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|Judgments - Regina v. Housing Benefit Review Board of The City of Westminster Ex Parte Mehanne
HOUSE OF LORDS
Lord Bingham of Cornhill Lord Browne-Wilkinson Lord Hope of Craighead Lord Hutton Lord Hobhouse Of Wood- borough
OPINIONS OF THE LORDS OF APPEAL FOR JUDGMENT
IN THE CAUSE
HOUSING BENEFIT REVIEW BOARD OF THE CITY OF WESTMINSTER
EX PARTE MEHANNE
ON 8 MARCH 2001
 UKHL 11
LORD BINGHAM OF CORNHILL
1. The issue in this appeal concerns the correct construction of regulation 11 of the Housing Benefit (General) Regulations (SI 1987/ 1971) ("the Regulations") as in force on 1 January 1996. This regulation had been the subject of several amendments before that date, and was to be the subject of radical amendment thereafter. This opinion is directed only to that version of the regulation. The question for decision by the House may be expressed in this way: where it appears to a local authority (or a review board) that the rent payable by a claimant for housing benefit for a dwelling which he occupies is unreasonably high by comparision with the rent payable in respect of suitable alternative accommodation elsewhere, and the authority (or the review board) is required to treat the claimant's eligible rent as reduced by such amount as it considers appropriate, may the authority (or the review board) take account of the claimant's personal circumstances (so far as relevant to his housing situation) when considering the amount by which it is appropriate to treat his eligible rent as reduced? The deputy judge (Mr Gerald Moriarty QC) gave a negative answer to that question in his judgment (11 December 1997, unreported), which the appellant review board contends was correct. The Court of Appeal (Stuart-Smith, Thorpe and Mummery LJJ) gave an affirmative answer ( 1 WLR 16), which the respondent (Mr Mehanne) seeks to uphold.
2. At the end of July 1994 Mr Mehanne with his wife arrived in the United Kingdom from Lebanon and claimed asylum. Just under three years later he was recognised as a refugee.
3. In early December 1995 Mr Mehanne accepted an assured shorthold tenancy of a one-bedroom flat in London W2 at a rent of £174.51 per week. His wife was in the very early stages of pregnancy with their first child. Mr Mehanne applied for housing benefit from Westminster City Council, the relevant authority. On 10 January 1996 the rent officer determined that the rent Mr Mehanne had agreed to pay was not significantly above a market rent when compared with other properties in London W2. Ten days later the authority's housing benefit officer determined under regulation 11(2) of the Regulations that for the period December 1995 to June 1996 Mr Mehanne's eligible rent should be treated as reduced to £150 per week for the calculation of housing benefit. This determination was made on the basis that the rent was unreasonably high by comparison with the rent payable for suitable alternative accommodation in less favoured parts of Westminster. Mr Mehanne pursued his rights of review under regulations 79(2) and 81 of the Regulations, but without success: on 29 July 1996 a review board considered Mr Mehanne's application and in due course confirmed the authority's decision that his eligible rent should be treated as reduced by £24.51 per week. The decision of the review board was the subject of a written note signed by the chairman dated 15 September 1996, later corrected. The review board held that £150 per week represented a fair approximation of the rent payable for suitable alternative accommodation in the northern area of Westminster. In reaching its decision the board regarded itself as bound by regulation 11(2) to treat Mr Mehanne's eligible rent as reduced and, in considering the appropriate amount by which to treat the eligible rent as reduced, regarded itself as precluded from paying attention to features of his personal circumstances on which he sought to rely. Those features were: the pregnancy of Mrs Mehanne; the reduced rate of income support receivable by Mr Mehanne as an asylum seeker; his greater vulnerability to eviction attributable to his having falsely represented, when obtaining his tenancy, that he was not dependent on housing benefit; and the obligation on the local authority to house Mr Mehanne if the shortfall in housing benefit resulted in his eviction and he was unable to obtain suitable accommodation elsewhere.
4. Housing benefit is an income-related benefit currently provided under Part VII of the Social Security Contributions and Benefits Act 1992. Entitlement to benefit is subject to conditions set out in section 130. Under section 134 of the Social Security Administration Act 1992 housing benefit may be granted in the form of a rent allowance funded and administered by the local authority in whose area the dwelling in question is situated. Under regulation 61 of the Regulations the maximum housing benefit may be the full amount of a claimant's eligible rent. A claimant's "eligible rent" is determined under regulation 11, the regulation with which this appeal is concerned. At 1 January 1996, the date material for this appeal, regulation 11 (so far as relevant) provided:
5. Two points emerge clearly from this brief reference to the housing benefit regime. First, it is directed to the humane objective of assisting those of modest means to provide themselves with a roof over their heads. This is, after all, one of the most basic of human needs, and it is not surprisingly accepted as a proper object of public expenditure. But, secondly, such expenditure must be directed to meeting real needs. Thus expenditure may be restricted if a claimant is housed more expensively than necessary, whether because his accommodation is unnecessarily large, or because he is paying more than the market rate for the area in which he lives, or because he could be housed adequately but more economically in similar accommodation in an accessible but less expensive quarter. Special consideration is, however, given to those who are elderly, or unable to work, or who are responsible for a child or young person living with them.
6. For present purposes it is convenient to describe a rent payable for a dwelling larger than is reasonably required under regulation 11(2)(a) or a rent which is unreasonably high under regulation 11(2)(c) as "excess rent". Mr Mehanne's case was covered by regulation 11(2)(c) and his excess rent was the weekly rent of £174.51 which he contracted to pay for his flat in London W2. It is convenient also to describe the cost of suitable accommodation elsewhere as the "alternative rent". In Mr Mehanne's case his alternative rent was £150.
7. There was much common ground between the parties on the construction of regulation 11:
(1) It was agreed that in a case where regulation 11(2) applied and regulation 11(3) did not, the local authority was obliged to treat the claimant's eligible rent as reduced. This conclusion was inevitable given the language of paragraph (2)(c): "the authority shall . . . treat the claimant's eligible rent, as reduced . . .". An earlier version of the provision had read: "the authority may treat the claimant's . . . eligible rent, as reduced . . .". The effect of the change was plainly to transmute a permissive power into a mandatory obligation. In the terminology used above, the local authority was required to treat the claimant's excess rent as reduced.
(2) It was agreed that where any of the factual conditions in regulation 11(3) applied, the local authority might not treat the claimant's excess rent as reduced unless - (a) suitable cheaper alternative accommodation was available, and (b) the authority considered that, taking into account the relevant factors specified in paragraph (6)(b), it was reasonable to expect the claimant to move from his existing accommodation. At the time relevant to this appeal Mr Mehanne did not meet any of the factual conditions in paragraph (3), and he was accordingly unprotected by this paragraph. I understood it to be common ground between the parties, as held in R v Housing Benefit Review Board for East Devon District Council, Ex p Gibson (1993) 25 HLR 487 and R v Waltham Forest London Borough Council, Ex p Holder (1996) 29 HLR 71, that the availability of suitable alternative accommodation to the particular claimant was a relevant consideration under paragraph (3) but not under paragraph (2).
(3) It was agreed that in a case where paragraph (2) applied and the local authority was required to treat the claimant's excess rent as reduced, it might not treat it as reduced to a level below the alternative rent. Schiemann J so held in R v Brent London Borough Council, Ex p Connery  2 All ER 353, and this conclusion was not challenged. It would indeed be disturbing if a local authority had power to treat a claimant's eligible rent as reduced below the level of rent payable for suitable alternative accommodation elsewhere.
(4) It was agreed that in a case to which paragraph (2) applied the local authority was not required to determine the claimant's eligible rent by simply reducing his excess rent to his alternative rent. The paragraph could with the utmost simplicity have been drafted so as to have that effect, but such was not the course adopted. The obligation on the local authority was to "treat the claimant's eligible rent, as reduced by such amount as it considers appropriate having regard in particular to the cost of suitable alternative accommodation elsewhere." Thus the duty of the local authority, following ascertainment of the excess rent and the alternative rent, was not to perform the merely mechanical task of treating the former as reduced to the level of the latter. Instead, the local authority was to exercise a judgment, or, as it is often called, a discretion. The local authority was to treat the excess rent as reduced by some amount, but not to a level below the alternative rent.
8. At that point the common ground between the parties ended and the issue between them arose: in making the judgment required under paragraph (2), to what matters could the local authority (if it thought it right) have regard other than the cost of suitable alternative accommodation elsewhere (namely the alternative rent, as I have defined it)?
9. The review board's answer, taken from its printed case, was put in these terms:
10. The first factor mentioned in (a) is expressly referred to as a matter to which regard must be had by the local authority, and it is not controversial. I would also accept that in identifying what alternative accommodation would be suitable for Mr Mehanne some account could be taken of his wife's pregnancy: alternative accommodation elsewhere, otherwise suitable, might for example be regarded as unsuitable if situated at the top of a tall block with no lift. But paragraph (3) did not apply to Mr Mehanne at the relevant time and the question whether it was reasonable to expect him to move was one which would have arisen under paragraph (3) and not expressly under paragraph (2). Mr Drabble QC for Mr Mehanne submitted that the effect of eviction on Mr Mehanne and his wife at that juncture, the difficulty he would experience in paying the alternative rent and the implications for Mr Mehanne and his wife and the local authority of housing them in accommodation for the homeless were all aspects of Mr Mehanne's housing situation to which the local authority could properly have regard, in addition to the alternative rent, when considering by what amount it was appropriate to treat his excess rent as reduced. This submission the review board challenged. Those matters (it was said) had no effect on the level of rent payable and were matters to which no regard could be paid.
11. The review board's factor (b) in the passage quoted above was not controversial. In R v Brent London Borough Council, Ex p Connery, above, Schiemann J held that the state of a local authority's own finances was a relevant matter for the authority to consider when exercising its judgment under paragraph (2), then drafted to confer a permissive power and not to impose a mandatory obligation. Counsel for Mr Mehanne did not contend that this was not a proper matter to consider, only that it was not the only matter which could properly be considered.
12. The review board's factor (c) adds nothing. It has already been pointed out, and it is obvious, that regulation 11 is directed to preventing the waste of public money.
13. In my opinion the argument advanced on behalf of Mr Mehanne is correct, for essentially the reasons given by Mummery LJ in his judgment ( 1 WLR 16 at 24):
Criticism was made of the expression "reasonably relevant" but it is obvious that Mummery LJ meant "reasonably (or properly) regarded as relevant" and that is the correct test. In the absence of clear language I would be very reluctant to conclude that the local authority or the review board were precluded from considering matters which could affect the mind of a reasonable and fair-minded person when deciding on the level to which a claimant's eligible rent should be treated as reduced, and the very general language of paragraph (2) gives no ground for inferring that such a constraint was intended.
14. I would dismiss the appeal. The decision of the review board dated 15 September 1996 (as corrected) should be quashed and the review board should be directed to consider afresh and according to law (by a differently constituted board) Mr Mehanne's request of 26 March 1996 for a further review of the determination of the City of Westminster dated 8 March 1996. I would order the review board to pay the costs before the House.
15. I have had the advantage of reading in draft the speech prepared by my noble and learned friend Lord Bingham of Cornhill. For the reasons which he gives, I too would dismiss the appeal.Lord Hope of Craighead
LORD HOPE OF CRAIGHEAD
16. This appeal is concerned with the amount of the housing benefit to which the respondent, Mr Mehanne, was entitled from December 1995 to June 1996 for the rent of the one bedroom flat which he was occupying as his home. Housing benefit is one of the income related benefits currently provided under Part VII of the Social Security Contributions and Benefits Act 1992. The detailed provisions affecting entitlement to housing benefit are set out in Part II of the Housing Benefit (General) Regulations 1987. These regulations were made under an earlier statute, but they remain in force - albeit subject frequently to amendment. The issue which is raised in this appeal is concerned with regulation 11 of the 1987 Regulations in the form it was in when Mr Mehanne applied for housing benefit on 8 December 1995.
17. Regulation 10(1)(a) of the 1987 Regulations provides that housing benefit in the form of a rent allowance is payable in respect of the periodical payments which a person is liable to make in respect of the dwelling which he occupies as his home including payments of rent. Mr Mehanne was occupying his flat under an assured shorthold tenancy, and the rent was £174.51 per week. The rent officer determined that this was not significantly above the market rent for the flat, so the rent which he had to pay was fixed at that amount. This was the claimant's eligible rent for housing benefit purposes. But the local authority's housing benefit officer was of the opinion that the rent which he had to pay for his flat was unreasonably high by comparison with the rent payable in respect of suitable alternative accommmodation elsewhere. That being so, regulation 11(2) of the 1987 Regulations came into play.
18. Regulation 11(2) provides that where it appears to the authority that the rent payable for the claimant's dwelling is unreasonably high
19. The word "shall" in regulation 11(2) indicates that, if it appears to the authority that the rent is unreasonably high, the authority must make a deduction from the eligible rent in order to arrive at the amount by reference to which the claimant's maximum housing benefit is to be calculated. It has no discretion in the matter as to whether or not a deduction is to be made. But it does have a discretion as to the amount of that deduction. This is because the rent is to be reduced "by such amount as it considers appropriate." The question is, what factors can the authority take into account when deciding the amount by which the rent should be reduced? The answer to this question must be found in the words used by the regulation, read in the light of the purpose for which it was made.
20. The direction which is contained in regulation 11(2) is subject to paragraphs (3) to (4) of the regulation. Paragraph (3) applies where the claimant, any member of his family or any member of his extended family as described in paragraph (7) is aged 60 or over, is incapable of work or is a member of the same household as a child or young person for whom he or his partner is responsible. In these cases, to which it is convenient to refer as "the priority cases", the authority is directed that no deduction shall be made under paragraph (2) unless suitable cheaper alternative accommodation is available and the authority considers that, taking into account the relevant factors mentioned in paragraph (6)(b), it is reasonable to expect the claimant to move from his present accommodation. The relevant factors mentioned in paragraph (6)(b) are the effects of a move to alternative accommodation on the claimant's prospects of retaining his employment and the effects on the education of any child or young person who is a member of the same houshold if such a move were to result in a change of school.
21. These provisions recognise the hardship that could result if a claimant whose case fell within one of these priority cases were to be forced out of his present accommodation by reason of the fact that the housing benefit which he received was insufficient to enable him to pay the rent. In the priority cases the authority is required by regulation 11(3) to eliminate the gap between the claimant's eligible rent and the cost of suitable alternative accommodation elsewhere.
22. Mr McDonnell QC for the authority submitted that the discretion which was given to the authority by regulation 11(2) was a limited one, as the only factors which were relevant to the amount of the reduction were: the cost of suitable accommodation elsewhere, which was a factor to which the authority was required by regulation to have regard; those factors which a local authority is always entitled to have regard or to take into account when considering whether or not to exercise a statutory power, such as the financial effect on the authority of doing so; and any other factors which might effect the object for which the power had been conferred, which was to prevent the subsidy being wasted because the claimant was occupying property which was too valuable or was being overcharged for it. He said that it was not open to the authority to take into account factors such as those mentioned in regulation 11(3) or any other factors which might be said to be, in the words of Mummery LJ in the Court of Appeal  1 WLR 16, 24E, "reasonably relevant to the housing situation of the claimant."
23. I confess that I was at first attracted by this argument. Prior to its amendment by SI 1991/235 the word used in regulation 11(2) was "may" not "shall". The discretion which was previously available to the authority to eliminate the gap by making no deduction at all from the eligible rent has been removed. It seemed to me that, if it had been the intention to retain the authority's discretion to close the gap in non-priority cases, the logical thing to do would have been to leave it open to the authority, if it thought that this was appropriate, to close the gap entirely as it is required to do in the priority cases by regulation 11(3). As it is, the effect of the amendment is that all it can now do is reduce the gap. It seemed to me that there was, perhaps, an indication here that the purpose of the amendment was to alter the function of regulation 11(2) so that the authority could no longer use it to avoid hardship to claimants who fell outside the list of priority cases in regulation 11(3). The effect of the amendment would thus be to confine the authority's attention to the effect of the claim on public funds.
24. I have come to be of the opinion, however, that this would be to take too narrow a view of regulation 11(2). I think that the key to the matter lies in the nature of the benefit with which we are concerned in this case and the context in which it is being made available. The benefit is closely related to the functions of the authority under the Housing Acts as the local housing authority. One of the functions of a local housing authority is to secure that advice and information about homelessness and the prevention of homelessness is available free of charge to any person in its district and to give assistance to those who are homeless or threatened with homelessness: see now section 179 of the Housing Act 1996. In R v view Board for East Devon District Council, Ex p Gibson (1993) 25 HLR 487, 493 Sir Thomas Bingham MR drew attention to the relevance of this point to the system which has been laid down for housing benefit:
25. As to the wording of the regulation, the extent of the discretion which the authority continues to have under regulation 11(2) is indicated by the prohibition in regulation 11(3). As Mr Drabble QC for the claimant pointed out, one would expect that the factors which regulation 11(3) says cannot be taken into account in the cases to which it refers would be factors which could be taken into account in regulation 11(2) cases. There is nothing in the wording of regulation 11(2) which prohibits this approach. And if the regulation 11(3) factors can be taken into account, there would seem to be no good reason for excluding other factors which would enable the authority to take account of an individual claimant's housing requirements. This approach would enable the authority to balance the risk of hardship due to homelessness against undue demands on the public purse resulting from over-generous payments of housing benefit.
26. I would also attach importance to the fact that the risk of hardship due to homelessness is inherent in the nature of the exercise which the authority is required by regulation 11(2) to carry out. In order to avoid unreasonable demands on the public purse, the authority is required to make a reduction from the eligible rent if the dwelling which the claimant occupies is larger than is reasonably required or the rent is unreasonably high by comparison with that payable for suitable accommodation elsewhere. The claimant who is subject to this reduction is then faced with a choice. Either he must move to suitable accommodation which is available elsewhere for letting at a rent which will be covered by the amount of his housing benefit, or he must accept the fact that the housing benefit which he receives will fall short of what he needs to pay the rent. Some claimants will be able to make this choice. Others may not. For them, this may be a choice that cannot be made at all. Suitable alternative accommodation elsewhere may not be available in their area. A move to suitable accommodation in another area may bring with it loss of employment or other forms of very real hardship. And the margin between the rent that has to be paid and the housing benefit may be such that claimants will find themselves at risk of being evicted because they are genuinely unable to pay the rent when it falls due.
27. The authority has a statutory duty to rehouse claimants who become homeless. There are likely to be cases where all that is needed to prevent homelessness is a reduction in the gap between the eligible rent and the alternative rent fixed by the housing benefit officer. Reducing the gap may be enough to enable claimants to meet their obligations and remain in the accommodation which they occupy. An interpretation of regulation 11(2) which would disable an authority from reducing the gap between the eligible rent and the housing benefit in cases where to do this would prevent homelesseness would seem to be contrary to good sense. It would also, I think, be contrary to the overall purpose of the Regulations. I would hold that there is nothing in the wording of regulation 11(2) which drives one to the conclusion that the authority is so restricted in the discretion which it can exercise.
28. For these reasons, and those given by my noble and learned friend Lord Bingham of Cornhill, whose speech I have had the advantage of reading in draft and with which I agree, I too would dismiss the appeal.
29. I have had the advantage of reading in draft the speech prepared by my noble and learned friend Lord Bingham of Cornhill. For the reasons which he gives, I too would dismiss the appeal.
LORD HOBHOUSE OF WOODBOROUGH
30. This appeal has concerned a question of the construction of the Housing Benefit (General) Regulations 1987. Your Lordships are of the opinion that the Review Board misconstrued the Regulations. Accordingly, I agree that the appeal should be dismissed.
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