Wirral MBC v AL (HB)

Case Overview

1. This case is a decision of the Upper Tribunal (Administrative Appeals Chamber) regarding a dispute over Housing Benefit payments. It involves a claimant, Mr. C.H., his landlord (the first respondent, AL), and the Wirral Metropolitan Borough Council (WMBC, the appellant). ¹Wirral MBC v AL [2010] UKUT 254 (AAC)

2. The central issue are:

1. whether the council was correct in changing the recipient of the housing benefit payments from the landlord to the tenant under the Local Housing Allowance (LHA) regulations, and
2. whether the landlord is entitled to a duplicate payment when a tribunal later decided the benefit should have been paid to the landlord originally.

Key Themes and Issues

Direct Payment vs. Payment to Landlord:

3. The core of the case revolves around the complex regulations governing when Housing Benefit should be paid directly to the tenant versus directly to the landlord. The case highlights the shift in policy towards empowering tenants to manage their finances, specifically in Local Housing Allowance (LHA) areas.

Local Housing Allowance (LHA) Regulations

4. The case specifically concerns how the Housing Benefit regulations apply in Local Housing Allowance (LHA) cases. These regulations impose stricter conditions on when payments can be made directly to landlords compared to non-LHA cases.

Discretionary Powers of Local Authorities

5. The case provides an  analyses of the discretionary power of local authorities to make payments to landlords under regulation 96(3A) of the Housing Benefit Regulations 2006, especially when a maximum rent has been determined. Specifically, the regulation outlines cases when the Local Authority:

1. “considers that the claimant is likely to have difficulty in relation to the management of his affairs” or
2. “considers that it is improbable that the claimant will pay his rent.

Appeal Process and Scope

6. The case explores the nature and scope of appeals made by landlords against decisions made by local authorities regarding payment of housing benefit.

Offsetting of Benefit Payments

7. A crucial legal point addresses whether an authority must make duplicate payments to a landlord when it has already paid the benefit to the tenant, even if a tribunal later ruled the payments should have gone directly to the landlord.

Vulnerability and Responsibility

8. The case touches on the tension between the policy goal of encouraging tenant responsibility and the need to safeguard vulnerable individuals who may struggle to manage their finances.

Important Facts & Chronology

1. October 2008: The claimant, Mr. C.H., was housed in a property owned by the landlord, AL, by Wirral MBC’s social services after being found squatting. He elected to have his housing benefit paid directly to his landlord in exchange for not paying a deposit.
2. Initial 8 Weeks: For the first eight weeks, Wirral MBC paid the housing benefit directly to the landlord, AL.
3. December 23, 2008: WMBC changed the payment to be made directly to Mr. C.H. after reviewing the information provided by the claimant and applying government guidelines for LHA areas, citing the claimant had not provided sufficient evidence to satisfy regulations for continued payment to the landlord.
4. Landlord’s Appeal: AL (the landlord) appealed the council’s decision, arguing that tenants often do not pass on the benefit to their landlords, which resulted in rent arrears.
5. First-tier Tribunal Ruling: The first-tier tribunal sided with the landlord, stating that, based on evidence about the claimant’s unsettled lifestyle and lack of financial management, they felt that payments should have been made to the landlord after the 8 week initial period. They stated the council should have taken a different course of action at the time they made their original decision in December of 2008.
6. Upper Tribunal Appeal: Wirral MBC appealed the first-tier tribunal’s decision to the Upper Tribunal.

Key Arguments and Findings

Council’s Argument

9. The Council argued it acted within the law and following government guidelines. They were concerned that the first-tier tribunal based their decision on generalisations and landlord’s biased evidence. As they were not affirmatively satisfied of the need to send payments to the landlord at the time of the initial decision, they were bound to send payments to the tenant under regulation 94(1).

Landlord’s Argument

10. The landlord contended that the policy of paying tenants directly is flawed, and that tenants often do not pay rent when benefits are sent to them. He argued for a continuation of direct payments to avoid arrears.

Upper Tribunal’s Findings

11. The Upper Tribunal agreed the first-tier tribunal was correct to consider this case to be a complete re-hearing and should stand in the shoes of the authority when making a decision about whether to direct payments to the landlord. However, it also stated that a Tribunal is not bound by government guidance in the same way as the authority is, which could lead to differing but acceptable decisions.

12. The Upper Tribunal found that both the council’s original decision and the tribunal’s subsequent decision were reasonable and legally defensible based on the available evidence at the time of each respective decision. It emphasized the complexity of the situation because of its reliance on future projections when determining “likelihood” and “probability”.

13. The Upper Tribunal agreed the tribunal may have made an error by not notifying the claimant of his right to representation at the appeal hearing, but stated that this would not have affected the outcome.

14. Crucially, the Upper Tribunal ruled that, under regulation 98, the Housing Benefit already paid to the claimant for the period in question had to be offset against any liability arising from the tribunal’s decision, meaning that the landlord was not entitled to a duplicate payment. This followed precedent from a similar case (R(H) 2/08).

Key Quotes from the Document

On the “odd” nature of the system

15. “This case reveals a strange corner of the current policy and practice over the provision of public money… the practical effects shown here… do strike me as decidedly odd: I can only suggest it would be a good idea if the Secretary of State were to review the current system.”

On the shift in payment policy

16. “A key feature of the LHA arrangements… is that, wherever possible, Housing Benefit (HB) is paid to the tenant rather than to the landlord.”

On the conditions for direct payment to a landlord

17. “the discretion to do so may only be exercised for an initial 8 weeks if the authority considers it possible, or suspects, that the tenant will have difficulty coping with his affairs or will not pay the rent; after that time it may only continue to do so if it considers it likely he will have such difficulty or improbable he will pay the rent.”

On the interpretation of “improbable”

18. “The phrase ‘improbable’ means that there must be a degree of certainty that the tenant will not pay his/her rent. It is not sufficient to assume that there is a ‘possibility’ that the tenant will not pay his/her rent.”

On the interpretation of “likely”

19. “The phrase ‘is likely’ means that there must be a degree of certainty that the tenant will be unable to manage their financial affairs. It is not sufficient to assume that there is a possibility that the tenant may have difficulty in managing their financial affairs.”

On offsetting payments

20. “Where a person has been paid a sum of housing benefit under a decision which is subsequently revised or further revised, any sum paid in respect of a period covered by a subsequent decision shall be offset against arrears of entitlement under the subsequent decision except to the extent that the sum exceeds the arrears and shall be treated as properly paid on account of them.”

On both decisions being “tenable”

21. “These were in my judgment simply two equally tenable and justifiable conclusions on the questions of degree and administrative discretion… each quite properly reached by the relevant authority and the tribunal…”

Implications and Conclusion

22. This case highlights the tension between the government’s policy of promoting tenant responsibility and the need to protect potentially vulnerable tenants.

23. It demonstrates the complexity of the regulations surrounding housing benefit, particularly in LHA areas, where payments to the landlord can only be made when certain specific conditions are met.

24. The decision underscores the importance of proper evidence collection and documentation by local authorities when determining who should receive benefit payments.

25. A key ruling established that even if a tribunal later decides payment should have gone to the landlord, prior payments to the tenant are considered valid due to an offsetting provision, preventing duplicate payments.

26. The judge recommended the Secretary of State to review the current system because of its seemingly “odd” nature, though the judge stated he can not comment on the social and political issues.

27. In conclusion, this case provides a detailed analysis of the interplay between housing benefit regulations, local authority discretion, and the appeals process. It also establishes an important legal precedent regarding the offsetting of housing benefit payments when a decision is revised on appeal.