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You are here: BAILII >> Databases >> Supreme Court of Ireland Decisions >> Minister for Social, Community and Family Affairs v. Scanlon [2001] IESC 1 (16 January 2001)
URL: http://www.bailii.org/ie/cases/IESC/2001/1.html
Cite as: [2001] 2 ILRM 342, [2001] 1 IR 64, [2001] IESC 1
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THE SUPREME COURT
136/99
Keane C.J.
Denham J.
Murray J.
McGuinness J.
Fennelly J.
BETWEEN/
THE MINISTER FOR SOCIAL COMMUNITY & FAMILY AFFAIRS
(FORMERLY MINISTER FOR SOCIAL WELFARE)
APPELLANT
AND
MICHAEL J SCANLON
RESPONDENT
JUDGMENT delivered the 16th day of January, 2001 by FENNELY J. [Nem. Diss]The cycle of continual amendment and periodic consolidation of the Social Welfare Acts inevitably throws up problems concerning the effect of legislative change on past events. The present appeal concerns principally whether retrospection is to be given to a change designed to add to the armoury of means of recovery of social welfare over-payments by the Minister for Social Community and family Affairs (whom, for brevity, I will describe as the Minister).
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" On the question of whether he claimed with fraudulent intent, I am not quite so sure. All businesses had been in operation while he was employed by CIE, and he claims that this caused confusion. In the light of this explanation, I feel that it would be difficult to sustain an accusation of fraud. I am satisfied however that in the light of the new evidence of his involvement in business enterprises, he was not entitled to benefit in respect of absence from work due to illness, and that any benefit paid should be disallowed under Section 249(b) of the Social Welfare (Consolidation) Act, 1993. My decision to this effect is attached "
The "attached" decision is merely a summary of the conclusion of the Appeals Officer. It states:
"Decision of Appeals
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I decide that. in the period from 24 September 1985 to 25 May 1994, Mr Michael Scanlon RSI No.01115536 was not entitled to Disability or Pay-Related Benefits as new evidence available shows that he was working during this period."
"Note on reasons for Decision
On examination of the evidence I am satisfied that the .flppellant's involvement in his businesses as Manager and Occasional operator, constituted work and that 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 the Benefit was not payable and should be refunded "
I draw attention to two critical features of this decision. Firstly, it alters the statutory reason for the decision given by the Deciding Officer. In depends not on "false or misleading" statements or "wilful concealment" of materia1 facts but simply on "new evidence that [the respondent ] was working". Secondly, though not using words descriptive of the exercise of a discretion, the Appeals Officer was, in fact, doing just that when she said that she was " satisfied that Benefit was not payable and should be refunded. " For the purposes of the legal issues in this appeal, the decision of the Appeals Officer has to be taken as finally deciding that the respondent had not been entitled to the benefit he received, because he was not, at any time during the relevant period, disabled from work. The respondent did not seek judicial review of the decision.
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The proceedings came on for hearing before Miss Justice Laffoy in the High Court on the basis of the affidavits. In a judgment of 11th May, 1999, she dismissed the Minister's claim on grounds which can only be understood when the legislation is discussed, but briefly were to the effect that:- 1. Insofar as the claim related to sums paid to the respondent prior to 1st April, 1991 they depended on a legislative change made in that year which Should not be interpreted as having retrospective effect. 2. Insofar as they related to sums paid in respect of the period 1st April, 1991 to 2nd April, 1993, they depended on a legislative mechanism for recovery which came into effect only on the latter date and for similar reasons that retrospective effect should not be allowed. 3. That, even in respect of sums paid in the period after 2nd April, 1993, when no question of the retrospective effect of legislation arose, the claim could not succeed in the absence of a new demand for payment following upon the decision of the Appeals Officer .
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"A deciding officer may, at any time and from time to time, revise any decision of a deciding officer, if it appears to him that the decision was erroneous in the light of new evidence or of new facts which have been brought to his notice since the date on which it was given or by reason of some mistake having been made with respect to the law or the facts, or if it appears to him in a case where benefit has
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been payable that there has been any relevant change of circumstances since the decision was given, and the provisions of this Act as to appeals shall apply to such revised decision in the same manner as they applv to an original decision."
This provision has been repeated almost verbatim in all subsequent amending and consolidating Acts, notably Section 300(1) of the Social Welfare (Consolidation) Act, 1981 (the Act of 1981), Section 31(1) of the Social Welfare Act, 1993 (the Act of 1993) and Section 248(1)(a) of Social Welfare (Consolidation) Act, 1993 (the Consolidation Act of 1993). The effect of such a revised decision was dealt with in Section 46(5) of the Act of 1952. It is the extent to which these provisions were subsequently altered that is the core of the issue on this appeal. Section 46(5) read:-
"(5) A revised decision given by a deciding officer or an appeals officer shall take effect as follows:-
( a) where benefit will, by virtue of the revised decision, be disallowed or reduced 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 oral) 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, in a case in which the benefit is by way of periodical payment, the original
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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 such original decision to which such false or misleading statement or representation or such wilful concealment of any material fact does not relate.
(b) in any other case, it shall take effect as from the date considered appropriate by the deciding officer or apppeals officer ( as the case may be), but 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 paragraph (b } of subsection (2) of section 48 of this Act, as paid on account of another benfit) not be affected."
Paragraph (a) of this provision has also remained virtually unchanged, with inconsequential changes in wording, through section 300(5)(a) of the Act of 1981, section 31(1) (introducing a new section 300B(a)) of the Act of 1993 and section 2451(1) of the Consolidation Act of 1993. In short, decisions to grant benefit were, at all times since 1952, subject to the possibility of revision and, in the event of fraud or wilful concealment, to consequential recovery of payments already made. Section 46(5) of the Act of 1952 also remained in effect with minimal change of no consequence for the present appeal up to its re-enactment in section 300(5)(b)(i) of the Act of 1981.
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"(aa) Where any benefit, assistance, supplement or child benefit will, by virtue of the revised decision, be disallowed or reduced or a qualification certificate under Chapter 2 of Part III is revoked 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 may be) 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. "
The ground of "new evidence or of new facts" had always since 1952 been the first of the grounds available for the revision of a decision. It had not, however, merited separate treatment in the sub-section dealing with the consequences of a revision. The discovery of new evidence or new facts might or might not involve the discovery of fraud or wilful concealment
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The legislative provisions here summarised were re-enacted with no material alteration by section 248 (regarding revision of decisions) and section 249 (regarding their effects) of the Consolidation Act of 1993. The controversy surrounds the question as to whether the introduction of paragraph (aa) in 1991 should be interpreted so as to have retrospective effect. The Appeals Officer, having reviewed the Deciding Officer's findings of false or misleading statements and wilful concealment, the Minister's right to recover is based only on "new evidence". The learned High Court judge cited certain passages from the judgment of O'Higgins CJ in Hamilton v Hamilton [1982] IR 467 and from that of Wright J. in Re: Athlumney, ex parte Wilson [1898] 2 QB 547. Referring to the amending provisions of the Act of 1991 introducing paragraph (aa) she said:-"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 (the Act of 1981) shall apply to new facts or new evidence relating to periods prior to and subsequent to the commencement of that paragraph. "
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She continued:-" 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 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. "
"Secondly, the fundamental question on the retrospective 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
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unequivocal intention of the legislature was that the provision would have retrospective effect only. In my view, the words in question in the context in question are equally open to the interpretation that the 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. "
At the hearing of the appeal, Mr O'Donnell, Senior Counsel, for the Minister agreed that the trial judge correctly identified the fundamental issue. He also accepted that, upon the construction advanced by the Minister, paragraph (aa) would, quoting her words, "create a new obligation in respect of a transaction already past" and would be retrospective. Indeed, he could hardly do otherwise. If the provision does not have retrospective effect, the Minister cannot recover payments of benefit made before the enactment of that provision. He went on to point out that, in the passage in question, the learned trial judge dealt both with the correct statutory interpretation and the construction of the statute in the light of the Constitution and traces this "confusion" to certain passages quoted by her from the judgment of O'Higgins C.J.
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"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'."
Noting the reference by O'Higgins C.J. to the traditional view that retrospective legislation is regarded as prima facie unjust for its effect on vested rights she quoted the following passage from 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)'."
Finally, she quoted from p. 475 regarding the 'proper approach to the considerations of an Act of the Oireachtas", where O'Higgins C.J. had said:
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"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 constructing an Act of the Oireachtas where two possible meanings or intentions are open, one which conforms with an Acts 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."
It is necessary, as Mr O'Donnell submitted, to segregate the two issues, namely the correct approach to the interpretation of statutes with potential retrospective effect in accordance with common-law principles and the interpretation of provisions with such effect in the light of the Constitution. I propose to deal firstly with the constitutional issue. It is important to record at the outset that there is no question before the court regarding the constitutionality of any of the provisions at issue. Although some of the arguments of Dr Forde, Senior Counsel for the respondent seemed to go so far as to challenge the compatibility of the provisions of paragraph (aa) with the Constitution (assuming, of course, that it has retrospective effect), the learned High
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Dr Forde argued that paragraph (aa) imposes a retrospective penalty if it permits the Minister to recover benefits already received and that it is fundamentally unfair to alter a rule which previously permitted a person to retain benefits already but wrongly paid (in the absence of fraud). He relies on the following passage from Murphy J. in Dublin Heating Co Ltd v Hefferon Kearns Ltd [1992] 51 ILRM at p.59 in commenting on Article 15.5 of the Constitution:-"The Oireachtas shall not declare Acts to be infringements of the law which were not so at the date of their commission."
"What was submitted on behalf of the applicants and what has been contended by textbook writers is that this article in prohibiting retroactive effect is not confined to criminal offences. On its face this would appear to be correct. On its face there seems to be no reason why a tort would not be described as 'an
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infringement of the law'. Furthermore in practical terms a citizen might have much more reason to be aggrieved if his actions which at the time of their performance where wholly innocent were to attract substantial civil liability than he would be if the same actions were to be transmuted into a criminal activity punishable by a nominal fine.
In my view reckless trading is now an infringement of the law and to declare retrospectively innocent actions as constituting that wrong would necessarily amount to a breach of Article 15. "
It must be recalled that the section at issue in that case, section 33 of the Companies (Amendment) Act, 1990, potentially exposed officers of a company to significant personal liability for the act of participating in the reckless trading of a company –personal liability for the debts of the company. A retrospective interpretation of that provision would have attached serious legal consequences to past acts which they did not have at the time they were committed. In any event and in spite of some remarks by Dr Forde to the contrary, paragraph (aa) does nothing to declare acts to be "infringements of the law". It permits, subject to its own provisions, the recovery of sums wrongly paid on earlier dates. In the Dublin Heating Co case Murphy J. observed that the "wrongdoing of reckless trading did not exist prior to the enactment of the 1990 Act ". Dr Forde also argued that the respondent enjoyed a property right in the benefits he had received. If that were so, then a retrospective reading of the legislation would deprive him of it and should not be adopted.
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"If the legislature intended the Act of 1976 to affect retrospectively the rights created by such agreements - upon the expected operation of which the parties may have further committed themselves - one would expect the enacted words to state that effect clearly and unambiguously. Since they fail to state such an intention expressly, one must endeavour to see if an inference to that effect follows necessarily from the statutory provisions."
I do not think there is any antithesis between the requirement of "clear and unambiguous" words and concluding that they are so by "necessary implication." O'Higgins C.J. approved of the following passage, also cited in the judgment under appeal, from the judgment of Wright J. in Re: Athlumney:-
O'Higgins C.J. himself identified the rationale of the rule at p. 474 as follows:"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 matter of procedure, unless that 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. "
"Retrospective legislation since it necessarily affects vested rights has always been regarded as being prima facie unjust".
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Barron J. succinctly explained the rule in the High Court in O'H v O'H [1990] IR 558 at 562. Having considered Hamilton v. Hamilton and other cases he said:"….. the general rule is not an inflexible one and …., if necessary, the courts will give effect to the words of the statute and apply it retrospectively when by express words or necessary intendment it appears that this was the legislative intent."
"From these cases, I am satisfied that whether or not a statute should be regarded as having retrospective effect is a matter of construction of the provision concerned. There is a presumption against retrospective construction. This
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Mr O'Donnell went further, however, and argued for a balance to be struck between the degree of injustice flowing from a retrospective reading on the one hand and the required clarity of language to rebut the presumption on the other. He cited, in particular, the following passage from Lord Mustill's speech in the House of Lords in L'Office Cherifien v. Yamashita -Shinnihon Steamship Co Ltd [1994] 1 AC 486 at 525:-however is only another way of saying that unless there is a clear intention that is should be, it will not be so construed."
"Precisely how the single question of fairness will be answered in respect of a particular statute will depend on the interaction of several factors, each of them capable of varying from case to case. Thus, the degree to which the statute has retrospective effect is not a constant. Nor is the value of the rights which the statute affects, or the extent to which that value is diminished or extinguished by the retrospective effect of the statute. Again, the unfairness of adversely affecting the rights, and hence the degree of unlikelihood that this is what Parliament intended; will vary from case to case. So also will the clarity of the language used by Parliament, and the light shed on it by consideration of the circumstances in which the legislation was enacted. All these factors must be weighed together to provide a direct answer to the question whether the consequences of reading the statute with the suggested degree of retrospectivity are so unfair that the words used by Parliament cannot have been intended to mean what they might appear to say."
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"All sums due to the Social Insurance Fund or the Occupational Injuries Fund shall be recoverable as debts due to the State and, without prejudice to any other remedy, may be recovered by the Minister as a debt under statute in any court of competent jurisdiction."
However, Section 300(5) of the Act of 1981, providing for the revised decision, does not establish the required link by making any sums whose recovery might be sought repayable to the fund. This is a missing link so far as the Minister is concerned, in the absence of some such mechanism as an extension of the 1953 Regulation. His claim turns then necessarily on Section 300(4) of the Act of 1981, introduced by Section 31(1) of the Social Welfare Act, 1993. This provision was, in turn, re-enacted by Section 278(a) of the Consolidation Act of 1993, which reads:
"Where, in accordance with the provisions of sections 249, 264 or 269, a decision or determination is varied or reversed by a deciding officer, an appeals officer or an officer of the health board (as the case may be) so as to disallow or reduce any benefit, assistance, child benefit or family income supplement paid or payable to a person -
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(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."
The learned trial judge applied the same reasoning to this provision as to paragraph (aa). She considered that to allow the Minister to recover benefit payable between 1st April, 1991 and 2nd April, 1993 would involve giving it impermissible retrospective effect. However, once it is established that, as I have concluded, paragraph (aa), as clarified by the Act of 1992 did, in fact, have retrospective effect there is no significant additional element of retrospectivity involved in permitting a statutory recovery mechanism to operate in respect of further revised decisions, even if some of them are made pursuant to paragraph (aa), by then, of course, incorporated in Section 249 and 246 of the Consolidation Act of 1993. From the enactment of Section 300D(4) of the Act of 1993, that provision, read in combination with paragraph (aa), unambiguously permitted full retrospectivity of decisions covered by the latter. I would accordingly, disagree with the learned trial judge on the second issue. The third point concerns the need for a new "demand" following the decision of the Appeals Officer. Even in respect of disability benefit disallowed to the respondent in respect
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"In any proceedings for an offence under this Act, or in any proceedings involving any issue related to the payment of contributions, or for the recovery of any sums due to the Minister or the Social Insurance Fund, a decision on any question relevant to the proceedings given in accordance with this Act shall, unless an appeal or reference in respect of the decision is pending or the prescribed time
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for appealing against the decision has not expired, be conclusive for the purpose of those proceedings and
(a) if any such decision which might be so given has not been obtained and the decision is necessary for the determination of the proceedings, the question shall be submitted for decision in accordance with this Act, and
Thus, when an appeal is pending, a court seised of a claim for recovery by the Minister must simply adjourn the matter to await the outcome of the appeal. This implies necessarily that, upon confirmation of the decision of the Deciding Officer, the court may then proceed with the adjourned hearing. It also follows that the claim can proceed on foot of the claim based on the original decision, including the demand made on foot thereof. Consequently, I do not think the Act envisages that any new demand be made. In the result, I disagree also with the learned trial judge on the third ground upon which she dismissed the Minister's claim. I would, therefore, allow the appeal and grant a decree to the Minister for the sum claimed, namely £43,088.25.(b) where any such appeal or reference is pending or the time for so appealing has not expired or any question has been submitted under paragraph (a), the court dealing with the case shall adjourn the proceedings until such time as a final decision on the question has been obtained."