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IN PETITION OF DAVID YULE v. SOUTH LANARKSHIRE COUNCIL FOR JUDICIAL REVIEW OF A DECISION OF SOUTH LANARKSHIRE COUNCIL AND ANSWERS FOR RESPONDENTS


EXTRA DIVISION, INNER HOUSE, COURT OF SESSION

Lord Cameron of Lochbroom

Lord Osborne

Lord Reed

OPINION OF THE COURT

delivered by LORD CAMERON OF LOCHBROOM

in

RECLAIMING MOTION

in PETITION of

DAVID YULE

Petitioner;

against

SOUTH LANARKSHIRE COUNCIL

Respondents:

for

Judicial Review of a decision of South Lanarkshire Council

and

ANSWERS for RESPONDENTS

_______

Act: J.J. Mitchell, Q.C., Summers; HBM Sayers (Petitioner & Reclaimer)

Alt: Hodge, Q.C.; Simpson & Marwick, W.S. (Respondents)

15 August 2000

[1]In June 1996 the petitioner's mother, Mrs. Rhoda Yule, was placed in Kirkknowe Nursing Home, Wishaw. In terms of certain statutory provisions and regulations to which we will refer in due course the respondents, as the local authority, required to carry out a financial assessment of Mrs. Yule as a resident of that nursing home and a person to whom such statutory provisions and regulations applied. Following certain discussions and correspondence the respondents, in a letter dated 12 March 1997, intimated that they had decided that Mrs. Yule was not entitled to public funding in respect of the costs of her stay at that nursing home because she was in possession of notional capital in excess of £16,000 by reason of the value of a dwelling house at 195A Stonelaw Road, Rutherglen. This house had previously belonged to and had been occupied by Mrs. Yule.

[2]The present petition was raised by the petitioner as agent under power of attorney for his mother. It sought reduction of the decision of the local authority intimated in the letter referred to on the ground that the decision was ultra vires et separatim unreasonable et separatim unlawful, all as set out in the first plea-in-law. The question of vires was the subject of a debate before the Lord Ordinary. On 4 February 1998 the Lord Ordinary repelled that part of the first plea-in-law so far as directed to the contention that the decision was ultra vires of the local authority. A motion for review of that interlocutor was dismissed on 1 July 1998. Thereafter, after further debate, the Lord Ordinary on 12 May 1999 repelled the outstanding pleas-in-law for the petitioner and dismissed the petition. It is against that decision that the petitioner has brought this reclaiming motion.

[3]The immediately relevant statutory provisions are to be found in the opinion of the Lord Ordinary dated 4 February 1998 to which we refer.

[4]We start with section 22 in Part III of the National Assistance Act 1948 as amended. This relates to charges to be made for accommodation. It provides as follows:

"22(1) Subject to section 26 of this Act, where a person is provided with accommodation under this Part of this Act the local authority providing the accommodation shall recover from him the amount of the payment which he is liable to make in accordance with the following provisions of this section.

(2) Subject to the following provisions of this section, the payment which a person is liable to make for any such accommodation shall be in accordance with a standard rate fixed for that accommodation by the authority managing the premises in which it is provided and that standard rate shall represent the full cost to the authority of providing that accommodation.

(3) Where a person for whom accommodation in premises managed by any local authority is provided, or proposed to be provided, under this Part of this Act satisfies the local authority that he is unable to pay therefor at the standard rate, the authority shall assess his ability to pay, and accordingly determine at what lower rate he shall be liable to pay for the accommodation...

(5) In assessing as aforesaid a person's ability to pay, a local authority shall give effect to regulations made by the Secretary of State for the purposes of this subsection."

[5]Section 21 of the Health and Social Services Adjudication Act 1983 concerns the recovery of sums due to a local authority where persons in residential accommodation have disposed of assets. It provides as follows:

"21.-(1) Subject to the following provisions of this section, where -

(a)a person avails himself of Part III accommodation; and

(b)that person knowingly and with the intention of avoiding charges

for the accommodation -

(i)has transferred any asset to which this section applies to some other person or persons not more than six months before the date on which he begins to reside in such accommodation; or

(ii)transfers any such asset to some other person or persons while residing in the accommodation; and

(c)either -

(i)the consideration for the transfer is less than the value of the asset; or

(ii)there is no consideration for the transfer,

the person or persons to whom the asset is transferred by the person availing himself of the accommodation shall be liable to pay to the local authority providing the accommodation or arranging for its provisions the difference between the amount assessed as due to be paid for the accommodation by the person availing himself of it and the amount which the local authority receive from him for it.

(8) In this Part of this Act 'Part III accommodation' means accommodation provided under sections 21 to 26 of the National Assistance Act 1948, and, in the application of this Part of this Act to Scotland, means accommodation provided under the Social Work (Scotland) Act 1968."

[6]Section 87 of the Social Work (Scotland) Act 1968 concerns the charges that may be made for services and accommodation. In particular it provides:

"(2)Persons...for whom accommodation is provided under this Act...shall be required to pay for that accommodation in accordance with the subsequent provisions of this section.

(3)Subject to the following provisions of this section, accommodation provided under this Act...shall be regarded as accommodation provided under Part III of the National Assistance Act 1948, and sections 22(2) to (8) (as amended...)...shall apply accordingly."

[7]The National Assistance (Assessment of Resources) Regulations 1992 (S.I. 1992/2977) were made under the provisions of section 22(5) of the 1948 Act as amended and were in force at the relevant date. Part III of the regulations is headed "Treatment of Capital" and regulations 20, 21, 23 and 25 in particular and so far as relevant to this appeal provide as follows:

"Capital Limit

20.No resident shall be assessed as unable to pay for his accommodation at the standard rate if his capital calculated in accordance with regulation 21 exceeds £16,000.

Calculation of Capital

21 -(1) The capital of a resident to be taken into account shall, subject to paragraph (2), be the whole of his capital calculated in accordance with this Part and any income treated as capital under regulation 22.

Calculation of capital in the United Kingdom

23-(1) Except in a case to which paragraph (2) applies and subject to regulation 27(2), capital which a resident possesses in the United Kingdom shall be calculated at its current market or surrender value (whichever is higher)....

Notional capital

25-(1) A resident may be treated as possessing actual capital of which he has deprived himself for the purpose of decreasing the amount that he may be liable to pay for his accommodation except-

(a)where that capital is derived from a payment made in consequence of

any personal injury and is placed on trust for the benefit of the resident: or

(b)to the extent that the capital which he is treated as possessing is

reduced in accordance with regulation 26: or

(c )any sum to which paragraph 44(a) or 45(a) of Schedule 10 to the

Income Support Regulations (disregard of compensation for

personal injuries which is administered by the Court) refers...

(5)Where a resident is treated as possessing capital under any of paragraphs (1)...the foregoing provisions of this Part shall apply for the purposes of calculating its amount as if it were the actual capital which he does possess."

[8]It is further to be noted that section 134(1) of the Social Security Contributions and Benefits Act 1992 provides as follows:

"No person shall be entitled to an income-related benefit if his capital or a prescribed part of it exceeds the prescribed amount."

[9]As recorded by the Lord Ordinary in his opinion dated 4 February 1998, the parties are agreed that the payment made by the respondents of the balance of the nursing home charges constituted an income-related benefit, that the accommodation provided to Mrs. Yule is provided under the 1968 Act, that the "prescribed amount" in terms of section 134(1) of the 1992 Act was £16,000 and that when the heritable property disponed by Mrs Yule in 1995 was taken into account her capital exceeded that figure.

[10]The substance of the Lord Ordinary's decision appears in the final passage of his opinion when he says this:

"The question for me then is, was the decision so unreasonable that no reasonable authority could ever have come to it, or, more particularly, was there material before the local authority on which the decision could reasonably have been reached? To answer this I have to consider the facts as they were before the local authority as the result of their enquiries.

The petitioner was 78 when she disponed the fee of her dwellinghouse to her granddaughter. She retained the liferent of the house and continued to live in it until her accident. She could have achieved the same practical result by making a will in favour of her granddaughter. No clear explanation was provided to the respondents as to why the petitioner chose to give the house to Miss Yule by inter vivos transfer rather than by will. For instance, there was no suggestion of pressing need on the part of Miss Yule. At the same time as executing the disposition the petitioner executed a power of attorney in favour of her son. Her son informed social workers carrying out a community care assessment in May 1996 that there had been a gradual change in her over the past six to seven years and that for a number of years she had harboured paranoid ideas regarding a neighbour. In their letter of 12 November 1996 Muss Yule's solicitors informed the respondents that, as at 3 March 1995, the petitioner's health was excellent.

The respondents were entitled to draw inferences from the information received by them. The execution of the power of attorney indicated that the petitioner's affairs required to be managed by others. It is reasonable to draw from that the inference that the petitioner's health was not perfect at the time of execution. It is a fact of life, which the respondents were entitled to take into account, that persons in their late seventies are increasingly likely to require nursing home accommodation. The avoidance of the requirement to meet the full cost of nursing home accommodation provided a motive for making the gift by inter vivos transfer of the property rather than by will. In so far as any other motive or explanation was provided to the respondents, they were entitled to reject it. In my view no satisfactory motive or explanation was in fact proffered. The provision of conflicting information as to the petitioner's health provided a justification for drawing an adverse inference from information which was capable of affording such an

inference.

The decision on matters of fact is left to the respondents and there is no appeal. Accordingly the weight given by the respondents to particular pieces of evidence is entirely a matter for them and not open to challenge. I do not accept the petitioner's submission that the respondents could only make the decision which they did if there was evidence that the claimant knew of the existence of a capital limit, and that she had foreseen the making of an application for the relevant benefit. In seeking to operate Regulation 25 local authorities are unlikely to be met with ready admission that the purpose of a transfer of a capital asset of an elderly person was to decrease the amount that he or she might be likely to pay for accommodation provided under the 1968 Act. There will (sic) cases in which the elderly person is incapable of forming any intention to transfer or of understanding the nature and purpose of any arrangement. In such cases he or she may be assisted by relatives or advisers. There is no power to compel the provision of information, and the local authority must determine the purpose of the transfer from the information which has been provided to it. In such circumstances the true purpose of any transfer may be ascertained or inferred without any specific finding as to the state of knowledge or intention of the elderly person."

[11]We now turn to the facts as they appear to have been, and to have been known to the respondents, at the time when they came to consider the matter which gave rise to the letter of 12 March 1997.

[12]We begin with a letter of 1 November 1996 addressed by the respondents' Head of Conveyancing, Contracts and Litigation to the petitioner's granddaughter, Miss Deborah Yule. It is convenient to set it out in full:

"FINANCIAL ASSESSMENT - MRS. RHODA YULE

195A STONELAW ROAD, RUTERGLEN

I refer to previous discussions you have had with my colleagues in the Social Work Department and would confirm that this matter has now been passed to myself to deal with.

I understand from my colleagues in the Social Work Department that your mother (sic) was placed in Kirknowe Nursing Home on 13th June this year. I trust you are aware that the Council is required to carry out a financial assessment on any persons entering residential or nursing care. If any such person has Capital in excess of £16,000 then that person is not eligible for public funding. When carrying out this financial assessment the Council is required to take account of any capital assets that are either owned by the resident at the time of assessment or were owned by her and have apparently been transferred for no or less than full value with the intention to avoid the payment of board charges.

I understand that your mother (sic) previously owned the property at 195A Stonelaw Road, Rutherglen, however, this was transferred on the Third March 1995 to Mrs. Yule in Liferent and yourself in Fee for no consideration. As a result although Mrs. Yule has a right to live in the property during her liferent she now has no right to the proceeds or profits should the property be sold this having been transferred to yourself.

I should be obliged if you could advise me in writing why the property was transferred in this manner for no consideration.

In terms of the National Assistance (Assessment of Resources) Regulations 1992 if a Local Authority believes that a resident has deprived herself of a capital asset in order to avoid or reduce accommodation charges then it may treat the resident as still possessing that particular asset when assessing her ability to pay the charges. I would therefore advise you that unless we are provided with a satisfactory explanation as to why your mother's (sic) property was transferred in this manner for example the transfer was in order to comply with a prior legal agreement, then it would be our preliminary view that deprivation of capital has occurred and we will be assessing Mrs Yule as having notional capital of the amount she has purportedly deprived herself

of.

This is of course a matter you may wish to take legal advice upon. I look forward to hearing from either yourself or your solicitor with the above information."

The terms of the letter make clear that the respondents had already had discussions with members of Mrs. Yule's family about the application made on behalf of Mrs. Yule. The application was submitted by the petitioner and dated 30 April 1996. It advised the respondents that Mrs. Yule was then possessed of assets by way of bank accounts and others amounting to £2,336.68. It was stated that Mrs. Yule was living in a house owned by a member of the family. From the petition and answers it appears that it was also known to the respondents that Mrs. Yule's income was derived from retirement pension, war pension and occupational pension.

[13]It would also appear that at some stage prior to 1 November 1996 the respondents had learnt that the house was one which had been owned by Mrs. Yule but that by disposition dated 27 February and recorded 3 March 1995 Mrs. Yule had disponed the house to her granddaughter. It would also appear that at the time of writing the letter the respondents were unaware that the disposition contained a reservation of a liferent in favour of Miss Yule. It is averred in Answer 2 for the respondents that it was by letter dated 12 November 1996 from the solicitors acting for Miss Yule that the respondents learnt of this and this is not denied by the petitioner.

[14]Mr. Mitchell for the petitioner did not seek to criticise the terms of the letter of 1 November 1996, accepting that it was proper for the respondents to seek further information. In that letter the respondents were, in our opinion, properly seeking information concerning the transaction which gave rise to the disposal of the single capital asset of value which had been possessed by Mrs. Yule. They were also making clear the provisions of the relevant regulations which were being applied to the question. At the same time they were entitled to advise Miss Yule of the preliminary view that they had formed upon such information as was possessed by them at the time.

[15]The reply for Miss Yule in the letter dated 12 November 1996 was in the following terms:

"We act for the above named client who has passed to us your letter of 1st

inst.

We have been asked to bring to your attention that as you will note the property was transferred from Mrs Rhoda Yule to our client on the 3 March of last year. On that date and for a lengthy period afterwards, albeit Mrs Rhoda Yule was elderly for her age her health was excellent. However on or about the 6 January of this year Mrs Rhoda Yule had an accident. The accident obviously was unanticipated. Unfortunately the effects of that accident caused Mrs Rhoda Yule to apply for and obtain admission to the nursing home on or about June of this year.

The reason the property was transferred to our client by Mrs Rhoda Yule, her grandmother, was through a particular fondness she had for our client. Mrs Rhoda Yule has three grandchildren, two boys and our client. Our information is that it was always Mrs Rhoda Yule's intention to transfer the property to our client and only when she was putting her affairs in order at the beginning of 1995 did she put it into effect her wishes.

We trust that you will take the view that Mrs Rhoda Yule and the likely circumstances did not for whatever reason deprive herself of capital.

Should you wish to raise any further point please do not hesitate to get in touch but in the meantime we look forward to hearing from you."

[16]In the face of that letter the respondents then sought information as to why a lifetime gift had been made rather than a testamentary bequest. This request was made in their letter dated 29 January 1997 addressed to Miss Yule's solicitors. The letter stated:

"I refer to your letter of 12th November, 1996, regarding payment of Mrs. Yule's nursing home fees. I would apologise for the delay in replying to this letter.

I note from your letter the reasons why Mrs. Yule transferred her property to your client at the beginning of 1995. Surely a will leaving the property to your client would have achieved the same result! Could you please advise me why it was done at this stage as opposed to being left to your client through Mrs. Yule's will.

Once I receive this information the Council will be able to make a final decision as to whether or not they will be funding Mrs. Yule's place at Kirknowe Nursing Home. I look forward to hearing from you."

[17]The response was given in the letter from the solicitors dated 4 February 1997 and was as follows:

"We thank you for your letter of 29th ult. and note what you write. Apart from what has been explained in previous correspondence, we obviously do not wish to speculate why Mrs. Rhoda Yule did not make out a will. Quite literally, we do not know whether a will has, in fact, not been made out. As far as the family is concerned, they do not know of any will.

Turning to Mrs. Yule's health, it is our understanding that she is now suffering from moderate dementia which was brought on by an accident.

However, more in point, it is our understanding that when application was made for Mrs. Rhoda Yule to reside in a Nursing Home, a full disclosure of her circumstances were made known and based on those circumstances, she was then provided with accommodation in Kirknowe Nursing Home, Wishaw. In relation to that residence, we enclose a copy of a letter dated 29th July of last year from the Social Work Department.

In essence, the home formerly owned by Mrs. Rhoda Yule was conveyed to Miss Debra Yule some considerable time before an application was made in relation to Mrs. Rhoda Yule becoming a resident in a Nursing Home. It is our understanding that at the time of the conveyance, the fact that Mrs. Rhoda Yule might be obliged to reside in a Nursing Home was not contemplated."

[18]It remains only to note that Mrs. Yule had been the subject of a community care assessment which had been completed on 1 May 1996. It gave details of the fractures which were sustained by Mrs. Yule when she fell and broke her arm on 6 January 1996 and was admitted to hospital. The averments in the petition and answers set out that the petitioner and his wife were involved in the care of Mrs. Yule after her discharge from hospital in about April 1996 and that, with the assistance of the respondents' social work department, an application was made to have her admitted to Kirkknowe Nursing Home. In the community care assessment it was noted that the petitioner had reported that there had been a gradual change in Mrs. Yule

"over the past 6-7 years. She had always been a nervous type of person with at times a disagreeable nature. He (the petitioner) stated that she had harboured paranoid ideas regarding a neighbour for a number of years now. Mrs. Yule has always kept herself to herself. She knows many people round about where she lives, but does not mix socially. She has always been content with her own company and that of her family."

[19]The respondents' decision intimated in the letter of 12 March 1997 was taken at a time when it was reasonable to assume from the terms of the letter of 4 February 1997 that no further information would be provided by members of the family of Mrs. Yule. It is accepted that it would not have been possible to approach Mrs. Yule herself for information. We consider that it must have been plain to the family that the respondents were looking to make a final decision as to whether or not they would be funding Mrs. Yule's place at the nursing home. In the light of the letter of 4 February 1997 the respondents proceeded to do so.

[20]At the time when they came to consider the question for the purpose of reaching a decision the respondents would know that Mrs. Yule had little by way of capital at the time of the application made on her behalf, that a year before at the age of 78 she was "putting her affairs in order" and that in doing so she made a lifetime gift of her house, her sole capital asset of any substantial value, while reserving to herself the liferent of that house, that she did so for no consideration other than "for the love, favour and affection" that she had for Miss Yule, and that there was no material provided to them to indicate that there was then any prior legal obligation or any other apparent need for Mrs. Yule to provide such a capital asset for her granddaughter instead of making such provision by way of testamentary bequest.

[21]We would add that it was not made clear before us whether or not the respondents were then aware that a power of attorney had been granted to the petitioner contemporaneously with the disposition of the house to Miss Yule. However, we note that the application form was submitted by the petitioner because, as would be known to the respondents, Mrs. Yule was by then suffering from mental illness and dementia and for that reason was being provided with accommodation in the nursing home. The Lord Ordinary appears to have proceeded upon the basis that the respondents knew that the power of attorney had been granted at the same time as the disposition. This may not have been the case, so we were advised. But, in any event, the respondents were told that the disposition was executed in the context of any elderly lady putting her affairs in order. Furthermore they were given no information about the making of a will on her part.

[22]The Lord Ordinary also makes reference to "conflicting evidence" about Mrs. Yule's state of health. No specific mention of this is made in the decision letter. But it is the case that the community care assessment made at the time of Mrs. Yule's admission to the nursing home does suggest a deterioration in health over a period of years prior to 1996 which does not sit happily with the assertion in the letter of 12 November 1996 that albeit that Mrs. Yule was elderly, "for her age" her health was "excellent". Furthermore, the accident suffered by Mrs. Yule on 6 January 1996 resulted in a fracture of her arm. It is said in the letter of 4 February 1997 that Mrs. Yule's dementia was brought on by the accident. But this would appear to be in conflict with her mental state prior to January 1996 reported in the community care assessment. While it is not explicit in the respondents' letter intimating their decision, we consider that this background would be known to the respondents and would serve to underline the reference in the letter to the decision of Mrs. Yule to begin putting her affairs in order in May 1995.

[23]For the petitioner counsel took no exception with the Lord Ordinary's opinion where he says this:

"It is agreed that the accommodation occupied by the petitioner is provided under the Social Work (Scotland) Act 1968. In terms of section 87(2) of that Act persons for whom accommodation is provided under the Act are required to pay for it in accordance with the subsequent provisions of section 87. Section 87(3) provides that accommodation provided under the 1968 Act is to be regarded as accommodation provided under Part III of the National Assistance Act 1948, and that sections 22(2) to (8) of the 1948 Act are to apply.

Section 22(2) of the 1948 Act provides that the basic obligation of the person provided with accommodation, 'the resident', is to pay the full cost of the accommodation provided, 'the standard rate'. Section 22(3) provides that where a person satisfied the local authority that he is unable to pay for the accommodation provided at the standard rate, the local authority is to assess his ability to pay and determine at what lower rate he is liable to pay. In terms of section 22(5) the local authority is required, in assessing a person's ability to pay, to give effect to the regulations made under that subsection, the National Assistance (Assessment of Resources) Regulations 1992. Regulation 20 of those Regulations provides that no resident shall be assessed as unable to pay for his accommodation at the standard rate if his capital exceeds the prescribed amount. It is agreed that when the heritable property disponed by the petitioner in 1995 is taken into account, her capital exceeds the prescribed amount. Regulation 25 provides that a resident may be treated as possessing actual capital of which he has deprived himself for the purpose of decreasing the amount that he may be liable to pay for his accommodation."

Nor was there any dispute between parties that the effect of the disposition was to deprive Mrs. Yule of capital. The question which remained was whether it had been shown that she had done so "for the purpose of" decreasing the amount that she might be liable to pay for her accommodation.

[24]The submissions of Mr. Mitchell for the petitioner started from the proposition that the respondents had in effect placed an onus upon the applicant, in this case the petitioner on behalf of Mrs. Yule, to satisfy them that she was entitled to assistance. In doing so, he said, the respondents had failed to apply their minds to the test which was to be derived from decisions in relation to the regulations relating to the provision of supplementary benefit. The scheme of the regulations concerned with the assessment of capital in relation to applications for supplementary benefit, was in all material respects the same as that to be found in regulation 25 of the 1992 regulations.

[25]In passing, we take note that in the first debate before the Lord Ordinary the issue which he was called upon to determine was whether the power to recover payment of charges, where persons in residential accommodation have disposed of assets, was conferred upon the respondents by virtue of the provisions of the Health and Social Services Adjudication Act 1983 or in terms of the 1992 regulations. In the former case section 21(1)(b) of the Act strikes where a person who avails himself of Part III accommodation, "knowingly and with the intention of avoiding charges for the accommodation" has transferred any capital asset to some other person or persons not more than six months before the date on which he began to reside in such accommodation. The Lord Ordinary rejected a submission for the petitioner that the six month period was the only period during which Mrs. Yule's intention was relevant so that in seeking to assert that an intention to avoid charges for accommodation could arise outside that period, the respondents were acting ultra vires. The Lord Ordinary held, and this has not been further challenged on appeal, that the respondents were well-founded in their submission that the provisions of the 1948 Act as amended, the 1968 Act and the 1992 regulations when regarded together, constituted a self-contained scheme for the payment of accommodation charges and for the assessment of ability to pay. Regulation 25 made no reference to a time limit of six months and none fell to be implied.

[26]Mr. Mitchell accepted that the present issue is concerned with whether the respondents correctly identified the question which had to be addressed by them and, if so, whether there was material before them upon which they could reasonably decide the question as they did. He accepted that the statutory provisions from which the respondents' function in making the assessment was derived, came from a statutory source, namely the 1948 Act as amended, different from the system which applied in the case of income-related benefit. As a consequence there was not to be found a statutory adjudication and appeal system of the kind which applied in the latter case. Nevertheless, he said, the general approach of the adjudicating body in each case must be the same, namely, to ask whether there had been a deprivation of capital and, if so, whether it was for the purpose specified in the regulation. Mr Mitchell did not demur from the Lord Ordinary's view that in practical terms the respondents' task of deciding whether they were satisfied of Mrs. Yule's inability to pay the full rate and the task of assessing her ability to pay, merged into a single exercise. He also accepted that "the purpose" need not be the sole or predominant purpose. But, Mr. Mitchell said, it had to be shown that the transferor, as the claimant for the benefit of not paying the standard charge because of inability to pay, must have known, and be proved to have known, of the capital limit. Mr. Mitchell made reference to Ogus on the Law of Social Security (4th ed.) p. 590: also R(SB) 12/91. He also referred to Mesher's Commentary on the Income Support (General) Regulations 1987 as amended. In relation to the word "purpose" in regulation 51, the commentary states that the adjudication officer must show that the person's purpose was one of those mentioned in paragraph (1) of the regulation. Therefore there had to be some basis of fact from which the inference of purpose could be drawn. It had to be established, as a matter of fact, that Mrs. Yule knew that there was a means-tested requirement for charges in residential accommodation provided through a local authority and a capital limit to it. In the absence of any further information, the facts before the respondents at the time of reaching their decision were neutral on these matters. The burden of finding the purpose lay on the respondents. No evidence had been provided to the respondents that the reason for the disposal of her house by Mrs. Yule to her granddaughter had been with a view to decreasing the amount that she might be liable to pay for her accommodation in residential care. Accordingly there was no basis in fact for the inference which the respondents had drawn as to the purpose for which the disposal was undertaken. Suspicion was insufficient, not least because there was nothing in the material before the respondents to indicate that Mrs. Yule anticipated any need on her part for such residential care. At best for the respondents, they had speculated on these matters. The mere fact of disposal to her granddaughter did not render Mrs. Yule's purpose other than an innocent one. What the respondents had done was, in effect, to place an onus upon the petitioner, in making the application on behalf of his mother, to satisfy them that his mother was entitled to assistance. Reference was made to Reg. v. Legal Aid Assessment Officer ex parte Saunders Q.B.D. 10 November 1989 (unreported) for the proposition that the respondents, as the assessing authority, had to be satisfied that Mrs. Yule must at least have foreseen the probability that she would make application for such residential care and therefore have disposed of her property with the intention of bringing her assets down below the specified capital limit. In the circumstances and in the absence of any information to establish that Mrs. Yule knew of the capital limit, or, indeed, expected that she might require residential care and, if so, what were the consequences by way of recovery of charges for such residential care, the decision of the respondents was fatally flawed and fell to be reduced. The approach of the Lord Ordinary to the matter was, in any event, flawed since he had proceeded upon material which did not, so far as was to be deduced from the correspondence, form any part of the respondents' decision-making process. For instance, the respondents had no information before them that Mrs. Yule's health was not perfect at the time of executing the disposition. There was thus no indication that they had had regard to any conflict of information on this head. Nor did the respondents appear to have had knowledge that, contemporaneous to the execution of the disposition, Mrs. Yule had granted power of attorney to the petitioner. Yet it appeared from the Lord Ordinary's opinion that these were matters contained in the information available to the respondents and therefore constituted material from which the respondents were entitled to draw inferences. The matter should be remitted back to the respondents to make such further investigation as they might consider appropriate before reaching a final determination. Mr. Mitchell intimated that the respondents had undertaken to pay the charges for Mrs. Yule's residential care in the nursing home pending the determination of the present appeal.

[27]For the respondents, Mr. Hodge invited us to refuse the reclaiming motion. The respondents had, as the correspondence made clear, addressed themselves to the right question. Under reference to the decision in R(SB) 38/85, the "purpose" did not have to be the predominant purpose of the applicant in depriving herself of a capital asset. Standing the information available to the respondents there was sufficient in it to entitle them to conclude that there had been a deliberate deprivation by Mrs. Yule of her capital for the purpose defined in the statutory regulations. The disposition of the house inter vivos with a reservation of the liferent brought about an irrevocable deprivation of that capital asset. The donee got an immediate and gratuitous benefit. When application was made to the family for information, no reason was advanced as to why the gratuitous alienation could not have been secured by way of a testamentary bequest. The transaction was an unusual one in that there was the reservation of the liferent notwithstanding the gift of the fee. The transaction took place against the background of an elderly lady putting her affairs in order. The family had been invited to explain why this unusual course had been adopted and had been unable to advance any reason. It was reasonable to assume that the respondents would have been aware of the terms of the community care assessment. The circumstances were such that in the absence of any reasonable explanation for the adoption of such an unusual course, it was open to the respondents, acting reasonably in their function as the assessing authority, to infer that the purpose behind the transaction on the part of Mrs. Yule was, at least in part, to secure that she did not require to meet any charges if she were to be admitted to residential care in a nursing home. The Lord Ordinary had, therefore, been correct in holding that on the basis of the information before them, the respondents were entitled to take the view that the purpose of the transfer of the house was to decrease the amount that Mrs. Yule might be liable to pay for the nursing home accommodation provided to her. Accordingly, the respondents were entitled to conclude that the petitioner was not unable to pay for the accommodation provided at the standard rate.

[28]We start with the terms of section 22(3) of the 1948 Act as amended. This provides that it is for the person for whom accommodation is provided, or proposed to be provided, to satisfy the local authority that he is unable to pay therefor at the standard rate. In those circumstances where he does so, the local authority shall then assess his ability to pay and accordingly determine at what lower rate he shall be liable to pay for the accommodation. In the assessment process, the local authority is bound to give effect to the regulations made under subsection (5) of section 22. Regulation 20 of those regulations provides that where a resident has capital, calculated in accordance with regulation 21, which exceeds £16,000, he shall not be assessed as unable to pay for his accommodation at the standard rate. An element in that calculation of capital is capital which a resident is treated as possessing under regulation 25(1). The amount of that capital is to be calculated as if it were actual capital which a resident possesses as set out in Part III of the regulations. The process of assessment, therefore, begins with the requirement for the resident or prospective resident to provide information to the local authority from which the local authority can be satisfied that he is unable to pay the standard charge for the accommodation. The local authority cannot be so satisfied if the capital, both actual and notional, exceeds the specified sum. In determining the matter of notional capital, the local authority can only proceed upon the material which is available to them either from their own sources or upon that material as supplemented by material from the applicant and from such other sources as the local authority can reasonably be expected to apply to. We agree with Mr. Mitchell that in considering whether there is notional capital to be added to the actual capital of an applicant, the local authority must look to the information before them to determine whether a purpose to the effect specified in the regulations can be deduced. But, in our opinion, this is not a matter of onus of proof. Rather, before the local authority can reach such a view, it must have material before it from which it can be reasonably inferred that the deprivation of capital took place deliberately and with a purpose of the nature specified. The local authority cannot look into the mind of the person making the disposition of capital or of others who may be concerned in the transaction. It can only look at the nature of the disposal within the context of the time at which and the circumstances in which that disposal took place. In relation to this issue, we have in mind what is said in Mesher's Commentary cit. supra at p. 184 under the heading "Deprivation", as follows:

"Here the onus of proof is complicated by the relationship with the claimant's actual capital. Once it is shown that a person did possess, or received, an asset, the burden shifts to him to show that it has ceased to be a part of his actual capital, to be valued under reg. 49 (R(SB) 38/85). Therefore, para. (1) can only come into play after these two stages have been passed with the second stage depending on the claimant. If he cannot satisfactorily account for the way in which an asset or a sum of money which he says he no longer has, was disposed of, the proper conclusion is that it remains a part of his actual capital."

Again with regard to the word "purpose", the commentary is as follows:

"Here the (adjudication officer) must show the person's purpose is one of those mentioned in para. (1). There is unlikely to be direct evidence of purpose (although there might be contemporary letters or documents), so that primary facts must be found from which an inference as to purpose can be drawn (CSB 200/1985, R(SB) 40/85)."

In Ogus cit supra at p. 590 the matter is put thus, again in relation to calculation of notional capital for assessment of an individual's eligibility for income-related benefit:

"There are provisions analogous to those on 'notional income' to deal with possible abuse or collusive behaviour...The underlying test seems to be whether the claimant would have carried out the transaction at the time in question if there had been no effect on eligibility for benefit."

[29]These expressions of view are, in our opinion, indicative likewise of the approach that an assessing authority properly requires to take when considering the issue of the calculation of capital in relation to whether or not the applicant is unable to pay the standard charges for residential accommodation. However, we do not consider, as was urged by Mr. Mitchell, that it is necessary that the claimant should know of "the" capital limit above which, in terms of the relevant regulations applicable at the time, the local authority is bound to refuse the application, if it is a reasonable inference, looking to the transaction in the whole surrounding circumstances relating to the applicant, that it must have been a purpose of the transaction to avoid having to pay any charges in the event of becoming a resident in residential accommodation provided by the local authority. In this respect we consider that the 1992 regulations have to be looked at in a different light to those concerned with provision for income-related benefits, not least because the purpose of the individual may have been formed possibly some time ahead of the prospect that he or she might require to enter such residential accommodation. We note, as is set out in Ogus cit. supra p.588, that in the case of income-related benefits, different capital limits apply to particular forms of income support. We would also add that we do not find the case of R. v. Legal Aid Assessment Officer ex parte Saunders of assistance. As was pointed out in that judgment, the regulations with which the court was there concerned, were set in an entirely different context from those which related to social security benefit to which reference was made. The court did not consider the latter regulations and their construction to be of assistance in determining the question before the court.

[30]In the present case, it was clear that the respondents could look for information no further than the members of the family to whom they applied for information. Furthermore, it was clear that the family were indicating that they were not able to throw any further light on the purpose of the transaction by which Mrs. Yule deprived herself of her capital asset in the house beyond what was contained in the correspondence up to and including the letter of 4 February 1997. It may have been the case that the respondents only learnt some time after they made their determination that, at the same time as executing the disposition of her house, Mrs. Yule had also granted a power of attorney to her son, the petitioner. However, the respondents cannot be faulted for proceeding to make their assessment on the information available to them at the time. Mr. Mitchell appeared to suggest that in looking to the family for information, the respondents were placing an onus of proof upon the family to provide a reason for Mrs. Yule acting as she did, being a reason which did not contravene the provisions of regulation 25 (1). We do not agree. The respondents could not look to Mrs. Yule herself for any explanation. They were bound to look to the family for information on the matters which concerned them. They were careful to make clear in the first letter what was required of the local authority in considering the application made to them and what was the particular problem that faced them. Nothing said in correspondence by the respondents, in our judgment, can be said to have placed an onus of proof upon the family of Mrs. Yule.

[31]When regard is had to the letter in which the respondents' decision was conveyed to the family, the respondents properly set out the question which they required to ask themselves, when they said that

"in determining any application for public funding the Council is required...to consider whether the transfer of any property by the resident was carried out either in full or in part with the motive of avoiding that property being taken into account in determining his or her eligibility for public funding".

We do not consider that in substituting the word "motive" for the word "purpose" which appears in regulation 25 (1), the respondents were misdirecting themselves. The letter went on to note, correctly, that Mrs. Yule had "deprived herself of her beneficial interest in the property." The respondents thereafter set out the material on which their decision was founded.

[32]In our opinion, looking to that material, a number of primary facts stand out. This was an elderly woman with no substantial capital assets other than her house. She was putting her affairs in order. She elected to dispone her house while retaining a limited interest in it, by way of a liferent, giving her the right to occupy it during her lifetime. This would protect her while she remained able to do so. The fee in the house was disponed out of her hands for no consideration, other than the love, favour and affection that she had for her granddaughter. There was nothing suggested to the respondents to the effect that the granddaughter had need at the time to succeed to any interest in the house or to live in it in the future, or that there was any prior legal obligation to that effect. The suggestion that Mrs. Yule was in good health ran counter to the information that was before the respondents prior to the letter of 1 November 1996 in which they first applied to Miss Yule for information. That was a factor which, it would appear from the pleadings, was in mind at the time that the decision was taken. From what was put before the respondents in regard to all these matters, we consider that there were sufficient primary facts to entitle the respondents reasonably to conclude that Mrs. Yule had deliberately determined to denude herself of her one substantial asset because, by doing so, she might thereby avoid the prospect that if she were to enter residential care in her lifetime, her house would require to be sold and the proceeds, at least in part, would require to be devoted to payment for that care, to the detriment of her family's interest in the succession to her estate on her death. It is sufficient to say that such an inference would have been fortified if the respondents had also been aware of the fact that Mrs. Yule, as part of the dispositions she was making in putting her affairs in order, had also granted a power of attorney to the petitioner. That additional information would reasonably suggest that it was contemplated that a time could come during which Mrs. Yule would not be able to conduct her own affairs. That would also be consistent with an anticipation that she might require to enter residential care during her lifetime.

[33]We agree with the Lord Ordinary that it is open to a local authority to reach a view as to the purpose of a transaction such as the present, without any specific finding as to the exact state of knowledge or intention of the applicant, so long as the primary facts are such as reasonably to lead to the inference that the purpose was at least in part that specified in regulation 25(1).

[34]For all these reasons the respondents were, in our opinion, entitled to reach the decision that they did and to hold that they were not satisfied that Mrs. Yule was unable to pay for accommodation charges for her residential care accommodation at the standard rate for the reasons which they gave. We therefore agree with the Lord Ordinary in his disposal of the petition. Accordingly, the reclaiming motion will be refused.