Eyeson v Milton Keynes Council [2005] EWHC 1160 (Admin)

Case No CO/3851/2004[2005] EWHC 1160 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
DIVISIONAL COURT
Venue Royal Courts of JusticeDate Tuesday, 8th March 2005
Strand
London WC2
B E F O R E:
LORD JUSTICE MAURICE KAY
MR JUSTICE MOSES
Between
NANCY EYESONClaimant-v-
Between
MILTON KEYNES COUNCILDefendant
Computer-Aided Transcript of the Stenograph Notes ofSmith Bernal Wordwave Limited190 Fleet Street London EC4A 2AGTel No: 020 7404 1400 Fax No: 020 7831 8838(Official Shorthand Writers to the Court)
MR M FENHALLS (instructed by Pictons) appeared for CLAIMANTMR R GREGORY (instructed by Milton Keynes Council) appeared for DEFENDANT
J U D G M E N TTuesday, 8th March 2005
[1]MR JUSTICE MOSES: This is an appeal by way of case stated from the decision of the Milton Keynes Magistrates' Court, a division of the Thames Valley Justices. The decision was made on 29th April 2004. The appellant was convicted of two offences of failing to give a prompt notification of a change of circumstances with a view to obtaining Housing Benefit and Council Tax Benefit contrary to section 112(1A) of the Social Security Administration Act 1992. The obligation on the appellant to notify the change of circumstances arose as a result of the increase in the level of Working Families' Tax Credit being paid to her with a view to obtaining Housing Benefit and Council Tax Benefit. The facts of the matter[2]The conclusions of the justices and the questions they pose are fully set out in the case which I annex to my judgment. It is therefore unnecessary, save for the purposes of the resolution of the particular arguments, to deal with the facts further at this stage.[3]The first submission advanced on behalf of the appellant, is that her failure to notify the Housing Benefit Department of her change in circumstances related to a tax credit and was therefore outwith the provisions of section 112(1A) of the Social Security Administration Act 1992.[4]In order to deal with that submission it is necessary to identify the statutory scheme into which section 112(1A) of the 1992 Act falls. The Working Families' Tax Credit is defined in the Tax Credits Act of 1999. Section 1(1) provides:
"Family credit and disability working allowance shall be known, respectively, as working families' tax credit and disabled person's tax credit."
[5]Section 112(1A) of the Social Security Administration Act 1992 was inserted by section 16(3) of the Social Security Fraud Act 2001. Section 112(1A) provides:
"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."
[6]The question thus arises whether there has been a change of circumstances affecting any entitlement to any benefit under any provision of the relevant social statutory legislation. The answer is plain. There was such a change of circumstances, namely an increase in tax credit which affected this appellant's entitlement to Housing Benefit. But the crucial question which arises in this part of the appeal is whether the changes were changes which are required to be notified. One possibility is that it is a change that is excluded by regulations from the changes that are required to be notified (see Section 112(1A)(b)). In my judgment it would be odd if this change was excluded by regulations since we have not been referred to those regulations. The question is whether there is an obligation to refer as a result of paragraph 13 of schedule 2 of the Tax Credits Act 1999. Paragraph 13 of schedule 2 of the Tax Credits Act 1999 provides in the relevant parts:
"13. The following sections - (a) sections 111A and 112 of the Social Security Administration Act 1992 (dishonest and fraudulent representations)... ... Shall not apply in any case where the benefit or other payment or advantage is or relates to, or the failure to notify relates to, tax credit."
[7]Thus the statutory question turns on whether the benefit or the failure to notify relates to tax credit. It is necessary, first, to consider whether the benefit relates to a tax credit. In my judgment it is clear that it does not. The benefit to which paragraph 13 of schedule 2 refers relates back to the benefit identified in Section 112(1A)(a) of the Social Security Administration Act 1992 in its reference to a change of circumstances affecting any entitlement of his to any benefit. The benefit is plainly Housing Benefit and thus the first part of the full-out words of paragraph 13 of schedule 2 do not apply since the benefit does not relate to tax credit as defined in section 1(1) of the Tax Credits Act 1999.[8]The next question posed by the statute is whether the failure to notify relates to the tax credit. That is a reference back to Section 112(1A)(d), namely whether there has been a failure to give a prompt notification of that change. That change in (d) itself refers back to (a) of subsection (1A), namely a change of circumstances affecting any entitlement to Housing Benefit. It is important to recall that the change of circumstances affects the entitlement to Housing Benefit. The failure to notify does not affect any entitlement to tax credit but rather to Housing Benefit entitlement which is affected, and was affected in the instant case, by the increase in the Working Families' Tax Credit.[9]It is true that the change of circumstances does consist of an alteration in the level of tax credit, but it does not affect entitlement to that tax credit. In those circumstances, whilst the change of circumstances may be said to relate to the tax credit, the failure to notify does not, because the notification requirement in issue relates to Housing Benefit and not to tax credit. The failure to notify does not thus relate to tax credit within paragraph 13 of schedule 2 of the Tax Credits Act 1999.[10]I conclude that on the wording of paragraph 13, read in the context of Section 112(1A) of the 1992 Act that the operation of Section 112(1A) is not excluded. My conclusion is fortified by the statutory scheme. The Tax Credits Act of 1999 places the responsibility of administration on the board which is defined by section 18 of the 1999 Act as the Commissioners of Inland Revenue. Responsibility is not placed on the Housing Benefit Department of a local authority (see section 5).[11]The 1999 Act contains its own discrete code of penalties. By section 9(1) of the Tax Credits Act 1999:
"Where a person fraudulently or negligently makes any incorrect statement or declaration in connection with a claim for tax credit, he shall be liable to a penalty not exceeding the amount of the difference specified in subsection (2) below."
[12]It is not surprising, therefore, that in relation to any incorrect statement in connection with a claim for tax credit, there should be exclusion of any sanction for such a failure from the provisions of sections 112(1A) of the 1992 Act.[13]The plain purpose of paragraph 13 schedule 2 of the 1999 Act is to avoid duplication. If the claimant was correct there would not only be no duplication, but there would be a gap in the enforcement of the obligations of notification. There would be no mechanism for enforcing obligations to notify of a tax credit affecting entitlement to Housing Benefit. Mr Fenhalls responded that it must be recalled that these are offences of strict liability and in those circumstances the court should not be surprised at any such gap. After all, it is open, so he argued, to the Housing Benefit Department to reclaim any overpayment.[14]I reject that argument. Looking at the statutory scheme as a whole it is plain that paragraph 13 schedule 2 plays an important part in avoiding duplication and in avoiding any administrative difficulties caused by the fact that the administration in relation to tax credits is undertaken by a separate organisation from that which might be affected by a tax credit, namely Housing Benefit.[15]In those circumstances I answer the question in the case stated at paragraph 15(a) in the affirmative. I should pause to observe that the ingenuity of the arguments advanced on behalf of the appellant by her solicitor at the trial were themselves engendered by a note to section 112 in Stone's Justices' Manual at paragraph 8/29093(1). The author of Stone's observed that the provisions of that section do not apply in cases where any benefit or other payment or advantage is or relates to, or the failure to notify relates to, tax credit. That note is accurate so far as it goes since it reproduces the wording of the paragraph, but perhaps it does not go far enough in saying that it may provide no defence to a claim which relates to Housing Benefit as the justices themselves concluded. It may therefore be that the decision of this court ought, itself, to be noted at that point in that invaluable volume.[16]I turn then to the next argument that is advanced on behalf of the appellant which relates to the time at which this prosecution was brought. As is apparent from the case stated, the offences related back to 10th April 2002 and 1st October 2002, there being a typographical error at paragraph 14 of the case stated.[17]Allowing some time for the elastic concept of "as soon as reasonably practicable", the offences therefore ought to have been prosecuted within 12 months from May or November 2002 pursuant to section 116 of the Social Security Administration Act 1992.

(b) :

"(b) proceedings for an offence under this Act relating to housing benefit ... may be begun at any time within the period of 3 months from the date on which evidence, sufficient in the opinion of the appropriate authority to justify a prosecution for the offence, comes to the authority's knowledge or within a period of 12 months from the commission of the offence, whichever period last expires."
[18]By section 116(3):
"For the purposes of subsection (2) above - ... (b) a certificate of the appropriate authority as to the date on which such evidence as is mentioned in paragraph (b) of that subsection came to the authority's knowledge shall be conclusive evidence of that date."
[19]It should be noted that there is some mystery contained within the case as stated by the justices. At paragraph 3 they refer to the fact that informations were accompanied by a certificate that sufficient evidence, in the opinion of the council, to justify a prosecution came to the council's knowledge on 23rd September. But as the case stated records, no reference was made to this certificate during the hearing, and those representing the appellant were unaware of its existence until the time came for the drafting of the case. I should add that Mr Fenhalls and his instructing solicitor have still seen no such certificate.[20]It is plain from the case stated that the timing point, raised by the appellant's solicitor at the close of the prosecution case, was not disposed of by reference to any certificate, but rather in relation to the question whether, apart from any certificate pursuant to section 116(2)(b), sufficient evidence in the opinion of the appropriate authority to justify a prosecution had come to the authority's knowledge earlier than 23rd September 2003.[21]In my judgment it is not open to the council now to rely upon the certificate. It was not before the justices. It was therefore not evidence before them, conclusive or otherwise. The court was told by counsel for Milton Keynes, Mr Gregory, that a search for the certificate had been made, but it is quite apparent that no certificate was produced to the justices as they themselves recall.[22]The question therefore is whether there was sufficient evidence, in the opinion of the appropriate authority, to justify a prosecution, and whether these proceedings were brought within the period of three months from that date. The justices, as is apparent from the case, set out in detail the evidence of the benefit fraud investigator, Mr Pryke, as to the steps he took to ascertain whether such information had been forthcoming.

(b) recorded:

"It is accepted that all the documentary evidence sufficient to justify a prosecution was available to the Council by 10th February 2003."
[23]It is important also to observe that no further evidence was forthcoming. As is apparent from the council, the appellant was given three opportunities to attend for interview. She failed to do so, but the council proceeded on the basis of the evidence they already had, and, as is found by the justices, already had by 10th February 2003.[24]I am prepared to accept that the council might have taken the view, it being dependent upon their opinion, that despite documentary evidence sufficient to justify a prosecution, they needed more in order to establish or prove the knowledge of the appellant for the purposes of section (1A)(c). But no such evidence was given before the justices. No such fact was found by the justices. On the contrary, notwithstanding that section 116(2)(b) of the 1992 Act was cited to them, all they say, at paragraph 11, was that there was a satisfactory explanation for the delay. That, of course, is not the statutory test. There is no finding, other than the finding to which I have already referred (section 9(c)), that there was a later date when the council took the view, or had the opinion, that there was sufficient to justify a prosecution after 10th February 2003.[25]In those circumstances it seems to me impossible for the authority, as they have sought to do in very fair arguments advanced by Mr Gregory, to rely upon the three requests for interviews which went unanswered. They had been arranged in April, May, 11th September and, finally, 23rd September 2003. There is no basis for saying that absent the opportunity given to the appellant to attend those interviews, the local authority had the opinion that there was insufficient evidence to justify a prosecution.[26]Indeed, Mr Gregory advanced the sensible point that the local authority might have wished to consider, as a result of any interview, whether it was in the public interest to prosecute this lady. So they might. Interviews would have afforded a sensible opportunity for them to consider that important point. The difficulty with that argument is that section 116(2)(b) does not refer to any public interest requirement but focuses particularly upon a sufficiency of evidence requirement in the opinion of the local authority. It is not, therefore, open to them to delay on the basis that they need more information before deciding whether it was in the public interest to prosecute the lady.[27]The difficulties could so easily have been avoided had the local authority had available a photocopy of the certificate, which it is now asserted was in existence, which could either have been available at the court or sent in advance, when the decision was made to prosecute in order to explain why it was that proceedings were being brought so long after the events to which they relate in April and October.[28]It is plain that by December the local authority must have been aware that the appellant had knowledge that increase in her entitlement to tax credit did indeed affect her entitlement to Housing Benefit because she herself reported that matter on 3rd December 2002 (see paragraph 14 of the case stated). In those circumstances I am driven to the conclusion that the prosecution in relation to both these two offences was outside the time limit in section 116(2)(b). Accordingly on that basis I would allow this appeal and answer the question at paragraph 15(b) in the negative.[29]That conclusion makes it unnecessary to consider the final point, advanced with becoming diffidence by Mr Fenhalls on behalf of Ms Eyeson, that there was insufficient evidence to conclude that the appellant was guilty of the offences with which she was charged. The careful way in which the justices detail her evidence shows that that is an impossible submission. Since I conclude in her favour in relation to her argument as to delay, she succeeds, and I for my part would draw a veil over those final submissions.[30]For the reasons I have given I would allow this appeal.

LORD JUSTICE MAURICE KAY: I entirely agree. It follows that the questions (a) and (b) will be answered as indicated by my Lord. The appeal will be allowed, the conviction and sentence quashed.

[32]MR FENHALLS: So my Lords know, she has performed the community service which she was required to perform already, but it is a matter of record for my Lords.

LORD JUSTICE MAURICE KAY: She cannot have a credit for that.

[34]MR FENHALLS: I understand she has paid costs of £160 which were awarded in the Magistrates' Court. I invite my Lords to draw in the quashing of the conviction.

LORD JUSTICE MAURICE KAY: Yes, certainly. Costs here, what happens to those?

[36]MR FENHALLS: My Lord, a representation has been granted by Nicholas Blake QC so it will be taxed in the usual way.

LORD JUSTICE MAURICE KAY: Very well. Thank you both very much indeed.

Cited in 3 later judgments