[2007] UKSSCSC CH_180_2006 (25 May 2007)

CH/180/2006

DECISION OF THE SOCIAL SECURITY COMMISSIONER

1.	   This appeal is brought by a landlord with the permission of a tribunal chairman.  For the reasons given below, this appeal is allowed, but I must substitute my own decision dismissing the appeal of the landlord from the decisions of the council to pay housing benefit to the tenant and not to the landlord.  The landlord appears to me to have been the victim of maladministration by the council and may be entitled to compensation on that account, but that is not a question over which I have any jurisdiction. 

2.	   I am setting aside the decision of the tribunal as being in error of law for the following reasons, explained in more detail in the course of this decision:

(1)	The tribunal considered that the decision under appeal was one made on 8 September 2004.  It was not.  
(2)	The tribunal failed to consider at all the duties of the council on the facts of this case, taking into account regulations 77 and 94 of the Housing Benefit (General) Regulations 1987.
(3)	The landlord had not been given proper notice of the hearing of the appeal by the Appeals Service, as it ought to have been.  Accordingly, there was a breach of the rules of natural justice and of Article 6 of the European Convention on Human Rights, as a result of which its representative did not attend the appeal.

3.	   The landlord is a registered charity which lets rooms to vulnerable young people in London.  The tenant to whom this appeal relates was a young lady to whom the landlord let a room from 1 March 2004.  The tenant applied to the council for housing benefit from that date, her application being received by the council on that date.  In part 7 of the application, she asked for the benefit to be paid direct to the landlord.  The application was accompanied by a letter dated 27 February 2004 from the tenant to the council’s benefits manager authorising the landlord to request and receive information from that department relating to the claim.  There was also a letter of the same date from the landlord giving a breakdown of the rent and asking for payments to be made direct to the landlord.

4.	   There was no evidence before the tribunal of how the application was dealt with by the council, except that it was common ground that payment had not been made to the landlord but to the tenant until the beginning of September 2004, when the landlord had advised the council that the tenant had paid no rent since March.  At that stage there was a computer entry relating to that advice which also noted that on the application form it was stated that payment should go to the landlord.

5.	   Written submissions made on behalf of the council to the tribunal stated that on 30 March 2004 the council wrote to the tenant requesting further evidence in support of her claim.  She provided that information on 18 May 2004 and on 27 May 2004 the council awarded her housing benefit from 15 March 2004, which it decided to pay to the tenant.  Payments were then made to the tenant until a final payment was made on 16 September 2004.  On 21 July 2004, it was stated, the decision of 27 May 2004 was revised and benefit was awarded from 1 March 2004.  Following the telephone conversation with the landlord on 2 September 2004, on 8 September 2004 there is said to have been a supersession decision by which the council superseded the decision of 21 July 2004 and pay the tenant’s housing benefit directly to the landlord.  The following statement that payments of housing benefit were sent directly to the landlord starting on 9 September 2004 appears to contradict the previous submission that the last payment to the tenant was made on 16 September 2004.  

6.	  A letter now supplied by the council written by the council to the tenant and dated 8 September 2004, which was not before the tribunal, confirms that a housing benefit cheque dated 30 August 2004 had been cancelled and would be reissued to the landlord shortly, and that future benefits would be paid to the landlord direct.  The letter goes on to state that “due to an incorrect assessment” housing benefit cheques were sent to the tenant for the period 15 March to 29 August 2004, and the landlord could not be paid again by the council for this period.  A similar letter was sent on the same day to the landlord.

7.	   By a fax of 13 October 2004, the landlord appealed against “the decision to pay [the tenant] instead of themselves”.  The landlord’s representative requested a copy of every decision regarding the claim either sent to the tenant or the landlord and a copy of every claim so that he could prepare the case.  The provisional submissions were that the decision to pay the tenant rather than the landlord was irrational and any payments made to the tenant were ultra vires.  It was also contended that after 8 weeks it was mandatory to make all payments to the landlord under regulation 93(1) of the Housing Benefit (General) Regulations because of accrued rent arrears.

8.	   In fact the council appears to have provided an incomplete copy of the original application for housing benefit and the documents submitted with it, but it provided no copy or record of any decision made by it, or any subsequent correspondence with the tenant.  Instead, it submitted that there was no evidence for the purpose of regulation 93 that the tenant was in receipt of any specified state benefit or that she had any rent arrears, and that there was no evidence provided by the landlord to support a finding that it was in the best interests of the tenant that the payments should be made direct to the landlord.  It was denied that the decision to pay housing benefit was irrational, and asserted that only the tenant could be described as having a legitimate expectation to receive payment.  The housing benefit had been paid lawfully to the tenant under regulation 92(1).  Various additional submissions were made as to whether it was mandatory to pay the landlord under regulation 93.

9.	   By letter dated 8 December 2004, a council benefits officer wrote to the landlord’s representative acknowledging the receipt of the appeal and describing it as an appeal against the decision of 15 March 2004 to 29 August 2004 that housing benefit monies were paid to the tenant rather than the landlord.  The council had looked at the case again and confirmed that the decision not to pay the landlord was correct.  It confirmed that the cheques for housing benefit were sent out to the tenant rather than the landlord in error for the period from 15 March to 29 August 2004, but all efforts to rectify the mistake were made as soon as it was identified and from 30 August 2004 all cheques were made payable to the landlord.  However, housing benefit could not be paid twice over for the same period on the same property, and the landlord would have to claim the outstanding rent from the tenant.  As this letter is later in the file than the decision and the application for leave to appeal to a commissioner, it would appear that it was not before the tribunal.  An earlier letter from a council benefits officer dated 7 October 2004 apologising for any inconvenience resulting from the council’s oversight in paying the money to the tenant, and giving the same reason for an alleged inability to pay the money to the landlord, was before the tribunal.

10.	By notice dated 29 April 2005, in the tribunal file, the landlord’s representative sought an oral hearing of the appeal.  The hearing of the appeal was fixed for 15 June 2005 and the record of the proceedings indicates that the hearing date was notified on 4 May 2005.  Unfortunately, it subsequently became apparent that the notification was defective.  It was dated 4 May 2005 and was addressed to the representative, Islington People’s Rights.  It contained a tribunal reference but no name of either the landlord or the tenant and no national insurance number for the tenant.  It stated that the appeal would be heard at or soon after 10am on 15 June 2005, and stated that “If you need to contact me, please quote the National Insurance number which is at the top of this letter.”  As I have indicated, there was no such number.

11.	Regulation 39(4) of the Social Security and Child Support (Decisions and Appeals) Regulations 1999 requires that where an oral hearing is requested in the appropriate way, as it was, the appeal tribunal shall hold an oral hearing.  It is a precondition of an oral hearing that the parties are notified of it.  I am not satisfied that the notice which was sent can be regarded as a sufficient notification of the oral hearing.  It is true that it was sent some 6 weeks before the appeal and it might have occurred to somebody at Islington People’s rights that it might be a good idea to try to find out what case was being referred to in the rather odd and inadequate notice.  However, bearing in mind that it was for the representative to make enquiries, not even knowing on whose behalf the enquiries were being made, or who at the organisation was dealing with the case, I am unable to see how this letter could amount to proper notice, and unlike the chairman who refused to set aside the decision, I do not consider that the defective notice could be ignored on the basis that it was for the representative to make enquiries if he or she did not know to which case, or client, it referred.

12.	I therefore consider that through no fault of the tribunal in this respect, the decision was in error of law as the requisite oral hearing had not been held.

13.	The tribunal is, however, responsible for the record of proceedings.  This identified one person as the tribunal under the heading “constitution of the tribunal” yet the record was signed by somebody else, presumably another chairman who took over at the last minute but failed to amend the details of the tribunal.  The record also shows the hearing as starting at 9.20, despite the 10 am start indicated in the defective notice, and as concluding at 10.35 pm.  A presenting officer attended for the council and submitted that there was a clerical error in making the payment to the tenant.  None of the relevant decisions were in evidence (nor at that stage had they been supplied to the landlord) and the decision notice states that the decision of the council made on 8 September 2004 was correct.  That, of course, was not the decision appealed from.

14.	The tribunal, in the statement of reasons, also found that there was a decision by the council to pay the tenant directly.  I am unable to see how it can have come to such a conclusion without seeing the decision and in the light of the recorded concession by the council that the payment to the tenant was a clerical error.

15.	It is unnecessary to consider the reasoning of the tribunal further.  It is apparent that for the reasons I have already given, the tribunal was in error of law in several respects and its decision must be set aside.

16.	It was only following a direction by a commissioner dated 31 January 2006, that the council finally purported to produce computer print outs of a decision dated 25 May 2004 and a revision decision of 21 July 2004, stating that “Notification letters concerning these decisions were not issued under Regulation 77 of the Housing Benefit (General) Regulations 1987 to [the landlord], since the Local Authority had paid Housing Benefit direct to [the tenant], under Regulation 99(2) of the Housing Benefit (General) Regulations, and [the landlord] were not considered to be persons affected by this decision.”  Regulation 99(2) of the 1987 Regulations relates to the recovery of overpayments, so that payments cannot have been made under that regulation.  It may be that the writer of the letter intended to refer to regulation 92(1).

17.	What were actually produced were not actual decisions, but notification letters to the tenant dated 28 May and 22 July 2004 advising her that her claim had been assessed and giving details of her entitlement.  There is nothing in these letters to indicate the precise terms of the decisions, and it appears that the council simply failed to address the request for the benefit to be paid to the landlord, and that somebody simply arranged for cheques to be issued to the tenant.  There is no evidence that that person had any authority to make any decision on the request for payment to be made to the landlord, or that they were purporting to do so.  I therefore find that there were decisions made on or shortly before 28 May and 22 July 2004 that the tenant was entitled to housing benefit in the amounts described in those letters, but that the question to whom the payment ought to be made was never addressed by the council.  Instead payments were made to the tenant on the assumption that the tenant was the right person to receive the benefit.  The revised decision in July must have been made in the knowledge that the payments were being made to the tenant.  The landlord was never notified of the decisions to pay housing benefit or of the fact that benefit was being paid to the tenant until September 2004.  The evidence indicates that such payments were made to the tenant until the end of August 2004.

Ought the landlord to have been notified of the decision on the claim?
18.	The first question before me is whether the landlord ought to have been notified of the awards of benefit.  The council has contended that it was not a person affected by the decision.  Under regulation 77(1) of the 1987 Regulations (now regulation 90(1) of the Housing Benefit Regulations 2006, an authority was required to notify in writing any person affected by a decision made under those Regulations, in the case of a decision on a claim, forthwith or as soon as reasonably possible.  Under regulation 2 of those Regulations (now regulation 2 of the 2006 Regulations), “person affected” was to be construed in accordance with regulation 3 of the Housing Benefit and Council Tax Benefit (Decisions and Appeals) Regulations 2001.  Under Regulation 3(1) of those latter Regulations as then in force, subject to regulation 3(2), a person is to be treated as a person affected by a relevant decision of a relevant authority where that person is, inter alia, a landlord “and the decision is made under regulation 93 (circumstances in which payment is to be made to a landlord) or 94 (circumstances in which payment may be made to a landlord) of the Housing Benefit Regulations.”  The 2001 Regulations have since been amended to refer to the equivalent provisions in the 2006 Regulations.

19.	Regulation 3(2) of the 2001 Regulations provides that paragraph (1) was only to apply in relation to a person referred to in paragraph (1) where the rights, duties or obligations of that person are affected by a relevant decision.  The council has contended that as there was no decision to pay the benefit to the landlord, the landlord was not a person affected by the determination.  A passage from paragraph 28 of a circular A9/96 issued by the DSS is relied on in support of the proposition that in relation to regulation 94 the ‘person affected’ provisions only bite when a council has made a positive decision to make payments direct to the landlord.

20.	It is difficult to think of a less attractive proposition.  It would mean that the landlord need never be told if a joint application for rent to be paid to it is unsuccessful, and that it is simply left in the air whether the application for housing benefit has been determined or not, and whether it should be seeking its rent from the tenant without regard to anything that might be coming direct to it from the council by way of housing benefit.

21.	It appears to me to be self-evident that the landlord’s rights are affected.  A landlord may wish to decide how to exercise its rights if the tenant is in arrears with rent.  Any decision is likely to be affected by the question whether the application for housing benefit has been determined and whether there is benefit to be paid direct to the landlord.  That is also the case if the council has decided to pay the tenant rather than the landlord.  The landlord will then wish to take steps to recover the rent direct from the tenant, and will also have the right to appeal the decision of the council not to make the payment to it direct (CH/2986/2005).  In addition, the landlord will need to decide whether to bring possession proceedings against the tenant, and if it does so, the terms on which any possession order could be obtained from the court would be very different if there was still a decision on housing benefit to be made, than if an award had been made and payment had been made to the tenant.  This would be all the more so if the tenant had not made any payment of rent and had used the benefit for some other purpose.

Was the decision made under regulation 93 or 94 of the Housing Benefit (General) Regulations 1987?
22.	The next question is whether the decision which was made was a decision under regulation 93 or 94 of the 1987 Regulations which ought to have been notified under regulation 77.   Regulation 93 provided, so far as relevant, that “A payment of rent allowance shall be made to a landlord …

(a)	where under Regulations made under the Social Security Administration Act 1992 an amount of income support … or jobseeker’s allowance payable to the claimant or his partner is being paid direct to the landlord; or
(b)	where sub-paragraph (a) does not apply and the person is in arrears of an amount equivalent to 8 weeks or more of the amount he is liable to pay his landlord as rent, except where it is in the overriding interest of the claimant not to make direct payments to his landlord.

23.	There was an exception under regulation 93(3) where the relevant authority was not satisfied that the landlord was a fit and proper person to receive the allowance.

24.	In the present case there was nothing before the council to indicate that either of the two circumstances envisaged by section 93 applied.  It does not therefore appear to me that any decision under section 93 was called for.  In the absence of any such evidence, it was for the landlord to notify the council if it considered that there were circumstances which at some point brought regulation 93 into operation.

25.	Regulation 94 plainly did apply, and the council had a discretion to make payments direct to the landlord.  It is also plain from the evidence of what subsequently happened that, had the council applied its mind to the request for payment to be made to the landlord, it would have decided to make the payments to it.

26.	There appear to me to be two options in this case.  Either the council never made a decision to make payments to the tenant, in which case what the tenant received was not housing benefit at all, and the sums paid are recoverable by the council from the tenant, or it made such a decision despite its contention that the payments were a clerical error.  If it never made a decision to pay benefit, then there cannot have been a decision under regulation 94, and there was nothing to notify to the landlord.  However, in those circumstances, the money paid to the tenant was not housing benefit and is recoverable.  A decision could then be made to pay the accrued housing benefit direct to the landlord.

27.	If the council did make a decision to pay housing benefit, and the benefit was paid to the tenant, then the question is whether that decision was one under regulation 94 when the council, through incompetence, did not appreciate that there was a regulation 94 application.

28.	I have come to the conclusion that it would be unrealistic to treat the payments which were made as not being made pursuant to a decision of the council.  Either there was an initial decision, or if not, then the subsequent revision decision ratified what had previously been unauthorised.  For these reasons, and for the reasons given by Mr. Commissioner Williams in CH/2986/2005, at paragraphs 32-41, I conclude that there was a decision on the question to whom payment should be made.  

29.	It also appears to me that it would be unrealistic to say that no notification of the decision needed to be given to the landlord because the decision was made overlooking the fact that the landlord and tenant had asked for payment to the landlord.  I do not consider that the council can in effect rely on its own incompetence to relieve it of the minimum duty it would have had to inform the landlord of the outcome had it properly decided the claim before it.  The decision must be treated as a decision on an application under regulation 94 even though the council had overlooked that aspect of the claim.  Accordingly the decision ought to have been notified to the landlord under regulation 77.

Is the landlord now entitled to obtain a decision that housing benefit should be paid to it and would that be ineffective because of the prohibition against double payment?
30.	This issue was considered at length by Mr. Commissioner Jacobs in CH/3629/2006 and CH/1821/2006.  In CH/3629/2006, he decided that although the local authority ought not to have made a decision to pay the tenant, any decision setting aside the decision would not entitle the landlord to be paid anything because of the offsetting provisions in regulation 98 of the 2006 Regulations (regulation 97 of the 1987 Regulations).  The result is that the landlord is not entitled to receive housing benefit in respect of any period for which the claimant has already received the benefit.

Ought the tenant to have been a party to this appeal?
31.	It is clear for the reasons given in CH/2986/2005, that the tenant ought strictly to have been a party to the appeal.  However, she is not going to need to make any repayment of any housing benefit paid to her or incur any other liability as a result of my decision.  Nor is she now a tenant of the landlord.  She will remain liable for the rent but she has received housing benefit to help her pay it.  It is true that a decision in favour of the landlord, that the council had to pay housing benefit to it, might have resulted in her liability for rent being reduced without the council securing an equivalent right to reclaim any overpayment, but for the reasons given, I do not regard this as a possible outcome.  On all the facts of this case, it does not appear to me that the procedural irregularity has produced any possibility of injustice to the tenant and it would be wrong to remit the case to the tribunal to go through the motions of serving the tenant with notice of the appeal and then hold a further hearing in which its decision would have to be in accordance with my findings on this appeal.

Is the landlord without remedy?
32.	Although the tenant is strictly liable for the arrears of rent, it appears to me to be very unlikely that legal proceedings by the landlord will be financially productive.

33.	It further appears to me that the landlord has been deprived of the housing benefit which it should have received from the council as a result of maladministration on the part of the council both in paying the tenant without properly considering the regulation 94 application by the landlord and in failing to notify the landlord of its decision to pay the tenant despite that application.  In those circumstances, it appears to me that the council should consider paying compensation to the landlord, as was also suggested in CH/3629/2006, but that is not a matter within my jurisdiction.  It may be a matter within the jurisdiction of the Local Authority Ombudsman if the council does not voluntarily offer compensation.

	(signed on the original)	Michael Mark
		Deputy Commissioner
		25 May 2007