DECISION OF THE UPPER TRIBUNAL

(ADMINISTRATIVE APPEALS CHAMBER)

 

 

The DECISION of the Upper Tribunal is to dismiss the appeal by the local authority.

 

The decision of the Nottingham First-tier Tribunal dated 3 November 2010 under file reference 045/10/01263 does not involve any error on a point of law.

 

This decision is given under section 11 of the Tribunals, Courts and Enforcement Act 2007.

 

 

REASONS FOR DECISION

 

The decision in summary

 

1. The local authority’s appeal to the Upper Tribunal is dismissed.  The decision of the Nottingham First-tier Tribunal (FTT) taken on 3 November 2010 does not involve any error on a point of law.  The FTT’s decision therefore stands. 

 

The background to this appeal to the Upper Tribunal

 

2. The FTT’s decision was to allow the claimant’s appeal and to set aside the local authority’s decision issued on 18 November 2009.  The local authority had decided that the claimant was not entitled to housing benefit (HB) because of regulation 9(1)(h) of the Housing Benefit Regulations 2006 (SI 2006/213). 

 

3. In plain English, the claimant, who had previously owned her home subject to a mortgage, had sold the property to a private landlord, but had remained in occupation under a tenancy agreement with the new owner.  In short, the local authority took the view that the claimant did not have to sell up, and so decided that she was not eligible for HB under her new tenancy arrangement.

 

4. The language of the legislation is not quite so straightforward.  Regulation 9 of the Housing Benefit Regulations 2006 is headed “Circumstances in which a person is to be treated as not liable to make payments in respect of a dwelling” (with the effect that she is not entitled to HB).  One of those circumstances, as set out in regulation 9(1)(h), is where the claimant previously owned the property in question within the previous five years (as was plainly the case here).  There is, however, an exception, namely where the claimant “satisfies the appropriate authority that [she] could not have continued to occupy that dwelling without relinquishing ownership”.

 

5. The local authority was not so satisfied.  The tribunal took a different view.  In summary, the tribunal concluded that the claimant fell within the exception to regulation 9(1)(h).  The tribunal’s detailed Decision Notice, issued on the day of the hearing, concluded as follows:

 

“… the Tribunal accepted that the appellant could not have continued to occupy her home without relinquishing ownership and that she entered into a genuine rental arrangement with the purchaser of her home in the hope that she could continue to pay the rent even though the payment of the rent was much higher than her mortgage repayments.  The Tribunal took account of the appellant’s state of mind, the debts of her sister and daughter and her own indebtedness at the time she had made the decision to sell the house.  The Tribunal accepted that the appellant was under considerable stress at the time she made that decision and her perceptions of what was possible, sensible or appropriate were relevant as evidence of what was practically possible.”

 

6. The FTT judge also issued a Statement of Reasons at the local authority’s request.  This set out 13 detailed paragraphs of specific findings of fact and reiterated the reasoning contained in the Decision Notice.

 

7. The District Tribunal Judge [DTJ] (who had not dealt with the appeal at the FTT hearing) gave the local authority permission to appeal, but with “considerable regret” given the time and effort devoted to the appeal by the FTT judge in question.  However, the DTJ wondered whether there was some merit in the local authority’s argument that the FTT had misapplied regulation 9(1)(h) in the light of the reported decision of Mr Commissioner (now Judge) Jacobs in R(H) 6/07.

 

8. The local authority and the claimant’s representative have both made detailed written submissions on the appeal.  Neither has requested an oral hearing before the Upper Tribunal and I take the view that one is not needed. The local authority’s grounds of appeal are three-fold.  I am not satisfied that they are made out, for the following reasons.

 

Ground 1: did the FTT err in handling procedural matters?

 

9. The local authority argue that the FTT (i) failed to allow the presenting officer to question the claimant fully on her family’s circumstances; (ii) did not have all the notes from the first adjourned hearing at the final hearing; and (iii) failed to allow sufficient time for the hearing at the final hearing.

 

10. As to point (i), a tribunal judge presiding over a hearing has a broad discretion as to how to manage the hearing and in particular ensuring that questioning is directly relevant to the issues raised by the appeal.  There is no indication from the record of proceedings that the presenting officer (PO) raised any concerns at the hearing itself that appropriate lines of questioning by the local authority were being unfairly cut short.  I am not satisfied that it has been shown there was any error of law in this respect.

 

11. As regards point (ii), I accept that the FTT judge’s handwriting in the record of proceedings (RoP) is not exactly crystal clear, but for the reasons that follow I do not think it is necessary to call for a typed transcript.  Indeed, I am confident there is no merit in this challenge.  The judge’s note reads as follows at the start of the second and final hearing: “PO – we had not rec’d the previous RoP. Judge – I will read you prev … [?] & ensure it is agreed. (Gives … [?] will be sent to you) – RoP read out and agreed”. In the face of that contemporaneous note, I can see no error of law in the tribunal’s handling of the matter.

 

12. As to point (iii), the FTT first considered the appeal on 1 September 2010.  That hearing, according to the judge’s RoP, lasted from 2.00 pm until 3.30 pm.  The appeal was adjourned for further evidence.  The FTT judge directed that the final hearing was to be fixed with a time slot of 40 minutes.  The judge’s RoP for the second and final hearing records that the hearing lasted from 2.00 pm until 3.00 pm.  There is nothing in this ground of appeal.  The contemporaneous RoPs do not bear out the local authority’s challenge.  The case was adjourned part heard and the time allocated has to be seen across the two hearings.  Again, I can find no error of law.

 

Ground 2:  did the FTT have regard to irrelevant factors and fail to consider relevant matters?

 

13. In reaching its decision, the FTT placed particular emphasis on the fact that, as well as the claimant’s own debts, the claimant’s sister had debts of some £10,000 and her daughter owed £12,000, whilst her son was in trouble with drug dealers and owed £6,000.  The claimant’s sister had also been threatening to commit suicide.  The local authority argues that these debts of other family members were irrelevant matters that should not have been taken into account.

 

14. I cannot accept that proposition.  As a matter of law the motive of the claimant in disposing of the property is in principle irrelevant in determining whether regulation 9(1)(h) applies (see CH/396/2002 at paragraph 9). As Mr Commissioner Jacobs noted there, “The issue was whether the claimant could have continued to live in her home without relinquishing her ownership. Motivation was irrelevant to that.”  In many cases it may well be that if the claimant was primarily seeking to pay off her own debts, then that might be more compelling evidence that she was under a “practical compulsion” to dispose of the property.  However, paying off the debts of close family members may also be a relevant factor, depending on the circumstances.  Indeed, in CH/3853/2001, Mr Commissioner Jacobs was careful not to exclude the possibility that a purely “moral obligation” might put the claimant in the position of being under a “practical compulsion” (see paragraph 16). That is ultimately a question of the weight to be attached to the evidence, which is a matter for the FTT.

 

15. The local authority also argues that the FTT failed to take into account a range of relevant factors, such as the differential between the (lower) mortgage repayments and the (higher) rent liability, the claimant’s income and expenditure patterns and the long-term nature of her health condition.  Again, I am not satisfied that the FTT erred in law.  As well as hearing from the claimant herself in the course of two relatively lengthy hearings, the FTT had before it detailed written submissions from the representatives for the local authority and the claimant.  The FTT’s reasoning expressly recognised the difference between the previous mortgage costs and the new rental liability.  The FTT also made express factual findings about the claimant’s income and outgoings and about her health conditions. 

 

16. The reality with this ground of appeal is that the local authority is seeking to re-argue the case on the facts (rather as I found to be so in the earlier case of Basildon DC v AM [2009] UKUT 113 (AAC)).  The local authority is really challenging the weight to be attached to particular items of evidence, but that is typically a matter for the FTT to determine.  As Rix L.J. explained in the Court of Appeal’s decision in Fryer-Kelsey v Secretary of State for Work and Pensions (reported as R(IB) 6/05), it is not the function of appellate courts (and thus also the Upper Tribunal) “to set the appeal tribunal to rights by teaching them how to do their job of weighing the evidence” (at paragraph 25). Furthermore, the FTT was in any event not obliged to deal with every single point raised by the local authority.  As Laws L.J. noted in A.T. (Guinea) v Secretary of State for the Home Department [2006] EWCA Civ 1889 (at paragraph 17), it is “elementary that the duty to give reasons does not entail a requirement that the fact-finding judge deal expressly with every point”.

 

 

 

 

Ground 3: did the FTT misapply the legal test under regulation 9(1)(h)?

 

17. This is arguably the local authority’s strongest point, as recognised by the DTJ who gave permission to appeal against the FTT’s decision.  In summary, the local authority’s argument is that the FTT misapplied regulation 9(1)(h) and in particular the guidance on that test as set out in R(H) 6/07.  This was not, the local authority say, a case in which the FTT could reach the decision that it did, namely that the claimant “could not have continued to occupy that dwelling without relinquishing ownership”.  According to the local authority, the FTT was wrong to conclude that this was a case of “exceptional circumstances”.  It is said that the claimant’s health condition was long-standing, as was her indebtedness; she had previously sought debt advice; other options were open to her which had not been explored; it was unclear why the family members’ debts had to be cleared to enable her to continue occupying the property.

 

18. The claimant’s representative relies on R(H) 6/07, which he contends was properly applied by the FTT on the particular facts of this case.  This was, he argues, a case of exceptional circumstances.  He points out that the FTT had found that the claimant’s various difficulties were extreme and had built up to a head at the time when the decision to sell was made.  In particular, the FTT had found that by that time the claimant “was in such a distressed state that she could not face going out of her home let alone seeking professional guidance”.

 

19. In R(H) 6/07, Mr Commissioner Jacobs held as follows (at that time the relevant rule was in regulation 7(1)(h) of the earlier 1987 Regulations, but the principles remain the same):

 

‘14. As I have said, the issue I have to decide is not best formulated in terms of an objective or subjective test. Regulation 7(1)(h) contains elements of both.

 

15. There is a distinction between the legal test to be applied and the circumstances to which it has to be applied. Regulation 7(1)(h) deals with both. It identifies the legal test as whether the claimant or her partner could have continued to occupy the dwelling without relinquishing ownership. I stand by what I wrote in CH/3853/2001 that, as a matter of language, “could not” does not mean that it was completely impossible to do otherwise. That is not how “could” is used and there is nothing in the context or the likely policy of the legislation to suggest a different interpretation. That is the test, but what are the circumstances to which it must be applied? The reference to the claimant and her partner makes the test not a general one of what is possible, but a targeted one of what is possible for them. In other words, the test has to be applied to their circumstances.

 

16. In the context of this case, the test had to be applied to the claimant’s family and financial circumstances. But was her perception of what was possible, sensible or appropriate in those circumstances relevant to the application of the test?

 

17. The claimant’s perceptions may be relevant as evidence of what was practically possible. But in this case the claimant admitted that she did not investigate the full range of possibilities. It seems that, motivated by a desire to rid themselves of their debts, the claimant and her husband hit upon an idea and did not consider any other options. Her perception in those circumstances is not relevant as evidence of what was actually possible.

 

18. The claimant’s perceptions may also affect or limit the options that are available. For example, a claimant might be under so much stress as a result of debts and worries that it is in the interests of her own mental health to dispose of ownership as quickly as possible without investigating and regardless of other options that are available. But that would be an exceptional case and there is no evidence that the claimant or her husband were so much or so badly affected in this case.

 

19. Apart from these possibilities, the claimant’s perceptions are not relevant to the application of the test. It is impossible in the normal use of language to interpret “could not” to mean “believed she could not”. The language is not susceptible to such an interpretation. And there is no justification for subverting the language to be found in policy, in any feature of the legislative context, or in the practical consideration relevant to the application of the legislation.’

 

20. Therefore, as the claimant’s representative notes, the phrase “could not” in regulation 9(1)(h) “does not mean that it was completely impossible to do otherwise”.  Rather, “the reference to the claimant and her partner makes the test not a general one of what is possible, but a targeted one of what is possible for them. In other words, the test has to be applied to their circumstances” (at paragraph 15).  Furthermore, “the test had to be applied to the claimant’s family and financial circumstances” (at paragraph 16).

 

21. In the particular circumstances of R(H) 6/07, that claimant’s perceptions of the options open to her was not found to be “relevant as evidence of what was actually possible” (at paragraph 17).  But Mr Commissioner Jacobs expressly recognised that there might be other exceptional cases which might affect or limit the available options (paragraph 18).

 

22. Reading the FTT’s Decision Notice and Statement of Reasons, I am satisfied that the FTT applied the correct legal test.  The FTT expressly referred to the guidance in R(H) 6/07 and made findings of fact and gave reasons why it concluded that this was an “exceptional case” within paragraph 18 of R(H) 6/07.  This was, the FTT found, a case of extreme stress such that the claimant’s perceptions were relevant to the application of the test in regulation 9(1)(h).

 

23. Although the local authority’s challenge is not put in quite these terms, it amounts to an argument that the FTT’s decision in this case was perverse.  However, as already noted, the question that was ultimately before the FTT was whether the appellant “could not have continued to occupy that dwelling without relinquishing ownership.” It was, of course, for the claimant to show on the balance of probabilities that the escape clause against the normal operation of the former owner rule in regulation 9(1)(h) applied to her.  On the evidence before it, and having considered the careful submissions from both representatives, the FTT concluded that the claimant had met that test.  It has also said why it came to that conclusion.  In my view this is not a perverse decision.

 

24. In practice it may be relatively rare for a former owner to be in a position to avail herself of the exception to regulation 9(1)(h). However, this FTT made careful and detailed findings of fact and as a result concluded, in the words of R(H) 6/07 (at paragraph 18), that the claimant was “under so much stress as a result of debts and worries that it is in the interests of her own mental health to dispose of ownership as quickly as possible without investigating and regardless of other options that are available”.  In the last resort the assessment of whether the circumstances of the case were exceptional – and it might be difficult to think of more exceptional family circumstances than in the present case – is a quintessential question of fact for the FTT to determine on the basis of its own evaluation of the evidence and the weight to be attached to it.

 

Conclusion

 

25. For the reasons explained above, the decision of the Nottingham First-tier Tribunal does not involve any error of law.  I must therefore dismiss the local authority’s appeal under section 11 of the Tribunals, Courts and Enforcement Act 2007.  The decision of the First-tier Tribunal stands.

 

 

 

 

 

Signed on the original Nicholas Wikeley

on 29 September 2011 Judge of the Upper Tribunal