Stephenson, R (on the application of) v Stockton On Tees Borough Council

Lord Justice Wall :

The appeal

1 With permission granted at an oral hearing on 8 April 2005 by Waller LJ, Mrs. Evelyn Stephenson appeals against Keith J’s dismissal on 12 October 2004 of her claim for judicial review of a decision made by the Respondent to this appeal, Stockton-on-Tees Borough Council (the council), that disability related expenditure paid by the appellant to her daughter Diane Pennock was to be disregarded when assessing the appellant’s net income for the purpose of deciding how much she should pay towards the home care support provided for her by the council. The judge also dismissed a further claim relating to special equipment purchased by the appellant, which she does not seek to appeal.

The facts

2 I can do no better than to take the facts as they were at the date of the hearing before Keith J from the first five paragraphs of his clear and well-structured judgment.

1. The Claimant, Mrs Evelyn Stephenson, is 78 years old. She lives alone in warden-controlled sheltered accommodation which she rents from the Defendant, Stockton-on-Tees Borough Council ("the council"). She is in poor health, and is virtually housebound as a result. She receives a severe disability premium and an attendance allowance to enable her to pay for her additional needs.

2. In addition, the Council provides her with home care support four times a day. Carers help her to get washed and dressed, they prepare her meals for her and do some housework for her. Her needs were recently assessed by the Council and the care plan produced as a result of that assessment suggested 13¾ hours of home care support each week.

3. Mrs Stephenson is fortunate to have much support from her daughter, Mrs Diane Pennock, who is an experienced nurse. Mrs Pennock does many of the things which Mrs Stephenson's carers do not do. For example, she does Mrs Stephenson's laundry and ironing, she deals with her correspondence and finances, she does some of the housework which the carers do not do, and she looks after her feet and cuts her nails. In addition, she takes Mrs Stephenson out in her car once a week. In that way, Mrs Stephenson can regularly see her elderly brother, and can do her own shopping.

4. Mrs. Pennock used to work a normal working week. In October 2002, she decided to reduce her working week to thirty hours over four days in order to spend more time with her mother. Mrs Stephenson was unwilling to let Mrs Pennock do that without at least partly compensating her for her loss of earnings. It was agreed that Mrs Stephenson would pay her £45.00 a week for the care which she was providing. In August 2003, Mrs Pennock stopped working even a four day week. This allowed her to spend even more time with her mother, and she now looks after her mother for at least two days a week.

5. The Council charges Mrs Stephenson for the home care support it provides. Those charges take into account Mrs Stephenson's income. In assessing what her income is, the Council took into account the severe disability premium and attendance allowance which she was receiving. It then had to decide what Mrs Stephenson's expenditure was in respect of her disabilities, because the Council proposed to reduce the amount which her income was assessed as being by the amount of that expenditure. In determining what that expenditure was, the Council ignored the £45.00 a week which Mrs Stephenson was paying to her daughter. That approach was in accordance with the Council's policy, when assessing income, of not taking into account the cost of care provided by a family member. That policy is challenged on this claim for judicial review. There is also a challenge to some aspects of the calculation of Mrs Stephenson's expenditure in respect of her disabilities.

3. At the outset of the appeal, we were informed by counsel for the appellant, Mr Ian Pennock, that since the date of the judgment the appellant had moved to different accommodation outside the council’s catchment area, and was thus no longer receiving the thirteen and three quarter hours of home care support for which the council had been charging. For the council, Mr. Clive Sheldon argued that this rendered the appeal academic, but that insofar as there were arrears due from the appellant to the council (the appellant not having paid the increased charges consequent upon the council’s implementation of the £45 per week disregard) the council was prepared to waive them if the appeal was withdrawn. That, however, was not a course which was acceptable to Mr. Pennock, who argued that a point of principle and of some general importance to local authorities was involved. We accordingly heard the appeal on its merits.

4. The only relevant point which does not emerge from the facts as stated by the judge in paragraphs 1 to 5 of his judgment is that at the material time Diane Pennock lived some 40 miles from the appellant’s accommodation, and that a two hour journey by car each day was involved when she visited the appellant.

The statutory framework

5. The council was not obliged by law to seek to recover from the appellant the cost of the home care support it provided for her. However, it plainly had the power to do so. Once again, I gratefully adopt the judge’s succinct summary: -

6. Section 17(1) of the Health and Social Services and Social Security Adjudications Act 1983 gives local authorities "providing a service to which [section 17] applies [the power to] recover such a charge (if any) for it as they consider reasonable". It has not been suggested that the services provided by the Council to Mrs Stephenson are not services to which section 17 relates. Section 17(3) provides relief for persons who may not be able to pay for such services. It provides:

"If a person

(a) avails himself of a service to which this section applies, and

(b) satisfies the authority providing the service that his means are insufficient for it to be reasonably practicable for him to pay for the service the amounts which he would otherwise be obliged to pay for it,

the authority shall not require him to pay more for it than it appears to them that it is reasonably practicable for him to pay."

It has not been suggested that Mrs Stephenson's means are insufficient for it to be reasonably practicable for her to pay what the Council is charging her for the services which it provides to her .

7. In Avon County Council v Hooper [1997] 1 WLR 1605 , Hobhouse LJ (as he then was) said at p. 1610B that "there is an overriding criterion of reasonableness which governs the local authority's exercise of the power which is given by subsection (1)". That was said in the context of the issue in that case, which was whether the local authority should have exercised its power to charge for the services which it provided at all. In the present case, it is not suggested that it is unreasonable for the Council to charge Mrs Stephenson for the services provided to her. It is the amount of the charge which is in question. Since the Council can recover such charge "as they consider reasonable", it is for the Council to determine what amount is reasonable, and its view as to what is reasonable can only be interfered with on conventional public law grounds. This analysis was not disputed by Mr. Ian Pennock for Mrs. Stephenson.

8. However, that is subject to section 7(1) of the Local Authority Social Services Act 1970 , which provides:

"Local authorities shall, in the exercise of their social services functions, including the exercise of any discretion conferred by any relevant enactment, act under the general guidance of the Secretary of State."

The Guidance

6. The relevant guidance for local authorities issued by the Secretary of State is contained in a document entitled Fairer Charging Policies for Home Care and other non-residential Social Services which was issued in September 2003. As the judge pointed out, the guidance contains no reference to whether the cost of care provided by a family member should be treated as relating to the recipient’s disability. That said, the relevant extracts from the guidance are the following: -

(i) "For users who receive other income in addition to Income Support ….. taking them above the basic levels, (usually disability-related benefits such as Attendance Allowance (AA) ….. but also including SDP [severe disability premium]) councils may choose: either to exempt such users from charges regardless of their additional income, or to include the user's overall income within a charge assessment. Where councils choose the latter, the aim should be to ensure that any charge levied does not reduce the user's net income below basic levels of income support …. plus 25% (para 22)

(ii) "[Severe disability premium and attendance allowance] may be taken into account as part of a user's income – although it is open to councils not to do this. Where these benefits are taken into account, councils should be guided by the overriding principles that charges:

-do not reduce the user's net income below basic levels of income support, plus 25% and

-do not result in the user being left without the means to pay for any necessary care or support or for other costs arising from their disability" (para. 32).

(iii) "This aim is best achieved through charge assessments, which assess both the resources and expenditure of the user – expenditure should include any disability-related expenditure. Councils are expected to assess disability-related expenditure specifically for all users whose disability-related benefits are taken into account as income” (para 33)

(iv) "It is not possible to give a completely comprehensive list of disability-related expenditure, which could legitimately be claimed for. Councils will need to develop local policies consistent with this guidance ….. The overall aim should be to allow for reasonable expenditure needed for independent living by the disabled person. Items where the user has little or no choice other than to incur the expenditure, in order to maintain independence of life, should normally be allowed” (para 44)

(v) "The process of assessment and claiming for items of disability-related expenditure should not be made unduly complex, particularly for users without high care needs ….. The approach should support self-assessment by the user as much as possible, taking a holistic view of the user's finances and personal needs, both to support the user's own independence of living and to ensure that any charge assessed is reasonable” (para 45).

(vi) "In assessing disability-related expenditure, councils should include the following: …..

(vii) "Costs of infrequently purchased equipment will normally be annualised or amortised over a reasonable period for replacement and divided into a weekly equivalent" (para. 48).

7. The judge accurately summarised the effect of the guidance in the following paragraph: -

10. Thus, what the guidance contemplates is that if a local authority decides to charge for a particular service, it should assess what the recipient's income is. In making that assessment, it should decide whether to include in the recipient's income any severe disability premium or attendance allowance which the recipient is receiving. If it decides to include those benefits in the recipient's income, it should assess what the recipient's expenditure relating to his or her disability is, and reduce the amount which the recipient's income is assessed as being by the amount of that expenditure. However, the result of that assessment should leave the recipient with a basic level of income (plus a buffer of 25%), and should not leave him or her "without the means to pay for any other necessary care or support". It is not suggested that the assessment left Mrs Stephenson with an income which was less than the basic level of support (plus a buffer of 25%), or without the means to pay for necessary care or support.

The policy of the council

8. The council decided to charge for the services which it provided, and to take the recipient’s income into account in deciding what charges to impose. The judge summarised the position in the following way: -

11……. It (the council) decided to include any severe disability premium and attendance allowance received by the recipient in the recipient's income, and to take the recipient's expenditure relating to his or her disability into account. It followed the formula of ensuring that the recipient would not be left with less than a basic level of income plus a buffer of 25%. As for the assessment of the recipient's expenditure relating to his or her disability, the council's policy was:

"The council will carry out an assessment of disability-related expenditure to allow reasonable costs to be taken into account before charges are calculated based on the items shown and will consider any other items identified by Service Users."

12. Pursuant to the council's scheme of delegation, the council's Director of Social Services (now known as the Head of the Health and Social Care Service) had to work out the details of how a recipient's expenditure relating to his or her disability was to be calculated in the light of this broad policy statement. Those details were set out in a document headed "Social Services Framework for Disability Related Expenditure". For privately arranged care services, the document read as follows:

"Allow the number of hours identified (and not provided for) at an hourly rate of no more than the current rate Stockton Social Services pay to Independent provider (currently £8.20 per hour)

note

Allowance will not be made if care is provided by a family member.*

* exception to this rule is when the assessment identifies cultural issues."

The council has developed framework guidelines for use by the council’s Assessment Teams (“the framework)”. The framework provides that allowance is to be made for “privately arranged care services”. However, the framework contains a general rule that such allowance is not made if the care is provided by a family member (“the family member rule”). An exception to this rule is when the assessment identified cultural issues.

It is the manner in which the council applied this “rule” to the appellant’s payments to her daughter which is at the heart of this case.

The family member rule: rule or policy?

11. In paragraph 13 of the judgment, the judge recorded the following: -

13. Although the note suggests that the exception to the family member rule will only be permitted where cultural issues come into play, that is not the case. That emerged in correspondence following Mrs Stephenson's internal appeal against the Council's refusal not to take into account the £45.00 a week which she paid to Mrs Pennock. In a letter to Mrs Stephenson's solicitors dated 26 March 2004, the Council's Head of Legal Services wrote:

“….. where care is provided by a family member from necessity, (because of cultural or other exceptional circumstances), rather than by choice, an exception to the general rule will be considered to enable persons of particular racial groups, or with particular needs, fair access to services that meet their special needs. However, if a special need cannot be identified, the exception to the general rule will not apply."

Although there was no evidence to this effect, I was told by Mr Clive Sheldon for the Council that the reason why this was not mentioned in the document referred to in the previous paragraph was because the Council was always willing not to apply the family member rule if exceptional circumstances justified treating someone exceptionally.

12. Finally in relation to the background, it was not disputed by the council that the £45 paid by the appellant to her daughter was expenditure related to her disability. The judge again summarised this very clearly in paragraph 14 of his judgment:

14. The council does not accept that everything which Mrs Pennock does for Mrs Stephenson amounts to care. But it does accept that those things which Mrs Pennock does for Mrs Stephenson which the Council accepts amount to care would, if done by an agency or professional carers, cost Mrs Stephenson more than £45.00 a week. Accordingly, it is common ground that the only reason why the £45.00 was not taken into account by the Council in determining what part of Mrs Stephenson's expenditure related to her disability was because the care was provided to her by her daughter, and because the family member rule therefore applied.

The manner in which the case was advanced to the judge

13. The case was presented to the judge on behalf of the appellant on the basis that the family member policy was irrational. The judge summarised the argument in paragraph 15 of his judgment.

15. Mr Pennock's principal attack on the family member rule was that it was irrational. If a family member provides care which would have been provided by an agency or professional carers, and if the family member is paid by the person to whom the care is provided no more than the agency or professional carers would have charged, why should the cost of that care be treated differently? The Council might well be concerned to avoid fraudulent claims, i.e. claims that the family member makes a charge for the care which is being provided when in truth no such care is being provided or no such charge is being made, or when no such charge would be made but for the fact that expenditure relating to the recipient's disability reduces the recipient's income for the purpose of determining what charges are to be made for home care support. But that concern could be met by the Council deciding each case on an individual basis rather than imposing a blanket ban on the cost of care provided by a family member being taken into account. If the Secretary of State had thought that the adoption by local authorities of the family member rule was appropriate, he could have chosen to provide for it in the guidance. The fact that he did not do so suggests that he thought that the family member rule would be too prescriptive.

14. In my judgment, the judge was entitled to reject the argument based on irrationality for the reasons which he gives in paragraphs 16 and 17 of the judgment: -

16. I cannot go along with these arguments. If the letter of 26 March 2004 is anything to go by, the rationale for the family member rule is that care which is provided by family members is normally provided voluntarily. That is so even if the care which is provided is essential to the disabled person's needs. Care which is given voluntarily is not usually charged for. Thus, if a disabled person chooses to pay for care which the carer would have been prepared to provide without charge, payment for that care should not be treated as expenditure relating to the disabled person's disability. As Mr Anthony Beckwith, the Head of Policy of the Council's Health and Social Care Service, said in para. 5 of his first witness statement:

"It has been a general premise within Social Care nationally that any care provided by close family members is done so on a voluntary basis. Rather as children do not typically pay parents for the care given in childhood it is expected that parents do not pay their children to provide care in later life. Clearly such arrangements may well exist but the view is taken within this Council that there are other means by which a carer can be compensated for providing care especially through benefits."

There may be exceptional cases in which the care has to be provided by a close relative. In those circumstances, the care would be provided (to use the language of the letter of 26 March 2004) "from necessity ….. rather than by choice". Where that is the case, an exception may be made.

17. I do not regard thinking along these lines as irrational. Indeed, there is some support for it in the reference to choice in the sentence in para. 44 of the ministerial guidance that "[i]tems where the user has little or no choice other than to incur the expenditure, in order to maintain independence of life, should normally be allowed". The care which Mrs Pennock provides is extremely important for Mrs Stephenson. It gets her out of the house, it enables her to maintain her links with her brother, and it makes her feel more in touch with the world. And the tasks which Mrs Pennock does for Mrs Stephenson at her home supplements the home care support she receives. But the Council was entitled to assume that the arrangement between Mrs Stephenson and Mrs Pennock was what one might expect within families, namely that Mrs Stephenson did not have to pay Mrs Pennock for what Mrs Pennock was doing for her. Mrs Pennock would have provided this care without charge, and it was Mrs Stephenson who chose to pay her for it. In other words, the Council was entitled to assume that the £45.00 a week was expenditure which she chose to incur. Neither Mrs Stephenson nor Mrs Pennock ever told the Council otherwise, not even when Mrs Stephenson lodged her internal appeal against the Council’s decision.

Was the family member policy properly applied in this case?

15. So far I have travelled comfortably with the judge. However, in my judgment, the failure of the rationality argument is not conclusive against the appellant. I will return later to the question of whether ECHR Articles 8 and 14 are engaged. The critical point of the case, in my judgment, is whether or not the council applied the family member policy lawfully on the facts of this particular case.

17. The facts of this case are highly unusual. No attack was mounted on the bona fides of the agreement between the appellant and her daughter. No dispute arose as to the circumstances in which Diane Pennock gave up firstly full time and then part time employment in order to assist in her mother’s care. Nobody doubted that the appellant’s insistence in paying her daughter was genuine, even if what she paid was only a small proportion of the value of the services Diane Pennock was providing. Nobody challenged the cost to Diane Pennock of the eighty mile round trip to visit her mother. Nobody appears to have evaluated what must have been the enormous psychological benefit to the appellant of a weekly trip out shopping and visiting her elderly brother, a trip made possible only by Diane Pennock’s ability to arrange it around toilet facilities at which she was able to attend to her mother’s needs – something without which the expeditions would have been impossible.

18. The family member policy depends, it seems to me, on the proposition that the family member would normally perform the services voluntarily in any event, and that the recipient of the services would not expect to pay, or be expected to pay for them. Neither proposition appears to apply here. Mrs. Stephenson was only prepared to allow her daughter to reduce her working hours and then give up work on the basis that she compensated her for doing so, albeit to the limited extent to which she was capable. One does not need to consider such an arrangement in contractual terms, or to import into it an intention between Mrs Stephenson and her daughter to create legal relations, in order to advance the proposition that these were services related to Mrs. Stephenson’s disability for which she was paying, and in relation to which it was by no means certain on the evidence that they would have been either instituted or continued voluntarily had Mrs. Stephenson not insisted that they be paid for.

19. In my judgment, these highly unusual factors made it necessary for the council, at the very least, to consider carefully whether or not the circumstances with which it was faced constituted an exception to the family member policy. In my judgment, there is no evidence that it did so.

20. The reasons for the decision under attack are contained in the letter dated 26 March 2004 addressed to the appellant’s solicitors to which reference has already been made. The relevant parts of the letter read: -

Your complaint is: -

1. The council has not acted in accordance with statutory guidance, namely the refusal to take account of disability related expenditure paid to Mrs. Stephenson’s daughter …..

With regard to your first point, the Council has taken account of the disability related expenditure paid by Mrs Stephenson to her daughter. Although I am not clear from the information submitted if this sum is £10.00 or £45.00 per week. However, the list of services provided to Mrs. Stephenson by her daughter and the costs were considered both by the Assessment Team and by the Appeal panel.

The Council’s position is that it does not, as a general rule, allow disability related expenditure for care or services provided by a family member when assessing the service user’s contribution to the care provided by the local authority. I do not consider this practice to be unreasonable. The overall aid of the guidance is to allow for reasonable expenditure needed for independent living. The Council has assessed Mrs. Stephenson’s reasonable weekly disability related expenditure as: -

Special equipment £3.46

Window cleaning £1.50

Excess heating £1.71

Any additional payment Mrs. Stephenson makes to her daughter is not permitted by the Council’s charging policy. In formulating the policy and the framework guidelines for use by the Assessment team, the Council has followed guidance issued by the Department of Health dated September 2003 made under section 7 of the Local Authority Social Services Act 1970. Whilst the Council may allow costs of privately arranged care services as disability related expenditure, it does not regard care provided by a family member as privately arranged care services.

I should also explain that when considering what expenditure is reasonable, the Council will take into account services that form a significant part of the care plan. The Council’s policy is not to restrict what may be allowed as disability related expenditure. Following consultation with users it was decided that “any reasonable disability related expenditure” should be allowed. This is a judgment that the Council has to make. In Mrs. Stephenson’s case the list of disability related expenditure paid to her daughter is not allowed due to the services being provided by a family member. If such services were provided privately, they would need to be reasonably necessary taking into account the care plan before they could be allowed as disability related expenditure.

I therefore feel you disagree with the Council’s judgment in a situation where it has a certain amount of discretion and where it has exercised that discretion reasonably.

(emphases added)

21. In my judgment, the council does not appear to have exercised the discretion to which it refers at all. What it has done is to decide the question on the simple basis that the family member “rule” applied: these were services undertaken by a family member, therefore they did not qualify. It has applied that “rule” rigidly, for although there is a reference in the letter to a consideration of “the list of services provided to Mrs. Stephenson by her daughter and the costs” there is no analysis of the arrangements between Mrs. Stephenson and Mrs. Pennock.

22. It is for this reason that, in paragraphs nine and ten of this judgment, I noted that the both the judge and the council had called the policy the “family member rule”. This reflects the fact that the council has applied the policy in an over rigid fashion, as though it were a rule, and has given insufficient consideration to the question of exceptional or particular circumstances. Thus the letter of 26 March 2004, set out at paragraph 20 above, applies the “general rule”. In my judgment, this has resulted either in a failure to exercise the discretion implicit in the policy at all, or at the very best, in an exercise of it which is plainly flawed. On either basis, I do not think that the decision can stand.

23. In the appellant’s notice, it is argued that the family member policy amounted to an impermissible “substantially different course” from that set out in the statutory guidance. Reliance was placed on the use of that phrase in a decision of Sedley J (as he then was) in R v Islington London Borough Council ex parte Rixon (1998) 1 CCLR 119. This is not such a case. Nothing in the guidance is inconsistent with a family member policy. For the reasons I have given, however, it must not be applied rigidly, and the exceptions to it cannot be limited to a narrow interpretation of “cultural issues”.

24. Where the Council has made the perfectly proper decision to make a charge for the services it provides, it is plainly under an obligation to examine the individual circumstances of each case in order to decide what the proper charge should be. I can fully understand a strict stance being taken in relation to the family member policy in the context of a wish to avoid fraudulent or otherwise unwarranted claims. Mrs. Stephenson’s claim is neither. In my judgment, as I have already stated, it seems to me the Council simply applied the policy without any reference to the highly unusual underlying facts.

The reliance on ECHR

25. What I have already said is sufficient to dispose of the appeal without any reference to ECHR. However, since the judge addressed both, I propose, briefly, to do the same.

26. In my judgment, the judge was plainly right to reject the argument based on ECHR Article 14, and to find that it was not engaged. The argument that the policy is discriminatory depends upon a very narrow interpretation of the exceptions to it, and in particular on a definition of “cultural issues” which (a) identifies them as, in effect, the only exception; and (b) treats them as issues dependent on race, religion or ethnicity. The term: “cultural issues”, in my judgment, has to enjoy a wider interpretation if it is not to fall foul of art.14.

27. As to Article 8(1), the judge dealt with the argument in paragraphs 25 and 26 of his judgment in the following way: -

25. The alleged breach of Art. 8(1) is based on the proposition that the family member rule in effect denies the disabled person the choice of being cared for by a family member. I do not agree. The disabled person is not being prevented from being cared for by a family member. What he or she is being prevented from is having payment made to the family member treated as expenditure relating to his or her disability. If the Council is persuaded that the family member rule impacts unfairly in any particular case, it can treat the case as an exceptional one. Since care is usually provided by a family member voluntarily and is not usually charged for, what the disabled person is being denied is something which would be unusual. The right to respect for family life in Art. 8 is all about the preservation of family relationships and the maintenance of family life. The family member rule does not prevent those relationships from continuing to flourish, nor does it interfere with the maintenance of family life.

26. But even if Art. 8(1) is engaged, and the family member rule constitutes an interference with the right to respect for family life, a respectable argument could be mounted for saying that the interference is justified under Art. 8(2). Apart from the need to prevent crime, the economic well-being of the State could be said to justify the family member rule on the basis that if care which is ordinarily provided voluntarily without charge is charged for, the cost of that care should not be discharged out of public funds.

28. Speaking for myself, my inclination is to agree with the judge that Article 8 is not engaged in relation to the family member policy, although if it is engaged (and I see a respectable argument for asserting that it is) my earlier conclusion may have problematical implications for any Article 8(2) defence. In my judgment, however, given what I have found to be the flawed exercise of the council’s discretion in implementing the family member policy, it is not necessary to reach any conclusion on Article 8, and I say no more about it.

29. In these circumstances, I would allow the appeal and quash the decision. The normal consequence would be a direction to the council to reconsider. Speaking for myself, whilst I would be minded to make such a direction, it would seem to me more sensible for the council to agree to remit the arrears, as it indicated it would do if the appeal was withdrawn. This is a question which should be discussed between counsel prior to this judgment being handed down. It should be capable of agreement: if not, we will rule on it.

30. I am conscious of the fact that I have reached my conclusion that this appeal should be allowed on a different basis from that on which it was argued before the judge, to whose careful reasoning I would like to pay tribute. For the reasons I have attempted to give, however, I have formed the clear view that the manner in which the council applied the policy on the highly unusual facts of the case renders unsustainable its decision to disregard the disability related expenditure paid by the appellant to Diane Pennock when assessing the appellant’s net income for the purpose of deciding how much she should pay towards the home care support provided for her by the council.

31. I would allow the appeal accordingly.

Mr Justice Richards:

32. I agree.

Lord Justice Sedley:

33. I also agree.