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[2008] UKUT 7 (AAC) (04 November 2008)

 


Decision of the Upper Tribunal
(Administrative Appeals Chamber)

My decision is given under section 12(2)(a) and (b)(i) of the Tribunals, Courts and Enforcement Act 2007:

I SET ASIDE the decision of the Bristol appeal tribunal, held on 16 August 2007 under reference 186/07/00078, because it involved the making of an error on a point of law.

I REMIT the case to a differently constituted First-tier Tribunal (Social Entitlement Chamber) and DIRECT that Tribunal to conduct a complete rehearing, in accordance with my analysis of the law below, of the issues that are raised by the appeal and, subject to the Tribunal's discretion under paragraph 6(9)(a) of Schedule 7 of the Child Support, Pensions and Social Security Act 2000, any other issues that merit consideration.

I draw the local authority's attention to my comments on further evidence in paragraphs 9 and 27.

Reasons for Decision

A. Introduction

1. This case concerns an overpayment of housing benefit and a payment of excess council tax benefit. The issue for the appeal tribunal was whether those sums were recoverable from the claimant. The local authority had decided that they were and the Tribunal confirmed its decision. Mr Commissioner Turnbull gave leave to appeal against that decision and, having received the written observations of the parties, directed an oral hearing.
2. I took the hearing in Cardiff Civil Justice Centre on 30 October 2008. The claimant attended with his friend, Ms Corinna Striker, who spoke on his behalf. The local authority, Bristol City Council, was represented by Ms Hilary Keevill. I am grateful to both Ms Striker and Ms Keevill for their clear, succinct and helpful submissions.
3. I have decided to set the Tribunal's decision aside and to direct a rehearing. In those circumstances, I will present my reasons in a way that will, I hope, assist the Tribunal in rehearing this case rather than dwell on the error that was made. I identify the error in paragraph 24.

B. My jurisdiction

4. As I explained to the parties at the hearing, the housing benefit jurisdiction of the appeal tribunal and the Commissioners was transferred to the First-tier Tribunal and the Upper Tribunal on 3 November 2008. As I had not given my decision on this appeal by then, the proceedings were transferred to the Upper Tribunal and I have given my decision as an Upper Tribunal Judge and the case will be reheard by a First-tier Tribunal. This has not affected the substance of what I have decided.

C. History and background

5. Some of the facts of this case are unclear or disputed. I will set out sufficient to make sense of my decision, indicating where they are unclear or disputed.
6. The claimant has received housing benefit and council tax benefit from 1995. In 2003, he was briefly in employment, but then received incapacity benefit and later income-based jobseeker's allowance. He secured employment from 14 November 2003.
7. Ms Striker told me that the claimant showed his offer of employment letter to the Jobcentre and was told that this would not necessarily affect his entitlement. She did not say he had showed it to the local authority. Indeed, she suggested that the claimant was not aware of the local authority as a separate awarding authority from the Jobcentre. I do not know if the Secretary of State accepts that the claimant did disclose the offer of employment. Ms Keevill did not accept that the claimant was unaware of the separate role of the local authority, as the claimant must have posted or delivered claim forms to the local authority.
8. The claimant completed a claim form in October 2003 (page 109 onwards), but no one could tell me why.
9. In an interview under caution, the interviewer referred to a claim form submitted on 11 November 2003 (page 72). That form is not in the papers and Ms Keevill could not explain what it was. It may be that a further search will throw some light on this. The local authority must produce it if it is available or tell the Tribunal that it is not in its records. The chairman of the appeal tribunal also referred to a claim for backdating in the interview (page 202). Ms Keevill could not find that reference, nor could I.
10. The claimant certainly completed a review form (page 10 onwards). He signed it over the date of 3 November 2003 and says that it was sent immediately to the local authority. The local authority disputes that and says it did not arrive until December 2003, when it was date stamped. On the form the claimant indicated that he was not getting or waiting to hear about income support or income-based jobseeker's allowance and was not working. The significance of the dispute over the date is that the claimant says that it was correct that he was not working when he signed the form. The local authority says that, even if that is so, it was not correct by the time he sent it to the local authority.
11. The local authority awarded benefit and notified this to the claimant on 22 December 2003 (pages 34 and 35). The basis of the award was stated as being that the claimant was receiving income support or income-based jobseeker's allowance.
12. The claimant's work was at first casual rather than permanent, covering for other employees as and when required. Despite Ms Striker's repeated assertion that this was work for varying hours on a casual basis, the payslips at pages 49 to 67 show regularly basic monthly pay with additions. That can only mean that the claimant was working at least the same minimum number of hours each month, albeit perhaps not evenly spread over the month. On the basis of the hourly rate suggested (around £9) and some rough mental arithmetic, he must have been working at least 35 hours a month to earn the basic pay.
13. After a year, the claimant's employment was made permanent. It is likely that he reported this to the Department for Work and Pensions, because the Department in turn alerted the local authority that he was no longer receiving jobseeker's allowance. This led the local authority, in April 2005, to suspend payment and then to supersede the awards from November 2004 (page 36). Following an investigation, the local authority discovered the original date of employment and in March 2006 made a further supersession with effect from 17 November 2003 (pages 152 to 155). The recoverable benefit calculations are at pages 167 and 168.
14. The Secretary of State has issued a recoverable overpayment decision against the claimant in respect of jobseeker's allowance. That must have been based either on a misrepresentation (an incorrect statement) made by the claimant or on his failure to disclose information he was required to report (see section 71(1) of the Social Security Administration Act 1992). Ms Striker said that he had appealed against that decision and the appeal was outstanding. Even if the decision is confirmed, it is a decision of a different decision-maker on different and unknown evidence. It is not determinative of any factual issue in this case.

D. The legislation

15. For convenience, I will set out only the legislation on housing benefit. There is equivalent provision for council tax benefit.
16. The recovery of overpayments is governed by section 75 of the Social Security Administration Act 1992:

'(1) Except where regulations otherwise provide, any amount of housing benefit determined in accordance with regulations to have been paid in excess of entitlement may be recovered either by the Secretary of State or by the authority which paid the benefit.

'(2) Regulations may require such an authority to recover such an amount in such circumstances as may be prescribed.'

17. The Housing Benefit Regulations 2006 are made under that authority.
18. 'Overpayment' is defined by regulation 99:

'"overpayment" means any amount which has been paid by way of housing benefit and to which there was no entitlement under these Regulations (whether on the initial decision as subsequently revised or superseded or further revised or superseded) and includes any amount paid on account under regulation 93 (payment on account of a rent allowance) which is in excess of the entitlement to housing benefit as subsequently decided.'

19. The circumstances in which an overpayment is recoverable are prescribed by regulation 100:

'(1) Any overpayment, except one to which paragraph (2) applies, shall be recoverable.

'(2) Subject to paragraph (4) this paragraph applies to an overpayment which arose in consequence of an official error where the claimant or a person acting on his behalf or any other person to whom payment is made could not, at the time of receipt of the payment or of any notice relating to that payment, reasonably have been expected to realise that it was an overpayment.

'(3) In paragraph (2), "overpayment which arose in consequence of an official error" means an overpayment caused by a mistake made whether in the form of an act or omission by-

(a) the relevant authority;

(b) an officer or person acting for that authority;

(c) an officer of-

(i) the Department for Work and Pensions; or

(ii) Revenue and Customs

acting as such; or

(d) a person providing services to the Department for Work and Pensions or to the Commissioners for Her Majesty's Revenue and Customs,

where the claimant, a person acting on his behalf or any other person to whom the payment is made, did not cause or materially contribute to that mistake, act or omission.

'(4) Where in consequence of an official error, a person has been awarded a rent rebate to which he was not entitled or which exceeded the benefit to which he was entitled, upon the award being revised or superseded any overpayment of benefit, which remains credited to him by the relevant authority in respect of a period after the date on which the revision or supersession took place, shall be recoverable.'

E. How the legislation applies in this case

20. There is no doubt that the claimant was paid more than he was properly entitled to by way of benefit. That is not in dispute. The issue is whether those amounts are recoverable. The starting point is that all payments in excess of entitlement are recoverable. However, there is an exception. The issue, therefore, becomes this: does the claimant fall within that exception?
21. The exception has two requirements. Both must be satisfied if the claimant is to avoid liability. If either one of them is not satisfied, the claimant is liable to repay.
22. The first condition is that there must be an official error. The second requirement is that at the time of receipt of the payment or of any notice relating to that payment, the claimant could reasonably have been expected to realise that he was receiving more than he was properly entitled to. I will deal with those in turn.

F. Was there an official error?

23. Official error involves two elements: a mistake and causation.
24. There are two possible mistakes that officials may have made in this case.
25. One possible mistake is that of the local authority. The claimant completed a review form. He signed it over the date of 3 November 2003 (page 32e), but the local authority's stamps show it as received in December 2003 (page 10). This was the annual review that was undertaken at the end of each benefit period (now abolished). The claimant ticked to show that he was neither getting nor waiting to hear about income support or income-based jobseeker's allowance (page 17). However, the local authority awarded benefit on the basis that he was receiving one of those benefits and notified the claimant accordingly (page 35). The Tribunal overlooked this evidence and did not deal with the issue that it raised. That is why I have set its decision aside. I am grateful to Ms Keevill for drawing the evidence to my attention at the hearing.
26. This evidence raises the issue whether the local authority made a mistake. That depends on what information was available to the officer who made the decision. If the officer relied on the claimant's entry on the review form, the decision was not based on what the claimant had said. It is possible that the officer may have checked on the Department for Work and Pensions's computer to see if the claimant was receiving either benefit and this may have showed that he was receiving jobseeker's allowance. The local authority had access to that computer in 2003. However, unlike today, access is not available to all decision-makers. At that time, the decision-maker had to request a higher grade officer to access that computer for information. I do not know if that was done routinely.
27. I cannot decide on the evidence before me whether or not the local authority made an official error. That will depend on whether the officer relied solely on the form or obtained information from the Department for Work and Pensions's computer. The local authority's records may show what was done, especially as a formal request was needed. It must either make that information available or tell the Tribunal that it does not exist. If it does not exist, the Tribunal will have to decide on the balance of probabilities what occurred. That will require evidence of the standard procedures at the time.
28. The other possible mistake is that of the Department for Work and Pensions. Ms Striker told me that the claimant showed the officer at the Jobcentre the letter offering him employment and explained that the work would be casual to cover for other employees as and when required. She said he was told that he was still entitled to jobseeker's allowance provided that his hours did not exceed a particular number. (She did not say what that number was.) That, she said, led the claimant to believe that the amount of his earnings was not relevant to benefit entitlement generally. The Tribunal will have to inquire and decide whether the claimant was entitled to draw that conclusion from what he was told. From what I heard at the hearing, the advice was given in the context of jobseeker's allowance and its application to other benefits was an inference drawn by the claimant. But I did not question the claimant about it and the issue will, if necessary, have to be resolved at the rehearing.
29. Ms Striker did not say that the claimant had shown the offer letter to the local authority.
30. Even if officials at the local authority or Jobcentre made mistakes, that is not enough to establish an official error. An official error only occurs if the overpayment arose as a consequence of that mistake without any material contribution by the claimant. The Tribunal will have to investigate this issue.
31. The approach to causation in the context of official error was considered by the Court of Appeal in R (Sier) v Cambridge City Council Housing Benefit Review Board [2001] EWCA Civ 1523. I will set out the facts and reasoning of that case, because Ms Striker may not have access to it. The quotations refer to the relevant provisions of the Housing Benefit (General) Regulations 1987. They have now been consolidated, without any change to their meaning, in the Housing Benefit Regulations 2006.
32. In Sier, the claimant was awarded housing benefit on a property in Cambridge on the basis that he was receiving income support. He ceased to claim income support in Cambridge, but continued to claim housing benefit there. He went to live in a property in London and claimed housing benefit and income support there. If the normal practice had been followed, the Department would have notified Cambridge City Council that the claimant had ceased to claim income support there. However, that practice was not followed. It appears (from paragraph 14) that the claimant was not aware of this practice. The issue for Court of Appeal was the causation of the overpayment by Cambridge City Council. Latham LJ said:

'25. … In the present case, one has to have regard to the general legislative purpose, which seems to me to be clear. Parliament has laid down in the Regulations that a person is to be relieved of the obligation to repay an overpayment when that has been occasioned by an administrative mistake and not by any fault on the part of the recipient. That seems to me to be the basic thrust of the Regulation and one should approach the meaning of the word "cause" and its application to the facts on that basis.

'26. Bearing that in mind, I consider that Richards J was correct in concluding that the failure to send form NHB8 to Cambridge City Council had not "caused" the overpayment even if that failure did amount to an official error. The overpayment occurred because the appellant continued to claim Housing Benefit for the Cambridge property and failed, in breach of his duty under Regulation 75 of the 1987 Regulations, to notify the Cambridge City Council of what in my judgment was clearly a relevant change in his circumstances and one which he would have appreciated. The administrative failure, if that is the appropriate way of describing it, to send form NHB8 of the Cambridge City Council did not cause any payments to be made. The most that could be said is that as a result of that failure Cambridge City Council was not alerted to the fact that the appellant was no longer entitled to the relevant payments. But it seems to me that the answer to the question posed by the Regulation is clear: this was not an overpayment caused by official error and accordingly the Regulations do not relieve the appellant of the obligation to repay the overpayment, which is the primary rule in such circumstances.'

And Simon Brown LJ said:

'29. On Mr Stagg's submission, in a case like the present, the fact that the primary cause of the relevant overpayment was the appellant's own failure, in breach of his statutory duty, to disclose the important change in his circumstances, rather than the breakdown of the department's non-statutory back-up system, is a complete irrelevance; unless perhaps it were to bear on the residual question arising under regulation 99(2) as to whether the claimant could reasonably have been expected to realise that it was an overpayment. The strength of that submission depends upon treating the question whether the appellant caused, or materially contributed to, the department's mistake as a wholly discrete one. On that approach, of course, the appellant was not responsible for the failure of the department's back-up system.

'30. Such a result, however, seems to me so entirely surprising and unsatisfactory that it requires one to approach regulation 99(3) rather differently. In my judgment a single composite question falls to be asked under regulation 99(3). One must ask: "was the overpayment the result of a wholly uninduced official error, or was it rather the result of the claimant's own failings, here his failure in breach of duty to report a change of circumstance?" The answer to that question on the facts of this case is, of course, self-evident.

'31. … If one asks the purpose for which the question arises under regulation 99(3) as to whether the overpayment was caused by an uninduced official error, the common-sense answer is so as to distinguish that sort of case from a case where the claimant himself is substantially responsible for the overpayment. It would be remarkable indeed if the claimant was liable to make repayment in a case where he merely contributed to what might be a fundamental error on the part of the department, and yet wholly escapes such liability even when himself primarily responsible for the overpayment.'

G. Could the claimant reasonably have been expected to realise he was getting more than he should have?

33. This will depend on the all the circumstances of the case, including the claimant's knowledge and experience of the benefit system and the terms in which his awards were notified to him by the local authority. I will mention some relevant factors, but they are not exhaustive.
34. The claimant has received housing benefit and council tax benefit since 1995. He must have acquired some knowledge of how the system worked in that time. However, Ms Striker said that he did not distinguish between different benefits. He saw his point of contact as the Jobcentre and did not consider the local authority as a separate awarding body. Ms Keevill pointed out that review forms would either have been sent or delivered to a local authority address. Ms Striker presented Mr Roberts as an innocent abroad in the benefit system. I did not question him and so cannot form my own opinion. The nature of the claimant's employment may provide an objective measure his capacity to understand the benefit system.
35. The terms in which the local authority's decision was notified are also relevant. The local authority told him that he was being awarded benefit because he was receiving income support or income-based jobseeker's allowance. The Tribunal will have to decide whether, given the decision notice and the fact that the claimant was receiving jobseeker's allowance, it was reasonable for him to believe that the amount of his earnings would affect his entitlement to other benefits. This point is linked to the advice given at the Jobcentre, on which I have already commented. The Tribunal will have to consider whether the claimant is really so naïve as to believe that the amount of his earnings was completely irrelevant to all benefits.
36. Of course, if the claimant knew full well that he was not entitled to jobseeker's allowance, he could not say that it was reasonable for him to rely solely on the terms of the decision notice and the fact that he was improperly receiving that benefit. I am not suggesting that the claimant did know that he was not entitled to jobseeker's allowance. But this is one of the possibilities that the Tribunal may properly investigate and he should be prepared to meet it.

H. The local authority's handling of the appeal

37. I want to comment on two aspect of the local authority's handling of this case.
38. My first comment concerns the way the case was presented to the Tribunal. The chairman was critical of this. She described the submission as incompetent. The index did not match the documents provided. Many documents were provided later and unindexed. The decisions under appeal were not initially produced and had not been adequately explained. It had taken two adjournments to get the relevant documents and the calculation of the overpayment and excess benefit from the local authority. The chairman concluded: 'The local authority has thrown a bundle of papers in front of the Tribunal and hoped that somewhere in there would be the basis to uphold the decision made.' The chairman also commented on the failure to send a presenting officer despite a direction to do so.
39. I told Ms Keevill that I hoped her authority had taken on board what the chairman said. I also warned her of the new powers of the First-tier Tribunal from 3 November 2008. It may be helpful if I set out some of them. They are contained in the Tribunal Procedure (First-tier Tribunal) (Social Entitlement Chamber) Rules 2008. Rule 5(2) confers case management powers to give directions in relation to the conduct of the proceedings. That includes power to require a party to produce a bundle for a hearing (rule 5(3)(i)). And that means a properly constructed and indexed bundle, not just a collection of documents presented in no discernible order. A party is not entitled simply to ignore a direction. The proper course is either to comply with it or apply for it to be amended, suspended or set aside under rule 6(5). Rule 7(2) gives the Tribunal powers to take such action as it considers just for failure to comply with a direction.
40. These rules do not exist for their own sake. They exist, and must be interpreted and applied, to enable the Tribunal to deal with a case fairly and justly (the overriding objective). That includes ensuring, so far as practicable, that the parties are able to participate fully in the proceedings (rule 2(2)(c)). A benefit claimant cannot participate fully in the proceedings if the documents are presented in a way that even an experienced Tribunal Judge finds difficult to unravel and understand. This power gives legislative form to the practice followed by the social security appeal tribunals of taking an enabling approach to assist parties to understand and participate in the proceedings. It is now imposed not only on the Tribunal but also on the parties, who are required by rule 2(4) to co-operate with the Tribunal in furthering the overriding objective and generally.
41. My second comment concerns the Commissioners' decisions that the local authority sent to the claimant in preparation for the hearing before me. The local authority was entitled to cite them and it was proper to send them to the claimant in advance of the hearing. However, the claimant and Ms Striker misunderstood their significance and assumed that the authority was confusing this case with cases involving other people.
42. This misunderstanding regularly occurs when previous decisions are sent to claimants. The same happened in another case in my Cardiff list, involving a different local authority. It would save misunderstanding if local authorities were to make clear when sending out authorities on which they rely that they are relevant for the legal principles on which they were decided and not for the particular facts of the case.

I. Disposal

43. I allow the appeal and direct a rehearing. I make the following comments so that the claimant will understand the nature of the rehearing.
44. The rehearing will not be limited to the grounds on which I have set aside the Tribunal's decision. The Tribunal will consider all aspects of the case, both fact and law, entirely afresh.
45. The Tribunal will not be limited to the evidence and submissions before the Tribunal at the previous hearing. It will decide the case on the basis of the relevant evidence and submissions made at the rehearing.
46. The Tribunal must come to its own conclusions on issues of both fact and law that it considers. Neither my decision itself nor anything I have written in my reasons for decision is an indication of the likely outcome of the rehearing. Nor will the Tribunal be bound by any conclusions of fact or law reached by the Tribunal in the decision that I have set aside.

Signed on original on 4 November 2008

Edward Jacobs Upper Tribunal Judge