UK Social Security and Child Support Commissioners' Decisions

[2006] UKSSCSC CIS_203_2002 (24 August 2006)

DECISION OF THE SOCIAL SECURITY COMMISSIONER

1. The claimant's appeal to the Commissioner is allowed. The decision of the Hull appeal tribunal dated 8 October 2001 is erroneous in point of law, for the reasons given below, and I set it aside. It is expedient for me to substitute a decision on the appeal against the Secretary of State's decision dated 6 March 2001 after making further findings of fact (Social Security Act 1998, section 14(8)(a)(ii)). My decision is as follows:

(a) the adjudication officer's decision dated 18 May 1998 is superseded on the ground of relevant change of circumstances and the superseding decision is that the claimant is from and including 31 August 1998 (until overtaken by the next following decision) entitled to income support at the weekly rates shown as payable in the schedule to the Secretary of State's decision dated 6 March 2001 and the adjudication officer's decision effective from 23 August 1999 is revised on the ground of ignorance of or mistake as to a material fact and the decision as revised is that the claimant is from and including 23 August 1999 entitled to income support at the weekly rates shown as payable in the above schedule;

(b) as a consequence income support amounting to £3,863.92 was overpaid to the claimant in the period from 31 August 1998 to 16 July 2000;

(c) of that amount, £3,781.40, relating to the period from 31 August 1998 to 2 July 2000, is recoverable from the claimant in accordance with section 71 of the Social Security Administration Act 1992 as payment of that amount was made in consequence of his failure to disclose a material fact.

There is a further explanation of my substituted decision in paragraphs 22 to 24 below.

The background

2. This is an overpayments case that has been deferred for long periods of time while awaiting first the progress of the appeal against Commissioner's decision CIS/4322/2001 to the House of Lords as Hinchy v Secretary of State for Work and Pensions [2005] UKHL 16, R(IS) 7/05, and the appeal against Commissioner's decision CIS/4348/2003 to the Court of Appeal as B v Secretary of State for Work and Pensions [2005] EWCA Civ 929, R(IS) 9/06.
3. The case as presented to the appeal tribunal was as follows. The claimant (born 28 March 1930) had been in receipt of income support from 1990. He had been in receipt of the middle rate of the care component of disability living allowance (DLA) and the lower rate of the mobility component from August 1994. Accordingly his income support was calculated as for a single claimant including the severe disability premium (SDP). He was paid income support by order book and his DLA was paid separately from the DLA Unit. An adjudication officer's decision dated 18 May 1998 awarding income support at the weekly rate of £116.05 from and including 11 May 1998 was identified. On 27 June 2000 the claimant signed an answer to some questions sent out to him in relation to an application for a social fund community care grant. He stated that he had ceased to receive DLA in August 1998. There is no readable date stamp for the receipt of that answer. The written submission to the appeal tribunal described this as a notification to the benefit office. Notes made by an officer reconsidering the decision under appeal said that social fund forwarded the information about DLA to income support on 10 July 2000. Enquiries to the DLA authorities revealed that the last payment of DLA was made on 19 August 1998, covering the period to 26 August 1998. The calculation of income support was corrected prospectively, removing SDP, from 24 July 2000.
4. On 6 March 2001 the following decision was given:

"We have looked again at the decision dated 18 May 1998 awarding Income Support from and including 11 May 1998. There has been a relevant change of circumstances since the decision was given.

Our decision is that for the period 31 August 1998 to 16 July 2000 (both dates included) [the claimant] was entitled to Income Support at a reduced rate because Disability Living Allowance Care Component had ceased and as a consequence he was not entitled to the severe disability premium.

Of £9613.15 already paid to [the claimant] as Income Support from 31 August 1998 to 16 July 2000 (both dates included) £5749.23 is to be offset against the arrears of Income Support now due from 31 August 1998 to 16 July 2000 (both dates included).

As a result, an overpayment of Income Support has been made from 31 August 1998 to 16 July 2000 (both dates included) amounting to £3863.92 as shown on the schedule.

On 26 August 1998, or as soon as possible afterwards, [the claimant] failed to disclose the material fact that his Disability Living Allowance had ceased.

As a consequence, Income Support amounting to £3863.92 from 31 August 1998 to 16 July 2000 (both dates included), as detailed on the schedule, was paid which would not have been paid but for the failure to disclose.

Accordingly, that amount is recoverable from [the claimant]."

The schedule of overpayment showed an overpayment of the weekly rate of SDP per week for the period specified (apart from the period from 10 April 2000 to 7 May 2000: see below). From 23 August 1999, the amount properly payable and the amount actually paid went down considerably. That was because the claimant became entitled to retirement pension from that date.

5. The claimant appealed. He was by this stage represented by Mr Ian Miller, a welfare rights officer employed by Hull Social Services, who put in a detailed written submission. There were three basic arguments. The first was that the claimant had been awarded DLA for a fixed period of two years expiring on 26 August 1998 and the income support office would have known of that in May 1998. The second was that disclosure of ceasing to receive DLA was not reasonably to be expected in view of the claimant's mental condition. The third was that the Secretary of State had not shown that all the decisions authorising payment of income support throughout the period of the alleged overpayment had been superseded or revised so as to satisfy section 71(5A) of the Social Security Administration Act 1992 or provided evidence of the decisions superseded or revised so that it could be checked that grounds of supersession or revision existed. There was reference to a good deal of Commissioners' case-law.

The appeal tribunal's decision

6. The claimant attended the hearing on 8 October 2001 with Mr Miller. The appeal tribunal dismissed the appeal and confirmed the decision of 6 March 2001. In the statement of reasons it was concluded that there was no evidence that the income support office knew of the terminal date of the fixed term award of DLA and that the claimant had known that his award had come to an end when it did. The order book notes or instructions on leaflet INF4 included stopping getting another benefit as something that the claimant was required to tell his social security office about. The appeal tribunal said that in the absence of medical or psychiatric evidence it could not come to any conclusion as to the true extent of the claimant's mental problems, but found that he was not totally incapable of appreciating the need to disclose the material fact so as to render disclosure not reasonably expected under the test it regarded as currently authoritative. On the issue of supersession or revision, the appeal tribunal said this:

"The Tribunal has concluded that this process has been properly carried out. The Secretary of State has discharged the burden of proof.

The Tribunal regarded it as entirely clear that, not for the first time, the Appellant was awarded Income Support on the 18 May 1998. The Tribunal regards that as sufficient indication of the relevant and latest, ie last before the relevant change of circumstances, material decision. Considerable reliance was placed on behalf of the Appellant on the proposition that each of the subsequent reviewing (as it then was) decisions should be identified and produced.

The Tribunal wholly accepts that that may well be necessary if that decision is material in that it has changed the original award in some important and relevant aspect.

There was no evidence that that was the case in the Appellant's situation. The Tribunal regards it as wholly otiose for what might be a considerable number of `reviewing' decisions since the material award - such as the annual review on the uprating of the award or upon a change of address to be produced - Whilst arguably of importance in the general scheme of things they do not bear materially upon the issues such as those being faced by this Tribunal.

To damn the whole process of recovery simply because possibly one minor and inconsequential reviewing decision has not been produced is not regarded as within the law as provided by statute nor as explained by subsequent Commissioners' Decisions.

The Tribunal takes the view that the grounds for that `review' had been adequately demonstrated - the removal of DLA and thus the concurrent reduction necessary on that account of his Income Support by the removal of SDP.

It is clear that the amount of Income Support payment has been changed. It is clear from the submission that the change effected with effect from 23 August 1999 was as a result of the beginning of the payment of his Retirement Pension. It still meant however that Income Support was continuing to be paid including an incorrect element for SDP. That is the important element.

The Tribunal regards the last relevant decision - that of the 18 May 1998 as being the one correctly being `reviewed'. It had been correctly identified."

The appeal to the Commissioner

7. The claimant was granted leave to appeal by Mr Commissioner Jacobs. Mr Miller's grounds of appeal were that the Secretary of State had not discharged the burden of proof that the income support office did not already know the material fact said not have been disclosed by the claimant, that the appeal tribunal had not adequately explained why it found the claimant mentally competent so that disclosure was reasonably to be expected, and that the appeal tribunal had not adequately explained how section 71(5A) was satisfied. The appeal was not supported by the Secretary of State in the submission dated 15 April 2002. After some exchanges of written submissions, and the Secretary of State having declined an invitation from Mr Commissioner Howell QC to agree to the setting aside of the appeal tribunal's decision on the point about its finding of mental competence, the proceedings were deferred as described above, although Mr Miller's request for an oral hearing was granted by a legal officer to the Commissioners.
8. The oral hearing was arranged after the petition to the House of Lords for permission to appeal against the Court of Appeal's decision in B had been refused. It took place at Doncaster County Court on 7 August 2006. The claimant was not present, but was represented by Mr Stephen Hodgson, who had taken over the conduct of the case for Hull Welfare Rights Service after Mr Miller had left. The Secretary of State was represented by Mr Huw James, solicitor, instructed by the Solicitor to the Department for Work and Pensions. I am grateful to both representatives for their submissions.
9. Some of the legal issues that might otherwise have arisen have fallen away because of the decisions in Hinchy and in B. Hinchy has established that the fact that officers of the Secretary of State in the office administering DLA knew that the claimant in the present case was not entitled to DLA after 26 August 1998 does not mean that there was nothing for the claimant to disclose to the officers of the Secretary of State administering his income support. B has established that the test of failure to disclose under section 71 is whether there is a breach of either of the duties under regulation 32 of the Social Security (Claims and Payments) Regulations 1987, with no additional test of whether disclosure is reasonably to be expected, so that the question of the claimant's mental state is no longer material. It does not matter whether the claimant appreciated the need to report the end of the payment of his DLA.
10. However, there remain issues about whether there was anything for the claimant to report and whether the income support office already knew anything that could have been reported by the claimant, so there could not be a "failure" to disclose. It is relevant to both issues that Mr Miller had in June 2002 discovered a diary sheet of a Hull City Council social worker from April 1997 recording exchanges of telephone calls with an officer in the income support office who was enquiring into whether the claimant was entitled to DLA and what his proper income support entitlement was in his then circumstances. The officer reported on 22 April 1997 the information that the claimant had been on middle rate care component and lower rate mobility component since August and December 1994 respectively, "due for review Aug 98". SDP was therefore to be awarded and backdated, but it was also reported that the DLA Unit was to be informed of concerns that the claimant was not entitled to DLA at all. Of course, that evidence was not before the appeal tribunal, and cannot be used to show that it made any error of law. But I can look at it in substituting a decision.

(a) Was there anything for the claimant to disclose?

11. Mr Hodgson made the beguiling argument that there was no change of circumstances for the claimant to report when his award of DLA came to an end. The award had been made for a fixed period in 1996. In 1998 the claimant did nothing. He did not make a renewal claim. He simply let the existing circumstances unfold, so that there was no change to report and no failure to disclose. That does not work. It ignores the first duty under regulation 32(1) of the Claims and Payments Regulations as they were in 1998, for benefit recipients to:

"furnish in such manner and at such times as the Secretary of State may determine such information or evidence as the Secretary of State may require for determining whether a decision on the award of benefit should be revised ... or superseded ...."

If the first duty applies, the second duty, to report any change of circumstances which a benefit recipient might reasonably be expected to know might affect the continuance of entitlement to or payment of benefit, need not be invoked.

12. In the present case, Mr Miller had made no challenge to the assertion that the leaflet INF4 had been provided to the claimant at intervals. That leaflet (pages 12 to 14 of the papers) required a claimant to tell the social security office if he stopped getting a benefit or other money. The order book notes (pages 15 and 16) said that a claimant had to tell the social security office at the address on the cover of the book if any benefit went up or down. The claimant was thus under a duty to notify the income support office that payment of DLA had ceased, of which event it was accepted he was aware. There could then be a failure to disclose a material fact within section 71. Ceasing to receive at least the middle rate of the care component of DLA was undoubtedly a material fact, as qualification for SDP is in terms of receipt of that rate, not entitlement (Income Support (General) Regulations 1987, Schedule 2, paragraphs 13 and 14B). The appeal tribunal therefore did not err in law on the ground that there was nothing for the claimant to disclose on 26 August 1998.

(b) Knowledge of material fact by the income support office

13. Mr Hodgson submitted that, if the income support office actually knew in May and August 1998 that the claimant's award of DLA was for a fixed period ending on 26 August 1998, there could not have been a failure to disclose by the claimant, as there can only be disclosure to a person of what that person does not already know. As a general proposition that has to be accepted, as it was in Hinchy. But on the evidence before it the appeal tribunal was entitled to conclude that the income support office did not have that actual knowledge. On the new evidence of the social worker's telephone diary things become a little more complicated. I shall deal with that evidence as I have concluded that it does not advance the claimant's case at all.
14. There are two key elements. The first is that qualification for SDP is in terms of receipt of the care component of DLA, not entitlement. The second is that it is common for renewal claims for DLA to be made and to be successful following the end of a fixed term award (and they can be made well in advance to ensure continuity of payment). Thus it seems to me that, even on the basis that the income support office did actually know that the claimant's award of DLA was to run only to 26 August 1998, it did not thereby know that the claimant would not continue to receive the middle rate of the care component after 26 August 1998. There was something that the income support office did not know and that the claimant could have disclosed to them, but failed to. The argument for the claimant on this point fails even on the additional evidence.

(c) The calculation of the recoverable overpayment

15. Although Mr Miller did not take any point on calculation before the appeal tribunal, there are two issues which seem to me to arise on the documents before me. The first is to do with the period from 10 April 2000 to 7 May 2000 for which the schedule of overpayment makes the weekly overpayment £40.73. At the time the weekly amount of the SDP was £40.20. For that period the amount actually paid to the claimant is stated as £79.30, going down to £78.77 from 8 May 2000, from which date the weekly overpayment is stated as £40.20. There is no explanation of why the claimant was paid the additional 53p for those weeks, but I cannot see how those payments could have resulted from the claimant's failure to disclose that he was no longer receiving DLA.
16. The second issue is that the recoverable overpayment was made to run to 16 July 2000 although the claimant's reply revealing the DLA position and implying that he was getting income support was dated 27 June 2000. The date of receipt of the reply is not known, but the Secretary of State's written submission to the appeal tribunal plainly suggested that the benefit office in which it was received for social fund purposes was also the benefit office at which the claimant's income support was administered. That would appear to have been the social security office identified in leaflet INF4 and in the order book notes as the place to which the claimant should send notification. In my judgment there was sufficient reference in the reply to the claimant's current income support award make the receipt of the receipt sufficient to end the failure of disclosure in accordance with paragraph 28 of Tribunal of Commissioners' decision R(SB) 15/87. It does not matter that the information was apparently not passed on to the income support section until 10 July 2000. Making a guess at the date of receipt in the social fund section as on or before 2 July 2000, I conclude that the Secretary of State had failed to show that the payment of the two weeks of SDP from 3 July 2000 to 16 July 2000 resulted from a failure to disclose a material fact by the claimant. At the oral hearing Mr James did not seek to argue to the contrary (although the number of weeks involved had not then been precisely identified).
17. I have hesitated over whether the appeal tribunal should be faulted in law over those relatively small issues when Mr Miller had not raised them. But the amounts will matter to the claimant and I think that the issues do sufficiently arise from the evidence before the appeal tribunal that it ought to have dealt with them. There was therefore an error of law.

(d) Supersession or revision of the decisions under which benefit was paid

18. This was the main element in Mr Miller's submissions to the appeal tribunal. He submitted that the Secretary of State's decision of 6 March 2001 was defective and that the condition in section 71(5A) of the Social Security Administration Act 1992 was not met - that an amount is not to be recoverable under section 71(1) unless the determination in pursuance of which it was paid has been reversed or varied on appeal or revised under section 9 of the Social Security Act 1998 or superseded under section 10. He pointed out that the decision, which combined the superseding decision and the overpayment decision, purported only to supersede the decision of 18 May 1998. It was known that this was not the first decision to award income support, but was presumably the last superseding decision before the start of the alleged overpayment. He also pointed out that, within the period of the alleged overpayment there must have been a supersession decision altering the rate of income support entitlement as from 23 August 1999, to take account of retirement pension as income. That decision had not been revised or superseded and so remained in effect. Nor had that decision or the decision of 18 May 1998 been produced so that it could be checked whether grounds of revision or supersession existed. The Secretary of State should not be given any further opportunity to produce the decisions as the proper procedure should have been well-known.
19. The appeal tribunal's rejection of that submission is set out in paragraph 6 above. At the oral hearing, Mr Hodgson for the claimant submitted that its approach ignored and/or misunderstood the law and left no basis in accordance with section 71(5A) for finding any recoverable overpayment from 23 August 1999. He accepted I think that, as a result of Tribunal of Commissioners' decision R(IB) 2/04, there would have been no jurisdictional problem in the appeal tribunal's carrying out a revision of the decision effective from 23 August 1999, but it did not do so. Mr Hodgson also submitted that the supersession of the decision of 18 May 1998 could not properly have been affirmed without production of the decision. It might have made an award of income support for a limited period only, given the knowledge about the fixed period of the DLA award. It might have been given in official error if it awarded income support including SDP for an indefinite period when the end of the fixed term of the DLA award was close, so that it should have been revised rather than superseded. Mr James for the Secretary of State adopted the view expressed by Mr Commissioner Howell QC in his directions of 19 July 2002, effectively that there was no real material issue about the failure to identify all the decisions that needed to be altered, as there was no dispute that the claimant in fact received SDP throughout and that the Secretary of State had power to supersede or revise all the relevant decisions. Alternatively, if the appeal tribunal did err in law, the errors could be corrected by the Commissioner in a substituted decision without altering the substance of the decision against the claimant.
20. In decision CIS/764/2002 I dealt with essentially the same argument of principle that had been put forward by Mr Miller on behalf of another claimant. I said this in paragraphs 9 and 14 after noting that the combined supersession/overpayment recoverability decision in that case had superseded the last operative decision before the beginning of the period of the alleged overpayment, but had not purported to revise or supersede any decisions made during that period:

"Often there will not have been any review decisions for long periods after an initial decision awarding income support, as changes in the rates of income support or of other benefits already counting as income were given effect automatically without a review. But where a new source of income arose, reducing the amount of income support entitlement, there would have to have been a review and revision to give effect to the new entitlement from the effective date. On general principle, as confirmed by the Court of Appeal in Chief Adjudication Officer v Eggleton, reported as R(IS) 23/95, while the previous decision would remain effective down to the day before the revised decision took effect, from that date the revised decision would be effective. It would be that decision which authorised the payment to the claimant of the new amount of income support. Therefore, in the present case, before the overpayment for the period from 24 February 1995 onwards could be determined to be recoverable under section 71(1), the review and revision decision which must have been given would have to be revised or superseded. The decision of 26 March 2001 did not purport to do that, so that to that extent section 71(5A) was not complied with. I am not at all sure that the same would follow in relation to a decision that on a change of circumstances (eg becoming incapable of work) there was to be no change in the amount of the claimant's entitlement to income support, but I do not have to reach a conclusion on that.

[In paragraphs 10 to 13 I held that the appeal tribunal had power to correct the defects in the Secretary of State's decision: points now overtaken by R(IB) 2/04]

14. Applying those conclusions to the present case, the appeal tribunal erred in law in failing to identify that there had not been a supersession or revision of all the decisions operative during the period of the alleged overpayment."

21. I take the same view now, fortified by Mr Commissioner Bano having followed paragraph 10 of CIS/764/2002 in decision CIS/3228/2003. It was an error of law for the appeal tribunal to fail to make a decision that superseded or revised all the decision under which the payments alleged to be overpayments were authorised. I think that the appeal tribunal may have concentrated on the practical problems of producing all the decisions that Mr Miller said should be produced (which was not, as I explain below, necessary) and perhaps misunderstood the basis of the separate part of the argument about the requirements of section 71(5A). That error cannot in my view be dismissed as a mere technicality or as not material, given the centrality of section 71(5A). But it is an error that can easily be corrected. I do not accept Mr Hodgson's submissions about the need for production of the decision of 18 May 1998 and the decision taking effect from 23 August 1999. I fear that I find his points about the decision of 18 May 1998 fanciful. It is plain that the decision of 18 May 1998 did not award income support for a definite period linked to the end date of the DLA award, as payment including SDP continued uninterrupted after the end of the DLA award. Nor did a decision to make an indefinite award arise from official error, because of the factors mentioned in paragraph 13 above. In some circumstances it may be necessary for copies of decisions that are to be revised or superseded to be produced, but in many circumstances, as here, other evidence of the nature of those decisions will be adequate. There was no doubt that the decision of 18 May 1998 and the decision effective from 23 August 1999 both made the claimant entitled to income support including SDP and that there were grounds for supersession and revision respectively of both decisions, related to the ceasing of receipt of DLA. No further evidence was necessary.

The Commissioner's decision on the appeal

22. Accordingly, I conclude that the appeal tribunal did err in law for the reasons given in paragraphs 15 to 17 and 21 above. I set its decision aside. It is right for me to substitute a decision having made fresh findings of fact, in particular accepting the evidence set out in paragraph 10 above, with the conclusions in paragraphs 15 to 17.
23. My formal decision is set out in paragraph 1 above. It carries out a revision of the decision effective from 23 August 1999 as well as a supersession of the decision of 18 May 1998. The revision is on the ground of ignorance of or mistake as to material fact that made the decision more advantageous to the claimant than it would otherwise have been, ie mistake as to the continuing receipt of DLA (Decisions and Appeals Regulations, regulation 3(5)(a)). As the claimant would have qualified for income support as a person aged over 60 there is no question of the decisions awarding income support having been incapacity benefit decisions. The decision as revised, that the claimant was entitled to the amounts of income support shown as payable in the schedule to the decision of 6 March 2001, takes effect from and including the same date, 23 August 1999. The supersession is on the ground of relevant change of circumstances, ie the ceasing of receipt of DLA after 26 August 1998 (Decisions and Appeals Regulations, regulation 6(2)(a)(i)) and takes effect from the date of the change (regulation 7(2)(c)(iii)). The superseding decision is that the claimant was entitled to the amounts of income support shown as payable in the schedule from and including 31 August 1998 down to 22 August 1999, after which the revised decision above takes effect. As a result of those decisions, the total amount of £3,863.92 was overpaid to the claimant in the period from 31 August 1998 to 16 July 2000.
24. However, it is necessary to recalculate how much of that overpayment was incurred in consequence of the claimant's failure to disclose on or before 27 August 1998 and on a continuing basis the material fact that he had ceased, or was going to cease, to receive the middle rate of the care component of DLA. For the reasons given above, there was a breach by the claimant of the first duty under regulation 32(1) of the Claims and Payments Regulations and there was something for him to disclose of which the income support office was not already aware. Accordingly, the conditions of section 71 are met. However, I conclude that the failure to disclose had come to an end by 2 July 2000, so that the overpayment from 3 July 2000 onwards was not a consequence of the claimant's failure to disclose. Nor was the amount of £2.12 overpaid in the four weeks from 10 April 2000 to 7 May 2000 in excess of the amount of SDP. Subtracting the final two weeks of overpayment at £40.20 each and the £2.12 from the total overpayment leaves £3781.40. My decision is that that amount is recoverable from the claimant under section 71 of the Social Security Administration Act 1992.

(Signed) J Mesher

Commissioner

Date: 24 August 2006