Capital – Scots private law – real and personal rights – whether money lent for a specific purpose to be treated as capital
The claimant was in receipt of jobseeker’s allowance (income-based) (JSA (IB)). His mother lent him sums of money for the specific purpose of the purchase of a house. The claimant deposited the sums in question in building society accounts and ultimately purchased a house using these sums. He appealed against a decision of the First-tier Tribunal (F-tT) that money for the sole purpose of purchasing a house still falls to be counted as capital in terms of regulation 108 of the Jobseeker’s Allowance Regulations 1996. Under the private law of England and Wales the sums of money involved would be regarded as being held in trust by the claimant, and would not be treated as “capital” for the purpose of the regulations. The issue before the Upper Tribunal was how sums of money lent to a claimant on JSA (IB) fall to be treated under Scots private law for the purposes of regulations 107, 108, 111 and 116 of the Jobseeker’s Allowance Regulations 1996. It was not in dispute that Scots private law was applicable on the facts of the case.
Held, allowing the appeal, that:
the building society acquired the right to the money which the claimant deposited into his account and the claimant acquired a personal right against the building society to seek repayment of that money. The claimant remained under personal obligations to his mother (as the lender) and she had a personal right to require the claimant to use the loan only in accordance with the purpose she had stipulated and that personal right placed a concomitant personal duty on the claimant which meant that the loan could not be the claimant’s “capital” for the purposes of the 1996 Regulations (paragraphs 11 to 13);
sums of money lent to a claimant on JSA (IB) do not form part of a claimant’s “capital” and are not to be included in the calculations required by regulation 108 and 111. Such sums do not count towards the “capital limit” of £16,000 laid down by regulation 107 nor do they fall to be included in the calculation of tariff income from capital required by regulation 116 (paragraph 1);
the same approach applies to cases covered by regulations 45, 46, 49 and 53 of the Income Support (General) Regulations 1987 (paragraph 1).
The judge set aside the decision of the F-tT and directed that the Secretary of State recalculate the claimant’s entitlement to JSA (IB) on the dates specified.