Summary: Mr X complained about the Council’s decision that his brother had deprived himself of capital to avoid care charges. We found the Council was not at fault in how it reached this decision. However, there were delays in the process and the Council failed to direct Mr X to its complaints procedure. The Council agreed to apologise and revise its practice guidance.

The complaint

1. Mr X complains on behalf of himself and his brother, Mr Y, that the Council:
• did not properly consider what Mr Y’s share was of the property which he jointly owned with Mr X.
• did not give Mr X an opportunity to complain about this but directed him straight to the Ombudsman.
2. Mr X says the Council’s approach caused two years of dispute and considerable stress, uncertainty and unnecessary legal costs to them both. He would like the Council to withdraw its allegation of deprivation of assets and apologise to them.

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The Ombudsman’s role and powers

3. 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)
4. 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)
5. We may investigate matters coming to our attention during an investigation, if we consider that a member of the public who has not complained may have suffered an injustice as a result. (Local Government Act 1974, section 26D and 34E, as amended)
6. 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

7. I have considered the complaint made by Mr X and the documents he provided.
8. I considered the Council’s comments about the complaint and the documents it provided in response to my enquiries.
9. Mr X and the Council had an opportunity to comment on my draft decision. I considered any comments received before making a final decision.

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What I found

Law and guidance

Charging for permanent residential care

10. The Care Act 2014 and the associated Care and Support Statutory Guidance (“the guidance”) set out the rules councils must follow when completing a financial assessment to decide how much a person must pay towards the costs of their residential care.
11. The law states that people who have over the upper capital limit (currently £23,250) should pay the full cost of their residential care home fees. Once their capital has reduced to less than the upper capital limit, they pay an assessed contribution towards their fees.
12. The guidance says a person may wish to complain about any part of the financial assessment or how a council has chosen to charge. Where a council has set up a panel to deal with financial assessment or charging issues, it should remind the person they still have access to the statutory complaints procedure.

Treatment of capital

13. Annex B of the guidance tells councils how to treat capital assets such as property. Usually, property belongs to the person in whose name it is held, the legal owner. Where there is a dispute about ownership, councils should seek written evidence to prove where ownership lies. Where there is joint ownership, the total value should be divided equally between the owners, unless there is evidence the person owns an unequal share.
14. Councils need to work out the value of the capital asset to take account of it in a financial assessment. Valuation must be at the current market value, minus 10% to account for the cost of selling the asset, and any outstanding debts secured against it, such as a mortgage.
15. Where there is a dispute about the value of a property, councils should aim to resolve this as quickly as possible. They should seek an independent valuation of the person’s share of the property.

Deprivation of assets

16. Annexe E of the guidance covers the deprivation of assets. The guidance states the following.
• When completing or reviewing a financial assessment, a council may identify circumstances that suggest a person may have deliberately deprived themselves of assets to reduce their contribution towards the cost of their care.
• People should be treated with dignity and respect and be able to spend the money they have saved as they wish. But it is important to the overall affordability of the care and support system that people contribute to the care costs they are responsible for. A council should therefore ensure people are not rewarded for trying to avoid paying their assessed contribution.
• Councils should not automatically assume deprivation. There may be valid reasons someone no longer has an asset and a council should ensure it fully explores this first.
• Deprivation of assets means a person has intentionally deprived or decreased their overall assets to reduce the amount they pay towards their care. This means they must have known they needed care and support and have reduced their assets to reduce the contribution they make towards the cost of that care and support.
• A person can deprive themselves of capital in many ways, but common approaches may include transferring the title deeds of a property to someone else.
17. A council should consider the following before deciding whether there has been deprivation to avoid care and support charges:
• whether avoiding the care and support charge was a significant motivation in the timing of the disposal of the asset.
• at the point the capital was disposed of could the person have a reasonable expectation of the need for care and support.
• did the person have a reasonable expectation of needing to contribute to the cost of their eligible care needs.
18. If a council decides a deliberate deprivation of assets has taken place, the council should charge the person as if the deprivation had not occurred.
19. If the person has transferred the asset to a third party to avoid the charge, the third party will be liable to pay the council the difference between what it would have charged and what it did charge the person receiving care.

What happened

20. Mr X and Mr Y are brothers. In 2012, they bought a house. Mr X paid for his half in cash and secured a mortgage with Mr Y for the other half. Mr Y lived in the property and paid the monthly mortgage repayments. In 2015 his daughter, Ms Z, moved in with him.
21. Mr Y suffered a stroke in 2017 and spent time in hospital. The Council carried out a social care assessment. As part of this, it assessed Mr Y’s capacity to make decisions about his property and finances and decided he lacked capacity. Ms Z and her brother had arranged joint lasting power of attorney to act on Mr Y’s behalf. The Council has provided evidence Ms Z was aware of the costs of care while visiting potential care homes for her father.
22. In January 2018, Ms Z provided information for a financial assessment of her father. She said the property was valued at £237,000. She provided a ‘memorandum of agreement’ which said Mr X held a 75% share of the property, and Mr Y held 25%. Although this was signed by Mr Y, it was when he was deemed to lack capacity to make decisions about his property and finances.
23. Mr Y’s family said the original mortgage on the property had been taken out jointly but Mr Y made all the repayments. However, as Mr Y could not afford to pay rent to Mr X alongside the mortgage repayments, the brothers agreed Mr Y would hold a minority share to compensate Mr X for this loss.
24. In March 2018, Ms Z said her father was no longer able to pay the mortgage on the property. She said she was trying to raise a mortgage to buy her father’s 25% share of the property.
25. The Council asked Mr X for evidence of the agreement to reduce Mr Y’s share of the property. The only record available was from the Land Registry which listed both brothers as owners but did not set out any details about their share.
26. In early April, the Council told Mr X it was concerned about a deprivation of assets. It said the ‘memorandum of agreement’ was signed when Mr Y lacked capacity, after it had become clear he would need care and support and the family knew it would have to be paid for.
27. Around this time, the Council assessed Mr Y’s capacity again. It found he now had capacity to make decisions about his finances and property. He confirmed he had a long-standing agreement with Mr X to split the property 25%/75% in Mr X’s favour.
28. The Council agreed to fund Mr Y’s care fees while it resolved the financial situation.
29. In July 2018, Ms Z secured a mortgage to buy 25% of the property from Mr Y.
30. The Council referred Mr Y’s case to its deprivation of assets panel in November 2018 to review the evidence. Because of a delay in securing evidence from Mr X, the panel considered the case in January 2019. The Council wrote to Mr X’s solicitor in February outlining its view of the case and providing evidence of the previous mental capacity assessment which indicated Mr Y lacked capacity.
31. A different solicitor, acting on behalf of Mr Y and Ms Z, contacted the Council. The panel discussed the case again in February and May. Communication between the Council and the solicitors continued.
32. In August 2019, the Council told Mr Y it would be making a final decision about deprivation of assets in September and asked him to provide any final evidence he wanted considered. Ms Z submitted her own final evidence before the panel met.
33. The Council considered Mr Y’s case at its deprivation of assets panel. The Council wrote to Mr Y with its decision. It set out the background to the case and the evidence it considered. The panel decided there had been a deprivation of assets. It told Mr Y it would assess him for contributions to the cost of his care as if he still had the asset. It directed Mr Y to the Ombudsman if he was unhappy.
34. The Council also wrote to Mr X. It said he would be required to pay the difference between what the Council would have charged for Mr Y’s residential care if he had not disposed of the asset and what he was charged. It directed Mr X to the Ombudsman if he was unhappy.
35. In October, Mr X and Ms Z sold the house for £240,000.
36. Mr X complained to the Ombudsman in December. In the same month, he provided contemporaneous evidence to the Council from the solicitor who had carried out the conveyancing on the property in 2012. This showed the agreement was for Mr X to own 60% of the property and Mr Y to own 40%. Mr X offered to pay £27,000 to Mr Y to settle the dispute over financial contributions.
37. The Council disagreed with Mr X’s calculations. It said it had agreed to base its calculations on a net property value of £200,000, based on what Ms Z paid for her 25% share. It said based on the 60/40 split, Mr X needed to pay Mr Y 15% of the net value, which was £30,000.
38. At the end of January 2020, Mr X transferred £30,000 to Mr Y’s account.

Analysis

My role is to decide whether there has been fault in the Council’s decision making

39. process. It is not to decide whether deprivation of assets occurred.
40. The Council considered all the evidence provided by Mr X, Mr Y and Ms Z and weighed this in its decision making. While it did not share its reasoning in detail with Mr X, I do not consider this to be fault. It provided a detailed explanation to Mr Y, who had then been assessed as having capacity.
41. The guidance says the Council can consider a joint asset to be owned in equal share unless there is evidence to the contrary. In this case, the family did not provide contemporaneous evidence of Mr Y’s unequal share in the property until December 2019.
42. I found no fault in how the Council decided this was a case of deprivation of assets.
43. The guidance says councils should seek an independent valuation if there is dispute about the value of the property. Although the Council considered Ms Z had bought her share of the property at an undervalue, it accepted this valuation for the purpose of calculating contributions to the cost of Mr Y’s care. As there was no dispute about the value of the property, there was no need to seek an independent valuation. Mr X and Ms Z sold the property for a higher price than the Council’s valuation. I do not find fault with the Council.
44. The Council says as it has a robust process in place to consider potential cases of deprivation of assets, decisions of the panel are final and they cannot be subject of complaint or appeal. However, the guidance is clear that where decisions are made by a panel, people should have recourse to the complaints procedure. This was fault.
45. I do not consider this caused Mr X or Mr Y an injustice. Given I have not found fault in the way the Council reached its decision about deprivation of assets, it is unlikely further investigation by the Council would have led to a different result in this case.
46. However, it is possible other people have been caused an injustice by the Council’s policy of not investigating complaints about decisions made by the deprivation of assets panel. I have made a recommendation below to address this.
47. The Council accepts it took a long time to resolve this case and there were periods where the investigation drifted. In response to my enquiries, it said it would like to apologise to Mr Y and his family for any distress caused by this. Having reviewed the records, I can see some periods of delay were caused by a lack of response from Mr X, Ms Z or their representatives to queries from the Council. At other times the Council prioritised resolving issues with Mr Y’s residential care. I am satisfied an apology is appropriate to remedy the injustice in this case.

Agreed action

48. Within one month of this decision, to remedy the injustice in this case, the Council will:
• Apologise to Mr X and Mr Y for the frustration caused by the delays in this case.
• Revise its practice guidance on deprivation of assets to ensure it includes reference to the statutory complaints procedure.

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Final decision

49. I have completed my investigation with a finding of fault for the reasons explained in this statement. The Council has agreed take action to remedy the injustice caused by the fault.

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Investigator's decision on behalf of the Ombudsman