The landlord would have an almost watertight case if he used your complaints procedure and then, if necessary, went to the Local Government Ombudsman in order to get compensation equal to the “lost” HB.
To some extent, the procedure the landlord should use would depend on why payment was made to the tenant. If the authority made a decision to pay the tenant, that decision is appealable. The decision to pay the claimant would then be capable of being revised by a Tribunal.
On the other hand, if it was simply a mistake – which appears to be the case here – by the local authority, the landlord’s redress would be via a formal complaint (and the Ombudsman if necessary).
There are precedents set by the Ombudsman in this respect – see, for example, complaint no. 92/A/3397 (London Borough of Haringey), 99/B/04581 (Southend-on-Sea Borough Council) and 00/c/05755 (Barrow-in-Furness Borough Council).
It is also worth bearing in mind the “Guidance on Good Practice – Remedies” booklet published by the Ombudsman:
“Complaints may come from landlords. They will generally also be about delay in determining or paying a claim…….The complaint may, however, be about a failure to pay the landlord rather than the tenant, and compensation in such a case should relate to the amount of rent loss as a result of maladministration.”
The Ombudsman would certainly recommend you pay compensation to the landlord equal to the amount of HB paid to the claimant, plus you’d be asked to pay an extra amount for the landlord’s time and trouble in bringing the complaint.
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