IN THE UPPER TRIBUNAL Case No.  CH/2431/2012

ADMINISTRATIVE APPEALS CHAMBER

Decision

The claimant’s appeal against the decision of the First-tier Tribunal of 24^th April 2012 succeeds for the reasons set out in paragraph 18 below.  I set that decision aside and re-make it as follows:

‘The claimant’s appeal succeeds.  The claimant is entitled to housing benefit in respect of the rent paid under his tenancy.’

Background and procedural history

1.           The appeal relates to housing benefit (‘HB’), in particular, whether the claimant is not entitled to HB because he has a long tenancy of the property in South-East London in which he lives.

2.           The claimant claimed HB in respect of the property on 14^th January 2010.  In the HB claim form he described his tenancy as an assured life tenancy (see page 41 of the bundle). 

3.           Initially the claim was successful and HB was paid however on 15^th September 2010 the local authority (the ‘LA’) terminated the award.  It gave the following explanation:

‘This is because your tenancy is for the term of your life.  Such lifetime tenancies are treated as being a 90 year lease and therefore exceed a ‘long tenancy’ which is classed as being 21 years or more.  Housing Benefit regulation 12(2)(a) states that the payments due under such long tenancies are not eligible for Housing Benefit.’

(see page 77 of the bundle)

4.           On 23^rd September 2010 the claimant appealed against the decision of 15^th September 2010. 

5.           The decision of 15^th September 2010 was reconsidered on 15^th June 2011 but was not changed.

6.           On 24^th April 2012 the First-tier Tribunal dismissed the claimant’s appeal.  The claimant attended the appeal but was not represented. 

7.           The claimant appeals against the tribunal decision of 24^th April 2012 with leave of an Upper Tribunal Judge.  In giving leave the Judge directed that a copy of the decision in R(H) 3/07 be added to the papers.

The appeal

8.           An appeal to a Judge of the Upper Tribunal will be successful only if the decision of the tribunal below is erroneous in point of law.

9.           There will be an error of law if:

(1)        The tribunal got the law wrong.

(2)        The decision is not supported by the findings of fact made by the tribunal.

(3)        The tribunal’s decision was perverse, in other words, on the basis of the facts as found no person acting judicially and properly instructed as to the relevant law could have come to that decision.

(4)        There has been a breach of natural justice.

(5)        The tribunal did not give adequate reasons for its decision. 

The relevant law

10.        Regulation 12(2)(a) of the Housing Benefit (Persons who have attained the qualifying age for state pension credit) Regulations 2006 (‘the Regs’) provides that, subject to an exception which is not relevant here, HB is not payable in respect of a payment of rent under a ‘long tenancy’.

11.        Long tenancy is defined in regulation 2 of the Regs as:

‘a tenancy granted for a term of years certain exceeding twenty one years, whether or not the tenancy is, or may become, terminable before the end of that term by notice given by or to the tenant or by re-entry, forfeiture (or, in Scotland, irritancy) or otherwise and includes a lease for a term fixed by law under a grant with a covenant or obligation for perpetual renewal unless it is a lease by sub-demise from one which is not a long tenancy’

(Italics supplied)

The oral hearing

12.        I held an oral hearing of the claimant’s appeal against the tribunal’s decision of 24^th April 2012 on 19^th April 2013.  The claimant attended and was represented by Mr Heather of Counsel.  The LA was represented by Mr Carr.

13.        Mr Heather had provided a skeleton argument and bundle of authorities in advance of the hearing.  Mr Carr provided copies of his authorities immediately before the hearing.

14.        In essence, Mr Heather’s argument before me was as outlined in his skeleton and was as follows:

(1)           The claimant’s tenancy agreement did not fall within the definition of a ‘long tenancy’ in regulation 2 of the HB Regs as it was not ‘granted for a term of years certain exceeding twenty one years’.  It was expressed to be an assured tenancy for life (see page 58 of the bundle) and that was what it was.

(2)           Section 149(6) LPA 1925 which provides that lease at a rent for life ‘shall take effect as’ a lease for a term of ninety years was a deeming provision.  As a matter of construction, regulation 2 did not catch leases that were deemed or created by statute.  This proposition was supported by the following:

(a)        If the draftsman of regulation 2 of the Regs had intended to catch a lease taking effect under section 149(6) LPA 1925, he would have included it expressly as had been done in other statutory provisions where the term ‘long lease’ was defined.  Examples of where the draftsman had taken that course were to be found in section 76(2) Commonhold and Leasehold Reform Act 2002, section 7 Leasehold Reform, Housing and Urban Development Act 1993, and section 3(1) Leasehold Reform Act 1967.  These provisions should, Mr Heather asserted, be contrasted with section 59(1) Landlord and Tenant Act 1987 which was in broadly the same terms as regulation 2 and which it had been established did not include a lease taking effect under section 149(6) LPA 1925.

(b)        The draftsman of regulation 2 had specifically included one type of lease where the term was fixed by law in the definition of long lease, a lease with a covenant or obligation for perpetual renewal which took effect under section 145 of and Schedule 15 to the Law of Property Act 1922 as being for a term of 2,000 years.

(3)           Section 1(1) LPA 1925 sets out the only estates in land which are now capable of subsisting in law - an estate in fee simple absolute in possession and a term of years absolute.  The claimant’s tenancy could not be a term of years absolute as defined in section 205(1)(xxvii) LPA 1925 as this excluded ‘any term of years determinable with life or lives.’  The requirement that the creation of a legal estate be by deed in section 52 LPA 1925 therefore did not apply nor did section 27(2) Land Registration Act 2002 which required registration of the grant of a term of years absolute for a term of more than seven years.  The claimant’s tenancy agreement did not create anything other than personal rights between him and his landlord.

(4)           Mr Heather adopted the reasoning at paragraph 22 of R(H) 3/07 where Deputy Commissioner Paines QC where he said, in relation to the HB provisions:

‘…The provisions on long tenancies … seem to me to be designed to set an (inevitably arbitrary) dividing line between claimants who are not in economic terms the owners of the property they occupy and those who are: long leaseholds are typically acquired in return for a premium which is more significant financially than any ground rent, have a capital value and are bought and sold; and the holders are normal lay regarded as temporary owners of the property.  It seems to me that the regime applied to owners is not intended to be applied to claimants unless they actually hold a long term interest of a sort which typically has a capital value; …’

Here the claimant’s tenancy had no capital value and he was not, in economic terms, the owner of the property so regulation 12(2)(a) of the Regs did not apply so as to disentitle him to HB.

15.        Mr Carr representing the LA, having accepted that the decision in R(H) 3/07, if followed, was seemingly fatal to his case, made the following points:

(1)        It was open to me to take the approach to construing regulation 2 of the Regs outlined by Judge Jacobs in R(H) 5/09 at paragraph 31 where he said:

‘The housing benefit legislation largely avoids terms of art from property law. … It is concerned with the economic substance of an arrangement rather than with the precise legal form.’

What the claimant had been granted here was expressed to be an assured tenancy for life and, as that was in substance a tenancy for a term exceeding twenty-one years, his tenancy was a long tenancy for the purposes of regulation 12(2)(a) of the Regs.

(2)        Commissioners Jacobs and Howell and Deputy Commissioner Ovey had all taken the view in decisions preceding R(H) 3/07 that a tenancy for life to which section 149(6) LPA 1925 applied was a long tenancy for the purposes of the Regs.  Mr Carr pointed me, in particular, to paragraph 8 of Commissioner Jacobs’ decision in CH/2743/2003, paragraph 16 of Commissioner Howell’s decision in CH/2258/04 and paragraph 22 and 24 of Deputy Commissioner Ovey’s decision in CH/3586/2005.

(3)        Mr Carr placed some reliance on paragraph 24 of Deputy Commissioner Ovey’s decision in CH/3586/2005 which is in the following terms:

‘It will be appreciated from the foregoing that if the grant of a tenancy for life is to create a legal estate, the grant must be made by deed.  The definition of “long tenancy” in regulation 2 of the Housing Benefit Regulations, however, simply refers to “a tenancy granted for a term of years certain exceeding 21 years”; there is no express requirement that the grant should create a legal estate.  In the absence of such a requirement, I see no need to read one in.’

16.        In reply, Mr Heather drew my attention to paragraph 20 of R(H) 3/07 where Deputy Commissioner Paines QC said:

‘I am aware that in CH/3586/2005 a Deputy Commissioner was prepared to assume that the definition of a long tenancy did not include the requirement that the grant should create a legal estate.  However, the Deputy Commissioner found that the agreement in that case was not a long tenancy for other reasons, and it was unnecessary for her to consider the law as closely as I have done.’

Reasons for decision

17.        The tribunal dismissed the claimant’s appeal on the grounds that:

‘The Tribunal found that the document was, on the available evidence, the claimant’s tenancy agreement and it gave him a lifelong tenancy.  As such no benefit was payable in respect of it.’

(see Statement of Reasons for Decision at page 89 of the bundle).

18.        It is not apparent from the Statement of Reasons for the First-tier Tribunal’s decision why it came to the conclusion it did.  In addition the tribunal got the law wrong as explained below.  For these reasons the decision of 24^th April 2012 is erroneous in law.

19.        The effect of section 149(6) LPA 1925 is to convert a tenancy for life into a tenancy for a term certain of more than twenty-one years (see judgement of Lord Neuberger in Mexfield Housing Co-operative Ltd v. Berrisford [2011] UKSC 52 at paragraphs 45 to 51).  Section 149(6) is not a deeming provision as contended by Mr Heather. 

20.        I am not persuade by Mr Heather’s arguments on the construction of the definition of  ‘long tenancy’ in regulation 2 of the Regs.  I agree with Commissioner Jacobs in CH/2743/2003, Commissioner Howell in CH/2258/04 and Deputy Commissioner Ovey in CH/3586/2005 that that definition includes tenancies which take effect as leases for more that twenty-one years under section 149(6).

21.        I adopt the reasoning of Deputy Commissioner Paines in R(H) which leads to the conclusion that the definition of ‘long tenancy’ in regulation 2 of the Regs requires that the grant of such tenancy should create a legal estate.

22.        Subject to limited exceptions, section 52 LPA 1925 requires the creation of a legal estate to be by deed.  The requirements for a deed are that:

(1)        The document must make clear on its face that it is intended to be a deed, whether by describing itself as a deed or expressing itself to be executed or signed as a deed or otherwise.

(2)        It must be validly executed as a deed.

23.        The tenancy agreement of 29^th July 2008 (at page 58 of the bundle) is not a deed and therefore it did not create a long tenancy within the meaning of regulation 2 of the Regs.  Nevertheless, there will be a periodic tenancy at common law and the claimant was liable to pay rent so long as that tenancy had not been terminated.  HB is therefore payable to the claimant in respect of that rent.

24.        Mr Carr asked me, in the event that my decision was that HB was payable, to decide who it should be paid to.  This point was not argued before me and I do not have sufficient information to deal with it other than to point out that the LA should consider whether the proviso to regulation 76(1)(b) of the Regs (that a payment should not be made to a landlord ‘where it is in the overriding interest of the claimant not to make direct payments to the landlord’) applies in this case.

(signed on the original)

A L Humphrey

Upper Tribunal Judge

23^rd April 2013