Upper Tribunal (Administrative Appeals Chamber)

IN THE UPPER TRIBUNAL File No: CH 2297/09

Administrative Appeals Chamber

18 February 2010

 

TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007

SOCIAL SECURITY ACTS 1992-2000

 

APPEAL FROM DECISION OF FIRST-TIER TRIBUNAL

 

Appellant: [the claimant]

Respondent: Hounslow LBC

First-tier Tribunal: Hounslow

Tribunal case ref: 173/08/00725

Tribunal date: 20 March 2009 (reasons issued 20.05.09)

 

DECISION OF THE UPPER TRIBUNAL

 

The claimant’s appeal is allowed. The first-tier tribunal’s decision is set aside as erroneous in law and replaced with this decision under section 12(2)(b)(ii) of the Tribunals, Courts and Enforcement Act 2007, that the claimant’s original appeal to the tribunal against the respondent authority’s decision of 16 April 2007 is allowed and that decision revised as follows.

 

1. References in this decision to benefit being “overpaid” to the claimant include the crediting of amounts of Housing Benefit to her rent account and the allowance of excess benefit to her Council Tax account as well as any actual payment.
2. For the week commencing 23 May 2005 there was no overpayment of either Housing Benefit or Council Tax Benefit to the claimant.
3. For the weeks commencing 30 May 2005 down to and including 16 April 2007 (HB) or 31 March 2007 (CTB) the claimant was overpaid totals of £9833.86 Housing Benefit and £2434.55 Council Tax Benefit in excess of her true entitlement, made up as shown in the table at page 252 of the apppeal file.
4. Those totals comprised (a) amounts overpaid because figures taken into account from time to time in the benefit calculations for her husband’s earnings had been too low; plus (b) further amounts overpaid because figures so taken into account for child tax credits received by her husband had also been too low.
5. Of those overpaid amounts,

(1)  none actually paid, credited or allowed to the claimant after 25 February 2007 is legally recoverable from her under sections 75 and 76 of the Social Security Administration Act 1992, on the basis of the first-tier tribunal’s findings to that effect which the authority has not sought to dispute in this appeal; and subject to that

(2)  all those due to the child tax credit figures being too low are recoverable;

(3)  of those due to the earnings figures being too low

(a) all actually paid, credited or allowed to the claimant during the period from 30 May 2005 to 23 November 2005 inclusive are recoverable;

(b) those actually paid, credited or allowed to the claimant during the period from 24 November 2005 to 25 February 2007 inclusive are not recoverable, except for those attributable to the increase in the husband’s basic weekly earnings from £384 to £404 on 1 May 2006 and the annual bonus he received on 16 December 2006 which are both recoverable.

6. The case is remitted to the authority to recalculate and notify to the claimant as soon as possible the reduced amount of the overpayments remaining recoverable from her and each side is to be at liberty to apply within one month of the date of issue of this decision for any clarification or supplementary directions needed.

 

 

REASONS

 

Mr P L Howell QC:

 

Introduction

1. This appeal for which leave was granted by another judge is by the claimant against the decision of the first-tier tribunal at Hounslow on 20 March 2009 (Mr P Quinn, first-tier judge, sitting alone) that for the purpose of deciding whether overpayments of housing and council tax benefit were legally recoverable from the claimant by the respondent authority (“the council”) it was not necessary to differentiate within the overall total between amounts that had been overpaid for different reasons, so that she could be liable to repay the whole as a person who had “contributed to the overpayment” even if only responsible for a minor part of the total amounts overpaid, and though much larger amounts within it had been overpaid due to quite separate mistakes made by the council itself in the calculation.

2. I have had the benefit of short though well focused written submissions on both sides, on behalf of the claimant from Ms A Harris of the council’s own welfare advice unit (it is in the best tradition of our public services that an authority provides officers to help people argue against its own decisions) and on behalf of the council itself from Mr P Patel of its revenue department who also represented it before the tribunal below. Having considered them I have concluded that Ms Harris’ arguments are to be preferred and the first-tier judge did misdirect himself on the point of law at issue here, with the result that his decision has to be set aside and the case redetermined.

The facts in outline

3. I will first deal with the point of law as it is a fairly self-contained one, and for the present only the barest outline of the facts will suffice. The claimant, a tenant of the council, was awarded housing and council tax benefit from 23 May 2005. At that time her husband’s earnings were reduced because he was off work and only getting sick pay and her entitlement was calculated on that basis. Shortly afterwards he went to a new job at increased earnings but she did not report this immediately. When she did do so, people working for the council first mislaid or overlooked the payslips she supplied and then several months later entered his earnings details incorrectly, as if they were monthly rather than weekly, with the result that the computer divided them by 4.33, and issued benefit reassessment awards that were correspondingly too high. The mistake went undetected by anyone and she went on being overpaid benefit on the same incorrect basis until the following year. In the meantime she had also failed to report that her husband had begun receiving increased child tax credit payments from 11 August 2005, and a modest pay rise from the start of his second year in the new job on 1 May 2006, which meant that further amounts of the housing and council tax benefits she had been receiving were in fact overpayments. In April 2007 the claim was finally reassessed correctly from the beginning and the total amounts found to have been overpaid from all these causes came to £9833.86 for housing benefit and £2434.55 for council tax benefit.

4. The council claimed to recover the whole of those amounts back from the claimant without differentiation. It acknowledged that there had been a mistake in its own calculations but determined that the totals overpaid were still legally recoverable from her under sections 75-76 Social Security Administration Act 1992 and the relevant regulations. The claimant appealed to the tribunal which substantially upheld the council’s decision though for not entirely the same reasons.

The issue of law

5. As in paragraph 1 of the formal decision above, references throughout this judgment to benefit being “overpaid” to the claimant include the crediting of amounts of housing benefit to her rent account and the allowance of excess benefit to her council tax account as well as any actual payment. In fact as one of the council’s own tenants I do not think she will have received any actual payment at all, though the crediting of an amount of housing benefit to her rent account will have achieved the same effect as it discharges pro tanto her liability for the rent (cf. section 134(2) Social Security Administration Act 1992): thereafter if the credit given was too much, it can only be recovered via the statutory overpayment provisions, not by recreating the rent liability retrospectively. Similarly, excess council tax benefit allowed to her council tax account can only be taken away again in accordance with the recovery scheme under section 76.

6. The basic rule for each benefit is that all overpayments however caused are automatically recoverable regardless of any question of fault, unless they fall within the strictly limited exception for amounts of housing benefit overpaid, or excess council tax benefit allowed, in certain cases of “official error”. Whether a particular overpaid amount falls within the general rule or the exception depends on regulations 99-100 of the Housing Benefit Regulations 2006 SI No 213 for housing benefit, and regulations 82-83 of the Council Tax Benefit Regulations 2006 SI No 215 for council tax benefit. For this purpose the effect of the two sets of provisions is similar so to avoid repetition I will refer only to those for housing benefit which so far as material are as follows:

“PART 13 - Overpayments

Meaning of overpayment.

99. In this Part, “overpayment” means any amount which has been overpaid by way of housing benefit and to which there was no entitlement under these Regulations (whether on the initial decision or as subsequently revised or superseded or further revised or superseded) ...

Recoverable overpayments

100. - (1) Any overpayment, except one to which paragraph (2) applies, shall be recoverable.

(2) … this paragraph applies to an overpayment which arose in consequence of an official error where the claimant ... could not, at the time of receipt of the payment or of any notice relating to that payment, reasonably have been expected to realise that it was an overpayment.

(3) In paragraph (2), “overpayment which arose in consequence of an official error” means an overpayment caused by a mistake made whether in the form of an act or omission by:

(a) the relevant authority;

(b) an officer or person acting for that authority;

(c) an officer of the Department for Work and Pensions ...

where the claimant ... did not cause or materially contribute to that mistake, act or omission.”

7. The terms of the regulation thus require that for an amount overpaid to get within the exception, there are four aspects of the facts that potentially have to be examined:

(1) what caused the amount in question to be overpaid?

(2) was that cause a mistake by the authority or a person within reg. 100 (3)?

(3) if yes to (2), did the claimant cause or materially contribute to that mistake?

(4) if no to (3), could he or she nevertheless reasonably have been expected to have realised, at the relevant time in reg. 100(2) in relation to that amount, that it was an amount to which there was no true entitlement?

8. Only if the inquiry gets as far as the final aspect and finds that the answer to (4) in relation to a particular amount is no, will that amount be excepted: otherwise, everything overpaid is recoverable. This can sometimes work harshly on entirely innocent claimants who find themselves in effect having to insure the authority against even its own mistakes, but that is what the legislation provides: it is where the line has been drawn, as part of the terms on which this kind of public assistance is able to be claimed.

9. In relation to any particular amount overpaid the causative part of the inquiry (aspects (1)-(3) in paragraph 7) requires a practical and substantive, not a philosophical and abstract, approach. It is the substantial cause of that amount being overpaid that matters: R (Sier) v Cambridge CC HBRB (unrep. 8 October 2001) [2001] EWCA Civ 1523, CA. As Simon Brown LJ said in a short concurring judgment in that case that part of the inquiry really amounts to asking the single composite question whether the overpayment in question was the result of a wholly uninduced official error, as distinct from the kind of case where the claimant himself is substantially responsible for the overpayment: that is a question to be answered in a common sense way and if put in those terms it is usually easy to see the answer on the facts.

10. Thus if an authority provided with all the right information makes a complete mess of its own calculations it cannot of course stop the resultant overpayment being one of “official error” by saying that if only the claim had not been made in the first place its errors would never have taken place, even though in one sense that is causally true. Conversely if incorrect or incomplete information is given in a claim form and benefit is overpaid in reliance on that, the claimant cannot turn those overpayments into ones “caused by official error” by pointing out that if only the authority had done better detective work among other information it had, or if only there had not been a failure to match or transmit information between it and the DWP, it could have realised that what he was telling them was wrong. Such arguments deserve and get short shrift in the pragmatic causal inquiry needed for regulation 100. In each case what matters is the real or substantial cause that triggers the overpayment of the amount in question, not anything more remote, recondite or speculative in the facts before or after that might be said to have a connection with it, or that might have operated to stop it but did not.

11. Two points need to be made on what I have termed “the amount in question”. One is that with benefits such as housing or council tax benefit that are paid or credted periodically pursuant to a running award, the “overpayment” claimed to be recoverable under regulation 100 will seldom be a single overpaid amount, and is much more likely to comprise a total made up of numerous individual amounts overpaid at different times over a period, normally in a sequence of individual benefit payments. While in a simple case where all derive from the same initial non-disclosure or mistake it may only be necessary to answer the main causal question on aspects (1)-(3) once for the whole series, when or if it comes to the final aspect (4) it may still be necessary to separate out the total into its individual constituent overpaid amounts and to look at the dates and surrounding facts of those individual payments or credits, as the answers at that stage may differ.

12. The other point is that just as the total claimed as a recoverable “overpayment” may be made up of a number of separate individual overpayments made at different times, so that total (and for that matter any total amount overpaid on any one individual date) may also comprise two or more, or two or more series, of distinct individual amounts being overpaid from different causes. The present case combines both of those features, in that the claimant was overpaid benefit on many successive occasions over a period of more than 18 months, and on many of those the total overpayments included amounts due to the means-tested income calculation of her husband’s earnings being based on too low a figure, plus further amounts due to it also being based on too low a figure for his tax credits.

13. The issue that arises is whether the definition of “overpayment” in regulation 99 debars a claimant from the possible benefit of regulation 100 in a case where amounts overpaid from different causes happen to have been combined together in one or more single benefit payments or credits. Where the claimant’s conduct has contributed to one cause but not the other, should the regulations be applied to the two separately, or are they together one “overpayment” so that her contribution to what may be only a minor part of the total makes her automatically liable to repay it all, even the amount for which she was not responsible and might otherwise rely on the defence of “official error”?

14. The first-tier judge’s approach, supported by the council in this appeal, was to adopt the second of those meanings, so that the claimant’s failure to report the increase in her husband’s tax credit payments (which began before the council made its mistake in the calculation of his earnings) meant she must have been contributing at least in some measure to all overpayments that took place from then on. On that basis there was no need to analyse out the facts in detail to identify what gave rise to individual amounts within the overall total being overpaid, and he did not do so. As he said in paragraphs 12-13 of the reasons for his decision issued to the parties on 20 May 2009, at page 310:

“12. In the submission on [the claimant's] behalf it was conceded that the overpayments relating to the increase in Tax Credits ... were recoverable. However I found that from 30 05 05 (the date of the Tax Credit award letter) until [she] disclosed this letter to the local authority (25 02 07) there was an overpayment created by [her] non-disclosure. The local authority could not be expected to correctly calculate HB and CTB until they were given all the information. Sier v HB Review Board held that an overpayment was automatically recoverable if the claimant had contributed to it.

13. ... Once [she] had given in the all important Tax Credit letter on 23 01 07 (and there was no evidence of it ever having been given in earlier) the local authority were in a position to make a correct assessment of her entitlement. ... I considered the case of CH/3647/2006 and it was quite clear to me that if [she] had provided the Tax Credit letter the overpayment would not have occurred.”

15. There are some discrepancies in the dates given in that passage (the tax credit award letter referred to was in fact dated 9 August 2005, and supplied by 23 January 2007 at the latest: pages 129-131) but the principle being applied is clear. So long as the claimant had not supplied the tax credit letter, she had in the judge's view “contributed” to the total of the overpayments she had been receiving. He considered he was bound by Sier to hold that sufficient to make the whole total automatically recoverable from her, regardless of whether there were other elements within it which, if looked at separately, might be said to have had a distinct cause for which she was not responsible. On that basis it followed that the whole of the overpayments made until 25 February 2007 were recoverable. He found the (relatively small) further amounts overpaid after that date to have been due to an official error within the exception and thus not recoverable, and that part of his decision has not been questioned by either party in this appeal.

16. On the main part of the decision I agree with the argument of Ms Harris on behalf of the claimant that the first-tier judge misdirected himself on the point of principle and what he considered to be the effect of Sier; and he ought instead to have followed what was said in the Commissioner’s decision in case CH 0858/06 (relied on in her submission at the tribunal) about different elements in an overpayment being “severable” for this purpose, and applied regulation 100 separately to any overpaid amounts within the overall total that could be identified as due to separate and distinct causes.

17. As with any means-tested benefit, the assessment of housing and council tax benefit entitlement involves not just one but a number of different figures and calculations. The different amounts that have to be entered to make up the total of the claimant’s income, for example, may well be derived quite independently from one another, and related only in the sense that they refer to the same person and are entered as components of the same assessment. If something goes wrong with one of them, there is no necessary reason why that should have anything to do with whether (or why) any other may also have something wrong with it, even though each of course affects the same total so that any one (or any two or more together) can throw the whole result out of true.

18. In my judgment it follows clearly from the definition of “overpayment” in regulation 99 as “any amount” to which there was in fact no true entitlement that in such cases any overpaid amounts identifiable as attributable to separate and distinct causes, though comprised in the same total payment or credit as others, may need to be separated out and the causal and other inquiries required by regulation 100 applied to them separately. I therefore agree with the conclusion of the Commissioner in CH 0858/06 at paragraphs 30-37 that overpaid amounts within a single aggregate payment (or credit) are “severable” for this purpose, though I feel less doubt on the point than he there expressed. I do not think it imposes any real strain on the language to read “any amount” as what it actually says: any amount to which there was no entitlement (that is any numerical monetary amount of which that is true, whether or not as part of a larger total). I do not for my part see how the mandatory causal inquiry prescribed by regulation 100 in relation to overpaid amounts can sensibly be conducted in any other way. To do otherwise would lead to the kind of confusion the tribunal fell into in this case, by trying to identify a single “cause” for two distinct and causally unrelated amounts, artificially lumping them together as if they were one, and turning the practical question in Sier of what was the “real or substantial cause” into an impossible conundrum.

19. I do not agree that to apply regulation 100 separately, where needed, to different amounts comprised within an aggregate overpaid total but having materially distinct causes would be inconsistent with anything said or held in Sier, as argued in Mr Patel’s submission on behalf of the council and assumed by the first-tier judge. It is important to be clear what was decided in Sier. The issue before the Court of Appeal was whether a claimant who had obtained a series of benefit overpayments by not disclosing the facts that he had another property (on which he also claimed benefit), and further had ceased to qualify for income support, could avoid recovery on the ground of “official error” when the DSS, as it then was, had failed to send the authority the usual notification of his income support being stopped. As already noted, the Court of Appeal decision emphasises that the approach to causation in such cases is to be concerned with the practical question of what really caused the overpayments in question to be made. The unanimous (and perhaps not very surprising) conclusion was the point already made in paragraph 9 above, that a claimant who has got benefit by not disclosing relevant facts is not able to turn the case into one of “overpayment caused by official error” by saying that if only officialdom had been more vigilant he would have been spotted.

20. As Latham LJ who gave the leading judgment expressly said at paragraph 25, affirming the decision of Richards J that the failure to send the departmental form to the authority had not “caused” the overpayment even if it did amount to an official error,

“The overpayment occurred because the appellant continued to claim Housing Benefit ... and failed, in breach of his duty ..., to notify the Cambridge City Council of what in my judgment was clearly a relevant change in his circumstances and one which he would have appreciated. The administrative failure, if that is the appropriate way of describing it, to send form NHB8 [to] the Cambridge City Council did not cause any payments to be made. The most that could be said is that as a result of that failure Cambridge City Council was not alerted to the fact that the appellant was no longer entitled to the relevant payments. But it seems to me that the answer to the question posed by the Regulation is clear: this was not an overpayment caused by official error and accordingly the Regulations do not relieve the appellant of the obligation to repay the overpayment, which is the primary rule in such circumstances.”

21. Both Mantell and Simon Brown LJJ agreed. As the latter said in his short concurring judgment, the answer to the “single composite question” in which he summarised the effect of the first three factual aspects of the inquiry under what is now regulation 100 was, on the facts of that case, self-evident. Mere lack of contribution to an administrative step that never took place was not of course an answer to recovery of an overpayment whose actual cause had been the claimant’s own failings, there his failure in breach of duty to report a change of circumstances.

22. As is apparent, what the Court of Appeal were there dealing with was an argument that a single overpayment or series of overpayments, all derived from the same original cause, should instead be treated as if they had all been caused by something else. No question arose of having to distinguish between different amounts that had been overpaid from different causes within an overall total. They did not need to address, and nothing in any of the judgments purports to address, the question that arises here and nor is there anything in them that suggests that looking separately at the actual causes in such cases is wrong. On the contrary it seems far more consistent with everything they said that a factual and common-sense approach should be adopted, and if the reality is that £100 of benefit has been overpaid from cause A and another £100 from distinct cause B, you apply the provisions of regulation 100 to each separately rather than attempting to lump them together artificially as one and identify some common “substantial cause” that never really existed.

23. I therefore do not accept the suggestion in Mr Patel’s submission that there is something inconsistent between what was said in CH 0858/06 and in Sier so that the latter must be followed instead as the “leading case” on the present point. The conclusion he seeks to draw, that as he puts it in paragraph 4 on page 333,

“The ‘sequence of events ...’ established that the ‘mistakes’ made by the H&CTB department from 09/06/2005 to 26/02/2007 overlapped mistakes made by the appellant and so the H&CTB department’s mistakes for that period were not ‘wholly uninduced official errors’ as explained in Sier”

is I think a misunderstanding of Sier: it confuses whether an official error occurred with what if anything it caused. A slightly different though related misunderstanding also seems to lie behind the first-tier judge’s comment that Sier “held that an overpayment was automatically recoverable if the claimant had contributed to it” as if that concluded the issue in this case as regards the whole total, however caused: compare also his use of “the overpayment” at the end of the following paragraph, to refer to the whole without differentiation. The Deputy Commissioner’s decision in case CH 3647/06 he also cited contains a valuable summary of the causal test in Sier with which I entirely agree, but similarly does not touch on the problem of separate causation of different amounts and contains nothing to support the conclusion he reached.

24. Part of the confusion may be due to an over-literal reading out of context of comments made on Sier in cases where that problem was not an issue, for example that in the otherwise extremely helpful commentary on regulation 100 in the CPAG’s Housing Benefit and Council Tax Benefit handbook, 22nd edn. pp. 466-7, where an observation in case CH 2794/04 by the judge who himself gave leave for this appeal, paraphrasing the effect of Simon Brown LJ’s question, is in its turn paraphrased by suggesting that

“... despite the wording of ... reg. 100(3), the question to be asked following the Court of Appeal’s decision in Sier is the broader one of whether the claimant's act or omission caused (in the sense of contributing to) the overpayment being made.”

That needs to be read with some caution. There is no suggestion anywhere in Sier that any of the express terms of the legislation should actually be disregarded, nor I am sure could there have been any such intention; and in the hope of saving future misunderstandings I think it is worth clarifying that Sier does not stand as authority for any idea that instead of applying what the legislation says its actual wording should be ignored, or treated as if it said “overpayment” rather than “mistake” when or if any question of contribution to an official mistake (aspect (3) in paragraph 7 above) should come to be considered. Still less does it say, as seems to have been assumed here, that a person has to be treated as “causing” a total of many overpayments merely because he or she has “contributed to” even the smallest overpaid amount within it. For my part I would suggest that the notion of “contributing to” is best kept for the cases where the legislation expressly provides for it, and not allowed to confuse the primary question of the cause of a particular amount having been overpaid. For that the test is the simple common sense one explained in Sier of what was the substantial (i.e. not just a contributory) cause of the overpayment: cf. R(H) 10/08 paragraph 30.

25. What can be said is that given the primary importance of the two main causal aspects in paragraph 7(1)-(2) above as emphasised and explained in Sier, the occasions when a “Yes” to aspect (3) is actually determinative may well in practice be few (perhaps a poorly written figure on a claim form that an overworked benefit officer too quickly misreads?). The existence and potential significance of that part of the express wording of the legislation is however acknowledged, and affirmed rather than negated, in Simon Brown LJ’s single composite question by the inclusion of the phrase “wholly uninduced” so as to qualify “error”, which does of course accurately reproduce its effect.

26. In my judgment therefore the decision of the first-tier tribunal was based on a misunderstanding of the effect of Sier and was erroneous in law and I set it aside.

Redetermination of the case: the claim history in more detail

27. That makes it necessary to consider what should now be done to bring the case to a final conclusion. Since I have inevitably had to go into the documentary evidence in some detail to understand how the issues of law in the case arose (a process that took me more time than I like to admit), I consider the most expedient course is for me now to exercise the power I have under section 12 of the Tribunals, Courts and Enforcement Act 2007 to substitute the best decision I can on the basis of the material now before me, in preference to putting the parties to the further delay and expense of sending the case back for another first-tier tribunal hearing. To explain the decision I am substituting a further look at the factual history of the claim is now needed.

28. The claimant, a lady now aged 53 with no previous experience of the housing benefit system, claimed housing and council tax benefit from the council on 24 May 2005. She and her husband had just lost their own home through mortgage arrears and any savings they had were gone. The council had come to their rescue by rehousing them and their three children in temporary accommodation under a weekly licence direct from itself at £292 per week from the previous day, 23 May 2005. To add to their troubles the claimant’s husband was ill and off work, receiving only sick pay and in danger of losing his job, and over the same period with which we are concerned she herself had to have medical treatment for breast cancer and then in turn for the side effects of that treatment which gave rise to kidney problems. The whole period must of course have been an extremely tough time for them both, and this was fully recognised by the tribunal judge who heard her evidence and expressly recorded in his decision that he found her an honest witness: where she had failed to give full information at all times he said he could understand the reasons for this (page 306).

29. The claimant was awarded full housing benefit and council tax benefit on her claim with effect from 23 May 2005. The award decision was issued on 11 June 2005 and will then have been implemented by credit entries on the couple’s rent and council tax accounts. The benefit calculations annexed to the award letters (pages 56-59) show that from 23 May 2005 their assessed income included £90.85 per week for earned income and £10.53 for child tax credit, which accurately reflected the rate of the monthly sick pay her husband had been receiving at that date and his current tax credit award, both as shown in the payslip and award details she submitted with the claim. The letters emphasised that any changes in the couple’s circumstances, including in particular changes in their income, must be reported and that any overpayment of benefit due to failure to disclose or to late disclosure of information would be recovered.

30. However before those letters had been issued, the claimant’s husband had managed to get a new job at which he had started work on 31 May 2005 at a basic wage of £384, payable weekly. The claimant did not report this to the council immediately and there was some conflict in the evidence about when she did. She said she had done so and submitted copy payslips some time around the end of June, but the council had no trace of these; so far as its records were concerned the first contact about the new job was a phone call from her on 11 August, followed up with the letter at page 61 enclosing payslips (including what she said were further copies of those already supplied), marked as “Received at Reception” on 16 August 2005. The first-tier judge found that no effective notification had been given before that date and I will proceed on that basis as nothing in fact turns on it, though what then happened (or rather did not happen) about those payslips does suggest the council’s document handling systems, or maybe those of its post opening and counter services, which appear from the various document stamps to have been sourced out separately to two different private firms, were between them quite capable of letting things get astray.

31. Also about the middle of August, the claimant’s husband was issued with a new child tax credit award which increased his payments to £102.17 per week from 11 August 2005: see the award letter dated 9 August 2005 at pages 129-131. For housing and council tax benefit purposes this was a change in his income from 18 July, as the payments were 4-weekly in arrear. Again it is common ground that the claimant did not report this to the council at that time. The first-tier judge found as a fact that she did not give an effective notification of the increase until much later, on 23 January 2007, there being (as he said) no evidence of her having supplied the council with a copy of the award letter before then. There was some debate in the evidence about this too as the copy letter at page 129 does not have any received date stamp on it, but I am again content to adopt the first-tier judge’s finding, not least because it was expressly conceded on behalf of the claimant in the written submission at page 254 and at the hearing that all the overpaid benefit due to the increase in tax credits was recoverable.

32. What happened about the payslips, nine in all, that the claimant had handed in on 16 August 2005 was, as hinted above, nothing. These showed clearly that her husband had started his new job in the week ending 4 June 2005 and what his new weekly wages were. They thus contained all the information needed to reassess the claim to reflect the true level of his weekly earnings from the beginning of that week on 30 May 2005. They are all stamped and initialled as received on behalf of the council on that date but they then either failed to reach its benefits office so as to be linked with the claimant’s file, or if they did get that far they were overlooked.  Whichever it was, it was a mistake within the terms of regulation 100(3) to which the claimant in no way contributed.  The claimant’s housing and council tax benefit payments then continued unaltered for another three months, during which she heard nothing more from the council about them.

33. On 24 November 2005 further benefit payments were suddenly suspended by a benefits officer (AW) who wrote to the claimant saying “Thank you for your recent [sic] correspondence I apologise for the delay.  Thank you for informing us that your partner has started a new job”.  She was told that her claim had been “provisionally assessed with the information that you have provided” and required to provide “five consecutive weekly payslips if your partner is paid weekly, two consecutive payslips if paid monthly” plus bank statements and details of any savings. 

34. Two days later the claimant was issued with further formal award letters (the second assessment). These told her the claim had been reassessed because of “a change in your income” but she had been re‑awarded full benefit at the same rate as before, on a continuing basis with effect from 23 May 2005.  The only change made in the calculations was that the weekly earned income included was altered to £112.73, apparently (though the claimant was not told this) the result of a recalculation of the monthly earnings from his old job from the previous April and May, which made no difference to the entitlement. No explanation was given to show that this was nothing to do with the actual change in his income from the end of May, which is what any reasonable person would have understood the letters of 24 and 26 November to be about.

35. On 12 December 2005 the claimant supplied the further information requested, including six consecutive up-to-date payslips showing her husband’s current income from 29 October to 3 December 2005.  On 30 January 2006 AW (who, it can be seen with hindsight, had still not taken in or possibly even got the ones she had already supplied) noted on the computer system “updated finance - partner’s income from 30/10/05 wef 31/10/05 – capital calc claim no change in entitlement” and caused “change of circumstances” letters to be issued notifying the claimant again that there was no change in her entitlement from 31 October 2005. 

36. Those letters were issued to the claimant and embodied further formal award decisions dated 1 February 2006 (the third assessment) telling her that her benefit had been reassessed for a change of her financial circumstances (“a change in your income”) and that from 31 October 2005, and then again continuously from 5 December 2005 (when there was a further recalculation to include as “capital” some savings too small to make any difference), her reassessed entitlement to both housing and council tax benefit remained exactly the same as before.  On the same date the suspension on payments was lifted, so that (then or soon thereafter) the claimant’s rent and council tax accounts again began receiving the full rate of both benefits and also the arrears for the period from 24 November 2005.

37. The weekly earnings figure on which those reassessments and the resumed payments were based was now reduced to £72.68.  How that exact figure was derived from the payslips supplied is a puzzle I have been unable to solve, but it is common ground that the reduced figure was the result of an elementary blunder by someone in the benefits office entering some figures obtained from them on to the computer system as if they were monthly earnings, rather than weekly ones as the payslips themselves, all clearly dated, showed them to be.  As a result the computer recalculated the benefit with the husband’s weekly earnings brought in at under a quarter of their true amount, and the benefits office failed to notice that the reassessed entitlement was correspondingly too high. In consequence, the arrears payments from 24 November 2005 and the continuing payments from the lifting of the suspension on 1 February 2006 all contained overpaid amounts due to the reassessment being issued with the husband’s earnings being calculated as too low, despite the correct and complete figures the claimant had already provided.  Again the claimant had in no way contributed to the mistake and a clearer case of a “wholly uninduced official error” in terms of regulation 100(3) it would be impossible to imagine.

38. This state of affairs continued uncorrected and undetected for what turned out to be another twelve months.  On 27 March 2006 the claimant was issued with further decision letters (the fourth assessment) reflecting the annual up‑rating and reassessing her benefit on the same mistaken basis, again without anyone in the benefits office spotting that anything was wrong. (So far as the council was concerned the issue of those further awards for the new financial year may have been a purely mechanical operation without human intervention, but even if so I do not see how an ordinary claimant receiving an official letter telling her that her benefit has been reassessed and re‑awarded at a specified rate can be expected to know that.)

39. From 1 May 2006 the claimant’s husband received a modest increase in his gross basic pay from his new employer, from £384 to £404 per week.  It is common ground that the claimant did not notify this change to the council at that time. On 31 October 2006 she was sent a routine annual review form to complete which she duly returned on 21 November 2006, stating that her husband’s net current earnings were over £300 per week.  On 5 December 2006 another benefits officer (IW) wrote to the claimant saying that following the receipt of the review form further information was now required to ensure a correct reassessment of her benefit entitlement. The letter required her (entirely properly) to produce her husband’s most recent five consecutive weekly payslips together with their most recent tax credit award letter, bank statements and other information.  On 4 January 2007 she complied by producing at least some of the documents including the payslips, which were certainly received in the benefits office as they are referred to in subsequent documents and computer notes. However the actual documents supplied to the council on this date must also have gone astray somewhere in the system at some later point as they are missing from the file.

40. By 12 January 2007, IW had examined the husband’s up-to-date payslips and noted that the basic weekly rate had by then increased to £404.00.  On that date and for that reason (only), she suspended the claimant’s entire benefit payments again; and sent the claimant a further letter asking for details of when the change had taken place, further up-to-date payslips and all tax credit award letters received after 23 May 2005  The letter also shows that IW was well aware that the previous level of the husband’s earnings had been £384.00 weekly not monthly, but no sign of her noticing the mistake in the way these had been entered and calculated and its continuing effect on the benefit level.

41. On 23 January 2007 the claimant again attended at the council’s offices and handed in copies of the further documents required, including further payslips showing the increase in her husband’s pay rate from 1 May 2006, and tax credit award letters dated 9 August 2005 and 2 October 2006 showing his weekly tax credit income as having increased to £102-odd from 11 August 2005 with a further small increase for the new tax year from 19 April 2006, and then a substantial decrease again to £32.95 per week from 4 October 2006.

42. From that point at the very latest, the council had been supplied by the claimant with all the information needed to correct all the previous mistakes and under‑recording of income that had taken place in the benefit assessments right back to the very beginning.  No further benefit was then currently being paid in any case, because of the suspension imposed from 12 January 2007.

43. By 3 February 2007 another benefits officer (MM) was working on the file and noted on the computer “I’ve added CTC from July 05 to present ... put on partner’s wage slips for 2006 from April 06 when the wage was 384/wk to when it changed to 404/wk … and up to present. ... Calculated the claim and created an overpayment because of the CTC going back to 15/7/05.”  What is interesting is that this officer too seems not to have immediately noticed that the wages had been wrongly entered from much earlier, and that much larger overpayments had been being made over the same period for that reason.  Only after another two days, on 5 February 2007, did that finally become apparent to anyone in the council who had worked on the case, when the same officer noted that “Partners wages from 23/5/05 to 7/4/06 are on as monthly and should have been on as weekly”. 

44. On 6 February 2007, the claimant was issued with a further set of reassessment decision letters (the fifth assessment) citing a “change in financial circumstances” and setting out over 30 pages of calculations, taking account of the increase in child tax credits to £102.00-odd per week from 18 July 2005 (but wrongly duplicating the previous £10.53 by not removing it from the calculation, and failing to allow for the subsequent decrease from October 2006); and with the income calculation now having the weekly earnings correctly entered from 3 April 2006, but not for any period before. Letters claiming the recovery of benefit allegedly overpaid on the basis of those calculations were issued to the claimant at the same time. 

45. On 13 February 2007, a further set of reassessment letters (the sixth assessment) was issued telling the claimant her claim had been reassessed from 18 July 2005 due to “a change in financial circumstances ... of a change in your income”. A comparison with the previous ones shows there had been a recalculation to correct for the duplication of the original child tax credits, though still not to allow for the reduction in October the following year, but no other changes that I can detect. However the letters now told the claimant that there had been an “underpayment” of both housing and council tax benefits and that her entitlement would be paid into her account, though little explanation was given to show what this actually meant. I doubt if the claimant or many other people would have understood from this that the council was still saying that there had actually been an overpayment, though less than it had been telling her before.

46. At this time however the payment or crediting of the claimant’s benefits was apparently still suspended, and she and her husband were still bizarrely being asked to give details of when he had changed his job in the previous year but one: information they had already given, as noted above, at the very latest on 16 August 2005 as it was clearly shown by the first weekly payslip submitted on that date. On 15 February 2007 the claimant phoned the council in an attempt to clarify what it was they still wanted, but then on 20 February 2007 another benefits officer (JM) abruptly “cancelled the claim” for alleged failure to provide information. On 25 February 2007 a decision letter to that effect was issued (the seventh decision) saying the claim had been “cancelled” with effect from 8 January 2007 and demanding repayment of amounts allegedly overpaid. After a justified protest from the claimant, confirming “yet again” that her husband had started his new job on 31 May 2005 (Tuesday, because Monday was the bank holiday) this was reconsidered and reversed by another benefits officer (CP) who issued another decision (the eighth decision) on 6 March 2007 “reinstating” the claim with effect from 9 January. Further computer records show the issue of additional “change of circumstances” and “statement of reasons” letters on 22 March, 4 April and 12 April so there may have been yet more formal decisions and reassessments made in this period, but if any of these were notified and issued to the claimant there are no copies or other details in the file.

47. Whether any actual payments or credits had been made to the claimant’s rent and council tax accounts since the date of the suspension on 12 January 2007 is also a question to which there is no answer in the documents.  It seems at least open to doubt, as on 15 April 2007 the claimant wrote protesting that she and her husband’s rent and council tax accounts were now said to be in arrears, though they had not been notified of any changes.  On receipt of this letter the following day the case was at last put into the hands of what the submission describes as “an experienced assessor”. This officer (MW) thereupon noted that the claim had been paid incorrectly for nearly two years, went right through it recalculating the claimant’s entitlement back to the beginning and incorporated his revised determinations in the overpayment decision of 16 April 2007 which is the subject of this appeal (at pages 230- 232: the ninth decision in the series I have been able to identify).  The relevant entitlement determinations to give effect to his recalculations are not in the bundle as they should be but I do not understand them to be in dispute, apart from the one small agreed slip that they showed the overpayments as going back to the very first week of benefit from 23 May 2005 instead of the next one. That correction was incorporated in the recalculated table at page 252 usefully showing the net overpaid amounts for all the benefit weeks from 30 May 2005, though even it does not show when the particular benefit payments containing those amounts were actually made.

48. For the sake of completeness I should record that after this decision there then ensued further correspondence which was inconclusive until Ms Harris’ office came on the scene in April 2008. Her intervention resulted in the issue of another decision (the tenth) on 4 June 2008, formally refusing to reconsider or revise that of 16 April 2007 but instead agreeing to a late appeal against it proceeding to the tribunal in view of the claimant’s circumstances. That was the appeal before the first‑tier tribunal on 20 March 2009, and the one I now have to redetermine.

Conclusions

49. Relating all that to the law summarised above, my conclusions are as follows. For this purpose I emphasise that the important dates are those when the overpaid amounts in question were actually paid or credited, rather than the benefit weeks to which they relate. (There is one qualification to that, in that any excess rebates or allowances already made in advance for periods falling after the relevant revising or superseding decision are made recoverable in all circumstances by regulation 100(4) of the Housing Benefit and regulation 83(5) of the Council Tax Benefit Regulations: but there has been no suggestion that any of the overpaid amounts in issue in this case is in that category.)

50. First, as already noted, it is common ground that the overpayments only began on 30 May 2005 instead of 23 May 2005 as stated in the decision under appeal, and in the absence of any other point being raised on the calculation of the net amounts overpaid I formally confirm the revised amounts shown in the table on page 252 as correct.

51. Secondly I confirm and adopt the first‑tier judge’s findings that any overpaid amounts shown in that table which were actually paid or credited to the claimant’s accounts on or after 26 February 2007 are irrecoverable, on the ground that he was satisfied they were due to official error and the claimant could not reasonably be expected to have realised that she was receiving such overpayments. I am not sure exactly how much is actually involved in that point, as the benefits had already been suspended from 12 January 2007 and the judge’s reasons are not all that specific in identifying the official error involved or the payments to which it gave rise, but as those were findings in the claimant’s favour and have not been questioned by the council in this appeal I have concluded that the claimant should retain any benefit she gets from them.

52. The remaining overpayments fall into two periods, first those made from 30 May 2005 to the first suspension of benefits on 24 November the same year, and the second those paid or credited from the lifting of that suspension on or about 1 February 2006, including the arrears from 24 November 2005 onwards, down to the date of the second suspension on 12 January 2007 (or to 26 February 2007, if any further payments had been made by that date despite the suspension – the evidence does not show).

53. The whole of the overpayments made during the first of those two periods are in my judgment recoverable from the claimant. Those due to the tax credit figures being too low for the latter part of that period are rightly conceded to be recoverable because the council did not know the true figure until January 2007, so there could be no question of official error in relation to those amounts. The remaining amounts overpaid throughout this period, all due to the earnings figures being too low, are also in my judgment all recoverable. I think it is fair to say there was an official error when the council failed to act on the earnings details supplied to it on 16 August 2005, and also that it was this error, rather than the claimant’s delay in reporting them until then, that was the substantial cause of those overpayments continuing from that point on. However in my judgment it is also fair to say that the claimant should reasonably have realised, both before and after then, that they were overpayments. She knew the assessment of her benefit depended on the correct earnings figures, and had been trying to report them.  She knew the current assessment and the benefit rate she was still receiving had been based only on her husband’s reduced sick pay rate, which was now out of date and much below his actual earnings from 30 May 2005.  According to her own evidence, she had already experienced problems in getting information to the right person in the council, and thus knew that its document systems were not perfect. Faced with its complete lack of response while the payments continued unabated at the full rate just as before, she ought reasonably to have concluded that the most probable explanation was some further mistake or inaction within the council; not that her claim had been properly reassessed in silence and she really was for some reason still entitled to full benefit at the same rate as before despite her husband’s increased earnings.

54. The overpayments made during the second period will however in my judgment have to be separated out and quantified according to what caused them. Those due to the tax credit figures in the income calculation remaining stuck at the original £10.53 per week instead of the true rates the claimant’s husband was receiving from time to time are all recoverable for the same reason as the corresponding ones made in the first period, no official error about the tax credits being established on the evidence. The relatively small amounts added to the total overpaid during the second period by the claimant’s failure to notify her husband’s £20 weekly pay rise from 1 May 2006, and the Christmas bonus he apparently received in his pay packet at the end of the same year, are also conceded to be recoverable, there being no question of official error in relation to those either.

55. That leaves the major part of the amounts overpaid during this period, which were those due to the husband’s weekly earnings from 31 October 2005 being mistakenly recorded in the income calculation as far lower than they actually were.  There is no doubt that the sole cause of this from the outset was the blunder in the way the payslip figures were entered on the system, to which the claimant in no way contributed: an official error squarely within the legislative definition. 

56. The two questions that arise are whether there was any point over the course of the second period when that ceased to be the substantial cause of these overpaid amounts continuing; and whatever the answer to that, whether the claimant ought reasonably to have been expected to realise they were overpayments, either during the whole period or for some part of it.

57. As to the causal point, the claimant’s failure part way through the period to tell the council of her husband’s £20 pay rise did of course cause the benefits she got for the weeks from 1 May 2006 to contain a slightly larger amount of overpayment than before. In my judgment however the causal effect of that failure did not go any further than that. It did not alter the fact that the continuing stream of overpaid amounts due to the council’s own blunder in the earnings calculation remained amounts that were being overpaid as the direct consequence of that error, not of her inaction about the increase. Applying the principle of the substantial cause in accordance with Sier it cannot in my judgment be said as a matter of causation that those continuing overpayments were instead due to her own unrelated error of omission, or for that matter to her not having noticed the council’s error and pointed it out. The possibility that she might have done so, and likewise the possibility that if she had reported the £20 pay rise that might have caused the council to redo the whole calculation and if it did, then to realise the mistake itself, are in the category of speculation about things that might have happened to prevent a continuing run of overpayments but in fact did not. As such they are insufficiently substantial to replace the actual primary cause of the overpayments which was the blunder. In my judgment therefore the council’s wholly uninduced official error remained, for the whole of the second period, the substantial cause of the overpayments due to the earnings calculation, subject to the two small exceptions I have mentioned.

58. Everything therefore depends on the final aspect, of what it was reasonable to expect the claimant to realise.  In my judgment the answer to that for the second period is materially different from the first, because in the earlier one she had heard nothing from the council to suggest that it had made a reassessment of her claim after being supplied with the correct figures whereas in the second, after having all the details needed to recalculate for the increase in her husband’s earnings due to his change of job, it had issued her with no less than two separate sets of reassessment award letters confirming her present entitlement by the time it lifted the suspension and resumed payment, and yet another set doing so again the month after that.

59. In those circumstances it seems to me that the claimant, who as the tribunal accepted from her evidence was not well versed in the details of housing or council tax benefit assessments, and found the pages of computer-generated figures issued with successive reassessment decisions as she said, “all just figures” which she did not understand, was entitled as the Deputy Commissioner said in case CH 2943/07, to start from the basis that the authority had, and was correctly applying, the information she had already given about the earnings when it told her what benefit she was going to get. Starting from that point, and applying the test of what it was reasonable to expect this claimant to realise about the resumed payments to which she was told she was entitled from 1 February 2006 onwards, it is in my view material that from her point of view the council (a) had suspended her benefit in order to reassess it correctly for the change in her husband’s earnings (the only one there had then been); (b) had been supplied with all the information it asked for or needed to make that reassessment correctly, back to the date of the suspension and beyond; (c) had taken over two months to reconsider the case before it issued the formal reassessment and confirmatory award letters referring to “a change in your income”; and (d) was sufficiently confident in the correctness of its own figures to have lifted the previous suspension on 1 February 2006 and arranged to pay her the arrears of benefit to which it had now formally confirmed twice she was entitled. She had not been given any explanation of what earnings formula was being applied or what earnings calculations had resulted in the reassessment award of 26 November 2005 using the figure of £112.73, or that of 1 February 2006 reducing it again to £72.68, both to the same apparent effect; but even if those figures registered with the claimant at all she was in my view entitled to assume that by the end of the two-month process, and having apparently had two complete goes at it, the council knew what it was doing.

60. Moving on in time, that remained the position (indeed was reinforced) in my judgment when the further set of decision letters for the annual up-rating emerged on 27 March 2006, again confirming her continued entitlement on the same basis as before. I have then further considered whether from 1 May 2006, the need to report the £20 pay rise should itself have caused the claimant to pore over the council’s previous calculations, and thereby to realise at that point that despite the decisions previously issued confirming her entitlement she was getting more than she should even apart from that increase; but on balance have concluded against this.  The need, and her failure, to report that increase cannot affect the reasonableness of her previous reliance on the council to know how to carry out its reassessment calculations, nor in my view did they turn that reliance into something that suddenly became unreasonable from then on.

61. I take into account also, as the first‑tier judge did, the difficult personal circumstances she was experiencing over this entire period due to the medical treatment, and no doubt continuing worries about how she and her husband and children would be able to manage, financially and otherwise, if she did not fully recover. It is also in my view relevant that as recounted in the history above there seems to have been more than one occasion when the council’s own officers were working on the calculations without the error in the earnings figures, and its effect in causing overpayments for such an extended period, becoming as immediately obvious even to them as one might have thought if it really was something she as an ordinary claimant ought fairly to have been expected to realise for herself.

62. In sum, these questions are by their nature matters of judgment and impression on the circumstances of each individual case and person involved, but I think in view of the history of the matter and the first‑tier findings about her personal circumstances this claimant is entitled to the benefit of any doubt. I therefore conclude on the balance of probabilities that it would not have been reasonable during the second period of overpayment for the claimant to realise that the benefit the council confirmed three times as payable, after it had all the right figures, still included an overpayment due to the miscalculation of the weekly earnings her husband had been receiving since 30 May 2005.  In judging what is reasonable there must come a point at which a claimant who has provided the correct information is entitled to assume the authority knows what it is doing, and in my judgment that point was reached here.

63. The consequence is that the amounts overpaid from that cause over the second period are not recoverable from her, and the reduced amounts remaining so recoverable must be recalculated and notified to her by the council as soon as practicable. Her appeal is therefore allowed and the formal decision above substituted accordingly:  it includes a one-month liberty to apply for further directions just in case any difficulty or point arises on the calculations which I have not managed to foresee.

 

P L Howell

Judge of the Upper Tribunal

18 February 2010