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Cite as: [2008] UKSSCSC CH_38_2008

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[2008] UKSSCSC CH_38_2008 (12 June 2008)

CH/38/2008

DECISION OF THE SOCIAL SECURITY COMMISSIONER

The claimant's appeal fails. The decision of the Liverpool tribunal ("the tribunal") given on 20 September 2007 is erroneous in point of law and therefore I set its decision aside. However, this does not assist the claimant. In accordance with paragraph 8(5)(a) Schedule 7, Child Support Pensions and Social Security Act 2000 I substitute my own decision to the same effect. The local authority is entitled to recover overpayment of benefit in the following sums: housing benefit in the sum of £5,902.75, and council tax benefit in the sum of £1,672.63. Both overpayments are in respect of the period 27 October 2003 to 18 March 2007. The tribunal's error was that it concluded the whole period of the overpayment was attributable to official error. As can be seen from paragraph 10 below, this was not the case.

The facts of the claimant's case are straightforward. Since at least 16 June 2003 he has been in receipt of both housing benefit (HB) and council tax benefit (CBT). In late October 2003 there was a change of circumstances, namely that he failed to satisfy the personal capability assessment for incapacity benefit and thereby lost his entitlement to that benefit. He notified the local authority that he was no longer in receipt of incapacity benefit. The local authority on 13.1.2004 superseded the previous award of benefit, and then assessed him on his reduced income, consisting only of an occupational pension. It subsequently emerged that he was also in receipt of a higher rate mobility component of disability living allowance (DLA). I think it is agreed that he did not disclose this to the authority and certainly none of the claim forms reproduced in the appeal bundle show any mention of DLA. DLA is not taken into account as income, so this did not give rise to any overpayment. However, it does affect the applicable amount because it gives rise to entitlement to a disability premium. However, so did his status of incapacity for work. Between 16 June 2003 and 26 October 2003 the claimant had been in receipt of an award of housing benefit of £25.18 per week, and of council tax benefit of 85p per week. After the supersession decision, with effect from 27 October 2003, he was awarded £51.86 per week housing benefit and £9.06 per week council tax benefit. I note the difference between the two awards is substantial.

The claimant appealed the decision on incapacity benefit, and did so successfully. The claimant notified the local authority of this on 28 February 2005. The effect of his successful appeal was that arrears of benefit were awarded such as to put him in the position he would have been in had his entitlement to incapacity benefit had been continuous, with no reduction in income from 27 October 2003. Regulation 31(2) Housing Benefit Regulations 2006 ("the HB Regulations") provides that the period over which any benefit under the Benefits Act is to be taken into account shall be the period in respect of which that benefit is payable. Regulation 79(7) of the HB Regulations, which deals with the date on which a change of circumstance is to take effect, provides:

"… where the change of circumstances is the payment of income, or arrears of income, in respect of a past period, the change of circumstances shall take effect from the first day on which such income, had it been timeously paid in that period at intervals appropriate to that income, would have fallen to be taken into account for the purposes of these regulations."

In short, for the purpose of housing benefit entitlement, as the result of his successful appeal, the claimant was in effect entitled to incapacity benefit without a break from 27 October 2003, and his weekly income was to be treated as increased for each week since that date.

Regulation 21(2) of the Council Tax Benefit Regulations ("the CTB Regulations") is to identical effect: it provides that the period over which any benefit under the benefit Acts is to be taken into account shall be the period in respect of which that benefit is payable. Regulation 67(9) CTB Regulations specifies that where the change of circumstances is the payment of income, or arrears of income, in respect of a past period, the change of circumstances shall take effect from the first day on which such income, had it been timeously paid in that period at intervals appropriate to that income, would have fallen to be taken into account for the purposes of these regulations.

Accordingly, when the claimant reported his change of circumstances on 28 February 2005, the local authority should have recalculated the claimant's housing benefit and council tax benefit entitlement. It did not. The claimant reported this change of circumstance not only on 28 February 2005, but also in a review form received on 21 June 2005. At page 29 of the papers is a receipt dated 7 November 2005 in which the local authority acknowledges being shown proof of benefit entitlement and the preceding page shows that the benefit disclosed was incapacity benefit. On 1 December 2005 the local authority even obtained directly from the DWP evidence of the amounts of incapacity benefit currently in award. The following year the claimant provided evidence of the annual uprating increase in his incapacity benefit. Yet all this time the local authority failed to supersede an award which was based solely on his occupational pension. Very clearly from 28 February 2005 onwards the overpayment has been caused by the local authority's failure to act.

This did not stop the local authority from issuing the overpayment decisions referred to at paragraph (1) above. The regulations for both housing benefit and council tax benefit provide that overpaid benefit, even where it has been paid by reason of official error, may still be recoverable by the local authority. The claimant appealed against the overpayment recovery decisions issued by the authority and the matter eventually came to the tribunal. The claimant's letter of appeal was drafted by the firm of solicitors who also represented him at the tribunal hearing, and who are also involved in the present appeal to the Commissioner. I note from the tribunal's record of proceedings that it was not suggested to the tribunal that different arguments might apply in respect of the period 27 October 2003 to 26 March 2005 to those applicable in respect of the period from 27 March 2005. However, I agree with the claimant's representative that the tribunal should have considered this period separately, and its failure to do so means that its decision is erroneous in point of law.

The HB Regulations and CTB Regulations make virtually identical provision in relation to recoverable overpayment. Because of the virtually identical wording, I will not set out regulation 83 CTB Regulations. Regulation 100 HB Regulations provides as follows:

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

(2) Subject to paragraph (4) this paragraph applies to an overpayment [which arose in consequence of] 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.

(3) In paragraph (2), 'overpayment which arose [in consequence of an official error]' means an overpayment caused by a mistake made whether in the form of an act or omission by –

(a) the relevant authority;

(b) an officer or person acting for that authority;

(c) an officer of –

(i) the Department for Work and Pensions; or

(ii) Revenue and Customs

acting as such; or

(d) A person providing services to the Department for Work and Pensions or to the Commissioners for Her Majesty's Revenue and Customs,

where the claimant, or a person acting on his behalf or any other person to whom the payment is made, did not cause or materially contribute to that mistake, act or omission.

(4) …

The tribunal in this case was in no doubt that the whole of the overpayment had occurred by reason of official error but nonetheless held it was recoverable because the claimant had not shown that he 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.

In respect of the period from 27 March 2005 there is no error in the tribunal's analysis of the facts or the relevant law. The claimant received numerous notices from the local authority from which he could easily have seen that the local authority was erroneously failing to take into account the reinstated incapacity benefit. The claimant agreed that he received these various notifications, copies of which are enclosed in the appeal bundle, and show that notices were issued on 27 March 2005, 5 April 2005, 30 April 2005, 21 November 2005, 21 March 2006, and 24 July 2006. As the tribunal correctly noted, all overpayments of housing benefit and council tax benefit are recoverable unless the claimant can bring himself within the excepttion relating to official error. The claimant and those advising him should note that the burden of showing that he can bring himself within this exception rests on the claimant. It is for him to show that he could not reasonably have been expected to realise that the payment was an overpayment. There is in addition to the reasons noted by the tribunal, a further reason why the claimant in this case could reasonably have been expected to realise that the payments were overpayments. That is that between June and October 2003 he was in receipt of a much smaller amount of benefit. He received only £25.18 per week housing benefit but after the supersession because of the loss of incapacity benefit, his housing benefit increased to £51.86 per week. His council tax benefit rose from only 85p per week to £9.06 per week. These changes are, as noted above, substantial. When assessed on both occupational pension and incapacity benefit there was a very substantial shortfall between the housing benefit awarded and the contractual rent due. When incapacity benefit was taken out of the assessment, the amount of housing benefit awarded doubled. While assessed on occupational pension and incapacity benefit, the claimant received only a very modest amount of council tax benefit, less than £1 per week. Once incapacity benefit was taken out of the assessment he received over £9 per week. He must have been surprised when his housing benefit and council tax benefit did not again reduce once he had been re-awarded the incapacity benefit.

What then of the period 27 October 2003 to 26 March 2005? His representative argues in the appeal to the Commissioner that the tribunal should have separately considered this period. The representative acknowledges that a decision that the claimant could have been aware he had been overpaid from 27 March 2005 might reasonably be reached, but argues that it would be unreasonable to conclude that he should have been aware that he had been overpaid housing benefit and council tax benefit from 27 October 2003 to 26 March 2005. In support of this argument the representative cites my decision in CH/1384/2007, but that was a case very much dependent upon its facts, as so many of these cases are. In the present case the overpayment is recoverable from the claimant in respect of this period because the overpayment was not one which arose in consequence of an official error, and the tribunal was wrong to conclude that it did. Therefore the basic rule under regulation 100(1) HB Regulations and regulation 83(1) CTB Regulations applies, which is that any overpaid benefit shall be recoverable.

The local authority correctly superseded the claimant's entitlement to housing benefit and council tax benefit having been notified that he had lost his entitlement to incapacity benefit. The loss of his incapacity benefit was not caused by official error. His entitlement was reinstated by a tribunal following an appeal. The fact that a tribunal came to a different conclusion on whether the claimant satisfied the personal capability assessment to that which was reached by the Secretary of State does not show that the Secretary of State's decision amounted to "official error". In the first place, assessment of disability inevitably involves a degree of subjectivity, and it might be that the tribunal which allowed the claimant's appeal heard additional evidence which was not available to the original decision maker. Secondly, it is not an error which relates to the award of HB or CTB. It is not "a mistake made whether in the form of an act or omission" and therefore the definition of "official error" in regulation 100(3) HB Regulations is not satisfied. Once the award had been re-instated, by reason of the provisions set out at paragraphs (3) and (4) above, the local authority must treat the claimant's income as increased throughout each of the relevant weeks. The local authority's error was in failing to supersede timeously. But that itself did not create the overpayment for the period 27 October 2003 to 26 March 2005. That was created by the effects of the successful appeal on incapacity. Even if the local authority had acted immediately when given notice of the reinstatement of his incapacity benefit, the claimant would still have been overpaid for the period 27 October 2003 – 26 March 2005.

The only other point I should clarify is to assure the claimant that his entitlement to the disability premium throughout has been recognised, and taken into account in calculating the recoverable overpayment. Although the income from DLA is not taken into account in calculating entitlement to either housing benefit or council tax benefit, it is relevant to an award of the disability premium under paragraph 13, Schedule 3 Housing Benefit Regulations and the equivalent Council Tax Benefit Regulations. However, this is also satisfied where the claimant is or is treated as incapable of work in accordance with the relevant part of the Contribution and Benefits Act. Accordingly, while the disability premium had to be taken into account in calculating benefit entitlement throughout the whole period at issue, there was no additional premium to which the claimant was entitled by reason of the award of DLA. This is because he did not satisfy the conditions for the severe disability premium. Paragraph 14 of Schedule 3 sets out the conditions for an award of this premium. The claimant was not in receipt of the care component of DLA at any level. The award, as here, of only the mobility component of DLA does not satisfy the conditions. Accordingly, there are no additional matters which should have been taken into account because of this in calculation of the amount of the overpayment.

For the reasons set out above the claimant's appeal has failed.

(Signed on the Original) Mrs A Ramsay

Deputy Commissioner

12 June 2008