CH/4213/2007

DECISION OF THE SOCIAL SECURITY COMMISSIONER

The decision of the Nottingham appeal tribunal dated 13 July 2007 is erroneous in law.  I set it aside and remit the case to a differently constituted appeal tribunal for determination.   

REASONS

1.	The decision of the appeal tribunal in this case suggests that appeal tribunals are still having difficulty with the somewhat  complicated and much-amended provisions of the Housing Benefit Regulations 2006 governing recovery of overpayments of housing benefit (‘HB’).  The tribunal appears to have thought that it was its function to review the discretionary decision taken by the local authority as to which of two people should repay overpaid HB.
2.	This is an appeal by a landlord against a decision to recover allegedly overpaid HB from him.  In accordance with the commissioners’ practice of not identifying parties to cases in the body of decisions, I shall refer to him as ‘the landlord’ and to the HB claimant as ‘the tenant’.  In 2006 the tenant was a tenant of the landlord and had an award of HB, which was paid directly to the landlord.  In November 2006 the local authority received notification from the DWP of a change of the tenant’s address on 1 March 2006  from the tenancy address to another address that is blanked out in the copy in the papers (page 19).  In consequence, HB was suspended (page 20) and the tenant was asked for information.  He replied on 3 January 2007 saying that as far as he could remember he had moved out of the tenancy address in March 2006; he could not remember the exact date as he suffered from memory loss as a result of a brain injury (page 25). 
3.	By letter dated 12 January (page 27) the tenant was informed that his HB entitlement had been recalculated and an overpayment of £1,440 identified, this being the HB paid from 6 March 2006 onwards.  An invoice was sent to him, apparently on 11 January (page 26).  In response, a support officer at the tenant’s support group for head injury sufferers wrote on his behalf saying that he had written to the local authority and informed his landlord at the time of leaving.  (In fact, no such letter was received by the local authority and the tribunal found it unlikely that the tenant told the landlord.) 
4.	On 5 February the local authority wrote to the tenant saying they had not received a letter from the tenant in March 2006 but that, as the landlord had continued to receive the HB, it should be recovered from him and not the tenant.  The invoice was cancelled (page 30).  On 6 February the local authority wrote to the landlord saying that a decision had been taken to recover the overpayment from him in accordance with regulations 100 and 101 of the Housing Benefit Regulations (page 8) and an invoice was sent to him (page 10).
5.	The landlord replied (page 11) saying that the tenant had frequently been absent from the tenancy address, but would eventually turn up again.  The letter referred to the tenant’s head injury and mental problems.  The landlord accepted that the tenant might have left before October 2006 but knew he had been there some considerable time after March.  The landlord had no way of knowing that he had left and could not lawfully re-let while rent was being paid.  It was the tenant’s responsibility to report changes of circumstances to the local authority.
6.	By letter of 19 March the local authority appeals team asked the landlord (page 33) and the tenant (page 34) for further information.  The tenant’s support officer replied saying that the tenant had vacated the tenancy address to take up a training placement, after which he had gone to live at his mother’s address (page 37).  The landlord replied (page 18) giving an account of the history of the tenancy, including describing a conversation he had had with the tenant about his absences and behaviour.  He said the tenant ‘explained that he spends a lot of time living at his mother’s house, but from time to time he needed his own space as I am sure his mother needed hers’.  He said that the last time he saw the tenant at the property was in September 2006, when the tenant had lost his keys again and had forced the front door.
7.	On 13 April 2007 the local authority confirmed its decision to recover the overpayment from the landlord.  The reasons were essentially that the tenant had told the landlord of his departure in March 2006 and the landlord had a duty to inform the local authority of this change in circumstances; and in the light of the tenant’s absences and the conversation in which he had referred to living at his mother’s the landlord should have taken more steps to ensure that the tenant was still in residence (pages 12-13).  He was sent a repeat invoice (page 41).
8.	The landlord wrote again, taking issue with the decision-maker’s reasons (pages 14-15) but in May 2007 the local authority confirmed its decision (pages 43-44).
9.	The appeal tribunal dismissed the landlord’s appeal.  It  began its reasoning by saying ‘The issue before the tribunal is whether it is appropriate to recover the overpaid housing benefit from [the tenant] or [the landlord]’.  The tribunal implicitly found that the tenant had vacated the tenancy address in March 2006 because it upheld the local authority’s decision to supersede the award of HB.  It went on to hold that the case was not one of official error, so that the overpayment was recoverable.  It noted the local authority’s decision to recover from the landlord rather than the tenant, and summarised the landlord’s argument as being that recovery should not be from him since, so far as he was aware, the tenant was still living at the property.
10.	The tribunal rejected the landlord’s evidence that the tenant was still in occupation in September 2006, in short because it conflicted with the evidence of the DWP and the support worker and there was little independent confirmation of the date.  The tribunal was critical of the landlord’s record-keeping and failure to take steps to ensure that the tenant was still in residence.  It concluded ‘[The landlord] has singularly failed to take any steps to ensure that [the tenant] continued to reside at the property or to keep in contact with him.  In these circumstances it is appropriate for the full overpayment to be recovered from him and for these reasons the appeal is dismissed’.
11.	I can only infer that the tribunal thought its task was to apply a test of ‘appropriateness’ as to which of two people should repay overpaid HB.  This is incorrect.  The function of a tribunal in an appeal such as this is to decide whether the person from whom a local authority has decided to recover an overpayment is liable in law to repay it.  In a case where more than one person is liable to repay an overpayment, the tribunal has no jurisdiction over the reasonableness or appropriateness of a local authority’s decision to proceed against one of them rather than the other.  I must therefore set the decision aside.
12.	I have considered whether I can give the decision that the tribunal ought to have given.  That would involve me making findings of fact which I do not consider that it would be right to do without giving the landlord a hearing.  He has expressed willingness but understandable reluctance to travel to London for a hearing.  I consider that the most convenient course is to remit the case to a tribunal to decide in accordance with the law as explained in this decision. 
The law
13.	A decision to recover overpaid HB involves a local authority deciding the following matters:
(1)	Has HB been paid to which the claimant was not entitled, and if so how much?
(2)	If so, do grounds exist for revising or superseding the decision under which it was paid?
(3)	If so, is the overpayment recoverable in accordance with regulation 100 of the HB Regulations?
(4)	If so, from which person or persons is it recoverable in accordance with regulation 101?
(5)	If it is recoverable from more than one person, from which persons(s) and in what proportions is recovery to be sought?
14.	A local authority’s decision on the first four issues is appealable to an appeal tribunal but, as the tribunal of commissioners held in R(H) 6/06, a decision on the fifth issue is not appealable to an appeal tribunal.  In short, this is because paragraph 3 of the Schedule to the Housing Benefit and Council Tax Benefit (Decisions and Appeals) Regulations 2006 provides that “subject to paragraphs 1(f) and 2(c), no appeal shall lie against a decision as to the exercise of discretion to recover an overpayment of housing benefit….”  Paragraph 2(c) deals with council tax benefit and paragraph 1(f) gives a right of appeal in HB cases only on the question of whether a person is one from whom recovery may be sought (i.e. whether the person is liable in law to repay).
15.	In the present case there is a dispute about issue (1): the landlord maintains that the tenant was still in occupation after March 2006.  The tribunal will have to decide whether the tenant remained entitled to HB from 6 March 2006.  It will need to apply regulation 7 of the HB Regulations.  The first issue that arises, applying regulation 7(1) and (2), is which out of the tenancy address and the tenant’s mother’s address was the dwelling that the tenant normally occupied as his home.  If it was the mother’s address, then the tenant was not entitled to HB in respect of the tenancy address.  If it was the tenancy address, then the tribunal will need to decide whether regulation 7(13) – which the landlord has invoked – applied to any absences.
16.	If that is decided against the landlord, there seems no doubt that there was power to supersede the earlier award of HB with effect from the date on which the change of circumstances – the tenant’s ceasing to occupy the tenancy address as his home) took effect, giving rise to an overpayment.  The overpayment will be recoverable in accordance with regulation 100 unless (broadly speaking) it arose from official error and the persons listed in regulation 100 could not reasonably have been expected to realise that it was an overpayment and did not cause or materially contribute to the error.  
17.	It is controversial whether an overpayment is recoverable under regulation 100 unless none of the persons listed in that regulation contributed to the mistake or could have realised there was an overpayment or whether an overpayment is irrecoverable against a person who did not contribute to the error and could not have realised there was an overpayment even though other persons did contribute to the error or realise that there was an overpayment.  I do not consider that it is necessary to resolve that controversy in the present case; that is because, if the requirements of regulation 101 for recovery against the landlord are satisfied, the effect of the tribunal’s finding on that will be that he contributed to the error and/or could have been expected to realise that there was an overpayment.
18.	The complicated provisions of regulation 101 require consideration next.  The regulation has to be read against the background of section 75 of the Social Security Administration Act 1992, which is the statutory source of the power to recover overpayments.  Section 75(3) provides that “an amount recoverable under this section shall be recoverable (a) except in such circumstances as may be prescribed, from the person to whom it was paid; and (b) where regulations so provide from any other person (as well as or instead of the person to whom it was paid) as may be prescribed”.  The prescribing is done by regulation 101.
19.	Regulation 101(1) implements section 75(3)(a) by providing that the overpayment shall not be recoverable from the person to whom it was paid (whom I shall for brevity call ‘the payee’) if a number of conditions are satisfied.  An additional condition was added with effect from 10 April 2006 (during the period that may be material to this case), but at least one of the other conditions is not satisfied here: it is that the landlord must have notified the authority in writing that he suspects that there has been an overpayment.
20.	Regulation 101(2) implements section 75(3)(b).  Regulation 101(2) also changed on 10 April 2006.  Before that date it provided
(2)	For the purposes of section 75(3)(b) of the Administration Act (recovery from such other person, as well as or instead of the person to whom the overpayment was made), the prescribed person is –	
(a)	in a case where the overpayment arose as a consequence of a misrepresentation or failure to disclose a material fact (in either case, whether fraudulently or otherwise) by or on behalf of the claimant or any other person to whom housing benefit has been paid, the person who misrepresented or failed to disclose that material fact;
(b)	in a case where a recoverable overpayment is made to a claimant who has one or more partners, the claimant’s partner or any of his partners;
(c)	the claimant.

21.	All of these people are people from whom the overpayment can be recovered, in addition to the payee.  That version of regulation 101(2) did not have the effect of exonerating any person who was otherwise liable: see paragraph 55 of R(H) 6/06.  I do not consider that the amendment of the regulation was intended to have retrospective effect; while the amendment is beneficial to people who are exonerated from liability by the new provisions, the effect of exonerating them is to make it more likely that another person will be pursued instead of them.  I do not consider that the amended regulation was intended to affect people’s interests in this way in respect of periods before it came into force.  Accordingly, if there was an overpayment in the period prior to 10 April 2006, it is recoverable from the landlord.
22.	With effect from 10 April 2006, regulation 101(2) has provided
(2)	For the purposes of section 75(3)(b) of the Administration Act (recovery from such other person, as well as or instead of the person to whom the overpayment was made), where recovery of an overpayment is sought by a relevant authority –
(a)	the prescribed person from whom it is sought shall be –
(i)	in a case where an overpayment arose in consequence of a misrepresentation of or a failure to disclose a material fact (in either case, whether fraudulently or otherwise) by or on behalf of the claimant or any other person to whom housing benefit has been paid, the person who misrepresented or failed to disclose that material fact instead of, if different, the person to whom the payment was made;
(ii)	in a case where an overpayment arose in consequence of an official error where the claimant or a person acting on his behalf or any other person to whom the payment has been made could reasonably have been expected, at the time of receipt of the payment or of any notice relating to that payment, to realise that it was an overpayment, that person instead of, if different, the person to whom the payment was made; or
(b) 	where sub-paragraphs (a)(i) and (ii) do not apply, the prescribed person from whom it is sought is –
(i)	the claimant;
(ii)	in a case where a recoverable overpayment is made to a claimant who has one or more partners, the claimant’s partner or any of his partners.
23.	The effect of subparagraph (a) is to make a person liable instead of the payee and therefore exonerate the payee; the effect of subparagraph (b) (which only applies where (a) does not) is to make persons liable in addition to the payee: see paragraph 57 of R(H) 6/06.  
24.	The new tribunal will need to consider whether, with effect from 10 April 2006, regulation 101(2)(a) exonerates the landlord in the present case.  As to that, the tenant is a person who on the face of it falls within (a)(i) or (ii), but (depending on the tribunal’s findings of fact) the landlord may also.  A difficulty with the drafting of the subparagraphs is that they only expressly contemplate a situation in which only one person falls within their terms.  However, I do not consider that it can have been the intention that, if the tenant was guilty of non-disclosure or realised there was an overpayment, then he is liable and the landlord is not, even if the landlord was also guilty of non-disclosure or realised there was an overpayment.
25.	The new tribunal must therefore decide whether (a)(i) or (a)(ii) applies to this case.  Subparagraph (a)(ii) seems unlikely to apply, as it seems unlikely that the present case was one of official error; but the tribunal will have to make a finding on whether the landlord was a person who failed to disclose a material fact within the meaning of subparagraph (a)(i).  Subparagraph (a)(i) needs to be read against the background of regulation 88, which casts on persons in receipt of HB a duty to report changes of circumstances which they might reasonably be expected to know might affect the claimant’s right to HB.  The tribunal will need to decide whether the landlord falls within regulation 101(2)(a)(i) on the basis of his knowledge of the circumstances as disclosed in the papers and in the light of any representations he makes at the hearing.
26.	If the tribunal decides that the landlord does not fall within regulation 101(2)(a)(i), it will need to decide whether the tenant does.  If so, the tenant is solely liable and the tribunal should allow the landlord’s appeal in respect of the period from 16 April 2006.  The tribunal cannot, of course, give any decision that is binding on the tenant, since he is not  a party to the appeal.
27.	If the tribunal decides that the landlord does fall within regulation 101(2)(a)(i), then it must dismiss the appeal: the consequence will be that either the landlord is the only person liable or (more probably) both the landlord and the tenant are liable.  In a case where two or more people are liable to repay the same overpayment, the local authority will have to take a decision as to which of them to pursue, since plainly it cannot recover the same money twice from different sources (though the local authority may decide to recover part from one person and part from another: see paragraph 62 of R(H) 6/06).  
28.	As the tribunal of commissioners point out in paragraph 24 of R(H) 6/06, the decision to enforce the liability against one liable person rather than another involves weighing up competing factors: degrees of fault, ease of enforcement, who benefitted from the overpayment, etc.  The council’s decision must be taken in conformity with the requirements of public law and is in theory subject to judicial review in the Administrative Court, but for the purposes of this decision it is sufficient to note that it cannot be the subject of an appeal to an appeal tribunal.

	(signed on the original)	Nicholas Paines QC
		Deputy Commissioner
		30 June 2008