England and Wales High Court (Administrative Court) Decisions

Fairbank v Lambeth Magistrates' Court [2002] EWHC 785 (Admin) (25th April 2002)

IN THE HIGH COURT OF JUSTICE
QUEENS BENCH DIVISION
DIVISIONAL COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		25th April 2002

Lord Justice Kennedy :

1. This case came before us as an application to send the Case Stated back to the Magistrates’ Court for amendment. In our view although the format of the Case Stated is not ideal no amendment is necessary before the matter can be considered substantively as an appeal by way of Case Stated. We have therefore refused the application to remit, and proceeded to hear the appeal.

Background.

2. The case concerns an applicant for housing benefit and council tax benefit. In 1996 those who claimed such benefits in the London Borough of Lambeth had to complete an application form which asked, amongst other things, about houses which they owned other than their own homes. At the end of the form the applicant had to complete a declaration of truth, and if when completing the form he made a statement or representation which he knew to be false then he committed an offence contrary to section 112 of the Social Security Act 1992. It was the prosecution case in the Magistrates’ Court that this applicant did commit that offence because when applying for benefit he failed to disclose a house in Yorkshire which was registered in his name. It was and is his case that he was not required to disclose that house because although it was registered in his name he only held it as a trustee, and the question posed for our consideration is whether, on the facts as found, it was right in law for the District Judge to find that the appellant was the owner of a property within the meaning of Regulation 2 of the Housing Benefits (General) Regulations 1987.

The Facts.

3. The following facts emerge from the Case Stated either as findings of fact or as recitation of evidence which seem to be unchallenged –

1. In 1989 the appellant purchased 2 Waterfall Cottages, Marsden, in Yorkshire. The purchase price of £11,000 was provided by his father, who had intended to buy it himself. Initially it was not lived in by any member of the family, nor was it rented out.

2. Between 1995 and early 1997 the property was renovated, and from Christmas 1996 onwards it was let to tenants.

3. On 17th July 1996, whilst renovation was in progress and before the property was let, the appellant, who was a council tenant living in London, SW9, applied for housing benefit and council tax benefit, and completed the necessary form.

4. Part 10 on the form, headed “Capital and Investments” said –

“If you own houses other than your own home please tell us the address of the property”.

The appellant, a man of good character and a local councillor, put a line through that part of the form and signed the declaration of truth in paragraph 17 at the end of the form.

5. Between 16th June 1996 and 6th April 1997 the appellant received housing benefit and council tax benefit.

6. In 1998 the appellant’s father died, and on 19th June 1998, when the appellant was living at 35 Carr Lane, Slaithwaite, in Yorkshire he was interviewed, in the presence of his solicitor, by officers of Lambeth LB. He then admitted that he owned 2, Waterfall Cottages, and said that the property had been let to tenants for 5 or 6 months, at a rent of £80 per month. When asked why he had dealt with Part 10 of the form as he had, he replied that was because he presumed the question related only to other properties in London, and when asked if the declaration he had signed was true he said –

“Yes – in a way – in that the house was purchased by my parents as something for the future so – although it was in my name, whether it was actually – I mean I suppose technically it is in my name but it was something that the family purchased on my behalf. But I mean – why didn’t I put it down there – I presumed it meant do you have anywhere else to stay in London.”

7. Basically he contended that he never had any benefit from the house at 2 Waterfall Cottages. It was bought as a possible family home for his parents. It was put into his name because his father was unwell, and he held the property in his words “on trust”. There was no written evidence of any trust, but he received rent, paid bills and managed the property for his parents, to whom he accounted for any surplus.

8. When the appellant’s father died his interest, if any, in 2 Waterfall Cottages was not treated as part of his estate. It was not mentioned in his will; it does not appear that any positive action was taken in relation to the estate.

Statutory Provisions.

4. In Regulation 2 of the 1987 Regulations “owner” is defined as meaning “the person who ... is for the time being entitled to dispose of the fee simple, whether or not with the consent of other joint owners”.
5. Regulation 72 of the same Regulations requires that claims be made in writing in a form approved for the purpose by the authority administering housing benefit. They can also be made in such written form as that authority may accept as sufficient, so the form which the appellant completed on 17^th July 1996 was not a statutory form. It was simply a form approved by the local authority to elicit the information it required to administer housing and council tax benefit.

In the Magistrates’ Court.

6. The District Judge at paragraph 4(h) of the Case Stated held that given the definition of “owner” in the Regulations, and the manner in which 2 Waterfall Cottages was registered (i.e. simply in the appellant’s name) it was property to which Part 10 of the application form referred and it was therefore unnecessary to decide whether or not there was a trust, and if so of what kind.
7. In paragraph 4(i) the District Judge said –

“The question I do have to decide is whether or not Mr Charles Fairbank knew that the question (i.e. Part 10) included that property and whether his failure to disclose it was a representation which he knew to be false.”

8. Having rejected the possibility that the house was not in the appellant’s mind when he completed the form, the Judge said –

“From the defendant’s dealings with this property, including its purchase, renovation and letting I am satisfied to the high standard required by the criminal law that he knew that it was property that he owned and should have been disclosed to those responsible for assessing his entitlement to Housing Benefit.”

Then in paragraph 4(l) the judge said –

“I am therefore satisfied that when Mr Charles Fairbank completed and signed the application form and declaration he did so knowing it was false and in relation to his ownership of houses.”

Subsequent Events.

9. On 17^th May 2000 the District Judge refused to state a case. The appellant then, in the Administrative Court, got permission to seek judicial review of that decision. At that point the respondent and the appellant agreed to an order being made by the High Court requiring the District Judge to state a case, and he did so, raising the question posed earlier in this judgment. The appellant’s counsel was unhappy with the way the facts were set out in the Case Stated, and sought an order from this Court remitting the case to make further findings, but, as already indicated, it is the view of this Court that what counsel had been seeking does not in reality go beyond the facts set out earlier in this judgment. There would therefore be nothing to be gained by sending the matter back to the District Judge, quite apart from the question of whether it would be appropriate at this stage to seek further findings of fact.

Discussion.

10. To my mind it is important not to forget that the underlying litigation here is a criminal prosecution for contravention of a statutory requirement. Essentially what the prosecution had to show was that in paragraph 10 of his application form the appellant made a statement which he knew to be false. Section 112 of the 1992 Act, so far as material, provides –

“If a person for the purpose of obtaining any benefit or other payment under the Social Security legislation .... makes a statement or representation which he knows to be false ... he shall be guilty of an offence.”

Of course if in law, for the purposes of Part 10, the appellant, on the facts as found, did not own 2 Waterfall Cottages then his state of mind is irrelevant because his statement was not false. Mr Smiler, for the appellant, submits that in order to interpret the words used in Part 10 it is necessary to look at the Regulations, because the form came into existence pursuant to the powers granted by the Regulations. I would find that submission compelling if the form were itself a prescribed form, perhaps to be found in an annex to the Regulations, but it is not. The connection between the Regulations and the form is tenuous. The Regulations do not prescribe the contents of the form, only the body by which it must be approved, and that body can also accept a written application for benefits in any other form it regards as sufficient. It could, for example, accept a letter from a member of an ethnic minority written in his mother tongue. So, to my mind, there is no obvious reason why there should be resort to the definition in Regulation 2 in order to interpret the word “own” in Part 10 of the form. It is an ordinary English word used in a form plainly intended for use by non-lawyers. I accept, as Mr Smiler submits, that to a lawyer that word may cover a number of concepts but, as Leveson J pointed out during argument, it is used in Part 10 in such a way as to elicit information which will almost inevitably lead to further enquiries. “If you own houses other than your main home, please tell us the address of the property”. Plainly any affirmative response would lead to enquiries as to whether the claimant could live in the other property or derive financial benefit from it.

11. That brings me to the critical question of whether a person, such as this appellant, who at the time he completed the form was the registered owner of a house other than his main home, a house bought with his father’s money and which was then being renovated, could be expected to respond affirmatively to the relevant words in Part 10 of the form. In order to answer that question I do not consider it to be necessary to analyse the nature of the appellant’s legal interest in 2 Waterfall Cottages. Suffice to say that in my judgment his interest was such as to require anyone in his position to give an affirmative response, and by doing otherwise he made a statement or representation which was false. I am fortified in that conclusion by what I can best describe as the common sense of the situation, and the appellant’s own later recognition of it. Plainly in order to evaluate entitlement to benefit the authorities need to know about any other property of which the appellant could be described as the owner, and when interviewed the appellant did not initially seek to justify his non-disclosure by reference to his lack of ownership. He said –

“I presumed it meant London because you wouldn’t be allowed to have Housing Benefit for a place if you had a place in London.”

When his attention was directed to the declaration at the end of the form he did say that the property was purchased by his parents, but recognised that it was in his name, and then said “but I mean – why didn’t I put it down there – I presumed it meant do you have anywhere else to stay in London.” What is noticeably lacking is any suggestion that the extent of his ownership was not such as to require a positive response to part 10.

12. That leaves only the question of knowledge – whether the appellant knew his statement or representation to be false, and as to that Mr Smiler realistically accepts that he cannot in this Court hope to disturb the adverse findings made by the District Judge which are set out earlier in this judgment.
13. That is sufficient to dispose of this appeal, but, in deference to the submissions made by Mr Smiler, I am prepared to go a little further. Mr Smiler submitted that where a purchaser (1) provides funds to buy a property, and (2) conveys the said property into the name of a third party, and (3) there is nothing to indicate an intention on his part of not appropriating the beneficial interest to himself, there is a presumption that he intended to retain the beneficial interest for himself. In support of that proposition Mr Smiler invited our attention to Dyer v Dyer [1788] 2 Cox 72. That case was cited by Lord Upjohn in Pettitt v Pettitt [1970] AC 777 at 814, and the citation makes it clear that in the earlier case Eyre C.B. went on to say that –

“The circumstance of one or more of the nominees being a child or children of the purchaser, is to operate by rebutting the resulting trust.”

So the effect of the authorities is now conveniently summarised in Halsbury’s Laws of England Volume 20 paragraph 40 thus –

“Where a person buys real .... property and pays the purchase money, ... but takes the purchase in the name of another, who is neither his child, adopted child nor wife, prima facie there is no gift, but a resulting trust for the person paying the money.”

This appellant was the child of the man who, he says, provided the money, so, as it seems to me, the initial assumption must be that this was a gift without a resulting trust. In that event the appellant was at the material time the owner of the house without any qualification whatsoever, so no one in his position should have dealt with Part 10 as he did.

14. However on the evidence adduced before him the District Judge might have found that the appellant was a trustee, and if I am wrong in my conclusion that it is neither necessary nor appropriate to have resort to Regulation 2 in order to interpret Part 10 of the form, what would be the position then? Mr Smiler submits that the appellant would have needed to consult with the beneficiaries in order to sell (see section 26(3) of the Law of Property Act 1925) and in those circumstances he was not, for the purposes of Regulation 2, “entitled to dispose of the property, whether or not with the consent of other joint owners”. The appellant completed his application form shortly before the passing of the Trusts of Land and Appointment of Trustees Act 1996, section 6 of which made certain changes in the law, but even prior to those changes if the appellant was a trustee he was a trustee under an implied trust for sale.
15. In R v Sedgemoor District Council Housing Benefit Review Board ex parte Weaden [1986] 84 LGR 850 Schiemann J was concerned with an applicant for housing benefit who, together with her parents, had purchased a property which was conveyed to all three of them as tenants in common. Subsequently an agreement was made pursuant to which she lived in the property and paid the outgoings and £30 per week to the other two trustees for sale. The agreement also provide for division of the proceeds in the event of sale. The Review Board found that she was an owner for the purposes of Regulation 2 of the Housing Benefit Regulations 1982 (the predecessor of Regulation 2 of the 1987 Regulations) which at that time did not contain the words “whether or not with the consent of other joint owners”. The judge held that she was not an owner as defined in the Regulation, saying at 856 –

“A person is not entitled to dispose of the fee simple if he needs the consent of others to dispose of it and has not got it.”

However, it is in my judgment important to consider the context in which those words were said. There were in existence two other trustees for sale.

16. After Regulation 2 took its present form Blackburne J considered it in R v Sheffield HBRB ex parte Smith [1996] 28 HLR 36 at 47, when he said that the expression “owner” in Regulation 2 does not extend to a person “whose only interest in the dwelling is as a beneficiary entitled, if and when the trusts affecting it should be fully executed, to share in the ultimate net proceeds of sale (assuming there are any).”
17. In my judgment neither Weadon nor Smith is of much assistance in relation to the problems with which we are concerned in this case. For my part I am satisfied that even if the appellant was a trustee, and even if the definition of ‘owner’ in Regulation 2 could be applied to the word ‘own’ in Part 10 of the form, he would still fall within it because he was the person who was for the time being entitled to dispose of the fee simple. No one else had that right, and although he had to consult beneficiaries they were, I accept, not co-owners, and he did not require their consent.
18. Finally Mr Smiler drew our attention to Waller v Waller [1967] 1 WLR 451 in support of his proposition that the appellant could not alone give a valid receipt for the proceeds of sale (see section 14(2) of the Trustee Act 1925). Another trustee would need to be appointed. That might well be the case if other persons were interested in equity in the proceeds of sale (see Waller’s case at 453C), but in the present case we are not concerned with the proceeds of sale, only with current entitlement to sell. Accordingly I remain of the conclusion that even if the appellant were a trustee, and even if the definition in Regulation 2 could be applied to Part 10, the appellant would not be able to take advantage of it.

Conclusion.

19. For the reasons explained earlier in this judgment I do not regard the question posed at the end of the Case Stated as relevant, but if relevant I would answer it in the affirmative, and for the reasons I have given I would dismiss this appeal, with costs summarily assessed as claimed in the sum of £4,493.50. As the appellant is legally assisted the determination of his liability to pay all or any of that sum must be made by a costs judge.

Mr Justice Leveson:

20. I agree.
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LORD JUSTICE KENNEDY: For the reasons set out in the judgment which has been handed down, this appeal will be dismissed. Yes, Mr Smiler?

MR SMILER: My Lord, I have two applications. One is, I think I still need to make, legal aid taxation?

LORD JUSTICE KENNEDY: Yes.

MR SMILER: I am grateful. The other, my Lord, is for the court to certify one or two questions of public importance relating to this matter, if I might explain why that is?

LORD JUSTICE KENNEDY: Are they in print?

MR SMILER: My Lord, yes.

LORD JUSTICE KENNEDY: May we have them?

MR SMILER: My Lord, yes.

LORD JUSTICE KENNEDY: It does actually help, if this course is to be adopted, if we have a chance to look at them before we actually sit.

MR SMILER: My Lord, I apologise. They are on the second page, my Lord.

LORD JUSTICE KENNEDY: Thank you. Yes.

MR SMILER: My Lord, the two points I would wish to highlight are firstly that, on further research, the application in the social security appeals, which counsel has seen, would appear to suggest that established practice is that it is the beneficial interest which is taken into account when determining eligibility for benefit, and that the thrust of the judgment that has been given would appear to suggest that that ought to be changed.

In my submission that would be a substantial change. It is a matter in which -- and I have here statistics relating to the number of cases of alleged fraud which are considered each year, which runs into, for last year, something like 100,000 cases. But clearly leaving aside the fraud, the question of determination of benefits relating to people who own property in trusts is one which is being decided on a regular basis by social security officials, and it does not appear, beyond Social Security Appeal Tribunal cases, which themselves are not comprehensive, as though there is a clear guidance for them. My concern is that the judgment before us is the only guidance that I can find, and that appears to conflict with the way in which the cases are being applied, or the law is being applied by the Social Security Appeal Tribunals.

My Lord, the second point which I would wish to draw to the court's attention is that it says in the judgment that if the form had been a prescribed form, the court's view might have been altered. Since the draft judgment was handed down, I have carried out some research and there is something which suggests that there is a prescribed model form. I have not been able to obtain a copy of that and I have tried extremely hard, and that is found in Tolley (?), Tolley Social Security and State Benefits Handbook.

LORD JUSTICE KENNEDY: That is not to the point. The point which we were seeking to make in the judgment is that it is not entirely uncommon, in fact it is quite common, to have, for example in the White Book, prescribed forms which form part of the structure of the Regulations. This form plainly does not, even if somebody has decided that it might be convenient to have it in a form which they suggest. There is no reference in these Regulations to a prescribed form.

MR SMILER: I have not seen such a reference. It is unclear what is meant. It says: "Although a standard model is proposed, each council may have a different form", what Tolley means by that is not clear to me, and I have not been able to ascertain as yet. But, my Lord, the essential point is that the case is, and again I have cases, if the court wishes to see, Social Security Appeal Tribunal cases, I have two which seem to be relevant, which suggest clearly that it is the beneficial interest which is taken into account and, indeed, that holding on trust does not disentitle the claimant to benefit.

MR JUSTICE LEVESON: But that is not the point. The point is not whether it would affect the benefit. The point is whether there was a false representation on the form. Its impact on the benefit is a matter for the Social Security Tribunals.

MR SMILER: My Lord, yes, but the judgment has gone beyond.

LORD JUSTICE KENNEDY: My Lord's question to you is precisely the point I was about to put if he had not put it, yes.

MR SMILER: Yes, but the judgment goes on and answers a question beyond that and, in doing so-----

LORD JUSTICE KENNEDY: We made it quite clear that, if you look at the beginning of paragraph 13, that is sufficient to dispose of the appeal; the opening words of paragraph 13.

MR SMILER: My Lord, yes.

LORD JUSTICE KENNEDY: And that is the answer to the question posed on this particular form and in the circumstances of this case, in our judgment, was false and the court was entitled so to find.

MR SMILER: My Lord, yes.

LORD JUSTICE KENNEDY: How does any point of law arise out of that? I mean to take your first one, whether a trustee is an owner, we do not find that he was a trustee in that part of the judgment anyway.

MR SMILER: My Lord, no. I think that the position is unclear because you have said in the judgment that the magistrate would be entitled, or may have found that he was a trustee and, in those circumstances, that the question of trusteeship is still relevant.

MR JUSTICE LEVESON: I do not think that you would find the House of Lords terribly interested in analysing the dictum of my Lord, bearing in mind the other work that they have to do. You have to identify a point of law of general public importance that directly arises on the case.

MR SMILER: My Lord, yes.

LORD JUSTICE KENNEDY: Well, unless there is anything more you wish to say, Mr Smiler, you may have gathered from the interventions that we are not at the moment much attracted by the point of law you would wish us to certify, either of them.

MR SMILER: My Lord, there is nothing further that I can say.

LORD JUSTICE KENNEDY: Very well. We decline to certify. Thank you very much.

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