Page and Davis v. Chief Adjudication Officer  UKSSCSC CSB_72_1990 (24 June 1991)
(Page and Davis v. CAO)
Mr. J. J. Skinner CSB/72/1990
CA (Dillon, Woolf and Leggatt LJJ)24.6.91
Recovery of overpayment – overpayment due to innocent failure to disclose a material fact – whether recoverable
A widow who claimed and received supplementary benefit failed to disclose to the local office of the Department of Social Security that she had received widows benefit. As a consequence there was an overpayment of supplementary benefit. It was accepted that her failure to disclose was wholly innocent. The Commissioner rejected the claimant's argument that on its true construction section 53(1) of the Social Security Act 1986 does not catch innocent misrepresentation or innocent failure to disclose. On 24 June 1991 the Court of Appeal (Dillon, Woolf and Leggatt LJJ) dismissed an appeal by the claimant and held that:
the wording of section 53(1) was plain and unambiguous and covers innocent as well as fraudulent misrepresentation and non-disclosure.
DECISION OF THE SOCIAL SECURITY COMMISSIONER
"53-(1) Where it is determined that, whether fraudulently or otherwise, any person has misrepresented, or failed to disclose, any material fact and in consequence of the misrepresentation or failure -
(a) a payment has been made in respect of a benefit to which this section applies; or
(b) any sum recoverable by or on behalf of the Secretary of State in connection with any such payment has not been recovered,
the Secretary of State shall be entitled to recover the amount of any payment which he would not have made or any sum which he would have received but for the misrepresentation or failure to disclose.
(2) An amount recoverable under subsection (1) above is in all cases recoverable from the person who misrepresented the fact or failed to disclose it."
Mr. Shrimpton argues that the words "whether fraudulently or otherwise" are to be construed in accordance with the ejusdem generis rule and only bite where the failure or misrepresentation are fraudulent or culpable in a sense akin to fraud. Mr. Parke argues that the reference to "fraudulently or otherwise" extends the scope of that section beyond culpability to wholly innocent misrepresentation or innocent failure to disclose.
"20. - (1) If, whether fraudulently or otherwise, any person misrepresents, or fails to disclose, any material fact, and in consequence of the misrepresentation or failure -
(a) the Secretary of State incurs any expenditure under this Act; or
(b) any sum recoverable under this Act by or on behalf of the Secretary of State is not recovered;
the Secretary of State shall be entitled to recover the amount thereof from that person."
It will be seen that section 53 of the 1986 Act is for all practical purposes identical with section 20, but of course the new section applies to all benefits under the Social Security Act 1975, child benefit, family credit and, subject to the provisions of subsection (10A) of the section, to income support. In so far as means tested benefits are concerned the phrase used can be traced back to the National Assistance Act 1948, which dealt with recovery in cases of misrepresentation or non-disclosure, and it was again repeated in the Ministry of Social Security Act 1966, section 26. Prior to the enactment of the National Assistance Act 1948 the Poor Law Act 1930 dealt with the problem by way of the criminal law and section 20 of that Act provided that a person who did not make correct and complete disclosure was to be taken to be an idle and disorderly person within the meaning of the Vagrancy Act 1824. Since 1986 the supplementary benefit test has been applied as a common test.
"(2) In my judgment, 'any person' is quite clearly to be taken in its ordinary sense and extends to any person whatsoever provided that it is he or she who has made the material misrepresentation or failed to make the material disclosure; but while the concept of making or not making a misrepresentation needs no explanation or refinement, I consider that a 'failure' to disclose necessarily imports the concept of some breach of obligation, moral or legal i.e. non-disclosure must have occurred in circumstances in which, at lowest, disclosure by the person in question was reasonably to be expected: see among the definitions of 'failure' in the Shorter Oxford English Dictionary: 'one … non-performance, default; also a lapse …'
(3) However, the reference to 'fraudulent or otherwise' necessarily extends the scope of the provision beyond fraudulent misrepresentation or failure to disclose to wholly 'innocent' misrepresentation or failure to disclose, for instance, by reason of forgetfulness."
I do not accept that what was said by the Commissioner in paragraph 4(3) was obiter. It was not the principle question before him but, in exercise of his inquisitorial jurisdiction, he had to be satisfied that the tribunal dealt correctly with the question of the non-disclosure by the husband and wife when they were alive. However it is clear that the Commissioner dealt with the question of the construction without reference to any canon of interpretation and it would appear that he did not hear argument on the point. He seems to have approached the construction on the basis that there was no ambiguity in the wording of the sub-section.
"In terms of section 20 of the Act of 1976, it is not necessary to show intention or malice or even negligence on the part of the deceased in failing to disclose at the relevant time his capital assets. In my opinion, it is necessary to show that the deceased either knew or with reasonable diligence ought to have known that he possessed such assets."
Again in that case it would appear that no argument as to the meaning of the statute was advanced before the Commissioner and it was construed on the basis that there was no ambiguity.
"For completeness, I should say that the appellant has also challenged the initial right to recover, but there is no substance in her grounds for so contending. In case it may be of some comfort to the appellant, recovery is required under section 20 even in the absence of fraud. A failure to disclose may be wholly innocent, but the consequence is that there is still a liability to repay."
Again in that case the Commissioner's dictum was given without hearing argument but on the basis there was no ambiguity. In R(SB) 54/83 a Commissioner explained what must be proved in order to recover expenditure on the grounds of failure to disclose a material fact. He explained inter alia that it must be shown that the person from whom it is sought to recover the expenditure knew the material fact and that such disclosure by the person was reasonably to be expected. He did not enter into the controversy of innocent failures to disclose other than in that limited sense, but it may be inferred from his decision that he accepted the correctness of the interpretation placed on the section by the Commissioner in R(SB) 21/82. R(SB) 18/85 is a case where the Commissioner adopted what was said at paragraph 4(3) of R(SB) 21/82. It was a case dealing with misrepresentation. The Commissioner had this to say, at paragraph 8:
"It might well be that he honestly believes that his Army pension did not constitute either earnings or income, but this only went to the question of fraud. However, as the terms of section 20 clearly indicate, fraud or the absence of it was a wholly immaterial consideration (R(SB) 21/82 para. 4(3)), in so far as the tribunal regarded as reasonable the claimant's belief as to the effect of his Army pension, they were considering the wrong issue. Reasonableness or innocence had simply nothing to do with the matter in hand."
In that case the claimant was represented by counsel.
The construction was recognised by a tribunal of Commissioners in R(SB) 15/87. It was said at paragraph 14:
"There is no suggestion of misrepresentation by the claimant and the adjudication officer accepted that the claimant's 'failure to disclose a material fact was wholly innocent', not that that relieves him of his duty to make such disclosure (see para. 4 of R(SB) 21/82)."
In addition to the decisions cited in argument there are other reported decisions where the same interpretation was placed on the section; see R(SB) 9/85, where it was held that a wholly innocent misrepresentation allowed a recovery under the section. In addition to the reported cases there are countless unreported decisions of Commissioners where the same meaning is given to the section as was given by the Commissioner in R(SB) 21/82.
"Where the words of an Act of Parliament are clear, there is no room for applying any of those principles of interpretation, which are mere presumptions in case of ambiguity."
So my first task is to decide whether the words of section 53 of the 1986 Act are plain and bear one meaning only. I have read them again and again with care and in my view they are precise and unambiguous. I have borne in mind that they are a virtual re-enactment of section 20. In my judgment the only construction which can be placed upon them is that the misrepresentation or failure to disclose may be made either fraudulently or, in contrast thereto, innocently. It seems to me that such is the interpretation to be placed upon them when they are looked at in their natural and ordinary sense. When I look at them in the context which they are used, and in light of the words which surround them, I am reinforced in the view I have taken of them. There was one question which caused me concern. I asked myself why it was necessary for the draughtsman of the section to use the words "whether fraudulently or otherwise" at all. But it seems to me they must have been used for the avoidance of doubt and in order to emphasise that innocent and not only fraudulent misrepresentation or failure to disclose were to be caught and to make sure that a challenge to the section on that basis could be defeated. Because of the view which I have of section 53, it is unnecessary for me to enter upon an examination of all the points which have so diligently been taken by Mr. Shrimpton arising from the canons of construction. I bear in mind the words used by Lord Diplock in Duport Steels Limited v. Sirs  1 All ER 529 at 541
"..., the role of the judiciary is confined to ascertaining from the words that Parliament has approved as expressing its intention what that intention was, and giving effect to it. Where the meaning of the statutory words is plain and unambiguous it is not for the judge to invent fancied ambiguities as an excuse for failing to give effect to its plain meaning because they themselves consider that the consequences of doing so would be inexpedient, or even unjust or immoral."
It is not to be supposed that I consider the consequences of the meaning, which I accept, to be inexpedient or unjust or immoral. But to introduce in this case the ejusdem generis rule, where the words are plain and unambiguous, would be to invent a fancied and forced ambiguity. It follows that I place a similar interpretation on section 53 of the 1986 Act to that placed by Mr. Commissioner Edwards-Jones on section 20 of the 1976 Act in R(SB) 21/82.
"What you find in the Directors Liability Act is a liability imposed - a liability to make compensation - and the money payable is obviously a compensation to the plaintiff for the loss which he has sustained. It must be estimated and awarded with reference to that. It does not in the least resemble a 'penalty, damages or sum of money' imposed by statute as a punishment without reference to the injury sustained by the person who sues for it."
It seems to me that like reasoning can be applied to section 53 of the 1986 Act and I hold that is not a penal section.
"In so far as the Commissioners are concerned, on questions of legal principal, a single Commissioner follows a decision of a tribunal of Commissioners unless there are compelling reasons why he should not, as, for instance, a decision of a superior court affects the legal principals involved. A single Commissioner in the interests of comity and to secure certainty and avoid confusion on questions of legal principal normally follows the decision of other single Commissioners (see decisions R(G) 3/62 and R(I) 23/63). It is recognised however that a slavish adherence to this could lead to the perpetuation of error and he is not bound to do so."
The question before me is one of legal principle and I should follow the decision of the tribunal in R(SB) 15/87 unless there are compelling reasons why I should not do so, see R(U) 4/88. In the interests of comity and to secure certainty and avoid confusion, I should follow the decisions of another single Commissioner; I recognise that I am not bound to do so and certainly I should not slavishly adhere to the principle where I think a decision is wrong. However, the question of construction, which is at issue in the instant case, is not only one which has been decided by a single Commissioner or even by a tribunal of Commissioners. It is one which is well settled law and has received the acceptance of all Commissioners over the last eight years. I bear in mind the words of Lord Denning in R v. National Insurance Commissioner  2 All ER 278 at 282:
". .: if a decision of the Commissioners has remained undisturbed for a long time, not amended by regulation nor challenged by certiorari, and has been acted on by all concerned, it should normally be regarded as binding. The High Court should not interfere with it save in exceptional circumstances, such as where there is a difference of opinion between the Commissioners (see R v. National Insurance Commissioner, ex parte Michael). A recent decision is less binding."
That of course was said before appeal to the Court of Appeal had replaced judicial review, but it emphasises the need for a cautious approach where the law has been settled by the Commissioners.
Date: 29 June 1990 (signed) Mr. J. J. Skinner
The claimant appealed to the Court of Appeal. The decision of the Court of Appeal follows
DECISION OF THE COURT OF APPEAL
Mr. Michael Shrimpton, instructed by Messrs. Hillingdon Legal Resource Centre (Hayes, Middlesex), appeared for the Appellants (Plaintiffs).
Miss Genevra Caws QC, instructed by The Solicitor, Department of Social Security, appeared for the Respondent (Defendant).
LORD JUSTICE DILLON: These are appeals by two ladies, Mrs. Page, Mrs. Davies, pursuant to the leave of the social security Commissioner from a decision, in the case of Mrs. Page, of social security Commissioner Skinner, whereby her appeal against the decision of a social security appeal tribunal was dismissed.
The question that arises on each appeal is a question under section 53(1) of the Social Security Act 1986. That subsection provides as follows:
"Where it is determined that, whether fraudulently or otherwise, person has misrepresented, or failed to disclose, any material fact an consequence of the misrepresentation or failure -
(a) a payment has been made in respect of a benefit to which this section applies; or
(b) any sum recoverable by or on behalf of the Secretary of State in connection with any such payment has not been recovered,
the Secretary of State shall be entitled to recover the amount of any payment which he would not have made or any sum which he would have received but for the misrepresentation or failure to disclose."
The wording of the subsection is invoked in the case of both these appellants for entirely innocent conduct, that is to say misrepresentation or failure to disclose a material fact which was in no way fraudulent but innocent.
The case put forward by Mr. Shrimpton on appeal is that on a true construction the section is to be construed only as applying to misrepresentation or failure to disclose which is fraudulent or affected by moral turpitude or deliberate, malicious or reckless. That is not intended to be a complete category of the interpretation he relies on but he says emphatically that innocent conduct is not caught and an innocent person is not to be penalised by being subjected to the recovery of overpaid benefit.
It is not in doubt that the benefits in question are the discretionary benefits which are paid to people with the least means. They are not benefits franked by contributions and it is submitted, and it is a submission I am not concerned to traverse, that this is in certain respects penal in the harshness of the effects it may have. It is a section which appears to give a discretion to the Secretary of State. With that, however, and the operation of the discretion we are not concerned. We have been told by Miss Caws, for the Department, that the intention would be to recover by instalments from future benefits at a low rate and subject to review in the case of hardship, but we are not concerned with that, because the essential question raised is the question of construction of the provisions of the section.
Mr. Shrimpton argues that the words "whether fraudulently or otherwise" are to be construed in accordance with the ejusdem generis rule and so cannot be construed so as to cover innocent misrepresentation because that is not of the same genus as fraudulent misrepresentation. Alternatively, he puts the case on the noscitur a sociis maxim that the word is to be construed in its context with the words that go with it and otherwise is coloured by, and to be construed in order with, the context of the word "fraudulent".
In the connection with noscitur a sociis we were referred by Mr. Shrimpton in particular to the decision of the House of Lords in London & North Eastern Ry. Co. v. Berriman  1 All ER 255. In his speech in that case at page 260E, Lord MacMillan referred to the collocation of the words as being significant, but he also, and to my mind in the present context it is of greater importance, said this at 260H:
"It is not legitimate to stretch the language of a rule, however beneficent its intention, beyond the fair and ordinary meaning of its language. I quote and adopt the words of Alderson B in Attorney General v. Lockwood (9 M & W 378 at 398):
'The rule of law, I take it, upon the construction of all statutes . . . is, whether they be penal or remedial, to construe them according to the plain, literal and grammatical meaning of the words in which they are expressed, unless that construction leads to a plain and clear contradiction of the apparent purpose of the Act or to some palpable and evident absurdity'."
In the same case Lord Simonds, at page 268F, referred to what he said he had "always understood to be a cardinal rule in the construction of statutes, which is nowhere better stated than in Unwin v. Hanson", where Lord Esher "thus stated the principle  2 QB 115 at 119:
'If the Act is directed to dealing with matters affecting everybody generally, the words used have the meaning attached to them in the common and ordinary use of language. If the Act is one passed with reference to a particular trade, business, or transaction, and words are used which everybody conversant with that trade, business, or transaction, knows and understands to have a particular meaning in it, then the words are to be construed as having that particular meaning, though it may differ from the common or ordinary meaning of the words'."
In relation to noscitur a sociis, Mr. Shrimpton also referred us, as an illustration of the principle, to the case of Stag Line Limited v. Foscolo, Mango And Company Limited  AC 328. There, a ship started from Swansea with a cargo of coal for carriage to Constantinople, but she deviated into St. Ives to land some engineers who were on board for a particular purpose and on leaving St. Ives and before she had returned to her usual route she stranded on the Cornish coast and was lost with the whole cargo. It was sought to justify the deviation by a term under the bills of lading which gave the shipowners liberty to call at any ports in any order for bunkering or other purposes. Not surprisingly, it was held that the words "other purposes" were coloured by the context in which they appeared and did not confer any general licence to deviate. It is quite obvious that they were ancillary to the general purpose of carrying the cargo from Swansea to Constantinople.
In the present case the argument for the department as set out in the skeleton argument is simply this. In ordinary English language the phrase "whether fraudulently or otherwise" is used to mean simply "whether fraudulently or not"; and so the words "whether fraudulently or otherwise" have a plain and unambiguous meaning which leaves no room for the application of the various ancillary rules of construction. Many of the rules mentioned by Mr. Shrimpton in his skeleton argument, such as the maxim aequum et bonum est lex legum, and the submission he puts that the section, in its effect on poor people and the hardship it could involve, is to be regarded as tantamount to a penal act, are maxims which the court would gladly apply where there is a choice of two alternative constructions, one narrower one wider. The question in this case is whether there really is any choice.
Mr. Shrimpton puts his argument, essentially, on the ejusdem generic rule. He points out correctly that that is one of the first rules of construction which is taught to every student in matters of parliamentary construction. He adds, and I for my part would accept, that there is no reason why it should not apply where, as here, there is not a category of matters which are said to form the genus but one matter only. Therefore, especially as Miss Caws conceded that point, we did not find it necessary to call on Mr. Shrimpton to deal with certain observations by Lord Diplock in Quazi v. Quazi. But the question is whether it can, indeed, be fairly said that the ejusdem generic rule is to be applied. Mr. Shrimpton's submissions point out that of course it has been in other contexts in other Acts used where words such as "or otherwise" have been used in the Act. But it really seemed that his submissions came down to this: that Acts of Parliament and other legal documents are not to be construed according to the natural and ordinary meaning of the words used, but according to the rules of construction devised by lawyers over the centuries, which, while not strictly mandatory, are not easily to be pushed to one side or displaced.
Undoubtedly, the ejusdem generic rule is long established and very helpful in many contexts in enabling a phrase to be understood, be it in a statute or in a legally drawn agreement; and, as I have said, I do not regard its application as limited so as to exclude the case where there is only a single word used from which the category can be determined. But here, as it seems to me, the context in which the words appear shows that "whether fraudulently or otherwise" comes in connection with a person having, by misrepresentation or failure to disclose material facts, obtained a payment which he or she should not have obtained. In such a context, anyone would say that the money must be recoverable the Secretary of State must have power to recover it, whether or not as a matter of discretion he exercises the power if the misrepresentation or non-disclosure was fraudulent.
The whole burden of the phrase "whether fraudulently or otherwise" must be, in my judgment, that it is to apply even if the misrepresentation into fraudulent, in other words, if it is innocent. No other construction make any sense, in my view, of this particular subsection. Consequently, the ejusdem generis rule not being mandatory, it does not assist us on these plain words.
Mr. Shrimpton referred us to other decisions. We discouraged him from referring to many decisions on other cases because in a case such as this other decisions do not help. One was the case of Hadley v. Perks  LR 1 QB 444, where Mr. Justice Blackburn was concerned to construe the word "having" as "having in his possession goods which may be reasonably suspected of being stolen or unlawfully obtained". That section was ancillary to a section in which the word "having" had been linked to "conveying" in the context of constables stopping, searching and detaining persons in, it would seem, the public highway and the word "conveying" was taken into account in construing the word "having". That seems plain sailing, if I may respectfully say so.
He also referred, as particularly helpful to him, to the decision of Mr. Justice Hamilton, as he then was, in the case of The Attorney General v. Seccombe  2 KB 688. That was concerned with the construction of the very well known phrase "to the entire exclusion of the donor or of any benefit to him by contract or otherwise" in section 11 subsection (1) of The Customs and Inland Revenue Act 1889 and therefore, by reference, in section 2(1)(c) of the Finance Act 1894. That was a section which was at the heart of an enormous part of the litigation over estate duty for very many years. There were also many other statutory provisions that came in. It was concerned with gifts where, in effect, it seemed that, without legal right but by acquiescence of the donee, the donor had retained all the benefits of the property given. The context is wholly different from the context in the present case, and I cannot regard what Mr. Justice Hamilton said in that case, which was in line with some observations in the Court of Session though there was always a certain amount of query whether it would stand up if challenged in a higher court, as governing the construction to be put on what, to my way of thinking, are plain and obvious words in the section with which we are concerned in the present case.
Mr. Shrimpton drew our attention also to the earlier legislative history of the phrase "fraudulently or otherwise" with which we are concerned, which is to be found in connection with the same discretionary benefits in section 45(1) of the National Assistance Act 1948. He also referred us to the wording in relation to certain insured and non-discretionary benefits in section 40 subsection (1) of the National Insurance (Industrial Injuries) Act 1946. That section was considered by a divisional court of the Queen's Bench Division in the case of R v. Medical Appeal Tribunal (North Midland Region) ex parte Hubble  2 All ER 374. The judgment was delivered by Mr. Justice Diplock. The subsection provides:
"Any decision under this Act of a medical board or a medical appeal tribunal may be reviewed at any time by a medical board if satisfied by fresh evidence that the decision was given in consequence of the nondisclosure or misrepresentation by the claimant or any other person of a material fact (whether the non-disclosure or misrepresentation was or was not fraudulent)."
The Divisional Court held that the wording used there, "whether the nondisclosure or misrepresentation was or was not fraudulent", left no room for any ejusdem generic approach and plainly covered the case of an innocent non-disclosure or misrepresentation.
Mr. Shrimpton submitted, firstly, that the wording used in the 1946 Act, section 41, "whether the non-disclosure or misrepresentation was or was not fraudulent" was different from the wording used in the 1948 Act, "whether fraudulently or otherwise". Therefore, he submitted, there was a presumption, although the two matters were not dealing with precisely the same subject matter, that different intentions were intended to follow from the use of different words. For my part, I am unable to discern any different meaning in the words "fraudulently or otherwise" in respect of misrepresentation and non-disclosure, and the words "whether the nondisclosure or misrepresentation was or was not fraudulent" in the like context in relation to non-disclosure or misrepresentation.
I do not find it possible to construe Acts of Parliament by searching out such minutiae in differences of wording and attempting therefore to find a construction which is not the plain and obvious construction. Applying the general principles mentioned by Lord MacMillan and Lord Simonds in their speeches in the London & North Eastern Ry. Co. case, I find the wording of section 53(1) plain and unambiguous. It covers innocent as well as fraudulent misrepresentation and non-disclosure, and I would dismiss this appeal.
LORD JUSTICE WOOLF: I agree and there is nothing I can usefully add.
LORD JUSTICE LEGGATT: The respondents have been concerned to establish the governing principle. Having done so, it is to be hoped that they will exercise such discretion as they may have to refrain in the cases now before the court from actually proceeding to recover sums overpaid to the innocent recipients of their apparent bounty, especially having regard to the length of time for which the threat of recovery has been overhanging them.
To Mr. Shrimpton's arguments I will only add Dis aliter visum, for which he will not need the translation, "the gods thought otherwise".
I agree that the appeal should be dismissed.
Order: Appeal dismissed; legal aid taxation for the appellants; application for leave to appeal to the House of Lords refused.