Campbell and Others v South Northamptonshire District Council and Another

JurisdictionEngland & Wales
JudgeJacob LJ,Sir William Aldous,Peter Gibson LJ
Judgment Date07 April 2004
Neutral Citation[2004] EWCA Civ 409
Docket NumberCase No: C3/2003/2090
CourtCourt of Appeal (Civil Division)
Date07 April 2004

[2004] EWCA Civ 409

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE SOCIAL SECURITY COMMISSIONER

Royal Courts of Justice

Strand,

London, WC2A 2LL

Before:

Lord Justice Peter Gibson

Lord Justice Jacob and

Sir William Aldous

Case No: C3/2003/2090

CH 5125-5130/2002

Between:
Campbell & Ors
Appellant
and
(1) South Northamptonshire District Council
Respondents
(2) Secretary of State for the Department for Work and Pensions

Mr James Goudie QC and Mr Paul Stagg (instructed by Messrs Mason Bullock of Northampton) for the Appellants

Mr James Findlay (instructed by Kevin Lane, Head of Corporate Services, South Northamptonshire District Council) for the First Respondent

Mr Philip Sales and Miss Marie-Eleni Demetriou (instructed by the Solicitor for the Department for Work and Pensions) for the Second Respondent

Jacob LJ

This appeal is from a decision of Mr Commissioner Jacobs given on 20 th May 2003 when sitting as a Social Security and Child Support Commissioner. He dismissed appeals in 5 cases decided by Mr Richard Poynter, the Social Security Appeal Tribunal. Mr Commissioner Jacobs gave permission to appeal to this Court. The 5 appellants claim housing benefit ("HB"). This has wrongly been refused contends their counsel, Mr James Goudie QC.

1

The decisions below set out with commendable clarity the details of the facts. Essentially the position is simply as follows. All the appellants are members of the Jesus Fellowship Church. They have become what are called "Style Three" members. This means that they have agreed to live communally, pooling their income in a common purse, and giving all their capital to the Church Trust. They occupy properties owned by the Church under agreements of various types. These agreements are genuine legal agreements, not shams. There are real legal liabilities for rent. It is not suggested the agreements were created to take advantage of the HB scheme.

2

The provision with which we are concerned is regulation 7 of the Housing Benefit (General) Regulations 1987 as amended by regulation 3 of the Housing Benefit (General) Amendment (No 2) Regulations 1998. This reads:

"(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 agreement pursuant to which he occupies the dwelling is not on a commercial basis ….

(1A) in determining whether a tenancy or other agreement pursuant to which a person occupies a dwelling is not on a commercial basis regard shall be had inter alia to whether the terms upon which the person occupies the dwelling include terms which are not enforceable in law.

3

The Tribunal, upheld by the Commissioner, held that the agreements pursuant to which the appellants occupied their dwellings were not "on a commercial basis." So by the regulation, they are treated as if they do not have to pay rent and hence are not entitled to HB.

4

Mr Goudie has two main points, one under the ECHR and the other relating to how regulation 7 came to be amended in 1998. His ECHR point does not challenge the validity of the regulation as such – his point relates to what he claims is an error of approach caused by a failure to take the ECHR into account in reaching the decision. His alternative point about the amendment, if right, would have the consequence that the amendment would be ultra vires and invalid. It is a pure domestic law point.

The ECHR Point

5

I begin by setting out the Tribunal's reasons for holding that the agreements were not on a commercial basis. It did so in a model way, first identifying the "commercial" factors and then those which were "non-commercial."

"Factors which tend to suggest the agreements are commercial

75. The factors which tend to suggest that the agreements are commercial are as follows:

(a) The Trust is non-charitable. The Trustees are under legal obligations to protect Trust property, to ensure that it is only used for proper purposes and to secure a proper return on Trust assets. Its finances are properly managed by Mr Farrant and are subject to detailed and rigorous financial controls.

(b) Those Conditions of Residence which deal with the Board and Lodging charge create a genuine and legally enforceable liability on the part of Community Members to make payments in respect of the occupation of Community Houses.

(c) The Trust takes reasonable measures to enforce payment of arrears of the Board and Lodging charge by former residents of Community Houses who have left.

(d) The Trust takes reasonable measures short of eviction against Community Members who are in arrears of the Board and Lodging charge but are otherwise in good standing with the Church and who wish to remain as Community Members.

Factors which tend to suggest the agreements are not commercial

76. The factors which tend to suggest that the agreements are not commercial are as follows:

(a) The Lifestyle Conditions which (inter alia) require Members to pool their income in a Common Purse, actively to pursue a particular religious lifestyle, submit to the authority of the Elders, bring up their children in a specified way and participate wholeheartedly in the activities of the Church and the communal life of the Community Houses.

(b) In the case of the Elders' Conditions of Residence, the requirements to be responsible for oversight of the religious life of the Community House, including matters of religious discipline.

(c) Full Style 3 Members are required to donate all their belongings to the Trust.

(d) The Board and Lodging charge is not set so as to maximise the Trustees' return on their investments but so as to cover costs and provide a reasonable return on capital. It is also relevant that:

i. The Board and Lodging charge is not based on the current values of the Trust's property portfolio but on its historic cost;

ii. The Board and Lodging charge is not based on the actual value of the property occupied by the payor but on figures calculated on the value of the Trust's property portfolio as a whole;

iii. The Board and Lodging charge is not related to the size of the accommodation occupied by the payor and his or her family;

iv. As the Board and Lodging charge is based on bed-spaces, the return which the Trust receives from the Elders (who are, in effect, the Head Licensees) varies according to the number of occupiers.

(e) The Board and Lodging charge can be increased by the Trustees, on occasion with retrospective effect, without consulting or securing the prior agreement of the payor.

(f) The Elders may unilaterally change the sleeping arrangements of Community Members.

(g) The Elders' conditions of residence may be unilaterally changed by the Trustees.

(h) The procedure of merging a Common Purse which is in financial trouble with one which is not. The possibility that one group of sub-licensees of a Landlord should intervene to assist the Landlord by assuming the financial responsibilities of another group of the Landlord's sub-licensees is without any parallel in the commercial letting market.

(i) Community Members in good standing are permitted to run up arrears of Board and Lodging charge indefinitely without being evicted as long as the failure to pay the charge results from factors outside that Member's control, such as non-payment of housing benefit. Mr Farrant said in evidence that, in the long run, the Trustees stood a better chance of recovering their money by keeping the person with arrears as a Style 3 member and that since a continuing Style 3 member would already be paying all of his or her income into the Common Purse there would be no assets against which any legal judgment could be enforced. That may be so in the short or even the medium term but ultimately there would come a point when a commercial landlord would cut his or her losses and seek to replace a tenant who could not pay the ongoing charge with one who could, even at the risk of making it more difficult to recover any arrears. A commercial landlord would not have permitted the Elders of … to accumulate arrears in excess of £84,000 without taking steps to terminate their licenses no matter what the reasons for the arrears may have been.

(j) When pursuing arrears, even through the courts, the Trust or the Elders do not normally make a claim for interest."

6

For convenience I set forth the Convention provisions relevant to this case:

"Article 8 – Right to respect for private and family life

1. Everyone has the right to respect for his private and family life, his home and his correspondence.

2. There shall be no interference by a public authority with the exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic well being of the country, for the prevention of disorder and crime, for the protection of health or morals, or for the protection of the rights and freedom of others.

Article 9 – Freedom of thought, conscience and religion

1. Everyone has the right to freedom of thought, conscience and religion; this right includes freedom to change his religion or belief and freedom, either alone or in community with others and in public or private, to manifest his religion or belief, in worship, teaching, practice and observance.

2. Freedom to manifest one's religion or beliefs shall be subject only to such limitations as are prescribed by law and are necessary in a democratic society in the interests of public safety, for the protection of public order, health or morals, or for the protection of the rights and freedom of others."

"Article 14 – Prohibition of discrimination

The enjoyment of the rights and freedoms...

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