Upper Tribunal (Administrative Appeals Chamber)

 

IN THE UPPER TRIBUNAL Appeal No. CH/1782/2014

ADMINISTRATIVE APPEALS CHAMBER

 

THE TRIBUNAL PROCEDURE (UPPER TRIBUNAL) RULES 2008

 

Name: KP

Tribunal: First-tier Tribunal (Social Entitlement Chamber)

Tribunal Case No: SC242/13/11110

Tribunal Venue: Taylor House

Hearing Date: 10 September 2013

 

 

NOTICE OF DETERMINATION OF

APPLICATION FOR PERMISSION TO APPEAL

 

I refuse permission to appeal.

 

This determination is made under section 11 of the Tribunals, Courts and Enforcement Act 2007 and rules 21 and 22 of the Tribunal Procedure (Upper Tribunal) Rules 2008.

 

 

REASONS

Introduction

1. The Applicant (“the claimant”) seeks to appeal against the First-tier Tribunal (“the Tribunal”) decision by Judge C J Wright dated 10 September 2013. District Tribunal Judge (DTJ) Woollen for the Tribunal below had previously refused permission on the papers (26 February 2014). In summary, DTJ Woollen had accepted that the application raised a point of law but she concluded that the Tribunal had dealt adequately with the point and there were no errors in its reasoning.

 

2. I held an oral hearing of this application for permission to appeal at Field House in London on 2 September 2014. The claimant was represented by Mr Ahmed, who did not appear at the tribunal below. He had only been instructed a few days previously but had mastered the appeal bundle and put his arguments ably and clearly. I am grateful for his assistance.

 

The point of law

3. The point of law may be summarised in this way. If a claimant is convicted of benefit fraud, and the criminal court makes a compensation order, is the public authority responsible for paying out benefits (here the local authority (LA), as this was a housing benefit case, rather than the Department for Work and Pensions (DWP)) limited to recovering from the claimant the particular amount specified in the court’s compensation order?

 

4. In short, my conclusion is that it is not so limited. The LA’s power to recover wrongly paid housing benefit (HB) and council tax benefit (CTB) is a civil matter subject to section 75 of the Social Security Administration Act (SSAA) 1992 and the Housing Benefit Regulations 2006 (SI 2006/213). That power is not governed by, nor indeed limited by, the Powers of Criminal Courts (Sentencing) Act 2000 (“the 2000 Act”). In other words, the criminal court’s imposition of a compensation order as part of the sentencing process does not operate as a sort of cap on the maximum amount of wrongly paid housing benefit (or council tax benefit) that the LA can recover.

 

The essential facts

5. The essential facts are as follows. The LA paid the claimant HB and CTB from September 2009. On her benefit claim forms she had disclosed two bank accounts, with assets below the £16,000 capital cut-off. It later came to light that she had four other undisclosed bank accounts. In total she had over £25,000 in capital in 2009 and over £35,000 in 2010 and 2011, excluding her from entitlement to both HB and CTB at all material times.

 

6. On 25 August 2011 the LA decided that the claimant was not entitled to HB and CTB for the relevant period and that she had been overpaid £8,184.23 in HB (07.09.2009 – 21.08.2011) and £2,376.14 in CTB (22.02.2010 – 31.03.2012). The latter figure was later reassessed at £1,696.51 for the period from 22.02.2010 to 24.08.2011. Elsewhere it is cited as £1,687.26. For present purposes nothing turns on those minor differences in the amount of CTB wrongly paid. The Appellant lodged an appeal to the Tribunal against those decisions.

 

7. Meanwhile, the LA had also instigated criminal proceedings in the Crown Court. The claimant was duly charged on an indictment containing five counts of dishonestly making false representations with a view to obtaining HB and CTB contrary to s.111A of the SSAA 1992. The total sum involved was described as £9,871.49 (i.e. £8,184.23 HB and £1,687.23 CTB). It appears from the papers before me that the claimant’s defence at trial was that she had not been dishonest. Rather, she argued the accounts in question had been “earmarked” for particular purposes (e.g. to fund anticipated employment tribunal proceedings) and she did not believe that such funds had needed to be disclosed to the local authority. The jury evidently did not accept her explanation and she was found guilty. I have read the Sentencing Remarks of the Recorder of the Royal Borough of Kensington & Chelsea, sitting at Isleworth Crown Court on 17 August 2012.

 

8. The Recorder passed a sentence of 10 weeks’ imprisonment suspended for 12 months. He also made a compensation order in the sum of £2,500, to be paid in 28 days. He had this to say on the subject of the compensation order:

 

“ ... You have savings of £5,817, I am informed. I have considered carefully whether it would be right to deprive you of that entire sum. I am not going to take that course, but I am going to order you to make a substantial contribution out of those funds. I am not depriving you of the entire sum because it seems to me that you do deserve sympathy to some extent for the circumstances in which you came to lose gainful employment, and the serious and real problems you have experienced over your housing and health in recent years. For that reason it would seem to me it would be unjust to order payment over of your entire savings. This order will mean that you have some money, in addition to the benefits which you receive, the details of which are set out in the pre-sentence report.

 

I order that a sum of £2,500 be paid in compensation. Clearly this does not compensate the public purse and all hard working tax payers from whose pockets you have benefited, but it seems to me the best one can do in the circumstances to compensate the borough.”

 

9. On 21 September 2012 the Solicitor to the LA wrote to the claimant’s then representative as follows:

 

“We understand that you are advising [the claimant] with respect to the above. We further understand that it has been suggested that the compensation order made by the Crown Court is the limit of [the claimant]’s liability for overpaid benefits.

 

This is categorically not the case. No such limit was imposed by the Crown Court nor any comment made or indication to that effect. Indeed had it been our view would be that it was a nullity as the court does not have the power to override the relevant provisions of statute.

 

The court simply made a compensation order under the Powers of Criminal Courts (Sentencing) Act 2000. [The claimant’s] means and available capital were taken into account by the judge in making that order. Nothing in that order however prohibits the Local Authority from seeking to recover the balance of the overpayment over and above the amount of compensation ordered by the Crown Court.

 

Section 134 of the Act referred to provides:

 

(1) This section shall have effect where a compensation order, or a service compensation order or award, has been made in favour of any person in respect of any injury, loss or damage and a claim by him in civil proceedings for damages in respect of the injury, loss or damage subsequently falls to be determined.

 

(2) The damages in the civil proceedings shall be assessed without regard to the order or award, but the plaintiff may only recover an amount equal to the aggregate of the following—

(a) any amount by which they exceed the compensation; and

(b) a sum equal to any portion of the compensation which he fails to recover,

and may not enforce the judgment, so far as it relates to a sum such as is mentioned in paragraph (b) above, without the leave of the court.

 

The Act is perfectly clear. The proceedings in the Magistrates’ Court are civil proceedings and the Local Authority’s civil rights are unaffected by the compensation order save as provided for at s134(2).”

 

10. Shortly after the sentencing hearing, the LA made an application for a liability order against the claimant in Hammersmith Magistrates’ Court. It is plain on the papers before me that that application was made in respect of unpaid council tax. The liability order was granted in the sum of £3,644.96 including costs on 18 October 2012 (see p.278; a copy of the actual order was handed in by Mr Ahmed at the permission hearing).

 

11. On 10 September 2013 the Tribunal heard the claimant’s appeals against the HB and CTB entitlement and overpayment decisions referred to at paragraph 6 above. The Tribunal had detailed written and oral submissions from the claimant, who was represented at the hearing by a trainee barrister on a pro bono basis. The gist of the claimant’s argument was that the LA was limited by the terms of the Recorder’s order to recovering a maximum of £2,500 in wrongly paid HB and CTB for the period in issue. The Tribunal rejected that submission, with reasonably detailed reasons contained in the Decision Notice issued on the same day and more fully in the Statement of Reasons dated 23 December 2013.

 

The claimant’s submissions

12. The crux of Mr Ahmed’s submissions was that the local authority and the Tribunal below had erred by focussing exclusively on section 134 of the 2000 Act. He referred me to section 130 of the same Act, the primary provision governing compensation orders, and in particular to section 130(4) (an order should be for “such amount as the Court considers appropriate”) and 130(11) (the Court must have regard to the defendant’s means). Mr Ahmed referred me in detail to the Recorder’s sentencing remarks (paragraph 8 above), which showed that the Crown Court had applied section 130 with care. He argued that the Recorder could have made a compensation order in a larger sum but had expressly declined to do so, acting in the proper spirit of section 130. He also referred me to R v Donovan (1981) 3 Cr App R (S.) 192, holding that compensation orders are meant for cases where the appropriate amount of compensation can be readily and easily ascertained. He further argued that the effect of section 130 was to limit the total amount that the local authority could recover in this case.

 

The local authority’s submissions

13. The local authority did not attend the permission hearing (and was not required to do so). It has made written representations along the lines of the arguments made at paragraph 9 above. It also makes the point that if the effect of a compensation order was indeed to cap the amount to be recovered in the way suggested, then there would be little incentive for the DWP or councils to prosecute benefit fraud, as on that basis there would be a prospect of a court limiting the total amount that could be recovered.

 

The Upper Tribunal’s analysis

14. I am not persuaded by the arguments advanced on behalf of the claimant, despite the attractive way in which Mr Ahmed put them. I do not doubt his analysis of the requirements laid on the criminal court by section 130 of the 2000 Act in terms of its sentencing powers. However, the fundamental problem with his submissions is that it ignores the fact that the criminal and civil proceedings are separate and governed by different rules. I cannot accept that section 130 of the 2000 Act acts as some sort of trump card to restrict the total amount recoverable in other proceedings. That analysis is inconsistent with section 134, which plainly contemplates both that there may be civil proceedings to recover more but ensures that the principle of no double recovery is maintained. In addition, there are three further reasons why I reject his submissions, which may be summarised by reference to three Ps – primary legislation, precedent and principle.

 

15. As regards the primary legislation, section 75 of the SSAA 1992 provides that “Except where regulations otherwise provide, any amount of housing benefit determined in accordance with regulations to have been paid in excess of entitlement may be recovered either by the Secretary of State or the authority which paid the benefit”. Neither the social security primary legislation nor the HB or CTB regulations make any exception limiting the amount of any recovery to the sum specified in any compensation order made by a criminal court under section 130 of the 2000 Act.

 

16. As for precedent, Mr Commissioner Dobry held in unreported decision CSB/392/1985 that a compensation order made in the criminal courts does not determine the amount recoverable by the Secretary of State (see e.g. at paragraphs 14 and 15) and so the DWP (or, in the context of housing benefit, the local authority) is entitled to issue an overpayment recovery decision in the full amount, subject obviously to the principle that any sum awarded by the court under a compensation order and repaid under must then be deducted from the statutory overpayment. Similarly in CIS/683/1994 Mr Commissioner Henty expressly held that no decision by anyone under (what was then) the Powers of Criminal Courts Act 1973 “could, in any way, disturb those rights”, i.e. in that case the Secretary of State’s statutory rights to recover overpayments. I see no reason why the local authority should be in a different position to the Secretary of State in this respect.

 

17. As to principle, it seems to me there is considerable force in the local authority’s argument that any other construction would act as a major disincentive to the authorities as regards bringing prosecutions for benefit fraud. The logic of Mr Ahmed’s argument leads to the inevitable conclusion that an honest but forgetful claimant who is overpaid £10,000 in HB, and who is not prosecuted, is liable to repay the whole £10,000, while a dishonest claimant who defrauds a local authority of the same sum of £10,000 in HB is only liable to repay e.g. £2,500, if that is (as here) the amount ordered to be paid by way of a compensation order. The Recorder was making a compensation order as part of a range of sentencing options, and was not purporting to determine the claimant’s liability in civil proceedings to repay benefit (a matter over which the Crown Court simply has no jurisdiction). The Recorder made his comments on the basis of the information about the claimant’s means that was then before him. There was nothing at all to suggest that the total civil debt was adjusted down to the amount of the criminal compensation order. Under benefits legislation the local authority has the power to e.g. make further deductions from ongoing benefit payments in the future to help meet the overpayment liability.

 

18. The liability order was made in the magistrates’ court in respect of unpaid council tax. The decision that there was no entitlement to CTB in effect revived the council tax liability. Mr Ahmed made various representations about the process by which the liability order was obtained, but the liability order was not a matter that fell within the Tribunal’s jurisdiction. It was plainly part of the process of recovery and as such a matter for the courts, not the tribunals.

 

Conclusion

19. Overall, therefore, I am satisfied that the tribunal in this case did not err in law. It made appropriate findings of fact and gave sufficient and indeed comprehensive and cogent reasons for its decision. The grounds of appeal are simply not arguable and rest on a series of fundamental misunderstandings. It follows that I must refuse this application for permission to appeal to the Upper Tribunal. 

 

 

 

 

 

 

(Signed on the original)

Nicholas Wikeley

Judge of the Upper Tribunal

 

(Dated) 3 September 2014