Summary: Mr and Mrs C complained about the way in which the Council carried out Ms M’s financial assessment for residential care. They say the Council should not have included a value for Ms M’s share in a property and it took too long before the Council provided a response to their appeal. The Ombudsman found fault with the way in which the Council processed the appeal, which resulted in avoidable delay and distress. However, the Council acted correctly by getting an independent valuation of Ms M’s share.

The complaint

1. The complainants, whom I shall call Mr and Mrs C, complained to us on their own behalf, and on behalf of Mrs C’s mother, whom I shall call Ms M. Mr and Mrs C complain that the Council’s decision to include £67,500 as part of Ms M’s financial assessment for residential care is wrong. Further, there was an unreasonable delay by the Council in arriving at a decision on the appeal they made on 21 December 2018. This resulted in distress and having to incur legal costs.

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The Ombudsman’s role and powers

2. We investigate complaints about ‘maladministration’ and ‘service failure’. In this statement, I have used the word 'fault' to refer to these. We must also consider whether any fault has had an adverse impact on the person making the complaint. I refer to this as ‘injustice’. If there has been fault which has caused an injustice, we may suggest a remedy. (Local Government Act 1974, sections 26(1) and 26A(1), as amended)
3. We cannot question whether a council’s decision is right or wrong simply because the complainant disagrees with it. We must consider whether there was fault in the way the decision was reached. (Local Government Act 1974, section 34(3), as amended)
4. If we are satisfied with a council’s actions or proposed actions, we can complete our investigation and issue a decision statement. (Local Government Act 1974, section 30(1B) and 34H(i), as amended)

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How I considered this complaint

5. I have considered the information I received from Mr and Mrs C and the Council. I shared a copy of my draft decision statement with them, and considered any comments I received, before I made my final decision.

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What I found

What should have happened

6. The Care Act Guidance Annex B “Treatment of Capital” says that:
• 14) A council will need to work out what value a capital asset has in order to take account of it in the financial assessment. Valuation must be the current market or surrender value of the capital asset, for example, property, whichever is higher, minus the following:
1. 10% of the value if there will be any actual expenses involved in selling the asset, for instance legal fees to sell a property.
2. Any outstanding debts secured on the asset, for example a mortgage.
• 15) The current market value will be the price a willing buyer would pay to a willing seller. The way the market value is obtained will depend on the type of asset held.
• 16) If the person and the assessing officer both agree that, after deducting any relevant amounts set out in paragraph 14, the total value of the person’s capital is more than the upper capital limit of £23,250, then it is not necessary to obtain a precise valuation. If there are any disputes, a precise valuation should be obtained.
• 17) Where a precise valuation is required, a professional valuer should be asked to provide a current market valuation. Once the asset is sold, the capital value to be taken into account is the actual amount realised from the sale, minus any actual expenses of the sale.
• 18) Where the value of a property is disputed, the aim should be to resolve this as quickly as possible. Council’s should try to obtain an independent valuation of the person’s beneficial share of the property within the 12-week disregard period where a person is in a care home. This will enable councils to work out what charges a person should pay and enable the person, or their representative, to consider whether to seek a deferred payment agreement.

What happened

7. Mr and Mrs C bought a property in 2015 with Mrs C’s mother (Ms M); they all have an equal share in the property. They say they bought the property with the intention of providing them all with a home for life. However, Ms M had to move into a care home at the end of 2018, due to her declining health.
8. Ms M’s temporary residential care started on 6 December 2018 and the financial assessment visit took place six days later. The assessor established there was a mortgage on the property and Ms M owned one third of the property. The Council concluded that Ms M’s share of the property had a value of £133,000. This meant her capital was above £23,250 and she would therefore have to pay the total cost of her care home fees.
9. The Council told me that it calculated this as follows:
• The estimated value of the property was £400,000.
• One third of this was £133,333.
10. Based on the Council’s explanation, the estimate failed to include:
• A deduction of the mortgage £171,000
• A 10% deduction (see paragraph 16 and 36).
11. While it was not necessary in this case to come to an exact valuation yet, my view is the assessor nevertheless failed to provide a reasonable estimate of the current market value of Ms M’s share. The current market value is the price a willing buyer would pay to a willing seller. In this case, the assessor failed to establish and consider that Mr and Mrs C were living in the property and they were unwilling to buy Ms M’s share of the property. It is known that, in such circumstances, the market value of Ms M’s share would be (significantly) less than simply one third of the total estimate value of the property.
12. The Council sent the outcome of the financial assessment to Mr and Mrs C in December 2018. However, Mr and Mrs C were unhappy with the Council’s decision and appealed it on 21 December 2018. They obtained legal advice from a solicitor, who said the actual market value of Ms M’s share in the property should be ‘Nil’, because her share could not be sold on the open market. Mr and Mrs C based this on case law (The Chief Adjudication Office v Palfrey (1995) and said the circumstances in that case were very similar to theirs.
13. Mr and Mrs C chased a response on 16 January 2019. The Council passed the case to its legal team on 30 January 2019, and updated Mr and Mrs C accordingly.
14. Mr and Mrs C chased the Council on 8 March 2019 to ask for an update and asked it to provide more clarity about the timeframe. The Council responded the same day and said the matter was currently with the Adult Social Care and Legal department who were looking into obtaining an independent valuation of the property.
15. The complainants’ solicitor wrote to the Council on 26 March 2019. In the letter, the solicitor compared Ms M’s case to case law (the “Palfrey case). The solicitor argued that, in the Palfrey case, the Court of Appeal confirmed that:
• The correct approach is to look at the current market value of a share in a property. However, the court felt that, with the facts before them, there would be no market for Mr Palfrey's share of the property. The court’s reasoning was that: Mr Palfrey’s daughter (the co-owner) had no intention of buying her father's share of the property, and no outsider would be willing to buy into a house whose occupation would have to be shared with the daughter
• Although Mr Palfrey was no longer present at the property, where a capital asset is a jointly owned property held for the purpose of accommodating the joint owners and that purpose is on-going, the sale of the house cannot be enforced.
• For those reasons, Mr Palfrey's beneficial interest in the property only had a nominal value.
16. The Council said it would look into this and provide a response by 2 April 2019. The Council provided an update on 3 April, which said it had been actively liaising with its legal service and financial department to provide a joint response.
17. At this point in time, the Council had not yet proceeded with an independent valuation, as required under Annex B of the Statutory Guidance, because there was uncertainty about which budget/department had to pay for this.
18. The Council contacted the Valuation Office Agency (VOA) for an independent valuation, and updated Mr and Mrs C on 12 April 2019. The VOA surveyor subsequently asked the Council for some extra information, before he could carry out his valuation.
19. The Council sent the required information to the VOA on 26 April 2019. However, it appeared on 1 May 2019 that the Surveyor needed further information. The Council subsequently asked Mr and Mrs C for information that the Council already had, namely the co-owners (Mr and Mrs C) live at the property. The Council provided the extra information to the VOA on 20 May 2019.
20. The Council chased the VOA for an update on 17 June and received a copy of the Valuation Report two days later. The report said that:
• The total value of the property was £565,000 - £171,000 = £394,000.
• Ms M’s one third share had a market value of £75,000.
• Minus 10% = £67,500.
21. The Council responded to the appeal on 21 June 2019. It said, among others, that:
• In view of the dispute raised, and in accordance with Annex B of the Care and Support Statutory Guidance (18), the Council asked for an independent valuation of the property share held by Ms M. The valuation established the market value of the share would be £67,500, which the Council would include as part of Ms M’s financial assessment.
• Mr and Mrs C could consider a deferred payment agreement on behalf of Ms M.
22. The complainants appealed the Council’s decision on 3 July 2019. As such, the Council decided it would contact the Surveyor to comment on Mr and Mrs C’s view that the report had not specifically referred to the Palfrey case.
23. The Council provided its final response on 15 July 2019. In it, the Council said that it had received the following response from the senior surveyor who completed the valuation:
• The `Palfrey` case concerned the half share of a family residence in which the co-owner`s interest was held to be nominal value, although it could change if the house was subsequently sold. The case related to a family house with an estimated market value of £40,000 only (£31,893 after deducting mortgage and expense fees). It was therefore felt in that case that it was unlikely that an `outside` investor would be willing to acquire a half share into the property due to the risks involved with relatively little financial advantage. Therefore, with little market the beneficial interest would effectively be nil.
• The Palfrey case emphasised the decision was purely based on the facts of the case and should not be applied in general across the board, with each case having to be determined on its own merits. Where co-owners are unwilling/unable to purchase the share, the value of the beneficial interest in the property will depend on whether there is a market. In relation to Mr and Mrs C’s property: property is a character period building in a good location, which would help to increase demand and potential financial advantage. Reviewing sales evidence, there are Auctioneers specialising in the sale of similar part interests where family members continue to reside at the property rent free, indicating there is a market for a part share in such a property.
24. Mr and Mrs C subsequently referred the case to the Ombudsman.
25. The Council has told me that:
• It acknowledges there was a delay in reaching a decision. This delay was due to the fact the Council did not have a clear process for obtaining an independent valuation, when applying Annex B of the Care and Support Statutory Guidance (2018). The Council has learned from this case and has now established a process to prevent such delays occurring in the future. The Council is currently revising the Financial Assessment Guidance.
• Once it received the independent valuation report, it was challenged in further correspondence from the complainants’ Solicitors. As such, it took time to clarify the Council’s position, by obtaining advice from the Council’s Legal Services and the Surveyor who conducted the independent valuation.
• It would like to issue a further apology for the protracted way in which it handled this case, causing distress to those concerned.
• Taking all things into consideration, and in recognition of the delays, the Council would like to offer a goodwill gesture payment of £250 to the complainant.
• This case has set a precedence that Adult Social Care will be responsible for such costs.

Assessment

26. As mentioned in paragraph 10 and 11 above, there was fault with the way in which the Council arrived at an estimate for the market value of Ms M’s share in the property.
27. The Council has acknowledged there was an unreasonable delay in going through the appeals process. There was a two months delay with involving the VOA and it took a further month until the Council had provided all the information the VOA needed.
28. However, once the Council received the valuation report from the VOA, it issued its appeals response in a timely manner. It also provided a prompt response to Mr and Mrs C’s subsequent appeal on 3 July 2019.
29. The Ombudsman cannot question whether a council’s decision is right or wrong simply because the complainant disagrees with it. The Ombudsman must consider whether there was fault in the way the decision was reached. Although there was an unreasonable delay in carrying out the valuation, the Council has followed the relevant guidance. The Council has considered the information and arguments Mr C and Mrs C have provided, obtained legal advice and instructed the VOA to carry out an independent valuation of Ms M’s property share. As I did not find fault with the process through which the Council arrived at a final valuation of Ms M’s share in the property, I cannot challenge the merits of the Council’s decision (see paragraph 3).
30. If Mr and Mrs C believe the Council was at fault in the way it has interpreted relevant legislation and case law in this specific case, then this would be a matter for the courts to decide, not the Ombudsman.

Agreed action

31. I recommended that, within four weeks of my decision, the Council should:
• Apologise to Mr and Mrs C for the faults identified above, the delays that occurred, and the distress this has caused them. It should also pay the £250 the Council has proposed to remedy this injustice.
• Review the process it has now put in place to deal with these type of circumstances, to ensure that it deals with these type of cases in a timely manner, by: obtaining all the relevant information during the financial assessment itself, arriving at a reasonable estimate for the market value of the relevant share, and providing all the relevant information needed by the VOA in a timely manner (for instance by developing a template).
• Share the faults identified in paragraph 10 and 11 with all staff involved with providing estimates of the value of property (shares).
32. The Council told me it has accepted my recommendations

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Draft decision

33. For reasons explained above, I found there was fault with the way the Council dealt with Ms M’s financial assessment/appeal. I am satisfied with the actions the Council will carry out to remedy this and have therefore decided to complete my investigation and close the case

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Investigator's decision on behalf of the Ombudsman