England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CROWN OFFICE
(Mr Justice Hidden)

		Royal Courts of Justice Strand, London, WC2A 2LL Tuesday 3rd April 2001

LADY JUSTICE HALE

1. Elders and members of the Jesus Fellowship Church live as a Christian community in a large house owned by the Jesus Fellowship Community Trust, each contributing to a common purse out of which household expenditure is met. The issue in this case is whether the Elders, who are liable to the Trust for all the residents' occupation, can claim housing benefit on the basis of the whole sum, or only of that portion which is attributable to their own and their families' occupation. The issue is obviously capable of affecting many other home sharers where not all are directly liable for the rent. The local Housing Benefit Review Board held that the claimant could only claim on the basis of what he paid in respect of himself and his wife. Hidden J granted judicial review of that decision. The Review Board now appeal to this Court with permission from Latham LJ.

History

2. The claimant is by occupation a teacher. Since 1992, he and his wife have lived as part of a community at Eagles Wings, a large house in Shenley Church End, Milton Keynes, owned by the Jesus Fellowship Community Trust. They have their own bedroom but all the rest of the house is shared. Bedrooms can be changed according to the needs of the community. The Trust licenses the house to the Elders, the claimant and one other. Under the Trust's rules, only Elders can be licensees from the Trust. They in turn sub-license other church members, known as Covenant Members style 3, and some non-church members to live there. Each Covenant member and Elder must make payments into the common purse for their family's board and lodging costs. The Elders are responsible for making payments in respect of the residents' occupation to the Trust.
3. These obligations are contained in the Conditions of Residence of Church Household Elders. Clause 4 provides:

'The obligations required of Covenant Members Style 3 who are resident at the property apply equally to Church Household Elders. This includes paying into the House Family Common Purse board and lodging costs for yourself and your family at the following rates (or such other rates as may be notified to you): . . .'

There are then specified different rates for adults, children 11-15 years, children 5-10 years and children 0-4 years. When the claimant signed the form in 1995, the rate for adults was £55 per week, although it has since gone up.

4. Clause 6 provides:

'Elders must ensure that the payment due from them to the Trust in respect of the residents' occupation (including their own occupation) is punctually made at the end of each calendar month from the funds of the House Family Common Purse. The rates per resident are as follows: . . .'

There are then specified different rates for the four different age groups, lower than those in clause 4. In 1995 the rate for adults was £30 per week.

5. A statement from Michael Farrant, a Senior Leader of the Church with particular responsibility for financial administration, explains the history of housing benefit claims by community members. Until mid-1993, individual residents on low incomes claimed housing benefit based on the lodging part of their personal contributions. In August 1993 several local authorities withdrew benefit. They argued (a) that there was no legal liability to make these contributions, and (b) even if there was, it was "created to take advantage of the Housing Benefit scheme" (within reg 7(b), see below), and (c) (for residents other than Elders) that they lived with their landlord, the Elders, and the arrangements were "otherwise than on a commercial basis" (within reg 7(a)(ii), see below). In the cases of R v Rugby Borough Council Housing Benefit Review Board ex p Harrison and others; R v Daventry District Council Housing Benefit Review Board, ex p Bodden and others (1995) 93 LGR 139, Blackburne J determined that arguments (a) and (b) failed but argument (c) succeeded; it was for review boards to determine whether the test of commerciality was satisfied and the court could not interfere unless a Board could not reasonably have reached the decision it did. (An appeal was lodged but discontinued on leading counsel's advice).
6. Mr Farrant recounts how the submissions of John Howell QC, counsel for the Department of Social Security in that case, supported the present claim by the Elders:

'16 . . . Mr Howell made it clear . . . that, if residents did not meet the commerciality test, that was not the end of the matter: the Housing Benefit scheme, as it applies to resident landlords, is in fact designed to limit any claim for [Housing Benefit] to the primary lessees, as far as possible.

'17 Thus, under this scheme, if a family rented a property but took in friends as lodgers (on a non-commercial basis), the latter cannot claim Housing Benefit in respect of their payments to the family, as they live with their landlord. Only the actual tenants of the property can claim Housing Benefit. The lodgers are deemed to make contributions to the total rent, by means of non-dependant deductions, according to their income.

'18 . . . The purpose, he said, was to prevent artificial apportionment of liabilities between residents so as to maximise benefit entitlement. It would not be right if an unemployed lodger-friend, who would otherwise be entitled as such to maximum [Housing Benefit], could be saddled with a high rent share, so as to relieve a wage-earning resident landlord, who would of himself be entitled to no Housing Benefit at all or to Benefit at a lower rate. This explanation was something entirely new to us and made some sense . . .

'19 Importantly, Mr Howell made no suggestion at all that the tenants in such a case would be able to claim only for the part of the property occupied by their own family . . . Indeed, the whole thrust of his case was that they could claim (subject to non-dependant deductions) for the rent they had to pay on the whole property, even though part of it was, ex hypothesi, occupied by their friends.'

7. No-one has challenged this account in these proceedings. Nor has the Department sought to intervene to present that or any other view. We can therefore assume that that was the view taken by the Department in December 1994 of the proper interpretation of the Regulations and the reasons for it.
8. Hence the claimant made this claim on 17 January 1996 asking that it be backdated to 12 June 1995. The only point at issue before the Housing Benefit Review Board was the level of rent to be used in calculating his Housing Benefit entitlement. The Review Board determined that it was only the amounts payable for himself and his wife and not for the whole community.

The legislation

9. The Social Security Contributions and Benefits Act 1992, in section 123(1)(d) lists housing benefit among the 'income related benefits'. The basic rules of entitlement are laid down in section 130. Only subsections (1)(a) and (2) are relevant to this appeal:

'(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; . . . '

'(2) In subsection (1) above "payments in respect of a dwelling" means such payments as may be prescribed . . . '

'Dwelling' is defined in section 137(1):

' . . . "dwelling" means any residential accommodation, whether or not consisting of the whole or part of a building and whether or not comprising separate and self-contained premises;'

10. The details are contained in the Housing Benefit (General) Regulations 1987, SI 1987 No 1971. Regulation 10(1) provides:

'Subject to the following provisions of this regulation, the payments in respect of which housing benefit is payable in the form of a rent rebate or allowance are the following periodical payments which a person is liable to make in respect of the dwelling which he occupies as his home - . . .

(b) payments in respect of a licence or permission to occupy the dwelling;'

Regulation 7 provides for the circumstances in which a person is to be treated as not liable to make payments in respect of a dwelling, even if in fact he is. These include -

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

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

(ii) the tenancy or other agreement between them is other than on a commercial basis;

'(b) a person whose liability to make payment in respect of the dwelling appears to the appropriate authority to have been created to take advantage of the housing benefit scheme . . . '

Regulation 7(b) is in wide terms designed to cater for abuse of the system. It has not been suggested since the Harrison case that the Fellowship's arrangements are an abuse. But they have been held to fall within regulation 7(a)(ii).

Regulation 61 provides for maximum housing benefit:

'The amount of a person's maximum housing benefit in any benefit week shall be -

(a) 100% of his eligible rent calculated on a weekly basis in accordance with

regulations 69 and 70 (calculation of weekly amounts and rent or rate free periods); ...

less . . . any deductions in respect of non-dependants which fall to be made under regulation 63

(non-dependant deductions).'

Regulation 3 defines a non-dependant:

'(1) In these Regulations, "non-dependant" means any person, except someone to whom paragraph (2) applies, who normally resides with a claimant.

(2) This paragraph applies to -

(a) any member of the claimant's family; . . . '

11. Clearly, therefore, the regulations cater for people living with the claimant in the same dwelling who are not members of his family. Regulation 63 then provides for a fixed deduction from the maximum housing benefit, varying according to whether or not the non-dependant is in work, and if in work how much he earns. The obvious purpose of this, consistent with Mr Howell's submissions, is to calculate benefit on the basis that these non-dependants are making a fair and proper contribution to the rent, whatever the actual position may be.

The arguments in this case

12. The Housing Benefit Review Board took the view that the claimant's responsibilities under clause 6 of his Conditions of Residence were not 'payments in respect of a licence or permission to occupy the dwelling' but 'an administrative responsibility he had by virtue of his "job" as an Elder'. However, the payment made under clause 4 for his wife and himself was, in part, a payment in respect of a licence to occupy. The proportion of that which was eligible for housing benefit purposes could be determined by looking at clause 6. Hence the payment for the purpose of the calculation was £60 per week.
13. The argument of Mr Goudie QC for the claimant, which persuaded Hidden J and was repeated before us, is straightforward. The Elders' liability to the Trust is a legal liability: see the Harrison case above, and R v Stratford-upon-Avon BC, ex p White (1999) 31 HLR 126, CA, at 137 to 141. Only the Elders have a liability to the Trust. That liability is for payments in respect of the whole dwelling. They occupy the whole dwelling. Regulation 10(1)(b) is not limited to payments in respect of their own accommodation costs. It applies to payments in respect of a licence to occupy. Clause 6 payments clearly are in respect of such a licence. It is common ground that 'in respect of' has 'the widest possible meaning of any expression intended to convey some connection or relation between the two subject matters to which the words refer.' There is no requirement in the regulations that the payment be only in respect of his own accommodation costs: otherwise they would not provide for non-dependant contributions. Clause 6 payments were payments in respect of a licence but clause 4 payments were not. Hence the Review Board had misconstrued the regulations. Alternatively their conclusion that the payments were merely an administrative responsibility placed upon Elders was unreasonable within the meaning of Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223.
14. Mr Straker QC for the Review Board argues that it was within the limits of available responses to hold that payments passed on from other residents were not payments 'in respect of a dwelling occupied as his home' but payments he was obliged to make in his capacity as Elder. Those payments were not in respect of his own occupation but that of others. If there were no other residents, would be no other payments.
15. The argument is therefore about whether 'payments in respect of a dwelling which he occupies as his home' means 'payments in respect of his own (or his own and his family's) occupation of a dwelling as his home'. This would be to rewrite both section 123(1) of the Act and regulation 10(1). The non-dependant deduction provisions make it quite clear that the payments may relate to a dwelling in which other people also live. It would be strange indeed, and most unfair, if an Elder could only make a claim based upon his own contribution to the common purse, but then suffer fixed non-dependant deductions for all the adult residents (indeed that was what the local authority had earlier decided in this case).
16. It is also quite clear that the clause 6 payments made by the Elders are the rent paid by them, as licensees, in respect of their licence to occupy the house. They have to make those payments irrespective of whether or not the residents make their clause 4 payments: it is not therefore the simple transmission of payments made by others. The argument has only arisen because those payments happen to be calculated by reference to the number of people living there. The Trust could have charged a fixed rent based on the number of people it expected would normally be living there. Mr Straker accepted that in that case the full rent would qualify. He tried to argue that the words 'periodical payments' in regulation 10(1) implied a sum which was the same each week, but again there is nothing to that effect in the regulation. The regulations are obviously capable of encompassing variable sums, such as seasonal adjustments.
17. For the reasons given by Mr Mr Howells in the Harrison case, the Elders' claim based upon the whole of the sums they are liable to pay under clause 6 is entirely consistent with the policy as well as with the wording of the legislation. It may seem odd that the claim cannot be made directly by those residents who are in fact impecunious (of which there were four out of the ten adult residents at the time). However, Mr Farrant's calculations demonstrated that the results in this case of allowing all the clause 6 payments, apportioned between the two Elders, then applying the non-dependant deductions and the claimant's means test inherent in the calculations, produced a result which was not out of line with (in fact less than) that which would have been produced if the individual residents' claims had been allowed. Doing it in this way reduces rather than increases the scope for manipulation of the system. Furthermore, if by any chance there were such manipulation, regulation 7(b) is there to prevent it.
18. In my view, the Housing Benefit Review Board misconstrued the legislation and Hidden J was right to grant judicial review of their decision. I would dismiss this appeal.

LORD JUSTICE JUDGE

19. I agree with Hale LJ's construction of the statutory scheme.
20. As her judgment shows, in summary, the present application for judicial review was made by the Elders of a community home in which style 3 members were living as sub licensees under a legal obligation to pay for their board and lodgings into the common purse. The Elders themselves were subject to conditions of residence which required them to make such payments themselves, (at different rates), together with a further obligation to see that both their own payments, and those of their sub licensees, were paid to the Trust.
21. It is not suggested that these arrangements were an artificial device to produce housing benefit for prosperous licensees of the Trust, or sub licensees of the Elders, or, for that matter, an abuse of public funds, outwith the objects of the Housing Benefit Scheme. Rather, the result produces the solution advanced on behalf of the Department of Social Security by leading counsel at the hearing of the applications for judicial review by individual 3 style members of the Jesus Fellowship Community Church which were rejected by Blackburne J in R V Rugby Borough Housing Benefit review Board ex p Harrison & Ors [1995] 93 LGR 139. That argument does not bind this court, but it provides the comfort of practical good sense in support of the statutory construction adopted by Hale LJ.
22. In my judgment the appeal should be dismissed.
ORDER: Appeal dismissed; appellant to pay the respondent's costs, to be the subject of a detailed assessment; permission to appeal to the House of Lords refused.
(Order does not form part of approved Judgment)