Doncaster v Coventry City Council, First Tier Tribunal 032/09/00932, 5 October 2009
The Guild of Residential Landlords has won a very important case which will benefit all landlords throughout England and Wales where the tenant becomes in arrears and the landlord requests direct payment.
Since this article was written, the DWP has amended the local housing allowance guidance (mentioned below) in favour of this case after seeking legal advice. Essentially, this means the Government has accepted this case and amended all guidance as appropriate. This is fantastic news as it should avoid the need for any further appeals on this point.
The circular (HB/CTB A26/2009) providing the amendment is available here
The guidance which has been changed as a direct result of this case is available here
Regulation 95 Housing Benefit Regulations provides that where a tenant is in arrears of an amount equivalent to 8 weeks or more of the amount he is liable to pay his landlord as rent, payment shall be made to the landlord.
A landlord must notify the local authority of the fact that the tenant is 8 weeks or more in arrears before regulation 95 applies. [Social Security Commissioner Decision CH 0180 2006 – M Mark at para 24]
Currently, the Guild is assisting with around 30 or 40 cases where the landlord has requested direct payment but payment has been refused because the local authority claim the tenant is NOT 8 weeks in arrears.
Two reasons are normally cited for this: (a) because the local authority pay housing benefit in arrears, they therefore regard all rents to be payable in arrears and (b) more commonly, the local authority refer the landlord to the DWP guidance on local housing allowance where in a note above 6.86 – 6.89 it states “Note: DWP takes the view that a person cannot be in rent arrears in respect of a period that has not yet been served”
The Guild has always maintained that this statement is wrong and that normal laws of rent apply to housing benefit. The law of when rent is due is as follows:
Rent is due in the morning of the day appointed for payment, but it is not in arrear until after midnight [Dibble v Bowater (1853) 2 E. &B. 564]. If rent is payable in advance it will only become payable ifthe term has continued until the end of the rent day. [Re Aspinall,Aspinall v Aspinall  Ch. 526.] Rent paid in the morning of the rent day is a good discharge of the tenant’s obligation to pay. [Clun’s Case (1613) 10 Co.Rep. 127a.] Rent may lawfully be made payable on a Sunday, and if not paid will be in arrear by midnight of that day.[Child v Edwards  2 K.B. 753]
But rent due upon a bank-holiday will not be payable until the following day. [Banking and Financial Dealings Act 1971, s.1.]
The tenants rent was payable in advance on 16 day of every month. On 16 August 2008, the tenant failed to pay rent to the landlord. On 16 September 2008, the tenant again failed to pay the rent.
On 17 September 2008, the landlord made a written request to Coventry CC for payments to be made direct citing that the tenant was 8 weeks or more in arrears and therefore regulation 95 applied. The landlord enclosed a copy of the tenancy agreement showing the rent was payable in advance and also sent a copy of the rent schedule showing the two missed payments.
On 25 September 2008, Coventry CC replied and stated direct payments would not be made to the landlord because “according to our records your tenant is not 8 weeks in arrears with rent payments”. Verbally, Coventry CC confirmed to the landlord that the reason for the decision on 25 September 2008 was because they were of the view that a tenant cannot be in arrears until the period for the rent has passed, therefore two full months must pass before payment can be made. (It is to be noted this and subsequent letters never contained any rights of appeal or other statutory information but this was not material to the case)
The local authority continued to pay the tenant until 22 October 2008 when a new request for direct payment was made by the landlord, for which payment was made. Therefore, the amount in question was four weeks rent at £98.02 per week covering the period 17 September to 12 October 2008.
The landlord requested a written statement of reasons, then a review of the decision (which was not carried out for 6 months) and finally an appeal was sent to the tribunal after the review did not find in favour of the landlord.
The grounds for appeal were that at the time of the request on 17 September 2008, the tenant was the equivalent of 8 weeks in arrears because the rent was payable in advance.
On 5 May 2009, after many letters by the landlord, the local authority finally admitted that they should have made payment to the landlord but then refused to pay because a local authority has no power to pay benefit twice even if the first payment had been made in error. This was confirmed by Commissioner Jacobs in CH 3629/2006. (We accepted that payment could not be made to the landlord but the landlord would be entitled to “compensation” for an equal amount to the rent that was sent in error as was suggested by Commissioner Jacobs in the same case. At the time of the hearing, we were completing the complaints procedure with the intention to go to the Local Government Ombudsman who would then have provided compensation.)
The Housing Benefit Appeal was allowed and the decision not to pay the landlord direct on 25 September 2008 by Coventry CC was set aside.
Judgement of CJ Jones
“The appellant is entitled to payment of rent in respect of … from the period 17 September 2008 to 12 October 2008 totalling £392.32 since the tenant was in arrears of 8 weeks with his rent as at the decision date.
Whilst the appellant has an entitlement to be paid, because of the off setting provisions contained in regulation 98 of the Housing Benefit Regulations 2006 no actual payment can be made. (Observations of Mr Commissioner Jacobs in CH 3629/2006 considered and applied).
This case has been beset with errors on behalf of the local authority recognised by the local authority in their letter of 5 May 2009 to the appellant. Compensation is due to the appellant and should be paid now rather than the appellant pursue a protracted application to the Ombudsman. Decision 3629/2006 specifically refers to the issue of compensation.
In making this decision I have considered the Housing Benefit Local Housing Allowance Guidance Manual as amended in March 2008 and in particular the note at the foot of 6.86 – 6.89 that rent cannot be in arrear in respect of a period that has not been served.
I do not agree with that view. Rent is in arrears once the contractual date for payment has passed irrespective of whether rent is due in advance or in arrear. Regulation 95 of the 2006 Regulations refers to a liability to pay rent and the liability in this case is to pay rent in advance.” [CJ Jones]
A copy of the judgement is available here