Upper Tribunal (Administrative Appeals Chamber)

IN THE UPPER TRIBUNAL Appeal No.  CH/3041/2012

ADMINISTRATIVE APPEALS CHAMBER

 

Before Judge S M Lane

 

 

The appeal is ALLOWED.

 

The decision of the First-tier Tribunal (Social Entitlement Chamber) heard on 6 January 2012 under reference 242/10/10874 involves an error on a point of law.  The tribunal’s decision is SET ASIDE and RE-MADE under section 12(2)(a) and (b)(ii) of the Tribunals, Courts and Enforcement Act 2007.

 

The overpayment of Housing Benefit (HB) in the amount of £1220.78 as set out in the respondent Authority’s decision on 3 June 2010 is not recoverable from the appellant. 

 

An excess payment of Council Tax Benefit (CTB) in the sum of £21.50 is not recoverable from the appellant.

 

The overpayment and excess payment were caused by official error to which the appellant did not cause or to which she materially contributed and she could not reasonably have been expected to realise that an overpayment was occurring at the time of any payment or notice relating to that payment. 

 

 REASONS FOR DECISION

 

1          I apologise for the lateness of this decision. 

2          The appellant, whom I shall call ‘the claimant’, did not attend, but was represented by Mr Manning, of counsel, instructed (I believe) by Mr Mark Batten of Centre 70 Advice Centre in London.  The respondent was represented by Mr D Rufus, the Principal Appeals and Customer Officer of the Lambeth Benefits Service.  The Secretary of State for Work and Pensions agreed to be joined as a second respondent because of the complexity of the issues involved in the appeal and was represented by Mr S Cooper.  Mr Cooper had personal difficulties which meant he had to leave after the morning session.  There were no objections to his doing so, and I granted him permission to leave.

3          I am very grateful to the representatives who engaged fully with the co-operative spirit of the Tribunal system.  I am also grateful that they agree that I should set aside the decision and remake it as set out above. 

4          The issues in this appeal were complex and wide-ranging.  They involved the proper method of calculating earnings from employment with variable hours and changing wages, the periods over which the average should be taken, the recoverability of overpayments where the earnings turned out to be higher than the average obtained in the calculations, official error, whether a claimant could reasonably be expected to realise that an overpayment had occurred in estimated earnings cases and the effective dates for supersession of decisions (including late reporting of a non-dependent’s departure from the household).  A further issue on the effectiveness of a revision by the Local Authority after the F-tT has made its decision also arises.  This last issue was not discussed at the hearing, and unnecessary to the decision. 

5          It is hoped that this decision will enable Local Authorities to re-focus on legislative requirements of calculating earnings under regulation 29(3) of the Housing Benefit Regulations 2006 and regulation 19(3) of the Council Tax Benefit Regulations 2006.  The latter regulations have been repealed, but there may be a rump of cases still to be heard.

6          It would be difficult to understand the Tribunal’s decision without setting out the background facts at some length.  

The Background

7          The decision in issue is dated 3 June 2010 and concerns an overpayment of HB and CTB.

8          The claimant had a part time job at a local GP’s surgery.  Her earnings from that job were her sole form of income.  She had been in receipt of HB and CTB in respect of her flat for some time and a non dependent deduction was being applied to her benefit at the non-working rate in respect of her son.  This is clearly shown in the notifications.  Her earnings were subject to a good deal of fluctuation owing to (a) pay increases at fairly frequent intervals; and (b) the varying amounts of overtime she worked.  The claimant would report these changes to the Authority at intervals by attending their offices and taking a number of her payslips with her.  Sometimes she wound up with a small overpayment to repay, and sometimes an underpayment occurred for which she received payment of arrears.  The difficulty that arose regarding the decision of June 2010 lay in the method by which the changes in the claimant’s earnings were assessed.

9          She reported changes in her income on three main occasions.  Whilst (i) and (ii) are not under appeal, they are included to set the scene.

(i)The reassessment of 12 November 2008 relating to 16 June 2008 -10 November 2008 and 10 November 2008 to 6 April 2009: 

a.    In November 2008, the claimant brought into the Benefits Service a set of four monthly payslips (pages 9-12) relating to June, July, August and October 2008.  They show that there had been quite a big increase in her basic pay.  The June payslip showed this as £568.69 per month, whilst the other three show £738.69. Her basic pay had therefore gone up by £170 per month.  All the payslips show some overtime varying between five and sixteen hours.  

b.    We are not told exactly what calculations the Authority made on the basis of these payslips but it resulted in a weekly gross income figure of £184.98 (p 21).  There is no explanation of the averaging exercise used by the Authority to reach the figure of £184.98; and it is difficult to see why the Authority adopted – seemingly without seeking further information - a period which included June 2008, when the claimant’s basic pay increased dramatically from July.

c.    The recalculation based on a rise of £170 per month resulted in the reduction of claimant’s entitlement from £35.27 to £14.08 and an overpayment of £423.80 HB for the period 16 June to 3 November 2008.  The claimant accepted this overpayment.

(ii)          Reassessment of 29 August 2009 relating to 30 March 2009 to 6 April 2009 and 6 April 2009 to 5 April 2010 (payslips produced in March 2009): 

a.    In March 2009, the claimant brought in payslips (pp 29-32) relating to November 2008, December 2008 and February 2009.  They showed an increase in basic pay with her earnings shown as £1034.17.  This was an increase of nearly £300 per month.  As the Authority had previously seen her October 2008 payslip, there was no doubt that the change had taken effect from November 2008.  The payslips showed overtime, but the hours were less variable than previously.

b.    There were two pay rises during the 11 month period covered in the year to date figures.  On the Authority’s calculation, however, the claimant’s earnings were estimated at £173.67, which was less than that in the previous assessment.

c.    There was no explanation in the notification (p33ff) of the averaging exercise which led the Authority to reach £173.67.  The Authority only explained their use of the year to date its method in their submission to the Tribunal (p106).

d.    The Authority informed the claimant in the notification that it would pay arrears for the period 30 March 2009 – 6 April 2009 and then 6 April 2009 to 7 September 2009 paid into her rent account.  They treated the change as effective from 30 March. 

(iii)         Reassessment of 3 June 2010 relating to 2 November 2009 to 5 April 2010 (in stepped phases). Payslips produced in May 2010: 

a.    The claimant supplied five payslips covering November 2009, December 2009, January 2010, February 2010 and April 2010 (pp 47-51).

b.    The November and December 2009 payslips continued to show basic pay of £1034.17, so there was no change there.  However, the figure in her November 2009 payslip was slightly down from the figure in February 2009 (the last of the payslips previously presented) because it did not include any overtime. (The overtime appears to have been aggregated in the December 2009 payslip.)  Insofar as there was any change, there was a slight underpayment for November.

c.    Her basic pay went up in January 2010 to £1089.57 (£55 per month) and then to £1181.90, as shown on her April payslip.  Overall, her pay had gone up by a total of about £150 over a few months.  We cannot tell if this rate applied in March as that payslip was not produced.  Overtime opportunities seem to have decreased and it was last shown on the December 2009 payslip. 

d.    The Authority says in their submission that they did a straightforward averaging of the totals from the five payslips to produce a gross figure of £923.23 monthly.  This converted to £253.73 per week and resulted in a much lower entitlement figure than previously.  

e.    The notification of June 2010, does not explain this process, resulted in an overpayment of £1220.78 HB  and £21.50 CTB.  It was at this point that the claimant objected and eventually appealed.

10       The claimant’s representative lodged an appeal on her behalf by letter dated 29 June 2010 (pp 64-65).  The letter of appeal indicated, in addition to the submissions on the overpayment, that the claimant’s non-dependent son was no longer living with her, having left at some point earlier than November 2009.  The representative subsequently stated (p 81) that the claimant had not appreciated that a non-dependent deduction was being made until he explained this to her and so had not realised the need to report the change.  The Authority accepted this as a report of a change of circumstances and reassessed her benefit by applying the normal rules for effective date of supersession which, because it was a favourable change reported late, meant that the reassessment could only be made from a current date.

 

11       There were two reasons for carrying out reassessments.  The first was to establish her income to see whether she continued to be entitled to benefit from the date of change onward.  The second was for establishing whether any over or underpayments of benefit had occurred.

 

The treatment of earnings

12       Regulation 29 sets out how an employed earner’s earnings are to be calculated.  Regulations 29(1) and (2) deal with how earnings are to be determined at the outset of a claim while 29(3), the provision relevant to this appeal, deals with changes during the course of an award. 

29.—(1) Where a claimant’s income consists of earnings from employment as an employed earner his average weekly earnings shall be estimated by reference to his earnings from that employment—

 

(a) over a period immediately preceding the benefit week in which the claim is made or treated as made and being a period of—

 

(i) 5 weeks, if he is paid weekly; or

(ii) 2 months, if he is paid monthly; or

 

(b) whether or not sub-paragraph (a)(i) or (ii) applies, where a claimant’s earnings fluctuate, over such other period preceding the benefit week in which the claim is made or treated as made as may, in any particular case, enable his average weekly earnings to be estimated more accurately.

 

(2) Where the claimant has been in his employment for less than the period specified in paragraph (1)(a)(i) or (ii)—

 

(a) if he has received any earnings for the period that he has been in that employment and those earnings are likely to represent his average weekly earnings from that employment his average weekly earnings shall be estimated by reference to those earnings;

 

(b) in any other case, the relevant authority shall require the claimant’s employer to furnish an estimate of the claimant’s likely weekly earnings over such period as the relevant authority may require and the claimant’s average weekly earnings shall be estimated by reference to that estimate.

 

(3) Where the amount of a claimant’s earnings changes during an award the relevant authority shall estimate his average weekly earnings by reference to his likely earnings from the employment over such period as is appropriate in order that his average weekly earnings may be estimated accurately but the length of the period shall not in any case exceed 52 weeks.

 

(4) …

 

Regulation 29(2)(b) and 29(3) in particular cater for a range of circumstances in which the Authority must make a prediction regarding the claimant’s likely weekly earnings over a period which will enable it to estimate his average weekly earnings accurately.  Where there is fluctuating income or, as in this case, fluctuating income coupled with a number of pay rises, making this prediction can be difficult.  But the point of the exercise is to make a sensible decision about his average weekly earnings which reflects what the claimant is likely to earn.  That figure then forms the basis on which benefit is calculated. 

13       The exercise will obviously have an element of futurity but it may also require the Authority to look back at what happened before.  There may be a pattern in the changes which will help the Authority with the prediction.  But referring to the past in order to predict the future is only helpful if the past history can give the decision maker an indication of what may happen in the future. 

Was the method of calculation adopted by the Authority correct in law?

14       Mr Rufus rightly pointed out that it is difficult for a claimant to establish an error of law in relation to the assessment of earnings under regulation 29(3).  This is because the regulation gives the Authority a wide discretion in the choice of the period to be used.  It would not, therefore, be sufficient for the claimant just to show that another Authority (or Tribunal standing in its shoes) might reasonably have chosen a different period.  Reasonable people may reasonably differ and come to different, reasonable conclusions.  In order for there to be an error of law, therefore, the claimant would have to show that the choice of period was outside the range of choices that an Authority properly directing itself could have made.

15       I accept that the claimant has a high hurdle to jump, but it is not insurmountable and in my view, the claimant has succeeded.

16       There are two aspects to consider: 

(i)      the Authority must actively turn its mind to whether the period it chooses will identify likely earnings from which it can accurately find an average weekly figure;

(ii)     they must act rationally in their choice.

17       The way in which the Authority approached the assessment of the claimant’s earnings in this case was flawed.  In essence, the Authority took whatever payslips the claimant brought into them, averaged them, and if this produced a figure different from that used previously, reassessed her benefit using the start of the month covered by the first payslip submitted as the effective date.  This appears to have been done over a considerable period of time, with no explanation of the process in the award notifications, with the result that the awards were impenetrable.

18       The Tribunal took the view that the past award history was irrelevant to its task.  In the circumstances of this case, this was an error of law.  It was not possible to understand the cloud of unknowing that surrounded the award without looking at the history

19       Reassessment ii:  The payslips produced in March 2009 show that the claimant’s monthly earnings had increased to £1034.17.  The Authority calculated the average on the basis of the ‘year to date’ information shown on the February 2009 slip (payslip 11).  But during the 11 month period covered by those figures the claimant had two pay rises.  In April, May and June 2008, she had probably been paid at the rate of £568.69; for July, August, September and October at the £738.69 rate; and for November, December, January and February at the £1034.17 rate.  By taking an average, the Authority arrived at a figure for weekly gross earnings of £173.67 (see page 35) i.e. less that that used previously.  

20       It is clear that simply striking an average from the figures in the February payslip would not produce an amount accurately reflecting either her current or prospective pay levels.  The period selected included a rate of earnings which was well out of date.  Using it as part of the period gave a false perspective to her likely earnings because it artificially lowered them by reference to the outdated information. The changes in the claimant’s pay in November 2008 – February 2009 were such that the Authority should either have recognised that there had been a material change in November 2008 and put it into effect or, at the very least, sought further information from the claimant about her pay. 

21       Reassessment (iii)  In their submission (p 108), the Authority states that it did a simple averaging of the totals from the five payslips the claimant provided, producing a gross figure of £923.23 monthly.  This converted to £253.73 per week and resulted in a much lower entitlement figure than previously.  

22       The Authority treated the effective date of the assessment as 2 November 2009, using the November payslip as the first one in the averaging.  It then calculated an overpayment for the period from 2 November 2009 to 7 June 2010, the end of the week in which they made their decision.  But there had been no material change in the claimant’s basic pay in November and December 2009.  The December 2009 payslip is higher than its November counterpart only because it credits the claimant with overtime for both November and December.  I cannot see that either of those payslips marked a material change from the previous pattern. 

23       This error also makes the effective date identified by the Authority, 2 November 2009, incorrect.  Regulation 79 of the HB Regulations (and its equivalent under the CTB Regulations, regulation 67) places the effective start date of the change as the first day of the benefit week following the date on which the change actually occurred. 

24       The next issue is whether choosing November 2009 instead of January 2010 is a decision that is outside the range of those choices that could reasonably be made.  I have come to the conclusion it was not a choice open to the Authority.  The inclusion of two months (November and December) during which the claimant’s basic earnings remained the same with overtime in a known pattern (albeit aggregated and paid in the December payslip) is a fundamental mistake which significantly undermines the decision.  

25       The First-tier Tribunal adopted this error by the Authority and thereby perpetuated the mistake.  This is an error which warrants the setting aside of its decision.

The overpayments

26       The First-tier Tribunal further erred in law in relation to the question of overpayment and its decision is set aside on that ground as well.  Had I not found that the overpayments were not recoverability, the amounts might have increased.

27       Overpayments of Housing Benefit are defined under regulation 99 of the Housing Benefit Regulations 2006.  Excess benefit for the purposes of Council Tax Benefit is defined under regulation 82 of the equivalent Regulations.  The basic meaning is the same for both.

99. ‘…overpayment’ means any amount which has been paid by way of housing benefit and to which there was no entitlement under these Regulations …’

28       Overpayments are raised under regulation 100(1) of the Housing Benefit Regulations 2006 (and the Council Tax Benefit Regulations 2006 equivalent, regulation 83). 

100. (1) Any overpayment, except one to which paragraph (2) applies, shall be recoverable.

(2) Subject to paragraph (4) this paragraph applies to an overpayment caused by an official error where the claimant or a person acting on his behalf or any other person to whom the payment is made could not, at the time of receipt of the payment or of any notice relating to that payment, reasonably have been expected to realise that it was an overpayment.

(3) In paragraph (2), "overpayment caused by official error" means an overpayment caused by a mistake made whether in the form of an act or omission by—

(a) the relevant authority;
(b) an officer or person acting for that authority;
(c) an officer of—

(i) the Department for Work and Pensions; or
(ii) Revenue and Customs,

acting as such; or

(d) a person providing services to the Department for Work and Pensions or to the Commissioners for Her Majesty's Revenue and Customs,

 

where the claimant, a person acting on his behalf or any other person to whom the payment is made, did not cause or materially contribute to that mistake, act or omission.

(4) … 

29       The regime under which Housing Benefit overpayments are recoverable is primarily one of strict liability under regulation 100 (regulation 83, Council Tax Benefit Regulations 2006).  Any overpayment is recoverable, except one caused by official error.  The exception is, however, by no means generous.  There must be (i) an official error, (ii) to which the claimant did not contribute, (iii) in circumstances where the claimant could not reasonably have been expected to realise that an overpayment was occurring at specified points in time. 

30       The error in calculation made by the Authority is potentially an official error which brings regulation 100(2) into play.  However, the claimant also adopts supports two submissions made on behalf of the Secretary of State which, if those submissions are right, would mean that there would be no overpayment at all.  The claimant would succeed without reference to regulation 100(1) or (2).

31       The Secretary of State’s two main submissions are: 

(i)            the Authority could avoid problems associated with fluctuating earnings by making an award for a fixed period of the same length as the period over which the earnings had been averaged. 

(ii)          if the averaging exercise under regulation 29 is done properly, there can never be an overpayment or underpayment of benefit, at least where the fluctuations which occur are within the broad range of earnings that were taken into account during the averaging exercise. The averaging exercise was intended to cater for these expected swings and roundabouts. 

Submission (i) - can an Authority make fixed term awards? 

32       I have come to the conclusion that this is not possible under the Housing Benefit Regulations 2006.  Fixed term awards were abolished in 2003/2004 when the provisions relating to fixed benefit periods under the Housing Benefit Regulations 1987 (regulation 66; regulation 57,Council Tax Benefit Regulations 1992) were repealed. There is nothing in the 2006 Regulations that replaces the power to make fixed terms award expressly, and in my view regulations 76 and 79 and the procedures for supersession and revision under the Housing Benefit and Council Tax Benefit (Decisions and Appeals) Regulations 2001 impliedly exclude the possibility of doing so.

33       Regulation 76(1), which deals with the starting date of entitlement, states that a claimant ‘shall be entitled…from the benefit week following the date on which his claim is, or is treated as made.’  There are no provisions regarding the date on which benefit is to end.  Instead, the Regulations include a broad duty requiring claimants to notify an Authority of changes of circumstance (regulation 88(1)), and regulation 79 sets out the date from which a change of circumstance is effective.  The actual process by which an award is changed or terminated – revision, or as relevant to this appeal, supersession – is set out under the Housing Benefit and Council Tax Benefit (Decisions and Appeals) Regulations 2001. 

34       Regulation 79(1) of the Housing Benefit Regulations 2006 (and its equivalent in the Council Tax Benefit Regulations 2006) does not lend support to the submission that a fixed term award is possible.  The regulation states  -

a change of circumstance which affects entitlement to, or the amount of, housing benefit … shall take effect from the first day of the benefit week following the date on which the change of circumstance actually occurs, and where that change is cessation of entitlement to any benefit under the benefit Acts, the date on which the change actually occurs shall be the day immediately following the last day of entitlement to that benefit.

This provision is posited on ongoing entitlement with change permitted where change actually occurs.  The remaining paragraphs of regulation 79 either confirm that a change must actually have occurred, or set the date on which the change occurs by reference to deeming provisions or dates elsewhere in those regulations or other legislation. 

35       Anticipated changes are catered for under the procedures set out for supersession by reason of change of circumstance.  Supersession changes an existing decision whilst revision replaces the original decision (Schedule 7, Child Support, Pensions and Social Security Act 2000 and regulation 7, 7A Housing Benefit and Council Tax Benefit (Decisions and Appeals) Regulations 2001).  The date from which a supersession of the previous decision is effective is determined under regulation 8 of those Regulations.

36       Taking these provisions together, the legislation envisages an original, indefinite award which must be changed by revision or supersession.  It does not permit fixed term awards.

Submission (ii) - can there ever be an overpayment where earnings are based on an averaging exercise? 

37       The answer, in my view, is yes.  The Secretary of State’s submission on this issue is rejected. 

38       There is nothing in the language or logic of the provisions relating to assessment of earnings, reporting changes, and recovery of overpayments to justify the reading proposed in the submission. Regulation 29 states how earnings are to be assessed.  The averaging exercise results in a figure which is taken accurately to represent average earnings.  All that the exercise under regulation 29(3) does is provide the starting figure to be slotted into the formula by which benefit is worked out in detail.  It has no greater significance than a figure derived by averaging the payslips of an employed claimant whose earnings do not fluctuate. 

39       Regulation 29 does not tell us what may be done where events cast doubt on the figure ascertained in the averaging exercise, or whether and in what circumstances an award may be changed or terminated, or what a claimant must do to keep the Authority informed of his circumstances, or what will happen if an overpayment occurs.  These are addressed by other regulations.  Those regulations contain ordinary words which should be given their ordinary meaning unless there is a compelling reason to hold otherwise. 

40       If the Secretary of State’s submission is right, however, it would have significant effects on the regulations that govern the processes mentioned in paragraph 39.  The Secretary of State contends, or example, that where the averaging exercise in regulation 29(3) applies, the claimant does not need to report changes in that income at all, and that if the claimant’s average earnings from that employment increase during the review period this is reflected in a reduction in the award of benefit for the next period.

41       There are no provisions for formal review in the Regulations and, as Mr Rufus pointed out, the burden is placed squarely on claimants to notify the Authority of changes.  He thought it would be possible periodically to send out letters to claimants subject to the averaging exercise, asking them to send in payslips, but that there was no formal duty to do so and it would add to the administrative costs of the system.

42       At the end of the day, I am unable to accept that that claimant is freed from the obligation to notify changes in earnings by the side wind of averaged earnings. 

43       Regulation 88 of the Housing Benefit Regulations 2006 and its Council Tax Benefit Regulations 2006 equivalent require a claimant to notify the Authority of any change of circumstances which they -

‘ … might reasonably be expected to know might affect the claimant’s right to, the amount of or the receipt of Housing Benefit’.

44       The Secretary of State’s submission would require reading into the regulation words along the line of ‘except changes within the parameters of the exercise carried out to establish average weekly earnings by reference to likely earnings.’ 

45       This would be a fundamental change to the very wide scope of the duty in regulation 88(1) to report changes which the claimant might reasonably be expected to know might affect his benefit.  

46       The regulation is clearly intended to require claimants to report more rather than less information, and let the Authority assess its actual importance to a claim.  Claimants of these means tested benefit are usually issued with information that indicates that their earnings are an important factor in their entitlement to benefit so that they might, at the very least, be expected to realise that increases and decreases in the money coming into their households are linked to the amount of benefit they receive.  They are not, however, expected to be mathematicians.  In CJ v Stratford-on-Avon DC (HB) [2012] UKUT 357 (AAC) it was observed that ‘Claimants are not to be expected to be particularly numerate or familiar with either accounting practice or benefit law … they cannot reasonably be expected to realise that they are being overpaid if that would involve them realising that a trained benefit officer using the correct information was not calculating their earnings properly [15].’ 

47       In this light, an exception loosely based on ‘expected swings and roundabouts’ would require claimants to know the parameters on which their weekly average earnings are based and do their maths regularly to see whether a change was within or outside the ‘expected swings and roundabouts’.  This cannot have been intended. 

48       The submission would also carve out an exception to the duty which is inconsistent with exceptions expressly included in regulation 88(3) and not permissible under ordinary canons of statutory interpretation.  

49       Regulation 88(1) is expressly subject to four exceptions in regulation 88(3).  These exceptions relate to reporting changes to (a) the amount of rent payable to a housing Authority, (b) the ages of the claimant, his family members and non-dependents as previously identified by the claimant as living with him, (c) the Regulations themselves and (d) changes which affect the amount of a claimant’s Income Support, JSA(IB), ESA(IB) but which do not affect his Housing Benefit (other than the cessation of entitlement to one of those benefits). 

50        The first three exceptions pertain to matters which the Authority already have.  The fourth exception is made because claimants in receipt of the listed benefits are entitled to Housing Benefit regardless of the amount of benefit they receive.  The only change they need to report is a termination of the listed benefit. 

51       It is readily understandable that exceptions would be made for these four matters which are either known to the Authority or which would not, in general terms, affect the claimant’s Housing Benefit.  It is, however, difficult to see why a matter such as the fluctuation of income should be excluded from the duty:  it is a matter which may vary very widely over time despite the best endeavours of the Authority to find an average wage, and which the Authority will only know about if a claimant notifies them. 

52       Ordinary principles of statutory interpretation lead to the same result, in particular, the maxim inclusio unius est exclusio alterius: - i.e, the inclusion of one is the exclusion of another (11 Co. 58).  It would be wrong, in my view, to imply into the regulation a further, wide exception in the face of the existing, tightly drawn exceptions in the regulation which share an obvious rationale. 

53       Accordingly, I consider that the claimant remains under the standard duty to report changes of circumstance, and whether he knew or might reasonably be expected to know that the change in his earnings might affect his benefit would simply be a question of fact. 

54       Similar difficulties arise in relation to overpayments.  An overpayment arises where an amount has been paid by way of Housing Benefit or Council Tax Benefit to which there is no entitlement under the Regulations.  The system is based on an award of a particular amount, not an award of a variable amount. 

Calculating an overpayment

55       My conclusion is that there is no margin of x% on either side of the figure obtained in the averaging exercise that can be disregarded as a foreseen fluctuation built into the award. 

56       If a question of overpayment arises, the claimant can supply payslips or other evidence relating to his actual earnings for the period in question.  The Authority can  then compare the award with the actual earnings over the period. If the actual earnings show an underpayment, the claimant may be owed arrears.  If there has been an overpayment, it will be recoverable unless there has been a qualifying official error under regulation 100(2).  

57       There does not appear to be any foolproof way for claimants to insulate themselves from the ill-effects of receiving too much or too little benefit, apart from reporting changes, big or small, as soon as they occur.  Frequent reporting of this sort would, no doubt, be an unwelcome burden for both claimants and Authorities.  For a great many, however, the averaging exercise will be sufficiently accurate to minimise hardship.  

Is the overpayment recoverable under regulation 100(2)?

58       A Tribunal must find that the conditions in regulation 100(2) and (3) are met by a claimant in order to make an overpayment irrecoverable.  For the purposes of this appeal, it must be shown that

(i)there has been an official error

(ii)     caused by a mistake by the Authority

(iii)    where the claimant did not cause or materially contribute to the mistake and

(iv)    the claimant could not, at the time of receipt of the payment or of any notice relating to that payment, reasonably have been expected to realise that it was an overpayment. 

59       In R (Sier) v Cambridge CC Housing Benefit Review Board [2001] EWHC Admin 160; [2001] EWCA Civ 1523 the Court of Appeal held that the question to ask under regulation 100(3) was whether the claimant had caused or contributed to the overpayment, and not whether he had caused or contributed to the mistake.  The Upper Tribunal is bound by this decision.

60       The claimant did not report every single change in her earnings as it happened, but she did report changes in her earnings regularly.  It is clear that the appellant realised that sometimes the changes would result in underpayments and sometimes in overpayments.  But the question is whether she could reasonably be expected to realise that an overpayment was occurring.  It is rare to see a case in which the calculations in an award notification defy the understanding of a reader interested in its contents.  Had the instant appeal been an ‘ordinary’ case, the Tribunal would have been justified in stating, as it did (paragraph 19 of its Statement of Reasons) that ‘The earnings figures which the local authority had originally applied were incorrect as the claimant did not provide accurate evidence of her earnings in respect of the period in issue until May 2010.’  But given the lack of information in the notifications on how her earnings were calculated and the fact that in reassessment ii the calculation of her average earnings figure went down rather than up, I am unable to find that the claimant’s behaviour had any causal potency in the overpayments. 

61       For much the same reasons, I find that the claimant could not reasonably have been expected to realise that she was receiving an overpayment at any material time. 

62       What a claimant could reasonably be expected to realise is deduced from the information available to him and what that information could have revealed.  The information will usually be based on past experience of the scheme and the documents provided by the Local Authority.  CH/2554/2002 [13] [15] (Commissioner Jacob).  For this claimant, past experience and documents from the Authority could not have enabled her to realise that she was being overpaid.   

63       At the end of the day, I was simply unable to see how the claimant could have divined that she was being overpaid from the information available from her.  With more information including, obviously, an explanation of the basis of the calculation, the outcome might have been different.

64       As it is, none of the overpayment is recoverable.  It is therefore unnecessary to consider a further error by the Tribunal in deciding that, once a claimant was shown to be at fault in causing or materially contributing to an overpayment, the whole amount was recoverable from her regardless of whether any element of the overpayment was caused by a separate and distinct error by the Authority.  Such an approach was held to be wrong in SN v LB Hounslow [2010] UKUT 27 (AAC), a decision with which I respectfully agree.

Supersession - the non-dependent’s deduction

65       The claimant’s award was subject to a deduction to reflect the contribution her non-dependent son, who was residing with her, was deemed to make to payment of her rent.  The claimant failed to notify the Authority for a number of months that her son had moved out.  When she realised that the deduction was no longer applicable, she sought to have its removal ‘backdated’ to the date that her son left home.

66       The effective date of a supersession is determined by reference to paragraph 4, Schedule 7 of the Child Support, Pensions and Social Security Act 2000 and regulation 8 of the Housing Benefit and Council Tax Benefit (Decisions and Appeals) Regulations 2001.

67       The general rule under paragraph 8(5) is that the decision takes effect as from the date on which it is made, or in certain circumstances, the date on which an application for supersession is made. 

68       Under regulation 8(2), the effective date of a supersession for a change of circumstances is determined under regulation 79 of the Housing Benefit Regulations 2006 (or its Council Tax Benefit Regulations 2006 equivalent, regulation 67) unless the change in circumstances is reported more than one month after it occurs and the superseding decision is advantageous to the claimant (regulation 8(3)).  In that case, the effective date is the date on which the change is notified.  So, if a change which is advantageous to a claimant is reported within one month of its occurring, it takes effect on the date it occurred.  If not, it takes effect on the date it is notified.  There are provisions for extending the one month time limit, but they are not applicable here.

69       Since the claimant did not report the change within one month of her son moving away, the effective date of the change was prima facie the date of notification. 

70       The claimant’s representative submitted, however, that her appeal against the overpayment decision opened up all issues of entitlement, whenever they occurred, with the effect that the change could be backdated to the actual date it occurred regardless of the rules on the effective date of a supersession for change of circumstances. 

71       In Housing Benefit and Council Tax Benefit cases, an Authority normally makes a combined decision correcting a claimant’s entitlement and determining the amount and recoverability of any resultant overpayment, as the Authority did in this case.  Issues of entitlement were accordingly open in the appeal.  The date from which changed entitlement runs is, however, governed by the Housing Benefit and Council Tax Benefit (Decisions and Appeals) Regulations 2001. 

 

 

[Signed on original] S M Lane

Judge of the Upper Tribunal

[Date] 11 May 2015