UK Social Security and Child Support Commissioners' Decisions

[2006] UKSSCSC CIS_1996_2006 (10 October 2006)

PLH

Commissioner's Files: CIS 1996/06 & 2125/06
 


SOCIAL SECURITY ACTS 1992-1998

APPEAL FROM DECISION OF APPEAL TRIBUNAL

ON A QUESTION OF LAW

DECISION OF THE SOCIAL SECURITY COMMISSIONER

Claim for: Income Support

Appeal Tribunal: Leeds

Tribunal Case Ref: U/01/013/2005/01088 & 01089

Tribunal date: 16 March 2006

Reasons issued: 5 April 2006

1. These two appeals against decisions making sums of overpaid income support recoverable under section 71 Social Security Administration Act 1992 from a man who was the partner of an income support claimant, but not himself the claimant, succeed. The decisions of the Leeds appeal tribunal on 16 March 2006 (Mrs R J Bradshaw, sitting alone) were in my judgment erroneous in law for the reasons given below and I set each of them aside. In each case I exercise the power in section 14(8)(a) Social Security Act 1998 to give instead the decision I am satisfied the tribunal ought to have given (indeed the only decision it could properly have given) on the evidence and material before it, namely that neither the whole nor any part of the sums claimed, of £2517.17 and £3605.97 respectively, was legally recoverable from the appellant under section 71 on the alleged ground of his failure to disclose material fact.
2. At the material time the appellant, a man now aged 33, was living with a woman formerly in business as a pub landlady who was claiming income support as a person unable to work through incapacity. In all the relevant income support claim and review forms she entered particulars of him as her unmarried partner, together with her children at least one of whom was his. She was awarded and drew income support at all material times from March 2001 as a member of a couple, giving particulars of a small amount of earnings the appellant was getting from her for working behind the bar less than 24 hours per week and confirming that apart from that he had no other work, earnings or income. In the proceedings before the tribunal the Secretary of State was seeking to make two sums of £2517.17 and £3605.97 out of that income support recoverable from him under section 71. These were amounts allegedly overpaid to her for the periods 17 June to 3 October 2003 and 19 January to 31 May 2004, when a fraud investigation showed he had been clandestinely working and receiving earnings while still on the claim as her partner.
3. The material before the tribunal included clear evidence that the appellant had been working and receiving earnings for extended periods while the claimant continued to claim and receive income support on the basis of their being a couple neither of whom was in remunerative work. First, over the whole period from 17 June to 3 October 2003 he had been working, or at least receiving earnings, for varying numbers of hours as a bricklayer for a construction company; and second, over the whole period 19 January to 31 May 2004 he had been working and receiving earnings for well over the remunerative employment limit of 24 hours a week as a machine operator for another company. The departmental officers concerned with the case appear to have accepted the assurances and explanations given to them by the claimant, that she was throughout unaware of the fact that the man she was claiming to be living with as her partner had been going out to work at all, or that he had any earnings coming in from outside employers. He for his part, in the course of a departmental interview under caution at which he first denied having worked but then admitted lying, also maintained that he never told the claimant he was working, but admitted being well aware that the information he withheld from her about the money he was earning would have affected her benefit. At the tribunal hearing he claimed they had been living apart over the relevant period while she said they were still living together as a couple. The tribunal having heard the evidence on both sides recorded an entirely proper finding of fact that he and the claimant were still an unmarried couple living together as husband and wife throughout the periods for which benefit was claimed to have been overpaid.
4. There was no satisfactory evidence placed by the department before the tribunal to show how the claimant's entitlement to income support for the relevant periods had been validly removed or reduced so as to give rise to either of the alleged overpayments. This was not just a defect of form but one of substance, because before any sum of money can be shown to be recoverable by the Secretary of State from an individual in legal proceedings under section 71, it must be shown how and in what amounts the sums sought to be recovered have been paid out in excess of the true ascertained legal entitlement. Before the tribunal the appellant disputed that either he or the claimant had ever received notice of proper decisions altering her legal entitlement to income support from the amounts previously awarded and paid. This, and other substantial deficiencies in the Secretary of State's case, went wholly unremedied by him before or at the tribunal hearing, which the Secretary of State did not even bother to attend by a representative to assist the tribunal or to set out and prove the legal case he was seeking to make.
5. That of course was wholly unsatisfactory in a case of this nature and I have every sympathy with the tribunal, which was thus left to try and deal unaided with a difficult area of the law and apply it to a factual situation both obscure and in some respects hard to believe; at the same time being faced with the hard choice of whether to try and patch up an inadequate legal case for the department, against an admitted liar but at the risk of appearing partisan.
6. Doing a large part of the Secretary of State's groundwork for him, the tribunal expressed itself satisfied from indications in the material that was provided, albeit secondary, that decisions had been made on 9 September 2004 effective to revise the claimant's entitlement downwards: for the period 17 June to 3 October 2003 by the sum of £2,517.17, some benefit still being payable for the majority of those weeks; and for the period 19 January to 31 May 2004 to nil, removing the whole of her previous entitlement of £3,605.97. The difference between the treatment of the two periods reflected evidence that the work done by the appellant during the second period was for more than 24 hours per week and thus clearly counted as "remunerative work" for income support purposes; while for the earlier period his own evidence under caution at interview was that he had not actually been doing all the work for which he was documented as receiving earnings, as according to him he had been involved in some form of fiddle at the construction site. The recalculation for the earlier period therefore merely reduced the claimant's entitlement to take account of the earnings payments shown as made to her partner, rather than taking it away altogether as would or should have happened if he was then in remunerative employment for more than 24 hours a week.
7. The case for recovery of those two amounts from him was initially formulated by the Secretary of State in terms of misrepresentation by the claimant, for which the appellant was alleged in no very clearly-analysed way to be liable under section 71. The two "overpayment decisions" he initially appealed to the tribunal were dated 27 and 21 September 2004 respectively and alleged that:

(1) (as regards the period from 17 June to 3 October 2003: decision dated 27 September 2004) the claimant had on numerous occasions "misrepresented the material fact that her partner [the appellant] was in receipt of earnings for work of less than 24 hours per week", and as a consequence £2,517.17 income support was paid which would not have been paid but for the misrepresentation: the decision then merely concluding "accordingly, that amount is recoverable from [the appellant]."

(2) (as regards the period from 19 January to 31 May 2004: decision dated 21 September 2004) the claimant had on numerous occasions "misrepresented the material fact that her partner [the appellant] was in remunerative work of over 24 hours per week"; and in consequence £3,605.97 income support was paid which would not have been paid but for the misrepresentation: the decision on this occasion concluding "accordingly, that amount is recoverable from [the appellant] because he knowingly concealed from [the claimant] the fact that he was in receipt of earnings and therefore allowed her to misrepresent the material fact."

8. Each of those decisions was later revised by the Secretary of State to restate the claim for recovery against the appellant on a different basis, of an alleged "failure to disclose" material information contrary to section 71. By two further decisions both made on 29 March 2005, the original "overpayment decisions" of 27 and 21 September 2004 were revised (the date of one appears to be stated wrongly) so that:

(1) as regards the earlier period, income support of £2,517.17 paid to the claimant was stated to be recoverable from the appellant because: "on 17 June 2003 or as soon as possible thereafter [the appellant], the partner of [the claimant] failed to disclose to her the material fact that he was receiving earnings. As a consequence income support amounting to £2,517.17 was paid which would not have been paid but for the failure to disclose."

(2) as regards the later period, the whole of the income support paid to the claimant was stated to be recoverable from the appellant because: "on 19 January 2004 or as soon as possible thereafter [the appellant], the partner of [the claimant] failed to disclose to her the material fact that he was in remunerative work. As a consequence income support amounting to £3,605.97 was paid which would not have been paid but for the failure to disclose."

9. In accordance with regulation 30 of the Social Security and Child Support (Decisions and Appeals) Regulations SI 1999 No. 991 the appeals originally brought against the decisions of September 2004 were automatically transmuted into appeals against the revised form of each decision issued on 29 March 2005, so that was the case as presented by the Secretary of State before the tribunal.
10. The tribunal however instead of adjudicating on the claims as thus put forward by the Secretary of State adopted yet another differing basis, not put forward by him at all, as the reason for upholding his claims for recovery against the appellant in full. As explained in the combined statement of reasons for the two cases issued to the parties on 5 April 2006 this was as follows.

"5. Regulation 32(1B) of the Social Security (Claims and Payments) Regulations 1987 provides that every beneficiary and every person by whom or on whose behalf sums by way of benefit are receivable shall notify the Secretary of State of any change of circumstances which he might reasonably be expected to know might affect the continuance of entitlement to benefit or the payment of benefit as soon as reasonably practicable after the change occurs by giving notice of the change to the appropriate office.

This provision imposes a duty and I was satisfied that the Appellant was a person who was subject to that duty being a person on whose behalf benefit was received by [the claimant].

He was not able to work when she first claimed; she was ill and at some stage in hospital and the Appellant in his own words was looking after the family.

Starting work was a change of circumstance but was it reasonable to expect the Appellant to know that this change of circumstance might affect the continu[ity] of entitlement for benefit? Neither [the claimant] nor the Appellant notified the Secretary of State of the change of circumstance; the Department discovered the facts in May 2004 and the Appellant subsequently disclosed the information when he was interviewed on the 12 July 2004. This was not giving notification as soon as reasonably practicable after the change occurred.

It was not argued by the Appellant that he did not know that this was a change of circumstance which might affect entitlement to benefit; indeed in his interview he conceded that he knew that the money he was earning would have affected her benefit."

11. On the basis of its own findings that the claimant's entitlement had been validly reduced for the first period, and taken away altogether for the second, by a proper decisionmaking process despite the decisions themselves not being in evidence as they should have been, and that the claimant and the appellant were still living together as an unmarried couple throughout the material periods, the tribunal held that

"9. As I have stated above I was satisfied that there was a duty imposed on the Appellant to disclose the change of circumstance, in this case his commencing work. He failed to disclose that.

A material fact for the purposes of section 71 is a fact which is objectively material to the decision to award benefit. It cannot be disputed that commencing and continuing to work was a material fact in respect of a claim to and an award of income support; indeed the Appellant knew that it was material and that it ought to have been disclosed.

As a result of the Appellant's failure to disclose the material fact, benefit was paid which would not have been paid but for the failure to disclose and under section 71 the overpayment is recoverable from the Appellant."

12. Both the Secretary of State in his revised decisions, and the tribunal, appear to have been satisfied that it was the appellant who in fact caused both overpayments, by what they identified as his "failures" contrary to section 71: not telling the claimant he was working according to the Secretary of State, and not telling the Secretary of State according to the tribunal. Neither went into much detail on how they were satisfied of it as a matter of causation but for present purposes it can simply be assumed that it was so.
13. Even on that basis however (which involves the claimant being wholly innocent in the representations she continued to make, and the appellant anything but innocent in deliberately withholding from both his partner and the Secretary of State the material information he knew ought to be disclosed, in the full contemplation that this would lead to the continued payment of income support to which the claimant was not entitled), the Secretary of State's claims against him cannot in my judgment succeed; either on the grounds alleged by the Secretary of State, or on those substituted for him by the tribunal.
14. As the submissions dated 1 August 2006 by Mrs Jill Douglas on behalf of the Secretary of State in each of these appeals are right to concede, the tribunal's findings of facts and reasons were insufficient to show how the duty of disclosure it placed on the appellant arose. Moreover in my judgment the tribunal misdirected itself in holding that the facts could bring him within regulation 32(1B) of the Claims and Payments regulations at all. That provision, as the decision rightly said, imposes a duty; but a person in this appellant's position is not one of the people on whom that duty is expressed to be imposed. An income support claimant's partner, whose details have to be included in the claim, does not thereby become another claimant; is not a "beneficiary" (an expression which is undefined, but in this context must mean a person with some entitlement to the relevant benefit); or a person "by whom" the benefit awarded, not to the partner but to the claimant in his or her own right, is receivable. Nor is the income support under such an award receivable by the claimant in any sense as agent for or "on behalf of" a partner merely because that partner's existence and resources are disclosed in the claim and taken into account in calculating the applicable amount, and thus the net overall level of benefit, appropriate to the claimant on the claim and any resulting award.
15. Nor in my judgment can there now be any other possibility of recovery against a person in this position under section 71 for "failure to disclose" on the basis put forward by the Secretary of State or otherwise, even though the facts and the causation assumed here must show, if any ever did, a clear failure on the part of the appellant make the disclosure, to his partner or the Secretary of State or both, that most people would say good faith required and was reasonably to be expected of him in all the circumstances, to prevent her misrepresenting the facts and drawing benefit to which he knew she had no lawful entitlement. Such a formulation of "failure to disclose" to found the statutory remedy of restitution under section 71, despite long acceptance as a matter of authority, principle and practicality, has recently been held incorrect in R(IS) 9/06 B v Secretary of State [2005] EWCA CIV 99, [2005] 1 WLR 3796. Instead, the test to be applied is now that "failure" for the purposes of section 71 depends solely on the existence or otherwise of an express duty to make such disclosure being specifically imposed on the person concerned by some other provision outside the section itself.
16. Applying that test, there is no relevant regulation specifying that partners of income support claimants have to disclose or notify anything at all to the Secretary of State, or for that matter to the claimant, no matter how directly responsible or even deliberate their omission to do so may be in causing benefit to be wrongly paid out in excess of lawful entitlement. The observations about the possible liability of such a person in paragraph 17 of case CIS 674/94 relied on by Mrs Douglas, though in my view fully in accord with the law as it used to be, can no longer have any relevance under the altered test in B. It may be debated whether it was wise (or even necessary: cf. CA 2298/05) for the Tribunal of Commissioners and the Court of Appeal in that case to throw overboard the previous law and practice on failure of disclosure under section 71 to the extent they did, and with such scant regard for the learning and experience of those who evolved and applied it over so many years; but there is no denying it has been done. The consequence, in my judgment, is that there can be no question of recovery from a person such as the appellant in circumstances such as those shown or found by the tribunal to have existed here. I therefore reject Mrs Douglas' suggestion that the case should be sent back for a further tribunal hearing, which I should in any case have been reluctant to grant to a Secretary of State who did not trouble to attend the original one.
17. One practical solution if this result of B. is thought unattractive or inconvenient might be to require any claimant who includes particulars of a partner on a claim or review form to produce a declaration or countersignature from the partner confirming the details relating to him or her, as with the existing provision relating to dependants' increases in regulation 32(2). As observed by the Commissioner in R(SB) 21/82 itself, the route to the restitutionary remedy under section 71 on the ground of misrepresentation is almost invariably simpler, and it has not I think yet been suggested by anyone that a separately specified "duty not to misrepresent" needs to be found somewhere else before the clear words of the section setting out the legal consequences of doing so can apply.
18. In each of these cases the appeal is therefore allowed and my decision reversing that of the tribunal is substituted accordingly in the terms set out above.

(Signed)

P L Howell

Commissioner

10 October 2006