Reply To: Commissioners Decision

#9477
Kevin D
Participant

Not sure if this is CH/5147/2001, or 200[u:6ba4b5583d]2[/u:6ba4b5583d].

Either way, I only have a record of one HB/CTB decision referenced 5147. It’s been cut & pasted below:

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THE SOCIAL SECURITY COMMISSIONERS – Commissioner’s Case No: CH/5147/2002
DECISION OF THE SOCIAL SECURITY COMMISSIONER

1. This appeal, brought with my leave, fails. The decision of the tribunal on 3 10 01 was not wrong in law, as explained below. The appellant is not entitled to housing benefit on his claim made on 7 2 00 in respect of 4 B Close.

2. The appellant and his wife had, according to his housing benefit claim form, moved into 4 B Close in October 1991. This property was owned by their son who also lived there. The appellant claimed council tax benefit from 1 4 93 on the basis that he was the occupier of the property and in receipt of income support. They lived there all together (including the son’s wife after her marriage in 1994) until March 1999, when the son moved out to join his wife in the rented accommodation into which she had moved earlier, because she could not get on with her parents-in-law. The son hoped to be able to reconcile everyone, but in the end decided to buy 5 B Way, to which he and his wife moved in December 1999, his parents staying on at 4 B Close.

3. The appellant claimed housing benefit on 7 2 00, stating that his son was charging him £350 a month rent for 4 B Close from 1 2 00. An agreement dated 27 1 00 for a one-year assured shorthold tenancy with effect from 1 2 00, first payment due on 1 3 00, was provided. The appellant made a statement on 2 3 00 in which he explained why he was beginning to be charged rent, that this was less than the probable market rent of £500 a month, and that no rent had yet been paid because they were awaiting the outcome of the housing benefit claim. If an award was not made the appellant thought he and his wife might have to leave the property so that his son could relet or sell, but he had not discussed this with his son. This information was substantially confirmed by the son on 16 3 00. He added that he would expect his parents to pay any shortfall in rent if housing benefit did not fully meet it.

4. The initial adverse decision is contained in a letter of 28 4 00, which gave four reasons for regarding the letting as not being a commercial one under regulation 7(1)(a) of the Housing Benefit (General) Regulations 1987 (SI No 1971) as amended by the Housing Benefit (General) Amendment (No 2) Regulations 1998 (SI No 3257). The appellant responded on 26 5 00, countering those reasons. The council made further comments in a letter of 20 7 00, to which the appellant responded on 17 8 00. He explained that his son’s moving out had been caused by domestic problems within the family. He said he had paid no rent until after he received the decision letter of 28 4 00, but had paid some since. The council reconsidered its decision, but confirmed it in a letter of 26 10 00, to which the appellant responded on 20 11 00, which was treated as an appeal.

5. It is fair to summarise the correspondence as a laying-out by the council of the factors taken into consideration in deciding whether a letting is or is not “commercial”, and answers to each of them arguing the facts and submitting that none of them should be taken as conclusive. The council raised the delay between the son moving out in March 1999, to rented property and then again from his purchase of 5 B Way in December 1999, to 1 2 00 before beginning to charge rent. The appellant replied that the original move had been intended to be temporary, and offered various reasons for the delay between December 1999 and 1 2 00. The council raised the preferentially low rent being charged to the appellant. The appellant said the open market rent of £500 had been only an “assumption” on his part, that in fact his son had decided on £350 after making inquiries about a commercial rent, so that he would have charged the same to any tenant, and that anyway the amount of rent was not a conclusive factor. The council said that it was not usual for commercial landlords to await the outcome of a tenant’s housing benefit application before asking him to look for alternative accommodation and that commercial landlords would normally take steps to evict non-paying tenants. The appellant said that he did not believe this was necessarily the case. His son had said he would seriously consider asking his parents to move out, and this implied that he would be ready to take any necessary steps including legal steps, so the fact that no attempt had been made to recover arrears, and the appellant had not looked for alternative accommodation was not conclusive. All landlords did not have to be the same. The council had not shown any ethnosensitivity in comparing his son with landlords from the indigenous community. His son was still holding off from trying to collect arrears because the appellant and his wife were both over 60 and receiving income support. This was also the reason why the appellant and his wife had stayed where they were and the son had bought a different property. The council cast doubt on whether any rent had actually changed hands, and with his letter of 20 11 00 the appellant produced a rent book showing payments of £100 on the 1st of each month, including 1 3 00 (not 1 2 00), although this start date does not reflect evidence in the statement of 2 3 00 or in the letter of 17 8 00.

6. A welfare rights officer on 18 9 01 provided further information to the council confirming the unhappy domestic differences that had arisen between the daughter-in-law and her parents-in-law, which had prevented what would have been the normal arrangement in the Asian community whereby the cultural obligation on children to provide a home for their parents would be fulfilled by both couples living in the same house. This had been an embarrassment to the parties, which was why they had not previously said what the domestic problems had been. The son had not needed to contribute to the rent, as his wife was meeting this herself, and initially also helped towards the mortgage of 5 B Way, but had stopped doing this when she became pregnant. The appellant was paying £100 a month rent, but the son would need to derive about £350 a month to avoid, in the long-term, having to sell 4 B Close, though that point in time was fast approaching.

7. This officer represented the appellant at the tribunal, at which the appellant attended with an interpreter and his son was also present and gave evidence. The son confirmed the account of how the situation had arisen and said he had fixed the rental figure by speaking to friends and would not have taken professional advice even if he had been renting to a member of the public. He had taken out his mortgages on the basis of his own income and neither was in arrears, although his now wife worked part-time. He was able to maintain both mortgages, but would prefer to obtain a market rent for 4 B Close. He intended to recover the rent arrears, though he did not know how he would do this. He might take legal advice. If benefit was not awarded he would probably ask his father to leave the property. He was obliged in his culture to house his parents. They had not paid towards the cost of the house.

8. The tribunal dismissed the appeal. The decision notice and the full statement must be read together. The tribunal accepted the reasons given for the split into separate households. The appellant was to be treated as not liable to make payments because the agreement under which he occupied 4 B Close was not on a commercial basis. It held under regulation 7(1A) that the provision for “rent” in the tenancy agreement was not regarded by either party as giving rise to a legal obligation. The rent had not been commercially assessed and the rent book had been produced only to give the appearance of a formal agreement. The relationship between the parties was one of close relatives with a cultural tradition of provision by children for parents, and there was no intention to recover any arrears of rent, even if the agreement did give rise to legal liability. The son had obtained the mortgage on the second house in addition to the first on his own income, and was continuing to meet both, and the tribunal did not accept that he would need to sell one of the properties unless he could obtain a commercial rent for 4 B Close. The primary purpose in creating a tenancy was to fund the purchase of the second house.

9. The grounds of appeal, on which the chairman refused leave, were first that the tribunal had concentrated on the failure to collect arrears, to the exclusion of anything else, and that there was no rule of thumb that landlords not seeking to collect arrears from tenants on income support are not commercial landlords. This was the only ground on which the council commented, by pointing out that other matters had also been canvassed during the hearing, as shown in the record of proceedings and the decision notice. The council is right about this. The appellant complained that nothing in regulation 7(1A) says that creating a tenancy without obtaining a professional opinion on rent to be charged is non-commercial. Nor does it, but the regulation is in the most general terms, allowing decision makers to take a variety of circumstances into account. It was further objected that the tribunal had not accepted the history of how the souring of relationships between father and son came about. But the tribunal did accept this history. Finally, there is a point about whether or not the appellant’s son was able to subsidise his father’s accommodation, but this seems to be based on a misunderstanding of the tribunal’s finding, which was that he could. Some pages from Findlay on Housing Benefit were included with the grounds of appeal. Some of these refer to “contrived” tenancies under regulation 7(1)(l), but this subparagraph never formed part of the council’s case. Those on regulation 7(1)(a) highlighted that the mere charging of a low rent does not, on its own, make an agreement non-commercial, and that the presence of unenforceable terms (regulation 7(1A)) is not conclusive either. Both these contentions are perfectly correct; but neither says that these factors are not to be taken into account as part of a whole picture.

10. After some encouragement from me, the appellant responded to the council’s limited submissions. He urged that I should take into account that his son was a “learner” landlord and had made some mistakes which led him not to fit into the council’s “set formula” for distinguishing genuine from pretended landlords. The tribunal had simply followed this formula in the questions it asked and had not made its own findings. The reference to the cultural tradition of provision by children for parents was a very generalised view of Asian culture, which preconceived generalisation had “fogged up” the tribunal’s fact-finding role. I should please give due consideration to all the correspondence with the council.

My conclusion

11. I remind myself as well as the parties that an appeal from a tribunal to a commissioner is on an error of law only: paragraph 8(1) of Schedule 7 to the Child Support, Pensions and Social Security Act 2000. But whether or not an arrangement was made on a commercial basis is a question of fact, so I can intervene only if the tribunal’s decision has been one that no tribunal acquainted with the ordinary use of language could reasonably have reached: Brutus v Cozens [1972] 2 All England Law Reports 1297. It would not be enough that I might have come to a different conclusion. While, therefore, I must satisfy myself that the tribunal properly investigated the facts, and gave an adequate explanation of its reasons, I cannot allow an appeal simply because a different conclusion on the facts might also have been available. There is no point, therefore, in appellants urging me to reach a different conclusion on matters of fact.

12. “Commercial” is an ordinary English word to which the law gives no special definition, except in so far as regulation 7(1A) requires regard to be had to whether any of the terms on which a person occupies a dwelling include terms unenforceable at law. The finding that an arrangement was not on a commercial basis need not involve any finding of bad faith. All the circumstances must be investigated, and the appellant is right to say that no one of them alone (such as a low rent) is likely to be conclusive. Nor does a close family relationship mean that an arrangement will not be commercial, though it was said in R v Poole BC, ex p Ross (1995) 28 HLR 351 that the closer the relationship the more critically any agreement may be examined. The test is one of the dominant purpose of the arrangement, factors which may need to be taken into account including the owner’s need for rent, the claimant’s need for accommodation and the history of previous arrangements between the parties. The burden of showing that an arrangement is commercial is on the council, but it will of course be entitled to use as evidence information given to it by or on behalf of the claimant.

13. I am not persuaded that the tribunal erred in its investigation into or findings of fact. It accepted the history of how the family split came about and concluded that the primary purpose of the arrangement was to help with funding the extra mortgage, but that it was in fact possible for the appellant’s son to fund it without receiving a commercial rent – indeed, on the tribunal’s finding about the lack of intention to enforce the provision for rent, without any rent at all. The only evidence of rental payments produced was the rent book which, as I observed above, did not accord with other evidence given. Putting it at its lowest, rent did not begin to be paid until after the council gave its initial decision on 28 4 00, and that is the date at which the tribunal had to look, in accordance with paragraph 6(9)(b) of Schedule 7 to the Child Support, Pensions and Social Security Act 2000. The son had obtained the second mortgage in or around December 1999 on the basis of his own income, and continued to pay both mortgages. The tribunal was entitled to conclude on the evidence it heard that the son had no real intention of enforcing payment of the arrears, and further that he had no real intention of evicting his parents. It was entitled to rely on the evidence given both in writing and orally of cultural obligations in the Asian community. In the absence of any such evidence, this finding might indeed have been a stereotyped view, but the criticism can hardly be made where the appellant and his son have relied on it themselves. The tribunal was also entitled to take into account, not conclusively but as part of the whole picture, that the son’s failure to take professional advice about a market rent did not indicate an intended commercial arrangement.

14. I stress that these are conclusions of fact, and hence are not of themselves open to me to interfere with, unless they are such that no tribunal acquainted with the ordinary use of language could reasonably reach them. The tribunal did not err in considering factors identified by the council: these were not a “set formula” but factors properly to be taken into account in deciding whether, to use the appellant’s terminology, the landlord here was genuine or only pretended. The tribunal did make its own findings, including that the tenancy agreement’s rent provision was not intended to be enforceable. This was a ground not relied on by the council, and I considered whether there was any question of the appellant having been taken by surprise by the introduction of this factor. But I have concluded that even if there was, it was not material. The tribunal would have reached the same conclusion under regulation 7(1)(a) even if regulation 7(1A) had not been relied on.

15. I have, as the appellant asked me to do, paid close attention to the correspondence between him and the council, which I have summarised in paragraphs 4 and 5 above. But it does not alter my view. I admire the skill with which the appellant sought to counter the council’s arguments, but I am less impressed by the shifting of factual ground which this involved, for example as to the actual market rent and whether or not there was any intention to recover the substantial arrears which were accruing, even on the appellant’s contention that he was paying £100 a month.

(signed on original) Christine Fellner Commissioner 12 September 2002

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