DECISION OF THE UPPER TRIBUNAL
(ADMINISTRATIVE APPEALS CHAMBER)

The DECISION of the Upper Tribunal is to allow the appeal by the appellant City Council.

The decision of the Newcastle-upon-Tyne First-tier Tribunal dated 31 August 2011 under file reference 228/10/03463 involves an error on a point of law and is set aside. 

The claimant’s appeal against the City Council’s decision in relation to housing benefit and council tax benefit dated 13 July 2010 is remitted to be reheard by a different First-tier Tribunal, subject to the Directions below.

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

DIRECTIONS

The following directions apply to the re-hearing:

(1)	The re-hearing will be at an oral hearing; 

(2)	The new tribunal should be differently constituted from the First-tier Tribunal which considered this appeal at the hearing on 31 August 2011;

(3)	The new tribunal must consider all the evidence afresh and is not bound in any way by the decision of the previous tribunal;

(4)	The new tribunal should have regard to the guidance contained in paragraphs 39-44 of the reasons below;

(5)	The City Council should prepare a supplementary submission (see paragraph 45 below) and send it to the regional HMCTS office within one month of the issue of this decision;

(6)	The Secretary of State should prepare a supplementary submission (see paragraph 46 below) and send it to the regional HMCTS office within one month of the issue of this decision.

These directions may be supplemented or modified as appropriate by later directions by a District Tribunal Judge in the Social Entitlement Chamber of the First-tier Tribunal.  

REASONS FOR DECISION

The decision in summary
1.		I allow the City Council’s appeal to the Upper Tribunal. This is because the First-tier Tribunal (FTT)’s decision involves an error on a point of law. The FTT’s decision is set aside. Unfortunately the Upper Tribunal is not in a position to substitute (or to “re-make”) its own decision for the one that the FTT made. This means that the appeal will need to be re-heard by a different tribunal judge in Newcastle.

2.	The outcome of the re-hearing depends on the view taken by the new FTT of all the evidence in the case. The fact that the City Council’s appeal to the Upper Tribunal has succeeded on a point of law is no indicator one way or the other as to the likely result of the re-hearing, which will be determined on the facts.

The background to the appeal to the First-tier Tribunal
3.	The background to this appeal is a good example of the problems caused by the interaction of different benefits currently paid by different arms of the State. Housing benefit (HB) and council tax benefit (CTB) are administered by local authorities, while the two forms of employment and support allowance (contributory and income-related) are paid by the Department for Work and Pensions (DWP).

4.	The claimant, a married woman, was receiving HB and CTB from the local authority. Her husband was receiving ESA in various forms at various times from the DWP. 

5.	For present purposes the claimant started receiving HB and CTB in 2005. In late 2009 and early 2010 there appear to have been several moves by one or other of the couple on or off ESA. On 8 January 2010 the claimant was sent a letter setting out her HB and CTB entitlement with effect from 30 November 2009 (doc 32). This listed her income as child tax credit (CTC), working tax credit (WTC), child benefit from 30 November 2009 to 13 December 2009 and “income support/ JSA(IB)/PCGC” from 14 December 2009. Given the known facts, that last abbreviation must also be taken to include the income-related form of ESA.

6.	The City Council issued four further HB and CTB award letters on 9 March 2010 (doc 45), 21 April 2010 (doc 57), 19 May 2010 (doc 71) and 7 June 2010 (doc 82). These were intended to track what the City Council understood to be further changes in the claimant’s family income. The first letter, in March 2010, stated her income to be means-tested benefits only. In fact, of course, she was also getting child benefit. However, the fact that she (or her husband) was getting a means-tested benefit in the form of income-related ESA was sufficient to “passport” her onto full HB and CTB without a further income assessment. I return to the later three award letters in a moment.

7.	The following month, in early April 2010, the claimant started a part-time job. It seems clear that her husband promptly informed both the City Council (doc 50) and the DWP of this fact (doc 209). He told the former (accurately) that he had been claiming jointly for his wife from the DWP and was receiving ESA. The DWP noted that his wife had to be removed from his ESA claim, which was to revert to a single person rate. What happened after this is not so clear.

8.	It may be that the City Council simply assumed, on the basis of the DWP notification, that all payments of ESA had stopped (see doc 54). In fact the DWP notification (docs 51-52) only appears to relate to the income-related form of ESA (see note that “income exceeds reqs [requirements]” and references to “ESA(IR)”). Certainly the City Council seems to have asked the claimant about family earnings only (doc 54).

9.	The further three award letters, issued in April, May and June 2010, each referred solely to various combinations of earnings, WTC, CTC and child benefit for the periods in question. None of these last three letters referred to either form of ESA as part of the claimant’s family income.

10.	The City Council’s position, both before the FTT and the Upper Tribunal, is straightforward. It argues, in short, that the couple were continuing, throughout this period, to receive ESA, albeit at the lower single person rate on a contributory basis, and that they had failed to inform the Council of this fact. In fact, the position may not be quite so simple. The actual fate of the husband’s ESA claim in the period from April 2010 is, to some extent, shrouded in uncertainty.

11.	On one view of the evidence the claimant’s husband had an award of contributory ESA in place as from 16 April 2010 because his partner had started work (see doc 156). That would support the City Council’s position. On another view of the evidence, the claimant’s husband had an award of contributory ESA in place as from 02 April 2010 (a fortnight earlier) but that award had only been made by the DWP more than two months later on 21 June 2010 (doc 94). If that is right, then at the dates that the three letters had been received, the couple were not at that time actually receiving any ESA. However, for the reasons that follow, that may not necessarily in the end assist them.

12.	Be that as it may, on 13 July 2010 a City Council decision maker made a file note (doc 94), confirming that the claimant had provided proof of her tax credit income related to the new part-time job. The decision maker also noted the information from the DWP computer records and that this had generated a recoverable overpayment. On the next day the City Council sent the claimant a new award letter (doc 95) and an overpayment letter (doc 104). The HB and CTB overpayments were stated to be £634.21 and £187.08 respectively for periods between April and July 2010.

13.	The claimant very promptly lodged an appeal via her then representative at Newcastle Law Centre (doc 106). Her argument, in short, was that she had advised a City Council employee in March 2010 that she was returning to work and that her husband was getting ESA. A budgeting sheet, prepared with the assistance of that employee, was produced as evidence of this notification (doc 111).

The First-tier Tribunal’s decision
14.	The FTT held an initial adjourned hearing on 19 January 2011 (doc 153) and District Tribunal Judge Moss issued further case management directions on 4 March 2011 (doc 205), sensibly joining the Secretary of State for Work and Pensions as a party to the appeal and asking the DWP to produce a submission (doc 207a) and the claimant to send in specified further evidence. The case came back before a different District Tribunal Judge for an oral hearing on 31 August 2011 (doc 220). He allowed the claimant’s appeal, with a decision notice setting aside the City Council’s decision of 13 July 2010. This was in part because the “decision set out at page 94 is incomplete”. This was a reference to the file note summarised at paragraph 12 above. 

15.	The FTT’s subsequent statement of reasons (doc 225) reviewed the (admittedly confusing) evidence and the parties’ submissions in the case. The District Tribunal Judge summarised the reasons for his decision as being that (i) the  claimant was not aware that she had been overpaid benefit; and (ii) in any event it was not clear that the proper decision-making procedures had been followed by the City Council (doc 226 at [9]).

The grounds of appeal to the Upper Tribunal
16.	The City Council applied for permission to appeal (doc 227). In short the local authority argued that the FTT had failed to make sufficient findings of fact and had erred in law. In particular, as noted above, it was said that the City Council’s various notification letters were clear and that the claimant had failed to notify the authority that ESA had not been included in those calculations.

17.	The District Tribunal Judge refused permission to appeal, saying that the matters raised by the City Council were immaterial given the FTT’s finding that “there was no evidence of a decision having been made” (doc 229).

The proceedings in the Upper Tribunal
18.	 The City Council made a fresh and more detailed application for permission to appeal to the Upper Tribunal. I gave the Council permission to appeal, pointing out some of the possible difficulties with the FTT’s fact finding and reasoning. 

19.	Frances Gigg has made a helpful submission on behalf of the Secretary of State. She supports the City Council’s appeal on that basis that the FTT had (i) failed adequately to explore the cause of the overpayment (and had insufficient evidence to justify the finding that there had been an official error by the Council); and (ii) had erred in law in deciding that there had been no effective or proper decision by the Council.

20.	The City Council has not made a further submission, but relies on that made by the Secretary of State’s representative. The claimant’s new representative, Shelter, has not made any substantive response, but there are extensive arguments on file on the claimant’s behalf made by her previous representative at the Law Centre. No party has asked for an oral hearing and I do not think one is needed before the Upper Tribunal.

The Upper Tribunal’s analysis
Introduction
21.		I allow the City Council’s appeal, but not necessarily for all the reasons that it puts forward. I should say at the outset that the Council’s argument that the claimant and her husband failed to keep them up to date with changes in their income is not necessarily consistent with all the evidence. I have already referred to the husband’s prompt notification to both the Council and the DWP of his wife’s return to work at the start of April 2010 (see paragraph 7 above). His action was entirely understandable, given that the couple had very recently been struggling to meet a different and earlier overpayment demand (see claimant’s letter of 4 March 2010 at doc 44). There were also two further overpayment demand letters for relatively small amounts in April and May 2010 (docs 62 and 76). All that might suggest that if the couple had information about their finances which they had to disclose, then they had every incentive to do so and previous experience suggested that they would indeed do so.

22.	This is, however, a case about an alleged overpayment of HB and CTB. The test is not one of whether there was a failure to disclose, although such an omission might be evidentially relevant to the actual proper test to be applied, depending on the circumstances. First, however, I must decide whether or not the FTT erred in law in concluding as it did that the City Council had not made an effective decision. If it had not, then consideration of the overpayment issue would be redundant.

Did the City Council make an effective decision?
23.	The FTT found that the decision or file note at doc 94 was “incomplete”, according to the decision notice. The statement of reasons explained that there was no evidence of a decision on the claimant’s entitlement to HB and CTB and equally no evidence of a decision as to the recoverability of any overpayment. The Council’s letter at doc 95 “simply tells the appellant that there has been a change in benefit rates. It does not explain what gave rise to that letter”.

24.	Frances Gigg for the Secretary of State disagrees. She argues that the note at doc 94 shows a clear intention to revise the claimant’s award on the basis of increased income, and that the letter at docs 95-103 explains the outcome of that decision. She relies on the decision of Mr Commissioner (now Judge) Turnbull in CH/4354/2003.

25.	I accept the arguments of the Secretary of State’s representative and the City Council on this point. It may be helpful to consider this issue in two stages, namely first, was there an effective decision and, secondly, was there an effective notification of that decision?

Was there an effective decision?
26.	The file note at doc 94, taken by itself, lacks any formality or detail. It is, however, clear enough that the decision maker concerned had decided that the claimant’s HB and CTB entitlement had to be reduced for the period in question and that as a result there was a recoverable overpayment. The 9-page letter at doc 95 headed “Notification of Housing and Council Tax Benefit” has plenty of detail, and is accompanied by a further letter of the same date (doc 104) headed “Overpaid Housing and Council Tax Benefits”.

27.	The Secretary of State’s representative argues that, taken together, this amounts to evidence that the City Council made a revision decision, revising the decision awarding benefit from 1 April 2010 which had underpinned the 21 April 2010 notification letter (the first letter to omit reference to ESA as part of the claimant’s income).

28.	I agree with that analysis. The most helpful authority in point is Walsall Metropolitan Borough Council v PL [2009] UKUT 27 (AAC), relied on by the City Council in its detailed grounds of appeal (under the reference CH/3801/2008). Judge Jacobs confirmed (at paragraph 3) that “There is, however, no requirement that the evidence of a decision must, and can only take, the form of a copy of the decision. Tribunals are required to draw appropriate inferences from the evidence provided by the local authority.” On the facts of that case, Judge Jacobs concluded (at paragraph 17) that

“the evidence of the submission writer, the computer printout and the notification letters is, taken together and without further explanation of the printout, sufficient to show on the balance of probabilities that the local authority made the decisions it claims to have made in respect of entitlement and liability.”

29.	In my view the same reasoning applies in the present case. Looking at the evidence in the round, this was a decision by the City Council which was in substantial compliance with the procedural requirements (see R(H) 3/04 at paragraphs 74-76). I am not persuaded that any of the authorities relied on by the claimant’s former representative really assists her. For example, CIS/75/2007 and KW v Secretary of State for Work and Pensions [2009] UKUT 143 (AAC) were both concerned with income support overpayments, where the test is materially different. CH/920/2010 is a housing benefit decision, but Judge Poynter expressly found (at paragraph 13) that there was no evidence in that case that any decision had been properly notified. Judge Mesher expressed similar doubts in SD v Newcastle City Council (HB) [2010] UKUT 306 (AAC) in relation to an associated income support decision. These authorities are thus distinguishable on their facts.

Was there an effective notification of that decision?
30.	The requirements for a proper notification of a decision are set out in regulation 90 and Schedule 9 to the Housing Benefit Regulations 2006 (SI 2006/213). Those provisions specify certain details that must be included in both notifications of award decisions (see especially paragraphs 9 and 10) and of overpayment decisions (paragraph 15). As to the latter, a simple reference to a change in circumstances without more is not enough (see R v Thanet District Council ex p Warren Court Hotels Ltd [2000] 33 HLR 339). However, detailed calculations may not be needed for the overpayment notification – the old and new figures and the resulting difference will be sufficient, given the need for an entitlement decision (R(H) 1/02 at paragraph 10).

31.	In Walsall Metropolitan Borough Council v PL [2009] UKUT 27 (AAC) Judge Jacobs commented (at paragraph 16) that “The notices are not easy reading and their significance might not have been immediately obvious to a claimant. However, on careful reading they do identify the relevant periods, the calculations and amounts.” The same applies in the present case. The FTT was wrong to conclude that the letters simply notified a change in benefit rates. True the first letter (doc 95) referred rather unhelpfully to the reason for the decision being “change of liability”, but the relevant period and amounts were cited and the accompanying overpayment notification (doc 104) referred both to the change in the assessment of HB and CTB entitlement and to the “change in income” (doc 105).

Conclusion on the decision issue
32.	It follows from the analysis above that the FTT erred in law by concluding that the City Council’s decision was incomplete or ineffective in any way. That is sufficient to allow the City Council’s appeal and to set aside the FTT’s decision. However, I also need to address the question of the cause of the overpayment.

The cause of the overpayment
33.	In her submission on behalf of the Secretary of State, Frances Gigg fairly points out that the evidence on file does not all point one way on this question. In particular, it is by no means clear what caused the ESA to be omitted from the HB and CTB assessment. I have already indicated above that there is ample evidence on file that the claimant and her husband did take steps to tell both the DWP and the City Council of relevant changes in April 2010 when she went back to work. However, the City Council may recover overpayments of HB and CTB in the absence of fault. Unlike the DWP, the Council is not required to show a failure to disclose or a misrepresentation.

34.	I agree with the Secretary of State’s representative that the FTT failed to explore this issue adequately. The FTT focussed on whether the DWP’s benefit award decisions were readily understandable and whether or not the DWP had informed the claimant of changes in her ESA entitlement (at paragraph 6 of the statement of reasons). I certainly accept that the standard form DWP notification at doc 21 is less than a model of clarity. However, that letter was dated 16 November 2009. In focussing on that letter, the FTT failed to draw a distinction between what the DWP had notified to the claimant and what had been notified to her husband. It had also failed to make findings of fact as to what happened the following April, which was the material time in this appeal. It is unclear from the FTT’s decision whether it had found that the claimant’s husband had not been notified of the change in his ESA entitlement and/or whether there had been an official error by the City Council.

Conclusion on the overpayment issue
35.	The FTT’s failure to identify the cause of the overpayment is a further error of law, so the City Council’s appeal is also allowed on that point.

36.	I had hoped that it might have been possible to re-decide the underlying appeal myself, and avoid sending the case back for re-hearing before a new tribunal. However, further facts need to be found, especially given the difficulties with the evidence on file. These relate particularly to the DWP’s computer records, which apparently had to be “rebuilt” (in the absence of any clerical records) when the claimant’s husband won an ESA appeal in November 2010 (docs 207a-218).

37.	I therefore allow the City Council’s appeal, set aside the FTT’s decision and send the case back for a new hearing.

Directions to the new tribunal
38.		Standard directions to the new FTT are listed at the start of this decision by the Upper Tribunal. 

39.	For the reasons explained above, the new tribunal should start from the premise that the City Council made two effective and properly notified decisions on 14 July 2010. The first decision revised the earlier awarding decision which had been notified by letter dated 21 April 2010, thus re-assessing and reducing HB and CTB entitlement for the period from 1 April 2010. The second decision was to the effect that there was a recoverable overpayment for the relevant period in consequence.

40.	The new tribunal should then consider the claimant’s appeal against the City Council’s decision that the HB overpayment of £634.21 (5 April 2010 – 18 July 2010) and the CTB excess payment of £187.08 (5 April 2010 – 18 July 2010) are both recoverable and furthermore recoverable from the claimant.

41.	In doing so, the new tribunal will of course appreciate that the law governing the recovery of overpayments provides local authorities with more scope (and, conversely, claimants with less protection) than is the case with other social security benefits, paid by the DWP. In summary, the DWP have to show a failure to disclose or a misrepresentation by the claimant (Social Security Administration Act 1992, section 71). A local authority, however, is in a different and stronger position. The starting point is that all HB and CTB overpayments are recoverable from claimants (regulation 100(1)). There is an exception to this principle (regulation 100(2)) where the overpayment was caused by an official error (not caused or contributed to by the claimant) and the error is one which the claimant should have spotted (as Judge Poynter neatly paraphrased the test in CH/920/2010 at paragraph 4). The official error may be by, amongst others, the local authority or the DWP (regulation 100(3)).

42.	On the evidence currently available, there appear to be only two scenarios as regards the relevant facts. The first possibility is that the DWP acted reasonably promptly on the information provided by the claimant’s husband in April 2010 and, having ceased payment of income-related ESA, reinstated his contributory ESA at the single person rate with almost immediate effect. The second possibility is that the DWP did not act promptly, and only made a decision to reinstate his contributory ESA in June 2010, which then had to be backdated to April 2010.

43.	If the first scenario is found to be the case, then it follows that the claimant (or, more precisely, her husband) was in receipt of contributory ESA when she received the award letters dated 21 April 2010, 19 May 2010 and 7 June 2010, none of which included ESA as part of her income. There may still be the possibility of official error in this situation. Indeed, in its grounds of appeal (at doc 233), the City Council conceded that there had been an official error, without actually specifying the nature of that error. It may be that the City Council wrongly assumed that no ESA at all was in payment from April 2010, when in fact the DWP notification referred solely to income-related ESA having stopped. The City Council may not have asked the right questions of the claimant about her family income. If an official error by the City Council is found to be the cause of the overpayment, for at least part of the period, then the further question arises of whether or not the claimant could reasonably have been expected to realise that she was being overpaid. The City Council argues that she should have so realised. However, that argument is premised on the assumption that ESA was actually in payment throughout the period from April to June 2010.

44.	If the second scenario is found to be the case, then it follows that the claimant (or, more precisely, her husband) was not in receipt of contributory ESA when she received the award letters dated 21 April 2010, 19 May 2010 and 7 June 2010. On that basis, the letters and the various income components were correct at the time they were sent, and ESA was only reinstated from 21 June 2010 (but with arrears backdated to April). The Secretary of State’s representative suggests that if the cause of the overpayment was simply the backdated award of ESA, then the overpayment will be automatically recoverable. It is certainly right that the arrears of benefit are treated as having been paid when they should have been paid, not when they were actually paid (late): see regulation 79(7). However, I am not sure that is necessarily the case that the consequential overpayment will necessarily be automatically recoverable. It may be that in that scenario although there may have been no causative official error by the City Council, there may have been an official error on the part of the DWP. An act or omission by a DWP official may be an official error (regulation 100(3)(c)(i)). However, it has also been suggested that delay alone may not amount to official error: see R v Liverpool City Council ex p Griffiths [1990] 22 HLR 312. There does not appear to be any suggestion on the evidence that the claimant did anything which might have caused or contributed to any such official error.

Directions to the City Council
45.		In its original submission to the FTT, the City Council argued that the HB and CTB overpayments for the period from 5 April 2010 to 18 July 2010 were the result of claimant error, namely her failure to inform the local authority of the fact that her husband was receiving ESA. In its grounds of appeal to the Upper Tribunal, the City Council conceded that the overpayment was the result of official error. The City Council should prepare a supplementary submission for the new tribunal clarifying its position, and identifying the nature of the official error.

Directions to the Secretary of State
46.	The Secretary of State should provide the new tribunal with a supplementary submission setting out the full history of any ESA claim by either the claimant or her husband for the period from 1 January 2010 to 31 December 2010. This should include, so far as possible, the dates any initial, revision or supersession decisions were actually made, the effective dates for any such decisions, and in particular the actual periods when ESA was in payment and the amounts paid.

Conclusion
47.		I conclude that the decision of the First-tier Tribunal involves an error of law for the reasons summarised above. I therefore allow the City Council’s appeal and set aside the decision of the tribunal (Tribunals, Courts and Enforcement Act 2007, section 12(2)(a)). The case must therefore be remitted for re-hearing by a new tribunal subject to the directions above (section 12(2)(b)(i)).  

Signed on the original			Nicholas Wikeley
on 08 October 2012				Judge of the Upper Tribunal