UK Social Security and Child Support Commissioners' Decisions

[2007] UKSSCSC CH_3736_2006 (20 April 2007)

Decision

1. The claimant's appeal succeeds. The decision given by Liverpool Appeal Tribunal on 2 June 2006 under reference U/06/068/2006/00321 is wrong in law. I set it aside and I refer the case to a differently constituted tribunal ("the new tribunal") for determination in accordance with directions I give at paragraph 29 below. Those directions are addressed to the parties as well as to the new tribunal and I draw their attention to the time limits that I have imposed.

Introduction.

2. This appeal is about:

(a) whether the appellant has been overpaid housing benefit (HB) for the period from 25 October 2004 to 20 February 2005; and/or

(b) whether she has been paid excess council tax benefit (CTB) for the period from 25 October 2004 to 31 March 2005; and, if so,

(c) whether that overpayment or excess payment is recoverable from her.

In this decision I will refer only to the rules for HB, but with one exception—see paragraph 29(o) below—the same rules apply to CTB. For CTB reference should be made to section 76 of the Social Security Administration Act 1992 (the Administration Act) and regulations 56A, 58 (now revoked), 83 and 84 of the Council Tax Benefit (General) Regulations 1992 (the CTB Regulations). Since the events that gave rise to this appeal, the Housing Benefit (General) Regulations 1987 (the HB Regulations) and the CTB Regulations have been consolidated but I will continue to refer to the regulations as they were numbered during the period of the alleged overpayments.

3. The dispute between the parties is over:

(a) whether the appellant correctly reported the fact that she had commenced work following a period in receipt of jobseeker's allowance (JSA); and

(b) if she did, whether she could reasonably have been expected to realise at the time that she was subsequently being overpaid benefit.

Although neither party has yet addressed it, there is also a further important issue of principle about how local authorities should treat the cessation of entitlement to income support (IS) or income-based JSA (JSA(IB)) following the abolition of benefit periods in April 2004.

Background

4. The new tribunal will make its own findings of fact in due course. However, on the evidence available to me, the factual background is as follows:

(a) The appellant is a private tenant in the area administered by Liverpool City Council ("Liverpool").

(b) Prior to the events that led to this appeal, the appellant was in receipt of HB and CTB from Liverpool and JSA(IB) from the Department for Work and Pensions.

(c) On 13 January 2005, Liverpool was informed by a data matching exercise that the appellant's JSA had been "dormant" since 22 October 2004.

(d) On 1 March 2005, Liverpool wrote to the appellant and informed her that her entitlement had been "recalculated due to cancellation" and that she had been overpaid £714 in HB from 25 October 2004 to 20 February 2005 at £211.06 in CTB from 25 October 2004 to 27 February 2005.

(e) Despite the fact that nearly seven weeks had elapsed between Liverpool's becoming aware of the information about the appellant's JSA and acting upon it, no attempt was made to contact the appellant for confirmation that her JSA had ceased, for details of her income and capital in the subsequent period or for her comments on what Liverpool had been told by the DWP.

(f) On 23 March 2005, the appellant appealed against that decision. Her case was that she had started work as a welfare benefits adviser on 15 November 2004 and that she had written to Liverpool on 18 November 2004 to advise them of that change in her circumstances but that it had caused the overpayment by failing to act on the information she had given. She produced what she said was a copy of that letter.

(g) The appellant originally accepted that she was no longer entitled to either HB or CTB. Subsequently, however, she submitted that her wages were low enough for her to retain some entitlement to benefit.

(h) The appellant acknowledged that her JSA might have ended in October 2004 because there had been an occasion on which she had failed to sign on. However, she maintained that, as she did not start work until 15 November 2004, and was without income prior to that date, she remained entitled to HB and CTB.

(i) Finally, the appellant asserted that, for various reasons, she could not reasonably have been expected to realise at the time that she was being overpaid.

The tribunal's decision

5. The appeal came before the tribunal on 2 June 2006. An oral hearing was held at Liverpool's request. The appellant, who had requested a paper hearing, did not attend.
6. The tribunal dismissed the appeal and confirmed Liverpool's decision. The statement of reasons concludes that the appellant had been overpaid and that she must have known that she was not entitled to benefit at the time the overpayments were made.

The appeal to the Commissioner

7. The appellant applied for leave to appeal to a Commissioner and this was granted by the regional chairman of the North West Region who said that he did so because

"the appellant appears regularly before the tribunal as a representative and it seems in the interest of justice for her grievance to be aired before the Commissioner".

8. Liverpool does not support the appeal.

Reasons for the Commissioner's decision

9. I have allowed this appeal because the tribunal erred in law by failing to deal at all with the relevant issue of whether there were grounds upon which to supersede the previous award of benefit in the appellant's favour so as to bring that award to an end

The requirement for supersession

10. In most cases involving alleged overpayments of HB it will be necessary for the local authority to show that the decisions awarding the overpaid benefit have been revised or superseded. That is so even though section 75 of the Administration Act (which deals with overpayments of HB) does not contain any provision equivalent to section 71(5A) which governs overpayments of the benefits administered by the Department for Work and Pensions.
11. A revision or supersession will normally be required because an "overpayment" is defined by regulation 98 of the HB Regulations as "any amount which has been paid by way of housing benefit and to which there was no entitlement under these Regulations".
12. Whether there is "entitlement under [the] Regulations" depends upon whether there has been a decision under regulation 76 awarding benefit. If such an award has been made, then the claimant remains entitled to the benefit awarded for as long as that award remains extant. Before it can be asserted that he or she has been overpaid, it is necessary that the decision awarding the benefit should—to use neutral terminology—be changed or revoked.
13. Decisions awarding HB are final (see paragraph 11 of Schedule 7 to the Child Support, Pensions and Social Security Act 2000 (the 2000 Act)). They cannot simply be "cancelled" (see CH/2302/2002). Since 2 July 2001 when Schedule 7 came into force, the only legal mechanisms by which decisions can be changed or revoked are:

(a) the revision of the original decision under paragraph 3 of Schedule 7; or

(b) the supersession of the original decision under paragraph 4 of that Schedule; or

(c) by a decision taken on an appeal under paragraphs 6, 8 or 9.

As is explained in paragraph 10 of R(IB) 2/04, a revised decision normally takes effect from the same date as the original decision (although it will sometimes take effect from the date on which the original decision would have taken effect if it had been correct). By contrast, a decision that supersedes an earlier decision will take effect from a later date.

14. There will be overpayment cases where no revision or supersession is necessary. Examples will include:

(a) cases where benefit has been correctly awarded but a clerical or computer error has resulted in payment at a rate in excess of that awarded; or

(b) cases in which payments on account have been made under regulation 91 or 91A of the HB Regulations before there has been a decision on entitlement and it is therefore possible to determine whether or not benefit has been overpaid by reference to the original entitlement decision.

It is to such cases that regulation 98 of the HB Regulations is referring when it contemplates that there might be an overpayment "on the initial decision". Such cases are relatively rare. The present appeal is not one of them.

15. It follows that before any question of overpayment arose, it was necessary for Liverpool to demonstrate that, on a balance of probabilities, there were grounds upon which to supersede the award of benefit to the appellant and that the superseding decision should be less advantageous to her than the original decision.
16. From its statement of reasons, the tribunal seems to have assumed that the appellant's previous entitlement to HB had been validly brought to an end. The statement does not deal at all with the supersession issues and there is no acknowledgment that the burden of proof on those issues lies with Liverpool rather than with the appellant.
17. That is unfortunate because Liverpool's approach to the ending of the appellant's previous award was inadequately argued and almost certainly incorrect.

The end of the previous award

18. Liverpool dealt with the matter on the assumption that because the appellant's entitlement to JSA had ended, her entitlement to HB must have ended as well. I understand why that assumption was made. Those who claim HB while in receipt of IS or JSA(IB) do not have to pass a separate means-test for HB but, subject to their being liable to pay rent, are passported automatically onto maximum HB. Intuitively, therefore, one would expect that if entitlement to IS or JSA(IB) were to come to an end, entitlement to HB would end too, at least until the authority had an opportunity to carry out its own means-test.
19. Moreover, that used to be the law. Regulation 67(1)(a) of the HB Regulations provided that where a claimant ceased to be entitled to IS or JSA(IB), her HB benefit period (and hence entitlement to HB) would automatically cease at the end of that benefit week. If that regulation had still been in force, Liverpool would have been correct to decide as they did.
20. But during the period that is relevant in this appeal, regulation 67(1)(a) was not in force. Benefit periods were abolished with effect from 6 October 2003 for claimants over the age of 60, and from 5 April 2004 for all other claimants. The whole of regulation 67 was revoked with effect from those dates.
21. It follows that, except in the circumstances contemplated by regulation 65A of the HB Regulations, the cessation of IS or JSA(IB) is an ordinary change of circumstances that must be assessed like any other: it does not have the effect of automatically ending entitlement to HB.
22. In fact, it cannot even be assumed that the cessation of IS or JSA(IB) will reduce entitlement to HB. There are any number of circumstances in which a claimant can cease to be entitled to those benefits and, until the authority knows why entitlement has ended in the particular case with which it is concerned, it cannot conclude that it ended in circumstances that will provide grounds upon which to supersede the claimant's entitlement to HB.
23. The present appeal may be a good example. The claimant says that, if her JSA claim came to an end, it was because she forgot to sign on. If she is correct about that, then for the period beginning with the day after she last signed on she would have been left without income. It should be obvious that a reduction in the claimant's income—and, particularly a reduction to zero—is not a change in circumstances that can justify reducing or ending her entitlement to HB. On the contrary, if she had been on contribution-based JSA (JSA(C)), rather than JSA(IB), it might have led to an increase in HB. If, on the other hand, the appellant had ceased to be entitled to JSA because she had found work, then that would be a change that would almost certainly lead to a reduction in her HB and might—depending on the level of her earnings—extinguish her HB entitlement altogether.
24. Given those considerations, what should local authorities do when the DWP tells them that a claimant's entitlement to IS or JSA(IB) has ended?
25. The answer will depend upon the circumstances of each individual case. For example, it may be quite clear why IS or JSA(IB) has ended because the claimant has independently reported a change of circumstances to the authority. In cases where it is unclear why benefit has stopped, the correct approach is for the authority to suspend benefit and make further enquiries to establish whether the circumstances—including, in particular, the claimant's actual income and capital during the period after IS or JSA(IB) ended—provide grounds for superseding the HB award.
26. The authority has power to suspend payment of HB in such circumstances because the cessation of IS or JSA(IB) will almost always give rise to an issue whether the decision awarding HB should be revised or superseded. Regulation 11(2)(a)(ii) of the Housing Benefit and Council Tax Benefit (Decisions and Appeals) Regulations 2001 (the 2001 Regulations) will therefore be satisfied.
27. In many cases, the request for further information will produce a response from the claimant that will enable the authority to reassess entitlement to HB and to confirm or supersede its previous decision. If the claimant does not provide the information requested, then the authority has two choices:

(a) the first option is to follow the procedure in Part III of the 2001 Regulations which, if the claimant continues not to supply the information, will lead eventually to a decision that she "shall cease to be entitled to benefit" under regulation 14.

(b) alternatively, it may be possible for the authority to supersede the award of benefit by drawing an adverse inference. This may not always be appropriate but, in circumstances where:

i) the claimant's entitlement to IS or JSA(IB) has ended; and

ii) the claimant has been asked to provide information that is clearly relevant to the question of her continuing entitlement to housing benefit; but

iii) has neither provided that information nor given any reason why she is unable to do so

it might sometimes be permissible to draw the inference that the claimant is refusing or failing to provide the information because to do so would demonstrate that she had no continuing entitlement to benefit.

One consequence of the second option is that the appellant could subsequently produce the necessary evidence in support of an appeal against, or an application to revise, the decision. However, from the authority's point of view, it has the advantage that the effective date of the supersession will be the beginning of the benefit week following the one in which IS or JSA(IB) came to an end. By contrast the earliest date on which benefit can end under Part III of the 2001 Regulations will be the date on which it was suspended, which will almost always be later. This is because (despite what regulation 14 may appear to say to the contrary) that regulation is made under paragraph 15 of Schedule 7, which only empowers the Secretary of State to make regulations that bring entitlement to HB to an end "not earlier than the date on which payments were suspended".

28. In this appeal, Liverpool did not suspend the appellant's benefit or ask her for any further information about her circumstances. It continued to pay her for seven weeks and then purported to "cancel" her entitlement retrospectively on the assumption that her entitlement to HB must have ended with her entitlement to JSA. For the reasons I have given, that assumption required further investigation and the tribunal erred in law by upholding Liverpool's decision without requiring it to prove the existence of grounds for supersession.

Directions.

29. I give the following directions:

To the appellant

(a) Within one month of the date on which this decision is sent to the parties, the appellant is to supply the Liverpool Office of the tribunal with copies of the following documents:

i) all her wage slips for the period from 1 September 2004 to 28 February 2005.

ii) the statements of each and every one of her bank and/or building society accounts for the same period.

iii) proof of posting of the letter dated 18 November 2004 that appears on page 29 (i.e. certificate of posting or recorded delivery slip). If no such written evidence exists, the appellant should state where and when she posted that letter.

iv) documentary evidence that she paid council tax for the period from November 2004 to March 2005

(b) There is some doubt as to whether the appellant intends this appeal to relate to both HB and CTB or to CTB only:

i) If she does not wish the new tribunal to consider HB she should notify it in writing of that fact within one month of the date on which this decision is sent to the parties;

ii) If she does wish the new tribunal to consider HB aspect of the appeal, she should—within the same time limit—provide evidence (for example a rent account) showing when and to whom the overpayments of HB were made and whether she made payments towards her rent during the period from November 2004 to March 2005.

(c) The appellant should consider whether it would be in her best interests to attend the oral hearing that I direct below and to obtain representation in this appeal. I make that recommendation in full knowledge that she is a welfare rights representative herself. However, her submissions to the previous tribunal suggest to me that HB and CTB may not be her particular area of expertise. It is said that lawyers who represent themselves often do not put their cases to best advantage and it may be that the same is true of some welfare rights advisers. The fact that the appellant regularly appears to represent others before tribunals in the North West Region is a further reason why it might be desirable for her to be represented when her own entitlement is in issue.

To the respondent

(d) Within one month after the date on which the appellant's additional evidence is sent to Liverpool, it is to:

i) contact the DWP and obtain precise details of all payments of JSA that were made to the appellant during the overpayment period, whether those payments were of JSA(C) or JSA(IB) and, if the appellant's entitlement to JSA came to an end at any relevant time, the precise circumstances in which id did so.

ii) file a further submission with the tribunal:

•    setting out the additional information it has obtained from the DWP;

•    stating whether it maintains that the appellant's entitlement to JSA came to an end in the circumstances set out in regulation 65A of the HB Regulations; and:

if so, whether it is accepted that the appellant had an underlying entitlement to benefit during the period of the claimed overpayment and, if so, how much; or

if not, whether it is now accepted that the claimant was entitled to benefit at any rate during the overpayment period or any part of that period.

The submission should include Liverpool's reasons for its views and full details of all relevant calculations.

iii) supply details of the payments of HB that were made during the overpayment period and to whom those payments were made.

If the situation is that HB was paid directly to the appellant's landlord, Liverpool may also wish to consider how its case in relation to HB is affected by the decision of the Tribunal of Commissioners in R(H) 6/06. That decision will not, however, affect the appeal as it relates to CTB.

iv) supply a copy of the appellant's claim form that led to the award of benefit from October 2004 and copies of the letters notifying the appellant of that award;

To the new tribunal

(e) The new tribunal must be constituted by someone other than the chairman who sat on 2 June 2006.

(f) The new tribunal must hold an oral hearing of the appeal and conduct a complete rehearing of all the issues that arise. It is not bound by the findings of the previous tribunal or by anything I have said in this decision about the facts of the case, as opposed to the law.

(g) There will be three live issues for the tribunal:

i) whether the appellant has been overpaid;

ii) the amounts of any overpayments; and

iii) to what extent any overpayments are recoverable.

(h) As far as the existence of the overpayments is concerned, the tribunal's first task must be to find as a fact when the appellant's JSA ceased. During any period for which she was entitled to JSA(IB), the appellant remained entitled to full HB and CTB.

(i) If it is the case that the appellant ceased to be entitled to JSA(IB) before she started work on 15 November 2004, then her entitlement to HB and CTB did not automatically cease but, rather, fell to be calculated by reference to any other income and capital she may have possessed in those weeks.

(j) For the period after she started work, the appellant will be entitled to benefit, if at all, based on her earnings for that period assessed in accordance with regulations 21, 22, 24, 28 and 29 of the HB Regulations.

(k) On the assumption that, once those calculations have been performed, the appellant will be found to have been overpaid benefit, the new tribunal must then proceed to decide whether the overpayment is recoverable. The new tribunal should start from the premise that all overpayments of HB and CTB are recoverable. The appellant is incorrect to state that overpayments are only recoverable if they arisen through the fault of the claimant.

(l) The only circumstances in which any overpayment will be irrecoverable is if it has been caused by an official error as defined in regulation 99 of the HB Regulations. The only error that is alleged in this case is that Liverpool failed to act on the information in the letter that appears at page 29. The new tribunal must therefore investigate and make findings of fact upon the circumstances in which that letter was written and decide, on a balance of probabilities, whether the appellant actually sent it and, if so, when it was sent and whether and when Liverpool received it.

(m) If Liverpool did not receive the letter then there is no official error and that is the end of the matter. It is not a mistake to omit to act upon information that one does not have. That is so even though the overpayment may have arisen through the default of the Royal Mail rather than of the appellant.

(n) If, however, the tribunal finds that Liverpool did receive the letter, it must consider:

i) whether Liverpool committed an official error by failing to act upon that letter; and, if so,

ii) whether, at the time the original payments of HB and CTB were made—or at the time of a notice relating to those payments—the appellant could reasonably have been expected to realise that they definitely contained some element of overpayment. I direct the new tribunal that, contrary to the view taken by the previous tribunal, it is relevant to this issue whether the appellant knew that payments were being made. This will depend, amongst other things, on what notices Liverpool sent to her about the awards of benefit that had been made in her favour, whether those notices were received, whether it was possible for the appellant to know the state of her rent account and whether she made payments of rent and council tax herself during the period of the overpayments.

(o) In relation to CTB only, I draw the new tribunal's attention to regulation 84(5) of the CTB Regulations in respect of CTB credited to the appellant's council tax account in respect of periods after the date of Liverpool's overpayment decisions.

(p) The procedural parts of these directions are subject to any further directions that may be given by a Regional or District Chairman of appeal tribunals or by the person who chairs or constitutes the new tribunal.

Bias

30. There remains a ground of appeal upon which I have not commented. The appellant states that she "has good reason to suspect bias on the part of the chair" and that she is "looking for a decision from the Commissioner on my point that the chair of the tribunal displayed both incompetence and bias" and that she "happen[s] to know that a number of complaints have been made about this chair on this issue".
31. I wish to make it absolutely clear that I decline to give the appellant the decision she says she is looking for. Although I have concluded that the way the tribunal approached the appeal was legally incorrect, I have seen nothing in the papers that would justify generalised allegations of incompetence or bias. If it is the case that complaints have been made against the chairman, that does not mean that those complaints are justified or that this particular case was handled incorrectly. I can think of no reason why the chairman might have been biased against the appellant and, although the appellant says that she has good reasons to suspect bias, she is apparently not prepared to give details about what those reasons might be.
32. In the circumstances, I conclude that appellant's allegation of bias is without foundation, improper and should never have been made. To accuse a chairman of bias when one is not prepared to substantiate the allegation amounts to no more than name-calling. From an unrepresented claimant that type of abuse might be overlooked, but a person who makes her living representing others before tribunals ought to know better than to behave in such a manner.

(Signed on the original)

Richard Poynter Deputy Commissioner 20 April 2007