UK Social Security and Child Support Commissioners' Decisions

[2003] UKSSCSC CH_563_2003 (29 October 2003)

 


1. This appeal, brought by the council with leave of a district chairman, succeeds. The decision of the tribunal on 11 10 02 was erroneous in law, as explained below, and I set it aside. But I am able on the evidence before me to substitute as my own decision the decision the tribunal should have given. This is that the claimant was not entitled to housing benefit in respect of 12 C Lane on his claim made on 2 11 01. This was the only claim before the tribunal; the later claim made in June 2002 was not.
2. I held an oral hearing at which the claimant, who is a solicitor, was represented by Graham Platford of counsel and the council by Gary Lucie of counsel, instructed by Laura James, a solicitor employed by the council. I am most obliged to everyone for their help at the hearing, and to the two counsel for their further submissions in response to my post-hearing direction asking for comment on a recently decided case.

The issues

3. What I had to decide was whether the tribunal had gone wrong in law in dismissing all the council's grounds for rejecting the housing benefit claim in the circumstances described below. The grounds were s130 of the Social Security Contributions and Benefits Act 1992, and regulations 10(2)(c), 7(1)(e) and 7(1B), 7(1)(h) and 7(1)(l) of the Housing Benefit (General) Regulations 1987. Councils properly cite, cumulatively or in the alternative, every ground they rely on, so that a claimant may prepare to answer all of them, although only one need succeed.
4. Under SSCBA s130(1)(a), it was said there could be no entitlement to housing benefit because the claimant was not "liable to make payments in respect of a dwelling…which he occupies as his home". It was suggested that the Nay Housing Care Trust (named as landlord in the tenancy agreement under consideration and dated 31 10 01) had no title permitting it to grant rights of occupation, and would in any event not evict the claimant, as this would defeat the purpose of the trust. The whole arrangement was not intended to create legal relations. It was a family arrangement, not at arm's length. In any case, the claimant was (at the date of the original decision, though from 8 4 02 this changed) under a personal liability to the building society for mortgage repayments, and under s130(2)(b) such payments cannot be "payments in respect of a dwelling".
5. The second ground was that under regulation 10(2)(c) the claimant was not entitled to a rent allowance because his payments were "payments by an owner". "Owner" is defined in regulation 2(1) as

in relation to a dwelling in England and Wales, the person who, otherwise than as a mortgagee in possession, is for the time being entitled to dispose of the fee simple, whether or not with the consent of other joint owners.

The register (until 8 4 02) showed the claimant as proprietor with title absolute. The trust deed of 17 1 97 showed him as joint tenant in common with his mother as trustee for sale. Either way, he was an "owner".

6. Regulation 7(1) sets out a variety of situations in which a claimant is to be treated as not liable to make payments, even when he is. They have evolved over the years of administering the housing benefit scheme (there was a major reorganisation from 25 1 99) as types of situation where abuse of the scheme is possible, even though there may be no bad faith in any particular case. As has been frequently observed, they can be harsh in operation, and work rough justice. The burden of proof is on the council asserting that the regulation applies, although an evidential burden may in the course of the proceedings be placed on a claimant. The third ground was regulation 7(1)(h) (claimant previously owned the property). Reliance on it on the present claim seems to have been prompted by some misconception about the effect of a trust deed of 28 10 01. From 8 4 02, when the claimant transferred his interest to his mother and aunt, it was capable of having effect; but this transfer was not notified to the council until after the reconsideration decision had been made. The fourth ground of benefit refusal was regulation 7(1)(e). This precludes benefit where

subject to paragraph (1B), [the claimant's] liability under the agreement is to…a trustee of a trust of which

(i) he…

is…a trustee or a beneficiary

Paragraph (1B) provides that

Sub-paragraph[s] (e)…of paragraph (1) shall not apply in a case where the [claimant] satisfies the appropriate authority that the liability was not intended to be a means of taking advantage of the housing benefit scheme

The council's argument was that the claimant was indeed making payments to a trust of which he was a beneficiary, and he had failed to satisfy it that the liability was not intended to be a means of taking advantage of the housing benefit scheme.

7. The final ground was regulation 7(1)(l), which may be relied on if other grounds fail but

the appropriate authority is satisfied that the liability was created to take advantage of the housing benefit scheme…

The council's view was that the 31 10 01 tenancy agreement was so created.

8. I had the benefit of detailed written submissions from both sides, supplemented by oral argument at the hearing, and some later written submissions from both sides.

The factual background

9. The claimant suffers from cerebral palsy, and has been assessed as needing 24-hour care. This is provided by carers working in shifts, who are procured by a charity, Support and Housing Assistance for Disabled People (SHAD), which the claimant founded and of which he is still a trustee. As many if not all of these people are working temporarily in the UK, and also in view of the care which the claimant may need, it is convenient for them to "live in". That is what they do at 12 C Lane, where there are bedrooms which they or some of them occupy, their board is provided and they receive a modest weekly amount of pocket money. The claimant pays SHAD for this out of money he receives from the local authority's social services department and from the Independent Living Fund.
10. The claimant formerly lived, though working in London during the week, with Ms M, by whom he has two sons, G and T. He had a mortgage on the property where they lived and where, as I understand it, Ms M and the children continue to live. The relationship deteriorated. The claimant found a nearby house at 12 C Lane which initially was intended for use by his weekend carer. Two other people came to live in the house, and received housing benefit for their rent. The purchase price was something over £88,500. The claimant's mother provided £7809.57 towards the purchase price, the remainder being raised by the claimant alone by mortgage from the Cheltenham & Gloucester Building Society. The mother was said to be motivated by a concern for continuity of care for her son, and a wish to keep any property out of Ms M's hands.

The transactions of 17 1 97

11. The property was bought on 17 1 97, and on 26 2 97 was registered in the claimant's sole name with title absolute. No restriction, such as would give notice to a third party of the existence of any trust, was entered on the register, and it is clear from the letter from Mr Shaw, an Assistant Land Registrar, at pages 15A-B that no information was furnished at the time of registration which would have led to such an entry. I have not seen a copy of the transfer. The mortgage also was in the claimant's sole name.
12. But on the same date as the purchase, a trust deed was executed by the claimant and his mother. This is said to be supplemental to a transfer of even date "made between" the parties to the deed (the claimant and his mother) and recites that the property was thereby transferred in consideration of the sum referred to therein to "the trustees" (defined as the claimant, his mother and any other trustees he might in his absolute discretion appoint) to hold as trustees for sale. It was made plain by later events that there was no such transfer to the trustees, but only one by the vendors to the claimant.
13. The deed recited the mother's provision of £7809.57 towards the purchase price of 12 C Lane and the claimant's provision of the rest by way of mortgage. In consideration of both settling their shares, the claimant and his mother were "appointed as joint tenants in common and as trustees for sale" (clause 2). The trust thereby established was to be known as the Nay Housing Care Trust (Nay was the mother's maiden name). The "trust property" was 12 C Lane. The "trust fund" included the trust property and any other property for the time being and from time to time held under the trusts of the deed. The "trust purposes" were "to assist the Social Services Department or any successor body local to [the claimant] make provision for his physical care needs (other than residential or hospital care) by the recruitment, remuneration, sustenance, travelling costs, support, relief and accommodation of staff during the course of their duties whilst caring for [the claimant]".
14. I say straight away that this appears to me to be a trust of which the claimant is a beneficiary. It is far too imprecise to be enforceable by the Social Services Department. The claimant himself has said it is not a charitable trust, because under the trust purposes, he is the only person to benefit. Further, there is a gift over to the claimant's sons (clause 5(2)), and under clause 15 this will vest on the claimant's bankruptcy etc, even though his care needs will be continuing and Social Services will no doubt be under some obligation to meet them.
15. Clause 14 attempts to distance the claimant and his mother from any beneficial interest in the trust fund by providing that neither income nor capital may be applied or paid to or for the benefit of them or their spouses. But this does not square with the expressed trust purposes of helping Social Services to provide carers for the claimant. You cannot deprive other provisions in a document of their legal effect simply by saying you do not mean them to have that effect.
16. The claimant was intended to be closely concerned with the operation of the trust. He has experience of procuring carers from his work with SHAD, and clause 9(3) empowers the trustees to delegate functions. As provided in clause 7, a mandate authorising the trust bank to act on cheques signed by either the claimant or his mother was signed by them on 11 2 97. The "Treasurer's" account was in the claimant's name (page 21C). All this made excellent sense, as he is on the spot, while his mother lives in Norfolk. There was a professional charging clause which would have allowed the claimant as a solicitor to claim payment for his services (though he has said he never did so). He was given absolute discretion over the appointment and removal of trustees and a veto over any variation of the trusts. His mother was, however herself expressed to be bound into liability under the mortgage to which she was not a party (clause 17). That clause does not have the effect, as has been asserted, of making the trust fund liable for the repayments.
17. Despite all this elaboration, carried out on the day the claimant bought 12 C Lane, he had himself registered, as I have said, a month or so later as sole proprietor with title absolute and nothing on the register to prevent him selling the property the next day. Selling is not one of the events which would have activated the gift over to the sons. It is said the mother trusted her son, and no doubt she did, but in that case one wonders why the trust was set up at all.
18. I need not speculate why the claimant permitted the register to make a misrepresentation. It is said that his mother did not want to be troubled by dealings with the building society, but this does not sit with clause 17 purporting to make her liable to it. To keep the property out of Ms M's hands (or sphere of interest), it would surely have been better to make clear by a glance at the register that the property was subject to trusts and the claimant did not have an unincumbered title.
19. In the late summer of 1997 the claimant himself began to stay at 12 C Lane at weekends, and increasingly during the week for professional reasons. He paid rent as a practice expense. There was, as confirmed at the hearing before me, no written tenancy agreement (not quite the impression given by the written submissions). The claimant's solicitors' partnership was dissolved in or around March 2000. Rent was paid for a while longer. In May 2001 he went on to incapacity benefit, and from August 2001, income support. The possibility of claiming housing benefit was explored with the Social Services Department. He was advised to retire as trustee.

The transactions of October 2001 and April 2002

20. He took legal advice which led to the execution on 28 10 01 of a memorandum of trust which, pursuant to the powers to vary contained in the original deed, recited the claimant's consent to the variations, his retirement as trustee and his appointment of his aunt (with an address in Norwich) as trustee. The "trust purposes" definition was slightly altered to identify "the Social Services Department" as Hampshire Social Services Department, and to add that the carers could be paid or unpaid. The trust was placed under a liability to pay the mortgage instalments and the charging clause was removed. The transfer of even date referred to in the original deed was identified as between Hart and [the claimant], ie it was the transfer that vested the property in him. The non-profit-making nature of the trust during the claimant's life was asserted. (This was no doubt to confirm its character as a "voluntary organisation", significant for the claim for support charges made in the tenancy agreement a few days later.) The claimant's lack of any interest (presumably beneficial interest is meant) in the trust fund at any time, and his having always been a trustee, were recited; the same criticism as I made of the original clause 14 can be made – you cannot deprive other provisions of legal effect simply by saying so. The claimant's veto on variation was not altered, and nor was his absolute power to appoint and remove trustees.
21. On 30 10 01 the remaining tenant was evicted. On 31 10 01 a written tenancy agreement was made between the Nay Housing Care Trust and the claimant. This was for 12 months from 31 10 01 and monthly thereafter. It contained covenants and a re-entry clause for non-payment of rent. The schedule set out details of the monthly accommodation rent (£1104) and support charges (£1196) apart from personal care charges (which were separately funded). These charges were for "support, assistance, advice or counselling" for people with particular needs which were foreshadowed by the Local Government Act 2000 as coming at a future date within the "Supporting People" scheme, instead of being housing benefit service charges.
22. On the same date a housing benefit claim was completed, naming the legal owners of the property as the claimant's mother and aunt. This was received by the local authority on 2 11 01. Various queries were made about the support charges, and ultimately a search of the Land Register showed that the registered proprietor with title absolute was and always had been the claimant. He explained that there were "many practical reasons" (unspecified) for this, but mainly his mother trusted him. She could enforce her registration as a true legal owner. The Land Registry said he should transfer the property to her and his aunt. She "must" have an overriding interest. (To clear this point up, neither she nor the aunt had an overriding interest under s3(xvi) and s70 of the Land Registration Act 1925. They had "minor interests" under s3(xv), which required express protection on the register.)
23. On 20 2 02 the housing benefit claim was turned down. There was further correspondence, but reconsideration of the decision on 15 4 02 produced no change. The claimant appealed.
24. In the meantime, on 8 4 02 the Land Registry registered a transfer (not for value) from the claimant to his mother and aunt as trustees, with a trust restriction.

The proceedings before the tribunal

25. For the tribunal hearing, the claimant supplied a skeleton argument and witness statement, and was represented by Mr Platford. The council, most tiresomely, did not attend. The tribunal decided, given the whole structure and history of the arrangement, that it was intended to and did give rise to legal relations and a liability to make payments. It accepted that despite the state of the register the claimant held as trustee and could not have sold without his mother's consent, and was not an "owner" because he lacked the necessary beneficial interest. Further, there was a resulting trust in favour of the mother because of her contribution to the purchase price. It rejected the regulation 7(1)(h) ground, for the same reasons. It accepted that the claimant was a trustee (it did not consider whether he was a beneficiary), but held that the arrangements had not been intended to take advantage of the housing benefit scheme, for the reasons to be given in relation to regulation 7(1)(l). As to that, the tribunal held that the test was whether the dominant purpose of the arrangement was to take advantage of the scheme. Here it was not. The claimant was severely disabled, his care needs (and the trust) had pre-existed the October 2001 arrangements, and he had been guided by the Social Services Department in setting it up.

The proceedings before me

26. My jurisdiction is in error of law only: Social Security Act 1998, s14. Tribunals are the judges of fact, and unless their findings are unsupported by evidence, or ignore relevant evidence, or take into account wholly irrelevant matters, so as to amount to error of law, I cannot intervene on matters of fact. However, since I am setting the tribunal's decision aside and giving my own, I do have power under s14(8)(a)(ii), if I need it, to make fresh or further findings of fact.
27. It may clear my mind, and everyone else's, if I make some initial observations. The Nay Housing Care Trust as set up in 1997 was a device of some sort. The reasons given in the papers could have been secured by other means. It seems likely the building society was not informed of the true position until very much later, and certainly there was nothing in public documents to indicate that the claimant was other than the owner of the property. However, people are entitled to arrange their affairs as seems best to them, the only caveat being that they must live with the results. There is no evidence to show that any possible future entitlement to housing benefit for the claimant was in anyone's mind. At that stage he was still in practice and expecting so to continue.
28. There was no written tenancy agreement in August 1997 and I was offered no evidence of the contents of any oral agreement. The claimant simply moved in to part of the property for part of the time, and paid rent from his practice account into the trust account which was also under his control and into which rent from the other tenants or tenant went. Out of this it seems the mortgage repayments were made.
29. By summer 2001 things had changed. The claimant had given up practice and had begun to claim benefit. He was waiting to take possession of the whole of the property. His care funding from Social Services and the Independent Living Fund did not meet all "support charges" such as appear in the schedule to the tenancy agreement of 31 10 01. These were previously treated as a "service charge" element of housing benefit, but would from April 2003 be met to housing benefit claimants from a different budget, "Supporting People". The literature I have seen exhorts people to look at their support funding and seek to increase it where necessary, under transitional arrangements.
30. The claimant took advice and attempted to distance himself from the trust by retiring as a trustee and appointing his aunt in his place. He remained the registered proprietor of the house, and was still the beneficiary, subject to the trust for his mother's contribution and the gift over to his sons. And he kept his power to veto any variations and his absolute discretion over the appointment (or removal) of trustees, including himself.
31. The 31 10 01 tenancy agreement was drafted, at least as to the "care" elements, with the help of Social Services. If they told the claimant, knowing the full situation, that he would be safe to claim housing benefit, he has a right to feel aggrieved. But they are a department of the County Council. The housing authority was the district council and the housing benefit decision was for them, not the county social services, to make. The claimant did take counsel's advice a few months later, and was told he was safe on the housing benefit rules. But that is neither here nor there, if that advice was wrong. Ultimately the claimant did divest himself of the title in favour of his mother and aunt, with the full concurrence of the building society, though the trust provisions for veto and trustees remained unchanged. But at the date of the original decision and, so far as the council was aware, the date of the reconsideration decision, the situation was as I have just set it out.
32. I hope I will be forgiven for not reiterating at length the vigorous submissions on either side. They contain certain inaccuracies, and since the claimant was, we are told, paying rent from August 1997 until summer 2001, the arguments about a trustee's duty to account in equity during this period are unnecessary. In the absence of a written tenancy agreement, or any evidence about the terms of an oral agreement, the "tenant in equity" submissions are equally irrelevant.

No liability to make payments in respect of 12 C Lane

33. I turn to this first. The tribunal found that the tenancy agreement of 31 10 01 was intended to create legal relations between the claimant and the Nay Housing Care Trust. It looked at the history, including the earlier payment of rent into a separate trust account by the claimant and the other tenants and payment of mortgage instalments out of that account. It found there was a rent liability (or accountability as a trustee in equity) during the period 1997-2001, and it accepted the claimant's evidence at the hearing that the trustees would sue him for rent arrears and evict him so that new tenants could move in and their rents would pay the mortgage. The claimant would have to be rehoused by the council.
34. I remind myself that I should not interfere with a tribunal's findings of fact unless they are unsupported by evidence, or miss out relevant matters or take into account irrelevant ones. I also remind myself that the consensus of legal opinion is now that the existence of a liability to make payments is a question of fact, not law (CH/1171/02). The tribunal did its best with this highly complicated case, and because of the council's tiresomeness it did not have arguments to counter Mr Platford's. It was able to see and hear the claimant and form its own views on his reliability. If it chose to accept his evidence that his mother and aunt would evict him, however improbable this may seem to me, I would not on this ground overturn its findings on liability to make the payments specified in the tenancy agreement. The claimant had been paying rent for periods before the 2001 arrangements. However, I do not think I can overlook that until 8 4 02 the claimant remained personally liable under the mortgage to make the repayments. This is irrespective of any arguments about legal and equitable interests and Rye v Rye [1962] AC 496. There was under the 1997 trust deed no obligation on the trust to make repayments, there was indeed an attempt to make the claimant's mother personally liable along with him. He may have channelled, and caused the tenants to channel, their payments into the trust account off which the repayments were direct-debited, but this account was in practice within his sole control because of the form of the bank mandate, and was run from his office. Even when the 2001 trust deed imposed a repayment liability on the trustees, the conveyancing was not completed until the following April. I conclude that the interposition of a trust between the claimant and the building society did not alter the fact that the "accommodation rent" element of the housing benefit applied for on 2 11 01 would have constituted "payments in respect of a dwelling" which were "mortgage payments". And the support charges could not be met outside a housing benefit award.

Ownership

35. I turn to the ground under regulation 10(2)(c) and regulation 2(1): that housing benefit could not be paid to the claimant because he was the "owner" of the property he occupied as his home. The council's argument was that as registered proprietor the claimant was, under s20(1) of the Land Registration Act, in the words of regulation 2(1), "entitled to dispose of the fee simple, whether or not with the consent of other joint owners". Any argument between the claimant and the trustees was irrelevant to the express power to dispose: s20(1) envisaged a registered proprietor selling in breach of trust and the holders of minor interests had them overridden, if they had not been protected as provided.
36. The claimant argued that "entitled to dispose of the fee simple" had to mean entitled in equity as well as in law. In equity the 2001 trust deed operated as an agreement to vest the legal title in the trustees, and equity regards that which ought to be done (ie of which specific performance might be decreed) as done: Walsh v Lonsdale (1882) 21 Ch D 9. The claimant was by virtue of the land register "able to give a good receipt for the purchase money for the fee simple", but he was not "entitled to dispose" of it without the trustees' consent. A distinction was sought to be drawn between "joint owners" (whose consent expressly does not affect entitlement to dispose of the fee simple) and trustees.
37. I am not persuaded. The land registration system is designed to keep Walsh v Lonsdale matters off the title if the parties choose not to use the available protection. Breaches of trust must be dealt with by other means. The register is the public face of property ownership. It was not rectified to cover the period in question: the 8 4 02 transfer, and the trust restriction of the same date, spoke only from that date (page 24E). Further, at the hearing we were shown the case of Fairbank v Lambeth Magistrates Court [2002]EWHC 785 (Admin). Here, the Divisional Court upheld the conviction of a person for knowingly failing to disclose on a housing benefit claim that he owned a property of which he was registered proprietor. He argued that in fact he held only as trustee, but the court held the District Judge was not wrong in law in finding that he was the "owner". The basic finding was that on the facts anyone with ordinary common sense would have recognised himself as an owner. But the court went on to say that despite the Law of Property Act requirement for a trustee to consult beneficiaries before selling, the defendant would have come within the regulation 2(1) definition because he was for the time being entitled to dispose of the fee simple. The case of R v Sedgemoor DC HBRB ex parte Weaden [1986] 84 LGR 850 was different because there were there two other trustees for sale on the register, and at that time the regulations did not discount the need for consent of a joint owner. Mr Platford suggested Fairbank was quite different from the present case, where we had a detailed document requiring consultation with a fellow trustee. We do indeed have two such documents, but apart from a bank mandate which permitted the claimant in effect to have sole charge of the trust bank account, we have no evidence of any other consultations taking place nor, on the facts, any need for there to have been any.
38. After the oral hearing my colleague Mr Commissioner Mesher decided CH/1278/02, which seemed in point. It concerned a claimant who was denied housing benefit under regulation 7(1)(h) because she had within the past five years owned the dwelling in respect of which her liability to pay rent arose. It is, of course, the same definition of "owner" that the commissioner was considering. The claimant had been a joint administrator with one of her sisters of her mother's estate, of which the beneficiaries were the claimant, that sister and another one. The property, which formed part of the estate, was sold to the third sister, and in due course the claimant became that sister's tenant. The commissioner held that regulation 2(1) caught the claimant as a former legal owner (joint administrator) of the property. "Fee simple" denoted the legal estate, whether or not the term might cover any beneficial interests. Where there is a trust of freehold land, the trustees hold the fee simple for the beneficiaries. Blackburne J in R v Sheffield HBRB ex parte Smith (1994) 28 Housing Law Reports 36 remarked that the expression "entitled to dispose of the fee simple" was not confined (my emphasis) to the legal estate owners, but would not extend to a beneficiary entitled only to share in the ultimate net proceeds of the sale.
39. That seemed fairly conclusive against the present claimant, but I thought it fair to circulate it and invite any further comment. Mr Platford urged that Blackburne J's "not confined to" legal ownership meant that beneficial ownership alone could in certain circumstances be enough, ie the judge meant that legal owners would not always be entitled to sell, rather than that they would not always be the only people who could do so. He suggested that "ownership" signified a right to occupy. He said Mr Commissioner Mesher clearly relied on his claimant having been both legally and beneficially entitled within the previous five years.
40. Mr Lucie said Mr Platford had misrepresented the council's position in a particular way (I agree, but it does not matter), and that Mr Commissioner Mesher had expressly acknowledged that the effect of the regulations could be "capricious or harsh".
41. I reject Mr Platford's arguments which, with respect, seek to impose on the observations of both Blackburne J and Mr Commissioner Mesher a weight they cannot bear. I find myself in agreement with the council, for the reasons set out in CH/1278/02. This is a point of law, over which the tribunal was simply wrong. It accepted the arguments that it is beneficial ownership that counts, and that the need for the trustees' consent to sell would preclude entitlement to dispose, and it is clear from the cases cited that that was wrong.

Regulation 7(1)(h)

42. Once the claimant had transferred 12 C Lane to his mother and aunt, he ceased to be the owner. But he then became a person who was disqualified from housing benefit because he

previously owned…the dwelling in respect of which the liability arises and less than five years have elapsed since he…ceased to own the property,

unless he satisfied the council that

he…could not have continued to occupy that dwelling without relinquishing ownership.

The tribunal's finding that the claimant was never the owner of 12 C Lane meant that it also dismissed this ground of rejection without considering the proviso. But my finding on ownership means that the proviso would have to be considered. The change of circumstances from 8 4 02 could have been a ground for the council superseding the 20 2 02 refusal of benefit, but it never considered this as part of its reconsideration because it did not hear of the change until after the latter decision had been made. So an appeal on the point is not before me. The claimant would no doubt argue that he had to dispose of the freehold of 12 C Lane in order to continue to live there because he hoped it would increase his chances of getting the housing benefit he needed to pay the rent to the trust which was now liable for the mortgage. But I think this is an argument he will have to make to the council on his next claim. He was warned on 18 4 02 that he might wish to make a fresh claim, even if he wished to appeal the existing decision.

Regulation 7(1)(e)

43. The tribunal got this wrong too. It read (e) as if it made no mention of payment to "a beneficiary" under a trust. It does, and the claimant remained one, although by the date of the housing benefit claim he was no longer (contrary to the tribunal's finding) a trustee. I note Mr Platford's argument that if a trustee is a legal owner the situation is covered by regulation 10(2) without need for 7(1)(e). But quite apart from the "belt and braces" aspect of regulation 7, (1)(e) goes wider so as to catch beneficiaries, other people (partners, ex-partners, close relatives living with a claimant), and also companies. This is doubtless because the interposition of a trust or a company is capable of being a device to secure housing benefit, and therefore requires a claimant to show under (1B) that the trust or company was not a device intended to take advantage of the scheme. Could the present claimant rely on this let-out?

Regulation 7(1B) and (1)(l)

44. The tribunal did overlook the differing burden of proof between regulation 7(1B) and 7(1)(l), the former requiring the claimant to satisfy the council that "the liability was not intended to be a means of taking advantage of the housing benefit scheme", the latter placing on the council the burden of showing that the liability "was created to take advantage of the housing benefit scheme". But it is not impossible that a tribunal could regard the same set of facts as satisfying or failing to satisfy both burdens of proof, and unless the wrong factors have been relied on, I would not be able to intervene. "Take advantage" in the context of regulation 7(1)(l) was explained by Sedley J in R v Solihull MBC HBRB (1993) 26 Housing Law Reports 370 as intended "to shut out certain arrangements which, in the Secretary of State's view, would amount to an abuse of the system". He added

I believe that to be a correct approach, provided that abuse is not equated with bad faith on the part of the applicant. Bad faith would, of course, be persuasive evidence of abuse, but the appropriate Authority might in some cases properly conclude that there was a breach of regulation 7[(1)(l)] without it. In other words, the use of the words "take advantage" shows that at least in the eye of the beholder there has to be conduct which appears to some extent improper.

I confess to finding this formulation not noticeably helpful, having difficulty in distinguishing "bad faith" from "conduct which appears" in the eye of the beholder (presumably me) "to some extent improper". But it received Court of Appeal endorsement in R v Stratford-upon-Avon DC HBRB v White (1998) 31 Housing Law Reports 126.

45. What we are looking at here are the arrangements made in October 2001 - the claimant's retirement as trustee of the trust, albeit that the trust already existed, his appointment of his aunt as replacement trustee, and the signing of the tenancy agreement. Advice was taken on alterations to be made to the existing trust which it was hoped would distance the claimant from it. Advice was taken on the content of the support charges to be introduced into the tenancy agreement to establish a transitional claim in the hope of being well-placed for the introduction of "Supporting People". The housing benefit claim was signed on the same day as the tenancy agreement.
46. The tribunal correctly approached its decision by recording that there is no initial presumption of abuse, even taking account of the close relationship between the parties. What the council had to show was that the dominant purpose of the 2001 arrangements was to attract housing benefit. The factors the tribunal relied on in concluding that regulation 7(1)(l) was not made out (and regulation 7(1B) was satisfied) were (a) that the claimant is severely handicapped, (b) that his care needs (and his occupation of part of 12 C Lane) had pre-existed the 2001 arrangements, (c) that the Nay Housing Care Trust had also pre-existed those arrangements and its purposes benefit the council in saving it from the expense of housing and caring for the claimant, and (d) that the tenancy agreement had been prepared on the council's (Social Services Department's) advice.
47. I conclude that none of these was an illegitimate factor to take into account. Of course, as pointed out above, the councils were not the same, and (d) does not get the claimant out of the legal ambit of some of the regulations, but it can be weighed in deciding on his motivation. He is severely handicapped, and his care needs and part-occupation of 12 C Lane did pre-exist October 2001. So did the Nay Housing Care Trust. That it was a device of some kind when set up did not necessarily make it "to some extent improper" to try and utilise it, suitably adapted, for housing benefit purposes. Undoubtedly the 2001 arrangements were made with the view and hope of getting housing benefit, but this does not axiomatically mean that they were "intended" or "created" to "take advantage" of it. The tribunal's conclusions, under both 7(1)(l) and 7(1B) with their differing burdens of proof, were ones which were open to it on its findings of fact.
48. Overall, however, the council's appeal succeeds.

(signed on original) Christine Fellner

Commissioner

29 October 2003