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[1997] UKSSCSC CIS_12022_1996 (30 January 1997)

R(IS) 5/00

Mr. P. L. Howell QC CIS/12022/1996
30.1.97

Recovery of overpayment - whether recoverable from appointee responsible for failure to disclose

The claimant had been in receipt of income support since 1988. He lived with his mother, and as he was unable to manage his own affairs she had throughout acted as his appointee for social security purposes. The claimant had a building society account containing savings belonging to him. The balance in the account was disclosed to the Department of Social Security in March 1991. Thereafter, from time to time, his mother deposited sums to the account out of her own pension. These were intended as gifts to him. The balance increased until March 1995 when the Department of Social Security became aware of the passbook entries. The balances in the account from August 1992 had been such as to give rise to an overpayment of income support.

An adjudication officer decided that the overpaid benefit was recoverable from the claimant's mother as his appointee. On appeal the tribunal found that she had failed to make the disclosure that was reasonably to be expected of her in the circumstances and that the overpaid sum was recoverable from her.

The claimant's mother appealed to the Commissioner. The adjudication officer, relying on the Commissioner's decision in CIS/332/1993, submitted that the tribunal had erred in law in not drawing a distinction between failures of disclosure by the claimant's mother in her capacity as his appointee and other failures for which she was responsible in her personal capacity.

Held, allowing the appeal only to the extent of correcting a calculation error, that:

it is well established that the acts or omissions of an agent may be imputed to his principal, so as to affect the principal's legal position and that a person is not relieved from general civil or statutory responsibility for his own acts or omissions merely because he is acting on behalf of someone else (para. 17);

there was nothing in previously decided cases to warrant departing from these principles or attempting to draw a distinction between what a person omits to disclose as appointee or personally. Such a distinction was not helpful in a case such as the present where the claimant's mother was taking the whole of the responsibility for dealing with the claimant's social security affairs and it was her silence, after she had given the passbook balance in March 1991, that led to the claimant getting too much benefit (paras. 12, 13 and 18);

where an appointee acting on behalf of a claimant has been responsible for a failure to disclose a material fact and benefit has been overpaid as a result, concurrent rights of recovery exist against the appointee as the person directly responsible, and against the claimant who, through his appointee, has failed to disclose the material fact (para. 19).

R(SB) 21/82 and R(SB) 28/83 followed.

DECISION OF THE SOCIAL SECURITY COMMISSIONER

The decision of the social security appeal tribunal given on 16 October 1995 as in my view correct on the main point of substance but erroneous in one technical respect. I set it aside and exercise the power in s. 23(7)(a) Social Security Administration Act 1992 to substitute my own decision to the same practical effect.

My decision in place of that of the tribunal is that:

(1) the earlier decisions awarding income support to the claimant from 6 August 1992 onwards (referred to in the adjudication officer's decision dated 10 May 1995 at pages T67 to T70) are reviewed for ignorance of material fact and revised to the claimant's correct entitlement as shown in the schedule on page T83, with the income support already paid to him for those periods being treated as paid in satisfaction of his correct entitlement pro tanto;

(2) the amounts shown by that schedule as overpaid to the claimant by way of income support totalling £1,273 were paid because his mother who has at all times been the appointee for him, and he through her, each failed between 6 August 1992 and 1 March 1995 to disclose to the department the material fact that his capital savings had risen above the sum of £3,215.89; and

(3) the amount of £1,273 so overpaid is accordingly recoverable by the Secretary of State under s. 71 Social Security Administration Act 1992 from the claimant's mother and appointee, the department not having pursued any question in this case of separate recovery from him.

In her observations in reply at page 130, the claimant's appointee requested an oral hearing of this appeal, at her own home in view of her state of health. I considered this but decided that no oral hearing was needed, as the appeal is confined to points of law and the issues appeared clearly from the written submissions made by both sides.

The facts can be stated quite shortly. The claimant, who is now in his forties, suffers from epilepsy and some form of brain damage and is unable to manage his own affairs. He lives with his elderly mother who also suffers from disability. He has been on income support since 1988 and throughout that time his mother has acted as his appointee and dealt with his social security. At all material times he has had a building society account containing savings belonging to him, the amount of which was material for calculating his income support. From March 1991 to March 1995, the department's calculations were based on his having savings of £3,215.59, which was the figure given to them by the claimant's mother and the building society in March 1991: pages T5-T52.

In fact, the true balances on the savings account were growing over this time. Between July 1992 and March 1995, the balance accumulated from some £3,900 to £5,790, mainly from periodic cash deposits the claimant's mother made out of her own pension, by way (as the tribunal found) of gifts to him, against the day when she would no longer be able to provide a home for him herself. The department's figures were revised to take account of these increased balances, but only in March 1995, after the building society passbook entries (pages T59-T66) had been disclosed to them. In the meantime, benefit of over £1250 had been overpaid to the claimant. On 10 March 1995, an adjudication officer issued the decision giving rise to this appeal, to the effect that the overpayment had arisen from a failure by the claimant's mother to disclose material information from 6 August 1992 onwards, and therefore it was recoverable from her.

I should here emphasise, as did the tribunal, that there is no suggestion of any deliberate intent on the part of either the claimant or his mother to mislead the department. It is entirely accepted that if there has been any relevant failure to disclose information in this case, it was an innocent one.

The main issue at the tribunal hearing on 16 October 1995 was whether there had in fact been any notification to the department of the rising balance on the savings account between 14 March 1991 and 6 March 1995. It was common ground that the claimant's mother had telephoned on the first date disclosing her son's then savings of £3215, and on the second making clear that he now had capital of over £5,000. These two calls were recorded in departmental notes (pages T51, T53), but there was no record of any other disclosure in between.

The tribunal heard oral evidence from the claimant's mother that she believed she had in fact made other calls and given relevant information in the intervening period, though she could not be more specific. They concluded however that it was not established to their satisfaction that whatever took place had amounted to the required disclosure. In particular, it was inherently unlikely that there would have been three separate occasions, as she had suggested, when she had made disclosure, without the department recording anything at all about them. They therefore found on the balance of probabilities that there had not been any disclosure between the two admitted calls in March 1991 and March 1995.

Consequently, applying the well established test in R(SB) 21/82, the tribunal held that there had been a failure on the part of the claimant's mother as his appointee to make the disclosure that was reasonably to be expected of her in the circumstances; and that the overpaid benefit amounting to £1,273 as shown in the calculation put before them by the adjudication officer (pages T83) was recoverable from her. However in the formal part of their decision, they purported to confirm the original decision of 10 May 1995, which was based on an uncorrected calculation and showed £1,282 as recoverable. As pointed out by the adjudication officer in his submission at page 112, this made the decision defective, and the appeal must succeed on that technical ground if no other.

The notice of appeal and observations submitted on behalf of the claimant at pages T96, 101 and 129-130 make a variety of criticisms about the way the case has been dealt with on the facts. I have carefully considered all the grounds put forward in these documents, but the only relevant issue on the facts is whether the claimant or her son did or did not inform the department of the true level of his savings over the period between August 1992 and March 1995. This issue was fully dealt with at the hearing on 16 October 1995 when the claimant's mother gave evidence in person and the whole question of when she telephoned the department, and what information was given to them over the whole period, was thoroughly gone into by the tribunal. The tribunal are the body entrusted by Parliament with deciding relevant factual issues, and it is not open to me in effect to reopen the factual inquiry they have already conducted. They appear to me to have done the job thoroughly and conscientiously, and reached the conclusion they did with regret, because of their obvious respect for the claimant's mother and the efforts she had made to provide for her son. In my judgment the points raised do not provide an arguable ground for saying that the tribunal fell into any error of law in the way they decided these factual issues, and I must therefore reject the submissions on behalf of the claimant on this aspect.

This leaves the submission by the adjudication officer in paragraph 8 of his observations at page 111, that the tribunal have gone wrong in law in deciding that the overpayment was recoverable from the claimant's mother at all. The suggestion, based on some observations in another Commissioner's decision in case CIS/332/1993, is that it was an error of law for them not to draw a distinction between failures of disclosure by the claimant's mother in her capacity as his appointee, and others for which she was in some way responsible in her personal capacity.

In my judgment, this puzzling and metaphysical distinction is not a helpful one to try and make in a case such as the present. The practical reality is that the claimant's mother was taking the whole of the responsibility for dealing with the claimant's social security affairs, and it was her silence after giving the initial figure to the department that in the circumstances led to his getting too much benefit. Even a philosopher would find it difficult to say when she was being silent on her own account and when as appointee.

With all respect to the adjudication officer's submission based on CIS/332/1993, the principles to be applied in such a case as the present are quite simple and have been clear for many years. They are to be found in two reported decisions on supplementary benefit in the early 1980s, each by a distinguished and experienced Commissioner: R(SB) 21/82 (Mr. Edwards-Jones QC) and R(SB) 28/83 (Mr. Watson QC).

In R(SB) 21/82 it was held by Mr. Commissioner Edwards-Jones QC that:

"(1) benefit wrongly overpaid because of a failure to disclose material information is recoverable from the person responsible for the failure, even though their failure was wholly innocent; and

(2) "any person" in what is now s.71 of the Administration Act means what it says, so that any person who is in fact responsible for a failure to disclose may be liable to make good the overpaid benefit, whether or not they got the benefit themselves; but

(3) a "failure" to disclose necessarily involves the breach of an obligation, moral or legal: so that the non-disclosure must have occurred in circumstances in which, at lowest, disclosure by the person in question was reasonably to be expected; and

(4) a failure to "disclose" can only occur in relation to information a person has or has had within his or her knowledge or possession."

See R(SB) 21/82 esp. paras. 4, 20 and 24; and Jones v. Chief Adjudication Officer [1994] 1 WLR 62 esp. 65B-66C, 70H, 72H [R(IS) 7/94] where Mr. Commissioner Edwards-Jones' decision was cited with approval by the Court of Appeal.

It is quite clear from paras. 2(1)-(3) and 4(4) of R(SB) 21/82 that it was part of the decision that omissions to disclose material facts for which a wife, acting or purporting to act on behalf of her husband in relation to his supplementary benefit claim, was responsible could give rise to a liability on her part to reimburse the Secretary of State for overpaid benefit, even as regards any period while the husband (and not she) was the claimant. There is no suggestion that such liability should depend on whether her omissions could somehow be distinguished as being on her own account. The absence of any such distinction in Mr. Edwards-Jones QC's decision is in my judgment powerful authority against it existing at all.

In R(SB) 28/83, benefit had been overpaid to a claimant suffering psychiatric disorder, at a time when his affairs were in the hands of a receiver appointed by the Court of Protection. Mr. Commissioner Watson QC held that the overpayment could be recovered from the claimant's estate where the receiver acting on his behalf and managing his affairs had the requisite knowledge of the value of his assets, but had failed to disclose it to the department; with the result that too much benefit was paid. The Secretary of State was not seeking to recover from the receiver personally, and the only issue was whether recovery was permissible from the estate. Holding that it was, Mr. Commissioner Watson cited R(SB) 21/82 with approval and held on the facts that disclosure of the value of the assets was reasonably to be expected of the receiver, so that there had been a "failure" by him to disclose, in the sense defined by Mr. Commissioner Edwards-Jones. The failure by the receiver was imputed to his incapacitated principal, with the result that the overpaid amount was recoverable from the claimant's estate.

These two reported decisions appear to me to do no more than reflect two well established principles of the general law. The first is that the acts or omissions of an agent may be imputed to his principal, so as to affect the principal's legal position. The second is that a person is not relieved from general civil or statutory responsibility for his own acts or omissions merely because he is acting on behalf of someone else. (In the field of private contractual obligations a person may of course contract expressly as agent in such a way as to incur no personal liability; but that is more a matter of what is being agreed than an exception to the principle.)

In my judgment there is nothing in either decision that warrants departing from either of these principles, or attempting to make a distinction between what a person omits to say as appointee and personally. The reference at the end of para. 12 of R(SB) 28/83 to the receiver as "acting in a representative capacity only in this appeal" is not in my respectful view to be read as in any way questioning that a person responsible for a relevant "failure to disclose" can be personally liable to make good an overpayment, as held by Mr. Edwards-Jones QC in R(SB) 21/82. This was not an issue before Mr. Watson QC in the later case at all.

I do not think it is to be doubted that in a case where an appointee acting on behalf of a claimant has been responsible for a failure to disclose material information and benefit has been overpaid as a result, concurrent rights of recovery may exist under s. 71 of the Administration Act: against the appointee as the person directly responsible, and against the claimant who, through his appointee, has failed to disclose the material information that should have been disclosed. There are many instances in the law where a person has concurrent rights of recovery against two different people for the same sum. Where an appointee fails to give the disclosure reasonably to be expected, s. 71(3) is such a case. The aggregate amount recoverable is of course limited in all cases to the amount of the overpaid benefit, because these are rights of restitution, not penalties.

In the present case, the claimant's mother as his appointee had assumed the entire management of the social security affairs over the relevant period, and she had herself given the original information on which the benefit calculations were based. When the original information on which the department continued to rely became out of date, I do not think there could be any doubt that the circumstances reasonably required her to make disclosure of the up to date figures, to prevent overpayment of benefit. On the tribunal's findings, she failed to do so for some four years, from March 1991 to March 1995. It must in my judgment follow that there was a failure of reasonable disclosure on her part, and thus a right of recovery against her under s. 71. As noted above, the department have not pursued the question of any separate right of recovery from her son in this particular case.

For those reasons, I set aside the tribunal decision of 16 October 1995 and give instead the decision set out in paragraph 2 above.

Date: 30 January 1997 (signed) Mr. P. L. Howell QC Commissioner