England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
ADMINISTRATIVE COURT
(Mr Justice Harrison)

		Royal Courts of Justice Strand London WC2 Thursday, 9th May 2002

1. LORD JUSTICE WARD:In 1997 the appellant, Miss Clarke, was living in rented accommodation. She was in receipt of housing benefit paid to her by the respondent, the London Borough of Enfield. Her landlord gave her notice to quit and she needed to find new accommodation. She was a single mother with a four year old daughter and she was at the time expecting her second child. As it happened, her brother, who owned a house in Edmonton, had decided to return home to live with his mother and was looking for a tenant for his property. The appellant says that she rented the property from her brother.
2. In March 1997 she applied to the local authority for housing benefit in respect of such payments as she said she was making to her brother. When making that application she told a lie: she said that she was not a close relative of her landlord. The respondent accepted that she was entitled to housing benefit, which was then paid to her.
3. On 7th August 1998 the benefits investigation manager of the local authority wrote to the appellant after learning that the landlord was in fact her brother. The appellant was informed that her application for housing benefit was refused because the tenancy appeared to be "more of a domestic family arrangement" between her and her brother. The local authority relied on regulation 7(1)(b) of the Housing Benefit (General) Regulations 1987.
4. The statutory provisions are these. Under section 130 of the Social Security Contributions and Benefits Act 1992:

"(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;

(b)there is an appropriate maximum housing benefit in his case; and

(c)either -

(i)he has no income or his income does not exceed the applicable amount ...

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

5. The relevant regulations in the Housing Benefit (General) Regulations 1987 are these:

"6. (1)The following persons shall be treated as if they were liable to make payments in respect of a dwelling -

(a)the person who is liable to make those payments; ...

7.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 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 payments in respect of the dwelling appears to the appropriate authority to have been created to take advantage of the housing benefit scheme ..."

6. The appellant exercised her right to appeal that decision, but the papers before us do not reveal the grounds upon which she made her challenge.
7. On 20th October 1998 a member of the benefit appeals team wrote:

"Concerning your recent letter appealing against the decision to disallow your Housing Benefit Application under regulation 7(1)(a)(ii) ..."

8. I emphasise that regulation because the original decision was made under 7(1)(b). Perhaps strangely, the reason given was that the original determination made under 7(1)(b) was correct "because the arrangement you have with your brother does not constitute a commercial tenancy".
9. The appellant exercised her right to appeal that decision. Once again, there is nothing in the papers to indicate on what grounds she did so. On 22nd April 1999 the review board decided to uphold the decision of the benefit authority that the tenancy had been created to take advantage of the Housing Benefit Regulations. The appellant sought permission to apply for judicial review of that decision, which was refused by Mr Justice Tucker. She renewed it to this court and on 20th July 2000 this court granted permission to apply for judicial review on the basis that it was reasonably arguable that none of the findings of fact upon which the review board relied justified a finding that the applicant's dominant purpose when entering into the agreement with her brother was to take advantage of the housing benefit scheme as opposed to the reasonable satisfaction of her housing needs.
10. The parties then entered into a compromise and, as a result, on 26th October 2000 a draft order to be made by consent was submitted by the parties in these terms:

"1.The decision made by the respondents dated the 22nd April 1999 be quashed.

2.The claimant's application for Housing Benefit be reconsidered by a newly convened and differently constituted Housing Benefit Review Board."

11. The actual order as drawn by the Administrative Court ordered in common form that the decision be removed into the Queen's Bench Division and "that thereupon the said decision be quashed".
12. A memorandum of reasons for that consent order was filed, as it had to be. In that agreed statement the parties explained that the housing benefit tribunal had held:

"(1)that the applicant's liability to pay rent to her brother for the premises in which she resided was a legally enforceable obligation; but

(2)that the applicant's tenancy was not granted to meet a genuine housing need but to take advantage of the housing benefit scheme. This was because she had originally misled the Council."

13. The statement went on to assert that in making the latter finding the review board had applied the wrong test and that:

"As the Housing Benefit Tribunal applied the wrong test the applicant and the respondents agree that the determination of the said Housing Benefit Tribunal cannot stand. Accordingly they are also agreed that the applicant's application for housing benefit should be reheard by another tribunal."

14. This reconstituted housing benefit review board met on 9th January 2001 to hear the appeal and decided that there were two points for it to consider: first, whether the appellant was liable to make rental payments; second, if there were such a legal liability, whether the liability had been created to take advantage of the housing benefit scheme. In other words, the review board were considering the matter both under regulation 6 and under regulation 7(1)(b). The decision was:

"The Review Board decided that there was no liability to pay rent under regulation 6."

15. The review board made a number of findings of fact, identifying a number of uncertainties and inconsistencies in the appellant's account of the terms upon which she and her brother were agreed. The board gave reasons for their decision, which were in summary that they found that the arrangement was more a domestic than a commercial arrangement and that there was thus no liability to pay rent. The concluding paragraph of the decision letter records:

"For the reasons given in this letter the Review Board decided there was no genuine liability for Miss Clarke to pay rent, and therefore decided against Miss Clarke on both points considered in this appeal."

16. The appellant sought judicial review of that decision on the grounds, first, that there was no jurisdiction to reopen the question whether or not the appellant was under a liability to pay rent; secondly, that the housing authority was estopped from denying that she was under such a liability; thirdly, that it was Wednesbury unreasonable to find that there was no liability to pay rent; fourthly, that it was Wednesbury unreasonable to find that the tenancy had been created to take advantage of the housing benefit scheme; and finally, that no good reasons were given for finding that the tenancy was contrived to take advantage of the regulations.
17. The application for judicial review was dismissed on the papers, but renewed to Mr Justice Harrison. On 18th September 2001 he dismissed the application and refused permission to appeal.
18. The appellant sought permission from this court on three grounds:

(1)The judge erred in holding that the local authority were not estopped from asserting that the appellant had not entered into any legally binding contract with her brother.

(2)The judge erred in law in holding that the consent order (being a contract) between the parties did not include the implied term that the rehearing before the tribunal would be limited solely to the issue of whether or not the appellant's tenancy was contrived in order to take advantage of the Housing Benefit Regulations.

(3)The judge erred in law in holding that the decision that the appellant had not entered into any legally binding contract with her brother was not Wednesbury unreasonable."

19. Lord Justice Brooke gave permission limited to the first ground only and refused permission on grounds (2) and (3). Thus the matter comes before us today to decide whether or not there is any estoppel and to reconsider whether permission should be granted on grounds (2) and (3).
20. As to estoppel, Mr Ley submits that there are two limbs to the first review board's decision, the first being that there was legal liability to pay rent and, second, that the tenancy was "contrived", if I can use that expression to label the section 7(1)(b) ground. He submits that the agreed statement of facts makes it plain that the challenge was limited to the second question which was said to have been wrongly decided by the review board. There never was, he submits, any challenge to the first finding. His submission is that, because that issue had been resolved and was not challenged, issue estoppel prevents the local authority raising that issue again.
21. Mr Ley submits in support of his submission that we can get some help from Ridehalgh v Horsefield [1994] Ch 243. That is now the leading authority on wasted costs, but Mr Ley points out that the backcloth to the claim for wasted costs in that particular case was that the county court decided, in a landlord and tenant dispute, that a notice had been served for the purposes of Case 21 of the Rent Acts, but nevertheless the claim for possession failed. The landlords then brought separate proceedings relying on Case 19, and the county court judge ruled that the tenants were estopped from denying that they had been served. I can see how some issue estoppel arises in that event, but I simply cannot see how issue estoppel arises in this case. Issue estoppel depends upon there having been a clear finding on the issue by a previous court or, I am prepared to accept, tribunal or other adjudicative body. But it must be a subsisting finding. Here the finding of the first review board lasted so long as the decision survived, but once the decision was quashed it ceased to have any legal effect at all. The consent order of 26th October is explicit and unambiguous. It ordered that the decision of the first review board be quashed. The decision was all of the decision, not just part of it. The appellant cannot pick and choose bits and pieces to retain and to discard. It is all or nothing. It was the decision which was quashed, not the reasons for it, nor the facts found in it. The order was quite clear that the claimant's application for housing benefit be reconsidered, and that must mean reconsidering de novo as if all that had gone before had come to naught. We cannot overlook another important difference between Ridehalgh and this case. Here we are dealing in the Administrative Court with the legality of an administrative decision and the remedy is to quash it or uphold it.
22. In my judgment the issue estoppel argument is utterly hopeless and I reject it.
23. Then Mr Ley submits to us that there is an estoppel by representation. He submits that the appellant only signed the consent order because the statement of reasons had expressly stated that she had a tenancy and made plain that that was not a finding of the review board under attack. He submits that she relied on the facts therein to be true and would never have agreed to the order had she appreciated that the respondents would reopen that issue. That does not seem to me to be correct. If and insofar as she relied on the representations or promises contained in the memorandum of reasons, she did so to agree the terms of the order which correctly recorded the agreement between the parties, namely that the decision be quashed. That was the relief she sought in her application for judicial review. She got what she wanted. The decision was quashed. She had her rehearing. She suffered no detriment. Nowhere was there a suggestion that the reconstituted board should be confined to the contrivance point only.
24. It is far from clear to me whether the latter point was argued before Mr Justice Harrison. But whether it was or not, I reject it. There is no merit in the ground of appeal on which Lord Justice Brooke granted permission to appeal and the appeal should be dismissed.
25. Mr Ley seeks permission to appeal on his other two grounds. He submits, first, that a contract underlies the consent order, that contract being contained in the memorandum of reasons. He submits that it was an implied term of that agreement that the new tribunal was only to consider the contrivance point. I have no difficulty with the submission that an agreement underpins the consent order. It is not, however, a commercial agreement, but an agreement of accord and satisfaction to compromise the pending litigation by an order made by consent. The difficulty, to my mind, which Mr Ley cannot surmount is that the implied term for which he contends is totally at variance with the agreement that was made as well as the order made pursuant to it. Both sent everything back to the fresh tribunal. Mr Ley would argue that upon its proper construction, or by virtue of the implied term, only part went back for a fresh decision. The two cannot stand together. His difficulty is that the court has made an order in the terms expressed which can only be construed as meaning that everything went back for a fresh decision. While the order stands it must be carried out. It was carried out. The implied term argument cannot prevail unless it is used in some way in an action to set aside the consent order and to substitute for it that which, it is now said, represents the true agreement. Whilst the order remained in force, the fresh tribunal was duty bound to act in accordance with its terms. I see no reasonable prospect of successfully arguing that point and I would refuse to give permission to do so.
26. The third ground is that the decision that the appellant had not entered into any legally binding contract with her brother was Wednesbury unreasonable. The principal complaints are that the board failed to take into account that after housing benefit ceased the appellant nonetheless paid £100 a week to her brother, the money being lent to her by her child's father. Furthermore, she points to the fact that she had a rent book and she was in exclusive possession. It is submitted that those factors point inevitably towards a tenancy. I agree that they are indications of a tenancy, but the board took many facts into account in looking at the circumstances of this case. Their written decision was, as Mr Justice Harrison held it to be:

"...a very thorough and well-reasoned decision. It is not incumbent upon the board to mention in their decision all the points that were relied upon. They made a number of points which seem to me to be entirely reasonable points upon which to rely in support of their conclusion."

27. I agree. Whether I would have reached the same conclusion is neither here nor there. I can see no reasonable prospect of successfully arguing that this was a decision which was Wednesbury unreasonable. I would refuse to give permission on that ground also.
28. In the result, both the appeal and the application for permission to appeal on other grounds must be dismissed.
29. LORD JUSTICE KEENE: I agree that this appeal and the renewed application for permission to appeal should be dismissed for the reasons given by my Lord. I would only add some very brief comments of my own.
30. The normal position when a public law decision like this is quashed is that the decision goes back for the decision-maker to reconsider it on its merits, which means all its merits. The order of the court in this case was entirely consistent with that approach. Estoppel nowadays plays very little part as a concept in public law matters. In the present case there is no room for issue estoppel because the issue of the appellant's liability to pay rent was never before the court. It had been before the review board, but its decision was quashed. It is said that there existed here some sort of estoppel by agreement, the agreement being the memorandum of reasons. That was a written agreement, on the face of the wording of which there was no agreement between the parties that the matter should only go back on issue two. Faced with that, Mr Ley submits that the agreement had an implied term to that effect in order, he says, to give efficacy to the contract, relying upon the classic case of The Moorcock. The trouble, to my mind, with that submission is that this was a perfectly efficacious contract as it stood. It required no such extra term. Consequently, no implied term can be founded on such a basis.
31. This appeal in my judgment is wholly without merit and should be dismissed.
32. SIR MARTIN NOURSE: I agree with both judgments and cannot usefully add anything of my own.
Order: appeal dismissed; renewed application for permission to appeal dismissed; permission to appeal to the House of Lords on estoppel point refused; public funding costs assessment for the appellant.