UK Social Security and Child Support Commissioners' Decisions

[2007] UKSSCSC CIB_912_2007 (03 August 2007)

CIB/912/2007

DECISION OF THE SOCIAL SECURITY COMMISSIONER

A summary of the Commissioner's decision

1. This appeal to the Social Security Commissioner succeeds. My decision is that the Darlington appeal tribunal erred in law in its decision of 29 November 2006. I must therefore set the tribunal's decision aside.
2. This is, however, not the end of the matter. In my judgment I am not in a position to decide the merits of the claimant's appeal from the original decision of the Secretary of State concerning the alleged overpayment of incapacity benefit. It follows that I have no option but to send this appeal back for rehearing by a different tribunal. This rehearing is subject to my further directions at paragraph 54 below.
3. I should obviously make it clear that the fact that the claimant's appeal to the Commissioner has succeeded should not be taken as any indication as to the outcome of the rehearing by the new tribunal. The new tribunal will need to form its own view of the merits of the case and in particular make its own findings of fact and then reach a decision in accordance with the relevant law.

The substance of this appeal to the Commissioner

4. In short, the substance of this appeal is as follows. The Darlington appeal tribunal heard the claimant's appeal against the decision of the Secretary of State dated 18 October 2005. The Secretary of State's decision was that the claimant had been overpaid a total of £9,587.07 in incapacity benefit between 16 June 2003 and 22 June 2005, which was recoverable from him on the basis that he had failed to disclose the material fact that he was earning in excess of the permitted work lower limit as from the earlier of those two dates. The tribunal dismissed the claimant's appeal and confirmed the Secretary of State's decision.

The permitted work rules and the background to this appeal

5. At this point the background to the appeal needs to be set out. For some years there have been rules in place that have allowed recipients of incapacity benefit to undertake a certain limited amount of work without it affecting their entitlement to benefit. The name and nature of these rules have varied over the years. In April 2002 the old therapeutic work rules were superseded by the permitted work rules. The relevant rules are contained in regulations 16 and 17 of the Social Security (Incapacity for Work) (General) Regulations 1995 (SI 1995 No. 311). I should add here that the rules in place at the material time for these proceedings have since been further amended as from 10 April 2006 by the Social Security (Incapacity for Work) Amendment Regulations 2006 (SI 2006/757), which have substituted entirely new versions of regulations 16 and 17 with effect from that date. The provisions in place since April 2006 are in certain respects both simpler and more permissive – reflecting the official policy emphasis on welfare-to-work strategies – than those in force previously.
6. In summary, and in outline only, the rules in force as from 8 April 2002 allowed incapacity benefit recipients to undertake permitted work in four types of situation. The first was where the claimant did not earn more than £20 a week (the permitted work lower limit); such work could be undertaken indefinitely. The second, again for an unlimited period, was where the claimant was in "supported work" and did not earn more than a higher weekly figure, then £66 a week (now raised to £86 a week). The third was limited (at that time) to a period of up to 26 weeks and providing that the permitted work higher limit was not exceeded and the average working hours did not exceed 16 a week. In certain circumstances this could be extended immediately for one further period of 26 weeks. The last was where the work was part of a supervised treatment programme, again so long as the earnings did not exceed the higher threshold.

The chronology of events in this appeal

7. For present purposes the material facts in this appeal are as follows. The claimant, a man now aged 57, has been in receipt of invalidity benefit since 1993 (which later became incapacity benefit in 1995 – the mechanics of that process can be ignored for the moment). The stated incapacity, at least at the outset, was joint pains. On 17 June 2002, so after the April 2002 changes came into force, the claimant completed a Therapeutic Work form declaring that from that date he was working as a handyman in a residential care home for on average of 15 hours a week with earnings of £61.50 a week (docs 1-2).
8. The Department wrote to the claimant on 19 June 2002 (docs 3-4) confirming that he fell under the permitted work rules and in particular the third variant described above, namely the permitted work higher limit rule (the upper limit at that stage was £66 a week). The letter indicated that this dispensation lasted until 15 December 2002, but might then be renewed for a further 26 weeks.
9. On 11 December 2002 the residential care home manager, and the claimant's employer, returned a form to the Department, confirming the claimant's employment details and asking that the claimant be able to start supported permitted work (docs 5-8). The Department replied on 17 December 2002 to the effect that an employer could not be a Job Broker or Advisor in these circumstances (docs 9-12). The claimant was asked whether he wished (i) still to apply for an extension; (ii) to reduce his earnings to the £20 level; or (iii) to give up the employment.
10. On 23 December 2002 the claimant returned a PW6 form to the Department (docs 13-14). He indicated that he wished to start Supported Permitted Work. His current permitted work was duly extended for a further six months to 15 June 2003 (docs 15-16).
11. The Department then sent him a PW7 form in June 2003 outlining his various options at the expiry of the current arrangements (docs 17-20). The claimant indicated on 13 June 2003 that he would be reducing his earnings to £20 or less as from 16 June 2003. The claimant confirmed this on a PW1 form, which was completed on 24 June 2003 – this stated that from 16 June he was working 4 hours a week for £16.80 a week (doc 23).
12. In response, on 2 July 2003 the Department sent the claimant a standard two-page letter DL/PW1. The letter comprised four parts. The first part read as follows:

"About your work

Thank you for telling us about your work. From the information you have given us I am pleased to tell you that the work falls within the permitted work rules.

You told us that you started work on 16.6.03.

This means that you can work and earn no more than £20.00 a week for an unlimited period, without your Incapacity Benefit being affected.

You may be able to increase your hours to less than 16 and earn no more than £67.50 a week, but you should tell us about this before you change your hours or earnings."

13. The next section, of similar length, was headed "How your earnings may affect your benefit" and gave very general advice about the impact on various benefits and liability for income tax. The third section of the letter read in full as follows:

"Changes you must tell us about

You must tell us if:-

your earnings change

your hours of work increase

you change employer

you stop work"

14. The letter then closed with three short paragraphs headed "More Information", giving advice about how to obtain further details. The matter seems to have rested there for two years until the summer of 2005 – no doubt in part at least because so far as the Department was concerned the claimant was now covered by the unlimited period permitted work rules (the first scenario mentioned in paragraph 6 above), and so there was certainly no obvious need for a six monthly check as had been the case previously.
15. In June 2005 the Department sent the claimant a PW8 enquiry form about his work (docs 28-29). The claimant stated that he was still working as a handyman for the residential care home and that he worked 15 hours a week for £74.56 a week. He enclosed copies of his last two payslips by way of confirmation (docs 30-31).
16. On 27 June 2005, in response to a further enquiry, the claimant reported that his hours had increased to 15 a week and his wage to £74.56 as from 2 May 2005 (doc 32). However, in an apparent contradiction of this he stated in a formal statement to the Department on 13 July 2005 (docs 33-34) that "I have always worked for 15 hours a week since starting the permitted work" (which was said to be from 2003). He also stated that the care home manager (who "is very knowledgeable when dealing with benefit queries") had advised him that he could continue working indefinitely without it affecting his incapacity benefit. He had not sought any further advice and indicated that he would now be reducing his hours and hence his wages to £20 a week or below.
17. The claimant's employer subsequently confirmed (docs 35-36) that the claimant's hours had been 15 a week since June 2003 and that his wages were £61.50 a week at that time and had risen by small increments steadily to £74.56 a week in August 2005.

The supersession decision

18. On 8 September 2005 a decision maker made a supersession decision, superseding the invalidity benefit award of 29 January 1993 and the incapacity benefit award of 13 April 2005 on the basis of a change in circumstances (doc 37). This was said to be that although the claimant had worked in the permitted work higher limit category from 17 June 2002 to 15 June 2003, since 16 June 2003 he had been allowed to earn no more than £20 a week but had in fact earned more than that. He was therefore treated as capable of work as from 16 June 2003 and so not entitled to incapacity benefit.

The overpayment decision

19. This supersession decision in turn prompted an overpayment decision on 18 October 2005 by a different decision maker (docs 38-40). This was to the effect that there had been an overpayment of incapacity benefit amounting to £9,587.07 for the period from 16 June 2003 to 22 June 2005. A small amount representing a week or so in benefit (£93.84) was said to be recoverable for the period from 16 to 22 June 2003 owing to the direct credit transfer arrangements in place. The bulk of the alleged overpayment (£9,493.23) related to the balance of the period of two years or so. This was said to be recoverable (under section 71 of the Social Security Administration Act 1992) because the claimant had failed to disclose the material fact that he had earned in excess of the permitted work limit. The Department's debt management branch then wrote to the claimant on 2 November 2005 asking for the sum of £9,587.07 to be repaid.

The claimant's appeal to the tribunal

20. The claimant appealed against the overpayment decision (docs 44-45), stating that he was under the impression that he was able to continue working throughout the period in question so long as his weekly earnings were below the higher weekly limit. His employer had, he said, advised him that this was possible. His employer also provided a letter in support (docs 46-47), explaining that his understanding that such work was within the permitted work rules as his organisation contracted directly with the local authority and the NHS for the provision of care services and the work was supervised and community based. However, a decision maker later declined to change the overpayment decision (doc 48).
21. The claimant sought advice and his representative prepared a submission which, amongst other points, challenged the validity of the supersession decision and in the alternative argued that the claimant was engaged in supported permitted work (doc 49). An appeal tribunal quite properly adjourned the matter on 1 September 2006 for the Secretary of State to produce a supplementary submission addressing these issues (docs 50-51). That further submission was duly produced (docs 52-57) and the matter re-listed before the Darlington tribunal on 29 November 2006. The claimant and his representative attended and there is a short note of the proceedings (docs 58-59). As is regrettably so often the case nowadays, no presenting officer attended the hearing on behalf of the Department, notwithstanding the substantial sum of allegedly overpaid benefit at issue.

The tribunal's decision to dismiss the claimant's appeal

22. The tribunal decided to dismiss the claimant's appeal and to confirm the Secretary of State's decision that there was a recoverable overpayment in the sum of £9,587.07 (doc 60). The tribunal subsequently issued a Statement of Reasons for its decision (docs 62-63). This recorded that the only live issue was whether the claimant had been engaged in supported permitted work (as had been also noted on the Record of Proceedings). There had, it seems, been a short adjournment in the course of the hearing so that the claimant and his representative could consider whether any further oral submissions were to be made on the supersession point. Apparently no other facts were challenged and no further submissions made.
23. The key and final paragraph in the tribunal's Statement of Reasons read as follows:

"9. The history of the claim is set out in the papers. It is not disputed. It need not be repeated here. The tribunal find as a fact that the appellant misrepresented his earnings. The evidence which supports our finding of fact is contained in the two submissions of the Secretary of State, which we accepted. There was no challenge to the factual information in respect of the information which the appellant had provided or neglected to provide to the Secretary of State. Consequently the Tribunal was satisfied that the appellant had failed to disclose a material fact that he was earning in excess of the permitted lower limit from 16 June 2003 on that date. As a consequence the appellant had received an overpayment of incapacity benefit amounting to £9,587.07 and that sum which had been paid would not have been paid but for the appellant's failure to disclose. That sum is therefore recoverable from the appellant. The appeal was dismissed."

The composition of the tribunal

24. For completeness and for the record I start with a point that has not been discussed by either the claimant's representative or the representative of the Secretary of State in the conduct of this appeal to the Commissioner. The Record of Proceedings states that the tribunal on 29 November 2006 comprised a lawyer member and a doctor member (doc 58). The doctor's name has not been crossed out and there is no indication in the chairman's notes that the doctor stood down. The Statement of Reasons also records that "The evidence which supports our finding of fact is contained in the two submissions of the Secretary of State, which we accepted". Unless the chairman was using the royal "we", this implies that the case was indeed heard and determined by a two-member tribunal. Against this, however, the Statement of Reasons is headed with the legal chairman's name alone.
25. The point, of course, is that the correct composition of appeal tribunals is carefully regulated by legislation. The general rule is that incapacity benefit appeals involving the personal capability assessment are dealt with by a two-member tribunal (a lawyer and a doctor) while incapacity benefit appeals on other issues (e.g. late claims) are determined by a lawyer member sitting alone. The precise rule is set out in regulation 36(2)(a) of the Social Security and Child Support (Decisions and Appeals) Regulations 1999 (SI 1999 No 991). This provides that a tribunal shall consist of a legally qualified panel member and one medically qualified panel member where:

"(i) the issue, or one of the issues, raised on the appeal is whether the personal capability assessment is satisfied, or

(ii) the appeal is made under section 11(1)(b)" [of the Social Security (Recovery of Benefits) Act 1997].

26. There is no suggestion in this case that either situation set out in scenarios (i) or (ii) above applied in this appeal (nor that regulation 36(2)(b) was relevant). It followed that as a matter of law the appeal should have been heard by a lawyer member sitting alone. The complexities which arose in Deputy Commissioner's decision CIB/3236/2006 do not arise here. As I have indicated, the documentary evidence is ambiguous on this point. I also bear in mind that a busy chairman and/or clerk will sometimes neglect to cross out a tribunal member or party's name in the paperwork when they do not attend. The claimant and his representative, who were both present, will doubtless remember the composition of the tribunal. If it were necessary to ask them at this late stage, I would put enquiries in train. However, this appeal can be disposed of on other grounds and so the point need not be explored further. All I need say is that if (and I emphasise if) it so happens that the appeal was in fact heard by a two-member tribunal on 29 November 2006, that is a further ground for setting aside the tribunal's decision.

The claimant's grounds of appeal to the Commissioner

27. The claimant's representative details three grounds of appeal before the Commissioner (doc 67). In summary, she argues that the tribunal erred in law by (1) failing to address the supersession point in the submission; (2) failing to make it clear whether the overpayment was found to be recoverable on the basis of misrepresentation or failure to disclose; and (3) failing to identify the nature of the duty to disclose and in particular whether it arose under regulation 32(1), (1A) or (1B) of the Social Security (Claims and Payments) Regulations 1987 (SI 1987 No 1968). She does not in terms challenge the tribunal's (implicit) conclusion that the claimant had not been engaged in supported permitted work. That may well have been wise, as it is by no means clear that the claimant's employer (and supervisor) himself fell within the definition of 'a person employed by a public or a local authority or voluntary organisation' (etc) (in regulation 17(1)(iii) and (1E)). A District Chairman granted the claimant leave to appeal to the Commissioner.
28. The Secretary of State's representative now involved in this matter has produced a very helpful and comprehensive submission to the Commissioner, which it is difficult to do justice to within the constraints of this decision (docs 89-94). In terms of disposition, the Secretary of State supports the appeal but invites me to set aside the tribunal decision and substitute my own decision, which he suggests would be on a firmer factual and legal footing but would be essentially to the same effect. Unsurprisingly, the claimant's representative welcomes the former submission but as to the latter argues that a remittal to a fresh tribunal would be a more appropriate outcome (doc 97).

The Commissioner's observations and decisions on those grounds of appeal

29. In summary, I agree broadly with the Secretary of State's representative for the reasons that follow that the tribunal decision was erroneous in point of law and so must be set aside. However, I agree with the claimant's representative, again for the reasons set out below, that a referral back to a differently constituted tribunal is the more appropriate course of action to take. There will therefore have to be a rehearing before a new tribunal.
30. Putting to one side for a moment the rather technical supersession issue, I agree with both representatives that the tribunal erred in law in at least two respects. First, the tribunal failed to make it clear whether the overpayment was recoverable on the grounds of misrepresentation or failure to disclose (or both). The tribunal started off in paragraph 9 of its Statement of Reasons by finding "as a fact that the appellant misrepresented his earnings" but then later in the same paragraph it stated that it "was satisfied that the appellant had failed to disclose a material fact that he was earning in excess of the permitted lower limit from 16 June 2003". In short I agree with the claimant's representative that there is no adequate explanation in the Statement of Reasons enabling the claimant to understand the basis of the alleged recoverable overpayment.
31. If the overpayment is indeed recoverable on the basis of a failure to disclose, then the second error of law, as identified by both representatives, concerns the tribunal's failure to particularise the nature of the duty to disclose under regulation 32. The tribunal in paragraph 9 of its Statement of Reasons asserts rather than explains this failure to disclose, without addressing the regulation 32 point at all. This is a further error of law.
32. I therefore conclude that the Darlington tribunal's decision of 29 November 2006 was erroneous in point of law and so must be set aside (Social Security Act 1998, section 14(8)). The Secretary of State's representative argues that the facts are sufficiently clearly recorded for me to substitute my own decision for that of the tribunal under section 14(8)(a) of the 1998 Act. I do not consider this to be an appropriate or expedient course of action. In my judgment there remain a number of matters to be resolved and it is best that these are dealt with by the fact-finding tribunal, not least in the light of a recent decision of the Court of Appeal which is discussed further below. I am also conscious of the size of the alleged overpayment in question in this case, so had there been any doubt in my mind I think justice will in any event be better served by a rehearing before a new tribunal.

The supersession point

33. It may assist the new tribunal if I make the following observations by way of general guidance. I do so bearing in mind that the fact-finding and application of the relevant law will ultimately be a matter for the new tribunal. The first issue that arises is whether the overpayment decision was invalid on the basis that the previous superseding decision was itself invalid, as the claimant's representative argues. The normal rule in statute is that a superseding decision takes effect from the date of that decision (Social Security Act 1998, section 10(5) and (6)). There are, however, exceptions to that rule.
34. The original departmental submission to the tribunal was that the decision maker could rely on regulation 7(2)(c)(ii) of the Social Security and Child Support (Decisions and Appeals) Regulations 1999 (SI 1999 No 991). This provision allows a decision maker to supersede from the date of the change of circumstance (here 16 June 2003), rather than from the date of the superseding decision (here 8 September 2005), in relation to "an incapacity benefit decision where there has been an incapacity determination".
35. The Secretary of State's representative now involved in these proceedings argues that regulation 7(2)(c)(ii) does not apply because the decision to be superseded was the 1993 invalidity benefit decision which does not qualify as an incapacity benefit decision (doc 90, paras. 12-13). I agree with this analysis. The Secretary of State's representative goes on to submit (doc 91, paras. 14-18), that the decision maker was still entitled to supersede from the date of the relevant change of circumstance under a different provision, namely regulation 7(2)(c)(iii).
36. In this regard the new tribunal should note that the version of regulation 7(2)(c)(iii) in force at the date of the superseding decision was different to the law as it stands today. This is as a result of amendments made in April 2006 by the Social Security (Miscellaneous Amendments) (No. 2) Regulations 2006 (SI 2006 No. 832). This is most readily evident by comparing the text in the respective editions for 2005 (at page 582) and 2006 (at page 563; see also the commentary at page 574) of Volume 3 of the annotated Social Security Legislation. The effect of that change is discussed in the context of attendance allowance by Mr Commissioner Mesher in CA/2650/2006.

Hooper and the supersession point

37. The tribunal should furthermore note the recent decision of the Court of Appeal in Hooper v Secretary of State for Work and Pensions [2007] EWCA Civ 495, shortly to be reported also as decision R(IB) 4/07. This was a case that also involved a claimant who had been in receipt of invalidity benefit and then (after 1995) incapacity benefit. The Department sought recovery of a substantial overpayment on the basis that the claimant had failed to disclose the material fact that he was working and earning more than £20 a week. For present purposes the important passage is at paragraph 42 of the Court's judgment, where Dyson LJ ruled as follows:

"It follows that, although the tribunal did not consider the Regulation 7(2)(c) issue, if they had done so, they would have been bound to decide that regulation 7(2)(c)(ii) did not apply because the decision being superseded was not an 'incapacity benefit decision' within the meaning of regulation 7A(1) of the 1999 Regulations; and that for the same reason, regulation 7(2)(c)(iii) did apply. They would, therefore, have been bound to dismiss the appeal against the supersession decision."

38. It seems to me that that is very strong authority for the argument put by the Secretary of State's representative on this point in the present appeal. For completeness I should confirm that I agree that the tribunal erred in law in dealing with this point. It relied by implication on regulation 7(2)(c)(ii), as had the decision maker, but that was an incorrect approach. The tribunal compounded the error by not addressing the point made by the claimant's representative in her written submission.
39. This, of course, is not the end of the matter. The new tribunal must then consider whether it is in a position to rectify the ineffective supersession decision made by the original decision maker. In doing so it will apply the principles laid down in the Tribunal of Commissioners' decision R(IB) 2/04 (and especially at paragraphs 72-82). It is entirely a matter for the new tribunal, but it may be thought unlikely that the superseding decision in the present case is completely 'incoherent' in the sense used in decision CIS/362/2002.
40. On the assumption that the tribunal finds that it is able to rectify the defective supersession decision, and thereby the procedural validity of the overpayment decision, the tribunal will then have to address the substantive overpayments issue. In this context I draw the tribunal's attention to the submissions by the Secretary of State's representative in relation to both misrepresentation (docs 91-92, paras. 19-22) and failure to disclose (docs 92-93, paras. 23-33), along with any further submissions that the claimant's representative wishes to make on each of those alternative heads of recovery.

The failure to disclose issue and Hooper

41. I have no further comments to make on the misrepresentation point at this juncture. This is an area with which the tribunal will undoubtedly be familiar with the applicable law. However, some further observations are due on the failure to disclose issue given the circumstances of this case. The Secretary of State's representative very fairly notes in relation to the facts of this case that he "had some difficulty in reaching the conclusion that there was a failure to disclose" (doc 92, para. 24). The tribunal will therefore wish to scrutinise the arguments now advanced on behalf of the Secretary of State with particular care.
42. In this context I should again draw the attention of the new tribunal to the Court of Appeal's decision in Hooper v Secretary of State for Work and Pensions [2007] EWCA Civ 495. In headline terms the Court decided – perhaps counter-intuitively to the layperson – that the word "should" does not necessarily mean "must". However, in doing so the Court followed the approach taken by Mr Commissioner Mesher in R(IB) 4/05 and by Mr Commissioner Howell QC in CIB/1985/2004.
43. The facts of Hooper are similar but not entirely on all fours with the present case. The similarities include the facts that both cases concerned long-term recipients of invalidity benefit who had subsequently transferred to incapacity benefit and from whom the Department was seeking to recover a substantial overpayment based on an alleged failure to disclose work (which was found not to be exempt work). In Hooper (and indeed the earlier Commissioners' decisions relied on by the Court of Appeal), however, the issue of whether there had been a failure to disclose revolved around the contents of a factsheet sent to all incapacity benefit claimants in March or April of 2002, which set out the new permitted work rules. In the present case there is no suggestion that the claimant received that factsheet – and, of course, he first started his handyman job in June 2002.
44. Dyson LJ in the Court of Appeal's decision in Hooper (at paragraph 4) explained the important parts of the factsheet as follows:

"After describing what work would be permitted, the document contains a section headed 'how does permitted work affect my benefit?' It states that 'permitted work will not affect your incapacity benefit' and then:

'You will no longer need to get a doctor to agree that the work will help your medical condition, but you should tell the office that deals with your benefit before you start work. You should fill in an application form before you do any permitted work.'"

45. Mr Commissioner Jacobs, in his own decision in Hooper (under file reference CIB/1146/2005 at paragraph 7)), concluded that this passage in the factsheet imposed a duty on the claimant to report the fact that he was going to start work: "I read that passage as containing an instruction to the claimant to report that he was going to start work. The word 'should' in both places is not the most mandatory term that could have been used, but it is commonly used as a polite way of wording an instruction and that is how I read it."
46. The Court of Appeal, allowing the claimant's appeal on this point, disagreed with Mr Commissioner Jacobs. At paragraphs 53 and 54 of its judgment the Court of Appeal cited extensively from the decisions of Mr Commissioner Mesher in R(IB) 4/05 and of Mr Commissioner Howell QC in CIB/1985/2004. In terms of guidance to tribunals and decision-makers, the most important passage in the judgment of Dyson LJ is to be found at paragraphs 56 and 57:

56. I agree with the reasoning of both of these commissioners. Read in the context of the factsheet as a whole, I do not consider that the words "you should tell the office… before you start work" and "you should fill in an application form before you do any permitted work" are the language of clear and unambiguous mandatory requirement. The consequences for a claimant of not complying with a requirement in accordance with regulation 32(1) can be very serious. That is why in my view, if the Secretary of State wishes to impose a requirement on claimants within the meaning of regulation 32(1), it is incumbent on him to make it absolutely clear that this is what he is doing. There should be no room for doubt in the mind of a sensible layperson as to whether the SSWP is imposing a mandatory requirement or not.

57. Mr Commissioner Jacobs said that the word "should" in the factsheet was a "polite way of wording an instruction". There may be contexts where the dictates of politeness are such that "should" means "must". Even in a social context, "should" may not mean "must". As Thomas LJ pointed out in argument, "you should go to the doctor" does not mean the same as "you must go to the doctor". The former is more the language of "you would be well advised to go to the doctor". The latter is an instruction. But there is no reason why the Secretary of State should have felt inhibited from using the clear and unambiguous word "must" in the present context. The context is not one which demanded politeness at the expense of clarity.

47. In the light of those observations, the new tribunal will need to consider carefully how far, if at all, the decision in Hooper is applicable in the circumstances of the present case. I note again that there is no suggestion in this case that the claimant received the factsheet that was the subject matter of the Court of Appeal decision. That factsheet was necessarily in the nature of general information to all claimants. In the present case, however, the claimant received a series of official forms and letters directed to his particular circumstances. There is no suggestion, for example, that he did not receive the letter of 2 July 2003 at docs 26-27. There is an argument that this letter might be seen as somewhat equivocal in its terms. The first paragraph on the first page of the letter, extracted at paragraph 12 above, does appear to be similar in content and tone to that of the factsheet in Hooper. Immediately after that opening paragraph is the second paragraph which opens as follows:

"How your earnings may affect your benefit

Permitted work will not affect your Incapacity benefit…"

48. On the other hand, over the page, on the second page of that letter, is the third paragraph referred to above (at paragraph 13), which is on the face of it mandatory in nature as it uses "must" rather than "should". The tribunal will doubtless note the comment of Dyson LJ in Hooper (at paragraph 56) that "There should be no room for doubt in the mind of a sensible layperson as to whether the SSWP [Secretary of State for Work and Pensions] is imposing a mandatory requirement or not." To put it another way, taking the letter as whole, the tribunal will need to be satisfied that disclosure was required rather than merely advisable.

Back to the misrepresentation issue

49. However, the letter may not be the only relevant factor. I also note the comment by the Secretary of State's representative that the claimant in the present case was paid by order book until August 2004 (doc 91, para. 21). I also accept, as the claimant's representative points out (doc 97), that there is no copy of the order book instructions in the present appeal bundle. It is important to note that the Secretary of State's representative, in the conclusion to his submission to the Commissioner, puts the case for the recovery of the bulk of the overpayment (leaving aside the small sum relating to direct credit transfer arrangements) on the basis of misrepresentation alone, and not failure to disclose. Obviously this is different to how the case was put to the tribunal.

The possible relevance of regulation 17(1D) and CIS/3605/2005

50. There is one final matter that should be mentioned. This point may be relevant to the period covered by, and so the amount of, the overpayment that is said to be recoverable. I explained above at paragraph 6 that under the permitted work rules in force from April 2002 a claimant could work initially for a period of up to 26 weeks, providing the permitted work higher limit was not exceeded and the average working hours did not exceed 16 a week. I also mentioned that in certain circumstances this could be extended immediately for one further period of 26 weeks, as indeed happened here. What I did not mention at that stage was that the rules also provided thereafter for a gap period of 52 weeks, during which a claimant either did no work or worked within the lower limit rules. After the expiry of the gap period of 52 weeks, then a claimant could recommence work within the higher limit rules, providing he had the support of e.g. a job broker or adviser and there was evidence that such work would improve his capacity for full-time work. This further extension period could be for 52 weeks. The relevant provision at the time was regulation 17(1D) of the 1995 Regulations.
51. This provision may be significant for the following reason. The Department here is effectively saying that, the claimant having exhausted his back-to-back successive 26 weeks periods of permitted work between June 2002 and June 2003, the entire overpayment of incapacity benefit for the period of some two years from June 2003 is recoverable from the claimant. An argument to the contrary might run as follows. If the claimant had followed the correct procedures, he could have worked for £20 for the gap period of 52 weeks from June 2003, or not worked at all, and then entirely properly restarted working within the higher limit rules for a further 52-week extension period under regulation 17(1D) as from June 2004 (using broad rather than precise dates).
52. In this context I draw the parties' attention to the decision of Mr Commissioner Levenson in CIS/3605/2005. That was, of course, a case involving recovery of income support, not incapacity benefit, and different principles may apply (see e g Social Security (Payments on Account etc) Regulations 1988 (SI 1988 No. 664), regulation 13). However, at paragraph 12 Mr Commissioner Levenson observed as follows:

"Section 71(1) limits recoverability to those payments which would not have been made but for the misrepresentation of failure to disclose. This means that, in the circumstances which arose in the present case, the tribunal was quite right (and, indeed, obliged) to find that the Secretary of State was entitled to recover a lesser amount than that which the uncorrected the entitlement decision indicated might be recoverable."

53. I considered whether it would be helpful to have submissions on this point before resolving this appeal to the Commissioner. However, in my view that would now serve little useful purpose, as the matter must go back to a tribunal in any event. I therefore deal with it in the context of my directions below.

The decision of the Commissioner and directions to the Secretary of State and the Tribunals Service

54. My decision is therefore as follows. The claimant's appeal to the Commissioner succeeds. The decision of the Darlington appeal tribunal on 29 November 2006 is erroneous in point of law. I must therefore set the tribunal's decision aside. It is neither appropriate nor expedient for me to make the decision the tribunal should have made, and so determine the claimant's appeal against the decision of the Secretary of State. I therefore remit the claimant's appeal against that decision to a fresh tribunal for rehearing (Social Security Act 1998, section 14(8)(b)). I do so with the following directions, which are subject to any further directions as issued by a District Chairman in the Tribunals Service for the better conduct of this appeal:

(1) The Secretary of State should prepare a supplementary submission to the new tribunal. This supplementary submission should cover the following further points, along with any other matters which are considered to be material:

(i) whether the Secretary of State stands by the submission to the Commissioner at doc 93 para 35 that the alleged overpayment in this case is recoverable solely on the ground of misrepresentation, or whether the Secretary of State is still also alleging a failure to disclose;

(ii) if the Secretary of State is also alleging a failure to disclose, the supplementary submission should contain the full text of regulation 32 of the Social Security (Claims and Payments) Regulations 1987 (SI 1987 No 1968) as in force at the relevant time, along with the full decision in Hooper v Secretary of State for Work and Pensions [2007] EWCA Civ 495, shortly to be reported as decision R(IB) 4/07;

(iii) if the Secretary of State is relying in whole or in part on misrepresentation as a ground for recovery, then copies of the relevant order book declarations and instructions should be produced;

(iv) whether the Secretary of State is continuing to seek recovery for the entire period in question, bearing in mind the possible argument relating to regulation 17(1D) and CIS/3605/2005, raised at paragraphs 50-52 above;

(v) in any event, the supplementary submission should also contain the full text of 16 and 17 of the Social Security (Incapacity for Work) (General) Regulations 1995 (SI 1995 No. 311) and regulation 7 of the Social Security and Child Support (Decisions and Appeals) Regulations 1999 (SI 1999 No 991) as they applied at all material times.

(2) The Tribunals Service should arrange for the claimant's appeal to be reheard by a differently constituted appeal tribunal and in accordance with such further directions as a District Chairman may issue.

(signed on the original) N J Wikeley

Deputy Commissioner

3 August 2007