IN THE UPPER TRIBUNAL 	Appeal No: CH/3834/2012

ADMINISTRATIVE APPEALS CHAMBER

Before: Upper Tribunal Judge Wright 

DECISION 

	The Upper Tribunal allows the appeal of the appellant.

The decision of the First-tier Tribunal sitting at Hull on 22 May 2012 under reference SC950/11/01473 involved an error on a point of law and is set aside.

The Upper Tribunal is not in a position to re-decide the appeal. It therefore refers the appeal to be decided afresh by a completely differently constituted First-tier Tribunal and in accordance with the Directions set out below.     

This decision is made under section 12(1), 12 (2)(a) and 12(2)(b)(i) of the Tribunals Courts and Enforcement Act 2007

DIRECTIONS

Subject to any later Directions by a District Tribunal Judge of the First-tier Tribunal, the Upper Tribunal directs as follows:

(1)	The new hearing will be at an oral hearing.

(2)	If the appellant has any further evidence that she wishes to put before the tribunal this should be sent to the First-tier Tribunal’s office in the Leeds Appeals Service Centre within one month of the date this decision is issued.

(3)	The First-tier Tribunal should have regard to the points made below.

REASONS FOR DECISION 

1.	This is an appeal by the claimant from a decision of the Hull First-tier Tribunal (SEC) dated 22.05.12. I will refer to this from now on as “the tribunal” and the claimant as the “appellant”.  The decision under appeal to the tribunal was one made by Hull City Council (“the Council”) on 19 November 2010. That decision was to the effect that: (a) between 19.01.09 and 15.03.09 the appellant had been overpaid housing benefit of £135.26 and excess council tax benefit amounting to £9.84 and that these sums were recoverable from her; and (b) between 13.04.09 and 21.06.09 the appellant had been overpaid housing benefit of £158.64 and excess council tax benefit (between 13.04.09 and 29.06.09) due to official error and these sums were recoverable from her as the appellant could reasonably have been expected to realise that an overpayment was occurring at the time of payment.  (A third “overpayment” of council tax benefit for the period 30.06.09 to 2.08.09 has never been disputed and does not form any part of the appellant’s challenge to the tribunal’s decision. I therefore say no more about it).

2.	The overpayments began from 19.01.09. In effect, that is from the outset of the appellant’s claim for housing and council tax benefit. Stripped to its essentials the reason for the overpayments was that Council had been unaware when calculating the appellant’s entitlement to housing and council tax benefits of awards of working tax credit and child tax credit made to the appellant with effect from 18.01.09. That information was first provided to the Council by the appellant on 2.03.09 in the form of a letter to her from HMRC dated 29.01.09        showing awards of working and child tax credits from 12.01.09.  It is not disputed, as I understand it, that this additional income means that the appellant was overpaid the above sums.  The issue on appeal was whether those sums were recoverable from her.

3.	The tribunal allowed the appellant’s appeal to the extent of holding that the overpayments were not recoverable for the one week period from 9 March 2009 to 15 March 2009.  This was because the tribunal found that these overpayments had arisen as a result of official error on the part of the Council and the appellant could not reasonably have been expected to realise that she was being overpaid in respect of these sums.

4.	In giving directions on this appeal on 17 December 2012 I observed:

“Permission to appeal was granted by District Tribunal McDonald on 24.07.12 on the ground that “it would be advantageous to have a decision from the Upper Tribunal on the point as to how quickly the respondent could reasonably have actioned the information provided to it by the appellant, given the speed of electronic communication”.   

In making its observations on the appeal it would assist the Upper Tribunal if Hull City Council could address the following matters.

(i)	Whether the First-tier Tribunal erred in law in allowing the local authority 7 days to action the information provided on 2.03.09?  Could suspension of benefit not then have been actioned “at the touch of a button”?  But even if it could, what other considerations might have led the authority not to suspend payment of benefit immediately?  Does Hull CC revenues and benefits section have a policy in respect of (a) time limits for actioning information on receipt, and/or (b) suspending payment of benefit (and if yes to either, what is the policy)?  Is any national guidance provided by the DWP (or the local government ombudsman) about (a) time limits for actioning information on receipt, and/or (b) suspending payment of benefit (and if yes to either, what is the policy)?

(ii)	Further or alternatively, did the First-tier Tribunal err in law in not providing adequate reasons for its decision that [the appellant]could reasonably have been expected to realise she was being overpaid?  The reasoning here is seemingly compressed into the statement “[lack] of diligence by the appellant in considering the material made available to her resulted in her not spotting that she had been incorrectly assessed in the calculation of her proper entitlement”. Was this enough to answer her case on this issue?  What in fact was the lack of diligence here?”

5.	Both the Council and the appellant argue that the tribunal erred in law in its decision, though for differing reasons and with different consequences.  
6.	The Council argue that the tribunal erred in law in holding that the overpayment for the one week of 9.03.09 to 15.03.09 was not recoverable. Its argument is that the reasons why the appellant could reasonably have been expected to realise that she was being overpaid are the same for this period as they are for the later period of 13.04.09 to 21.06.09 which the tribunal had held were recoverable. In essence, this is a challenge to the adequacy of the tribunal’s reasoning: if the later overpayments were recoverable despite official error (that is, on the basis that the appellant could reasonably have been expected to realise she was being overpaid at the time those payments were made to her), why then did the tribunal hold that for the earlier one week period the appellant could not reasonably have been expected to realise that she was being overpaid?.    The Council ask that the tribunal’s decision be set aside and the Upper Tribunal remake the decision so as to find that the one week overpayment 9.03.09 to 15.03.09 is recoverable from the appellant, and deciding the rest of the appeal in the same manner as the tribunal had.

7.	As for the tribunal’s reasoning on the official error overpayment from 13.04.09 to 21.06.09, the Council argue that the tribunal’s reasoning is adequate because in addition to the words quoted in paragraph (ii) in paragraph 4 above the tribunal had said (in paragraph 19 of its statement of reasons) that it “endorses and adopts the reasons for seeking recovery of the admitted overpayment sums given by the Respondent in the written submission”.  That, of course, begs the questions whether the reasons given by the Council in its submission   were adequate.        

8.	By contrast, the appellant argues that the defect in the reasoning lies the other way around, or at least she emphasises that the tribunal’s reasoning why she could reasonably have been expected to realise that she was being overpaid for the later period of 13.04.09 to 21.06.09 is just as fundamental a defect in the tribunal’s reasoning to merits its decision being set aside. Her representative argues that she had never claimed housing benefit or council tax benefit before and so was relying on the Council for support and guidance throughout the process.    Moreover the lack of diligence relied on by the tribunal had not been explained adequately.

9.	Both parties made detailed submission on what either were or ought to be the Council’s procedures and what a reasonable time was for a local authority to act on information received. In this they were seeking to address the wider issue raised by Judge McDonald when she gave permission to appeal. I will comment on that wider issue shortly.  However, before doing that I will set my reasons for concluding that the tribunal erred in law and why it is not appropriate for the Upper Tribunal to re-make the decision.

Errors of Law
 
10.	There are three failings in the tribunal reasoning which mean that it erred in law in coming to its decision and the decision must therefore be set aside. The material deficits in the reasoning are in respect of the tribunal’s reasons explaining why: 

(i)	the Council had 7 days to act on the information provided on 2.03.09 before it fell into official error; 
(ii)	the appellant could not reasonably have been expected to realise she was being overpaid for the one week period from 9.03.09 to 15.03.09; and (conversely) 
(iii)	the appellant could reasonably have been expected to realise she was being overpaid for the period 13.04.09 to 21.06.09.
   
On each of these issues the reasoning of the tribunal is, in my judgment, inadequate.  

11.	As to (i), the reasoning and findings of fact are contained in paragraph 14 of the statement of reasons, which says:

“The tribunal finds it reasonable to expect the Respondent, in the circumstances peculiar to this case, to action information received within 7 days. This need not be more than suspending payment of benefit pending further enquiry. The tribunal’s finding is based upon its knowledge of how quickly the Respondent can respond when circumstances so dictate and having regard to the speed or electronic communications” 

12.	There are a number of statements in this passage that are problematic and needed further explanation.  First, what were the circumstances peculiar to this case?  As I understand it the critical feature of the case (though I doubt it made it a peculiar one), was that on 2.03.09 the appellant had handed in to the George Street Customers Service Centre of the Council a change of circumstances form to which was attached the tax credits award letter to her from HMRC dated 29.01.09.  The Council’s written appeal response to the tribunal describes this document as having been received “by the decision maker” on 2.03.09. If this is a correct characterisation of who received the document I struggle to understand why the speed of electronic communications was a relevant consideration. That may have been relevant if the information provided by the appellant on 2.03.09 had not been provided to the decision maker and it had to be scanned and then emailed to a decision maker. But that is not the Council’s case: its case is that the information was with the decision maker on 2.03.09. Moreover, on the evidence before me I cannot see what electronic communication the decision maker needed to engage in after 2.03.09 before suspending payment of the benefit. 

13.	In addition, I consider some explanation had to be given by the tribunal about its knowledge “of how quickly the Respondent can respond when circumstances so dictate”.  This seemed to be knowledge held by the judge of the tribunal and relating to cases like, or similar to, that of the appellant. However in the context of the Council arguing that in a case such as this a two week period to process the information was appropriate (see paragraph 6 in Section 7 of its appeal submission to the tribunal), in my judgment the tribunal had to explain more adequately than it did the evidential basis for its 7 day time period.  That likewise would have explained to the appellant why a period of less than 7 days was not appropriate.

14.	I stress, however, that the criticism of the tribunal here is not in choosing a period of 7 days. That may have been justified. The defect in the decision is the failure of the tribunal to explain why on the evidence before it a period of 7 days was appropriate.

15.	As for the tribunal’s reasoning why the appellant could not reasonably have been expected to realise she was being overpaid for the one week period from 9.03.09 to 15.03.09, the key problem is that there is no real reasoning at all.  It has to be remembered that it was not the Council’s case that this period was covered by official error and therefore the tribunal could not (as it did for the later official error overpayment) seek to rely on the Council’s submission. This was, so to speak, a fresh decision by the tribunal.  What the tribunal says in terms of its reasoning on this issue follows on from its official error finding quoted in paragraph 11 above. But all it says is:

“Having regard to all the circumstances described by the appellant and disclosed in the papers, the tribunal is satisfied that the appellant does not fall foul of the recovery provisions relating to payments made by way of official error and that the overpayments relating to the period 3.03.09 to 15.03.09 are not recoverable from her” (Both parties accept 3.03.09 is simply a typographical error and should instead read 9.03.09). 

This, however, is really no more than a statement of conclusion rather than an explanation about why on the evidence the appellant could not reasonably have been expected to realise that she was being overpaid. She had, apparently, received a payment for this period into her bank account on 11.03.09. If that is true then, although it may create a difficulty in showing a reasonable realisation of being overpaid before that payment, it gives rise to a (contentious) issue of what the appellant may reasonably have been expected to realise on or after this payment was made. The tribunal’s reasoning here fails in any meaningful sense to grapple with this issue and explain why on the evidence the appellant could not reasonably have been expected to realise she was being overpaid during this one week period. For example, what exactly in the circumstances she had described supported this conclusion?
                       
16.   	Similar criticisms in my judgment apply to the tribunal’s reasoning on why the appellant could reasonably have been expected to realise she was being overpaid for the later period of 13.04.09 to 21.06.09.  An immediate question that arises is: why the change in what she could reasonably have been expected to realise between the one week overpayment in March 2009 and this period?  In this context, the reasoning really needed to say more than “[lack] of diligence by the appellant in considering the material made available to her resulted in her not spotting that she had been incorrectly assessed in the calculation of her proper entitlement”. For example, what is meant by the material made available to her and why does this material differ from that available to the appellant before or during the period 9.03.09 to 15.03.09.  Moreover, the phrase “material made available to her” would seem to refer only to the notification letters issued to the appellant by the Council, but what of the payments made into her bank account during this period? Regulation 100(2) of the Housing Benefit Regulations 2006 is couched in terms of what someone could reasonably have been expected to realise “at the time of receipt of the payment” as well as any notice relating to that payment, however the reasoning is silent on an examination of when any payments may have been made to the appellant between 13.04.09 and 21.06.09.                 

17.	The Council, accepting that the lack of diligence passage alone is not adequate reasoning, seek to meet this criticism by relying on the tribunal’s reliance here on its submission to the tribunal (and paragraphs 9-19 therein).  However, that submission does not save the reasoning either, in my judgment. The central thrust of the Council’s case as set out in its submission is that the appellant could reasonably have been expected to realise she was being overpaid for the period 13.04.09 to 21.06.09 because of notification letters issued to her on 23.01.09 and 28.02.09 (see para. 17 of the section 7 in the submission).  It is true that the Council also sought to rely on payments of housing benefit (not, I note, council tax benefit) paid into the appellant’s bank account (see paragraph 15 of the section 7 in the submission), but f0r the reasons given in paragraph 16 above it would seem that the tribunal only sought to rely on the notification letters as giving rise to the appellant reasonably realising she was being overpaid.  The cogency of the tribunal’s reasoning thus turns on the effect of notification letters alone. 
                                                                
18.	The trouble with those letters, however, is that both of them predate the appellant giving the tax credits information to the Council on 2.03.09. Neither letter, therefore, could have been based on that information and so a reader of them would have been entirely unsurprised that the benefit entitlement there set out did not include the increased tax credits income provided to the Council on 2.03.09. These letters alone therefore could not have given rise to any reasonable expectation in a reader of them that the person was being overpaid as, on the timeline of when they were written, neither could have shown that the information received on 2.03.09 had not been acted on. 

19.	Accordingly the letters alone, in my judgment, take the case no further in terms of showing that the appellant could reasonably have been expected to realise that she was being was being overpaid between 13.04.09 and 21.06.09. The critical point of focus had to be on the period after the tax credits information had been provided on 2.03.09 and whether the appellant ought reasonably to have been expected to realise that her housing and council tax benefits had not reduced from the levels set in the letters of 23.01.09 and 28.02.09 on receipt of the 2.03.09 information showing an increase in her tax credits income. Thus the central issue was the totality of the information the appellant had after 2.3.09 and whether on that information she ought reasonably have been expected to realise that she was being overpaid. That information did not, as I understand it, include any more letters from the Council. What it did include, however, was alleged payments of housing benefit made into the appellant’s bank account. It was that post-2.03.09 information, taken together with the earlier notification letters, that gives rise to the argument that the appellant ought reasonably to have realised she was being overpaid because it showed (so the Council argue) that the housing benefit had not reduced despite the increase in the tax credit income that the appellant had made the Council aware of on 2.03.09.                                              

20.	Although these bank account payments are referred to in the Council’s submission to the tribunal, the fundamental problem is that the tribunal’s reasoning does not address the payments at all.  Indeed the tribunal’s language of “in considering the material made available to her resulted in [the appellant] not spotting that she had been incorrectly assessed” strongly suggests it focused solely on the notification letters (which alone take the enquiry nowhere, for the reasons given above) and had ignored the evidence of the alleged payments into the bank account. This deficit in the reasoning of the tribunal on an issue central to its decision renders its decision erroneous in point of law.

22.	Further, I do not consider that the information before me on this issue is sufficiently clear to enable me to decide the point for myself. For example, I do not know (and cannot tell from the record of proceedings) what the appellant’s evidence was in respect of (a) what she made of the notification letters (assuming it is accepted she received them), (b) what expectation she had (if any) in terms of the level of her housing benefit and council tax benefit entitlement after she had provided the information on 2.03.09, and (c) how often between 13.04.09 and 21.06.09 she received any bank statements through the post or could otherwise reasonably have obtained such statements, what the entries for housing benefit said in such statements (e.g. did they clearly set out weekly entitlement for a specified period), and what she made, or could reasonably have made, of the fact that her housing benefit had not reduced.  All of these areas ought to have been explored by tribunal and will need to be explored by the next First-tier Tribunal with the appellant. It cannot be done by the Upper Tribunal on the papers alone.

Reasonable time for a council to act on information

23.	This is the point that concerned District Tribunal Judge McDonald and led her to give permission to appeal on the basis that a ruling from the Upper Tribunal would assist “on the point as to how quickly the respondent could reasonably have actioned the information provided to it by the appellant, given the speed of electronic communication”.  I fear my answer may disappoint Judge McDonald.

25.	On the specific point about how quickly this Council could have actioned the information provided to it given the speed of electronic communication, I can only repeat the point I made above about it being entirely unclear what further electronic communication was required before the information could be actioned. According to the Council’s submission the decision maker had all the information on 2.03.09.

26.	On the wider point of how long a local authority administering the housing benefit and council tax benefit schemes may have before its inaction may be said to be an official error by omission (and it is not disputed before me, and is settled law in any event (see, for example, para. [20] of CH/858/2006), that delay in processing or acting on information received can amount to “official error” on the part of the local authority), the answer, as always, is it will depend on all the facts of the individual case. 

27.	A relevant consideration in deciding whether a delay does amount to an official error may include the guidance relied on by the Council in this case set out in HB/CTB Circular A24/2008 (assuming it has not been superseded). This is to the effect that “once a [local authority] receives sufficient information to process a change of circumstances, if they do not process that change of circumstances before the customer’s next payday, they will have to make a decision on whether the overpayment, from the Monday following the receipt of all the information, should be classified as [a local authority] official error or Administrative delay”. That, in effect, seems to suggest a one week time period to act on the information received, consistent with the terms of regulation 79 of the Housing Benefit Regulations 2006.

27.	However, this is only guidance, and so parties to an appeal may argue that it ought not to apply.  Further, a tribunal is not obliged to follow guidance. However, it will need to take it into account if (as here) it is relied upon. In any event, the guidance is subject to a number of qualifications. For example, it is predicated, sensibly in my view, on the local authority receiving sufficient information to process a change of circumstances. What is or is not sufficient will depend on the facts of the individual case. For example, a telephone call from a claimant to say he or she has increased their hours of work of itself is very unlikely to be sufficient as it tells the decision-maker nothing about the increase (if any) in income.  But the tax credits information provided in this case on 2.3.09 may have been sufficient information.  What the tribunal needed to do, and will need to do, is to find out if it was in fact sufficient information or whether any other steps were required.

28.	Additionally, the guidance in the Circular distinguishes between mistakes made by the local authority (such as it putting the sufficient information on one side and then forgetting about it) and matters outwith its control (such as staff shortages due to sickness) or being unable to process the information in time due to a backlog, and suggests the first example would amount to official error but the last two would not.  These are, however, no more than relevant considerations, and a tribunal is not bound to follow them. For myself, although I can see that simply forgetting about information provided will in most cases amount to a mistake/official error, I am less certain that the other two examples cannot. For example, if due to chronic staff sickness a local authority was not in a position to deal with reports of changes of circumstances in any sense expeditiously and it did not address its mind to how it could address this problem (e.g. by employing temporary staff), then its inaction in processing information received may amount to an official error.  

29.	In addition, the Circular says nothing about suspending payment of benefit. However, in certain cases a failure to suspend payment of benefit may, of itself, in my judgment, amount to an official error under regulation 100(3) of the Housing Benefit Regulations 2006 (the “HB Regs”) (and its council tax benefit counterpart).  The considerations in play here are likely to be more finely balanced given the importance of continuing payments of housing benefit to meet the rental obligations of the claimant, bearing in mind the consequences that may arise in terms of the relationship of the claimant with his or her landlord if the payments are suspended.  But in principle the words in regulation 100(3) of the HB Regs – defining what is meant by “overpayment which arose in consequence of an official error” as an “overpayment caused by a mistake made whether in the form of an act or omission by...the relevant authority…” – are wide enough to cover a failure to suspend payment of housing benefit in an appropriate case.

30.	Beyond these comments, however, I think it would be unwise and unhelpful to stray.  The instances of where delay does (or does not) amount to “official error” are better worked out in the cases in which the issue arises.                                                                                                                                   

 (Signed) S. M. Wright
Judge of the Upper Tribunal
                                                                                                          
Dated 9th July 2013