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Cite as: [2011] UKUT 321 (AAC)
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MB v Royal Borough of Kensington & Chelsea [2011] UKUT 321 (AAC) (08 August 2011)
Capital
Ownership/Possession
DECISION OF THE UPPER TRIBUNAL
(ADMINISTRATIVE APPEALS CHAMBER)
The DECISION of the Upper Tribunal is to allow the claimant’s appeal.
The decision of the London Holborn First-tier Tribunal dated 8 February 2010 under file reference 242/09/11470 involves an error on a point of law. The First-tier Tribunal's decision is set aside. The case is remitted to a new First-tier Tribunal for a re-hearing subject to the Directions listed below.
This decision is
given under section 12(2)(a) and 12(2)(b)(i) of the Tribunals, Courts and
Enforcement Act 2007.
DIRECTIONS
The following directions apply to the re-hearing:
(1) The re-hearing should be at an oral hearing;
(2) The new tribunal should be differently constituted from the First-tier Tribunal which considered this appeal at the hearing on 8 February 2010;
(3) The file in this case and any connected appeals involving the same claimant and relating to the same property in Ireland should be placed before a District Tribunal Judge of the First-tier Tribunal for consideration as to whether a case management hearing is required before the re-hearing;
(4) The local authority should produce all relevant material relating to the decisions under appeal;
(5) The new tribunal must consider all the evidence afresh and is not bound in any way by the decision of the previous tribunal.
These directions may be supplemented by later directions by a Tribunal Judge in the Social Entitlement Chamber of the First-tier Tribunal.
REASONS FOR DECISION
Summary of the Upper Tribunal’s decision
1. I allow the claimant’s appeal to the Upper Tribunal. I am doing so
because there is a legal error in the decision of the First-tier Tribunal.
This is because I find that three of the claimant’s four grounds of appeal are
made out. I am also setting aside the First-tier Tribunal’s decision. There
will need to be a re-hearing. Although it is a matter for the District
Tribunal Judge who gives directions for re-listing, it may well be helpful to
have a case management hearing prior to re-listing. The fact that this appeal
to the Upper Tribunal has been successful should not be taken as any indication
as to the likely outcome of the re-hearing before the First-tier Tribunal.
An outline of the complex background to this appeal
2. The factual background to the present appeal is exceedingly complex. What follows is a summary sufficient for the purposes of the present decision. The claimant, an Irish national, is a widow and lone parent now aged 36. On 20 December 2007 she made a claim to the Royal Borough of Kensington & Chelsea (RBK&C) for HB and CTB in respect of her home (“No 54”). She said that she had moved there from her previous address in the Royal Borough of Kingston-upon-Thames (RBKuT). On 7 January 2008 the RBK&C awarded her HB and CTB with effect from 14 December 2007. In April 2008 the claimant told the RBK&C that she had recently moved from No 54 to another address in the same borough.
3. Shortly afterwards the RBK&C started an investigation into her claim for benefit. The referral memo from one of its assessment officers asserted that “her lifestyle appears to be beyond the means of someone living on such a low income”. It was alleged that she drove a Lexus with a personalised number plate, she was “always immaculate(ly turned out) … and her clothes etc look very expensive too” and (according to bank statements) she shopped at Harrods. It was suspected that she had an undisclosed source of income. RBK&C officers interviewed the claimant at length under caution on 9 September 2008, when they questioned her about, amongst other matters, how she could afford to pay for her two children to attend private school and also to maintain a gym membership. The RBK&C later established (through the Irish Land Registry) that the claimant was the registered owner of a residential property in the Republic of Ireland.
4. On 28 January 2009 the RBK&C issued two decisions. The first (the entitlement decision) was to the effect that the claimant’s revised benefit entitlement to HB and CTB as from 14 December 2007 was nil. This was said to be because she owned property worth more than £16,000 which she had failed to disclose to the RBK&C. The second (the overpayment decision) was that as a result there had been a recoverable overpayment of £24,907.30 in HB and of £1,518.65 of CTB. The claimant appealed to the First-tier Tribunal (“the tribunal”).
5. In its written submission to the tribunal, the RBK&C argued in summary that (i) the claimant was both the legal and beneficial owner of the property in Ireland (“No 27”); (ii) she had been working and not disclosing her income while in receipt of HB and CTB; and (iii) she had lied in order to claim benefits in that it was alleged that she had simultaneously been claiming benefit in both the RBK&C and the RBKuT.
The First-tier Tribunal’s decision
6. The First-tier Tribunal heard the claimant’s appeal on 8 February 2010. The claimant attended the hearing as did an officer from the RBK&C. The tribunal dismissed her appeal. Its decision, confirming the local authority’s decisions of 28 January 2009, was that there had been recoverable overpayments of both HB and CTB. The Tribunal Judge helpfully gave summary reasons on the Decision Notice as follows:
“Brief reasons:
1 [The claimant] owned a property in Ireland. The equity was at least 100,000 euros. Even if she did not own the whole property (which I did not accept) she had put £25,000 into the property and therefore had capital well in excess of £16,000 that she had not disclosed to the Local Authority.
2 She had earnings of 91,540 euros as set out in page 50 of the submission.
3 She had not made full disclosure of her bank accounts.
4 Her income and capital exceeded the limits for Housing Benefit and Council Tax Benefit.
5 She was the sole registered proprietor of the property in Ireland. There was no evidence of a trust. The mortgage was in her sole name.”
7. The Tribunal Judge subsequently issued a short statement of reasons, elaborating a little on that decision – but only a little, given the statement ran to nine short paragraphs and covered less than a single side of A4 of text. On the capital issue, the Tribunal Judge reasoned as follows:
“6 As far as capital was concerned [the claimant] was the sole owner of No 27. There was a charge in favour of [an Irish bank]. No 12 [a property in the same street] was valued at approximately 379,000 euros which gave a useful comparison for No 27. The equity was at least 100,000 euros which meant that [the claimant] had capital in excess of £16,000. She was not living in the property. It was rented out.
7 [The claimant] said that she inherited about £100,000 on the death of her husband. She said that she got £75,000 which included £25,000 for each of her 2 children. Her £25,000 share was put into the house in Ireland. It could not therefore be disputed that she had capital of at least £25,000.”
8. So far as the claimant’s income was concerned, the Tribunal Judge reasoned as follows:
“8 The claimant] claimed to be in difficult financial circumstances. In 2006 she earned a profit of £42,670 (see page 49). For the year ending October 2007 her income was £91,540. This was confirmed by a letter signed by her accountant (page 50). I was not prepared to go behind this statement. It was a declaration of income by a professional person. [The claimant] therefore also had income that excluded her from Housing Benefit.”
The claimant’s appeal to the Upper Tribunal
9. The claimant’s application for permission to appeal from the tribunal’s decision to the Upper Tribunal was refused by a District Tribunal Judge. She renewed the application before the Upper Tribunal. It is fair to say that the claimant’s initial application was not well focussed; for the most part it sought to re-argue the facts, and although she provided further potentially relevant evidence, this had not been shown to before the tribunal below. In addition she enclosed copies of extensive documentation relating to her various debt and medical problems.
10. The claimant subsequently secured representation through the good offices of the Free Representation Unit (FRU). Mr Giles Robertson of FRU prepared a detailed written submission on her behalf, identifying, refining and developing the grounds of appeal and referring to relevant case law. The RBK&C took up the opportunity to reply in writing to that submission. I then held an oral hearing of the application for permission to appeal at Harp House on 24 May 2011. Mr Robertson appeared for the claimant; the RBK&C did not attend (and indeed had not been required to do so) but resisted the application.
11. I gave the claimant permission to appeal in a reasoned determination dated 24 May 2011. Both parties’ representatives have made further detailed and helpful written submissions which I have taken into account. Neither party has sought an oral hearing of the appeal itself before the Upper Tribunal. I am conscious that there are other proceedings pending before the First-tier Tribunal involving the claimant, as well as possible criminal proceedings, which I refer to below. In these circumstances I have concluded that the present appeal should be dealt with on the papers, being confined as it is to issues of law on which both parties have made detailed submissions.
The grounds of appeal and the parties’ submissions to the Upper Tribunal
12. Mr Robertson set out four grounds of appeal on behalf of the claimant. I should also note that at the oral hearing of the earlier application, Mr Robertson quite properly conceded that in order to secure permission to appeal he had to show that the grounds of appeal were arguable as regards both the capital and income issues decided by the tribunal below. A failure to get over the arguability threshold on either would be fatal to the application, as it would mean that the overall outcome of the tribunal’s decision would not have been materially affected. In the event I found the grounds of appeal to be at least arguable on both matters.
13. The first ground of appeal was that the tribunal’s conclusion that the claimant owned the Irish property involved an error of law for four reasons: (i) the tribunal erred by applying English law when it should have applied Irish law; (ii) if it should have applied English law, it erred by ignoring the possibility of an implied or resulting trust arising; (iii) if it applied Irish law, it made assumptions as to the content of Irish law on which it had no evidence; (iv) it gave insufficient reasons for the choice of law it made.
14. The second ground of appeal was that the tribunal’s conclusion that the claimant had capital of at least £25,000 involved an error of law as it had applied the wrong law (see also the first ground of appeal) and had also failed to apply regulation 48 of the Housing Benefit Regulations 2006 (SI 2006/213) (“Calculation of capital outside the United Kingdom”).
15. The third ground was that the tribunal, in adopting the local authority’s arguments, had erred in accepting that the burden of proof was on the claimant to disprove beneficial (or equitable) ownership of the Irish property. In effect the claimant was being asked to prove a negative, namely that she had no beneficial interest in No 27.
16. The fourth ground was that, in deciding that the claimant had income which took her out of entitlement, the tribunal had given no adequate reasons for preferring the evidence of the claimant’s accountant to her own evidence.
Ground 1: the foreign law question
17. Mr Robertson’s submissions on the first ground of appeal are summarised at paragraph 13 above. His core contentions were that the tribunal erred in law by failing to recognise that it had a question to resolve as to the applicable law and by making a finding (“there was no evidence of a trust”) which was unsupported by the evidence. Mr Robertson further argued that the tribunal, if it had applied English law, had applied the wrong law as the purchase and holding of No 27 was governed by Irish law. Furthermore, Irish property law was not identical to the property law of England and Wales. In a learned analysis in the written submission on the application for permission to appeal, Mr Robertson pointed out that while there was a considerable degree of overlap between the two property law regimes, there were also significant differences. In particular, Irish land law has embraced the “new model” constructive trust, imposed where it would be unjust and unconscionable not to do so, whereas – at least since the retirement of Lord Denning MR – the English courts have adopted a more restrictive approach to constructive trusts, based on common intention.
18. The local authority’s position is to sidestep the issue of the applicable law. It submitted that the claimant was undeniably the owner of no 27, and as such the evidential burden shifted to her to show that she was not also the beneficial owner. It asserted that she had not provided evidence to the tribunal of the existence of any trust and, moreover, that a trust cannot arise unless the terms are certain. The local authority also pointed out that the mortgage on the property was in the claimant’s name, and noted that evidence had now been supplied after the appeal had been heard and dismissed by the tribunal below.
19. I am satisfied that the tribunal erred in law on this point. There is simply no indication from either the decision notice or the statement of reasons that the Tribunal Judge considered the question of the applicable law as regards the ownership of No 27. This was immoveable property located in Ireland, bought in 2004 by an Irish citizen apparently domiciled and resident in Ireland and with the assistance of a mortgage provided by an Irish bank, with its title registered with, and evidenced by, the Irish Land Registry. In those circumstances it is difficult to see how the applicable law could be other than Irish law. As Mr Robertson reminded me, Ireland attained independence in 1922 and so the writ of the Law of Property Act 1925 did not operate there (see section 209(3)). Indeed, he might have added that the Law of Property Act 1922 also did not apply (see section 191(3); see further V.T.H. Delaney, “English and Irish land Law – Some Contrasts” (1956) 5 American Journal of Comparative Law 471 at 476, and see now the modernising statute the Land and Conveyancing Reform Act 2009 (No 27 of 2009)). In those circumstances I do not really see this as a “choice of law” question at all, as some of the submissions to the Upper Tribunal have suggested.
20. It is well established that foreign law is a question of fact (per Mr Commissioner Mesher in R(G) 2/00 at paragraph 20). There was no evidence whatsoever before the tribunal as to the nature and content of Irish land law and the Irish law of trusts. It appears that the Tribunal Judge proceeded on the assumption that either English law applied or Irish law applied and was the same in all material respects as English law. Either way, the decision discloses a plain error of law.
21. At this stage it is worth identifying what the claimant disclosed to whom and when. In August 2006, when providing her details to a company carrying out vetting checks on prospective tenants, she was asked for all addresses at which she had lived in the previous 3 years. She gave the address for No 27. The question on the RBK&C claim form in December 2007 only referred to the previous 12 months, and she gave the RBKuT address. The RBK&C form also asked if she owned, or partly owned, property or land in the UK or abroad. She ticked the “No” box. At the interview in September 2008, which was before the RBK&C had obtained the copy documents from the Irish Land Registry, she was asked if she had a property in Ireland. She said that she did not. In her letter of appeal she also stated that she had no property abroad. The RBK&C then wrote to the claimant, asking her to explain why she was listed as the full owner of No 27 and to provide proof that she was not the legal and beneficial owner of that property. In the course of a long letter in reply, she stated that she had correctly explained at the interview that she did not own a property abroad but had rented it.
22. At the tribunal, however, a rather different account began to emerge. According to the record of proceedings, the claimant relayed this potted history:
“2003/2004: Lost husband. H had messy divorce. Ex-wife had lots of his property, I had 2 children. Not much capital. I did not know what to do. Wanted a property. Not enough money. Approached family friends. One was acct. I contributed to mortgage. Property in my name. I don’t own the property. Funds came from others.”
23. The tribunal’s findings and reasons on this point were set out in paragraphs 1, 4 and 5 of the decision notice and paragraphs 6 and 7 of the statement of reasons (see paragraphs 6 and 7 above). A key finding was that “There was no evidence of a trust”. Leaving aside the issue of the applicable law, I agree with Mr Robertson that that finding alone involves an error of law. The claimant’s account at the hearing, quoted above, was evidence. The last three short sentences – although she was doubtless unaware of their potential significance – were evidence that legal and beneficial ownership were separate and the final sentence was an indication that (under the English law scenario at least) a resulting trust may have been in place. Of course, the tribunal may not have believed the claimant, given her previous statements, but it could not simply assert that “there was no evidence”.
24. I would simply add that some of the local authority’s submissions seem to be premised on the assumption that a trust of land can exist only if there is documentary evidence of its creation. That is obviously not the case under the law of England and Wales (and, as I understand the case law, nor is it the position under Irish law either). But the claimant has not argued that there was any express trust in place. If the claimant’s account at the hearing that “funds came from others” was accurate, then on the basis of the authorities referred to me by the assiduous Mr Robertson, there was at least the germ of an argument that a third party might have an interest in the property under Irish law by way of a resulting trust (Re Slattery [1917] IR 278), a constructive trust (Murray v Murray [1996] 3 IR 251) or proprietary estoppel (McDonagh v Denton [2005] IEHC 127). At the very least, further questions needed to be asked by the tribunal, suggesting a failure to adopt an inquisitorial approach.
25. I acknowledge, as the local authority argues, that the claimant has sought to rely on further evidence produced after the date of the tribunal hearing. Clearly the tribunal cannot fairly be criticised for not having regard to evidence that was not placed before it. It may well be that, as the RBK&C submits, the recently produced evidence may need to be scrutinised with some care. But equally a new tribunal might take the view that the claimant was not well versed in the distinction between legal and equitable ownership and, if her account is true, never actually saw herself as the true owner of No 27.
26. I repeat that foreign law is a matter of fact to be proven by evidence before the First-tier Tribunal. Although I am sure that he would not profess to be an expert on Irish property law, Mr Robertson’s diligence means that there is an outline of the relevant Irish law of trusts so far as it may affect the present case. It is unrealistic to expect the claimant to provide any further evidence as to the current state of Irish property law. The onus is really on the local authority now either to bring forward its own evidence about Irish property law or to accept Mr Robertson’s account of the legal position and (if it maintains its position) focus on its argument that there was in fact no trust involved.
27. Given the circumstances set out at paragraph 19 above, the new tribunal may have little difficulty in concluding that the common law rules point to Irish law as the applicable law, Ireland being the country with which the property and the parties had the closest connection. If trust issues arise, the same result would presumably also follow from the Recognition of Trusts Act 1987, applying the Hague Convention on the Law Applicable to Trusts and on their Recognition. The tribunal may find further assistance in the Court of Appeal’s decision in Martin v Secretary of State for Work and Pensions [2009] EWCA Civ 1289 and in Chichester DC v B and the Secretary of State for Work and Pensions [2009] UKUT 34 (AAC) (also known as CH/426/2009; especially at paragraphs 22-23).
Ground 2: the valuation of foreign capital point
28. Mr Robertson argued that the tribunal had erred by failing to have regard to, and then to apply, regulation 48 of the Housing Benefit Regulations 2006. This provides as follows:
“Calculation of capital outside the United Kingdom
This section has no associated Explanatory Memorandum
48. Capital which a claimant possesses in a country outside the United Kingdom shall be calculated—
(a) in a case where there is no prohibition in that country against the transfer to the United Kingdom of an amount equal to its current market or surrender value in that country, at that value;
(b) in a case where there is such a prohibition, at the price which it would realise if sold in the United Kingdom to a willing buyer,
less, where there would be expenses attributable to sale, 10 per cent. and the amount of any encumbrances secured on it.”
29. It is well established that the current market value under regulation 48 is to be determined by the market value of the property in the jurisdiction within which it is located (see Social Security Commissioner’s decision CH 4972 2002 at paragraph 9). The tribunal certainly sought to make that assessment as best it could on the available evidence.
30. Mr Robertson, of course, rests his main challenge to the tribunal’s decision on the first ground of appeal. However, he also submits that the tribunal’s finding that the claimant had “capital of at least £25,000” was wrong in law as there was no consideration of regulation 48 and its requirements. The local authority argues that this point does not assist the claimant, as the tribunal’s principal finding was that she owned the entirety of the legal and beneficial interest in the property. Furthermore, an equivalent property in the same road had been valued at 379,000 euros, which produced a net capital valuation of 247,283 euros (or £237,638 at the time), having made deductions of 10% for the costs of sale and for the mortgage secured on the property.
31. The local authority is correct, of course, in pointing out that the tribunal’s primary finding was that the claimant was the sole owner in law and equity of no 27. However, the “capital of at least £25,000” was plainly a fall-back or reserve finding that the claimant was in any event disentitled on the ground of excess capital. To that extent I agree that with Mr Robertson that the tribunal’s decision involves an error of law as regards its default position in that there was no consideration of regulation 48.
32. Indeed, the position is more serious than that – if the tribunal’s fall-back position was that the claimant was the sole legal owner but had an equitable interest in the property representing (on this view of the facts) her original £25,000 investment, this would presumably be a case of beneficial co-ownership. In those circumstances it would be necessary for the tribunal to consider and (if appropriate) apply regulation 51 (“capital jointly held”) of the 2006 Regulations:
“51. Except where a claimant possesses capital which is disregarded under regulation 49(5) (notional capital) where a claimant and one or more persons are beneficially entitled in possession to any capital asset they shall be treated as if each of them were entitled in possession to the whole beneficial interest therein in an equal share and the foregoing provisions of this Section shall apply for the purposes of calculating the amount of capital which the claimant is treated as possessing as if it were actual capital which the claimant does possess.”
33. In applying this provision, tribunals must ask themselves (assuming that there are only two beneficial joint tenants) “what is the current market value of the claimant’s ‘half interest’ in the property?” and not “what is half of the current value of the net equity in the property”, which is quite a different matter (on which see AM v Secretary of State for Work and Pensions [2010] UKUT 134 (AAC) at paragraph 5, applying R(IS) 5/07).
34. There is also authority for the proposition that regulation 51, and its equivalents in the other means-tested benefit schemes, applies to land held outside the UK (per Mr Commissioner Goodman in CIS/2575/1997 at paragraphs 12-14, coincidentally also a case involving land held in Ireland). However, that is not the end of the matter. Regulation 51 (and its parallel provisions) applies only to property held under a joint tenancy, not a tenancy in common (see Hourigan v Secretary of State for Work and Pensions [2002] EWCA Civ 1890, reported as R(IS) 4/03). The commentary in CPAG’s Housing Benefit and Council Tax Benefit Legislation (23rd edition, 2010/11) makes the following observation (at page 392):
“In CIS/2575/1997 the commissioner held that the regulation also applied to foreign property and covered all forms of co-ownership whether existing under English law or not. Whether or not the latter finding can stand with Hourigan remains to be seen. Logically, if a form of foreign co-holding is akin to tenancy in common, the regulation should be inapplicable. If that is correct, evidence from a local lawyer in the country where the property was held would be required to ascertain the nature of the co-ownership.”
35. I have not had argument on the point raised in the commentary and do not need to decide it for the purpose of this appeal, although I recognise the force of the argument advanced there. I would simply note that if the claimant’s account is to be believed, it seems more likely that there is a tenancy in common in equity rather than a joint tenancy under Irish law, and so the Hourigan principle would apply in any event. There is also nothing to stop either party taking the steps suggested in the final sentence of the extract quoted above, but it may be that proceedings along the lines suggested in paragraph 26 above may be appropriate.
Ground 3: the burden of proof question
36. In its original submission to the tribunal, the RBK&C relied on CH/2950/2006 as authority for the proposition that it is the claimant’s responsibility to prove that any capital they hold does not also belong to them beneficially. The local authority’s submission to the Upper Tribunal was that it bore the burden of showing grounds for revising or superseding any previous decision to award benefit and for demonstrating that there had been a recoverable overpayment. However, it argued that it had discharged that onus by proving that the claimant was the registered legal owner of the Irish property. The claimant, it submitted, then became subject to an evidential burden to show, on the balance of probabilities, that she was not the beneficial owner of No 27.
37. Mr Robertson submits that the decision in CH/2950/2006 does not make the point claimed by the local authority. That may well be strictly correct, but in CH/2950/2006 Mr Commissioner Angus did refer to his companion decision in the related appeal CIS/1173/2006, in which he did agree with the proposition advanced by the RBK&C. Although the Commissioner did not cite any specific authority in CIS/1173/2006, he was undoubtedly relying on the ruling by Mr Commissioner Mesher (as he then was) in CIS/030/93 that “once it is shown that the claimant was the legal owner of a capital asset, the burden then falls on her to prove (on the balance of probabilities) that she did not have any or all of the beneficial interest in that asset” (at paragraph 36).
38. Mr Robertson relies instead on a passage in the decision of Judge Williams in
Chichester DC v B and the Secretary of State for Work and Pensions [2009] UKUT 34 (AAC) (at paragraph 28) for the contrary proposition:
“The burden of proof therefore lies on the Council to show that on the balance of probabilities on the available evidence there were grounds to revise the decisions awarding the benefit to Mr B. To establish this, the Council has to show that Mr B probably has a beneficial interest in the money in the Maltese bank accounts.”
He argues that this approach is to be preferred as otherwise the claimant must prove a negative, i.e. that she does not have a beneficial interest in the property. Mr Robertson also does not seek to argue the point fully, given the other more central issues on the appeal, and suggests this may not be the best case to resolve any conflict of authorities.
39. Be that as it may, I have to say I am not persuaded there is any real mileage in this ground of appeal. The position as stated by Mr Commissioner Mesher has been reasserted in many Commissioners’ decisions since in Great Britain (but see also the discussion by Mr Commissioner Mullan in the Northern Ireland case of LG v Department for Social Development (IS) [2011] NICom 140 at paragraphs 33-47). That line of authorities was also acknowledged without any contradiction by the Court of Appeal in Martin v Secretary of State for Work and Pensions [2009] EWCA Civ 1289 (at paragraph 5). The passage cited by Mr Robertson from Chichester DC v B is not actually inconsistent with that approach, and indeed can be supporting the argument that once the local authority has established a prima facie case, the burden then shifts to the claimant. The decision of the House of Lords in Kerr v Department for Social Development [2004] UKHL 23 is also relevant in this context.
40. In Kerr, Baroness Hale of Richmond indicated that it “will rarely be necessary to resort to concepts taken from adversarial litigation such as the burden of proof” (at paragraph 63). Her reasoning (at paragraph 62) was as follows (and we might substitute “local authority” for “department” in this passage):
41. I acknowledge that (unsurprisingly) the present case hardly demonstrates “a co-operative process of investigation”. The dynamics of the parties’ relationship may well be different on an overpayment appeal than in relation to an ordinary claim for benefit. However, Baroness Hale went on to add (at paragraph 63) that (and, again, we can insert “local authority” for “AO” [adjudication officer]):
“…The first question will be whether each partner in the process has played their part. If there is still ignorance about a relevant matter then generally speaking it should be determined against the one who has not done all they reasonably could to discover it. As Mr Commissioner Henty put it in decision CIS/5321/1998, ‘a claimant must to the best of his or her ability give such information to the AO as he reasonably can, in default of which a contrary inference can always be drawn.’ The same should apply to information which the department can reasonably be expected to discover for itself.”
42. That is, I think, the answer to Mr Robertson’s point. The local authority has proved (and it is conceded in any event) that the claimant is the legal owner of no 27. The particular information surrounding the purchase of no 27, and the subsequent mortgage payments for no 27, are issues which are exclusively within the claimant’s knowledge. It is her responsibility to marshal what evidence she can to show that she was not the sole beneficial owner, as well as being the legal owner, and the new tribunal will then have to make a judgment as best it can on the balance of probabilities on the evidence before it.
Ground 4: the income question
43. The local authority’s original revision decision was based solely on the issue of excess capital. However, it was no secret that the RBK&C had serious doubts about whether the claimant had properly disclosed all her sources of income to the council. The interview under caution would have left the claimant in no doubt about the local authority’s concerns. The point was also raised in the RBK&C written submission to the tribunal. The claimant accordingly had ample notice that the tribunal might well wish to explore the alternative issues around her income and her entitlement (or not) to benefit. To be fair, Mr Robertson does not suggest that the claimant was taken by surprise. His challenge is to the tribunal’s reasoning.
44. The tribunal’s conclusions were stark (see paragraphs 6 and 8 above). The tribunal’s decision notice simply recorded that her income exceeded the limits for entitlement to HB and CTB. The tribunal’s statement of reasons relied on two pieces of information. The first was a statement from an (unnamed) accountant for the year to June 2006, and repeated in a reference for a landlord, that her profit was £42,670. The second was a letter from a (named) accountant that her income for the year to October 2007 was £91,540 (Mr Robertson rightly takes no point on the typographical error involved, as the letter actually referred to a total annual income of 91,540 euros). The explanation given by the tribunal was simply that: “I was not prepared to go behind this statement. It was a declaration of income by a professional person.” No more, no less.
45. Mr Robertson submits that the tribunal erred in law in apparently according greater weight to the accountant’s evidence simply because he was a professional and also, in any event, by failing properly to weigh the competing evidence and explaining why the tribunal had reached the conclusion that it did. He noted that the letter in question, although on the accountant’s headed notepaper, was handwritten and contained spelling errors. The claimant’s account, both at the interview under caution and in subsequent correspondence, was that the income figures were, in essence, works of fiction. At the interview she said that she had persuaded the first accountant to confirm her income as other than it actually was so that she would be positively vetted for a tenancy. She also explained that the second accountant was a family friend who had undertaken a similar favour. She candidly admitted that neither statement of income was correct.
46. The RBK&C resists this ground of appeal too. The local authority argues that it is clear that the tribunal was rejecting the contention that the accountants’ statements were false, had properly considered the accountant’s signature as binding and had correctly placed weight on the professional standing of the signatory.
47. There are some potentially tricky issues here (e.g. the extent to which the accountant was or was not the claimant’s agent with the power to bind her). I need not explore those niceties. The simple fact is that this aspect of the decision is flawed by inadequate reasoning. When giving permission to appeal I described the claimant’s explanation as “unattractive”. Mr Robertson nimbly asserts that “the argument is advanced not because of its beauty but because of its truth”. The latter contention, of course, is for the next tribunal to determine. However, I am certainly satisfied that this tribunal failed to give a sufficient explanation of its decision. The tribunal might have come to the conclusion that the claimant had repeatedly lied and that it could attach no credence to anything that she said, and that her explanation was simply a self-serving account to explain away some unhelpful evidence. But it did not say that: as Mr Robertson argues, the tribunal erred in law by simply fixing on one piece of evidence as something it “was not prepared to go behind”. That represented an abandonment of the tribunal’s task of weighing the conflicting evidence.
48. True, there is no universal obligation on tribunals to explain assessments of credibility in every instance. But this tribunal did not even say in quite so many words that it disbelieved her (although the decision notice obliquely included a finding that she had not made full disclosure of her bank accounts). However, there is “an obligation on a tribunal to give adequate reasons for its decision, which may, depending on the circumstances, include a brief explanation as to why a particular piece of evidence has not been accepted. As the Northern Ireland Tribunal of Commissioners explained in R 3/01(IB)(T), ultimately ‘the only rule is that the reasons for the decision must make the decision comprehensible to a reasonable person reading it’” (CIS/4022/2007 at paragraph 52). This tribunal’s statement of reasons fails that test, as set out above.
Conclusions on the grounds of appeal
49. My conclusion, for the reasons above, is that the grounds of appeal are all made out with the exception of ground 3. I therefore allow the appeal, set aside the tribunal’s decision and direct a re-hearing. However, there are a number of other matters to mention.
Did the First-tier Tribunal have all the relevant evidence?
50. When giving permission to appeal, I noted that when the claimant was interviewed (at considerable length) under caution, she was asked questions about various documents which were shown to her (e.g. a private tenancy agreement, an Experian credit rating check and a credit application). Copies of that evidence do not appear to have been in the bundle before the tribunal. As I indicated when giving permission, “that does not seem to me to be entirely satisfactory; if a local authority has relevant evidence which it has used in reaching its decision, it should really be in the tribunal papers.” For as Mr Commissioner (now Judge) Jacobs explained in CH/396/2002 (at paragraph 18):
“…the appeal tribunal has to undertake a complete reconsideration of the issues that arise. In effect, the tribunal stands in the position of the decision-maker in the local authority and makes the decision afresh. It can only fulfil its duty if it is provided by the local authority with all material from its files that is potentially relevant to the appeal.”
51. I simply have no idea whether the missing evidence is helpful to the local authority’s case or to the claimant’s case (or, in different respects, to both). But tribunals should not be expected to decide appeals – especially appeals involving an alleged overpayment of over £25,000 – on the basis of what the local authority happens to think are the edited highlights of the case papers. I refer simply to the overriding objective in rule 2 of the Tribunal Procedure (First-tier Tribunal) (Social Entitlement Chamber) Rules 2008 (SI 2008/2685; “the 2008 Rules”).
What was the dwelling normally occupied as the claimant’s home?
52. Lurking in the background to this appeal there are other proceedings. The general rule, of course, is that HB is only payable in respect of one home (subject to certain exceptions), being the home which the claimant normally occupies. The RBK&C’s written submission to the tribunal stated that the claimant had been claiming HB for addresses in the RBK&C and the RBKuT at the same time. That was not, however, the basis of the local authority’s revised decision on the claimant’s (lack of) entitlement to HB. The presenting officer mentioned the point in passing at the tribunal hearing but it was not pursued and nor was it referred to in the tribunal’s decision notice or statement of reasons.
53. If true, it is obviously potentially a very serious matter. There is evidence on the file which appears at first sight to support the local authority’s case, but I note that there have been no findings of fact on this matter by the tribunal below and it would be wrong for me to express any further view as the case has to go back for a re-hearing (and of course I am by no means certain that all the relevant evidence has been disclosed by the RBK&C). However, it appears from the file that there are already separate part-heard proceedings in the First-tier Tribunal involving the claimant’s HB appeals against decisions of two other local authorities, the RBKuT and the London Borough of Westminster, which appear also turn on the Irish property ownership issue. There are, it appears, additionally actual and/or contemplated criminal proceedings against the claimant pending in the magistrates’ court.
54. The criminal matters themselves are, of course, no matter for this jurisdiction. The inter-action between the criminal and the tribunal proceedings may become an issue. If so, then the tribunal will doubtless have regard to the Court of Appeal’s advice in Mote v Secretary of State for Work and Pensions [2007] EWCA Civ 1324 (reported as R(IS) 4/08, especially at paragraphs 31-40). I would also echo the observation of Mr Commissioner Mesher (now Judge Mesher) in CH/3744/2006, where he observed that “In my no doubt unrepresentative experience as a Commissioner, the standard of the examination of questions of true entitlement to benefit in criminal prosecutions is often woeful, so that claimants with some kind of case will often be better off getting the expert evaluation of an appeal tribunal” (at paragraph 14).
55. In the light of the multiplicity of proceedings and parties, and the complexity of the case, this may well be a matter in which the District Tribunal Judge (DTJ) responsible for re-listing takes the view that a case management hearing is desirable before the re-hearing (see rule 5(3)(f) of the 2008 Rules. I do not direct a case management hearing as that is a matter for the good judgment of the DTJ concerned. The First-tier Tribunal has the power to consolidate proceedings (rule 5(3)(b)) and may also direct parties to produce documents, information, evidence or submissions (rule 5(3)(d)). The local authority, in its submission in response to the appeal to the Upper Tribunal, has asked if the claimant could clarify certain matters. Those requests, and any others considered appropriate, are best addressed to the First-tier Tribunal by way of an application for directions under rule 6.
Conclusion
56. My decision is that the First-tier Tribunal’s decision involves a mistake of law for the reasons explained above. I am therefore allowing the claimant’s appeal to the Upper Tribunal and setting aside the decision of the London Holborn First-tier Tribunal dated 8 February 2010 (Tribunals, Courts and Enforcement Act 2007, section 12(2)(a)). I am not in a position to re-make the decision, or substitute my own decision, for the tribunal’s decision (Tribunals, Courts and Enforcement Act 2007, section 12(2)(b)(ii) and 12(4)). I therefore remit the case for re-hearing before a new First-tier Tribunal subject to the Directions and guidance above.
57. I repeat my comment that the outcome of this appeal should not be taken as any indication of the likely outcome of the re-hearing.
Signed on the original Nicholas
Wikeley
on 08 August 2011 Judge of the Upper Tribunal