UK Social Security and Child Support Commissioners' Decisions

[2001] UKSSCSC CJSA_2536_2000 (15 August 2001)

THE SOCIAL SECURITY COMMISSIONERS

Commissioner's Case No: CJSA/2536/2000

SOCIAL SECURITY ADMINISTRATION ACT 1992

SOCIAL SECURITY CONTRIBUTIONS AND BENEFITS ACT 1992

SOCIAL SECURITY ACT 1998

APPEAL FROM A DECISION OF AN APPEAL TRIBUNAL

ON A QUESTION OF LAW

DECISION OF THE SOCIAL SECURITY COMMISSIONER

COMMISSIONER: MR J MESHER

[ORAL HEARING]


 


DECISION OF THE SOCIAL SECURITY COMMISSIONER

1. The claimant's appeal is allowed. The decision of the Swindon appeal tribunal dated 27 January 2000 is erroneous in point of law, for the reasons given below, and I set it aside. The claimant's appeal against the adjudication officer's decision issued on 14 May 1999 is referred to a differently constituted appeal tribunal for determination in accordance with the directions given in paragraphs 33 and 34 below (Social Security Act 1998, section 14(8)(b)).
2. This is a complicated case. Since I have decided that it has to go back to another appeal tribunal for a complete rehearing I shall not go into all the factual complications, but concentrate on the points at which the appeal tribunal of 27 January 2000 went wrong in law and on the arguments of law made by the claimant and the Secretary of State. The final result will depend on the new appeal tribunal's assessment of the evidence on matters of fact.
3. There was an oral hearing of the appeal to the Commissioner. The claimant attended with his partner. The Secretary of State was represented by Ms Margaret McDonagh of what is now the Office of the Solicitor to the Department of Work and Pensions. I am grateful to all present for their assistance. I directed that the Secretary of State should attempt to find any additional documents showing the course of decisions on the claimant's housing costs, but in the event nothing was located which threw any additional light on that point.
4. The central issue in the case is the meaning and application of the provisions in paragraph 12 of Schedule 2 to the Jobseeker's Allowance Regulations 1996 on restricting the amount of housing costs for loan interest which can be met. The relevant parts of paragraph 12 are as follows:

"12.-(1) Housing costs which, apart from this paragraph, fall to be met under this Schedule shall be met only to the extent specified in sub-paragraph (3) where--

(a) the dwelling occupied as the home, excluding any part which is let, is larger than is required by the claimant and his family and any child or young person to whom regulation 78(4) applies (foster children) and any other non-dependants having regard, in particular, to suitable alternative accommodation occupied by a household of the same size; or

(b) the immediate area in which the dwelling occupied as the home is located is more expensive than other areas in which suitable alternative accommodation exists; or

(c) the outgoings of the dwelling occupied as the home which are met under paragraphs 14 to 16 are higher than the outgoings of suitable alternative accommodation in the area.

(3) Subject to the following provisions of this paragraph, the amount of the loan which falls to be met shall be restricted and the excess over the amounts which the claimant would need to obtain suitable alternative accommodation shall not be allowed.

(4) Where, having regard to the relevant factors, it is not reasonable to expect the claimant and his family to seek alternative cheaper accommodation, no restriction shall be made under sub-paragraph (3).

(5) In sub-paragraph (4) `the relevant factors' are--

(a) the availability of suitable accommodation and the level of housing costs in the area; and

(b) the circumstances of the family including in particular the age and state of health of its members, the employment prospects of the claimant and, where a change of accommodation is likely to result in a change of school, the effect on the education of any child or young person who is a member of his family, or any child or young person who is not treated as a part of his family by virtue of regulation 78(4) (foster children).

(6) Where sub-paragraph (4) does not apply and the claimant (or other member of the family) was able to meet the financial commitments for the dwelling occupied as the when these were first entered into, no restriction shall be made under this paragraph during the first 26 weeks of any period of entitlement to a jobseeker's allowance nor during the next 26 weeks if and so long as the claimant uses his best endeavours to obtain cheaper accommodation or, as the case may be, no restriction shall be made under this paragraph on review during the 26 weeks from the date of the review nor during the next 26 weeks if and so long as the claimant uses his best endeavours."

5. The relevant claim for jobseeker's allowance (JSA) was made on 17 January 1998. Income-based JSA was awarded, apparently including housing costs for mortgage interest in the applicable amount. On 16 April 1998 a letter from the Benefits Agency was given to the claimant by a visiting officer saying that the adjudication officer had decided that his housing costs were too high and that a restriction to the amount of benefit in payment for his housing costs would be made in six months from the date of the letter. The letter also said that if the claimant made efforts to sell his home the restriction would not be applied for an additional six months, to a total of one year from the date of the letter. According to the adjudication officer's written submission to the appeal tribunal the restriction at that point was based on the home being too large. The family consisted of the claimant, his partner and their two sons, then aged seven and five. The home was a partly converted barn, with two bedrooms, kitchen, bathroom and sitting room on the first floor. The ground floor was made up of four large rooms which were shells still needing conversion.
6. On 31 July 1998 the claimant was sent an A64A enquiry form, which he signed on 2 August 1998. On the form he confirmed that the amount outstanding on his mortgage was £98,000. He had already told the visiting officer that he had bought the property for £125,000 in its unconverted state in 1988. On the A64A form he said that he did not know the current value of the property, but that selling it in its partly converted state would involve a large loss. The District Valuer put the open market value of the property as at 5 August 1998 at £200,000. That valuation was and is hotly contested by the claimant and I shall have to come back to it.
7. A decision then seems to have been made by an adjudication officer (see page 61) that the claimant's housing costs should be restricted to nil from the beginning of November 1998 (or at least that the decision notified on 16 April 1998 should not be reviewed). That was on the basis that there would be enough left after the expenses of selling the property and redeeming the mortgage to buy outright the most expensive of three properties currently advertised for sale in nearby places. The nature of the decision made is rather obscure, but it is agreed that housing costs ceased to be paid from 4 November 1998. On 11 November 1998 a letter was sent to the claimant from the Benefits Agency in the following terms:

"In April this year it was decided that your housing costs were too high and that a restriction would be imposed in October 1998.

If you are making efforts to sell your house this restriction will not be applied for a further six months i.e. 16th April 1999. Please supply us with evidence that your property is on the market by providing us with a copy of the estate agent's details."

8. The claimant wrote to appeal against the adjudication officer's decision. The visiting officer called again on 27 January 1999 and apparently saw evidence of recent flooding and of waterlogging outside. In response to discussion on that occasion the claimant sent in a letter dated 29 January 1999 from Perry & Company, property consultants and valuers, mentioning the works remaining to be done on the property and severe water problems, and saying that the property was unsaleable in its then condition. The adjudication officer then found out that the District Valuer's opinion was based on a purely external inspection. The District Valuer declined to make an internal inspection, as that was outside the terms of their contract with the Benefits Agency, but said that the valuation would be reconsidered if the claimant produced more details.
9. What happened next was described as follows in paragraph 5.12 of the adjudication officer's written submission to the appeal tribunal:

"On 10 02 99 the adjudication officer wrote to [the claimant] and issued him a further form A64A. She asked [the claimant] to produce more details of evidence to substantiate Perry and Company's letter stating that the property was unsaleable. She asked for [the claimant] to supply a more detailed report from Perry and Company which they had promised in their letter dated 29 01 99 which stated more clearly why they think the house is unsaleable. She reviewed her decision to restrict housing costs to nil pending the question as to whether the valuation of the property was correct and [the claimant's] further evidence. [The claimant] was issued arrears of housing costs from 04 11 98 to 26 01 99 on 10 02 99. The weekly housing costs were put back into payment and the appeal was superseded."

10. A copy of the letter of 10 February 1999 is in the papers and it is agreed that the arrears of housing costs were paid together with an ongoing allowance in weekly benefit. However, there is no document recording the adjudication officer's decision of 10 February 1999. Nothing has come to light as a result of the search after the oral hearing. In those circumstances, I accept (as did the appeal tribunal) that there was an adjudication officer's decision reviewing and revising the decision imposing a restriction on the claimant's housing costs and not merely some administrative decision to remove a suspension of payments to the claimant. Only if there had been such a decision by an adjudication officer could an appeal be regarded as superseded and the arrears paid. And since the claimant had never taken any steps to put his house up for sale or otherwise actually to seek alternative accommodation, the revised decision on 10 February 1999 could in the circumstances only have been based on a conclusion that no restriction was to be imposed by virtue of paragraph 12(4) of Schedule 2.
11. The claimant returned the new form A64A (on which he repeated that the house was unsaleable) with a letter dated 8 March 1999 from Perry & Company detailing the works needed to put the property into an acceptable marketable condition, but giving no costings or valuation. On 14 May 1999 an adjudication officer's decision was issued that housing costs were to be nil from 19 May 1999. According to that letter the reason was that the housing costs were too high because the claimant's home cost more than suitable alternative homes in the area. The claimant appealed, and it is that appeal with which I am concerned. The two grounds put forward by the claimant were that the decision was based on an inaccurate and invalid valuation and that the claimant's financial position (in particular the imminent arrival of substantial amounts from successful legal actions against debtors) meant that he would not be on benefit for much longer.
12. Following a "paper hearing" which was set aside, a hearing on 3 December 1999 was adjourned for specified further evidence. Perry & Company in a letter dated 7 December 1999 gave a valuation (taking into account the problems with the property) of £142,500 as at May 1999. The District Valuer in a letter dated 22 December 1999 gave a reasoned valuation (on the assumption that the house had four bedrooms) of £200,000 as at 5 August 1998 (or £230,000 as at 19 May 1999), having allowed £75,000 for the works needed to make the property habitable. There was also a letter from the Headteacher of the primary school attended by the claimant's children since April 1999. This was their local area school. They had originally gone to another school due to a mix-up over the catchment area boundary. There had been an improvement in some social and behavioural problems since the change and the Headteacher considered that a further change would have adverse effects.
13. The single-member appeal tribunal on 27 January 2000 allowed the claimant's appeal in part. The decision was that the claimant's applicable amount was not to include an amount for housing costs from 19 November 1999. The view was taken that under paragraph 12(6) of Schedule 2 the restriction could not take effect for the first 26 weeks following the review decision of 14 May 1999. The claimant now appeals against that decision with the leave of a Commissioner. The grounds of the claimant's appeal were not supported on behalf of the Secretary of State, but it was submitted that the appeal tribunal had erred in the application of paragraph 12(6) of Schedule 2 and that the restriction of housing costs should have taken effect from 19 May 1999.
14. The appeal tribunal's statement of reasons was exceptionally thorough and detailed. In the main I reject the challenges made to it by the claimant, on the ground that no error of law has been shown, merely that the claimant does not like the outcome of the appeal tribunal's assessment of the evidence. That applies to the claimant's challenges to the appeal tribunal's conclusions of fact on the valuation of his house and on his financial situation.
15. On the first of those points, the appeal tribunal assessed the weight of each piece of evidence in considerable detail and concluded that the property was worth £187,500 in May 1999. The claimant submitted that the District Valuer's opinion was so flawed that it should have been given no weight at all in the assessment, so that it was an error of law for the appeal tribunal even to have considered it. I disagree. The appeal tribunal considered the opinion of 22 December 1999, which was not so flawed as to be disregarded completely, being from a named person with qualifications given, being reasoned and with some statement of the assumptions on which it was made. The appeal tribunal took into account the limitations on that opinion, in particular that there had been no internal inspection. The appeal tribunal properly assessed all the elements of the evidence and the conclusion of fact as to valuation contains no error of law. It is not an error of law that some other equally reasonable appeal tribunal might have reached a different conclusion of fact.
16. On the second of the points mentioned in paragraph 14, the appeal tribunal did not "place great reliance on the claimant's confident expectation that the sustained litigation of the 1990s will now bear fruit so that he ceases to depend on benefit". It was said that although he had gone a substantial way towards securing his damages, the evidence did not show that things were close to a conclusion. The claimant submitted that the evidence was in fact much more positive, and produced a number of documents relating to the current position of the litigation. However, I am quite satisfied that the appeal tribunal's conclusion of fact was one which it was entitled to reach on its assessment of the evidence then before it.
17. I also reject the claimant's submission that there were no grounds to review the adjudication officer's decision of 10 February 1999. I have already agreed that the appeal tribunal was right to regard that decision as itself a review and revision of the previously operative decision. The decision of 14 May 1999 could only have been given on review, although the decision itself referred to no ground of review and neither did the explanatory letter of 19 May 1999. In the written submission to the appeal tribunal it was submitted that there had been a change of circumstances since the decision of 10 February 1999 was given, in that the claimant had not provided sufficient evidence to show that his property did not have a capital value. The appeal tribunal rightly rejected that as incoherent. The claimant submitted that nothing had changed between 10 February 1999 and 14 May 1999, so that there should have been no review. However, the appeal tribunal found, looking at all the evidence available as at 27 January 2000, that the decision of 10 February 1999 was given in ignorance of material facts, ie the facts underlying the proper valuation of the property. The appeal tribunal was entitled, under section 12(8)(b) of the Social Security Act 1998, to look at all that evidence, as it was relevant to the circumstances down to 14 May 1999. It may well be that on the evidence in existence on 14 May 1999 no ground of review was made out, but the appeal tribunal was entitled to find the ground of review of the decision of 10 February 1999 made out on the more extensive evidence available to it.
18. However, after long thought I have concluded that the appeal tribunal did err in law in relation to the calculation of the resources available to the claimant to obtain alternative accommodation as at 14 May 1999 and in relation to the evidence on the relevant factors under paragraph 12(5) of Schedule 2.
19. On the first point, the appeal tribunal's reasoning was as follows. The property was worth £187,500. Taking off the outstanding mortgage of £98,000 left £89,500. There was a redemption penalty on the mortgage of three months' interest (about £3,300) and £12,500 was allowed for that and the expenses of the sale and moving. That left £77,000. The most expensive of the three properties put forward by the adjudication officer in September 1998 was £76,950. There was therefore enough money available to buy a new property outright. Although there would have been some upward movement in prices, this would not have taken the lower priced-properties (£63,500 and £69,950) out of the range and in any case a cash purchaser might secure some discount.
20. The margins involved in this calculation are very tight. For instance, if the figure of £12,500 were increased to £13,000 (by rounding up instead of down from 5% of £187,500 and the £3,300 redemption penalty) then the proceeds of sale would fall below what was required to buy the most expensive of the three properties outright. In addition there was evidence from the District Valuer that the property market in the area had been particularly buoyant in 1998. In those circumstances I consider that there ought to have been further investigation of the February or May 1999 prices of suitable alternative properties in the area and of how far the advertised prices of property represented the final selling price, and perhaps some explanation of why 5% was considered to be an appropriate figure for the expenses of sale, purchase (including stamp duty) and moving. If a new loan would have been needed to buy an alternative property, then housing costs should not have been restricted to nil from whatever was the right date. In view of the extreme tightness of the margins, the issue was not dealt with adequately.
21. On the second point mentioned in paragraph 18, the claimant's case to the appeal tribunal was that the three properties put forward by the adjudication officer were either outside the catchment area of his children's primary school or too far away to expect them to travel. He argued that it would be unreasonable to expect him and his family to move to any of those properties. He gave evidence that when the children went to the other school, a different school from that attended by most of the children in the area around their home, they were outsiders both at home and at school and that problems developed. But things were improving at the local school and another change of school would be very damaging. He therefore argued that taking that into account as one of the relevant factors, there should be no restriction on housing costs under paragraph 12(4) of Schedule 2.
22. The appeal tribunal said this on the question:

"I am satisfied that suitable accommodation would be available within the area to [the claimant]. Of the factors mentioned at paragraph 12(5)(b), the one relied on by [the claimant] is the effect upon his children of a change of school. However he has not persuaded me that a move will necessarily result in a change of school. The onus is there on him. It is asserted that the particular properties identified by the officer are not within a reasonable distance of the school, but then there is no evidence to show that the properties that are within that school's catchment area are out of [the claimant's] reach and without evidence I do not so find. If he can move to a property within the catchment area, the question of disruption of the children's education does not arise."

23. The claimant submitted to me that the appeal tribunal had in effect wrongly put onto him the burden of proving a negative, that there were not properties available within the school's catchment area which were suitable for the family. I am satisfied that an error of law arose in this way. First, I am not sure why the appeal tribunal was not persuaded by the claimant's case on the school catchment area and travelling distances when there was no evidence to the contrary. But, more important, the reasoning seems to be based on the proposition that suitable properties would be available within the catchment area. Whether or not one should get entangled in issues of where the burden of proof lies, it seems to me that the issue of the availability and price of such properties was sufficiently new that the claimant should have been given an opportunity to marshall evidence and argument on it. It is true, as Ms McDonagh submitted, that it was the claimant who had raised the point about the effect on the children of a change of school at the adjourned hearing on 3 December 1999. However, the adjudication officer had throughout been content to rely on the three advertisements put forward in September 1998. Although the general issue was not new, I conclude that it was unfair to decide it against the claimant on 27 January 2000 on the basis of an absence of evidence about properties within the school catchment area.
24. For those reasons, the appeal tribunal's decision must be set aside. I do not then need to deal with other more minor criticisms of the decision made by the claimant, which I would have rejected as not raising points of law. However, I must, for the guidance of the new appeal tribunal which will rehear the appeal, deal with the ground on which the Secretary of State submitted that there was an error of law.
25. That turns on the meaning and application of paragraph 12(6) of Schedule 2. Ms McDonagh submitted that the claimant had had the benefit of that provision for "the first 26 weeks of any period of entitlement" to JSA and had never been entitled to any extension of that period for a further 26 weeks because he had made no efforts to obtain cheaper accommodation. Therefore, it was submitted, when the appeal tribunal decided on review that it was, under paragraph 12(4), reasonable to expect the claimant and his family to seek cheaper accommodation, there should have been no further 26 weeks deferral of the restriction of housing costs to nil. Reliance was placed on a decision of mine, CIS/3163/1997, in which I said in paragraph 15 that the maximum period for the application of the equivalent income support provision was 52 weeks from the date of the review which first starts the paragraph 12(6) clock running or from the date of entitlement if paragraph 12(6) is applied immediately on the award of entitlement. The notion of a claimant having to be given notice of an impending restriction of housing costs, so as to start the clock running, stems from Commissioners' decisions R(SB) 7/89 and CIS/104/1991. It is not expressed in the regulations.
26. The claimant submitted that the clock did not just stop running with the review of 10 February 1999, but that the effect of that review was to end entirely the effectiveness of the running of the clock which started on 16 April 1998. Thus on the review of 14 May 1999 he was entitled to a fresh period of 26 weeks under paragraph 12(6) of Schedule 2 and the appeal tribunal had approached this issue correctly.
27. My initial view was that the Secretary of State's submission was right, but in the course of working out my decision I have come round to the conclusion that the appeal tribunal did not err in law on this point.
28. First, what I said in paragraph 15 of CIS/3163/1997 must be read in the context of the submission which I was rejecting. It had been argued that, as at the end of an initial 52 week period of deferral of restriction there would have to be a review decision to mark the change of circumstances, a new period of 26 weeks plus a possible further 26 weeks would immediately arise on that new review. I rejected that submission, saying that rolling periods of 52 weeks' freedom from housing costs restrictions were not authorised. I was not dealing with a situation, as in the present case, where a period intervenes in which the decision is that paragraph 12(4) does apply because it is not reasonable to expect the claimant and his family to seek alternative cheaper accommodation. I do not regard what I said in CIS/3163/1997 as constraining the proper application of paragraph 12(6) in the present case.
29. It is the last part of paragraph 12(6), after the words "or as the case may be", which must be considered. The start of the clock running is made the date of "the review" without defining which review is referred to. In paragraph 15 of CIS/3163/1997 I said that it meant the review which first started the clock running, but that was in the context noted above. Since the opening words of paragraph 12(6) are "Where sub-paragraph (4) does not apply", it seems to me that, where the decision to that effect was made in a review decision, "the review" refers to that decision. In the context of CIS/3163/1997 that was also the review which first started the clock running. In the present case, the clock was started running by the decision of 16 April 1998, which must have been a review decision. And it stopped running in a sense on 4 November 1998 when the claimant's housing costs were restricted to nil. Then the decision of 10 February 1999 intervened, substituting the decision that as from 4 November 1998 paragraph 12(4) of Schedule 2 applied. When the review decision of 14 May 1999 was made, in effect substituting a decision that paragraph 12(4) did not apply, because the restriction of housing costs was reimposed, it seems to me that that decision became "the review decision" within paragraph 12(6). Thus the claimant was entitled to at least a 26 week period of deferral of the restriction. That result was not excluded because he had earlier in the same continuous period of entitlement to JSA enjoyed 26 weeks' deferral following an earlier review decision. The intervention of the decision that paragraph 12(4) applied was crucial. If such a decision intervenes during a period of entitlement, or the conditions of paragraph 12(1) cease to be met (eg because of an increase in the size of the family or a shift in property values), then it is right that a subsequent review decision reimposing the restriction should be treated as a fresh decision triggering the operation of paragraph 12(6).
30. The proper decision given as at 14 May 1999 (if the appeal tribunal had not otherwise erred in law) would have been to review the decision of 10 February 1999 on the ground of ignorance of material fact. The revised decision would be whatever decision should have been given on that date. On the reasoning adopted by the appeal tribunal, there should not on 10 February 1999 have been a review and revision of the decision imposing the housing costs restriction, as the conclusion that it was reasonable to expect the claimant to seek alternative cheaper accommodation would have applied throughout. So the intervening decision that paragraph 12(4) did apply ought to have been removed on review. Does that make any difference to my conclusion in the previous paragraph? I think not. The chain of decisions which actually occurred must be looked at, especially in relation to what can fairly be regarded as notice to the claimant of an impending restriction. A review decision which reimposes a housing costs restriction in the circumstances mentioned in the previous paragraph triggers paragraph 12(6) from the date that the review is carried out, even though it may properly operate to reimpose the restriction for some period in the past as well as for the future.
31. For those reasons I reject the Secretary of State's submission that the appeal tribunal erred in law in not giving effect to its conclusions on paragraph 12(4) from 19 May 1999.
32. The appeal tribunal's decision having been set aside, the case must be referred to a differently constituted appeal tribunal for determination in accordance with the following directions.
33. There must be a complete rehearing of the claimant's appeal against the adjudication officer's decision of 14 May 1999, on the evidence presented and submissions made to the new appeal tribunal, which will not be bound by any findings made or conclusions expressed by the appeal tribunal of 27 January 2000.
34. The new appeal tribunal must follow the legal approach set out above to the meaning and operation of paragraph 12(6) of Schedule 2, if and when it becomes necessary to consider that provision. In relation to the questions of whether for all or any of the period in question there should be a restriction on housing costs under the conditions of paragraph 12(1) to (3) and whether paragraph 12(4) applies, I should not give any substantial directions, as everything will turn on the new appeal tribunal's fresh assessment of the evidence. However, it seems to me, without making any rulings about burdens of proof, that where the claimant has made out at least a prima facie case on the catchment area of the school, the location of the three alternative properties put forward by the adjudication officer and problems for his children from a further change of school, it is up to the Secretary of State to come forward with counter-evidence about the catchment area (if what the claimant has said is challenged) and evidence of suitable properties available within the catchment area at the relevant time (if he wishes to deal with the possibility of the new appeal tribunal's finding that it would not have been reasonable to have expected the claimant to move to any of the three properties put forward). The Secretary of State may wish also to take into account the matters mentioned in paragraph 20 above. The claimant will of course wish to consider what evidence to put

forward himself on all those matters and possibly on the valuation of his home in 1998 and 1999.

(Signed) J Mesher

Commissioner

Date: 15 August 2001