Upper Tribunal (Administrative Appeals Chamber)

DECISION OF THE UPPER TRIBUNAL

(ADMINISTRATIVE APPEALS CHAMBER)

The DECISION of the Upper Tribunal is to allow the appeal by the appellant.

The decision of the Harrow First-tier Tribunal dated 2 October 2008 under file reference 035/08/00440 involves an error on a point of law. The First-tier Tribunal’s decision is set aside.

The Upper Tribunal is not in a position to re-make the original decision under appeal. It therefore follows that the appellant’s appeals against the local authority respondent’s decisions dated 22 November 2007 are remitted to be re-heard by a different First-tier Tribunal, subject to the Directions at paragraph 75 below.

This decision is given under section 12(2)(b)(i) of the Tribunals, Courts and Enforcement Act 2007.

REASONS FOR DECISION

The nature of the case

1. This case concerns the appellant’s appeal against a First-tier Tribunal decision, which in turn confirmed the local authority’s revised decision that (i) she was not entitled to housing benefit and council tax benefit for significant periods between 1993 and 2008: (ii) she was also liable for the recovery of the substantial consequential overpayment of housing benefit and excess payment of council tax benefit. It also raises the important question of how far a local authority deciding a housing benefit or council tax benefit claim is bound by a Department for Work and Pensions (DWP) social security decision-maker’s award of income support.

The local authority’s decisions

2. On 22 November 2007 the local authority sent the appellant two letters stating that her entitlement to housing benefit and council tax benefit had been revised for (different) past periods going back to 1993.

3. The first letter stated that she had been paid excess council tax benefit in respect of three addresses at which she had lived, namely No. 52 D Waye, No. 90 B Way and No. 48 N Road. The periods concerned were from 1 April 1993 (the date that the council tax benefit scheme came into force) until 1 March 1998, from 8 June 1998 to 30 June 2002 and from 22 May 2006 to 21 March 2008. So they did not cover the whole period from 1993 to 2008: there was a gap of three months in 1998 and a gap of some four years between 2002 and 2006. The amount of excess council tax benefit was stated to be £6,895.98. This was said to be recoverable from the appellant, as it had not been caused by official error. For good measure, the letter asserted that the appellant had misrepresented the fact that she owned properties and had received capital. At all relevant times the capital limit for both housing benefit and council tax benefit was £16,000.

4. The second letter stated that there had also been an overpayment of housing benefit amounting to £27,265.42 for the period from 4 December 1995 to 30 June 2002 in respect of her tenancy at No. 48 N Road. This overpayment was said to be recoverable from her for the same reasons. It does not appear to be in dispute that the appellant lived in temporary accommodation at No. 52 D Waye and No. 90 B Way for short periods in 1993 after having separated from her then husband (hence these addresses were relevant only to the council tax benefit matter, as the housing benefit overpayment was said to date from 1995). It also seems to be agreed that she lived at No. 48 N Road from November 1993 continuously through to at least the end of March 2008. I note that the appellant was originally a council tenant at No. 48 but bought the property in 2002, which accounts for the duration of the alleged overpayment of housing benefit.

The decision of the First-tier Tribunal

5. The First-tier Tribunal heard the appellant’s appeals at Harrow on 2 October 2008, following an earlier adjournment. The Tribunal Judge dismissed the appeals and confirmed the local authority’s decisions. In her summary Decision Notice she added that “The overpayments occurred because she failed to disclose excess capital of £16,000”.

6. The Tribunal Judge subsequently issued a detailed six page Statement of Reasons for her decision. I should observe at the outset that this was on any reckoning a complex case, both legally and factually (which is why the Regional Tribunal Judge said that she granted permission to appeal to the Upper Tribunal). The Tribunal Judge was faced with over 300 pages of evidence, including four transcripts of extensive interviews with the appellant under caution and a welter of documents relating to financial and property matters. In addition, according to the Tribunal Judge’s note, “a great many documents [were] handed in today bit by bit” [by the appellant]. However, in my initial observations on the appeal, I suggested that there were potentially three main errors of law in the tribunal’s decision.

7. The first related to the tribunal’s treatment of the appellant’s argument that the local authority was bound by the decision of the DWP to award income support for much of the period in question. I return to this issue in more detail below, as it has important implications for the re-hearing of the appeal.

8. The second potential error of law related to the tribunal making findings of fact which were not supported by the evidence. The following examples will suffice. In essence, the tribunal adopted the findings of fact made by the local authority following its investigation. In relation to the property at No. 62 L Road, the tribunal found that (i) the appellant had bought No. 62 L Road in 1986 and was listed as sole owner; (ii) the property was worth between £88,000 and £120,000 in 1991, based on the relevant council tax band, subject to a mortgage of £54,000 and so with a net equity value of £16,750; (iii) the property was sold on 06/10/03 for £150,000; (iv) the appellant had completed a housing benefit review form on 04/01/01 when she still owned No. 62 L Road (and indeed No. 12 C Road) and yet had dishonestly declared that she owned no other properties.

9. There are problems with all these findings in the light of a close scrutiny of the evidence before the tribunal. As to (i) an Office Copy of the Land Registry entry showed that the property had been purchased by the appellant and her husband as co-owners in 1986. So at the time of purchase she was not the sole owner. As to (ii), this calculation was in fact based on the figure for the lower end of the council tax band valuation for 1991 less the mortgage as it stood at its highest point in 2000, but again all on the premise that the appellant was sole owner. The appellant’s husband, from whom she separated in 1993, died some time in 1997, and it was presumably only at that point that the appellant became sole owner by survivorship. As regards (iii), No. 62 L Road was certainly registered with a new owner at the Land Registry on 6/10/03. However, there was ample evidence before the tribunal in the form of invoices from the appellant’s solicitor and estate agent that the sale was actually completed about 18 months earlier on 21 May 2002. This certainly appears to be corroborated by a bank statement receipt of some £184,732 on 22 May 2002. On point (iv), the appellant was apparently the sole owner of No. 62 L Road when she signed the housing benefit review form. However, that form was actually signed on 04/01/02, not on 04/01/01. Probably, of course, that is simply a typographical error. Yet the tribunal’s finding, agreeing with the local authority, that the appellant also owned No. 12 C Road at that date is plainly unfounded, as there was evidence that No. 12, bought jointly in 1989 by the appellant, her husband and a third party, had been purchased by C Ltd in 1994. There was no evidence before the tribunal or indeed any finding by the tribunal that the appellant had any interest at all in C Ltd. The sale of No. 12 L Road was simply overlooked.

10. The third possible error of law concerned the application of the test for the recovery of the alleged overpayment of housing benefit and excess payment of council tax benefit. It seemed that the tribunal had focussed on issues of misrepresentation and failure to disclose, which of course relate to the statutory test for recovery of other social security benefits under section 71 of the Social Security Administration Act 1992, and not directly to housing benefit and council tax benefit. In addition, I asked whether the tribunal had adequately addressed the appellant’s argument about “official error”.

The parties’ arguments before the Upper Tribunal

11. The appellant’s representative seeks to argue that the decision of the First-tier Tribunal is wrong in law for a range of reasons. Some of these matters are issues of fact which were for the tribunal to determine. Others display a misunderstanding of the relevant legal provisions. The fact that I have allowed the appellant’s appeal to the Upper Tribunal should not be taken to mean that I have accepted all the arguments advanced on her behalf by her current or previous representatives.

12. The local authority’s representative now agrees that the tribunal erred in law for the reasons identified above in paragraphs 7-10. I find that the tribunal’s decision does involve an error of law in relation to those three areas and for that reason, given their significance, must set aside the tribunal’s decision under section 12(2)(a) of the Tribunals, Courts and Enforcement Act 2007.

13. Both representatives argue that, if possible, the Upper Tribunal should make its own decision on the appellant’s original appeal against the local authority’s decision. There is certainly some merit in that argument, given the length of time that has elapsed and the considerable body of documentary evidence in the papers. However, I have regrettably come to the view that it is not appropriate for the Upper Tribunal to dispose finally of the case. There remain a number of important factual matters to resolve, there are important issues of credibility to be decided, and the local authority may also wish to seek further evidence from the DWP. The appropriate forum for all such matters to be decided is the First-tier Tribunal.

14. Both representatives ask, in the event that the case is sent back for re-hearing, if the Upper Tribunal can nonetheless resolve as many findings of fact as are possible. However, the Upper Tribunal can only make findings of fact if it is re-making the decision under appeal (section 12(2)(b)(ii) and (4)(b) of the Tribunals, Courts and Enforcement Act 2007). It has no power to make findings of fact when remitting the case for reconsideration by a fresh tribunal (section 12(2)(b)(i) and (3)).

15. Clearly, then, it would not be right for the Upper Tribunal to make any findings of fact which might prejudice the re-hearing. However, in the attached schedule an apparent chronology of key events is set out. This is intended to assist the parties and the First-tier Tribunal that re-hears the appeal. The new tribunal is at liberty to accept or reject parts or all of that suggested chronology as it sees fit in the light of all the evidence it hears.

16. In the light of the errors identified above in the previous tribunal’s decision, I also proffer the following directions and guidance which I hope will be of benefit to the Tribunal Judge charged with the rehearing of the appellant’s appeal against the local authority’s decisions, as well as to the parties. This guidance centres on the three areas mentioned above.

The status of the income support award in relation to the local authority

17. There is very limited evidence from the DWP about the history of the appellant’s income support claim(s). In fact, all there is on file is a witness statement from a DWP fraud officer dated 21 August 2008 (pp.268-269). This confirmed that the local authority had referred the matter to the DWP on 2 February 2007 and that at that point the appellant had been claiming income support since 18 May 2006. It also stated that:

“Further inquiries revealed that Mrs B had been claiming Income Support between 1993 and 2002. Departmental records for Income Support paid during the period 1993 to 2002 had been archived and were not available to the decision maker to make a decision on her entitlement for Income Support for the period 1993 to 2002, as a result no decision was made.”

I also note that a DWP fraud investigator had previously attended the four interviews under caution which the local authority had conducted with the appellant in the course of 2007.

18. The local authority representative is clearly frustrated by the action (or perhaps inaction) of the DWP. She complains that the DWP “are aware of the information regarding the properties owned by Mrs B, but have decided not to change their decision”. She goes on to state: “It is clear from the comments in the DWP’s statement, that they consider the matter closed and are not actively looking to change any decisions. I am not entirely satisfied that the DWP can legally chose to take this path.” She also concedes that she is not “100% familiar with Income Support recoverability rules”. Clearly, the DWP’s apparent reluctance to pursue the matter is something which the local authority should take up with the DWP through the appropriate channels, if it sees fit to do so.

19. The appellant’s representative, however, makes a more fundamental point. In summary, the argument is that there are extant DWP decisions awarding the appellant income support income support for the period from 1993 to 2002 and from 2006, which have not been revised. Furthermore, it is said, the local authority cannot go behind those decisions, given R v Housing Benefit Review Board of Penwith DC ex p. Menear (1991) 24 HLR 115 and R v South Ribble Borough Council, ex p. Hamilton (2000) 33 H.L.R. 104. I accept that the First-tier Tribunal erred in law in not adequately addressing this argument. I also note that this issue was expressly raised at the first adjourned hearing of the appeal on 22 August 2008 (p.251) and was subsequently re-iterated by the appellant’s then representative in writing (pp.256-257).

20. So how then should the new tribunal address the issue? The first matter that needs to be established is the precise period (or periods) when the appellant was actually in receipt of income support, rather than simply a generalised statement that it was “between 1993 and 2002”. Presumably the local authority can make enquiries of the DWP and so establish the actual start and end dates of all awards of income support during this lengthy (and rather vague) period.

21. The precise dates are important because a person is entitled to housing benefit if she “has no income or [her] income does not exceed the applicable amount” (Social Security Contributions and Benefits Act 1992, section 130(1)(c)(i)). In addition, where a person is on income support, any earnings and the whole of any other income they may have are to be disregarded for the purpose of housing benefit (see now paragraph 12 of Schedule 4 to, and paragraph 4 of Schedule 5 to, the Housing Benefit Regulations 2006 (SI 2006/213)). Likewise, the whole of their capital is to be disregarded (now paragraph 6 of Schedule 6 to the 2006 Regulations). These provisions replaced parallel rules to the same effect in the 1987 Regulations, which applied at the time in question. In effect, a person on income support is deemed to have no income or capital for housing benefit and council tax benefit purposes.

22. The general rule, therefore, is that there is no need for local authorities to reassess these conditions of entitlement. This is demonstrated by R v Housing Benefit Review Board of Penwith DC ex p. Menear. In ex p. Menear the local DHSS social security office initially decided that an elderly couple were living together as an unmarried couple and so refused income support to the female claimant, but then later reversed that decision. Even so, the local authority asked for details of her male companion’s income and capital, and later decided (despite the DHSS change of heart) that they were an unmarried couple and so the claimant had no separate housing benefit entitlement. Kennedy J. granted the application for judicial review. Ex p. Menear is authority for the proposition that the housing benefit decision-maker is bound by a DWP decision on income and capital issues: see the detailed analysis of Mr Deputy Commissioner Paines QC in R(H) 9/04.

23. The justification for the binding effect of the DWP decision was set out by Scott Baker J. (as he then was) in R v South Ribble Borough Council, ex p. Hamilton (2000) 33 H.L.R. 104 at 108, paragraph 9:

“The reasoning underlying the way the respondent says the legislation works is that a claimant in receipt of income support, entitled to housing benefit, will already have had a detailed income and capital assessment for the purposes of ascertaining entitlement to income support. By definition, income support claimants have been assessed as having capital worth less than the relevant capital figure and income less than the applicable amount. So there is no need to carry out again the detailed assessment exercise of their income and capital to determine entitlement to housing benefit.”

24. However, Scott Baker J. went on to add: “But where fraud has underlain the income support assessment the reasoning no longer applies. The income support assessment is no longer a valid and reliable basis for the housing benefit claim. As Miss Stockley for the respondent points out, this is particularly so where fraud only becomes apparent after the award of income support.” The Court of Appeal’s decision in ex p. Hamilton is thus authority for the proposition that a “person on income support” (within regulation 2(1) of the 2006 Regulations) means a person lawfully in receipt of income support, in the sense of not having obtained that benefit by fraud or dishonesty.

25. In R(H) 9/04, as noted above, Mr Deputy Commissioner Paines QC ruled that the effect of ex p. Menear is that a local authority housing benefit decision-maker is bound by a DWP decision on income and capital issues. However, the housing benefit decision-maker was not bound by a DWP decision as to family status – if that point was challenged by the claimant, the local authority had to reach its own conclusion on the issue “especially in a case where, as here, it is unlikely that the DWP’s position represents a considered view” (at paragraph 37). However, a “considered” DWP decision on a point other than income and capital, and so where the DWP and the local authority had parallel decision-making powers, was likely to be satisfactory evidence of a particular state of affairs, at least in the absence of evidence to the contrary (at paragraph 39). The force of the distinction being made here is not, in my view, affected by Mr Deputy Commissioner Paines QC’s partial recantation of some of his comments in R(H) 9/04 in his later decision in CH/411/2007, which deals with the particular point about the status of decisions as to whether a claimant is a “person from abroad” (see further Hillingdon LBC v MJ [2010] AACR 4, originally decided as CH/3079/2009, at paragraphs 20-23).

26. The local authority’s representative relies on the argument that in the present case the DWP’s position had not been reached as a result of “a considered view”. However, the difficulty with that particular submission is that Mr Deputy Commissioner Paines QC’s comment was clearly in the context of an issue where the DWP and local authority had parallel and independent decision-making powers (e.g. on deciding family status). By definition, the comment did not refer to the situation where the DWP effectively had exclusive jurisdiction to act (e.g. in determining income and capital), subject always to ex p. Hamilton. As the local authority’s representative also points out, the implications of these authorities were considered by Miss Deputy Commissioner Ovey in unreported decision CH/4014/2007 and by Mr Commissioner Turnbull in CH/4012/2007 respectively.

27. In CH/4014/2007 the claimant had been in receipt of housing benefit and council tax benefit as a lone parent from 1994 until 2007. The local authority suspected that in fact she was living together with her partner as an unmarried couple. Local authority and DWP fraud investigators conducted joint interviews with the claimant. The local authority decided that the claimant and her partner had been living together and suspended her claims to housing benefit and council tax benefit. The DWP was still considering the position and had not made a decision on her income support entitlement. A tribunal dismissed the claimant’s appeal against the local authority decisions.

28. Miss Deputy Commissioner Ovey held that the local authority was not empowered to make the decisions it purported to make. The case fell “fairly and squarely within Menear” (at paragraph 18). The Deputy Commissioner noted that the evidence of fraud in ex p. Hamilton was strong, whereas there had simply been an allegation of fraud in CH/4014/2007. She continued:

“22. In those circumstances, I find assistance in the helpful note at page 281 of the Child Poverty Action Group’s commentary on Housing Benefit and Council Tax Benefit Legislation. In connection with Hamilton it is said:

‘On its facts, the decision is justifiable as a matter of public policy. However, caution will be required in its application. In Hamilton there was apparently no evidence that the DWP had ever considered whether it shared the local authority’s view that the claimant was acting fraudulently. However, there may be cases where the DWP has examined a claim and has concluded that there is no basis for taking away the claimant’s IS or JSA, or where a decision by a decision maker that a claimant has been acting fraudulently is reversed on appeal to an appeal tribunal. In that event, Hamilton should not be read as giving the local authority an entitlement to take a different view.’

23. As I said in paragraphs 7 and 8 above, in the present case the Department of Work and Pensions was involved in the relevant interviews and at the time of the hearing before the tribunal was apparently considering what view it would take. In those circumstances, it seems to me that the question whether income support was obtained by the claimant fraudulently or dishonestly is clearly one for the Department, which is actively looking at the point. It is not for the local authority to reach a decision on whether or not the decision makers in the Department have reached or do reach the correct conclusion. I do not seek to define the precise boundaries of the circumstances in which Hamilton can be relied on, but I take the view that the present case is clearly not within those boundaries.

24. It follows that I conclude that the tribunal was mistaken in law in taking the view that the local authority was entitled to depart from the Department’s decision, then still effective, that the claimant was entitled to income support. I allow the appeal and set aside the decision.”

29. I understand that the local authority in CH/4014/2007 (the same council as in the present appeal) took counsel’s advice on the possibility of appealing that decision to the Court of Appeal, but it appears that (for whatever reason) no such steps were taken. However, in CH/4012/2007 (again, the same local authority) Mr Commissioner Turnbull expressly declined to offer a firm view on the observations of Miss Deputy Commissioner Ovey. In CH/4014/2007, as in CH/4012/2007, there was an extant award of income support for the past period which the DWP had not revisited as at the time of the council’s decision (although in this case it seems that the DWP did in fact later make a decision in that case removing income support for the past period). There was also a material difference between those cases in that in CH/4012/2007 the local authority made a decision about the claimant’s capital (this was not a living together case), whereas in CH/4014/2007 the local authority purported to decide the claimant’s relationship status. Mr Commissioner Turnbull also commented as follows (original emphasis):

“8. If what Miss Ovey said there is right, it would appear that the doctrine in the Hamilton case could not apply here either, even if the Claimant was fraudulent or dishonest in relation to her income support award, because as I understand it the DWP was also involved in the interviews in the present case, and was presumably also, at the time of the housing and council tax benefit decisions, actively looking at what should be done in relation to the income support decisions.”

30. I share the uncertainty expressed by Mr Commissioner Turnbull (as he then was) over Miss Deputy Commissioner Ovey’s reading of the scope of the ex p. Hamilton principle in CH/4014/2007. For the reasons that follow, however, I do not need to resolve that question in the context of this appeal. That said, I also agree with the Deputy Commissioner that the commentary that she cites at paragraph 22 of her decision is helpful in understanding the boundaries of ex p. Hamilton, although it may not be the end of the matter.

31. Like CH/4012/2007, but unlike CH/4014/2007, the present case concerns a local authority decision about the claimant’s capital, not her relationship status. It is therefore distinguishable from CH/4014/2007 in that respect in any event. The present case, however, is also arguably materially different to both CH/4012/2007 and CH/4014/2007 in one further respect. In CH/4012/2007, following a joint investigation by the DWP and the council, there was (eventually) a DWP decision that the claimant had no entitlement to income support for the past period. In those circumstances there is a very strong case that a tribunal could take the DWP decision into account, despite it post-dating the council’s decision. Mr Commissioner Turnbull left this point open in CH/4012/2007 (at paragraph 5), although he noted CJSA/2472/2005 (now reported as R(JSA) 2/07). However, the Commissioner does not appear to have been referred to Mr Commissioner Powell’s decision on the point in CH/1820/2006 (see paragraph 16 of that decision, also cited at paragraph 52 of CH/411/2007). In CH/4014/2007, however, there was a joint investigation but the local authority “jumped the gun” in making its own decision, whilst the DWP was still considering what action to take. It is not known what action, if any, the DWP later took in that case. The ratio of the Deputy Commissioner’s decision seems to be that on the facts the local authority had no business making a decision on the claimant’s relationship status. In the present case there was again a joint investigation, which led the local authority to make its own possibly “pre-emptive” capital decisions on 22 November 2007 (see paragraphs 2 to 4 above). The DWP was still (apparently) considering the matter and eventually made what is perhaps best described as a “non-decision”, as intimated on 21 August 2008 (see paragraph 17 above).

32. In the present case, therefore, there is little evidence that the DWP was “actively looking at the point”, to use Miss Deputy Commissioner Ovey’s terminology. True, it had taken some part in the four joint interviews. But the DWP had then found that the claimant’s past income support case papers were unavailable and so “as a result no decision was made”, as indicated in its fraud officer’s witness statement nearly a year later. So the present case is different from both CH/1820/2006 and CH/4012/2007 in that it appears that there is no later DWP decision to withdraw income support for the past period. It is also different from CH/4014/2007 in that it is both (i) an appeal about a decision on capital, not relationship status; and (ii) a case in which the DWP (according to the local authority at least) were taking no active interest in the matter.

33. In those circumstances, and taking into account the legislative provisions and case law referred to above, it seems to me that the position in the present case is as follows: (i) the starting point is that there is on the face of it an extant award of income support for the periods between 1993 and 2002 and since 2006; (ii) once the precise parameters of that award have been established, the default position by statute is that the claimant is deemed to have no income and capital for the purposes of both the housing benefit and council tax benefit claims over that same period; (iii) to that extent, the local authority remains bound by the decision(s) of the DWP covering that period (ex p. Menear); (iv) however, if the local authority can show on the balance of probabilities that the income support awards at the material times were obtained by fraud or dishonesty, then it can show that the award of income support underpinning the awards of housing benefit and council tax benefit was vitiated by such fraud or dishonesty (ex p. Hamilton). There are two further matters relating to the proof of fraud or dishonesty in First-tier Tribunal proceedings which are worthy of note.

34. First, the appellant’s former representative argued that the local authority could not go behind the award of income support for a past period until the DWP had secured a conviction in a criminal prosecution for fraud. I do not accept that proposition. There is noting in ex p. Hamilton which supports such an argument. In that case there was at best a strong suggestion that fraud may have taken place, but there is no indication that the Court of Appeal regarded a conviction (or even the launch of criminal proceedings) as a prerequisite for the exception to the general rule in ex p. Menear to apply.

35. I am conscious that other arguments may apply in the very different context of child support law, where it may be relevant to determine whether a parent with care has obtained a prescribed benefit by fraud. In R(CS) 3/08 Mrs Commissioner Jupp ruled, following ex p. Hamilton, that legislation should not be construed so as to enable a person to profit from her own known fraud (in that case the parent with care had been convicted of an offence of fraud in relation to her income support claim). The Commissioner concluded that the Court of Appeal’s decision in Secretary of State for Social Security and another v Harmon, Carter and Cocks [1999] 1WLR 163 (R/CS 4/99 – the Harmon case), that “in payment” did not mean “lawfully in payment” could therefore be distinguished. In R(CS) 2/09, however, Mr Commissioner Levenson held that “unless there has actually been a criminal conviction (or, possibly, an admission of fraud during the course of tribunal or court proceedings), then in my view the position in Harmon (and MacGeagh) continues to apply.” This ruling, however, was in the specific context of section 6 of the Child Support Act 1991. It has no bearing on the present case, which must be determined on the basis of the principles set out by the Court of Appeal in ex p. Hamilton.

36. The second issue relates to the standard of proof which applies, given that the local authority do not have to show that the appellant has been convicted of an offence of fraudulent or dishonest conduct in relation to her income support claim. At the previous tribunal hearing the local authority conceded that, as it was alleging fraud or dishonesty, the standard of proof it faced was higher than the normal civil standard of the balance of probabilities, albeit not as high as the criminal test of beyond reasonable doubt. That concession doubtless reflected the maxim that “the more serious the allegations to be proved, the more cogent is the evidence required to reach the standard of proof”, as stated by the Tribunal of three Social Security Commissioners in R(IS) 17/04 at paragraph 17(c), relying on the decision of the House of Lords in Re H [1996] AC 563 at 586 (per Lord Nicholls of Birkenhead).

37. However, that comment of the Tribunal of Commissioners in R(IS) 17/04 now need to be read in the light of more recent decisions of the House of Lords and now the Supreme Court. In Re B (Children) [2008] UKHL 35, Lord Hoffmann said (at paragraph 35) that “there is only one civil standard of proof and that is proof that the fact in issue more probably occurred than not.” Likewise, in the same case, Baroness Hale of Richmond explained that: “Neither the seriousness of the allegation nor the seriousness of the consequences should make any difference to the standard of proof to be applied in determining the facts. The inherent probabilities are something to be taken into account, where relevant, in deciding where the truth lies” (at paragraph 70). More recently, the Supreme Court has reaffirmed that the civil test is “the balance of probabilities, nothing more and nothing less” (Re S-B (Children) [2009] UKSC 17 at paragraph 34). Those decisions related to child protection matters, but the general proposition remains good that there is just one civil standard of proof. First-tier Tribunal hearings are civil proceedings and so the test is simply the balance of probabilities.

38. Presumably the thrust of the local authority’s case at the re-hearing will be that the claimant was not actually entitled to income support for the period from 1993 until 2002 (and again from 2006 to 2008), and again presumably on the basis that she did not disclose relevant capital (in the form, primarily, of property holdings) to the DWP (there may be a secondary argument also about possibly undisclosed income, as will become apparent later). The evidence relating to these periods is discussed further below, and will require careful fact-finding from the new tribunal. However, the new tribunal must also bear in mind that unlike the capital limit for housing benefit and council tax benefit, which has remained at £16,000 throughout the relevant period, the capital limit for income support has changed over time.

39. At the time of the original income support claim in 1993, the upper capital limit for income support was £8,000, above which there was no entitlement to benefit (Income Support (General) Regulations 1987 (SI 1987/1967), reg. 45). The tariff income rule applied to capital between £3,000 and £8,000 (reg. 53). Those rules applied throughout the period from 1993 to 2002 to claimants of working age such as the appellant. The appellant re-claimed income support in May 2006. A month previously, on 10 April 2006, the income support upper capital limit was raised to £16,000 for all claimants (Social Security (Miscellaneous Amendments) (No. 2) Regulations 2005 (SI 1005/2465), reg. 2(4)). At the same time the lower threshold was raised from £3,000 to £6,000 for the tariff income rule.

The factual issues to be determined at the new hearing

40. First of all, therefore, the new tribunal must make findings of fact as to the precise periods during which the appellant was in receipt of income support. It must then establish whether or not those awards of income support have been subsequently revised or superseded in any way by the DWP. By the time this matter is re-heard by a new tribunal, it is always possible that the DWP may have located the relevant case papers and reached a substantive and considered decision on whether or not the claimant was indeed entitled to income support for all or part of the period 1993-2002 (and again from 2006).

41. If the DWP decide that there is no past entitlement to income support, that adverse decision will of course itself give the claimant new appeal rights (as regards that income support decision) and the local authority may decide to re-make its own revision decisions on housing benefit and council tax benefit in the light of the new DWP decision.

42. If, however, the DWP positively conclude on an examination of the merits of the case that there is no basis for removing the claimant’s past entitlement to income support, then in principle the local authority cannot now go behind that decision (ex p. Menear).

43. If, on the other hand, the DWP decide to take no further action, and so leave the 1993-2002 award(s) in place, e.g. because their relevant records have been destroyed, or the evidence that they do have on file is at best ambiguous and insufficient to justify a revision, then it remains open to the local authority to seek to prove fraud or dishonesty on the part of the appellant as a basis for showing there was no entitlement to income support and hence also to housing benefit and council tax benefit (ex p. Hamilton).

44. This latter course of action may not be straightforward for the local authority. It is important to note that the local authority would have to show that the income support award(s) had been obtained fraudulently or dishonestly. The local authority may or may not have access to the claimant’s income support claim forms and review forms. There are, of course, information-sharing powers applying to the exchange of such evidence between public authorities, which the local authority may wish to explore. Even if the relevant documents have been destroyed by the DWP, it may be possible – with care – to draw certain inferences as to their contents; but equally it may not actually be feasible to reconstruct the contents of the missing documents. In that eventuality the local authority may be unable to undermine the bare fact of an earlier award of income support (see further R(IS) 11/92, and especially paragraphs 38-42).

45. In addition, the local authority would have to show (on the balance of probabilities) that the appellant owned property which would have excluded her from entitlement to income support at the material times (and bearing in mind, of course, that the capital rules for income support were lower for most of the period in question). In addition, the local authority would have to establish that the award of income support had either been obtained by fraud or dishonesty in the first place or its continuance had been secured by such bad faith.

46. In order to answer such questions, the new tribunal will have to consider the circumstances of each claim separately. On the working assumption that there were two continuous but separate income support awards (one from 1993 to 2002 and then again one from May 2006 to March 2008 at least), this means that the tribunal will have to investigate the following matters in the light of the suggested chronology appended.

The period of the 1993-2002 income support claim

47. There is, inevitably, only limited documentary evidence relating to this period. At present there is no paper evidence relating to the award of income support except for the DWP fraud officer’s very short witness statement. There are few bank account statements, and then only for the latter part of this period. There is a copy of a short housing benefit review form from 1999 (pp.22-23) and a slightly longer one from 2002 (pp.24-27). There is also the appellant’s mortgage application form from May 2003 (pp.106-120); although this is obviously after the end of the period of claim, it refers to the appellant’s income for part of that period and obviously raises questions about her credibility, as discussed below.

48. The local authority case, as accepted by the tribunal, was that the appellant owned two other properties throughout this period. For the reasons set out at paragraphs 8 and 9 above, the position does not appear to be that straightforward. The two properties in question were said to be No. 12 C Road and No. 62 L Road. As indicated at paragraph 45 above, in order to substantiate its argument that there have been overpayments of housing benefit and council tax benefit, the local authority must show that the appellant was excluded from income support at the material times by virtue of owning such property and that she had obtained that benefit fraudulently or dishonestly.

49. As regards No. 12 C Road, the Land Registry evidence (pp.49-50) suggests it was bought on 12 January 1989 (before the first claim for benefit). The three legal owners were the appellant, her then husband and a third party, described as a “builder”. However, he may have been a family member, as all three individuals shared the same address (the appellant’s former matrimonial home). There is no indication on file as to the beneficial ownership of No. 12 C Road. For example, were the three co-owners joint tenants or tenants in common in equity? There is no Land Registry note of the purchase price. There is evidence of a mortgage with the Nat West but, it appears, no indication of the amount of the advance. There is also clear evidence of a sale in October 1994 to C Limited (pp.51-52). There is, in addition, the appellant’s statement under caution that No. 12 C Road was a B&B property but it had been repossessed and sold at auction (pp.146-148). She also stated that it had been sold at auction for £250,000 but that they had owed the Nat West some £430,000 (p.153).

50. The appellant’s claim for income support started some time in 1993, while she was still a co-owner of No. 12 C Road. Her representative’s submission to the adjourned tribunal was that she had disclosed (to both the DHSS and the local authority) the fact that her husband had properties and that she had fled the matrimonial home due to domestic violence (pp.252 and 256-257; see also p.284). The new tribunal may need to make a finding on that matter. Be that as it may, there would presumably have been the potential for a capital disregard under either paragraph 6 (business assets being disposed of) or paragraph 26 (premises in respect of which the claimant is taking reasonable steps to dispose) of Schedule 10 to the Income Support (General) Regulations 1987 for a period 26 weeks or indeed possibly longer.

51. It is, of course, entirely a matter for the new tribunal, but on the present state of the evidence it may be difficult to make a finding that the appellant had any meaningful capital assets based on her interest in No. 12 C Road from the date of claim in 1993 and up to the time of sale in 1994 (or indeed that the sale generated any proceeds for her). That may change if fresh evidence comes to light.

52. The evidence in relation to No. 62 L Road is more difficult. According to the Land Registry Office Copy, the appellant and her then husband were registered as owners of this property on 18 August 1986, well before her income support claim (p.279). The purchase price and beneficial interests are not stated. According to the local authority, the property’s value in April 1991 was between £88,001 and £120,000 (p.10), based on council tax bandings. There was a first mortgage with the Woolwich (p.281), originally for £54,000 (in 1986) but by 2000 the outstanding balance was more than £69,000 (p.242). There was then a second mortgage (amount unknown?) on No. 62 L Road with Nat West, which was registered in September 1989 (pp.273 and 281); this may have been to help finance the purchase of No. 12 C Road (p.148).

53. The appellant’s husband apparently died in 1997, when she would presumably have become the sole owner of No. 62 L Road by survivorship. By this time, of course, the appellant had been separated from her husband for some four years. Her statement under caution was to the effect that she had no idea what had happened to this property until some years later (pp.153 and 173; see also p.286). There is certainly evidence that she sold No. 62 L Road in May 2002 for £250,000 (pp.275 and 276; on that basis, according to the web-based Nationwide house price index calculator, its actual value in (for example) May 1993 would have been £93,000, towards the bottom end of the relevant council tax band). There is also evidence that the appellant received a bank credit of £184,732.12 on 22 May 2002 from her solicitors’ client account (p.61; see also p.272 confirming the discharge of what appears to be the first mortgage with the Woolwich). It is difficult to see how the local authority formed the view that the origin of this credit was “unknown” (p.11). There is certainly no copy of the solicitors’ completion statement for the sale, but the building society’s mortgage account statement indicates that the outstanding first mortgage of £61,261.30 was paid off in full at that point (p.249). So, as at the point of sale, the appellant’s equity in No. 62 L Road was clearly very substantial. Of course, at some point in 2002 the appellant withdrew her claim for income support; under caution she had stated that this was because a new partner had moved in with her and that it was his departure in May 2006 that prompted her re-claim (pp.136-138).

54. Again, the findings of fact are entirely a matter for the new tribunal. However, given the paucity of the evidence at present, it may be difficult to make an accurate assessment of the value of the appellant’s interest in No. 62 L Road whilst her husband was still alive. If it was being run as a B&B business by him, there might also be a question of a possible capital disregard under paragraph 6 of Schedule 10 to the Income Support (General) Regulations 1987, for a period at least. Once the appellant’s husband had died, then on the face of it she was solely entitled to the equity in the property. If, for example, he had died in May 1997, then the value of No. 62 L Road (again using the Nationwide house price index calculator as best evidence) would have been in the order of £121,000, suggesting an equity at that stage of between £52,000 and £67,000, depending on the size of the then mortgage debt).

55. This might suggest that from the point of her husband’s death in 1997 the appellant owned a capital asset in the from of the equity in No. 62 L Road which was substantially in excess of the upper capital limit for income support (£8,000) and both housing benefit and council tax benefit (£16,000) at the time, subject to any capital disregards that might apply. If that is so, however, it is not the end of the matter. Rather, the tribunal will have to form a view on the appellant’s state of knowledge as regards this property at various times as this would have a direct bearing on any possible finding as to any dishonesty or fraudulent behaviour on her part. I referred above to her statements that she had had no idea what had happened to the property for some years. The tribunal may need to explore this issue in some detail with the appellant.

56. In this context it should be noted that, as at 5 November 1997, the Land Registry still had the appellant’s husband registered as a co-owner of No. 62 L Road (p.279). There is some evidence that his name was not removed from the Land Registry entry until 29 September 2000 (see p.43; this also appears to have been conceded by the local authority’s representative at the tribunal hearing (see p.295)). If so, this may lend some credence to the appellant’s account of how she was unaware for some time as to what had happened to No. 62 L Road.

57. Another matter which the tribunal may need to explore is the appellant’s mortgage application of May 2003 (for funds to purchase No. 236 V Road). This states that her income for each of the three years from 2001 to 2003 was £77,381 or more. Yet it appears that for a good part of that period she was claiming income support. Furthermore, on 4 January 2002 she confirmed to the local authority that she was getting income support and child benefit, that she was not working and that she had no other income (and indeed no other property: see pp.24-27). There is clearly a difficulty in reconciling this conflicting evidence. It is one thing to say (as to the previous tribunal) that the omission to refer to No. 62 L Road on the review form was simply a terrible mistake – it is another to explain the clear conflict between (a) the assertion on the housing benefit review form that she was not working and had no income other than benefits with (b) the declaration on the mortgage application form of a substantial income relating to the same period.

58. Finally, I should also emphasise that the property at No. 236 V Road is irrelevant to the period of the 1993-2002 claim for benefit. This is because there is clear evidence that the appellant purchased that property in the summer of 2003, when she was not on benefit, for £250,000 (p.54). This property was bought with a mortgage with MAS of just over £225,000 (pp.101-102).

The period of the 2006-2008 income support claim

59. The evidence for this period may be clearer, given that it is closer in time. It appears that the income support claim restarted on 18 May 2006 (p.268). On 22 May 2006 the appellant also completed a claim form for housing benefit and council tax benefit (pp.28-37). As the appellant was now the owner of No. 48 N Road, this was only a claim for council tax benefit. It follows that for this period then can at most be an excess payment of that benefit, but no housing benefit overpayment.

60. On that application the appellant stated that she had three bank or building society accounts, one with HSBC, one with Barclays and one with the Nationwide (p.35). The HSBC account was overdrawn by £1,111.69 on 22 May 2006, although a payment of £500 was received on 23 May 2006 and further payments of £600 and £500 received in the days that followed (p.64). The source of these credits (and other substantial amounts in following weeks, amounting to more than £17,000 over the next 9 months) is unclear (see pp.12-13). Some, but not all, of these credits were matched fairly closely in time with large cash withdrawals for the same or similar amounts. There is also an attempt, presumably by the local authority, to calculate the substantial income received into the appellant’s account from 2001 to 2006, during part of which she was on income support (p.260).

61. The papers before the tribunal do not appear to include any statements relating to the Barclays or Nationwide accounts. It is not clear whether the local authority has sought to obtain copies of statements for these accounts. The tribunal bundle does include a series of statements relating to a second and at that time dormant HSBC account, held at the same branch as the first account. This was not mentioned on the claim form – however in May 2006 this account stood at only £18.47 (p.99).

62. In addition, the appellant ticked the box on the May 2006 claim form to indicate that she owned a property in which she was not living (p.30). So if she had made a mistake on the 2002 review form she did not make the same error on the 2006 application. In the light of the evidence discussed above, this disclosure was plainly a reference to No. 236 V Road. There does not appear to be any evidence that she owned any other properties at that time. The local authority queried the position about this other property and asked for details (p.39). The appellant sent a copy of a similar letter she had received from the DWP dated 3 July 2006 (p.40). She also supplied a copy of a letter from her estate agents dated 10 July 2006, confirming that the property was on the market for sale (p.41). The outstanding mortgage at this time was still just over £225,000 (p.104).

63. The local authority’s submission before the previous tribunal stated simply that the appellant’s interest in No. 236 V Road amounted to £22,500, by itself over the £16,000 capital limit for council tax benefit. This figure was arrived at by deducting the mortgage from the purchase price and then deducting 10 per cent from the balance for the costs of sale. There are two obvious problems with rather simplistic this approach.

64. First, it assumes that the value of that house in May 2006 was the same as its purchase price in the summer of 2003. This seems highly improbable for a house in Greater London. That impression is confirmed by using the Nationwide house price index calculator, which suggests that a property such as this would have increased in value to some £299,000 between the time of purchase in 2003 and the second quarter of 2006, an increase of 19.8 per cent. Clearly, this is not as reliable a source of information as a District Auditor’s valuation of a specific property, but there is some corroboration for this level of increase in the subsequent sale price attained for this property in October 2006 (see below). If that level of increase is accepted, the value of the appellant’s equity in No. 236 as at May 2006 was actually in the order of £44,100 (£299,000 - £250.000 = £49,000; less 10% = £44,100), significantly above the council tax benefit threshold. It is also not clear whether or not No. 236 was let, as the appellant was apparently not living there. If it had been let, that would of course have generated an income stream.

65. Secondly, however, the local authority assessment takes no account of the possibility that the value of appellant’s equity in No. 236 was in fact subject to a capital disregard. In particular, an income support claimant is entitled to a disregard in relation to "any premises where the claimant is taking reasonable steps to dispose of those premises, for a period of 26 weeks from the date on which he first took such steps, or such longer period as is reasonable in the circumstances to enable him to dispose of those premises " (Income Support (General) Regulations 1987, Sched. 10, para. 26). This particular disregard applies just to “premises” – there is no requirement under paragraph 26 that the premises be “formerly occupied by the claimant as [her] home”. An equivalent provision applies to council tax benefit (2006 Regulations, Sched. 5, para. 25).

66. It is unclear in the present case when the appellant first took such steps (the letter at p.41 from the estate agent is unspecific as to dates). That is a matter on which the appellant may still be able to get written confirmation from her then estate agent. However, assuming for the moment that such steps were first taken in the spring of 2006, there is clearly some evidence for a tribunal to conclude that the disregard applies for a period of at least 26 weeks.

67. There is also evidence that No. 236 V Road was sold for £312,000 on 16 October 2006 (p.58). There is additionally evidence that the appellant received the sum of £75,353.89 into her dormant HSBC account on 16 October 2006 (p.99). It does not seem that the appellant informed the local authority of the sale. Certainly in January 2007 the local authority ran a check and discovered that No. 236 V Road had been sold but that income support and council tax benefit were still in payment, prompting the fraud referral to the DWP.

68. Obviously the proceeds of sale from No. 236 V Road represented “cash in the bank” and on the face of it therefore excluded the appellant from entitlement to benefit from that point onwards, assuming that a capital disregard applied to the equity value beforehand. Yet it is always possible that the appellant might be able to rely on a different disregard, depending on the circumstances, and indeed different disregards can apply in succession (CIS/6908/1995). However, it is difficult on the current evidence to see how another disregard might apply. For example, capital can be ignored if it is intended to be used to buy another home, but this only applies where the capital is “directly attributable to the proceeds of sale” of the previous home (Income Support (General) Regulations 1987, Sched. 10, para. 3, and 2006 Regulations, Sched. 6, para. 3). There appears to be no evidence that No. 236 V Road was the appellant’s home. If that is so, and no other disregards applied, it is difficult – on the basis of the present evidence on file – to see the basis for an award of income support and council tax benefit as from 16 October 2006. However, further evidence may yet emerge to undermine that supposition.

69. That, of course, takes us back to the point that, at present at least, the appellant still seems to have an award of income support effective as from 18 May 2006, and also back to the discussion of the effect of ex p. Menear and ex p. Hamilton. If there is no change in the DWP position, the new tribunal will have to consider whether there is sufficient evidence to make a finding of fact (i) that the appellant was not entitled, because of her capital assets, to income support (and therefore council tax benefit) as from 16 October 2006 (or from some earlier date, if it concludes for some reason that a disregard of the value of the equity in No. 236 V Road was either not applicable or had expired); and further (ii) that the award of income support was vitiated by fraud or dishonesty on the appellant’s part.

The recoverability of any overpayments by the local authority

70. Once the tribunal has found the relevant facts, it will then be able to form a view as to whether there has indeed been an overpayment of housing benefit and/or an excess payment of council tax benefit for all or part of the various periods in question. The amounts may need to be subject to a recalculation if the periods concerned are less than those asserted by the local authority. If there has been an overpayment and/or an excess payment, the issue then is whether such amounts as are involved are recoverable by the local authority. This aspect of the case can be dealt with much more shortly.

71. The previous tribunal failed adequately to distinguish between the recoverability test for overpayments of social security benefits generally and the separate rules that apply to overpayments of housing benefit and excess payments of council tax benefit. For social security benefits generally, including income support, the DWP can recover an overpayment only if the claimant has misrepresented or failed to disclose a material fact (see section 71 of the Social Security Administration Act 1992). In contrast, in principle all housing benefit and council tax benefit overpayments are recoverable, provided that they were not made as the result of an official error (although they may be recoverable even in those circumstances; see regulation 100 of the 2006 Regulations and its equivalent in regulation 83 of the Council Tax Benefit Regulations 2006 (SI 2006/215)).

72. It follows that a claimant’s misrepresentation or failure to disclose a material fact is not directly relevant to the recoverability of overpayments of housing benefit and excess payments of council tax benefit. Of course, a claimant’s misrepresentation about, or failure to disclose, a material fact, such as owning another property, may well be relevant to (but clearly not determinative of) the separate issue as to whether the local authority has shown fraud or dishonesty within ex p. Hamilton as the basis for going behind an income support award.

73. Accordingly, therefore, if there is found to be an overpayment of housing benefit and/or an excess payment of council tax benefit, the new tribunal will need to consider whether or not there has been any “official error”. In this context I note that the appellant’s case in part seems to be that she made a full disclosure of all her interests in other properties at the time of first claiming benefit right back in 1993 (p.257). The “official error”, of course, may be on the part of either the local authority or the DWP. Even if the overpayment or excess payment is the result of official error, the tribunal would then still have to consider whether or not the appellant could “reasonably have been expected to realise that it was an overpayment” in order to determine its recoverability.

Conclusion

74. My decision is as set out above.

75. In addition the following Directions, made under section 12(3)(b) of the 2007 Act, apply to the new hearing:

(1) The new tribunal should not involve any tribunal judge who has been involved in the previous hearings of this appeal on 22 August 2008 (the adjourned hearing) and 2 October 2008 (the full hearing).

(2) The appellant should:

(i) obtain evidence from her estate agent as to when she put No. 236 V. Road on the market with them; and

(ii) state the date that her late husband died;

and send such information to the Regional Tribunals Service office within one month of the issue of this decision.

(3) If the appellant has any further written evidence to put before the tribunal, this should also be sent to the Regional Tribunals Service office within one month of the issue of this decision.

(4) The local authority should inform the Regional Tribunals Service office within one month of the issue of this decision whether it has:

(i) obtained from the DWP the precise dates of the appellant’s income support awards;

(ii) obtained from the DWP copies of her income support claim forms and review forms and any other relevant documents;

(iii) obtained from the DWP confirmation that that Department’s position as regards the previous awards of income support remains as stated in the Witness Statement dated 21 August 2008;

(iv) taken any further steps in the prosecution of the appellant and the outcome of those proceedings if known.

(5) If the local authority has any further written evidence to put before the tribunal, this should also be sent to the Regional Tribunals Service office within one month of the issue of this decision.

(6) The new tribunal must consider all the evidence afresh and is not bound in any way by the decision of the previous tribunal, although the evidence given at that hearing may be taken into account.

These directions are all subject to any later directions by a Tribunal Judge in the Social Entitlement Chamber of the First-tier Tribunal.

Signed on the original Nicholas Wikeley

on 18 January 2010 Judge of the Upper Tribunal

SCHEDULE OF KEY DATES

NOTE: This Schedule does not amount to a schedule of findings of fact: those are for the First-tier Tribunal to make, adopting and amending this chronology as it sees fit.

1986 (August) appellant bought No. 62 L Rd in joint names with her husband [p.278], later in her name only by survivorship [p.43]. This property was bought subject to mortgage with the Woolwich [pp.44, 242, 281].

1989 (January) appellant and two others bought No. 12 C Road [p.49].

1989 (September) second mortgage agreed on No. 62 L Rd [pp.50, 273].

1993 appellant separated from husband – precise date not known? – and claims income support, housing benefit and council tax benefit.

1994 (October) No. 12 C Road sold to third party

1997 appellant’s husband dies – precise date not known?

2000 (September) appellant’s husband’s name taken off Land Registry entry for No. 62 L Road?

2002 (January) appellant declares she has no other property, is not working, has no income other than benefits and is not self-employed [pp.24-27].

2002 (May) appellant sells No. 62 L Rd [pp.61, 63, 275, 276].

2002 benefit claims end (precise date unclear?)

2003 (May) appellant reports earnings to mortgage company in excess of £77,000 pa for 2001, 2002 and 2003 (p.110).

2003 (July) appellant withdraws capital of £33,696.76 [p.88], presumably as deposit for next purchase as transferred to a firm of solicitors?

2003 (August) appellant buys No. 236 V Road for £250,000 with mortgage of £225,000 [pp. 54 and 101-120].

2005 (March) appellant receives capital of £36,064.30 (p.95), source unclear.

2006 (May) appellant claims benefit again; reports on housing benefit claim form that she has another property [p.30]

2006 (July) evidence that No. 236 V Rd is already put on the market [p.41].

2006 (October) No. 236 V Rd is sold for £312,000 with net proceeds of some £75,353.89 [pp.58, 99].