UK Social Security and Child Support Commissioners' Decisions

[2004] UKSSCSC CDLA_1350_2004 (17 December 2004)

DECISION OF THE SOCIAL SECURITY COMMISSIONER

1. The Royal Borough of Kensington and Chelsea's appeal to the Commissioner is allowed. The decision of the Fox Court appeal tribunal dated 9 December 2003 is erroneous in point of law, for the reason given below, and I set it aside. It is expedient for me to give the decision that the appeal tribunal should have given on its findings of fact (Child Support, Pensions and Social Security Act 2000, Schedule 7, paragraph 8(5)(a)). My decision is that the claimant's appeal against the decision notified in the letter dated 13 February 2003 is disallowed, with the result that the overpayment of housing benefit and excess council tax identified in that letter (amounting to £1,295.14) is recoverable from the claimant under regulation 99 of the Housing Benefit (General) Regulations 1987 and regulation 84 of the Council Tax Benefit (General) Regulations 1992.
2. This is a relatively straightforward overpayment recoverability case. It should never have reached the level of an appeal to the Commissioner. The appeal tribunal's decision was based on a fundamental error of law. The local authority's application to the chairman for leave to appeal was received on 26 March 2004. Quite apart from the fact that the chairman's refusal of leave was not notified until 3 August 2004 (a delay about which the local authority has understandably complained), I cannot understand why, in the face of the grounds put forward by the local authority, the appeal tribunal's decision was not set aside under section 13(2) of the Social Security Act 1998, let alone why leave to appeal was refused. As the chairman saw fit to criticise the local authority's application of the legislation in strong terms, which were not in fact justified, I feel no compunction in expressing myself as above. The local authority now appeals with my leave granted on 20 September 2004.
3. The claimant made a renewal claim for housing benefit (HB) and council tax benefit (CTB) in June 2002. On the form signed on 29 June 2002 she gave some details of her earnings and in the section on benefits received entered only child benefit, which was correct at the time. A letter from the local authority dated 12 August 2002 asked for further evidence of her earnings and also asked whether she had applied for or been awarded working families' tax credit (WFTC). I do not know what reply was made to that letter, but a letter dated 23 August 2002 notified the claimant of an award of HB and CTB for the period from 8 July 2002 to 6 January 2003. Although the letter said that there had been a reassessment because of a change in circumstances or in the benefit schemes, it seems to have been the decision on the claim that was notified. The details of the assessment showed that the only income taken into account was the claimant's earnings and the child benefit. A letter dated 14 October 2002 notified a reassessment for the period from 14 October 2002 to 6 January 2003 (apparently because of an increase in the personal allowance specified for children under 16). The letters gave instructions about informing the local authority of changes in circumstances, including changes in income.
4. On some date in September 2002, the claimant was notified by the Inland Revenue of an award of WFTC starting on 9 July 2002 at the rate of £61.93 a week. The copy of the award letter in the papers has the lefthand edge cut off, so that the precise date is missing. The claimant did not inform the local authority of the award or the receipt of arrears or of continuing payments by her employer. It has been accepted by the local authority that the claimant genuinely did not realise the need to do so.
5. On 10 January 2003, the claimant submitted a renewal claim form on which she accurately recorded her receipt of child benefit and of WFTC. The WFTC award letter was seen at the benefits section counter and copied. The renewal claim was assessed on that basis. A letter dated 13 February 2003 contained the following:

"An overpayment of benefits has occurred because your claim has been reassessed to take into account that your entitlement to Working Families Tax Credit began on the 9th July 2002.

Because of this reassessment, you have been overpaid £1295.14."

There was a breakdown of the HB and CTB overpayments for the period from 15 July 2002 to 6 January 2003 at the end of the letter, which also said that the amounts would be recovered, but that if the claimant thought that she had not been overpaid, that the amount was wrong or that the overpayment was not recoverable, she could appeal.

6. The claimant did appeal. The letter mainly dealt with her financial position and the difficulty she would have in repaying the overpayments, but also said that she did not realise that she had to inform the local authority of receipt of WFTC, which she thought was designed to provide extra help, and that she would not have claimed WFTC if she had realised how little better off overall it would leave her. The local authority wrote a letter of explanation dated 12 March 2003, which was then relied on in the submission to the appeal tribunal as setting out the local authority's case. The letter referred to regulation 99 of the Housing Benefit (General) Regulations 1987 and the equivalent regulation for CTB. It was said that all overpayments were legally recoverable, except for certain overpayments caused by official error.
7. The claimant opted for an oral hearing, but did not attend the hearing on 9 December 2003 (listing had been delayed because the case was wrongly thought to be affected by a pending test case on recovery of overpayments). A representative of the local authority did attend, who was unable to assist the appeal tribunal in establishing the exact date on which the claimant learned of the award of WFTC. The decision was to allow the appeal and to revise the local authority's decision. The decision notice continued:

"It is elementary law that in any overpayment allegation the burden of proof is on the party alleging to prove on the balance of probability that the appellant knew the material fact and failed to disclose same.

In this appeal the Local Authority has contemptuously disregarded this elementary principle and boldly accept that they are assisted by Regulation 24. In my view they have failed at this initial stage and accordingly the matter is referred to the Local Authority to establish what date [the claimant] actually knew the material fact and to adjust the amount of the recoverable overpayment from that date to a date in September 2002."

8. The statement of reasons, signed on 28 February 2004, maintained the position that the claimant could not have failed to disclose anything until she knew that she had been awarded WFTC and thus had something to disclose. It is tolerably clear that the intention was to substitute a decision that the part of the overpayment incurred from the date of that knowledge was recoverable from the claimant, but to leave it to the local authority to establish the precise date.
9. On the appeal to the Commissioner, the claimant (after the end of the time allowed in my directions of 20 September 2004) had no comments to make on the local authority's case as set out in the grounds attached to its form OSSC2.
10. It is absolutely plain that the appeal tribunal's decision was erroneous in point of law, by asking itself the wrong legal questions. It adopted the tests of failure to disclose and misrepresentation of material fact that apply to social security cases under section 71 of the Social Security Administration Act 1992. Those tests are not relevant in HB and CTB cases in relation to recoverability of overpayments against a claimant. As the local authority has rightly maintained throughout, the general rule in regulation 99(1) of the HB Regulations and in regulation 84 of the CTB Regulations is that all overpayments are recoverable, except when caused by official error. In the present case, there is no question of any error by the local authority or by any other body within the definition of "official error". The overpayment for the period in question was caused simply because the local authority did not know of the claimant's receipt of WFTC. It appears that payments of HB were made direct to the claimant's landlord, but there is nothing in the HB Regulations (which I do not need to set out here) to prevent recovery from the claimant or to impose any additional conditions on recoverability of the HB overpayment. The question of when the claimant knew of the award of WFTC was therefore irrelevant to whether or not the overpayment of HB and excess CTB was recoverable from her.
11. For that reason, I set aside the appeal tribunal's decision as erroneous in point of law. When I granted leave to appeal, I suggested that accepting the local authority's argument would entail referring the case to another appeal tribunal for rehearing. However, on reflection and as the claimant has added nothing to the arguments she put forward when appealing against the local authority's original overpayment decision, I have concluded that it is unnecessary to impose that further delay. As there is no real dispute of fact or evidence at all, it is better for me to substitute the decision that the appeal tribunal should have given.
12. That decision is to disallow the claimant's appeal against the local authority's overpayment decision. She did not really challenge the existence of an overpayment or its amount. The local authority's letter of 13 February 2003 referred to a reassessment of benefit for the period from 15 July 2002 to 6 January 2003, but no further evidence of decisions carrying out that reassessment is in the papers. Sometimes it is necessary to establish carefully that such decisions have properly been given, because only by such decisions can it be established that payments in excess of entitlement have been made or allowed. But in the present case it is plain that there was a ground to supersede the awarding decision notified in the letter of 23 August 2002, from the date on which the entitlement to WFTC started, on the ground of an award of a "relevant benefit" (which includes WFTC) subsequent to the making of an award of HB or CTB (Housing Benefit and Council Tax Benefit (Decisions and Appeals) Regulations 2001, regulations 7(2)(i) and 8(14)). There was also a ground to revise, with effect from 14 October 2002, the decision notified in the letter of 14 October 2002, on the ground that it was given in ignorance of a material fact (the receipt of WFTC) and was for that reason more advantageous to the claimant than it should have been (Decisions and Appeals Regulations, regulation 4(2)(b) and paragraph 3(3) of Schedule 7 to the 2000 Act). Thus, the claimant's entitlement to HB and CTB for the whole period from 15 July 2002 to 6 January 2003 could properly be altered in the way that the local authority did. I conclude that payments and allowances in excess of entitlement were made of the amounts specified by the local authority in its letter of 13 February 2003.
13. I also conclude that the resulting overpayment of HB and excess CTB is recoverable from the claimant. She has put forward no arguments or evidence that suggest even a possibility of the existence of an official error. Nor can I see anything in the circumstances that does so. Given that, I see no point in ordering any further hearing by another appeal tribunal. For the reasons given above, the effect of the relevant regulations is that the HB overpayment and the excess CTB is recoverable from the claimant, as the exception for official error cannot apply.
14. My decision giving effect to that conclusion is set out in paragraph 1 above.

(Signed) J Mesher

Commissioner

Date: 17 December 2004