Tenancy Fraud Forum 2018

 

The Tenancy Fraud Forum (TFF) held its annual conference at the BMA in London on Wednesday, 3 October 2018:

The TFF was launched in April 2012 and arose out of a recognition that there was an increasing need for a fraud forum that focused solely on tenancy fraud issues because of the complex law that surrounds such matters, and the requirement for niche investigations. The Executive Committee of TFF is made up of fraud specialists from local authorities and housing associations.

The annual event was as ever well attended and I was privileged to be asked to give the keynote speech, and focused on the need for greater understanding of the extent of fraud ‘in the system’, the litigation tools at the disposal of landlords and the need to consider widening the local authority investigation powers to be found in the Prevention of Social Housing Fraud (Power to Require Information) (England) Regulations 2014/899 and the Prevention of Social Housing Fraud (Detection of Fraud) (Wales) 2014/826 beyond the suspected fraud and their family.

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The lasting impression I got from listening to some excellent speakers on topics such as money laundering, surveillance and right to buy fraud – and speaking to many delegates – was that there was some tremendous work going on in the social housing sector to detect fraud and an increasing cross-working practice in the sector, alongside an acknowledgement that there is a long way to go:

The TFF is a an important organisation led by the brilliant and indefatigable Katrina Robinson MBE…I’m already looking forward to the 2019 Conference!

National Fraud Initiative Report 2018

The Cabinet Office has produced the National Fraud Initiative Report 2018, the headline figure of which is that the National Fraud Initiative (NFI), the Cabinet Office’s data matching service, has enabled participating organisations to prevent and detect over £300 million UK fraud and error in the period April 2016 to March 2018, a rise from £222 million in 2014/15.

The NFI compares sets of data, such as the payroll of a company with benefit records, allowing fraudulent claims and payments to be identified. Between April 2016 and March 2018, the NFI worked with over 1,200 public and private sector organisations.

The report highlights 4 NFI products:

  1. National – Data is collected from organisations across the UK for national fraud detection batch matching. Matches are accessed through a secure web application.
  2. AppCheck – Fraud prevention tool that helps organisations to stop fraud at the point of application, thereby reducing administrative and future investigation costs.
  3. ReCheck – Flexible batch matching tool that allows an organisation to repeat national batch matching at a time to suit them.
  4. FraudHub – this enables groups of organisations to regularly screen more than one dataset with the aim of detecting errors in processing payments, or benefits and services.

Looking at the figures in a housing context for England (£275.3 million of the £300 million figure) the report shows:

  • £5.5 million related to tenancy fraud, £25.5 million to waiting lists, and £1 million to right to buy (RTB – 4 cases);
  • 58 social housing properties were recovered, a small increase from the 54 properties in 2014/15. The NFI use an estimate of £93,000 per property recovered based on average four year fraudulent tenancy – this includes temporary accommodation for genuine applicants; legal costs to recover property; re-let cost; and rent foregone during the void period between tenancies;
  • 7601 false applications were removed from local authority allocation schemes during 2016/17 – over half of these applications were cancelled by one council.  The NFI works on an estimate of £3,240 per case for future losses prevented as a result of removing an applicant from a list;
  • The NFI estimate a saving of £65,000 per RTB application withdrawn based on average house prices and the minimum right to buy discount available (this has some regional variations such as with London it is £104,000 per application withdrawn to reflect the maximum value of RTB discount available for London properties);
  • The Annual Fraud Indicator 2017 highlights that housing tenancy fraud costs local government £1.83 billion. This has increased from the £1.76 billion quoted in 2016;
  • Whilst there are 400 local authority participants in the NFI, there are just 7 Housing Associations.

The report gives 2 examples of local authority use of NFI initiatives:

  1. Royal Borough of Greenwich – an NFI housing tenancy to housing tenancy match showed two matching tenancies between two London boroughs. Investigations in the Royal Borough of Greenwich showed their tenant had used false identity documents to gain a one bedroom flat in May 2013; claimed housing benefit; used the same documents to gain employment as a waste operative in the borough four years earlier, in October 2009 (he was no longer in that employment at the time of the investigation). The Royal Borough of Greenwich evicted the tenant from the property in February 2017 and he was prosecuted and sentenced at Woolwich Crown Court on 4th October 2017 to 33 months imprisonment. In total the man had received in excess of £60,000 in employment and housing benefit payments.
  2. Portsmouth City Council – a housing tenants to housing benefit match identified a tenant in a property owned by Portsmouth City Council. The tenant had however been claiming housing benefit in excess of £150 per week for a different property in a nearby authority area since January 2016. The match revealed the tenant had let the property from Portsmouth City Council in February 2013, but investigations found the tenant’s partner had been subletting the Portsmouth property for up to two years. The council sought a prosecution in October 2017 and the property was successfully recovered.

Excluding all or part of a witness statement

Introduction

There appears to have been the beginnings of a trend in housing possession cases recently for defendants to challenge the admissibility of all or part of the claimant’s witness statement evidence by way of an application under CPR r. 32.1 to exclude all or part of witness evidence filed on behalf of the claimant:

“(2) The court may use its power under this rule to exclude evidence that would otherwise be admissible.”

Correspondingly and in terms of form, paragraph 25 of the Practice Direction to CPR r.32 provides at paragraph 1:

“Where:

(1) an affidavit,

(2) a witness statement, or

(3) an exhibit to either an affidavit or a witness statement,

does not comply with Part 32 or this practice direction in relation to its form, the court may refuse to admit it as evidence and may refuse to allow the costs arising from its preparation.” (emphasis added).

This article seeks to explain the basis and general merit of such exclusion applications. and possible and appropriate responses by the landlord respondent.

 

The Issue

A common starting point is the judgment of the (now) Master of the Rolls (then Chancellor) in JD Wetherspoon Plc v Harris and others [2013] EWHC 1088 (Ch); [2013] 1 WLR 3296 where he confirmed that a witness statement should cover only those issues upon which the party serving it wishes that witness to give evidence-in-chief.  That, as a broad statement of principle, is uncontroversial.

He went on to stress that it was not the function of a witness statement:

  • to provide a commentary on the documents in the trial bundle,
  • to set out quotations from such documents,
  • to engage in matters of argument or
  • to deal with other matters merely because they arise in the course of the trial.

And so at paragraph 39 of his judgment he said:

“Mr Goldberger would not be allowed at trial to give oral evidence which merely recites the relevant events, of which he does not have direct knowledge, by reference to documents he has read. Nor would he be permitted at trial to advance arguments and make submissions which might be expected of an advocate rather than a witness of fact. These points are made clear in paragraph 7 of Appendix 9 to the Chancery Guide (7th ed), which is as follows:

“A witness statement should simply cover those issues, but only those issues, on which the party serving the statement wishes that witness to give evidence in chief.  Thus it is not, for example, the function of a witness statement to provide a commentary on the documents in the trial bundle, nor to set out quotations from such documents, nor to engage in matters of argument.  Witness statements should not deal with other matters merely because they may arise in the course of the trial.””

With regard to the reference to the Chancery Guide, which though it has no direct application of course to trials in the County Court accurately records the principles applicable to such cases (save for the procedural aspects referred to in paragraph 19.5), the current version says this about witness statements:

‘19.1  CPR rule 32.4 describes a witness statement as “a written statement signed by a person which contains the evidence which that person would be allowed to give orally”.

19.2  The function of a witness statement is to set out in writing the evidence in chief of the maker of the statement. Accordingly witness statements should, so far as possible, be expressed in the witness’s own words. This guideline applies unless the perception or recollection of the witness of the events in question is not in issue.

19.3  A witness statement should simply cover those issues, but only those issues, on which the party serving the statement wishes that witness to give evidence in chief. It should therefore be confined to facts of which the witness can give evidence. It is not, for example, the function of a witness statement to provide a commentary on the documents in the trial bundle, nor to set out quotations from such documents, nor to engage in matters of argument, expressions of opinion or submissions about the issues, nor to make observations about the evidence of other witnesses. Witness statements should not deal with other matters merely because they may arise in the course of the trial.

19.4  Witness statements should be as concise as the circumstances of the case allow. They should be written in consecutively numbered paragraphs. They should present the evidence in an orderly and readily comprehensible manner. They must be signed by the witness, and contain a statement that he or she believes that the facts stated in his or her witness statement are true. They must indicate which of the statements made are made from the witness’s own knowledge and which are made on information and belief, givingthe source of the information or basis for the belief.

19.5  Inadmissible material should not be included. Irrelevant material should likewise not be included. Any party on whom a witness statement is served who objects to the relevance or admissibility of material contained in a witness statement should notify the other party of their objection within 28 days after service of the witness statement in question and the parties concerned should attempt to resolve the matter as soon as possible. If it is not possible to resolve the matter, the party who objects should make an appropriate application, normally at the pre-trial review (“PTR”), if there is one, or otherwise at trial.”

 

Reference to the Civil Procedure Rules demonstrates that these are just part of the basis for establishing a “proper” witness statement.  And so CPR r. 32.8 simply provides:

“A witness statement must comply with the requirements set out in Practice Direction 32.”

Practice Direction 32 (paragraphs 17 to 25) set out these requirements and in terms of statements’ contents simply and in essence provides that:

  1. The statement must, if practicable, be in the intended witness’ own words (18.1).
  2. It should indicate which of the statements in it are made from the witness’s own knowledge and which are matters of information or belief, and the source for any matters of information or belief (18.2).

 

Purpose of Witness Statements

Any party will at a civil trial seek to prove the necessary facts of their case by:

(a) Witnesses giving oral evidence – see CPR r.32.2(1);

(b) Hearsay Evidence, such as witness statements where the maker does not attend trial to be cross-examined – see the Civil Evidence Act 1995, s. 1 and CPR r. 32.5(5)(b) and r. 33.2 – though there are issues of weight); and/or

(c) Relevant documents – see paragraphs 11.3 to 15.4, and 18.5 of the Practice Direction to CPR r. 32.  Note however the admissibility in any event of agreed documents:

“27.2  All documents contained in bundles which have been agreed for use at a hearing shall be admissible at that hearing as evidence of their contents, unless –

(1) the court orders otherwise; or

(2) a party gives written notice of objection to the admissibility of particular documents.”

Evidence at such a civil trial, including possession claims brought by local housing authorities and private registered providers of social housing, will therefore of course be greatly underpinned by a witness statement from each live witness served in accordance with earlier court directions.  CPR r. 32.4 accordingly says:

“(2) The court will order a party to serve on the other parties any witness statement of the oral evidence which the party serving the statement intends to rely on in relation to any issues of fact to be decided at the trial.”

Additional questions in chief put by a party to its witness maybe allowed by the trial judge – see CPR r. 32.5(3)(4) – but the starting point is that:

32.5(2) Where a witness is called to give oral evidence under paragraph (1), his witness statement shall stand as his evidence in chief unless the court orders otherwise.

The importance, therefore, of the witness statement is obvious and its exclusion, even in part, could fatally, or at least substantially, undermine a party’s case and leave it without evidence of essential facts.

 

Landlord’s response to application

CPR r. 32 and Practice Direction

Civil Evidence Act 1995

There is nothing objectionable to any party insisting upon strict adherence to the court rules and established practices as and when appropriate.

For example, witness statements showing (in part) a remarkable resemblance to skeleton arguments are not uncommon and should be rightly criticised.  I recently acted for the landlord in a residential possession trial (mandatory ground) where the defendant included in his own evidence, and that of others supporting him, irrelevant information on alleged poor management practice by the landlord which had no bearing on his sole defence of proprietary estoppel.

Whether there is subsequently a need or tactical imperative to formally apply to exclude all or part of such evidence, as opposed to making submissions to like effect (as I did in the proprietary estoppel trial), is a moot point however.

One example of where the application route was adopted, in addition to the Wetherspoon case, is Akhtar v Muhammad [2002] EWHC 673 (Ch) where the court held that it was appropriate to allow, in part, an application by the defendant for the exclusion of certain passages contained in the claimant’s witness statement on the basis that they were likely to cause a proliferation of issues at trial.

However, the Master of the Rolls in Wetherspoon went on to “warn” against a too literal approach to the relevant rules and principles:

“41…these rules as to witness statements and their contents are not rigid statutes. It is conceivable that in particular circumstances they may properly be relaxed in order to achieve the Overriding Objective in CPR r.1 of dealing with cases justly”.

Further, it should be borne in mind:

  1. A clear and agreed list of issues (or one set down by the court in the absence of agreement – see CPR r. 3.1(2)(k) and r. 32(1)(a)/32.2(3)), or the limitation of cross examination for the same reasons (CPR r. 32.1(3)), should in many instances effectively sideline any unnecessary and inappropriate information contained in the statement objected to.
  2. Such elements only really have any relevance in so far as they risk derailing the trial timetable and/or prejudicing the fair conduct of the trial.
  3. There can of course be agreement to remove certain parts of a statement or a whole statement (presumably not only where appropriate, but where the factual elements of the claim can still be proved).
  4. Hearsay evidence is, as already noted, admissible in civil trials and therefore a statement recording the evidence relied upon by the claimant is not properly to be treated as just a “commentary on the documents in the trial bundle” but something the claimant wishes to give evidence in chief on (even if hearsay).
  5. Proper regard has to be had to the overriding objective:

“1.1

(1) These Rules are a new procedural code with the overriding objective of enabling the court to deal with cases justly and at proportionate cost.

(2) Dealing with a case justly and at proportionate cost includes, so far as is practicable –

(a) ensuring that the parties are on an equal footing;

(b) saving expense;

(c) dealing with the case in ways which are proportionate –

(i) to the amount of money involved;

(ii) to the importance of the case;

(iii) to the complexity of the issues; and

(iv) to the financial position of each party;

(d) ensuring that it is dealt with expeditiously and fairly;

(e) allotting to it an appropriate share of the court’s resources, while taking into account the need to allot resources to other cases; and

(f) enforcing compliance with rules, practice directions and orders.”

Conclusion

It follows that any party considering making an application to exclude evidence, or the court considering the same, has to adopt a pragmatic approach. As Mr Justice Arnold said in Takeda Pharmaceutical Co. Ltd v Fougera Sweden Holding 2 AB [2017] EWHC 1995 (Ch)

“8. Fougera contends that large swathes of all four of these statements are inadmissible in evidence at this trial on one or more of the following grounds: (i) they contain statements of subjective intention in relation to the SPA and/or opinion and/or legal argument, (ii) they concern the negotiation of the SPA, (iii) they concern facts which were only available to one of the contracting parties and (iv) they concern the conduct of the parties after the SPA. Consistently with that contention, counsel for Fougera elected not to cross-examine any of the witnesses.

9. Takeda disputes that any parts of the statements are inadmissible. In order to reduce the ambit of the dispute, Takeda has elected not to rely upon some of paragraphs objected to by Fougera. Nevertheless, Takeda does rely upon a fairly large number of paragraphs in all four statements which are objected to. I do not propose to lengthen this judgment by considering each paragraph and each objection seriatim. I consider that, on the whole, Fougera’s objections are justified. Even if all the evidence relied on by Takeda were admitted, however, I do not consider that it would affect the conclusions which I have reached.”

It is certainly the case that witness statements need to be carefully drafted – they are not skeleton arguments and should only focus on the information the party needs to submit to prove its case (or successfully oppose the claim).  Where that does not involve direct evidence it should be clear how the deponent came by the information and why they are the one providing it.

For a landlord in a sub-letting possession claim therefore, by way of example, one would expect witness evidence – hearsay or otherwise – of:

  • the tenancy agreement;
  • service of the notice;
  • the (other) residence of the defendant (if known);
  • the details (and evidence) of the alleged sub-letting and how it was discovered;
  • the rent and the sub-letting rent for any rent/use and occupation/unlawful profit order claim;
  • compliance with the pre-action protocol;
  • (in a claim with an alternative breach of tenancy basis of possession, details of any relevant factual factors going towards reasonableness and any relevant policies).

Whatever the progress of the “trend” referred to at the beginning of this article, it will still be rare that witness evidence will be excluded, at least to the extent that the claim will be derailed.

 

Witnesses – Credibility and Probative Value

On Friday 3 August 2018 HHJ Simon Barker QC, sitting as a Deputy High Court Judge, handed down judgment in Saeed v Ibrahim [2018] EWHC 1804 (Ch).  The case concerned a claim for declarations, accounts or restitution or damages arising from property and other transactions involving some or all of the various parties.

Whilst the Claimants were ultimately successful, the interest of the case for this article’s purpose is the nature of the oral evidence heard by the court.  It is clear from the judgment that there were, perhaps not unusually serious issues arising from the oral evidence heard at trail.  That clearly had relevance to the case itself but also provides an opportunity to review certain of the issues and factors surrounding the use and selection of witnesses.  For example:

(a) Quality of Witness Statements

It should go without saying but frequently needs to be said that a person needs to understand and approve their statement in considered, clear and logical fashion, if only to avoid the conclusion HHJ Simon Barker QC reached here:

“12.  When giving his oral evidence, D1 spent some time making significant corrections to and clarifications of 10 of the 49 paragraphs of his main witness statement. Mr Ghaffar submitted that in their evidence his clients, that is D1 and D3 for this purpose (D1 purported to give evidence on behalf of D5), did their best to tell the truth but, Mr Ghaffar conceded, there were aspects of their evidence which were unsatisfactory.”

(b) Problems with Oral Evidence

Of course one can never entirely legislate for what a witness will say when called to give their evidence orally but “car crash” performances rarely if ever win the day:

13. …Mr Briggs submitted that D1 was an exceptionally evasive and unsatisfactory witness…D1 was unable to answer questions; other occasions when D1 launched into tangential speeches as answers; various occasions on which he blamed his solicitors for shortcomings (flaws in his witness statement, disclosure shortcomings including in relation to powers of attorney in his sons’ names, and inconsistencies between his pleaded case and his evidence). In addition, during cross-examination D1 admitted that C1 had indeed brought cash in a holdall or bag to his home, admitted the existence of documentation reflecting money transfers through AR to C1, and referred to meetings (initially one, then two, and finally three) with a lawyer about trust deeds. At one point in cross-examination, D1 referred to C1 having brought cash to him at his home “so many times” that he could not say whether or not he had done so on the occasion the subject of the question. From the outset of his oral evidence D1 appeared confident in his answers. He showed no signs of concern or embarrassment when challenged on his probity (e.g. why he failed to make income tax returns when he had annual rental income in the order of £50,000), his lack of concern about the accuracy of conveyancing documents to effect property transfers (e.g. the transfer of 37LR to D3 in October 2005), and when, as not infrequently happened, he was caught out in lies. When giving evidence about his means and access to money (two examples are the use of family members as nominee holders of accounts and the use and whereabouts of an advance inheritance of several hundred thousand pounds said to have been received from his father) D1 was persistently evasive. To describe D1 as an unimpressive witness would fall well short of the mark.”

The Claimant’s counsel had in this context referred to Painter v Hutchinson [2007] EWHC 758 (Ch) to support his attack on the First Defendant’s credibility, in particular paragraph 3 of the judgment of Mr Justice Lewison (as he then was):

“However, in addition to having been convicted of dishonesty in the past, Mr Hutchison was also a very unsatisfactory witness. Even Miss Rich did not suggest that his evidence was reliable. I will give detailed examples later, but for now I summarise my general impression. He was evasive and argumentative. He would launch into tangential speeches when confronted by questions that he could not answer consistently with his case. He attempted to place the most strained readings on the plain words of his pleaded case and his principal witness statement. He was free with allegations that his previous solicitors and counsel had made mistakes in accurately recording his instructions. At times he gave self-contradictory answers within the space of a few minutes of his evidence. New allegations emerged in the course of his cross-examination which had not previously formed part of his pleaded case or his written evidence. It was impossible not to conclude that they had been made up on the spot. In the course of his cross-examination of Mr Hutchison Mr Cowen convincingly demonstrated to my mind that Mr Hutchison’s case had shifted in important respects either in response to evidence given by Mr Painter or in response to documents that had emerged on disclosure. It changed again and again in the witness box itself. His disclosure of documents has been lamentable and highly selective. In my judgment he has deliberately and dishonestly fabricated evidence in order to try to accommodate what was indisputable within the overall framework of his story.”

(c) “Pointless” selection of witness

Sometimes no witness may be better than the one selected.  It is sufficient under this sub-heading to simply set out in full paragraph 17 of the Judgment:

“Mr Javed Qamar (‘JQ’) is a long-standing friend of C1 and, to some extent, a funder of C1 in this case. In closing submissions, Mr Briggs accepted that JQ’s evidence was partisan. I disregard his evidence.”

(d) Passage of time & recollection

Reference was made to the fascinating and apposite remarks of Mr Justice Leggatt (as he then was) in Gestmin SGPS SA v Credit Suisse (UK) Ltd [2013] EWHC 3560 (Comm), albeit with reference to commercial cases:

“15. An obvious difficulty which affects allegations and oral evidence based on recollection of events which occurred several years ago is the unreliability of human memory.
 
16. While everyone knows that memory is fallible, I do not believe that the legal system has sufficiently absorbed the lessons of a century of psychological research into the nature of memory and the unreliability of eyewitness testimony. One of the most important lessons of such research is that in everyday life we are not aware of the extent to which our own and other people’s memories are unreliable and believe our memories to be more faithful than they are. Two common (and related) errors are to suppose: (1) that the stronger and more vivid is our feeling or experience of recollection, the more likely the recollection is to be accurate; and (2) that the more confident another person is in their recollection, the more likely their recollection is to be accurate.
 
17. Underlying both these errors is a faulty model of memory as a mental record which is fixed at the time of experience of an event and then fades (more or less slowly) over time. In fact, psychological research has demonstrated that memories are fluid and malleable, being constantly rewritten whenever they are retrieved. This is true even of so-called ‘flashbulb’ memories, that is memories of experiencing or learning of a particularly shocking or traumatic event. (The very description ‘flashbulb’ memory is in fact misleading, reflecting as it does the misconception that memory operates like a camera or other device that makes a fixed record of an experience.) External information can intrude into a witness’s memory, as can his or her own thoughts and beliefs, and both can cause dramatic changes in recollection. Events can come to be recalled as memories which did not happen at all or which happened to someone else (referred to in the literature as a failure of source memory).
 
18. Memory is especially unreliable when it comes to recalling past beliefs. Our memories of past beliefs are revised to make them more consistent with our present beliefs. Studies have also shown that memory is particularly vulnerable to interference and alteration when a person is presented with new information or suggestions about an event in circumstances where his or her memory of it is already weak due to the passage of time.
 
19. The process of civil litigation itself subjects the memories of witnesses to powerful biases. The nature of litigation is such that witnesses often have a stake in a particular version of events. This is obvious where the witness is a party or has a tie of loyalty (such as an employment relationship) to a party to the proceedings. Other, more subtle influences include allegiances created by the process of preparing a witness statement and of coming to court to give evidence for one side in the dispute. A desire to assist, or at least not to prejudice, the party who has called the witness or that party’s lawyers, as well as a natural desire to give a good impression in a public forum, can be significant motivating forces.
 
20. Considerable interference with memory is also introduced in civil litigation by the procedure of preparing for trial. A witness is asked to make a statement, often (as in the present case) when a long time has already elapsed since the relevant events. The statement is usually drafted for the witness by a lawyer who is inevitably conscious of the significance for the issues in the case of what the witness does nor does not say. The statement is made after the witness’s memory has been “refreshed” by reading documents. The documents considered often include statements of case and other argumentative material as well as documents which the witness did not see at the time or which came into existence after the events which he or she is being asked to recall. The statement may go through several iterations before it is finalised. Then, usually months later, the witness will be asked to re-read his or her statement and review documents again before giving evidence in court. The effect of this process is to establish in the mind of the witness the matters recorded in his or her own statement and other written material, whether they be true or false, and to cause the witness’s memory of events to be based increasingly on this material and later interpretations of it rather than on the original experience of the events.
 
21. It is not uncommon (and the present case was no exception) for witnesses to be asked in cross-examination if they understand the difference between recollection and reconstruction or whether their evidence is a genuine recollection or a reconstruction of events. Such questions are misguided in at least two ways. First, they erroneously presuppose that there is a clear distinction between recollection and reconstruction, when all remembering of distant events involves reconstructive processes. Second, such questions disregard the fact that such processes are largely unconscious and that the strength, vividness and apparent authenticity of memories is not a reliable measure of their truth.
 
22. In the light of these considerations, the best approach for a judge to adopt in the trial of a commercial case is, in my view, to place little if any reliance at all on witnesses’ recollections of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts. This does not mean that oral testimony serves no useful purpose – though its utility is often disproportionate to its length. But its value lies largely, as I see it, in the opportunity which cross-examination affords to subject the documentary record to critical scrutiny and to gauge the personality, motivations and working practices of a witness, rather than in testimony of what the witness recalls of particular conversations and events. Above all, it is important to avoid the fallacy of supposing that, because a witness has confidence in his or her recollection and is honest, evidence based on that recollection provides any reliable guide to the truth.”

Of course a good witness will not always win the day any more than a bad witness will necessarily always lose the case for the party calling them.  Lessons can though be learned and remembered from Saeed, not forgetting the Judge’s ultimate conclusion on the evidence he heard requiring him to acknowledge at paragraph 20 of the Judgment:

“…the actual unreliability of almost everyone who gave oral evidence (the exception being D2, but she had almost no actual involvement or relevant knowledge).”

 

Housing Fraud Training

Monday, 9 July 2018 sees the roll-out, starting in London, of a “Misuse of Social Housing Tenancies” programme, organised by MBL Seminars Ltd and presented by Andy Lane.  There are also courses planned in 2018 for:

  • Bristol – 13 September
  • Leeds – 18 September
  • Cambridge – 17 October

IMG_0538

[Andy presenting an earlier course at Cornerstone Barristers on public law
defences to possession claims]

Recent activity against social housing fraud

The last fortnight has shown no sign of any let-up in the successful efforts of many local housing authorities and housing associations to tackle pro-actively detected incidences of social housing fraud.  Below are just a three examples of this ongoing effort:

 

“Only or principal home” and an outright order for possession

Possession Claim

I acted for a local authority today in a possession claim brought against one of its secure tenants because of alleged breaches of tenancy.  The terms of the tenancy agreement in issue were:

  1. You must use the property as your only or principal home.
  2. You must not leave the property for more than a single period of 21 days without informing us in advance in writing with details of how we can gain access to the property during the period of absence. You must also tell us in writing when you anticipate returning to the property and the reason for your absence. If you do not inform us, we may treat you as having parted with possession of the property and take action to repossess it.

Of course the first term replicates the Housing Act 1985 (“the Act”) where section 79(1) provides that a secure tenancy only remains as such for so long as the landlord and tenant conditions are met. The latter is provided for at section 81:

“The tenant condition is that the tenant is an individual and occupies the dwelling-house as his only or principal home; or, where the tenancy is a joint tenancy, that each of the joint tenants is an individual and at least one of them occupies the dwelling-house as his only or principal home.”

The factual basis of claim 

The tenant had from February 2013 to early 2017 obtained and undertook employment in a food take-away shop some 50 miles away from her authority flat (“the flat”), with accommodation being provided above the shop.  Her son was placed in a school in the county where the work was located rather than where the flat was.

She maintained that she visited and stayed at the flat on a regular basis, and at least once a week as a minimum, though this was disputed by the hearsay evidence of three neighbours and, more significantly, meter records in respect of the water, gas and electricity accounts for the flat which showed little, and for some periods no, usage.

She did though ensure that the rent and council tax was paid, and did not sub-let all or part of the flat at any time.

In 2016 the tenant submitted an application for the right to buy the flat, and some time afterwards the local authority received information that she had not been living there.  Detailed investigations were undertaken though by the time the notice to quit, which had thereafter been served, had expired it was not disputed that the tenant had moved with her family back into the flat such that the notice was of no effect.

Possession proceedings were issued following service of a notice seeking possession and the authority relied on (discretionary) Ground 1 of Schedule 2 to the Act:

“Rent lawfully due from the tenant has not been paid or an obligation of the tenancy has been broken or not performed.” (emphasis added)

 

Relevant Case-law

There are numerous cases surrounding the whole question and meaning of ‘only or principal home’ though the court focused on three.

In Islington Borough Council v Boyle [2011] EWCA Civ 1450; [2012] PTSR 1093 the Master of the Rolls set down the relevant principles to consider when addressing the this concept:

“55 I summarised the propositions to be derived from those and other cases in Amoah v Barking and Dagenham London Borough Council (2001) 82 P & CR DG12 . In the light of the submissions in the present case, and further reflection, I would summarise as follows the relevant principles to be applied in determining whether a tenant continues to occupy a dwelling as his or her home, for the purposes of the 1985 Act, despite living elsewhere. First, absence by the tenant from the dwelling may be sufficiently continuous or lengthy or combined with other circumstances as to compel the inference that, on the face of it, the tenant has ceased to occupy the dwelling as his or her home.In every case, the question is one of fact and degree. Secondly, assuming the circumstances of absence are such as to give rise to that inference: (1) the onus is on the tenant to rebut the presumption that his or her occupation of the dwelling as a home has ceased; (2) in order to rebut the presumption the tenant must have an intention to return; (3) while there is no set limit to the length of absence and no requirement that the intention must be to return by a specific date or within a finite period, the tenant must be able to demonstrate a “practical possibility” or “a real possibility” of the fulfilment of the intention to return within a reasonable time; and (4) the tenant must also show that his or her inward intention is accompanied by some formal, outward and visible sign of the intention to return, which sign must be sufficiently substantial and permanent and otherwise such that in all the circumstances it is adequate to rebut the presumption that the tenant, by being physically absent from the premises, has ceased to be in occupation of it. Thirdly, two homes cases, that is to say where the tenant has another property in which he or she voluntarily takes up full-time residence, must be viewed with particular care in order to assess whether the tenant has ceased to occupy as a home the place where he or she formerly lived. Fourthly, whether or not a tenant has ceased to occupy premises as his or her home is a question of fact. In the absence of an error of law, the trial judge’s findings of primary fact cannot be overturned on appeal unless they were perverse, in the sense that they exceeded the generous ambit within which reasonable disagreement about the conclusions to be drawn from the evidence is possible; but the appeal court may in an appropriate case substitute its own inferences drawn from those primary facts.” (emphasis added)

He went on to consider the “two homes cases” later in his judgment:

“65 In the light of the cases, I would summarise as follows the principles (in some cases reflecting those in para 55 above) which apply to the identification of which of two or more homes of the tenant is or was the tenant’s principal home. First, the length or other circumstances of the tenant’s absence may raise the inference that the dwelling which is the subject of the proceedings ceased to be the tenant’s principal home so as to cast on the tenant the burden of proving the contrary. Secondly, in order to rebut that presumption, it is not sufficient for the tenant to prove that at the material time it was his or her subjective intention and belief that the dwelling remained the principal home. The objective facts must bear out the reality of that belief and intention both in the sense that the intention and belief are or were genuinely held and also that the intention and belief themselves reflect reality. The reason for the absence, the length and other circumstances of the absence and (where relevant) the anticipated future duration of the absence, as well as statements and conduct of the tenant, will all be relevant to that objective assessment. Thirdly, the court’s focus is on the enduring intention of the tenant, which, depending on the circumstances, may not be displaced by fleeting changes of mind. Fourthly, the issue is one of fact to be determined in the light of the evidence as a whole, and in respect of which the trial judge’s findings of primary fact can only be overturned on appeal if they were perverse in the sense that I have mentioned earlier; but the appeal court may in an appropriate case substitute its own inferences drawn from those primary facts.” (emphasis again added).

The defendant’s representative played special regard to Crawley BC v Sawyer [1988] 20 HLR 98.  The court in this case held that there was no material difference between occupying premises as a “home” and occupying them as a “residence”. It was a case in which for a period of about a year a secure tenant had gone to live with his girlfriend and had thereafter returned to the property. During that period he had paid rent and rates, visited the property once a month and at some stage had spent a week back there. His evidence was that he had not abandoned the property and had had every intention of returning to it. The trial judge found that, even during that period of about a year, the property had remained, if not his only home, at least his “principal home” for the purpose of section 81 and so the local authority was not entitled to possession of it. The Court of Appeal held that the trial judge had been entitled on the evidence to take the view that the tenant had been living with his girlfriend only on a temporary basis and that, indeed, his principal home remained the property during that period. At p. 102 Parker LJ said:

“Going through the whole thread of these matters is the common principle that, in order to occupy premises as a home, first, there must be signs of occupation – that is to say, there must be furniture and so forth so that the house can be occupied as a home – and, secondly, there must be an intention, if not physically present, to return to it.”

 

Lord Justice Lewison confirmed in Havering LBC v Dove and another [2017] EWCA Civ 156; [2017] PTSR 1233 that the “Boyle principles” applied as much to a case where the subject property was not “fully used” as to a case of abandonment:

“22 In my judgment these principles are engaged not only where the tenant is absent from the property in the sense of not being physically present at all. They are also engaged where the tenant ceases to occupy the property as his or her only or main home even if he or she continues to occupy it as a home; as, for example, where what had once been the tenant’s only home becomes no more than a weekend or holiday home. Moreover the question of an intention to return (which often features in these cases) is in reality an intention to revert to a previous pattern of existence…”

Judgment

The court found that the authority had proven breaches of both tenancy terms relied upon.  In particular, the tenant had not rebutted the presumption that her occupation of the flat had ceased, and did not have the requisite intention to return there within a reasonable time.

Those were issues of “fact and degree” of course and perhaps of more interest was the court’s treatment of the nature of breach.  The authority had stressed it represented a serious misuse of social housing more in line with sub-letting and obtaining a tenancy by false representation cases than, say, rent arrears and anti-social behaviour complaints.  The court accepted this submission.

There was evidence before the court that there were over 1000 people waiting for a 2-bedroom property on the authority’s allocation scheme, at a cost of over £9000 per year for each household. Though the tenant had not immediately profited from her actions, as a secure tenant she would enjoy the right to buy and a significant benefit in the form of the statutory discounts available.

The court therefore determined that it was not only reasonable to make a possession order but that such an order should be made outright, along with the usual costs order.

Lessons Learnt

Taking too much from any case in this area of law is fraught with caveats and warnings.  Factual circumstances, evidence available and produced, and the inherent vagaries of the county court mean that cases such as this perhaps at best demonstrate what may be possible in the right circumstances.

The local authority investigations were here of the highest order, and the caution interview undertaken with regard to the right to buy application of special assistance (for example, it confirmed that the tenant knew what her obligations were under the tenancy with regard to use of the flat, and highlighted discrepancies in her accounts of how many times she visited the flat in the disputed 4-year period).

In the right case, evidence of the impact of a property effectively “lying empty” is helpful, such as a landlord’s pressing housing requirements in relation to would-be tenants, as is consideration of the cost of investigations.

Like a false representation ground, there is often little (or, at least, limited) point in suspending any order for possession on this Ground, but today’s case does demonstrate that even where a notice to quit route to possession is not available possession action may still be appropriate and successful.

Fraudulent Misrepresentation damages award

I am extremely grateful to Robert Brown, a well-known and highly regarded barrister at Arden Chambers, for alerting me to a case he was involved in recently concerning a damages claim for fraudulent misrepresentation.

In essence, the defendant had applied to the claimant local authority for housing assistance in 2003.  In 2009 he was offered a tenancy of a flat and signed a declaration confirming that his housing circumstances had not changed since he had first applied, and that he had no other accommodation to live in.

That was clearly wrong as he had in fact purchased a house in 2005 and when this was discovered many years later he was prosecuted under the Fraud Act 2006. In 2015, he pleaded guilty to five offences, including an offence of fraud by false representation contrary to Fraud Act 2006, s.2, and was then sentenced to 16 months’ imprisonment.

The local authority thereafter started a civil action to recover damages of £69,842.64 for the defendant’s fraudulent misrepresentation. Importantly and appropriately, this sum was based on the estimated cost of securing one unit of temporary accommodation for other applicants for housing during the period in which the defendant was the tenant of the flat.

After a trial in the County Court at Central London, HHJ Saggerson found for the local authority and ordered the defendant to pay damages of £69,842.64 (whilst also holding rent payments made could not be taken into account as a credit by the defendant as these were payable by whoever occupied the property).  He was also ordered to pay the local authority’s costs, which were summarily assessed.

The Judge rejected challenges to the claim based, for example, on causation and remoteness of damage, though doubted whether the original pleading of breach of contract as the cause of action was sustainable.  He had though no doubt that the amended statement of case introducing a fraudulent misrepresentation claim was clearly made out.

Needless to say, great credit must go to the local authority and Robert in pursuing this claim to such a successful conclusion and demonstrating that one measure of damages for allocation fraud could be the cost of continuing to accommodate a nominal household who might otherwise have been nominated to the disputed accommodation.


As mentioned at the head of this article, I am very grateful to Robert and Arden Chambers for alerting me to this case, and would welcome similar examples of social housing fraud in the courts from other barristers and solicitors. 

Social Housing Fraud in the Courts