IN THE UPPER
TRIBUNAL Case No. CH/530/2015
ADMINISTRATIVE
APPEALS CHAMBER
Before Judge Mark
Decision: The appeal is dismissed.
REASONS FOR DECISION
- I note that,
although no directions have been issued to her, JH, the claimant’s sister
and landlord, is also a party to this appeal as she was added as a party
before the First-tier Tribunal and made written representations opposing
the claimant’s appeal. As I am dismissing the appeal, and the appeal is
against the result she sought before the First-tier Tribunal, there is no
need for her to be invited to make any submissions. The claimant has
indicated that it is for the Upper Tribunal to decide whether an oral
hearing is needed and that he would attend to answer questions if
appropriate. The appeal here is on points of law only and I do not
consider that an oral hearing is called for.
- The appeal is
brought with the permission of an Upper Tribunal Judge from a decision of
the First-tier Tribunal dated 9 September 2014. That decision dismissed
the claimant’s appeal from a decision of the Respondent council dated 25
November 2013 that from 28 October 2013 payments of housing benefit would
no longer be paid to the claimant but would be paid to a firm of estate
agents, FB. FB had been appointed by JH as her agents to collect rent on
a flat which she had let to the claimant. The decision notice describes
FB as the landlord, which is incorrect. It was the landlord’s agent to
receive the rent, but nothing turns on that error.
- The decision
was made under regulation 95(1)(b) of the Housing Benefit Regulations 2006
in respect of housing benefit which had been awarded to the claimant.
Regulation 95(1)(b) provides that, subject to exceptions which do not
apply in this case, a payment of rent allowance shall be made to a
landlord where the person entitled to the allowance 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 the landlord.
- The claimant
had been living abroad for many years. He returned to England
in the spring of 2013 and was homeless. He stayed for some months with
his sister, JH, and her husband at their home. JH also owned a flat which
she let out to tenants. In August 2013 it was let to a tenant under a
tenancy which was due to expire on 4 October 2013. Late in August the
tenant was seen to be vacating the flat. There would appear to have been
discussions between the tenant and JH and the evidence suggests that the
tenant may have accepted that she continued to be liable for the rent
until 4 October and to have agreed to repairs and improvements being
carried out at the flat by JH during the residue of her lease.
- JH and the
claimant appear to have decided that JH would let the flat to the claimant
for the same rent as that tenant had been paying and that the claimant,
who was on jobseeker’s allowance, would claim housing benefit, which it
was anticipated would cover most if not all of the rent. There was also
the possibility of a discretionary housing payment being sought by the
claimant, if needed to cover the full rent. As the claimant had no other
means of paying any rent, it was important that housing benefit should be
obtained by him.
- The claimant
then prepared, and he and JH signed, a tenancy agreement in relation to
the flat. It is dated 29 August 2013 and is stated to be a tenancy of the
flat for a term certain of 6 months commencing on 1 September 2013 at a
rent of £450 per month payable in advance by equal monthly payments. It
provides for the first such payment to be made on the date of signing of
the agreement, although it never seems to have been the intention of the
parties that any payment should be made before housing benefit had been
sought and obtained. It then goes on to provide for subsequent payments
to be made “on the ……. day of each month”. The form used was a standard
form for an unfurnished assured shorthold tenancy. Given the start date
of the tenancy on 1 September 2013, and in the absence of any other date
being specified for payment of subsequent monthly rental, other than that
it was to be paid in advance, I consider that it was to be paid by the
last day of each calendar month in respect of the following month.
- The claimant
then claimed housing benefit from the council on the following day,
submitting a copy of the agreement in support of his claim. The claim
form, also dated 29 August 2013, states that he was to move into the
property on 1 September 2013, and it explained the relationship between
the claimant and JH. It claimed benefit from 1 September 2013. By a
decision dated 5 September 2013, the claimant was awarded housing benefit
of £90.80 per week from 1 September 2013 payable monthly. He was also
awarded council tax benefit. By letter to the council dated 8 September
2013, the claimant confirmed that he moved into the property on 1
September 2013. I also note that in a telephone attendance note of the
council dated 14 October 2013 (file p.58) JH is stated to have told the
council that the claimant moved in on 2 September 2015 with his furniture
but because of problems in the kitchen he had had to stay with her and her
husband while the kitchen was fixed and had then gone back to the flat on 20
September.
- Matters did
not go smoothly. It would appear that, although it was intended that the
claimant should move into the flat, JH and her husband did not intend that
he should move in before the expiry of the previous lease on 4 October
2013. Thus by email of 29 September 2013 to the claimant, JH alleged that
the claimant had moved in against the wishes of herself and her husband and
that while the previous tenant had allowed alterations to be made during
her tenancy “she was quite put out when she saw we had moved in your
furniture.” Again, by email of 2 October 2013 JH wrote to the claimant
that he was not supposed to move into the house until 5 October when the
existing tenant’s contract expired, and that the start date of the new
tenancy turned out to be 25 September 2013. This is inconsistent with
what she is subsequently said to have told the council on 14 October (see
paragraph 7 above).
- JH also
appears from other correspondence to have changed her mind at least
temporarily about the tenancy and to have wanted to sell the flat and her
husband appears to have been complaining about the absence of the initial
rent payment due on 29 August 2015. I also note from p.132 of the file
that the claimant stated that most of what was agreed between himself and
JH “was verbal and never committed to writing”.
- It appears to
me that there are matters here which the council may wish to investigate.
This is particularly so if the claimant did not move in until 25 September
2013, and had not been intended to move in until 5 October 2013, despite
his assurance that he had moved in on 1 September 2013.
- It is
unnecessary, however, for me, or the First-tier Tribunal, to try to
resolve these issues on this appeal as the award of housing benefit was
made on the basis that the agreement was genuine and that the claimant did
move in on 1 September 2013. It is also apparent, for the reasons given
below, that even if the claimant only became liable for rent from 25
September 2013, he was in arrears by more than 8 weeks by the date of the
decision under appeal, 25 November 2013.
- What in fact
happened was that £736.17 in housing benefit was paid to the claimant covering
the period up to 27 October 2013, but he never paid any rent to JH. He
gave several reasons why he was not paying anything. One was that he had
left personal belongings at the home of JH, where he had previously been
living, and she had refused to return them. Another was that there were
problems with the electricity and with work done at the flat which, in
effect, involved some breach of her obligations as his landlord. He also
questioned whether any rent could be due, or was due, in respect of the
period to 4 October 2013. There were also issues whether the rent was due
in advance as provided in the tenancy agreement or in arrears as and when
housing benefit was paid.
- Partly
because of the deteriorating situation between them and partly perhaps
because she was going with her husband on a cruise, JH then appointed FB
to act as her agent in relation to the property and notified the council
and the claimant. FB then asked for rent to be paid directly to it and by
a decision dated 25 November 2013 the council determined that from 28
October 2013 payments would be made to FB with the first payment covering
the period from 28 October 2013 to 30 November 2013 being issued by 30
November 2013.
- This appears
to have incensed the claimant, who wrote to the council by letter dated 30
November 2013 withdrawing his application for housing benefit with
immediate effect. This was actioned and it was also pointed out that his
claim for housing benefit had already been suspended on 30 September 2013
because a third party had advised that there was no tenancy agreement in
place.
- The claimant
appealed the decision to pay the housing benefit to FB on a number of
grounds to which I shall return. The tribunal added JH as a party as she
was clearly going to be affected by the decision. At the subsequent
hearing, some months after submissions had been received from JH, the
tribunal concluded that the claimant was more than 8 weeks in arrears with
his rent and that he had not satisfied the burden of proving that it was
in his overriding interest not to pay rent to the landlord. The claimant
sought to have the decision of the tribunal set aside on the grounds that
he had wrongly been refused an adjournment and that there was bias on the
part of the tribunal in favour of JH because she was a magistrate. That
application was refused and the claimant was refused permission to appeal.
- The claimant
then sought permission to appeal from the Upper Tribunal. Permission was
granted in essence because the Upper Tribunal Judge considered it arguable
(1) whether the claimant had a liability to pay rent before 5 October 2013
when the previous tenancy expired and (2) whether the tribunal erred in
law in relation to its findings as to the claimant’s claim to set off
damages claimed by him against rent and whether an adjournment ought to
have been given to enable the claimant to adduce further documents
concerning this claim.
- Somewhat
unhelpfully, the council has failed to make any representations on these
points and has confined itself to saying that the decision under appeal
should be upheld, but further submissions were made by the claimant.
The terms of
the tenancy
- The claimant
was in receipt of housing benefit on the basis of his own evidence to the
council that he was a tenant under the agreement of 29 August 2013, that
the lease commenced on 1 September 2013 and that he went into occupation
on 1 September 2013. It is open to him to explain that certain terms were
waived, and I see no reason not to suppose that the provision for payment
of rent in advance was waived as it is clear that everybody was acting on
the basis that, at least initially, most of the rent would come from
housing benefit paid in arrears.
- What he could
not do, unless a claim was made against him by the previous tenant, was to
challenge his landlord’s title to grant him the tenancy. It is well
established that if a landlord lets a tenant into possession under a
lease, then, so long as the tenant remains in possession undisturbed by
any adverse claim, the tenant cannot dispute the landlord’s title (Industrial
Properties (Barton Hill) Ltd v Associated Electrical Industries Ltd [1977] QB 580 at p.596 per Lord Denning). I therefore reject his arguments based
on the alleged illegality of the letting. They are not arguments he is
entitled to raise. The previous tenant did nothing to challenge his
presence in the flat and any dealings between JH and those tenants are
irrelevant to this case.
- If, which is
unclear, despite the representations made to the council, the claimant did
not in fact go to live at the property until 25 September and this was by
arrangement with the landlord, then there may have been a further waiver
in respect of rent otherwise due before that date, which, as it was not
notified to the council, would have meant that he was overpaid housing
benefit for September. He would, however, have received housing benefit
for September by 30 September and would have been liable at that point to
pay at least that sum in respect of the rent due for the four weeks of the
tenancy from 25 September 2013. I note in this respect that he wrote to
JH on 28 October 2013 (file p.82) stating that he had £404 in his bank
account, largely made up by the housing benefit payment, which was the
rent for September.
- He would then
have been liable to account for the next housing benefit payment received
at the end of October in respect of the following four weeks. On that
basis he had failed to pay anything in respect of the first 8 weeks of the
tenancy. I see no reason in those circumstances why any concessions made
by the landlord in respect of waiting for payment of housing benefit, or
of agreeing to accept whatever he could get as housing benefit and any
discretionary payments, before insisting on payment of rent should have
continued to apply and they were plainly withdrawn. He was therefore
liable to pay rent in advance. Even on the basis that the tenancy was
only to be treated as starting on 25 September, by the date of the
decision, 25 November 2013, almost 9 weeks had elapsed and no rent had
been paid.
- Subject
therefore to the claimant’s contentions on set off, which I consider
below, on any footing he was over 8 weeks in arrears with his rent.
Set-off
- There are
three forms of set-off which may be relied on in appropriate cases where
rent is claimed. The first is not strictly set-off at all. Where a
tenant carries out works of repair which are the responsibility of the
landlord, the tenant has the right to treat reasonable expenditure as made
on account of rent, including future rent payable to that landlord (Lee
Parker v Izzet [1971] 3 AER 1099). This is an old common law right
which preceded the earliest statutes permitting set-off.
- Secondly
other quantified or quantifiable claims against the landlord can be set off
in litigation under section 13 of the Debtors Relief Act 1729. As
explained by the House of Lords in Stein v Blake [1996] AC 243, at
p.251B-D:
“Legal setoff does not affect the substantive
rights of the parties against each other, at any rate until both causes of
action have been merged in a judgment of the court. It addresses questions of
procedure and cash-flow. As a matter of procedure, it enables a defendant to
require his cross-claim (even if based upon a wholly different subject-matter)
be tried together with the plaintiff's claim instead of having to be the
subject of a separate action. In this way it ensures that judgment will be
given simultaneously on claim and cross-claim and thereby relieves the
defendant from having to find the cash to satisfy a judgment in favour of the
plaintiff (or, in the 18th century, go to a debtor's prison) before his
cross-claim has been determined.”
- As the
substantive rights are not affected before judgment of a court, it is
plain that the rent remains outstanding and that the cross-claim is simply
a factor (often a very strong factor) in deciding whether, for the
purposes of regulation 95(1)(b) it is in the overriding interests of the
claimant not to make direct payments to the landlord.
- Finally, there
is the right of equitable set-off. This is where the cross-claim arises
directly out of the relationship of landlord and tenant or out of an
agreement for the lease or otherwise where there is a sufficiently close
connection with the transaction giving rise to the cross-claim for the
equity of set off to arise (British Anziani (Felixstowe) Ltd v
International Marine Management (UK) Ltd [1980] QB 137). Again, as
explained by Buxton LJ in Smith v Muscat [2003] EWCA Civ 962, at
paragraph 44, equitable set-off “is and is only one that operates as
an incident of litigation. Such a set-off is merely a sub-species of
counterclaim: see the analysis of Slade LJ in the National Westminster
Bank case, [1993] 1 WLR at p 76 E-G. It is a special and privileged
type of cross-claim because it operates in the litigation to extinguish
the claim and prevent its original establishment, rather than to provide a
sum to be balanced off against the claim once established.”
- Again,
therefore, even if there is an equitable set-off available to the claimant
in the present case, it does not mean that it reduces the outstanding rent
except after it has been raised and dealt with in litigation in answer to
a claim for rent. In relation to regulation 95(1)(b), it is only a factor
to be considered in considering the overriding interest of the claimant,
the weight of which needed to be considered by the tribunal.
- I would add
for completeness that the right of set-off may be excluded by clear words
in the tenancy agreement. A provision for payment of rent without any
deduction or set-off is sufficiently clear for this purpose (Electricity
Supply Nominees Ltd v IAF Group plc [1993] 1 WLR 1059) but the words
“without any deduction” are not sufficiently clear (Connaught
Restaurants v Indoor Leisure Ltd [1994] 1 WLR 501). It has been said
to be unclear whether the Unfair Terms in Consumer Contracts Regulations
(SI1999/2083) might apply to such a provision. In the present case, there
is no attempt in the tenancy agreement to exclude equitable set-off.
The
claimant’s cross-claims
- The main
claim is that JH has failed to return to him his belongings which he left
in her home when he went to the flat. The belongings appear to be
clothing and possibly furniture. He indicated in correspondence that he
would pay the rent, or at least the housing benefit element of it, once
they had been returned to him. There is nothing in this claim. There is
nothing to impose any duty on JH to return the belongings and she made it
clear repeatedly that he was free to come and collect them if he wished
(file, pp.190-194). As she put it in email correspondence with the
claimant, she was not obliged to provide him with a taxi service.
- Secondly it
is said (file pp.125-6) that after the tenancy was entered into, JH’s
husband removed both the electric fire from the living room and the door
between the living room and the kitchen from its hinges, making the house
far colder than it should be and difficult to retain heat. His finances
did not permit any increased use of the central heating JH had refused to
provide his personal belongings which included warm winter clothing. The
kitchen also remained unfinished 10 weeks into the tenancy. I note that
the very lengthy email including these matters is dated 30 November 2013,
or 13 weeks after 1 September 2013.
- It is plain
from the claimant’s email of 28 September 2013 (p.114) that the
arrangements between himself and JH included his permitting some
renovations to the flat while he was there, that he felt it was being done
too quickly and that, although commenting that the kitchen was not
finished, he did not want any further work doing until they had arranged a
simple written schedule. A further email dated 2 October 2013 from the
claimant to JH confirms that he wanted a schedule of work (p.132) and led
to the response that the problem was that he had moved in before 5 October
when he was supposed to move in, an assertion that once again contradicts
the terms of the tenancy agreement. What happened after that in relation
to the repairs is unclear.
- I can see
nothing in this which makes it in his overriding interest to have paid to
him rent which he was plainly proposing to withhold for no good reason.
He was already holding £736.17 benefit, and if he genuinely thought he had
a claim in respect of the condition of the property or for extra heating
costs, he could have used something out of that sum to pay for any extra
heating costs and sought to set those payments off against the rent.
While the tribunal may not have given adequate reasons for its decision
that he had not established that it was in his overriding interest not to
make direct payments to the landlord, that was the only conclusion it
could have come to on the evidence.
- Issues have
been raised by the claimant as to how he came to be refused discretionary
further payments by the council. They are not the subject of this appeal
and I do not deal with them, although I note that on appeal a further sum
of £171.48 was paid to the claimant by the council as discretionary
payments in respect of the period from September to November 2013.
- I am unable
to see any basis for the allegation of bias against the tribunal. The
fact that JH is a local magistrate would not reasonably be seen as
prejudicing the tribunal in her favour.
- The various
complaints against JH and how she dealt with the council do not affect the
point that no rent had been paid by the claimant to her and there was
every likelihood that, without any legal justification, he would continue
to retain further payments of housing benefit and not pay any rent if the
benefit continued to be paid to him. There was also no basis to set aside
the tribunal’s decision. The claimant had had JH’s written submissions
well ahead of the hearing date and had had ample opportunity to respond to
them, and produce relevant correspondence, if he wished before the
hearing.
(Signed) Michael Mark
Judge of the Upper Tribunal
Date 8 July 2015
