Upper Tribunal (Administrative Appeals Chamber)

IN THE UPPER TRIBUNAL Case No. CH/334/2009

ADMINISTRATIVE APPEALS CHAMBER

Before Judge of the Upper Tribunal A Lloyd-Davies

DECISION

My decision is that the decision of the tribunal held on 21 October 2008 involved the making of an error of law. I set that decision aside. I remit the case for rehearing by a differently constituted tribunal.

REASONS

1. By a claim received on 7 May 2004 the claimant, who was in receipt of state pension credit, claimed housing benefit and council tax benefit in respect of the flat occupied by him, his partner and his younger daughter (who was born in 1980). In that form he stated that the owner of the flat was his elder daughter. He produced a tenancy agreement dated 7 May 2004 in which his elder daughter was expressed to be the landlord and he and his partner expressed to be the tenant.

2. Following receipt of information from the DWP and a Land Registry search, the local authority discovered that the long leasehold title to the flat was in fact registered in the names of both daughters and not the elder alone. On 4 June 2008 the local authority issued two decisions. The first decision was to the effect (i) that the claimant had not been entitled to housing benefit since 7 May 2004 since the claimant was a close relative of his landlord and was living in the same home, and hence under regulation 9(1)(b) of the SPC Housing Benefit Regulations 2006 was treated as not liable to make payments of rent and (ii) that the resultant overpayment of benefit in the sum of rather over £52,500 was recoverable from the claimant. The second decision was that there was a recoverable overpayment of council tax benefit in the sum of just over £7,750 for the period from 8 May 2004 until 31 March 2009 because, under section 6 of the Local Government Finance Act 1992, the claimant was not the person liable for council tax on the flat, that person being his younger daughter.

3. The claimant appealed. The tribunal dismissed both appeals. In both its decision notice and its statement of reasons it relied on regulation 9(1)(b) of the SPC Housing Benefit Regulations 2006, holding that the claimant was not to be treated as liable to make payments in respect of the flat since, within regulation 9(1)(b), the claimant’s liability was to a person who also resided in the dwelling and who was a close relative of his, namely the younger daughter. Seemingly the tribunal also relied on this provision in respect of the recovery of council tax benefit – it did not refer to the basis upon which the local authority had held there to be an overpayment of this benefit.

4. I granted leave to appeal to the claimant. The claimant’s representative requested an oral hearing of the appeal, to which request I acceded. At the hearing the claimant was represented by Mr Timothy Samuel of Counsel and the local authority by its appeals manager Mrs Grehan. I am grateful to them for their submissions both oral and written.

5. Mr Samuel’s primary submission was to the effect that the tribunal decided that because the legal owners of the flat were the two daughters the claimant was therefore under a liability to make payments to the younger daughter. He further submitted that the tribunal did not consider the true legal position, which was that a person with no interest (or only a partial interest) in a property can nonetheless create a tenancy in favour of another which is binding as between the person expressed to be landlord and the person or persons expressed to be tenant, although such a tenancy would not be binding on the true owners: a tenancy by estoppel. Mrs Grehan effectively conceded this before me. It is clear that the tribunal never considered the question of whether the tenancy agreement between the elder daughter and the claimant and his partner was binding as between the parties to it, notwithstanding that the younger daughter was not a party to that tenancy agreement. Accordingly the decision of the tribunal has to be set aside. The matter has to be remitted to a new tribunal since not only the “tenancy by estoppel” point has to be decided but also, as Mrs Grehan submitted, whether any question arises as to the applicability of any other head of regulation 9(1), in particular paragraph (l) of regulation 9(1); additionally there may be an issue of whether the local authority knew the true position as to ownership from the outset and whether the claimant can rely on official error.

6. The tribunal’s decision on council tax benefit must also be set aside since the tribunal seems to have assumed that regulation 9(1)(b) also applied for the purposes of council tax benefit. The tribunal did not separately deal with the basis upon which recovery of the council tax benefit was sought. Mrs Grehan urged me to decide that the excess council tax benefit was recoverable from the claimant since it was clear that the primary liability for that tax was not that of the claimant but that of his younger daughter. I decline to substitute my own decision for the following reasons:-

(a) There has been no explanation from the local authority as to the power it has retrospectively to alter a decision as to primary liability for council tax and no evidence of any subsisting alteration decision. (If, in a case not involving council tax benefit, A has erroneously been found to be liable for council tax and has paid the appropriate amount for a number of years and B is subsequently discovered to be primarily liable, does the authority cancel A’s liability, repay A and seek repayment from B? If not, why should the position be different when council tax benefit is involved?)

(b) The issues of whether the local authority knew that the younger daughter was a co‑owner and of official error may arise.

(c) There may be an issue as to whether the younger daughter was in fact living in a separate dwelling to her parents.

(d) There is an issue as to whether the younger daughter was not resident in the flat for some period and hence not liable for council tax during that period.

(e) There is, finally, the issue that, if it be found that the claimant was, for any period, not liable to pay council tax, any excess council tax benefit should be offset against the council tax for which he was previously found to be liable. My understanding is that council tax benefit is usually credited to a council tax liability account: if the liability for the tax has been removed, it would seem logical that the liability for repayment of excess benefit should also go (and see sub‑paragraph (a) above).

7. Accordingly I set the decision of the tribunal aside both in respect of housing benefit and in respect of council tax benefit and remit both appeals to a new and differently constituted tribunal.

(Signed on the Original)

A Lloyd-Davies

Judge of the Upper Tribunal

12 March 2010