DECISION OF THE UPPER TRIBUNAL
(ADMINISTRATIVE APPEALS CHAMBER)

The DECISION of the Upper Tribunal is to allow the appeal by the local authority.

The decision of the Liverpool First-tier Tribunal dated 11 March 2010 under file reference 062/09/01954 involves an error on a point of law.  The First-tier Tribunal's decision dated 11 March 2010 is therefore set aside.  The Upper Tribunal remakes the decision in the following terms:

The claimant’s appeal against the local authority’s decision dated 13 July 2009 is allowed in part rather than in full.  The overpayment of housing benefit for the period from 1 February 2009 to 13 July 2009 and the excess payment of council tax benefit for the same period are not recoverable from the claimant.  However, the excess payment of council tax benefit for the period from 14 July 2009 to 31 March 2010 is recoverable from the claimant.  This is because of the operation of regulation 83(5) of the Council Tax Benefit Regulations 2006.

This decision is given under section 12(2)(a) and (b)(ii) of the Tribunals, Courts and Enforcement Act 2007.

REASONS FOR DECISION

Summary of the Upper Tribunal’s decision

1.	I allow the local authority’s appeal to the Upper Tribunal.  I am doing so because there is a legal error in the decision of the First-tier Tribunal.  I am also setting aside the First-tier Tribunal’s decision.

2.	I could send the case back to be reheard and re-determined by a different First-tier Tribunal.  However, I do not think that would be a sensible course of action, given that the First-tier Tribunal has either found the relevant facts carefully or they are apparent from the papers on file.  I am accordingly re-making the decision.

3.	In summary my decision is that the overpayments of housing benefit (HB) and council tax benefit (CTB) for the period from 1 February 2009 to 13 July 2009 are not recoverable from the claimant.  That outcome is the same as decided by the First-tier Tribunal.  The excess payment of CTB for the period from 14 July 2009 to 31 March 2010 is recoverable from the claimant. That outcome is different to that decided by the First-tier Tribunal.  

4.	Although it is not formally part of the Upper Tribunal’s decision, it is now plainly desirable for the local authority to provide the claimant with a clear breakdown of the amount (if any) which is still outstanding, taking into account any payments which have already been made by the claimant.

The background to this appeal

5.	The claimant is a lone parent now aged 23.  On 26 January 2009 she made a claim for HB and CTB in respect of her home (“No 26”).  She was awarded HB and CTB from 1 February 2009.

6.	In July 2009 the claimant completed a benefit review form as part of a home visit.  The local authority then realised that although they had taken into account the claimant’s child benefit, they had not included her income from child tax credit (CTC) and working tax credit (WTC).  

7.	On 13 July 2009 the local authority issued a revised decision, recalculating the claimant’s HB and CTB entitlement from 1 February 2009 and stating that she had been overpaid both benefits in the meantime.  The period of the HB overpayment was from 1 February 2009 to 13 July 2009 and the amount recoverable was said to be £811.00.  The CTB excess payment was said to be £686.03, covering the longer period from 1 February 2009 through to 1 April 2010.  That decision was confirmed on 24 August 2009.

8.	The claimant appealed, asking for a hearing on the papers.  The First-tier Tribunal allowed her appeal.  Its decision was that the overpayments of HB and CTB had been caused by official error; furthermore, it was not reasonable in all the circumstances for the claimant to have realised that she was being overpaid, so the overpayments were not recoverable. The First-tier Tribunal Judge also issued a Statement of Reasons, explaining that decision.  

The local authority’s appeal to the Upper Tribunal

9.	The local authority, in their application for permission to appeal, made it clear that they were not disputing the First-tier Tribunal’s decision as regards the HB overpayment.   They also concede that the overpayment of HB and excess payment of CTB were caused by official error.  I accept those concessions as rightly made.

10.	However, the local authority are challenging the First-tier Tribunal’s decision as regards part of the CTB excess payment.  Their argument is that the tribunal failed to apply regulation 83(5) of the Council Tax Benefit Regulations 2006 (SI 2006/215).  The effect of that rule, say the local authority, is that the excess payment of CTB for the period from 14 July 2009 (the day after their revision decision) through to 31 March 2010 is recoverable from the claimant.

Why the First-tier Tribunal erred in law

11.	The First-tier Tribunal explained very clearly why the overpayments were caused by the local authority’s official error and why it was reasonable for the claimant not to realise that she was being overpaid HB and CTB.  The tribunal’s decision on those points was entirely justified and in those respects shows no legal errors.

12.	The First-tier Tribunal then stated that it was allowing the claimant’s appeal against the local authority’s decision dated 24 August 2009.  Arguably the claimant’s appeal was against the council’s earlier decision of 13 July 2009 as confirmed on 24 August 2009 but nothing turns on the point.  The tribunal made no reference to the precise periods covered by the alleged overpayments (or their amounts) in either its Decision Notice or its Statement of Reasons.

13.	Regulation 83(5) of the Council Tax Benefit Regulations 2006 provides as follows:

“(5) Where in consequence of an official error a person has been awarded excess benefit, upon the award being revised or superseded any excess benefit which remains credited to him by the relevant authority in respect of a period after the date of the revision or supersession, shall be recoverable.”

14.	In the present case, the claimant had been awarded excess CTB as a result of official error.  The natural meaning of regulation 83(5) is that the excess benefit for the “period after the date of the revision” (i.e. after 13 July 2009) “shall be recoverable”.  On the face of it that is a mandatory rule with no exceptions.  In other words, the defence that the claimant could not reasonably have been expected to realise she was being overpaid does not apply for that period after the date of the revising decision.

15.	The First-tier Tribunal made no reference to this rule.  Unfortunately the significance of the rule was not brought to the tribunal’s attention in the local authority’s written submission as clearly as it might have been.  The submission certainly referred to regulation 83(5) at paragraph 16 of the decision maker’s appeal response at the beginning of the tribunal papers.  Paragraph 17 then stated:

“17. Therefore even if it were decided that [the claimant] could not reasonably have been expected to realise she was being overpaid, the Council Tax Benefit overpayment from 14 July 2009 to 31 March 2010.”

16.	Plainly that sentence does not make any sense.  The text should have continued after “31 March 2010” with words such as “is recoverable in any event” or “is recoverable even if the overpayment for the earlier period is not recoverable”.  The local authority’s garbled explanation of the relevant rules may well have resulted in the tribunal missing the point.

The Upper Tribunal’s decision on this appeal

17.	My decision is that the First-tier Tribunal’s decision involves a mistake of law for the reason explained above, and only for that reason.  I am therefore setting aside the decision of the Liverpool First-tier Tribunal dated 11 March 2010 (Tribunals, Courts and Enforcement Act 2007, section 12(2)(a)).

18.	It is not necessary to send this case back for a rehearing.  I can re-make the decision, or substitute my own decision, for the tribunal’s decision (Tribunals, Courts and Enforcement Act 2007, section 12(2)(b)(ii) and 12(4)).

19.	The Upper Tribunal’s decision is as follows.  The claimant’s appeal against the local authority’s decision dated 13 July 2009 is allowed in part rather than in full.  The overpayment of HB for the period from 1 February 2009 to 13 July 2009 and the excess payment of CTB for the same period are not recoverable from the claimant.  I adopt the First-tier Tribunal’s findings of fact and reasoning to make that decision.

20.	However, the excess payment of CTB for the period from 14 July 2009 to 31 March 2010 is recoverable from the claimant.  This is because of the operation of regulation 83(5).

What this means in practice

21.	The effect of this decision is that, just as the First-tier Tribunal decided, the claimant may well have been overpaid HB and CTB for the period from 1 February 2009 to 13 July 2009, but that overpayment is not recoverable from her.   It follows that she is not liable to repay the HB overpayment of £811.00, or that part of the CTB excess payment of £686.03 which relates to the same period up to 13 July 2009.

22.	In addition, however, and contrary to the First-tier Tribunal’s decision, the balance of the £683.03 CTB excess payment which relates to the period from 14 July 2009 to 31 March 2010 is in principle recoverable from her.  However, this does not necessarily mean that there is still an excess payment of CTB owing by the claimant to the local authority.  The reason for this is that CTB is credited in advance for the remainder of the financial year to a person’s council tax account.  Presumably the local authority in the present case will have effected an adjustment of the claimant’s council tax liability to reflect her true circumstances as from 14 July 2009.  Thus if there is still money owing, it is more likely that it relates to the payment of a council tax liability itself, rather than any further excess payment of CTB.

23.	I must also stress that the First-tier Tribunal’s function (and on appeal that of the Upper Tribunal) is confined to considering the factual position as at the date of the local authority decision under appeal (here 13 July 2009).  By law the tribunal cannot take into account any changes of circumstances after that date (see Child Support, Pensions and Social Security Act 2000, Schedule 7, paragraph 6(9)(b)).

24.	In that context I note that the claimant’s evidence to the Upper Tribunal is that she left her address at No 26 on 31 September 2009 and went back to live with her parents.  She therefore makes the very reasonable point that for most of the period from 14 July 2009 to 31 March 2010 she was not actually living at No 26.	She points out that she made two payments totalling £181.54 on 7 August 2009 to the local authority’s account.  It is not clear from the papers whether those were payments in respect of her council tax liability itself or rather in relation to any overpayment of benefit.  

25.	I also note that the local authority’s letter of 24 August 2009 states that the council was at that time deducting £9.75 per week from future payments to recover the overpaid benefit.  It is not clear how long those deductions continued, but clearly if those amounts purported to relate to an overpayment for the period up to 13 July 2009 then they were inconsistent with the subsequent decisions of both the First-tier Tribunal and now the Upper Tribunal.

26.	I refer to the point I made in paragraph 23 above.  In those circumstances, although council tax issues as such are not part of this tribunal’s jurisdiction, it is clearly desirable that the local authority provide a clear explanation to the claimant as regards the state of her council tax account.  That may of course require the local authority to make further decisions as regards her benefit entitlement, if they have not already done so, in the light of any changes of circumstances since 13 July 2009.

The decisions of the Social Security Commissioners on the same point

27.	There are two Social Security Commissioners’ decisions which deal with the same point as now arises in the present case: CH/3076/2006 and CH/1384/2007.  The first of these to be decided was CH/1384/2007.  In that appeal Mrs Deputy Commissioner Ramsay (as she then was) was faced with a situation which was broadly similar to the present case, although the period covered by the official error was longer.  She concluded that an excess payment for the period from 10 April 2003 to 11 June 2006 was not recoverable, but that the excess payment for the period from 12 June 2006 to 31 March 2007 was recoverable on the basis of what is now regulation 83(5) of the 2006 Regulations.

28.	However, a fortnight or so later, Mr Commissioner Rowland (as he then was) reached a different conclusion in CH/3076/2006, unaware of the Deputy Commissioner’s decision in CH/1384/2007.  Mr Commissioner Rowland decided that an advance credit of CTB for the period to the end of the financial year was not an amount of excess benefit.  His view was that the credit should be treated as a credit of CTB only as each week of entitlement under the award passes (see paragraph 11).

29.	With respect, I disagree, and prefer the reasoning of the Deputy Commissioner in CH/1384/2007.  Her analysis takes proper account of the fact that there is an important difference between HB and CTB in that the primary legislation presupposes that CTB awards are made for the period to the end of the financial year (see section 138(1)(b) of the Social Security Administration Act 1992).  Mr Commissioner Rowland does not deal with that point in his discussion of regulation 83(5): see paragraph 9 of CH/3076/2006.

30.	Indeed, it is not easy to see what the purpose of regulation 83(5) is if one were to adopt the analysis in CH/3076/2006, a point made by the authors of CPAG’s Housing Benefit and Council Tax Benefit Legislation (22nd edition 2009/10) at p.695.  I also note that the overall structure of regulation 83, governing recoverable excess benefit, is tolerably clear.  The starting point is that any excess CTB is recoverable (regulation 83(1)).  That general principle is subject to regulation 83(2), which provides for an exception in certain (but not all) cases of official error.  That exception is in turn subject to regulation 83(4) and (5).

31.	As a result a claimant may be able to rely on official error under regulation 83(2) as a basis for resisting an overpayment demand, providing she could not reasonably have been expected to realise excess benefit was being paid at the time.  However, that proviso or ‘escape clause’ does not apply under regulation 83(5) for future periods.

Conclusion

32.	For the reasons explained above, the decision of the tribunal involves an error of law.  The Upper Tribunal therefore allows the local authority’s appeal against the decision of the First-tier Tribunal dated 11 March 2010 and sets that decision aside (Tribunals, Courts and Enforcement Act 2007, section 12(2)(a)).  The Upper Tribunal re-makes the decision in the terms as set out above (Tribunals, Courts and Enforcement Act 2007, section 12(2)(b)(ii)).

33.	I reiterate that this means that the claimant need not make any repayment of either overpaid HB or excess CTB for the period from 1 February 2009 to 13 July 2009.  There appears to have been no overpayment of HB after that date in any event.  So far as CTB is concerned, in principle the excess payment for the period from 14 July 2009 to 31 March 2010 is recoverable.  However, this recovery may well simply be a paper transaction.  The local authority may well need to revisit the claimant’s account to ensure that it reflects the effect of both the outcome of this appeal and any decisions taken after 13 July 2009 in relation to changes in the claimant’s circumstances.

Signed on the original				Nicholas Wikeley
on 6 January 2011					Judge of the Upper Tribunal