England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM QUEEN’S BENCH DIVISON
ADMINISTRATIVE COURT
19th July, 2002

		Royal Courts of Justice Strand, London, WC2A 2LL
		Straker Holford & Co.

Lord Justice Schiemann:

1. This is the judgement of the court. This appeal raises a point of general importance for those who live with students. It concerns the inter-relation of Regulation 10 and Regulation 48A of the Housing Benefits (General) Regulations 1987 as amended (“the Regulations”).
2. The appellant lives in a flat in London. He is jointly liable with his wife, mother-in-law, son and daughter for the rent on the property. He and his wife are in receipt of income support. His mother-in-law is in receipt of benefits, his daughter is in employment and his son is a full-time student.
3. The appellant claimed housing benefit to assist him with meeting his rent liability. The Act provides that housing benefit is available in certain circumstances to meet liability for a reasonable rent. His claim, made on behalf of his wife and himself, was assessed on the basis that the rent liability should be divided equally between the five members of the family.
4. Housing benefit can only be claimed in respect of the reasonable rent. The rent officer in the present case assessed the reasonable rent as being lower than the contractual rent. The correctness of that determination is not in issue in the present appeal. So in the remainder of this judgment references to the rent are to be taken as references to the reasonable rent.
5. The appellant’s housing benefit was assessed on the basis that each of the father, mother, mother-in-law, daughter and student son was liable for one fifth of the rent. The issue in this appeal is whether this approach, which reflected the truth of the situation, was the correct approach under the Regulations or whether the student son should have been excluded from the calculation with the result that the other four, including the appellant, would be treated as if he were liable for one quarter of the rent. The Judge, Mrs Justice Rafferty, held that the Authority had approached the matter correctly. The father appeals.

The Legislative Scheme

6. We have placed the most relevant provisions in primary and secondary legislation in an appendix to this judgement.
7. By section 130 (1)(a) of the Social Security Contributions and Benefit Act 1992, it is a condition of entitlement to housing benefit that the claimant is “liable to make payments in respect of a dwelling in Great Britain which he occupies as his home”. By section 130 (4) regulations are to determine the “appropriate maximum housing benefit” for each claimant.
8. There is an enabling power in section 137 (2)(i) of the 1992 Act for the making of regulations “for the purposes of this part of this Act .... for treating any person who is liable to make payments in respect of a dwelling as if he were not so liable”. The part of the Act referred to relates to income related benefits which include housing benefit.
9. Regulation 10 (1) sets out the various payments in respect of which housing benefit may be payable. “Eligible Rent” is defined in Regulation 10 (3) as being the aggregate of the payments set out in Regulation 10 (1) for which the claimant is liable, with certain adjustments. Regulation 10 (3) is made “subject to .... any apportionment in accordance with paragraphs (4) and (5)”.
10. Regulation 10 (5) requires that “where more than one person is liable to make payments in respect of a dwelling”, the rent shall be apportioned in order to calculate the eligible rent in respect of “each such person”.
11. Regulation 48A provides that

“A full time student shall be treated as if he were not liable to make payments in respect of a dwelling”

The Legislative history

12. There can be no doubt as to the legislative purpose which lay behind the introduction of Regulation 48A into the Regulations. It was added by the Social Security Benefits (Students Loans and Miscellaneous Amendments) Regulations 1990 to which we shall refer to as the Students Regulations. The explanatory note to the Students Regulations reads:

“These Regulations ... exclude students, with certain specified exceptions, from entitlement to housing benefit and income support by treating students, in the case of housing benefit, as not liable to make payments in respect of their dwelling...”

13. The position is further made clear by Cmd. 1141, containing the report on the draft Students Regulations of the Social Security Advisory Committee, the Department of Social Security’s note to the Committee on the content and purpose of the Students Regulations, and the Secretary of State’s response to the Committee’s report. These documents show beyond doubt that the main, and arguably the sole, purpose of Regulation 48A was to remove the entitlement to housing benefit of most full-time students, and that this went hand in hand with the provision of increased funding of students’ living costs, (including accommodation costs) by other means. The DSS note states as follows:

“It is the government’s policy that the financial support provided to full-time students should come from one source, namely the Educational Maintenance System. To achieve this end the Government proposes to withdraw certain social security benefit entitlements from students.

The majority of full-time students will no longer be entitled to unemployment benefit, income support and housing benefit .... instead the Department for Education and Science will be establishing new and additional funding arrangements for students: top-up loans and Access Funds ....

Regulations will provide that all full-time students .... will become disentitled to housing benefit by treating them as persons not liable to make payments in respect of a dwelling.”

Submissions

14. It is common ground that, following the enactment of Regulation 48A, the appellant’s son is not entitled to claim housing benefit because he is a full-time student.
15. The appellant submits that the deeming provision in Regulation 48A is, on the face of it, of general application and applies to any part of the Regulations where his liability to make payments is relevant. He is therefore not “such [a] person” for the purposes of Regulation 10 (5).
16. The appellant submits that there is nothing in the enabling power in section 137 (2)(i) which suggests that the deeming provisions made under that paragraph are limited in their effect. The reference to “this part” is to Part VII of the 1992 Act, which includes section 130 as well as section 137.
17. Accordingly, submits the appellant, such deeming provisions must unless otherwise stated, apply in relation to Regulations made under section 130 (4), which include Regulation 10 (5), as well as for the purpose of determining whether the conditions of entitlement to housing benefit in section 130 (1)(a) is fulfilled.
18. Had it been intended that such deeming provisions should not apply to Regulation 10 (5) it would have been (and still is) very easy for the Secretary of State to insert a provision along the lines of the following:

“For the purpose of paragraph (5) any provision of these Regulations by virtue of which a person who is liable to make payments in respect of a dwelling is treated as if he was not so liable shall not have effect.”

19. In so far as the appellant’s construction of the Regulations produces any oddities these can be dealt with by virtue of the anti avoidance provisions of Regulation 7 or the discretionary provisions in Regulation 10(6B).
20. Mr Nigel Giffin on behalf of the Secretary of State made the following submissions which were adopted by Miss Lieven on behalf of the respondents. He submits that the starting point of any analysis is that Regulation 48A of the Regulations appears in Part VII of the Regulations, entitled “students”. By Regulation 47 it is provided that [emphasis supplied]:

“The provisions of Part II, III, IV .... shall have effect in relation to students subject to the following provisions of this Part.”

21. He submits that Regulation 48A is a deeming provision and that it is well established that the scope of deeming provisions should, so far as possible, be limited to that which is necessary to achieve their statutory purpose. He draws our attention to DEG-Deutsche Investitions-und Entwicklungsgesellschaft GmbH v Koshy [2001] 3 All ER 878 at paragraphs 16 and 20, where the Court of Appeal referred to:

“.... the need, in applying a deeming provision (and especially one which amounts to a statutory fiction) to have regard to the legislative purpose underlying the provision. Outside the scope of that legislative purpose, there may be no reason to prefer fiction to the truth.... the statutory hypothesis is to be carried as far as is necessary to achieve the legislative purpose, but no further.”

22. He also cites the dicta of Nourse J. in IRC v Metrolands (Property Finance) Limited [1981] 1 WLR 637 at 646, cited with approval by Lord Lowry in Marshall v Kerr [1995] 1 AC 148 at 160F-H:

“When considering the extent to which a deeming provision should be applied, the Court is entitled and bound to ascertain for what purposes and between what persons the statutory fiction is to be resorted to. It will not always be clear what those purposes are. If the application of the provision would lead to an unjust, anomalous or absurd result, then unless its application would be clearly within the purposes of the fiction, it should not be applied. If, on the other hand, its application would not lead to any such result then, unless that would clearly be outside the purposes of the fiction, it should be applied.”

23. He submits that the purpose of the deeming provision in the present case is limited to ensuring that full-time students do not themselves normally receive housing benefit and that any broader application of the Regulation 48A(1) would lead to unjust and anomalous, and potentially absurd, results.
24. He gives three examples as exemplifying this.

i) Consider a house shared by a group of single people. Suppose the case in which four friends (“A”, “B”, “C” and “D”) share a house. They are jointly and severally liable for the rent. In fact they each contribute 25% of the rent. “A” is in paid employment. “B” is unemployed and in receipt of housing benefit. “C” and “D” are students. If the claimant’s construction be correct, “B” would expect to receive housing benefit amounting to 50% of the rent, i.e. twice as much as he is actually having to spend on his rent.

ii) Even in the present case, the claimant’s construction will lead to over-provision being made for housing costs out of public funds. Full-time students will, in the form of the students’ support that is available to them, actually or potentially enjoy some contribution towards their housing costs out of public funds. Broadly speaking, students in higher education receive financial support through loans, supplementary allowances and bursaries.

iii) Where students in more vulnerable categories are [by reason of the provisions of 48A(2)] eligible for housing benefit, the amount of loan or grant they receive (less certain disregards) is taken into account when assessing their entitlement to housing benefit: see Regulations 53(1) and 57A(1) of the Regulations.

25. He submits that the manner in which Regulation 48A is to be confined to its proper purpose in the present context is by reading narrowly the words “in relation to students” in Regulation 47, so as to mean that the provisions of Part VII are read into Parts II, III, IV when dealing with claims for housing benefit made by students but not otherwise. Thus, when (as here) the student in question is not a housing benefit claimant, and is relevant only as a third party sharing accommodation with the claimant, Regulation 10 (5) should be given its full force and effect, and not be regarded as affected by Regulation 48A (1).
26. To these submissions made on behalf of the Secretary of State, Mr. Stagg makes two submissions in reply on behalf of the appellant.

i) It is impossible to read words into the Regulations in the way the Secretary of State suggests.

ii) That if one adopts the approach of the Secretary of State as outlined in paragraph 25 above this itself produces oddities.

27. The first of these oddities concerns Regulation 6(1)(e) which, submits Mr. Stagg, would be rendered superfluous. His reasoning goes as follows:

i) The exclusion of most full-time students from housing benefit was introduced by Regulation 4 of the Students Regulations.

ii) Regulations 6(1)(b) of the Regulations deems a partner of a person who is liable to pay rent to be themselves liable for that rent. The purpose of that provision is to enable a couple to choose which claims housing benefit. If husband and wife live in a council house and the husband is the tenant they may wish the wife to claim housing benefit. The wife is not liable for the rent, but Regulations 6 (1)(b) deems her to be so liable, so she can claim housing benefit.

iii) Consider now the situation where the husband is a full-time student. The policy is that partners of full-time students should be able to claim benefit as normal in respect of the family home. Regulation 6 (1)(e) reinforces this. Even though the husband is a full-time student and is deemed not to be liable for the rent by Regulation 48A(1), the wife is still treated as liable and can claim housing benefit.

iv) If the Secretary of State’s argument be correct, however, then Regulation 6(1)(e) was unnecessary, since Regulation 48A(1) has no application to the husband and therefore the wife is still treated as liable under Regulation 6(1)(b).

28. Mr Giffin was inclined to accept that this point in relation to the superfluity of Regulation 6(1)(e) is well made. He submits however that points on superfluity in secondary legislation are seldom of much weight. Moreover, he submits that the adoption of the claimant’s approach does not solve all problems of superfluity : it would remove the problem from Regulation 6 but substitute a superfluity in Regulation 5(3).
29. The second alleged oddity concerns Regulation 5 (5)(b). This, in broad terms, permits a claimant to claim housing benefit on two houses in circumstances where he or his partner is a student and a second home is necessary to facilitate attendance on the course. Mr Stagg invites consideration of the position where the husband and wife live together in a council flat. The husband claims housing benefit for them both. The wife gets a place at a university some distance away and needs to get lodgings to live in while she is studying. It is clear he submits from the reference to Regulation 48A(1) in Regulation 5 (5)(b) - introduced by Regulation 4 (2) of the Students Regulations - that the policy is to deny housing benefit to the wife in respect of the rent on the lodgings. However, if the Secretary of State’s submissions – that Regulation 48A only bites where a claim to housing benefit is being made by a student - be right, the husband is able to claim housing benefit in respect of the lodgings, since Regulation 48A(1) has no application to his claim since he is not a student making a claim.
30. Mr Giffin submits that this point and another point made in relation to Regulation 5(5)(b) are of no present relevance. In that subregulation Regulation 48A is incorporated directly. The problem before the court is whether to incorporate Regulation 48A indirectly via Regulation 47. As to this, any argument founded on direct incorporation is of no help.
31. A third alleged oddity suggested by Mr Stagg relates to Regulation 50 and 52. Assume that a husband and wife live in a council flat and the wife gets a place in a hall of residence. He submits that in those circumstances the husband would, if the Secretary of State’s argument were right, be entitled to make a claim in respect of any payments made by the wife to the educational establishment.
32. A fourth alleged oddity suggested by Mr Stagg is that if, in circumstances such as those outlined in the previous paragraph, the wife were to make a claim, Regulation 52 would not have any effect.
33. As to the third and fourth alleged oddities, Mr Giffin submits that they are not oddities at all. A number of different situations could arise – where the student accommodation is occupied by the student alone, where the student accommodation is shared by the student and his partner but the rent liability is solely that of the partner, and where the student accommodation is shared by them and they have a joint tenancy in respect of it. The first case he submits is met by the submissions recorded in paragraph 30 above, the second appears to be an avoidance device dealt with by the anti-avoidance provisions, and the third leads to no surprising result.

Conclusion

34. The appellant’s basic argument set out in paragraphs 15-19 clearly has some force. There is no denying that the Secretary of State’s submissions involve reading down Regulation 47 and that unless this is done the Secretary of State’s case fails.
35. We have however been persuaded that the legislative background and the matters set out in paragraph 23 above make it legitimate to engage in the exercise postulated by the Secretary of State. We do not consider that any help is to be gained from the discretionary or anti-avoidance provisions in Regulations 6 and 7.
36. As regards the point as to the superfluity of Regulation 6(1)(e) we do not find it persuasive. There is a, to say the least, tenable argument which indicates that there is in truth no anomaly. The argument goes as follows :

i) ‘the person’ referred to in regulation 6(1)(a) is contemplated as being a potential housing benefit claimant.

ii) Therefore if the regulation 6(1)(a) ‘person’ is a student, the Regulation 48A provision applies to him and he never enters into Regulation 6(1)(a). It simply does not apply to him.

iii) Regulation 6(1)(b) deals with a partner of a regulation 6(1)(a) ‘person’. But it has no application to a partner of a student because a student is not a Regulation 6(1)(a) ‘person’ : see (i) and (ii) above.

iv) Therefore Regulation 6(1)(e) is still needed to allow a student’s partner to make a claim.

37. As regards the alleged oddities concerning Regulation 5(5)(b), we agree with Mr Giffin’s fundamental criticism of this point as set out in paragraph 29 above.
38. As regards the third and fourth alleged oddities we do not find them persuasive. Three matters fall for consideration.

i) Is it clear that any real oddity exists?

ii) Does Regulation 48A have any application to Regulations 50 and 52? Regulation 47 applies Regulation 48A to Parts II, III and IV of the Regulations whereas Regulations 50 and 52 are in Part VII.

iii) Are the alleged oddities such as to be of the same weight as the oddities identified in paragraph 24 above?

39. It is not necessary for us to reach a final conclusion on either of the first two of these three matters. We are not persuaded that these alleged oddities are such as to inhibit us from following the approach urged upon us by Mr Giffin which has the merit of manifestly reflecting reality and the legislative purpose behind these amendments.
40. This appeal is therefore dismissed.