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[2009] UKUT 60 (AAC) (31 March 2009)
Housing and council tax benefits
liability, commerciality and contrivance

Decision of the Upper Tribunal
(Administrative Appeals Chamber)

This decision is given under section 11 of the Tribunals, Courts and Enforcement Act 2007:

The decision of the Birkenhead appeal tribunal under reference 062/08/00922, held on 23 October 2008, did not involve the making of an error on a point of law.

Reasons for Decision

1. In this case, I have the happy task of deciding whether two of my decisions as a Social Security Commissioner were consistent and, if they were not, which was correct. In those circumstances, I offered to transfer the case to another Upper Tribunal Judge if either party wished. Both have declined my offer.

A. The issue and how it arises

2. In July 2005, the claimant moved into a Housing Association property and claimed housing benefit. This was awarded. On 28 March 2008, he reported that he had moved to a new property, which he was renting from his sons. He had previously owned the property into which he moved. That raises the issue whether he was entitled to housing benefit in respect of that property. This depends on the interpretation and application of regulation 9(1)(h) of the Housing Benefit (Persons who have attained the qualifying age of state pension credit) Regulations 2006.

B. The legislation

3. Section 130(1) of the Social Security Contributions and Benefits Act 1992 provides:

'130 Housing benefit

(1) A person is entitled to housing benefit if-

(a) he is liable to make payments in respect of a dwelling in Great Britain which he occupies as his home; …'

Section 137(2) provides for regulations to be made:

'137 Interpretation of Part VII and supplementary provisions

…

(2) Regulations may make provision for the purposes of this Part of this Act-

…

(h) as to circumstances in which a person is or is not to be treated as occupying a dwelling as his home; …'

Regulation 9(1)(h) is made under that authority:

'9 Circumstances in which a person is to be treated as not liable to make payments in respect of a dwelling

(1) A person who is liable to make payments in respect of a dwelling shall be treated as if he were not where-

…

(h) he previously owned, or his partner previously owned, the dwelling in respect of which the liability arises and less than five years have elapsed since he or, as the case may be, his partner, ceased to own the property, save that this sub-paragraph shall not apply where he satisfies the appropriate authority that he or his partner could not have continued to occupy that dwelling without relinquishing ownership; …'

C. My previous decisions

4. In CH/0716/2002, I was concerned with the interpretation of regulation 7(1)(h) of the Housing Benefit (General) Regulations 1987. At that time, the provision read:

'(h) he previously owned, or his partner previously owned, the dwelling in respect of which the liability arises except where he satisfies the appropriate authority that he or his partner could not have continued to occupy that dwelling without relinquishing ownership; …'

5. I decided that the prohibition only applied if there had been continuity of residence in the dwelling. It did not apply if there had been any break in residence, however short. I said:

'8. It is possible to read the provision in two ways.

9. On the first reading, the provision falls into two parts, each of which is interpreted separately from the other. The first part – 'he previously owned, or his partner previously owned, the dwelling in respect of which the liability arises' - contains a general prohibition. The second part - 'except where he satisfies the appropriate authority that he or his partner could not have continued to occupy that dwelling without relinquishing ownership' – contains an exception. On this reading, the prohibition applies regardless of whether or not there has been continuity of residence. This is how the tribunal interpreted regulation 7(1)(h).

10. On the second reading, the provision falls into the same two parts, but the second is relevant to the interpretation of the former. On this reading, the reference to continuity informs the interpretation of the scope of the general prohibition, limiting it to cases in which the claimant has remained in occupation of the dwelling despite the change of ownership.

11. I prefer the second reading for these reasons. (a) It is more in keeping with principles of interpretation to read a provision as a whole. (b) It produces a more rational result. Why should someone in the claimant's position who has been out of occupation the dwelling for over a decade be deprived of housing benefit? (c) It is consistent with the obvious policy underlying regulation 7(1). It is clearly designed to identify cases in which there is a risk of abuse of the housing benefit scheme. The categories may be drawn in a way that can produces rough justice. No doubt, that was based on a policy decision to err on the side of protection for the scheme rather than fairness in an individual case. However, given that the categories can produce rough justice, it is appropriate to give them the narrowest interpretation that is consistent with the policy of protecting the scheme. (d) It takes account of the other categories of exclusion in regulation 7(1). My preferred reading, if taken in isolation, undoubtedly excludes from its scope cases in which there is an obvious risk of abuse. For example, a claimant may have been out of occupation for only a few days rather than for a few years. However, the other categories will be sufficient to exclude those cases where there is an abuse. In particular, the case is almost certain to fall under regulation 7(1)(l) as an attempt to take advantage of the housing benefit scheme. There may be exceptional circumstances in which a sudden change of circumstances allows the claimant to occupy the dwelling shortly after selling it. If there is a genuine reason that shows that advantage is not being taken of the scheme, there is no need for the claimant to be excluded from entitlement. So, the second reading of regulation 7(1)(h) produces an interpretation that takes account of the operation of the exclusions as a whole.'

6. In CH/3616/2003, I was concerned with the amended version of regulation 7(1)(h), which is the same terms as regulation 9(1)(h). I decided that this required a different interpretation and that the prohibition applied regardless of whether there had been continuity of residence. I began by referring to CH/0716/2002:

'11. I had to, and did, take account of the nature of the provision as an anti-abuse measure. I also had to interpret it in the context of the other anti-abuse provisions. But it is clear from my reasoning that I was influenced by the open-ended operation of the provision. It operated without any limit on time. In that case, the claimant had not been in occupation of the premises for over a decade when he resumed occupation, this time as a tenant. Even for an anti-abuse measure, it was capable of operating in a draconian manner in circumstances that were far removed from any possibility of abuse.

12. The new version is more limited in its operation. It has a time limit of 5 years. In those circumstances, the features that troubled me in the former version do not apply. The new, time-limited version strikes a balance between the broad brush nature of an anti-abuse provision and the interests of a claimant who may quite innocently come back into occupation of the property. In those circumstances, there is no reason to limit the scope of the provision to cases where there is continuity of occupation. That requirement is limited to the exception at the end of the provision.'

7. When I made my decision in CH/0716/2002, I was aware that the provision had already been amended and said:

'8. … That amendment, or the reason why it was considered appropriate, cannot affect the proper interpretation of the provision as originally enacted.'

D. Other views

8. My conclusion in CH/3616/2003 found favour with at least two other Social Security Commissioners: Mr Commissioner Howell in CH/4733/2003 and Mr Commissioner Angus in CH/3220/2005, although both thought my decision in CH/0716/2002 was wrong.
9. My interpretation did not find favour with the editors of CPAG's Housing Benefit and Council Tax Benefit Legislation . To quote from page 272 of the 21^st edition for 2008-2009, my analysis 'does not seem logical or in accordance with the normal rule of interpretation'.

E. Conclusion on interpretation

10. I confirm the interpretation I gave in CH/3616/2003 for the reasons I gave in that decision. It is, to me, the natural meaning of the language used that continuity of residence is relevant only to the exception. The prohibition applies regardless of whether there has been continuity of residence. Continuity is only necessary to come within the exception, which allows for entitlement to housing benefit within five years. That is indicated by wording of the exception that the claimant 'could not have continued to occupy that dwelling without relinquishing ownership'. This is the only place in which continuity is mentioned. I gave a different interpretation to the previous version of the legislation in CH/0716/2002, because it was open-ended in its operation. This is what led me to interpret the provision differently from the natural meaning of its language. That consideration no longer applies, as the provision is limited to five years.

F. Effect of analysis so far

11. On my analysis of the law, the claimant does not come within the exception, because there was no continuity of residence. Nor did he cease to own the property five years before returning, as he moved out of the property in 2005, transferred legal title to his sons in 2006 and returned in 2008.

G. When did the claimant cease to be the owner of the property?

12. However, the claimant's representative has argued that five years have elapsed, because his sons became owners of the property in 2002, when they assumed financial responsibility for the property on the understanding that the property would be transferred into their names. If that is correct, five years have elapsed. I reject that argument. because it overlooks the definition of owner in regulation 2(1):

'"owner" means-

(a) in relation to a dwelling in England and Wales, the person who, otherwise than as a mortgagee in possession, is for the time being entitled to dispose of the fee simple, whether or not with the consent of other joint owners'.

As I said in CH/3616/2003:

'7. … There is no provision that cognate terms must be interpreted according to this definition, but it is obviously sensible that they should. So, 'owned' in regulation 7(1)(h) must be interpreted in accordance with this definition.'

13. In this case, it was the claimant and his wife who were entitled to dispose of the fee simple, not their sons, until they transferred the fee simple to them in 2006. It may be that the sons had a beneficial interest in the property (either proportionate to their expenditure or, perhaps the whole of the beneficial interest), but the claimant (with the consent of his wife) was able to dispose of the legal title until 2006. That makes him an owner for the purpose of housing benefit law: see the analysis of the Court of Appeal in Burton v New Forest District Council, reported as R(H) 7/05.

H. Could the claimant have remained in the property?

14. As the claimant had still been an owner of the property within five years of his claim for housing benefit, he was only entitled to benefit if (a) there was continuity of residence and (b) he could not have continued to occupy without relinquishing ownership. As there was no continuity of residence, (b) does not arise for consideration. However, I will deal with it for completeness, albeit it briefly.
15. The evidence shows only that the claimant decided to make an arrangement with his sons. It does not show that he investigated whether he could have help with his housing costs through income support or could enter into a commercial arrangement to release some of the equity in the property. In those circumstances, the evidence is not sufficient to show that the claimant could not have retained his ownership. His appeal would fail on this ground also.

I. Disposal

16. I dismiss the appeal.

Signed on original on 31 March 2009

Edward Jacobs Upper Tribunal Judge