UK Social Security and Child Support Commissioners' Decisions

 


[2004] UKSSCSC CH_4918_2003 (10 June 2004)

CH/4918/2003

DECISION OF THE SOCIAL SECURITY COMMISSIONER

1. The landlord's appeal to the Commissioner is disallowed. The decision of the Oxford appeal tribunal dated 23 September 2003 is not erroneous in point of law, for the reasons given below, and therefore stands.
2. This is an overpayment case where the issue is whether an overpayment accepted as caused by official error is not recoverable because the landlord, to whom direct payment of housing benefit was made, could not reasonably have been expected to realise that there was an overpayment.
3. The claimant became a tenant of a flat in sheltered housing from 2 April 2001. The landlord was Oxford Citizens Housing Association, a registered social landlord. The tenancy agreement specified separate amounts of net rent (£57.71), service charge (£14.09) and heating/other charge (£8.18) going towards the total weekly rent payable of £79.98. There is no dispute that the third element was charged for heating. The claimant provided a copy of the tenancy agreement with her claim for housing benefit. On 18 May 2001 the local authority, Oxford City Council, made a decision awarding housing benefit on the basis of the total weekly rent being eligible, so that £79.98 per week was awarded. The claimant had requested that direct payment be made to the landlord. The local authority's letter of 18 May 2001 to the landlord said that a cheque for £639.94 for the period from 2 April 2001 to 28 May 2001 would be sent and that ongoing payments would be of £319.92 four-weekly. A statement of conditions and rights was apparently enclosed, but a copy is not in the papers. On a renewal claim a further award of £319.92 four-weekly was made on 14 May 2002.
4. After a further renewal claim was made, the local authority realised that the earlier awards should not have included the £8.18 heating charge as part of the eligible rent for housing benefit. There is no dispute that that is correct. The local authority revised its earlier decisions, presumably for official error, to decisions that the claimant was entitled to only £71.80 per week. An overpayment of £777.10 was calculated. The letter dated 18 February 2003 to the claimant, informing her of the revision and the reason for it, stated that that overpayment was recoverable, but an invoice would be sent to the landlord for payment. The letter dated 18 February 2003 to the landlord did enclose an invoice.
5. The claimant appealed against the decision. She was represented by Oxfordshire Welfare Rights. The local authority's written submission accepted that the overpayment had been solely caused by official error on its part and that the claimant herself could not reasonably have been expected to realise that an overpayment was being made. But it did not accept that the landlord could not reasonably have been expected to realise that it had received overpayments. It was submitted that the overpayment was recoverable in accordance with regulation 99(1) and (2) of the Housing Benefit (General) Regulations 1987:

"(1) Any overpayment, except one to which paragraph (2) applies, shall be recoverable.

(2) Subject to paragraph (4), this paragraph applies to an overpayment caused by an official error where the claimant or a person acting on his behalf or any other person to whom the payment is made could not, at the time of receipt of the payment, or of any notice relating to that payment, reasonably have been expected to realise that it was an overpayment."

Paragraph (4) is not relevant in the present case. For completeness, I add that regulation 101(1) is not applicable in the present case either.

6. The claimant did not attend the hearing on 23 September 2003, but was represented by Mr Turville of Oxfordshire Welfare Rights. Representatives of the landlord also attended. The argument for the claimant, very briefly, was that the landlord as a very large social landlord could not reasonably be expected to check the accuracy of every letter from the local authority giving notice of an award of housing benefit or of some change in entitlement. The main concern of housing officers was reasonably with cases in which rent arrears built up. There were different sorts of service charges in different cases and sometimes all payments were eligible for housing benefit purposes.
7. The appeal tribunal rejected that case and disallowed the appeal. The chairman made these findings of fact about the payment system:

"OCHA is a large social landlord with well in excess of 1000 tenants. The overwhelming majority of those tenants are in receipt of HB. Almost all of them have their rent paid direct to OCHA to whom payments are made four weeks in arrears in the form of a single cheque which arrives with a schedule that sets out the names of each tenant included, their reference number and the amount included in respect of that individual. The cheque is received at the Finance Department of OCHA and staff there allocate the relevant amount to each individual account. That is not the only communication between the local authority and OCHA because at any time what are known as yellow sheets arrive with information about individual tenants. Examples in my papers were at pages [18, 20 and 22]. These letters inform OCHA of changes in the assessment for that tenant. Most are retained and files by the Customer Services Department which receives them but if there is any query, typically a change in amount or cancellation, the letter is referred to a Housing Officer who is expected to take some action. Housing Officers are primarily interested in tenants in arrears: they know the importance of tenants keeping up to date with their payments and the concomitant problems of debt planning or possession if arrears get out of hand. They provide support to tenants if they can but the tenancy agreement - at pages 1 - 37 - is very clear that the responsibility for paying rent is the tenant's."

8. The appeal tribunal applied to the landlord the test laid down by Mr Commissioner Jacobs in decision CH/2554/2002 in relation to claimants, ie what could reasonably be expected of the claimant, depending on what could reasonably be deduced from the information available to the claimant. It concluded that it would have been the work of a moment to divide the sum notified as payable by four, compare it to the rent due, realise the error that a heating charge had been treated as part of the eligible rent and notify the local authority. The appeal tribunal also said that the claimant could have made enquiries to the local authority or the landlord and might reasonably have been curious that her heating was being paid by the local authority as well as her rent. However, I do not take that as rejecting the local authority's concession that the claimant could not reasonably have been expected to realise that there had been an overpayment. It must be borne in mind that regulation 99(2) is only taken out of operation if a person could reasonably have been expected to realise that there "was" an overpayment, not that there "might be" an overpayment (CH/2554/2002, paragraph 9).
9. The landlord now appeals with the leave of the chairman of the appeal tribunal. Grounds were put forward by Mr Turville, now representing the landlord. Very briefly, they were (i) that the burden was on the local authority to show that the landlord ought to have realised that there was an overpayment in the particular case and it was not enough to rely on what might be expected generally of a particular landlord; (ii) that the appeal tribunal should have made findings not about general systems of receipt of payments and notifications, but about what happened in this particular case; and (iii) that the appeal tribunal did not explain why on an application by analogy of CH/2554/2002 it was reasonable to expect the landlord to check the calculations of the housing benefit awarded in this particular case. There was also a suggestion that the appeal tribunal had erred in law in concluding that the overpayment was recoverable from both the claimant and the landlord.
10. I gave leave to the Secretary of State for Work and Pensions to become a respondent to the appeal in addition to the local authority and the claimant and the submission on his behalf was the first in time to be made. The submission dated 18 February 2004 opposed the appeal. It was submitted that the only test was reasonableness, in the case of the particular landlord concerned, and that the appeal tribunal had made sufficient findings about the particular case by its conclusion that, if the award letter had been scrutinised, the mistake would have been spotted without much difficulty.
11. The local authority's submission dated 5 March 2004 also did not support the appeal. It was submitted that the appeal tribunal had applied the right overall test, using the guidance of CH/2554/2002. On the burden of proof it was submitted that, following paragraph 51 of Tribunal of Commissioners' decision CH/5216/2001 and CH/4065/2001, it was for the landlord to show that it could not reasonably have been expected to realise that there was an overpayment and that the appeal tribunal had made no error of law in considering the evidential burden and had made enough findings about what could reasonably have been expected. There were sufficient findings and sufficient explanation of the basis on which the conclusion about reasonableness was based. Finally, it was submitted that the appeal tribunal had not made any decision about from whom the overpayment should be recovered. I agree with that final submission and will not return to it again.
12. In reply, Mr Turville submitted on 15 March 2004 that it would have required significant time and resources for the landlord to check every notification of housing benefit entitlement for every one of its tenants and, even if it did, the appeal tribunal had not adequately explained why it would have realised that there was an overpayment. As in addition the statutory responsibility for administering housing benefit was placed on local authorities, it was not reasonable to expect social landlords to conduct a detailed double check of decisions or payments. He questioned what test was to be applied to a landlord by analogy with CH/2554/2002. He submitted that paragraph 51 of CH/5216/2001 was not relevant as it was to do with the burden of proof where an appeal is made on judicial review grounds and that CH/4065/2001 was not relevant as the directions referred to the specific circumstances of that case. Finally, he suggested that, since a landlord who had received direct payments of housing benefit and had to repay an overpayment could recoup it from the tenant through the rent account, the effect of the submissions for the local authority and the Secretary of State was that a local authority could place the financial burden of its own maladministration on the tenant.
13. The claimant has made comments, in a letter dated 20 December 2003 forwarded from the Appeals Service and in observations received on 22 April 2004. These were received outside the proper order, but I take them into account. She makes the points that she was completely unaware of there being any question over the total amount of rent, including the heating charge, not being met by housing benefit and that the landlord should have noticed the discrepancy and taken action to prevent the situation arising where she had to pay off arrears after the overpayment had been repaid. The fact that, as suggested by Mr Turville, a claimant who could not reasonably be expected to realise that an overpayment was being made to her landlord could end up meeting the cost of repaying the overpayment has caused me much thought than any of the strictly legal points raised in this case.
14. I reject the submissions made for the landlord and conclude that there was no error of law in the appeal tribunal's decision. I look first at the three specific grounds mentioned in paragraph 10 above.
15. On the first of those grounds, the appeal tribunal did not apply a legally wrong burden of proof. I do not need to enter into any deep discussion of legal and evidential burdens. The structure of regulation 99 of the Housing Benefit Regulations is that all overpayments are recoverable under paragraph (1) except where paragraph (2) applies. Paragraph (2) can only apply if it is affirmatively found that the relevant persons (see my paragraph 19 below) could not reasonably have been expected to have realised that an overpayment was being made. An appeal tribunal must ask itself the question that way round, as regulation 99(2) is an exception to the general rule on recoverability in regulation 99(1). I reject the submission that there is a legal burden on a local authority before an appeal tribunal to show that a relevant person could reasonably have been expected to have realised that there was an overpayment. That does not exclude there being circumstances in which a local authority is bound in practice to lose on that issue unless it comes up with further evidence or argument.
16. On the second ground, I am satisfied that the appeal tribunal did make sufficient findings of fact given the nature of the question to be asked. It was known what had actually happened in the sense of what notifications were sent to the landlord in the claimant's case. Then the question was whether, in the light of all the evidence and arguments put forward, the landlord could not reasonably have been expected to realise that there was an overpayment. That was an question of judgment.
17. On the third ground, I am satisfied first that the appeal tribunal did not err in law in asking itself, by analogy with CH/4554/2002, what could reasonably be expected of the particular landlord in question. Nor did it err by failing to give adequate reasons for its conclusion against the landlord. There are limits to how far an appeal tribunal can explain a judgment in terms of what a person could or could not reasonably have been expected to realise. Here the appeal tribunal's conclusion was not outside the area of reasonable judgment allowed to it and there was an adequate explanation of why it reached that conclusion. It was a matter for the judgment of the appeal tribunal whether it was reasonable to expect the landlord to check the accuracy of notifications and whether it would have the knowledge to realise that the heating charge should not have been included in the eligible rent. The matters mentioned in Mr Turville's submission of 15 March 2004 would be relevant to the exercise of judgment, but there is in my view nothing to indicate that the appeal tribunal failed to consider any relevant factors in the light of the way the appeal was presented to it. I add that "the person" to whom payment was made in this case was the Oxford Citizens Housing Association itself (see Schedule 1 to the Interpretation Act 1978), which can only act through its officers and employees. The question under regulation 99(2) is not what any particular employee in any particular department could have been expected to realise, but what Housing Association, through all its officers and employees, could have been expected to realise.
18. I need also to mention a further point, which is relevant to the points made by Mr Turville and the claimant about where the final financial burden of repaying an overpayment ends up. The wording of regulation 99(2) of the Housing Benefit Regulations is not entirely clear. It could be read as meaning that an overpayment is not recoverable where either the claimant or a person acting for the claimant or the person to whom payment was made could not reasonably have been expected to realise that it was an overpayment. On that reading, the overpayment in the present case would not have been recoverable, even from the landlord, because the claimant could not reasonably have been expected to realise that an overpayment was being made. If it was intended that an overpayment was not recoverable only if neither the claimant nor a person acting for the claimant nor the person to whom payment was made could not reasonably have been expected to realise that it was an overpayment, that form of words could easily have been used (although admittedly it might involve a double negative). However, this issue has already been dealt with by the Court of Appeal in Warwick District Council v Freeman (1995) 27 Housing Law Reports 616. Hale J, as she then was, held that, because of the structure of the regulations separating the question of whether an overpayment of housing benefit is recoverable from the question of from whom it is to be recovered, regulation 99(2) is only satisfied if all three of the people identified could not reasonably have been expected to realise that an overpayment was being made.
19. The result in the present case is thus that the overpayment is recoverable under regulation 99 because the landlord did not meet the condition in paragraph (2). The question of from whom it should be recovered is separate, and the appeal tribunal did not purport to deal with that question. The further result is that, even if a local authority determines that the overpayment should be recovered from the landlord, if that leaves the landlord with a shortfall in what the claimant was legally obliged to pay the landlord, the landlord seems to retain the normal legal remedies to recoup that shortfall from the claimant. The question whether there could in law be circumstances in which the landlord's conduct prevents him from enforcing some or all of those legal remedies is well beyond the scope of what I have power to decide in this case. Nor is it for me to suggest in what circumstances a landlord might think it right not to enforce remedies which are legally available.

(Signed) J Mesher

Commissioner

Date: 10 June 2004