UK Social Security and Child Support Commissioners' Decisions

 


PLH Commissioner's File: CH 1325/03

SOCIAL SECURITY ACTS 1992-2000

APPEAL FROM DECISION OF SOCIAL SECURITY APPEAL TRIBUNAL

ON A QUESTION OF LAW

DECISION OF THE SOCIAL SECURITY COMMISSIONER

Appellant: London Borough of Hillingdon

Respondents: (1) [the claimant]

(2) [the landlord]

Claim for: Housing Benefit

Appeal Tribunal: Harrow

Tribunal Case Ref: U/04/035/2002/00964

Tribunal date: 16 August 2002

Reasons issued: 11 December 2002

This appeal by the local authority is dismissed, as in my judgment there was no error of law in the decision of the Harrow appeal tribunal consisting of the chairman Mr J P Singh sitting alone on 16 August 2002, when he held the claimant entitled to housing benefit from the date of her claim on 13 November 2001 but not before.

The claimant came to this country from Zaire some time before 1998, claiming to be a refugee. After a prolonged delay during which two children were born to her she had her application for asylum rejected on 28 May 2000, but at the same time was given exceptional leave to remain in the United Kingdom with the two children until 19 May 2004. In 1998 she had moved in to live with a Mr B (the father of her elder child) at the address he already occupied. The landlord there was a Mr V. The claimant's partner Mr B left her in November 2001 and she then claimed housing benefit for herself from the same address, not having done so before.

In support of that application she then produced (for the first time) a 12-month tenancy agreement naming her as the sole tenant of the premises, signed by the landlord Mr V and herself and bearing the date 1 October 1998. Both she and the landlord claimed it had been continuously in force since that date. However the local authority had evidence of a previous claim for housing benefit for the property made in August 1999, not by her but by Mr B. That claim had been rejected or not proceeded with because no tenancy agreement at all could be produced. There was no evidence that the claimant had ever paid any rent to Mr V down to the time of her housing benefit application in November 2001, and it appears to be common ground she had not.

On 13 November 2001 the claimant made her application, first for housing benefit from that date on as the sole tenant in occupation of the premises and currently liable for the rent under the agreement she had undoubtedly by then signed. However she also asked for backdated housing benefit to be paid for her to Mr V for the whole of the period back to 1 October 1998, on the basis that she was legally liable for it under the agreement even though no previous attempt had been made to assert or enforce this alleged liability against her.

When asked to explain why not, the landlord asserted in a letter dated 2 January 2002 at page 51 that:

"The tenancy agreement signed on 1.10.98 is still in force. No section 21 notice has been served therefore this tenancy agreement is still in force. I have not issued proceedings for rent arrears as I am hopeful this can be resolved without further expense."

However it is relevant that in the papers is a copy of a letter dated 26 February 1999 from a firm of solicitors then acting for the same landlord Mr V, serving a section 21 notice in respect of the property, addressed not to the claimant but to Mr B and saying (page 65):

"We are the solicitors instructed by your landlord … we write to enclose by way of service upon you our client's notice under section 21(1)(b) of the Housing Act 1988"

To this was attached a formal notice of the same date addressed to Mr B as the sole tenant under a shorthold tenancy, requiring possession of the premises in May 1999.

What the precise arrangements were between the landlord and Mr B, and whether or to what extent the landlord managed to get rent from Mr B over the period before his departure in November 2001, are not of direct relevance in this appeal and the tribunal chairman rightly did not attempt to make findings on them. The only relevance of the (undisputed) evidence of Mr B's involvement, and in particular the steps being taken on the landlord's behalf against him in 1999 on the basis that he was the sole tenant of the premises, is the very large element of doubt it inevitably casts on the later assertions by both the landlord and the claimant, that the tenancy agreement in her sole name produced for the first time in November 2001 had in fact been signed on 1 October 1998 and had been continuously in force as a legally binding document ever since. "Doubt" is of course a rather weak word for the effect of that evidence, because if action was being taken against Mr B as the sole tenant in 1999 those later assertions were necessarily untrue; the most obvious inference being that the production of a backdated tenancy agreement in November 2001 represented a crude attempt to get as much housing benefit as possible paid direct to the landlord for the period before the claim then being made for the first time by the claimant as sole tenant.

The local authority however failed to differentiate between the very dubious basis of the backdating claim, and the question of the claimant's legal liability for rent for the period from 13 November 2001 onwards when she undoubtedly had a tenancy in her own name under the agreement and was in occupation with her children. They jumped to the conclusion that if the rent obligation now alleged to have existed from 1 October 1998 had not been enforced against her for three years, then the fact that the landlord might have some legal difficulty in getting those arrears out of her now must also necessarily mean that she could not be made to pay the current rent under the agreement from the date of her claim.

On that footing, they issued a decision dated 19 February 2002 (page 46) rejecting the whole of her application for housing benefit, both future and past, on the ground that although they accepted she was a person liable to make payments in respect of the dwelling, she fell to be treated as not so liable under regulation 7(1)(a), Housing Benefit (General) Regulations 1987 SI 1971. That regulation provides so far as material that:

"7. – (1) A person who is liable to make payments in respect of a dwelling shall be treated as if he were not so liable where –

(a) the tenancy or other agreement pursuant to which he occupies the dwelling is not on a commercial basis".

She appealed to the tribunal, and in a very clear and carefully reasoned decision issued to the parties on 11 December 2002 (pages 82-85) the chairman rejected the council's "all or nothing" approach. He noted that it was not disputed the claimant's tenancy agreement had been entered into between her and the landlord, at any rate by the time of the application on 13 November 2001, and it was a subsisting agreement on that date. He found (and neither of these findings is disputed) that it contained all the necessary elements of a legally binding tenancy, and the stated rent of £185 per week was not unrepresentative of rent for premises of the kind in question. Consequently he held that the authority had failed to show the tenancy agreement pursuant to which the claimant was currently occupying the dwelling was "not on a commercial basis" within the terms of regulation 7(1)(a), so as to deprive her of the housing benefit to which she was otherwise entitled from 13 November 2001 on her claim of that date. In that context, he recorded specifically that

"No issue was taken with regard to the validity of the contract, the thrust of the Housing Service's argument being that the arrangement was not on a commercial basis."

and made an express finding that the intention of the parties was to enter into a legal relationship: the only question being the date from which it had effect.

On that, the chairman was plainly unpersuaded that the agreement he described as having been "eventually made with the claimant and dated 1998" had in fact been in existence for anything like that long, commenting "One may surmise that it was the landlord's attempt to recover rent which had not been paid since 1998". On that footing he confirmed the rejection of the claim for any backdated benefit before the date of the actual claim, saying that the burden of establishing good cause was on the claimant and this had not been established. There is no appeal by the claimant against that decision.

The only issue on the authority's appeal is whether the chairman misdirected himself, as they allege, in holding they had failed to show the claimant's admittedly valid tenancy agreement for the period from 13 November 2001 was "not on a commercial basis" so as to be within regulation 7(1)(a); that being their sole ground for rejecting the claim for that period. The main argument put forward is that as the question of a "commercial basis" is something to be judged by reference to the agreement as a whole (R v Sutton LBC ex parte Partridge (1994) 28 HLR 315, 320, to which the chairman expressly and correctly directed himself in paragraph 5 of his statement of reasons on page 84), he had erred in not doing as the council had done and regarding the apparent prolonged non-payment of rent from October 1998 as conclusive against there being a currently enforceable tenancy. As it is put by the council's senior benefits officer in the written submission at pages 91 to 92:

"The Authorities solicitor advised that in his opinion prolonged failure to enforce the obligation to pay rent would make it extremely likely, if not impossible to enforce any claim for arrears through the courts unless there were wholly exceptional circumstances which prevented the enforcement over this time.

The apparent obligation to pay rent has been in existence since 1998 although a formal tenancy was not drawn up until November 2001 but no rent has been requested nor has any recovery action been taken.

The authority believes that this non-enforcement of rental liability has made the tenancy unenforceable in law, which is a relevant factor under regulation 7 of the Housing Benefit (General) Regulations 1987 and should be taken into account."

In my judgment that submission is not well founded and it does not show the tribunal chairman's carefully reasoned conclusions to be erroneous in law. No doubt an apparent disregard by the parties of the terms included in a written agreement can be taken into account in assessing what the true terms of any agreement between them are, or whether any legal relationship under it is a "commercial" one or not. But it is not I think correct to say that the chairman disregarded this point: indeed he obviously did not, because the prolonged non-payment of rent by the claimant herself from 1998 is referred to expressly more than once in his statement of reasons. So if the complaint is that he has failed to take account of a potentially relevant consideration I do not think it is justified: nor is the suggestion that he must have misdirected himself about looking at the agreement as a whole, since this is what he expressly says must be done, referring in what in my judgment are impeccable terms to the authority of ex parte Partridge cited above. That a past failure to recover rent may be a relevant consideration does not of course make it the only consideration, or make it wrong in law to take a different view of the arrangement from the council. The nub of the case is I think apparent from what the chairman goes on to say, in paragraph 5 of the statement:

"Thus the agreement and the relationship between the parties must be looked at as a whole. In this regard the documentation which I had before me setting out the terms of the tenancy agreement are not wanting in any respect and is indicative of a valid contract between the parties, the only question being the date from which it is to have taken effect. That however is a matter which is concerned with back-dating provisions and not with the validity of the contract."

That it seems to me is the essential distinction that was missed by the council in its initial determination, and is again missed in the passage from the written submission to me just quoted above. The fact that the landlord may have little chance of establishing a present legal liability to pay him arrears of rent all the way back to 1 October 1998, under an agreement which there is every reason to doubt was ever entered into anything like as long ago as that date, does not of course prevent that agreement creating a perfectly binding legal liability for the current rent from the date it was actually entered into. As the claimant's representative from the Hillingdon Law Centre points out in his submission at page 98, the tribunal was concerned on this aspect of the case only with benefit from the date of claim on 13 November 2001; and on that, the issue of liability for and enforceability of any rent claimed for the period before that date is irrelevant.

On the evidence before him which I have sought to summarise above, the chairman was in my judgment entitled to reach the conclusion he did that the claimant had a subsisting and valid tenancy agreement under which she was legally liable for the rent of £185 per week from the date of her claim on 13 November 2001 onwards, even though the agreement may have been heavily backdated for other purposes by the landlord and/or herself. Nor is there any question of his having erred in law in holding it a valid contract from the date of the claim when the authority had expressly conceded that to be the case, and had decided the claim on the specific ground that it was a tenancy agreement, but "not on a commercial basis" within regulation 7(1)(a): which necessarily involves that the tenant is a person liable to make payments in respect of the dwelling, but has artificially to be treated under regulation 7(1) as if the facts were otherwise.

It follows that I reject both the original submissions on behalf of the council, and the supplemental submission by its benefits officer dated 1 September 2003 making the fresh allegation that the contract was a "sham tenancy". Apart from the fact that the council conceded its validity at the tribunal, so are probably not in a position to raise the point at all on this appeal, this further submission still suffers from the same confusion as before. The only arguable element of "sham" demonstrated by what is now put forward is in the probable backdating of the agreement to 1 October 1998; not its creation of a perfectly binding and effective legal tenancy for the period after 13 November 2001 by which time there is no dispute it had in fact been entered into.

(Signed)

P L Howell

Commissioner

28 October 2003