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Cite as: [2009] UKUT 176 (AAC)

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DL [2009] UKUT 176 (AAC) (10 September 2009)
Housing and council tax benefits
recovery of overpayments

DECISION OF THE UPPER TRIBUNAL

ADMINISTRATIVE APPEALS CHAMBER

The landlord's appeal to the Upper Tribunal is allowed. The decision of the Liverpool appeal tribunal dated 8 December 2008 involved errors on points of law, for the reasons given below, and is set aside. The Upper Tribunal can properly re-make the decision on the landlord's appeal against the local authority's decisions dated 30 April 2008 (Tribunals, Courts and Enforcement Act 2007, section 12(2)(b) and (4)(a)). That decision is that the appeal is allowed and that the overpayment of housing benefit incurred in relation to the period from 27 August 2007 down to the last pay-day falling on or before 2 October 2007 is recoverable from the landlord as the person to whom benefit was paid, but the overpayment incurred in the rest of the period down to 13 April 2008 is not recoverable because it was caused by official error. If there is any unresolved disagreement as to the calculation of the amount recoverable under that decision the case may be returned to the Administrative Appeals Chamber of the Upper Tribunal for further decision.

REASONS FOR DECISION

The background

This is an overpayment case that has some unusual features. The claimant had an award of housing benefit from around March or April 2006 in respect of his private tenancy. Payment was made direct to the landlord, presumably at the claimant's request. The claimant was also in receipt of income support. He died on 20 August 2007, apparently while on a visit to Ireland, but payments of housing benefit continued to be made to the landlord down to 13 April 2008.

So far as the local authority was concerned, the first it heard of the claimant's death was on 23 April 2008, in the form of a report dated 10 April 2008 from the housing benefit matching service. In decisions dated 30 April 2008 and notified on 1 May 2008 the local authority found that the landlord had been overpaid housing benefit of £2,400 for the period from 27 August 2007 to 6 April 2008 and of £75 for the period from 7 April 2008 to 13 April 2008, which overpayments would be billed to him. The landlord wrote in reply that the claimant had been at the property on 1 May and that he did not know that he had been off benefits. The local authority on 9 July 2008 informed that landlord that the cause of the overpayment was the claimant's death on 20 August 2007 and said that, as it was reasonable that the landlord should have known that, the overpayment was recoverable from him. On the same date an officer of the local authority recorded some information from the Department for Work and Pensions (DWP) customer information system (CIS). The record included that notes stated:

"02-Oct-2007 CUST DIED 20.08.07, BD8 TO BE FAXED. CLAIM SUSPENDED. MR"

It also included a statement that income support had been uprated to include disability premium in January 2008, but the claimant passed away and the date of death was on the CIS.

The landlord then in a letter of appeal stated that he had not known that the claimant had died and that there was no reason for him to have known. The property had been occupied, post was picked up and utilities used. He asked why it had taken the local authority eight months to realise it was paying benefit for a dead man. The local authority's written submission to what was then still an appeal tribunal set out regulations 100 and 101 of the Housing Benefit Regulations 2006, although omitting the amendments with effect from 10 April 2006. It was submitted that the landlord had been negligent in his duty to make reasonable checks and enquiries in relation to the occupancy of the property and so contributed significantly to the duration and amount of the overpayment.

The landlord did not attend the hearing on 8 December 2008, but his father attended and he was represented by counsel, Mr Robert Cline, instructed by his solicitor. Among Mr Cline's submissions were that the overpayment resulted from official error in the failure of the DWP to inform the local authority of the claimant's death. It was suggested that his death must have come to attention of the DWP. It was also submitted, with further oral evidence in support, that it had not been reasonable for the landlord to have realised that overpayments of housing benefit were being made. The property appeared to be occupied and the claimant had objected early on in the tenancy to the landlord calling frequently.

The tribunal's decision

The tribunal disallowed the appeal and confirmed the decisions of 30 April 2008. After finding that entitlement to housing benefit ceased after 20 August 2007, it said this in its statement of reasons about official error:

"7. Secondly, the tribunal considered whether the overpayment had arisen as a result of an official error. In particular they considered whether the overpayment had been caused by a mistake made whether in the form of an act or omission by the Department of Work and Pensions. The Tribunal accepted that had been no mistake by the Local Authority or an officer or person acting for that Authority. The Tribunal notes that it is not clear when the DWP became aware of [the claimant's] death. It would not be a requirement for him to sign on for his benefit each week as evidenced by the letter produced by [the landlord's] father confirming that [the claimant] was in receipt of Income Support not Jobseekers Allowance. The obligation to notify a person's death rests with his personal representatives. [The landlord's] father confirmed that [the claimant's] family lived in Ireland and from the information in document 12 it appears that neither the DWP nor the Local Authority were notified of [the claimant's] death until a date after January 2008 because the DWP have confirmed that [the claimant's] income support was uprated to include the disability premium in January 2008. The Tribunal noted that this would be payable 52 weeks after the commencement of the claim for Income Support which according to the letter was 2 February 2007.

8. Following on from common principles the Department of Work and Pensions cannot notify a change of circumstances of which they are not aware.

9. The Tribunal concluded that neither the Local Authority nor an officer of the Department of Work and Pensions were responsible for any act or omission which gave rise to the overpayment. Accordingly the overpayment did not arise as a result of official error."

The tribunal then concluded that the landlord could not escape recoverability under regulation 101(1) of the Housing Benefit Regulations 2006 because he did not satisfy condition (d)(ii) (landlord has not acted or neglected to act in such a way as to contribute to the period or amount of the overpayment).

The appeal to the Upper Tribunal

The landlord now appeals against the tribunal's decision with my permission. When giving permission I suggested that, even if the tribunal had been wrong about regulation 101(1)(d), the landlord could not have satisfied condition (b) (landlord had notified the local authority or the DWP in writing that he suspected that there had been an overpayment) or (c) (grounds for instituting criminal proceedings against someone other than the landlord for an offence or there has been a deliberate failure to report a relevant change of circumstances). Then I continued that:

"it is arguable that the tribunal made a finding of fact that was not supported by the evidence in concluding in paragraph 7 under the heading of reasons that the DWP was not notified of the tenant's death until after January 2008. The document at page 12 ... seems to indicate that the DWP knew of the tenant's, an income support beneficiary's, death by 2 October 2007. I do not know what a BD8 is, but if that were a standard communication to the local authority, there might then be an arguable case for official error if it was not faxed or it was faxed and not acted on. Whatever the position on that, it is arguable that the tribunal erred in law by not dealing expressly with the circumstance that the DWP knew of the tenant's death from 2 October 2007."

I also directed the local authority to deal in its submission with the question whether the decision of 30 April 2008 should also have made the overpayment recoverable from the claimant's estate, in accordance with paragraph 60 of Tribunal of Commissioners' decision R(H) 6/06.

The local authority's submission dated 3 April 2009 first very helpfully explained that a BD8 is certificate of registration of death issued by the registrar to the person notifying the death where Jobcentre Plus or the Pensions Service need to know about the death. The local authority had been unable to find out from local DWP offices what ought to happen when a BD8 is received in a local office. However, it was submitted that such a form would not be faxed to a local authority by the DWP and that the standard form of communication was as follows:

"Firstly, the usual channel used by DWP to notify the Local Authority of a change to an Income Support recipient's circumstances is by a process known as Electronic Data Transfer (EDT) which sends decision notices, usually in bulk, via an automatic transfer of information from one computer system at the DWP to another computer system at the Local Authority. No such EDT notice was received in respect of the claimant in this case. Whether or not the apparent failure of an automatic computerised notification constitutes official error is open to debate."

On the question of recovery from the claimant's estate, the local authority submitted that it was not practical to recover in that way as the claimant had not had a partner and the authority held no details of any relatives (who may anyway have been in Ireland). The overpayment was fairly recoverable from the landlord and the factors mentioned at page 421 of CPAG's Housing Benefit and Council Tax Benefit Legislation(2007/2008 edition) had been taken into account.

Mr Cline on behalf of the landlord focused in his reply dated 4 June 2009 on the evidence that the DWP had known of the claimant's death on 2 October 2007, contrary to the finding of the tribunal that it had not known until after January 2008, and on the evidence before the tribunal the only possible conclusion could have been that the overpayment was due to official error from that date.

I then invited the Secretary of State for Work and Pensions to become a party to the proceedings and, whether or not he did so, to provide evidence about the applicable administrative instructions for informing the relevant local authority of the death of an income support recipient known also to be in receipt of housing benefit. The Secretary of State did become a party and provided a very helpful submission, dated 25 June 2009, through Mr R J Atkinson, attaching copies of administrative instructions. I shall leave most of the details until I come to re-making the decision on the appeal against the decisions of 30 April 2008. The submission did not in so many words say whether or not the landlord's appeal was supported, but did submit following Mr Atkinson's investigation with the local office of what probably happened in the present case that there had been an official error when the income support section of the local Jobcentre Plus office received the report of the claimant's death and suspended payment of income support, but did not notify the local authority.

Did the tribunal make material errors of law?

The answer must be yes. It is important to recall that an overpayment is caused by official error under regulation 100 of the Housing Benefit Regulations 2006 when it is caused by a mistake whether in the form of an act or an omission by an officer of the DWP (regulation 100(3)). The tribunal was therefore right to focus on when the DWP were informed of the claimant's death, but it seems to me that there was no basis for the finding that that was not until after January 2008 when the report at page 12 is looked at as a whole. Although there was a reference to the uprating of income support entitlement to include the disability premium in January 2008, that appears to have merely related to underlying entitlement in the light of the clear indication that payment of benefit had been suspended on the information (even though not formally verified) available at the latest from 2 October 2007 that the claimant had died on 20 August 2007. There was also a failure to consider, whether the DWP were informed of the claimant's death on 2 October 2007 or after January 2008, whether the overpayment of housing benefit from that date onwards was caused by an official error in the DWP's not informing the local authority. There seems no way in which either the claimant or the landlord could possibly be said to have contributed to that mistake by an officer of the DWP.

It is not enough to make an overpayment not recoverable under regulation 100(2) that regulation 100(3) is satisfied. It must also be the case that neither the claimant (or person acting on the claimant's behalf) or the person to whom payment was made could at the time of receipt of payment or a notice to do with payment "reasonably have been expected to realise that it was an overpayment". Some of the matters that the tribunal mentioned in paragraph 12 of its statement of reasons in relation to regulation 101 and whether the landlord had contributed to the amount or period of the overpayment could have been relevant to the question of whether he could reasonably have been expected to realise (not merely suspect) that the benefit received was (not merely might be) an overpayment. However, the tests are not the same. It cannot be said that the errors identified in the previous paragraph were not material to the decision on the ground that, even if the tribunal had decided in the landlord's favour on those points, it would inevitably have decided the whole case against him on this point.

Those reasons are enough to require the tribunal's decision to be set aside. I do not have to decide for that purpose whether there was additionally an error in confirming a recoverability against the landlord alone, rather than a decision against the landlord and the claimant's estate. However, the answer on that point is relevant to whether I can re-make the decision on the appeals against the decisions of 30 April 2008 or whether the case has to be sent back to the local authority to begin again.

The potential difficulty arises from what was said by the Tribunal of Commissioners in R(H) 6/06 (paragraph 60):

"In every case where a recoverable overpayment has been made, the local authority should make a single decision referring to all those from whom the overpayment is recoverable, rather than separate decisions addressed to each of them."

The decision continued in paragraph 61:

"If, contrary to that suggestion, a local authority issues a decision against only one of, say, two people from whom an overpayment is recoverable, it seems to us that, on an appeal, the appellant will be entitled to a finding that he or she is not the only person from whom the benefit is recoverable. However, the tribunal will not be entitled to make a decision against both people because the other will not have been a party to the proceedings. Consequently, the tribunal will be limited to setting aside the decision under appeal and leaving it to the local authority to make a new decision against both people."

The local authority misunderstood those principles in its submission of 3 April 2009. The factors that it mentioned are relevant to a consideration of against whom to enforce recovery after all those legally liable to make recovery have been identified in a decision. The principles of R(H) 6/06 operate at the stage of making that decision, where for the reasons given by the Tribunal of Commissioners there can be no question of a discretion to make a decision with a more limited scope. The representatives of the landlord and of the Secretary of State did not deal with this issue. However, I am satisfied that in the unusual circumstances of this case, the overpayment could not have been made legally recoverable from the claimant's estate.

One problem is that such a decision cannot be made against the estate of a deceased claimant unless there is a duly constituted personal representative of the estate. That is for the reasons explained at length in decision R(IS) 6/01 (see in particular paragraphs 33 to 39). Here, the local authority did not in April 2008 actually know whether a personal representative of the claimant's estate existed, either as an executor under a will or as an administrator under an intestacy. But that ignorance was the result of not having made any enquiries and the facts that a person had informed the DWP of the claimant's death and that there were some references to executors suggested that there may well have been a duly constituted personal representative. There could therefore still have been a reference back to the local authority to start again as suggested in R(H) 6/06.

16. However, there is a much more fundamental problem. It is clear that where there has been an overpayment of housing benefit during a claimant's life a decision can be made after the claimant's death against a duly constituted person representative of the estate that the overpayment is recoverable from the estate. That follows by analogy from the old decision of Secretary of State for Social Services v Solly[1974] 3 All ER 922 (discussed in paragraphs 29 to 31 of R(IS) 6/01). If the housing benefit has not been paid to the claimant, but to the landlord or some other person, the prescription in regulation 101(2)(b)(i) of the Housing Benefit Regulations 2006 of "the claimant" as a person from whom the overpayment can be recoverable extends in principle to the claimant's estate after death. But in my view that can only apply to cases where the overpayment was in respect of periods before the claimant's death. The liability to make repayment can then perfectly properly be regarded as a liability of the claimant's estate. But here the claimant had no liability to make repayment at the date of his death. There had been no payment in excess of entitlement at that date. If a local authority continued to make payments of housing benefit direct into a claimant's bank account after his death, it seems to me that those amounts could not be recoverable from his estate through a personal representative on the basis of a liability of the claimant as such or even as the person to whom the benefit was paid under section 75(3)(a) of the Social Security Administration Act 1992. It may well be that the local authority would have a right to restitution of the amounts under common law principles, but not in my view under the statutory machinery. If so, then there cannot be recovery from "the claimant" when the benefit was paid after the claimant's death to the landlord. My conclusions here can only be provisional, because I have had no specific submissions on the point and there are conceptual difficulties. However, they are firm enough in the light of the attitude of the parties for me to proceed on the basis that it was proper for the local authority to make the overpayment recoverability decision against the landlord alone. The tribunal's decision can then be re-made on the same basis.

The Upper Tribunal's decision on the landlord's appeal against the decisions of 30 April 2008

I do not need to worry about whether an award of housing benefit ceases to have effect by operation of law on the claimant's death or whether a decision (supersession on the ultimate change of circumstances?) needs to be made by the local authority. There is no dispute that the payments made to the landlord here after 20 August 2007 were paid in excess of entitlement and constituted overpayments. They are therefore recoverable from the landlord under section 75(3)(a) of the Social Security Administration Act 1992 unless the circumstances fall within a category prescribed in regulations. The landlord cannot be relieved of liability through regulation 101(1) of the Housing Benefit Regulations 2006, for the reasons given when I gave permission to appeal (see paragraph 6 above). The crucial provision is therefore regulation 100(2).

I accept that the first part of regulation 100(2) is satisfied, in that the overpayment from the first pay-day after 2 October 2007 arose in consequence of an official error by an officer of the DWP. To explain that I need to look in some detail at the information provided in and with Mr Atkinson's submission for the Secretary of State on 25 June 2009. If the income support office is informed of a claimant's death and that information is verified (as by the provision of a BD8 certificate), a new nil entitlement will be recorded either on the computer system (ISCS) or clerically from the day after the death. ISCS will then automatically issue a form NHB(IS) to the housing benefit and council tax benefit office informing them of the claimant's death, the date of death and of the date on which housing benefit or council tax benefit would be affected. Where payment of income support was combined with payment of other benefits, another system would produce the same notification. In clerical cases, the form is to be sent clerically. That action would not be taken if the death had not yet been verified. Payment of income support could be suspended. The general administrative instructions in cases of suspension of the whole of benefit paid are to issue a form DLSUSTERM 4 to the local authority, if appropriate.

The submission of 25 June 2009 included the following:

"I submit that the document (page 12) on which this case turns can explain what has happened in this case, and to some extent is supported by the information the appellant (landlord) has provided subsequent to the First-tier Tribunal hearing. The form appears to be a clerically prepared copy of the content of a screen on the DWP Customer Information System (CIS). The LA submission (page 66) indicates that it was prepared by their staff. I have spoken to an IS team supervisor at the Birkenhead Jobcentreplus office where the claimant's case will have been dealt with, and they agree with the following explanation. If the claimant died in the Republic of Ireland on 20/08/2007 it might reasonably take a while for next of kin to contact his local Jobcentreplus office to report his death; they appear to have done this on 02/10/2007. They will have been advised to obtain appropriate verification, Form BD8. It may be that the member of staff receiving the notification did not grasp the difficulty someone in Ireland might have obtaining that form, but in stating `BD8 TO BE FAXED' they appear to be stating that the BD8 is to be faxed to the Jobcentreplus office by the next of kin, not that the Jobcentreplus office has the BD8 and it is to be faxed to the LA.

Without the BD8, or such official notice of verifiable equal validity, the correct `verification' cannot be input to the benefit system and broadcasts will not go out to other benefits sections and the LA. The reason such verification is required is security: in the pre-digital past there were occasional high-profile occurrences of benefit fraud reliant [on] use of the personal details of deceased claimants/taxpayers. So now, once the correct `verification' of death has been input to DWP computer systems there will be immense difficulty in making such an account live: a date of death verification cannot be amended by local staff, and I don't think it is an exaggeration to suggest any member of the public to whom this happens will, in attempting to get it corrected, experience considerable difficulties. ...

In the present case, without sight of the BD8, payment of IS has been suspended. This measure prevents the continued overpayment of IS. There is no evidence of the LA being notified of this. The second attachment to this submission details the action to be taken when suspending payments of IS. It can be seen ... that on implementing a suspension of IS payments the LA should be notified by way of DLSUSTERM4, if appropriate. It is clear whoever dealt with the report of the claimant's death on 02/10/2007 was not aware of the implication for HB, otherwise the LA would have been advised of the IS suspension and to suspend their payments as well."

I accept and adopt that submission as to what happened in the present case. I also accept Mr Atkinson's submission for the Secretary of State that there was an official error on the income support section on 2 October 2007. It was plainly known to that section that the claimant was in receipt of housing benefit. The failure of the officer of the DWP concerned either to appreciate the significance for housing benefit of the suspension of payment of income support on a report of the death of the claimant or, if that was appreciated, to carry out the applicable instructions on notification of the local authority, was a mistake. No other person contributed to that mistake in either form. The mistake was in substance the cause of subsequent overpayments of housing benefit, because if it had not been made the local authority would have been able to suspend payment pending verification of the claimant's death.

There is perhaps more difficulty with the second part of regulation 100(2). Could the landlord at the time of receipt of the payments or notices relating to them have reasonably been expected to realise that it was an overpayment? Here I have in the main to go back to the evidence given to the tribunal of 8 December 2008, but since then the landlord has also provided copies of statements from the claimant's Post Office card accounts showing credits from the DWP past 20 August 2007 down to 2 October 2007 and corresponding cash withdrawals by someone down to 11 October 2007. There was also evidence of the landlord having written to the claimant in March and April 2008 about signing a new lease and on 27 May 2008 about having been told that the housing benefit claim had been terminated. At the hearing on 8 December 2008, the landlord's father gave evidence that on visits to the building lights were on in the claimant's premises, post was gone from the hall, the stairs were swept and nothing untoward had been reported by neighbours. The tenant above the claimant and the tenant of a shop on the ground floor (who was at the hearing) were said to be prepared to testify that they had heard normal comings and goings. The tribunal took the view that the landlord had "been negligent in his duty as a landlord to make reasonable checks and enquiries" and that to make no contact with a tenant for a period of over nine months was a neglect of duty. It considered that good practice would have been to visit the property at a minimum of every two or three months, which inspection would have substantially reduced the amount of the overpayment.

The tribunal seems to me to have taken an unduly rigorous view of what a landlord ought to do to inspect the interior of a property and to see the tenant in person in circumstances in which the rent is being paid and there has been no positive indication of something out of the ordinary. And in any event, the focus has to be on the test in regulation 100(2) rather than that in regulation 101(1)(d)(ii). A landlord might have suspicions that something out of the ordinary was going on without that reaching the stage of a realisation that too much housing benefit was being paid. In my judgment, in the early part of the period after the claimant's death there was nothing that should reasonably have caused the landlord to realise that too much housing benefit was being paid. It was not as if he was trying to contact or see the claimant and failing and outward appearances were normal, even if some other person may have covertly been using the claimant's identity. It was not until there were no replies to the letters about the new lease that real suspicions might have begun to arise and that was towards the end of the period in question. I have concluded that the suspicions did not become serious enough that the reasonable realisation test was met before payment of housing benefit ceased after 13 April 2008.

Accordingly, I conclude that the housing benefit received by the landlord after a notification by the DWP to the local authority on 2 October 2007 could have been acted on is not recoverable under section 75 of the Social Security Administration Act 1992 and regulations 100 and 101 of the Housing Benefit Regulations 2006 because from that date regulation 100(2) (official error) applies. From 21 August 2007 down to that date there was no official error so that the amount of housing benefit payable to the landlord is recoverable from him. That is the re-made decision on the appeal against the decisions of 30 April 2008, as set out at the beginning of this decision. If there is disagreement on the calculation of the amount that is recoverable that cannot be resolved by discussion, the case can be referred back to the Administrative Appeals Chamber of the Upper Tribunal for further decision.

(Signed) J Mesher

Judge of the Upper Tribunal

Date: 10 September 2009