UK Social Security and Child Support Commissioners' Decisions

 
DECISIONS OF THE SOCIAL SECURITY COMMISSIONER
1. My decisions are that the decisions of the Northampton appeal tribunal, held on 15 to 17 April 2002 are not erroneous in point of law.

The appeals to the Commissioner

2. These are five appeals by members of the Jesus Fellowship. The appellants are the benefit claimants. The first respondent in their local authority, the South Northamptonshire Council. The second respondent is the Secretary of State.
3. The cases came before me as appeals to a Commissioner against the decisions of the appeal tribunal brought by the claimants with the leave of the district chairman who heard the appeals.
4. Page references are to the papers in the file for CH/5126/2002.
5. In view of the issues raised on the appeals, I directed an oral hearing. It was held before me in London on 19^th March 2003. The appellants were represented by Mr J Goudie QC and Mr P Stagg of counsel. The local authority was represented by Mr J Findlay of counsel. The Secretary of State was represented by Miss M Demetriou of counsel. I am grateful to them all for their written and oral arguments.

The tribunal's decision

6. The statement of the reasons for the tribunal's decision, in its original format, runs to 38 pages. It is by any standard an impressive piece of work. The Senior Legal Officer to the Commissioners contacted the chairman at my request and asked him to provide me with an electronic copy of his decision. He has done that and I am grateful to him for the typing from which he has thereby saved me. I have annexed his statement to this decision. I have taken the liberty of making three changes. First, I have corrected the name of the counsel who represented the local authority at the hearing. Second, I have corrected a mistake in the paragraph numbering. Third, I have removed personal details from the decision in order to comply with the Commissioners' current policy of issuing decisions in anonymous form.

Regulation 7

7. This case concerns the interpretation, application and validity of regulation 7 of the Housing Benefit (General) Regulations 1987. The relevant provisions in the current form of regulation 7 are:

'(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 arrangement pursuant to which he occupies the dwelling is not on a commercial basis

…

'(1A) In determining whether a tenancy or other arrangement pursuant to which a person occupies a dwelling is not a commercial basis regard shall be had inter alia to whether the terms upon which the person occupies the dwelling include terms which are not enforceable in law.'

8. These provisions were introduced by regulation 3 of the Housing Benefit (General) (Amendment No 2) Regulations 1998. They came into force on 25^th January 1999. Before that date, the relevant provision that would have applied in a case like those before me read:

'(1) 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-

…

(ii) the tenancy or other agreement between them is other than on a commercial basis …'

The facts of the case

9. I rely on the tribunal's decision for the statement of the facts of the cases, subject to one qualification.
10. Only two findings of fact were challenged. One was the tribunal's finding that the arrangement under which the claimants occupied their dwellings was not on a commercial basis. I deal with, and reject, that argument below.
11. The other finding that was challenged was recorded in paragraph 102. The tribunal found that it was possible for the claimants to maintain their religious beliefs without living in accommodation owned by their church. That may be correct as a matter of construction of the church's constitution. However, it is possible that in practical reality the claimants could only submit fully to the discipline of their church by living in property owned by that church. The reason is that only in that way is the church able to exercise control over the life-style followed by the claimants. I am not persuaded that the tribunal went wrong in law in making its finding. However, in so far as it may be relevant, I have considered these cases on the basis that this finding of fact is not correct and that the claimants are only able to live in accordance with the calling of their faith by living in property owned by their church.

The claimants' arguments

12. Mr Goudie argued that the tribunal went wrong in law in four ways.

•    The tribunal went wrong in deciding that the arrangement under which the claimants occupied their dwellings were not on a commercial basis.

•    The tribunal's decision was in violation of article 14 of the European Convention when read in conjunction with article 9.

•    The 1999 amendments to the Housing Benefit (General) Regulations 1987 were of no force or effect in view of the decision in Howker v Secretary of State for Work and Pensions and Social Security Advisory Committee [2002] EWCA Civ 1623.

•    The amendments were also of no force or effect because they were made for an improper purpose.

Commercial basis

13. The issue for the tribunal was whether or not the arrangements under which the claimants occupied their dwelling were on a commercial basis. That was a finding of compound fact. (The expression is that of Jessel MR in Erichsen v Last (1881) 8 Queen's Bench Division 414 at page 416.) The tribunal decided that the arrangements were not on a commercial basis. The issue for me is whether the tribunal went wrong in law in making that finding. As I wrote in CH/0627/2002, paragraph 27:

'27. One argument that will not find favour with the Commissioners is to isolate comments made by tribunals on individual constituent facts and argue that the tribunal attached the wrong significance to them. Many of those facts, taken in isolation, may be neutral or equivocal in their significance. It is always possible to point to a different significance that could have been attached to some, or all, of those facts. But that does not identify a flaw in the tribunal's reasoning. It is an unavoidable feature of the nature of the issue.'

14. Mr Goudie argued that 'Since the commerciality of an agreement is a matter of inference, an error of law is more readily demonstrated than is the case with the finding of primary facts'. For that proposition, he cited the decision of the House of Lords in Benmax v Austin Motor Co Ltd [1955] 1 All England Law Reports 326 and paragraph 17 of my decision in CH/1076/2002. I am not sure how the paragraph in my decision supports the proposition. However, I accept that Benmax is authority for the proposition cited. I am not sure that the finding of a compound fact is an inference rather than an assessment of the cumulative effect and significance of the relevant constituent facts. That may be just a matter of terminology. I accept that the principle applied by the House of Lords applies to a finding of compound fact whether or not it is properly called an inference. The reasoning of the House was this. A fact-finding body is better able to make findings of fact that involve an assessment of witnesses and their evidence than an appellate body that has to rely on a record. But an appellate body is as able as the fact-finding body to draw an inference once the primary facts are established. That reasoning applies alike to findings of compound fact and to inferences, if they are different.
15. Mr Goudie argued that the tribunal misdirected itself or misapplied the legislation in four ways. I take the headings from the skeleton argument.

Ground 1 – errors in application of paragraph (1)

16. The tribunal took account of the whole of the arrangements involving the claimants. It did not limit itself to the arrangements for occupation. Mr Goudie argued that that was wrong. Miss Demetriou argued that the tribunal had correctly directed itself on this issue, which had not been in dispute at the hearing. Mr Findlay drew attention to the lack of authority for much of Mr Goudie's argument.
17. I reject Mr Goudie's argument.
18. In so far as Mr Goudie's argument relies on the factors that the tribunal was entitled to take into account, I disagree. Considering the whole of the arrangements was a proper approach to the interpretation of the occupation arrangements and the analysis of whether they were on a commercial basis. In view of the lifestyle adopted by the claimants, the arrangements formed a composite whole. It would be unrealistic to isolate the occupation arrangements and interpret and analyse them in isolation from their context.
19. In so far as Mr Goudie's argument relies on the interpretation of regulation 7, I reject it. Regulation 7(1)(a) refers to 'tenancy or other arrangement'. In determining the nature of that arrangement, it is proper to consider the context of the arrangement. Regulation 7(1A) expressly relates to, and limits its application to, regulation 7(1)(a). It merely specifies a factor that has to be taken into account when applying regulation 7(1)(a). It would probably be a factor that was relevant without any provision. Its precise scope is not, therefore, of particular significance. Provisions that are outside the scope of regulation 7(1A) may nonetheless be relevant directly under regulation 7(1)(a). In so far as Mr Goudie argued that the tribunal was wrong in law to treat particular provisions as 'terms' under regulation 7(1A), his argument is misconceived. Even if the tribunal made this mistake, it is of no significance, as the tribunal was entitled to consider those provisions under regulation 7(1)(a) anyway.
20. Mr Goudie argued that a provision is only a term for the purposes of regulation 7(1A) if it imposes an obligation, as opposed to being merely a statement of aspiration. On this argument, 'terms which are not enforceable at law' must mean obligations that are not legally enforceable. Such things exist, but they are very difficult to distinguish from mere aspirations. In theory, this is very close to arguing that unenforceable provisions are irrelevant when applying regulation 7(1A). In practice, the argument comes even closer than that. It effectively deprives the provision of any significant effect. That cannot be right. My interpretation is that in regulation 7(1A) 'terms' means 'provisions' and is not limited to obligations.

Ground 2 – relevance of enforcement of conditions

21. This ground refers to this passage from paragraph 77 of the tribunal's decision:

'I cannot place much weight on the facts that the Conditions of Residence create a genuine enforceable liability and that reasonable legal and extra-legal measures are taken to enforce those Conditions. Those factors merely go to show that there is a liability … rather than that the liability is commercial.'

22. Mr Goudie argued that the tribunal misdirected itself, because 'evidence that the liability is enforced in practice is very weighty evidence that an agreement is commercial in nature.' Miss Demetriou argued that the tribunal was merely emphasising that regulation 7 presupposes the existence of a genuine legal liability. Mr Findlay argued that the passage had been taken out of context.
23. I reject Mr Goudie's argument. The terms in which it is expressed show that it an argument about the weighing of relevant factors. The passage quoted shows that the tribunal took this factor into account. The argument invites me to re-evaluate the relevance of this factor and substitute my own assessment for that of the tribunal. The weighing of the factors involved a matter of judgment by the tribunal. Whether they could have been weighed differently is irrelevant. So is whether I agree with the way the tribunal carried out this balancing exercise. The tribunal's assessment was one that it was entitled to make. It did not go wrong in principle. It did not overlook a relevant consideration. It did not take account of an irrelevant consideration. Nor was its assessment clearly wrong.

Ground 3 – relevance of financial controls

24. This ground refers to this passage from paragraph 77 of the tribunal's decision:

'The rigorous financial procedures and controls which are operated by Mr Farrant and his staff show that the Trust is an efficient and properly run organisation but not that it is a commercial one.'

25. Mr Goudie argued, in summary, that the tribunal misdirected itself by considering the nature of the landlord's organisation rather than the nature of the arrangement under which the claimants occupied their dwellings. Miss Demetriou argued that Mr Goudie was merely challenging the weight given to this particular consideration. Mr Findlay distinguished between commerciality and efficiency.
26. I reject Mr Goudie's argument. If the sentence on which he relies is taken in isolation, it supports his argument. However, it must be read in the context of the reasons as a whole. The nature of the landlord's organisation is a factor that is relevant to the nature of the arrangement, although it is not conclusive. As Mr Goudie points out, many landlords are not commercial organisations. This isolated passage does not show that the tribunal misdirected itself on the law or misapplied that law. Reading the decision as a whole leaves me in no doubt that the tribunal correctly understood the law that it had to apply.

Ground 4 – allegedly non-commercial features

27. This ground refers to paragraphs 78 and 79 of the tribunal's decision.
28. Mr Goudie argued that the tribunal accorded too much weight to the factors discussed in these paragraphs. Miss Demetriou argued that Mr Goudie was merely challenging the weight given to this particular consideration. Mr Findlay did not specifically comment on this ground.
29. I reject Mr Goudie's argument for the same reason that I rejected his argument on ground 2. His argument does not show that the tribunal went wrong in law. The weighing of the factors involved a matter of judgment by the tribunal. Whether they could have been weighed differently is irrelevant. So is whether I agree with the way the tribunal carried out this balancing exercise. The tribunal's assessment was one that it was entitled to make. It did not go wrong in principle. It did not overlook a relevant consideration. It did not take account of an irrelevant consideration. Nor was its assessment clearly wrong.

Discrimination

30. Mr Goudie argued that there was a breach of article 14 when read in conjunction with article 9. On the facts as I assume them to be for the purpose of this decision, I accept that the circumstances of these cases fall within the ambit of article 9.
31. The claimants' skeleton argument alleged discrimination by failing to make special provision for organisations like the Jesus Fellowship, whose members were committed to communal living. I accept that discrimination may take the form of treating persons in analogous circumstances differently or of failing to treat differently persons whose circumstances are significantly different: Thlimmenos v Greece (2001) 31 European Human Rights Reports 411 at paragraph 44. So, I accept in principle the possibility of discrimination as alleged.
32. Having read the skeleton arguments, I gave a direction asking (a) whether the discrimination alleged by the claimants was direct or indirect and (b) if the latter, whether it was within the scope of article 14. I drew attention to these comments of Sir Richard Tucker in R (Barber) v Secretary of State for Work and Pensions [2002] 2 Family Law Reports 1181:

'39. … I very much doubt whether the argument of indirect as opposed to direct discrimination is available … under Art 14. Mr Coppel submits that there is no example in the European or domestic courts of a successful claim for indirect discrimination contrary to Art 14 and that if I were to find for the claimant on this ground, I would be the first judge to do so.

40. In any event, as Mr Coppel rightly submits, an allegation of indirect discriminating raises complex issues. The field of employment law shows that for such a claim to succeed, it must be supported by proper statistical evidence.'

33. At the oral hearing, Mr Goudie argued that: (a) all that article 14 required was that he prove discrimination' and that he could do; (b) anyway, the discrimination in this case was direct; (c) anyway, the discrimination in this case was indirect but nonetheless within article 14.
34. Miss Demetriou argued that: (a) there was no discrimination; (b) any discrimination was not direct, because no group was singled out and treated less favourably; (c) any discrimination was not indirect; and (d) indirect discrimination did not fall within article 14.
35. Mr Findlay did not present arguments on human rights.

Article 14 – does it cover indirect discrimination?

36. I am able to decide this case without reference to this issue. However, for the benefit of those who will have to consider the issue in the future, I set out the arguments, the authorities and my conclusion.
37. Article 14 provides:
'Article 14 - Prohibition of Discrimination

The enjoyment of the rights and freedoms set forth in this Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status.'

38. Article 14 covers different treatment of individuals in comparable circumstances (whether by express provision or by failure to make separate provision) without a justification that is (a) objective and reasonable and (b) proportionately applied.
39. The article does not refer to any particular form of discrimination. In particular, it does not refer to direct or indirect discrimination. The reason is simple. At the time when the Convention was written, this distinction was not recognised. Indirect discrimination was not recognised as a concept until the judgment of the Supreme Court of the United States in Griggs v Duke Power Co – see the history traced by Lord Justice Sedley in R (on the application of Marper) v Chief Constable of South Yorkshire [2003] Human Rights Law Reports 1 (paragraph 89).
40. That does not mean that the distinction and concept have no place in the Convention. The Convention is interpreted dynamically. Mr Goudie argued that both the Strasbourg and the domestic case law recognised indirect discrimination as sufficient. He cited these authorities:
41. Marckx v Belgium (1979) 2 European Human Rights Reports 330. This case concerned the difference in treatment of legitimate and illegitimate children in Belgian law. The latter's family relationships and patrimonial rights, unlike the former, depended on voluntary recognition or a court declaration. The distinction and the different treatment based on it were expressed on the face of the legislation. The court held that there had been a violation of article 14 when read in conjunction with article 8.
42. Mr Goudie referred to the language used by the court in paragraph 32 of its judgment. After setting out the terms of article 14, the paragraph continues:

'The Court's case law shows that, although Article 14 has no independent existence, it may play an important autonomous rôle by complementing the other normative provisions of the Convention and Protocols: Article 14 safeguards individuals, placed in similar situations, from any discrimination in the enjoyment of the rights and freedoms set forth in those other provisions. A measure which, although in itself in conformity with the requirements of the Article of the Convention or the Protocols enshrining a given right or freedom, is of a discriminatory nature incompatible with Article 14, thereby violates those two articles taken in conjunction. It is as though Article 14 formed an integral part of each of the provisions laying down rights and freedoms.'

That passage is directed at the relationship between article 14 and the other Convention rights. The court is making the point that a provision which complies with the terms of the other Convention right may nonetheless be discriminatory under when article 14 is notionally read in conjunction with the article. This passage does not further Mr Goudie's argument.

43. Mr Goudie also referred to the language used by the court in paragraph 40:

'40. The Government do not deny that the present law favours the traditional family, but they maintain that the law aims at ensuring that family's full development and is thereby founded on objective and reasonable grounds relating to morals and public order (ordre public).

'The Court recognises that support and encouragement of the traditional family is in itself legitimate and even praiseworthy. However, in the achievement of this end recourse must not be had to measures whose object or result is, as in the present case, to prejudice the "illegitimate" family; the members of the "illegitimate" family enjoy the guarantees of Article 8 on an equal footing with the members of the traditional family.'

Mr Goudie emphasised the words 'object or result' in the second paragraph. But the whole of paragraph 40 is directed at the Belgian Government's argument that the different treatment was justified. The words 'object or purpose' are directed to the proof of justification for the difference in treatment. They were not directed to the nature of the difference. In particular, as the difference in treatment was expressly set out in the legislation, the nature of the discrimination was not in issue in the proceedings. Miss Demetriou argued that this passage was obiter. I prefer to say that it is dealing with a different issue from that of indirect discrimination.

44. This case does not further Mr Goudie's argument.
45. Belgian Linguistics Case (No 2) (1968) 1 European Human Rights Reports 252. This case concerned the different language used for education in different areas. As in Marckx, the distinction and the different treatment based on it were expressed on the face of the legislation. The court held that in one respect there had been a violation of article 14 when read in conjunction with article 2 of the First Protocol.
46. Mr Goudie referred to the language used by the court in paragraphs 9 and 10 of its judgment. Paragraph 9 makes the same point that is made in paragraph 32 of Marckx; my comments on that paragraph apply to this paragraph also. Paragraph 10 begins by drawing a distinction between different treatment and discrimination. It then deals with how different treatment and discrimination are to be distinguished:

'It is important, then, to look for the criteria which enable a determination to be made as to whether or not a given difference in treatment, concerning of course the exercise of one of the rights and freedoms set forth, contravenes Article 14. On this question, the Court, following the principles which may be extracted from the legal practice of a large number of democratic States, holds that the principle of equality of treatment is violated if the distinction has no objective or reasonable justification. The existence of such a justification must be assessed in relation to the aim and effects of the measure under consideration, regard being had to the principles which normally prevail in democratic societies. A difference of treatment in the exercise of a right laid down in the Convention must not only pursue a legitimate aim: Article 14 is likewise violated when it is clearly established that there is no reasonable relationship of proportionality between the means employed and the aim sought to be realised.'

Mr Goudie emphasised the words 'aim and effects'. But the whole of the passage I have quoted is directed to the proof of justification for the difference in treatment. The passage shows the intimate connection between justification and discrimination. The latter is defined in terms of the former. However, the words 'aims and effects' relate to justification and not to the form that the difference in treatment may take. Miss Demetriou argued that this passage was obiter. I prefer to say that it is dealing with a different issue from that of indirect discrimination.

47. This case does not further Mr Goudie's argument.
48. McShane v United Kingdom (2002) 35 European Human Rights Reports 593. This case concerned an allegation of discrimination against republicans in the policy of the security forces in Northern Ireland. The court held that there had been no violation of article 14.
49. Mr Goudie referred to the language used by the court in paragraph 135 of its judgment:

'135. Where a general policy or measure has disproportionately prejudicial effects on a particular group, it is not excluded that this may be considered as discriminatory notwithstanding that it is not specifically aimed or directed at that group.'

However, the court went on to decide that the statistical evidence did not show that this had occurred in this case. Miss Demetriou argued that statistical proof was exactly how indirect discrimination was proved. So, the court had cancelled its comments on indirect discrimination by its reference to statistics. I do not accept that analysis. The court appears to have accepted the possibility of indirect discrimination but found that it was not established on the evidence. There is nothing in the latter proposition to cancel the former.

50. The passage I have quoted certainly supports Mr Goudie's argument that indirect discrimination falls within article 14.
51. R (on the application of Marper) v Chief Constable of South Yorkshire [2003] Human Rights Law Reports 1. This case concerned the Chief Constable's policy, permitted by legislation, of retaining DNA evidence collected from a suspect who was later acquitted. The Court of Appeal decided that there was no violation of article 14, because the difference in treatment was objectively justified. Lord Woolf, the Lord Chief Justice, also considered (paragraph 47) that the discrimination relied on was not within the categories covered by article 14.
52. Mr Goudie referred to the judgment of Lord Justice Sedley. He considered (paragraph 80) that the discrimination relied on was 'as involuntary and as stigmatic a condition as the majority of those listed' in article 14 and that 'it falls sensibly within the catholic phrase "other status".' He then analysed the case in terms of indirect discrimination (paragraphs 88 to 92). This judgment certainly supports Mr Goudie's argument that indirect discrimination falls within article 14. However, the judgments of Lord Woolf and Lord Justice Waller do not. And any discrimination in that case must surely have been expressed in the terms of the policy that exercised the power conferred by the legislation.
53. Surprisingly, Mr Goudie did not rely on Thlimmenos v Greece (2001) 31 European Human Rights Reports 411 in the context of this argument. However, Miss Demetriou did refer to it in her argument. The case concerned a person who had been barred from a post as a chartered accountant on the ground of a conviction that he had incurred only because of his faith as a Jehovah's Witness. The court held that there had been a violation of article 14 when read in conjunction with article 9. The court considered that the Government's response was disproportionate to the legitimate aim of excluding improper persons from the profession of chartered accountant. Miss Demetriou argued that this case was distinguishable on the ground of remoteness – the result followed directly from the religious belief. That may be true of the facts of that case, but I see no reason to limit so narrowly the principle on which the case was based. That principle supports Mr Goudie's argument that indirect discrimination falls within article 14.
54. My conclusions on the indirect discrimination argument are these. I respectfully agree with what Sir Richard Tucker said in Barber. There is no decision that actually and expressly accepts that indirect discrimination is covered by article 14. I find that surprising. The text books accept that indirect discrimination is covered and cite some cases in support. However, my analysis of Marckx and the Belgian Linguistics Case (No 2) show that the passages cited do not support the proposition. There are, though, comments in other authorities that do support Mr Goudie's argument, both in the Strasbourg jurisprudence (McShane) and in the domestic law (Marper). The principle underlying Thlimmenos also supports Mr Goudie. Finally, there no reason in principle why article 14 should not apply to indirect discrimination as well as any other form of discrimination, whether direct, intentional, unintentional or any other form that can exist. Under the Strasbourg jurisprudence, Convention rights have to be interpreted dynamically in accordance with current circumstances. Those circumstances include the various forms in which discrimination occurs in practice and which are controlled by legislation.
55. So, I accept that if the claimants suffered discrimination and that discrimination was indirect, it falls within article 14.

Article 14 – was there discrimination?

56. Miss Demetriou relied on the tribunal's reasoning in paragraph 115 of the full statement of the tribunal's decision. In short, that reasoning was that if there was a difference in treatment it was a proportionate response to the legitimate aim of preventing abuse and making appropriate administrative arrangements for the implementation of that aspect of the scheme.
57. Mr Goudie argued that the prevention of abuse was a legitimate aim, but that the 'commercial basis' category was not a proportionate response to the legitimate concern to prevent abuse. He argued that as that category did not refer in terms to religious belief, it was permissible to interpret it so as to exclude religious belief being taken into account.
58. It is to me self-evident that regulation 7 is a provision that is designed to prevent abuse. That appears from the terms of the regulation and its place in the scheme. If there is any doubt about this, it is laid by the correspondence with the Social Security Advisory Committee, which I deal with in the next section of this decision. In terms of article 14, the avoidance of abuse is a legitimate aim.
59. In order to fulfil that purpose, the anti-abuse categories are drawn more widely than is necessary to catch cases that actually involve abuse. That is done for two reasons.
60. The first reason is the effectiveness of the control. An anti-abuse provision naturally seeks to catch cases of actual abuse. That is obviously both justifiable and reasonable. It is also proportionate. However, regulation 7 goes further than that. It is drawn more widely than actual instances of abuse in order to include circumstances in which there is a risk of abuse. That is the nature of an anti-abuse provision. It enhances its effectiveness in limiting abuse. It is justifiable in principle, because the nature of abuse is infinitely various and may be difficult to prove. Whether it is reasonable and proportionate depends on the nature and extent of the provision. I am concerned with the 'commercial basis' category. That is a category of case in which there is an obvious possibility of abuse. I consider it both reasonable and proportionate. Also, it is within the degree of deference that it is appropriate to allow to the State in the implementation of the scheme.
61. The first reason is linked to the second reason, which is ease of administration. Clear categories based on observable and ascertainable facts are easier for the housing benefit officers of local authorities to apply than more subtly drawn categories that depend on an analysis of intention, motivation or purpose. The officers concerned are not trained as lawyers and they have to make decisions quickly and on the basis of documentary evidence only. It makes their task of policing the scheme and detecting abuse easier if they do not have to rely for their main weapon on a rule that is drawn in terms of intention, purpose or motive. This is an objectively justifiable consideration. It is reasonable and proportionate. It is within the degree of deference that it is appropriate to allow to the State in the implementation of the scheme.
62. I have not overlooked the fact that regulation 7(1)(l) contains a provision that requires an analysis of intention, purpose and motive. However, that is a final category that catches cases that do not fall within the specific circumstances set out in regulation 7(1)(a) to (k). Those earlier, specific provisions reduce the need for this sort of investigation and analysis by the officers.
63. The result is that cases may be caught by regulation 7 which do not involve actual abuse. It is for that reason that I have decided elsewhere that 'given that the categories can produce rough justice, it is appropriate to give them the narrowest interpretation that is consistent with the policy of protecting the scheme.' See CH/0716/2002, paragraph 11.
64. I accept that the arrangements made by the Jesus Fellowship and the claimants in these cases do not involve any improper intention, motive or purpose. If the arrangements they have made fall foul of regulation 7, they do so only because they are of a type that contains the potential for, or risk of, abuse. However, I accept Miss Demetriou's argument and the tribunal's conclusion that the 'commercial basis' category is a response to the legitimate concern to prevent abuse of a publicly funded benefit scheme that is objectively justifiable, reasonable and proportionate. There is no scope in my analysis for a special exception for claimants whose religious faith calls them to live a communal life. It would be possible to devise a policy that both protected the scheme and allowed the claimants to live as their faith requires. However, my function is not to rewrite legislation as the claimants would prefer it to be. It is to decide whether the legislation as it stands is compatible with the claimants' Convention rights. In doing that, I have to allow a degree of deference to the policy makers and their political masters.

The Howker argument

65. This issue was not raised at the hearing before the tribunal, because the Court of Appeal had not at that time given its decision in Howker. Put shortly, the case decides that Regulations are invalid if the Social Security Advisory Committee was mislead about their effect.
66. Some documents that were before the Committee were produced at the hearing. At the hearing, Miss Demetriou undertook that the Secretary of State would provide any other documents that existed. They were provided and I directed the other parties to make written observations on them. The local authority made no comments, but Mr Goudie and Mr Stagg made a written submission, dated 3 March 2003. I did not consider that observations in response to that submission were needed from the other parties.
67. Mr Goudie and Mr Stagg argued that, looking at that documentation as a whole, the Committee was misled. I disagree.
68. I do not need to set out the documents in detail. I am satisfied that the Committee was not mislead about the effects of the amendments that it considered. My reason is this. One of the documents before the Committee was headed SSAC 44/98 Annex C. This was a memorandum from Mary Selby of Housing Benefit Policy 3 to Gill Saunders of the Committee. In paragraph 4, Mary Selby wrote:

'7(1B)(a) (referred to as 1A(j)) is not intended to tackle religious groups who live communally. Insofar as they seek to abuse the HB scheme by the terms of their residence, we would expect them to be caught by 1A(a) ie non-commercial arrangements.'

69. That passage made it clear to the Committee that religious groups who live communally might be deprived of benefit on the basis that their arrangements for occupying their premises was not on a commercial basis. I agree with Mr Goudie and Mr Stagg that there are passages in the documents before the Committee that suggest that the amendments were merely a clarification of the existing legislation and did not represent a change in policy. However, the passage I have quoted is a clear statement that the provision relied on by the local authority in these cases might apply to claimants whose living arrangements were similar to those of the Jesus Fellowship. The opening words of the second sentence in the quotation tie this comment to cases of abuse. However, that merely reflects the fact that the provisions as a whole are anti-abuse provisions. This is a memorandum, not a piece of legislation. It would be wrong to attach too much significance to the precise choice of words; the substance of the meaning is clear.
70. The most that Mr Goudie and Mr Stagg can show is that there may have been some contradiction in what the Committee was told. But, first, the Committee was able to see that for itself. It was not misled. And, second, the specific and unambiguous reference to religious groups living communally should not have left the Committee in any doubt about how the amendments might apply to the circumstances that have arisen in these cases.

The improper purpose argument

71. Mr Goudie accepted that he could not sustain this argument without further disclosure from the Secretary of State. He argued that, in order to justify disclosure, all he had to do was to raise a sufficient suspicion that there had been an improper purpose behind the 1999 reform of regulation 7. I accept that that is all that he has to do. However, at the end of the oral hearing I told him that I refused to direct further disclosure. My reasons are these.
72. I have asked myself, and Mr Goudie, two questions. First, why would the Secretary of State for Social Security or the policy makers in that Department have wanted to target the Jesus Fellowship or similar organisations? Second, if they did, could it not have been done much more simply than by use of the 'commercial basis' test?
73. By way of answer, Mr Goudie referred me to the arguments put by Mr Stagg to the appeal tribunal. They are set out in paragraph 15 of his skeleton argument to the tribunal (pages 246 and 247).
74. I am by nature and experience a cynical person. So I am open to be persuaded by this argument. However, I find nothing in Mr Stagg's arguments to arouse my suspicion. They merely show that the Secretary of State was properly concerned with the interpretation and operation of the housing benefit scheme.
75. Mr Goudie told me that the members of the Jesus Fellowship believed that they were the target of the 1999 amendments and of the way the local authority had implemented them. I do not doubt that that is how they feel. However, those feelings were not objectively justified by anything I have seen in these cases.

Summary

76. I have considered Mr Goudie's arguments on the basis that the tribunal made a mistake in one finding of fact. If the tribunal did make that mistake, it is relevant only to some of the grounds of appeal. On the facts as I have assumed them to be, the tribunal did not go wrong in law. If the tribunal did go wrong in law in making that finding, I would nonetheless adopt its reasoning and give a decision to the same effect. I am not persuaded that the tribunal's mistake on that fact was one of law, so I have dismissed the appeal. If I had allowed the appeal, the effect would not have been to the claimants' advantage.

Signed on original

Edward Jacobs Commissioner 20 May 2003

[Diagram or picture not reproduced in HTML version - see original .rtf file to view diagram or picture] STATEMENT OF REASONS FOR
THE TRIBUNAL'S DECISION This statement is to be read together with the decision notice issued by the tribunal.

Northampton Appeal Tribunal	Held on:	15 – 17 April 2002	15 – 17 April 2002
Appellant:		Tribunal Reg. Nos:
	NI No:
Respondent:

The following is a statement under regulation 53(4) of the Social Security and Child Support (Decisions and Appeals) Regulations 1999 of the Tribunal's reasons for its decision in the above appeal.

Contents

This Statement of Reasons contains the following sections:

Introduction 15

Background To The Appeals 16

The Present Appeals 18

What The Tribunal Decided About The Facts 20

The Jesus Fellowship Church 20

The Jesus Fellowship Community Trust 21

The Common Purses 21

The Conditions Of Residence 22

The Elders' Conditions Of Residence 24

Contribution of Capital 25

The Trust's Businesses and other Activities 25

The individual appellants 27

Setting the Board and Lodging Charge for the properties 27

Enforcement of the Conditions of Residence 28

Financial Conditions 28

Non-financial Conditions 29

Jesus Fellowship Housing Association 30

Reasons for the Tribunal's Decision 30

Commerciality 31

The Interpretation of Regulation 7 31

Regulation 7(1)(a) 31

Regulation 7(1A) 32

"Enforceable at Law" 33

Factors which tend to suggest the agreements are commercial 35

Factors which tend to suggest the agreements are not commercial 35

Weighing the factors 36

The Human Rights Act 1998 37

Is the Convention Engaged? 39

Articles 8 and 14 taken together 39

Articles 9 and 14 taken together 41

Is there relevant discrimination? 42

Legitimate purpose and proportionality 44

Introduction

77. This Statement of Reasons relates to the Housing Benefit and Council Tax Benefit Appeals of … Those appeals all raise issues as to the Housing Benefit and Council Tax Benefit entitlements of Covenant Members of the Jesus Fellowship Church. I heard them together in Northampton on 15 to 17 April 2002 and my decision was issued on 21 May 2002.
78. At those hearings the appellants were represented by Mr Paul Stagg of Counsel instructed by Mr Ian Mason of Messrs Mason Bullock and the Respondent local authority, South Northamptonshire Council, was represented by Mr James Findlay of Counsel instructed by Miss Natasingh, a solicitor with the Council's Legal Department. As these appeals raised significant issues under the Human Rights Act 1998 and in particular because the consequence if I were to accept the appellants' arguments might have been the disapplication of part of the Housing Benefit (General) Regulations 1987 ("the Housing Benefit Regulations"), I gave directions on 5 February 2002 that the Secretary of State for Work and Pensions was to be invited to attend and make representations at the hearing. The Secretary of State accepted that invitation and was represented by Miss Demetriou instructed by the Office of the Solicitor to the Department. In addition, the appellants were present in person for much of the hearing and all gave evidence apart from [one] (who was prevented from doing so by illness). I also heard evidence from Mr Michael Farrant, who is a Trustee and the Treasurer of the Jesus Fellowship Community Trust and a member of the Apostolic Group of the Jesus Fellowship Church, and from Mr Anthony Hurley, the Benefits Manager of South Northamptonshire Council. I am most grateful to the witnesses and to the legal representatives of the parties for the assistance which they have given me.
Background To The Appeals
79. The Jesus Fellowship Church is a Christian Church in the Baptist tradition. Its members fall into two broad categories, namely, those who have entered into the Church Membership Covenant and those who have not. The entitlement to Housing Benefit of one particular sub-group of Covenant Members has given rise to considerable litigation over the years. That sub-group is known corporately as "The New Creation Christian Community" and its members are referred to as "Style 3" members. Members of this sub-group live communally in "Community Houses" and pool their income and expenditure in what is known as a "Common Purse". In addition, Style 3 members lend any assets they may have to the Jesus Fellowship Community Trust ("the Trust") and, after an initial probationary stage, donate those assets to the Trust.
80. The Community Houses are (with some exceptions) owned by the Trust and are licensed to senior male Style 3 members who are known as "Elders". The Elders then issue sub-licenses to other Style 3 members and to those who may be staying in the Community Houses as temporary guests. Historically, some of the Style 3 members have been reliant upon social security benefits and have claimed Housing Benefit in order to help discharge their liabilities for the cost of their accommodation in Community Houses. Although it is not necessary for me to make findings of fact on the point, I am informed by Mr Farrant that Housing Benefit was normally paid in these circumstances until August 1993 when, in what have come to be known colloquially among members of the Church—although not, I should say, amongst the local authorities concerned—as "the dawn raids", a number of houses were visited simultaneously by Housing Benefit officers employed by a number of different local authorities in the Midlands.
81. Following these visits, Housing Benefit was refused on the basis that the financial arrangements of Style 3 members did not impose a legal liability to make payments in respect of a dwelling and that, even if such a liability did exist, it was "contrived" that is to say created to take advantage of the Housing Benefit scheme within the meaning of Regulation 7(1)(b) of the Housing Benefit Regulations as that regulation was then worded. In addition, it was said that those Style 3 members who were not Elders (and who therefore occupied their accommodation under sub-licenses from the Elders) were living with their landlords (that is to say the Elders) "other than on a commercial basis" and therefore fell to be treated as if they were not liable to make payments by virtue of regulation 7(1)(a)(ii) of those Regulations.
82. The Style 3 members affected by these decisions made applications for review to the various authorities involved and then for and further review to the Review Boards of those authorities. In due course, the issues raised by the decision fell to be considered by the High Court on applications for Judicial Review made in two representative cases, R. v Rugby Borough Council Housing Benefits Review Board, ex parte Harrison and R. v Daventry District Council Housing Benefit Review Board, ex parte Bodden. [1994] 28 HLR 36, QBD (Blackburne J). That case held that the Conditions of Residence of Style 3 members did give rise to a legally enforceable liability to make payments in respect of their occupation of Community Houses but that the decisions of the Review Boards to the effect that the liability was not "on a commercial basis" was one that those Review Boards were entitled to make and could not be categorised as being erroneous in law.
83. The conclusion that the terms and conditions of residence created a legally enforceable liability was confirmed by the Court of Appeal in R. v Stratford upon Avon Borough Council, ex parte White. [1998] 31 HLR 126 (CA, Gibson, Otton L.J.J. and Sir Christopher Slade). That appeal was concerned with the liability of Elders. The Court of Appeal also concluded, on the basis of evidence that was substantially similar to the evidence adduced before me, that the Stratford upon Avon Review Board could not reasonably have concluded that the liability of the Elders had been created to take advantage of the scheme because there was no evidence to suggest that either the Elder in question or the Trust had behaved in an improper manner or had been motivated by dubious ingenuity to create the liability.
84. To complete the background history, mention must also be made of the decision of the Court of Appeal in R. v Milton Keynes Housing Benefit Review Board, ex parte Saxby. [2001] EWCA Civ 456. In that appeal the Court of Appeal held that the Elders entitlement to Housing Benefit should be based on the full sum of their liability under the Licence Agreement to the Trust for the whole property and not merely their personal obligation to pay the share of the board and lodging expenses attributable to their own occupation of the property and that of their individual families. Thus if an Elder makes a claim for Housing Benefit the "rent" for the purposes of regulation 10 is the full amount of the licence fee for the entire property. However, deductions are then made on the basis that the other Style 3 members who, it will be remembered, occupy the Community Houses as sub-licensees of the Elders, are non-dependants of those Elders. The effect of this is that varying deductions must be made from the Elders' maximum Housing Benefit depending on the income and status of their sub-licensees.
85. It is therefore possible to summarise the law relating to the Housing Benefit entitlements of Style 3 members as it stood immediately before 25 January 1999 as follows.

a) Style 3 members who were not also Elders did not, in practice, receive Housing Benefit.

This was because it was not felt worthwhile to pursue individual claims for such members in the face of the practical certainty that the local authorities would refuse those claims on the basis that the claimants were residing with their landlords (i.e. the Elders) and their liability to make payments was uncommercial. Blackburne J. had held in Harrison that such a conclusion was not erroneous in law and a policy decision had been taken within the Church not to appeal that decision; However

b) the Elders (who did not reside with their landlords and for whom, therefore, the issue of commerciality was not relevant) could make a claim for Housing Benefit covering the "rent" payable in respect of the whole property. That claim would then be reduced on the basis that the sub-licensees were non-dependants of the Elder.

86. It should be noted in passing that the designation of the sub-licensees as non-dependants, implies a conclusion that they were not "liable to make payments on a commercial basis to" the Elders under Regulation 3(2)(e)(i) of the Housing Benefit Regulations. Whether or not that conclusion is correct is the issue which I have to decide under the equivalent provisions of the Council Tax Benefit Regulations for the purposes of Mr Campbell's related Council Tax Benefit appeal.
87. Finally, I should note that the law as declared in Saxby created significant administrative difficulties for local authorities. Many Community Houses contain a substantial number of residents and the identity of those residents and their incomes can vary almost from week to week. This means that the amount due under an Elders' claim frequently requires to be reassessed. Those who develop computer software for the administration of Housing Benefit and Council Tax Benefit do not appear to have anticipated that a claimant might have 20 or more non-dependants at any given time and the frequent recalculations must therefore be carried out manually. In addition, each change in residents or the income of residents requires the local authority to verify that the change in circumstances which has been reported to it is indeed correct.
The Present Appeals
88. The appeals before me arise out of the amendments to Regulation 7 which were made by the Housing Benefit (General) Amendment (No 2) Regulations 1998 (SI 1998 No. 3257). The transitional protection provided by Regulation 1(3) of those regulations does not apply to any of the claimants with whose appeals I am concerned. The amending regulations completely recast the wording of regulation 7(1) and also introduced new paragraphs (1A) and (1B). So far as is relevant, the amended regulation 7 reads as follows:

"Circumstances in which a person is to be treated as not liable to make payments in respect of a dwelling

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

(b) his liability under the agreement is to a person who also resides in the dwelling and who is a close relative of his or of his partner;

(c) his liability under the agreement is—

(i) to his former partner and is in respect of a dwelling which he and his former partner occupied before they ceased to be partners, or

(ii) to his partner's former partner and is in respect of a dwelling which his partner and his partner's former partner occupied before they ceased to be partners;

(d) he is responsible, or his partner is responsible, for a child of the person to whom he is liable under the agreement;

(e) subject to paragraph (1B), his liability under the agreement is to a company or a trustee of a trust of which—

(i) he or his partner,

(ii) his or his partner's close relative who resides with him, or

(iii) his or his partner's former partner

is, in the case of a company, a director or an employee, or, in the case of a trust, a trustee or a beneficiary;

(f) his liability under the agreement is to a trustee of a trust of which his or his partner's child is a beneficiary;

(g) subject to paragraph (1B), before the liability was created, he was a non-dependant of someone who resided, and continues to reside, in the dwelling;

(h) he previously owned, or his partner previously owned, the dwelling in respect of which the liability arises except where he satisfies the appropriate authority that he or his partner could not have continued to occupy that dwelling without relinquishing ownership;

(i) his occupation, or his partner's occupation, of the dwelling is a condition of his or his partner's employment by the landlord.

(j) he is a member of, and is wholly maintained (disregarding any liability he may have to make payments in respect of the dwelling he occupies as his home) by, a religious order;

(k) except where paragraph (2) applies, he is in residential accommodation

(l) in a case to which the preceding sub-paragraphs do not apply, the appropriate authority is satisfied that the liability was created to take advantage of the housing benefit scheme established under part VII of the Contributions and Benefits Act.

(1A) In determining whether a tenancy or other agreement pursuant to which a person occupies a dwelling is not on a commercial basis regard shall be had inter alia to whether the terms upon which the person occupies the dwelling include terms which are not enforceable at law.

(1B) Sub-paragraphs (e) and (g) of paragraph (1) shall not apply in a case where the person satisfies the appropriate authority that the liability was not intended to be a means of taking advantage of the housing benefit scheme."

89. The most important change to note is that under the amended law a person whose tenancy is not on a commercial basis is automatically to be treated as if he or she were not liable to make payments in respect of a dwelling. There is no longer any requirement that such a person should also be residing with his or her landlord before payment of Housing Benefit is stopped. This change clearly called into question the continuing entitlement to Housing Benefit of the Elders whose Conditions of Residence included those applicable to the other Style 3 members, which were regarded by the local authorities as non-commercial but who had previously escaped exclusion from benefit on the basis that they did not reside with their landlords.
90. It should finally be noted that the Human Rights Act 1998 came into force on 2 October 2000.
What The Tribunal Decided About The Facts
91. Most of the primary facts that are relevant to these appeals were not in dispute, although the interpretation to be placed on those facts was. I heard evidence from Mr Michael Farrant and from all of the appellants (except Miss Johannessen). With one exception, I found them to be credible and straightforward witnesses although, perhaps understandably, the individual appellants did not have as comprehensive an understanding of the Church's arrangements as Mr Farrant did. The exception is Mr Campbell who I accept was credible but who was not always straightforward. On one occasion in particular, his replies to a hypothetical question from Mr Findlay struck me as evasive, despite the fact that he had been perfectly prepared to give a straightforward answer to hypothetical questions posed by his own Counsel. Fortunately, I do not consider that anything turns on Mr Campbell's evidence on that particular point.
92. I find the facts which are set out at paragraphs 17 to 46 and 48 to 58 below.
The Jesus Fellowship Church
93. The Church is a Christian Church. Its theological beliefs and practices are set out in a Statement of Faith and Practice. Paragraph 14 of that statement is in the following terms:

"14. We hold that the regenerate, as may be possible, shall voluntarily have "all things in common", practising community brotherhood in accordance with the holy principles of devotion to Christ and of wholehearted sharing exemplified in the first Church-Community in Jerusalem. We believe that the scripture reveals, and the Holy Spirit now testifies, that Christ's Kingdom is marked by justice, meekness, mercy and genuine love. We practice, therefore, the law of Christ in loving our brethren as ourselves, observing material equality amongst members of the local Church-Community and expressing kingdom righteousness in a common life of holy fellowship and shared possessions. Within prevailing social and legal conditions we believe, therefore, whenever possible, in the practice of such community living wherever a local Church-Community has been planted, and that all property and income of those members participating, shall be held and administered communally.

We recognise, however, the right of every believer to determine this matter before God according to his own conscience."

94. Covenant members of the Church are those who have entered into what is described as "the Seven-Fold covenant". There are four categories or "Styles" of covenant membership. Style 1 members live in their own home and run their own finances but are regularly and actively engaged in the life of the Church. Style 2 members enter into additional commitments as regards meeting attendance, lifestyle and financial giving and Style 4 members are members who live at a distance from a congregation of the Church and are therefore unable actively and regularly to participate in the life of the Church. The appellants are Style 3 members. Style 3 members are committed to the practice of community living. They live in Community Houses and pool their income in a "Common Purse" as is described below. Within the Church, Style 3 members are known collectively as the "New Creation Christian Community" ("the Community"). The Community consists of about 450 adults and 150 children. Approximately one fifth of those who are members of the Church are also members of the Community.
The Jesus Fellowship Community Trust
95. The Trust is the central fund for the New Creation Christian Community. It is a non-charitable trust established by a Trust Deed which was executed on 31 October 1979 and amended from time to time thereafter. A transcript of the Deed, as it stood on 1 August 2001, forms Annex A2 to Mr Farrant's statement. With some exceptions, the Trust owns the Community Houses and licenses them to the Elders as set out below.
The Common Purses
96. The Common Purses are operated in accordance with the "Common Purse Objects and Procedures", a statement of which is set out at Appendix A3 to Mr Farrant's statement. It is necessary to recite the objects of the Common Purses in full. They are as follows:

"1. Everything in Common

Common Purses are, primarily, the means by which members of the Community House Families pool incomes, meet personal and corporate expenses from the pool, and donate any surplus to the Jesus Fellowship Community Trust, ("the Trust"), in accordance with agreed procedures. They are normally centred on one of the houses owned or controlled by the Community.

97. Gain All You Can

All income of all Common Purse members must be paid into the Common Purse as soon as it is received. Members must seek to maximise their income (including claiming all available social security and other benefits) and make sure they receive what they are actually entitled to; they must, in any case, provide the Common Purse with sufficient income to cover their own and any dependants' living costs (save in exceptional circumstances for which prior authorisation from the Church is needed).

98. Save All You Can

All the normal running costs of the House Family are covered by the Common Purse and all the reasonable personal expenses of its members will be met from the Common Purse. Members must apply scriptural standards of equality, industry, simplicity, mutual submission and stewardship to ensure that as little expenditure as possible is incurred, and that payment is only made for expenditure necessarily and properly incurred. Expenditure which is unusual in nature or amount must not be undertaken without prior authorisation.

99. Give All You Can

The surplus of income over expenditure is held on trust for the Trust and must be paid to the Trust as regularly as possible. The Trust will use these surpluses firstly to provide vehicles, furniture and domestic assistance for the House Families covered by the Common Purses and secondly to provide houses, lands, businesses and funding for the Church/Community as a whole.

100. Agreed Procedures

This Objects and Procedures sheet applies to all Common Purses of the Church/Community, and must be formally adopted by new Common Purses. Responsibility for its application rests with the overseer and administrator of each Common Purse, under the covering of the Common Purse central administrator and auditor appointed by the Church."

Clause H of the Common Purse Objects and Procedures contain formal declarations of trust. Apart from Jesus Army clothing and equipment (which is held upon trust for the Church) and consumables and other items of a strictly personal nature, all items purchased from the funds of the Common Purse and all surpluses of income over expenditure accruing from time to time in the accounts of the Common Purse are held upon trust for the Trust absolutely.

The Conditions Of Residence
101. Those Style 3 members of the Church who are not also Elders occupy Community Houses in accordance with a statement of Conditions of Residence. It is also necessary to recite those conditions in full. As at the date of Mr Farrant's statement they were as follows:

"Jesus Fellowship Community Trust

Statement of Conditions of Residence at………………………….

To…………………………………………From. The Elders

(This statement will continue to apply despite any change of Elders)

General

This house is run as a committed part of the Jesus Fellowship Church and the New Creation Christian Community. Your residence here depends upon your continuing to be a Covenant Member (Style 3) of the Church and to uphold and maintain the standards involved in such membership. You will understand that our lifestyle reflects our position as a Church of the Lord Jesus Christ and that our houses are consecrated to Him.

Specific Requirements

102. Your legal position is that of a licensee of the Elders, in accordance with the rules of the Trust.
103. You must recognise the authority of those who are the House Leaders for the time being, who are responsible for the spiritual and material well-being of the House Family and its members.
104. You must contribute materially and practically to the house. This includes:

a. Paying board and lodging costs for yourself and your family at the following rate (or such other rates as may be notified to you):

Adults (16 years & Over) £65 per week

Children 11 - 15 years £40 per week

Children 5 - 10 years £35 per week

Children 0 - 4 years £30 per week

Please note that these rates do not include personal and clothing expenses, transport costs or telephone use for which additional income is required.

b. Helping in the house according to your ability.

105. As a Style 3 member you will participate fully in the pooling of income within the House Family, monies paid by you into the House Family Common Purse will be applied firstly in meeting the living costs and personal expenses of the House Family, including yourself and your family. The surplus including housing costs will be paid at the end of each calendar month to the Trust to cover outgoings on the property, other goods and services supplied by the Trust to the House Family and, if funds permit, a contribution by it to the work of Jesus Fellowship Church.
106. Children should be brought up in accordance with the teachings of the bible and the practice of the Church Community.
107. You are expected to participate wholeheartedly in the life of the Church Community, to attend its various meetings and activities and to support its faith and practice in accordance with your covenant pledge.

Termination

Your licence to reside in the house will be terminated by the Elders upon reasonable notice if you are unable or unwilling to continue to fulfil these Conditions, or if for any other reason it is apparent that you are no longer a suitable resident.

Please Note

You will appreciate that this Statement, for legal reasons, needs to set out clearly the

conditions of residence. However, please understand that we belong together as a Community House Family and you are fully accepted into it.

Yours for Jesus sake,

…………………………………….

on behalf of the Elders

We have read and understood the above Statement and fully accept the terms and conditions contained in it.

Signed …………………………………….."

The Elders' Conditions Of Residence
108. The Elders of Community Houses hold those properties as licensees of the Trust. The Conditions of Residence set out above also apply to the Elders and they are also subject to further obligations and responsibilities. The Conditions of Residence of Elders, as they stood at the date of Mr Farrant's statement, are as follows:

"General Introduction

Under the provisions of the Trust Deed of the Jesus Fellowship Community Trust, the Elders of Church Households are the licensees of the Trust and are responsible for the day-to-day management of the Community Houses provided by the Trust for the use and occupation of their Church Household. This responsibility results from the spiritual office, which they hold. Thus, if an Elder ceases to hold that office or to be in good standing as a Covenant Member Style 3 of the Church, he is disqualified from continuing as a licensee and his licence will automatically cease. The decision of the Senior Leadership in case of any dispute will be final.

Specific Conditions

109. Church Household Elders must accept the authority both of the Trustees and of the Senior Leadership of the Church.
110. Although selection of residents is (subject to the Covering Authority) the Elders' responsibility, these residents must be primarily Covenant Members Style 3 of the Church. Persons who are expected within a reasonable period of time to become such Members and temporary guests may also be permitted to reside at the property in accordance with the terms of the Trust Deed and the Constitution of the Church.
111. Elders are responsible for issuing to Covenant Members and to temporary guests the respective conditions of residence applicable to them.
112. The obligations required of Covenant Members Style 3 who are resident at the property apply equally to Church Household Elders. This includes paying into the House Family Common Purse board and lodging costs for yourself and your family at the following rates (or such other rates as may be notified to you):-

Adults (16 years & Over) £65 per week

Children 11 - 15 years £40 per week

Children 5 - 10 years £35 per week

Children 0 - 4 years £30 per week

113. Church Household Elders have a responsibility, in accordance with directions given by the Trustees from time to time, to ensure that appropriate routine maintenance of the property is carried out by the residents and that deterioration in its fabric, or other works which might be required, are drawn to the Trustees' attention in accordance with such directions.
114. Elders must ensure that the payment due from them to the Trust in respect of the residents' occupation (including their own occupation) is punctually made at the end of each calendar month from the funds of the House Family Common Purse. The rates per resident are as follows:-

Adults (16 years & Over) £40 per week

Children 11 - 15 years £25 per week

Children 5 - 10 years £20 per week

Children 0 - 4 years £15 per week

115. Elders' responsibilities are joint and several. This means that they are both corporately and individually responsible for the fulfilment of these conditions. It is, however, expected that Elders will normally act corporately, in accordance with the faith and practice of the Church.
116. The Trustees reserve the right to alter or replace these Conditions at any time."
Contribution of Capital
117. Although it is a requirement of Style 3 Membership that—after an initial probationary period—all the Member's capital is donated to the Trust, it is comparatively rare for such contributions to be made. It is more common that new Members bring no assets and have small debts which require payment. I accept Mr Farrant's estimate that only a fifth of new Style 3 Members have any capital, only one in six or seven have more than £1,000 is accepted. None of the individual appellants in these appeals made any significant capital contributions at the time of joining the Community.
The Trust's Businesses and other Activities
118. The Trust, directly and indirectly, owns and operates a number of businesses. The main holding company for those businesses is House of Goodness Limited ("House of Goodness").
119. House of Goodness trades as:

a) New Creation Farm ("the Farm") which carries on traditional farming at two sites and also operates craft businesses; and

b) Goodness Foods Wholesale ("Goodness Foods") which carries on business as a wholesaler of health foods and commodity trader and also carries out a certain amount of manufacturing and packing.

House of Goodness also has a small division consisting of two men carrying on an architectural business.

120. In addition to its trading activities, House of Goodness owns the following companies:

a) Skaino Atmos Limited ("Skaino") which provides tradesman's services and distributes imported heating and ventilation products;

b) Towcester Building Supplies Limited ("Towcester Building Supplies") which, as its name suggests, is a builders merchant; and

c) White and Bishop Limited ("White & Bishop") which runs department Stores selling outdoor clothing and accessories.

121. Individual Style 3 members also own the solicitor's practice, Mason Bullock, which acts as the appellants' solicitors in these appeals and a doctors' practice. For professional reasons, these businesses cannot be owned by the Trust or by a company owned by the Trustees.
122. The Trustees also run two operations to meet the needs of Community Members. The first is Jesus Fellowship Catering which is known as "the FDC" because it supplies Members with Food, Domestic and Clothing items and the second is Jesus Fellowship Vehicles which supplies and repairs the vehicles which are made available for the use of those living in Community Houses.
123. Most of the items supplied by the FDC are sourced from businesses which are not owned by the Trust but a few items are supplied to the FDC by Goodness Foods, eggs and apples are purchased from the Farm and some clothes are bought from White & Bishop. The Trust buys property maintenance services from Skaino.
124. Jesus Fellowship Vehicles is responsible for a fleet of mini-buses and cars which are allocated to the Common Purses for the use of Community Members. Vehicles are purchased second-hand and sold after approximately three years. The Common Purses pay for the costs of repairs (which are carried out in the Trust's own Vehicle Repair Workshop) and for the fuel used. The Trust aims to recover sufficient by way of donation from the Common Purses to fund the other costs of providing of the vehicles
125. In dealings with the public, which comprise the majority of their activities, the Trust-owned businesses seek to make a profit in order to fund the Church's evangelical activities. Typically 50% of the profits are paid to the Church as a charitable donation with the balance being retained within the businesses as working capital and for future growth. In dealings with the Trust and other Trust-owned businesses, each business sets its own prices. However, in the latter case, the ethos is neither to make a profit out of—nor to cross-subsidise—Community members.
126. The Trust employs women known as "Domestic Sisters" to do domestic work in Community Houses where those living in the house cannot manage the necessary work without such assistance.
127. All those employed by the Church, the Trust and the businesses owned by the Trust are covenant members of the Church. The preference is that employees should also be Style 3 Members and more than 80% are. However, not all Style 3 Members work for the Church, the Trust or the businesses. I accept the evidence that about one third of economically active Community Members work for businesses which are not associated with the Church.
128. With two exceptions all employees of the Church, the Trust and the Trust-owned businesses earn a wage of £4.50 per hour. This is just above the minimum wage of £4.10 per hour. The exceptions are:

a) those employed by the Doctor's practice where pay is at NHS rates; and

b) members of staff who are employed on agency contracts who are paid agency rates

Prior to the introduction of the minimum wage, the Domestic Sisters were paid at a lower rate.

The individual appellants
Setting the Board and Lodging Charge for the properties
129. The Board and Lodging Charge which is imposed by Clause 3 of the Conditions of Residence and Clause 4 of the Elders' Conditions of Residence is calculated as set out in paragraphs 79 and 80 of Mr Farrant's statement. First the costs per person for food, heating and lighting etc. are predicted for the coming year on the basis of the costs incurred in the current year. Then the costs of the Trust are estimated and converted to a figure per person. The total cost per person is then converted into scale rates for adults and children taking into account the likely portions of each.
130. (Although not strictly a finding of fact, it is convenient to state here that I am bound by the decisions in Harrison and White to hold that the clauses of the Conditions of Residence and the Elders' Conditions of Residence which expressly set out a separate, identifiable, board and lodging charge have the effect of imposing a genuine and legally enforceable liability to make payments to the Elders or to the Trust of a payment in respect of the Member's or Elder's occupation of the Community House (and that of his family). I would have reached that conclusion even if I were not bound to do so.)
131. Once calculated, the Trustees may re-calculate and increase the Board and Lodging charge unilaterally and without consultation. On occasion this has been done retrospectively, in the sense that the increased charges for a particular financial year take effect from the beginning of that year even if they are notified to the Community Members after that date because of delays in completing the calculations. In fairness it should be said that as the entire surplus income of Community is—one way or another—paid to the Trust through the Common Purses, a retrospective increase in the Board and Lodging charge makes no practical difference for those Style 3 Members who are contributing more than the level of the revised charge. It might, however, be of consequence for those Members reliant on housing benefit to pay the charge.
132. The figure for the costs of the Trust contains a provision for a return on the Trustees' investment. That provision is calculated as set out at paragraph 80 of Mr Farrant's statement. To summarise, the figure used is the cost which the Trustees would incur if they had to borrow on the totality of its property investment (valued on a historic basis) at a rate of 9%. The 9% figure is calculated as an assumed long-term bank base rate of 7% per annum plus a 2% borrowing cost.
133. Apart from the fact that the Board and Lodging Charge for Community Houses in London is higher than in the rest of the country to reflect an element of "London weighting", the Board and Lodging Charge is the same across all the Trust's properties and is not related either to the actual value of the property (either on a historic or current value basis) or to the accommodation occupied by the individual Community Member who is paying the charge. In return for payment of the Board and Lodging Charge, the individual receives not any particular room but a bed-space which—at least in the case of single Community Members—is likely to be in a shared room. Bed-spaces are allocated by the Elders and individual Members may be moved from one room to another according to the needs of the Community and at the Elders' discretion. No doubt in practice the Elders consult with those affected before making such a decision, but no consultation is legally required.
Enforcement of the Conditions of Residence

Financial Conditions

134. I accept that the Trust takes reasonable steps to enforce the financial obligations in the Conditions of Residence. The nature of the living and financial arrangements of the Style 3 members means that those steps only take a legal form in the case of former members who have left the Community Houses or those whose membership is in the process of being terminated. For those who remain within the Community, enforcement is more a matter of book-keeping: the board and lodging charge and any arrears are notionally taken from the contributions made by the individual member to the Common Purse before any sums are allocated towards the regular donation of surplus funds to the Trust. Similarly where an Elder leaves the Community owing money, the arrears would normally be sought from his fellow Elders who are jointly and severally liable with him.
135. When a Style 3 Member or a Temporary Guest leaves a Community House owing arrears of the Board and Lodging charge, it will often be uneconomic to pursue those arrears. In that respect, the Trust or the Elder concerned is in the same position as any other Landlord. However, there have been occasions when legal action has been pursued against former residents as follows. In the interests of confidentiality I have not used the names of the former residents concerned but the cases referred to were discussed at the hearing and are referred to in the additional bundle of appeal papers:

a) In 1992, an attempt was made to re-establish a former Elder, Mr A, (whose Eldership had been suspended) and his wife in the life of the Community. For this purpose, a property was acquired and let to them on an assured shorthold tenancy. Mr and Mrs A subsequently decided that they could not carry on as Covenant Members and the Trust's response was that if that was so they could not remain in the property. When Mr and Mrs A would not leave, a Notice Requiring Possession was served and a Summons issued. That claim for possession was based on the termination of the tenancy by notice and not on the arrears of rent (although a separate monetary claim was also made) or any breach of the Conditions of Residence. Possession was granted and the Trustees continued to press informally for payment of the arrears until, following the intervention of another Christian community on Mr & Mrs A's behalf, an Elder visited them and reported to the Trustees on their personal circumstances. Having considered that report, the Trustees decided that the debt was not one which should be pursued further.

b) Mr B, a former Elder who is referred to at paragraph 83 of Mr Farrant's statement, made a claim for housing benefit in 1998 whilst still a Community Member. That claim was not adjudicated upon pending the decision in the Saxby case. By the time that the claim was paid in January 2002, Mr B had left the Community but the housing benefit was paid to him personally and he did not account to the Trustees in respect of it. At the time of the hearing legal action was being actively pursued, Particulars of Claim having been settled by counsel and served in draft on Mr B's solicitors in the hope of effecting a settlement.

136. The issue of legal proceedings to enforce a financial claim is not the primary method used by the Trust or the Elders to enforce payment of the Board and Lodging charge. As a preliminary, the Elders responsible for the Common Purse would take informal action to secure payment or, if that appeared to be unlikely, to secure the departure of the debtor from the Community House in order to prevent the arrears from increasing. Page 128 of the additional bundle contains a list, prepared by Mr Campbell of all the cases since 1993 in which he has had to take such arrears action as an Elder at Festal Grange. I accept that evidence but, to protect the confidentiality of the debtors, I do not propose to set it out in detail in this Statement.
137. I was not, however, provided with evidence of any occasion when a Community Member who was in good standing with the Church and wished to remain a Community Member has been evicted for rent arrears which had accrued despite that Member's bona fide attempts to meet the Board and Lodging Charge. On the contrary, there were examples of cases in which very large arrears of had accrued in consequence of the non-payment of Housing Benefit during the mid- and late 1990s and in which no action to evict had been taken. Where a Common Purse had many members who were reliant on benefit, or was failing for other reasons, action was sometimes taken to merge that purse with another more financially successful Purse which would then undertake responsibility for the debt. However, there are cases in which very large arrears of Board and Lodging charge have been permitted to accrue without the Common Purse being merged. The most extreme example of this is the … Common Purse which, at the end of the first quarter of 2000, had arrears of Board and Lodging Charge amounting to £84,734.00.
138. When financial claims are enforced, it is not usual for the Trust or the Elders to seek to claim interest. Mr Farrant explained that such a claim was felt to be contrary to the ethos of the church. This is so even when legal proceedings are commenced and statutory interest could be claimed under section 69 of the County Courts Act 1984. The proceedings against Mr & Mrs A which, it will be recalled, contained a monetary claim did not seek interest. Interest was claimed against Mr B but that was an en exceptional case in which the Trust, rightly or wrongly, felt strongly that Mr B had stolen the benefit which had been paid to him.

Non-financial Conditions

139. The normal procedure for a Style 3 Member who was in breach of a non-financial Condition, for example one of the Conditions which are listed in paragraph 69 below, would be for the responsible Elders to speak to the person concerned and seek to amend his or her behaviour. If that proved not to be possible, the Member concerned would ultimately be asked to leave and would normally do so without the need for legal action. However, in addition to the case of Mr & Mrs A which involved a breach of both financial and non-financial conditions, the legal option has been considered or pursued in at least two cases:

a) Mr C moved to a Community House but found that the lifestyle was not one which he wished to follow. He declined to participate in the life of the Church but wished to remain in the property. He was advised—wrongly—that the Elders had not adopted the correct procedure to require him to leave and there followed an extensive correspondence between the Trustees' solicitor and Mr C's advisers. The situation finally resolved when Mr C vacated the property voluntarily.

b) In 1993 Mr & Mrs D were evicted by Court order from a property which they held as tenants of the Trust under an assured shorthold tenancy. The proceedings were consensual and were on the basis that the tenancy had been determined by notice and not on the basis of any breach of the agreement. Mr & Mrs D had originally intended to become Style 3 Members of the Church but it subsequently became clear on both sides that this would never happen in practice. Mr & Mrs D wished to leave the property but were unable to do so because South Northamptonshire Council would not re-house them unless a possession order was obtained against them. But for that refusal, Mr and Mrs D would have left the property voluntarily and no proceedings would have been issued.

140. I was not provided with any evidence of an occasion when a tenant or licensee had been successfully evicted from a Community House or other Trust property as a result of contested proceedings based on the breach of a non-financial condition.

Jesus Fellowship Housing Association

141. For the sake of completeness, I should mention the existence of Jesus Fellowship Housing Association Limited ("the Housing Association"). This Association used to own the Community Houses when the Church first began to operate them. It was subsequently decided that a charitable Housing Association was not the most appropriate vehicle for the Community and all the large Community Houses which were previously owned by the Housing Association have now been purchased by the Trust. I understand that the Housing Association remains in existence and may still own some smaller properties. Be that as it may, none of the appellants in these appeals live in properties owned by the Housing Association.

Reasons for the Tribunal's Decision

142. The issues for the tribunal to decide were predominantly legal ones. The two main questions were whether the agreements under which the appellants occupied their homes were on a commercial basis and, if not, whether the European Convention on Human Rights as applied to the UK by the Human Rights Act 1998 nevertheless had the effect that the appellants were not excluded from entitlement to housing benefit.

Commerciality

The Interpretation of Regulation 7

Regulation 7(1)(a)

143. It is accepted by the parties that the correct test to apply to regulation 7(1)(a) is that enunciated by Sedley J. (as he then was) in R. –v– Poole Borough Council ex parte Ross as follows:^[1]

"The appropriate test is in my judgment a dominant purpose test. The correct approach is … to ask … whether the evidence has satisfied [the Decision Maker] on the balance of probability that the principal basis on which the agreement was made was a non-commercial one. If the test is not met the liability is not excluded."

It is also agreed that that in applying that test I must look at either "the whole relationship between the parties so far as it concerns the occupation of the premises in question" (see Laws J (as he then was) in R. –v– Sutton LBC ex parte Partridge^[2]) or at "the arrangement as a whole and ask whether it is on a commercial basis" (see Blackburne J in R –v– Rugby Borough Council Housing Benefit Review Board ex parte Harrison and R. –v– Daventry District Council Housing Benefit Review Board ex parte Bodden^[3]).

144. I accept Mr Stagg's submission that there is no such thing as a standard commercial agreement in this context. Landlords and Tenants negotiating in a free market are entitled to agree whatever contractual arrangements are mutually convenient even if, in practice, it is now usual to create an assured shorthold tenancy in one of the forms prepared by the companies which publish legal stationery. In any case in which the commerciality of the agreement is disputed there will always be factors which tend to suggest that the agreement is a commercial one and factors which tend to the opposite conclusion. Those factors, and the relative weight to be given to each, may vary from case to case. However, it is likely to be a constant that, whatever other terms may be agreed, a landlord entering into a commercial letting agreement will normally want to protect the value of his or her property against damage by the tenant, ensure that he or she is legally entitled to recover possession of the property within a reasonable time should he or she wish to do so and, of course, to obtain the best rent available in the market. By contrast, a commercial tenant will normally want to obtain the right to live with reasonable security of tenure in adequate, properly maintained, accommodation at the minimum rent payable and with as little interference as possible from the landlord or others who occupy the property in the way in which he or she lives his or her life. As the parties to a commercial agreement will normally, although not always, be acting at arms length and may not know each other at the outset of the agreement, it will also be usual for both to wish the obligations under the agreement to be certain, clearly defined, and legally enforceable. It is for this reason that the presence in an agreement of terms which cannot be enforced by law tends to show that the agreement is not commercial.
145. The approach which I take from the authorities quoted above is that when considering the commerciality of an agreement I must have regard to all the relevant factors and decide whether, taking the agreement as a whole and applying an appropriate weight to each factor, it should properly be described as being "not on a commercial basis". Although I have not decided this appeal on the basis of the burden of proof, I should record for the sake of completeness that the burden lies on the local authority to satisfy me on a balance of probabilities that the agreement is not commercial.
146. I should also mention a subsidiary issue. Mr Stagg relies on the words "so far as it concerns the occupation of the premises in question" in the Partridge case to submit that in assessing the commerciality of the agreement, I should not take into account those parts of the relationship between the appellants and the Trust or the Church which do not directly relate to the occupation of premises. In particular, it is submitted that I should not take into consideration the relationship of employer and employee (where it exists) or the terms and conditions of any such employment. Mr Findlay submits that I should take all the circumstances, including where appropriate the employment relationship, into account and that it would be an error not to do so. On this point I accept Mr Findlay's submissions. The facts of Partridge were far removed from those of the present appeal and I do not consider that Laws J.'s formulation, which formed part of an extempore judgment, should be treated as laying down a different test from that subsequently enunciated by Blackburne J. in Harrison.
147. Moreover, the relationship between the Trust and Community Members is so close and all-encompassing that I regard each aspect of that relationship as being inextricably linked. By way of example, Mr Farrant explained to me that one of the reasons why higher wages were not paid to those Community Members who are employed by the Trust or Trust-owned companies would be that it would make no difference: as most such employees (other than agency staff) are Style 3 Members, increased wages would all in turn be paid into the Common Purses and would generate a corresponding surplus in those Purses which would then be returned to the Trust. Given the overall closeness of the relationship, I cannot accept that those aspects which concern principally the employment of a Style 3 Member do not also concern his or her occupation of a Community House.
148. However, in case this appeal should go further, I should also say that it is not actually necessary for me to have regard to any factors relating to the employment of the appellants by the Trust or its associated companies. The decision which I reach below has been made without bringing those factors into the balance. As they all tend towards the conclusion that the agreements are non-commercial, taking them into account would not have changed the decision other than by strengthening the conclusion which I have reached without considering them.

Regulation 7(1A)

149. As noted above, one of the changes to regulation 7 in January 1999 was the introduction of a new paragraph (1A) in the following terms:

"(1A) In determining whether a tenancy or other agreement pursuant to which a person occupies a dwelling is not on a commercial basis regard shall be had inter alia to whether the terms upon which the person occupies the dwelling include terms which are not enforceable at law."

Although different possible interpretations of paragraph (1A) are outlined in Mr Stagg's skeleton argument, there is, in fact, no dispute between the parties as to which is the correct interpretation: it is the interpretation referred to in Mr Stagg's skeleton as "the neutral interpretation" (although neither Mr Findlay nor Miss Demetriou accepted that classification). The presence or absence of unenforceable terms was a factor identified by Blackburn J in ex parte Harrison and all that paragraph (1A) does is to confirm the relevance of that factor. It does not prescribe the weight which is to be given to that factor, which will of course depend on the individual circumstances of the claim for benefit under consideration. In that sense it exists for the avoidance of doubt . Further, the presence or absence of terms in a tenancy agreement which are not legally enforceable is so obviously germane to the question of whether or not the agreement is commercial that anyone deciding that question would necessarily have to consider it even if paragraph (1A) did not exist.

150. Given this interpretation of paragraph (1A), I cannot accept the submission at paragraph 9 of Mr Stagg's skeleton argument that regulation 3 of the Council Tax Benefit (General ) Regulations 1992 should be interpreted differently from regulation 7 on the basis that it does not contain any provision equivalent to paragraph (1A). In my judgment, if a decision in the housing benefit appeals that the Conditions of Residence are not on a commercial basis, necessarily entails that the ordinary Style 3 Members at Festal Grange are Mr Campbell's non-dependants for the purposes of both housing benefit and council tax benefit. The outcome of Mr Campbell's council tax benefit appeal must inevitably follow that in the housing benefit appeal.

"Enforceable at Law"

151. Before considering whether the agreements which I have to consider include terms which are not enforceable at law, I need to decide what is meant by "enforceable" in this context. I accept Mr Stagg's submission that a term may be "enforceable" in this sense even if a breach would not necessarily give rise to a successful claim for damages: it is sufficient for a term to be "enforceable", that a Court would enforce it by making an order for possession based on the breach.
152. However, on a proper analysis of the agreements in these appeals, that does not assist the appellants because those terms of the agreements which impose positive obligations to live a lifestyle which accords with the precepts of the Church would not be "enforced" by the Courts even in this broader sense of the word. Specifically, the terms which are not so enforceable are:

a) in the Conditions of Residence:

i) the Clause headed "General"

ii) the Specific Requirements enumerated as paragraphs 2,4, 5 and 6; and

b) in the Elders' Conditions of Residence:

i) the Clause headed "General Introduction"

ii) the Specific Conditions enumerated as paragraphs 1, 2, and 7 (final sentence); and

c) Paragraph C.1.(c) of the Schedule to [one claimant's] assured shorthold tenancy and of Schedule 2 to [another claimant's] assured shorthold tenancy

It will be convenient to refer to those terms as "the Lifestyle Conditions".

153. [Three of the claimants] are licensees of the properties they occupy. They enjoy no security of tenure and the Trust … or the Elders … would not need grounds in order to recover possession. If their respective Licensors considered them to be in breach of their one or more of the Conditions of Residence and sought a possession order against them, that order would almost certainly be granted. But the Court would not thereby be enforcing the Condition. A licence does not confer any interest in the property on the Licensee but only a personal right against the Licensor. The Licensor may legally obtain possession as required and without the need to rely on the breach of a term of the Licence agreement and in granting a possession order the Court would not be enforcing the allegedly broken term but giving effect to the inherent nature of the Licence.
154. [Two of the claimants] have assured shorthold tenancies of the properties which they occupy, presumably because they and their families do not share occupation of those properties with others. Issues about whether a Court would grant possession for breach of the Lifestyle Conditions can only arise during the initial contractual period of the tenancies (six months in each case). Thereafter the Landlord has an absolute right to possession based on the expiry of the agreed term and again without asserting any other ground. Consideration of what would happen if there were a breach during the initial six month period is necessarily artificial because it is probable that other methods would first be used to resolve the dispute: it is unlikely that proceedings would be commenced within that period.
155. However, if [those claimants] had committed a breach of the Lifestyle Conditions during the first six months of their tenancies and their Landlords had sought a possession order on basis of that breach then, in my judgment, the Court would not have granted an order. Although there is no authority directly in point, I accept Mr Findlay's submission that, on the authority of such cases as Rogers –v– Booth,^[4] Courts do not enforce such terms because as a matter of policy they do not wish to become involved in disputes over issues which are inherently non-justiciable. These would include such issues as, for example, whether or not a child has been brought up in a manner which is sufficiently in accordance with the teachings of the Bible.
156. Non-justiciable issues such as this would arise in a disputed action for possession on the basis of a breach of the Lifestyle Conditions in the same way as they would in a claim for damages. In my judgment, a court would be equally reluctant to adjudicate upon those issues in either context. Neither would a court be prepared to accept a contractual term making the contested word of an Elder that a breach had occurred conclusive evidence of that fact. To do so would be to permit one party to the proceedings to be judge in his own cause. The only circumstances in which a Court might be prepared to enforce the Lifestyle Conditions before the end of the contractual period would be if the tenant clearly accepted that he or she had ceased to practice as a Style 3 Member of the Church and therefore no dispute which could give rise to non-justiciable issues existed. Even then a Court, knowing that the Landlords could recover possession as of right at the end of the six month period might well prefer to leave them to their remedies at that stage.
157. I therefore conclude that the terms on which the appellants occupy their homes do include terms which are not enforceable at law. That is so even if one accepts—as I do—the appellant's submission that a term can be "enforceable" for these purposes without giving rise to an action for damages in the event of a breach.

Factors which tend to suggest the agreements are commercial

158. The factors which tend to suggest that the agreements are commercial are as follows:

a) The Trust is non-charitable. The Trustees are under legal obligations to protect Trust property, to ensure that it is only used for proper purposes and to secure a proper return on Trust assets. Its finances are properly managed by Mr Farrant and are subject to detailed and rigorous financial controls.

b) Those Conditions of Residence which deal with the Board and Lodging charge create a genuine and legally enforceable liability on the part of Community Members to make payments in respect of the occupation of Community Houses.

c) The Trust takes reasonable measures to enforce payment of arrears of the Board and Lodging charge by former residents of Community Houses who have left.

d) The Trust takes reasonable measures short of eviction against Community Members who are in arrears of the Board and Lodging charge but are otherwise in good standing with the Church and who wish to remain as Community Members.

Factors which tend to suggest the agreements are not commercial

159. The factors which tend to suggest that the agreements are not commercial are as follows:

a) The Lifestyle Conditions which (inter alia) require Members to pool their income in a Common Purse, actively to pursue a particular religious lifestyle, submit to the authority of the Elders, bring up their children in a specified way and participate wholeheartedly in the activities of the Church and the communal life of the Community Houses.

b) In the case of the Elders' Conditions of Residence, the requirement to be responsible for oversight of the religious life of the Community House, including matters of religious discipline.

c) Full Style 3 Members are required to donate all their belongings to the Trust

d) The Board and Lodging charge is not set so as to maximise the Trustees' return on their investments but so as to cover costs and provide a reasonable return on capital. It is also relevant that:

i) the Board and Lodging charge is not based on the current values of the Trust's property portfolio but on its historic cost;

ii) the Board and Lodging charge is not based on the actual value of the property occupied by the payor but on figures calculated on the value of the Trust's property portfolio as a whole;

iii) the Board and Lodging charge is not related to the size of the accommodation occupied by the payor and his or her family;

iv) as the Board and Lodging charge is based on bed-spaces, the return which the Trust receives from the Elders (who are, in effect, the Head Licensees) varies according to the number of occupiers.

e) The Board and Lodging charge can be increased by the Trustees, on occasion with retrospective effect, without consulting or securing the prior agreement of the payor.

f) The Elders may unilaterally change the sleeping arrangements of Community Members.

g) The Elders' conditions of residence may be unilaterally changed by the Trustees.

h) The procedure of merging a Common Purse which is in financial trouble with one which is not. The possibility that one group of sub-licensees of a Landlord should intervene to assist the Landlord by assuming the financial responsibilities of another group of the Landlord's sub-licensees is without any parallel in the commercial letting market.

i) Community Members in good standing are permitted to run up arrears of Board and Lodging charge indefinitely without being evicted as long as the failure to pay the charge results from factors outside that Member's control, such as non-payment of housing benefit. Mr Farrant said in evidence that, in the long run, the Trustees stood a better chance of recovering their money by keeping the person with arrears as a Style 3 member and that since a continuing Style 3 member would already be paying all of his or her income into the Common Purse there would be no assets against which any legal judgement could be enforced. That may be so in the short or even the medium term but ultimately there would come a point when a commercial landlord would cut his or her losses and seek to replace a tenant who could not pay the ongoing charge with one who could, even at the risk of making it more difficult to recover any arrears. A commercial landlord would not have permitted the Elders of … to accumulate arrears in excess of £84,000 without taking steps to terminate their licenses no matter what the reasons for the arrears may have been.

j) When pursuing arrears, even through the courts, the Trust or the Elders do not normally make a claim for interest.

Weighing the factors

160. In my judgment, the factors which suggest that the agreements are commercial are overwhelmingly outweighed by those which suggest they are not. I cannot place much weight on the facts that the Conditions of Residence create a genuine enforceable liability and that reasonable legal and extra-legal measures are taken to enforce those Conditions. Those factors merely go to show that there is a liability—a fact which is any event assumed as a condition precedent to the applicability of regulation 7—rather than that the liability is commercial. The rigorous financial procedures and controls which are operated by Mr Farrant and his staff show that the Trust is an efficient and properly run organisation but not that it is a commercial one.
161. Although I have listed ten factors as tending to show non-commerciality, the most important of these are the Lifestyle Conditions. They would outweigh the factors listed in paragraph 75 above even if the factors listed in paragraph 76 (b)–(j) were not also present. The Lifestyle Conditions go far beyond the normal negative obligations on licensees and tenants to conduct themselves in a manner which does not reduce the value of the properties or interfere with the quiet enjoyment of other occupiers. They require the appellants actively and wholeheartedly to follow a specified way of life and impose wide-ranging obligations affecting virtually every aspect of their existence. In my judgment, the Lifestyle Conditions make it clear beyond any doubt that the predominant purpose of the agreements is to enable the adoption by the appellants of a particular religious lifestyle and the promotion of the religious purposes of the Jesus Fellowship Church rather than simply to provide a home for the appellants in return for a normal commercial rent.
162. As I have held above, the Lifestyle Conditions are not legally enforceable even in the extended meaning of that term for which Mr Stagg contends and which I accept. I am compelled by regulation 7(1A) to have regard to the fact that the agreements contain terms which are not so enforceable and it would have been necessary for me to do so even if regulation 7(1A) did not exist. In the context of these appeals, that factor gives considerable weight to the conclusion of non-commerciality.
163. I accept that analogies with terms in commercial agreements can probably be found for each of the factors listed in paragraph 76(b)–(j) if those factors are taken individually. For example, Mr Stagg is correct to say that those who run hostels may reserve the right to move residents from one room to another or that some commercial letting agreements may not provide for the payment of interest on arrears. However, I am obliged by Ross not merely to look at each factor individually but to consider the relationship of the parties to the agreements taken as a whole. Even if each of the individual factors suggesting non-commerciality may not be sufficient to support that conclusion on its own, they are sufficient taken together with each other and with the Lifestyle Conditions. The other factors add considerable weight to the Lifestyle Conditions—albeit weight which is not strictly necessary given what I say at paragraph 78 above.
164. Finally, although it is not binding on me, I also note the conclusion of Blackburne J in Harrison that, on evidence which was very similar to that before me, the conclusion that the Conditions of Residence were not on a commercial basis was not erroneous in law and was one which the Review Board was legally entitled to reach.

The Human Rights Act 1998

165. Given my conclusions on the issue of commerciality, I must also address the submissions which were made to me on the effect of the Human Rights Act 1998.
166. It is accepted on behalf of the Respondent and the Secretary of State that the Human Rights Act applies to these appeals and that no point is taken in relation to the timing of any particular claim for benefit or decision on such claim.
167. In Mr Stagg's skeleton argument, the main submission under the Human Rights Act was made on the basis of "targeted discrimination", i.e., that by making paragraph (1A) of regulation 7, the Secretary of State's purpose was to disentitle from housing benefit those—such as the appellants—who wish to live in a community which imposes lifestyle obligations. That submission was predicated on the so-called "negative" interpretation of paragraph (1A) under which it requires particular emphasis to be placed upon the presence of non-commercial terms in the agreement. Since all parties accept that the "negative" interpretation not the correct one, the submissions at the hearing were made on the alternative basis that regulation 7 discriminates against the appellants contrary to Articles 8 and 14 taken together, and Articles 9 and 14 taken together, of the European Convention on Human Rights by treating the appellants the same as others who occupy property on non-commercial terms when their circumstances are, in fact, significantly different. The submission is therefore one of indirect discrimination. It is based on the decision of the European Court of Human Rights in Thlimmenos -v- Greece.^[5]
168. Mr Stagg submits that if I find that there would otherwise be an infringement of the Convention, I should (under section 3 of the Human Rights Act ) adopt a "positive interpretation" of paragraph (1A) under which the presence of unenforceable terms in the agreements should—in these cases—be taken as tending towards the conclusion that the agreements are on a commercial basis rather than as negating that conclusion. Such an interpretation is said to be possible because although paragraph (1A) enjoins me to "have regard" to whether or not the agreement contains unenforceable terms it does not spell out expressly that the presence of such terms is to be taken as reducing the likelihood that the agreement will be found to be commercial or what weight that factor is to add to that conclusion.
169. I cannot accept that submission. I agree that section 3 obliges me to read and give effect to legislation in a way which is compatible with the Convention rights but that obligation is only imposed "[s]o far as it is possible to do so". It is not possible to read paragraph (1A) as bearing the "positive" interpretation: that interpretation is wholly incompatible with the meaning of the word "commercial". The presence of terms in an agreement which cannot be legally enforced means that the agreement is less, not more, commercial than an agreement which is otherwise equivalent but which does not contain those unenforceable terms. In my judgment, if I were to find that there has been an infringement of appellants' Convention rights the only course open to me under section 3 would be to disapply both sub-paragraph (1)(a) and paragraph (1A) of regulation 7. Regulation 7 is, of course, sub-ordinate legislation and I am aware of nothing in primary legislation which would prevent my removing the incompatibility in that way.
170. I note in passing that if I were to disapply regulation 7(1)(a) the effect would be to end the basis for claiming approved in Saxby. Disapplication of the regulation would not re-instate the former prohibition against paying housing benefit in respect of non-commercial agreements with a resident "landlord" and each Style 3 Member would become eligible for housing benefit in his or her own right and based on his or her own individual financial circumstances.
171. Against that background, it is agreed that I must consider four issues:

a) Is Article 14 of the Convention, taken together with either Article 8 or Article 9 or both, engaged in this case?

b) If so, is there relevant discrimination for the purposes of Article 14?

c) If so, does the discriminatory measure pursue a legitimate purpose?

d) If so, is there proportionality between the measure and the purpose pursued?

I consider each of those issues in turn.

Is the Convention Engaged?

Articles 8 and 14 taken together

172. Article 8 of the Convention is in the following terms:

"Article 8

Right to respect for private and family life
173. Everyone has the right to respect for his private and family life, his home and his correspondence.
174. There shall be no interference by a public authority with the exercise of this right except such as in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic well-being of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others"
175. Article 14 of the Convention is in the following terms:
"Article 14 Prohibition of Discrimination

The enjoyment of the rights and freedoms set forth in this Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status."

176. Article 14 is not free-standing. In order for it to be engaged it is first necessary that the alleged discrimination be connected with "the enjoyment of the rights and freedoms set forth in [the] Convention". It is not, however, necessary that an independent breach of any other article of the Convention be established. It is sufficient to show that the discrimination complained of falls within the ambit of another article. The relevant test was conveniently set out by the European Court of Human Rights in Petrovic -v- Austria^[6] as follows:

"The Court has said on many occasions that Art. 14 comes into play whenever 'the subject matter of the disadvantage … constitutes one of the modalities of the exercise of a right guaranteed' (see National Union of Belgian Police v. Belgium (1975) 1 EHRR 578 at 592-593 (para 45)) or the measures complained of are 'linked to the exercise of a right guaranteed' (see Schmidt v Sweden 1 EHRR 632 at 645 (para 39)).

I accept Miss Demetriou's explanation that "modalities" in this context refers to a method or mechanism of the exercise of the right guaranteed.

177. In relation to Articles 8 and 14 taken together, Mr Stagg submits that the provision of housing benefit to those who would otherwise lack the resources to provide a proper home for themselves and their families is one of the methods by which the UK demonstrates respect for a claimant's home and that it is therefore within the ambit of that Article for the purpose of Article 14 even though Article 8 on its own does not confer any obligation to provide financial assistance (see Petrovic, paragraph 26).
178. Miss Demetriou argues on behalf of the Secretary of State that housing benefit neither constitutes nor is linked to the modalities of the exercise of any right protected by Article 8. It is said to be an economic right of general application and a means of assisting people with low income.
179. I accept Mr Stagg's submissions on this point. I accept that care must be taken not to give too loose an interpretation to the phrase "within the ambit" because to do so would cause Article 14 to become free-standing. However, it is also the case that too narrow an interpretation runs the risk of requiring an independent breach of another article before Article 14 can be engaged and thereby rendering the latter article otiose. In my judgment, Miss Demetriou's submissions come close to requiring an independent breach.
180. I am unable to distinguish housing benefit from the parental leave benefit which was in issue in Petrovic. That allowance was intended by the state to promote family life and, in conjunction with parental leave, enabled one of the parents to stay at home to look after the children. Housing benefit is similarly intended to protect and show respect for an individual's occupation of his or her home. It is not a benefit of general application such as income support which is intended to protect only against the risks of poverty. Its conditions of entitlement are narrowly drawn and closely related to the occupation of a dwelling as the claimant's home (see section 130(1)(a) of the Social Security Contributions and Benefits Act 1992) and it is paid in addition to benefits which are intended to protect against poverty where that is appropriate.
181. I therefore hold that, for the purposes of Article 14 of the Convention, the provision of housing benefit by the United Kingdom is within the scope of Article 8. Article 8 does not oblige the UK to establish a housing benefit scheme at all but, if it does so, that scheme must be established and administered in a way which does not infringe Article 14.
182. Finally on this point, I should mention that I was referred by Miss Demetriou to the decision of the Court of Appeal in Kasto –v– London Borough of Hounslow in which the Court is said to have held that regulation 7 was not within the ambit of Article 8. The decision in Kasto was made on a renewed application for leave to appeal, argued by a litigant in person without reference to authority and in particular without reference to the Petrovic case on which my decision is based. Moreover, it was decided before the Human Rights Act came into force and, therefore, at a time when the Court could not have quashed regulation 7 simply on the basis that the Convention was infringed. I doubt very much whether it is authority for the proposition advanced by Miss Demetriou not least because, if it were, I do not believe that the Court of Appeal would have been prepared to approach the later case of Sharon Tucker –v– Secretary of State for Social Security^[7] on the hypothetical basis that housing benefit was within the scope of Article 8 (see paragraph 41 of the Tucker judgment). In case I am wrong on this point I should add that Kasto is not binding on me (see Clark –v– University of Lincolnshire^[8]) and that, as I am otherwise satisfied that housing benefit is within the scope of Article 8 for the purpose of Article 14, I would respectfully have declined to follow it had it been necessary to do so.

Articles 9 and 14 taken together

183. Article 9 of the Convention is in the following terms:

"Article 9

Freedom of thought, conscience and religion

184. Everyone has the right to freedom of thought, conscience and religion; this right includes freedom to change his religion or belief and freedom, either alone or in community with others and in public or private, to manifest his religion or belief, in worship, teaching, practice and observance.
185. Freedom to manifest one's religion or beliefs shall be subject only to such limitations as are prescribed by law and are necessary in a democratic society in the interests of public safety, for the protection of public order, health or morals, or for the protection of the rights and freedoms of others."
186. Mr Stagg argues that in the circumstances of this case the conditions of entitlement to housing benefit are within the ambit of Article 9 because the appellants' style of communal living forms part of the manifestation of their religious beliefs. It is argued that if, as a result of the denial of housing benefit, a Style 3 Member lacks the means to pay the Board and Lodging charge she or he will ultimately be required to leave the Community House and will thus be denied the right to manifest her or his beliefs in this way.
187. I reject that argument. By contrast with the position under Article 8, payment of housing benefit is not one of the ways in which states manifest their respect for or promote the rights to freedom of thought, conscience or religion or the manifestation of religious beliefs.
188. In the context of these appeals communal living is not absolutely required even for Style 3 Members. The Statement of Faith acknowledges the right of individuals to decide whether or not to live communally according to their own consciences and also provides that the manifestation of one's beliefs in such a manner is to be subject to "prevailing social and legal conditions". Looking beyond the Community to the Church as a whole, Mr Farrant's evidence is that only one fifth of the Church's members are Style 3 Members: the remaining four fifths share the appellants' religious beliefs but do not manifest those beliefs by communal living.
189. Further, the type of communal living desired by the appellants is not incompatible with the receipt of housing benefit. In order to receive housing benefit, it is not necessary that, as between themselves, they should abandon any of their religious beliefs, practices or discipline, or the pooling of their income and capital, or the donation of surplus income to the Church. All that is required is that they should have a normal commercial relationship with those who let or licence them to occupy their homes. Given my conclusions on the commerciality issue, this will require that the terms on which they occupy those homes should not impose those religious practices and discipline as a condition of occupation and that the properties occupied should not be let or licensed by the Church, the Trust or, possibly, the Housing Association. (In this, the position of the appellants is analogous to that of the claimant in the Tucker case who is free to rent accommodation from any landlord in the country who is willing to let it except from the father of her child). It is no part of the Statement of Faith and Practice that the communal living which is considered desirable should necessarily take place in property owned by the Church or persons and organisations connected with it.
190. As long as the relationship with the landlord is on a commercial basis, how Community Members then arranged their financial affairs among themselves would be a matter for them. Either the individual Style 3 Members could make their own arrangements with the landlord or they could licence their accommodation from an Elder who would lease the property from the landlord and then make a Saxby claim on behalf of the entire household.
191. I do not accept Mr Stagg's submission that such an arrangement would be unworkable in practice particularly since the possibility of a Saxby claim would enable the requirements of religious practice and discipline to remain in the licence agreements of all Style 3 Members other than Elders. I see no reason why appropriate properties would not be available to Elders on the open market on normal commercial terms and, whilst there would be some diminution in the security of tenure currently enjoyed, I am confident that Community Members would make good tenants and would, with the assistance of the housing benefit which would—ex hypothesi—become payable, avoid falling into substantial arrears. In these circumstances, the normal commercial prudence of landlords would ensure a reasonable level of stability.
192. There is a sharp contrast between this position and the facts of Thlimmenos –v– Greece^[9] which is relied on by the appellants and which is discussed in more detail below. In that case the refusal of military service was a direct requirement of the pacifism mandated by the Applicant's religious beliefs as a Jehovah's Witness. The Court held that the matters complained of fell within the ambit of Article 9 because it accepted^[10] that the Applicant had been convicted of a felony as a result of the very exercise of the freedom guaranteed by that article. He could not, consistently with the requirements of his religion, have conducted himself in a manner which complied with the requirements of the law. That is not the case in these appeals.

Is there relevant discrimination?

193. On the basis of the interpretation of regulation 7(1A) which I have accepted, Mr Stagg no longer submits that the 1999 changes to regulation 7 were targeted deliberately to disadvantage the appellants. In the absence of such a submission, it is plain that the operation of regulation 7(1)(a) does not directly discriminate against the appellants on the grounds of their religion. I accept Miss Demetriou's submissions that the regulation is in general terms and the religion of the housing benefit claimant is irrelevant to its operation. The appellants do not receive housing benefit because they do not occupy the Community Houses on a commercial basis, rather than because of their religious beliefs or the manner in which they choose to manifest them. As I have stated above it would, in my judgment, be possible for the legal arrangements under which Community Houses are occupied to be changed so as to put them on a commercial basis without requiring the appellants' to act contrary to their religious beliefs and without interfering with their religious practices.
194. Mr Stagg's argument rests on what is, in effect, indirect discrimination. It is submitted that the appellants have been discriminated against because the general requirement of commerciality has been applied to them when, it is said, the Convention requires that an exception ought to have been made in their favour in order to accommodate their manner of living.
195. The submission is made on the authority of the Thlimmenos case^[11]. In that case, the Applicant was a Jehovah's Witness. In 1983, he refused to wear a military uniform at a time of general mobilisation and was convicted before a military tribunal of insubordination, a felony. He was sentenced to four years' imprisonment of which he served two years and one day. Subsequently he wished to become a Chartered Accountant but was prevented from doing so on the basis that he was convicted of a felony. Mr Thlimmenos complained that his human rights had been infringed because he had been treated in exactly the same way as any other convicted felon notwithstanding the fact that the offence of which he had been convicted was prompted by his religious beliefs.
196. Finding in his favour, the Court said:^[12]

"44. The Court has so far considered that the right under Article 14 not to be discriminated against in the enjoyment of the rights guaranteed under the Convention is violated when States treat differently persons in analogous situations without providing an objective and reasonable justification. However, the Court considers that this is not the only facet of the prohibition of discrimination in Article 14. The right not to be discriminated against in the enjoyment of the rights guaranteed under the Convention is also violated when States without an objective and reasonable justification fail to treat differently persons whose situations are significantly different." (Emphasis added)

On this reasoning, the Court went on to hold that the Greek state had failed to treat the Applicant differently from other convicted felons, and that, given the sentence of imprisonment which the Applicant had served, the imposition of a second punishment in the form of a disqualification from a profession was not proportionate to the stated legitimate aim of ensuring that those who refused to serve their country were appropriately punished.

197. It will be observed that Thlimmenos is a very different case from these appeals. Although the quotation above is a proposition about the application of Article 14, that proposition is made in the context of combined breach of that article and Article 9 taken together. As I have held, the present appeals do not fall within the ambit of Article 9. Religious freedom is one of the key rights guaranteed by the Convention and I am not persuaded that Article 14 is necessarily to be applied in the same manner when what is being considered is an allegation of a breach of that article taken together with Article 8.
198. Be that as it may, Thlimmenos is also to be distinguished on the facts. I accept Miss Demetriou's submission that the Applicant's case was a strong one because of the imposition of a double punishment for a single offence and that, as I have stated above, Mr Thlimmenos was required by his religion to act as he did where as the appellants' religion does not require them—even as a matter of practicability—to organise their living arrangements on a non-commercial basis.
199. As, in my judgment, the Thlimmenos principle is not applicable to the present appeals, I am bound to follow the case law of the Commission to which Miss Demetriou referred me^[13] and which establishes that before discrimination can be found a causative link must be shown between the unfavourable treatment complained of and the status by virtue of which the appellants' claim to be the victims of discrimination. There is no such link here. Even if the appellants had persuaded me on the facts that regulation 7(1)(a), though neutral in its terms, has a differential impact on the followers of particular religions, that would not suffice to establish relevant discrimination for the purpose of Article 14.

Legitimate purpose and proportionality

200. My conclusion on the issue of relevant discrimination makes it unnecessary for me to decide whether, if there were a discriminatory difference in treatment, it could nevertheless be justified on the basis that it was a proportionate method of pursuing a legitimate purpose. However, in case this appeal should go further, it may be helpful to state that I consider myself to be bound by the decision of the Court of Appeal in Tucker to hold that regulation 7 (including paragraphs (1)(a) and (1A)) pursues the legitimate aim of the prevention of abuse. The Court also decided in that case (which concerned paragraph (1)(d) of regulation 7) that the regulation was a proportionate method of pursuing that aim. I note that, in relation to paragraph (1)(c) the High Court arrived at the same conclusion in the cases of R (on the application of Painter) –v– Carmarthen Housing Benefit Review Board and R (on the application of Murphy) –v– Westminster City Council.^[14] I am not persuaded that there is good reason for me to reach any other conclusion in relation to paragraphs 7(1)(a) and 7(1A).
201. Those liable to pay for their accommodation under non-commercial agreements are excluded from housing benefit because such agreements, whilst not necessarily abusive per se, carry with them a significant potential for abuse. If I were to hold that the Human Rights Act required me to disapply regulations 7(1)(a) in relation to those who live communally for religious or spiritual reasons, those who lived in such communities would be eligible for housing benefit unless it could be established that such potential abuse had become actual abuse on the facts of the individual claim. Local authorities would therefore have to undertake detailed investigations into each claim in order to rule out abuse. Such investigations would inevitably entail additional administrative costs and would probably also involve unjustified public expense because some whose arrangements which were in fact abusive of the housing benefit scheme would escape exclusion from benefit because of evidential difficulties.
202. It is clear therefore that those responsible for policy have to strike a balance taking into account the desirable aim of paying benefit to those in financial need, the requirement to prevent abuse of the housing benefit scheme and the relative administrative costs of various solutions which might be adopted. Where to strike the precise balance on this sort of question is a difficult—and ultimately political—decision. The legal issue is not whether the Secretary of State has drawn the line in the place where the appellants, the respondent authority, or indeed the tribunal, would have drawn it but whether he has remained within the margin of appreciation which the Convention allows to governments as to the methods by which legitimate purposes are to be pursued. For the reasons given by the Court of Appeal in Tucker and by the High Court in Painter and Murphy, regulation 7 lies within that margin of appreciation. If, therefore, I had held that there was a relevant difference in treatment in this appeal, I would also have held that it was justified as a proportionate response to the important need to prevent abuse of the housing benefit scheme.

Signed
Chairman:	Richard Poynter	Date:	17 September 2002

For clerk's use only. Statement issued to parties on ......................................