[2008] UKUT 18 (AAC) (19 November 2008)

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Upper Tribunal (Administrative Appeals Chamber)

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Cite as: [2008] UKUT 18 (AAC)

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Decision of the Upper Tribunal
(Administrative Appeals Chamber)

This decision is given under section 11 of the Tribunals, Courts and Enforcement Act 2007:

The decision of the Taunton appeal tribunal under reference 206/07/00233, held on 7 June 2007, did not involve the making of an error on a point of law.

Reasons for Decision

Introductory Matters
A	Why this case has been decided by the Upper Tribunal	Paragraph 1
B	The parties	Paragraph 2
C	The key issue that I have to decide	Paragraphs 3-6
D	The oral hearing	Paragraphs 7-8
Retrospective Effect
E	Terminology and decision-making	Paragraphs 9-12
F	History of the case	Paragraphs 13-14
G	The law at the time of the award and payment	Paragraphs 15-22
H	The law at the time of the overpayment and liability decisions	Paragraphs 23-28
I	Plewa v Chief Adjudication Officer	Paragraphs 29-36
J	Does the language of regulation 101(2) cover payments made before it came into force?	Paragraph 37
K	Is regulation 101(2) retrospective?	Paragraphs 38-40
L	The presumption against retrospective effect	Paragraphs 41-47
M	Is regulation 101(2) unfair?	Paragraphs 48-56
N	Is retrospective effect authorised by statute?	Paragraphs 57-58
O	Would there be a gap in the legislation if regulation 101(2) were not retrospective?	Paragraphs 59-60
P	The Secretary of State's intention	Paragraphs 61-63
Q	A general overview of fairness	Paragraphs 64-68
R	Convenience	Paragraphs 69-72
S	Is regulation 101(2) procedural?	Paragraphs 73-74
Other Matters
T	The claimant's grounds of appeal	Paragraphs 75-77
U	The tribunal's reasons	Paragraphs 78-80
V	The local authority's presentation of the appeal to the tribunal	Paragraphs 81-85

Disposal	Paragraph 86	Paragraph 86

Introductory Matters

A. Why this case has been decided by the Upper Tribunal

This case began as an appeal by the claimant to the appeal tribunal followed by an appeal to a Social Security Commissioner, both under the Social Security Act 1998. The housing benefit and council tax benefit jurisdiction of the appeal tribunal and the Commissioners was transferred on 3 November 2008 to the First-tier Tribunal and Upper Tribunal respectively. These proceedings were transferred to the Upper Tribunal under the Transfer of Tribunal Functions Order 2008 (No 2833). This has not affected my decision on the issues raised by the appeal.

B. The parties

This is an appeal brought by the claimant with the leave of Mr Commissioner Mesher. The claimant's local authority, Mendip District Council, is the first respondent. Mr Mesher also directed that the Secretary of State for Work and Pensions be a party as second respondent.

C. The key issue that I have to decide

In Plewa v Chief Adjudication Officer [1995] 1 AC 249, Lord Woolf said (at page 258) of a new scheme for overpayments in social security:

'It is desirable that in this situation legislation should make it clear whether the new provision is to be retrospective or not.'

If that advice had been heeded and explicit provision made, this case would not have been necessary.

The key issue in this case is whether the amendments to the law on recoverability of overpayments of housing benefit that came into force in April 2006 apply to liability in respect of payments made before that date. In the circumstances of this case, the difference is that under the former law the claimant and his landlord would, for the period when benefit was paid to the landlord, be jointly and severally liable to repay, whereas under the present law the claimant would be solely liable. I have decided that the legislation is retrospective and that its operation is fair.

This issue has arisen in a number of cases. It was due to be decided by Mr Mesher in CH/1601/2007. That case collapsed when the local authority decided that it would not seek to recover the overpayment. Mr Mesher then directed that the issue be considered in this case at an oral hearing. As he was not available on the date fixed, he transferred the case to me.

The claimant's landlord was potentially affected by this decision. Mr Mesher did not join the landlord as a party or invite her to apply to become one. Neither have I. The issue that I have to decide is a legal one and any prejudice to her could only arise at the later stages of fact-finding and enforcement, and then only if the legislation used by the local authority was not retrospective.

D. The oral hearing

The hearing was held in Sedgemoor Magistrates' Court on 12 November 2008. The claimant attended and spoke on his own behalf, accompanied and supported by Louise Richardson, his disability advocate. The local authority was represented by Derek Perry, of counsel. The Secretary of State was represented by Jason Coppel, of counsel. He concentrated on the issue of retrospective and Mr Perry dealt with the other issues that arose. I am grateful to all those who attended for their contributions.

Mr Coppel provided what counsel are pleased to call a skeleton argument. In fact, it was (as is common practice) a comprehensive written statement of his arguments. All quotations of his arguments are from his skeleton.

Retrospective Effect

E. Terminology and decision-making

Any consideration of housing benefit begins with a claim. The local authority decides the claim by refusing it or by making an award. If it makes an award, the claimant is entitled to payment under that award for so long as it remains operative. I call this the award. It remains operative until it is either varied on appeal or suspended, revised or superseded by the local authority.

A revision or supersession may change the claimant's entitlement to benefit. The consequence of the change may be that the claimant has been overpaid. I call this the overpayment decision.

The local authority may then decide that the claimant or someone else is liable to repay all or part of the overpayment to the local authority. I call this the liability decision. The effect of the decision is that the overpayment is recoverable from the person identified as liable.

Actual enforcement of the person's liability is a separate process. It is subject to legal control through judicial review. There is no appeal to a tribunal.

F. History of the case

The claimant was awarded housing benefit from 13 November 2000 and council tax benefit from 10 November 2000. For part of the time, housing benefit was paid to the landlord. Following an investigation, the local authority discovered that the claimant and his wife had amounts of capital that together were well over the threshold for an award of either benefit. On 9 May 2006, the local authority decided that the claimant had been overpaid housing benefit of £22,741.03 in respect of the inclusive period from 13 November 2000 to 20 June 2005 and had been paid excess council tax benefit of £5,978.30 in respect of the inclusive period from 10 November 2000 to 1 April 2006. It also decided that both amounts were recoverable from the claimant. It made those decisions under section 75 of the Social Security Administration Act 1992 and regulation 101(2) of the Housing Benefit Regulations 2006.

The claimant exercised his right of appeal, but the tribunal dismissed his appeal. I comment on the tribunal's reasons later. It did not deal with the issue of which legislation governed the claimant's liability for the housing benefit overpayment.

G. The law at the time of the award and payment

Until 30 September 2001, the relevant legislation was as follows.

Liability was governed by section 75(3) of the Social Security Administration Act 1992:

'75 Overpayments of housing benefit

(1) Except where regulations otherwise provide, any amount of housing benefit determined in accordance with regulations to have been paid in excess of entitlement may be recovered either by the Secretary of State or by the authority which paid the benefit.

(2) Regulations may require such an authority to recover such an amount in such circumstances as may be prescribed.

(3) An amount recoverable under this section is in all cases recoverable from the person to whom it was paid; but, in such circumstances as may be prescribed, it may also be recovered from such other person as may be prescribed.'

The result was that an overpayment was always recoverable from the payee and the others persons prescribed by regulation 101 of the Housing Benefit (General) Regulations 1987:

'101 Person from whom recovery may be sought

(1) Subject to paragraph (2) a recoverable overpayment shall be recoverable from either-

(a) where the overpayment was in consequence of a misrepresentation or failure to disclose a material fact (in either case whether fraudulent or otherwise) by or on behalf of the claimant or any other person to whom a payment of housing benefit may be made, the person who misrepresented or failed to disclose; or

(b) in any case, the claimant or the person to whom the overpayment was made.'

Paragraph (2) dealt with recovery from housing benefit payable to a claimant's partner. I need not set it out, because there has been no change to this.

Under this legislation, the overpayment was recoverable from the landlord for the period when she was payee under section 75(3) and from the claimant as such under regulation 101(1)(b).

From 1 October 2001 to 9 April 2006, the relevant legislation was as follows.

Section 75(3) of the Social Security Administration Act 1992 was amended from 1 October 2001:

'(3) An amount recoverable under this section shall be recoverable-

(a) except in such circumstances as may be prescribed, from the person to whom it was paid; and

(b) where regulations so provide from such other person (as well as, or instead of, the person to whom it was paid) as may be prescribed.'

From the same date a new version of regulation 101 of the 1987 Regulations was substituted:

'101 Person from whom recovery may be sought

(1) For the purposes of section 75(3)(a) of the Administration Act (prescribed circumstances in which an amount recoverable shall not be recovered from the person to whom it was paid), the prescribed circumstance is –

(a) housing benefit has been paid in accordance with regulation 93 (circumstances in which payment is to be made to the landlord) or regulation 94 (circumstances in which payment may be made to a landlord);

(b) the landlord has notified the relevant authority or the Secretary of State in writing that he suspects that there has been an overpayment;

(c) it appears to the relevant authority that, on the assumption that there has been an overpayment –

(i) there are grounds for instituting proceedings against any person for an offence under section 111A or 112(1) of the Administration Act (dishonest or false representations for obtaining benefit); or

(ii) there has been a deliberate failure to report a relevant change of circumstances contrary to the requirement of regulation 75(1) (duty to notify a change in circumstances) and the overpayment occurred as a result of that deliberate failure; and

(d) the relevant authority is satisfied that the landlord –

(i) has not colluded with the claimant so as to cause the overpayment;

(ii) has not acted, or neglected to act, in such a way so as to contribute to the period, or the amount, of the overpayment.

(2) For the purposes of section 75(3)(b) of the Administration Act (recovery from such other person, as well as or instead of the person to whom the overpayment was made), the prescribed person is –

(a) in a case where the overpayment arose as a consequence of a misrepresentation or 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;

(b) in a case where a recoverable overpayment is made to a claimant who has one or more partners, the claimant's partner or any of his partners;

(c) the claimant.'

Under this legislation, the overpayment was recoverable:

• from the landlord for the period when she was payee under section 75(3)(a). This was subject to regulation 101(1), but as the landlord did not suspect an overpayment and did not report it, regulation 101(1)(b) was not satisfied; and

• from the claimant as such under section 75(3)(b) and regulation 101(2)(c).

H. The law at the time of the overpayment and liability decisions

The decision under appeal was made on 9 May 2006. At that date, the relevant legislation was as follows.

Section 75(3) of the Social Security Administration Act 1992 was unaffected:

'(3) An amount recoverable under this section shall be recoverable-

(a) except in such circumstances as may be prescribed, from the person to whom it was paid; and

(b) where regulations so provide from such other person (as well as, or instead of, the person to whom it was paid) as may be prescribed.'

Regulation 101 of the Housing Benefit (General) Regulations 1987 had been replaced by regulation 101 of the Housing Benefit Regulations 2006 and there was a new version of regulation 101(2):

'101 Person from whom recovery may be sought

(1) For the purposes of section 75(3)(a) of the Administration Act (prescribed circumstances in which an amount recoverable shall not be recovered from the person to whom it was paid), the prescribed circumstance is –

(a) housing benefit has been paid in accordance with regulation 93 (circumstances in which payment is to be made to the landlord) or regulation 94 (circumstances in which payment may be made to a landlord);

(b) the landlord has notified the relevant authority or the Secretary of State in writing that he suspects that there has been an overpayment;

(bb) the relevant authority is satisfied that the overpayment did not occur as a result of any change in the dwelling occupied by the claimant as his home;

(c) it appears to the relevant authority that, on the assumption that there has been an overpayment –

(i) there are grounds for instituting proceedings against any person for an offence under section 111A or 112(1) of the Administration Act (dishonest or false representations for obtaining benefit); or

(ii) there has been a deliberate failure to report a relevant change of circumstances contrary to the requirement of regulation 75(1) (duty to notify a change in circumstances) and the overpayment occurred as a result of that deliberate failure; and

(d) the relevant authority is satisfied that the landlord –

(i) has not colluded with the claimant so as to cause the overpayment;

(ii) has not acted, or neglected to act, in such a way so as to contribute to the period, or the amount, of the overpayment.

(2) For the purposes of section 75(3)(b) of the Administration Act (recovery from such other person, as well as or instead of the person to whom the overpayment was made), where recovery of an overpayment is sought by a relevant authority –

(a) the prescribed person from whom it is sought shall be –

(i) in a case where an overpayment arose in consequence of a misrepresentation of 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;

(ii) in a case where an overpayment 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 has been made could reasonably have been expected, at the time of receipt of the payment or of any notice relating to that payment, to realise that it was an overpayment, that person instead of, if different, the person to whom the payment was made; or

(b) where sub-paragraphs (a)(i) and (ii) do not apply, the prescribed person from whom it is sought is –

(i) the claimant;

(ii) in a case where a recoverable overpayment is made to a claimant who has one or more partners, the claimant's partner or any of his partners.

…

(3A) For the purposes of paragraph 2(b)(ii), "overpayment arose in consequence of an official error" shall have the same meaning as in regulation 100(3) above.'

Mr Coppel told me that the reasons for the change were (i) to direct local authorities to recover from the person at fault and (ii) to give landlords a right of appeal if they were not at fault. It was felt that landlords had become too often an automatic target for recovery regardless of their responsibility for the overpayment.

Under this legislation, the overpayment was recoverable from the claimant, but not from the landlord. The landlord was for part of the period the payee under section 75(3)(a) and did not satisfy regulation 101(1). Just looking at those provisions, she was liable. However, regulation 101(2)(a)(i) provides that the person who caused the overpayment by a misrepresentation or failure to disclose is alone liable to repay. If the claimant misrepresented or failed to disclose the capital held by himself or his wife, he would be liable and the landlord would not.

The result is this. Under the law as it stood at the time when the awards were made and benefit was paid, the claimant and, for part of the time, his landlord were jointly and severally liable. But under the law as it stood at the time when the overpayment and liability decisions were made, the claimant was solely liable.

I. Plewa v Chief Adjudication Officer

It is convenient to begin with this case, which is the leading authority on retrospectivity in respect of social security benefits. The House of Lords was concerned with a change to the overpayment provisions for social security benefits. The claimant had been overpaid retirement pension, which is a non-means tested benefit. At the time the award was made and the pension paid, there were different legislative tests for recoverability for means tested and non-means tested benefits. The rule for means tested benefits was that overpayments were recoverable only if they arose as a result of a misrepresentation or failure to disclose. The rule for non-means tested benefits was that all overpayments were recoverable unless the claimant had shown due care and diligence to avoid the overpayment. By the time the liability decision was made, the same test applied to all social security benefits - the means tested approach based on misrepresentation and failure to disclose. The adjudication officer applied the law as it was at the time of the liability decision.

The House applied the modern test for retrospective legislation: was its retrospective effect so unfair that it was not permissible to attribute to Parliament the intention that it should so operate? Applying that test, the House decided that the new legislation did not apply to non-means tested benefits that had been overpaid before that legislation came into force. The decision was based on the fact that the rule for means tested benefits (and, therefore, the new rule) allowed recovery from third parties, whereas the rule for non-means tested benefits did not. This created a new obligation that had not previously existed for non-means tested benefits. Lord Woolf gave the reasons for the House (at page 257):

'When the possible effect on innocent third parties is taken into account, … it is clear that a considerable degree of unfairness could result from the third party being under an obligation which he would not have been under prior to the coming into force of section 53. It is not unreasonable to suggest that the third party might not even have been prepared to act on behalf of a claimant if he had known that he could incur a personal obligation.'

Lord Woolf also commented on the loss of the defence of due care and diligence. I refer to this later when I consider whether the change to regulation 101(2) was retrospective.

I note the following features of that case.

First, the House relied on two factors – the effect on third parties and the removal of a defence. However, they are merely the factors that the House considered relevant to the issue of fairness in the context of that case. They are not the only factors that are potentially relevant. The principle for which the case is authority is this: legislation is not retrospective if it is unfair by creating a new liability or removing an existing defence.

Second, the House was not concerned with whether those factors applied in Mr Plewa's circumstances. He was the claimant, not a third party, so that factor did not apply. He may, or may not, have been able to benefit from the defence of due care and diligence. The social security appeal tribunal had thought that he might satisfy the defence, but the House did not enquire. It was enough that the defence no longer applied.

Third, the House did not decide that the new law could not be applied to third parties, but could be applied to claimants. Nor did it say that the new law based on misrepresentation and failure to disclose could be applied, but only subject to a defence of due care and diligence. It had no power to create a transitional provision when none existed. Nor did it have any scope to interpret the language of the new law to make it fairer. It was only concerned with how the law as it stood applied to facts that had occurred before it came into force. Either it applied or it did not. The court decided that it did not and that decision applied to all cases, regardless of whether the effect of the change in the particular case was beneficial, disadvantageous or neutral.

Fourth, the House did not analyse the comparative balance of benefit and disadvantage that the change in the law brought to different parties. Nor did it question whether the new law was objectively fairer or more balanced that the previous law.

J. Does the language of regulation 101(2) cover payments made before it came into force?

If regulation 101(2) does not apply in its terms to payments that were made before it came into force, there is no need to consider fairness. Regulation 101(2), as in force at the time of the overpayment and liability decisions, applies 'where recovery of an overpayment is sought by a relevant authority'. Mr Coppel argued:

'Giving the words which are used their ordinary meaning, the new regulation applies in any case where it is decided to seek recovery of an overpayment, and so in any case where such a decision is taken after the new regulation came into force.'

I accept this argument. The words govern the temporal application of the regulation and their focus is on the time of the liability decision, not the time of the award and payment.

K. Is regulation 101(2) retrospective?

Mr Coppel argued:

'The new regulation does not have retrospective effect in any material sense.'

He spelt this out in more detail:

'Therefore, a statutory provision is only retrospective "if it takes away or impairs a vested right acquired under existing laws, or creates a new obligation, or imposes a new duty, or attaches a new disability, in regard to events already past". The new regulation does not impose any new duty on authorities to recover overpayments: they retain an administrative discretion to choose not to recover an overpayment. And an authority's decision as to from whom recovery should be sought is taken in regard to the determination that there has been an overpayment and the discretionary decision to seek recovery of the overpayment rather than to "events already past" in the sense of the overpayments themselves. As a result of primary legislation (s. 75(3) SSAA in this case), it is the determination that there has been an overpayment rather than the overpayments themselves which gives rise to the right of an authority to recover overpaid benefit and so to the issue of the person from whom benefit should be recovered …'

I reject this argument. It is contrary to what Lord Woolf said in Plewa (at page 258):

'Although the position of the actual payee is obviously not as clear as that of a third party, even in the case of a claimant, I would have been inclined to attach more importance to section 53's possible retrospective unfair effect than the Court of Appeal did in Tunnicliffe. This is because it removed the defence of due care and diligence. If recipients would not have been under a liability in fact to make a repayment under the former machinery then from the practical point of view they were being placed under a liability which did not previously exist by the change in the law. This is a situation where the presumption against retrospectivity should apply.'

That passage may or may not form part of the reasoning that led to the decision of the House of Lords. But it is a clear and unqualified statement that a change in liability in respect of past events is retrospective. If it is not formally binding on me, it is highly persuasive. Moreover, it is with respect sensible. Mr Coppel's analysis may be technically correct in strict legal terms, but it fails to take account of the reality that there has been a change between the time of payment and the time of the liability decision.

Regulation 101(2) is retrospective in its terms. I must now consider the effect of that.

L. The presumption against retrospective effect

As Lord Woolf said, there is a presumption against retrospectivity. Mr Coppel argued that this was a flexible presumption. I accept this argument.

There are different types of presumption. Some are merely drafting devices that save the need to set out common provisions in legislation. Others are based on the likely intention to be attributed to the legislation. And yet others are effectively rules of constitutional significance that can only be displaced by the clearest wording. (This is not intended to be an exhaustive list.)

Section 16(1) of the Interpretation Act 1978 is capable of operating as a presumption of the first type, although Plewa shows that not all instances of retrospectivity come within it.

'16 General savings

(1) Without prejudice to section 15, where an Act repeals an enactment, the repeal does not, unless the contrary intention appears,—

(a) revive anything not in force or existing at the time at which the repeal takes effect;

(b) affect the previous operation of the enactment repealed or anything duly done or suffered under that enactment;

(c) affect any right, privilege, obligation or liability acquired, accrued or incurred under that enactment;

(d) affect any penalty, forfeiture or punishment incurred in respect of any offence committed against that enactment;

(e) affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment;

and any such investigation, legal proceeding or remedy may be instituted, continued or enforced, and any such penalty, forfeiture or punishment may be imposed, as if the repealing Act had not been passed.'

Generally, the presumption against retrospectivity is of the second type. This is how it was put by Lord Woolf MR in Secretary of State for the Home Department v Nargis Chowdry [1998] Immig AR 241 at page 247:

'In passing legislation, Parliament can be assumed not to intend to produce results which are unfair, therefore unless Parliament makes it clear that a result which is unfair was an intended result, the courts will assume that that unfair result is not the one that Parliament intended. If Parliament makes it clear that its intention is to produce a result which it may or may not acknowledge is unfair, then courts have to give effect to that intention.'

Some of the factors relevant to this approach were set out by Lord Mustill in L'Office Cherifien des Phosphates v Yamashita-Shinnihon Steamship Co Ltd [1994] 1 AC 486 at page 525:

'Precisely how the single question of fairness will be answered in respect of a particular statute will depend on the interaction of several factors, each of them capable of varying from case to case. Thus, the degree to which the statute has retrospective effect is not a constant. Nor is the value of the rights which the statute affects, or the extent to which that value is diminished or extinguished by the retrospective effect of the statute. Again, the unfairness of adversely affecting the rights, and hence the degree of unlikelihood that this is what Parliament intended, will vary from case to case. So also will the clarity of the language used by Parliament, and the light shed on it by consideration of the circumstances in which the legislation was enacted. All these factors must be weighed together to provide a direct answer to the question whether the consequences of reading the statute will the suggested degree of retrospectivity are so unfair that the words used by Parliament cannot have been intended to mean what they might appear to say.'

One relevant factor is the extent and impact of the amendments. There is a spectrum from wholesale replacement through significant amendment to minor tinkering in order to correct technicalities or to improve clarity. It is more likely that a wholesale replacement will be unfair if retrospective than would minor tinkering. In this case, the amendment is closer to minor tinkering than wholesale replacement.

Some aspects of retrospectivity are covered by presumptions of the third type. They are close to the prohibitions on retrospectivity that can be found in Constitutions (such as Article 35(3)(l) of the South African Constitution) and human rights instruments (such as Article 7 of the European Convention on Human Rights). The nature of the provisions in this case are remote from the concerns that create a presumption of this third type.

M. Is regulation 101(2) unfair?

Ideally, the claimant would have identified some aspect of the change in legislation that was unfair. That would have provided a focus for my analysis and decision. However, the claimant's grounds of appeal do not address this issue, which was identified by Mr Mesher on granting leave. I must, therefore, consider generally whether there are circumstances in which the change might cause an unfairness to anyone affected.

In doing so, I must consider whether regulation 101(2) operates unfairly to the claimant in his particular circumstances. But I must not limit myself to that. As Lord Woolf MR said in Secretary of State for the Home Department v Nargis Chowdry [1998] Immig AR 241 at page 247:

'The interpretation of the 1996 Act [the Asylum and Immigration Act 1996] does not depend upon the particular circumstances of a particular applicant.'

The effect of the change to regulation 101(2) is to remove joint and several liability and substitute sole liability in cases involving misrepresentation and failure to disclose. That change has a potential impact in that the local authority will have only one target for recovery. That should not have been a significant change from previous practice, because the guidance given to local authorities by the Department for Work and Pensions encouraged recovery from the person responsible for the overpayment. However, as Mr Coppell admitted, the practice varied and some local authorities preferred to recover from landlords if possible as this was often easier. The loss of joint liability would, therefore, mean that a claimant is more likely to be a target for recovery than before. Does that result in an unfairness?

If the claimant is required to repay a local authority, it makes no difference in practice whether that is under a joint or sole liability. Even if the liability is joint, it is difficult to see what effective cause of action the claimant might have against a landlord or any other person who might be liable, given that they would not have made any misrepresentation or failure to disclose.

If the landlord is required to repay the local authority, it makes no difference in practice whether that is under a joint or sole liability. Even if the landlord has misrepresented or failed to disclose, the tenant remains liable for the rent. That liability was discharged by way of the housing benefit, but it revives when that benefit is recovered from the landlord. The tenant is liable to pay the rent that is now due or is liable to eviction for failing to do so. If the tenant has left the landlord's premises, it may be that the landlord will be unable to enforce this contractual right to the rent. However, this same difficulty arises whether the landlord is solely or jointly liable with the tenant. The change in law neither creates nor increases this risk.

If someone acting on the claimant's behalf is required to repay the local authority, it makes no difference in practice whether that is under a joint or sole liability. Another person who retained the housing benefit would have no claim against the claimant for any part of the repayment, even if they were jointly liable. And any rights that another person may have who passed the housing benefit on to the claimant will not vary according to whether the liability was joint or sole.

On the above analysis, the changes to regulation 101(2) did not result in any significant change in the ultimate legal position of any persons affected. It is not unfair to give the provision retrospective effect.

Mr Coppel drew my attention to two decisions in which deputy Social Security Commissioners had dealt with the retrospective effect of the amended version of regulation 101(2): CH/1504/2007 and CH/4213/2007. However, with respect to the deputies, neither had the benefit of the argument I had.

In Overpayments and Recovery of Social Security Benefits (LAG 1996), Paul Stagg suggested (pages 181-183 and 279) that the Civil Liability (Contribution) Act 1978 may provide for a right of recovery between parties who are jointly and severally liable for an overpayment. I have considered this possibility. However, the right of contribution only arises if the persons are 'liable in respect of any damage suffered by another person' (section 1(1)) and section 6 provides:

'6. Interpretation

(1) A person is liable in respect of any damage for the purposes of this Act if the person who suffered it (or anyone representing his estate or dependants) is entitled to recover compensation from him in respect of that damage (whatever the legal basis of his liability, whether tort, breach of contract, breach of trust or otherwise).'

Despite the breadth of that definition, it only applies to the recover of 'compensation'. That is not an appropriate word to describe the recovery of overpaid benefit. This process is more like restitution or payment of a debt that compensation for a wrong.

N. Is retrospective effect authorised by statute?

Mr Coppel did not deal with this issue. However, a retrospective regulation, like all regulations, is only valid if it is authorised by statute. In Master Ladies Tailors Organisation v Minister of Labour and National Service [1950] 2 All ER 525, the court was concerned with delegated legislation and decided that it was not retrospective. However, Somervell LJ sitting as an additional judge of the King's Bench Division said (at page 528):

'It has, of course, been laid down in the clearest possible terms that no statute or order is to be construed as having a retrospective operation unless such a construction appears very clearly or by necessary and distinct implication in the Act.'

The relevant authority for recovery of housing benefit is section 75. It does not authorise retrospective provision expressly. However, in most circumstances a payment in excess of entitlement inevitably involves a retrospective change to that entitlement. Against that background, it is easy to find that the provision authorises retrospective provision by necessary and distinct application.

O. Would there be a gap in the legislation if regulation 101(2) were not retrospective?

I now deal with five of Mr Coppel's arguments that do not arise in view of my decision on fairness.

Mr Coppel argued that if regulation 101(2) did not have retrospective effect, it would not be possible to recover any overpayment that occurred before the change in law in April 2006. He argued that this was possible in Plewa only because the repealed legislation continued in force in respect of past liability and, in this case, there was no liability until the recovery decision was made. This argument raises some fascinating issues concerning the nature of a right or liability to which section 16 of the Interpretation Act 1978 applies. I do not need to resolve them, as they no longer arise in view of my decision on fairness.

P. The Secretary of State's intention

Mr Coppel argued:

'the Secretary of State was the author of the new regulation … and has always regarded it as being applicable to decisions to recover overpayments taken after the date on which it came into force.'

And

'It should not be forgotten that Plewa and the other decided cases referred to above concerned primary legislation, and represent attempts by the courts to divine the intention of Parliament where that has not been made clear by the statutory words. In contrast, the present case concerns a regulation whose ordinary meaning is clear and the intention behind which is not in doubt.'

I do not accept that the Secretary of State's intention is so significant as Mr Coppel argued. This issue is discussed by Francis Bennion in Statutory Interpretation (Butterworths 2008 5th edition). Section 60 reads:

'Allowing for the difference in juridical nature and provenance, delegated legislation is to be construed in the same way as an Act.'

On the provenance of delegated legislation, Bennion says:

'Since the intention of a particular government is a more straightforward concept than the intention of a complex legislature such as the Queen in Parliament, this difference is likely if anything marginally to simplify the task of interpretation.'

That passage provides limited and qualified support for Mr Coppel's argument, but it does not justify so much prominence as he sought for the Secretary of State's intention on the effect of the amendment to regulation 101(2). I accept that the Secretary of State or, more likely, a junior minister or official, intended the change to the legislation to have retrospective effect. However, I have attached no significance to that intention.

Q. A general overview of fairness

Mr Coppel argued:

'The new regulation 101(2) is designed, and has the effect, of ensuring that there is greater fairness in the recovery of overpayments by the relevant authorities.'

I do not accept that it is permissible, proper, or possible for a judge to undertake a review of the overall fairness of legislative changes.

I am not aware of an indication in any modern authority on retrospectivity that this is permissible. There is nothing in Lord Woolf's speech in Plewa that he gave any consideration to, let alone undertook an analysis of, the overall fairness of the changes to the law on recoverable overpayments. There is no indication that he attempted to balance the detriment to third parties who became liable, the disadvantage to claimants in the loss of the defence of due care and diligence, the benefits (including fairness) of basing recovery on misrepresentation and failure to disclosure, and the advantage of consistency between different classes of benefit. The focus in his speech is entirely on the fairness of particular aspects of the changes.

It is not a proper judicial function to make a value judgment of Government or Departmental policy. As Bingham LJ said in R v Secretary of State for the Home Department, ex parte Mundowa [1992] 3 All ER 606 at page 616:

'the court is not an arbiter of what the United Kingdom's immigration policies should be …'

Lord Selborne LC put the point more generally in Goodson v Richardson (1874) LR 9 Ch App 221 at page 224:

'Parliament is, no doubt, at liberty to take a higher view upon a balance struck between private rights and public interests than this Court can take.'

It is not possible to make the value judgment invited by Mr Coppel. The law does not provide criteria by which to judge decisions taken on political and policy considerations.

I accept, of course, that I have to judge the fairness of particular aspects of the change. But that involves a single criterion of fairness, which is well known as a factor in judicial decision-making. It is very different from attempting an overall assessment of competing effects.

R. Convenience

Mr Coppel argued that failing to apply regulation 101(2) to all overpayments 'would be, potentially, inconvenient and highly inefficient, particularly where overpayments to a single claimant straddled the coming into force of the new regulation.' I do not accept that convenience is in principle a relevant consideration. Nor do I accept that the change to regulation 101(2) would cause any significant inconvenience if it were of only prospective effect.

As to the principle, I am not aware of any authority that takes convenience into account. The focus is on the fairness to the persons affected; and convenience to a public authority is hardly relevant to that. In Plewa, the House of Lords was well aware that different legislation and tests would have to be applied to different periods, because Lord Woolf set out how this would work at page 260.

As to the convenience of decision-making generally, the conditions of entitlement regularly change and require separate consideration for different periods, especially when overpayments are involved. Much of the burden of this is avoided by the use of computer programmes. The change is handled by appropriate modifications to the software used by local authorities.

As to this particular change, its main effect is on the persons who may be liable to reimburse the local authority. Considering that issue would take little time and far less than having to apply the varying rules of entitlement that applied in different periods.

S. Is regulation 101(2) procedural?

Mr Coppel argued:

'The new regulation does not affect the key substantive decisions as to (a) whether there has been an overpayment (see s. 75(1) SSAA) and (b) whether that overpayment should be recovered. Rather, it only impacts upon the route by which recovery should be pursued once those decisions have been taken. In the Appellant's case, he would have been liable under the old regulation to repay the overpayments of HB; he remains liable under the new regulation. All that has changed is that the Council is required to seek recovery from him rather than having a discretion to seek recovery from him in respect of the period when payments were made direct to his landlord. From the Appellant's point of view, and adopting the old typology, this is a procedural change at best (which whilst no longer decisive is a strong indication that there is no sufficient unfairness). And there is no evidence that this procedural change would make any difference at all to the Appellant (ie there is no reason to believe that the Council would not seek recovery from him under the old regulation, if that were held to apply).'

I reject this argument. The distinction between substantive and procedural provisions is no longer determinative of retrospectivity. And regulation 101 is not a procedural provision in any useful sense of those words. A provision is procedural if it governs the way in which rights are ascertained and enforced. It is not procedural if it determines what those rights are.

Other Matters

T. The claimant's grounds of appeal

The claimant's grounds of appeal were essentially that he could not afford to repay the amount owing. He told me about the health and financial problems that he and his wife were experiencing. I explained that the local authority has a discretion over enforcement and that he should put his argument about hardship to the authority.

The claimant also argued that, as the local authority had been able to identify all the bank accounts held by him and his wife, it could and should have done so at the time of his claim in order to prevent the overpayment. I reject this argument. The law imposes on a claimant the duty to provide information to the local authority relevant to entitlement. It also gives the local authority power to investigate, but the local authority is not obliged to use that power in every case. It is entitled to rely on the claimant to provide the correct information.

The claimant told me that he did not know of the money in his wife's accounts and that she had forgotten about them. Those matters do not affect his liability. The information he provided to the local authority was inaccurate and incomplete. It does not matter that he was not aware of his wife's finances.

U. The tribunal's reasons

The Secretary of State's written observations on the appeal, for which Mr Coppel was not responsible, described the tribunal's reasons as 'totally inadequate'. The officer pointed out some matters on which the tribunal had not made specific findings. The local authority's written observations dealt satisfactorily with those and I need say no more about them.

Mr Perry accepted that the reasons were deficient, but argued that in the circumstances of the case the tribunal had come to the correct decision.

With some hesitation, I accept Mr Perry's argument. The tribunal failed to make proper findings of fact. That in turn reflected the lack of evidence presented by the local authority. However, that evidence has now been provided and it is clear that the claimant and his wife had capital in excess of the threshold for entitlement. It is also clear that he did not inform the local authority of this capital. The tribunal came to the correct decision.

V. The local authority's presentation of the appeal to the tribunal

The local authority's decision was based on the capital held by the claimant and his wife. In its submission to the appeal tribunal, it provided six pages in very small print containing an analysis of the amounts held in the couple's bank accounts and its relevance to the claimant's entitlement. It did not provide any of the evidence on which that analysis was based. In this appeal, the local authority provided a submission accompanied by 402 pages of evidence. That evidence should have been provided for the hearing before the tribunal. I repeat what I wrote recently in CH/4262/2007:

'40. These rules [Tribunal Procedure (First-tier Tribunal) (Social Entitlement Chamber) Rules 2008] do not exist for their own sake. They exist, and must be interpreted and applied, to enable the Tribunal to deal with a case fairly and justly (the overriding objective). That includes ensuring, so far as practicable, that the parties are able to participate fully in the proceedings (rule 2(2)(c)). A benefit claimant cannot participate fully in the proceedings if the documents are presented in a way that even an experienced Tribunal Judge finds difficult to unravel and understand. This power gives legislative form to the practice followed by the social security appeal tribunals of taking an enabling approach to assist parties to understand and participate in the proceedings. It is now imposed not only on the Tribunal but also on the parties, who are required by rule 2(4) to co-operate with the Tribunal in furthering the overriding objective and generally.'

Mr Perry argued that the evidence was not required, because the claimant's grounds of appeal to the tribunal did not dispute the amount of capital that he and his wife had possessed at relevant times and were concerned only with enforcement of his liability. As I have explained, there is no appeal on enforcement. That is a matter for the local authority's discretion and judicial review.

What Mr Perry says about the claimant's grounds of appeal is correct. However, the claimant was not represented and the tribunal, in taking its inquisitorial approach, was entitled to the evidence on which the decision was based in order to ensure that there was no issue that might affect the overpayment and liability decisions.

I appreciate that it can be difficult for the officers of a local authority to know exactly what should or should not be included in the bundle of documents provided for a tribunal. They should not provide every document in their possession regardless of its relevance. But nor should they take too narrow a view of what is relevant to the appeal. All too often I see cases in which the local authority produces relevant material only after the tribunal has made its decision. The wise and safe course is to err on the side of giving the tribunal too much than too little.

This is not solely a matter for local authorities. Tribunals have power to give directions for the production of documents and should use that power to ensure that they have all the material that is required in order to make a sound decision on the issues that arise.

Disposal

I dismiss the appeal. The tribunal was correct to apply the version of regulation 101(2) that was in force at the time the overpayment and liability decisions were made. Its findings of fact were sparse, but the material facts were not in dispute. The only issues raised by the claimant were outside the tribunal's jurisdiction. In the circumstances, the tribunal came to the correct decision.

Signed on original
on 19 November 2008

Edward Jacobs
Upper Tribunal Judge

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You are here: BAILII >> Databases >> Upper Tribunal (Administrative Appeals Chamber) >> [2008] UKUT 18 (AAC) (19 November 2008) URL: http://www.bailii.org/uk/cases/UKUT/AAC/2008/18.html Cite as: [2008] UKUT 18 (AAC)