Presentation on theme: "Social Services Debts Effective Recovery Christine Cooper Barrister"— Presentation transcript:
1 Social Services Debts Effective Recovery Christine Cooper Barrister
2 Residential CareS. 21 National Assistance Act 1948 (NAA) contains a power to provide residential accommodation for those in need of care and attentionS. 22 requires the local authority to recover the cost unless satisfied that the person is unable to pay the full costAssessment of ability to pay conducted in accordance with the National Assistance Act (Assessment of Resources) Regulations 1992Must have regard to guidance in Charging for Residential Accommodation Guide (CRAG)
3 Non-residential CareS. 29 NAA contains a power to provide services other than residential care where a person’s needs call for the provision of those servicesS. 17 Health and Social Services and Social Security Adjudications Act (HASSASSA) provides a power to charge for services provided under s. 29 NAAGuidance and minimum standards for charging policies is contained in Fairer Charging for Home Care and other Non-residential Social Services September 2003Must apply CRAG for capital and savings but not income
4 Is there a debt? No right to payment unless and until: Assessment of needsCare plan that has been implementedFinancial assessmentWritten explanation of how charge is calculated with notification of how to challengeUnmet demand for paymentThe assessment of need and care plan must be lawfulThe financial assessment must comply with CRAG unless there is a very good reason for departing from it.
5 First Steps in Recovery LettersPurpose – to persuade the person to payBe clear about who owes the money and who must payGive an opportunity toSay if there is a dispute about the amount owedMake a proposal for paymentSome useful phrases to include:“Your mother’s contribution to the cost of her residential care has not been paid…I am writing to you because you are responsible for your mother’s finances… I must now ask you to pay this sum out of your mother’s funds…”
6 Continued“If there is a reason why the outstanding fees have not been paid then please let me know what it is…”Unless the matter can be resolved, the Council will have to consider taking legal action to recover the money owed. If at all possible, the Council would wish to avoid the upset and distress that might be caused by such action and is willing to consider any payments proposals that you make...”“You may wish to obtain legal advice before responding to this letter and I would encourage you to do so…”
7 Offers to Pay Realistic approach essential If on benefits, may get less than £5.00 per week through the courtsOn-going charges may be affected by payments towards the debt because the contribution cannot reduce the person’s income below the thresholdPersonal expenses allowance if in residential careIncome support plus 25% for non-residential careSigned written agreementSay the Council will not issue proceedings in consideration of the offer to pay which it has accepted
8 Court Proceedings Consider capacity at the outset. If there is no suitable litigation friend, proceedings may not be economically viable as Official Solicitor’s costs must be paidEvidence is needed so show that:The care was actually providedThe person’s income and capital have been correctly valuedThe charge has been properly calculatedThe charge is no more than the cost to the local authority of providing the serviceThe person has been informed of the charge in writing with an explanation of how it has been calculated and how to challenge the assessmentDemands for payment have been sent but not paid
9 In other cases, the claim is for a money judgment Do not underestimate the difficulty of proving that the vulnerable and disabled person really must pay the debtIf there is a HASSASSA charge, possession proceedings may be most effectiveThere can still be a challenge to the debtMust also prove that there was a debt for residential accommodation at the time that the HASSASSA charge was createdIf the debt is proved and still not paid, the local authority may sell the propertyJointly owed properties are more complex but a claim under the Trusts of Land and Appointment of trustees 1996 is possibleIn other cases, the claim is for a money judgmentEnforcement action can then follow if the judgment is not paid
10 Claims Against Third Parties HASSASSA s. 22 transfer of liabilityResidential accommodation charges onlyNeed to prove assets dispose of at an undervalue with relevant periodNeed to prove intention to avoid or reduce charges payableS. 423 of the Insolvency Act 1986Assets transferred at an undervalueNeed to prove the intention was to put them out of reach of a creditor or future creditorCourt has wide discretion as to remedy
11 Contractual promises to pay Not tested but theoretically possiblePromise to pay charges from the funds received on behalf of the person receiving careWording would need to be clear and transparentConsideration is in accepting information and promise and processing financial assessmentMay provide basis for forbearance to sue agreement which is itself a binding contract
12 Common Problems with Evidence Poor quality evidenceEspecially true of invoicesLack of correspondenceFlaws in the original assessmentFailure to carry out reviewsNo record of reasons for decisions
13 Enforcement Execution against goods (Bailiffs) Charging Orders Attachment of EarningsThird Party Debt OrdersCourt QuestioningBankruptcy
15 Some Specific Problems Payment of rent to family membersUnofficial attorneysRegistration of HASSASSA chargesDraft Care and Support Bill
16 Rent to Family MembersNot appropriate where the person is in residential careNon-residential care guidance does not contemplate such a situationNeed to examine the circumstances carefullyWhat is the rent for?Is it to contribute towards household expenditure “for their keep”?Is the family member receiving reduced Housing Benefit because another adult is living in the property?Is it a contribution towards the rent or mortgage for a larger property so that the person can be accommodated?It might be a mixture of the above.
17 Principle is whether the rent is in reality replacing normal expenditure Can it be expected to be provided from the basic protected incomeIf the person to whom the rent is being paid were not a relative would it be allowed as a housing expense?Balance between being alert for sham rental payments and not preventing families from adopting sensible financial arrangementsSimilar approach needed for loan repayments especially where the loan was taken out to pay for necessary adaptations
18 Registration of HASSASSA Charges S. 22 HASSASSA (1) Subject to subsection (2) below, where a person who avails himself of Part III accommodation provided by a local authority in England, Wales or Scotland—(a) fails to pay any sum assessed as due to be paid by him for the accommodation; and(b) has a beneficial interest in land in England or Wales,the local authority may create a charge in their favour on his interest in the land.(2) In the case of a person who has interests in more than one parcel of land the charge under this section shall be upon his interest in such one of the parcels as the local authority may determine.(2A) In determining whether to exercise their power under subsection (1) above and in making any determination under subsection (2) above, the local authority shall comply with any directions given to them by the Secretary of State as to the exercise of those functions.(3)(4) Subject to subsection (5) below, a charge under this section shall be in respect of any amount assessed as due to be paid which is outstanding from time to time.
19 (5) The charge on the interest of an equitable joint tenant in land shall be in respect of an amount not exceeding the value of the interest that he would enjoy in the land if the joint tenancy were severed but the creation of such a charge shall not sever the joint tenancy.(6) On the death of an equitable joint tenant in land whose interest in the land is subject to a charge under this section—(a) if there are surviving joint tenants, their interests in the land; and(b) if the land vests in one person, or one person is entitled to have it vested in him, his interest in it,shall become subject to a charge for an amount not exceeding the amount of the charge to which the interest of the deceased joint tenant was subject by virtue of subsection (5) above.(7) A charge under this section shall be created by a declaration in writing made by the local authority.(8) Any such charge, other than a charge on the interest of an equitable joint tenant in land, shall in the case of unregistered land be a land charge of Class B within the meaning of section 2 of the Land Charges Act 1972 and in the case of registered land be a registerable charge taking effect as a charge by way of legal mortgage.
20 Registration with the Land Registry Straight forward where land registered in sole name of the person in residential careRegistration may reveal a dispute as to the true beneficial owner and may lead to proceedings before an AdjudicatorUnlikely to be possible to register the charge where land jointly ownedAn unregistered HASSASSA Charge is an equitable interest in land and requires a different enforcement route
21 Restriction in the form below appears to be the best that can be entered on the land register where the land is jointly owned and the HASSASSA charge applies to only one of the owners“No disposition of the registered estate is to be completed by registration without a certificate......that written notice of the disposition has been given to …. being the person with the benefit of a charge arising under s22 of the Health and Social Services and Social Security Adjudications Act 1983
22 Equitable ChargesThe holder of an equitable charge has an interest in the propertyOthers will also have interestsAny person with an interest in property can make an application under s.14 Trusts of Land and Appointment of Trustees Act 1996 (TOLATA)The court may order the property to be soldThe court will consider the matters set out in s. 15 TOLATA includingThe purpose for which the property is heldThe welfare of any child who lives in the propertyThe interests of any secured creditorsThe circumstances and wishes of others with an interestThe interests of others may prevail
23 Relationship with Deferred Payment Agreements HASSASSA Charges should not be used where the resident is willing to pay the assessed charge but is unable to do so until property is sold (LAC(2001)15)There is a duty to offer Deferred Payment AgreementsThe DPA is a binding agreement so avoids later disputesIn DPA cases the charge cannot be enforced until 56 days after deathA DPA offer may reveal a dispute as to beneficial ownershipIt is better to resolve the dispute sooner rather than later
24 Unofficial Attorneys No formal authority to act on the person’s behalf Many thousands of such people assist friends and relatives without any problems whatsoeverWhere issues arise, important to consider whether there are real safeguarding concernsIf income is being spent by the unofficial attorney without paying the assessed charges:Does the person have capacity – if not, an application should probably be made for a corporate appointee and/or a financial deputyIf the person has capacity, have they consented to their money being spent in this way – there may be a need for safeguarding measuresIf the person with capacity has authorised the unofficial deputy to spend their money without paying the care fees, take enforcement action.
25 Draft Care and Support Bill Currently out for consultation – closes todayIntended to consolidate the various different pieces of legislation dealing with care and support for adultsIntended that the same standards and criteria will apply throughout EnglandIncludes consolidation of charging regimes for residential and non-residential careRegulations will specify how the needs assessments and care plan are producedSome important financial aspects of current draft bill
26 Mandatory to offer DPA to those who meet set criteria Self funders can ask for services to be provided by the local authorityDifference in rates charged by many care homes makes it financially advantageous to have a service through the local authorityIncrease in number of full cost assessmentsPotential increase in the number of debtorsMandatory to offer DPA to those who meet set criteriaCannot claim for the debt if DPA should have been offered unless it was actually refusedWill be regulations permitting some interest and administrative costs to be charged on DPA
27 As currently drafted no equivalent to HASSASSA charges Potentially more debtors and no securityEnforcement by possession proceedings will only be available under the DPA chargeThat will usually be after deathLong timetable for implementationIntroduced to parliament in Autumn 2013Intended to complete its passage in Autumn 2014For implementation in 2015Lobbying is likely to result in some changes to the detail