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Cite as: [2015] UKUT 86 (AAC)

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LM v London Borough of Southwark (HB) (Housing and council tax benefits : recovery of overpayments) [2015] UKUT 86 (AAC) (17 February 2015)

 

DECISION OF THE UPPER TRIBUNAL

(ADMINISTRATIVE APPEALS CHAMBER)

 

The DECISION of the Upper Tribunal is to allow the appeal by the Appellant,

 

The decision of the London Fox Court First-tier Tribunal dated 04 February 2014 under file reference SC242/11/15328 involves an error on a point of law and is set aside. The Appellant’s appeal against the Council’s decision in relation to her entitlement to housing benefit dated 15 November 2011 is remitted to be reheard by a different First-tier Tribunal, subject to the Directions below.

 

This decision is given under section 12(2)(a) and 12(2)(b)(i) of the Tribunals, Courts and Enforcement Act 2007.

 

 

 

DIRECTIONS

 

The following directions apply to the re-hearing:

 

(1)        The re-hearing will be at an oral hearing;

 

(2)        The new tribunal should be differently constituted from the First-tier Tribunals which have considered this appeal at all of the previous hearings, not just the hearing on 4 February 2014;

 

(3)        The new tribunal should have the assistance of a Czech interpreter, but not the interpreter who was present at the adjourned hearing on 22 February 2013;

 

(4)        The new tribunal must consider all the evidence afresh and is not bound in any way by the decision of the previous tribunal;

 

            (5)        The Appellant is encouraged to obtain advice (and possibly representation) for the re-hearing from a Citizens Advice Bureau or law centre.

 

 

These directions may be supplemented or modified as appropriate by later directions by a District Tribunal Judge in the Social Entitlement Chamber of the First-tier Tribunal. 

 

 

 


REASONS FOR DECISION

 
The purpose of the benefits system

1.     “The benefits system exists to pay benefits to those who are entitled to them... the system is there to ensure, so far as it can, that everyone receives what they are entitled to, neither more nor less.”  This statement by Baroness Hale of Richmond was made in the decision of the House of Lords (now the Supreme Court) in the case of Gillies v Secretary of State for Work and Pensions [2006] UKHL 2 (at [41]). Sometimes this task is easier said than done. This appeal shows some of the problems that may arise.

 

An outline of my decision

2.     I am allowing the Appellant’s appeal to the Upper Tribunal. I am doing so because there is a legal error in the decision by the First-tier Tribunal (FTT). There will need to be a new hearing before a different FTT, which will need to re-hear the case entirely afresh.

 

3.     The Appellant must understand that the fact that this appeal has succeeded on  a point of law does not necessarily mean that the appeal before the new FTT will succeed. This is because the re-hearing will be decided on the facts. The facts are for the FTT to judge.

 

The Upper Tribunal is deciding this appeal on the papers and without a hearing

4.     Barring special circumstances, the parties have a right to ask for an oral hearing before the FTT. However, there is no right to an oral hearing before the Upper Tribunal. Instead, I have a discretion as to whether to hold an oral hearing of the Upper Tribunal appeal. I have to take into account the parties’ views (see rule 34 of the Tribunal Procedure (Upper Tribunal) Rules 2008 (SI 2008/2698)).

 

5.     The Appellant has asked for an oral hearing, as she says she has been unfairly treated by the Council. However, I can allow her Upper Tribunal appeal without the further delay involved in holding an oral hearing at this level. It is also important to understand that the Upper Tribunal’s role is to correct the FTT on issues of law. It is not the job of the Upper Tribunal to hold a further investigation of the facts of the case. The Appellant will, of course, both have the opportunity, as is just and fair, to have her say at a re-hearing before a differently constituted FTT as a result of my decision. I therefore refuse her request for an Upper Tribunal oral hearing.

 

6.     The Respondent Council urges me, if the appeal from the FTT decision is allowed, to re-make the tribunal’s decision myself. It considers there is sufficient information for the Upper Tribunal to make a new decision in its own right. There is certainly plenty of information on file. However, not all of that evidence has been considered by the FTT. This appeal is basically about the application of settled law to the facts. That task is best left to the FTT.

 

7.     I therefore refuse the Appellant’s request for an Upper Tribunal oral hearing and also refuse the Council’s request to re-make the decision under appeal myself. I direct a re-hearing by a new FTT of the original appeal. I recognise this is unfortunate given the length of time this case has already taken, and the number of hearings that have already been held, but for the reasons above I find this is the fair and just solution.

 

8.     In the rest of this decision I explain (a) the Council’s decision under appeal to the FTT (and the CTB mystery); (b) the sequence of FTT hearings to date; (c) the reasons why the FTT went wrong in law.

 

The Council’s decision under appeal to the FTT: the CTB mystery

9.     It is always a good idea to start with the Council’s decision as appealed by the claimant to the FTT. The FTT said in its detailed decision notice (which also stood as the statement of reasons) that it was confirming the Council’s decision of 15.01.2011. The file does not seem to contain a Council decision dated 15.01.2011.

 

10.   So this reference to 15.01.2011 appears to be almost certainly a misprint for the Council’s decision of 15.11.2011 (p.131). That decision letter stated that there was a total overpayment of housing benefit (HB) of £15,686.96 for the period from 16.02.2009 to 17.07.2011, of which a balance of £15,464.86 was “payable as of the date of this letter”. It did not explain the (small) difference in the two figures given for the HB overpayment. It did not refer to, let alone quantify, any council tax benefit (CTB) overpayment. The FTT in its decision on 04.20.2014 accepted the larger of the two HB figures in the 15.11.2011 letter (see decision notice p.339 at §23), but without explaining why. The Council’s decision of 15.11.2011 had said that it “replaced” the previous HB/CTB decision of 12.08.2011.

 

11.   The previous HB/CTB decision of 12.08.2011 (p.95) referred to a smaller HB overpayment (£8,503.16) for a shorter period (01.04.2010 to 17.07.2011), i.e. omitting the earlier period from Spring 2009. It also referred to a CTB overpayment of £788.19 for the period from 20.09.2010 to 19.07.2011.

 

12.   The Appellant certainly appealed against the HB/CTB decision of 12.08.2011 (see p.100) and she also then appealed again against the subsequent revised decision of 15.11.2011 (see p.133).

 

13.   An earlier FTT had noted that the Council’s original submission did not deal with the overpayment of CTB (see p.273). That tribunal made directions for a fresh amended submission to be filed by the Council covering the CTB point. The FTT then had to repeat that direction (p.275). The Council complied with an additional submission (pp.276-295, including attachments). That submission accepted that the decision of 15.11.2011 did not mention CTB (at §3) and so accordingly argued the FTT had no jurisdiction to consider the issue of CTB (at §4).

 

14.   The FTT on 04.02.2014 made no mention of CTB. It seems to me at least arguable that the FTT on 04.02.2014 erred in law in failing to make a finding on the CTB issue. However, the Appellant has not raised this as a ground of appeal and I did not refer to it when giving permission to appeal, so I do not rely on this error.

 

15.   As it is, and in any event, if it was an error by the FTT, it was not a material error, i.e. it was not a mistake which affected the outcome of the appeal in any relevant way. The reason for that is as follows. The Council’s letter of 12.08.2011 found there was a CTB overpayment of £788.19 for the period from 20.09.2010 to 19.07.2011. The Council’s subsequent decision of 15.11.2011 replaced the earlier letter. Although referred to in the Council’s submission to the FTT as a supersession, it did not purport to supersede the earlier decision from a later date. It was therefore a revision decision, completely replacing the earlier decision letter (see Child Support, Pensions and Social Security Act 2000, Schedule 7, paragraph 3). It also follows that the Appellant’s appeal was made as against the decision as revised (see Housing Benefit and Council Tax Benefit (Decisions and Appeals) Regulations 2001 (SI 2001/1002), reg. 17(3)).

 

16.   The inevitable consequence of this is two-fold. First, the FTT was only concerned with the appeal against the Council’s decision of 15.11.2011. Second, as that decision was confined to HB, there is (certainly on the evidence before me) no valid existing decision by the Council to the effect that there was any CTB overpayment (strictly an excess payment) for the period from 20.09.2010 to 19.07.2011.

 

The sequence of FTT hearings to date

17.   Unfortunately this case has a long and complex history at the First-tier Tribunal. It can be summarised in this way. On 21.06.2012 the FTT adjourned the original hearing (p.205). On 20.09.2012 a FTT heard but dismissed the appeal (p.232) – from now on I call this tribunal FTT 1. The Appellant appealed. On 12.12.2012 a FTT district tribunal judge set aside that decision by FTT 1 (p.260). On 18.01.2013 a new FTT adjourned the appeal because of the Appellant’s illness (p.267). On 22.02.2103 a different FTT adjourned again, this time because of a difficulty with the Czech interpreter (p.271). On 01.08.2013 there was another adjournment, because of the new interpreter having cancelled (p.273). The FTT also made directions about the CTB issue, repeated on 11.10.2013, as noted above (p.275).

 

18.   Finally an effective tribunal hearing took place on 04.02.2014. There is a very clear and apparently comprehensive record of proceedings (pp.302-336). I call this tribunal FTT 2 from now on. FTT 2 issued a detailed decision notice dismissing the appeal (pp.337-339). The subsequent statement of reasons (p.341) added nothing of note.

 

19.   The Appellant applied to the FTT for permission to appeal. A district tribunal judge accepted that the decision by FTT 2 was not “a fully polished decision” but said it was adequate to explain the facts found and reasons for the decision. She therefore refused permission to appeal (p.390).

 

20.   At this stage I simply observe that the district tribunal judge responsible for making re-listing directions will need to take account of the complex history above. It would be wise to have the re-hearing listed in front of a tribunal judge who has had no previous involvement with the appeal. The new tribunal should also have the assistance of a Czech interpreter, but not the interpreter who was present at the unsatisfactory adjourned hearing on 22.02.2013. For the record I simply note that it was not the Appellant but, unusually, the tribunal judge who in effect made the complaint against the interpreter on that earlier occasion.

 

The decision of FTT 2 and the parties’ arguments

21.   When I gave the Appellant permission to appeal (pp.402-405), I noted in summary that FTT 2 had decided that “(1) the claimant’s husband had not visited the council’s offices in March 2009 and informed them that he had started work; (2) “as a result” the overpayment for the period 10.02.2009-10.10.2010 (‘Period 1’) was confirmed; (3) the husband’s payslips were provided in September 2010 but the local authority had failed to act on this information; but (4) despite that official error, the claimant should reasonably have realised that she was being overpaid HB and so the overpayment for the period 11.10.2010-17.07.2011 (‘Period 2’) was also recoverable.”

 

22.   I gave permission to appeal for four reasons. These related to: (1) the finding of fact that in March 2009 the husband had not reported starting a job; (2) the FTT’s test for a recoverable overpayment; (3) the FTT’s reasons as regards the recoverability of the overpayment; and (4) the evidence which was provided to the FTT.

 

23.   The Council’s representative does not support the Appellant’s appeal to the Upper Tribunal and has provided a detailed submission in support of that position. In short the Council argues that FTT 2 reached a decision it was entitled to on the evidence that was before it and its decision shows no error of law.

 

24.   The Appellant’s arguments are much briefer. In short, she regards the FTT 2 decision as unfair and in particular argues that the Council made repeated mistakes yet the decision by FTT 2 puts the entire blame on her.

 

25.   However, as I explained when giving permission to appeal:

 

“The relevant law is clear. In summary, by law basically all overpayments of HB and CTB are recoverable from claimants, whether or not the claimant is at fault. The only exception is where the overpayment has been caused by an “official error” by the local authority – and, even in these cases, the council can still recover the overpayment, if the claimant should reasonably have realised that they were being overpaid benefit. So even where the local authority is at fault, it can even so still recover an overpayment if the FTT decides the claimant should reasonably have realised that they were being overpaid HB and/or CTB .” 

 

The reasons why FTT 2 went wrong in law

26.   I have considered the Council’s arguments. I agree with the Council that FTT 2 applied the correct legal test when deciding whether or not there was a recoverable overpayment of HB for Period 1. It follows that the second ground on which I gave the Appellant permission to appeal is not made out. There was no error of law in that respect. I do not need to deal with the third ground on which I gave permission (reasons as to recoverability), although I return to that issue later. However, I am satisfied that the first and last of the four grounds of appeal are made out. My reasons are as follows.

 

The finding of fact that in March 2009 the husband had not reported starting a job

27.   It is not in dispute that the husband started a new job on 9 February 2009. The Appellant’s evidence to FTT 2 was that when he had received his first pay-slip in March he had attended at the Council’s offices and provided a copy of this pay-slip. FTT 2 did not accept this evidence as credible.

 

28.   As I noted when giving permission to appeal:

 

“the issue of the husband’s notification (or not) in March 2009 had been at issue in two previous hearings. The first was the prosecution at Tower Bridge. The local authority accepted the judge there had found it “likely” that notification had taken place (p.152; see also pp.196-197). The second was the earlier (but later set aside) FTT hearing, when the FTT judge there had accepted as a fact notification took place (p.233 at [22]). Of course, there is a different test and different burden and standard of proof in criminal proceedings. It is also the case that one FTT’s finding of fact is not binding on another FTT. However, there appears to be no recognition in this FTT’s decision that those earlier and apparently contradictory findings had been reached in a judicial forum. That of itself suggests the reasoning may be inadequate.”

 

29.   The Council resists this ground of appeal. It argues that neither previous decision was either binding or persuasive. The criminal proceedings involved a different burden of proof. FTT 1’s decision was in effect nullified by having been set aside and had no persuasive value.

 

30.   All that is true so far as it goes. The issue in the criminal proceedings was that the Appellant was alleged to have failed promptly to notify the Council of a change in circumstances, namely her husband starting work, contrary to section 112(1A) of the Social Security Administration Act 1992 (p.214). According to the Council’s attendance note of the hearing, the district judge found her not guilty as the prosecution could not prove that she did not report the change. The district judge heard evidence from both the Appellant and her husband and found that “just because there was no receipt did not mean that the visit did not happen” (p.197). Indeed, the Council accepted that the district judge had found it likely that notification had taken place (p.152).

 

31.   It is also the case that the finding of fact by FTT 1 that the Appellant’s husband was not binding on FTT 2. This is for two reasons. First, a finding of fact by one FTT is not binding on another unless regulations so provide, and no such regulations are relevant here (Social Security Act 1998, section 17(2)). Secondly, FTT 1’s decision was set aside and so of no effect anyway.

 

32.   However, it remains the case that a tribunal must give adequate reasons. This tribunal gave some reasons why it did not accept the Appellant’s evidence as credible. However, it needed to acknowledge and engage with those earlier findings and explain more clearly why the accounts which had satisfied the magistrates’ court and FTT 1 were, at the third time of asking, now found to be not credible.

 

The evidence which was provided to FTT 2

33.   The Appellant had been interviewed under caution by Council staff on 26.11.2011 in connection with the criminal prosecution. The transcript of that interview was not in the papers before FTT 2, although there was reference to its existence (‘Summary of Facts’ prepared for criminal trial, p.212). The Appellant subsequently provided a copy of the transcript with her application for permission to appeal to the Upper Tribunal (pp.345-380, although page 1 appears to be missing).

 

34.   However, as I noted, when giving permission to appeal, rule 24(4)(b) of the Tribunal Procedure (First-tier Tribunal) (Social Entitlement Chamber) Rules 2008 (SI 2008/2685), provides (my emphasis added) that the local authority’s “decision maker must provide with the response…copies of all documents relevant to the case in the decision maker’s possession, unless a practice direction or direction states otherwise”.

 

35.   I accordingly suggested it was arguable that either the Council’s failure to produce all relevant documents (in particular the transcript of the interview under caution) and/or FTT 2’s failure to obtain the interview under caution (IUC) amounted to an error of law.

 

36.   The Council argues that (a) the Appellant did not raise the issue of the IUC; (b) there was no bar on the information being provided; (c) the Council’s omission to provide the IUC was not deliberate; (d) the criminal case had been concluded and the issue for FTT2 was the “creation and recoverability of the overpaid benefit”; (e) FTT 2 would anyway take new evidence and the credibility of the evidence of the Appellant and her husband would be determined afresh; and (f) the IUC was in any event not helpful to the Appellant. I have to say that I do not find any of these arguments persuasive.

 

37.   As to (a), this is an inquisitorial and not an adversarial jurisdiction. It was also plain that the Appellant has had difficulty in understanding the various legal processes involved and not least the distinction between the criminal and civil proceedings. In any event this is no answer to the Council’s obligation under rule 24(4)(b).

 

38.  As to (b), again the question is not any party’s liberty to produce the IUC but the Council’s obligation to do so under rule 24(4)(b).

 

39.   As to (c), again this is no answer to the duty under rule 24(4)(b).

       

40.   As to (d), it is true that the criminal proceedings were over but the contents of the interview were plainly “relevant to the case” and so covered by rule 24(4)(b).

 

41.   As to (e), it was certainly the task of FTT 2 to hear new evidence and test the credibility of the Appellant’s evidence afresh but that could only properly be done against the background of all the relevant evidence.

 

42.   As to (f), it is the FTT’s job, not the Council’s, to assess whether the IUC is helpful or not. The Council’s duty is to produce all relevant evidence. The Council’s representative relies on the Court of Appeal’s decision in Haringey LBC v Awaritefe [1999] 32 HLR 517 in support of the argument that no harm has been done to the Appellant. However, Awaritefe was a case in which the Court of Appeal held that a notice issued by the local authority should be upheld if a defect in it did not prejudice or cause injustice to the person affected. The case is not on all fours. The issue here is not a procedural or technical deficiency in a notice served on the claimant but the complete failure to produce a relevant document in the course of tribunal proceedings.

 

43.   The IUC was a relevant piece of evidence. The Appellant plainly regards it as supportive of her case, as otherwise I doubt she would have provided a copy with the application to the Upper Tribunal. The local authority should have provided a copy to FTT 2, failing which FTT 2 should have considered whether it needed to see a copy. There is therefore an error of law in FTT 2’s decision. As Judge Wright held in ST v Secretary of State for Work and Pensions (ESA) [2012] UKUT 469 (AAC) (at [25]):

 

“The key word here is “relevant”. The use of the word ‘must’ also makes clear that the Secretary of State’s decision maker is under a legal obligation to provide the Fist-tier Tribunal with copies of all documents relevant to the case that he has in his possession: an obligation that is not on its face cut down by consideration of what the appellant might have in his or her possession and be able to put before the tribunal. Furthermore, there is no evidence of any practice direction or direction being in place on this appeal that would have excused the Secretary of State from providing copies of all relevant documents with the appeal response.” 

 

44.   I recognise that there may well be other cases in which a claimant does not wish an IUC to be put in evidence before a tribunal. For example, there may be an argument that the IUC was conducted unfairly in some way. If so, the tribunal in question can make a decision on whether or not to admit the IUC (see rule 15 and especially rule 15(2)(b)(ii)). However, that does not appear to be the situation here.

 

Conclusion

45.   I therefore allow the appeal on those two grounds, set aside the decision of FTT 2 and direct a re-hearing. The remainder of this decision is devoted to some guidance on the application of the HB overpayment rules in the particular context of the facts of this appeal.

 

 

Guidance to the new tribunal on the recoverability of the overpayment

46.   The new tribunal will be familiar with the terms of regulation 100, and especially regulation 100(2), of the Housing Benefit Regulations 2006 (SI 20006/213), summarised at [25] above. It does not need a mini-lecture from me on that issue. 

 

47.   If the new tribunal takes the same view as FTT 1 – but not FTT 2 – namely that there was disclosure in March 2009 of the fact that the Appellant’s husband had started work, then the tribunal will need to go on to consider whether there was an official error by the Council. In addition, in that event the tribunal will have to ask itself whether the Appellant “could not, at the time of the receipt of the payment or of any notice relating to that payment, reasonably have been expected to realise that it was an overpayment” (regulation 100(2)).

 

48.   Throughout this case one of the Appellant’s main arguments has been that her HB payments, as recorded on bank statements, had gone down after March 2009, so she thought the necessary changes had been made. For example, the Appellant’s evidence at the criminal trial (and also before both FTT 1 and FTT 2) was that their HB had gone down (by about £50 a month, she said in the criminal trial) after March 2009. She said that she had accordingly assumed that her husband’s income had been correctly reported and the Council had made the necessary changes to her entitlement (see p.196). FTT 2 did not deal with this argument at all in its reasons for its decision, presumably as it found that there had been no such disclosure.

 

49.   The Council resists the Appellant’s argument. Its position is that in fact the Appellant’s HB entitlement went up, not down, after the alleged disclosure (see p.152). The Council had apparently not produced any documentary evidence at the criminal trial to counter the Appellant’s claim to the contrary but had it done so, the Council confidently argued in a later letter to the Appellant, the magistrates’ court’s decision “would not have been found in your favour” (p.152).

 

50.   However, it seems to me the actual evidence on file is by no means as clear as the Council seeks to argue. The HB payment records (p.200) show that HB was paid at the rate of £227.58 fortnightly from October 2008 through to the end of March 2009. There was then one payment of £235.16 for the first fortnight in April 2009. The payments then dropped to £200.82 fortnightly from April through to September 2009. This was corroborated by the Appellant’s bank statements which were produced between FTT 1 and FTT 2 (pp.247-259). The drop in HB was therefore closer to £30 a fortnight than £50, but of course the criminal trial was in June 2012, three years after the period in question. This reduction in HB is plainly relevant to the issue of whether or not the Appellant could “reasonably have been expected to realise that it was an overpayment” within regulation 100(2).

 

51.   The Council and FTT 2 have both placed great reliance on the HB decision notices issued by the Council, which throughout recorded the income of the Appellant’s husband as nil. That was plainly a relevant factor and the Appellant’s evidence about those notices may not have been entirely convincing. However, the new tribunal will still need to consider the dates and terms of those notices with some care as regards the relevant periods for which overpaid HB was in issue.

 

52.   The Council’s decision was that the HB overpayment started on 16 February 2009 (her husband, as noted above, started work on 9 February 2009). The Appellant’s evidence was that her husband visited the Council in March 2009, after he got his first pay-slip, but it is unclear precisely when in March that visit is said to have taken place. A benefit decision notice was issued on 22 March 2009 listing the Appellant’s husband’s income as nil (p.156). This actually appears to have been prompted by the annual up-rating, given the difference in the applicable amounts as compared with the previous notice dated 17 October 2008. The next benefit decision notice was apparently not then issued until 21 September 2009 (p.162), even though HB payments had reduced from the middle of April to £200.82 a fortnight. As noted, during this period the amount that the Appellant was paid in HB reduced (except for one fortnight; see p.200). The absence from the file of a new benefits decision notice in April, when payments reduced, is puzzling. However, close examination of the September notice reveals that the reason that the actual HB payments reduced was because of a weekly overpayment recovery of £17.80 being instigated. This relates to an earlier overpayment covering October and November 2008 (pp.55-56).

 

53.   If the new tribunal finds that a change was reported in March 2009, and was not acted upon by the Council at the time, then clearly careful findings of fact will be needed in terms of the test under regulation 100(2). The new tribunal, of course, should bear in mind that the test under regulation 100 is subjective. As Judge Mark explained in JS v Hull CC [2012] UKUT 477 (AAC)  (at [16]):

 

“It seems to me that what the claimant could reasonably have been expected to realise must be a subjective matter depending on the claimant’s abilities and understanding.  He may reasonably be expected to look at the letter sent to him, but he cannot reasonably be expected to understand everything in it, and still less automatically to realise from anything that did not look right, or that he did not understand, that there not merely might be an overpayment but that there was one. … Most people, as that tribunal stated, simply cannot cope with long documents and will glaze over long before they get to page 5 or 6.  While it is a question of fact in each individual case, it is wholly unrealistic to expect most of them to be able to cope with such a document, even to the point of picking up something that may look obvious to the judge hearing the appeal or to the council officer who is used to dealing with such documents.”

 

Conclusion

54.   I conclude that the decision of the First-tier Tribunal involves an error of law for the three reasons summarised above. I therefore allow the appeal and set aside the decision of the tribunal (Tribunals, Courts and Enforcement Act 2007, section 12(2)(a)). There needs to be a full re-hearing of the case by a new First-tier Tribunal (section 12(2)(b)(i)).

 

55.   This is a complex case, both factually and legally. The Appellant is at a disadvantage in not being a native English speaker. She may well find it helpful to obtain advice (and possibly representation) for the re-hearing from a Citizens Advice Bureau or law centre.

 

 

 

 

Signed on the original                                  Nicholas Wikeley

on 17 February 2015                                     Judge of the Upper Tribunal


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