Care costs consuming island homes:
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The Application of the Notional Capital Rule
The Court applied what is sometimes referred to as the ‘Notional Capital Rule’, which incorporates a 5 step criteria:
1. The local authority must not make inferences but decide on the fullest information provided as to how deprivation occurred.
2. The resident must have known the capital limits at the time of deprivation.
3. The personal circumstances of the resident will be taken into account and the length of time lapsed is relevant.
4. Reducing care fees must be a significant reason as to why deprivation occurred.
5. Forseeability: was the resident going into residential care foreseeable at the time of deprivation?
This test is highly subjective. CRAG s.6064 states that: ‘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…’. Thus if a person is in good health when disposing of property it would be difficult to argue that they disposed of it as they thought they would need care.
The Main Arguments Made By the Council
• Mrs Yule could have achieved the same practical result (gifting her property to her granddaughter) by making a will in favour of her granddaughter. Mrs Yule gave no clear explanation why she did not do this. Instead:
• Around the same time she drew up a Power of Attorney in favour of her son, which suggests that she was getting her affairs in order and perhaps required to be managed by others.
• Further in 1996 her son said that he had seen a gradual change in his mother’s behaviour.
• Mrs Yule was unable to provide a satisfactory decision as to why she gifted her property to her granddaughter while retaining for herself a liferent when this could have been achieved by drawing up a will.
• He rejected that the 6 month period was the only period where Mrs Yule’s intention was relevant.
The Lord Ordinary concluded, accepting the Council’s position and the arguments above that there were sufficient primary facts to entitle the respondents (South Lanarkshire Council) reasonably to conclude that Mrs Yule had been deliberately determined to denude herself of her one substantial asset because by doing so she might thereby avoid the prospect that, if she was to go into residential care in her lifetime, her house would be sold and the proceeds of which, in part, may used to pay for her care.
Mrs Yule’s case went to Judicial Review where Lord Cameron of Lochbroom agreed with the Lord Ordinary that the Council was entitled to arrive at their decision that Mrs Yule was able to pay for her residential care charges at the standard rate for the reasons which they gave.
