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[2008] UKSSCSC CH_2298_2007 (08 January 2008)

The Durham appeal tribunal's decision of 12 December 2006 (Mr M S Rowell, chairman, sitting alone) on this local authority's attempt to make a sum of £1,379.29 legally recoverable from the claimant for allegedly overpaid housing benefit was in my judgment erroneous in law. The tribunal clearly misdirected itself on the effect of the relevant legislation in regulation 101 Housing Benefit (General) Regulations 1987 SI. No. 1971 in holding there could be no recovery of any overpayment from the claimant and on that ground the authority's appeal is entitled to succeed. However the tribunal also failed to address and resolve relevant factual issues raised before it, affecting whether that amount could be properly regarded as an overpayment of benefit at all; and as it seems to me that there are genuine factual issues that need to be resolved here before a final decision in the case can be given, I accept the submission of the claimant's representative Mr S Guy of Durham Welfare Rights that the right course is for the case to be remitted to a fresh tribunal for complete redetermination.

What happened in this case demonstrates that the legislative provisions for making overpayments of housing benefit legally recoverable from the claimants concerned, and/or the landlords as the direct recipients of the actual payments, are still not so well understood by authorities and tribunals as they should be. Despite the thousands of words that have now been expended on the subject the basic principles have never in my view been open to any real doubt, nor are they actually very difficult to understand. The proper exercise of an authority's functions of determining and recovering an amount of overpaid housing benefit from a person legally liable to repay it under the primary legislation in section 75 Social Security Administration Act 1992, and the subordinate legislation in (at the time relevant for these proceedings) Part XIII of the 1978 regulations cited above, involves a process of (in all) three stages, carried out in that order.

(1) First, a decision identifying what was the claimant's true entitlement for the period in issue, in place of that originally awarded. Without this it cannot be said that there was any overpayment of benefit at all, since the original award decision otherwise remains conclusive of the correct amount of benefit for the period in question, by virtue of paragraph 11, Schedule 7, Child Support Pensions and Social Security Act 2000.

(2) Second, a decision that the overpaid amount of benefit so ascertained is legally recoverable from one or more named persons to whom the decision is addressed and issued, as an overpayment which under the regulations is (a) not of a type excluded from being recoverable; and (b) recoverable from that person (each such person, if more than one) because he is within a prescribed class and recovery from him is not precluded by any exception.

(3) Third, actual enforcement of the legal liability so established and quantified, by the normal legal remedies available to the authority for debts legally due to it or any special rights of offset or adjustment available as regards the particular benefit and the particular person so liable.

Each of the first and second stages, though not the third, involves the statutory decisionmaking and appeal process under Schedule 7 to the 2000 Act and the Housing Benefit and Council Tax Benefit (Decisions and Appeals) Regulations 2001 SI. No. 1002. There is no doubt that under this form of the legislation more than one person can be concurrently liable to repay the same amount of overpaid benefit, and in such cases the proper if not universal practice should be for decisions on the question of legal liability and the amount of the legally recoverable overpayment to be made in respect of all of them in a consistent way at stage 2, uncluttered by any separate consideration of the merits or value of afterwards proceeding to actual enforcement at stage 3 against any one in particular: R(H) 6/06. There is no statutory appeal against the authority's decisions at that third stage, which are challengeable, if at all, only in any enforcement proceedings brought in the ordinary courts, or by way of judicial review. (Exceptionally however, though of no relevance here, if some ground can be shown to exist for questioning the underlying legality of an authority's use of the section 75 procedure at all that may be raised as an issue in appeal proceedings at stage 2, because of the general principle that a local authority's actions and decisions are only legally valid if it acts lawfully and for proper purposes: R(H) 3/04.)

With that summary in mind, it is apparent that both the authority and the tribunal dealing with the present case fell into some confused assumptions about the law. The authority in its letters muddled up the three stages of the process as if they were one, and the tribunal seemingly misread the legislation and failed to recognise that more than one person can well be liable for the same overpayment.

The facts were that the claimant (the respondent in this appeal) was a single man living in rented accommodation in the authority's area (Bradford) as tenant of a housing association. Down to the end of 2003 he was awarded housing benefit and council tax benefit in respect of this property, his housing benefit being at all times paid direct to the association. In early 2004 the authority became aware that he had moved into a drug and alcohol rehabilitation unit in Middlesbrough, and in response to later enquiries was told he was receiving support there after a spell in hospital, with the intention of moving back into his own flat in Bradford as soon as he could, his tenancy being still on foot.

After first seeking to withdraw the claimant's benefit on the ground that he was no longer living at his flat in Bradford after December 2003, the authority obtained express confirmations in July and early August 2004: from the claimant himself, that he was then returning to his flat; from the housing association, that he was still currently its tenant there; from the rehabilitation centre, that he was returning and being resettled in his home; and from the Department for Work and Pensions, that there had been no break in his income support entitlement on which his housing benefit award was based: see documents 14 to 22. Having no reason to doubt those assurances, the authority (rightly, if all it had been told was true) reinstated the claimant's entitlement to housing benefit, accepting that his absence from home had been temporary and for medical reasons. It paid the housing association the substantial arrears of the claimant's benefit back to the start of 2004, and resumed direct payment to it of his continuing and reinstated housing benefit award as its tenant of the Bradford flat.

That continued until January the following year, when a computer matching search showed the claimant was by then living in another authority area altogether, and seeking to claim housing benefit there. In response to enquiries the claimant now said he had given up his tenancy of the Bradford flat in July 2004 instead of returning there. For its part the housing association (having gone on receiving his benefit) denied all knowledge of his departure and said he had not vacated the property until April 2005.

On 12 April 2005 the authority issued a decision letter addressed to the claimant, stating that housing benefit totalling £738.90 had been overpaid "to him" for the period 27 September 2004 to 9 January 2005 because he had then no longer been resident at his Bradford flat; that this amount was recoverable and should be recovered from him. In the light of his response it subsequently issued a further decision letter on 7 September 2005 addressed to the housing association, stating that it had been overpaid benefit totalling £1,379.29 in respect of the claimant for the period 19 July 2004 to 30 January 2005 as he had vacated the property on the first of those dates, that the overpayment was recoverable and should be recovered from the association: see pages 31, 39.

The following month however the authority (accepting, but without apparently seeking to check with the claimant himself, the landlord's assertion that according to tis records he had vacated the property on 24 April 2005) issued a further decision letter to the association on 17 October 2005 (page 44) stating that the previous decision of 7 September 2005 had been looked at again and "I have decided to revise it in your favour. This means that I have now decided that you do not have to repay this overpayment and recovery will be sought from your former tenant."

Then on 27 October 2005 it issued the further decision letter addressed to the claimant at page 1I, which was the decision under appeal to the tribunal. This began by alleging "You [sic] have been paid too much Benefit because you vacated [the Bradford flat] on 19/07/2004 and Housing Benefit continued to be paid to your landlord." The letter then quantified the overpayment for the period 19 July 2004 to 30 January 2005 inclusive at £1,379.29 and continued "It has been decided that this overpayment is recoverable and that it should be recovered from you."

On his appeal to the tribunal the claimant maintained that he had never received any of the housing benefit himself and that any benefit had been paid directly to the housing association as his landlord. The accuracy of this is not disputed. Despite having initially said in September 2005 that his tenancy had ended in July 2004, the claimant gave more detailed information in response to some more focused enquiries from his representative Mr Guy in November 2006. This suggested that on the contrary, the decision that he should not after all return to resume living in his former home had not actually been taken until the end of his stay in the rehabilitation unit, and had been taken in conjunction with the staff there at that time: he had been discharged from the unit on 4 October 2004, so that it must have been around then. At that time he had moved his belongings out of the flat and left the keys with the landlord's site agent who had his office at the same site. Mr Guy put this evidence before the tribunal : pages 72 to 74.

Also in evidence before the tribunal, at pages 64 to 67, was correspondence showing that the authority had been asked by the claimant's representative to provide further information on the reasons for the apparent decision not to hold the landlord legally liable for any overpayments it had received, and on what evidence the view had been formed that the claimant had not after all intended returning to his flat from July 2004; but had refused point blank to provide any information on the bizarre ground that this was "in order to maintain the integrity of the appeals process".

However at the tribunal hearing on 12 December 2006, which the authority did not even attend, the tribunal never got as far as going into the factual issues to which these statements and enquiries obviously gave rise on entitlement as well as overpayment: nor did it address at all whether or how the claimant's entitlement had been properly redetermined by revision or supersession of the relevant previous awarding decisions (stage 1 of the process outlined above, essential before there could be a valid stage 2). It did not do either of those things, and the whole proceedings went off at a tangent, because the chairman started the proceedings by expressing the view that the appeal had in any event to succeed, on the single ground that the payments of benefit in question had all been made to the landlord, and the condition in regulation 101(1)(b) of the 1987 regulations for relieving the landlord from legal liability was not satisfied; his apparent assumption that this automatically let the tenant off the hook being mistakenly acquiesced in by Mr Guy on behalf of the claimant.

As the authority points out in its appeal against the decision, both of the chairman's factual assumptions were true: there is no dispute that all the payments in question had been made to the association direct, and there never was any notification by it of a suspected overpayment, such as could have operated under regulation 101(1)(b) to remove its normal liability as recipient to repay benefit mistakenly overpaid and received. Nevertheless as the authority is also plainly right to point out, that still goes nowhere to relieving the claimant from his separate liability under section 75(3)(b) of the 1992 Act. That liability is expressly imposed on him by regulation 101(2)(c), making the overpaid amount legally recoverable from him independently of (and in the circumstances just outlined, concurrently with) the liability of the landlord who actually received the money.

Given that error of law (in my judgment a manifest one on the plain wording of the legislation both before and after the Tribunal of Commissioners gave their decision in R(H) 6/06) I must set the tribunal's decision aside. Moreover as it led to the further error that the tribunal failed to enquire into and make adequate findings as to the relevant facts going to the claimant's entitlement and the basis on which the same alleged overpayment had been held to be outside a recoverable category as regards the landlord who actually received it, I must remit the case for a further tribunal to go into the facts properly and to redetermine on the basis of its findings whether any, and if so what, amount has been shown to be legally recoverable from the claimant on a proper application of the first two stages of the process under section 75 of the 1992 Act, having regard to what was said by the Tribunal of Commissioners in R(H) 6/06; especially paragraphs 59 to 62 on cases of potential joint (or, more accurately, concurrent) liability.

As regards the legal liability of the association the revised decision issued to it on 17 October 2005 was, on the facts outlined above, plainly wrong and based on a similar misdirection in law on the (unfounded) assumption that no two people could be made legally liable for the same overpayment. The course I am taking will thus enable the authority to reconsider the question of the landlord's liability in the light of R(H) 6/06 and what is said above: on any footing it appears to have been unjustly enriched, and if the claimant's later statement is right it may even have contributed to the overpayment by not informing the authority when its agent received back the keys to the property. That is a reconsideration that needs to be carried out by the authority in order for it to discharge its functions under section 75 properly: there is no procedural bar to this, as the decision of 17 October 2005 is not among those made final by paragraph 11 of Schedule 7 to the 2000 Act. The results of the reconsideration should then be made available to the tribunal which will rehear the claimant's appeal, so that it can carry out the procedure envisaged by paragraphs 59 to 62 of R(H) 6/06.

The authority's appeal is therefore allowed, the decision of the tribunal set aside and the case referred under paragraph 8(5)(c) of the 2000 Act to a differently constituted tribunal for redetermination in accordance with the directions given above.

(Signed)

P L Howell

Commissioner

8 January 2008