IN THE UPPER TRIBUNAL	Case No.  CH/3165/2011
ADMINISTRATIVE APPEALS CHAMBER

Before Judge Mark

Decision:   The appeal is allowed.  I set aside the decision of the tribunal and I substitute my own decision setting aside the decision of the Respondent council that the overpayment of £7631.58 was recoverable from the Appellant as well as from its former tenant and deciding that (1) the identity of the Appellant is to be corrected to CM (formerly trading as Towerwall Property Management) and (2) the overpayment decision of the council under appeal is varied insofar at it relates to the amount repayable by the Appellant so as to provide that the Appellant is liable to repay only those overpayments made on or after 17 September 2008.  The total amount of the overpayments and the amount which the tenant is liable to repay is not affected by this decision.  The council must recalculate the amount of the overpayments made on and after 17 September 2008 for which the Appellant is liable.

REASONS FOR DECISION

1.	 In this case, housing benefit was paid directly to the landlord’s agent, TPM, and the repayment decision under appeal was made against both the tenant and TPM.  The evidence before the tribunal was that TPM was the business name of CM, and the appeal was brought by CM, who informed the tribunal that he had sold the business.  As TPM was simply CM’s business name, any liability for repayment is his and not that of the person now trading under that name.  The amendment of the name of the Appellant is to reflect this.  

1.	This appeal to the Upper Tribunal is the second appeal in this case.  On the first occasion, by a decision dated 3 May 2011, the matter was remitted to be reheard by the First-tier Tribunal in accordance with directions then given by the Upper Tribunal.

2.	TPM acted as property management agents for the landlord of 31 T Road (the property) which would appear from the tenant’s claim for housing benefit to be a two storey terraced house (file, p.16).  It was one of 90-100 properties managed by TPM.  The tenant, a 22 year old lady with a baby, became tenant of the property under an assured shorthold tenancy agreement dated 6 November 2006.  The whole of the agreement has never been in evidence but the page setting out the term, the rent and the parties, and bearing all relevant signatures, is at p.8 of the file.  The landlord is named but the only details given are of the agent, TPM, whose contact details include a postal address, a telephone number and a fax number.  The tenant and a guarantor are also named and postal addresses are given for both, but no phone numbers are given.

3.	On 26 February 2007, the tenant applied for housing benefit in respect of the property and an award was made.  At her request, payment of benefit was made direct to TPM.  Although the actual award is not in evidence, the repayment decision shows that the full amount of the rent was paid by was of housing benefit.

4.	At some point in the summer of 2007, it would appear that the tenant left the property and went to live in Devon.  She has given two conflicting dates as to when this was, but the overpayment decision upon which the present repayment decision was made is based upon her having ceased to live at the property from 14 August 2007.  Although she has written stating that she returned the keys to TPM, CM stated, and the tribunal accepted, that these were not returned, and that the deposit paid under the tenancy agreement was never reclaimed.   It is also undisputed that she did not inform the council.

5.	The property had been inspected on behalf of TPM in about May 2007 and had been found to be in good order, and the rent, which had been increased slightly following the end of the fixed 6 months term in May 2007, was being paid.  CM therefore explained that he saw no reason to visit the property, which was one of a number that he managed.  

6.	The Judge of the Upper Tribunal who heard the first appeal found that if the managing agent was to be liable to make the repayments, he could only be found liable from the time that he ought to have been aware that the house was not occupied.  It was expressly stated in paragraph 7 of the decision of the Judge of the Upper Tribunal in May 2011 that the new tribunal would have to determine whether or not the management agreement between the landlord and TPM, or any other circumstance, required the agent to inspect the property and how often those inspections would be required, and therefore the first date at which the property ought to have been inspected after it became vacant, so as to alert the managing agent to the fact that it was vacant and that there was a duty to disclose the fact.

7.	If, as one would expect, there was a written agreement setting out the managing agent’s duties, it was not produced to the tribunal hearing the second appeal.  The tribunal now under appeal did ask CM about the property and the agreement, and was told that there were no gas fittings there, so that no annual gas safety check was needed.  As to the agreement, CM explained that it was that he would let the property, check references, arrange for the signing of the tenancy and collect the deposit and rent.  There was also an agreement that tenants would contact him if there were any repairs needed and that he would arrange a contractor to carry out those repairs.  

8.	I find it very unsatisfactory that the tribunal had not, prior to the hearing, directed the production of the management agreement and instead relied on secondary evidence of it, which would almost certainly (and without any criticism of CM) be incomplete and, depending as it did on memory and his possibly imperfect understanding of it, be at risk of being inaccurate.  Nevertheless, the tribunal appears to have accepted his account of it.  It went on to find that there was “no written requirement for property to be inspected”, but concluded that “Taking account of the arrangement between [TMP] and the owner and the expectation of the owner that the property would be managed on his behalf, the tribunal considers that it would not be inappropriate for the property to be inspected one year after the previous inspection instead the property was not inspected for 2 years and 2 months” (paragraph 9 of the tribunal’s statement of reasons).

9.	The tribunal concluded that as CM had no reason to know that the tenant had moved out, it was not unreasonable to leave the property uninspected “until say 31/5/2008”.  

10.	On 10 September 2008 the council became aware, as a result of a data matching exercise that the tenant was claiming income support from an address in Plymouth in addition to claiming housing benefit in respect of the property, which was in the Wirral.  The data match, bearing the Housing Benefit Finance Department’s date stamp of 10 September 2008 is at p.24 of the file.  It clearly shows that the same person is involved, giving the same NI number and the same date of birth, as well as showing that the income support claim dated from the same date as the claim for housing benefit in respect of the property.  Payment of housing benefit for the period from 1 September 2008 to 7 June 2009 was made after the receipt of this information according the submissions of a decision maker for the second tribunal hearing.  

11.	There is no proper evidence as to the reaction of the council.  The submissions of the decision maker are that at that time the data match result was “considered by the investigations unit within the Housing Benefits section.  Due to volume of work and other priorities there was a delay in investigating the data discrepancy until April 2009.  Once the investigation was complete on 28 April 2009 a recommendation was made that payments of Housing Benefit be suspended by a decision-maker and further enquiries made.  That action was taken on 28 June 2009 due to a working backlog at that time.  A decision to supersede the decision awarding Housing Benefit was made four days later on 2 July 2009.”

12.	I note that the previous submissions of the council to the first tribunal stated that on16 April 2009 Plymouth City Council wrote to the council advising that the tenant had claimed and been awarded housing benefit in respect of a Plymouth address from 22 September 2007.  On 28 April 2009, the submissions stated a visitor from the council’s housing benefits section had called at the Wirral property and found a wheelie bin pushed against the front door, an amount of rubbish accumulated in front of the property, and when she pushed a letter through the letterbox, she noted a massive pile of post in the hall.  She was of the opinion that the property was empty.

13.	On 8 June 2009, the final payment of housing benefit was made by the council, covering the period 11 May to 7 June 2009.  If payments were made every 4 weeks, then it would seem that another payment would already have been made around 11 May 2009, even after the property had been inspected.  

14.	I note that the council has failed to appreciate the distinction between evidence and submissions.  The submission that the delays from September 2008 were due to volume of work and other priorities, if relevant, clearly needed to be proved by evidence that could be examined by CM and the tribunal.  There was no such evidence.  I shall return to this later in this decision.

15.	Notice of the overpayment decision was given to TPM by letter of 2 July 2009, and notice of appeal was given by letter of 29 July 2009.  A further undated letter (file, p.42-43) written at some point in or after late August 2009 states that CM could not fail to disclose a change of which he was unaware or had suspicion of, and also states that the property remained empty and unlet.  It was only the day before the first tribunal hearing, in October 2009, that CM went to the property and took photographs showing that the tenant had left some of her possessions at the property (p.59).

16.	The tribunal accepted that there had been an overpayment between 20 August 2007 and 7 June 2009 of £7631.58.  It went on to consider whether the overpayment had been caused by an official error within the meaning of regulation 100 of the Housing Benefit Regulations 2006.  It concluded that the failure to act on the information received in September 2008 was an omission by an officer or person acting for the council.  It then considered (1) what the position was before that time and (2) whether TPM had contributed to the act or omission.

17.	It concluded that before that time, there was no official error leading to the overpayment because the council was not alerted as to the situation.  That overpayment was therefore recoverable from somebody.  It further found that the overpayment after 5 September 2009 (the date on which for unexplained reasons it found that the data sheet at p. 24 was obtained by the council despite the received stamp of 10 September 2009) could not be regarded as having arisen by way of official error and was also recoverable from somebody.  

18.	The tribunal then turned to the question of the person or persons from whom the overpayment was recoverable taking into account regulation 101 of the Housing Benefit Regulations.  It concluded that it would have been reasonable to expect TMP to have made an inspection of the property on or about 31 May 2008 and found that if it had made such an inspection the council could have been alerted to the fact that the tenant was no longer living there.  By continuing to accept payment of housing benefit by BACS on a monthly basis, TPM were misrepresenting the fact that the property was still occupied by the tenant.  It then found that the omission properly to manage the property and accepting and applying payment of the benefit amounted to a misrepresentation of fact, namely that the tenant was occupying the property.  It therefore found any overpayment between 31 May 2008 and 5 April 2009 recoverable from TPM.  Overpayments prior to 31 May 2008 were not recoverable from TPM.  From 5 April 2009 onwards, the overpayments were also recoverable from TPM because it continued to misrepresent the position in the same way as before.

19.	Before the tribunal could find that there was a misrepresentation by TPM to the council, it had first to find that there was a representation.  It is clear that TPM could not have failed to disclose that the tenant had left the property because it did not know that she had left, nor was there any basis for a finding that it had turned a blind eye to her leaving.  What the tribunal is saying is that on the basis of its management agreement with the owner, it ought to have inspected by 31 May 2008, when it would have found out.  However, TPM had no reason to suspect that she had left (unlike the council after it had received the information that she was living in Plymouth), and TPM did not inspect the flat.

20.	I am unable to see how the inaction of TPM can amount to a misrepresentation that the tenant was still living at the property.  The council did not know when TPM had ever inspected the property.  For all it knew, the last inspection could have been in August or even September 2007 (when the presence of the tenant’s property and the absence of any pile up of mail may have left TPM believing that she was still there.  Or the last visit may have turned out to have been in September 2006.  At no stage prior to 31 May 2008 is it suggested by the tribunal that there was a misrepresentation to the council, yet any representation made by TPM that the tenant was in the property would have been a misrepresentation even before 31 May 2008.  

21.	The council was unaware of the terms of the management agreement between TPM and the owner beyond the fact that TPM was an agent authorised to receive the rent.  The council cannot have understood TPM to be representing on any particular day that the tenant was still at the flat on that day.  Nor could it even be taken as representing that it had inspected the flat at any time, as any duty to inspect depended upon the terms of the agency agreement between TPM and the owner, of which the council was unaware.

22.	Regulation 101(2)(a)(i) of the Housing Benefit Regulations 2006, as it stood between 10 April 2006 and 6 April 2009) provides that the prescribed person from whom recovery should be sought shall be “in a case where an overpayment arose in consequence of a misrepresentation or a failure to disclose a material fact (in either  case whether fraudulently or otherwise) by or on behalf of the claimant or any other person to whom housing benefit has been paid, the person who misrepresented or failed to disclose that material fact instead of, if different, the person to whom the payment was made”.  While the wording of the provision changed from 6 April 2009, its effect in the present case remained the same. 

23.	It is plain in this case that the overpayment, at least until September 2008, arose because of the failure of the tenant to disclose the material fact that she had stopped living in the property.  It is from her and not from TPM that repayment must be sought of any repayments made up to then.

24.	The tribunal went on to find that the overpayment which arose after 5 September 2008 could not be regarded as having arisen as a result of official error, so that the provisions of regulation 100 of the Housing Benefit Regulations 2006 could not apply.  The reference to 5 September would appear to be a mistake as the document putting the council on notice that the tenant was living elsewhere is date stamped as received on 10 September.

25.	Regulation 100(1) provides that any overpayment, except one to which paragraph (2) of that regulation applies, shall be recoverable.  Paragraphs (2) and (3) provide, so far as relevant, that:

“(2) Subject to paragraph (4) this paragraph applies to an overpayment which arose in consequence of 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 to that payment, reasonably have been expected to realise that it was an overpayment.
 (3) In paragraph (2), “overpayment which arose in consequence of an 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) …
(d)…..
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.”

26.	It appears plain to me that the failure of the council to take any action for many months was an omission amounting to official error.  While I accept that there were possible innocent explanations, which might have meant that the tenant remained entitled to housing benefit, these were unlikely prior to 5 April 2009 and could be ruled out after that date.  There were submissions before the tribunal as to why there was delay in pursuing the matter, but no proper evidence as to it, and nothing to explain why payment could not have been suspended pending investigation.  The suspension would immediately have put TPM on notice and could be expected to have led to TPM checking whether the tenant was still at the property.  In the unlikely event that there was a mistake, TPM and the tenant could then have drawn it to the council’s attention.  The failure to suspend payment was in my judgment an official error in consequence of which subsequent payments were made.  In my judgment, making every allowance for the document received on 10 September 2008 to be properly considered within the housing benefit finance department, payments ought to have been suspended within 7 days of receipt of the notice, that is by 17 September 2008.

27.	Further, once the council knew, having checked, that the tenant was not living at the property, subsequent payments that were made (at least more than 2 or 3 working days after the inspection) were not the result of the failure to disclose by the tenant or anybody else but because of the further incompetence of the council in not immediately stopping payment.

28.	These official errors do not, by themselves, prevent recovery of the overpayments, because it is still necessary to consider the remaining provisions of regulation 100(2).  So far as TPM is concerned, the question is whether TPM could not, at the time of receipt of the payment, reasonably have been expected to realise that it was an overpayment.   If it could reasonably have been expected to realise that it was an overpayment, then regulation 100(2) does not exclude the resulting overpayments from the effect of regulation 100(1) and those overpayment are recoverable from TPM under regulation 101(2)(a)(ii) in respect of overpayments up to 5 April 2009 and under regulation 101(2)(c) in respect of overpayments from 6 April 2009.  There is no material difference between these two provisions, both of which provide that where there is an overpayment in consequence of an official error when (inter alia) the person receiving the payment could reasonably have been expected, at the time of the receipt of the payment, to realise that it was an overpayment, the overpayment is recoverable from that person.

29.	It does not appear to me that that expectation is one which the council must have had.  It is a question of fact for the tribunal, looking at all the evidence, whether the recipient of the payment, in this case TPM, could reasonably have been expected, when the payment was received, to have realised that it was an overpayment.

30.	I see no reason to disturb the finding of fact by the tribunal that it was reasonable to expect TPM to inspect the property at least annually and that TPM ought to have inspected it by 31 May 2008, and would then have been able to determine that the tenant had vacated (or at least that she was not living there).  It follows that by September 2008, TPM could reasonably be expected to have realised that it was an overpayment.  That reasonable expectation arose because by well before that time TPM could reasonably be expected to have visited the property and discovered that the tenant was no longer living there.

31.	The tribunal was thus in error of law in concluding that there was any misrepresentations by TPM, and that TPM had any liability to repay any overpayments in the absence of official error by the council.  It was also in error of law in concluding that there was no official error on the part of the council, in finding that the housing benefit matching service document was received by the council on 5 September 2008 rather than 10 September 2008, and in its findings generally as to the persons from whom the overpayments were recoverable.

32.	 The end result is that TPM is not liable to repay payments made prior to 12 September 2008 as these were not made in consequence of official error, and there was no misrepresentation or failure to disclose by TPM, but that subsequent payments had been made in consequence of official errors, and that as TPM could reasonably have been expected to realise that these were overpayments, they are recoverable from TPM, or more accurately now that that business has been sold, they are recoverable from CM, who was then the sole proprietor of the business.

33.	While it appears to me to be illogical that the council should be able to recover once there is an official error of which the recipient of the payment has no way of being aware, whereas it cannot recover without such an official error, it is plain from the wording of regulation 101 that once there is an official error the circumstances in which repayment can be sought change and instead of looking at issues of misrepresentation and failure to disclose, the question becomes whether a person could reasonably have been expected to realise that there was an overpayment.  As noted by me in 2012 UKUT 88 AAC, there are a number of distinctions to be drawn in determining liability to repay which do not repay rational examination, but they are clear and must be applied.

(signed on the original)	Michael Mark
				Judge of the Upper Tribunal

				1 June 2012