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[1997] UKSSCSC CIS_975_1997 (28 July 1997)

R(IS) 6/98

Mr. M. J. Goodman CIS/975/1997

28.7.97

Funeral payment - bill rendered in the name of the claimant's parents - whether the claimant had accepted responsibility for the expenses

The claimant's baby daughter died on 26 April 1996. Her funeral was held on 1 May 1996. The bill for the funeral was in the name of the claimant's parents, and was paid by them. On 22 May 1996, the claimant applied for a social fund funeral payment. A tribunal found that she had accepted responsibility for the funeral, and awarded her a social fund payment. The adjudication officer appealed.

Held that:

a claimant can accept responsibility for funeral expenses (under regulation 7(1)(e) of the Social Fund Maternity and Funeral Expenses (General) Regulations 1987) through an agent. Provided an agent has the claimant's authority to act before entering into the contract, it does not matter if the funeral director believes the agent to be acting on their own account: the claimant (the "undisclosed principal") will later be able to assume legal responsibility for the contract (paras. 13 and 14).

[Note: The Commissioner qualifies in this decision what he said in CIS/12344/1996, where the funeral director knew of the agency agreement.]

DECISION OF THE SOCIAL SECURITY COMMISSIONER

To the limited extent indicated below, I allow the adjudication officer's appeal against the decision of the social security appeal tribunal dated 4 November 1996 as that decision is erroneous in law and I set it aside. My decision is, however, the same as that of the tribunal namely that the claimant is entitled to a funeral payment from the social fund in respect of the funeral of her daughter who died on 26 April 1996. The adjudication officer should forthwith calculate the allowable amount of the funeral payment and award that amount to the claimant. If any difficulty arises over the amount of the payment it can be referred to me or to another Commissioner for direction or supplemental decision: Social Security Administration Act 1992, section 23.

This is an appeal to the Commissioner by the adjudication officer against the majority decision of a social security appeal tribunal dated 4 November 1996 which allowed the appeal of the claimant (a single woman aged 22 years) from a decision of the adjudication officer issued on 12 June 1996 as follows:

"The claimant is not entitled to a funeral payment from the social fund (in respect of the funeral expenses for the funeral of her baby daughter who died on 26 April 1996, aged nine months) as [the claimant] had not accepted responsibility for the funeral expenses. Regulation 7 of [the Social Fund Maternity and Funeral Expenses (General) Regulations 1987, SI 1987 No. 481, as amended by SI's 1993 No. 479 and 1995 No. 1229]."

The summary of facts by the adjudication officer for the tribunal read as follows:

"On 22 May 1996 a claim form SF200 was received from [the claimant] aged 22 years claiming for a funeral payment from the social fund in respect of her daughter M, who had died on 26 April 1996 aged nine months approximately. [The claimant] advised that she received income support. She also stated that the funeral had taken place on 1 May 1996 and that the bill, which had been in her parents name had been paid by them. She stated that she had been unable to come to the local office of the Benefits Agency when [her daughter] had died. Because her parents had accepted responsibility for the funeral in so far as the bill was in their name and had been paid, it was determined [by the adjudication officer] on 12 June 1996 that no funeral payment could be awarded."

The claimant's grounds of appeal to the tribunal read as follows:

"I am writing to appeal against the decision of a funeral payment for my daughter. I have contacted the funeral services and they have forwarded to you an amended bill. My father did pay the bill as I could not go into the DSS office as losing a child is very distressing but the money from my father was only a loan."

The tribunal made the following findings of fact:

"The majority decision was that the appellant had herself accepted full responsibility for the funeral expenses and it was clearly understandable and reasonable for her to do so, and her father had only paid the undertaker's account as a temporary measure until the appellant's claim on the social fund had been sorted out later."

The majority gave as their reasons for decision:

"Both the appellant and her father were clearly honest witnesses and all the tribunal accepted that they had been misled when they initially made enquiries at the Department of Social Security and had been informed it would be all right to proceed as they had done."

The tribunal then added in its reasons:

"One of the tribunal, however, took the view that the account had been in the names of the appellant's parents and that they had actually paid the same was proof that they had accepted responsibility for the funeral expenses rather than the appellant, who was a young woman aged 22 in receipt of income support."

The only reason I have set the tribunal's decision aside is that their reasons for decision do not state the legal basis on which they had based their finding of responsibility by the claimant for the funeral expenses, nor do they refer to the rules of agency, to which I refer below. I therefore set their decision aside and to that extent only allow the adjudication officer's appeal. However, my decision in paragraph 1 is to the same effect as that of the tribunal, namely that the claimant is entitled to a grant from the social fund for the funeral payment for her daughter's funeral. I give my reasons below.

The adjudication officer's appeal to the Commissioner was initially on the ground that because the claimant's parents had paid the funeral bill on 31 May 1996, a novation (new contract) of the funeral debt was not thereafter possible. On the point of novation, the adjudication officer cites R(IS)9/93 and a decision on Commissioner's file CSB/423/1989.

That is correct so far as it goes, but the submission overlooks the fact that another possible ground of acceptance of responsibility by legal liability (see below) can arise from the legal rules of agency. This matter was dealt with by me in a "starred" ruling, allowing the adjudication officer to withdraw an appeal where clearly agency had been present, on file CIS/12344/1996 (made part of the appeal papers in this case, as a result of a direction by a nominated officer on 7 March 1997). That ruling deals with the not uncommon situation where the claimant is too distressed to arrange a funeral and someone else (a third party) makes the arrangement with the undertaker, who then sends the bill to the third party. It may well be that that was done as agent for the distressed claimant, who consequently has legal liability as principal and can be said to be the person "responsible" under the terms of regulation 7 of the 1987 Regulations.

As a result of the direction of the nominated officer on 7 March 1997 requiring a further submission from the adjudication officer, that officer has made a further submission dated 2 April 1997, in which he cites the ruling to which I have referred above and accepts that as he puts it "... in the instant case the claimant (the principal) clearly consented that her parents (the agent) should act on her behalf in arranging the funeral of her daughter, and that the claimant's parents consented to acting for her". To pause there, I accept that that clearly was the position, as I can see from the documents before me.

However the adjudication officer then goes on to refer to a statement by me in my ruling (on file CIS/12344/1996), at paragraph 10, where I said:

"Where an agency exists, then in the law of contract provided that the third party (i.e. here the undertaker) knew of the agency ... then both the principal and the agent are contractually liable jointly for the full amount to the third party." (my emphasis)

Basing himself on that statement, the adjudication officer in his submission of 2 April 1997 submits that the case ought to be referred back to another tribunal to ascertain whether or not, as a fact, the funeral director was aware that the claimant's parents were acting on her behalf as agent at the time the arrangements for the funeral were made.

That submission is of course based on paragraph 10 of my ruling. However, having given this matter further consideration, I should say at once that in my view the quoted passage in paragraph 10 of my ruling is not altogether correct. If it is alleged that there is a disclosed agency, with or without naming the principal, then of course it is necessary to show that the third party i.e. the funeral director, knew of the fact of agency. However the law of agency also allows of a concept known as that of the "undisclosed principal" (not the same as agency being disclosed but the principal not being named), which allows an agency to exist where the agent does not disclose even the fact of agency to the third party and appears to the third party to be acting on his own account. Nevertheless, provided the agent in fact had authority beforehand, it is possible afterwards for the undisclosed principal to declare his or her existence, intervene and take the benefit (and indeed the burden) of the contract. Where that occurs then the third party is contractually bound to the undisclosed principal even though he did not know at the time of allowing the debt to be contracted that there was any agency at all i.e. there was an undisclosed principal. Consequently, it does not matter here whether or not the funeral director knew at the time the funeral arrangements were made that the father was acting as agent for his daughter, though the director very likely did know of that fact. But even if the funeral director did not know, the daughter could still intervene at a later date as an undisclosed principal and thereby assume legal responsibility under the contract. For that reason I have not sent the matter back to another tribunal but have declared that the claimant is entitled to a funeral grant from the social fund.

I should however emphasise that for the rule as to an undisclosed principal to operate in these cases there must be clear evidence that whoever gave the order to the funeral director was acting under an agency given to that person beforehand and clearly so given. It is a rule of the law of agency that, as it is put "an undisclosed principal cannot ratify". In other words, it is not possible, where there was not an agency beforehand, for some person to come in at a later date and claim the benefit (and burden) of a contract, not in fact made on his behalf in the first place. Where at the time of the funeral debt being incurred, there was in truth no agency, then it is not open to any person in receipt of income support (or any other qualifying benefit) to intervene at a later date and claim to be legally responsible for the debt. Only a tripartite novation can achieve that result.

In all the circumstances, as I have explained above, it is not necessary for me to rule on the point made by the Nominated Officer in his direction as to whether the change in the wording of the regulation from the original word "takes" responsibility to the current word "accepts" responsibility alters the situation in these cases. Sufficient to say that I have simply decided this case on the ground that what is involved is legally binding responsibility. The claimant does satisfy the test for the reasons given above. I need not therefore speculate on whether the submission of the adjudication officer on the point as to whether the word "accepts" denotes some less stringent test of legal responsibility than "takes" is correct or not. Suffice to say that in this case I have simply based my decision on legal responsibility. Whether any other kind of responsibility such as moral responsibility would suffice, it is not necessary for me to decide in this case.

Date: 28 July 1997 (signed) Mr. M. J. Goodman

Commissioner