IN THE UPPER TRIBUNAL

ADMINISTRATIVE APPEALS CHAMBER

Before Upper Tribunal Judge Poynter

Attendances

For the respondent: Roger Booth of counsel

The appellant did not attend and was not represented.

DECISION

The appeal to the Upper Tribunal succeeds.

The decision given by the First-tier Tribunal sitting at Brighton on 14 March 2011 under reference SC177/10/03509 involved making an error on a point of law.

I set that decision aside and re-make it in the following terms:

The appeal to the First-tier Tribunal is allowed in part.

The decision on the claimant's entitlement to housing benefit issued by the City of Brighton and Hove on 8 February 2010, revised on 4 March 2010 and further revised on 21 April 2010 is confirmed.

The claimant is not entitled to housing benefit from and including Monday 11 January 2010.

The overpayment decision issued by the City of Brighton and Hove on 4 March 2010 and revised on 21 April 2010 is set aside.

The claimant has been overpaid £1,200.00 as housing benefit for the period from Monday 11 January 2010 to Sunday 7 March 2010.

That overpayment is recoverable in full from the claimant.

REASONS

Introduction

1                 This appeal is brought by the claimant against the decision of the First-tier Tribunal set out above. In that decision, the Tribunal held that the claimant was liable to repay an overpayment of housing benefit ("HB") in the sum of £684.96 for the period. It follows from my re-made decision that the claimant is no better off even though his appeal has technically been successful. However, for the reasons given at paragraph 55 below, he is no worse off either.

2                 The respondent to the appeal is the City of Brighton and Hove ("Brighton"). Permission to appeal was granted by Upper Tribunal Judge Jacobs on the basis that the First-tier Tribunal had granted permission in another appeal involving the same parties and it was desirable that the two cases should be decided consistently. My decision in that other appeal (CH/2485/2012) will be issued at the same time as this decision.

3                 I announced my decision by word of mouth at the end of the oral hearing. I must ask the parties to accept my apologies for the time it has taken to produce this written explanation of my reasoning.

4                 These reasons begin by setting out the procedural history of the matter. I then explain how the First-tier Tribunal erred in law. Finally, I make further findings of fact and explain why I have re-made the First-tier Tribunal's decisions.

5                 In fairness to the First-tier Tribunal, I should say that the submissions I received from Mr Booth at the oral hearing were considerably fuller and more coherent than the local authority's original response to the appeal. I am also conscious that I have had considerably more time to deal with the appeal than was available to the First-tier Tribunal.

6                 In addition, I have had the advantage of seeing documents that were not available to the tribunal judge. I have not, of course, taken those additional documents into account when deciding whether the First-tier Tribunal's decision was wrong in law. However, I have relied upon them when re-making that decision

Procedural history

7                 As the appeal was presented to the First-tier Tribunal, the procedural history of the matter was as follows:

(a)            On 12 January 2010, the claimant claimed HB for a property to which I will refer as "No. 22" ("Claim 1").

(b)            In that claim, the claimant stated that he had rented No. 22 from a private landlord since 1 January 2002 and that his rent was £890 per calendar month inclusive of all bills. Asked whether anyone over 16 lived with him in the property, he replied "No". He also stated that No. 22 was a flat in a block, comprising a living room, a kitchen, two bedrooms, a bathroom and a toilet and that he had exclusive use of all those rooms.

(c)            The claim was supported by three documents purporting to be rent receipts (which I discuss further at paragraphs 56(i)(ii) and 61(b) below) and a document bearing the date 20 February 2009 which purported to be an agreement to create a tenancy of No. 22 at the rent stated above and commencing on 14 July 2002. That "agreement" was not signed either by the claimant or the landlord. It did, however, contain the signature of a third person who gave her address as No. 22 and who stated that the claimant and the landlord had each signed the document in her presence. For obvious reasons, that statement cannot have been true. I discuss the implications of this at paragraph 62 below.

(d)            The Department forwarded the claim to Brighton and, on 6 February 2010, Brighton wrote to the claimant asking (among other things) for confirmation that he lived alone at No. 22, and for the details of "the days that your landlord stays at the property". Those enquiries were made partly because the address of the "witness" to the tenancy "agreement" suggested that the claimant did not live alone at No. 22 and also because—as I now know, but the First-tier Tribunal did not—Brighton had previously received inconsistent information from the claimant and the owners of No. 22 about the basis on which the claimant occupied that property.

(e)            On 8 February 2010, without waiting for a reply to their letter of 6 February 2010, Brighton awarded the claimant HB at the weekly rate of £150.00 from Monday 11 January 2010. The £150 figure represented the local housing allowance for a single bedroom property, which—on the information the claimant had given to the Department for Work and Pensions—was the correct rate. I will refer to this decision as "Decision 1".

(f)              On 16 February 2010, Brighton received a reply from the claimant. He confirmed that he lived alone at No. 22 and added that his landlords "used to come down every weekend and stay in the property but they now come down once or twice a month since the birth of their grand daughter".

(g)            On 4 March 2010, Brighton made two decisions. The first ("Decision 2a") was that the claimant was entitled to HB at the weekly rate of £85.62 from Monday 11 January 2010. The £85.62 figure reflected the local housing allowance for a room in a shared property. The second ("Decision 2b") was that the claimant had been overpaid £515.04 in HB for the period from 11 January 2010 to 7 March 2010 (i.e., 8 weeks @ £64.38 per week, that being the difference between £150.00 and £85.62) and that the overpayment was recoverable from him.

(h)            Further correspondence followed. In particular:

(i)              On 15 March 2010, Brighton issued the claimant with a new claim form. It did so because it had learned that his claim for jobseeker’s allowance had been refused.

(ii)             On 16 March 2010, Brighton suspended payment of the benefit awarded by Decision 1. At the time, benefit had been paid to Sunday 7 March 2010.

(iii)            On 22 March 2010, the completed claim form was returned.

(At the pre-hearing stage, I gave directions that suggested a fresh claim for benefit had been made on 22 March. Neither party disputed this. However, closer examination shows that the claim form has been marked—probably by Brighton—to indicate that it is being used to report a change of circumstances, rather than make a fresh claim. Moreover, the refusal of jobseeker’s allowance did not automatically end the award of HB and a fresh claim received at a time when the claimant has an award of benefit takes effect as an application to supersede that award (see, in the context of housing benefit, the unreported decision of Upper Tribunal Judge Mark reference CH/2008/2011 at paragraph 6).)

(i)              In the light of the further information that became available from that correspondence and claim form, Brighton decided on 21 April 2010 that the claimant's tenancy was not on a commercial basis and that therefore regulation 9(1)(a) of the Housing Benefit Regulations excluded him from entitlement to benefit from 11 January 2010 ("Decision 3a"). As a result, Brighton also decided that there had also been a further recoverable overpayment of £684.96 for the period from 11 January 2010 to 7 March 2010 (8 weeks @ £85.62 per week) ("Decision 3b").

(j)              On 27 April 2010, the claimant appealed ("Appeal 1").

(k)            On 29 April 2010, Brighton reconsidered its decision but refused to revise it ("Decision 4")

(l)              I now know, but the First-tier Tribunal was not told, that on 29 July 2010, the claimant made a further claim for HB ("Claim 2").

(m)          On 6 August 2010, Brighton gave a further decision ("Decision 5"). The operative part of that decision stated:

"Thank you for providing further information in support of your claim for HB at this address.

… I have used the information you have provided to make a decision regarding your Housing Benefit entitlement.

I am sorry to advise you that I still do not consider that your tenancy at this address can be considered as commercial for Housing Benefit purposes. I do not believe the new information that you have supplied provides any significant reason to change this decision."

I discuss the status of Decision 5 at paragraphs 14 to 16 below.

(n)            On 9 August 2010, the claimant appealed against Decision 5 ("Appeal 2") and, on 23 September 2010, Brighton refused to revise it ("Decision 6").

(o)            On 14 March 2011, the First-tier Tribunal heard the appeal at Brighton. Both parties were present at the hearing. The Tribunal's decision was in the following terms:

"The Housing Benefit appeal is disallowed.

The decision of the Respondent in relation to Housing Benefit issued on 21/04/2010 is confirmed.

There has been an overpayment of HB in the sum of £684.96 for the period 11/01/2010 to 07/03/2010. The overpayment is recoverable from [the claimant] because the local authority has correctly determined that his tenancy was not on a commercial basis.

The relevant facts include:

1.     There was no properly executed tenancy agreement in respect of the relevant period.

2.     There was no evidence of rental payments being made."

The tribunal judge issued a written statement of reasons for that decision on 17 May 2011.

Reasons for setting aside the Tribunal's decision

8                 On 7 June 2011, the claimant applied for permission to appeal to the Upper Tribunal with the assistance of BHT Advice. District Tribunal Judge Elias refused permission because she took the view that the grounds of appeal did not raise any question of law. I respectfully agree with that view and note that permission to appeal was given solely on the basis that this appeal and CH/2485/2012 should be decided consistently, rather than that there was any merit in the original grounds of appeal. As I have decided to set the First-tier Tribunal's decision aside for other reasons, I will not discuss those grounds further.

9                 In my judgment, the First-tier Tribunal went wrong in law because it:

(a)            did not correctly appreciate the scope of the appeal before it; and therefore

(b)            confirmed the amount of the overpayment recoverable for the period from 11 January 2010 to 7 March 2010 as £684.96, when—assuming that its decision was otherwise correct—the correct figure was £1,200.00

(c)            did not deal with the issue whether there were grounds for revising Decision 1 (i.e., the original decision to award the appellant HB at the weekly rate of £150); and

(d)            either:

(i)              failed adequately to distinguish between the separate issues of whether the claimant was legally liable to pay for his occupation of No. 22 or whether (as Brighton had decided) he was so liable, but that the agreement creating that liability was not on a commercial basis; or

(ii)             failed to have proper regard to regulation 9(2) of the Housing Benefit Regulations

10             I will consider each of those points in turn.

The scope of the appeal

11             When a local authority makes a decision on a claim for HB, that decision is final subject only to the rules on revision, supersession and appeal (see paragraph 11 of Schedule 7 to the Child Support, Pensions and Social Security Act 2000 ("Schedule 7")). Further, since the abolition of benefit periods, a decision to award HB will normally take effect for an indefinite period.

12             Therefore:

(a)            Decision 1 (which awarded the claimant £150.00 per week from 11 January 2010) was final and for an indefinite period. Brighton could only change it by revising it or superseding it.

(b)            A decision to reduce the amount of benefit awarded from the original effective date of the award required a revising decision under paragraph 3 of Schedule 7.

(c)            It follows that Decision 2a (which reduced the weekly rate of the award to £85.62 with effect from the start of the award) must have been a decision revising Decision 1.

(d)            It also follows that Decision 3a (under which the claimant was not entitled to benefit at all from the start of the former award) took effect as a further revision of Decision 1.

(e)            For the reasons given below, Decision 3b was an (incorrect) revision of the first overpayment decision (Decision 2b).

13             Decision 4 purported to be a refusal to revise Decisions 3a and 3b. But revising decisions cannot themselves be revised. That is because paragraph 3 of Schedule 7 only confers a power to revise, or further revise, a "relevant decision". As defined by paragraph 1 of Schedule 7, that phrase only includes the original decision on the claim and subsequent decisions superseding it. Therefore Decision 4 must be understood as a refusal to revise Decision 1 and Decision 2b further.

14             The status of Decision 5 is problematic because it does not set out the dates to which it applies or identify any specific earlier decision that is being confirmed.

15             From its timing, Decision 5 could be a refusal of Claim 2. That would involve reading the words

"I do not believe the new information that you have supplied provides any significant reason to change this decision"

as meaning that the reasoning underlying Decision 3a applied equally to the new claim.

16             However, in my judgment, the decision reads more naturally as a second refusal to revise Decision 1 further. In particular, the opening words thanking the claimant for providing further information in support of his claim suggest that the decision was given in respect of Claim 1. There had not been time for further information to be requested in respect of Claim 2.

17             (On the basis of that conclusion, the papers I have seen do not appear to include any decision on Claim 2. It is possible that there are still documents that I have not seen. However if, by oversight, no formal decision has been given on Claim 2, Brighton is legally required to issue one as soon as reasonably practicable.)

18             For the reasons given in paragraph 13, my conclusion that Decision 5 was a second refusal to revise Decision 1 further, entails that Decision 6 was a third such decision.

19             Brighton presented the appeal to the First-tier Tribunal on the basis that the decision under appeal was made on 6 August 2010 (i.e., Decision 5). The tribunal judge must have realised that that was not the full story because her decision notice (paragraph 7(o) above) identifies the decision under appeal as having been issued on 21 April 2010. However, the statement of reasons does not explain why she took that view.

20             Whatever the reason, the view that the appeal was against any decision taken on 21 April 2012 was not correct because both decisions taken on that date were revising decisions and, under paragraph 6 of Schedule 7, there is no right of appeal against a decision revising, or refusing to revise, an earlier decision. Any right of appeal is against the original decision either as revised, or in its unrevised form, as the case may be. A decision to revise or to refuse to revise normally extends the time limit for appealing (paragraph 3(5) of Schedule 7 and Schedule 1 to the Tribunal Procedure (First-tier Tribunal) (Social Entitlement Chamber) Rules 2008) but that extension of time only necessary because the revising decision does not itself carry a right of appeal.

21             In this case, the claimant purported to appeal twice:

(a)            Appeal 1 purported to be against the decision notified to him on 21 April 2010. However, as neither decision given on that date carried a right of appeal the appeal took effect as an appeal against Decision 1 (as revised by Decision 2a and further revised by Decision 3a) and Decision 2b (as revised by Decisions 3a and 3b).

(b)            Appeal 2 purported to be against Decision 5. However, as that decision was a refusal to revise Decision 1, the appeal took effect, if at all, as an appeal against Decision 1. To that extent, Appeal 2 was not separate from Appeal 1.

22             Therefore, the First-tier Tribunal was seised of appeals against two decisions

(a)            Decision 1 as revised and further revised; and

(b)            Decision 2b as revised

rather than the single decision dated 21 April 2010 which it purported to confirm.

The amount of the overpayment

23             All of that would be immaterial if the First-tier Tribunal's outcome decision had been correct. Unfortunately, its failure to identify the decisions that were before it. led the First-tier Tribunal to confirm Brighton's approach to the overpayment issues and to misstate the amount of the recoverable overpayment in this case.

24             Brighton's approach to making overpayment decisions in this case is that adopted by many, if not most, local authorities in cases where circumstances suggest that an earlier overpayment decision understates the amount recoverable. That approach is to treat the earlier overpayment decision as continuing in effect and to issue a second overpayment decision re-claiming the difference between the amount now held to be due and the amount covered by the earlier decision.

25             It may well be that local authorities work this way because it is convenient for their computers. However, the approach is not legally correct and is a constant source of confusion in appeals to the First-tier Tribunal.

26             The approach is incorrect because the law does not contemplate that a claimant can have been overpaid two or more separate amounts of the same benefit in respect of the same period.

27             The point can be readily understood if one thinks in terms of entitlement rather than overpayment.

28             Suppose that in February a claimant ("C") is awarded HB with effect from 1 January at the weekly rate of £100.00. That rate is lower than would otherwise be the case because C has capital of £15,000 which generates a weekly tariff income of £36.00. Later in February, C is awarded disability living allowance ("DLA") for a period beginning before 1 January and becomes retrospectively entitled to the disability premium which, at current rates, increases her applicable amount by £31 per week. The relevant authority will—correctly—respond to the DLA award by revising the original decision so as to increase the rate at which HB is payable. It would not leave the original award undisturbed and make a second award of HB at a weekly rate equal to the difference between C's "old" and "new" entitlements. Properly analysed, there is no "old" entitlement. On the facts as they are now known to be, C has always been entitled to the "new" rate. The "old" entitlement is better described as the "incorrect" entitlement.

29             Suppose it is then discovered that C has been doing undeclared work throughout the period of her claim. The local authority will again revise the decision awarding benefit to reduce the weekly rate of the award to reflect the weekly amount of her earnings less any disregards. It will also make an overpayment decision and the amount of the overpayment will reflect the difference between the old "incorrect" rate and the new "correct" rate.

30             If it is subsequently discovered that C has also failed to disclose working tax credit for the period, the correct approach is to revise the overpayment decision to increase the overpayment, just as in the earlier example, the awarding decision was revised to increase the weekly rate of C's entitlement to benefit. However, many authorities—including Brighton in this case—respond to such circumstances by issuing a second overpayment decision in which the weekly "correct" figure for the "first" overpayment becomes the weekly "incorrect" figure for the "second" overpayment.

31             Such an approach has no basis in law. Regulation 99 of the Housing Benefit Regulations 2006, defines an overpayment as an “amount which has been paid by way of HB and to which there was no entitlement”. Since there can only be one correct level of entitlement for any given period, there can only be one overpayment in respect of that period, namely, the total amount actually paid for that period less the total amount to which the claimant was correctly entitled.

32             The approach that there can be more than one overpayment for any given period is also incompatible with paragraph 11 of Schedule 7, which provides that, subject to revision, supersession, and appeal, decisions are final. In this case Brighton decided on 4 March 2010 that the claimant had been overpaid £515.04 for the period from 11 January 2010 to 7 March 2010. If, without revising that decision, Brighton is permitted to decide subsequently that the claimant was also (or instead) overpaid £684.96 (or any other sum) for that same period, then the original decision was not final because the effect of the subsequent decision is that the claimant has been overpaid some other sum than £515.04.

33             It follows that the requirements of paragraph 11 are only met if the subsequent decision is treated as having (in this case) revised the first. However, the original and revising decision are not cumulative. Once the earlier decision has been revised, it is changed and now only exists in its revised form, the revising decision being subsumed within it. As revised, the original decision remains the only decision that governs the overpayment period to which it relates, and the outcome for which it provides is the only outcome applicable to that period.

34             Accepting that there can be more than one overpayment for any given period also gives rise to technical difficulties. For example, suppose that in C's case, it is discovered that C has been paying relevant child care charges, which, had she declared them, would have been deducted from her earnings and which she is now entitled to have taken into account to as underlying entitlement under regulation 104. If there are two overpayments rather than one, from which overpayment is the deduction for underlying entitlement made? The wording of regulation 104 requires the deduction to be made whenever an authority calculates the amount of "a recoverable overpayment". If one grants the premise that there are two recoverable overpayments in C's case, then the regulation requires the full underlying entitlement to be deducted from both of them, rather than once in a single calculation of the total amount overpaid.

35             Finally any approach which allows there to be more than one overpayment for a period also risks injustice. Suppose in C's case the second overpayment decision had been made more than 13 months after the first and that is the occasion on which C appeals. Treating the second decision as freestanding makes it probable that C will be told that the Tribunal cannot change the first decision because she is out of time to appeal against it. In fact, the first overpayment decision (as revised by the second) is the decision under appeal and C's time for appealing against it is extended by the revising decision.

36             Applying the correct approach to this case:

(a)            The revision of Decision 1 by Decision 2a meant that the claimant had been paid an amount by way of HB to which there was no entitlement. There was therefore an overpayment and the amount of the overpayment was the product of the number of weeks for which the overpayment occurred and the difference between the weekly rate awarded by Decision 1 and that awarded by Decision 2a. Decision 2b correctly reflected that state of affairs.

(b)            The further revision of Decision 1 by Decision 3a meant that the amount of benefit that had been paid to the appellant and to which he had no entitlement increased, so that decision 2b was no longer correct. In other words, Decision 3a necessarily required the revision of Decision 2b. Decision 3b must be regarded as giving effect to the required revision, because otherwise Decision 2b is final and there is no legal basis for a decision that is inconsistent with it.

(c)            But once it is realised that Decision 3b is a decision revising Decision 2b, it is immediately clear that it is incorrect. Under Decision 1, the claimant had been paid HB at the weekly rate of £150 for the period of eight weeks from Monday 11 January 2010 to Sunday 7 March 2010. If Decision 3a is factually and legally correct, then the appellant was not entitled to any of that benefit. The overpayment was therefore £1,200.00 (£150 x 8) and not £684.96.

37             The First-tier Tribunal's decision that the claimant had been overpaid £684.96 was therefore wrong in law. That conclusion could only be supported on the basis that the original £515.04 overpayment was the subject of a separate decision that had not been appealed and was therefore not before the Tribunal. For the reasons I have given, that was not the case.

Failure to deal with the issue of revision

38             I have already explained that the Brighton's original decision was to award the claimant benefit and that what was under appeal to the First-tier Tribunal was a revised version of that decision under which the claimant was not so entitled.

39             A further consequence of that circumstance was that it was necessary for Brighton to establish grounds for revision.

40             Once a decision to award benefit has been made, it cannot be changed simply because the authority that made it subsequently comes to the view that it was incorrect. The authority, and on appeal the Tribunal, must also be satisfied that one or more of the grounds for revision exist. Those grounds are set out in regulation 4 of the Housing Benefit and Council Tax Benefit (Decisions and Appeals) Regulations 2001 ("the Decisions and Appeals Regulations").

41             That principle is unaffected by the fact that the Tribunal was considering an appeal against the original decision. As was stated by the Tribunal of Commissioners in R(IB) 2/04 (at paragraph 39):

"… where the original decision has been revised adversely to the claimant, he is entitled to assert on appeal that no ground for revision existed. In other words, the claimant is not limited to arguing that the original decision as revised is wrong, but may argue that the original decision should remain effective as not having been properly revised."

42             Whether or not there were grounds for revision was an issue that clearly arose on the facts of this appeal and the First-tier Tribunal should have dealt with the point. The written statement of reasons shows that it did not do so. That, too, was an error of law.

43             In the light of the evidence that was not before the Tribunal—and because the basis of my re-made decision is different—I have decided that grounds for revision existed. However, on the evidence presented to the Tribunal, the issue was a real one:

(a)            The grounds which might have allowed Brighton to revise its decision in this case (i.e., those in regulation 4(1)(b) or (2)(b)) both require that the authority should have been ignorant of or mistaken as to “some material fact”. The only alternative would have been for Brighton to rely upon regulation 4(2)(a), namely that the decision “arose from an official error”. However, even that ground is not clearly established in this case and for Brighton to have relied upon it would have amounted to a concession that any resulting overpayment was irrecoverable.

(b)            It was therefore necessary for the First-tier Tribunal to identify the material fact of which Brighton was ignorant, or about which it was mistaken, when it made Decision 1.

(c)            A “material” fact is one which would have made a difference, not one that might have put Brighton upon further enquiry (see the decision of Mr Commissioner Jacobs (as he then was) in CIS/3655/2007 at paragraph 29).

(d)            Contrary to the provisional view I expressed at the pre-hearing stage, I now accept that, as Decision 2a was made within one month of Decision 1, it was authorised by regulation 4(1)(b). Decision 1 was based upon a mistake as to the material fact that the claimant did not have exclusive occupation of No. 22. That fact was material because it went to the level of the claimant's maximum rent under regulation 13D(1)(b) of the Housing Benefit Regulations 2006.

(e)            However, the grounds for the further revision effected by Decision 3a are less clear. It was arguable that Brighton did not carry out that revision because it subsequently became aware of a fact or facts which would have required it to do so. Rather it removed the claimant's award because it came to the view that his tenancy was not on a commercial basis. That change of view was not itself a fact. It was a conclusion based on facts which do not themselves appear to have been material in the required sense.

(f)              I am familiar with the authorities which hold that such a conclusion is a conclusion of fact, rather than a conclusion of law. Even so, it is not a material fact for the purposes of establishing grounds for revision and supersession. I respectfully agree with the analysis of regulation 6 of the Social Security and Child Support (Decisions and Appeals) Regulations 1999 by Upper Tribunal Judge Parker in GR v Secretary of State for Work and Pensions (DLA) [2010] UKUT 312 (AAC) (at paragraphs 12 to 15) and her conclusion (at paragraph 15) that:

“The application of the legal test [i.e., to the primary facts], although a factual matter, is not a ‘material fact’ or a ‘circumstance’ for the purposes of regulation 6”

The conclusion that the appellant’s tenancy was not on a commercial basis is best regarded as a matter of judgment based on an interpretation of the underlying facts. The authorities cited by Judge Parker in the GR case establish that changing one's interpretation of facts is not the same thing as being ignorant of, or mistaken as to, those facts.

(g)            On that basis, and on the evidence that was available to the Tribunal, I cannot myself see any ground for the revision that Brighton carried out when it made Decision 3a.

Liability, commerciality and regulation 9(2)

44             Brighton's final decision was made on the ground that the claimant's tenancy was not on a commercial basis. In other words, it was saying that he was excluded from benefit by regulation 9(1)(a) of the Housing Benefit Regulations 2006 ("the HB Regulations"). That is also how the First-tier Tribunal expressed matters in its decision notice (paragraph 7(o) above). However, Brighton's response also raised (at paragraph 7.17 of the response) the separate issue of whether the claimant was legally liable to pay for his occupation of No. 22.

45             The judge found (at paragraph 5 of her reasons) that the tenancy agreement which appears in the papers "was not a valid tenancy agreement for the appellant". Even taking that conclusion in the context of the statement as a whole, it is unclear whether she was saying:

(a)            that the particular agreement reproduced in the papers was not valid; or

(b)            that there was no agreement at all between the appellant and his landlord that was effective to create a legally enforceable liability.

In the light of the decision notice, I incline to the view that she was saying the former. If the latter was intended, the decision notice should have said that there was no liability to pay rent rather than the claimant's tenancy was not on a commercial basis.

46             However, if I am correct about that, then the Tribunal's decision was wrong in law for failing to apply regulation 9(2) correctly.

47             So far as is relevant, regulation 9 is in the following terms:

“Circumstances in which a person is to be treated as not liable to make payments in respect of a dwelling

9.—(1) A person who is liable to make payments in respect of a dwelling shall be treated as if he were not so liable where—

(a) the tenancy or other agreement pursuant to which he occupies the dwelling is not on a commercial basis;

…

(2) In determining whether a tenancy or other agreement pursuant to which a person occupies a dwelling is not on a commercial basis regard shall be had inter alia to whether the terms upon which the person occupies the dwelling include terms which are not enforceable at law.”

48             The opening words of the regulation (“[a] person who is liable”) establish that it only applies if there is a genuine, legally enforceable, liability for the claimant to pay for the occupation of the dwelling. If there is no such liability, then the claimant is excluded from HB, not by regulation 9, but by regulation 8 and section 130(1)(a) of the Social Security Contributions and Benefits Act 1992. Therefore, if the First-tier Tribunal took the view that only the particular tenancy agreement in the papers was not valid, rather than that there was no valid agreement at all and therefore no legal liability to pay, it was correct to apply regulation 9.

49             However, if it is accepted that there was a genuine liability to make payments in this case, then that liability can only have arisen through some agreement. If the agreement in the papers was not that agreement, then the Tribunal needed to make findings of fact about what form the true agreement took and what its terms were. Such findings were necessary because the Tribunal was required (“shall”) by regulation 9(2) to have regard “to whether the terms upon which the person occupies the dwelling include terms which are not enforceable at law”. That requirement could not be met unless the Tribunal first established what the terms upon which the claimant occupied No. 22 were.

50             The Tribunal did not make those findings and therefore did not comply with regulation 9(2). That, too, was an error of law.

Conclusion

51             For those reasons, the First-tier Tribunal's decision was wrong in law in various respects. As I cannot say that the errors were immaterial and, in particular, as the decision misstates the amount of any recoverable overpayment that may exist in this case, I exercise my discretion under section 12(2)(a) of the Tribunals, Courts and Enforcement Act 2007 ("TCEA") to set that decision aside.

The re-made decision

Introduction

52             In pre-hearing directions, I indicated that if I were to set aside the First-tier Tribunal's decision, I would probably exercise the power conferred by section 12(2)(b)(ii) of TCEA to re-make that decision. I also indicated that, if Brighton wished me to do so, I would consider whether its decision could be supported on the alternative basis that the claimant was not legally liable to make payments in respect of his occupation of No. 22. Brighton did, in fact, put its case on that alternative basis and the claimant had notice that that was the case.

53             I directed a hearing of the appeal so that, among other things, the parties would have an opportunity to deal with any additional factual matters. The claimant did not attend that hearing, even though he had specifically requested that I should hold it. No explanation was offered for his absence. I exercised the discretion conferred by rule 38 of the Tribunal Procedure (Upper Tribunal) Rules 2008 to proceed with the hearing. I was satisfied that reasonable steps had been taken to notify the claimant of the hearing. I was also satisfied, taking into account the overriding objective, that it was in the interests of justice to proceed. As I did not know why the claimant had not attended the hearing, I could have no confidence that he would attend any future hearing. Not proceeding with the hearing would certainly have caused delay, and would have been unlikely to assist the proper consideration of the issues or to have any effect on the claimant's participation in the proceedings.

Summary

54             I have re-made the First-tier Tribunal's decision in the terms set out above because, in summary:

(a)            I have concluded that when the claimant and the owners of No. 22 agreed the terms upon which the claimant was to occupy that property, they did not intend to create legal relations. Therefore, during the period I have to consider, the claimant was not liable to make payments in respect of No. 22 and was not entitled to HB in respect of that property.

(b)            Brighton's original decision to award benefit (i.e., Decision 1), and the original overpayment decision (i.e., Decision 2b) were both based on ignorance of the material fact that there was no intention to create legal relations and the original decision was more advantageous to the claimant than it would otherwise have been. There are therefore grounds for revising those decision under regulation 4(2)(b) of the Decisions and Appeals Regulations. Given what I say at paragraph 43(f) above, I should confirm that I regard the intention of the parties as a matter of primary fact. As Bowen LJ remarked in Edgington v Fitzmaurice (1885) 29 ChD 459:

“…the state of a man's mind is as much a fact as the state of his digestion. It is true that it is very difficult to prove what the state of a man's mind at a particular time is, but if it can be ascertained it is as much a fact as anything else.”

That a person’s intention must be inferred from what he or she does and says, and from what he or she does not do or say, does not therefore prevent it from being a material fact for these purposes. An inference of fact is not the same as a judgment about underlying facts or a conclusion based on the application of a legal test to such facts.

(c)            As the claimant has been paid a total of £1200.00 to which, under Decision 1 as revised, he was not entitled, he has been overpaid that sum.

(d)            All overpayments of HB are recoverable unless they arose in consequence of an official error. There has been no official error in this case. As the overpaid benefit was paid to the claimant, the overpayment is recoverable from him.

55             It is convenient to note at this point that although it looks as if I have increased the sum the claimant has to pay, the result of the First-tier Tribunal's decision was that he was liable to pay £684.96 under the decision the Tribunal confirmed and £515.04 under Decision 2b which, at the time was incorrectly believed to have been a separate decision. Those two sums total £1,200.00, which is the same amount I have held to be recoverable.

Findings of fact

56             I make the following findings of fact, under section 12(4)(b) of TCEA:

(a)            Since 29 March 2000, No. 22 has been owned under a long lease by a couple to whom I will refer as "Mr & Mrs N".

(b)            On 10 July 2001, Mr N told Brighton that No. 22 was a second home. That information was given in connection with an application for a council tax discount and was the subject of a formal declaration that it was correct to the best of Mr N's knowledge and belief. Mr N also acknowledged that he was under a legal obligation to notify Brighton within 21 days if that circumstance should change.

(c)            Mr and Mrs N live in Middlesex but also own at least one other property in Brighton. That property is a flat in the same block as No. 22. Mr and Mrs N rent it to tenants on a commercial basis. I will refer to that other flat as No. 7.

(d)            At some point before 8 August 2002, the claimant began to live at No. 22.

(e)            Numerous inconsistent accounts have been given of the date on which he did so and the circumstances in which he did so. Given the view I have formed as to the credibility of the claimant and Mr and Mrs N (as to which, see paragraphs 62 to 67 below) it is not possible for me to make detailed findings of fact on those points. However, I accept the following:

(i)              The claimant is a friend of Mr and Mrs N. He has known Mrs N for many years. The evidence is unclear as to how long he has known Mr N but his friendship is, for example, close enough for him to have been invited to their daughter's engagement party;

(ii)             At the outset, the claimant's occupation of No. 22 was informal. He told the First-tier Tribunal, and I accept, that he was visiting Mr & Mrs N in Brighton at a time when he was without work or accommodation. They allowed him to stay at No. 22, ostensibly to look after the plants in that flat.

(iii)            At that time, Mr and Mrs N visited No. 22 every weekend. If they brought their children with them he would vacate his room and either sleep in the living room or go away for the weekend.

(iv)           At some point, Mr and Mrs N moved a tenant of one of their other properties into No. 22 to share with the claimant.

(f)              At no point before 30 May 2010 was there any written agreement regulating the claimant's occupation of No. 22. A document purporting to be such an agreement is said to have come into existence on that date and to have taken effect from 1 June 2010. However, the First-tier Tribunal was, and therefore I am, forbidden by paragraph 6(9) of Schedule 7 to take into account any change of circumstances that occurred after 8 February 2010 (the date on which Decision 1 was made) when considering the entitlement issues in this appeal. I therefore disregard that agreement for the purposes of this appeal.

(g)            Contrary to what the claimant asserted in Claim 1, the claimant does not have, and has never had exclusive occupation of No. 22. From the outset, Mr and Mrs N were free to come and go at the property as they pleased. There is no evidence that I am prepared to accept to show that anything has changed. It may be that Mr and Mrs N do not visit the flat as often as they used to but that does not mean that they are not free to do so, if they wished. If the claimant had exclusive occupation, Mr and Mrs N would not have been able to move another tenant in to share with him.

(h)            Even though there was no written tenancy agreement, the claimant tried on at least two occasions to persuade Brighton that there was:

(i)              On 10 March 2010, the claimant sent Brighton what he described as "a copy of the original Short Term Lease agreement". In fact that document was a copy of a tenancy agreement between Mrs N and the tenants of No. 7. That tenancy commenced on 17 December 2004 and was at a rent of £695 monthly. The claimant had amended that copy agreement by:

·                 crossing out the names of the tenants of No. 7 and writing in his own name;

·                 crossing out the words "Flat 7" in the description of the property and writing in the words "Flat 22";

·                 writing the date "1/8/2001" next to the date "17 December 2004" without crossing the latter date out; and

·                 writing the amount "£890.00" next to the amount "£695.00" without crossing the latter amount out; and

·                 inserting the date "1/8/2001" on the signature page and signing the document.

That copy document also appears to bear Mrs N's signature. However, on a balance of probabilities, it is a copy of her signature on the original tenancy of No. 7 and not her original signature on the document as amended by the claimant. In particular, the amendments made by the claimant have not been initialled by her or by Mr N.

(ii)             Subsequently, the claimant submitted the document to which I refer at paragraph 7(c) above, which was not signed by either party but was "witnessed".

(i)              There is no objective evidence (by which I mean evidence of bank statements, a rent book or contemporaneous rent receipts given by Mr or Mrs N) that the claimant has ever paid any rent for the property:

(i)              The claimant's evidence as to how rent has been paid is inconsistent, except to the extent that payment is always in cash. Brighton's analysis of the claimant's bank account (which I accept) shows that the withdrawals from that account were insufficient to pay the rent during the period to which they relate. On 11 June 2010, Mr N. told Brighton in general terms that all the rent had been paid and there were no arrears. For the reasons given below, I am unable to accept that evidence.

(ii)             Further on being pressed by Brighton for rent receipts the claimant wrote out his own and submitted them. The receipts were not signed by either Mr or Mrs N.

(j)              I accept that the claimant may have paid something for his occupation of the property over the years. However, I do not accept that the sums claimed were paid on a regular, periodical basis. I find that the agreement between the claimant and Mr and Mrs N was that they were happy for him to stay in the flat as a friend who was not as well off as they were, on terms whereby he would look after the flat for them, they could continue to use it as an when they required, and he would pay them what he could afford when he could afford it.

(k)            Neither the claimant, nor Mr and Mrs N intended that agreement to create any legal rights or obligations.

(l)              Mr N and the claimant are both accountants.

Reasons for the re-made decision

57             I accept that Mr and Mrs N do not owe the claimant anything and are under no obligation to allow him to live in No. 22 without any liability to pay for doing so. The question I have to answer is whether it is more likely than not that, without being obliged to do so, that is what they have done. The burden is on Brighton to establish on a balance of probabilities that this is what has happened. It would have been otherwise had Brighton not made the initial decision to award benefit. However, they did so and it is now for them to establish that there are grounds for revising it.

58             It is said by the claimant (and was said on his behalf by BHT Advice) that an agreement does not have to be in writing to create a legal liability to pay for the occupation of a dwelling; that it is possible for a genuine (and commercial) liability to exist between friends and that genuine (and commercial) agreements may nevertheless be informal. All that is, of course, correct. But it misses the point, which is not whether such an agreement can exist, but whether it does exist on the facts of this case.

59             If the situation had been that the claimant and Mr and Mrs N had not documented their agreement because they were friends and trusted one another, but had nevertheless dealt promptly and openly with Brighton and provided the authority with the evidence that it required when they were asked to do so, I would have been inclined to put a benign interpretation on the facts.

60             However, their evidence has been inconsistent and the claimant in particular has been disingenuous in supplying evidence that he must have known would not be acceptable, when—if the situation had been as he described—obtaining the evidence that Brighton required should have been a simple matter. That is despite the fact that both the claimant and Mr N are accountants and must therefore be aware of the need for formalities in some transactions; of the need for public authorities to satisfy themselves that public money is being properly spent; and of the need to be exact when dealing with public authorities.

61             The inconsistencies in the evidence are set out in detail in Mr Booth's submissions and I need not lengthen what is already a long decision by setting them out in full here. However, by way of example:

(a)            Mr Booth has identified no fewer than 8 different dates on which the claimant's occupancy of No. 22 is said to have started. The earliest of those dates is August 1981 and the latest is 2005. Both those dates were given by the claimant, but the dates given by Mr and Mrs N are also inconsistent. I accept that informal arrangements between friends can change imperceptibly over time. so that the precise date on which the change took place cannot always be identified. I also accept that memories fade with time. However, if it were the case that the claimant is under a legal liability to pay for his occupation of No. 22, I would expect him to have been able to say to within a year or two when that liability commenced, rather than give a range of dates that are up to 24 years apart.

(b)            The claimant's provision of rent receipts which he had written out himself and which were not signed by either Mr N or Mrs N, was inconsistent with his evidence that Mr or Mrs N collected the rent in person. If so, why could they not have signed the receipts when they did so? As an accountant, Mr N at least could not possibly have regarded a request for a signed receipt for a cash payment as an unreasonable one.

(c)            I regard the claimant's attempts to convince Brighton that the rent receipts should be accepted, even though not signed, as disingenuous. He is an accountant. He must have known that, whatever the position may have been between him and Mr and Mrs N, Brighton had asked to see receipts in the context of a claim for a payment from public funds so that they might have evidence from someone other than him that the rent was actually being paid. I am certain that the claimant also understood that "receipts" which he had written himself did not perform that function. It is far more likely than not that the "receipts" are not signed because the payments which they purport to record were not made.

(d)            In so saying, I am aware that Mr N has subsequently signed the receipts. However, I regard that as a change of circumstances arising after the date of the decision under appeal that I am forbidden to take into account. The simple fact remains that during the time I must consider, there were no signed receipts even though there was no reason why there should not have been signed receipts if the rent had been collected personally in cash by Mr N or Mrs N, as the claimant maintains.

(e)            The claimant describes the amended copy tenancy agreement (paragraph 56(h)(i) above) as being "a copy of the original Short Term Lease agreement". That is inconsistent with his other evidence"

(i)              To begin with, the document must have been entered into after 17 December 2004. That was the date on which the original tenancy of No. 7 (of which it is a copy) was entered into. However, the claimant made a claim for HB in respect of No. 22 on 8 August 2002 in which he said that he was "living there now" and that he was paying a rent of £100 per week. If that is correct, an agreement that was made after 17 December 2004 cannot, even if valid, have been the "original" agreement between the parties.

(ii)             Further, the amended copy tenancy agreement states that the rent from "1/8/2001" was £890.00 per month. The figure of £100 per week in the 2002 claim does not equate to £890 per calendar month. At least one of the two figures is therefore untrue. Once again, the claimant is an accountant. His grasp of arithmetic must be sufficient to appreciate that.

(iii)            Finally, the claimant did not merely amend the agreement to show the term as commencing on "1/8/2001". He inserted that date on the signature page to indicate that the document had been signed on "1/8/2001". I regret that I cannot regard that as anything other than the direct and deliberate falsification of the document. It is true that the falsification is easily detectable by comparison with the 17 December 2004 date. But the fact it has been carried out in a maladroit way does not make it any less of a falsification.

62             Which brings me to a circumstance to which I have attached particular weight when assessing the claimant's credibility. It will be remembered that, in response to a request to see his tenancy agreement, the claimant provided Brighton with a copy of a completed law stationer's tenancy agreement form that was not signed but was witnessed (see paragraph 6(c) above).

63             Brighton did not take the point, but I regard the presence of the witness's signature in the absence of a signature from anyone else as substantially undermining the claimant's credibility. The most charitable interpretation I can place on it is that the claimant persuaded the witness to sign in two places that the agreement had been signed in her presence when it had not been so signed and then submitted the document to Brighton in support of a claim for public money knowing that the witness had attested to something that was false.

64             It was a stupid thing to have done because, it was obvious on the face of the document that it had not been signed in the presence of the witness. However, that does not mean it was not also dishonest. In my judgment, it was dishonest even to have obtained the witness's signature in advance. The only possible reason for doing so was to have obtained an unwitnessed signature from Mr N at a later date and then to have submitted it to Brighton as a witnessed signature.

65             For those reasons, and however unfortunate it is to have to say it of a professional man, I find myself unable to accept that the claimant is a witness of truth. I attach no weight to his evidence unless it amounts to an admission against interest or it is corroborated by other evidence from a source other than him or Mr or Mrs N.

66             I am also unable to accept the evidence of Mr and Mrs N. Again, their evidence is inconsistent as to the date on which the claimant’s “tenancy” is supposed to have started and, if they are to be believed, they were renting No. 22 to the claimant at the same time as claiming a council tax discount on the basis that it was their second home. I cannot accept the statement in Mr N’s email to Brighton on 30 June 2010 that the rent set out in that document had been paid and there were no arrears because, the objective evidence of the claimant’s bank statements does not show where the money to have made such payments could have come from and because, if the payments had been made, their apparent failure to provide the claimant with signed receipts is cannot be explained, or at least cannot be explained in any way that would not further damage their credibility. Mr and Mrs N’s failure to provide the claimant with a written and signed tenancy agreement, even when it had become apparent that the absence of such an agreement was causing the claimant difficulties with his benefit claim, is also inconsistent with their present account of how circumstances were in the past: the evidence shows that they do give proper, signed tenancy agreements to their other tenants.

67             For those reasons, I also attach no weight to Mr and Mrs N’s evidence unless it amounts to an admission against interest or it is corroborated by other evidence from a source other than or the claimant.

68             Approaching the evidence in that way, leaves me with the facts that the claimant has been living at No. 22 since at least August 2002; that no formal, written, agreement was entered into; that there is no evidence to which I can attach any weight that the claimant ever made any payment for that occupation; and that the claimant is a longstanding and close friend of the owners of the property. In those circumstances, the existence of a written tenancy agreement for No. 7 assumes greater weight than might otherwise be the case. As Mr Booth put it at the hearing, we know that when Mr and Mrs N wish to create legal relations with a person who is occupying one of their properties, they grant that person a written tenancy. I regard the inference that they did not grant the claimant a written tenancy because they did not wish their arrangement with him to create legal relations as compelling. That inference is also consistent with Mr and Mrs N’s insistence on being paid in cash despite the obvious difficulties that causes and the absence of signed receipts for any payments that may have been made.

69             I therefore accept that Brighton has discharged the burden of establishing grounds to revise Decision 1.

70             It follows that the claimant was not entitled to the HB he received and has been overpaid the sum of £1,200. The only issue remaining is whether that overpayment is recoverable. It is. All overpayments of HB are recoverable unless they arose in consequence of an official error. The only thing Brighton did wrong was award the claimant HB when they were still waiting for a reply to their letter of 6 February 2010. However, that mistake was not an official error as defined because the claimant contributed to it materially by stating in his original claim form that he had exclusive occupation No. 22 when he did not. Moreover, that mistake did not cause the overpayment. The letter of 6 February 2010 was not concerned with the existence of the claimant’s liability to pay rent but only with whether or not he was the sole occupier of No. 22.

Conclusion

71             For those reasons, my re-made decision is as set out on page 1 above.

(Signed on the original)

Richard Poynter Judge of the Upper Tribunal 31 October 2013