Coventry City Council v Vassell

This matter raises important issues concerning the mental elements the prosecution have to prove to convict a housing benefit claimant for non-disclosure of a change in circumstances that affects his benefit entitlement.

It comes before this court as an appeal by way of case stated from a decision of the Coventry Magistrates’ Court on 1 September 2010. The justices found the Respondent Neil Vassell not guilty of one offence that, between 29 October 2007 and 5 July 2009, he failed to give prompt notification of a change of circumstances that he knew would affect his entitlement to housing benefit and council tax benefit (“CTB”), namely that he had begun to receive student finance by way of a supplementary grant, student loan and bursary, contrary to section 112(1A) of the Social Security Administration Act 1992 as amended (“the 1992 Act”). The information in fact referred to “section 112(1)” of the 1992 Act, but it is clear that section 112(1A) was intended and no point turns upon that error.

Housing benefit is paid to people with a low income who pay rent. Similarly, CTB is paid to such people who pay council tax. Each benefit is the subject of a national scheme, but both are administered and paid by local authorities. The rules for the two benefits are similar, and they are subject to parallel regulations, namely the Housing Benefit Regulations 2006 (SI 2006 No 213, “the HB Regulations”) and the Council Tax Benefit Regulations 2006 (SI 2006 No 215, “the CTB Regulations”). Those regulations have been the subject of frequent amendment. The regulations referred to and quoted in this judgment are those which applied in the relevant period.

Eligibility for a housing benefit or CTB depends upon individual circumstances, and is assessed mainly on the basis of information provided by an applicant. There are some circumstances (not relevant to this appeal) in which a claim can be made by telephone, but generally an application must be made in writing, on a form approved by the relevant local authority (regulation 83(1) of the HB Regulations, and regulation 69(1) of the CTB Regulations).

However, income-based job seekers allowance (“JSA”) provides a gateway to both housing benefit and CTB, in the sense that those who are entitled to JSA are also entitled to those additional benefits – and regulation 83(4) of the HB Regulations and the parallel regulation 69(4) of the CTB Regulations provide that, where the applicant is also claiming JSA, a claim for housing benefit and CTB may be sent or delivered to the appropriate Department of Work & Pensions (“DWP”) office. That DWP office is then required immediately to send the housing benefit and CTB forms on to the relevant local authority, which must notify the DWP of the address to which such forms are to be forwarded (regulation 83(3) and (4)(c) of the HB Regulations, and regulation 69(3) and 4(c) of the CTB Regulations). In practice, housing benefit and CTB claim forms are included in JSA claim packs, and, where JSA is claimed at a DWP contact centre (such as a Job Centre), the forms are all completed at the same time, left there and sent on.

If a benefit claimant’s circumstances change, then of course his entitlement to benefit may change. Local authorities are largely reliant on such changes being notified by the benefit claimant himself, for obvious reasons. Regulation 88(1) of the HB Regulations imposes a general duty on benefit claimants to notify changes of circumstances, in these terms:

“… if… during the award of housing benefit, there is a change of circumstances which the claimant… might reasonably be expected to know might affect the claimant’s right to, the amount of or the receipt of housing benefit, that person shall be under a duty to notify that change of circumstances by giving notice…”.

The notification generally has to be in writing, and has to be to “the designated office” (a phrase to which I shall return). Regulation 74(1) of the CTB Regulations is in similar terms.

That is a widely cast duty of notification; but there is no direct sanction if this particular duty is breached. Breach of regulation 88 of the HB Regulations or its CTB equivalent is not, for example, a criminal offence. Sanctions for non-disclosure (such as the recovery of overpayments, penalties and criminal prosecution) are dealt with in other parts of the statutory scheme, and each is dependent upon different criteria.

For example, recovery of overpayments is dealt with in Part 13 of the HB Regulations. Regulation 99 defines “overpayment” in terms of any benefit payment made to which the claimant was not entitled; and regulation 100 empowers the relevant authority to recover any overpayment except when it results from “an official error”, defined in Regulation 100(3) as an error for which the authority is solely responsible. There are parallel provisions in the CTB Regulations, in Part 11 and in particular regulations 82 and 83. If an authority continues to pay benefit after a claimant has given notification of a change in circumstances which extinguishes or reduces his entitlement to housing benefit or CTB, then the resulting overpayment would be by virtue of an official error and the authority would not be able to recover it. The definition of “official error” does not require the error to be made by a person in the authority’s department dealing with housing benefit; and, therefore, a failure of an officer in another department (e.g. the social services department) to pass details of a change of circumstances on to the housing department may amount to an official error, and mean that any overpayment is consequently irrecoverable. Similarly, it has been held that, where the DWP office handling a claimant’s JSA claim undertook to pass on a change of circumstances to the local authority housing department, but then did not do so, that too was capable of amounting to an official error to bar recovery of a resulting overpayment (Social Security Commissioners’ Case CH/939/2004). R (Sier) v Cambridge City Council [2001] EWCA Civ 1523 suggests it would be otherwise if no such undertaking were given.

However, it is clear from the statutory provisions that, in the absence of an official error, a local authority may recover an overpayment of benefit even if that overpayment results from an entirely innocent failure by the benefit claimant to notify a change in circumstances.

Circumstances in which a criminal offence is committed for non-notification of a change of circumstances are dealt with in Part VI of the 1992 Act. Section 112(1A) (inserted by Section 16(3) of the Social Security Fraud Act 2001) provides as follows:

“A person shall be guilty of an offence if –

(a)

there has been a change of circumstances affecting any entitlement of his to any benefit or other payment or advantage under any provision of the relevant social security legislation;

(b)

the change is not a change that is excluded by regulations from the changes that are required to be notified;

(c)

he knows that the change affects an entitlement of his to such a benefit or other payment or advantage; and

(d)

he fails to give a prompt notification of that change in the prescribed manner to the prescribed person.”

Two points are immediately apparent. First, a criminal offence is only committed in circumstances which are much narrower than those that might comprise a breach of the general duty to notify: where a benefit claimant “… knows that the change affects an entitlement… to… benefit” in the criminal provision can be compared with where he “might reasonably be expected to know might affect the claimant’s right to… benefit” in the general duty. Second, as unsurprisingly confirmed by the Divisional Court (Auld LJ and Newman J) in King v Kerrier District Council [2006] EWHC 500 (Admin), for a conviction under section 112(1A), each of the ingredients of the offence as set out in paragraphs (a) to (d) of the section must be proved to the criminal standard.

At the time of the alleged offence in the appeal before me, how notification of a change had to be made in “the prescribed manner to the prescribed person” was prescribed in Regulation 4 of the Social Security (Notification of Change of Circumstances) Regulations 2001 (2001 SI No 3252). Those Regulations were made by the Secretary of State under the criminal provisions of the 1992 Act, including section 112(1A), the requirements in the Regulations for “a failure to give prompt notification in the prescribed manner to the prescribed person” being specifically prescribed only for the purposes of those criminal offences.

At the relevant time, Regulation 4(1) provided:

“… [W]here the benefit affected by the change of circumstances is housing benefit or [CTB], notice must be given or sent in writing to the relevant authority at –

(a)

the designated office…”.

Subparagraph (b) referred to other possible methods of notification, not relevant to this appeal. By Regulation 4(2), “relevant authority” and “designated office” had the same meaning as those phrases were given in the HB Regulations and the substantively identical CTB Regulations.

By Regulation 2 of the HB Regulations, “relevant authority” meant simply the local authority administering the benefit. That is the “prescribed person” to whom notification has to be given. It is uncontroversial that the appropriate authority for the Respondent was the Appellant Council (“the Council”).

The same regulation defined “designated office” as:

“… the office designated by the relevant authority for the receipt of claims to housing benefit [or CTB, as the case may be] –

(a)

by notice upon or with a form approved by it for the purpose of claiming housing benefit [or CTB]….”

Changes in circumstances therefore had to be given or sent to the office which the benefit claim form identified as the appropriate office for the receipt, not specifically of notification of later changes, but of the benefit claim itself.

The authorities such as they are suggest that, although where notification of a change of circumstances has to be given to a particular legal person, then notification to another legal person will not suffice (see, e.g., Social Security Commissioners’ Case No CSS/33/1990: disclosure to the Post Office where benefit was collected found not to amount to disclosure to the departmental predecessor of the DWP).

In any event, where a benefit claimant claims housing benefit or CTB at a DWP office whilst claiming JSA (see paragraph 5 above), it is clear that that DWP office does not itself become “the designated office” for the receipt of housing benefit or CTB claims simply by virtue of the scheme which allows the relevant claim forms to be left there. “The designated office” is the office designated by the local authority as the office for receipt of benefit claims, only by notice on the housing benefit/CTB claim form. The DWP office would therefore only become “the designated office” if it were so designated on that form.

Neither does a DWP office have any general obligation to pass on to the local authority any information it receives that may be relevant to entitlement to housing benefit or CTB – although, of course, it has the power to do so. There is no general obligation on an authority administering one benefit to pass on to another authority administering a different benefit information that may be relevant to entitlement to that other benefit. (Indeed, generally, a claimant cannot make assumptions about the internal administrative arrangements of a public body that might or might not include arrangements for data transfer between offices in the same body: Hinchy v Secretary of State for Work and Pensions [2005] UKHL 16.) Leaving aside and open the question of the effect of an unequivocal undertaking from a DWP office to a benefit claimant that it will pass on information to the relevant local authority (considered in paragraph 8 above, in the different context of recovery of overpayments), there is only an obligation to transfer information to another public body administering another benefit where the statutory scheme expressly imposes it. I have already referred to the provisions that require a DWP office to forward a housing benefit/CTB claim form to the local authority when it is completed at a DWP office at the same time as a JSA claim form (see paragraph 5 above). Another example is found in regulation 4B(2)(b) of the Social Security (Claims and Payments) Regulations 1987 (SI 1987 No 1968), which requires a local authority office bearing the “ONE” logo to forward to the DWP information relating to any other benefit, except only where it relates to housing benefit or CTB: where no such logo is shown, there is no such obligation (Social Security Commissioners’ Case No CIS/4848/2002).

Therefore, summarising those provisions as they are relevant to this appeal, a housing benefit or CTB claimant will only be guilty of an offence under section 112(1A) if the prosecution prove to the criminal standard that he failed to give prompt notification of a change in his circumstances that he knew affected his entitlement to such benefit, to the relevant local authority at the office notified to him on the benefit claim form as the office designated for the receipt of such benefit claims.

The relevant facts, primarily taken from the case stated itself, are as follows. At the outset I should say that the justices found Mr Vassell to be a credible witness (see Case Stated, Paragraph 6), and they do not appear to have made any findings contrary to the statement he made and upon which relied. They clearly accepted all of the substance of that statement.

In January 2005, Mr Vassell successfully claimed JSA, housing benefit and CTB, each of which he received from that month. He made his claim for all three benefits at the Cofa Court Job Centre in Coventry. Cofa Court was a DWP office, but one which accepted claims for housing benefit and CTB under the provisions to which I have already referred (see paragraph 5 above). There was one form for both housing benefit and CTB, which did not expressly say to where the completed form should be sent, although it did have the following address at its head: “Benefits Service, Spire House, New Union Street, Coventry CV1 2PW”. The form had the following declaration, which Mr Vassell signed: “I know I must let the council know about any changes in my circumstances which might affect my claim”. That clearly reflects the general duty to notify any change of circumstances that might affect benefit entitlement, in regulation 88 of the HB Regulations and its CTB counterpart. There were, however, no further details of how or where a change of circumstances had to be notified.

In July 2007, Mr Vassell attended Cofa Court to notify a change in his circumstances which he thought might affect his right to benefits, namely he had taken up part-time employment with Coventry City Council. He submitted a written and signed declaration with regard to that change, and was directed by staff to the Council’s Housing Department, which was apparently in a different building, to notify them too of the change, which he did. There he completed a “Change of Circumstances Form”, which (i) referred to “my claim for housing benefit and [CTB]; (ii) on its face appeared to be a Council document (for example, it has a reference to a “Coventry City Council Stamp”); and (iii) referred to a reception desk at Spire House but which, at its foot, said: “Please post your benefit application form to: Coventry City Council Benefits Service, PO Box 3899, Coventry CV1 5WW”. The form had a number of declarations, including:

“I know I must let you know in writing about any changes in my circumstances which might affect my claim so that my benefit can be worked out again. I understand that it is an offence under the Social Security Fraud Act 2001 not to tell you about changes in circumstances straight away.”

Mr Vassell signed that form. It is uncontroversial that the July 2007 change in his circumstances was adequately notified to the Council.

From October 2007, Mr Vassell became a full-time student at Coventry University. He attended Cofa Court again that month, and notified them of this change in circumstance. Mr Vassell gave evidence that he signed his JSA signing-on book and, although the justices made no finding in respect of that, the manner in which he gave that notice is not vital to this appeal. His claim for JSA was certainly duly terminated. He was not told by the Cofa Court staff that he needed separately to inform the Council’s Housing Department of the change, in respect of his housing benefit or CTB claims; and he did not go to that department to do so.

Mr Vassell in his interview said that he thought that, by notifying Cofa Court as he did, that was sufficient notification in respect of all three benefits. He seemed initially to have expected that all three benefits (JSA, housing benefit and CTB) would be cancelled; but he knew that he continued to receive housing benefit and CTB from the Council. Having given (as he thought) notice to the Council of the change through Cofa Court, when payment of the local authority benefits continued, he thought that he must be entitled to them because they were still being paid.

The justices made a number of important findings in relation to the events surrounding Mr Vassell giving the notice to Cofa Court that he did give in October 2007, as follows:

In relation to the reference to more than one benefit claim form in (iv), on 3 August 2009, in circumstances which are not entirely clear, Mr Vassell completed a second benefit claim form for housing benefit and CTB. However, that was after the period covered by the charge (which ended on 5 July 2009), and does not appear to have any direct relevance to this appeal. That form, however, is in similar style to the Change of Circumstances Form that Mr Vassell completed in 2007: it has the Spire House reception address, and the front page is endorsed with the same rubric about the PO Box to which benefit claims should be sent. The form also apparently had a Notification of a Change of Circumstances Form attached to it, for the applicant to tear out and keep. That was headed with the same PO Box number.

In the event, it is now common ground that, when Mr Vassell became a full time student, his entitlement to housing benefit and CTB was brought to an end: but he continued to receive them and, as a result, he was overpaid £6,215.95 in housing benefit. The information before the magistrates also referred to CTB. However, although during the relevant period when he was a student £1,425 was paid to him in CTB, the Council now concede that this did not in fact amount to an overpayment, because it was paid back to them as council tax in circumstances in which Mr Vassell, as a full time student, was not liable to pay council tax.

On the basis of their findings of fact, the justices found that the case against Mr Vassell had not been proved beyond reasonable doubt.

The Council, being unhappy with the justices’ interpretation of the notification requirements for section 112(1A), sought to appeal. The case stated by the magistrates poses four questions for this court, namely:

“(a)

What does “prompt notice” mean in the context of Section 112(1A)(d)? On the basis of the evidence before the Justices, had [Mr Vassell] given “prompt notice” of the relevant change in circumstances?

(b)

To what organisation or organisations does “prescribed person” refer in Section 112(1A)(d), i.e. does “prescribed person” include a Job Centre Plus, the Department for Work and Pensions and/or a City Council? Had [Mr Vassell] notified the “prescribed person”?

(c)

What does “prescribed manner” mean in the context of Section 112(1A)(d) and had the relevant changes been notified in such a manner by [Mr Vassell]?

(d)

Where a recipient of CTB or housing benefit notifies a Job Centre Plus of a relevant change in circumstances:

(i)

is the Job Centre Plus obliged to share the said notification with a City Council, and

(ii)

would such a failure on the part of the Job Centre Plus absolve the Respondent of his duty to give prompt notification in the prescribed manner to the prescribed person? ”

All of those questions go to the person to whom and the manner in which (in other words, how) notification is to be given under the requirements of section 112(1A)(d).

There is, however, a logically prior and discrete question, namely what has to be notified. That is dealt with in section 112(1A)(c).

I have already referred to King v Kerrier District Council, in which the requirements of section 112(1A) were considered (paragraph 9 above). It was held by the Divisional Court that each of the ingredients of the offence set out in subsection (a) to (d) of the section had to be proved to the criminal standard, including subsection (c): “… he [i.e. defendant] knows that the change affects an entitlement of to such benefit…” (emphasis added). It was accordingly held that, for a successful prosecution, it must be proved that the defendant knew that the change would – as opposed to could – affect his entitlement to the relevant benefit. That confirms one mental element in the offence, and an element of some significance, namely a high degree of knowledge the prosecution have to prove with regard to the effect on entitlement to benefit by the change of circumstances. As I have already described, that is not a requirement for recovery of an overpayment as a result of non-notification (see paragraphs 8-9 above): but, in terms of the criteria for a criminal prosecution, subsection (c) sets a substantial hurdle for the prosecution to overcome. As this is a criminal provision, that is hardly surprising.

Mr Vassell was aware that, when he became a full-time student, that was a change of circumstance that might affect his entitlement to housing benefit and council benefit. Under Regulation 88 of the Housing Benefit Regulations (and CTB Regulations equivalent), he therefore had a duty to notify that change of circumstances. That he thought it could have that effect was enough to trigger that obligation.

However, although he knew it could affect that entitlement (and he expected to have his housing benefit and CTB stopped), he clearly did not know that it would. As he continued to receive the benefits, despite having (as he thought) given notice to the Council of his change of circumstance, he thought that, contrary to his expectation, that change of circumstance did not affect his entitlement to housing benefit and CTB. Having given notice to Cofa Court, he believed that he was continuing to receive housing benefit and CTB because he was entitled to them (see paragraph 24 above). He made that clear in his interview, the substance of which the justices accepted.

Consequently, in my view, the prosecution were unable to prove the element of the offence set out in subsection (c) of section 112(1A), namely that, at relevant time, Mr Vassell knew that his move into full-time education would (rather than could) affect his entitlement to housing benefit or CTB. For that reason alone, I consider this appeal should be dismissed.

However, although I shall return to the issues raised by section 112(1A)(c) (see paragraph 68 below), that does not address the questions posed in the case stated, to which I now turn.