UK Social Security and Child Support Commissioners' Decisions

 


[1996] UKSSCSC CIS_5242_1995 (06 August 1996)PRIVATE 

JMe Commissioner's File: CIS/5242/1995

SOCIAL SECURITY CONTRIBUTIONS AND BENEFITS ACT 1992

SOCIAL SECURITY ADMINISTRATION ACT 1992

APPEAL FROM DECISION OF SOCIAL SECURITY APPEAL TRIBUNAL ON A QUESTION OF LAW

DECISION OF THE SOCIAL SECURITY COMMISSIONER

Name:

Social Security Appeal Tribunal: Portsmouth

Case No:

[ORAL HEARING]

1. The adjudication officer's appeal is allowed. The decision of the Portsmouth social security appeal tribunal dated 22 February 1995 is erroneous in point of law, for the reasons given below, and I set it aside. The appeal is referred to a differently constituted social security appeal tribunal for determination in accordance with the directions given in paragraphs 12 to 18 below (Social Security Administration Act 1992, section 23(7)(b)).
2. The claimant bought her flat from the local authority in 1989 on a long lease. She had been in receipt of income support from 1988, and has continued to be entitled. As a condition of the lease she was obliged to pay a service charge. It appears that from the date of the purchase the full amount of the service charge was allowed as a housing cost under paragraphs 1(f) and 9 of Schedule 3 to the Income Support (General) Regulations 1987 (the Income Support Regulations).
3. In October 1994 details were obtained by telephone from the local authority of the breakdown of the service charge payable from 1 April 1994. The details, described as estimates, were recorded as follows:

1. Annual Service Charge £154.43

2. Annual Repair Charge £ 51.20

3. Cyclical Decorations £224.56

4. Long Term Major Repairs £ 89.66

5. Improvements £ 59.21

6. Cover in lieu of Insurance £ 82.55

7. Ground Rent £ 10.00

Total £671.61

On the basis of that information, the adjudication officer on 12 October 1994 gave the decision that the claimant was entitled to housing costs of £34.99 weekly from 27 September 1994. That amount was calculated by allowing the eligible mortgage interest, the annual ground rent and annual service charges of £512.74. The figures for items 4 and 5, long term major repairs and improvements, were excluded in order to reach the amount of service charges allowed.

4. The claimant appealed. She attended the hearing before the appeal tribunal on 22 February 1995 and was represented by Mr Ryan, a resident in the same block as the claimant who was also Secretary of the Residents' Association. He and the claimant gave evidence that the only work that had been done on her block since painting in 1989 or 1990 was the replacement of the original single-glazed windows and balcony doors by double-glazed units in February 1994. Mr Ryan said that because of the local authority's accounts rules the cost of that work would not appear in the service charge until 1995/96, and that, because the figures under consideration were for accounting year 1994/95, the cost of upgrading the windows could not form part of the £89.66 and £59.21. He and the claimant submitted that, despite the labels, items 4 and 5 did not cover major repairs or improvements within the meaning of paragraph 8(3) of Schedule 3 to the Income Support Regulations. The chairman recorded that the presenting officer accepted that the items did not come within paragraph 8(3), and that, since the claimant was obliged to pay those parts of the service charge, they should be allowed as a service charge.
5. The appeal tribunal allowed the appeal and held that the claimant was entitled to housing costs on items 4 and 5 of the service charge from 27 September 1994. It found as a fact that the £89.66 and £59.21 were not levied in respect of major repairs or items listed in heads (a) to (k) of paragraph 8(3). It recorded the following as part of its reasons for decision:

"We had no documentary evidence from Portsmouth City Council, the landlords, when precise information from them as to what work was done in respect of these sums was important. It may be that as a leaseholder [the claimant] has a right to demand from the City Council full details of her service charge and how the items in it are made up. Again, in turn the department may have a right to require her to access this information, but we were left to consider the case without any further details and on what information we had before us.

We found [the claimant] and Mr Ryan gave us an honest account.

We went through the excluded repairs, namely major repairs as defined in the paragraph in the Regulations. Mr Ryan as Secretary of the Residents Association we thought was in a position to advise on the work carried out by the Council and its later reflection in elements of [the claimant's] service charge. We accepted what he said.

Mr Ryan and [the claimant] felt that the two sums disputed were not in respect of major repairs as defined, and described in the sub-paragraphs (a) to (k) of paragraph 8(3). We might have felt inclined to have adjourned to try to get details of what work was covered by these sums from the Council, but we were not requested to adjourn, and although mindful that we could have taken this decision ourselves, as an adjournment was not requested, did not proceed along these lines.

As the Presenting Officer did not dispute that the payments did not come within the exclusion of paragraph 8(3), we felt justified in proceeding on this basis."

6. The adjudication officer was granted leave to appeal by the appeal tribunal chairman. The first submission made in support of the appeal, in the document dated 9 June 1995, was in my view hopeless. That was that an element of the service charge could not be eligible while there was some doubt about its eventual use, and that a decision could not be made until the precise disbursement of the expenditure was known. Such an approach would be completely impractical, when many elements of service charges consist of advance estimates of expenditure to be made in the year in question or contributions to reserve funds. The claimant opposed the appeal in her letter dated 19 January 1996, with which she enclosed detailed documents relating to her service charges for the year from 1 April 1995. I directed that there should be an oral hearing and that the claimant should produce further documents.
7. The oral hearing took place on 25 June 1996. The claimant attended and was represented by Mr Ryan. The adjudication officer was represented by Mrs Rabas of the Office of the Solicitor to the Department of Social Security. I am grateful to all concerned for their help in dealing with some complicated matters.
8. Mrs Rabas submitted that the appeal tribunal should not have made a decision allowing the disputed housing costs on the evidence before it on 22 February 1995. On that evidence it was impossible to say whether or not items 4 and 5 in the service charge were "for repairs and improvements" within the meaning of paragraph 8(3) of Schedule 3 to the Income Support Regulations and so excluded from allowable service charges by paragraph 9(2)(c). The appeal tribunal should have adjourned for further evidence about the nature of items 4 and 5. I reject that precise submission on a simple ground, which has very nearly (although not quite) caused me to dismiss the appeal as a whole.
9. The ground is this. Prior to 27 September 1994 the existing award of income support to the claimant apparently included as part of the claimant's housing costs the whole amount of the service charge which she was obliged to pay. That award could only be altered at the instance of the adjudication officer if the decision dealing with that element of housing costs was identified and the adjudication officer showed a ground for reviewing the decision under section 25 of the Social Security Administration Act 1992. Where an adjudication officer has had ample opportunity to produce evidence on those requirements, and a presenting officer representing the adjudication officer has not requested an adjournment to enable evidence to be put forward when the point has been raised, an appeal tribunal would be amply justified in simply saying that it would determine whether the adjudication officer had established any grounds for review of an identified decision on the evidence currently available. If it concluded that the evidence was insufficient for that purpose the result would be that the existing award would continue unaltered. It would not matter that there was insufficient evidence on which to make a judgment about whether particular elements of the service charge were allowable or not. It would simply be that the adjudication officer, after ample opportunity, had failed to establish any basis for altering the existing award.
10. However, that is not what the appeal tribunal did. It did not make any reference to the conditions for reviewing an existing award at all and did not raise the point about review with the presenting officer. It purported to determine that the claimant was entitled to have items 4 and 5 allowed as a housing cost from 27 September 1994. Such a decision would in principle be operative as a final decision down to the date of the appeal tribunal's decision, 22 February 1995. The effect is somewhat different from that of a decision that no basis for review and revision had been established. It was said in paragraph 13 of Commissioner's decision CSSB/540/1989 that:

"in general where it is shown that the adjudication officer has been asked to review or has decided to review an award of benefit in respect of the emergence of a relevant ground of review under [section 25] and has issued a decision altering the award of benefit in some respect, deficiencies in the form of his altered decision will not wholly vitiate his decision and can, if challenged, be corrected by a tribunal on appeal."

Here, there was some evidence before the appeal tribunal of a change of circumstances, in the new figures for the service charge payable from 1 April 1994 or in the change in the relevant regulations on 10 January 1994 (or possibly of a decision made after 10 January 1994 having been erroneous in point of law). The adjudication officer had made a decision altering the award of benefit. The appeal tribunal should have considered the proper process of review, so as to correct the deficiencies in the adjudication officer's approach. The appeal tribunal erred in law in not doing so, and in purporting to determine the precise figure of housing costs for the period down to 22 February 1995.

11. For that reason the appeal tribunal's decision must be set aside as erroneous in point of law. I had hoped to be able to substitute my decision for the appeal tribunal's, on the basis of the documents provided in response to the direction for an oral hearing. However, Mrs Rabas did not have any information as to what prompted the adjudication officer to revise the claimant's entitlement from 26 September 1994 or as to the basis of the existing award of income support to the claimant or what ground of review might most appropriately be relied on. In those circumstances, although there are attractions in simply substituting a decision that the adjudication officer has failed to show any grounds for review of any identified decision, I think that I must give the adjudication officer an opportunity of dealing with the review issue. That issue did not really come to the surface until the oral hearing. It can best be dealt with in a rehearing before a new appeal tribunal. Accordingly, the appeal is referred to a differently constituted social security appeal tribunal for determination in accordance with the following directions.

Directions to the new appeal tribunal

12. The first step must be for the adjudication officer to identify the decision or decisions of which review is sought and the ground or grounds of review relied on as operative from identified dates. That will require evidence to be produced of the basis on which housing costs were calculated prior to 27 September 1994 and of the course of decisions relating to housing costs. Those points must be incorporated into a fresh written submission for the new appeal tribunal, which should be provided to the claimant and her representative well in advance of the date fixed for the rehearing.
13. As indicated in paragraph 10 above, the appropriate ground of review may well depend on the course of the adjudication officer's decisions before 27 September 1994, as well as on the changes in the relevant legislation. The appeal tribunal of 22 February 1995 considered the form of paragraph 9(2)(c) of Schedule 3 to the Income Support Regulations in force from 10 January 1994, which excluded from allowable service charges "any amount for repairs and improvements", as defined in paragraph 8(3). On the same date, paragraph 8(3) was amended to cover not just repairs and improvements to the dwelling occupied as the home (to which the existing provision was restricted), but also "where the dwelling forms part of a building [repairs and improvements to] any part of the building containing that dwelling". Immediately before 10 January 1994 the exclusion in paragraph 9(2)(c), where the charges were "inclusive of any amount in respect of repairs or improvements within the meaning of paragraph 8(3)", was of "any amount attributable to those repairs and improvements". There might possibly be some doubt whether before 10 January 1994 paragraph 9(2)(c) excluded elements of a service charge which were not directly used to meet the cost of specific repairs and improvements. It certainly did not exclude any sort of payment related to repairs and improvements to the common parts of a block of flats because of the terms of paragraph 8(3) before its amendment. However, from 10 January 1994 the exclusion clearly extended to payments for repairs and improvements to common parts of a block of which the claimant's dwelling formed a part. In my view, from 10 January 1994 the phrase "any amount for repairs and improvements" in paragraph 9(2)(c) covers payments made into some kind of fund or reserve, providing that the purpose of the fund or reserve is to pay for major repairs or improvements within the categories listed in paragraph 8(3). That was assumed, although not I think decided, in my decision in CIS/1460/1995.
14. A change in the relevant legislation can be a relevant change of circumstances under section 25(1)(b) of the Social Security Administration Act 1992, as can be a change in the facts relevant to a claimant's entitlement. Thus, if the decision which the adjudication officer seeks to have reviewed was made before 14 January 1994, there might be a relevant change of circumstances in the amendments to paragraphs 8 and 9 of Schedule 3 to the Income Support Regulations on that date. Alternatively, there might be a relevant change of circumstances in the coming into force of the rate of service charge for the year from 1 April 1994, if that did represent a change from the existing situation. If the decision which the adjudication officer seeks to have reviewed was made after 14 January 1994, but failed to take into account the amendments in the legislation, there might be a ground of review for error of law under section 25(2) of the Social Security Administration Act 1992. Since the new appeal tribunal will be considering the position down to the date of the rehearing, even if no ground of review is made out in 1994, there may well be subsequent relevant changes of circumstances in alterations in the amount of service charges on 1 April 1995 and 1 April 1996 and in the wholesale replacement of Schedule 3 to the Income Support Regulations on 2 October 1995. One of the points made for the claimant was that she would not have bought her flat if she had not been assured by the Department of Social Security that the full service charge as well as mortgage interest would be met through income support, and that it would be unfair for the terms of that bargain to be changed. Even if such an assurance had been given extending into the future, it is clearly established that it cannot alter the obligation of adjudication officers and appeal tribunals (and Commissioners) to apply the legislation as it is in force from time to time (see, for instance, R(SB) 14/89 and the Court of Appeal's ruling in R(SB) 4/91).
15. If the new appeal tribunal concludes that the adjudication officer has proved a ground of review of an identified decision from some date, it must go on to consider whether the adjudication officer has proved that the decision should be revised in some way which is unfavourable to the claimant.
16. In doing so, the new appeal tribunal must apply my legal direction at the end of paragraph 13 above to all the evidence, which will include the documents produced for the oral hearing before me, about the purposes of the payments for long term major repairs and improvements. The claimant and her representative will of course be free to put in further written or oral evidence. The documents before me and what was said at the oral hearing seem to indicate that those payments went into reserve funds. On that basis the annual payments would be "for" whatever the general purpose of each fund was, whether or not there had been any expenditure out of the fund in the year in question. The new appeal tribunal would then have to consider, looking at the statements by the local authority of the purposes of those funds and of all the other elements making up the total service charge, and at evidence of the actual use of the funds, what the general purpose of each fund was, and ask how far that general purpose fell within the terms of paragraph 8(3) of Schedule 3 to the Income Support Regulations. If it is concluded that the purposes of a fund included some elements which fell within paragraph 8(3) as covering repairs and improvements as defined there and some elements which did not, a corresponding apportionment of the relevant annual payment would be necessary in order to determine how much was allowable as a housing cost.
17. The new appeal tribunal must consider the position down to the date of the rehearing. I do not know how the claimant's housing costs have been calculated in the light of the service charges in force from 1 April 1995 and 1 April 1996. The adjudication officer should provide evidence as to that to the new appeal tribunal, so that it can deal with the whole period.
18. I must draw attention to the significance of the terms of the new form of Schedule 3 to the Income Support Regulations which has been in force since 2 October 1995. Paragraph 17(2)(c) still excludes from allowable service charges any amount for repairs and improvements, but now as defined in paragraph 16(2). Paragraph 16(2) is much more restrictive, in several ways, than paragraph 8(3) of the old Schedule 3 in its definition of repairs and improvements. That restrictiveness of course may mean that some payments which before 2 October 1995 could not be allowed as a service charge can be allowed now. It would be wrong for me to say anything more about the interpretation of paragraph 16(2), but if the new appeal tribunal has to consider a period extending after 2 October 1995 it will need to examine paragraph 16(2) very closely.

(Signed) J Mesher

Commissioner

Date: 6 August 1996