News Category 2
Caution Required on Ringfencing Property From Care Fees - Justin Patten,
27/06/17. The issue of care fees was topical in the general election Irrespective of the future direction of the Conservative minority administration families across the country will continue to be concerned about their liability for care fees.
Here are some questions and answers on liability for care fees and how to protect your family's inheritance.
Do you really want to hand control over your care to the state?
If you are a self funder, (around 40% of care home places are self funding) the individual has more freedom about choosing a care home compared to someone funded by the local authority. Given this you may want to think carefully about putting yourself through the charms of local government bureaucracy, However if financial support is the name of the game consider below.
What Is the broad financial position If you want state help?
If you or your partner need care in later life and you are not entitled to NHS Continuing Healthcare funding, the Local Authority will usually conduct a means test to see if you can fund the cost of care yourself. If you have assets above £23,250, you will be expected to pay for the full cost of your care. If your assets are worth between £14,250 and £23,250, you will be expected to make a contribution to your care. Once your assets reach the lower £14,250 limit, the Local Authority will take over funding your care fees. We will have to see what pans out with the election but it looks like the Conservatives/Labour will be looking at a cap on care fees though the amount is unknown.
How can you mitigate the risk of losing equity in the family home?
Given the impotency of our political parties and the uncertainty of what is going to happen there are three broad options - Gifting, Asset Protection Trusts and Will Trusts.
How does gifting mitigate care fees liability?
Individuals can make an all-out lump sum payment of cash to a child or grandchild, a payment of a child or grandchild’s debt as a gift (e.g. paying off their mortgage, a transfer of a property to a child or grandchild e.g. their main residence or a holiday home or a transfer of assets into trust which cannot be revoked. This takes money out of the estate and may not be considered by the local authority and/or HMRC for the purposes of IHT liability/care fees. The downside of this is that you handing over control of money to someone else and it may still not be IHT efficient.
What is the second way to avoid care fees and protect the family home?
You can transfer your property into an irrevocable ‘Asset Protection Trust’ (also known as ‘Lifetime Asset Trusts’) to avoid care fees. Companies(who are not necessarily legally or financially trained) claim that this is completely legitimate and will ensure your assets are protected from care fees. However, the risk here is that these actions may be regarded as deliberate or intentional ‘deprivation of assets’ and they can create other complications as well such as creating a Capital Gains liability and can be expensive to be set up.
How likely is it that gifting and/or or Asset Trusts will be considered a deprivation of assets by the local authority?
The best source of guidance is Charging for Residential Accommodation Guide (CRAG) 2011 (https://www.gov.uk/government/publications/charging-for-residential-accommodation-guide-crag-2011)
Consider the following below within this:
Purpose of disposing of an asset 6.068
There may be more than one purpose for disposing of a capital asset only one of which is to avoid a charge for accommodation. Avoiding the charge need not be the resident's main motive but it must be a significant one.
and
Timing of the disposal 6.070
The timing of the disposal should be taken into account when considering the purpose of the disposal. It would be unreasonable to decide that a resident had disposed of an asset in order to reduce his charge for accommodation when the disposal took place at a time when he was fit and healthy and could not have foreseen the need for a move to residential accommodation.
If you fall foul of this guidance( and the local authority does have the right to go back a long while and can access legally privileged documents) then you are vulnerable to attack from the local authority and you may have a deliberate deprivation of assets situation.
How likely is it that a Local Authority will go for you/your estate if you have deliberately deprived assets from them?
As a taxpayer you would like to think it is very likely but this is not that clear - In 2012 The BBC contacted local authorities across the UK using the Freedom of Information Act to find out which had used the powers available to them to recover care fees Only 16 of the 121 councils that responded said they had recouped money back using legal powers. Surrey Council recovered the biggest sum, recouping more than £250,000 since 2009. This means despite the legal powers local authorities are not pulling their weight. However this may change in these cash strapped times.
What solution do you suggest?
If you want to gift/place your home in an Asset Protection Trust you may be playing Russian Roulette.
If you are single/divorced or your spouse/partner is now ill and is due to go to a care home it is too late.
If it is not late, you can do a will which has a clause that the first spouse to die leaves his or her interest in the matrimonlal home to a discretionary trust or a settlement in which the survivor has an immediate post death interest. The settled interest is then protected should the survivor require nursing home care. You need to ensure that the jointly owned property is owned as tenants in common not as joint tenants.
Charging for Residential Accommodation Guide (CRAG) 2011 gives additional guidance together with other legislation namely the National Assistance(Assessment of Resources) Regulations 1992.
Effectively you ringfence half the value of the property.
Overall it is critical to sever any joint tenancy before the first death or it is too late.
Justin Patten
Human Law
Image ©iStockphoto.com/nspimages
Nervous Shock Following Birth - Anna Macey, Kings Chambers
22/06/17. (RE and others v Calderdale and Huddersfield NHS Trust). This case arose out of a claim for clinical negligence following the birth of a baby, RE, who suffered an acute profound hypoxic ischaemic insult immediately prior to and after her delivery, on 22 April 2011.
RE was known to be a very large baby, and her mothers’ pregnancy was a difficult one. The delivery, which involved acute pain and anxiety for RE’s mother, included a period of around 15 minutes where RE had crowned, but not been delivered. When she was delivered RE was described by the Court as having been born “pale, floppy and without respiratory or heartrate”. Her body was white and lifeless, and her head was swollen and purple. Resuscitation was commenced and a heart rate was first noticed after 10 minutes, with her first gasp after 12 minutes.
Mr Justice Goss, sitting in the High Court, considered that there has been no negligence with respect to the antenatal care provided to RE’s mother. But the NHS Trust had...
Image ©iStockphoto.com/mihhailov
Fundamental Dishonesty: Blind Men and Elephants? - Patrick West, St John's Chambers
21/06/17. “Me I'm dishonest, and a dishonest man you can always trust to be dishonest. Honestly it's the honest ones you have to watch out for, you never can predict if they're going to do something incredibly stupid” - Jack Sparrow, Pirates of the Caribbean.
Joking apart, Johnny Depp’s line rings true when it comes to QOCS cases and fundamental dishonesty. These cases come in two varieties:
- The sort of case where the dishonesty is blindingly obvious (e.g. the Claimant caught out by a surveillance camera).
- All the others.
A quick reminder of what we are talking about:
CPR 44.15 states that:
"(1) Orders for costs made against the claimant may be enforced to the full extent of such orders without the permission of the court where the proceedings have been struck out on the grounds that—
(a) the claimant has disclosed no reasonable grounds for bringing the proceedings;
(b) the proceedings are an abuse of the court's process; or
(c) the conduct of—
Image ©iStockphoto.com/firebrandphotography
PI Practitioner, June 2017
16/06/17. Each issue a particular topic is highlighted, citing some of the useful cases and other materials in that area. You can also receive these for free by registering for our PI Brief Update newsletter. Just select "Free Newsletter" from the menu at the top of this page and fill in your email address.
Unreasonable behaviour in the Small Claims Track
A common application for the winning side in the small claims track is an application for costs arising from the other party's "unreasonable behaviour". The CPR contains limited guidance as to what constitutes unreasonable, and, perhaps surprisingly, there has been little authority at appellate level to assist. However, the issue recently arose in the Court of Appeal. Although the decision has not fundamentally altered the test, it nonetheless establishes...
Image ©iStockphoto.com/EmiliaU
Wilkinson Lives on in Crawley! (A Highway Authorities Lack of Resources Is Still Irrelevant to a Section 58 Defence) - Ian Pennock, Park Lane Plowden Chambers
12/06/17. The recent case of Crawley-v-Barnsley Metropolitan Borough Council [2017] EWCA Civ 36 confirms three main points established in the case of Wilkinson-v-City of York Council [2011] EWCA Civ 207 which has caused highway authorities difficulties because;
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It not only made a lack of resources irrelevant in considering a highway authority’s section 58 defence. But also;
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Endorsed the defendant highway authorities very own ‘National Code of Practice’ as a benchmark in considering whether or not they have exercised ‘reasonable care’ for the purposes of section 58 and by which they can be ‘hoisted by their own petard.’ As well as;
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Reinforcing the point that the correct interpretation of the interplay between sections 41 and 58 of the Highways Act 1980 is that the highway authority has either exercised ‘reasonable care’ (within the meaning of section 58) or not and it is not a defence to say that lack of ‘reasonable care’ did not cause or contribute to the Claimant’s accident.
Highway authorities continue to try and hide their ‘lack of resources’ as a reason for failing to exercise reasonable care (for the purposes of section 58) in increasingly imaginative ways (see, for example, the proposed new National Code of Practice) and attempt to argue that the case of TR v Devon [2013] EWCA Civ 418 means the utility of the National Code of Practice, in the courts consideration of their section 58 defence, is greatly diminished. They either do not understand the third point (or pretend not to understand it.)
The recent case of Crawley-v-Barnsley Metropolitan Borough Council [2017] EWCA Civ 36, was handed down on 2nd February 2017. Other than the fact that it was not reasonable for the highway authority to provide an out of hours response to reports of dangerous defects from the emergency services only (and then only on certain highways) and not to respond to reports of such defects from members of the public, “Crawley” applies and confirms the above three points from ‘Wilkinson.’
In ‘Crawley’ the highway authority received a report of (what transpired to be) a dangerous defect at 4.20pm on a Friday but an inspector did not attend until the Monday when he considered it ‘dangerous/actionable’ and ordered a 24 hour repair. In the meantime, on the Saturday, the Claimant injured himself upon it.
At first instance the District Judge found it was a breach of section 41 but the highway authority had the section 58 Defence available to it because, essentially, it was not unreasonable for the highway authority to restrict out of hours responses to reports from the emergency services only.
The Claimant appealed before H.H.J. Robinson who upheld that appeal on the basis that, amongst other things, if it was reasonable to deal with complaints reported on Monday to Thursday on the very next day, there was no justification, other than invalid resource based justification, for dealing with complaints made on a Friday any differently. The disgruntled highway authority appealed to the Court of Appeal.
Lord Justice Jackson in the lead judgment (but dissenting on unrelated points) considered, essentially, that it was not unreasonable for the highway authority to allow it’s employees the week-end off work. Briggs and Irwin disagreed (no doubt recollecting their time ‘on call’ during equally unsocial hours as ‘duty’ judges) and considered that, essentially, the highway authority’s failure to provide any ‘out of hours’ response whatsoever to a report from a member of the public (whereas it did so, in certain circumstances, for such reports from the emergency service) was flawed and therefore deprived it of the section 58 defence because it had not exercised reasonable care within the meaning of section 58. Therefore the highway authority’s appeal was dismissed.
In doing so the Court of Appeal has also reinforced it's prior view in “Wilkinson” that a lack of resources is an invalid excuse for failing to exercise reasonable care within the meaning of section 58. See paragraph 10 “I readily accept Toulson LJ’s Judgment [in Wilkinson] as accurately stating the law” or paragraph 34 “I readily accept that lack of resources is not a defence” per Jackson LJ.
As for the second point above established by ‘Wilkinson’ in relation to the National Code of Practice, Jackson LJ stated, (at paragraph 7) “That contains helpful and well-informed guidance but it has no statutory force.”
Despite that lack of statutory force Jackson LJ relied heavily on that "helpful and well-informed guidance" in the National Code of Practice to inform his consideration of the highway authorities contention that they had exercised ‘reasonable care’ for the purposes of section 58. See paragraphs 8 and 9 in “Crawley” where he actually sets out the provisions of the National Code of Practice.
Accordingly, this clearly establishes that the National Code of Practice gives much “helpful and well-informed guidance” to judges throughout the country in assessing a Defendant’s purported section 58 defence.
The third point in “Wilkinson” above derives from Toulson LJ citing Lord Denning, who in turn was citing Lord Diplock in Griffiths v Liverpool City Council [1967] 1 QB 374, at 391, where Lord Diplock stated;
“Unless the highway authority proves that it did take reasonable care the statutory defence under subsection (2) [section 58] is not available to it. Nor is it a defence for the highway authority to show that even if it had taken all reasonable care this might not have prevented the damage which caused the incident."
This can sometimes appear counter-intuitive but can be readily illustrated by the typical case where the frequency of inspection is challenged by a Claimant who says the highway ought to have been inspected monthly but the highway authority only did so every 3 months. The Claimant need only establish a ‘dangerous’ defect ‘caused’ his injury and once he establishes that a breach of section 41 usually follows. If it is found that a monthly inspection was required then the highway authority ought to be deprived of the section 58 defence (the burden of proof being upon them).
It is not a defence for the highway authority to say (as typically happens - and happened in a case where the author represented a successful Claimant the day before the author wrote this article) that their routine three monthly inspection was actually in the month before the Claimant’s accident so whether they ought to inspect the highway every three months, or monthly, is ‘irrelevant’ (presumably because such a failure to inspect at the correct monthly frequency could not have ‘caused’ the Claimant’s accident).
Such a purported defence by a highway authority introduces issues of ‘causation’ which have no place in the consideration of a section 58 defence. A Claimant does not need to also establish that the highway authority’s lack of ‘reasonable care’ (within the meaning of section 58) ‘caused’ his accident.
Accordingly, a highway authority ought to remain deprived of its section 58 defence where it does not inspect the highway at the correct frequency even if it’s infrequent inspection co-incidentally fell within the time period of the correct (monthly, quarterly or six monthly) inspection period.
In “Crawley” this correct interpretation and application of the interplay between sections 41 and 58 is not only confirmed by Jackson LJ’s statement that "I readily accept Toulson LJ's judgment [in Wilkinson] as accurately stating the law" but also by Lord Justice Briggs (with whom Lord Justice Irwin agreed) at paragraph 43 where he stated;
"There was some discussion during the hearing of the first appeal and in this Court whether a system which had led to an inspection by the weekend on-call team, on the Saturday, would have prevented the claimant’s injury, if the pothole was repaired only on the following day i.e. the Sunday. But a Section 58 defence is not concerned with questions of causation in that way…In my judgment the council’s system failed the Section 58 test not because, had reasonable steps been taken, the injury would definitely have been prevented. It failed because the system suffered from the built-in flaw that reports of potentially serious defects would not be evaluated at all by somebody with the requisite skill out of working hours unless they came from members of the emergency services."
The cases of “Wilkinson” and “Crawley,” should always be borne in mind by all claimant P.I. lawyers when considering a highway case and form an essential part of their ‘toolkit’ for court.
Ian Pennock
Park Lane Plowden Chambers
Leeds
(Ian Pennock is a Barrister specialising in Claimant Personal Injury work and represented the successful Claimant in the case of “Wilkinson.”)
Image cc flickr.com/photos/new_and_used_tires/6842127640/
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