Court of Appeal orders fresh hearing over procedural unfairness in housing benefit overpayment case
A failure to grasp whether an applicant had capacity has led the Court of Appeal (Civil Division) to allow an appeal in a dispute over housing benefit.
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Lord Justice Stuart-Smith, Lord Justice Edis and Lord Justice Newey heard the case brought by DP, by her litigation friend, against a London borough.
The proceedings arose from the council’s decision to reduce DP’s entitlement to housing benefit retrospectively on the grounds that, contrary to a 2024 declaration, her son had been living with her as a non-dependant adult from September 2014 to October 2018.
DP made a rolled-up application for permission to bring a second appeal from an order of the Upper Tribunal dismissing her appeal against the Social Entitlement Chamber of the First-tier Tribunal’s (FTT) dismissal of her appeal against the local authority's decision.
She had in 2014 submitted a change of circumstances form stating she was the sole occupier of the property and that her son had left two days before, making her entitled to a higher rate of housing benefit and increased council tax support.
The council investigated and found “extensive documentary evidence which consistently recorded the son's address as being at the appellant's property and so reduced her benefit”.
The court heard that DP held a fixed view that the London borough was pursuing a vendetta against her because she successfully obtained a Debt Relief Order in February 2018 against the council.
Stuart-Smith LJ noted: “There is no rational basis for the appellant's conviction about [the council's] motivation but…it is accepted by [the council] to be genuine; and it looms large in the procedural history.”
The FTT appeal went ahead but DP did not attend. It adjourned and ordered her to provide electoral register forms evidencing her son's residence in another London borough at the relevant times.
DP did not produce this evidence and supplied only a series of hand-written letters which focused “repetitively and (in a lay sense) obsessively” on council investigators’ visit to her home and the supposed motivation for the investigation being the debt relief order.
The FTT dismissed DP’s appeal against the benefit reduction and drew adverse inferences from the failure to provide independent evidence.
This decision put DP’s rent account with the council substantially in arrears and the council began possession proceedings.
She gained permission to appeal to the Upper Tribunal, but it rejected her case that it was not "a relatively straightforward and simple matter" for her to provide the evidence of her son's address “once one took account of her lack of capacity, impaired cognition, and paranoid belief system” and that the FTT had taken too restrictive an approach to the evidence needed.
Stuart-Smith LJ’s decision arose for the evidence of a psychiatrist who had examined DP.
He said “Even the most experienced and specialist tribunal judge may not recognise that a litigant who appears before them is compromised in their ability to participate fully in the proceedings, whether by reason of a lack of capacity or for some other reason not amounting to a loss of capacity.
“This case demonstrates the point. The FTT was not alerted to even the possibility that the appellant's ability to participate fully in the proceedings was compromised despite, her wholesale non-compliance with orders, her apparently unexplained failure to adduce evidence of the sort contemplated by FTT's case management orders, and the evidently obsessive streak (to put it no lower) that ran through her letters to the Tribunal which largely concentrated on her conviction that she was the subject of a vendetta by [the council]…”
While the FTT’s decision was reasonable, on “a proper assessment of [the pyschiatrist's] first report and certificate, the position changed radically.”
The Upper Tribunal had accepted the pyschiatrist's evidence showed DP had some abnormality of mind or of reasoning but also concluded the pyschiatrist “was not very informative as to the appellant's likely abilities from March 2020 onward,”
Stuart-Smith LJ said: “In my judgment…that was simply wrong: the evidence that she lacked capacity in November 2021 also supported a conclusion that she lacked it from March 2020 “
The Court of Appeal judge concluded that this was a case where there had been a mistake of an existing fact, “namely that the appellant was not compromised or lacking in capacity such that it would be relatively easy for her to participate fully in the proceedings as directed by the FtT's case management directions and at the January 2021 hearing.
“That is established by the evidence of [the psychiatrist]. The appellant was not responsible for the mistake, because it is a feature of her illness that she is in denial as to her difficulties. The mistake played a material part the tribunal's reasoning because the FtT drew an adverse inference from her failure to comply with the ostensibly reasonable case management directions or to provide a reasonable explanation for that failure.”
He said the FTT’s mistake “had a significant impact on the appellant's ability to participate fully in the proceedings which gave rise to material procedural unfairness”.
Stuart-Smith LJ concluded: “I consider that the second appeals test is satisfied. The fact that the appeal is based on what I consider to be a clear and material procedural unfairness is sufficient of itself to provide a compelling reason for the appeal to be heard.”
Lord Justice Edis and Lord Justice Newey both agreed.
Mark Smulian
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22-10-2025 4:00 pm
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