R(H) 2/07

Overview

1. This digest reviews the Social Security Commissioner’s decision in the case of CH/423/2006, delivered on 19 June 2006, concerning the interpretation of “exempt accommodation” under UK social security regulations.¹R(H)2/07: CH/423/2006 The core issue revolves around whether care and support provided to tenants in a supported living arrangement can be considered as being provided “on behalf of” the landlord, even if the landlord does not directly contract or pay for these services. This decision has significant implications for housing benefit entitlement for vulnerable individuals in similar supported living schemes across the country.

Key Parties

2. Appellants (Claimants): Three young men with learning difficulties sharing a house, each with a tenancy for their bedroom and shared living spaces. They require significant care, support, and supervision to live independently.

3. Landlord: Rivendell Lake Housing Association Limited (“Rivendell”), an unregistered housing association providing supported accommodation.

4. Care Provider: Citizenship First (“CF”), an organisation providing care, support, and supervision to the appellants.

5. Local Authority: Sheffield City Council (the “Council”), which also acts as the “Purchasing Authority” and provides primary funding for the care services.

6. Freehold Owner: Supported Living Limited (“SLL”), which leased the property to Rivendell.

Background of the Dispute

7. The appellants each paid a contractual rent of £238.92 per week. However, the Council, applying the Housing Benefit (General) Regulations 1987 (as amended from 2 January 1996), limited their housing benefit to the “local reference rent” of £45 per week. This significant reduction (approximately £10,000 per annum per appellant) was based on the Council’s determination that the accommodation was not “exempt accommodation.”

8. “Exempt accommodation” is defined in regulation 10(6) of the Housing Benefit (General) Amendment Regulations 1995 as including accommodation “provided by… a housing association… or voluntary organisation where that body or a person acting on its behalf also provides the claimant with care, support or supervision.” It was common ground that Rivendell is a “voluntary organisation.”

9. The core contention was whether the care, support, and supervision provided by CF was provided “on behalf of” Rivendell, the landlord. If it were, the older, more generous form of regulation 11 would apply, potentially allowing for housing benefit to cover the full contractual rent unless unsuitable alternative accommodation was available and it was reasonable to expect them to move.

Main Themes and Important Ideas

Definition and Interpretation of “Exempt Accommodation”

10. Crucial Wording: The case hinges on the phrase “a person acting on its behalf” within the definition of “exempt accommodation.”

11. Narrow vs. Wide Interpretation: The appellants argued for a “wider interpretation,” suggesting that accommodation should be considered exempt if the landlord is “participating in arrangements for the provision of supported accommodation in a situation where, if the care provider did not provide the care, the landlord would have to ensure it was received from another source.” They advocated for a “purposive approach to the interpretation of the legislation.”

12. Commissioner’s Ruling: The Commissioner rejected this wider interpretation, preferring a “narrower view.” He concluded that for care to be provided “on behalf of” the landlord, there must be:

1. An absence of contractual or statutory obligation on the landlord to provide the care themselves.
2. A direct engagement or instruction by the landlord to the care provider to perform services for the landlord, or something “akin to agency.”

13. Quote: “Care which is provided by B to C is not provided ‘on behalf of’ A, within the sense of regulation 10(6), merely because the provision of it results in some incidental, or even intended, benefit to A. There must in my judgement be some respect in which B acts for A, either because A would otherwise be legally obliged to provide the care or because A has engaged B to provide it for him.”

The Nature of the Relationship Between Rivendell and CF

14. Tripartite Agreement: Rivendell, SLL, and CF entered into a tripartite agreement. Clause 5.2.1 stated that CF would provide care “on behalf of the Association [Rivendell].”

15. Reality Over Form: The Commissioner found that despite this wording, the agreement was “in the nature of a joint venture agreement in which each of the three joint venture partners agreed, as principal, to play its defined part: it was not in substance an agreement in which Rivendell engaged CF to perform services for it or on its behalf.”

16. Funding and Engagement: Crucially, CF received no remuneration from Rivendell. Their payment came primarily from the Council and other sources, and the Council was found to be the party that initially nominated CF, could terminate CF’s contract, and would have to arrange an alternative provider if CF were dismissed.

17. Quote: “The words ‘on behalf of [Rivendell]’ at the end of clause 5.2.1 of the Agreement were in my judgement wholly at variance with the reality of the situation, and the Tribunal was right to attribute no significance to them.”

Relevance of Benefit to the Landlord

18. Scheme Viability: It was acknowledged that the scheme would not work without the provision of care, meaning the care directly benefited Rivendell by making the accommodation viable for the appellants.

19. Incidental Benefit Insufficient: The Commissioner explicitly stated that “the fact that the provision of the care etc. benefits Rivendell in the sense that without it the scheme would not be viable does not mean that the care is provided by CF ‘on [Rivendell’s] behalf’ within the meaning of regulation 10(6).”

20. Distinction from Agency: The Commissioner drew upon Gaspet v. Ellis [1985] 1 WLR 1214, which interpreted “on his behalf” in a statutory context as requiring an agency relationship or something “akin thereto,” where the person undertaking the act is “responsible to the claimant.” While the present case involves a contractual link (the tripartite agreement), it was not an agency relationship where Rivendell engaged CF to perform services for it.

Policy Changes and their Impact on “Exempt Accommodation”

21. Transition from THB to “Supporting People”: Before April 2003, “transitional housing benefit” (THB) allowed housing benefit to cover service charges related to housing-related support in “supported accommodation.” This scheme was discontinued and replaced by “Supporting People” (SP) funding.

22. Direct Funding of Care Providers: A key change from April 2003 was that SP Administering Authorities and social services departments began to channel funds for support costs directly to the support provider, rather than via the landlord. This was partly driven by the “Valuing People” White Paper (2001) to promote independence and separate housing provision from care provision.

23. Unintended Consequence: The Commissioner acknowledged that this change “has made it less likely in practice that accommodation will be ‘exempt accommodation’,” but stressed that this “cannot justify giving the relevant limb of that definition in regulation 10(6) a meaning which it will not in my judgement reasonably bear.”

No Logical Distinction Argument Rejected

24. The appellants argued there was “no logical distinction” between a situation where a social services authority contracts with Organisation A (landlord) who then sub-contracts care to Organisation B, and a situation where the authority makes a joint arrangement with Organisation A (housing) and Organisation B (care). They contended both situations should be exempt due to the special needs of the claimants.

25. The Commissioner rejected this, highlighting the “crucial distinction” that in the first scenario, the landlord (A) has a contractual obligation to provide care and engages B for that purpose. In the second, neither of those factors is present.

Conclusion of the Tribunal and Commissioner

26. The Social Security Commissioner upheld the Appeal Tribunal’s decision, dismissing the appeals. He concluded that the care, support, and supervision provided by CF to the appellants was not provided by “a person acting on [Rivendell’s] behalf” within the meaning of regulation 10(6) of the 1995 Regulations.

27. The reasoning was based on:

1. No obligation on Rivendell: Rivendell was under no contractual or statutory obligation to provide care.
2. No direct engagement/payment by Rivendell: Rivendell did not engage or pay CF for the care services. CF was engaged and remunerated primarily by the Council.
3. Joint venture, not agency: The tripartite agreement, despite its wording, did not establish an agency relationship where CF acted for Rivendell in providing care. They were independent joint venture partners.
4. Benefit insufficient: The fact that the care benefited Rivendell by making the housing scheme viable was not enough to establish that the care was provided “on its behalf.”

28. This decision confirms a narrow interpretation of “on behalf of” in the context of “exempt accommodation,” requiring a direct link of instruction or obligation between the landlord and the care provider for the care to be considered as provided “on behalf of” the landlord for housing benefit purposes.

Evolution of the Interpretation of the “On Behalf Of” Principle

29. The interpretation of “the on behalf of test” in the context of “exempt accommodation” for housing benefit purposes has undergone a significant evolution, moving from initial ambiguity to a consistently narrow application, as clarified by various judicial decisions.

Initial Broad Arguments and Statutory Context

30. The concept of “exempt accommodation” is crucial for housing benefit purposes because, since 1996, it allows for the “old” form of regulation 11 (now regulation 13 of the Housing Benefit Regulations 2006) to apply, meaning the eligible rent is generally not restricted by a rent officer’s determination, unlike non-exempt accommodation.

31. The relevant statutory provision defines “exempt accommodation” as including accommodation:

32. “provided by a non-metropolitan county council…a housing association, a registered charity or voluntary organisation where that body or a person acting on its behalf also provides the claimant with care, support or supervision”.

33. Prior to definitive rulings, arguments were made for a broader interpretation of “on its behalf.” This included the idea that if a landlord and a care provider worked together to achieve a common goal, such as the success of a supported housing scheme, then the care could be said to be provided “on behalf of” the landlord because it was in the landlord’s interest for that care to be provided. This was sometimes referred to as a “joint venture” argument. Proponents suggested that “on behalf of” could mean “for the benefit of” or “in the interests of”.

Establishment of the Narrow Interpretation (R(H) 2/07)

34. The foundational decision that established a narrow interpretation was the present case, R(H) 2/07, decided in June 2006.

35. Commissioner Turnbull held that care, support, or supervision (CSS) is only provided “on behalf of” a landlord within the meaning of the definition where:

1. The landlord was under a statutory or contractual duty to the claimant to provide CSS.
2. The provider of the CSS was under a contractual duty to the landlord to provide the CSS.
3. The provider received remuneration from the landlord for providing the CSS.

36. This decision explicitly rejected the broader “joint venture” argument, stating that the mere fact that the provision of care benefits the landlord does not mean it is provided “on Rivendell’s behalf”. The Commissioner drew “some support” for this conclusion from Gaspet v Ellis 1 WLR 1214, which suggested that “on behalf of” connotes a relationship of agency or something akin to it.

Reinforcement and Clarification (R(H) 6/08)

37. In R(H) 6/08, decided in October 2007, Commissioner Turnbull reinforced this narrow interpretation. He firmly rejected the argument that it was sufficient if the care provider acted on behalf of the landlord in some other respect (e.g., collecting rent) but not directly in providing care. He clarified that the words “or a person acting on its behalf” mean acting on the landlord’s behalf in providing the care, support, or supervision specifically.

High Court Upholding the Narrow View

38. The interpretation of the present case R(H) 2/07 faced a challenge through judicial review. Although HHJ Bidder QC in [2008] EWHC 3097 (Admin) (December 2008) granted permission, noting it was “strongly arguable” that the Commissioner’s interpretation was wrong, especially where care services benefited and were authorised/required by the landlord, the subsequent High Court decision definitively upheld the narrow interpretation.

39. In S, R (on the application of) v A Social Security Commissioner & Ors EWHC 2221 (Admin) (September 2009), Sir Thayne Forbes dismissed the judicial review application, upholding Commissioner Turnbull’s narrow interpretation. Key aspects of this ruling included:

1. The court emphasised that “on its behalf” means “in its place” or “instead of” the landlord.
2. The word “also” in the statutory definition was deemed significant, indicating that the landlord would otherwise “also” be providing such services.
3. It concluded that only specified organisations that have the ultimate responsibility for providing CSS qualify for the exemption when CSS is provided by another party acting on their behalf.
4. While acknowledging Commissioner Turnbull’s concerns in Chorley (e.g., UKUT 107 (AAC)) about the practical implications of this narrow interpretation, the High Court stated that such policy considerations were a matter for the Secretary of State, not the court, to address.

Continued Application and Shift in Focus

40. Following the High Court’s affirmation of the narrow interpretation, subsequent Upper Tribunal decisions have consistently applied this understanding of “on behalf of.” The legal discourse has since shifted, with less emphasis on whether a separate care provider acts “on behalf of” the landlord for the provision of care, and more focus on what direct support the landlord itself provides to meet the “more than minimal” threshold.

41. For example:

1. CH/1766/2010 (March 2011) reiterated that from April 2003, support provided by a care provider generally ceased to be considered as provided “on behalf of” the landlord, reinforcing the need for the landlord to provide direct, more than minimal support to qualify.
2. MMcF v Sefton Borough Council (HB) UKUT 403 (AAC) (September 2016) further clarified that while the landlord need not be the main care provider, and duplication of services by another provider is not a legal hurdle, these are evidential considerations when assessing if the landlord’s direct support is more than minimal.

42. In essence, the interpretation of “the on behalf of test” has solidified into a strictly confined legal agency or “in place of” relationship. This requires specific contractual duties and remuneration from the landlord for the provision of the care, support, or supervision itself. This narrow interpretation has been consistently applied since its affirmation by the High Court, leading to a greater emphasis on the direct provision of more than minimal support by the landlord itself to qualify for “exempt accommodation” status.

Reported Decision

43. The reported decision identifies the following points as held in this case:²Reported Decision R(H) 2/07

44. Held, dismissing the appeals, that:

1. in the absence of any contractual or statutory obligation on the part of Rivendell to provide the care, support and supervision, and given that Rivendell did not engage or instruct CF to provide it, it could not be said that CF were “acting on [Rivendell’s] behalf”, within the meaning of that expression in regulation 10(6) of the 1995 Regulations (paragraphs 30 to 33);
2. it was not self-evident that if CF ceased to provide the care, Rivendell would in practice have to seek to ensure that it was received from another source, since the Council appeared to have statutory obligations to provide the necessary care, but even if in practice Rivendell would wish to take steps to ensure such provision, that would not mean that the provider was acting on behalf of Rivendell (paragraphs 34 to 38);
3. the agreement provided that CF would be responsible for “all necessary care, support and supervision” and a consequence of the wider interpretation would appear to be that not only the strictly housing-related support, but also the personal care and supervision, was being provided by CF “on [Rivendell’s] behalf”, a consequence for which the claimants did not contend (paragraph 39);
4. there was a crucial distinction between the situation where the housing provider contracts the provision of care to a sub-contractor and an arrangement such as that in the present case, and the fact that the needs of the claimants for specialist accommodation are the same in the two situations cannot justify giving the words “acting on its behalf” a meaning which they cannot reasonably bear (paragraphs 40 to 45);
5. Gaspet Ltd v Elliss (Inspector of Taxes) [1985] 1 WLR 1214 was support for the view that, to fall within the definition in regulation 10(6), the care must be provided either by the landlord or by a person acting in some sense for him and it is clearly not sufficient that the provision of the care benefits the landlord, even if that benefit is intended (paragraphs 46 to 52).