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[2008] UKUT 11 (AAC) (04 November 2008)

 


IN THE UPPER TRIBUNAL Appeal No. CH/2340/2008

ADMINISTRATIVE APPEALS CHAMBER [2008] UKUT 11 (AAC)

Before Mr. Michael Mark – Deputy Upper Tribunal Judge

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 council and remitting the matter to the council to determine the claimant's entitlement to housing benefit on the basis that sub-paragraph 9(1)(h) of the Housing Benefit Regulations 2006 does not apply to the claimant because he could not have continued to occupy the dwelling in which he was living without relinquishing ownership.

As a result of the re-organisation of the Tribunal Service, this appeal is decided by me sitting as a deputy judge of the newly created Upper Tribunal, instead of being decided by me sitting as a deputy Social Security Commissioner.

REASONS FOR DECISION
1. This appeal is brought with the leave of a tribunal chairman from a decision of the Sheffield Appeal Tribunal given on 20 March 2008. This decision confirmed a decision of the Council dated 10 September 2007 and found that the claimant was not entitled to housing benefit in respect of the property occupied by him as a tenant because he was the former owner of the property and did not satisfy the council that he could not have continued to occupy the property without relinquishing ownership.
2. The claimant had been the owner of the property, which had been subject to two mortgages, both apparently from the same mortgage provider. One of those mortgages, in respect of which no documentation was made available to the tribunal was said to require monthly payments of about £250, to which the DWP had made a small contribution. The other involved monthly payments of about £290, to which the DWP had made no contributions as the monies loaned were utilised for ineligible property improvements. The claimant had had a weekly income from benefits in the region of £387 per week, and had been able to make the necessary monthly payments until April 2006.
3. In about May 2006, the DWP ceased to pay some of the benefits following the making of an allegation that the claimant was working. While it is unclear exactly which benefits were affected, it is clear that the claimant's income was substantially reduced. He made only one further payment on one of his mortgage accounts, in June 2006. It is unclear what payments he continued to make on the other account. The statement of reasons from the tribunal indicates that disability living allowance and carer's allowance were stopped, while incapacity benefit continued. This would seem surprising, although it does accord with the evidence as set out in the record of proceedings, since if the allegation was that the claimant was working, one would expect that incapacity benefit would have been the first benefit to be suspended.
4. The evidence as recorded in the record of proceedings is that when the benefits were stopped the claimant contacted the mortgage provider and was told that he could have three months grace to sort out his benefits. He had contacted other lenders to remortgage over a longer period to reduce his payments, but without success. He was getting further into debt and his health was deteriorating. The record of proceedings also indicated that he had been in touch with the Citizens Advice Bureau for advice and that because he did not have debts of £15000 (apart from the mortgages) he could not get an IVA.
5. The claimant had been challenging the termination of benefits by the DWP, but it was only after about 12 months (presumably in about the middle of 2007) that his appeal was successful, resulting in a substantial payment of arrears of benefit.
6. The mortgagee had taken possession proceedings against the claimant and had obtained a possession order from the court on 9 October 2006. Meanwhile, the claimant had received a flyer from a company offering to buy the property and then rent it back to him. He decided to take that course, and the sale was completed on about 5 October 2006, following which the mortgages had been redeemed out of the proceeds of sale. After the discharge of the mortgages and costs of the sale, he had received £22807 being the net proceeds of the sale. I note, although it is not referred to in the statement of reasons, that at p.55 of the file the claimant explains how he spent this money, and that £1800 is stated to have been used to pay off a county court judgment.
7. The sole issue for the tribunal was whether the claimant fell within regulation 9(1)(h) of the Council Tax Regulations 2006. He would do so, and thus not be entitled to housing benefit in respect of his rent unless he could satisfy "the relevant authority that he or his partner could not have continued to occupy that dwelling without relinquishing ownership". I note that at p.234 of CPAG's Housing Benefit and Council Tax Benefit Legislation Twentieth edition 2007/2008, reference is made to a suggestion that this exception is principally aimed at those who sell their home when a mortgage lender is "on the point of seeking possession" (GM A3.282). In this case, the mortgage lender was not only on the point of seeking possession, by the date of completion of the sale, the court hearing was only days away.
8. The tribunal, however, took the view that the claimant was not to know, at the relevant time, that the benefits issue would take as long as it did to resolve and might have expected the appeal to have resolved successfully in a much shorter period of time so enabling him to clear the arrears and avoid a repossession. There was said to be confirmation before the tribunal that the mortgagees had not applied for an eviction date. This was hardly surprising, since the possession order was only made a few days after the sale, and the mortgagee could not apply for a warrant for possession until after the period had expired under that order for the claimant to give up possession.
9. I also note that there is no evidence, or at least none referred to by the tribunal either as to the amount of the arrears at any particular time, or as to the amount owing on the two mortgages at any particular time, or as to the reasons for the delay in the appeal being dealt with. I am unable therefore to see on what basis the tribunal concluded either that the appeal could have been expected to be heard earlier than it was, or the amount that the claimant could expect to receive as a result.
10. The tribunal went on to note that the claimant had no other indebtedness – a finding which is clearly inconsistent with the evidence of a county court judgment for £1800. It also found that he had made little effort to borrow money from other sources, e.g. on credit card, to enable him to pay the mortgage arrears and buy time until his benefits appeal had been "progressed". It found that the claimant's "concerns were not of sufficient gravity to warrant a panic sale of the property at the time the property was actually sold." It also found that if the claimant "had pursued other avenues as indicated above, an eviction from the property may have been avoided."
11. As was stated in R(H) 6/07, repeating what Commissioner Jacobs, as he then was, had said in CH/3853/2001, "could not" does not mean that it was completely impossible to do otherwise. As the commissioner said in CH/3853/2001, "in use the word may convey a degree of difficulty that falls short of impossibility, but nonetheless conveys practical compulsion".
12. The tribunal's finding that the claimant had no other indebtedness plainly requires explanation in view of the evidence that the claimant used part of the proceeds of sale to pay off a county court judgment, and the evidence that an IVA had even been considered by the Citizens Advice Bureau. Its suggestion that he could have used a credit card to borrow to pay off the arrears requires evidence that he had one or more credit cards with a sufficient limit to enable him to do this, or that he could borrow from some other source in all the circumstances. I can find no such evidence.
13. Further, it appears to me that it would be the height of irresponsibility to borrow even short term at the very high rates of interest chargeable on credit cards or by anybody who would provide credit to such a poor credit risk, whose only hope of repaying the debt when due, if any hope there was, lay in a successful appeal from the DWP's decision terminating benefit.
14. For all these reasons, I conclude that the tribunal was in error of law and I set aside its decision.
15. I suspect that the claimant may have made a mistake in selling to the company which put the flyer through his door if no other buyers were considered unless, as to which there is no evidence, the price offered was close to market price. However, any attempt by him to get an extension of time from the court to bring his payments up to date would have had at best a very uncertain prospect of success for more than a very short period. Having heard many such applications, sitting in another capacity, I can say that the claimant's best prospects of getting a stay of execution of the possession order, or a suspension of that order in the first place, would have been to put the house on the market with a view to selling it himself.
16. If he wished to remain in the house, his only hope would have been to sell to somebody who would then let back the house to him, and that is what he did. He could not have remained in the house if he had sold it to somebody else. Further, the longer he put off the sale while trying to obtain extensions of time while awaiting the outcome of his appeal, the greater the amount of debt which would be secured on the property, the greater the risk that the court would refuse a further extension, and the greater the risk that the purchaser willing to lease back would cease to be interested, or would insist on revising the bargain to the claimant's disadvantage.
17. It does not appear to me that the claimant can properly be expected to weaken his position in this way vis-à-vis a prospective purchaser or become disentitled to housing benefit. For all practical purposes, if he wanted to remain in occupation of the house, he had to sell it and lease it back when he had the opportunity, and is not to be condemned for delaying such a decision for a few weeks in the hope that something would turn up. I am fortified in this conclusion by the fact that even if he had waited a few weeks or even months, it is clear that nothing would have turned up.
18. I therefore allow the appeal and give the decision set out above.

Michael Mark

Deputy Upper Tribunal Judge

4 November 2008