Upper Tribunal (Administrative Appeals Chamber)

IN THE UPPER TRIBUNAL Appeal No.  CH/3721/2008

ADMINISTRATIVE APPEALS CHAMBER

 

 

 

Before: UPPER TRIBUNAL JUDGE ROWLAND

 

The claimant was represented by Mr Sam Lister of both the Chartered institute of Housing and Worcester Citizens Advice Bureau and Housing Benefits Advice Centre.

 

The First Respondent was represented by Mr Paul Stagg of counsel, instructed by Legal and Democratic Services, Selby District Council.

 

The Secretary of State was represented by Mr Huw James, solicitor, as agent for the Solicitor to the Department of Health and the Department for Work and Pensions.

 

Decision:  The claimant’s appeal is allowed.  The decision of the York appeal tribunal dated 2 July 2008 is set aside and there is substituted a decision that the claimant is entitled to housing benefit at the rate of £60.55 pw from 1 October 2007 to 28 October 2007.

 

 

REASONS FOR DECISION

 

1. This case reveals a lacuna in housing benefit legislation.  The question is whether it may filled by judicial interpretation.

 

The housing benefit scheme

 

2.   Section 123(1)(d) of the Social Security Contributions and Benefits Act 1992 (“the Contributions and Benefits Act”) requires that a “prescribed scheme” shall provide for housing benefit.  Given that, by section 137(1), “prescribed” means “specified in or determined in accordance with regulations”, it is a little odd to find that the fundamental elements of the scheme are actually to be found in the Act itself.  Section 130 provides –

 

“(1) A person is entitled to housing benefit if –

(a)  he is liable to make payments in respect of a dwelling in Great Britain which he occupies as his home;

(b)  there is an appropriate maximum housing benefit in his case; and

(c)  either –

  (i) he has no income or his income does not exceed the applicable amount; or

  (ii) his income exceeds that amount, but only by so much that there is an amount remaining if the deduction for which subsection (3)(b) below provides is made

  (2) In subsection (1) above, “payments in respect of a dwelling” means such payments as may be prescribed, but the power to prescribe payments does not include …

  (3) Where a person is entitled to housing benefit, then –

(a)  if he has no income or his income does not exceed the applicable amount, the amount of the housing benefit shall be the amount which is the appropriate maximum housing benefit in his case; and

(b)  if his income exceeds the applicable amount, the amount of the housing benefit shall be what remains after the deduction from the appropriate maximum housing benefit of prescribed percentages of the excess of his income over the applicable amount.

  (4) Regulations shall prescribe the manner in which the appropriate housing benefit is to be determined in any case.”

 

3. Section 134 of the Social Security Administration Act 1992 (“the Administration Act”) also makes provision in respect of housing benefit.  So far as is material to this case, it provides –

 

“(1) Housing benefit provided by virtue of a scheme under section 123 of the Social Security Contributions and Benefits Act 1992 (in this Part referred to as “the housing benefit scheme”) shall be funded and administered by the appropriate housing or local authority.

  (1A)  Housing benefit in respect of payments which the occupier of a dwelling is liable to make to a housing authority shall take the form of a rent rebate or, in prescribed cases, a rent allowance funded and administered by that authority.

The cases that may be so prescribed do not include any where the payment is in respect of property within the authority’s Housing Revenue Account.

  (1B)  In any other case housing benefit shall take the form of a rent allowance funded and administered by the local authority for the area in which the dwelling is situated or by such other local authority as is specified by an order made by the Secretary of State.

  (2)The rebates and allowances referred to in subsections (1A) and (1B) above may take any of the following forms, that is to say –

(a)  a payment or payments by the authority to the person entitled to the benefit;

(b)  a reduction in the amount of any payments which that person is liable to make to the authority by way of rent; or

(c)  such a payment or payments and such a reduction;

and in any enactment or instrument (whenever passed or made) “pay”, in relation to housing benefit, includes discharge in any of those forms.

  …

  (5) Authorities may –

(a)  agree that one shall discharge functions relating to housing benefit on another’s behalf; or

(b)  discharge any such functions jointly or arrange for their discharge by a joint committee.

  …”

 

4. The Housing Benefit Regulations 2006 (SI 2006/213) (“the 2006 Regulations”) are thus made not only by virtue of section 123(1)(d) of the Contributions and Benefits Act but also under specific powers conferred by other provisions of that Act, including subsections (2), (3) and (4) of section 130, and by provisions in other Acts, including section 134(1A) of the Administration Act.

 

5. It can be seen from section 130(3) of the Contributions and Benefits Act that the amount of housing benefit to which a person is entitled depends essentially on three factors: the “appropriate maximum housing benefit” in the claimant’s case, the “applicable amount” and the claimant’s “income”.  The 2006 Regulations make provision in respect of those factors.

 

6. The “appropriate maximum housing benefit” is the “eligible rent” less any deduction in respect of a non-dependant who can be expected to contribute to the rent (see regulation 70).  The “eligible rent” (see regulation 12) is the rent in respect of which housing benefit may be awarded.  It does not include, for instance, any element of rent representing charges for gas and electricity for which a person may be expected to pay from other income.

 

7. The “applicable amount” (calculated under regulation 22) is, for most practical purposes, the same as the applicable amount for calculating entitlement to income support or an equivalent income-related benefits and it represents the minimum amount upon which a person in the claimant’s position can be expected to live. 

 

8. A claimant’s “income” is calculated under Part 6 of the Regulations.  Certain types of income are disregarded so that what is left is income from which a person can be expected to pay for everyday needs.

 

9. Against that background, it is not surprising that section 130(3)(a) of the Contributions and Benefits Act provides that, if a claimant’s income does not exceed the applicable amount, he is entitled to housing benefit equal to the “appropriate maximum housing benefit” in his case.

 

10. If, on the other hand, a claimant’s income exceeds his applicable amount, section 130(3)(b) of the Contributions and Benefits Act provides that he is entitled to housing benefit equal to what remains after deduction from the “appropriate maximum housing benefit” of 65% (the percentage prescribed by regulation 71) of the excess of his “income” over the “applicable amount”.

 

The facts

 

11. The facts of this case are not in dispute.  The claimant was in receipt of incapacity benefit at the rate of £98.45 pw and disability living allowance at the rate of £17.10 pw.  He lived in Tadcaster in a home rented from Selby District Council, the First Respondent, in respect of which he was entitled to £50.47 pw housing benefit, also administered by the Selby District Council, based on an eligible rent of £60.55.  On 26 September 2007, he was offered by City of York Council a tenancy of a new home.  The offer required immediate acceptance of a tenancy from the following Monday.  The claimant accepted the offer with effect from 1 October 2007.  He was required to give four weeks’ notice to Selby District Council of the termination of his tenancy in Tadcaster and he duly gave such notice on 26 September 2007, effective from 29 October 2007.

 

12. It is common ground that, under regulation 7(6)(d) of the 2006 Regulations, the claimant was entitled in those circumstances to be treated as occupying both his Tadcaster home and his York home “as his home” for the four weeks from 1 October 2007 to 28 October 2007.  Regulation 7(6)(d) provides –

 

“Where a person is liable to make payments in respect of two (but not more than two) dwellings, he shall be treated as occupying both dwellings as his home only –

…

(d)  in the case where a person has moved into a new dwelling occupied as the home, except where paragraph (4) applies, for a period not exceeding 4 benefit weeks from the date on which he moved if he could not reasonably have avoided liability in respect of two dwellings; or

…”

 

13. The claimant submitted a claim to City of York Council for housing benefit in respect of his new home and, on 8 October 2007, was duly awarded housing benefit at the rate of £44.15 pw with effect from 1 October 2007.  That was based on an eligible rent of £54.03 pw.  On 12 October 2007, he informed Selby District Council that he had moved.  Initially, that council superseded his award of housing benefit so as to disallow it from 15 October 2007 but, on 9 November 2007, it revised that decision and accepted that the claimant remained entitled to housing benefit until 28 October 2007, at the previous rate of £50.47 pw.  After some further correspondence, the claimant appealed, contending that he was entitled to benefit at the rate of £60.55 pw which would cover the whole of his eligible rent.  His appeal was dismissed by the York appeal tribunal on 2 July 2008 and the claimant now appeals against the appeal tribunal’s decision with permission granted on 18 November 2008 by the former chairman of the appeal tribunal, who had by then become a judge of the First-tier Tribunal.

 

The problem

 

14. The reason that the claimant appeals is that both local authorities took into account as income in their respective calculations the claimant’s incapacity benefit (his disability living allowance being disregarded under paragraph 6 of Schedule 5 to the 2006 Regulations).  It is obvious that, if a person has an income that exceeds the applicable amount but he is nonetheless entitled to housing benefit in respect of two properties and if separate calculations are made in respect of each property with both calculations taking into account his whole income, the total amount of the deductions under section 130(3)(b) of the Contributions and Benefits Act will be 130% of the excess of his income over the applicable amount so that, if he pays his share of the “eligible rent” in full, he will be left with less than the applicable amount for general expenditure including ineligible charges in his rent.

 

15. That is what happened in the present case.  The claimant’s “income” was £98.45 pw and it exceeded the amount of his “applicable amount” (which included a disability premium and so was £84.40 pw) by £14.05 pw.  Before 1 October 2007, when he lived only in Tadcaster, he was left with £3.97 pw of that excess, in addition to his applicable amount, for general expenditure.  (This figure is less than 35% but that appears to be the consequence of an unchallenged calculation relating to rent-free weeks.)  However, from 1 October 2007 to 28 October 2007, he had to pay £9.88 pw towards his eligible rent in York as well as £10.08 pw towards his eligible rent in Tadcaster.  Accordingly, he had £5.91 pw less than the applicable amount for general expenditure. 

 

16. It is common ground that that is an unfair result and cannot possibly have been intended by the legislature.  The question is whether it is the inevitable result of applying the legislation.  Mr Lister for the claimant and Mr James for the Secretary of State say that it is not, but Mr Stagg, whose argument on behalf of the local authority is effectively the one accepted by the appeal tribunal, says that it is. 

 

The parties’ submissions

 

17. Mr Lister and Mr James submitted that, if both homes had been within the same local authority’s area, the problem that arises in the present case would not have arisen because the two appropriate maximum housing benefits would have fallen to be aggregated and there would have been one calculation for the two homes so that the claimant’s income was taken into account only once.  This implies that a separate claim is not required in respect of each dwelling.

 

18. That was also Mr Stagg’s position in his skeleton argument.  However, he has resiled from that position and now takes the approach that the local authority did before the appeal tribunal.  He points out that regulation 70 of the 2006 Regulations, which makes provision for the appropriate maximum housing benefit, expressly requires the eligible rent to be calculated under regulation 80 and that regulation 80(10) provides –

 

“Where a claimant is entitled to benefit in respect of two (but not more than two) dwellings in accordance with regulation 7(6) his eligible rent shall be calculated in respect of each dwelling in accordance with this regulation.”

 

This, he submits, would prevent the appropriate maximum housing benefits being aggregated even if the homes were in the same local authority’s area.  This implies that a separate claim is required in respect of each dwelling even if they are within the same local authority’s area.

 

19. Mr Lister submits that the fact that the dwellings are in different local authorities’ areas should not affect the result, although he accepted that separate claims should be made to each local authority.  He submits that, where regulation 7(6)(d) applies, the claim in respect of the “new” home is to be determined in the conventional way by the local authority in whose area it is situated.  The existing award in respect of the “old” home is then to be superseded on the basis that entitlement is to be calculated as an overlapping award by aggregating the appropriate maximum housing benefit in respect of each home.  He submits that regulation 80(10) does not prevent such aggregation.  He further submits that, to prevent a duplication of payments the amount already paid by the other authority should then be offset under regulation 98.  When it was pointed out that regulation 98 applies only where a decision had been revised or where a deduction has been made in the calculation of a recoverable overpayment, he accepted that there might have to be a duplication of payments.

 

20. In the Secretary of State’s written submission, it was argued that it was not necessary for a separate claim to be made in respect of each home even if they were in different local authority areas and that therefore the only determination fell to be made by the local authority in whose area the “old” home was situated.  In his representative’s submission, section 134(1A) and (1B) of the Administration Act did not prevent a single housing benefit award leading to rebates or allowances from two local authorities and that a formal agreement under section 134(5) of that Act was not required.  The representative agreed with Mr Lister’s approach to the aggregation of the appropriate maximum housing benefits.  Mr James sensibly takes a less radical approach on behalf of the Secretary of State, submitting that a new claim is required in respect of a property in a different local authority area.  He too submits that the appropriate maximum housing benefits should be aggregated but he submits that that should be achieved through administrative arrangements, whether or not amounting to an agreement under section 134(5) of the Administration Act.

 

21. Mr Stagg states that there is no agreement between the relevant authorities under section 134(5) of the Administration Act and that, as far as he has been able to establish, the power to make an order under section 134(1B) has never been exercised.  He submits that separate claims are required in respect of properties in different local authorities’ areas, even if (contrary to his submission) they are not required in respect of different properties in the same local authority’s area, and that therefore there was no basis upon which Selby District Council could calculate housing benefit taking into account the appropriate maximum housing benefit in respect of a property outside its area in respect of which it was not the landlord.

 

Discussion

 

22. I agree with Mr Lister and Mr James that there would be no difficulty if the homes in the present case were both within the same local authority’s area.  There is nothing in the legislation to suggest that more than one claim for housing benefit from a single local authority is required.  Although a claimant may be asked to fill in a new claim form when moving from one property to another, where there is an existing award the “claim” is really an application for supersession of that award on the ground of a change of circumstances.  (It may be observed that regulation 79(2A) of the 2006 Regulations, fixing the date on which a move to a new home counts as a change of circumstances, seems to be based on the premise that no new claim is required.  This provision was mentioned in Mr Stagg’s original skeleton argument, but not in his supplementary one.)

 

23. Nonetheless, I differ from Mr Lister and Mr James in one respect.  I do not agree that, where a person is treated as occupying two dwellings in one local authority’s area as his home, the amount of housing benefit is calculated by aggregating the appropriate maximum housing benefit in respect of each home.  In my view, there is a single appropriate maximum housing benefit in such a case, calculated under regulation 70 by aggregating the eligible rents in respect of the two homes and then making the deductions in respect of non-dependents.  This difference of approach does not matter in a case like the present but it would be important where a non-dependant (perhaps a disabled adult relative) was moving with the claimant, because my approach would prevent a non-dependent deduction being made twice.  Moreover, this formulation makes it clear why regulation 80(10) is no obstacle.  Indeed, the need for regulation 80(10) is more readily understandable if both eligible rents are taken into account in the calculation of the same maximum housing benefit.  Although the legislation could specifically have stated that both eligible rents should be taken into account in the calculation, I do not consider that it was necessary for it to do so.  The scheme is clear enough.

 

24. However, it seems to me that the draftsman completely overlooked the need to make provision for cases where a person is treated as occupying as his home two dwellings in different local authorities’ areas.  I agree with Mr Stagg that section 134 of the Administration Act is the key provision in this regard.  A rebate under subsection (1A) is plainly only applicable where the local authority administering the scheme is the landlord (although the dwelling may be outside its area) and subsection (1A) also provides that rent allowances in respect of payments due to a local authority as landlord must be administered by the same local authority.  Subsection (1B) makes it equally plain that, in other cases, the local authority responsible for funding and administering housing benefit is the local authority in whose area the relevant dwelling is situated (except where the Secretary of State orders otherwise).

 

25. Where housing benefit is administered and funded by separate authorities, there must obviously be separate claims.  Even if one of the relevant authorities exercises functions on behalf of the other under an agreement under section 134(5), it seems to me that there must be separate claims unless, perhaps, the agreement requires a claimant to make any claim or application for supersession directly to the authority exercising the functions or to a joint committee.  I also have some difficulty in seeing how informal arrangements falling short of an agreement under section 134(5) can have the effect contended for by Mr James.  In any event, in the absence of any formal agreement or informal arrangements these points do not really arise.  A tribunal cannot determine a case on the basis of arrangements that do not exist.  This case had to be determined on the basis that there were separate claims.

 

26. There is, as Mr Stagg submits, nothing in the legislation to suggest that the eligible rent of a dwelling other than one in respect of which a claim (or application for supersession or revision) is made can or should be taken into account in the calculation of housing benefit.  If such a provision could be read into the legislation, there would be a problem of duplication of payments unless one also read in a provision to prevent the duplication of either claims or payments.

 

27. It is permissible to read words into legislation in some circumstances.  In Inco Europe v. First Choice Distribution [2000] 1 WLR 586 (HL), Lord Nicholls of Birkenhead said, at page 592, -

 

“…  It has long been established that the role of the courts in construing legislation is not confined to resolving ambiguities in statutory language. The court must be able to correct obvious drafting errors. In suitable cases, in discharging its interpretative function the court will add words, or omit words or substitute words. Some notable instances are given in Professor Sir Rupert Cross' admirable opuscule, Statutory Interpretation, 3rd ed., pp. 93-105. He comments, at page 103:

 

'In omitting or inserting words the judge is not really engaged in a hypothetical reconstruction of the intentions of the drafter or the legislature, but is simply making as much sense as he can of the text of the statutory provision read in its appropriate context and within the limits of the judicial role.'

 

This power is confined to plain cases of drafting mistakes. The courts are ever mindful that their constitutional role in this field is interpretative. They must abstain from any course which might have the appearance of judicial legislation. A statute is expressed in language approved and enacted by the legislature. So the courts exercise considerable caution before adding or omitting or substituting words. Before interpreting a statute in this way the court must be abundantly sure of three matters: (1) the intended purpose of the statute or provision in question; (2) that by inadvertence the draftsman and Parliament failed to give effect to that purpose in the provision in question; and (3) the substance of the provision Parliament would have made, although not necessarily the precise words Parliament would have used, had the error in the Bill been noticed. The third of these conditions is of crucial importance. Otherwise any attempt to determine the meaning of the enactment would cross the boundary between construction and legislation: see Lord Diplock in Jones v. Wrotham Park Settled Estates [1980] A.C. 74, 105. …

 

Sometimes, even when these conditions are met, the court may find itself inhibited from interpreting the statutory provision in accordance with the underlying intention of Parliament.  The alteration in language may be too far-reaching.  In Western Bank Ltd v Schindler [1977] Ch 1, 18, Scarman LJ observed that the insertion must not be too big, or too much at variance with the language used by the legislature.  …”

 

28. That is the difficulty in this case.  I find it impossible to interpret the legislation in a way that would allow housing benefit to be calculated in the present case in the same way that it would be calculated if the two homes had both been in the same local authority’s area.  That is because it must be dealt with in two separate claims rather than in a single claim with a single calculation.

 

Another suggestion

 

29. In his skeleton argument, Mr Stagg submitted that legislation to deal with the problem revealed by this case could take the form of two amendments to the 2006 Regulations.  The first amendment would provide that, where one local authority had awarded housing benefit to a person treated under regulation 7(6)(d) as occupying two dwellings as his home in respect of one of the homes, the local authority considering a claim in respect of the other home should disregard all income taken into account by the first authority unless the claimant’s income was sufficient to disqualify him from entitlement to housing benefit from the first authority altogether, in which case any surplus income would be taken into account.  The second amendment would provide that, where regulation 7(6)(d) had the effect that a person was to be treated as occupying two dwellings in different local authorities’ areas as his home, housing benefit awarded in respect of one dwelling would be disregarded in the calculation of housing benefit in respect of the other dwelling.

 

30. During the course of the hearing, I suggested that it might be possible to interpret the existing legislation so as to give it that effect.  Such an interpretation would achieve the same result as that contended for by Mr Lister and Mr James without doing quite so much violence to the legislation.

 

31. Mr Stagg submitted that such an approach would be straying beyond mere interpretation.  In his supplementary submission, he refers to the detailed provisions relating to income to be found in the 2006 Regulations which, he submits, leave no room for any further implication of circumstances in which income falls to be ignored.  In particular, he refers to regulations 36, 38 and 40 and to Schedules 4 and 5 introduced by those regulations.

 

32. However, as the headings to the regulations make clear, those provisions are concerned with the calculation of income.  Here, the question is not how income should be calculated but how it should be taken into account.  It is section 130 of the Contributions and Benefits Act which requires income to be taken into account in calculating entitlement to housing benefit and it is the structure of subsection (3) of section 130 itself that shows that income cannot fairly be taken into account twice if a claimant is entitled to make two simultaneous claims for housing benefit.

 

33. In my judgment, it is therefore section 130 that falls to be interpreted in this case and it is possible to construe it so that, where a person is treated as occupying two dwellings as his home and is required to make two claims for housing benefit because different local authorities are responsible for funding and administering housing benefit in respect of the two dwellings, his income is to be taken into account only once (although if part of the income is sufficient to extinguish entitlement on one claim, the balance may be taken into account on the other).  That is how it should be construed, so as to give effect to the obvious intention of the draftsman.

 

Conclusion

 

34. It follows that the appeal tribunal’s decision is erroneous in point of law and must be set aside.  Because the claimant’s income had been taken into account in the City of York Council’s calculation and was insufficient to extinguish entitlement to housing benefit from that council, he had no income left to be taken into account in calculating the housing benefit to be paid by Selby District Council. Accordingly, he was entitled to housing benefit from Selby District Council at a rate equal to the appropriate maximum housing benefit in his case, which was £60.55 pw for the four weeks in issue.  I can substitute a decision to that effect.

 

35. That provides a satisfactory answer to the present case.  However, it seems to me that the 2006 Regulations should be amended – either in the way suggested by Mr Stagg or in some other way – so that, in a case where regulation 7(6)(d) applies, they clearly give effect to the intention of Parliament.  Relying on reading words into the statute is not a satisfactory long-term solution.

 

 

MARK ROWLAND

7 January 2011