THE UPPER TRIBUNAL Appeal No. CH 2036 2008
ADMINISTRATIVE APPEALS CHAMBER
Appellant: BM
Respondents: Cheshire West and Chester Council and SSWP
Hearing at Harp House, London on 6 and 7 05 2009
Jan Luba QC, instructed by Essential Rights, Solicitors for the appellant
Stephen Knafler of counsel, instructed by the Solicitor to the Cheshire West and Chester Council, for the first respondent.
Brian Mulrennan of the Office of the Solicitor to the Department for Work and Pensions for the Secretary of State for Work and Pensions
DECISION
The appeal is allowed. For the reasons below, the decision of the tribunal is set aside. I refer the appeal to a new tribunal to decide the appeal again in accordance with the following directions.
Directions for new hearing
A The new hearing will be an oral hearing.
B This appeal is to be put before the district judge to consider any further case management directions necessary or expedient for that hearing.
C The new hearing may be before the judge who heard the first hearing or a different judge as the judge responsible for case management directions decides.
D I draw the attention of the district judge to the other appeals heard with this and also referred for rehearing.
REASONS FOR DECISION
- BM, the appellant in this appeal, is one of seven claimants appealing together to the Upper Tribunal about their entitlement to housing benefit. They do so with permission of the tribunal below. This appeal is the lead case for the appeals. This decision sets out the contentions of the parties and the decision of the tribunal on the disputed issues of law. Separate decisions are being issued for each of the other appeals to deal with factual differences
- The decision under appeal was made by Vale Royal Council on 22 11 2002. That Council has now been succeeded by Cheshire West and Chester Council. In this decision "the Council" refers to both as appropriate. The Council refused to accept an increase in the weekly eligible rent for BM's claim for housing benefit from £162.87 weekly to £294.18 weekly. Its decision was to allow an increase of 3.5 per cent only.
- The local tribunal in Chester handled the appeals carefully, and considered them at several successive hearings. The history is set out in that tribunal's full reasons and need not be repeated. Its decision in this appeal was given on 17 03 2008. It accepted on the evidence that the weekly increase asked for BM was unreasonably high. It then confirmed the decision of the Council to allow an increase of 3.5 per cent. It gave similar decisions in each of the other appeals. It granted permission to appeal in all of them.
- I issued a draft of my proposed decision and reasons to all parties after the hearing held in the Upper Tribunal. I am grateful to all parties for the corrections and other comments made, and have considered them in this decision.
The facts
- The key facts, based on a statement agreed by the parties, are as follows. BM was 59 when the Council took the decision under appeal. She had and has severe learning disabilities. She required and requires constant care throughout day and night. She was resident at the time at a property I shall call The Home in the Council's housing area. She had been resident at The Home for several years before the date of the decision. There were no plans for her to move at the time the decision under appeal was taken. So far as relevant, she did not move from The Home for several years after that decision.
- BM had an assured tenancy at The Home, occupying her own bedroom. The landlord was Alternative Housing ("AH"), a specialist housing association and registered charity, and therefore a not for profit organisation. The Home had three bedrooms, two separate toilets, a bathroom, two living rooms, a study, and a garden. BM's rent from 17 09 2001 was £303.64 weekly. This comprised of £162.87 core rent charges, £133.03 general counselling and support charges and £7.74 ineligible service charges. She claimed housing benefit on 18 09 2001. The decisions on that claim added up to an award of £295.90 payable weekly, the full amount claimed save for the ineligible charges.
- AH served notice on BM that her core rent and related payments were to be increased from 4 11 2002. The weekly core rent was increased from £162.87 to £294.18. The general counselling and support charges were increased from £133.03 to £680.32, and the ineligible service charges (that is, ineligible for housing benefit) from £7.74 to £8.84. The Council accepted the increase in the counselling and support charges, and was not concerned with the ineligible charges. Neither of those decisions is in issue here, save to note that the Council clearly considered the whole claim made. By separate decision the Council granted an increase in the weekly rent limited to £167.75. This was an increase of 3.5 per cent, as compared with the increase sought of 81 per cent.
- The Council took that decision under regulation 12(1)(a) of the Housing Benefit (General) Regulations 1987 ("the HB Regulations"). It compared the requested increases with those of two registered social landlords in the area, and with specific addresses within the property portfolios of those landlords. The agreed facts are that officers of the Council visited the comparator addresses in 2007, and visited The Home late in 2007. There was an interview report provided by care workers at one of the comparator addresses in 2005. I can see no evidence of any earlier visit.
- AH altered the rent payable by BM each year after 2002. Not all the alterations were increases. Those increases and decreases are not in issue in these appeals. They concern only the increases in 2002 and the decisions taken to limit the extent to which they were eligible for benefit.
Request for a witness summons
- The tribunal gave a direction to the parties before the decision that influenced the decision. It was a refusal to issue a witness summons at the request of those representing the Council directed to an officer in the Cheshire County Council department responsible for the supporting people programme. The officer had made a statement, and then declined to attend to give evidence on it. The tribunal chairman decided not to require the witness to attend.
- It is clear from the reasons given by the tribunal for its decision that it did not follow this through by excluding the officer's evidence. The tribunal set out in its statement the history of the request for, and refusal of, the witness summons. In its reasons it noted that, in particular, the chairman took into account that a witness summons issued under regulation 43 of the tribunal rules that then applied could not be enforced. That was a decision that the tribunal was entitled to make. Having done so, it should have followed through on the consequences. The outcome was that the draft evidence of the witness went untested by the appellant and the tribunal. Yet, at paragraph A 20 of the tribunal's statement it records that the Council relied on the statement. The tribunal went on to accept parts of the statement and made findings of fact based on them. That, in my view, is procedurally unfair. It prevented one party from making a proper challenge to statements that were said to be fact but it then allowed the other party to rely on them. That should not have been allowed to happen. If the witness summons was refused and no alternative steps taken to test the evidence, then the untested evidence to which objection was taken should have been excluded from the record save to the extent that the objecting party accepted it at the hearing.
- The position about the issue of witness summonses has now changed. Social security tribunals now derive their powers from the Tribunals, Courts and Enforcement Act 2007 and the Tribunal Procedure (Social Entitlement Chamber) Rules 2008. Rule 5(3) of those rules gives a tribunal the general power to require any person to provide documents, information, evidence, or submissions to the tribunal or a party. Rule 16 provides powers to require a person to attend as a witness. This rule is in the same form in the procedure rules for other chambers of the First-tier Tribunal. It was an accepted practice to issue such summonses in some of the tribunals now merged into the First-tier Tribunal. Further, where a witness made a statement to which a party objected, that party was entitled to ask the witness to attend for examination. The other change is that such summonses are now enforceable in a practical way. The Upper Tribunal now has the same powers, rights, privileges and authority as the High Court (and the Scottish and Northern Ireland courts) in relation to the attendance and examination of witnesses: section 25(1) and (2)(a) of the Tribunals, Courts and Enforcement Act 2007. That can clearly be used to enforce a witness summons.
The tribunal decision
- The tribunal divided its reasons into three sections. Section A was common to all the appellants in this and the liked appeals. This identified that the main issue as the application of regulation 12(1)(a) of the HB Regulations to each application. The burden of proof before the tribunal was on the Council. The tribunal then set out the arguments of both parties on the relevant law and reviewed the evidence before it.
- Section B set out evidence regarding each appellant. The tribunal identified from CH 2214 2003 what it considered the factors relevant in deciding BM's case. These were:
"- Whether the claimant would have to move if the rent increases were unreasonably high
- The quality of the accommodation
- The effect of the claimant having to move
- The length of time that the claimant has lived in the accommodation
- The age, state of health and social mobility of the claimant
- Whether there was adequate evidence of the level of increases in rent for suitable alternative accommodation."
It then made findings on the factors. The tribunal's findings on the last of these were:
"The alternative accommodation provided by [two named social housing providers] was clearly of good quality. Tenants have their own room in well maintained properties with 24 hour support.
In comparing the increase in rents the tribunal had regard to the figures provided by the Local Authority for rent increases in suitable alternative accommodation found in paragraph 21 of this document [a reference to section A of the decision] as compared with the level of increase in rent for The Home where the increase was 81%."
- The reference to paragraph 21 is to the following:
"[21] The Council relied on evidence from two local supported accommodation suppliers for adults with learning disabilities, [named], where the average rent increases were as follows (see evidence from Local Authority):
Year %
2002 2.2
2003 2.2
2004 3.3
2005 3.6
2006 3.2
2007 4.1"
- In section C the tribunal set out its conclusions. These were that the increase in weekly rent from 4 11 2002 was unreasonably high and that the tribunal accepted the comparator evidence produced as evidence of suitable alternative accommodation with rent increases significantly lower than that of The Home.
The law
- It is common ground that the decision in question was made, and made only, under the then form of regulation 12 of the HB Regulations as it applied to exempt properties such as The Home. Regulation 12 (and with it regulation 11) of the HB Regulations was repealed in its general form from 6 10 1997 by regulation 3(3) of the Housing Benefit and Council Tax Benefit (General) Amendment Regulations 1997, SI 1997 No 852. This was subject to the saving provision in regulation 4 of those regulations. It is common ground that that applies to BM and to the other appeals linked with her appeal. The same provision has now been carried forward into the Housing Benefit Regulations 2006 by regulation 13ZA of those regulations, as introduced by paragraphs 4 and 5 of Schedule 3 (transitional and savings provisions) to and regulation 6 of the Housing Benefit and Council Tax Benefit (Consequential Provisions) Regulations 2006, SI 2006 No 217. For the purposes of this decision, I refer to that provision as "the old regulation 12", and similarly to the version of regulation 11.
- It is also common ground that this regulation formed part of a legislative package with the old regulation 11. That dealt with restrictions on unreasonable payments, or levels of rent, while the old regulation 12 dealt with restrictions on rent increases. It was, however, a matter of dispute between the parties how far the two regulations should be read together. In particular, the old regulation 11 gives guidance on what is meant in that regulation by "suitable alternative accommodation". The old regulation 12 also makes use of that phrase but does not provide any definition. The parties did not agree on the extent to which the old regulation 11 definition could be used for the old regulation 12 decisions. Behind that disagreement was another, which is reflected in an ambiguity in the wording of the old regulation 12 on a different point. It is necessary to have the full text of the old regulation 11 in mind when considering the arguments about the scope of the decision to be made under the regulation 12. As both regulations have since been replaced, I set them both out in full in the appendix to this decision in the form they applied in 2002.
The appellant's submissions
- For BM, Mr Luba QC argued that the appeal raised two issues: (1) whether the key test in regulation 12 had been satisfied on the facts and (2) if it was, what deduction was to be made from the actual rent increases payable by BM.
- With regard to the regulation 12 test, he submitted that while the courts and tribunals had spent time looking at the issue of high rents, there was little consideration of the separate issue of high rent increases. The only decision of a commissioner was that in CH 2214 2003 on which both parties had therefore relied. He submitted that neither he, for BM, nor Mr Knafler, for the Council, had asserted that the tribunal misdirected itself in relying on that decision, but the written submissions of the Secretary of State had asked that this decision be reconsidered. In Mr Luba's view the question whether rent was "unreasonably high" was one of fact and there was no exhaustive mandatory statutory checklist of factors to be considered. The question before the tribunal on the appeal was: have the Council demonstrated that in November 2002 the Appellants' rent increases were unreasonably high having regard, in particular, to the level of increases for suitable alternative accommodation.
- To answer that question, he adopted the approach taken by the commentary in the CPAG's Housing Benefit and Council Tax Benefit Legislation (republished annually). This itself referred to the published guidance to local authorities from the Department for Work and Pensions on the operation of the provision.
- Paragraph 4.1310 of the Department for Work and Pensions Housing Benefit Guidance Manual gives the following guidance:
"Is the rent increase reasonable?
When deciding whether an increase is reasonable and the extent to which the eligible rent should be restricted, you should, for example, take into account:
- The level of rent increases locally for similar accommodation, and
Any improvements made to the accommodation which might justify an increase, even if the last increase had taken place less than 12 months before"
In argument, Mr Mulrennan accepted that the wording of this guidance could have been more focussed. I was also taken to new guidance published by the Department for Work and Pensions in Circular HB/CTB A22/2008. But this was published in November 2008, after this stage of this appeal had begun. I find no assistance in it.
- The comment on the old regulation 12 and this guidance in CPAG's Housing Benefit and Council Tax Benefit Legislation 2002/2003, at page 303, contains much broader criticism:
"This view can be criticised, however, in that the comparison under reg. 12(1)(a) is with the level of increase for suitable alternative accommodation, not accommodation in general. " suitable alternative" is not defined here but arguably it has a similar meaning to the old reg 11 as it is part of the same "code" of restrictive measures. It is submitted that, in considering the "level of increase" it is better to consider and compare the end figures involved rather than the percentage increase
"
Mr Luba QC suggested that this was correct, and accordingly did not agree with the submission for the Secretary of State.
- In Mr Luba's submission it followed that a decision under this provision required both a correct understanding of context and a correct comparison. In this case the context included the reasons why the landlords had served notice to increase the rent to the extent notified. The comparison was with the post-increase rents charged at that time in like-with-like accommodation. In establishing whether two properties were "like-with-like" the decision maker had to first identify the present accommodation situation of the claimant. Then there had to be identification of the rent payable in the comparators. On this Mr Luba QC agreed with the submission for the Secretary of State that the comparators had to be accommodation whose nature and facilities are suitable for the particular claimant and "the comparison should, where possible, be with comparable accommodation housing people with similar care needs."
- In making that comparison, there was little help in the HB Regulations. He agreed with the commissioner in CH 2214 2003 that the definition of "suitable alternative accommodation" in regulation 11 of the HB Regulations was concerned with restrictions on rent rather than restrictions on increases in rent and the list was not in any event definitive.
- Mr Luba QC contended that the Chester tribunal, having rightly identified the task it faced, then took the wrong approach to applying it to the question of comparisons. It had accepted the Council's case that the level of increases of rents locally levied by general housing associations provided a relevant comparator. That was not a like-with-like comparison. The comparators used were occupations by licence of housing association property with artificially suppressed rent increases. MB was a tenant under an assured tenancy from a private landlord levying a market rent.
- He drew attention to the finding of the tribunal in paragraph 21 of Section A of its reasons (set out above). Although it did not say so, it was a finding that the housing associations used as comparators had followed the guidelines laid down by the Housing Corporation in the statutory guidance it issued to housing associations under the Housing Act 1996. The regulatory code laid down by the Housing Corporation was in mandatory terms:
"Housing associations must set rents which move towards target social rents and are, on average, below those in the private sector for similar properties and which reflect size, property value and local earnings. (Code para. 3.1).
The Corporation supplemented this by guidance on rent increases. The guidance (in a series of circulars including 27/01, 30/01, 02/02 and more recently 05/05) set a formula for rent increases. It was:
1.005 x (RPI(B) RPI(A)) ± £2
In other words, a housing association was not allowed to change the rent it charged by more that £2 from a median figure that allowed an increase of 0.5 per cent more than the change in the Retail Prices Index in that year compared with the previous year.
- The tribunal had been provided by the appellants with this information. It had also been provided with information about the differences between the housing stock of housing associations and their approaches to rent pooling, and the position of the BM's landlords. The evidence provided by the Council had been limited to the comparator properties that were held under licenses. The tribunal had however taken the view (at section A paragraph 17 of its reasons) that "Regulation 12 relates only to the amount of rent increase during a benefit period. The security of tenure of the properties is not a relevant issue at this point." Mr Luba QC submitted that this was one of its errors in law on this issue. He also presented a detailed analysis of the tribunal decision to support his submission that, having correctly identified the other issues by which it should judge the comparability of the other properties, it had erred in law in its application of virtually all of them. I intend no discourtesy to Mr Luba QC in not repeating that detailed analysis, as I do not need to go further into the tribunal decision for the purposes of this decision.
Submissions for the Secretary of State
- For the Secretary of State, Mr Mulrennan responded in general terms before Mr Knafler responded in full. He made no submission on the individual aspects of the appeal. The Secretary of State did not wish to express any view on whether the tribunal had decided the appeal properly on the facts. The concern of the Secretary of State was with the legal test to be applied by the tribunal and how, in general terms, the test was applied.
- Mr Mulrennan emphasised that the forms of old regulations 11 and 12 that were relevant to this appeal were concerned with protecting the public purse against unreasonably high rents. They were anti-abuse regulations. This was accepted by the courts. See for example R v Housing Benefit Review Board for East Devon ex p Gibson (1993) 25 HLR 487, a decision of the Court of Appeal, where the Master of the Rolls, having noted that the Court was dealing with a procedure directed at mitigating the demand on public funds for unreasonably high rent, also inferred that the procedure was not designed to produce homelessness (page 493). He went on to accept from counsel for the Secretary of State:
"the Secretary of State's anxiety that the scheme should be efficaciously operated so as to ensure that public funds are not wastefully dissipated. The court recognises that as an entirely proper interest and recognises that, in any decision it may give, it must be very careful not to interpret the subordinate legislation in a way that would frustrate the intentions of the legislature or the Secretary of State's intention to which I have referred." (page 494).
The anti-abuse nature of the provisions was also recognised by Collins J in R v Coventry City Council ex p Morgan, 7 July 1995, Crown Office list, unreported.
- Mr Mulrennan specifically addressed the extent to which old regulation 11 and old regulation 12 could be read together. He submitted that while there was common ground between old regulation 11 and old regulation12, they were not to be viewed as overlapping regulations. The emphasis in old regulation 12 was on a rent increase that was unreasonably high. The focus was on the increase, while old regulation 11 was focussed on the level of rents. The factors relevant to a decision under that regulation were not the same as those relevant to an old regulation 11 decision. He agreed with Mr Luba QC that the only authority on these regulations was that in CH 2214 2003. But he submitted that the decision, in listing factors to be taken into account in deciding for old regulation 11 on suitable alternative accommodation, introduced factors that were not relevant to, or were of limited importance to, old regulation 12. Some factors relevant to rent level were not relevant to the level of an increase. One for example was security of tenure. This was too remote to the issue of an increase in rent. To that extent, he submitted that reliance on the factors in CH 2214 2003 was going beyond the scope of old regulation 12.
Submissions for the Council
- Mr Knafler agreed with Mr Luba QC that the test to be applied was that in old regulation 12 of the HB Regulations in the form it stood at the time of the original decision. That regulation had to be read with old regulation 11 of those regulations in the context of their history. A new version of regulation 11 was introduced in 1996. It introduced more stringent conditions on the levels of housing benefit payable. As a result, it was no longer necessary to retain the former regulation 12, restricting rent increases. But the previous version of old regulation 11 was maintained for those in exempt accommodation. So it was necessary to maintain the old form of regulation 12 also. The appellants were in exempt accommodation, so both regulations applied to them in the old form.
- Mr Knafler agreed with the Secretary of State that the old form of regulation 12 was therefore maintained in place to stop the abuse of the housing benefit system through increases in rents. More specifically, its purpose was to limit the increases to cost of living increases while allowing increases that had specific and adequate justifications.
- Turning to MB's appeal, Mr Knafler did not agree that this case was one where the landlord had charged a rent that was artificially low and was being increased simply to bring the rents up to the going rate. That was not established on the evidence and had not been put in issue before the tribunal. On the issue of the relevance of general rents to evaluating a specific increase, the Council's position was that it could be lawful to take into account overall rent levels for suitable alternative accommodation if the point was put in issue and accompanied by persuasive evidence. On that basis, the Council had taken the view both that the increase was unreasonable but also that a percentage increase above that of the comparators was reasonable.
- The Chester tribunal only erred in law in applying the test if it made a material error of law, as set out in R(I) 2/ 06. Here the tribunal had to make a judgment on whether a specific rent level was unreasonably high. It could only be criticised in making that judgment if it exceeded the well known Wednesbury limits, as restated by Lord Brightman in R v Hillingdon LBC ex parte Pulhofer [1986] 1 AC 484, 518:
"... where the existence or non-existence of a fact is left to the judgment and discretion of a public body and that fact involves a broad spectrum ranging from the obvious to the debatable to the just conceivable, it is the duty of the court to leave the decision of that fact to the public body to whom Parliament has entrusted the decision-making power save in a case where it is obvious that the public body, consciously or unconsciously, are acting perversely."
- Mr Knafler contended that the Council had considered the reasonableness of the rent increase properly and had then put its case to the tribunal on the evidence. The examples of suitable alternative accommodation put to the tribunal were properly chosen examples and were within the comparison made by the tribunal. The tribunal could only be criticised in accepting that comparison by reference to Wednesbury unreasonableness. It was for a local authority to establish a comparator before the tribunal and the burden of proof was on it to do so. Once that had been done the evidential burden shifted to the appellant. Here the evidence was of appropriate comparators and rent increases that were much lower.
- With regard to factors to be taken into account by the tribunal in making the comparison, Mr Knafler submitted that old regulations 11 and 12 were not to be read together. Old regulation 12 left it to decision makers to exercise judgment. There was no lexicon of factors by which that judgment had to be made. He took this tribunal to the detail of the Chester tribunal decision, submitting that it made no mistake of a kind that took its decision outside the allowed range of considerations open to a decision maker deciding this question.
How should old regulation 12 be interpreted?
- This appeal reveals significant difficulties in determining precisely what the relevant legislation required the Council to do with BM's application. The strong arguments of the three parties in this appeal confirm that the relevant wording in old regulation 12 is fundamentally ambiguous and that the official guidance to local authorities is accepted to be lacking in clarity. The main commentary on the regulation and guidance in the standard work on this legislation suggests more broadly that the latter misinterprets the former. There is only one decision of the courts and tribunals that approaches the topic, CH 2214 2003. The three parties are divided about both its relevance and its authority. BM's appeal, and the linked appeals, all make these issues of direct relevance to their resolution.
- Old regulation 12(1) applies where "a claimant's eligible rent is increased during a benefit period." It is common ground that this applies to BM. Both respondents emphasised that this was a special provision dealing with in-period increases, while an increase at the end of a period and the beginning of the next period was for separate consideration. The old regulation 12(1) is not a provision about increases generally.
- Within the scope of the regulation were different provisions for a first increase and a further increase or increases within 12 months of the previous increase. It was common ground that this application was about a first increase.
- The regulation applies to such increases in two situations. The first is where a rent officer has made a determination. The other applies "otherwise". This appeal is an "otherwise" appeal arising where a rent officer's decision is not relevant. It is for consideration whether a decision made in an "otherwise" case can take into account as comparators decisions that do involve rent officer determinations.
- The regulation requires that the relevant authority, when considering such an increase, must consider whether:
"the increase is unreasonably high".
In so doing it must have regard in particular to:
"the level of increases for suitable alternative accommodation".
- If it considers that an increase is unreasonably high, then it is required either to ignore it (that is, to take away the full amount of the increase) or reduce the amount. I consider the consequences below.
"the level of increases"
- It was clear from the presentation of the parties that there is a conceptual, or perhaps an arithmetical, ambiguity behind the test of whether a rent increase is "unreasonably high" having regard in part to "the level of increases" elsewhere. The Secretary of State, in particular, pressed the case for "the level of increases" to be interpreted as a reference to percentage increases. This was the main approach adopted by the Council in these appeals. It appears to have been the main approach taken by the tribunal. In other words, the level is to be judged purely in percentage terms, not absolute terms. By contrast, Mr Luba QC viewed the matter in terms of specific sums. The level is to be judged by the actual amount of additional rent in cash terms. The wording of regulation 12 does not provide any immediate assistance on this point.
- Behind this ambiguity is an issue that Mr Luba QC expressly addressed as relevant but Mr Mulrennan played down. If the increase is to be viewed only as a percentage then the actual cash amount of increase is, strictly, not relevant. The resulting amount of a percentage increase will always reflect, and reflect only, the base rent that is to be increased by that percentage. If the increase is to be viewed as the actual amount of the increase, then attention must be paid to the base rent before the increase and the resulting rent after the increase. While it makes sense to say that "50 per cent is an unreasonably high increase", because there is an inbuilt comparison latent in the language used, it does not make sense to say that "£50 is an unreasonably high increase" unless it is compared with something.
- I test this by an example. Assume that A charges a weekly rent of £1000 while B charges a weekly rent of £100 for similar accommodation. If an increase is to be judged by percentage alone, it would be reasonable to allow A to increase the rent by the same percentage as B. If B increased the rent by £20, this would be a 20% increase. Is it then reasonable to allow A to increase the rent by £200? In practice, the example is more likely to occur the other way round. Say that A increases the rent by only 3%. The argument would be that B could only do the same. This leaves B with an increase of £3 while A has an increase of £30. In percentage terms, that is the same level of increase.
- The other approach looks to additional amounts charged, not percentages. Let us say that A increases the weekly rent from £1000 to £1050. Is it unreasonable for B to increase the rent charged from £100 to £150? Does that seem "unreasonably high"? In quantitative terms, that is the same level of increase.
- I put a variation of this point to Mr Mulrennan as I understood him to be arguing for a percentage-only approach to interpretation. I did so because the written submission for the Secretary of State was ambiguous on this point. His response was that if there were particular factors to be considered, and these were shown on the evidence, then the decision maker would consider a higher percentage to be reasonable. I take his argument then to be that the percentage is the starting point, and only the starting point. If that is so, then his argument appears to rest on deploying both possible interpretations of the means of measuring the increase.
- If attention is paid to the cash amount of the increase, and not to the percentage, how is an increase to be adjudged as reasonable or unreasonable? Mr Luba QC contended that this was by looking at comparator rents. To use my example, if a comparison was made between A and B, then it could be reasonable to allow B to increase the rent by a larger sum than A because at the end of the exercise of increasing rents, the two rents would be more comparable than before. That would make the percentage increase by B sharply higher than the percentage increase by A. In his view, if the increase in question was not too far out of line with the comparators at the end of the exercise, then the amount of increase was not unreasonable regardless of the percentages. To feed that into my example, let us say that B decides to increase the rent from £100 to £200, while A is content not to raise the rent. The result is that the rents charged by A and B are more comparable than before, while A's increase is 0 per cent and that of B is 100 per cent. But that of B is reasonable because it is justified by the end position.
- In the light of these examples, should reasonableness of the "level" be measured in terms of a percentage increase from the base rent, or in terms of a cash increase as it merges into the resulting rent? I can see nothing in the language of regulations 11 and 12, and no authority, pointing to one interpretation as compared with the other. I find no assistance in the arguments that regulation 12 is an anti-abuse provision. It provides a control over rent increases on either interpretation. In particular, I see nothing that expressly requires or implies that the reasonableness of the increase, or any part of it, is to be measured merely as a percentage of the base rent. While the Commissioner in CH 2214 2003 refers to the percentage increase and the cash increase, I see nothing in that decision that suggests that the Commissioner took, or was asked to take, any view on this issue.
- This is therefore a new point. I take the view that the regulation must be interpreted as involving consideration of both aspects of any application. In other words, it is not enough to consider the increase simply as a percentage increase from the base rent (the rent before the increase is applied, taken in isolation from any other information). It must also be considered as a cash sum and compared for reasonableness to the equivalent weekly or other rents payable, after the increase, in comparator accommodation. I take that view in particular because the power in regulation 12 is a power to control individual rent increases given to local authorities and, on appeal, to local tribunals. It is a power to stop individual abusive claims. It is not a power to set a national guide figure for rent increases, such as that given to the former Housing Corporation. This interpretation is, in my view, supported by the consideration that this is an exception to the general rule that rent increases are eligible for housing benefit increases. The effect of a regulation 12 decision is to face a tenant or licensee with a shortfall in benefit as compared with rent. It is taking away resources from those who already have limited resources. Such a power is not to be interpreted too liberally.
- I do not accept the primary thrust of the argument for the Secretary of State as put in argument to me or in the guidance to local authorities. That suggests that unless there is some specific factor such as improvement to the individual property within the relevant period, then the comparison of reasonableness is with the percentage increases in equivalent accommodation but without regard either to the base rents or the resulting rents in the comparator accommodation.
The relevant factors to identify comparators
- It follows from that interpretation that the identification of what is reasonable by reference to what is "suitable alternative accommodation" must have in mind not only the increases applied in those comparators but also the base rents from which those increases are applied and the resulting rents after they are applied in those comparators.
- For that reason, the factors responsible for producing the base and resulting rents are relevant to any comparison under the old regulation 12 as well as under the old regulation 11. Clearly, the stress in the old regulation 12 is on the increase rather than the rent by itself, but that does not suggest that any important factor relevant to setting the level of rents in a comparator can be ignored when making the comparison. That is, in my view, the basis on which the arguments as to the relevance of CH 2214 2003 are to be examined. I agree in that context with the comments of the Commissioner at paragraph 17 of that decision:
"I am happy to accept that similar considerations must be taken into account in deciding what is suitable alternative accommodation for the purposes of regulation 12, as suggested by Mr Cox, but that does not take the matter very far. This is because even within regulation 11 these are not definitive but are matters (and not necessarily the only matters) to be taken into account, because it might be thought that these matters are obviously to be taken into account even without this being specified in the regulations, and because what I am no concerned with is only the increase in rent rather than the amount of the rent itself."
- The Secretary of State criticised the list of factors identified by the Commissioner to carry out this exercise in that decision. And Mr Mulrennan criticised the use in the tribunal decision under appeal of that list. I do not repeat the relevant part of CCH 2214 2003 because I agree with the Secretary of State that the list is specific to the decision. CH 2214 2003 is in my view an "own facts" decision. The error is not, with respect, in the guidance by the Commissioner to the tribunal in that case about the relevant factors but in an attempt to take that list and apply it generally. As the Commissioner emphasised, the list is of items that may be taken into account, depending on the facts of a particular application, rather than of factors that must be taken into account in all applications of old regulation 12. It may be a useful starting point in this case but it is no more than that. For that reason, I resist both the temptation to add another list of factors myself and to pick through the list used by this tribunal. But I do not agree with the Secretary of State that those factors, or any of them, can be identified as irrelevant as a matter of law. In particular, I disagree with his view that the nature of the legal relationship between the occupant and the landlord of the property in question and in comparator properties is always irrelevant.
- On this I agree with Mr Luba QC to the extent that its relevance cannot be excluded as a matter of law. I conclude that the tribunal below erred in law when it said, in paragraph A 17 of its statement of reasons that "the security of tenure of the properties is not a relevant issue" for regulation 12 and it therefore did not consider the point. It may, of course, be of limited weight in a particular case, but that is a different matter.
"the increase that is reasonable"
- If a tribunal decides that the requested increase is unreasonable, then it must go on to take a second decision. It must decide, in the words of old regulation 12(1):
"if it considers that a lesser increase is reasonable in all the circumstances".
If it does, then it must identify the lesser increase and reduce the allowable increase to that amount. In this case the Council considered that an amount that equalled 3.5 per cent was reasonable. But it did not explain to the tribunal in any detail why it decided that, and the tribunal did not consider it. The tribunal simply endorsed the decision although it had considered with some care whether the originally requested increase was reasonable.
- The levels of increase at identified suitable alternative accommodation has importance here. The tribunal must consider, judged by the comparators it has already considered, what rent increase is reasonable. And, as for any judicial decision, it must state why. This poses a difficult issue for a tribunal, to which no consideration has been given in CH 2214 2003 or in the guidance or commentary referred to above. The regulation requires a local authority, and on appeal a tribunal, to take its own view not only about whether a particular rent increase is unreasonable but also on the considerably more difficult and judgmental question of what is be reasonable.
- The difficulty can be illustrated by the way in which the Council formed its view in this case. It interviewed officers and it visited both the premises for which the increase was sought and the premises used as comparators. If a tribunal is to take its own decision as thoroughly as the Council, then it has to consider what evidence it needs to make the comparisons. It has an inquisitorial jurisdiction, so does not have to accept only the evidence put before it by the parties. There is of course a difficulty in that an appellant will have limited power to provide comparators. So the tribunal may have to look to the local authority for any further evidence it needs. It now has the powers to do that.
- In this case the tribunal failed to confront any of these problems. There is no specific consideration given to, nor are specific findings made about, the decision about the actual increase allowed. The tribunal, having decided that the rent increase claimed was unreasonably high, concluded that "the weekly increase for housing benefit purposes is restricted from 4 11 2002 to 3.5%" (decision notice). The only relevant comment, at the end of the relevant paragraph in section C of its statement of reasons is: "There was clear evidence that the increase in rents was significantly lower [at the comparators] than the increase in rents for the properties in issue owned by AH."
My conclusions
- On the main issue that the tribunal did decide, I see much weight in the argument put by Mr Knafler for the Council that the decision that the increase requested was unreasonably high is a question of fact of such a nature that it should not readily be subject to interference on appeal. That argument is sustainable without the adoption of the more restrictive approach to the interpretation of regulation 12(1) adopted by the Secretary of State. Indeed, Mr Knafler was careful to distance himself from certain aspects of the argument for the Secretary of State while maintaining that in this case the Council and tribunal did not err in law. It was open to argument that the tribunal's decision could stand on the facts even if it did not deal with the arguments about percentages rather than cash amounts.
- Even were I to agree fully with Mr Knafler on the primary decision made by the tribunal, I do not accept that its secondary decision that the allowable increase was to be limited to 3.5 per cent can be sustained. I have already noted that there is nothing in the tribunal's decision or reasons that suggest that it considered the Council's decision to apply a 3.5 per cent increase. The only explanation by the Council (in the decision letter of 22 11 2002) is that:
"I therefore intend to allow an increase in core rent that is consistent with the general level of rents. The increase will be set at 3.5%".
Why? The evidence recorded in paragraph 21 of the tribunal's decision does not suggest that figure. What else did the Council take into account in setting that figure? The tribunal was not informed of the Council's reasons beyond the statement above, and did not consider the matter in any detail. I considered briefly if I could allow the first decision of the tribunal to stand, and set aside only the second decision. But I do not consider that the reasoning of the tribunal is severable in that way and no party asked me to take that course of action. I conclude that the whole decision must be set aside, and the matter considered entirely anew.
- I do not therefore need to deal in more detail with others of the points made by Mr Luba QC in his searching analysis of the tribunal decision. I have drawn attention above to the way the tribunal handled the witness evidence, and to its view that the tenure of the occupants of what was contended to be suitable alternative accommodation was irrelevant.
- One other aspect of the tribunal's decision warrants further consideration. It is the way in which the tribunal handled the evidence by reference to the date on which the original decision was made. The decisions in question in this appeal and the linked appeals were made in 2002 about rent increases from 4 11 2002. Schedule 7, paragraph 6(9)(b) to the Child Support, Pensions and Social Security Act 2000 requires that:
"in deciding an appeal
an appeal tribunal:
(b) shall not take into account any circumstances not obtaining at the time when the decision appealed against was made."
- At several points in its analysis the tribunal appears to have put weight on evidence that postdates that decision. In [15] above I set out the tribunal's paragraph 21, which lists percentage rises for several years. Most were irrelevant to the decision before it and could not have been known when the Council took its decision. Nor do the later figures provide any assistance save for those like Mr Luba QC using them to identify their sources. Equally, I am puzzled how the Council and the tribunal both felt they could rely on evidence of inspections in 2007 to show why a decision taken in 2002 was by reference to valid comparators. If the property itself and the comparators were not inspected until several years after the comparison was made, of what relevance were the inspections? The question is whether, at the time the Council identified them, they were valid comparators in that they were suitable alternative accommodation. That can be judged only by the evidence available of the circumstances at that time. On the same reasoning, the length of time that BM remained at The Home after that decision is not relevant save in so far as it could be foreseen at the time of the original decision. Any consideration of that issue can be judged only by the professional opinions at that time of whether she could be moved.
- I therefore allow this appeal.
- I was asked by Mr Luba QC to replace the decision of the tribunal with the decision it should have taken. I do not consider that I can or should do that, notwithstanding that it is now many years since the original decision was made. I am not prepared to say on the material before me that the tribunal was wrong in concluding on the facts that the amount claimed by BM was unreasonably high. The amount claimed, whether viewed as a percentage or as an actual amount, was a large amount when compared with the base rent. And I have little useful evidence before me on which to make comparisons between the properties in 2002. At the same time I have expressed reservations about the evidence used by the tribunal below. I cannot take that decision as an abstract decision on the evidence in the papers or simply by reference to all the findings of fact made by that tribunal. And I am not prepared to take it on the basis of the burden of proof only. This sort of decision is of its essence the kind of decision to be taken by a fact-finding tribunal.
- The decision must therefore be referred to the First-tier Tribunal to remake the decision under appeal. In response to a submission from the Council, I record that I see no reason why the judge who decided the decision under appeal should not take the new hearing. There may be advantages to all sides in that, given the complexity of the appeals. I leave that for the judges locally to decide when making case management directions for this and the linked appeals. These appeals probably require further case management before the new hearing. I was asked to make further directions for that hearing. This should be done by the local tribunal judge and I refer the issue to that judge.
Guidance to the tribunal in remaking the decision
- I was also asked by the appellant and the Council to give further guidance to the tribunal in particular on the subject of suitable alternative accommodation for the new hearing. I accept that this appeal, and the linked appeals, are of considerable importance to the parties but are not now easy decisions for a tribunal. I add the following summary of the points made above with additional comments. I caution that these comments relate to this appeal and the linked appeals and are not intended to be general guidance, just as I have commented that CH 2214 2003 is to be read as comment and guidance on that appeal.
- The starting point must be that the tribunal consider the situation as at the date of the original decision, 22 November 2002, in respect of a rent increase notified for 4 November 2002 (see [7], [8] above). The tribunal should not be led into considering rent rises or other evidence with regard to the circumstances at any later date unless it is satisfied on all the evidence that there has been no change of circumstances between that date and the date of the evidence. In my view a later change of rent level is itself a change of circumstances, so is irrelevant in law to the decision that this tribunal must take. For that reason, the tribunal must consider what is, and what is not, relevant evidence. It must then exclude irrelevant evidence. It may wish to consider what other evidence it should invite or direct from the parties and whether it is useful to it to hear witnesses. I have commented at [12] on the powers now available to the tribunal with regard to evidence.
- The key question is whether, on relevant evidence, the rent increase is or is not within the old regulation 12 test of "unreasonably high". See [42] and the discussion at [44] to [52]. The tribunal may start with looking at what evidence the Council took into account on 22 November 2002. The difficulty is that the Council could not have taken into account much of the material that is now in the papers. It simply did not exist then. But it is now for the tribunal to take the decision again and not to confine itself to considering the reasonableness of the Councils' decision at that time.
- The tribunal must consider evidence available to it (if there is any) of suitable alternative accommodation at that time. That is an issue to which it should have particular regard; it is not definitive. The tribunal may reach a conclusion about whether the rent is unreasonably high even if there is no information about comparators, provided it does so as a judicial exercise, having asked for evidence and identifying its reasons. It is not required to decide anything more that what was probably the case in November 2002 on the evidence available when it decides the appeal.
- If the tribunal finds that the actual rise requested was unreasonably high, then it must decide what was reasonable. That is at the best of times a difficult decision for a tribunal. It involves a qualitative decision of a kind not usually made by tribunals. And it involves looking at evidence about comparators that appellants cannot reasonably be expected to supply. I do not underestimate the additional difficulties for this tribunal. This is in part because there is nothing currently in the appeal papers to indicate why the Council reached the decision it did in November 2002 about a rise of 3.5 per cent. It may be that the Council, which is not the same council as the council that took the decision under appeal, is unable to explain that decision now through no fault of its own. In any event, it is the duty of the tribunal to take the decision itself on the evidence available to it of the circumstances when the original decision was taken. This will include the explanation for the rise given by AH, viewed historically and not prospectively. It will include any evidence of rises at suitable alternative accommodation.
- The parties disagreed about the "suitable" test and I have commented on that at [53] to [56]. In the particular context of this appeal, the real difficulty for the new tribunal may be in the existence of any proper evidence of comparators in November 2002. It may help the tribunal if it takes an approach of seeking to identify what are closer comparators as compared with less close comparators. This is because, in my view, consideration of what is suitable alternative accommodation in the context of a particular appeal will not usually result in a definitive list of "suitable" and "unsuitable" properties in some absolute sense but a list which in reality is of "more suitable" and "less suitable" properties as well as a list of accommodation that is unsuitable. In looking at this, the tribunal must focus on the issue for it to decide, namely a reasonable level for a rent rise by reference to both of the base rent and the actual and relative amount of increase proposed as considered against any relevant comparators. It may find on the evidence that there is an interaction between the extent to which other accommodation is suitable and those base rents and levels of increase. The question of the tenure of accommodation may be part of this, with rises in some forms of tenure being limited more than rises in other forms of tenure. If it has no "close" comparators, then it must judge how far other comparisons are of value to it. That is a question to be decided on the available evidence, not in the abstract. In the final analysis the tribunal must decide the question even if there is no evidence before it of comparators.
- As just noted, one issue is that of tenure, or lack of it. That may assist the tribunal in identifying the closeness of a comparator. That is essentially a question of fact. The tribunal may reflect, for example, on how far the difference in the form of tenure is relevant both to the issue of suitability and the issue of the amount of a rent rise that is reasonable. It may consider, if there is relevant evidence, whether the rent or licence payment at comparators may have risen more if they were not constrained by external limits that do not constrain AH. Or it may consider, again if there is evidence, that the constraints themselves are relevant guides to what is a reasonable increase for the appellant's accommodation.
APPENDIX:
Extracts from regulations 11 and 12 of the Housing Benefit (General) Regulations 1987 as maintained in force from 2 2 2001 to 5 3 2006:
11 Restrictions on unreasonable payments
(1) Where a rent is registered in respect of a dwelling under Part IV or V of the Rent Act 1977 or Part IV or V of the Rent (Scotland) Act 194 and the rent recoverable from a claimant is limited to the rent so registered, his eligible rent determined in accordance with regulation 10 (rent) shall not exceed the rent so recovered.
(1A) Where a rent has been determined by a rent assessment committee in respect of a dwelling under Part 1 of the Housing Act 1988 or Part 2 of the Housing 9Scotland) Act 1988, the claimant's eligible rent determined in accordance with regulation 10 shall not exceed the rent determined by the committee during the twelve months beginning with the first day on which that determination had effect.
(2) The relevant authority shall consider
(a)
(b)
(c) whether by reference to a determination or re-determination made by a rent officer in exercise of a function conferred on him
or otherwise, whether the rent payable for his dwelling is unreasonably high by comparison with the rent payable in respect of suitable alternative accommodation elsewhere, and, where it appears to the authority that
the rent is unreasonably high, the authority shall, subject of paragraphs (3) to (4), treat the claimant's eligible rent as reduced by such amount as it considers appropriate having in particular to the cost of suitable alternative accommodation elsewhere and the claimant's maximum housing benefit shall be calculated by reference to the eligible rent as so reduced.
(3) (5) [not relevant]
(6) For the purposes of this regulation
(a) in deciding what is suitable alternative accommodation, the relevant authority shall take account of the nature of the alternative accommodation and the facilities provided having regard to the age and state of health of all the persons to whom paragraph (7) applies and, in particular, where a claimant's present dwelling is occupied with security of tenure, accommodation shall not be treated as suitable alternative accommodation unless that accommodation will be occupied on terms that will afford security of tenure reasonably equivalent to that presently enjoyed by the claimant
(7) This paragraph applies to the following persons
(a) the claimant;
(b) any member of his family;
(c) [applies to polygamous marriages]
(d) [applies to certain relatives of the claimant or partner] .
(8) [not relevant]
12 Restrictions on rent increases
(1) Subject to paragraphs (2) and paragraph (2A), where a claimant's eligible rent is increased during a benefit period, the relevant authority shall, if it considers whether by reference to a determination made by a rent officer in exercise of a function conferred on him by an order under section 1212 of the Housing Act 1988 or, as the case may be, section 70 of the Housing (Scotland) Act 1988, or otherwise either
(a) that the increase is unreasonably high having regard in particular to the level of increases for suitable alternative accommodation, or
(b) in the case of an increase which takes place less than 12 months after the date of the previous increase, that the increase is unreasonable having regard to the length of time since that previous increase, treat the eligible rent as reduced either by the full amount of the increase or, if it considers that a letter increase was reasonable in all the circumstances, by the difference between the full amount of the increase and the increase that is reasonably having regard in particular to the level of increases for suitable alternative accommodation, and the claimant's maximum housing benefit shall be calculated by reference to the eligible rent as so reduced.
(2) [not relevant]
(2A) This regulation shall not apply to any increase in a claimant's eligible rent in respect of those service charges specified in the exceptions provided in subparagraphs (a)(iv)(cc), (c) or (f) of paragraph 1 in Schedule 1 (ineligible service charges) and Schedule 1B (service charges for claimants in supported accommodation).
(3) [not relevant]
David Williams
Judge of the Upper Tribunal
19 08 2009
[Signed on the original on the date stated]
