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Minister for Social, Community and Family Affairs v. Scanlon [1999] IEHC 156 (11th May, 1999)

THE HIGH COURT

1997 No. 277 S

BETWEEN

MINISTER FOR SOCIAL, COMMUNITY AND FAMILY AFFAIRS

PLAINTIFF

AND

MICHAEL J. SCANLON

DEFENDANT

Judgment of Ms. Justice Laffoy delivered on the 11th day of May 1999

THE CLAIM

1. In these proceedings the Plaintiff seeks to recover from the Defendant the sum of £43,088.25 which is alleged to be due and owing by the Defendant to the Plaintiff in respect of disability benefit overpaid to the Defendant between 24th September, 1985 and 25th May, 1994.

THE FACTS

2. The essential material facts, which are not in dispute, are as follows:-

(a) On 1st October, 1985 the Defendant applied to the Minister's department for disability benefit, stating that he had last worked on 27th July, 1985. His claim was processed and he was awarded disability benefit with effect from 24th September, 1985.

(b) Between 24th September, 1985 and 25th May, 1994 the Defendant received disability benefit payments at the rates applicable to him which aggregated the sum claimed, namely, £43,088.25.

(c) In 1994, the Defendant's entitlement to disability benefit was reviewed and the review resulted in a revised decision of a deciding officer dated 15th June, 1994 which:-

(i) revised the original decision of a deciding officer to allow disability benefit for the period from 24th September, 1985 to 25th May, 1994, as the Defendant had worked between those dates;

(ii) decided that the disability benefit and pay related benefit paid in respect of those periods, amounting to £41,566.15 and £1,522.10 respectively, be disallowed; and

(iii) decided that benefit in respect of all those days was paid on the basis of statements or representations which were false or misleading in a material respect or by wilful concealment of material facts and, as a consequence, that the benefit paid was repayable.

Sections 248 and 249(a) of the Social Welfare (Consolidation) Act, 1993 (the Consolidation Act of 1993) were invoked in the certificate of that decision.

(d) The Defendant appealed that decision of the deciding officer to an appeals officer and, following an oral appeal, the appeals officer issued her decision on the appeal in April 1995, which was that in the period from 24th September, 1985 to 25th May, 1994, the Defendant was not entitled to disability or pay related benefit as new evidence available showed that he was working during this period. As to the reasons for the decision on appeal, the appeals officer stated as follows:-

"On examination of the evidence, I am satisfied that the appellant's involvement in the business as Manager and occasional operator, constituted work and he derived benefit from this work. I am not fully satisfied that the appellant knowingly made false or misleading statements in claiming disability benefit, but based on the new evidence that he was working, I am satisfied that benefit was not payable and should be refunded."

(e) The only evidence before the Court of a demand for repayment of the sum of £43,088.25, on which these proceedings is based, is of a demand made on 17th June, 1994, in the interim period between the revised decision of the deciding officer and the decision of the appeals officer.

THE RELEVANT STATUTORY PROVISIONS

3. In order to ascertain the legal position of a recipient of disability benefit during the years from 1985 to 1994 in respect of whom a deciding officer or an appeals officer has made a revised decision it is necessary to consider the following statutes:-

(1) The Social Welfare (Consolidation) Act, 1981, (the Consolidation Act of 1981);

(2) The Social Welfare Act, 1991 (the Act of 1991);

(3) The Social Welfare Act, 1992 (the Act of 1992);

(4) The Social Welfare Act, 1993 (the Act of 1993); and

(5) The Consolidation Act of 1993.

4. Section 300 of the Consolidation Act of 1981 dealt with revision of a decision of a deciding officer by a deciding officer or an appeals officer. Subsection (5) of Section 300 as originally enacted provided as follows:-

"A revised decision given by a deciding officer or an appeals officer shall take effect as follows:-

(a) where any benefit...will, by virtue of the revised decision, be disallowed...and the revised decision is given owing to the original decision having been given, or having continued in effect, by reason of any statement or representation (whether written or verbal) which was to the knowledge of the person making it false or misleading in a material respect or by reason of the wilful concealment of any material fact, it shall take effect as and from the date on which the original decision took effect but the original decision may, in the discretion of the deciding officer or appeals officer (as the case may be), continue to apply to any period covered by the original decision to which such false or misleading statement or representation or such wilful concealment of any material fact does not relate; and

(b) in any other case, it shall take effect as from the date considered appropriate by the deciding officer or appeals officer (as the case maybe), but-

(i) any payment of benefit...already made at the date of the revision shall (without prejudice to its being treated, in accordance with regulations for the purposes of Section 113(2)(b), as paid on account of another benefit) not be affected..."

5. Section 113 of the Consolidation Act of 1981 empowered the Minister to make regulations in relation to matters arising out of any appeal or revision of any decision under Part VIII of that Act, in which Section 300 was contained, and, by virtue of subsection (2)(b) thereof, he was specifically empowered to make regulations:-

"...in a case referred to in section 300(5)(a) for the repayment of any such benefit and the recovery thereof by deduction from any benefit...as maybe specified, or otherwise."

6. Section 117 of the Consolidation Act of 1981 provided that all sums due to the Social Insurance Fund should be recoverable as debts due to the State and might be recovered by the Plaintiff as a debt under statute in any court of competent jurisdiction.

7. Section 35 of the Act of 1991 amended Section 300 of the Consolidation Act of 1981 by the insertion after paragraph (a) of subsection (5) of the following paragraph:-

"(aa) Where any benefit...will, by virtue of the revised decision, be disallowed...and the revised decision is given in the light of new evidence or new facts which have been brought to the notice of the deciding officer or appeals officer (as the case maybe) since the original decision was given, it shall take effect from such date as that officer shall determine having regard to the new facts or new evidence."

8. Section 117 of the Consolidation Act of 1981 was amended by Section 38 of the Act of 1991 but the amendment is not material for present purposes.

9. Section 40 of the Act of 1992 clarified paragraph (aa) of subsection (5) of Section 300 and provided as follows:-

"For the avoidance of doubt, the provisions of paragraph (aa) (inserted by Section 35 of the Act of 1991) of Section 300(5) of the Principal Act shall apply to new facts or new evidence relating to periods prior to and subsequent to the commencement of that paragraph."

10. Section 31(1) of the Act of 1993 amended the Consolidation Act of 1981 by substituting for Section 300 the sections therein set out, which were numbered 300 and 300A to 300H inclusive. Section 300B dealt with the effect of revised decisions and determinations. By virtue of Section 32 of the Act of 1993, Section 117 of the Consolidation Act of 1981, as inserted by Section 38 of the Act of 1991, was repealed. The repealed provision was replaced by Section 300F, but, again, the amendments introduced in this provision are not material for present purposes.

11. Finally, the Act of 1993 was repealed by the Consolidation Act of 1993. Section 249 of the latter provides as follows:-

"A revised decision given by a deciding officer shall take effect as follows:-

(a) where any benefit...will, by virtue of the revised decision be disallowed...and the revised decision is given owing to the original decision having been given, or having continued in effect, by reason of any statement or representation (whether written or verbal) which was to the knowledge of the person making it false or misleading in a material respect or by reason of the wilful concealment of any material fact, it shall take effect as from the date on which the original decision took effect, but the original decision may, in the discretion of the deciding officer, continue to apply to any period covered by the original decision to which such false or misleading statement or representation or such wilful concealment of any material fact does not relate;

(b) where any benefit...will, by virtue of the revised decision be disallowed...and the revised decision is given in the light of new evidence or new facts (relating to periods prior to and subsequent to the commencement of this Act) which have been brought to the notice of the deciding officer since the original decision was given, it shall take effect from such date as the deciding officer shall determine having regard to the new facts or new evidence; and

(c) in any other case, it shall take effect as from the date considered appropriate by the deciding officer having regard to the circumstances of the case."

12. Section 264 of the Consolidation Act of 1993 deals with the effect of a revised decision by an appeals officer and is in similar terms to the provisions of Section 249. Sections 249 and 264 re-enacted the provisions of Section 300B, inserted by Section 31(1) of the Act of 1993, as regards revised decisions of deciding officers and appeals officers substantially verbatim. Section 278 of the Consolidation Act of 1993 provides as follows:-

"Where, in accordance with the provisions of sections 249, 264..., a decision...is varied...by a deciding officer, an appeals officer ...so as to disallow...any benefit...paid or payable to a person:-

(a) any benefit paid in pursuance of the original decision shall be repayable to the Social Insurance Fund to the extent to which it would not have been payable if the decision on the appeal or revision had been given in the first instance and such person and any other person to whom the benefit was paid on behalf of such person, or the personal representative of such person, shall be liable to pay to the said Fund, on demand made in that behalf by an officer of the Minister, the sum so repayable..."

13. The substance of the foregoing provision had been contained in subsection (4) of Section 300D, inserted by Section 31(1) of the Act of 1993.

14. Section 281 of the Consolidation Act of 1993 re-enacted Section 300F, inserted by Section 31(1) of the Act of 1993, and provided that all sums due to the Social Insurance Fund should be recoverable as debts due to the State and might be recovered by the Plaintiff as a debt under statute or a simple contract debt in any court of competent jurisdiction.

15. All of the provisions of the earlier acts which I have referred to above then extant were repealed by Section 300 of the Consolidation Act of 1993. However, the repeal was expressed to be subject to the following proviso:-

"Provided that without prejudice to the Interpretation Act, 1937, the provisions of the repealed enactments shall continue to apply to benefit...prior to the commencement of this Act to the same extent as if this Act had not been passed."

16. Section 301 of the Consolidation Act of 1993 provided that the continuity of the operation of the law relating to the matters provided for in the repealed enactments should not be affected by the substitution of the Consolidation Act for those enactments.

APPLICATION OF THE STATUTORY PROVISIONS: QUESTIONS

17. Having regard to the foregoing provisions, the position of a recipient of disability benefit in respect of whom a deciding officer or an appeals officer has made a revised decision over the years in question here would have been as follows:-

(1) In the period from 1985 until the coming into operation of the Act of 1991, his position would have been governed by Section 300(5) of the Consolidation Act of 1981 as originally enacted and, unless he came within the provisions of paragraph (a), in other words, that a finding of fraud was made against him, benefit already paid to him prior to the revised decision could not be affected and was irrecoverable. This construction is consistent with the decision of this Court, (Barron J.) in The State (Hoolahan) -v- Minister for Social Welfare and the Attorney General , in which judgment was delivered on 23rd July, 1986.

(2) In the period from the coming into operation of the Act of 1991 until the coming into operation of the Act of 1993, his position would have been governed by Section 300(5) of the Consolidation Act of 1981, as amended by Section 35 of the Act of 1991, as clarified by Section 40 of the Act of 1992. This means that, if the revised decision did not relate to a finding of fraud but did come within paragraph (aa) of subsection (5), in other words, was based on new evidence, he would be outside the ambit of paragraph (b) of subsection (5) and the revised decision would take effect from the date determined by the deciding officer or the appeals officer, as the case might be. Two questions, which are relevant to the issue before the Court arise in relation to this period. First, if a revised decision made during this period was based on new evidence, as a matter of construction of the relevant statutory provision, was the deciding officer or the appeals officer, as the case might be, entitled to make a decision taking effect as and from a date prior to the commencement of the Act of 1991, which would have had the effect of disallowing and rendering recoverable benefit paid prior to such commencement? In other words, did the relevant statutory provision, Section 300(5)(aa), as clarified, have retrospective effect? Secondly, was there a liability to repay and a statutory mechanism for recovering benefit disallowed on account of new evidence in this period?

(3) In the period since the coming into operation of the Act of 1993 his position has been governed until it was repealed by the Act of 1993 and subsequently by the Consolidation Act of 1993. It is undoubtedly the case that under both Acts, where benefit is disallowed because of fraud or an account of new evidence it is recoverable from such date as the deciding officer or the appeals officer determines, assuming that date post-dates the coming into operation of the relevant Act. However, a question arises, which is relevant to the issue before the Court, whether, as a matter of the construction of the provisions of Section 300, as amended by the Act of 1993, and, in particular, Sections 300B and 300D(4), and, as a matter of the construction of the provisions of Sections 249, 264 and 278 of the Consolidation Act of 1993, a determination of a deciding officer or an appeals officer is capable of having effect so as to render recoverable benefit paid before the respective dates of commencement of those Acts. In other words, the question is did those provisions have retrospective effect?

RETROSPECTIVITY

18. The subject of retrospectivity of legislation was dealt with by the Supreme Court in Hamilton -v- Hamilton (1982) I.R. 467. In his judgment, at page 473, O'Higgins C.J. stated as follows:-

"For the purpose of stating what I mean by retrospectivity in a statute, I adopt a definition taken from Craies on Statute Law (7th ed., p.387) which is, I am satisfied, based on sound authority. It is to the effect that a statute is deemed to be retrospective in effect when it 'takes away or impairs any vested right acquired under existing laws, or creates a new obligation, or imposes a new duty, or attaches a new disability in respect to transactions or considerations already past'."

19. Having stated that retrospective legislation, since it necessarily affects vested rights, has always been regarded as prima facie unjust, O'Higgins C.J. then went on to consider the approach at common law to the examination of a statute to determine whether the legislature intended it to have retrospective effect and stated as follows at page 474:-

"The result is a rule of construction which leans against such retrospectivity and which, according to Maxwell, is based upon the presumption 'that the legislature does not intend what is unjust' - see Maxwell on The Interpretation of Statutes (12th ed., p. 215)'."

20. O'Higgins C.J. then went on to quote with approval from three English cases, including the following passage from the judgment of Wright J. (at page 551-552 in the report) in Re: Athlumney, ex. p. Wilson (1898) 2 QB 547:-

"Perhaps no rule of construction is more firmly established than this - that a retrospective operation is not to be given to a statute so as to impair an existing right or obligation, otherwise than as regards matters of procedure, unless the effect cannot be avoided without doing violence to the language of the enactment. If the enactment is expressed in language which is fairly capable of either interpretation, it ought to be construed as prospective only."

21. Finally, O'Higgins C.J. considered the proper approach to the consideration of an Act of the Oireachtas for restrospectivity and stated as follows at page 475:-

"In considering and interpreting Acts of the Oireachtas we must assume, in the first instance, that what the legislature has done was not intended to contravene the Constitution. The presumption of validity prevails until the contrary is clearly established. It follows that in interpreting or construing an Act of the Oireachtas where two possible meanings or intentions are open, one which conforms with an Act's validity having regard to the provisions of the Constitution while the other does not, the meaning or intention which so conforms must be preferred. This is so because it must be assumed that the Oireachtas has intended to act within its powers and with due regard to the Constitution. This approach to the interpretation and construction of Acts of the Oireachtas is required by the Constitution. While it may not replace the common-law rule, it certainly supersedes it once the question of possible infringement of the Constitution arises."

22. Applying the foregoing principles to the statutory provisions at issue in the instant case leads to the following conclusions. First, the introduction of a requirement that the recipient of State benefit refund benefit paid to him in circumstances in which no such requirement existed when the benefit was received, in my view, undoubtedly creates a new obligation in respect to a transaction already past. The introduction of such requirement brings about a substantive change in the recipient's position, not merely a change of procedure or form. It is not merely a matter of taking past events into account; it is a case of applying new law to past events. When such requirement is introduced by statute, the statute is retrospective in effect within the definition of retrospectivity adopted by O'Higgins C.J. in Hamilton -v- Hamilton . Secondly, the fundamental question on the restrospectivity issue in the instant case is whether the words "it [the revised decision] shall take effect from such date as the deciding officer shall determine having regard to the new facts and the new evidence" in paragraph (aa) of Section 300(5), when read in the broader context of a provision which refers to the revised decision being given in the light of new evidence or new facts relating to periods prior to and subsequent to the enactment of the provision, are only open to one interpretation, namely, that the clear and unequivocal intention of the legislature was that the provision would have retrospective effect, or whether they are equally open to two interpretations, namely, one allowing for retrospective effect and the other providing for prospective effect only. In my view, the words in question in the context in question are equally open to the interpretation that legislature intended the relevant provision to have retrospective effect and the interpretation that it was intended to operate prospectively only. That being the case, according to the principles of construction applied by the Supreme Court in Hamilton -v- Hamilton , the relevant provision is to be construed as having prospective effect only. Thirdly, although the constitutionality of the relevant provisions is not in issue since Mr. Meehan, for the Defendant, contends for prospective operation only of those provisions, construing the provisions as operating prospectively only conforms with the validity of the provisions having regard to the provisions of the Constitution.

23. On that basis, Section 35 of the Act of 1991 which introduced paragraph (aa) did not have retrospective effect and, accordingly, benefit paid to the Defendant prior to the commencement of that Act is not recoverable. As regards benefit paid to the Defendant after the commencement of the 1991 Act, it was paid to and received by the Defendant on the basis that it could be affected by a revised decision in accordance with paragraph (aa) of Section 300(5) of the Consolidation Act of 1981, as inserted by the Act of 1991, which was outside the ambit of paragraph (b) of that sub-section and, in particular, the protection afforded by subparagraph (i) of that paragraph. Therefore, such benefit would have been recoverable on the making of a revised decision after the commencement of the 1991 Act disallowing it on the ground of new evidence, provided there was statutory liability for repayment and a mechanism for its recovery.

STATUTORY LIABILITY FOR REPAYMENT/ MECHANISM FOR RECOVERING BENEFIT

24. There was no such express liability or mechanism until the coming into operation on 2nd April, 1993 of Section 31(1) of the Act of 1993, which brought in Section 300D(4) of the Consolidation Act of 1981. In particular, the Regulation which provided for repayment to the Social Insurance Fund of benefit disallowed in consequence of a finding of fraud, Regulation 10 of Social Welfare (General Benefit) Regulations, 1953 (S.I. No.16 of 1953), was never extended to benefit disallowed on account of new evidence before the coming into force of Section 300D(4).

25. This raises the question whether Section 31(1) of the Act of 1993 and the introduction of Section 300D(4) had retrospective effect in relation to a revised decision founded on new evidence effective after the enactment of Section 35 of the Act of 1991. Applying the same principles of law and the same reasoning as I have applied earlier in relation to the issue of the retrospectivity or prospectivity of Section 35 of the Act of 1991, in my view, Section 300D(4) did not have retrospective effect and took effect prospectively only from 2nd April, 1993.

26. It was urged by Mr. Marry, on behalf of the Plaintiff, that Section 35 of the Act of 1991 was self-executing and that the absence of a Regulation on the lines of Regulation 10 or a statutory provision on the lines of Section 300D(4) did not prevent the Plaintiff recovering benefit disallowed thereunder on account of new evidence for the Social Insurance Fund. I do not accept this argument. Following the enactment of Section 300(5)(aa) in 1991, there was a patent cassus omissus in the Social Welfare code. While, in broad terms, a deciding officer or an appeals officer had a discretion as to the date on which a revised decision should take effect, whether the revision was founded on fraud or on new evidence, it was only in the case of a revised decision founded on fraud that an obligation to repay disallowed benefit to the Social Insurance Fund was imposed and that a mechanism, a demand by an officer of the Plaintiff, for triggering the entitlement of the State to recover was provided for.

CONCLUSION

27. Accordingly, the position in April 1995 when the appeals officer reversed the deciding officer's revised decision based on fraud and substituted for it a revised decision based on new evidence was that, as a matter of law, benefit paid to the Defendant prior to the commencement of the Act of 1993 was not repayable to the Social Insurance Fund on demand under Section 278 of the Consolidation Act of 1993 because:-

(1) The revised decision of the appeals officer, being based on new evidence, could have taken effect only from the commencement of the Act of 1991; and

(2) The revised decision could only have taken effect so as to render disallowed benefit to be repayable to the Social Insurance Fund and recoverable on demand made by and officer of the Plaintiff from the coming into operation of the Act of 1993.

28. While, in consequence of the revised decision of the appeals officer, a demand for repayment of the benefit paid to the Defendant between 2nd April, 1993 and the 25th May, 1994 could have been made, in the absence of evidence of such a demand after the decision of the appeals officer, the liability of the Defendant under Section 278 of the Consolidation Act of 1993 has not been established. I do not accept Mr. Marry's argument that the issuing of the Summary Summons in this case within the relevant limitation period was a sufficient demand within the meaning of Section 278, because the scheme of the Social Welfare code is that it is a demand which creates liability to re-pay and it is the existence of liability which empowers the Minister to sue and this is reflected in Sections 278 and 281 of the Consolidation Act of 1993.

29. The Plaintiff's claim is dismissed.