A recent Upper Tribunal Administrative Appeals Chamber decision has provided greater clarity on the entitlement to housing benefit of people who lack capacity. Morris Hill and Ken Slade report.
In Wychavon District Council v EM  UKUT 12 (AAC) the Upper Tribunal Administrative Appeals Chamber recently reviewed an earlier decision to find that an individual who lacked capacity to enter into a valid contract was entitled to receive Housing Benefit payments from Wychavon District Council and had a corresponding obligation to pay for necessary accommodation.
The obligation was not, Upper Tribunal Judge Mark held (overturning his earlier decision), contractual, but arose either at common law or under section 7 of the Mental Capacity Act 2005.
The living arrangements of EM, who is profoundly mentally and physically disabled, are significant. Her parents moved her from a care home, with the support of Worcestershire County Council, which also encouraged the understanding that an entitlement to housing benefit would follow such a move. EM’s parents moved her to an annexe that they had built at their home, EM having previously lived in the house’s garage, which had proved unsuitable since EM needed round the clock care from three carers who also needed their own accommodation.
EM’s parents were unable to afford this new arrangement, the annexe having been funded by way of a loan, without Housing Benefit, so EM’s father entered into a purported tenancy agreement with her at what was agreed to be a reasonable rent for an indefinite term. The key question for the Upper Tribunal was whether this created a liability that attracted Housing Benefit.
As we previously reported the Upper Tribunal had in 2011 allowed an appeal brought by the council against a decision of the First-tier Tribunal allowing an appeal against its decision that EM was not entitled to housing benefit. This was on the basis that EM’s father knew that her significant learning disabilities meant that she lacked capacity to enter into a tenancy agreement. At the time the tenancy had been granted there was no one with any power to enter into such an agreement on behalf of EM. Consequently the Upper Tribunal held that EM “had no liability to pay rent by reason of a document to which she was not a party and of which she had no knowledge or means of knowledge. Nor is there any other basis on which any liability for rent could be imposed on her…”.
EM sought permission to appeal the decision and the Upper Tribunal exercised its powers under rules 45 and 46 of the Tribunal Procedure (Upper Tribunal) Rules 2008 to review its earlier decision. The power of review exists in circumstances where, amongst others, the Tribunal overlooked a legislative provision or binding authority which could have had a material effect on its decision (rule 45(1)(a) of the 2008 Rules).
On reviewing his earlier decision Upper Tribunal Judge Mark set it aside. He found that, notwithstanding the fact that there was no contract, EM was liable to make payments for her occupation of the property and was therefore, on the face of it, entitled to receive Housing Benefit from Wychavon District Council.
At this hearing, EM had brought forward an entirely new ground – contracts for necessities, either under section 7 of the Mental Capacity Act 2005 or the common law position as set out in In Re Rhodes (1890) 44 CH D 94 – and it was this which caused Judge Mark to set aside his earlier decision.
Section 7 provides:
7. Payment for necessary good and services
(1) If necessary goods or services are supplied to a person who lacks capacity to contract for the supply, he must pay a reasonable sum for them.
(2) “Necessary” means suitable to a person’s condition in life and to his actual requirements when the goods or services are supplied.
As section 7 had not previously been referred to in either the First Tier or the Upper Tribunal, Mark J felt he was able to review his decision. In doing so he considered the common law position in relation to the supply of ‘necessaries’ as set out in In Re Rhodes, namely that a person lacking mental capacity has an obligation to pay a reasonable amount for ‘necessaries’. The provision of accommodation is a necessary if it is suitable having regard to the needs and resources of the person and has been provided with the intention that it would be paid for.
Judge Mark concluded that such an obligation arose at common law in this case because the evidence confirmed that the accommodation was reasonably necessary, having regard to EM’s needs and resources, and had been built by her parents on the understanding that she would pay them rent funded by Housing Benefit, such an understanding having been encouraged, as noted above, by the Adult Social Services Department of Worcestershire County Council.
Wychavon District Council sought to argue that that it was not necessary because EM had previously lived in her parents’ garage and could do again; but, as Mark J pointed out, this flew in the face of the evidence which had been accepted by the judge in the First-tier tribunal and was in some respects uncontested.
Although Judge Mark expressed some doubt whether ‘services’ in section 7 was wide enough to cover the provision of accommodation, he had no doubts that the common law rules as to necessaries survive the statutory provision and that the provision of accommodation was an obvious ‘necessary’.
Therefore Judge Mark was satisfied that EH was under an obligation to pay a reasonable sum for her accommodation and therefore remitted the matter back to the Council to calculate her entitlement to Housing Benefit.
The original decision of the Upper Tribunal, when handed down in March 2011, caused concern as to the affect it would have on those that lacked capacity and their entitlement to housing benefit. The earlier decision of Judge Mark coupled with the decision in G v E & A Local Authority & F (2010) EWHC 621 (Fam), in part, led to a big increase in applications to the Court of Protection for orders regarding tenancies and the introduction in June 2011 of the guidance, “Applications to the Court of Protection in relation to tenancy agreements”.
The review by Judge Mark helps to clarify the position and will allow local authorities to continue to award housing benefit to those for whom arrangements are made in order to live their lives as independently as possible. This underlines the general thrust of social care policy to strive to maximise the independence of those with learning difficulties and mental illness.
As Judge Mark noted, housing benefit is not only payable where a person is liable for rent but in respect of payments for the dwelling which is occupied as a home, and EM was so liable. Wychavon argued that such matters were best dealt with via the Court of Protection, with which Judge Mark agreed, while also pointing out that such applications took many months and, pending such an application, people without capacity should not be left without necessaries.
It seems the issue here was not in fact between EM and Wychavon but rather between Wychavon and Worcestershire, with Judge Mark noting that, had there been no obligation on EM to pay, one or other of local authority would have had to provide suitable accommodation for her. He went on to comment that it would be unfortunate if a series of appeals at public expense had been made necessary because of disagreement between the authorities as to who should pay for essential provision.
As mentioned in our original update it is vitally important to ensure proper care planning takes place for individuals that are eligible to receive packages of care and this is particularly so when different local authorities are concerned with the individual’s benefit entitlement and care arrangements.