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 Manchester First-tier Tribunal dated 22 June 2009 under file reference 946/08/05559 involves an error on a point of law and is set aside.

The Upper Tribunal re-makes the decision of the First-tier Tribunal in the following terms:

The appellant’s appeals are allowed.

In particular, the appellant’s appeals against the decisions of the respondent City Council issued on 12 December 2008, revising the earlier decisions issued on 7 January 2008, are allowed.

Accordingly:

(1) The City Council has not shown grounds for revising or superseding the decision dated 30 June 2004 to award the appellant housing benefit as from 3 November 2003.

(2) The City Council has not shown that there was an overpayment of housing benefit which is recoverable from the appellant for the period from 5 April 2004 to 8 August 2005. Thus the alleged overpayment of £7,350 is not recoverable from the appellant.

(3) The appellant’s appeal against the decision refusing her claim for housing benefit as from 5 November 2007 is allowed. She is a person liable to make payments of rent in respect of No. 17 S Grove. The tenancy agreements were commercial in nature and the rental liability was not created in order to take advantage of the housing benefit scheme (regulations 8 and 9 of the Housing Benefit Regulations 2006 (SI 2006/213)).

The attention of the parties is drawn to what appear to be two unresolved issues (see paragraphs 51-54 below).

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

REASONS FOR DECISION

The decision in summary

1. The appellant’s appeal to the Upper Tribunal is allowed. The decision of the Manchester First-tier Tribunal dated 22 June 2009 under file reference 946/08/05559 involves an error on a point of law. The appeal tribunal’s decision is therefore set aside. The Upper Tribunal substitutes its own decision, as set out above, for the decision that the First-tier Tribunal made. The effect of that is to allow the appellant’s appeals against the City Council’s decisions in relation to her claims for housing benefit. There are also, however, some still unresolved issues (see paragraphs 51-54 below).

The issue at the heart of this appeal

2. Shorn of its legal complexities, the practical issue at the heart of this appeal is whether the appellant was entitled to housing benefit as from 3 November 2003 and, if she was not, whether she is liable for an overpayment of housing benefit in the sum of £7,350 for the period from 5 April 2004 to 8 August 2005. At the hearing on 22 June 2009 the Manchester First-tier Tribunal decided that she was not entitled to housing benefit for any period and was also liable for the resulting overpayment. The City Council also first suspended and then stopped payment of housing benefit in September 2005; a further issue is whether the appellant was entitled to housing benefit as from her new claim from 5 November 2007.

3. To narrow the issues still further, the case ultimately turns on the question of entitlement. The appellant produced a series of consecutive one-year assured shorthold tenancy agreements dated October 2003 through to October 2007. The City Council took the view that the appellant’s tenancy agreements were sham documents and that she had no legal liability to pay rent. Alternatively, the Council argued that, if they were true tenancy agreements, then the arrangement was non-commercial in nature and on that basis there was no entitlement to housing benefit in any event. In short, the First-tier Tribunal adopted the same approach.

The problems facing the First-tier Tribunal

4. I do not underestimate the difficulties facing the First-tier Tribunal as it sought to resolve these appeals. The chronology of events was by no means clear, there was conflicting evidence, and the sequence and status of the City Council’s various decision letters was often confusing and at times somewhat suspect (in terms of their adherence to basic principles of decision-making in relation to housing benefit claims). Notwithstanding that recognition of the difficulties facing the tribunal, and for the reason set out below, I am driven to the conclusion that the First-tier Tribunal erred in law in its decision.

A very brief chronology of the background to the disputed claims

5. The appellant made two claims for housing benefit which were before the tribunal. She made the first claim on 3 November 2003. That claim was not resolved until 30 June 2004, when the City Council wrote to her stating that she was entitled to housing benefit of £95 a week as from the date of claim and that the underpayment of just over £2,000 for the intervening months would be paid direct to the landlord. However, a little over a year after that, on 7 September 2005, the City Council wrote to the appellant stating that her claim was being suspended with effect from 4 September 2005 as there was a doubt over her entitlement. This was because official mail that had been addressed to her had been returned by the Royal Mail on the basis that the address was “inaccessible”. The Royal Mail’s apparent difficulty remains a mystery, as three weeks later a City Council visiting officer certainly found the premises without any apparent difficulty (even if the appellant was not at home on that occasion).

6. The City Council wrote again on 27 September 2005 ending the appellant’s claim for housing benefit, apparently in the belief that she had vacated the premises. That actual letter is not available. I am, however, satisfied that it was sent – the tribunal file includes a computer print-out recording its despatch, and, more to the point, this is corroborated by the representative’s letter dated 29 January 2008 which referred to its receipt by the appellant. The representative also stated that receipt of that letter prompted the appellant’s visit to the council’s offices in September or October 2005, when the representative states that she completed a fresh claim form. I return to this matter below at paragraph 40.

7. There appears (at least from the file) to have been no further contact between the claimant and the council for the next two years. Some two years later, however, on 10 October 2007, the appellant went into the City Council’s offices with letters that she had been sent by bailiffs. The interviewing officer noted at the time that the appellant did not appear to realise that her housing benefit and council tax benefit claims had been “cancelled”. The appellant put in a further fresh claim for housing benefit that was received on 5 November 2007. The decision-making process that followed thereafter was less than exemplary.

The City Council’s decisions after the 2007 claim for housing benefit

8. First of all the City Council wrote a series of letters to the appellant asking for further information. It is right to say that there has been some confusion over the identity of the appellant’s landlord. The appellant gave the name (and address) of C Ltd as her landlord’s agent on the November 2003 claim. In June 2004 she told a member of the City Council’s counter staff that she had been told that C Ltd actually owned the property and there were no agents involved. The tenancy agreements certainly described C Ltd as the landlord. In December 2007 she certainly confirmed her understanding that C Ltd was both the owner and landlord. It was not until May 2008 that the appellant’s representative was able to produce a letter from Mr A who confirmed that in fact he was the owner and C Ltd were his agents. Indeed, back in 2004 the City Council had obtained a copy of the Land Registry entry which named Mr A as the owner.

9. As the appellant’s representative has been at pains to point out, there is no specific requirement in housing benefit law that the claimant must provide the details of the full name and address of the landlord. Furthermore, the City Council had previously been criticized by the Local Government Ombudsman for adopting a policy of not paying housing benefit claims unless the landlord’s full details were provided (Reports 02/C/15217 & 03/C/11787).

10. Meanwhile on 7 January 2008 the City Council sent the appellant two letters. The first letter stated that, as she had not provided the information requested, the City Council “cannot be satisfied that you have any entitlement to Housing Benefit and so I have decided that you are not entitled to Housing Benefit” (although the date from which this non-entitlement applied was not stated). The second letter stated that the City Council had “stopped your Housing Benefit from 5 April 2004 because your claim is now defective”. That second letter went on to state that, as a result, there had been an overpayment of housing benefit amounting to £7,350.00 for the period from 5 April 2004 to 8 August 2005, which was recoverable from her. It is by no means clear that either letter adequately sets out a ground (e.g. mistake of fact or official error) for revising any earlier decision to award benefit. Nor was there any explanation for the start date of 5 April 2004 for the alleged overpayment.

11. Further correspondence then ensued during 2008 between the appellant’s representative and the City Council. In the course of these exchanges, the City Council agreed to change its decision in relation to council tax benefit. Previously, on 11 December 2007, the City Council had decided that the appellant was entitled to council tax benefit for the period from 15 October 2007 to 1 April 2008, but that entitlement would not be backdated to 8 August 2005. That decision was reversed on 8 February 2008, with entitlement to council tax benefit being recognised as running continuously from 8 August 2005. The council’s new letter expressly stated that there was therefore no need to consider the issue of backdating. Although the reasoning behind that decision letter was not made explicit, it was written in response to a letter from the appellant’s representative and presumably accepted at least some of the arguments put forward in her letter. Those arguments were that the appellant (1) had been on income support throughout; (2) had made a claim for housing benefit and council tax benefit in the autumn of 2005; and (3) had been resident at the address in question throughout. Certainly the council’s presenting officer conceded at the tribunal hearing that she had been resident at the address throughout.

12. However, as regards the housing benefit aspects of the case, the City Council maintained that the two letters of 7 January 2008 were correct. The appellant’s representative wrote on 29 January 2008 asking for a detailed explanation of those decisions and indicating her intention to appeal if they were not changed. The City Council replied on 4 February 2008 stating that the appellant had persistently failed to provide full details of the owner of the property that she claimed to be renting and so there was “no alternative” but to find that she was not entitled to housing benefit. The appellant’s representative then lodged an appeal on her behalf on 26 February 2008 against the decisions involved in relation to housing benefit.

13. There is little evidence on file that the City Council treated the appeal expeditiously. There was also a further delay as it appeared that correspondence from the appellant’s representative to the Tribunals Service went astray. On 14 November 2008, the matter was put before a Regional Tribunal Judge for directions. Three days later the judge issued a direction requiring the City Council to prepare and submit a response to the appellant’s appeal within two weeks. This finally appears to have prompted the City Council to take some action on the appeal. Indeed, the City Council did not formally notify the Tribunals Service of the existence of the appeal until 11 December 2008, forwarding a Schedule of Evidence and a Submission to the Tribunal on that date.

14. This sort of delay is highly unsatisfactory, especially in a case which had already dragged on for a long time. A claimant has a right under Article 6 of the European Convention on Human Rights to have their appeal heard within a reasonable time by a tribunal. There is, however, no statutory time limit within which appeals should be referred by local authorities to the Tribunals Service. I can only echo and endorse the comments of Mr Deputy Commissioner (as he then was) Mark in unreported decision CH/3497/2005, where he observed that “it is wholly unacceptable to the proper operation of the system of appeals in housing benefit and council tax benefit appeals that delays of this sort should occur” (at paragraph 6).

15. The delay in the present case was just over 9 months, rather than the 19 months in CH/3497/2005, but this was still plainly far too long. I have not asked for an explanation for this delay, not least as I did not wish to prolong matters still further, but on the face of it the City Council needs to reconsider carefully its process for handling of appeals. As Mr Deputy Commissioner Mark observed in CH/3497/2005, “It is of crucial importance to many benefits claimants to have their appeals heard very promptly. This is clearly liable to be the case in housing benefit disputes, where delay could cost them their homes” (at paragraph 4).

16. The day after notifying the Tribunals Service of the appeal, the City Council sent the appellant two further letters. In the first letter dated 12 December 2008 the Appeals Officer stated that “I have looked at the facts again but have decided not to change the decision that you are not entitled to Housing Benefit from 3 November 2003.” This decision was said to be on the basis that there was no liability to pay rent (relying on regulation 8(1)(a) of the Housing Benefit Regulations 2006 (SI 2006/213)) and, if there was such a liability, the tenancy was not on a commercial basis and was contrived (relying on regulation 9(1)(a) and (l). This was clearly a more considered letter than those of 7 January 2008. However, at this point I interpose two observations.

17. First, the arguments based on regulation 8 and 9 had not been mentioned in either of the letters of 7 January 2008 or the reconsideration letter dated 4 February 2008, nearly a year earlier. Indeed, as late as 1 August 2008 the appellant was told on a visit to the City Council’s offices that she could not be paid housing benefit as the local authority did not have the residential address of her landlord. By that date, however, the City Council had been told by Mr A that Mr A was indeed the landlord and C Ltd were simply his agents.

18. The second observation is that the letter of 12 December 2008 also stated that “We revisited our initial decision on your entitlement dated 30 June 2004 and decided that you were not entitled to housing benefit from 3 November 2003. You were informed of this on 7 January 2008.” That was simply untrue. Neither letter dated 7 January 2008 referred to non-entitlement from the outset of the first claim on 3 November 2003, although that may have been the intention. That date simply does not appear in either of the January letters. The closest either letter gets to that date is the bald statement that benefit was being “stopped from 5 April 2004 because your claim is now defective”.

19. In the second letter dated 12 December 2008, the Appeals Officer stated that “I have looked at the facts again and have now decided that you are not entitled [to] Housing Benefit as I believe that you do not have a rent liability”. It was also said that if there were a rent liability, the arrangement was non-commercial. The City Council relied on regulations 8(1)(a) and 9(1)(a) (but not, in this regard, regulation 9(1)(l)). This second letter was plainly intended to deal with the housing benefit claim dated 5 November 2007. However, the first of the observations made above about the first letter of 12 December 2008 apply equally to its companion of the same date.

The First-tier Tribunal’s hearings and decision

20. The First-tier Tribunal held an initial hearing of the appeal on 12 February 2009. That hearing was understandably adjourned by the tribunal for the City Council to produce a supplementary submission “to explain what decisions were made when in relation to” the appellant’s housing benefit claim(s). This prompted a single page further submission, accompanied by various further pieces of evidence. The supplementary submission was less than entirely helpful; in effect it was a (partial) list of dates and decisions rather than a reasoned submission. Moreover, the summary it contained of the crucial decision letters of 12 December 2008 was in certain respects simply inaccurate. The further evidence included (and it appeared for the first time in the bundle) a copy of the original housing benefit award letter dated 30 June 2004.

21. The First-tier Tribunal then held a further and final hearing on 22 June 2009. The appellant attended with her representative and gave evidence through an interpreter. The City Council was also represented. The tribunal’s decision notice stated that the appeal was disallowed. It also stated that the City Council’s decision (in the singular) issued on 12 December 2008 was confirmed. This was summarised in terms of the appellant not being entitled to housing benefit as the tenancy was “not on a commercial basis and / or the tenancy has been set up to take advantage of the Housing Benefit Scheme”. The overpayment of £7,350 for the period from 4 April 2004 to 8 August 2005 was also found to be recoverable.

22. I recognise that there are real difficulties in accurately summarising a tribunal’s decision in a complex case on the day of a hearing, especially when there are also time pressures in a busy tribunal schedule. I simply note that the tribunal’s decision notice (1) treated the City Council’s actions as a single decision, without breaking them down into separate decisions; (2) failed to address the question of whether there were grounds for revising or superseding the earlier decision to award benefit; and (3) gave no date from which the appellant was not entitled to housing benefit (although it might reasonably be inferred that the tribunal meant that the effective date for that purpose was 3 November 2003). The District Tribunal Judge later issued a full statement of reasons.

Why the First-tier Tribunal erred in law

23. In my view the tribunal erred in law for two main reasons. The first relates to its treatment of the City Council’s decisions. The second concerns the substantive question of whether the appellant was entitled to housing benefit or rather excluded by virtue of either regulation 8 or regulation 9 of the 2006 Regulations.

The First-tier Tribunal’s treatment of the City Council’s decisions

24. The first reason relates to the tribunal’s treatment of the City Council’s decisions. In the statement of reasons the District Tribunal Judge refers to the local authority making two decisions on 7 January 2008: (i) that the appellant was not entitled to housing benefit because she had not provided the required information; and (ii) that there was a consequential overpayment of benefit of £7,350. The judge then found that this decision (again, in the singular) was revised on 12 December 2008, with the ground (as to point (i)) being changed to regulation 8 and /or 9.

25. The precise legal effect of the two letters of 7 January 2008 is undoubtedly not easy to deduce. The starting point, however, must be that there were two claims for benefit before the tribunal, one dated 3 November 2003 and one dated 5 November 2007 (as noted above, and considered further below, there may well have been a 2005 claim as well). There was also a decision dated 30 June 2004 making an award on the very first claim. Whatever their deficiencies, in my view the only possible construction of the two letters dated 7 January 2008 is that they were purporting to make three decisions. These were that (i) the decision of 30 June 2004 on the November 2003 claim was revised, such that the appellant was not now entitled to benefit as from 5 April 2004 (but not apparently from the original award date of 3 November 2003); (ii) as a result of that revised decision, a new decision had been made to the effect that there had been a recoverable overpayment of housing benefit for the period from 5 April 2004 to 8 August 2005 (when benefit was suspended); and (iii) the most recent claim was refused and the appellant was also not entitled to housing benefit as from 5 November 2007. The tribunal did not really deal with the third point at all, just mentioning the 2007 claim in passing. The tribunal’s failure to tease out those discrete decisions (and their various implications) amounts to an error of law.

26. I merely note that it is well-established that a decision that an overpayment of benefit is recoverable must itself be preceded by a valid decision revising or superseding the previous decision on benefit entitlement (see Social Security Commissioner’s decision R(H) 3/04). In that context, I am prepared for present purposes to assume that the tribunal was entitled to take the view that the City Council’s actions on 12 December 2008 were sufficient to re-make the decisions of 7 January 2008 so as to rectify the basis for the overpayment decision. However, that does not detract from the point that the tribunal did not adequately identify and address the decisions which were being appealed against.

The First-tier Tribunal’s treatment of the substantive entitlement question

27. The second reason why the tribunal erred in law is a more substantive point. As the case was finally put, the City Council made their submissions based on there being no legal liability to pay rent and/or, if there was such a liability, the arrangement being non-commercial and (in relation to the original claim at least) contrived. As a matter of statutory construction, it must be that regulation 8 and regulation 9 are mutually exclusive. The effect of regulation 8 is that there is no entitlement to housing benefit unless there is a legal liability to pay rent. The effect of regulation 9 is that, even though there is a legal liability to pay rent, there are some circumstances in which there is still no entitlement to benefit (see R(H) 1/03 at paragraph 19).

28. In principle, of course, there is no reason why a local authority should not argue in the alternative that there is no legal liability to pay rent but that, if it is wrong on that point, then the tenancy is in any event of such a nature that there is no entitlement to benefit. Equally, a tribunal is in principle entitled to find that e.g. there is no legal liability under regulation 8 but that if it is wrong about that, then it is satisfied that regulation 9 applies for whatever reason is specified. Alternatively, of course, a local authority or tribunal might conclude that there is a legal liability but that regulation 9 excludes entitlement to benefit for whatever reason is relevant.

29. Unfortunately, the tribunal’s findings of fact and reasons in the present case are not entirely adequate on these points. At one point the tribunal seems to accept the City Council’s argument that the successive fresh one year tenancy agreements signed in October 2005, 2006 and 2007 were shams. According to the tribunal, “As the tenant was not making any payment of rent it was unlikely that a landlord would continue to agree tenancy agreements each year whist receiving no rent”. However, there is no express finding that the agreements were concocted for the purposes of supporting the claim for housing benefit. Later, however, in a concluding paragraph (described as the basis on which the City Council’s decision (again singular) was supported), the District Tribunal Judge reasoned as follows:

“The tribunal concluded that as the appellant had lived at the property for so long without paying rent there was not a liability to pay rent. If the tribunal were wrong in relation to that, then the tribunal further concluded that as the landlord agreed to repay the monies whilst the tenant was living at the property on the basis that she did not and that as no steps had been taken for over two years to seek rent this was not on a commercial basis.”

30. In my view the reasoning here is difficult to sustain. Simply because a tenant lives in a property without paying rent for a period, even an extensive period, does not of itself mean that there is no legal liability to pay rent. Yet that is the proposition as advanced in the first sentence of this key passage. That simply cannot be right as a matter of law and amounts to an error of law.

31. I therefore set aside the decision of the First-tier Tribunal as it involves an error of law (section 12(1) of the Tribunals, Courts and Enforcement Act 2007). I then need to decide how to dispose of the case. Both parties’ representatives submit that the Upper Tribunal should decide the substantive appeal(s) itself. I agree as I doubt very much that any further new evidence is likely to come to light and the case has dragged on for long enough.

The appellant’s arguments before the Upper Tribunal

32. The appellant’s representative argues simply that the appeal(s) against the City Council’s decisions should be allowed. This is on the basis that the appellant is said to have a legal liability to pay rent, evidenced by the tenancy agreements, that those agreements were commercial in nature and that there has been no recoverable overpayment.

The City Council’s arguments before the Upper Tribunal

33. The City Council’s representative makes a more detailed submission. She accepts that there were indeed three decisions made in relation to the appellant’s two claims for housing benefit (and as set out at paragraph 25 above). In summary, she argues that there was no liability in law to pay rent as the tenancy agreements were shams (relying on decision R(H) 3/03). She submits that the appellant’s non-payment of any rent (other than rent paid direct by housing benefit), allied with the consistent failure by the landlord to take any steps to enforce possession, means that the tenancy agreements are shams and therefore there was no liability to pay rent within regulation 8(1). Alternatively, she argues, the same considerations point to each tenancy – if it does give rise to a legal liability – being non-commercial in nature and therefore regulation 9(1)(a) applies so as to exclude the appellant from entitlement to housing benefit (relying on decision R(H) 10/05).

The Upper Tribunal’s findings

34. I concede at the outset that I have not found this an easy case to resolve. The City Council’s production of documentary evidence has been less than thorough (for example, the 2004 award letter was produced late in the day and the original letter from the appellant’s representative dated 29 January 2008 included copies of the council’s letters dated 27 September 2005, but those attachments have been omitted from the bundle). Indeed, such documentation as has been produced suggests that the City Council’s decision-making and record-keeping processes have not been exemplary at all times.

35. There are also, undoubtedly, some difficulties with the appellant’s evidence. Both the City Council and the First-tier Tribunal have certainly seized on what appear to be inconsistencies in the accounts given by the appellant. The most significant of these inconsistencies is that in the most recent claim form, on 5 November 2007, the appellant stated that her landlord had never told her that housing benefit had stopped. The appellant stated that she therefore assumed she was still on benefit. However, in response to a later enquiry on 20 December 2007, the appellant stated that the agents had contacted her and her family “numerous times concerning rent payments”. As the tribunal noted, the two statements are in different handwriting (although the appellant signed both). However, the tribunal recognised that the appellant herself does not write English (or, it seems, speak or read English).

36. I have reached the conclusion that this inconsistency is not quite the contradiction that it seems at first sight. It is more apparent than real. There are two plausible explanations why this might be so. One possibility is that the tribunal may not have given sufficient consideration to the distinct possibility that one or other account may have been inadvertently (and innocently) misleading, given the fact that neither the appellant nor the persons transcribing her statements were native English speakers. There is plainly the risk that something might get lost in translation. It is also conceivable that one of the intermediaries, acting on the appellant’s behalf, might have given the answer he or she thought was necessary to satisfy the City Council, without checking its veracity too carefully.

37. There is, however, another possible explanation, which on balance I regard as more likely. This is that the statements were both accurate, but were referring to different individuals. The November 2007 claim form referred to “the landlord”, namely the owner of the property which the appellant was renting. It stated that the landlord had not told her about the housing benefit problem. The December 2007 reply referred to “the agents” having been in regular contact. It is quite possible that the landlord (Mr A, an individual) took relatively little interest in the tenancy arrangement and left all matters relating to it (including the housing benefit aspect) to his agents (C Ltd), who were in the business of managing a number of different properties. There is certainly evidence on file that the appellant’s dealings were primarily with the landlord’s agent (in the form of Mr R) rather than with the landlord directly. On that basis the two statements are entirely consistent with each other.

38. Furthermore, in reaching its decision to dismiss the appeal, the First-tier Tribunal plainly placed considerable weight on two particular factors. These were: (1) the landlord’s apparent inactivity in taking no steps to recover unpaid rent for over two years between 2005 and 2007; and (2) the landlord’s agreement to repay the sum of £420 in housing benefit relating to a month in 2005 (on the basis that the appellant was not living at the property for that period). However, I am by no means convinced that these arguments can carry the weight accorded to them by both the City Council and the tribunal.

The landlord’s inactivity in seeking enforcement

39. As to the first matter, the landlord’s apparent inactivity in seeking to recover unpaid rent between 2005 and 2007 needs to be seen in the wider context of the history of this matter. This is a case where a housing benefit claim made in November 2003 was not determined until over six months later in June 2004 (and not as late as 2005, as the appellant’s representative mistakenly suggests). The City Council paid arrears of rent in June 2004 of just over £2,000 and then continued paying housing benefit direct to the landlord’s agent until September 2005. The landlord’s agent was thus well used to the possibility that the council might be slow in sorting out the appellant’s housing benefit claim.

40. In September 2005, of course, the appellant’s housing benefit claim was initially “suspended” and then “ended” as “defective”. The evidence from both parties confirms that those letters were sent to the appellant (see paragraph 6 above). The appellant’s representative argued in her letter of 29 January 2008 that the appellant had visited the council’s offices in September or October 2005 and had made a further claim for housing benefit and council tax benefit at that time. That account may be accurate. For example, it is consistent with the appellant’s statement on her November 2007 claim, prompted by the receipt of the bailiffs’ letters. That statement reads (without any corrections):

“I was on housing benefit since 2005 as I was on JSA. I had just found out that my housing benefit had stopped due to home visit and letters sent back for whatever reason. I had always lived here. My landlord never told me that HB was stopped and therefore always assume that I was on HB. I want to claim a backdated to when it was last stopped. I don’t speak English nor write it. I only found out to my surprise that I wasn’t on HB when I visited the Town Hall.”

41. The first three sentences of that statement clearly refer to the events of autumn 2005. The rest of the passage is consistent with the appellant’s account that she had assumed that matters had been regularised with a further claim at that time and her request to have benefit backdated “to when it was last stopped”. Her surprise at finding out that housing benefit was not in fact in payment is confirmed by the account on file from the customer service officer of her visit dated 10 October 2007. Given the general unsatisfactory standard way in which this matter has been handled, at least as suggested by the papers in the tribunal bundle, the fact that there is no sign of a claim form dated in the autumn of 2005 does not necessarily mean that no such claim was ever made.

42. On this basis I find that the appellant was genuinely unaware of the problems with her housing benefit claim between the autumn of 2005 and the autumn of 2007. What then of the landlord’s attitude? The landlord’s apparent inactivity in taking no steps to recover unpaid rent for over two years between 2005 and 2007 must be seen against the considerable delay in the council sorting out the initial claim (see paragraph 39 above) and also in handling the current appeal. In addition, the tribunal did not refer to the appellant’s further statement (in what appears to be in yet another person’s handwriting) that “My landlord has not taken any legal action. He knows I am a single mother with children and that it is not my fault if the housing benefit does not pay him on time”. It may also be significant that when she moved to the city the appellant had been unable to get assistance from the homeless persons unit. Instead, she had been helped by family members who had put her in touch with the landlord’s agents. This may well account for the less than forceful approach to enforcement, but does not mean that the underlying arrangement is non-commercial (see CH/0296/2003 and CH/3586/2005).

43. For those reasons I am not persuaded by the City Council’s argument that the landlord’s apparent willingness to renew the agreements and his failure to take enforcement action is evidence either that there was no liability in the first place or that the agreement was non-commercial in nature. As the commentary in CPAG’s Housing Benefit and Council Tax Benefit Legislation (22^nd edition, 2009/2010, by Carolyn George and others) points out (at p.255), caution needs to be exercised before placing heavy reliance on such matters. The appellant is obviously a person of limited means and the landlord and his agents may well have taken a rational economic view, borne of actual experience in the present case, that they were more likely to see their money if they desisted from seeking to press for the tenant’s eviction and gave her time to pursue her appeal. It is also relevant that since at least January 2008 the appellant’s representative has been liaising with the landlord’s agent and pressing them to remain patient. As the representative points out, the appellant reclaimed housing benefit in late 2007; the tribunal hearing was over 18 months later and “none of this delay was attributable to her. During all this time the landlords were being told that she expected the appeal to be heard soon.”

The landlord’s agreement to repay £420 in overpaid housing benefit

44. The other factor which weighed heavily with the tribunal (and the council) was the landlord’s apparent agreement to repay £420 paid in respect of the appellant’s housing benefit in 2005. The City Council had originally decided that it was not satisfied that the appellant was living at the property for a month from August to September 2005 and found that there had been an overpayment of £420 in housing benefit, which it recovered from the landlord. According to the tribunal, echoing the council, “No appeal was received from them and they accepted repaying the money. It is unlikely that a landlord who knew that the tenant was present and continuing to live at the property would voluntarily repay rent whilst knowing that the tenant was still at the property.” The inescapable conclusion is that the tribunal assumed the landlord took a conscious decision at the time not to challenge the repayment, thereby casting doubt on both the fact of the appellant’s residence and the genuineness of the tenancy arrangement.

45. Again, however, I am not persuaded by this factor. There are several possible and entirely plausible explanations for the failure of the landlord or his agents to question this recovery. First, the council’s decision letter to the agent refers to three different tenants in respect of whom recovery was being made, and the other two individuals are given greater prominence in the main body of the letter than the appellant. Secondly, if he had applied his mind to the matter, the agent may well have seen recovery of this relatively small amount as part of the much longer running issue of the appellant’s overall housing benefit entitlement, rather than a discrete matter which needed to be challenged in its own right. Thirdly, although the agents should have been aware of this specific recovery, there is no evidence that the recovery was notified (either by the council or by the agent) direct to the landlord. Finally, as the appellant’s representative points out, the inaction of the landlord and agent on this point may simply have been the result of inefficiency on their part or a failure to understand the procedures involved. In my judgment the landlord’s apparent acquiescence in this recovery is too insubstantial a point on which to place the weight which the council asserts it warrants and the tribunal accepted it merited. The City Council’s reliance on this point also sits very uneasily with its concession in relation to the council tax benefit claim that in fact the appellant was resident at the address throughout.

The Upper Tribunal’s findings on the substantive issues

46. For the reasons set out above, I am not persuaded that either the landlord’s apparent inactivity in taking no firm steps to recover unpaid rent or the agreement to repay the sum of £420 is of determinative significance. There are also several other difficulties with the case as it has been presented by the City Council at various stages. To take just one further example, the November 2007 claim form stated that the rent payable was £140 a week but that the rent actually paid was £90 a week. The council seemed to regard this as suspicious. The appellant’s answer to the subsequent enquiry was entirely plausible, namely that “the landlord requested £140 but the housing officer valued the rent £90.00. This was my understanding. Also the rent goes direct to the landlord therefore I have no record of how much you exactly pay to him”. Given the history of this case, the discrepancy between £90 (stated on this form) and £95 (as indicated in the 2004 decision letter) is hardly surprising.

47. I am, therefore, not persuaded by the case as advanced by the City Council which, of course, has the burden of proving its case with regard to revising the original decision to award benefit. I am also satisfied that the appellant has shown that she was entitled to benefit on her new claim in 2007. I take into account all the circumstances of the case. I note that the appellant is a single parent with five dependent children (at least at the start of her first claim). It is conceded that she has lived throughout at the address in question. There has been no suggestion that she is in any way related to either the landlord or the landlord’s agent or that she has any other personal relationship with either of them. The landlord’s agent appears to run a lettings management business. I am not satisfied that the City Council has shown that the tenancy agreements are in any sense a “sham” as explained in R(H) 3/03. In particular, I find that the obligation therein to pay rent is a genuine term of each agreement. It is, of course, important to distinguish “between a term that will never be implemented and one that may never be implemented” (R(H) 3/03 at paragraph 19).

48. In the light of all the matters above, I conclude that the appellant was at all material times for the purposes of the City Council decisions involved in this appeal a person liable to make payments of rent within regulation 8(1)(a) of the 2006 Regulations 2006. I also conclude that these agreements were commercial in nature and that the rental liability was not created in order to take advantage of the housing benefit scheme. Accordingly, regulation 9 of the 2006 Regulations does not apply to the successive tenancy agreements.

49. As indicated above, I have set aside the decision of the First-tier Tribunal as it involves an error of law (section 12(1) of the Tribunals, Courts and Enforcement Act 2007). It is also appropriate for me to re-make that decision (section 12(2)(b)(ii)). Plainly the First-tier Tribunal (and on appeal the Upper Tribunal) cannot re-make decisions that do not actually arise as part of the appeal before them. Bearing in mind the decisions that were actually before the First-tier Tribunal, on a proper analysis of the case, I accordingly make the following three decisions as the decisions that the tribunal should have made, so allowing the appellant’s appeals against the decisions contained in the City Council’s letters of 12 December 2008 (which revised the 7 January 2008 decisions). First, the City Council has not shown grounds for revising or superseding the decision dated 30 June 2004 to award the appellant housing benefit as from 3 November 2003. Secondly, it follows that the City Council has not shown that there was an overpayment of housing benefit recoverable from the appellant for the period from 5 April 2004 to 8 August 2005 (when benefit was suspended) and so the sum of £7,350 is not recoverable from her. Thirdly, the appellant’s appeal against the decision refusing her claim for housing benefit as from 5 November 2007 is allowed.

50. I noted above that the City Council had suspended and then ended payment of housing benefit with a decision on 27 September 2005. The actual “end of benefit” letter has not been produced. Whatever the language used in that letter, it was in reality presumably a decision based on the appellant’s perceived failure to satisfy the information requirements. There are, of course, various statutory requirements on the suspension and “termination” of housing benefit that must be satisfied in such cases (see the discussion in R(H) 4/08, AA v London Borough of Hounslow [2008] UKUT 13 (AAC) and AA v Leicester City Council [2009] UKUT 86 (AAC)). The history of the present case suggests that it is at best an open question as to whether those statutory procedures were properly followed in the present case in 2005. Be that as it may, it does not appear that the appellant lodged an appeal against the September 2005 decision. Given the absolute time limit of one year on late appeals, it is plainly now too late for the appellant to mount a new challenge to the decision of 27 September 2005.

Two unresolved matters

51. However, unfortunately this still leaves two matters unresolved. First, as indicated above, the case as put by the appellant’s representative is that soon after receiving the “end of benefit letter” the appellant made a claim for housing benefit in October or November 2005. I have indicated above (at paragraph 40) why I take the view that that may have been the case. However, I do not need to make a formal finding of fact on that matter for the purposes of disposing of this particular appeal as the issue is not part of this appeal.

52. It is unclear from the file what steps, if any, the appellant’s representative has taken to pursue this point. The appellant may wish to request the City Council to recognise that there was a claim in October or November 2005 and to determine that claim. It is trite law that local authorities are under a duty to decide claims and that the consequential decisions are subject to appeal (see R(H) 3/05). So if the local authority takes the view that there was no valid claim at the time, it should issue a decision to that effect which gives the appellant the right to appeal.

53. The second unresolved matter relates to the November 2007 claim. That claim included a clear request from the appellant to consider backdating entitlement “to when it was last stopped” (see paragraph 40 above). The only letter on file that seems to address the issue of backdating was the initial decision letter dated 11 December 2007 (and later reversed on 7 February 2008) not to backdate the November 2007 claim in relation to council tax benefit. The decision letters of 7 January 2008 did not directly address the question of backdating of housing benefit. The decision letters of 12 December 2008 also do not address that issue in so many terms. The tribunal (understandably in the circumstances) did not deal with that aspect of the most recent claim either.

54. On that basis, and assuming that (i) the outcome is not rendered irrelevant by whatever steps and decisions are taken in respect of the alleged 2005 claim, and (ii) the City Council is unable to produce evidence that it did in fact make and communicate a decision on the request to backdate housing benefit, it would appear that the City Council still needs to make a decision on whether the appellant has shown continuous good cause for backdating entitlement to housing benefit for the period prior to 5 November 2007. As that claim was made before 6 October 2008, when the relevant law changed, the former 52 week maximum period for backdating applies (rather than the current 6 month rule: regulation 83(12) of the 2006 Regulations).

Conclusion

55. For the reasons explained above, the decision of the Manchester First-tier Tribunal involves an error of law. I therefore allow the appellant’s appeal and set aside the tribunal’s decision under section 12(2)(a) of the Tribunals, Courts and Enforcement Act 2007. I also re-make the decision and in doing so find the facts as set out above (under section 12(2)(b)(ii) and (4) of the 2007 Act). The decision that the tribunal should have made is set out at the head of this decision of the Upper Tribunal.

Signed on the original Nicholas Wikeley

on 15 February 2010 Judge of the Upper Tribunal