Northern Ireland - Social Security and Child Support Commissioners' Decisions

[2008] NISSCSC C11_06_07(IB) (30 April 2008)

Decision No: C11/06-07(IB)

SOCIAL SECURITY ADMINISTRATION (NORTHERN IRELAND) ACT 1992
SOCIAL SECURITY (NORTHERN IRELAND) ORDER 1998
INCAPACITY BENEFIT
Appeal to a Social Security Commissioner by the Department on a question of law from a tribunal's decision dated 11 May 2006
DECISION OF THE SOCIAL SECURITY COMMISSIONER
1. The decision of an appeal tribunal sitting in Belfast on 11 May 2006 (the tribunal) is wrong in law. I therefore set the tribunal's decision aside and return the appeal for a new hearing.
2. Leave to appeal to the Commissioner was given by another Commissioner. For various reasons, there has been very regrettable and substantial delay in the resolution of this appeal, so that almost 2 years has elapsed since the tribunal's hearing. For that reason, I do not intend to set out the arguments in full but refer the new tribunal to the file for their content. I do, however, assure the parties that the points made by them have been taken fully into account, even if not always agreed with.

Background

3. I set out the relevant facts insofar as necessary for the purposes of explanation of this decision. The new tribunal is, however, in no way bound by the present summary of fact.
4. On 20 April 2002, the claimant was a self-employed sheet metal fabricator. On that day, he was involved in a road traffic accident. On a form dated 30 April 2002, he claimed incapacity benefit (IB). On the claim form, the appellant wrote that his last day of employment was on 19 April 2002 and that he wished to claim IB from 20 April 2002.
5. In 2004, the Department came into possession of a letter dated 16 January 2004 from the claimant's then solicitors, which letter stated that the claimant had returned to work on 22 April 2002, "… as he is self-employed and workers required supervision. Plaintiff who is qualified welder and fabricator unable to carry out this type of work." Despite repeated enquiries to the claimant from the Department, the Department received no further information on the matter.
6. Therefore, on 21 February 2005 the Department decided that the claimant was not entitled to IB from and including 23 April 2002 because he had worked and that work did not fall into an exempt category. Subsequently, on 9 June 2005, the Department issued a recoverable overpayment decision. The claimant appealed to a tribunal.
7. The written submission to the tribunal on the Department's behalf founded on a failure by the claimant to disclose that he was working. However, a further submission was made on 30 March 2006 which pointed out that it was the Department's case that the claimant had also misrepresented a material fact on his original claim form.
8. At the tribunal hearing, the claimant was represented by the same representative who has acted on his behalf throughout the proceedings to the Commissioner (the representative), an accountant. The representative argued that throughout the relevant period all that the claimant was doing was supervising his business in order to keep it going but that the business lost money. The tribunal accepted that trivial or negligible amounts of work could be ignored in determining whether the claimant had in fact worked during the relevant period, although whether for financial gain or not was irrelevant, but did not accept that what the claimant did could be categorised as other than work. There is certainly no error of law in the tribunal's approach to that issue on the material in front of it; however, it is for the new tribunal to consider on a fresh basis whether the claimant's activities amounted to work, having regard to the evidence produced to it at the new hearing.
9. But although the tribunal thus agreed that supersession of entitlement to IB was appropriate, it did not uphold the recoverable overpayment decision. It decided that the Department had not satisfied the required burden of proof to show that the claimant was under any duty to disclose, given its failure to produce, for example, relevant instructions in an order book. Again, there is no error of law in that approach.
10. The Department appeals to the Commissioner on the ground that the tribunal had failed in its inquisitorial role with respect to possible misrepresentation on the original claim form dated 30 April 2002. I accept that the tribunal erred in law in that respect as, once it had made its determination, that there was no failure to disclose it should, on the evidence available to it, have then considered misrepresentation in the alternative. It is for that reason I allow the Department's appeal. If a new tribunal reaches that point, it must consider whether there was either a misrepresentation or failure to disclose a material fact by the claimant.

Directions for the new tribunal

11. But there are earlier questions for the new tribunal to address; if the new tribunal agrees that the claimant worked in the relevant period, it must next address whether nevertheless such work was "exempt work" and, further, even if not, whether the nature of the work which he did, having regard to the categories of exempt work, is such that the Department is not able to establish that the amount sought to be recovered is that of a payment which the Department would not have made but for any misrepresentation or failure to disclose.
12. Contrary to what the representative maintains, a self-employed person is not in any different position from an employed earner with respect to claiming IB. IB is funded largely by general taxation in addition to contributions by workers. Whether self-employed or an employed earner, there is entitlement to IB if a claimant is either, firstly, not working, or, secondly, is working but it is "exempt work". It is because the representative did not appear able to get beyond a complaint, in effect, that self-employed earners are penalised in some way, that I refused the request for an oral hearing. I am wholly satisfied, having regard to the ample time given to make focused submissions, that the proceedings can properly be determined without a hearing.
13. A person who works is to be treated as capable of work unless his work falls into one of various statutory categories of exempt work. The relevant categories of exempt work, as applicable in 2002, are set out in regulation 17 of the Social Security (Incapacity for Work) (General) Regulations (Northern Ireland) 1995 (the regulations), in the text set out in the original submission to the tribunal. Under regulation 17(1)(a)(i), as it then stood, work in respect of which the earnings in any week do not exceed £20.00 would have been permitted exempt work, provided the required notice was given in writing to the Department by the claimant or by someone acting on his behalf. Up to now, such notification has never been suggested on behalf of the claimant and the Department says there was none. (Subsequently, a statutory requirement for notification has been dropped.) His accounts do, however, suggest that what he took from the business were not "earnings" but rather "drawing from capital". If he can satisfy the new tribunal that he had no earnings in any relevant week (as distinct from drawings) which exceeded £20.00, this makes a crucial difference to a recoverable overpayment decision.
14. Unless the claimant can establish that he gave "the required notice" as well, it does not render his work "exempt work" and so supersession of his IB entitlement remains appropriate. However, it affects whether or not the resultant overpayment is recoverable; this is because, once the only factor precluding entitlement is that he did not give the required notice that (if such is demonstrated to be the case) he was working, but his earnings did not exceed £20.00, then the Department is not able to show a causal link between his misrepresentation or failure to disclose that he was working and the resultant overpayment.
15. The relevant principles were set out by Mr Commissioner Howell, a Great Britain Commissioner, in R(IB)4/05. Mr Howell was concerned with a case arising under regulation 17(1A) (circumstances which may also arise in the present case, and the claimant is free to raise a case under these in the alternative if he so wishes) but, insofar as the causal point is concerned, the issue is identical to that arising under regulation 17(1)(a)(i) of the regulations. The advantage for the claimant, of reliance on the latter category, is that the periods of exempt work are not limited in time, as in the former category.
16. As Mr Commissioner Howell points out, in the instances where the categories of exempt work are dependent upon notification, and the only condition of entitlement which a claimant does not satisfy is making that notification, then there is no causal link between the misrepresentation or failure to disclose the material fact that a claimant is working and the resultant overpayment. This is because, if there had been no such misrepresentation or failure to disclose the material fact that a claimant is working, then this would have constituted the necessary notification; and so it cannot thereafter be said that there is any amount of the claimant's IB that would not have been paid to him anyway had there been a true representation or disclosure.
17. As it was put by Mr Commissioner Howell at paragraph 22 of R(IB)4/05:

"I do not for my part regard this as an incongruous or absurd result. All it means is that this is a case where when all the true facts have been fully looked into, they show the claimant has in fact received no more and no less for that period than the benefit properly payable to him all along had correct disclosure at the required time been made. In such a case there is no loss out of public funds to be recouped under section 71. The powers in section 71 are confined to recouping true overpayments, that is money that turns out to have been paid out of public funds in excess of what would have been properly payable in any event had the correct representations and disclosures been made. It is of course entirely reasonable to have a notice requirement to help the Secretary of State keep track of what incapacity benefit claimants are up to, but if he wishes to impose what would in truth be an administrative penalty for the mere fact of non-compliance even where there is no true overpayment in the above sense, that must be a matter for appropriate primary legislation to authorise such penalties, not for a distortion of section 71 which as has often been said is restitutionary, not penal."

18. Thus, the new tribunal will have to determine:

(a) Did the claimant work in the relevant period?

(b) If yes, was it exempt work; in particular, was it work in respect of which the earnings in any week did not exceed £20 and it was work in respect of which the required notice was given?

(c) If no, was there a misrepresentation or failure to disclose by the claimant that he was in work?

(d) If yes, then if the only matter which prevented the claimant's work being exempt work was that he did not give the required notice, there is no recoverable overpayment but, otherwise, there will be.

Summary

19. The case is remitted to a new tribunal under the above considerations.

(Signed) L T PARKER

NI Deputy Commissioner

(GB Commissioner)

30 April 2008