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[2008] UKSSCSC CDLA_1461_2008 (07 October 2008)

DECISION OF THE SOCIAL SECURITY COMMISSIONER

The claimant's appeal to the Commissioner is allowed. The decision of the East Ham appeal tribunal dated 26 July 2007 is erroneous in point of law, for the reasons explained below, and I set it aside. The case is, subject to any action taken by the Secretary of State as mentioned in paragraphs 19 to 21 below, referred to a differently constituted appeal tribunal for determination in accordance with the directions given in paragraphs 22 to 24 below (Social Security Act 1998, section 14(8)(b)). The Secretary of State is requested to consider the matters raised in paragraphs 19 to 21 below with the minimum of delay, so as to be able to inform the clerk to the appeal tribunals of the outcome before arrangements for a rehearing have reached any advanced stage.

The claimant's appeal to the Commissioner is supported on behalf of the Secretary of State. In view of the terms of that support my decision can be relatively brief, although there are some rather technical questions of law involved.

The claimant was, by a decision apparently dated 9 August 2004, awarded the higher rate of the mobility component of disability living allowance (DLA) and the middle rate of the care component for the period from 5 May 2004 to 4 May 2006. The files relating to the original and the renewal claim, with the claim forms, have been lost. In August 2006 the Overseas Department of the Pensions Service contacted the Disability and Carers Unit with information that the claimant was living in Cyprus and had made a successful claim for Cypriot invalidity pension from an address there. I do not need to go through the evidence produced on either side (which included evidence from the claimant that she and her husband had tenancies of houses in London in the period in question, that she had numerous hospital appointments here throughout and an explanation of the periods and reasons why she went to Cyprus). On the other hand, there was evidence from the Cypriot authorities of her having worked there and having a social security contribution record as an employed person from 2001 to February 2005.

On 22 November 2006 a decision-maker revised the decisions of 9 August 2004 and 22 March 2006 and gave the decision that the claimant was not entitled to DLA from and including 5 May 2004 because the conditions relating to residence in Great Britain were not satisfied. The particular condition referred to was that a claimant is ordinarily resident in Great Britain, as well as being present or treated as present here (Social Security (Disability Living Allowance) Regulations 1991, regulation 2(1)(a)(i)). There was an express reference to regulation 3 of the Social Security and Child Support (Decisions and Appeals) Regulations 1999, but not to any specific ground of revision.

On 24 November 2006 a different decision-maker gave the decision that as a result of the decision dated 22 November 2006 an overpayment of DLA for the period from 5 May 2004 to 22 August 2006 amounting to £9,864.70 had been made which was recoverable from the claimant under section 71 of the Social Security Administration Act 1992 because she had failed to disclose the material fact that she was not ordinarily resident in Great Britain.

The claimant appealed. She attended the hearing on 26 July 2007, following an adjournment on 30 May 2007, when detailed directions were given for her to produce further documentary evidence in support of her case about the basis on which she had been in Cyprus. Some of that was produced in advance, some only on 26 July 2007, and some not at all. I shall come back briefly to the significance given by the appeal tribunal to the failure of the claimant and her representative, from the welfare benefits team of the London Borough of Redbridge, to produce that evidence, especially in the context of the failure of the Department to send a presenting officer to the hearing, as also directed on 30 May 2007.

The appeal tribunal dismissed the appeal. It upheld what it described as the supersession carried out by the Secretary of State on 22 November 2006, which it said had been on the ground of a change of circumstances. It concluded that the claimant was not entitled to DLA from and including 5 May 2004 because she was not ordinarily resident in Great Britain and that the resulting overpayment was recoverable from her. The statement of reasons contained a detailed analysis of the evidence, which I do not need to go through. The conclusion was that the claimant was more likely to have been living in Cyprus than in Great Britain. Some weight was put on the failure of the claimant to produce evidence of the terms of the Cypriot incapacity benefit legislation and in particular whether residence in Cyprus was a condition of entitlement.

The claimant now appeals against the appeal tribunal's decision with my leave. When granting leave, I said this:

"The appeal tribunal appears to have approached the case as one in which the burden of proving that she was ordinarily resident in Great Britain lay on the claimant, whereas in the case of a revision or a supersession to the detriment of the claimant the burden was on the Secretary of State to show that a ground of revision or supersession existed and that the revised decision should be to the claimant's detriment.

There is a real problem about a ground for revision, rather than supersession, under the form of regulation 3(5) of the Social Security and Child Support (Decisions and Appeals) Regulations 1999 in force prior to 24 September 2007. The ordinary provision on ignorance or mistake of material fact that made the decision more advantageous to the claimant than otherwise (regulation 3(5)(b)) did not apply to disability [benefit] decisions. The decisions dated 9 August 2004 and 22 March 2006 awarding the claimant disability living allowance (DLA) were disability [benefit] decisions, because they embodied disability determinations (that the claimant satisfied the medical conditions of entitlement to DLA). But regulation 3(5)(c) applied in relation to disability [benefit] decisions only to ignorance or mistake of a material fact to do with a disability determination. In the present case the ignorance relied on was to do with the claimant's presence in and ordinary residence in Great Britain or Cyprus. There therefore appears to be no ground of revision available on 22 November 2006 based on ignorance or mistake of material fact when the two awarding decisions were made. The ground of supersession under regulation 6(2)(b) would be made out, but in that case there would appear to be no provision allowing the superseding decision to take effect earlier than the date of the decision (ie 22 November 2006) under section 10(5) of the Social Security Act 1998.

Further, the appeal tribunal appears to have adopted the approach that, if the claimant was ordinarily resident in Cyprus, she could not be ordinarily resident in Great Britain, whereas it is possible in law for a person to be ordinarily resident in two territories at the same time.

The claimant's appeal was plainly directed both against the decisions of 9 August 2004 and 22 March 2006 as purportedly revised on 22 November 2006 and against the overpayment recoverability decision dated 24 November 2006. The appeal tribunal correctly mentioned the recoverability of the overpayment in the first paragraph of the statement of reasons, in which its decision was set out (although the decision notice that would have been issued on 26 July 2007 does not appear to be in the appeal tribunals' file). However, the Secretary of State's written submission to the appeal tribunal had said nothing at all about the overpayment recoverability decision or about section 71 of the Social Security Administration Act 1992, in which the conditions for recoverability are set out. The claimant may therefore, even though represented through a local authority welfare benefits team, not have had a fair opportunity to meet the case against her. The appeal tribunal made no specific findings of fact relevant to the question of recoverability, but appears to have assumed that if there was an overpayment, it would have to be recoverable. That may have been an error of law. There might be a question just what material facts the claimant had been instructed to report or could reasonably have been expected to realise might affect her entitlement to DLA. Of course, if entitlement to DLA could not be removed for any dates prior to 22 November 2006, there would be no overpayment."

Regulation 3(5)(b) and (c) of the Decisions and Appeals Regulations, as in force before the significant amendment with effect from 24 September 2007, provided (omitting the references to incapacity benefit decisions):

"(5) A decision of the Secretary of State under section 8 or 10 [of the Social Security Act 1998]--

...

(b) except in the case of a disability benefit decision ..., where the decision was made in ignorance of, or was based on a mistake as to, some material fact and as a result of that ignorance of or mistake as to that fact, the decision was more advantageous to the claimant than it would otherwise have been but for that ignorance or mistake;

(c) where the decision is a disability benefit decision ..., which was made in ignorance of, or was based on a mistake as to, some material fact in relation to a disability determination embodied in or necessary to the disability benefit decision ... and

(i) as a result of that ignorance of or mistake as to that fact the decision was more advantageous to the claimant than it would otherwise have been but for that ignorance or mistake and,

(ii) the Secretary of State is satisfied that at the time the decision was made the claimant or payee knew or could reasonably have been expected to know of the fact in question and that it was relevant to the decision,

may be revised at any time by the Secretary of State."

Regulation 7A(1) defines a disability benefit determination as a decision to award a relevant benefit (which includes DLA: Social Security Act 1998, sections 39(1) and 8(3)) embodied in which or necessary to which is a disability determination. It also defines "disability determination" in DLA cases as a determination "whether a person satisfies any of the conditions in section 64, 72(1) or 73(1) to (3), as the case may be, of the [Social Security Contributions and Benefits Act 1992]". The condition of satisfying prescribed conditions as to residence and presence in Great Britain is in section 71(6). The amendment in September 2007 re-ordered regulation 3(5) and added a ground of revision of disability benefit decisions for ignorance or mistake of material fact not involving the disability determination, where the decision was more advantageous to the claimant than it should have been. The general rule, under section 9(3) of the Social Security Act 1998, is that a revision takes effect from the date on which the decision revised took effect.

Under regulation 6(2)(b) of the Decisions and Appeals Regulations there is a general ground of supersession of any decision under section 8 or 10 for ignorance or mistake of material fact. However, as noted above, there is nothing in those Regulations (in particular, regulation 7) to displace the general rule in section 10(5) that a superseding decision takes effect from the date on which it was made or, where applicable, the date on which an application to supersede was made. Regulation 6(2)(a) allows supersession where there has been a relevant change of circumstances since the decision in question was made. Regulation 7(2)(c) has, since a significant amendment with effect from 6 April 2006 to close a hole similar to that not closed for revision until September 2007, provided that a supersession of a disability benefit decision for a relevant change of circumstances not in relation to a disability determination takes effect from the date of the change of circumstances.

The appeal to the Commissioner was supported in the submission dated 13 June 2008 on behalf of the Secretary of State. It was agreed that the appeal tribunal went wrong in regarding a finding that the claimant was residing in Cyprus as conclusive of the question whether she was ordinarily resident in Great Britain, by failing to appreciate that it is possible in law for a person to be ordinarily resident in two countries simultaneously (R(P) 1/01). It was also agreed that, for the reasons given above, if it were found that the claimant did not satisfy the residency and presence conditions of DLA at the outset of each award, the award could only have been brought to an end by supersession with effect from the date on which the superseding decision was made. It was submitted that I should remit the case to a new appeal tribunal to decide whether there were grounds for superseding the awards of DLA (possibly after waiting for the decisions in the test cases before the Commissioner on the effect of the ruling of the European Court of Justice in Commission of the European Communities v European Parliament and Council, Case C-299/05, 18 October 2007, on the exportability of DLA, or perhaps only the care component, to other Member States of the Union), if so whether any overpayment had been made and whether it was recoverable from the claimant. In reply, the claimant had no further comments, having earlier put in additional arguments about her ordinary residence in Great Britain.

It is plain from the above that the decision of the appeal tribunal of 26 July 2007 must be set aside as erroneous in point of law. Neither the appeal tribunal nor the decision-maker of 22 November 2006 gave any proper consideration to the rules on the effective dates of revisions and supersessions. The appeal tribunal proceeded as if it was concerned with a case of supersession for relevant change of circumstances and even stated (wrongly) that that was the nature of the Secretary of State's decision of 22 November 2006. If that had been the case, there would have been no difficulty, after the April 2006 amendment to regulation 7(2) of the Decisions and Appeals Regulations, in giving effect to the superseding decision from the date of the change of circumstances. However, that ground of supersession could not have supported taking away entitlement from 5 May 2004, in relation to the decision of 9 August 2004, or from 5 May 2006, in relation to the decision of 22 March 2006. And the appeal tribunal's findings of fact and conclusions were that the claimant had not been ordinarily resident in Great Britain for any of the period under consideration. Those findings and conclusions could not support the existence of a relevant change of circumstances as a ground of supersession.

The appeal tribunal ought first to have considered whether the decisions of 9 August 2004 and 22 March 2006 could have been revised, rather than superseded. That is in general the right order, because in almost all cases a decision cannot be superseded if it can be revised (Decisions and Appeals Regulations, regulation 6(3)) and because in general a decision can only be altered with effect from its own effective date by revision. And revision was in fact the basis of the Secretary of State's decision of 22 November 2006. However, for the reasons set out in paragraph 8 above, there could not on that date have been a revision of the decisions of 9 August 2004 and 22 March 2006 on the ground of ignorance or mistake of material fact. The Secretary of State had rightly not suggested that any other ground of revision might be applicable. At that date, the hole closed with effect from 24 September 2007 was still in existence.

Accordingly, all that the appeal tribunal could have fallen back on, on the assumption that the conclusion that the decisions of 9 August 2004 and 22 March 2006 were given in ignorance of or under a mistake as to a material fact was not legally flawed, was supersession on that ground, under regulation 6(2)(b) of the Decisions and Appeals Regulations. However, those Regulations do not allow a superseding decision on that ground to take effect any earlier than the date of the superseding decision (or of an application for supersession, not relevant in the present case). Thus, the decision of 9 August 2004 could not have been superseded on that ground so as to make any alteration in the claimant's entitlement to DLA for any part of the period from 5 May 2004 to 4 May 2006. The decision of 22 March 2006 could only have been superseded on that ground with effect from 22 November 2006. On that basis, there could have been no overpayment of DLA in the period from 5 May 2004 to 22 August 2006, as the claimant's entitlement for that period could not have been altered.

That is more than sufficient to require the setting aside of the appeal tribunal's decision. I record very briefly in addition that the appeal tribunal also erred in law, as accepted on behalf of the Secretary of State, by regarding the acquisition of ordinary residence in Cyprus as necessarily entailing loss of ordinary residence in Great Britain. I do not need to go into all the other questions of law that might arise (such as whether the Secretary of State could prove a misrepresentation of or failure to disclose a material fact without producing the claim forms or instructions about reporting information and whether ordinary residence is in itself a material fact or a conclusion of law to be drawn from the findings of primary fact). But I mention one particular point in the following two paragraphs.

The appeal tribunal wrongly approached the case as one in which it was for the claimant to prove that she had not ceased to be ordinarily resident in Great Britain. That is shown in the directions given on 30 May 2007 for the claimant to produce a translated copy of the statutory or other regulations to show whether payments of child credits in Cyprus and payment of invalidity pension was governed by any residence qualification. That evidence was said to be necessary to rebut evidence provided by the Cypriot social security institution on forms E001 and E205. That was an extraordinary requirement to impose, even though the claimant had representation from a local authority welfare benefits team and the family apparently had the assistance of an accountant in Cyprus. The need for the further evidence might with more justice have been said to stem from a need to establish the significance or otherwise of partial evidence relied on by the Secretary of State to make out his case. Certainly, in the light of the principles of Kerr v Department for Social Development [2004] UKHL 23, [2004] 1 WLR 1372, appendix to R1/04 (SF), and the obligations as to cooperation between the competent authorities of Member States under Article 84 of Council Regulation (EEC) No 1408/71, it was not proper to draw the adverse inference that the appeal tribunal did from the lack of evidence that the Cypriot legislation did contain a residence requirement. The content of the Cypriot legislation was something that could much more reasonably have been ascertained, and ascertained in an authoritative way, by the Department rather than by the claimant as part of its need to make out its case.

Moreover, it does not look even-handed to penalise the claimant for her failure to carry out an unreasonable requirement while saying nothing about the failure of the Department to send a presenting officer to the hearing on 26 July 2007, as had been specifically directed on 30 May 2007, or to provide any further evidence or submissions in support of its case. Commissioners have grown very tired of pointing out (a) the discourtesy to and lack of proper respect for appeal tribunals shown by such action; (b) the prejudice to the public interest generally if issues that could have dealt with before an appeal tribunal with the assistance of a skilled presenting officer have to be investigated for the first time at the level of the Commissioners; and (c) the short-sightedness of the approach in cases where the Department is seeking to recover substantial amounts of benefit alleged to have been overpaid.

Accordingly, I set aside the decision of the appeal tribunal of 26 July 2007 as erroneous in point of law. If the only issue outstanding were the existence and recoverability of an overpayment of DLA in the period from 5 May 2004 to 22 August 2006, I would have substituted a decision on the claimant's appeals against the two decision revised on 22 November 2006 and the recoverability decision of 24 November 2006. On the case as put before the appeal tribunal of 26 July 2007 by the Secretary of State there was no overpayment that could be made recoverable. However, that is not the only issue. There is also the issue of whether the claimant is properly entitled to DLA from and including 22 November 2006, the earliest date from which her entitlement could be altered on the case as put to the appeal tribunal. That requires examination of whether the Secretary of State has shown on the balance of probabilities after consideration of all the evidence made available that the claimant had ceased to be ordinarily resident in Great Britain, whether or not she had become ordinarily resident in Cyprus. If that was proved, there would then need to be consideration of whether the effect of European Community law, as stated in the ECJ's decision in Case C-299/05 and as to be applied in the test cases currently before the Commissioner, was that ceasing to be ordinarily resident could not prevent continued entitlement to the care component and/or the mobility component of DLA. Further, although the evidence presently available does not seem to point to any particular changes between May 2004 and September 2006 indicating that the claimant retained her ordinary residence in Great Britain at May 2004, but lost it at some later date, that factual possibility probably ought to be explored. It would certainly have to be if the Secretary of State put forward a case along those lines on further consideration of the circumstances. I think that the Secretary of State has to be given the opportunity for such consideration. I therefore refer the two appeals to a differently constituted appeal tribunal for determination in accordance with the directions below.

Before I set out directions for a rehearing, I raise this point for the consideration of the Secretary of State. The effect of my setting aside of the decision of the appeal tribunal of 26 July 2007 is that the claimant's appeals against the decisions of 9 August 2004 and 22 March 2006, as revised on 22 November 2006, and the decision of 24 November 2006 remain outstanding and undetermined. The Secretary of State therefore has the power on that ground alone under regulation 3(4A) of the Decisions and Appeals Regulations to (further) revise those decisions. The Secretary of State has already agreed that there was no ground to revise the two awarding decisions on 22 November 2006, with the consequence that on the case as so far put forward by the Secretary of State there could be no overpayment for the period from 5 May 2004 to 22 August 2006 to be made subject to recoverability.

It seems to me that it might be a great deal simpler for the Secretary of State to revise the decisions under appeal and substitute whatever decisions are considered appropriate. For instance, if the Secretary of State considers that the balance of the evidence shows that the claimant was not ordinarily resident in Great Britain throughout the whole of the period from 5 May 2004 to 22 November 2006 and beyond, decisions could be substituted that the decision of 9 August 2004 could not be revised or superseded so as to alter the claimant's entitlement in the period from 5 May 2004 to 4 May 2006 and that the decision of 22 March 2006 could not be revised, but was to be superseded on the ground of ignorance or mistake of material fact so as to remove entitlement to DLA with effect from 22 November 2006. The revision of the decision of overpayment recoverability decision of 24 November 2006 could therefore result in no decision being substituted or the substitution of a decision that there was no overpayment to be recovered. If that were done, the claimant would then have to appeal against the new supersession decision if she wished to challenge the conclusion that she had ceased to be ordinarily resident in Great Britain. However, the making of those decisions might avoid a good deal of unnecessary work for a new appeal tribunal and possible delay while waiting for the final determination of the effect of European Community law. It would also put in place a decision that enables the Secretary of State to pay the claimant DLA down to 21 November 2006 from the date on which payment was suspended in August 2006. Of course, if the Secretary of State takes the view either that the evidence now available does not show that the claimant lost ordinary residence in Great Britain at any date prior to 22 November 2006 or the view that ordinary residence was lost at some date between 5 May 2004 and 22 November 2006, effect could be given to those views.

If the Secretary of State were to carry out revisions under regulation 3(4A) of the Decisions and Appeals Regulations, and the decisions as revised were more advantageous to the claimant (as seems very likely), the existing appeals would lapse (Social Security Act 1998, section 9(6), and Decisions and Appeals Regulations, regulation 30). But a new right of appeal would arise against those new decisions.

Directions to the new appeal tribunal

If the current appeals by the claimant do not lapse by virtue of action taken by the Secretary of State as above, there must be a complete rehearing of the appeals on the evidence presented and submissions made to the new appeal tribunal, which will not be bound by any findings made or conclusions expressed by the appeal tribunal of 26 July 2007.

If the Secretary of State wishes to rely on the evidence of the award of credited contributions to the claimant in Cyprus under the label "children credits" down to 1988 as showing residence or ordinary residence in Cyprus in a way relevant to the period from 5 May 2004 or on the evidence of periods of insurance there from 1998 as a self-employed or employed person and of the payment of invalidity pension from 5 December 2005 on a claim dated 5 September 2005, the Secretary of State should produce evidence of the relevant Cypriot legislation to support the inferences argued for. In any event, the Secretary of State will need to prepare a fresh written submission setting out clearly what decisions he says that the new appeal tribunal should make. Further evidence and submissions may of course also be put forward on behalf of the claimant.

The new appeal tribunal must apply the legal approach set out above and in decision R(P) 1/01, from which it will be apparent what results will follow from different conclusions on when the claimant was ordinarily resident in Great Britain or not. If the new appeal tribunal concludes that the claimant was not ordinarily resident here from 5 May 2004 onwards, the question will arise of the effect of regulation 2 of the DLA Regulations from and including 22 November 2006 in the light of the effect of the ECJ judgment in Case C-299/2005. If the new appeal tribunal concludes that the claimant was ordinarily resident here on 5 May 2004, but lost that ordinary residence at some later date before 22 November 2006, supersession of the then operative decision for relevant change of circumstances will be possible, but the same question will arise as at the date of the change. If the new appeal tribunal concludes that the claimant has remained ordinarily resident in Great Britain throughout the period in question, there obviously can be no supersession or overpayment. The evaluation of all the evidence will be entirely a matter for the judgment of the members of the new appeal tribunal.

(Signed) J Mesher

Commissioner

Date: 7 October 2008