all cases it is helpful for beach hut owners to bear in mind that their beach hut is a day-time recreational hut of a particular limited size. (para 3.1.1)

It is important that beach huts retain the appearance of temporary timber built structures without permanent foundations in order to preserve their essential character, enable future siting improvements and avoid the incremental development of inappropriate buildings in these sensitive locations. (para 3.1.2)"

63. The evidence before the appeal tribunal about the terms of the licence from the site-owner was as follows. There was an annual licence fee, in April 2006 £247, plus a £1 charge for water. In a letter dated 19 February 2006 (page 294 of CJSA/4353/2006) the site-owner said that a couple of solicitors had asked for a copy of the licence agreement and, when told that nothing existed in writing, asked for a copy of the rules. The owner had gathered together the "rules" from several past documents and set them out on one page. Apart from rules about paying the annual fee, tidiness and giving the site-owner advance notice of planning applications, the only rules were about transfer of ownership:

"Chalet owners wishing to transfer ownership to someone else must provide details of the proposed owner(s) to the site owner together with two references (one social and one financial). The new owner(s) will be asked to agree to the site rules. Approval of the new owners will not be unreasonably withheld.

Except where the new owner is the child or grandchild of the transferor, a commission of 15% of the value of the chalet is payable by the transferor to the site owner on transfer."

64. That last rule appears to be a summary of what had appeared in earlier annual letters from the site-owner (see those dated 5 March 1995 and 4 March 1996 at pages 354 and 355 of the present case). As far as I can see those documents were not before the appeal tribunal, but as the more elaborate rule is entirely consistent with the 2006 summary, I set it out:

"Owners wishing to sell their chalets must first offer it to myself as the site owner at the asking price (less the nominal commission). Should I not wish to purchase, the chalet owner may then sell on the open market to a suitable buyer at the stated asking price - and then pay me 15% as commission. Should the chalet owner not obtain the price asked for and then reduces the price, the chalet must again be offered to me and the above procedure re-enacted."

There was also in those letters a warning that sites were not transferable without permission and that, if a chalet were sold without going through the above procedure, the new owner would not be eligible for a site and the chalet would have to be removed.

65. At the oral hearing I raised the question of whether the beach hut had become part of the land or remained a chattel, and so in the latter case a personal possession whose value was to be disregarded in accordance with paragraph 15 of Schedule 8 to the JSA Regulations. In the direction giving the parties the opportunity to comment on the point I referred to Mr Commissioner Jacobs' decision in CH/3700/2006, now to be reported as R(H) 7/08, deciding that "personal possessions" means in the present context any physical assets other than land or assets used for business purposes. Thus the value of the static, but moveable, caravan kept on a site in Wales, the asset in issue in that case, was to be disregarded. I respectfully agree with the meaning given to "personal possessions" in that decision. I also referred to the decisions of the House of Lords in Elitestone Ltd v Morris [1997] 1 WLR 687 and of the Court of Appeal in Chelsea Yacht and Boat Co Ltd v Pope [2000] 1 WLR 1941.
66. My question had been prompted in part by what the appeal tribunal had said in paragraph 59 of its statement of reasons, that the beach hut was held on a licence and therefore in legal terms would be classed as personal property and not an interest in land. It seemed to me that there was a real legal problem there (even though the appeal tribunal may not within the constraints of having to sort out a horribly complicated case got the full analysis right) and that the appeal tribunal might have erred in law by failing to follow through the consequences of a conclusion that the beach hut was personal property.
67. The representative of the Secretary of State in the submission of 19 March 2008 concentrated on perceived differences between the beach hut and the caravan that was the subject of R(H) 7/08. It was said that the beach hut was not moveable, that the site was not closed for part of the year and that it was an appreciating asset rather than a depreciating one. It was also said that the beach hut would have to be dismantled to be moved, effectively destroying it, so that on the principles in Elitestone and Chelsea Yacht it was part of the land. Alternatively, it was submitted that the beach hut was a chose in action, "the claimant having the right to use the hut and its site for the period of the licence", which on the evidence had a market value. In reply, the claimant submitted that the differences from caravans were less than suggested. Caravans on sites had their wheels removed and were propped up. The beach hut could be placed on a trailer for removal without destroying it. He enclosed a number of photographs designed to show the blocks on which the hut rested and that Ms B had been mistaken when at the oral hearing she said that the hut was fixed to the ground at the rear. What she meant was that it rested closer to the ground at the rear because of the ground level.
68. In my judgment the decision of the House of Lords in Elitestone stands for these broad principles. When one is considering a building of some kind, rather than items fixed to or standing in a building, the essential line is between something that remains a chattel and something that has become part and parcel of the land. In drawing the line both the degree of annexation to the land and the object or purpose of annexation are relevant factors. But since a building resting on the land by its own weight can be part of the land, the object or purpose was often decisive. On this Lord Lloyd of Berwick said:

"In the case of the house, the answer is as much a matter of common sense as precise analysis. A house which is constructed in such a way so as to be removable, whether as a unit or in sections, may well remain a chattel, even though it is connected temporarily to mains services such as water and electricity. But a house which is constructed in such a way that it cannot be removed at all, save by destruction, cannot have been intended to remain a chattel. It must have been intended to become part of the realty."

Lord Clyde also considered that the possibility of removing the building in one piece or demounting it for re-erection elsewhere was important, as was the degree of permanence of the structure. It was agreed that the purpose had to be ascertained from the circumstances and that the subjective intentions of the parties in question could not transform what was in law part of the land into a chattel or vice versa. Thus in Elitestone itself a two-bedroomed residential timber-framed bungalow which had stood on concrete pillars in the ground for 50 years was not a chattel, but part of the land.

69. Those principles were applied in Chelsea Yacht to a houseboat moored by lines to a pontoon and an embankment wall of the Thames as well as by an anchor in the river bed. There were connections to services like electricity, gas, telephone and drains, but all could be disconnected easily. The houseboat had no engine, but could be towed away, for instance to a dry dock for painting or repair. It is not surprising that it was held that the houseboat was not part of any land. The degree of annexation was slight and it could be used as a home without being attached to its particular mooring.
70. In my judgment, on the evidence before the appeal tribunal in the present case, there was a very strong argument that the beach hut itself was a chattel and had not become part of the land on which it stood. I do not go as far as saying that that was the only conclusion that could have been reached in law, but the case is close to that line.
71. The degree of annexation was slight. Even if there was some attachment to the land at the rear (which would seem a sensible precaution against the hut blowing away in high winds), there were no foundations. The weight of the hut was essentially borne on the ground itself, with some propping up on blocks to level the hut and no doubt to protect the floor from damp to some extent. There was no attachment to any mains services and no possibility of such connection. In relation to purpose, I accept, in particular from the surveyor's report and photographs, that the hut could be removed from the site either in one piece or by dismantling in units that could be re-assembled somewhere else. The structure was in its essence temporary, as is shown by the surveyor's opinion that the hut was nearing the end of its useful life, and not for residential or overnight use. It also seems to me that the purpose of the placing of the hut on the site was that it should not become part of the land. It is difficult in a case like the present to separate the subjective intentions of the site-owner and the claimant and other hut-owners from the general circumstances, but I think that it is legitimate to look at the overall way in which the hut field in question worked, which seems to have been based on long-standing custom and practice. Though some rules were reduced to writing, the basis seems to have remained that mutually understood custom and practice, which has similarities to the regime for caravan sites (now regulated by legislation). The rules on the sale of huts/sites outside the immediate family would only make sense if the huts themselves were not owned by the site-owner, as they would have been if they were part of the land.
72. The appeal tribunal accordingly erred in law by failing to consider that argument or the consequence in law that, the beach hut itself being a chattel and therefore a personal possession, its value as a capital asset had to be disregarded under paragraph 15 of Schedule 8 to the JSA Regulations.
73. But that is not the end of the matter and does not lead to the conclusion that the whole of the value put onto the beach hut by the appeal tribunal (£5,500 in September 1998 and increasing annually) was to be disregarded. One must ask exactly what constituted the asset being valued. It is inconceivable that in 2003 anyone would have paid anything near £7,000 just for a hut of the kind and quality of the claimant's, which was nearing the end of its useful life, when a brand-new one could be bought for a great deal less. The only answer can be that the major part of the value accepted by the appeal tribunal reflected the right under the contractual licence with the site-owner to put the hut on the site. It is a necessary implication from the custom and practice of the site that the contractual licence, although described as an annual licence, would not be terminated by the site-owner without good cause (including non-payment of the annual fees) and that the benefit of the licence could be transferred to another person with the consent of the site-owner and subject to the conditions of the contract as well as being passed down through the family. The right accordingly had a market value. Such a right is not a personal possession and there is nothing in the legislation allowing the disregard of the capital value of such an asset.
74. The appeal tribunal accordingly also erred in law by failing to follow through the half-expressed analysis in paragraph 59 of its statement of reasons to a proper conclusion about the nature of the capital assets represented by the beach hut.
75. There remains the question of what amounts are to be deducted from the market value of the beach hut as a capital asset under regulation 111(a) of the JSA Regulations. It seems to me that in principle, where one is concerned with an asset comprising an element that is disregarded (here the hut itself as a personal possession) and an element that is not (here the benefit of the contractual licence), but which is conventionally valued as one asset, the deductions of 10% for expenses of sale and of incumbrances secured on the asset should be considered first, before considering what part of the resulting amount is to be disregarded. I suspect that in the present case it would not make any practical difference if things were done in the opposite order.
76. There can be no doubt that there would be some expenses of selling the claimant's beach hut outside the family even if the site-owner's 15% commission were not regarded as such an expense. Therefore, 10% falls to be deducted from the market value. The question of whether that commission constituted "an incumbrance secured on" the beach hut takes a little longer to answer. The existence of the obligation of a seller of a beach hut to pay the site-owner that commission was in a sense an incumbrance, but it was not secured on the beach hut. It was a personal contractual obligation on the seller, which could not be enforced against the asset (the hut and the benefit of the contractual licence) itself. If, after going through the required procedures for obtaining the consent of the site-owner, a hut-owner transferred to a third party and then failed to pay the commission to the site-owner, the latter could not on that ground refuse the transferee the site or look to the transferee for payment of the commission. It was only if a seller purported to transfer without giving the site-owner first refusal that the latter had the right to refuse a site to the transferee. Accordingly, there could be no deduction under the heading of "incumbrance". The only deduction would be 10% for expenses of sale.
77. As a result there is no need to decide whether Mr Commissioner Hallett was right in paragraph 19(7) of decision R(IS) 21/93 to say that the equivalent income support provision had the same effect as the previous supplementary benefit provision, which required a deduction of "any debt or mortgage secured on" capital resources. There seems no reason in principle why an obligation to pay a defined percentage of the proceeds on sale of an asset could not be secured on the asset itself, although there was no debt currently in existence. I think at least that the notion of a debt should be interpreted fairly broadly, to cover a debt that will arise in the future on a currently defined contingency. On that basis, my conclusion above is consistent with Mr Commissioner Hallett's statement that capital is subject to an incumbrance:

"if a creditor has a secured right to resort to it for (or prevent its disposal until) satisfaction of his debt in priority to any unsecured debtor."

78. Accordingly, the appeal tribunal went wrong in law in allowing any deduction other than the statutory 10% for the expenses of sale from the capital value of the beach hut at various dates. In particular, it went wrong in so far as it decided that the site-owner's 15% commission was to be deducted as well as the statutory 10%. It may be that the practical effect of that error was cancelled out by the failure to apply the disregard of the value of personal possessions. The evidence points to the value of the hut itself as personal property as constituting only a minor part of its overall value. As this case is, for other reasons, to be remitted for rehearing, I shall not express any views on the proper proportion. However, if the proportion was, say, 15% of the overall value (then to be disregarded), that would seem to leave the practical outcome the same as that expressed in the appeal tribunal's statement of reasons.

(ix) The receipt of the proceeds of sale of 170 C Road

79. At no point in the proceedings has the Secretary of State specifically contended that the £71,485.81 paid into the claimant's HSBC account on 7 January 2004 (see paragraph 9 above) should be taken into account as part of his capital. The submissions made to the appeal tribunal relied almost entirely on notional capital. However, on the approach taken by the appeal tribunal, rejecting the existence of any notional capital and disregarding the value of 170 C Road from 7 January 2004, that sum became of central relevance. The appeal tribunal appears to have intended the claimant's entitlement to JSA while the value of 170 C Road was being disregarded to be calculated on the basis that his only capital asset was the beach hut, valued below £8,000 (so merely generating tariff income), without making it clear whether there was to be investigation of the balances in bank accounts to be added to the value of the beach hut. But, even if the (as yet unexplained) payment out of £51,252.20 on 12 January 2004 were accepted as reducing the claimant's actual capital and not producing notional capital, the amount left in the HSBC account would have taken the claimant well over the £8,000 limit on its own.
80. The Secretary of State made no point about that in submissions to the Commissioner/Upper Tribunal, nor did I see the point before submissions were completed and put it to the parties. It might therefore seem particularly harsh to fault the appeal tribunal for not dealing with the point. Since the failure to do so would not add to the reasons for setting aside the appeal tribunal's decision at the instance of the claimant, I do not reach any definite conclusions. However, it is something that will need to be explored before the new tribunal. Indeed, the emergence of the point and the need to give the parties the opportunity to make submissions and put forward evidence before findings of fact are made is a major reason why I have remitted the case for rehearing instead of substituting my own decision.
81. The completion statement enclosed with the solicitor's letter of 5 January 2004 (see paragraph 9 above) could simply have represented one part of a more general accounting reflecting, as was eventually put in the Proprietorship Register, the claimant's payment of £81,000 for his brother's interest in 170 C Road, financed in the main by the new mortgage. But that was not consistent with the actual payment to the claimant of the net sum of £71,485.81. It looks as though the claimant in some way produced the balance of the £162,000 over what was provided through the mortgage loan. That seems the only way that half of the proceeds of sale could make their way to him in addition to the half that must have been due to his brother. At the very least, the payment made to the claimant and the leaving of £20,000 in his HSBC account after 22 January 2004 are matters that require explanation by him. The sum was paid to him by the solicitor as if it was due to him, so that on the face of it it was capital possessed by the claimant. And the amount was sufficient on its own to exclude the claimant from entitlement to JSA.

The Upper Tribunal's conclusion on the appeal

82. The appeal tribunal made the following material errors of law. In relation to 170 C Road, there was a failure to deal with the issue of whether its value fell to be disregarded under paragraph 6 of Schedule 8 to the JSA Regulations (taking reasonable steps to dispose of premises) for any weeks from January 2002 or from 18 September 2003 (paragraphs 44 and 47 above), a failure to give adequate reasons why the disregard under paragraph 2 of Schedule 8 (premises acquired for occupation) was not to continue after 26 weeks from 7 January 2004 (paragraphs 52 and 57) and a failure to consider paragraph 8 of Schedule 8 (steps being taken to carry out essential repairs to premises to be occupied) for any period when paragraph 2 did not apply (paragraph 58). In relation to the beach hut, there was a failure to analyse in a proper way the legal nature of the claimant's possession of the beach hut (to be disregarded as a personal possession) and of his contractual licence to have the hut on its site (paragraphs 71 and 73) and an application of a wrong legal rule in relation to the deductions to be made from the market value of those assets, coupled with a failure to give adequate reasons (paragraphs 31 and 77). Finally, there was a failure to give adequate reasons and instructions as to what questions of fact were left to be determined by the Secretary of State (paragraph 37). Those errors plainly require the setting aside of the appeal tribunal's decision.
83. I would be prepared to determine most of those issues that were not addressed by the appeal tribunal, adopting the findings on which it did not err in law, on the evidence currently before me. However, on some issues the claimant could legitimately ask for the opportunity to produce more evidence. For instance, about the proportion of the overall value of the beach hut to be attributed to its nature as personal property and to the licence to have it on its site, about the exact course of the action leading to the order for sale of 170 C Road, including the terms of the order of 18 July 2003, and about exactly what his intentions and actions about repairing and living in 170 C Road were from 7 January 2004 until 4 August 2004. He might also legitimately ask for a further opportunity to produce evidence and to persuade a tribunal to reach a different conclusion on issues on which the appeal tribunal of 30 May 2006 did not err in law. For instance, about whether the declaration of trust of 14 February 1986 still had any effect by 3 October 2001 or 7 January 2004. Finally, there is the issue of the claimant's receipt of the sum of £71,485.81 on 7 January 2004 as the net proceeds of sale of 170 C Road and whether that sum or any part of it was properly part of the claimant's capital (see paragraphs 78 to 80 above). Clearly, no decision could be made against the claimant on that issue unless he had had the opportunity to provide an explanation and any additional supporting evidence. Despite the length of time for which the case has been before me, all those opportunities will best be afforded at an oral hearing before a new tribunal sitting in Bristol.
84. The claimant's appeal against the decision of 31 July 2005 is therefore remitted to a differently constituted tribunal for reconsideration in accordance with the directions below.

Directions

85. Before the date for the new hearing is fixed, the Secretary of State must prepare a fresh written submission, which must deal with the following matters as well as anything else considered relevant. The actual terms of the decision of 31 July 2005 must be set out and if at all possible a copy of the original record of the decision supplied. The fresh submission should make clear whether or not the Secretary of State accepts the approach taken by the appeal tribunal of 30 May 2006 to notional capital. If he does not, the written submission about that made to the appeal tribunal of 30 May 2006 may be adopted or modified or added to. If he does accept the approach, the submission must set out whether, in the light of the facts that the claimant's NatWest bank statements for the period down to 24 March 1998 and his interest in 170 C Road subject to Sharples' lien were apparently known to the decision-maker when JSA was eventually awarded from 24 December 2007, it is said that the awarding decision should be revised on the ground of ignorance or mistake of material fact or superseded on the ground of relevant change of circumstances (the acquisition of the beach hut in September 1998 or possibly an earlier increase in the amount of capital held in the NatWest account). If the Secretary of State already has in his possession statements for that account going beyond 24 March 1998 they should be provided. The submission should then set out what is said to be the proper decision on revision or supersession as to entitlement to JSA from whatever date is identified and down to 4 August 2004, applying the principles of law set out above. For weeks in which it is submitted that the claimant remains entitled to JSA, but at a reduced rate, the precise rate of entitlement is to be stated.
86. The district tribunal judge who considers the arrangements for the hearing of these four cases on their remission from the Upper Tribunal is to set a time for the Secretary of State to produce the fresh written submission. The judge is also to consider whether to direct the claimant to produce any information or evidence (such as copies of bank statements covering the remainder of the whole period in issue or evidence relevant to matters mentioned in paragraph 82 above) immediately or after the Secretary of State's submission has been received.
87. There must be a complete rehearing of the appeal on the evidence produced and submissions made to the new tribunal, which will not be bound in any way by any findings made or conclusions expressed by the appeal tribunal of 30 May 2006. The submissions made for the Secretary of State will have been clarified. The submissions for the claimant to be considered will include, unless he specifically indicates that he no longer relies on any particular argument, that at all relevant times he had no beneficial interest in 170 C Road and that, if he is found to have had such an interest, its capital value was either nil or fell to be disregarded under some provision of Schedule 8 to the JSA Regulations, and that by some date he had passed ownership of the beach hut to his children or to Ms B on their behalf. The new tribunal must apply the principles of law set out above so far as relevant to the points in issue before it and bear in mind that the burden is on the Secretary of State to prove that a ground of revision/supersession exists from some date and that the result is not to the advantage of the claimant. I hope that the discussion in my decision of some of the factual issues will help the new tribunal to establish a framework for considering the case, but any suggestions made about conclusions of fact are not binding. The evaluation of all the evidence will be entirely a matter for the judgment of the new tribunal. The decision on the facts in this case is still open.

(Signed) J Mesher

Judge of the Upper Tribunal

Date: 6 January 2009