England and Wales Court of Appeal (Civil Division) Decisions

Case No: CO/2000/2528

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

ADMINISTRATIVE COURT

Royal Courts of Justice

Strand, London, WC2A 2LL

Wednesday 20 December 2000

LORD JUSTICE BUXTON:

This is the judgment of the court

History and nature of the case

1. This appeal raises a short but not altogether straightforward issue as to the proper construction of regulations 3 and 7(1)(a) of the Housing Benefit (General) Regulations 1987 [the Regulations]. Regulation 7(1)(a) addresses one of the cases in which a person otherwise eligible is not permitted to claim housing benefit under the Social Security Act 1992: where (for the moment putting the matter colloquially) the claimant lives with and pays rent to one of his relations. That exception from eligibility for benefit is achieved in Regulation 7 by treating such a person as if he were not paying rent at all, and that is done by providing, in Regulation 7(1), that

"The following persons shall be treated as if they were not liable to make payments in respect of a dwelling-

(a) a person who resides with the person to whom he is liable to make payments in respect of the dwelling and....

(i) that person is a close relative of his or his partner."

2. In the present case, there is no dispute that the "close relative" condition is satisfied, and we say no more about it. Guidance is, however, given as to residence in Regulation 3(4) which provides, inter alia for the purposes of Regulation 7(1), that

"a person resides with another only if they share any accommodation except a bathroom, a lavatory or a communal area with the meaning prescribed in paragraph 7 of Schedule 1 [i.e. "areas (other than rooms) of common access (including halls and passageways)"]"

3. At all material times the applicant lived in the same house as his landlord, who was also his brother. It was common ground before the Board that until about January 1998 the applicant had shared relevant accommodation, a living room and kitchen, with his brother. The applicant's case was that thereafter relations had cooled, to the extent that he had withdrawn into his own bedroom, doing all his cooking there, and washing his dishes in a bathroom of which he had exclusive use. The local authority questioned the veracity of that account, stating that on inspection in March 1998 the applicant had appeared to be using the living room somewhat as a member of the family, and that no cooking facilities had been apparent in his bedroom. The Board, in its decision after a hearing in January 1999, accepted that the applicant had use of the kitchen and living room, and continued:

"The unanimous decision of the Board members is that you share accommodation additional to a bathroom, lavatory or passageway with your brother and his family, namely the kitchen and the living room, and are therefore treated by Regulation 3 as residing with your landlord."

4. In the present proceedings for judicial review of the Board's determination the applicant made two, different, complaints. The first was effectively that the determination was insufficiently reasoned, or alternatively could not be shown to have addressed the relevant facts, principally because no consideration appeared to have been given to evidence as to the applicant's detailed circumstances in March 1998, nor to evidence about changes in those circumstances between March 1998 and January 1999. The judge found those criticisms to be well-founded, and ordered the case to be remitted for further consideration by a differently constituted Board. There is no appeal against that decision, and in any event it was, if we may venture to say so, plainly correct. We do not address it further.

5. The second complaint was more fundamental, and gives rise to the subject-matter of this appeal. The effect, and indeed the express terms, of the Board's decision as set out above was that from their finding that the applicant was sharing with his landlord accommodation other than bathroom, lavatory or communal area it necessarily followed that, by the operation of Regulation 3, the applicant was "residing with" the landlord. The Board appears to have been led to that conclusion by guidance based on the decision of this court in Borough of Thamesmead v Goonery (unreported, 13 February 1995) [Goonery], a case to which I shall have to return. The applicant's complaint is that while the fact of the applicant's use of the living room and kitchen, if indeed established, would be highly relevant to a consideration of whether he was residing with his brother, it was not, as the Board had thought, conclusive of that latter question. In order to elucidate that point the applicant sought, and now seeks from this court, a declaration that

"A finding that a claimant shares accommodation (within the meaning of regulation 3 paragraph (4) of the Housing Benefit (General) Regulations 1987) with his landlord is a necessary but not a sufficient condition for the finding that he resides with that landlord (for the purposes of that paragraph)."

The decision of Munby J

6. In what was, if we may be permitted to say so, a full and careful judgment Munby J first considered the natural or expected meaning of the term "resides with", which is the factual matter that has to be determined under Regulation 7. He gained assistance from a decision of Henry J, R v Sutton LBC ex p Dadson (unreported, 20 November 1987) [Dadson], which concerned the implications of this same expression as used in the then equivalent regulations, regulation 26(2) of the Housing Benefits Regulations 1985. Henry J held that the question had to be decided according to the natural and ordinary use of the English language, and continued:

"If the inquisitive bystander had asked that question [whether Mrs Dadson was residing with her son] of either Mrs Dadson or her son, I am quite satisfied in the circumstances of this case that each would have said that they were residing with the other...there is no magic in the words "residing with", and..the answer that would be given to that question by the man in the street is likely to be the right answer in law."

7. Munby J found compelling the submission based on Dadson that "reside" was an ordinary English word, which in the absence of statutory counter-indication had to be given its ordinary meaning: a view also taken, in respect of different regulations, by Lord Slynn of Hadley in Bate v Chief Adjudication Officer [1996] 1 WLR 814. Regulation 3(4) did not, in its natural meaning, provide such counter-indication so as to substitute for a general approach to the meaning of reside a statutory rule that where persons share any accommodation other than bathroom, lavatory or communal areas they necessarily reside with each other. The judge held that the natural meaning and implication of the expression "only if" in Regulation 3(4) was to impose a necessary, but not a sufficient, condition for a finding of residence. That consideration is reinforced by the fact that Regulation 3(4) was introduced into the regulatory scheme at some time after the decision in Dadson, the scheme addressed in that case by Henry J containing only a provision equivalent to the now Regulation 7(1). We have been shown no background material to that legislative departure, but it would seem that it could have had only two, alternative, purposes: (A) to substitute the rule as applied by the Board for the approach adopted in Dadson; or (B) to exclude from the discretion of the Board any power to find residence cases where the only shared accommodation was bathroom, lavatory or communal area. If the objective was (A) it seems almost impossible that the draftsman would have adopted the language of Regulation 3(4). By contrast, that language is very apt to achieve objective (B).

8. Left to himself, therefore, Munby J would have granted the declaration sought. He however considered himself precluded from doing so by the contrary decision in Goonery, which he said it was his duty loyally to follow. He saw the point as one of considerable importance, and gave leave to appeal to this court.

The appeal

9. The appeal solely concerns whether it is open to this court to grant the declaration sought in the face of the decision in Goonery. That is an issue of importance in respect of the court's rules of precedent; and also of substantial importance in respect of the rules for eligibility for housing benefit, and the custody of the substantial amount of public funds that is allocated to that benefit. It was therefore most unfortunate that the London Borough of Brent decided that it would neither oppose the granting of the relief sought nor appear before the court, any more than it had appeared before Munby J; and that the Secretary of State, although invited to do so, declined to appear as an intervener. It is to be hoped that in future cases involving points of principle affecting eligibility for grants from public funds a different attitude will be taken.

10. We were therefore constrained to rely on the submissions of Mr Simon Cox for the applicant (which, it need not be said, properly drew to our attention all matters that Mr Cox was aware of that might be contrary to his case); together with such research as the court has been able to put together from its own resources.

The construction of Regulation 3(4)

11. Absent authority, we are entirely satisfied that the proper construction of Regulation 3(4) would be that adopted by the judge, for the reasons set out in paragraphs 8-9 above. No doubt in practical terms there might not be many cases in which a Board would not find that A was residing with B, in the normal meaning of that term, when A and B shared accommodation other than bathroom, lavatory or communal area; but the wording of the regulation does not drive them to that conclusion as a matter of law. All that the regulation, on its natural construction, does is to preclude such a finding where A and B are not sharing any accommodation beyond bathroom lavatory or communal area. That that is so makes it necessary to examine closely the reasoning and effect of Goonery.

Goonery

12. Goonery was an appeal in respect of a County Court arbitration award in favour of the local authority in a case of alleged overpayment of housing benefit. The claim arose because whilst in receipt of benefit Mr Goonery married the sister of his landlord, Mr Carver, and thereupon fell foul, if that is the right expression, of the close relative provisions of Regulation 7. Mr Carver also resided on the premises, and the sole issue was therefore whether Mr Goonery resided with Mr Carver for the purpose of the Regulations. The relevant facts as to that, as found or adopted, were that Mr Goonery occupied his own bedroom, did not make use of the sitting room, but used the kitchen for cooking and washing up, paying an extra charge to the landlord for the latter facility.

13. Mr Goonery represented himself before this court, and advanced very many wide-ranging and irrelevant arguments. The court, however, did not permit itself to be distracted thereby from the issue, which was whether for the purposes of entitlement to housing benefit Mr Goonery resided with Mr Carver. Giving the judgment of the court, Leggatt LJ said that the case was resolved by reference to Regulation 3 (4). The Lord Justice set that out, and continued:

"The question therefore is whether, when he lived at 8 Birch Street, Mr Goonery could properly be said, according to the ordinary meaning of the words, to be residing with Mr Carver in the sense that they shared any accommodation except a bathroom, lavatory and the common parts of the house."

14. Leggatt LJ then set out the evidence, and concluded:

"On his own account, Mr Goonery used the only kitchen in the house, as did the landlord's family. Mr Goonery paying for his use of it did not affect the position since such payments were made `in respect of the dwelling'. In my judgment, the fact that Mr Goonery paid Mr Carver for the use of a kitchen does not deprive the kitchen of the quality of being shared by using it in common; they shared it. There plainly was, on that account if on no other, evidence upon which the District Judge was entitled to find, as by implication he did, that Mr Goonery shared the kitchen so that he resided with Mr Carver who, at the material time, was his brother-in-law."

15. In our view, as in the view of Munby J, it is therefore inescapable that this court in Goonery decided that Mr Goonery resided with Mr Carver because, and simply because, he shared a kitchen with him. The court reached that conclusion because it thought that the issue of residence was determined by the terms of Regulation 3(4); and that the terms of that regulation defined the meaning of residence for the purpose of entitlement to housing benefit. If those two latter findings or assumptions are part of the court's ratio, and there is no means of excluding them from the normal rules of binding authority, then they bind us, as they bound Munby J, to decide this case in the sense adopted by the Board. To determine whether that is so it is necessary to review some fundamental principles of the system of precedent.

16. What was the ratio of Goonery?

17. Cases as such do not bind; their rationes decidendi do. While there has been much academic discussion of the proper way of determining the ratio of a case, we find the clearest and most persuasive guidance, at least in a case such as the present where one is dealing with a single judgment, to be that of Professor Cross, in Cross and Harris, Precedent in English Law (4^th edition) at p 72:

"The ratio decidendi of a case is any rule of law expressly or impliedly treated by the judge as a necessary step in reaching his conclusion, having regard to the line of reasoning adopted by him."

18. Judged by that test, there is no doubt that the assumptions in Goonery that the issue was to be decided solely by reference to Regulation 3(4); and that because Mr Goonery shared the kitchen with Mr Carver he resided with him; were impliedly, and possibly also expressly, treated by the court as a necessary step in reaching its conclusion. Indeed, those assumptions were not merely a necessary step in the reasoning, but assumptions that determined the conclusion or took up the whole of the reasoning process. Although it is perhaps otiose to do so in this case, Professor Cross's test can be most easily applied by positing the negative of the rule of law under consideration. If the court in Goonery had proceeded on the basis that Regulation 3(4) was not determinative (which, as indicated in paragraph 15 above, is the preferred view both of Munby J and of ourselves), then the result of the case might not have been different, but court's conclusion, in the sense of its finding that the sharing of the kitchen decided the matter, certainly would have been. Therefore, unless the present case can be treated as an exception to the general rule of precedent, we are bound to follow the same approach as did this court in Goonery.

19. Per incuriam?

20. The only escape from the ratio of a previous decision of the Court of Appeal has for long been thought to be provided by the three categories of case set out in the judgment in Young v Bristol Aeroplane Co [1944] KB 718. Of those, the only one even potentially applicable to the present case is that the court is not bound by a previous decision reached per incuriam. That rule is, however, to be understood in narrow terms. As Sir Raymond Evershed MR put it in Morelle v Wakeling [1955] 2 QB 379 at p 406:

"As a general rule the only cases in which decisions should be held to have been given per incuriam are those of decisions given in ignorance or forgetfulness of some inconsistent statutory provision or of some authority binding on the court concerned: so that in such cases some part of the decision or some step in the reasoning on which it is based is found, on that account, to be demonstrably wrong."

21. This statement suffices to exclude this case from the jurisprudence of Young v Bristol Aeroplane Co. The complaint in the present case is not that the court in Goonery overlooked the Regulations; or failed to apply any authority in relation to them that bound it; but simply that it made an unwarranted assumption about the meaning of the Regulations. Mr Cox rightly disclaimed any reliance on the per incuriam rule.

Assumption without argument

22. Mr Cox relied, instead, on a slender line of authority for a proposition, applicable in all courts, that a ratio or part thereof is not binding if it was assumed to be correct without the benefit of argument to that effect. This proposition is accepted as correct by Cross and Harris, at page 164 of their work already referred to, but its authority and its precise terms need careful analysis.

23. There may be a number of ways in which propositions that have not been the subject of argument become part of the ratio of a case, in the sense adopted in paragraph 22 above of being treated by the court as a necessary step in reaching its conclusion, and that process may again differ according to whether the court in question is performing an appellate role.

24. First, a proposition may be the subject of agreement or concession between the parties; the court in acting on it may or may not specifically reserve the issue of whether it is lending its own authority to the correctness of the proposition.

25. Second, there may be issues that are a necessary preliminary to the court deciding the case at all, for instance in terms of vires of the court or locus standi of one of the parties, that are not perceived as arising, or are not disputed. For the judge to be satisfied on these points is a necessary step in reaching his conclusion, but it may often be one that is not specifically thought about.

26. Third, where two points are in issue, both of which need to be decided in favour of the appellant, and he succeeds below only on one of them, against which decision there is no cross-appeal, the appellate court in finding for the appellant necessarily assumes, but does not decide, the correctness of the point not in issue before it, even though that point is necessary for the decision of the appeal in the appellant's favour.

27. The present case is, however, different from any of those examples. Here, the disputed proposition was specifically stated by the court, as part of its reasoning on the issue that it was actually deciding, and it is accordingly much less easily set aside. For that reason, much of the authority relied on for a general "assumption without argument" principle is only of persuasive effect: however persuasive some of it may be.

Authority

28. The only authority to which Munby J appears to have been referred was a holding of the Divisional Court in R v Canons Park Mental Health Tribunal ex p A [1994] 1 All ER at p 491 a-d, that that the court was not bound by a previous decision of its own reached "sub silentio." That expression, however, refers to propositions that are not expressly stated either in argument or in the judgment of the court; or, as in Canons Park, where the converse of a disputed proposition is assumed because it is not raised at all. That line of authority, such as it is, does not assist in the present case because, as Munby J said, the court in Goonery expressly enunciated, and certainly did not silently assume, the contraverted proposition.

29. Before us, however, a wider argument was developed. Mr Cox first took us to Baker v R [1975] AC 774, in which Lord Diplock said, at p 788B, that, because the Board does not usually permit points to be raised before it that had not been argued below,

"in its opinions delivered on an appeal the Board may have assumed, without itself deciding, that a proposition of law which was not disputed by the parties in the court from which the appeal is brought is correct. The proposition of law so assumed to be correct may be incorporated, whether expressly or by implication, in the ratio decidendi of the particular appeal; but because it does not bear the authority of an opinion reached by the Board itself it does not create a precedent for use in the decision of other cases."

30. This observation is certainly of importance in acknowledging that just because a proposition is part of the ratio of the case, determined by the test referred to in paragraph 22 above or by something very like it, nonetheless it is not necessarily binding in subsequent cases. The actual example addressed, however, is a special one, of the type mentioned in paragraph 32 above. The case cannot in itself be used to justify a general rule broad enough to encompass the judgment in Goonery.

31. The subject was reverted to in National Enterprises Ltd v Racal Communications Ltd [1975] Ch 397. The issue was whether the Arbitration Act 1950 should be construed as conferring jurisdiction on the court to appoint an arbitrator where an agreement provided for appointment by a third party, who however had not acted. On the simple construction of the Act, the court considered that there was no such jurisdiction. However, it was argued that in an earlier case, Davies v Cardiff Corporation (1964) 62 LGR 134, such an appointment had been made, and had been upheld in the Court of Appeal. Russell LJ, who sat in both appeals, pointed out that in the Court of Appeal in Davies the only issue was whether there had been any effective arbitration agreement at all. That issue having been decided in favour of the agreement, the earlier appointment necessarily stood. Russell LJ, with whose reasoning the remainder of the court agreed, held that Davies therefore did not compel a conclusion that jurisdiction existed in the case now before the court. He said, at p 406E:

"that question was not in issue in that appeal: it did not enter into the grounds of appeal: all that happened was that the appeal was dismissed upon rejection of the only grounds put forward. The court did not address its mind to the point, nor pronounce upon it. In those circumstances it cannot be necessary, if precedent is to be avoided, for the court to state in its judgments that it was assuming without deciding the point."

32. This is again a different case from the present, being more like the examples suggested in paragraphs 31 and 32 above. Nonetheless, Russell LJ lays strong emphasis, it would seem in more general terms than those adopted by Lord Diplock in Baker, upon the significance of the correctness of a point having been merely assumed. He also emphasised that the conclusion to which he came was consistent with the general rules as to precedent, as set out in for instance Morelle v Wakeling, mentioned by Russell LJ at p 406D. It was no doubt those considerations that have led two judges sitting at first instance, both of them judges to whose views the strongest respect is always paid, to formulate out of these materials a more general rule.

33. In Barrs v Bethell [1982] 1 Ch 294 at p 308F Warner J determined that there was a general principle that where a court assumes a proposition of law to be correct without addressing its mind to it, the decision of that court is not binding authority for that proposition. The case concerned the locus standi of ratepayers to sue their local authority, which had been assumed without argument in earlier authority (Cf paragraph 31 above); but the proposition was stated much more generally. Second, in Re Hetherington [1990] Ch 1 Browne-Wilkinson VC concluded that he was not bound to hold that trusts for masses for the dead are charitable trusts, even though in Bourne v Keane [1919] AC 815 the House of Lords had held that such trusts were valid and not void. The Vice-Chancellor pointed out, at p 9H, that that conclusion could only have been reached on the basis that the trusts were (a) not illegal as a superstitious use; and (b) either charitable or an anomalous exception to the perpetuity rule. That last exception could not have arisen on the facts of Bourne v Keane; so it was a necessary step in reaching the House's conclusion that the trusts were charitable. But that issue appeared never to have been actually debated before the House; and the Vice-Chancellor therefore held that the decision or assumption as to the charitable nature of the trust did not bind him because

"the authorities therefore clearly establish that even where a decision of a point of law in a particular sense was essential to an earlier decision of a superior court, but that superior court merely assumed the correctness of the law on a particular issue, a judge in a later cases is not bound to hold that the law is decided in that sense."

34. The authorities to which the Vice-Chancellor referred were those reviewed above, and some observations of May LJ in Ashville Investments v Elmer Contractors [1989] QB 488 at p 494 which, with respect, do not clearly address the present point. The case before the Vice-Chancellor was much more akin to the present case, since the issue in question, of whether the trusts were charitable, was a point of law arising in the substantive decision of the case, rather than a preliminary question of locus standi or a previous finding not addressed in an appeal. We regard Browne-Wilkinson VC's conclusion as strongly persuasive in the present case.

The rule as to issues assumed without argument

35. We therefore conclude, not without some hesitation, that there is a principle stated in general terms that a subsequent court is not bound by a proposition of law assumed by an earlier court that was not the subject of argument before or consideration by that court. Since there is no direct Court of Appeal authority to that general effect we should indicate why we think the principle to be justified.

36. First, even though it is assumed, on the basis of some observations in the House of Lords in Davis v Johnson [1979] AC 264, that the categories of exemption stated in Young v Bristol Aeroplane Co are closed, National Enterprises Ltd v Racal establishes that that is not so in respect of the present line of authority: see paragraph 40 above. That consideration is reinforced by the fact that Lord Diplock, in expressing his view in Baker v R as cited in paragraph 36 above, did not think that it involved any departure from the orthodox rules of precedent.

37. Second, in each of the authorities cited the rule is in fact stated in general terms, even though the facts addressed may be in a narrower compass. Those statements were, in our respectful view, properly synthesised by Browne-Wilkinson VC in Hetherington.

38. Third, we have to remember that it is the reasons that bind, and not the decision. Any formulation of a rule of precedent must be flexible enough to respect that basic truth. That is what led Lord Diplock to say in Baker, as cited in paragraph 36 above, that whilst an assumed proposition may be part of the ratio, it does not have precedential value. To hold otherwise would be to come close to permitting the outcome of the case, rather than its reasoning, to dictate its status.

39. Fourth, it is very well recognised that a court can identify a part of the ratio that has not been the subject of argument, and deny it precedential value: see paragraph 30 above. But if it were the case that all parts of the ratio, as defined for instance in paragraph 22 above, bind, then it would seem that the judge would not be free to indicate that one of the assumptions necessary to his decision did not have precedential value. It was recognition of the need to leave judges that freedom, and in an appropriate case to enable a subsequent court equally to conclude that a proposition that was part of the ratio nonetheless had not been the subject of decision,that led Russell LJ to speak as he did in the last sentence of the extract from his judgment in Racal cited in paragraph 38 above.

The ambit of the rule, and the present case

40. Like all exceptions to, and modifications of, the strict rule of precedent, this rule must only be applied in the most obvious of cases, and limited with great care. The basis of it is that the proposition in question must have been assumed, and not have been the subject of decision. That condition will almost always only be fulfilled when the point has not been expressly raised before the court and there has been no argument upon it: as Russell LJ went to some lengths in Racal to demonstrate had occurred in the previous case of Davies. And there may of course be cases, perhaps many cases, where a point has not been the subject of argument, but scrutiny of the judgment indicates that the court's acceptance of the point went beyond mere assumption. Very little is likely to be required to draw that latter conclusion: because a later court will start from the position, encouraged by judicial comity, that its predecessor did indeed address all the matters essential for its decision.

41. In Goonery the appellant appeared in person. That in itself is no ground at all for assuming that the present rule is likely to be applicable. The only report of the Court of Appeal's judgment that is available is in transcript form. The case acutely illustrates the difficulty of dealing with cases not reported in the official Law Reports, where there is a report of the argument. However, the fairly full account given by Leggatt LJ of what Mr Goonery said to the court contains no indication that he raised the point now in issue, and there is no suggestion that anyone else did so. Reading the judgment as carefully as we can, we are driven to the conclusion that the court in Goonery assumed that it had to decide the relevance of Mr Goonery's payment for use of the kitchen on the basis that Regulation 3(4) provided a complete test of residence for the purpose of the Regulations. That assumption was not the subject of argument or consideration, and thus falls within the principle stated by Browne-Wilkinson VC in Hetherington.

Disposal of the appeal

42. For that reason, the judge was not constrained by the judgment in Goonery, and neither are we, from giving the Regulations their natural and obvious meaning, as set out in paragraphs 8-10 above. We would for that reason allow the appeal, and make the declaration sought by the appellant, with the effect that the Board must determine the remitted case according to the law so declared.

Order:

1. Appeal allowed with detailed assessment of costs.

2. Community Legal Services Regulations 2000 Assessment of appellant's costs.

3. Declaration as per end of paragraph 6 of judgment.