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[2006] UKSSCSC CH_3497_2005 (06 July 2006)

CH/3497/2005

CH/3498/2005

CH/3499/2005

DECISION OF THE SOCIAL SECURITY COMMISSIONER
1. For the reasons given below, I allow these three appeals, relating to seven decisions of the Harlow District Council, which are brought with the leave of a commissioner. I set aside the decisions of the Harlow Appeal Tribunal given in each case on 23 March 2005, and I remit all the cases for rehearing in accordance with the directions given below. I express no view as to the likely outcome of the new hearings which I am directing. The new tribunal is likely to find it very difficult to follow the course of events from the three bundles which were before the previous tribunal, and would, in my view, be assisted by a single paginated chronological bundle of documents covering all the appeals. The District Chairman may wish to give directions as to this to avoid further delay.

Delays in referring these appeals to the Appeals Service

2. Before dealing with the merits of the appeals, I must note what appears to be a very serious failure on the part of the Harlow District Council to deal properly or in a reasonable time with the claimant's appeals. As will appear from the detailed history of events below, there were before the tribunal on 23 March 2005 appeals from no fewer than seven decisions refusing the claimant housing benefit. Two of those appeals had been properly made in June and October 2003. On each occasion the local authority wrote to the claimant that the appeal was being sent to the Appeals Officer for referral to the Appeals Service. So far as appears from the papers before me, this was not done. An assurance that it would be done within the next six weeks was given by letter of 18 August 2004, but again it did not happen. In most of the other cases, it would appear that no proper notice of the claimant's right of appeal was ever sent to him. By letters of 17 and 18 August 2004 appeals were invited against the other five decisions and appeals were received on 22 September 2004. By letter of 23 September 2004, the claimant was notified that these appeals would be passed on to the Appeals Service, but again this did not happen. It was only on 31 January 2005, over 19 months after the first notice of appeal had been served on the local authority, that all seven appeals were finally referred to the Appeals Service.
3. There is no provision in the Housing Benefit and Council Tax Benefit (Decisions and Appeals) Regulations 2001 for dealing with the process by which local authorities refer appeals which are accepted as valid to the Appeals Service (there is such provision in certain problem cases in regulation 20(7) and (8)) and there is no time limit laid down within which this is to be done. I note, however, from the CPAG volume on Housing Benefit and Council Tax Benefit Legislation, 18^th edition, 2005/2006, at p.957 that the Local Government Ombudsman has made it clear in a report in Complaint No.01/C/13400 against Scarborough BC that authorities should aim to refer all appeals to the Appeal Service within 28 days. Even the unfulfilled promise in August 2004 to refer the long overdue 2003 appeals within 6 weeks did not meet that requirement.
4. Under Article 6 of the European Convention on Human Rights a claimant is entitled to have his appeal heard within a reasonable time by an appeal tribunal. It is of crucial importance to many benefits claimants to have their appeals heard very promptly. This is clearly liable to be the case in housing benefit disputes, where delay could cost them their homes. In this case, it would seem that at least in the case of the two 2003 appeals, and possibly also in the other cases, the claimant may have been denied a hearing within a reasonable time by the local authority's failure to forward the appeals promptly to the Appeals Service.
5. Under section 6(1) of the Human Rights Act 1998, it is unlawful for a public authority to act in a way which is incompatible with a Convention right. "An act" for this purpose includes a failure to act (see section 6(6) of that Act). I have not sought or received any explanation from the Harlow District Council for the delays in the processing of these appeals, but it appears to me that it may well have acted unlawfully at least in the case of the two 2003 appeals.
6. In any event, it is wholly unacceptable to the proper operation of the system of appeals in housing benefit and council tax benefit appeals that delays of this sort should occur. If a local authority receives an appeal, it must be processed promptly and passed to the Appeals Service without delay. This applies also in cases where there is an issue which requires to be dealt with by a legally qualified panel member under regulation 20(7) or (8) of the 2001 Regulations.

The law

7. Housing benefit is paid in respect of a dwelling in Great Britain which a person occupies as his home (Social Security Contribution and Benefits Act 1992, s.130(1)(a)). Regulation 5 of the Housing Benefit (General) Regulations 1987 (the Housing Benefit Regulations) lays down rules as to the circumstances in which a person is or is not to be treated as occupying a dwelling as his home. Regulation 5(1) and (2) provide as follows:

"(1) Subject to the following provisions of this regulation, a person shall be treated as occupying as his home the dwelling normally occupied as his home-

(a) by himself or, if he is a member of a family, by himself and his family…

and shall not be treated as occupying any other dwelling as his home.

(2) In determining whether a dwelling is the dwelling normally occupied as a person's home for the purpose of paragraph (1) regard shall be had to any other dwelling occupied by that person or any other person referred to in paragraph (1) whether or not that dwelling is in Great Britain."

8. Regulation 7(1) of the Housing Benefit Regulations provides that a person who is liable to make payments in respect of a dwelling shall be treated as if he was not so liable if, amongst other matters, "the tenancy or other agreement pursuant to which he occupies the dwelling is not on a commercial basis".

The facts of this case

9. It would appear from the three files before me that in 1998 the claimant was homeless and that he became a lodger in the home of D, with his own room, on a bed and breakfast basis. There seems to have been no prior connection between the claimant and D. According to D, and there seems no reason to doubt what he says in this respect, they were put in touch by an agency finding lodgings for homeless people.
10. The claimant received housing benefit from 1998 and there appears to have been no problems until May 2002, when his income support was terminated at least temporarily and he had to re-apply for housing benefit on the basis of his income. In August 2002 letters were prepared re-awarding housing benefit, but it would appear from paragraph 5.8 of the local authority's submissions in CH/3498/2005 that the letters were not sent out and on 19 August 2002 there appears to have been a request that payment should be suspended while investigations took place because of suspicions that the claimant was no longer living at D's property. At that point it appears that the letters awarding benefit were sent out together with a letter of 19 August 2002 stating that payment had been suspended as the local authority was unable to confirm the claimant's residency at the property.
11. The investigation appears to have been prolonged, continuing for about a year. There is evidence on the files suggesting that the claimant could not be found on visits to the property, and that D was having to contact him by telephone, although it remained his electoral address, and he retained the room there. He was observed on at least one occasion, on 8 November 2002, at another property occupied by a lady and a child. The child was discovered to have the same surname as the claimant (see the fraud investigation report at p.29 of file 3498) and it is said that she was believed to be the daughter of the claimant (file 3498, p.1H, para.5.38).
12. It is plain from the conclusion of the report that the fraud investigator preparing the report suspected that the claimant was not living at the property and was possibly residing at the property where the child with his surname lived. In other words, there was a suspicion that the claimant was living with a partner and daughter as a family, and that he was not living at D's property although he retained the room there.
13. For reasons which are not explained, the local authority failed to reach any decision on the issue whether to revise or supersede the award of housing benefit apparently made on 2 August 2002 in respect of the claim made in May 2002. Apparently, instead of pursuing this issue, the claimant made five further claims for housing benefit between 17 April 2003 and 9 January 2004 (file 3498, p.100). In two of these applications, dated 19 August 2003 and 9 January 2004, the claimant stated that he did not pay rent for his room (file 3497, p.50, file 3499, p.51, although in this latter case the claimant also stated at p.39 that nobody lived with him but the person who lived with him paid £50 per week rent or money for board and lodging to him, suggesting some difficulty in filling in the form).
14. A new claim for housing benefit made on 17 April 2003 was rejected by letter dated 10 June 2003 (3498, p.98) on the grounds that the local authority's officers could not confirm residency and that the rental agreement was not on a commercial basis as D had taken no action to obtain payment from him or to have him removed from the property over a long period of time, and had not collected from him the shortfall between the stated rent and the housing benefit previously paid. The claimant appealed by a form dated 18 June 2003 (3498, pp.1N-2) and by letter of 19 June 2003 the local authority wrote to say that the case had been passed to its Appeals Officer for referral to the Appeals Service 3498, p.99).
15. Despite this letter, and despite a further letter dated 18 August 2004 (p.100) stating that this and another appeal, referred to below, would be submitted to the Appeals Service within the next six weeks, it is apparent from the tribunal file that the appeal was not in fact referred to the Appeals Service until 31 January 2005. This is a wholly unacceptable delay for which no explanation or apology has been offered by the local authority.
16. The next claim has a date stamp from the local authority indicating that it was returned on 10 June 2003 (3497, p.3). By a letter dated 30 September 2003 (3497, p.66), a senior member of the local authority's Housing Benefits Team wrote to the claimant that that claim had been passed to him by the local authority's Anti Fraud and Corruption Team with a recommendation that "no Benefit should not be paid" [sic] as they had failed to confirm the claimant's residency as required by regulation 5(1) of the Housing Benefit Regulations. The claim was disallowed accordingly and the writer went on to say that he did not believe that the rental arrangement was on a commercial basis, giving the same reasons as were given in the letter of 10 June 2003 when rejecting the previous claim. The copy letter on the file refers to appeal rights given overleaf, although there is no copy of the other side of the letter on the file, so that it is unclear whether proper notice of appeal rights was given.
17. The claimant responded by sending in an appeal notice, received on 14 October 2003, which again produced a letter from the local authority, dated 15 October 2003, stating that the case had been passed to its Appeals Officer and that the appeal would, in due course, be referred to the Appeals Service. Once again, it is apparent from the tribunal file that, despite the assurance in the letter of 18 August 2004, it was not so referred until 31 January 2005. Once again, no apology or explanation for this delay has been offered by the local authority.
18. The next claim was the incorrectly completed claim form in August 2003, which does not appear to have produced any response from the local authority. There followed a claim dated 6 October 2003 (file 3499, pp.2-15), which it would appear from a faint date stamp at p.2 to have been received by the local authority on 17 October 2003. In the form the claimant stated that he was receiving incapacity benefit (3499, p.3) and was waiting for sickness benefit (3499, pp.4, 9) The local authority appears to have responded with a standard form dated 17 October 2003 asking for an income support/JSA letter (although the claimant had stated at p.5 of his claim form that he was not receiving these benefits) and an incapacity benefit award letter. Further investigation by the local authority appears to have revealed that the claimant had had a claim for income support disallowed on 13 August 2003, but did have an award of income based jobseeker's allowance (3499, p.18). An internal memorandum of the local authority dated 12 November 2003 indicated that the claimant was on income support and on both types of jobseeker's allowances, although the basis for this is unclear.
19. By a letter dated 12 November 2003 (3499, p.20) the local authority informed the claimant that he did not qualify for benefit because he had not provided all the evidence requested to work out his claim. Reference was made to regulation 73 of the Housing Benefit Regulations and regulation 63 of the Council Tax Benefit Regulations. I am unclear whether any of the information sought by the local authority was ever provided. This letter contained no notice of appeal rights, and it does not appear that there was any appeal at the time.
20. There followed the further application for benefit, received on 9 January 2004, to which I have already referred (file 3499, pp.32-64). Surprisingly, this seems to have led to an award of housing benefit of £44.05 from 12 January 2004 to 18 January 2004 but to a rejection of the claim for benefit from 19 January 2004 because the claimant's income was too high for housing benefit (3499, pp.66-67).
21. Finally, there appears to have been a claim for housing benefit received on 4 August 2004 (3499, pp.84-98). A copy letter on the same file dated 17 August 2004 from the local authority (3499, pp.99-100) indicates that that claim, which is there stated to have been one of seven claims, has been disallowed that day. It lists the same six other claims as are also listed in the letter of 18 August 2004 at 3498, p.100, all of which are stated to have been disallowed, and invites appeals in respect of all except the two where appeals have already been submitted. Like the letter of 18 August 2004, it states that the two appeals already made would be submitted to the Appeals Service in the next six weeks.
22. By letter dated 10 September 2004, the local authority wrote to the claimant in response to a request by him for a more detailed explanation concerning the decisions on which he had yet to appeal. The letter stated that the writer was satisfied that from the commencement of the visits made in 2002 the claimant had no proven liability for rent and that the tenancy, if it was established, was not on a commercial basis.
23. By letter of 22 September 2004 (3499, p.1K) the claimant appealed all five outstanding decisions on the grounds that the claimant had always had a liability for rent on a commercial basis and since his first claim had lived continuously in the property. That letter was acknowledged by letter of 23 September 2004 from the local authority, which stated once again that the case (meaning these additional appeals) had been passed to the local authority's Appeals Officer and would, in due course, be referred to the Appeals Service. Like the other appeals, it is apparent from the tribunal file that they were in fact only passed to the Appeals Service on 31 January 2005.
24. Only one tribunal file was prepared for all five outstanding appeals.

The tribunal's decision

25. The tribunal gave a single decision on all the appeals before it. In paragraph 3, it found that the claimant's previous claim for housing benefit, received on 17 May 2002, had been disallowed on the basis that satisfactory residency had not been established. It had in fact originally been allowed, but payment had been suspended, and I infer that the tribunal treated the letters of 17 and 18 August 2004 as decisions revising or superseding the original decision.
26. The tribunal goes on to state in paragraph 4 that the claimant had appealed this decision but had failed to provide any evidence in support of his appeal. I do not understand this. It is plain that the claimant did provide evidence, which the tribunal itself refers to in paragraph 9 of the decision. In the end the tribunal reached no decision on any of the appeals that the claimant was not occupying the premises as his home. Rather it found that the haphazard nature of the residency coupled with D allowing him to continue to keep the room despite not paying any rent which led the tribunal to conclude that the occupancy was not on a commercial basis (paragraph 10). This finding was repeated in substance in paragraph 27 where the tribunal referred to the claimant's many absences and his failure to communicate with the local authority to assist in determination of the true nature of the tenancy, and the failure of D to enforce the arrears of rent as leading it to the conclusion that the tenancy was not on a commercial basis.
27. In my judgment, the tribunal's reasoning was in error of law and its decision must be set aside. The first issue before the tribunal was whether the room occupied by the claimant was the dwelling normally occupied as his home for the purposes of regulation 5. The infrequency of his presence there is a relevant factor on that issue, as is the question whether the claimant had any other place which he should be treated as occupying as his home. This raised the question, which was never addressed, as to whether the address where the claimant's apparent girl friend and daughter lived was in fact the dwelling which he occupied as his home. He does not appear to have been questioned as to either his relationship with them, or the time he spent at their home, or the nature of his presence there.
28. There is no reason to regard the claimant as homeless, and, so far as appears from the papers before me, there is no evidence that the claimant was ever absent from the room for any period which would take him outside the protection afforded by regulation 5(8) of the Housing Benefit Regulations. The burden was on the claimant to show that he occupied the room at D's house as his home, but in the absence of evidence showing that it was at least as likely that he occupied, or also occupied, as his home either the dwelling where his putative girl friend and daughter lived, or some other place, it seems to me that on the facts of this case the claimant would discharge that burden. The new tribunal will need to investigate these matters, and the claimant, and possibly D, will have to give evidence as to them. The fact, by itself, that the claimant was frequently not to be found at D's house cannot by itself lead to the conclusion that his room in it was not occupied as his home. Nor, by itself, can the fact, if established, that his daily life centred around his girlfriend and child, and that he spent much of each day, and some nights, at their home (cf.CH/1786/2005, where Mr. Commissioner Howell QC rejected the "centre of interest" test and stated that the question whether a person was occupying a dwelling as his home had to be determined as a single factual question).
29. However, a failure on the part of the claimant to give a proper explanation as to his absences consistent with his continuing occupation of the room as his home, might entitle a tribunal to conclude, taking into account other evidence as to any possible other home that the claimant might have, that at some point the claimant had acquired a new home. The tribunal may have to find when that point was if it affected the many decisions under appeal. It would also have to consider the situation at each of the dates of the decisions under appeal. That means that the tribunal will have to consider the issue effectively at all times between May 2002 and August 2004.
30. The question of commerciality will not arise at any stage when the claimant was not occupying the room as his home. If it does arise, because he was occupying the room as his home, then it appears to me at present that there is no connection between the commerciality of the letting and the amount of time the claimant spends in the room. There was what appears to have been a proper arm's length letting in 1998 to the claimant to occupy the room as his home. A landlord is not normally concerned with how much time his tenant chooses to spend there, and at present that appears to be the case here both in 1998 and between 2002 and 2004. It appears to me that the tribunal erred in law in treating the claimant's absences as material to the question of commerciality.
31. The fact that D allowed the claimant to remain without paying rent for some years, and did not seek the difference between the housing benefit, when it was paid, and the rent are factors which a tribunal may take into account, but in doing so, it must state why it rejects D's evidence on this issue. That evidence appears to have been that (1) the claimant had almost no money and he was satisfied with the housing benefit payments, particularly as he was also on benefit and any sum he recovered would come off his own benefit (a possible commercial reason for not spending time in a manner that could not benefit himself); (2) like many landlords of persons on housing benefit, he knew from the start that his only prospect of receiving rent was if the claimant had housing benefit, and that depended on his successfully appealing the local authority's decision – he could not possibly have expected in 2003 that it would take until 2005 for the appeal even to be heard; and (3) as with other landlords, he had taken a commercial decision that if he obtained possession of the room from the claimant, the claimant would have no incentive to pursue the appeals and he would have no prospect of recovering the outstanding rent.
32. No explanation has been given by the tribunal for rejecting those contentions. The question of parties not operating their agreements in accordance with their legal terms in the context of housing benefit was considered by Mr. Commissioner Jacobs in CH/1076/2002, where he said:

"15. The law recognises that parties do not always operate their agreements in accordance with their legal terms. As I wrote in CH/1618/2002, paragraph 18:

'It is common experience that contracts are often not implemented to the letter in all circumstances. There is much give and take in the operation of contracts.'

The law has a variety of concepts that allow the parties' practice to override their legal agreement. Waiver and estoppel are but too [sic] examples. These concepts may operate either permanently or merely in relation to particular facts. So, the fact that the parties have chosen not to act in accordance with their legal agreement is not necessarily inconsistent with their arrangement being on a commercial basis. But nor is it irrelevant. The tribunal had to analyse the significance of the landlord's conduct in this case.

33. Further, as Mr. Commissioner Jacobs stated in CH/296/2004, at the end of para.26

"There are many landlords who are prepared to accept the rent that can be obtained rather than insist on the full contractual rent and others who are prepared to be patient while the claim and appeal process is in process."

34. In R(H) 1/03, at paragraph 18.6, Mr. Commissioner Jacobs held that the test that must be applied is one of dominant purpose of the arrangement. To find that arrangement was not on a commercial basis, the tribunal must be satisfied that on the balance of probabilities the principal basis on which the arrangement was made was not a commercial one.
35. That finding can still be made even if the arrangement was originally a commercial one. However, regulation 7(1) requires that it is the tenancy or the agreement that is not on a commercial basis and the tribunal would need to make findings as to what had changed to make the tenancy or agreement as in force at a particular time non-commercial. It is not enough to find that the landlord was not acting commercially in his failure to enforce the terms of the agreement.
36. If the new tribunal does conclude that the claimant was, during all or some specified part or parts of the period covered by the seven appeals, occupying the room as his home, and if the tribunal does not find it established during any such period that the agreement pursuant to which he occupied the room was not on a commercial basis, then it will need either to determine itself his entitlement to housing benefit on each application made or to remit the matter to the local authority to determine that question on the basis of its findings. It will also need to determine the validity of the purported decision in August 2004 disallowing the original claim made on 17 May 2002 although there had already been a decision awarding benefit – see paragraph 10 above.
37. There is no proper explanation by the local authority of its purported decision to disallow the May 2002 claim having previously awarded benefit. On its face, it could only take effect, if at all, as a revision or supersession of the previous award, and if the ground for revision or supersession is not established on the appeal, it would seem to follow that the original award in August 2002 would stand and the claimant would be entitled to housing benefit at £50 per week pursuant to that award.
38. However, that award would not seem to be capable of surviving the award for one week in January 2004 on the application made that month, and the refusal of further housing benefit for future weeks on the basis that the claimant's income was too high. Again, the tribunal will need to consider the validity of the purported decision in August 2004 disallowing the January 2004 claim after those earlier decisions had been made in January 2004. It will also have to consider whether the appropriate course is to treat the appeal as being from the decision in January 2004 refusing benefit.
39. In the absence of any proper submissions or evidence from the local authority to explain why it purported to disallow claims in August 2004 that it had already dealt with in August 2002 and January 2004, I do not propose to express any final view on these issues, or on any issues which might arise from the matters set out in paragraphs 18 and 19 above, all of which have only become apparent on my analysis of three inter-related files, and which it would have been impossible for a tribunal to disentangle in the time available to it.
40. The morass of partially conflicting documentation which the local authority has generated appears to be the result of its failure to deal properly with appeals and to keep proper files and records of its own decisions.
41. The appeals are all allowed, and I make the order set out in paragraph 1 of this decision.

(signed on the original) Michael Mark

Deputy Commissioner

6 July 2006