Northern Ireland - Social Security and Child Support Commissioners' Decisions

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Cite as: [2012] NICom 315

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BR-v-Department for Social Development (IB) [2012] NICom 315

Decision No: C5/11-12(IB)

SOCIAL SECURITY ADMINISTRATION (NORTHERN IRELAND) ACT 1992

SOCIAL SECURITY (NORTHERN IRELAND) ORDER 1998

INCAPACITY BENEFIT

Appeal to a Social Security Commissioner

on a question of law from a Tribunal's decision

dated 28 April 2010

DECISION OF THE SOCIAL SECURITY COMMISSIONER

This is an appeal from the decision of the appeal tribunal sitting at Belfast on 28 April 2010, leave to appeal having been granted by the legally qualified member of the tribunal.

An oral hearing was requested by the appellant and I held an oral hearing of the appeal.

I disallow the appeal for the reasons I set out below.

REASONS

Background

The appellant, who was employed as a fire fighter, received statutory sick pay from 6 November 2004, having become unfit for that employment due to instability in his right knee joint. On 24 January 2005, the appellant was advised by his employer, the Northern Ireland Fire Authority, that his employment would be terminated on 20 April 2005 but that he would then become entitled to an occupational pension. The appellant's entitlement to 28 weeks of statutory sick pay was due to expire on 26 February 2005. Therefore, on 26 January 2005, the appellant claimed incapacity benefit (IB).

The claim for IB was made on pro forma SSP1. Along with the claim, the appellant furnished the Department with a copy of the notice of termination of his employment from the Fire Authority dated 24 January 2005. This indicated the prospective date and time of termination of the appellant's employment and referred to the procedure for claiming a superannuation entitlement. The letter referred to a claim form being enclosed. A handwritten endorsement on the letter, understood to have been made by the appellant, read "Rang Eddy Quinn about form – said he would send it out". Presumably therefore the form was not enclosed. In any event, the appellant subsequently claimed the occupational pension on an unknown date at some time after 20 February 2005. I know this as it is clear from the letter that claims could not be accepted more than two months before the termination of employment on 20 April 2005.

The appellant was awarded IB on 19 March 2005. On 20 April 2005, the appellant's employment was terminated by his employer on health grounds. Around that time the appellant began to receive an occupational pension of over £1000 per month. IB entitlement is affected by receipt of any amount of occupational pension which exceeds £85 per week. At one point in the course of his claim the appellant had been found not to satisfy the personal capability assessment and successfully appealed to a tribunal. It is likely, as a result, that the appellant was not sent an annual notice issued by the Department in and around March 2006 which set out the changes of circumstance which a claimant should tell the Department about. However, I am satisfied that nothing turns on this.

On 4 April 2007 the appellant advised the Department of a change in the rate of his occupational pension. This was the first occasion on which the Department became aware of the amount of occupational pension which the appellant was receiving. On 19 October 2007 the Department decided that because of the amount of his occupational pension, the appellant was not entitled to IB and had not been entitled from 1 May 2005. On 2 February 2009 the Department decided that an overpayment of IB had occurred and that the overpayment was recoverable from the appellant on the basis that he had failed to disclose a material fact. He appealed.

A tribunal sitting at Belfast on 28 April 2010 disallowed the appeal. The appellant requested a statement of reasons for the tribunal decision, which was issued to him on 4 May 2011. The appellant then applied to the legally qualified member of the tribunal for leave to appeal to the Social Security Commissioner. On 21 June 2011 the legally qualified member of the tribunal granted leave to appeal. He identified as an arguable point of law:

"Whether the tribunal erred in law in holding that the appellant who had disclosed the fact that he would when his current employment terminated on 20/02/05 become entitled to a pension of unspecified amount had a duty subsequently to disclose the material fact that payment of his pension had commenced, and the amount thereof".

Submissions

The appellant submits that the tribunal accepted that he had disclosed to the Department that he would continue to receive income from the NI Fire Authority as an employee until 20 April 2005 and thereafter as a pensioner. The tribunal had thereby accepted that he had declared an anticipated change in circumstances. On this basis he submits that he did not fail to disclose a material fact, as he could not fail to disclose, as a matter of law, something of which the Department was already aware.

The Department was invited to make observations on the appellant's grounds of appeal. Miss McHugh responded on behalf of the Department. She submitted that the appellant failed to disclose the material fact that he was receiving a pension which could affect the amount of his benefit. She submitted that the instructions given to the appellant with his SSP1 claim form were clear and to the effect that, if the claimant started to get a pension income after completing the form, there was an obligation to inform the IB Branch.

The appellant's representative was invited to comment on the Department's submission but confirmed that the appellant had no further comments additional to the grounds of appeal. I directed a hearing of the appeal and that case summaries should be prepared by each of the parties.

The legislation

The main provision dealing with the recoverability of overpaid benefit is section 69 of the Social Security Administration (Northern Ireland) Act 1992. This provides, so far as relevant:

"69.—(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 Department in connection with any such payment has not been recovered,

the Department shall be entitled to recover the amount of any payment which the Department would not have made or any sum which the Department would have received but for the misrepresentation or failure to disclose.

…

(5A) Except where regulations otherwise provide, an amount shall not be recoverable under subsection (1) above or under regulations under subsection (4) above unless the determination in pursuance of which it was paid has been reversed or varied on an appeal or has been revised under Article 10 or superseded under Article 11 of the Social Security (Northern Ireland) Order 1998.

...

Another relevant provision is regulation 32 of the Social Security (Claims and Payments) Regulations (NI) 1987. This reads, so far as relevant:

Information to be given and changes to be notified

32.—(1) Except in the case of a jobseeker's allowance, every beneficiary and every person by whom, or on whose behalf, sums by way of benefit are receivable shall furnish in such manner as the Department may determine and within the period applicable under regulation 17(4) of the Decisions and Appeals Regulations such information or evidence as it may require for determining whether a decision on the award of benefit should be revised under Article 10 of the 1998 Order or superseded under Article 11 of that Order.

(1A) Every beneficiary and every person by whom, or on whose behalf, sums by way of benefit are receivable shall furnish in such manner and at such times as the Department may determine such information or evidence as it may require in connection with payment of the benefit claimed or awarded.

(1B) Except in the case of a jobseeker's allowance, every beneficiary and every person by whom, or on whose behalf, sums by way of benefit are receivable shall notify the Department of any change of circumstances which he might reasonably be expected to know might affect—

(a) the continuance of entitlement to benefit; or

(b) the payment of the benefit,

as soon as reasonably practicable after the change occurs by giving notice of the change to the appropriate office—

(i) in writing or by telephone (unless the Department determines in any particular case that notice must be in writing or may be given otherwise than in writing or by telephone); or

(ii) in writing if in any class of case it requires written notice (unless it determines in any particular case to accept notice given otherwise than in writing).

…"

The tribunal's decision

The tribunal, consisting of a legal member sitting alone, disallowed the appeal. It decided that IB amounting to £7647.05 for the period from 1 May 2005 to 2 April 2007 was recoverable from the appellant.

The tribunal's statement of reasons shows that the tribunal accepted that the appellant had completed his claim form accurately and had submitted the Fire Authority letter with the claim. The letter put the Department on notice of a prospective change of circumstances. The tribunal identified the question before it as whether there was a further onus on the appellant to contact the Department to disclose that the prospective change had taken effect. I consider that this is the key issue in this appeal.

The tribunal addressed the issue of whether any information provided by the Department to the appellant had clearly stated the circumstances in which disclosure was required. The tribunal found that it was in response to an information document sent to the appellant by the Department in February 2007 that he had contacted them in April 2007 to advise that his pension had increased. However, the tribunal also found that the benefit award letter in clear language indicated that a claimant must notify the Department straight away if he or she begins to receive an occupational pension.

The tribunal acknowledged that the Department was partly at fault for not diarising the need to enquire whether the appellant's occupation pension had come into payment. However, the tribunal found that the cause of the overpayment of benefit was the appellant's failure to disclose and that there was no provision permitting it to allocate part of the fault to the Department and thereby to "write off" part of the amount recoverable.

The parties' submissions

The grounds of the appellant's application for leave to appeal were to the effect that in providing information to the Department at the time of his claim for IB the appellant had effectively disclosed all relevant information relevant to his claim for benefit. Specifically the tribunal had found that the appellant had disclosed the fact that he would continue to be in receipt of income from the Northern Ireland Fire Authority as an employee to 20 April 2005 and thereafter as a pensioner. It is submitted on the applicant's behalf that disclosing an anticipated change in his circumstances meant that he had not failed to disclose a material fact. He could not subsequently fail to disclose something of which the Department was already aware.

By contrast Miss McHugh for the Department submits that the material fact which would affect the appellant's entitlement to IB was receiving the occupational pension. The fact that he disclosed that he had a potential entitlement to the pension was insufficient. He might have subsequently deferred his pension claim and in any event he did not disclose the effective date from which the pension commenced and the rate of payment. Miss McHugh submits that a possible error was the tribunal's failure to consider the requirement of section 69(5A) of the Social Security Administration (Northern Ireland) Act 1992 for a decision superseding entitlement, before recoverability of an overpayment could arise. Nevertheless, she submits that the decision should be upheld.

In response, Ms Loughrey of Law Centre (NI) for the appellant properly and helpfully conceded that a section 69(5A) decision was correctly made and notified to the appellant and takes no issue with this aspect of the decision.

The hearing

I held a hearing of the appeal. Ms Loughrey appeared for the appellant. Miss McHugh appeared for the Department. The parties were broadly agreed on the facts and on the law to be applied.

The essence of Ms Loughrey's submission was that the Department had been informed by the appellant that he had an entitlement to an occupational pension upon terminating his employment on health grounds. The fact that he received an occupational pension once he finished his employment was something which the Department knew to expect. He could not disclose something which the Department already knew, and therefore he had not failed to disclose a material fact.

For the Department Miss McHugh submitted that the actual receipt of the occupational pension was a material fact which was not disclosed. She submitted that the rate of payment of the occupational pension was also a material fact. Although the Department should have set a "case control" to follow up on whether the occupational pension was ever claimed and received, and therefore there might have been two causes for the overpayment, this did not exonerate the appellant for his part in causing the overpayment.

At hearing, further argument was developed by Ms Loughrey around the cases of GK v SSWP [2009] UKUT 98 (AAC), GJ v SSWP [2010] UKUT 107 (AAC) and WH v SSWP [2009] UKUT 132 (AAC). As this had not been fully developed in her earlier written submissions, I directed further written argument on the relevance of these cases to the present appeal from each of the parties with particular regard by what is meant by the term "disclose".

In the written submissions, Ms Loughrey accepted that, in GK v SSWP, Judge Ward disagreed with the proposition that one could not fail to disclose a fact which the party to which disclosure required to be made already knew, albeit that she submitted the present case could be distinguished. On her reading of GJ v SSWP, she submitted that Deputy Judge Mark had found that "disclose" included the provision of information pursuant to the duty imposed by section 5 of the Social Security Administration Act 1992 and regulation 32(1) of the Social Security (Claims and Payments) Regulations 1987. This, she submitted, followed the approach of Judge Ward. In relation to WH v SSWP, she submitted that Judge Wikeley had taken a different view, based on the fundamental meaning of the term "disclose" regardless of the regulation 32 obligation. Ms Loughrey submitted that the position taken by Judge Wikeley in WH v SSWP was to be preferred.

Miss McHugh submitted that GK v SSWP supported the Department's position in the present case, and that, in GJ v SSWP, Deputy Judge Mark had followed the approach taken by Judge Ward in GK v SSWP. She submits that Judge Wikeley's remarks in WH v SSWP, to the extent that they are to the opposite view, are obiter. She maintained that the information provided by the appellant did not equate to disclosure in the present case.

Assessment

The legal principles for deciding whether an overpayment of benefit is recoverable have undergone some reassessment in the last decade. I consider that the most relevant provisions are section 69 of the Social Security Administration Act (Northern Ireland) 1992 ("the Administration Act") and regulation 32 of the Claims and Payments Regulations, as set out above.

The first question is whether the requirements of section 69(5A) of the Administration Act are satisfied. This is the "threshold question" of whether there are grounds to supersede the decision from which the relevant overpayment was said to have resulted.

In this case the tribunal has not expressly referred to section 69(5A). However, Ms Loughrey does not seek to rely on that omission. She accepts that the occupational pension received by the appellant would have affected his entitlement to IB, and that he has been overpaid benefit as a result. Her arguments are instead addressed to the question of the recoverability of the overpayment. Ms Loughrey is right not to pursue this issue. The tribunal has erred in law by not referring to the requirements of section 69(5A), but the error is not a material one and I correct the tribunal's decision to that extent.

In this case the Department, in order to establish the recoverability of the overpaid benefit, relies on the appellant's alleged failure to disclose a material fact and the power to recover given by section 69(1) of the Administration Act.

It is now settled law that the question of failure to disclose is linked to the obligations placed on a claimant by regulation 32 of the Social Security (Claims and Payments) Regulations (NI) 1987. These include an obligation to furnish information or evidence which the Department might require for determining whether a decision should be revised or superseded (arising from regulation 32(1)), an obligation to furnish information or evidence as the Department may require in connection with payment of the benefit claimed or awarded (arising from regulation 32(1A)) and a distinct obligation to notify the Department of any change of circumstances which the claimant might reasonably be expected to know might affect the continuance of entitlement to benefit (arising from regulation 32(1B)) (see Hinchy v SSWP [2005] UKHL 16 at paragraphs 32, 40 and 54).

In B v SSWP [2005] EWCA Civ 929 it was decided that whether something was a material fact was an objective question and that it was not to the point that a claimant had not understood the materiality of a fact. A person "fails to disclose" for the purposes of section 69 if he or she breaches the requirement of regulation 32 of the Claims and Payments Regulations.

In B, as in Hooper [2007] EWCA Civ 495, the terms of the instructions given to the claimant were important to the consequences of non-compliance with a requirement under regulation 32. Their Lordships in Hinchy were also concerned about the interpretation which could be placed on the Department's instructions in Great Britain. I am concerned with the equivalent instructions in Northern Ireland.

In the present case I consider that three documents are relevant. Firstly, upon claiming IB, the appellant was given information as part of his claim pack (form SSP1). Secondly in the decision dated 19 March 2005 which notified him of the award of IB, the appellant was given a set of information notes (form IB30). Thirdly, with the decision on entitlement the appellant was given further information about IB (form IB40).

The SSP1 includes, on the fourth page, the words:

"Pension Income

We will look to see if you have a pension income

We use pension income to mean money you have coming in form one of the following pensions:

occupational pension

personal pension

public service pension

stakeholder pension

a pension from a self-employed pension scheme

permanent health insurance payments arranged by an employer when the contract of employment has ended

Your pension will be managed by a pension provider. This is usually an organisation like a former employer or insurance company.

If you have a pension income before tax of over £85.00 a week, your Incapacity Benefit and any Incapacity Benefit you are claiming for anyone else, will decrease.

If you decide to take or start to get a pension income after you have completed this form you MUST inform Incapacity Benefits Branch."

Not surprisingly, Miss McHugh placed weight on this particular instruction.

The IB30 information notes, on the fourth page, contain the words:

"Pension Income

If you have a pension income, please tell us if this income goes up or down as it could affect the amount of money you get. By pension we mean any occupational or personal pension you may get. You MUST also tell us straight away if you start to get an occupational or personal pension as your benefit may be affected."

The IB40 information notes, at page 10, contain the words:

"Changes you must tell us about – continued

Any changes to do with benefits, pension income and allowances. Some benefits and pension incomes can affect the amount of Incapacity Benefit that you get. Any pension income payable at a gross rate (before tax) of more than £85.00 a week may affect the amount of benefit you get.