Northern Ireland - Social Security and Child Support Commissioners' Decisions

AJM-v-Department for Social Development (IS) [2013] NICom 46

Decision Nos:  C8/11-12(IS) & C1/12-13(IS)

 

 

 

 

SOCIAL SECURITY ADMINISTRATION (NORTHERN IRELAND) ACT 1992

 

SOCIAL SECURITY (NORTHERN IRELAND) ORDER 1998

 

 

INCOME SUPPORT

 

 

Appeal to a Social Security Commissioner

on a question of law from a Tribunal's decisions

dated 19 October 2011

 

 

DECISION OF THE SOCIAL SECURITY COMMISSIONER

 

 

1.     This is an appeal from two decisions of an appeal tribunal sitting at Dungannon on 19 October 2011.  Leave to appeal was granted by the legally qualified member (LQM) of the tribunal.

 

2.     As the appeals involve common questions of fact and law I consider that it is appropriate to determine them together.

 

3.     I disallow the appeal in C1/12-13(IS).  I allow the appeal in C8/11-12(IS) in part, directing the Department to recalculate the amount of the recoverable overpayment in the case.

 

         REASONS

 

         Background

 

4.     The appellant had been in receipt of income support (IS) from 16 April 1997 from the Department for Social Development (the Department) on the basis that he was a carer.  In his IS claim he had declared that he had no bank accounts, savings accounts or savings of any kind.  Following the receipt of information to the effect that the appellant had capital in various accounts which had not been disclosed, the Department determined that he possessed capital in excess of the prescribed capital limits for IS.

 

5.     On the basis of the evidence before the Department, the appellant’s award of IS was “revised” on 2 August 2010 to disallow IS for the period from 3 August 2004 to 2 August 2010.  The basis for the decision is stated to be the Department’s ignorance of the material fact that the applicant held capital in excess of the prescribed limits throughout the stated period.  The prescribed capital limit relevant to the appellant’s circumstances was £8,000 during the period from 16 April 1997 to 10 April 2006.  It increased to £16,000 from 11 April 2006.

 

6.     A further decision is said to have been made by the Department to disallow IS from and including 3 August 2010.  A copy of that decision is not available to me but a signed explanation from the Department states that it was a supersession decision based upon a relevant change of circumstances.

 

7.     Around the same time on 26 August 2010, the Department decided that on 3 August 2004 or as soon as practicable thereafter the applicant had failed to disclose the material fact that he had capital in excess of the prescribed limits and that in consequence IS amounting to £30,720.34 which had been overpaid to him between 3 August 2004 and 2 August 2010 was recoverable from him.

 

8.     On 15 December 2010 the Department issued a further revised decision concerning entitlement.  This decided that the appellant was not entitled to IS between 16 April 1997 and 10 April 2006 on the basis that he possessed capital in excess of the prescribed limit of £8,000, and that he was not entitled to IS from 11 April 2006 to 2 August 2010 on the basis that he had capital in excess of the prescribed amount of £16,000 (the entitlement decision).

 

9.     In turn, on 17 December 2010 the overpayment decision was revised.  The revised decision was to the effect that a recoverable overpayment of IS had been made between 30 January 2001 and 2 August 2010, amounting to £48,669.85 (the overpayment decision).  The Department further decided that the appellant had misrepresented the material fact that he possessed capital in excess of the prescribed limits, and that the amount overpaid would not have been paid but for the misrepresentation, and that it was therefore recoverable from the appellant.

 

10.   The appellant appealed both the entitlement decision (the appeal with reference DG/51/11/61/L) and the overpayment decision (the appeal with reference DG/53/11/61/L) to a tribunal consisting of a LQM sitting alone, who disallowed the appeals.

 

11.   The appellant requested a statement of reasons for the tribunal’s decision.  This was issued on 8 February 2012.  The appellant then requested leave to appeal to the Social Security Commissioner and on 22 February 2012 the LQM granted leave to appeal.  In granting leave to appeal, the LQM accepts that it is arguable that the tribunal has erred in law on the basis that matters raised by the appellant were not adequately considered by the tribunal or at all.

 




The tribunal’s decision

 

12.   The tribunal found that the appellant had declared on his IS claim form on 16 April 1997 that he had no savings of any kind.  The tribunal further found that on an A2 review form dated 28 September 1998 he declared that he did not have any bank accounts, savings accounts or savings of any kind.  The tribunal further found that the appellant and his wife had a joint deposit account with First Trust Bank on 16 April 1997 with account number …-156, which held a balance of £9,513.  The tribunal found that this was in excess of the prescribed capital amount which at the relevant time was £8,000.

 

13.   The tribunal found that the appellant withdrew and transferred the sum of £9,795.38 from account number …-156 and opened a passbook account …-051 in the names of himself, his wife and his four children.  This account was subsequently closed on 13 November 2003 with a balance of £23,088.47 being transferred into the names of three of the appellant’s children.

 

14.   The tribunal further found that account number …-011 was opened on 14 August 1997 with a lodgement of £15,000.  This was closed on 20 October 2000 with a withdrawal of £15,572, and further account number …-047 was opened in the joint names of the appellant’s wife and a name identical to that of the appellant except for a middle name initial.  The appellant denied that he was the person named on the account.  However, the tribunal found that the address provided for the account holders was that of the appellant and his wife.  Account number …-203 was then opened in the joint names of the appellant and his wife on 27 May 2002.  The tribunal accepted that the Department’s submission at Tab 17(a) was an accurate summary of the monies held by the claimant at any given time from 16 April 1997 to 3 August 2010.

 

15.   The tribunal considered the appellant’s submission that monies in the accounts were not owned beneficially by the appellant but held on trust for his children.  The tribunal found that the monies were gifted to the appellant’s children and deemed the appellant to still possess the monies as notional capital.  The tribunal found that the appellant possessed £70,476.56 on 11 April 2006.  The prescribed capital limit at that date had risen to £16,000, yet the appellant still possessed capital in excess of the prescribed limit.  On that basis the tribunal disallowed the appeal.

 

         Submissions

 

16.   The appellant submitted his appeal in C8/11-12(IS) on 21 March 2012.  He did not submit an appeal in C1/12-13(IS) until 29 April 2012.  However, the Chief Commissioner admitted the late appeal on 25 June 2012.  In his grounds of appeal, the appellant submits that:

 

(i)        he was not the legal and beneficial owner of the capital;

 

(ii)       he had no knowledge of the capital rule;

 

(iii)      the tribunal did not calculate his actual capital at the date of claim;

 

(iv)      the tribunal did not calculate the value of his share of capital held with others in joint accounts;

 

(v)       the tribunal irrationally ignored evidence which confirmed that he was not the legal and beneficial owner of the full amounts in the bank accounts;

 

(vi)      the Department’s calculation of overpayment has no legal standing and does not accurately reflect the actual value of capital;

 

(vii)    his children were the beneficial owners of their share of the capital.

 

17.   The Department was directed to respond to the grounds of appeal.  Mr Crilly responded for the Department in relation to the entitlement appeal.  Mr Donnan replied on behalf of the Department in relation to the overpayment appeal.  They each submit that the tribunal’s decision is not erroneous in law.

 

18.   Mr Crilly refers to the evidence regarding monies held in the various accounts and submits that the tribunal has not made an irrational decision in relation to it.  Mr Donnan submits that the appellant misrepresented the material fact that he possessed savings in excess of the capital limits.  He further submits that whereas the diminishing notional capital rule was not applied to the notional capital assessed by the Department, the level of actual capital which the appellant possessed made this immaterial.

 

         Relevant legislation

 

19.   Primary legislation establishes the capital rule precluding entitlement to IS where capital exceeds a prescribed amount.  Section 130(1) of the Social Security Contributions and Benefits (NI) Act 1992 (“the 1992 Act”) reads:

 

“Exclusions from benefit

130.-(1) No person shall be entitled to an income-related benefit if his capital or a prescribed part of it exceeds the prescribed amount.”

 

The prescribed limit which applies from 10 April 2006 appears at regulation 45 of the Income Support (General) Regulations (NI) 1987 (“the IS Regulations”), which states:

 

“Capital limit

45. For the purposes of section 130(1) of the Contributions and Benefits Act as it applies to income support (no entitlement to benefit if capital exceeds prescribed amount), the prescribed amount is £16,000.”

 

Prior to 10 April 2006 the relevant rule appeared at regulation 45(a) of the IS Regulations and in the appellant’s case the prescribed amount was £8,000.

 

The IS Regulations make further provision for calculation of capital and for treating a claimant as possessing capital of which he has deprived himself for the purpose of securing entitlement to IS of increasing the amount of his IS.  Relevant provisions include:

 

“Calculation of capital

46.-(1) For the purposes of Part III of the Order as it applies to income support, the capital of a claimant to be taken into account shall, subject to paragraph (2), be the whole of his capital calculated in accordance with this Part and any income treated as capital under regulation 48 (income treated as capital).

 

(2) There shall be disregarded from the calculation of a claimant’s capital under paragraph (1) any capital, where applicable, specified in Schedule 10 (capital to be disregarded).

 

Notional capital

51.-(1) A claimant shall be treated as possessing capital of which he has deprived himself for the purpose of securing entitlement to income support or increasing the amount of that benefit except-

(a) where that capital is derived from a payment made in consequence of any personal injury and is placed on trust for the benefit of the claimant; or

 

(b) to the extent that the capital which he is treated as possessing is reduced in accordance with regulation 51A (diminishing notional capital rule); or

 

(c) any sum to which paragraph 43(2)(a) of Schedule 10 (capital to be disregarded) applies which is administered in a way referred to in paragraph 43(1)(a).”

 

Capital jointly held

52.-(1) Subject to paragraph (2), except where a claimant possesses capital which is disregarded under regulation 51(4) (notional capital), where a claimant and one or more persons are beneficially entitled in possession to any capital asset they shall be treated as if

each of them were entitled in possession to the whole beneficial interest therein in an equal share and the foregoing provisions of this Chapter shall apply for the purposes of calculating the amount of capital which the claimant is treated as possessing as if it were actual capital which the claimant does possess.

(2) …”

 

         Hearing

 

20.   I held an oral hearing of the appeal.  The appellant attended but was unrepresented.  The Department was represented by Mr Crilly as regards the appeal concerning the entitlement decision and by Mr Donnan as regards the appeal concerning the overpayment question.

 

21.   It was not contended by the applicant that he had notified the Department at any time of the existence of the various bank accounts, or that when he signed declarations to the effect that he had no savings that these were true statements.  I did not need to hear from Mr Donnan on the question of recoverability, as there was a plain failure to disclose material facts and misrepresentation of material facts, which was not disputed.  The real issue was whether, regardless of failure to disclose or misrepresentation, the appellant possessed capital in excess of the prescribed limits between 1997 and 2010.  If he was nevertheless entitled to IS during the relevant period, the question of recoverability would not arise.

 

22.   The appellant addressed me on five points based on previous written submissions which he submitted established that the tribunal had erred in law.  In essence the applicant’s case was that he had acquired sums of money through his wife’s father, now deceased.  His wife’s father had asked him to hold the money on behalf of his children until they were old enough to manage it wisely.  To this end he had opened a joint bank account “051” in the names of his wife and six children into which his wife’s father deposited money.  He had transferred money to other accounts which were in the name of himself and his wife only, with the intention that this would revert to the children.  There was evidence of some of this making its way into accounts in the names of two or three of his children.  He submitted that he was not the owner of the money and that the amount of capital attributed to him was wrong.

 

23.   The appellant criticised the document at Tab 17(a) as misleading and involving double counting of sums.  He blamed the bank for not maintaining all the accounts in the six joint names rather than those of himself and his wife alone.

 

24.   Mr Crilly accepted that the document at Tab 17(a) was not evidence, but rather amounted to a submission on the part of the Department.  He accepted that the tribunal had appeared to view it as evidence.

 

         Discussion

 

25.   It appears to me that the tribunal set out to ascertain all the relevant facts in an appropriate way.  However, in the course of preparing its submission for the tribunal, the Department prepared a document consisting of a chart of dates and figures which is referred to as Tab 17(a).  This was clearly intended to aid the tribunal in assessing the amount of capital which was held by the appellant at any given time.  It is a document consisting of eleven columns.  The columns represent the date, the figures held at that date in accounts “073”, “156”, “051”, “011”, “047” and “203”, and in respect of the various dates, a figure for notional capital, a total figure for actual capital and a figure representing combined notional and actual capital.  Finally, there is a column headed “weekly expenditure”.  The appellant has challenged the legal status and accuracy of Tab 17(a).

 

26.   The Department sometimes prepares similar charts for dates and figures representing benefit payments.  As they are prepared on the basis of material in the Department’s knowledge and possession they can amount to evidence, or at least as a reliable guide to ascertaining whether, and how much, benefit has been paid.

 

27.   In the present case, it appears to me that Tab 17(a) is at best a submission reflecting the Department’s interpretation and legal analysis of the evidence.  For example, it adjusts the amount in account “051” to reflect a particular legal submission on joint ownership of that account.  It makes provision for notional capital.  It makes provision for actual capital no longer in the appellant’s possession based on a particular interpretation of the law.  Some of the submissions contained in Tab 17(a) were contentious and disputed.

 

28.   For example, the applicant received the sum of £35,000 into account “073” on 2 October 2007.  Evidence shows that this was a sum provided by way of a mortgage taken out with Abbey National - later Santander.  Evidence from the appellant which was before the tribunal showed that £30,000 of this was repaid on 16 November 2007.  However, in Tab 17(a) the Department continued to count this £30,000 as part of the applicant’s capital.

 

29.   Such errors would not be a problem if the document was viewed as a submission.  However, it appears to me that the tribunal placed too much reliance on the document. In its findings of fact the tribunal says at paragraph 6:

 

“Tab 17a of the Departmental submission shows the sums held at various times in the various accounts owned jointly by the Claimant and his wife or by the Claimant and his wife and their children.  The tribunal find that this was an accurate summary of the monies held at any given time by the Claimants from 16.4.1997 to 03.08.2010”.

 

30.   At paragraph 12 the tribunal says, “The tribunal further finds that at 11.04.2006 the Claimant’s capital totalled £70,476.56”.  This figure is taken directly from the Departmental submission to the tribunal.  There is no evidence of any method of calculation which would arrive at the figure.  It appears tolerably close to a figure which would be produced by subtracting the figure for notional income from the figure for “Total” from the entry on Tab 17(a) for dates around 11 April 2006 - which would be £70,417.87.  However, I cannot derive this exact sum from the relevant figures in Tab 17(a).  As the tribunal has not set out how it arrived at the figure, I can only assume that it derived it from the Department’s submission without any critical appraisal or independent calculation.

 

31.   In fact, when I total the various amounts held in the appellant’s accounts at that date, based on the evidence before the tribunal consisting of the actual statements for those accounts, I find that the actual capital held at 11 April 2006 was £18,853.60.  This still exceeds the capital limit of £16,000.  However, the appellant argues that the sum should be adjusted to reflect joint ownership of the money with his children, thus bringing it below the capital limit.  On any view, it is a long way from £70,476.56.

 

32.   The figure of £70,476.56 comprised elements for notional capital and capital which had been disposed of in unexplained ways.  If making a finding that the appellant still possessed capital which he had disposed of in unexplained ways, the tribunal was required to set out the basis for that finding.  However, the tribunal does not set out any such findings independently.  It is impossible to assess how the tribunal has arrived at the relevant figure, as the Department’s submission also does not explain how it arrived at the figure.

 

33.   I consider that the tribunal has erred in law by making a finding which is unsupported by evidence or is otherwise unexplained.  I consider that the tribunal’s statement to the effect that Tab 17(a) was an accurate summary of the monies held at any given time by the claimant from 16 April 1997 to 3 August 2010 was an irrational finding.  Tab 17(a) was very far from that.

 

34.   It appears to me that the tribunal was quite seriously misled by the Department’s document at Tab17(a).  This was an honest attempt by the Department to present an account of the appellant’s actual capital, notional capital and capital no longer possessed by him.  However, it seems to me that it was seriously flawed.  I consider that if the Department is to present such documents as evidence, they should be based on the work of an appropriately qualified individual, such as a forensic accountant.  If they are simply submissions by an officer of the Department based on a contested view of the facts, they should clearly take that form and carry an endorsement to confirm that that is what they are.  Tribunals can then adopt an appropriately critical view of the information submitted.  The present tribunal based its conclusions on the unsupported assertions of the Department, without adequate care in examining the actual evidence, and has made irrational findings of fact in consequence.

 

35.   I set aside the decision of the appeal tribunal accordingly.

 

36.   The Department submits that, if I allow the appeal, the matter should be remitted to a newly constituted tribunal for redetermination.  However, I consider that I am as well placed to determine this issue as a newly constituted tribunal.  I therefore make the decision which the tribunal should have made.

 

         My Findings

 

37.   In complex cases involving capital or notional capital, useful guidance can be found in R2/09(IS), a decision of former Chief Commissioner Martin.  He said at paragraph 17:

 

“How ought a decision-maker or a tribunal on appeal deal with issues of capital relevant to benefit entitlement?  While I do not wish to be too prescriptive, I suggest that a decision-maker or a tribunal on appeal in such circumstances should endeavour to seek the answers to certain questions, in a relevant and coherent order, and, if this is done, it is more likely that the correct decision will emerge.  These are, in my view, the relevant questions:

 

(Questions (i) to (viii) relate to actual capital.)

 

(i)            Is capital relevant to the rules of entitlement to the benefit at issue?

 

(ii)          If so, what is the relevance of capital to the issues in the case eg if the capital is above a certain amount will the claimant’s potential benefit be affected?

 

(iii)         Is the capital at issue in the case actual capital? and, if so, identify the actual capital.

 

(iv)         What is the connection between the capital and the claimant eg sole owner or co-owner?

 

(v)          If there is such a connection, does anyone else have a legal or other interest in the capital?

 

(vi)         Can any or all of the capital be disregarded, under the disregard rules?

 

(vii)        If not, what is the value of the actual capital?

 

(viii)      Having established the value of the actual capital, taking into account the disregard rules, is entitlement to the benefit at issue affected?

 

            (Questions (ix) to (xiv) will help clarify whether one is dealing with actual or notional capital and care should be taken not to ignore these questions on an assumption, often a wrong assumption, that the relevant capital is notional.)

 

(ix)         Did the claimant ever have capital which might have affected entitlement to the benefit in question?

 

(x)          Has it been established that the claimant still has that capital? ie is it still actual capital?

 

(xi)         What is the connection between that capital and the claimant eg sole owner or co-owner?

 

(xii)        If there is such a connection, does anyone else have a legal or other interest in that capital?

 

(xiii)      Can any or all of that capital be disregarded, under the disregard rules?

 

(xiv)      If not, what is that capital’s value?

 

            (Questions (xv) to (xvi) relate to notional capital.

 

(xv)        If no-one else has a legal or other interest in it, has the claimant deprived himself of the capital for the purpose of securing entitlement to benefit in line with the rules on deprivation? ie has it become notional capital?

 

(xvi)      What is the value of the notional capital, taking into account the diminishing notional capital rule? ie has the value diminished over the passage of time?

 

The answers to these questions are not necessarily straightforward and, almost inevitably, rigorous and careful fact-finding will be required by decision-makers and tribunals”.

 

38.   The appellant’s entitlement to IS was subject to rules requiring him to have capital below a threshold of £8,000 until 9 April 2006 and £16,000 from 10 April 2006.  Therefore it is first necessary to explore whether he held actual capital at these dates.

 

39.   Based on evidence in the form of a letter dated 14 May 2012 from the Manager of the Dungannon Branch of the First Trust Bank I find that account “051” was opened on 24 March 1997 in the joint names of the appellant, his wife and their four children.

 

40.   On 18 April 1997 the appellant made a claim for IS for himself and his wife, naming his four children - all aged under 18 - as dependants.  This claim was treated as made on 16 April 1997.  At the time, the capital limit for IS purposes was £8000.  At Part 7 of the IS claim form he stated that he had no savings or property, and in particular that he had no bank, building society or Post Office accounts.

 

41.   This was a misrepresentation. In fact, on 18 April 1997, the appellant and his wife held a joint deposit account, number “156”, which held £9813.11, reducing to £9793.11 on 30 April 1997.  Therefore at the date of claim the appellant had capital in excess of the prescribed limit and was not entitled to IS.

 

42.   On 8 May 1997 the appellant lodged £9795.30 to account “051”, having withdrawn the balance of this sum from account “156”.  As indicated above, this was a joint account with his wife and four children.  The Department has taken the view that the amount transferred to “051” was capital jointly held between the six account holders.  Based on regulation 52 of the IS Regulations, the value of the actual capital held by the appellant and his wife at 8 May 1997 was two sixths of the amount in account “051”, being £3265.10, plus the residue in “156”.

 

43.   Further consideration needs to be given to the issue of notional capital and whether the appellant should be deemed to continue to possess the two thirds of the sum in “051” which he had deprived himself of to donate to his children.  I will address this issue below.

 

44.   The appellant had an opportunity to report these financial transactions when he came to complete an A2 IS review form on 28 September 1998 at interview with a member of the Department’s staff.  On the same date the balance in account “051” was £9963.75.  He did not disclose that he held any capital in bank accounts.

 

45.   In the meantime, the appellant had opened account “011” on 14 August 1997 with a deposit of £15,000.  The source of the other £10,000 is unexplained.  However, I find that £5,000 of that sum came from account “051” (the joint account with the appellant’s children).  The contemporaneous First Trust bank records suggest that account “011” was in the appellant’s sole name, but the letter of 14 May 2012 indicates that it was in joint names with the appellant’s wife.  On 28 September 1998 the balance of that account, after a withdrawal of interest of £775.72, was still £15,000.  However, the appellant again declared that he had no money, property or savings.  On 20 October 2000 this account was closed with a balance of £15,572.47.  Therefore from 14 August 1997 to 20 October 2000, the appellant held capital well in excess of the £8,000 prescribed amount in account “011”, in addition to any sums in accounts “156” and “051”.

 

46.   Some years later on 4 December 2008, the appellant was interviewed by staff of the Social Security Agency’s Benefits Investigation Service.  Before interview, he was cautioned in the form that “if you do not mention when questioned something which you later rely on in Court it may harm your defence”.  When asked to confirm that he held accounts “156”, “051” and “011” at the relevant dates, he replied “No comment”.

 

47.   Subsequently, in a letter dated 26 February 2009 and at the adjourned tribunal hearing on 26 May 2011, the appellant made the case that he didn’t own the capital at the relevant time.  He submitted that it was money he was holding on trust for his children on behalf of his late father-in-law.  His father-in-law is deceased, having died in 2003 at the age of 94.  However, there was no documentary evidence to corroborate the account that the appellant’s father-in-law was giving the appellant money on trust and no oral evidence from family members to substantiate the claim.  Furthermore, the appellant did not advance this account when given an opportunity to do so at interview in December 2008.  The appellant has misrepresented the fact that he held capital in bank accounts consistently since 1997.  At any time from then he could have revealed the existence of the capital and advanced the explanation that he held it on trust when his father-in-law was alive to substantiate his account.  He did not do so.  He has demonstrated a lack of candour.  He makes the case to me that his father-in-law was a farmer and gave him or his wife regular cash payments from time to time and that he was holding his father-in-law’s money on trust for his children.  I observe that his father-in-law would have been in his late eighties or early nineties at the time of these transfers of money and unlikely to have been actively engaged in farming.  I do not accept that the appellant’s evidence is credible.  I consider that the source of his income remains unexplained.

 

48.   On 20 October 2000 the applicant opened account “047” and withdrew the full amount of £15572.47 from “011”, transferring it to “047”.  This was an account in the joint names, a name identical to the appellant’s, apart from the middle initial and the appellant’s wife at the appellant’s home address.  At the tribunal hearing the appellant denied that he was the second person named on the account, but this was patently not true.  At 27 May 2002, with increases from interest payments, the amount in “047” stood at £16641.63.  Therefore between 20 October 2000 and 27 May 2002 the applicant held actual capital in excess of the £8,000 limit.

 

49.   On 27 May 2002 the appellant withdrew £16,000 from “047” and opened new account “203” with a deposit of £16,000.  He transferred the balance of £641.63 back to account “051”.  Account “203” was in the joint names of the applicant and his wife.  At 29 December 2005, the balance in “203” with added interest was £18,537.75.  Therefore, between 27 May 2002 and 29 December 2005, the appellant held capital in excess of the prescribed limit of £8,000.

 

50.   On 29 December 2005 the appellant withdrew £18,537.75 from “203”.  On the same date £18,500 was paid into account “047”.  On 13 January 2006 £13,500 was then withdrawn and placed back into “203”.  Account“203” was subsequently closed on 19 September 2008 with a withdrawal of £14,121.45.  Therefore from 29 December 2005 to 9 April 2006 the appellant held capital in excess of the prescribed limit of £8,000.  That limit rose to £16,000 on 10 April 2006.

 

51.   From 13 January 2006 a balance of £5020.49 remained in account “047”.  This rose, with interest payments, to £5150.62 on 10 May 2007.  The combined balance of “047” and “203” exceeded £16,000 from 10 April 2006 to 10 May 2007.

 

52.   On 10 May 2007, the sum of £5,000 was withdrawn from “047” and was used to open an account “083” in the names of three of the appellant’s children.  The appellant’s fourth child was not named on the account.  The balance of £150.62 was transferred to “073”.  Subsequently, on 19 September 2008 the balance then held in “203” of £14121.95 was transferred to “083”.  The appellant was then interviewed by Benefit Investigation Services on 4 December 2008, having been sent an interview appointment on 9 October 2008.

 

53.   During the entire period there were deposits to account “073” which were withdrawn almost immediately, which the applicant has not explained.  These included sums of £5,000 on 2 January 2003, £7,613.05 on 14 March 2005, £5,300 on 15 April 2005 and £7,650 on 16 September 2005.  These are not explained by reference to any transfer between accounts.  A further sum of £35,000 deposited on 8 October 2007 has been satisfactorily explained by way of a mortgage loan.  I consider that I do not need to enquire further into the source and destination of these sums, totalling over £25,653 in order to determine the present appeal.

 

54.   There were further deposits to “051” which are not explained, to the extent that when this account was closed on 13 November 2003 the sum of £23,088.27 was held in the account.  This sum does not appear to have been transferred to any other account (contrary to the tribunal’s finding) and I consider that its ultimate destination was unexplained.

 

55.   The appellant on three occasions made transfers from the capital he jointly held with his wife to his children.  Thus, between 8 May and 14 August 1997, he had transferred two thirds of £9795.30 from “156” into joint names with his four children in “051", representing £6,530.20.  On 14 August 1997 he transferred £5,000 from “051” back into his own name jointly with his wife in “011”.

 

56.   The appellant maintained that this account represented him holding his father-in-law’s money on trust for his children.  There was nothing to support this case.  In particular, money was withdrawn from what was a joint account back into accounts solely controlled by the appellant.  The account contained numerous unexplained transactions which, as the tribunal found, did not suggest that the money in it was for the children’s exclusive use.  I reject the submission that it constituted a trust for the children.  Nevertheless, by regulation 52 of the Income Support Regulations, where a claimant and one or more persons are beneficially entitled in possession to any capital asset they must be treated as if each was entitled in possession to an equal share.

 

57.   Furthermore, on 10 May 2007 and 19 September 2008, sums were paid into an account in the name of three of the appellant’s children.  It was submitted that this was consistent with the claimed wishes of his father-in-law to establish a trust on behalf of all four of the children.  The appellant has not explained to me, apart from a reference to a serious but temporary illness on the part of the son not named on this account, how an account owned by only three of the children was compatible with the late father-in-law’s wishes.  I find that it further supports the view that the appellant’s claims regarding a trust for the benefit of all of his children are not reliable.

 

58.   It appears to me that the appellant was at all times aware of the capital rules concerning IS.  Otherwise, it is not explicable why he would have concealed the fact that he possessed capital when he was asked about that matter directly in various claim forms and review forms.  In the light of that knowledge, and in the absence of a credible explanation, I find that a significant purpose of the appellant in transferring sums of money to his three children in account “083” was to secure his entitlement to IS.  Where a claimant deprives himself of capital to secure entitlement to IS or increase the amount of his IS he must be treated as possessing it.  I find that the appellant must be treated as possessing the sum of £5,000 divested on 10 May 2007 and the sum of £14,121.95 transferred on 19 September 2008.

 

59.   Similarly, when he transferred £9795.30 to account “051” in joint names with his four children, I consider that the purpose behind this was securing entitlement to IS, as he would not otherwise be entitled to IS at this time.

 

60.   I find therefore that the appellant possessed actual capital in excess of the prescribed capital limits from 18 April 1997 to 8 May 1997; 14 August 1997 to 9 April 2006; and 10 April 2006 to 10 May 2007.  I further find that the appellant possessed a combination of actual capital and notional capital in excess of the prescribed limits from 8 May 1997 to 14 August 1997 and 10 May 2007 to 3 August 2010.  In consequence, I conclude that the appellant was not entitled to IS throughout the period from 18 April 1997 to 3 August 2010.  I disallow his appeal from the entitlement decision.

 

61.   As far as recoverability is concerned, on the basis of all the evidence, I conclude that the applicant has failed to disclose the material fact that he was in possession of capital above the prescribed threshold.

 

62.   He was interviewed by Benefit Investigation Services on 4 December 2008.  At that date, benefit investigation officers on behalf of the Department put to the appellant the details of the various bank accounts described above and put these to him for comment.  He refused to answer questions.  Nevertheless, at that date, he was given to know that the Department was in possession of the information that he had capital in a variety of bank accounts, and indeed had printed copies of his bank statements.

 

63.   The overpayment decision of the Department in this case was to the effect that the recoverability of IS arising from the appellant’s failure to disclose continued until 3 August 2010 when the decision on IS entitlement was superseded.  However, I requested further post-hearing submissions from the Department on the question of causation in relation to the overpayment in this case.  Specifically, I asked, once it was known to the appellant that the Department was aware that he had savings in excess of the capital limits, did he continue to have any duty to disclose?

 

64.   Mr Donnan responded, relying on JM v Secretary of State for Work and Pensions [2011] UKUT 15 (AAC)(JM v SSWP) - a decision of Upper Tribunal Judge Lane.  He submitted that the fact of knowledge of the appellant’s capital on the part of Benefit Investigation Services did not result in a break in causation between the appellant’s failure to disclose and the overpayment.

 

65.   In JM v SSWP, an investigation received data from the Generalised Matching Service (GMS) - a government facility for obtaining private financial data from private institutions - had revealed that the claimant held capital in excess of prescribed limits in his bank account.  The data was received on 7 February 2007.  On 6 March 2007 the claimant was interviewed by the Department.  The overpayment decision under appeal was for a period from 5 February 2001 to 7 March 2007 inclusive.  Judge Lane was deciding whether there had been a break in the causation of the overpayment when the GMS data was received on 7 February 2007.  In JM v SSWP, the overpayment was accepted by the Department as no longer due to a failure to disclose from the day following the Department’s interview with the claimant.

 

66.   It is 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).

 

67.   In terms of how that disclosure should be made, a Tribunal of Great Britain Social Security Commissioners in R(SB)15/87 at paragraph 28 said that a claimant’s duty is “best fulfilled by disclosure to the local office where his claim is being handled”.  In Hinchy, it was said by Lord Hoffman at paragraph 32 that “the claimant is not entitled to make any assumptions about the internal administrative arrangements of the Department.  In particular he is not entitled to assume the existence of infallible channels of communication between one office and another”.  Those cases concerned the issue of whether knowledge on the part of the child benefit branch and the disability living allowance branch respectively could exonerate a claimant’s failure to disclose to the local office dealing with means tested benefits.

 

68.   The Tribunal of Great Britain Social Security Commissioners in R(SB)15/87 accepted at paragraph 25 that “it is not possible to “disclose” to a person a fact of which he is, to the knowledge of the person making the statement as to the fact, already aware” (approving the statement of Latham CJ in the Australian case of Foster v Federal Commissioner of Taxation (1951) 82 CLR 606).  The remaining question which concerns me is whether the appellant, having been interviewed in his local social security office by staff of BIS, who put to him details of his various bank accounts, was subsequently still under an obligation to make separate disclosure concerning the existence of those accounts.

 

69.   I consider that JM v SSWP is of no assistance on that question, as the overpayment in that case was deemed to have not been recoverable from the day following the benefit investigation interview.  Mr Donnan, however, refers me to Morell v Secretary of State for Work and Pensions [2003] EWCA Civ 526.  In that case a series of misrepresentations had been made in annual review forms.  However, disclosure had been made by a local authority to the IS office on two occasions, but not acted upon.  It was held by the Court of Appeal in England and Wales that the misrepresentations were nevertheless the cause of the overpayment, despite the fact that the IS office had received relevant information.  As Morrell in concerned with misrepresentations and disclosure of which the claimant was unaware, I find that it is not particularly helpful on the issue of causation in the case of failure to disclose.

 

70.   Here the BIS had information about the appellant’s bank accounts from 28 August 2008.  The appellant was called to interview by a letter dated 9 October 2008, and was made aware through his solicitor that the interview was generally about savings.  On 4 December 2008 he was interviewed and was made aware that the Department had detailed knowledge of his bank accounts.  He was interviewed again on 3 February 2009.

 

71.   It was only on 8 July 2010 that BIS passed information about the appellant’s bank accounts to the IS branch.  I find that somewhat surprising.  Specifically, I had assumed that a duty of BIS would have been to ensure the integrity of benefits payments.  Had the information been passed to the IS branch at an earlier date, it could have led to a suspension of payment of IS while matters were investigated.  This would have prevented overpayment from at least 4 December 2008, when the appellant refused to explain his savings accounts, to 8 July 2010.  The IS branch did not then act on the information received on 8 July 2010 until 2 August 2010.

 

72.   This was not a case like Hinchy, where information affecting benefit entitlement was held by one branch but not conveyed to another.  The investigation by BIS appears to have stood alone from the administration of the appellant’s claim to IS, but was clearly focused on his entitlement to IS.  The appellant’s claim in 1997 was made to Dungannon Jobs and Benefits Office.  The staff involved in the BIS investigation conducted their interviews in Dungannon Jobs and Benefits Office.  They included an officer based at Banbridge, with whom the appellant corresponded on 26 February 2009 in relation to the bank accounts.  Decision notices in the current appeal were sent to the appellant from Lurgan Jobs and Benefits Office and from Dungannon Jobs and Benefits Office and at different dates.

 

73.   I find it difficult to understand how BIS could have had detailed information about a claimant’s financial circumstances as early as August 2008, which indicated that he had capital in excess of the prescribed limit and which therefore disentitled him from IS, and which he could not explain satisfactorily at an interview in Dungannon Jobs and Benefits Office, yet did not convey that information to the officers dealing with the IS claim in the same office until July 2010.  I would have expected that to have been done almost immediately and I think that it would be reasonable for the appellant to have expect that it would be done immediately.

 

74.   Hinchy does not permit a claimant to assume that just because one benefit branch has information about him and a system for conveying that information to another benefit branch dealing with his claim for a different benefit, that information will be conveyed to the right people.  Hinchy has thereby brought about a system wherein the Department has broad powers to investigate an individual’s private data held by third parties, yet is deemed not to know the information it holds about the same individual on its own computer systems.  Hinchy is of course a majority decision of the House of Lords and must be followed.  However, Hinchy is not inconsistent in any way with the findings of the Tribunal of Commissioners in R(SB)15/87 when they said at paragraph 26:

 

“We accept that a claimant cannot be expected to identify the precise person or persons who have the handling of his claim.  His duty is best fulfilled by disclosure to the local office where his claim is being handled either in the claim form or otherwise in terms that make sufficient reference to his claim to enable the matter disclosed to be referred to the proper person”.

 

75.   The appellant in the present case was aware that officers investigating his IS entitlement in Dungannon Jobs and Benefits Office knew that he had savings in a number of bank accounts and that they had details of the amounts of those savings.  Once he had been apprised of that fact, I consider that the principle in Foster v Federal Commissioner of Taxation had direct application.  He could not “disclose” something to staff at Dungannon Jobs and Benefits Office of which he knew they were already aware.  There had been sufficient reference to his claim to enable the evidence of his various bank accounts to be referred to the proper person.

 

76.   Why BIS did not communicate with the specific individuals who had responsibility for the appellant’s claim, thereby potentially triggering a suspension of benefit under regulation 16(3) of the Social Security and Child Support (Decisions and Appeals) Regulations (NI) 1999, I do not know.  I see no way in which that would have prejudiced the on-going investigation or the possibility of a subsequent prosecution of the appellant.  However, in the circumstances of the particular case, I consider that the appellant no longer had a duty to disclose the existence of his various bank accounts from the date of his interview on 4 December 2008.  He could not fail to disclose the material fact after that date.

 

77.   My decision is that IS overpaid to the appellant is recoverable from him from 16 August 1997 to 4 December 2008 inclusive.

 

78.   I direct the Department to calculate the amount of the consequent recoverable overpayment.  I permit the appellant liberty to apply for a direction from me on the amount of an overpayment if the parties do not agree that the figure calculated by the Department is accurate.

 

 

(signed):  O Stockman

 

Commissioner

 

 

 

22 July 2013