AM-v-Department for Communities (ESA) [2018] NICom 14

Decision No: C20/17-18(ESA)

SOCIAL SECURITY ADMINISTRATION (NORTHERN IRELAND) ACT 1992

SOCIAL SECURITY (NORTHERN IRELAND) ORDER 1998

EMPLOYMENT AND SUPPORT ALLOWANCE

Appeal to a Social Security Commissioner
on a question of law from a Tribunal's decision
dated 1 April 2016

DECISION OF THE SOCIAL SECURITY COMMISSIONER

1.	The decision of the appeal tribunal dated 1 April 2016 is in error of law. The error of law will be explained in more detail below.  In paragraph 50 below, I have set out further directions for the disposal of the appeal. 

	Background

2.	On 28 November 2015 a decision maker of the Department decided that an overpayment of contribution-based ESA amounting to £1620.89, for the period from 22 August 2012 to 24 June 2013, had occurred which was recoverable from the appellant.  The decision dated 28 November 2015 was reconsidered on 29 December 2015 and changed. It was decided that £1097.44 of the overpayment was recoverable from the appellant.  An appeal against the decision dated 28 November 2015, as reconsidered on 29 December 2015, was received in the Department on 29 December 2015.

3.	On 11 March 2016 a Legally Qualified Panel Member (LQPM) determined that an application by the appellant for a postponement of a listed oral hearing of the appeal should be refused. 

4.	The appeal tribunal hearing took place on 1 April 2016. The appellant was present.  There was no Departmental Presenting Officer present. The appeal tribunal disallowed the appeal and confirmed the decision dated 28 November 2015, as reconsidered on 29 December 2015.

5.	On 13 April 2016 an application to have the decision of the appeal tribunal set aside was received in the Appeals Service (TAS).  On 15 June 2016 the set-aside application was refused by the LQPM.

6.	On 1 July 2016 an application for leave to appeal to the Social Security Commissioner was received in TAS.  It is clear that this application was treated as a request for a statement of reasons for the appeal tribunal’s decision.  The statement of reasons was forwarded to the appellant on 14 September 2016. 

7.	On 23 September 2016 a further application for leave to appeal to the Social Security Commissioner was received in TAS.  On 1 November 2016 the application for leave to appeal was refused by the LQPM.

	Proceedings before the Social Security Commissioner

8.	On 11 November 2016 a further application for leave to appeal was received in the Office of the Social Security Commissioners. The appellant was represented in the application by Mr O’Donnell of the Citizens Advice organisation.  On 8 December 2016 observations on the application for leave to appeal were requested from Decision Making Services (DMS).  In written observations dated 18 February 2017, Mr Collins, for DMS, supported the application for leave to appeal.

9.	The written observations were shared with the appellant and Mr O’Donnell on 16 February 2017.  Written observations in response were received by way of e-mail correspondence from Mr O’Donnell on 21 February 2017.

10.	On 22 June 2017 I granted leave to appeal. When granting leave to appeal I gave as a reason that an arguable issue had arisen as to whether the appeal tribunal had given proper consideration to the Departmental decision-making process. 

11.	On the same date I directed an oral hearing of the appeal. In advance of the oral hearing Case Summaries were received from Mr O’Donnell and Mr Collins for which I am very grateful.  The oral hearing took place on 3 October 2017.  The appellant was represented by Mr O’Donnell.  The Department was represented by Mr Collins. Gratitude is extended to both representatives for their detailed and constructive observations, comments and suggestions.

	Errors of law

12.	A decision of an appeal tribunal may only be set aside by a Social Security Commissioner on the basis that it is in error of law.  What is an error of law?

13.	In R(I)2/06 and CSDLA/500/2007, Tribunals of Commissioners in Great Britain have referred to the judgment of the Court of Appeal for England and Wales in R(Iran) v Secretary of State for the Home Department ([2005] EWCA Civ 982), outlining examples of commonly encountered errors of law in terms that can apply equally to appellate legal tribunals. As set out at paragraph 30 of R(I) 2/06 these are:

“(i)	making perverse or irrational findings on a matter or matters that were material to the outcome (‘material matters’);
(ii)	failing to give reasons or any adequate reasons for findings on material matters;
(iii)	failing to take into account and/or resolve conflicts of fact or opinion on material matters;
(iv)	giving weight to immaterial matters;
(v)	making a material misdirection of law on any material matter;
(vi)	committing or permitting a procedural or other irregularity capable of making a material difference to the outcome or the fairness of proceedings; …
Each of these grounds for detecting any error of law contains the word ‘material’ (or ‘immaterial’).  Errors of law of which it can be said that they would have made no difference to the outcome do not matter.” 

	Analysis

14.	As was noted above, the decision under appeal to the appeal tribunal was a decision of the Department dated 28 November 2015.  A decision maker of the Department decided that an overpayment of contribution-based ESA amounting to £1620.89, for the period from 22 August 2012 to 24 June 2013, had occurred which was recoverable from the appellant.  I refer to this decision as the ‘overpayment’ decision.  As was also noted above, the decision dated 28 November 2015 was reconsidered on 29 December 2015 and changed.  It was decided that £1097.44 of the overpayment was recoverable from the appellant.

15.	Underpinning the decision dated 28 November 2015, as reconsidered on 29 November 2015, was an earlier decision of the Department dated 20 August 2013 in which a decision maker of the Department superseded an earlier decision itself dated 28 August 2012.  The decision dated 28 August 2012 had awarded an entitlement of contribution-based ESA to the appellant from and including 22 August 2012.  The basis for the supersession decision of 20 August 2013 was stated by Mr Collins to be that the appellant had worked and that the work was not within the exempt work rules because it was not within the prescribed weekly limits. I refer to the decision dated 20 August 2013 as the ‘entitlement’ decision. 

16.	In his Case Summary, Mr O’Donnell has submitted that the proper legislative basis for determining whether average hours of work, and earnings from same, are below the prescribed weekly limits to permit entitlement to ESA to continue is to be found in regulation 8(3)(b) of the Social Security Benefit (Computation of Earnings) Regulations 1996 (‘1996 Regulations’).  He has asserted that had the appeal tribunal properly applied this provision to the circumstances of the appellant’s case then the average hours worked by him, and the earnings from same, are below the prescribed weekly limits to permit entitlement to ESA to continue.

17.	Mr O’Donnell has asserted that there is nothing in the statement of reasons for the appeal tribunal’s decision to indicate that the appeal tribunal had considered the potential applicability of regulation 8(3)(b) of the 1996 Regulations.  He has added that his own interpretation of the applicability of regulation 8(3)(b) is supported by the decision of Upper Tribunal Judge Ward in NS v SSWP(IS) ([2015] UKUT 0423 (AAC)).

18.	In his Case Summary Mr Collins has submitted that regulation 45 of the Employment and Support Allowance Regulations (Northern Ireland) 2008 (‘the 2008 Regulations’) contains the provisions relevant to exempt work with respect to ESA.  More particularly regulations 45(4) and (5) provides for the computation of the permissible weekly hours and earnings and how the number of hours is to be determined. Mr Collins added that regulation 8(3) of the 1996 Regulations set out the method for calculating the weekly amount of earnings where such earnings fluctuate and that he accepted that ‘… this represents the correct approach to the calculation of fluctuating earnings.’ 

19.	Finally, Mr Collins submitted that:

‘Regulation 45 to which I have referred above sets out the limits in relation to hours worked and earnings and I can find nothing in the Department’s decision of 20 August 2013 or the Department’s appeal submission to adequately explain the Department’s basis for the disallowance – were his earnings over the weekly limit, had it been determined that he worked more than 16 hours per week, why was he disallowed on the specific dates mentioned and on what basis was the decision to disallow reached?

Similarly I would submit it is difficult to ascertain the basis for the tribunal’s conclusion that there were sufficient grounds for supersession without addressing the types of questions to which I have referred in the preceding paragraph.  Consequently I would agree there has been a failure by the tribunal in exercising its inquisitorial function.’

20.	At the oral hearing of the appeal I canvassed with Mr O’Donnell and Mr Collins my view that the 1996 Regulations did not apply to ESA.  The basis for that opinion is that primarily on a straightforward application of the rules of statutory interpretation. 

21.	Regulation 3(1) of the 1996 Regulations provides: 

‘Calculation of earnings 

3.—(1) For the purposes of Parts II to V of the Contributions and Benefits Act (other than those of Schedule 8) and of any regulations made thereunder which relate to benefit under those Parts of that Act or regulations, the earnings of a claimant shall be calculated by determining in accordance with these Regulations the weekly amount of his earnings.’

22.	Parts II to V of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 make provision for a wide range of social security benefits but ESA is not one of them.  On a straightforward reading of regulation 3(1), therefore, the 1996 Regulations do not apply to ESA. In paragraph 3.7 of Volume 1 of Social Security Legislation 2017/2018, the authors provide the list of social security benefits to which the Great Britain equivalent of the 1996 Regulations apply and, once again, ESA is not one of those benefits. 

23.	Provision for ESA is made through Part 1 of the Welfare Reform Act (Northern Ireland) 2007 (‘the 2007 Act’) supplemented by the 2008 Regulations.  As was noted by Mr Collins, regulation 45(8)(b) of the 2008 regulations makes provision for the calculation of the number of hours for which a claimant is engaged in work where the number of hours of work fluctuate and is parallel to regulation 8(3)(b) of the 1996 Regulations.

24.	In paragraph 9.141 of Volume 1 of Social Security Legislation 2017/2018, in an annotation to the Great Britain equivalent of regulation 45, the authors state:

‘Unlike the position with IB, ESA is not within the sphere of the SSCBA 1992 and so the Computation of Earnings Regs cannot apply. Calculation of earnings is to be done under the ESA Regs.’

25.	At the oral hearing of the appeal, Mr McDonnell and Mr Collins did not demur from my canvassed views. 

26.	It is clear, therefore, that the rules for exempt work in relation to ESA are to be found in regulation 45 of the 2008 Regulations.  That, however, does not have a significant effect on the apposite decision-making process.

27.	The decision under appeal to the appeal tribunal was the ‘overpayment’ decision.  That does not mean, however, that the appeal tribunal can ignore the ‘entitlement’ decision.  Section 69(5A) of the Social Security Administration (Northern Ireland) Act 1992 provides that:

‘(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’
 
28.	In summary, this paragraph says that there can be no recoverable overpayment of social security benefit, unless the original decision which gave rise to the award of benefit, now deemed to have been overpaid, is revised or superseded.  Without an alteration or change in the decision giving rise to the entitlement to the particular benefit, there can be no recovery of it. 

29.	The importance of the proper identification of a Section 69(5A) decision was emphasised by Deputy Commissioner Powell in C10/07-08(IS). At paragraph 4 he stated:

‘ … the relevant statutory provision, which is section 69(5A) of the Social Security Administration (NI) Act 1992, expressly provides that a decision which seeks to recover an amount of overpaid benefit cannot be made unless the determination in pursuance of which the amount was overpaid has been revised or superseded by a separate decision.  In other words, the decision which awarded benefit must be abrogated or corrected in one of the ways permitted by the legislation before a decision can be made as to how much has been overpaid and what is now recoverable.  Put like that, the sequence of decisions is logical.  The two decisions can be contained in a single document provided that the sequence is apparent.  Section 69(5A) is an important safeguard.  Tribunals, rightly, are alert to see that it has been complied with.  Nothing I am going to say casts doubt on their vigilance.  A tribunal must allow an appeal against a decision seeking to recover overpaid benefit once it becomes clear that the decision which awarded benefit has not been revised or superseded in the appropriate manner.  Further, a tribunal should also allow an appeal where not only is there no copy of the revision or supersession decision before it but such evidence as is relied upon leaves the tribunal uncertain as to whether the necessary decision was taken.’  

30.	In essence, the appeal tribunal will have to identify two decisions.  The first is a decision which alters previous decision(s) awarding entitlement to benefit – that can be described as the entitlement or Section 69(5A) decision. The second is a decision that overpaid benefit is recoverable – that can be described as the recovery or Section 69(1) decision. At paragraph 10 of C10/07-08(IS), Commissioner Powell stated:

‘It is now settled law, and section 69(5A) so provides, that the recovery of an overpayment of benefit requires two distinct decisions which are often called the “entitlement decision”, which changes the entitlement to benefit for a past period through the process of revision or supersession, and the “recoverability decision”.  The latter being based on the former.  I use the word “distinct” deliberately.  Since the recoverability decision is based on the entitlement decision it must be proceeded by it.  Subject to that, the two decisions can be given on the same date or even in the same document – provided that they are distinct and that it is clear that the entitlement decision comes first.’

31.	How did the appeal tribunal address the ‘entitlement’ decision?  In the statement of reasons for its decision the appeal tribunal said the following about the decision-making process in the Department:

‘We were satisfied that sufficient evidence was available to the Department to justify the execution of the supersession exercise.  The Panel was satisfied on the evidence before it today that the supersession exercise was conducted in accordance with the regulations.’

32.	In his written observations on the application for leave to appeal, Mr Collins made the following submissions:

‘As can be seen from the extract from regulation 45 earlier in these observations exempt work is not approved if over a certain threshold of hours worked or weekly earnings.  I can find nothing in the decision dated 20 August 2013 or the appeal submission to adequately explain the basis for the disallowance – was (the appellant) over the weekly earnings limit, had it been determined that he worked 16 hours or more per week, why was he disallowed on the specific dates stated in the decision and on what basis were these conclusions reached?

Similarly, I can find nothing to indicate that the tribunal gave adequate consideration to the supersession decision.  

…

Without giving due consideration to and being able to satisfactorily answer the types of questions I have referred to above regarding the initial supersession decision I would submit that it was not possible for the tribunal to conclude definitively that the overpayment decision under appeal was correct.  Consequently I would agree with (the appellant) that the tribunal failed in its inquisitorial function and erred in law.’

33.	Mr Collins has doubted whether sufficient consideration was given by both the Department and, as a consequence of the endorsement of the Department’s decision, by the appeal tribunal, of the evidential basis for the supersession decision. I agree with that submission, for the following reasons. 

34.	The ‘entitlement’ decision is the ‘supersession’ decision referred to by the appeal tribunal in the passage in its statement of reasons noted above. The supersession decision is that of 20 August 2013 in which a decision maker of the Department superseded an earlier decision itself dated 28 August 2012.  The decision dated 28 August 2012 had awarded an entitlement of contribution-based ESA to the appellant from and including 22 August 2012. 

35.	A copy of the decision dated 20 March 2013 was included in the original appeal submission as Tab No 5. The narrative of that decision is as follows:

‘This determination [sic] is given in respect of (the appellant’s) claim for Employment and Support Allowance from 22.08.12.

There has been a relevant change of circumstances. This was that (the appellant) has worked and that work does not fall in an exempt category. 

As a result (the appellant) is treated as not entitled to an Employment and Support Allowance for the following dates:‘

36.	There followed a long sequence of dates through which the decision maker had determined that the appellant was not entitled to ESA.  Finally, the decision added that the ‘law used to make this determination’ was ‘Employment and Support Allowance Regulations (Northern Ireland) 2008, regulations 40(2)(f) & 45.’

37.	With respect to the decision maker, there were other legislative provisions relevant to the ‘determination.’  As the decision was a supersession grounded on a relevant change of circumstances then article 11 of the Social Security (Northern Ireland) Order 1998 and regulations 6 and 7 of the Social Security and Child Support (Decisions and Appeals) Regulations (Northern Ireland) 1999 were also relevant. 

38.	Regulation 40(1) of the 2008 Regulations provides that:

‘Subject to the following paragraphs, a claimant is to be treated as not entitled to an employment and support allowance in any week in which that claimant does work.’

39.	Regulation 40(2) provides that regulation 40(1) does not apply to certain categories of work including, at sub-paragraph (f) – ‘any of the categories of work set out in regulation 45 (exempt work).’ In turn, regulation 45 sets out a number of categories of exempt work including work for which earnings in any week do not reach a certain minimum threshold and work which is less than sixteen hours per week and for which earnings do not reach a specified earnings threshold. 

40.	To all of that extent, thus far, the decision dated 20 August 2013 was based on the relevant legislative provisions.  What was missing, however, was an explanation of the basis for the conclusion that during the dates specified in the decision, the work which the appellant had undertaken was not within the regulation 45 exempt work categories because it was not within the prescribed weekly limits.  There was, in my view, no proper determination, under regulation 45(8) of the number of hours for which a claimant is engaged in work.

41.	The very generalised endorsement of the decision dated 20 August 2013 by the appeal tribunal and the conclusion that ‘… sufficient evidence was available to the Department to justify the execution of the supersession exercise’ and that the appeal tribunal ‘… was satisfied … that the supersession exercise was conducted in accordance with the regulations’ is not supportable and renders the decision of the appeal tribunal as being in error of law.

42.	How, then, should I dispose of the appeal?  Mr Collins concedes that the initial problem lay with the Department’s decision of 20 August 2013. It is apposite, therefore, to remit the matter to the Department with appropriate directions.  In the proceedings before me Mr Collins has been proactive in making contact with the Department about the decision dated 20 March 2013.  In his written observations he has reported the following outcome:

‘This undertaking was hampered by the fact that the original calculations and findings on which it was based are no longer available.  However a decision maker looked at the case papers accompanying (the appellant’s) application to the Commissioner and concluded that the decision to disallow was based on hours worked.  The Department have forwarded to me their findings and they are included with these observations.  That being said the tribunal on 01 April 2016 had no such explanation in front of it and, I would submit, failed in its inquisitorial function as I have suggested above.’

43.	It is axiomatic that the decision maker to whom this matter is remitted will wish to take into account the further findings made as a result of Mr Collins’ undertakings.

44.	There is further guidance available to that decision maker on the proper approach, for the purposes of regulation 45(8) of the 2008 Regulations, of the determination of the number of hours for which the appellant worked. Regulation 45(8)(b) is as follows:   

‘Exempt work 

45 

… 

(8) 	The number of hours for which a claimant is engaged in work is to be determined -

(a) 	where no recognisable cycle has been established in respect of a claimant’s work, by reference to the number of hours or, where those hours are likely to fluctuate, the average of the hours, which the claimant is expected to work in a week; 

(b) 	where the number of hours for which the claimant is engaged fluctuate, by reference to the average of hours worked over— 

(i)	if there is a recognisable cycle of work, the period of one complete cycle (including, where the cycle involves periods in which the claimant does no work, those periods but disregarding any other absences),

(ii)	in any other case, the period of 5 weeks immediately before the date of claim or the date on which a superseding decision is made under Article 11 of the 1998 Order (decisions superseding earlier decisions), or such other length of time as may, in the particular case, enable the claimant’s average hours of work to be determined more accurately.’

45.	It seems to me that regulation 45(8)(a) does not apply to the circumstances of the appellant’s case.  That is because no recognisable cycle of work has been established in respect of the appellant’s work. That is confirmed by the further findings unearthed by Mr Collins. Equally, it seems to me that regulation 45(8)(b)(i) does not apply for the same reason.  Finally, regulation 45(8)(b)(ii) cannot apply.  This is because the supersession decision was made on 20 August 2013.  The further findings uncovered by Mr Collins reveal that the appellant stopped working in the benefit week from 26 June 2013 to 2 July 2013.  Even taking 2 July 2013 as the last day of work, that is more than five weeks from the date of the supersession decision i.e. 20 August 2013.

46.	What, then, is the proper approach to be taken to the determination of the number of hours for which the appellant worked?  Assistance may be derived from the decision of Upper Tribunal Judge Ward in NS v Secretary of State for Work and pensions ([2015] UKUT 0423 (AAC)) (‘NS’). In that case Judge Ward was dealing with regulation 5(2) of the Income Support (General) Regulations 1987 (‘the 1987 Regulations’) which is in identical terms to regulation 45(8) of the 2008 Regulations. On the facts of the case before him, as in the instant case, Judge Ward found that none of the provisions of regulation 5(2) applied. In those circumstances, he determined, at paragraph 21 that:

‘The most accurate (and also the most advantageous to the claimant) approach is therefore to carry out the calculation over the whole period leading up to the date of supersession.’

47.	I accept and endorse the approach taken by Judge Ward and urge the decision maker to whom the matter is remitted to adopt that method when re-determining, for the purposes of regulation 45(8) the number of hours for which the appellant was engaged in work.  I say ‘urge’ because I am aware that I cannot direct the Department to make a decision in a particular manner.  It will be for the individual decision maker to adopt the approach considered appropriate by him or her.

48.	Two other matters arise.  The first is that in AS Upper Tribunal Judge Ward also noted that regulation 5 of the 1987 Regulations allowed for special situations to be taken into account, including periods for meals or refreshments.  There is a similar provision in regulation 45 and also a provision, which does not apply here, allowing for unpaid work for a charity or as a volunteer.  The second is that the additional findings uncovered by Mr Collins have also revealed the appellant’s earnings for the relevant periods.  As was noted above, regulation 45 as a whole is concerned with exempt work for the purposes of entitlement and another exempt category related to work for which earnings are below a specified limit.   

49.	I would also note that remittal to the Department and not to an appeal tribunal, at this stage, does not involve any prejudice to the appellant. This is for two reasons.  The first is that the reconsideration by the Department of the decision dated 20 August 2013 may result in a further decision which is favourable to the appellant.  Even if the further decision is not favourable it will generate its own further right of appeal. 

50.	In summary, therefore:

(i)	the matter is remitted to the Department for it to reconsider the entitlement decision dated 20 August 2013;

(ii)	in reconsidering the decision dated 20 August 2013 the decision maker must take into account the written observations prepared by Mr Collins and the further findings uncovered by him the course of the proceedings before me;

(iii)	in reconsidering the applicability of regulation 45(8) of the 2008 Regulations to the circumstances of the appellant’s case, the decision maker may wish to take into account the principles which I have set out above;

(iv)	the re-determination of the hours for which the appellant was engaged in work will also necessitate a re-determination of the appellant’s earnings;

(v)	both parties are at liberty to re-apply at any stage to me for a further direction or determination in respect the issues arising.     

(signed) K Mullan

Chief Commissioner

24 April 2018