Judge: Judge Mark
Citation:  UKUT 12 (AAC)
Summary: Avid housing benefit lawyers will recall that this case concerned a 20 year old woman, with profound physical and mental disabilities from birth, whose parents had converted an annex to their property in order to provide a specially constructed dwelling to meet her complex needs. This included round the clock sleep-in carers. An indefinite tenancy agreement was signed by her father as landlord and, in place of her signature as the tenant was written “profoundly disabled and cannot communicate at all”. Indeed, she had no knowledge or understanding of the purported basis of her living arrangements. The parents’ understanding was that these arrangements would enable her to get housing benefit. Rent was therefore charged at £694.98 per month to cover the cost of the additional mortgage and a claim for housing benefit was made.
The 2011 decision had held that, regardless of her capacity to consent, the daughter could not and did not communicate any agreement to the tenancy. So there was no agreement and no liability to pay rent and therefore no housing benefit payable. However, it soon became apparent that both the parties and the Upper Tribunal had overlooked the law relating to necessaries and this omission justified a review of that previous decision. Section 7 MCA 2005 provides:
“(1) If necessary goods or services are supplied to a person who lacks capacity to contract for the supply, he must pay a reasonable price for them.
(2) ‘Necessary’ means suitable to a person’s condition in life and to his actual requirements when the goods or services are supplied.”
This time round the Upper Tribunal stuck to its guns in holding that there was a manifest absence of agreement:
“11. I conclude therefore that she had no liability to pay rent by reason of a document to which she was not a party and of which she had no knowledge or means of knowledge, any more than a person of full mental capacity would be bound by such a document.”
However, departing from its earlier decision, she was liable to pay because the accommodation was necessary for her and the obligation arose either by implication at common law or under s.7 MCA 2005:
“28. I am in some doubt whether “services” in section 7 of the Mental Capacity Act 2005 is wide enough to cover the provision of accommodation, but I have no doubt that insofar as it is not wide enough, the common law rules as to necessaries survive and that the provision of accommodation is an obvious necessary.”
Comment: This second attempt to deal with what is clearly a difficult issue remains problematic. It departs from what has previously been suggested by Social Security Commissioner Mesher (CH/2121/2006) that:
“My provisional understanding of the authorities on the law of England and Wales is that even if a party to a contract does lack sufficient understanding to have capacity and the other party knows that, the contract is not void, but is merely voidable at the option of the affected party.”
It would then follow that the contract in the present case between father and daughter should have been voidable (as the tribunal at first instance originally held). This is also the position taken in the Explanatory Notes to section 7 of the 2005 Act which state:
“In general, a contract entered into by a person who lacks capacity to contract is voidable if the other person knew or must be taken to have known of the lack of capacity.”
The Court of Protection issued guidance in 2011 on tenancy agreements to enable single orders to be made to sign the agreement for those lacking capacity. Whether the agreement was void or voidable, admirers of Street v Mountford  1 AC 809 will have spotted that there was no tenancy in law because the daughter did not have exclusive possession of the dwelling. Her complex needs required carers throughout the day and night whom, it seems clear, would have required unrestricted access to her.
In relation to the law of necessaries, the Explanatory Notes confirm that delivering milk can be a “necessary” good or service under section 7. Thus a milkman can expect to be paid for delivering to the house of someone with progressive dementia (see also MCA Code of Practice at paras 6.56-6.66). The fact that the provision of accommodation may also arise under s.7, and in any event certainly at the common law, adds an interesting perspective to the decision in DM v Doncaster MBC and Secretary of State for Health  EWHC 3652 which we covered last month. If a person lacking capacity is able to be accommodated under s.7 MCA 2005 that would mean that they would not be accommodated under Part 3 of the National Assistance Act 1948 and the charging requirement in section 22 would not bite. However, whilst the route may differ, the destination may remain the same given that s.7 MCA 2005 requires a reasonable sum to be paid. Thus, it would seem, those deprived of their liberty may still have to pay.