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	UK Social Security and Child Support Commissioners' Decisions
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[2004] UKSSCSC CH_296_2004 (18 March 2004)

 
DECISION OF THE SOCIAL SECURITY COMMISSIONER
1. My decision is as follows. It is given under paragraph 8(4) and (5)(b) of Schedule 7 to the Child Support, Pensions and Social Security Act 2000.
2. 1. The decision of the Worcester appeal tribunal under reference U/04/055/2003/00469, held on 10 November 2003, is erroneous in point of law.
3. 2. I set it aside, make findings of fact and give the decision appropriate in the light of them.
4. 3. I find as fact that the tenancy and related arrangements under which the claimant occupies his dwelling are on a commercial basis.
5. 4. My decision is the claimant is not barred from entitlement to housing benefit under regulation 6 or 7 of the Housing Benefit (General) Regulations 1987. The local authority will now decide his claim for housing benefit on that basis.

The appeal to the Commissioner

6. This is an appeal to a Commissioner against the decision of the appeal tribunal brought by a housing benefit claimant with the leave of the district chairman who chaired the tribunal. The claimant's local authority does not support the appeal.
7. In view of the issue raised by this appeal, I directed an oral hearing. It was held before me in London on 17 March 2004. The claimant was represented by his father. The local authority was represented by its solicitor, Mr Mitton. The appeal was heard at the same time as that in another case that raised similar issues: CH/0215/2004. Inevitably, the arguments on the two appeals overlapped. I am grateful to all those involved for their submissions in both cases.
8. The Secretary of State was invited to join as a party to the proceedings, but declined.

The issue

9. The claimant made a claim for housing benefit on 20 December 2002. The local authority refused the claim. It was refused on the basis of regulation 7(1)(a) of the Housing Benefit (General) Regulations 1987, which provides:

'(1) A person who is liable to make payments in respect of a dwelling shall be treated as if he were not so liable where-

(a) the tenancy or other arrangement pursuant to which he occupies the dwelling is not on a commercial basis'.

10. As the case was presented at the oral hearing before me, no other bar to entitlement in regulation 6 or 7 applied. Specifically, the local authority accepted that the arrangement was not a sham, that the claimant had sufficient mental capacity to make the arrangement, and that it was not created to take advantage of the scheme.
11. The tribunal confirmed the local authority's decision. The issue for me is whether the tribunal went wrong in law in making that decision.

The approach for tribunals

12. Whether or not an arrangement is on a commercial basis is a matter of judgment. The tribunal has to find the relevant facts and then decide whether or not their combined significance is that the arrangement was on a commercial basis.

The approach for a Commissioner

13. The nature of the issue for the tribunal affects the nature of the issue for the Commissioner. The error of law may be found in the deficiency of the chairman's explanation of the tribunal's findings and reasoning. But that argument is not open in this case, and was not put to me. The chairman has given a clear and comprehensive account of her reasoning. Alternatively, it may be found in the substance of the tribunal's reasoning. I cannot set aside the tribunal's decision simply because I would have assessed the combined significance of the facts differently from the tribunal. I can only do this if the tribunal came to a conclusion that 'exceeded the generous ambit within which a reasonable disagreement is possible', to use Lord Fraser's formulation of the test in G v G [1985] 2 All England Law Reports 225 at page 229. Another way of expressing this is to say that the tribunal went wrong in what Lord Bridge called 'the balancing exercise' (quoted by Lord Fraser on page 229). My conclusion is that the tribunal went wrong in law on either of those formulations.

The facts

14. The facts are largely not in dispute.
15. The claimant is disabled. His condition was described by an independent consultant in Autism and Aspergers Syndrome as follows:

'[The claimant] is a 23-year-old male with severe difficulties in social interaction, some unusual preoccupations and some abnormalities in communication but no delay in development of verbal skills. These difficulties are causing severe difficulties and have halted [his] academic progress.

'Although there was not sufficient evidence to fulfil the criteria for Asperger Syndrome using the ADI instrument, there is sufficient evidence to confirm a Pervasive Developmental Disorder (NOS) with Aspergers Syndrome suggested as a differential diagnosis and working diagnosis (using ICD 10 criteria).

'It is possible that [he] has an anxiety disorder co-occurring with his P.D.D. He is also subject to low moods and depression.'

16. The claimant's father experienced financial difficulties and decided to move into a new house with a self-contained flat for his son. They entered into a tenancy agreement. The claimant is able to function independently, but requires support in order to achieve that independence. His parents are able to provide support from their dwelling.
17. It is convenient to quote from evidence in the related appeal, which also applies to this case. In the related case, the claimant has autism, similar to the diagnosis in this case. The evidence referred to the policy for the care and support for claimants with that disability:

'Standards six to ten, as laid down by the Care Standard Commission, start from the premise that service users should be enabled to take control of their own lives and those with intellectual impairments and/or limited communication skills should be supported to make their own decisions whenever possible.'

18. The claimant receives council tax benefit, disability living allowance (mobility component at the lower rate and care component at the lowest rate), incapacity benefit, and wages from permitted work on a database for young people. He is unable to pay the full contractual rent, but is paying £200 a month. The contractual rent was set at £520, which is high, but was set with a view to a more realistic figure being fixed by the rent officer. That officer's assessment was £350, but a copy was apparently not received by the claimant. His father has evidence of comparable rents ranging from £425 to £495 a month.
19. I asked the claimant's father whether he would evict his son. This was obviously a difficult question for him and his answer appeared to be to be plainly honest. He did not go as far as to say that he would or would not evict him for breach of covenant in the lease. He said that frankly there were times when he would gladly evict him and referred to his son's behaviour. But that related to personal matters, not to landlord and tenant issues. He also referred to his own financial need for income. I suggested to him that he might be willing to accept a lower rent and he acknowledged that as possible. I have more to say about this evidence later.
20. Some issues were raised relating to planning permission, housing lists, and the availability of accommodation. Those factors cannot affect the nature of the arrangement between the claimant and his father as landlord and tenant, either individually or collectively.

Analysis

21. It is convenient to begin with a question posed by the claimant's father at the oral hearing: 'Would there be any doubt that this was arrangement was on a commercial basis if I were not the landlord?' In support he referred to similar arrangements set up in other local authority areas in which housing benefit had been paid in respect of similar arrangements.
22. I do not know the circumstances of the cases to which the claimant's father referred. I can only deal with the circumstances of this case. But the answer to the question posed is that I would have expected a local authority to accept the arrangement as on a commercial basis if the landlord were someone other than the claimant's father. The only feature of the case that might cause concern is the amount of support that is given to the claimant. But there is nothing necessarily incompatible between a commercial arrangement and a caring or support arrangement between the landlord and the tenant. That is shown by paragraph 1 of Schedule 1 to the Housing Benefit (General) Regulations 1987. This contains a list of ineligible service charges. Paragraph 1(f) lists

'charges in respect of general counselling or of any other support services regardless whoever provides those services'.

If the charge is ineligible, no housing benefit is payable in respect of it. But the claimant is not otherwise automatically barred from entitlement to housing benefit. That shows that the provision of support in any form is potentially compatible with an arrangement for occupation being on a commercial basis. The point is made even clearer by the exception to paragraph 1(f) which provides that service charges are eligible if they are for services provided to a tenant in supported accommodation by the landlord personally or someone on the landlord's behalf.

23. On that basis, what is the significance of the fact that the landlord is the tenant's father?
24. The first difference is that there is a personal, family relationship between the landlord and tenant. But there is nothing necessarily incompatible in a commercial arrangement being made between parent and adult child. Mr Mitton referred me to the decision of the Tribunal of Commissioners in R(IS) 11/98 at paragraph 8, where the Tribunal quoted with approval from CIS/195/1991 in which the Commissioner had commented on the likelihood of an arrangement between close family members being on a commercial basis. The claimant's father pointed to the wider context of the passage. There is, though, a more fundamental answer to Mr Mitton's point. The Commissioner was only commenting on likelihood. That is a factor that is relevant to evaluating the evidence. But it has no precedent value. It leaves open the possibility that in any particular case the unlikely may have occurred. The Commissioner's comment implicitly recognises that possibility. See also R(H) 1/03, paragraph 18(5).
25. A family relationship may be indicative that an arrangement is not on a commercial basis. It is a factor to be taken into account. But it is not decisive. In this case, there is evidence that the claimant's father needed additional income and that the best method of helping the claimant is to allow him to function as independently as possible with appropriate support. Those two factors point towards a commercial arrangement rather than one that is not.
26. The claimant's father told me that he needed to maximise his income. That suggests that he would seek to let the accommodation to someone else if his son was not there. On that evidence, the claimant is not a unique tenant for the accommodation. But it would not make any difference if the claimant were the only person to whom his father would let the accommodation. An arrangement may be commercial even if the landlord would not let to anyone other than the tenant. Assume that I am sent abroad by my employer. I do not want my home damaged while I am away. But I know and trust a friend who is looking for temporary accommodation. I let the house to my friend. That arrangement could be commercial, even though I would not let my home to anyone else.
27. The second difference is that the nature of the care and support provided to the claimant by his father will naturally by reason of their relationship be of a different quality from that which a stranger could provide. But, as I have explained, that is not incompatible with a commercial relationship. The service charge provisions recognise that.
28. The third difference is that the motivation will be different. The claimant's father told me that he was motivated by financial considerations to arrange his accommodation as he did. I have no reason to doubt that. But I am sure that he also was concerned to ensure that his son was properly housed and supported. Even if that was his sole motivation and purpose, it would not necessarily prevent the arrangement being on a commercial basis. Quite the opposite, the evidence shows that supported independent living is the preferred way of enabling someone with the claimant's disabilities to live as full a life as possible.
29. The fourth difference is that the dynamics of the relationship between landlord and tenant are different as a result of their personal relationship. This is most likely to be reflected in decisions about the mount and payment of rent, and about the enforcement of obligations and eviction. More leeway is naturally to be expected than would be tolerated by a landlord whose sole concern was profit.
30. The tribunal expressly made no finding on eviction. I can understand why. I was impressed by the evidence from the claimant's father when I asked him if he would evict his son. The difficulty of the choice was immediately apparent from his demeanour and what he had to say. Clearly, he does not want to evict his son. I can understand that he does not want to consider this possibility or acknowledge it, even to himself. I can understand that he would want to postpone thinking about it until the appeal process is complete. In the end, I suspect that the question of eviction is an artificial one. The claimant has income from benefits and from wages. He can afford to pay, and is paying, something towards rent and that amount is significant. His father may decide that reducing the contractual rent to the amount his son can afford is preferable to evicting his son. That would be bowing to reality. It would not mean that the arrangement was not commercial. Rackman is not the only model of a commercial landlord. There are many landlords who are prepared to accept the rent that can be obtained rather than insist on the full contractual rent and others who are prepared to be patient while the claim and appeal process is in process.
31. Left to my own devices, I would have decided that the arrangement between the claimant and his father was on a commercial basis. However, I have to remind myself that that is not enough to show that the tribunal, which came to the opposite conclusion, went wrong in law. I have re-read the tribunal's decision with that in mind. It emphasised the intimate and personal aspects of the arrangement. I have come to the conclusion that in doing so, the tribunal overemphasised the care and support aspects of the arrangement. It did not refer to, and as far as I can see was not referred to, the service charge provisions which show that that aspect of an arrangement is not necessarily incompatible with it being on a commercial basis.
32. Mr Mitton argued that the appeal tribunal was entitled to come to the decision that it did. For the reasons I have explained, I disagree with that argument.

Conclusion

33. The claimant's father invited me to allow the appeal and to substitute a decision without a rehearing. I am satisfied that no further investigation of the facts is needed. I can, and do, deal with the case on the basis of the evidence available to me. My decision is that the claimant is not barred from entitlement to housing benefit under regulation 7(1)(a). Given the concessions made by the local authority, there is no bar to entitlement under regulation 6 or any other provision of regulation 7. The local authority must now decide the claim for housing benefit on that basis. Its decision on the claim will carry a right of appeal to an appeal tribunal, if the claimant is dissatisfied.

Signed on original

Edward Jacobs Commissioner 18 March 2004