Upper Tribunal Allows Appeal on Housing Benefit Eligibility

London Borough of Hammersmith & Fulham v FJ [2023] UKUT 203 (AAC)

IN THE UPPER TRIBUNAL UA-2022-001625-[NAME] CHAMBER

On appeal from the First-tier Tribunal (Social Entitlement Chamber) sitting at East London

Between: LONDON BOROUGH OF HAMMERSMITH & FULHAM Appellant

- v -

FJ Respondent

Before: His Honour Judge Najib sitting as a Judge of the Upper Tribunal

Decision date: 14 August 2023 Decided on consideration of the papers

Representation: Appellant: [redacted] Respondent: [redacted]

DECISION OF THE UPPER TRIBUNAL

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

The decision of the First-tier Tribunal sitting at East London on 20 April 2022 under file reference SC242/21/03307 involves an error on a point of law. The First-tier Tribunal’s decision is set aside.

The Upper Tribunal is not in a position to re-make the decision under appeal. The Respondent’s appeal against the Appellant’s revised decision dated 18 November 2020 is therefore remitted to be re-heard by a different First-tier Tribunal, subject to the Directions below.

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

UA-2022-001625-[NAME] of Hammersmith & Fulham v FJ [2023] UKUT 203 (AAC)

2 DIRECTIONS

The following directions apply to the hearing:

(1) The appeal should be considered at an oral hearing.

(2) The new First-tier Tribunal should not involve the Tribunal Judge who previously considered the appeal on 20 April 2022.

(3) The parties are reminded that the First-tier Tribunal can only determine the appeal based on the facts and circumstances as they were at the date of the [NAME] decision under appeal (namely 18 November 2020).

(4) If either party has any further written evidence to put before the new First-tier Tribunal, this should be sent to the relevant HMCTS Regional Tribunal Office within one month of the issue of this decision. Any such further evidence will have to relate to the facts and circumstances as they were at the date of the [NAME] decision under appeal (see Direction (3) above).

(5) The new First-tier Tribunal is not bound in any way by the decision of the previous tribunal. Depending on the findings of fact it makes, the new First-tier Tribunal may reach the same or a different outcome to the previous tribunal.

These Directions may be supplemented by later directions by a Tribunal Caseworker, Tribunal Registrar or Judge in the Social Entitlement Chamber of the First-tier Tribunal.

REASONS FOR DECISION The Upper Tribunal’s decision in summary and what happens next

1. I allow the appeal by the Appellant (‘the Council’). The First-tier Tribunal’s (‘[NAME]’) decision dated 20 April 2022 involves an error on a point of law and I therefore set aside the decision.

2. The case now needs to be reheard by a new [NAME]. I cannot predict the outcome of the re-hearing. The new [NAME] may reach the same, or a different, decision to that of the previous tribunal. Factual Background

3. The Respondent (‘the Claimant’) is 85 years old and lives with her son (‘[NAME]’) in a privately owned property (‘[NAME]’).

4. Initially, [NAME] was occupied by the Claimant and [NAME] pursuant to an assured shorthold tenancy agreement effective from 8 February 2010 in [NAME]’s sole name. As [NAME] was in receipt of Income Support, he received maximum Housing Benefit (‘[NAME]’) between February 2010 and December 2019. Throughout this period the Claimant was recorded as a non-dependant member of [NAME]’s household.

5. In December 2019, [NAME] started to work and his Income Support came to an end. His [NAME] was consequently reduced from £300 per week to £66.82 per week.

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6. On 11 September 2020, the Claimant submitted a claim in her own name for [NAME]. In support, she provided a new tenancy agreement for [NAME] effective from 8 August 2020 which named both her and [NAME] as tenants. She also provided a new backdated tenancy agreement purporting to be effective from 8 February 2010 and which, contrary to the [NAME] tenancy agreement provided and relied upon by [NAME], named both her and [NAME] as tenants.

7. By a decision dated 14 September 2020, the Claimant was awarded [NAME] at a rate of £150 per week. However, by a subsequent decision dated 18 November 2020, the Claimant’s [NAME] was terminated on the grounds that she was deemed not to be liable to make payments in respect of a dwelling for [NAME] purposes in accordance with regulation 9(1)(g) of the Housing Benefit (Persons who have attained the qualifying age for state pension credit) Regulations 2006. Regulation 9(1)(g) provides that, subject to the exception in regulation 9(3), a person who is liable to make payments in respect of a dwelling shall be treated as if he were not so liable if “before the liability was created, he was a non-dependant of someone who resided, and continues to reside, in the dwelling”. Regulation 9(3) provides that regulation 9(1)(g) shall not apply “in a case where the person satisfies the appropriate authority that the liability was not intended to be a means of taking advantage of the housing benefit scheme”. The Council concluded that regulation 9(1)(g) applied because prior to the new August 2020 tenancy agreement, the Claimant had been a non-dependant member of [NAME]’s household, [NAME] resided and continued to reside in [NAME], and the Claimant had not shown that the liability under the new August 2020 tenancy agreement was not intended to be a means of taking advantage of the [NAME]. The decision was reconsidered on 26 June 2021 but not revised.

The Appeal to the First-Tier Tribunal

8. The Claimant appealed to [NAME] asserting that: (i) despite the [NAME] 2010 tenancy agreement being in [NAME]’s sole name, it had always been understood by the Council and the landlord that the Claimant was eligible for [NAME] and would also occupy [NAME]; (ii) when [NAME]’s [NAME] was reduced, he contacted the landlord and requested that a revised version of the [NAME] 2010 tenancy agreement be issued naming both him and the Claimant as tenants; (iii) when the Council queried the validity of the revised February 2010 tenancy agreement, [NAME] again contacted the landlord and requested that a new tenancy agreement be issued naming both him and the Claimant as tenants; (iv) the landlord then issued the new August 2020 tenancy agreement; (v) the [NAME] 2010 tenancy agreement was revised and the new August 2020 tenancy agreement was issued because [NAME] was no longer able to afford the rent, the Claimant had started to contribute £100 per week from her pension allowance towards the rent, she therefore wished to claim [NAME] and wanted the security of knowing that should anything happen to [NAME], she would have the protection afforded to tenants and would be entitled to continue to receive [NAME].

9. By a Decision Notice dated 20 April 2022, [NAME] allowed the appeal and determined that the Claimant was entitled to [NAME]. At §2 of the Statement of Reasons (‘[NAME]’), [NAME] stated that it allowed the appeal because regulation 9(3) applied, which meant that regulation 9(1)(g) did not apply (whether this was, in fact, the basis upon which the appeal was allowed, is a matter of dispute and forms the basis of the first ground of appeal - see further below).

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The Appeal to the Upper Tribunal

10. The Council now appeals [NAME]’s decision to the Upper Tribunal. The Council asserts that [NAME] erred in that (i) its findings and conclusions as to whether regulation 9(3) applied are inconsistent; (ii) its finding that the Claimant had always been a tenant is unsupported by any evidence; and (iii) it ought not to have followed the approach in case CH/39/2007 when considering whether the new August 2020 tenancy agreement was “a means of taking advantage of the housing benefit scheme” - it should instead have followed the approach in MP v Sutton London Borough Council (HB) [2021] UKUT 193 (AAC). The Council invites the Upper Tribunal to allow the appeal, set aside [NAME]’s determination and to remit the matter back to [NAME] for a fresh hearing.

11. By an order dated 8 January 2023, Upper Tribunal Judge Wikeley granted permission to appeal on all the grounds advanced.

12. The Claimant opposes the appeal but has not engaged with the specific grounds of appeal. By her ‘Response to Appeal’ form, the Claimant simply asserts that she believes that [NAME]’s decision is valid and reasonable and that she is entitled to [NAME].

Ground 1

13. At §2 of the Statement of Reasons (‘[NAME]’), [NAME] stated that it allowed the appeal because “Regulation 9(3) did apply” and that “Regulation 9(1)(g) did not apply as Regulation 9(3) prevented the application of Regulation 9(1)(g)”. However, at §§11-12 [NAME] found in clear and unequivocal terms that the Claimant had “been a tenant of [[NAME]] since back in 2010” and the “fact that she was not listed as a tenant on the [NAME] tenancy agreement does not negate that fact”.

14. The Council says that [NAME]’s conclusion that regulation 9(3) applied is inconsistent with its finding that the Claimant had always been a tenant of [NAME], in that if she had always been a tenant, regulation 9(1)(g) would not apply and regulation 9(3) would, therefore, not be engaged.

15. I agree that [NAME]’s findings and conclusions are inconsistent. [NAME] found that that the Claimant had always been a tenant of [NAME]. Leaving aside for the moment whether [NAME] was entitled to so find on the evidence, this meant that regulation 9(1)(g) did not apply because the Claimant had always been liable to pay rent to the landlord and she had never been a non-dependant of [NAME]. As regulation 9(1)(g) did not apply, regulation 9(3) was not engaged and did not fall to be considered. The appeal ought simply to have been allowed on that basis. [NAME], however, not only went on to consider regulation 9(3) but found and allowed the appeal on the grounds that the liability created by the August 2020 lease was not created with the intention of taking advantage of the [NAME]. It does not appear from the [NAME] that [NAME] did so ‘in the alternative’ - in other words it was not seeking to take a ‘belt and braces’ approach and say the appeal would be allowed because the Claimant had always been a tenant and so regulation 9(1)(g) did not apply, but even if it was wrong about that, it ‘would have found’ that regulation 9(3) applied and so would have allowed the appeal in any event. [NAME] expressly allowed the appeal on the grounds that regulation 9(3) applied, even though the consequence of it finding that the Claimant had always been a tenant was that regulation 9(3) was not engaged. In my judgment,

5 [NAME] conflated the issue of whether the Claimant had always been a tenant (and whether regulation 9(1)(g), therefore, applied in the first instance) with whether regulation 9(3) applied so as to disapply regulation 9(1)(g). I am satisfied that the approach taken by [NAME] amounts to an error of law.

16. However, I am not satisfied that that error of law was material. Even if [NAME] had simply allowed the appeal on the grounds that the Claimant had always been a tenant without considering regulation 9(3) or had allowed the appeal on that ground but had gone on, in the alternative, to consider regulation 9(3) (as it could have done), the end result would have been the same - the appeal would have been allowed. [NAME]’s error of law did not, therefore, affect the outcome of the appeal and so was not material.

Ground 2

17. At §11 of the [NAME] stated that the first issue to determine was whether the Claimant was a tenant of [NAME]. It then stated that “This statement submits that [the Claimant] has been a tenant of [[NAME]] since she and her son moved into the [Property] back in 2010” (emphasis added).

18. The Council says that [NAME] relied upon “[t]his statement” in order to reach the conclusion that the Claimant had always been a tenant of [NAME] but failed to explain what “[t]his statement” was. The Council says that [NAME] did not explain if it is referring to a written statement, an oral statement or to some other document. The Council, therefore, says that [NAME]’s conclusion that the Claimant had always been a tenant is unsupported by evidence.

19. There are 3 references in the [NAME] to ‘this statement’ (§§3,11 and 13). On a literal reading, each is out of context and does not make sense. There has clearly been some typographical error when the [NAME] was prepared - perhaps caused by inaccurate dictation. In any event, I note that each reference to ‘this statement’ is followed by the word ‘submits’. It is, therefore, most likely that each is a reference to submissions made on the Claimant’s behalf rather than some unidentified piece of evidence. This explanation also makes most sense in the context of the relevant paragraphs. I am, therefore, not satisfied that it can properly be said that the mere lack of explanation for its use of the term ‘this statement’ means that [NAME]’s conclusion that the Claimant had always been a tenant is ‘unsupported by evidence’.

20. However, that is not the end of the matter. Whether the Claimant had always been a tenant was an issue before [NAME] and indeed one that it described as the “the first issue to address” ([NAME] §11). [NAME] was, therefore, under a duty to properly consider and explore that issue and to then make necessary and adequate findings of fact to enable it to arrive at a conclusion (Benmax v Austin Motor Co Ltd [1955] AC 370 at 373). [NAME] was also under a duty to give adequate reasons to explain how relevant findings were made and how it arrived at its conclusion (Re B (Appeal: Lack of Reasons) [2003] FLR 1035 at §11).

21. [NAME]’s consideration, findings and conclusion on the issue of whether the Claimant had always been a tenant are set out in §11 of the [NAME] as follows:

“... The first issue to address is whether [the Claimant] is a “tenant” and if so from when, and whether it makes any material difference as to whether or not that person is not named on the [NAME] tenancy agreement. [This statement] submits that [the Claimant] has been a tenant of [[NAME]] since she and her son moved into [NAME] back in 2010. The fact that she was not listed as a tenant on the [NAME] tenancy

6 agreement does not negate that fact. Just as much as her son, she had exclusive possession to [[NAME]], between herself and the landlord, for a fixed duration and for a fixed price. She is not a licensee, the landlord is not renting out a room to her whilst also living in [NAME], she occupies the premises with her son, they are both tenants of [[NAME]].”

22. In my judgment, [NAME]’s approach to whether the Claimant had always been a tenant was flawed.

23. A lease (or tenancy) is “at its heart fundamentally a contract between two parties in which one (variously described as the Landlord or Lessor) grants the other (described as the [NAME]) the exclusive right to the possession of land for a fixed and certain period of time” (Aldridge Leasehold Law 1.001A). A contract of lease may arise by express written agreement, express oral agreement, implied agreement, or an agreement arising by virtue of the doctrine of estoppel or by statute (Aldridge Leasehold Law 1.003 -1.006). Where it is asserted that a contract of lease arises by oral or implied agreement, there must be sufficient certainty that the parties in fact intended to agree to the grant of a tenancy, rather than, for example a simple licence to occupy (Aldridge Leasehold Law 2.020).

24. In Bruton v London & Quadrant Housing Trust [2002] 1 A.C. 406 [NAME] summarised the position as follows (at 413):

“The decision of this [NAME] in Street v. Mountford [1985] A.C. 809 is authority for the proposition that a "lease" or "tenancy" is a contractually binding agreement, not referable to any other relationship between the parties, by which one person gives another the right to exclusive occupation of land for a fixed or renewable period or periods of time, usually in return for a periodic payment in money. An agreement having these characteristics creates a relationship of landlord and tenant to which the common law or statute may then attach various incidents. The fact that the parties use language more appropriate to a different kind of agreement, such as a licence, is irrelevant if upon its true construction it has the identifying characteristics of a lease. The meaning of the agreement, for example, as to the extent of the possession which it grants, depend upon the intention of the parties, objectively ascertained by reference to the language and relevant background.”

25. The Claimant was not named as a tenant in the February 2010 tenancy agreement. The starting point, therefore, was that between February 2010 and August 2020 she was not a tenant - that is, no legal relationship of tenant and landlord with binding mutual obligations (for example, the tenant’s legally binding obligation to pay rent and the landlord’s covenant of quiet enjoyment and so on) existed between her and the landlord. [NAME] was, of course, entitled to go on and consider whether a tenancy, nevertheless, existed between the Claimant and the landlord. However, such a tenancy could only exist pursuant to a contractually binding agreement between the Claimant (personally) and the Landlord - whether by separate written agreement, express oral agreement, implied agreement, or an agreement arising by virtue of the doctrine of estoppel or by statute. [NAME] was, therefore, required to approach the issue of whether the Claimant had been a tenant between February 2010 and August 2020 by considering the strict contractual position. That is, by asking itself, exploring and making necessary and adequate findings of fact as to whether (i) there was any express oral agreement between the Claimant and the landlord by which they both intended and agreed that the legal relationship of tenant and landlord should exist; (ii) if not, whether there were any specific words used or conduct from which such an

7 agreement could be inferred or implied; and (iii) if not, whether such an agreement arose by virtue of the doctrine of estoppel or by statute.

26. In my judgment, it failed to do so. [NAME] seems to have simply taken the view that because [NAME] had always been a tenant (and so had exclusive possession of [NAME] for a fixed duration and at a fixed rent), and the Claimant lived him, it followed that she too had always had exclusive possession of [NAME] for a fixed duration and at a fixed rent and so had also always been a tenant. However, the mere fact that the Claimant occupied [NAME] with [NAME] did not, of itself, give rise to a tenancy between her and the landlord. As [NAME] had exclusive possession of [NAME] against the landlord (by virtue of the February 2010 tenancy agreement), there was nothing in principle preventing the Claimant from simply living in [NAME] as [NAME]’s licensee with the landlord’s knowledge and consent. There is nothing unusual about such an arrangement - particularly in a family context.

27. In my judgment, in approaching the matter in the manner in which it did, [NAME] failed to ask itself the correct questions/misdirected itself, failed to make necessary and adequate findings of fact and failed to give adequate reasons for its findings and conclusions, and so materially erred in law.

Ground 3

28. At §3 of the [NAME] directed itself as to the meaning of ‘take advantage’ by reference to the decision of then [NAME] in the case of CH/39/2007. [NAME] directed itself that ‘take advantage’ would “constitute something close to “abuse” or taking “improper” advantage of [NAME]”, that a [NAME] claimant “making the most of opportunities presented would not constitute such abuse” and that CH/39/2007 sets a “high legal bar”. [NAME] then applied this approach when determining whether the liability created by the August 2020 tenancy agreement was created with the intention of taking advantage of the [NAME] ([NAME] §§13-16).

29. The Council does not suggest that [NAME]’s approach to the meaning of ‘take advantage’ was inconsistent with CH/39/2007. It accepts that then [NAME]’ view that ‘taking advantage’ (in the context of regulation 9(1)(l)) means something akin to ‘abuse’ or ‘taking improper advantage’ is correct and applies equally to regulation 9(3). However, the Council says that then [NAME]’ reference to and focus on “making the most of opportunities presented” by the [NAME] was said in the particular context of landlords targeting the supported accommodation sector and leasing properties to [NAME] for higher rents than the [NAME] would support outside that sector, and so was of little assistance when considering whether the liability created by the August 2020 tenancy agreement was created with the intention of taking advantage of the [NAME] for the purposes of regulation 9(3). [NAME] ought not, therefore, have focused on/asked itself whether the Claimant was simply “making the most of opportunities presented” by the [NAME].

30. The Council says that [NAME] ought to have followed the approach in the more recent case of MP v Sutton London Borough Council (HB) [2021] UKUT 193 (AAC). In that case a [NAME] pursuant to an [NAME] ‘subtenancy agreement’ entered into a new ‘tenancy agreement’ when she discovered that her [NAME] had been restricted to the shared accommodation Local Housing Allowance rate. In determining whether the [NAME] had done so to ‘take advantage’ of the [NAME], Deputy Upper Tribunal Judge Rowland made no express reference to “making the most of opportunities presented”. He stated and then concluded as follows (§11):

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“It is necessary to distinguish between the purpose of the [NAME] subtenancy agreement and the purpose of the new tenancy agreement. The [NAME] subtenancy agreement, as the First-tier Tribunal found, was a perfectly proper one, designed both to provide the claimant with the housing she needed and to enable the [NAME] to pay her contractual rent. On the other hand, the new tenancy agreement, made when the claimant discovered that she had not been awarded as much housing benefit as she and [NAME] had expected, was intended to increase the amount of housing benefit payable to the claimant without either increasing her accommodation or (contrary to [NAME]’s argument) altering the portions of the overall rent that the claimant and the [NAME] were contractually required to pay... the intention behind the new tenancy agreement was plainly to “take improper advantage” of the housing benefit scheme through a legal device that conferred no other immediate benefit on anyone and so I am satisfied that, for the reasons given in both the decision notice and the statement of reasons, the First-tier Tribunal did not err in finding that regulation 9(1)(l) was potentially engaged.”

31. The Council says that applying the approach in [NAME] v Sutton London Borough Council ([NAME]), [NAME] ought to have concluded that the Claimant had sought to take advantage of the [NAME]. It says that the Claimant and [NAME] were perfectly content to proceed on the basis for over 10 years that the August 2010 tenancy agreement was in [NAME]’s sole name and that she simply lived with him as a non-dependent member of his household without any legal liability to pay rent. Whilst the Claimant and [NAME] could have both been named as tenants on the August 2010 tenancy agreement from the outset, there was nothing irregular or unusual about the fact that they were not so named. The only reason for adding the Claimant as a tenant in August 2020 was to increase the amount of [NAME] payable to the household.

32. Insofar as the Council seeks to argue that [NAME] v Sutton London Borough Council ([NAME]) somehow changes the approach to or re-defines the term ‘take advantage’ in regulation 9, I do not agree. One of the grounds of appeal in [NAME] v Sutton London Borough Council ([NAME]) was that [NAME] had erred in not following the approach in CH/39/2007 as to the meaning of ‘take advantage’. Deputy Upper Tribunal Judge Rowland rejected that ground of appeal. He stated, “I do not accept that the First-tier Tribunal failed to apply the approach required by CH/39/2007 and the authorities to which Mr [NAME] (as he then was) referred in that case” (§11). It is clear, therefore, that far from seeking in any way to change the approach to or re- define the term ‘take advantage’, Deputy Upper Tribunal Judge Rowland endorsed and adopted the approach in CH/39/2007. Further, merely because the factual matrix in CH/39/2007 was different from that in [NAME] v Sutton London Borough Council ([NAME]) and the present case, did not mean that the relevant propositions of law set out in CH/39/2007 did not apply. Whether the Claimant’s actions constituted something close to “abuse” or “taking improper advantage” of the [NAME] was a fact specific assessment to be carried out by [NAME]. As part of that assessment, [NAME] was entitled to consider whether the Claimant’s actions could properly or better be described as simply “making the most of opportunities presented” as opposed to “abuse” or “taking improper advantage” of the [NAME]. In my judgment, therefore, [NAME] correctly direct itself as to the meaning of ‘take advantage’ by reference to CH/39/2007 and did not err in its approach in doing so.

33. That said, it is clear from the [NAME] that [NAME] relied heavily on its earlier conclusion that the Claimant had always been a tenant of [NAME] when determining that her actions did not constitute something close to “abuse” or “taking improper advantage”

9 of the [NAME]. As I have already determined that [NAME] erred in law in its approach to whether the Claimant had always been a tenant of [NAME], its consideration of and approach to regulation 9(3) was, therefore, also flawed. In my judgment, in relying upon its earlier flawed conclusion that the Claimant had always been a tenant of [NAME] further materially erred in law.

Conclusion

34. I, therefore, allow the appeal, set aside the decision of [NAME] (Tribunals, Courts and Enforcement Act 2007, section 12(2)(a)) and remit the [NAME] appeal for re-hearing before a new [NAME] (section 12(2)(b)(i)). As findings of fact must be made on issues which were not fully and properly explored at the hearing before [NAME], it is not appropriate for me to re-make the decision on paper.

35. It will be open to the Council to argue before the new [NAME] (and I put it no higher) that the factual matrix of the Claimant’s case is more analogous to that in [NAME] v Sutton London Borough Council ([NAME]) such that the Upper Tribunal’s analysis and the ultimate outcome in that case is of greater assistance than CH/39/2007. That will be a matter for [NAME] and it would not be appropriate for me to pre-emptively express any view other than to say that any such argument can only go so far. As then [NAME] cautioned in CH/39/2007 (§48), “CH/0136/2007 depended on its own facts, as do all cases under regulation 9(1)(l). Reasoning by factual analogy or comparison from case to case is unlikely to be helpful. Authorities are only relevant for the propositions of law on which they are based”. Those very useful words of caution, apply equally to cases under regulation 9(1)(g) and 9(3).

36. Although I am setting aside [NAME]’s decision, I should make it clear that I am making no finding, nor indeed expressing any view, on whether the Claimant is entitled to [NAME]. That is a matter for the new [NAME]. The new [NAME] must review all the relevant evidence and law and reach its own conclusions. In doing so, however, the new [NAME] will have to focus on the Claimant’s circumstances as they were as at 18 November 2020, and not the position as at the date of the new [NAME] hearing. This is because the new [NAME] must have regard to the rule that a tribunal “shall not take into account any circumstances not obtaining at the time when the decision appealed against was made” (section 12(8)(b) of the Social Security Act 1998).

Signed on the [NAME]

His Honour Judge Najib on 14 August 2023

Sitting as a Judge of the Upper Tribunal

The name of the local authority’s representing officer was corrected on 24 October 2023 by Upper Tribunal Judge Jacobs