DECISION OF SOCIAL SECURITY COMMISSIONER

Case Reference: CSHB 718 2002

1.	The decision of the Glasgow appeal tribunal held on 18 July 2002 (the tribunal) is wrong in law.  I therefore remit the case for rehearing by a differently constituted tribunal in accordance with the guidance below.  The appellant throughout the proceedings has been the claimant and the respondent is the relevant Council.

General observations

2.	The tribunal was greatly disadvantaged in this case by the lack of a properly prepared submission on behalf of the respondent.  The adverse decision under appeal to the tribunal, dated 2 November 2001, was an alleged overpayment of housing benefit (HB) due to a change in circumstances for the period 1 January 1998 to 2 November 2001, which resulted in a recoverable sum of £13,742.63.  The submission states that the Council was satisfied that the claimant’s liability was created to take advantage of the HB scheme and cites regulation 7(1)(l) of the Housing Benefit (General) Regulations 1987 (the regulations):-

	“A person who is liable to make payments in respect of a dwelling shall be treated as if he were not so liable where…. the appropriate authority is satisfied that the liability was created to take advantage of the housing benefit scheme established under part VII of the Contributions and Benefits Act.”

3.	There is an adjudication sheet recording that on 2 November 2001 the claimant’s HB claim was cancelled with an effective date of change from 1 January 1998 giving a reduction in weekly benefit of £66.92.  But there is no other breakdown of how an overpayment from 1 January 1998 to 14 October 2001 amounts to £13,742.63, nor an explanation given for the latter date rather than 2 November 2001 as in the overpayment decision.  No history is provided of when awards were made and relating to what benefit period.  No law is cited on revision of entitlement nor on recoverable overpayments.  How such law applies to the facts of the case is not addressed in the written submission to the tribunal nor indeed at any stage by the respondent.

4.	There are four copy claim forms in the tribunal papers.  The schedule of evidence notes these as supplied by the appellant.  However, I was told at the oral hearing that they were supplied by the respondent.  The entry on the schedule is in manuscript and it seems clear that pages 40-157 of the papers (which include the copy claim forms) were lodged after preparation of the initial submission.  Yet there is no further information in the tribunal file.  It would be sensible if the Appeals Service included a copy of the covering letter to ensure accuracy about who submitted what.  It can be important if documents are lodged incomplete.

5.	The claim forms are dated 30 May 1997, 10 June 1998, 10 May 2000 and 5 April 2001.  Each of them differs in format although no explanation was given to the tribunal as to why this is so.  Nor do I understand how the explanation given to me at the oral hearing that the forms differ according to whether the claimant is a private tenant or a council tenant applies in this case.  In the form dated 10 June 1998, a claimant is asked into which category he falls and this claimant ticked the box that that he is “a private tenant”.  In any event, it must have been known to the local authority that this address was not part of its property.  Moreover, in the forms as submitted, it is only on the one dated 5 April 2001 that the applicant is asked to state whether or not related to the landlord.  An otherwise identical form dated 7 November 2000 does not contain this page.  The respondent must lodge an explanation of these different forms for the benefit of the new tribunal and authenticate the copies as complete because they have no pagination other than as appeal documents.

6.	The respondent lodged no copy of any lease.  The only copy of such an agreement is that supplied by the appellant on 10 December 2001 enclosed with his appeal to the tribunal.  This is a Missive of Let dated 9 December 1994 between a landlord who is in fact the appellant’s mother and the appellant as tenant, both stated to be residing at the same property (the family home) which is also the subject of the lease.  This lease is for a period of three years from 31 December 1994.  In the claim form dated 5 April 2001, the appellant refers to having supplied a lease with a term of 2 years and 11 months beginning on 1 January 2000.  He told the tribunal that he did not produce the 1994 lease when he claimed benefit but that on two occasions he has produced other leases to the Council. 

7.	There is an entry in the respondent’s fraud investigation activity log that an official enquiry was made as to why the appellant was considered liable for council tax from 1 January 2000, and the answer was that the appropriate section had been given a ‘copy of lease agreement’ from the housing benefit section.  Nevertheless, on enquiry at the oral hearing before me, all that could be produced on behalf of the respondent was a copy of the Missive of Let of 9 December 1994, itself copied from the appeal papers; that is clear because it has the appropriate page marking from the appeal documents and is not date stamped nor placed in the claimant’s file as received with the initial housing benefit claim.  I am at a loss to understand how all essential documentation underpinning the awards made was not readily to hand.  I sincerely hope that by the time the case goes before a new tribunal the relevant copies will have been located.  In any event, the appellant will have the originals.  However, there is an obligation on the respondent to support both its submission to the tribunal and that to the Commissioner with the appropriate evidence.  There are severe shortcomings in the way it has tackled this.

Background

8.	In 2001, a query arose about the claimant’s entitlement to housing benefit with respect to the family home.  This led to a signed statement on 12 September 2001 in which the appellant said that he had moved to live with his parents at the family home in 1994.  His father now lived partly at the family home and partly with his granddaughters but his mother moved into a nursing home in approximately 1996-97.  There were direct debits on his mother’s account for bills such as gas and electricity which had not changed since she went into care.  He used the HB he received for minor repairs and expenses for the family home and for groceries and none of it was used to pay for the expenses of his mother’s care.  He handled his mother’s financial affairs.

9.	A letter from the matron of the mother’s nursing home states that the mother entered it on 5 November 1998 from hospital following an operation for a broken neck of the femur.  Other medical evidence notes that the mother broke her hip in July 1995 but that in February 1996 she was still living at the family home.

10.	The fraud investigating officer on 12 September 2001 records the claimant as saying that none of the HB received is paid to his mother or father.  His evidence to the tribunal was to the same effect and, not surprisingly, the tribunal found as fact that:-

	“The appellant does not pay any monies to his mother.  He has never paid his mother any of the rent.”

11.	The fraud investigating officer on 12 September 2001 also records that when asked who owned the family home, the appellant advised that “it should still be his parents but that he was an only child and nothing has been signed over to him.”  However, in a telephone call the next day, it is recorded that the appellant then said:-

	“…he has checked out who owns the property and it is his mother since 1988.”

(Subsequently, the appellant produced a lawyer’s letter of 3 September 1986 to his parents noting a transfer of the family home from both parents in favour of the mother alone.)

The tribunal hearing and decision

12.	There was a presenting officer in attendance on behalf of the respondent.  The appellant was also present and represented by a member of the local Citizens Advice Bureau (the tribunal representative).  The presenting officer said that the appellant was granted benefit from December 1997 to 2 November 2001.  However, the local authority now considered that the tenancy was contrived within regulation 7(1)(l) of the regulations because no money was ever paid to the mother.  The argument put on behalf of the appellant by the tribunal representative was that the relevant tenancy agreement was that dated 1994, and it had not been demonstrated that this liability was created to take advantage of the housing benefit scheme because it arose well before the first HB claim. 

13.	In its decision notice, the tribunal confirmed the recoverable overpayment in the sum stated and that the liability to pay rent in respect of the family home fell within regulation 7(1)(l) of the regulations.  In its statement of reasons, it found that he entered into a lease with his mother in 1994 when he moved into the family home.  The rent then payable was £155 per month, a sum which the appellant later increased to fall in line with the local reference rent.  He never paid his mother any rent although he paid certain expenses relating to the property:-

	“His mother does not collect rent as the appellant does not pay any.  There has been no legal enforcement as a result of non-payment of rent.  The housing benefit is paid into the appellant’s bank account.  He does not pay any of the housing benefit he receives to his mother.  
	Since the appellant’s housing benefit ceased in 2001 he has not been required by his mother to pay any rent.”

The tribunal concluded that the respondent had demonstrated that there was an intention to take advantage of the housing benefit scheme so that:-

	“The appellant received housing benefit from 01.01.1998 to 02.11.2001 to which he was not entitled amounting to £13,742.63 because his liability to pay rent was created to take advantage of the housing benefit scheme.”

Appeal to the Commissioner

14.	For the purposes of the appeal to the Commissioner, the appellant is now represented by Mr Ian Walker of the Glasgow Shelter Housing Aid Centre.  At the application stage (leave was granted by the District Chairman), he had three grounds.  The first was that the tribunal erred by not explaining why the liability created in 1994, some three years before any HB claim was made, was nevertheless created to take advantage of the HB scheme.  Secondly, that the tribunal found that since HB ceased in 2001 the claimant’s mother had not required him to pay rent.  As this was after the date of the decision under appeal, the tribunal was precluded by paragraph 6(9)(b) of Schedule 7 to the Child Support, Pensions and Social Security Act 2000 from taking that into account.  Thirdly, the tribunal did not consider entitlement under regulation 7(1)(l) correctly.  The current version of regulation 7(1) of the regulations dates only from 25 January 1999 when it was substituted by regulation 3 of the Housing Benefit (General) Amendment (No. 2) Regulations 1998 (1998 No. 3257) (the Amendment regulations).  Moreover, regulation 1(3) of these latter regulations made transitional provision for those who were in receipt of HB on 25 January 1999 (as was this appellant).  In such a case, the amendments only bite in relation to that individual “on the day after the last day of the benefit period in respect of which that award is made”.  It is submitted that the tribunal went wrong by failing to identify the appropriate period or to apply the former version of regulation 7 to that period.

15.	The response on behalf of the respondent was lodged by Mr McArthur, the senior assistant benefit manager for the respondent Council, who also appeared on its behalf at my oral hearing.  This took the form of a letter addressed to the Secretary at the Office of the Social Security Commissioners and offered:-

	“no further response other than reiterating the Council’s belief that the tenancy between [the appellant] and his mother was created solely to take advantage of the Housing Benefit Scheme.”

16.	Mr McArthur accepted in his submission to me at the hearing that these comments were insufficient and noted with some relief that the function of acting at the Commissioner stage is to be taken over by the respondent’s legal section.  What was required was analysis of the tribunal’s decision having regard to whether or not it properly applied the relevant law and consideration of the adequacy of the factual basis on which it founded its decision.  Moreover, as Mr Commissioner Jacobs pointed out in CH/3853/2001, presenting observations in the form of correspondence with the Commissioners’ Office is inappropriate.  There should be a separate submission to the Commissioner, sent with a covering letter to the Commissioners’ Office, stating whether the appeal is or is not supported and why that is so.  Legal propositions will be backed up by appropriate references.

17.	It is very much to be hoped that the legal section will also assist in the preparation of appeal papers for tribunals.  As already noted, the relevant issues were not all identified for the tribunal nor the relevant law cited nor how that law applied to the facts asserted in the appellant’s case.  The summary of facts began with the investigation in July 2001and did not cover the whole period in issue.  There was no award history, no sufficient explanation of the copy claims produced nor their relationship to particular benefit periods, and no copies of any documentation on which the respondent relied as underpinning the liability for which HB was paid when making the relevant contemporaneous awards.  I hope that Mr McArthur will pass on all these observations to his legal section.

The oral hearing

18.	The oral hearing took place on 24 July 2003.  As already noted above, the appellant, who was not present, was represented by Mr Ian Walker of Shelter and the respondent by one of its employees, Mr J. McArthur.  I am grateful to them both for their help.  I am particularly indebted to Mr Walker for a detailed written submission amplified at the hearing.

19.	The written submission expanded on the earlier grounds of appeal and added a new one.  This was that the tribunal did not sufficiently address the recoverability of the overpayment.  It neither considered whether revision had properly been made nor whether the statutory criteria for a recoverable overpayment were satisfied.  Mr Walker accepts that the tribunal representative only focused on entitlement, which presupposed no overpayment, but did not argue that in the alternative, if there were an overpayment, then all or any part of it was irrecoverable.  However, Mr Walker submits that:-

	“Rather than being represented we believe the appellant was merely accompanied and supported at the tribunal by the Citizens Advice Bureau.”

My conclusions and reasons

Regulation 6(1)(a) of the regulations

20.	Since 1991, this has read:

	“Subject to regulation 7 (circumstances in which a person is to be treated as not liable to make payments in respect of a dwelling) the following persons shall be treated as if they were liable to make payments in respect of a dwelling – 
	(a)	the person who is liable to make those payments;”

21.	The respondent has failed to consider whether the appellant is disentitled to housing benefit on the ground that he is not liable to make relevant payments under regulation 6(1)(a) but only decided that he is treated as not so liable under regulation 7(1)(l).  This is surprising as the evidence clearly raises issues under both regulations and it would have been sensible if the respondent had addressed both.  Certainly the tribunal should have done so, having first made clear its intention to the appellant.

22.	The appellant now stands warned that the new tribunal will look at whether there was ever a genuine tenancy in the relevant period.  Whether a document, or a term within it, is a ‘sham’ has been considered by Mr Commissioner Williams in CH/1171/2002 and by Mr Commissioner Jacobs in CH/1618/2002.

23.	In CH/1171/2002, Mr Commissioner Williams quoted a passage from Snook v London and West Riding Investments Limited [1967] 2 QB 786 in which Lord Justice Diplock at page 802 defined ‘sham’ as follows:-

	“It means acts done or documents executed by the parties to the ‘sham’ which are intended by them to give to third parties or to the court the appearance of creating between the parties legal rights and obligations different from the actual legal rights and obligations (if any) which the parties intended to create.”

24.	The appellant relies on the 1994 Missive of Let.  At that stage the landlord lived with him in the family home and it is the family home which is the subject of the lease.  Yet in both English and Scots law the lessor impliedly gives the tenant possession under a lease.  At this stage it is difficult to see now it could have been a genuine arrangement.  It is also noted that alterations and omissions in the text have not been authenticated.

25.	However, the evidence suggests further Missives of Let, possibly executed at a time when the mother no longer lived in the property.  If there was no express lease, then tacit relocation may apply.  If neither party to a lease takes steps to terminate it when it expires then it is implied that the parties have entered a new lease on the existing terms, with the exception that where the lease is for a period of more than one year the extended period is for one year only, (although there may be successive one year periods).

26.	If the initial lease was a ‘sham’, then any attempt to argue that tacit relocation applies would be met by the same objection.  If there are subsequent Missives of Let, entered into when the mother was no longer in possession of the relevant property, then each such document must be assessed separately.  If an earlier lease is a ‘sham’ this is not conclusive with respect to the nature of subsequent leases, but it is evidentially relevant.  The new tribunal will also wish to satisfy itself that any documents were validly executed.

27.	The appellant does not appear to have known that his mother was the sole owner until 2001.  I find this very curious if agreements made with her operated as genuine tenancies.  Furthermore, the 1994 Missive of Let includes an express power, as might be expected, that the amount of rent charged will be reviewed by the landlord on a regular basis.  The tribunal found that it was the appellant, however, who instigated an increase, as a direct result of the rent registration process permitting a higher sum.

28.	Moreover, it appears that no rent has ever been paid by the appellant.  Payment of rent is a fundamental obligation under a lease.  Mr Commissioner Jacobs in CH/1618/2002 points out that if the obligation to pay rent is a ‘sham’ then the claimant is not entitled to housing benefit by virtue of regulation 6(1)(a). However, the appellant has not had the opportunity to challenge the possible application of regulation 6 nor to produce further leases, which is why I remit the case to a new tribunal to investigate the issue fully.  

Regulation 7(1)(l)

29.	If the new tribunal accepts there is the necessary underpinning true agreement, it must then decide whether he is nevertheless treated as not liable under regulation 7(1)(l).  I agree with Mr Walker’s submission that the tribunal erred in law in its approach to entitlement under this head.  It did so in two ways.  

30.	Firstly, it overlooked the transitional protection in regulation 1(3) of the Amendment regulations.  It should have identified the last day of the benefit period applicable on 25 January 1999 and applied the previous form of regulation 7 until the date of that last day.

31.	However it makes little difference insofar as regulation 7(1)(l) is relied on.  What was then regulation 7(1)(b) read:-

	“a person whose liability to make payments in respect of the dwelling appears to the appropriate authority to have been created to take advantage of the housing benefit scheme except someone who was, for any period within the eight weeks prior to the creation of the agreement giving rise to the liability to make such payments, otherwise liable to make payments of rent in respect to the same dwelling;”

32.	The exception cannot assist this appellant.  The liability under assessment as to whether it is contrived is the general liability to pay rent in the relevant period, not an obligation to pay a specific sum which may change from time to time, as it did here.  The appellant argues that the 1994 agreement is the one which created the relevant liability.  If that was “created to take advantage of the housing benefit scheme” then he falls foul of either version of the regulations and the proviso does not help him because his circumstances do not fall within it.  He must rely on his second limb of argument.

33.	This is that, insofar as a particular lease underpins his liability to pay rent, then whichever version on contrived tenancies applies, the respondent must demonstrate that the necessary intention to abuse the scheme existed when that liability to make payments was created.  I consider this is right and that the tribunal further erred in not clearly adopting this approach.  But the relevant lease is not the 1994 lease because this only lasted 3 years.  If, however, there are subsequent leases, express or implied, then the point must be considered afresh at each stage when a new liability to make payments arises.  It is the circumstances and factors surrounding those leases which have to be examined.

34.	Moreover, although the circumstances must be judged contemporaneously with the creation of the relevant liability, it is not necessary that there is an intention to take immediate advantage.  Provided that at the time the liability was created it was to take advantage of the housing benefit scheme, present anticipation of future advantage is sufficient.  That a claimant does not expect to claim HB at once when he takes on a rent liability is evidentially relevant to the issue of whether the liability was created to take advantage of the housing benefit scheme but it is not conclusive.

35.	It is not known whether this appellant was on housing benefit before he moved to live in the family home, because he was then in a different local authority area.  But a claimant who is used to claiming HB who then moves in with an elderly parent, might well already envisage a future such claim should the parent move into care.  Such an anticipation when a claimant takes on the rent liability is a relevant factor in determining the quality of that liability when it was created.  The question is always, what is the dominant purpose behind an agreement at the time it was made.  The apposite factors must be judged then.  The new tribunal will therefore have to determine what underpinned liability at any relevant stage and examine what lay behind each separate creation of liability as it arose.

Taking into account circumstances beyond the date of the decision under appeal

36.	The lack of enforcement by the landlord of the rent provisions after the date of decision was not a matter to be taken into account by the tribunal.  However, this consideration was otiose as the salient point was that, as the tribunal earlier found, rent had never been paid nor legally enforced throughout the overpayment period.  Therefore, although the tribunal technically erred, this does not justify setting aside their decision.  I do so on account of the errors of law set out under the last heading.

A recoverable overpayment

37.	The respondent described “a cancellation” decision.  As Mr Commissioner Williams said in CH/2302/2002 (at paragraph 11):-

	“To operate from the first date of award the “cancellation” had to be a revision of the original decision.  To show that there was a proper revision of the original decision granting benefit, the Council had to satisfy the tribunal of one or more grounds of revision of the original decision.  Those grounds are set out in regulation 4 of the Housing Benefit and Council Tax Benefit (Decisions and Appeals) Regulations 2001.  As the revision did not take place within one month of the original decision, it had to be based on the grounds in regulation 4(2), namely either official error or ignorance of, or mistake as to, some material fact.  Unless one of those grounds is shown, the decision of the Council could not be a revision decision taking effect from the original date of award.”

38.	In the decision letter, the respondent mentioned “change of circumstances”.  However, this could only found a supersession decision.  It is by no means clear from the papers that the respondents were unaware that the landlord was the mother.  The documentation lodged is insufficiently explained in that respect.  However, as Mr McArthur submitted, it seems likely that the respondent was ignorant of the material fact that no rent was actually paid.  This is a matter for the new tribunal.

39.	Under regulation 98 of the regulations, by amendment from 2 July 2001, the relevant awarding decision must be corrected so that it reflects the true situation which now substantiates an overpayment.  Regulation 99 then sets out the rules governing the recoverability of such an overpayment.  Did the tribunal err in neither considering the proprietry of revision, nor whether regulation 99 was satisfied, nor checking that the amount of the overpayment was correct?

40.	None of these arguments were raised by the tribunal representative.  Paragraph 6(9)(a) of Schedule 7 to the Child Support, Pensions and Social Security Act 2000 provides that an appeal tribunal need not consider any issue not raised by the appeal.  In usual circumstances, I do not think that a tribunal errs in law in not considering a point which is not part of the case put on behalf of the claimant by his representative.  However, it was patent from the papers that the Council had not even detailed the basis of its calculations and that there were discrepancies on the end date given for the overpayment period.  It is arguable that the inquisitorial duty of the tribunal extended to an independent verification of the Council’s overpayment calculation.  As noted by Mr Walker, this is not an arduous process but a matter of asking the respondent to show the level of rent claimed by the appellant, his level of income and the amount of benefit paid throughout the period of the overpayment.  In any event, as the appeal is being remitted, I direct the new tribunal to consider both revision and the amount of the overpayment if these matters remain relevant and to carry out any necessary rectification.

41.	I do not, however, accept Mr Walker’s submission on regulation 99.  He argues that the claimant has not caused or materially contributed to the error.  It may be that the Council failed sufficiently to investigate the appellant’s claim until 2001.  It may be that their forms were badly designed.  I have already noted the lack of documentation produced by the respondent in proof of its case.  Nevertheless the appellant materially contributed to the mistake.  If at any stage he had revealed that no rent was being paid (assuming the new tribunal confirms that fact) there would almost certainly have been no overpayment.

42.	Nor do I accept that any overpayment after the start of the fraud investigation was the sole fault of the respondent because it could then have suspended benefit.  It was not obliged to do so.  Suspension may cause hardship, and a Council is justified in not resorting to that until it has thoroughly investigated in case such hardship is unwarranted.  I am unable to categorise the respondent’s actions as in any way a “mistake” as there was no irrational exercise of its statutory discretion.  Nor did it have the appropriate knowledge as distinct from suspicion, which might have broken the causal chain, until the investigation was concluded.

Summary

43.	For the foregoing reasons the appeal of the claimant is allowed.  It is emphasised that there will be a complete rehearing on the basis of the evidence and arguments available to the new tribunal.  My jurisdiction is limited to issues of law so my decision is no indication of the likely outcome of the rehearing.

						(Signed)
						L T PARKER
						Commissioner
						Date:  4 August 2003