Upper Tribunal (Administrative Appeals Chamber)

IN THE UPPER TRIBUNAL Case No. CIS/1062/2009

ADMINISTRATIVE APPEALS CHAMBER

 

Before Judge Whybrow QC

 

Attendances:

 

For the Appellant: Mr Peter Mant of Counsel instructed under the FRU scheme

 

For the Respondent Mr Stephen Brown of DWP Legal Services

 

 

DECISION

 

The decision of the first-tier tribunal made on 9 January 2009 involved the making of a material error of law. I set aside its decision and remit the case to a differently constituted first-tier tribunal for rehearing in accordance with the directions set out in paragraphs 91 to 95 below.

REASONS FOR DECISION

 

Nature of appeal

 

1.          This is an appeal by the claimant against the decision of the first-tier tribunal confirming the decision of the respondent that the claimant had been overpaid income support in respect of the period from 23 August 2005 to 19 March 2007 in the total sum of £5543.48, and that this overpayment was recoverable from the claimant. The claimed overpayment was founded on the contention that the claimant had failed in her duty to disclose payments of child maintenance from her husband (or ex-husband) in respect of her children.

 

2.          The appeal to the Upper Tribunal was brought on the grounds, in summary, that the tribunal’s reasons for its decision were flawed. Upper Tribunal Judge Lloyd-Davies granted permission to appeal on the basis that the grounds of appeal were arguable.

 

3.     After receipt of the respondent’s first written submissions, which did not support the appeal, Upper Tribunal Judge Mesher made further directions (which are set out full in paragraphs 47 and 72 below) which raised two further issues which can be summarized briefly as follow. The first was whether there was an overpayment at all on the basis that it was arguable that on the true construction of paragraph 73 of Schedule 9 to the Income Support (General) Regulations 1987 as amended (“the ISGR”) payments of child maintenance, which fell within the ambit of the provisions relating to payments by liable relatives, were to be disregarded in full in calculating the claimant’s income. Second, if there had been an overpayment, there was an issue as to whether the overpayment was recoverable in that it was questionable whether in the circumstances the claimant had been under a duty to disclose the payments.

 

4.          In the light of the further written submissions of the respondent in response to this direction, I directed an oral hearing which I held on 18 May 2009. Shortly before the hearing took place, I raised with the parties a further issue as to whether on the true construction of the ISGR and, in particular, regulations 25 and 40, there was any statutory basis for applying any amount of the disregard in paragraph 73 of Schedule 9 to the ISGR to liable relative payments.

 

5.          At the hearing the claimant was represented by Mr Peter Mant of counsel and the respondent was represented by Mr Stephen Brown of DWP Legal Services. I am very grateful to both for their clear and helpful skeleton arguments and oral submissions. At the hearing both Mr Mant and Mr Brown accepted my invitation to reserve the issue of whether paragraph 73 applied at all to liable relative payments to further written submissions. Subsequently, Mr David Blundell of counsel on behalf of the respondent, and Mr Mant provided written submissions on this issue.

 

The relevant factual background

 

6.          Up until June 2005 the claimant lived with her husband and three dependent children in Dubai. On or about 17 June 2005 she left her husband, came to England with her three children, and claimed income support as a lone parent. On 9 August 2005 she was awarded income support with effect from 17 June 2005. The claimant in her customer statement dated 30 June 2005, on which the award was based, signed the usual declaration that the information given in the statement was correct and complete. The information provided included a negative answer to the question: “Do you or any of the children you are claiming for get any voluntary maintenance payments?” The customer statement also required the claimant to provide information about “other money coming in” and gave examples of what this phrase included, specifying, amongst other matters, maintenance paid through a written agreement or because of a court order. In response to a question in the statement asking whether the claimant had any such monies coming in, the claimant answered positively, explaining that it was in the form of child tax credits. The declaration section of the form also included a warning that it was an offence to fail to notify a change of circumstances promptly and that such failure may result in action being taken against her.

 

7.          It was the respondent’s case that when the award was notified, the claimant would have been sent a copy of form INF 4, which requested the claimant to inform the local benefits office of changes in her circumstances. This form included a long list of examples of changes which the claimant should report. Under the heading of “Other money coming in”, the form requested the recipient to

“Tell us if you or anyone you have claimed for

……………………………………………………

·       Get any money…………

Remember to include things like………

·       maintenance for a spouse, civil partner or children, whether it is paid by court order, voluntarily or by arrangement with the Social Security Agency or Child Support Agency”

 

8.          On 23 August 2005 the claimant began to receive from her husband payments of maintenance for the children. It appears that her case (which is set out more fully in paragraph 17 below) is that she did not report these payments immediately but did so when she received a review form (A2) in or about December 2005. On reporting the payments, the claimant says she was advised by an official from Belle Vale Jobcentre Plus that the payments did not affect her claim for income support. On 5 December 2005 the claimant completed the review form in which she answered a similar question about maintenance payments to that asked in her customer statement in the same way. The review form also stated that it was necessary to know if she had any “other money coming in”, and again set out examples of what is included in that expression, including specifically maintenance paid through a written agreement or because of a court order. In response to the question whether she had any such money coming in the claimant ticked the yes box and identified the relevant monies as child tax credits. The form further asked whether the claimant had any other money coming, which she had not already told about, to which question she ticked the no box. The claimant signed a declaration to the effect, amongst other things, that she must promptly tell the paying office of anything that might affect her entitlement, and that the information included in the form was correct and complete so far as she knew, and that she had included all her income and savings.

 

9.          On 10 July 2006 a consent order was made in the Liverpool County Court in divorce proceedings between the claimant and her husband, which, amongst other things, required her husband to pay periodical payments commencing on 10 August 2006 to the claimant for the benefit of each of the three children at the rate of £300.00 for each child until each reached 17 years or ceased full time tertiary education. The claimant’s case is that she informed the Belle Vale Jobcentre Plus that the order had been made, but was again advised that it did not affect her claim for income support.

 

10.   At some stage in 2006, apparently as a result of information received from a third party, a formal investigation was begun into her entitlement to income support. As a result of the investigation it emerged that from August 2005 her husband had been making substantial payments of varying amounts into the bank account in the joint names of the claimant’s husband and the claimant. In an interview under caution on 26 April 2007 and in subsequent further representations, the claimant said, in effect, that the payments made by the husband were intended to be principally maintenance for the children (£300.00 per month for each child), and the balance was intended to cover the cost of her mortgage and related endowment policy and insurance.

 

11.   On 26 June 2007 in the light of the information obtained by the investigation, including bank statements for the joint account, the respondent made a decision described as superseding the decision of 9 August 2005 on the ground that there had been a change of circumstances since the earlier decision had been made in that the claimant had been in receipt of voluntary maintenance payments in respect of the children. The June 2007 decision did not replace in terms the previous entitlement decision with a fresh entitlement decision but stated that the maintenance payments should be taken into account at the rate of £1099.17 per month (which was stated to represent the average payments over the last six months). The decision also stated that an overpayment should be calculated accordingly. On 30 October 2007 a further decision was made to the effect that, as a result of the supersession decision, an overpayment of income support had been made from 23 August 2005 to 19 March 2007 in the total sum of £5623.08 as set out in an attached schedule. It appears that the calculations of the overpayment had been made on the assumption that for each week £10 of the child maintenance payments should be disregarded. The decision further stated that this overpayment was recoverable from the claimant because on 25 August 2005, or as soon as practicable thereafter, the claimant had failed to disclose that she was in receipt of voluntary maintenance from her husband, and that the sum overpaid would not have been paid but for the failure to disclose.

 

12.   On 23 November 2007 the claimant appealed against the October 2007 decision on the ground that, when she first started to receive maintenance for the children, she informed by telephone the Belle Vale Jobcentre Plus that she was in receipt of this maintenance and was advised that because it was not maintenance for her “it was OK”. She also said that she was given the same advice on a subsequent occasion. In the light of her appeal the October 2007 decision was reconsidered, but not changed.

 

The appeal to the first-tier tribunal

 

13.   It is to be noted that the respondent in written submissions to the first-tier tribunal, under the heading of entitlement to benefit, made the following submission:

 

“5.1 The law says that income is calculated in a prescribed manner, with some amounts disregarded [citing in support regulations 28-32 of, and schedule 9 to, ISGR]

 

5.2     The law says that the amount of income to be taken into account shall be the gross amount, and that there shall be disregarded from the calculation of gross income any, sum, where applicable, specified in Schedule 9 [citing regulations 40 (1) and (2) of ISGR]

 

5.3     The law says that payments of child support maintenance shall be treated as income and shall be taken into account on a weekly basis, and that a disregard of not more than £10 a week is applicable [citing regulation 60B and paragraph 73 of Schedule 9]

 

5.4     I submit that the maintenance payments to [the claimant] fall to be taken into account, subject to a disregard, in the calculation of her Income Support entitlement from and including 23/08/05….”

 

14.   It is also to be noted that in those submissions reliance was placed on the duty imposed on a beneficiary of an award under regulation 32(1) of the Social Security (Claims and Payments) Regulations 1987 to provide such information as the respondent may request, and that form INF4, which it was said was issued after an award was made and also when the award was annually up-rated, constituted a clear request for such information, including specifically information about maintenance payments for the claimant’s children. It was submitted that in the circumstances and in the light of the decision in R (IS) 9/06 the question of whether disclosure was reasonably to be expected did not arise.

 

15.   The appeal was originally listed to be heard as a paper hearing but was adjourned for an oral hearing and for further information to be provided. On 14 October 2008 an oral hearing commenced at which both the claimant and the respondent were represented. The claimant gave some oral evidence including that her husband made payments into her account from August 2005, and that in December 2005 she told the Department of Work and Pensions (“DWP”) of this money but did not tell them it was maintenance for the children. Her representative argued that the money paid into her account before December 2005 should not be treated as maintenance because it was to cover direct debts and overdraft. The claimant also told the tribunal that she had informed the DWP in June 2006 that she had a court order for maintenance. After representations about the adequacy of the information before the tribunal, the hearing was adjourned again and further information was directed to be provided, including “client conversation” print outs for 2005 and 2006.

 

16.   In response to the direction, further information was provided. For the purposes of this appeal, it is necessary only to note three matters. First, a minute of the consent order was produced. Second, the respondent’s presenting officer provided an analysis of the payments into, and the withdrawals from, the joint bank account between December 2005 and April 2007, on the basis of which it was contended by the respondent that there was no evidence to show that the payments by the husband were intended to clear outstanding direct debts. Third, a witness statement was provided from the officer (Ms S.O/S) in the Belle Vale Jobcentre Plus who was responsible during the relevant period for interviewing lone parents claiming income support, and for checking and discussing the answers to each question in the customer statement. In that statement Ms S.O/S stated that if any information relevant to a claim for benefit had been provided, the information would have been recorded on the statement and forwarded to the department responsible for determining the claim. The respondent was unable to produce the client conversation print outs, although accepting that they had once existed.

17.   On 9 January 2009 a fresh oral hearing before a different tribunal took place and the appeal was determined. Again both parties were represented and the claimant gave oral evidence. The respondent’s presenting officer amended the total amount of the overpayment to £5543.48, and this sum was agreed by the claimant’s representative. The representations on behalf of the claimant and her evidence both focussed on the issue of whether the claimant had failed to disclose the maintenance payments to the children. The claimant’s evidence, in summary, was that at the time of the claim was made, no maintenance was being paid. However, when she received the review form and before completing it, she was in receipt of maintenance payments and telephoned the local office to inform them of the payments. She was then advised that these payments would not affect her entitlement. For this reason she completed the review form as she did. Later when the consent order was made, she contacted the office again, and was given the same advice.

 

18.   The tribunal in its reasons for its decision, confirming the decision of the respondent, stated that the issue in the appeal was whether the claimant had disclosed the payments. It found that she had failed to disclose the maintenance payments from her husband, and explained its finding and overall decision as follows:-

 

“6. The tribunal came to its conclusions on the basis that they preferred the evidence of the Department to the oral evidence of [the claimant] given today and within the papers. It was the case of [the claimant] that she had attended for interview at the Belle Vale Jobcentre Plus… and that attendance was on 30^th June 2005. [The claimant] told the tribunal that this was a lengthy interview and during that time the interviewer, known as [S], discussed her Income Support claim. During the course of the conversation she declared the fact that she had maintenance for the children but was told that if it was for the children it needn’t be disclosed. She therefore did not include it within the completed claim form for Income Support which she subsequently submitted.

 

7. The procedure described by [the claimant] was disputed by the Presenting Officer who confirmed that the Belle Vale Jobcentre Plus was merely an information gathering process and indeed this was also confirmed by the interviewer later identified as [S. O’S] who described herself as being responsible for interviewing lone parent customers when making claim to Income Support. She indicated that she would merely rely upon the information supplied and would complete the form which was then sent for checking by the claimant. This routine was done in every case. [The claimant] would have had the form sent to her, would have been asked to check the accuracy of its content and then sign and return it. The signed returned form in this case did not disclose maintenance from her ex-husband.

 

8. [The claimant] also went on to say that she made a further disclosure at the time when her divorce settlement was produced. She did not actually produce the settlement but states that she rang the office and told them that the maintenance was now contained within a court order.

 

9. The tribunal felt that they could not accept the evidence of [the claimant]. There was inconsistency in her evidence. She had told the first tribunal the money she had received from her first husband had been to pay for mortgage arrears and to cover direct payments out of an account. The money was just there to prevent it going overdrawn. The last tribunal asked the Department to analyse those payments and having done so the analysis which is now at pages 154 and 155 shows that her withdrawals were not made to clear outstanding direct debits as suggested by her. It appears those monies drawn were to fund general living expenses.

 

10. The tribunal also rejected her statement that she had been given advice by Belle Vale Jobcentre to the effect that because the maintenance was classed as her children’s maintenance she would not need to declare it. The tribunal rejected that as highly unlikely and improbable. The lady now known as [S. O’S] was an experienced information collector and the tribunal consider it improbable that she would have dealt with that interview in the way described by [the claimant]. Furthermore [the claimant] had the opportunity to correct any mistakes when she subsequently checked the form and signed it. In addition, [the claimant] was receiving £300 per month in respect of each of 3 children. Common sense would dictate that the receipt of such a level of income would impact upon a claim for state benefit. The tribunal found that they could not believe [the claimant] or accept her evidence.

 

11 The tribunal did however accept the evidence contained within the submission and accordingly upheld the decision subject to the amendment to the amount of the overpayment. The tribunal also found that this sum was recoverable. There had been a failure to disclose to the [respondent] the fact that she was in receipt of voluntary maintenance. Had that fact been disclosed then Income Support would not have been paid which was in fact paid because of the failure to disclose. The tribunal are satisfied that [the claimant] was aware of her duty to disclose as the claim form specifically requests details of other income. She had not disclosed it. It follows that the sum is recoverable from [the claimant].”

 

The relevant law

 

(i) Income support

 

19.   Section 123 of the Social Security Contributions and Benefits Act 1992 (“SSCBA”) provides for a scheme of income support to be prescribed. Section 124 (1) of the SSCBA sets out the general conditions of entitlement to income support. Section 124 (4) provides, in effect, that where a person is entitled to income support the amount shall be the applicable amount where he has no income or where he has income the difference between his income and the applicable amount. Section 124 (5) provides that where a person is entitled to income support for a period, the amount payable shall be calculated in such manner as may be prescribed. Section 136 (1) provides that where a person claiming income support is a member of a family, the income and capital of any member of that family shall be treated as the income and capital of the claimant except in prescribed circumstances. Section 136 (5) provides, amongst other things, for circumstances to be prescribed in which income is to be disregarded.

 

20.   For the purposes of this case, the relevant matters to be prescribed under the SSCBA have been prescribed by the ISGR. Except where I indicate otherwise, all the provisions to which I refer below are those in force during the period of the claimed overpayment and at the date of the overpayment decision.

 

21.   In relation to the income of children, regulation 23 (2) provides, amongst other things, that, subject to the following provisions of Part V of the ISGR, the income paid to, or in respect of a child or young person who is a member of the claimant’s family shall not be treated as the income of the claimant. This regulation thus establishes a general rule, subject to the provisions of Part V, that such income is not to be taken into account.

 

22.   An analysis of Part V of the ISGR shows that there are, in effect, four regimes for calculating, and/or attributing as a weekly amount, income, depending on the nature of the income. First, there is a general regime relating to all income other than income which constitutes liable relative payments or payments under the Child Support Act 1991 (“the CSA”). Second, there is a separate regime for payments which amount to liable relative payments. Third, there is a further separate regime relating to payments under the CSA. Fourth, there are special provisions relating to the income of students and their partners (which are not material to this decision).

 

23.   The general regime is set out in regulations 28 to 42 and contains detailed provisions for calculating that income, depending on its nature, and for establishing a weekly amount. Two regulations should be noted. Regulation 28 provides:-

 

“(1) For the purpose of [section 124 (1) of the SSCBA] (Conditions of entitlement to income support), the income of a claimant shall be calculated on a weekly basis-

(a)   by determining in accordance with this Part, other than Chapter VI, the weekly amount of his income; and

(b)   by adding to that amount the weekly income calculated under regulation 53 (calculation of tariff income from capital)

(2) For the purposes of paragraph (1) “income” includes capital treated as income under regulations 41 (capital treated as income) and income which a claimant is treated as possessing under regulation 42 (notional income).”

 

24.   Regulation 40 provides for the calculation of income other than earnings. Paragraphs (1) and (2) provide:

 

“(1) For the purposes of regulation 29 (calculation of income other than earnings) the income of a claimant which does not consist of earnings to be taken into account shall, subject to paragraphs 2 to 3B, be his gross income and any capital treated as income under regulation 41 (capital treated as income).

 

(2) There shall be disregarded from the calculation of a claimant’s gross income under paragraph (1), any sum, where applicable, specified in Schedule 9”

 

25.   Schedule 9 is headed “Sums to be disregarded in the calculation of income other than earnings”. Paragraph 73 provides, so far as material:

 

“(1) Subject to sub-paragraph (3), any payment of child maintenance where the child or young person in respect of whom the payment is made is a member of the claimant’s family except where the person making the payment is the claimant or the claimant’s partner……..

(3) No more than £10 shall be disregarded in respect of each week to which any payment of child maintenance is attributed in accordance with regulations 28, 29, 31 and 32 (calculation of income) or regulations 60B to 60D (treatment of child support maintenance).”

 

26.   The separate provisions relating to liable relative payments are effected by regulation 25, and are set out in regulations 54 to 60. Regulation 25 dis-applies the general regime in this way:

 

“Regulations 29 to 42, 46 to 52, and Chapter VIII of this Part shall not apply to any payment which is to be calculated in accordance with Chapter VII thereof (liable relatives).”

 

27.   Regulation 54 defines a liable relative payment. A “liable relative” is defined to include a spouse or former spouse of the claimant. A “payment” is defined to mean, subject to specified exceptions, “a periodical payment or any other payment made by or derived from a liable relative “.The exceptions include a payment

 

“(g) to, or in respect of, a child or young person who is to be treated as not being a member of the claimant’s household under regulation 16 (circumstances in which a person is to be treated as being or not being a member of the same household)”

 

A “periodical payment” is defined to include, amongst other things, a payment which is made under a court order or agreement for maintenance.

 

28.   Regulation 55 provides that:

 

“Subject to regulation 55A and except where regulation 66 (1) (liable relevant payments to be treated as capital) applies a payment shall-

(a) to the extent that it is not a payment of income, be treated as income;

(b) be taken into account in accordance with following provisions of this Chapter.”

 

29.   Regulation 55A provides that where the maintenance payments are collected by the Secretary of State those payments to be disregarded in calculating a claimant’s income. Regulation 56 provides for the period over which periodical payments are to be taken into account. Regulation 57 provides for the period over which other payments are to be taken into account. Regulations 58 and 59 prescribe the ways in which the weekly amount of a liable relative payment it to be calculated, and the date on which a liable relative payment is to be treated as paid. Regulation 60 prescribes the circumstances in which liable relative payments are to be treated as capital.

 

30.   Regulations 25A and 60 B to D provide a separate regime for calculating child support maintenance awarded under the CSA. Regulation 25A is a similar provision to regulation 25 and dis-applies regulations 29, 31, 32 40 and 42 to child support payments under the 1991 Act.

 

(ii) The legislative history of the maintenance disregard

 

31.   At the oral hearing and in subsequent written submissions reliance was placed, in construing both regulation 25 and paragraph 73 of Schedule 9, on the legislative history and policy background to paragraph 73 and also to subsequent amendments, and a later amendment to regulation 55.

 

32.   The child maintenance disregard can be traced back to the Social Security (Child Maintenance Premium and Miscellaneous Amendments) Regulations 2000 (“the 2000 Regulations”) which came into force at various dates beginning in 2003. The explanatory note to these Regulations stated, amongst other things, that:

 

“In particular, regulation 2(1)(b) and 2 (b) of these Regulations provides that for the purpose of ascertaining entitlement to income support and jobseeker’s allowance, up to £10 of a payment of child maintenance shall be disregarded. That disregarded amount is known as the child maintenance premium.”

 

33.   The 2000 Regulations were made in the context of a similar overall regime in which the calculation of liable relative payments and child support maintenance were the subject of different provisions for the calculation of income other than earnings and where in particular the then regulations 25 and 25A dis-applied regulation 40 which so far as material, was in the same form. The Regulations sought to achieve the legislative objective explained in the note in relation to income support by amending Schedule 9 of the ISGR to add the following paragraph:

 

“73 (1) Subject to sub-paragraph (3), any payment of child maintenance, whether under a court order or not, which is made or due to be made by the parent of a child or young person where that child or young person is a member of the claimant’s family except where that parent is the claimant or the claimant’s partner…..

 

(3) No more than £10 shall be disregarded in any week pursuant to this paragraph…”

(4) In this paragraph, “child maintenance” shall have the same meaning as that prescribed for the purpose s of section 74A of the Social Security Administration Act 1992 and shall include any payment made by the Secretary of State in lieu of such maintenance”

 

34.   The meaning of “child maintenance” was prescribed by regulation 2 (a) of the Social Security Benefits (Maintenance Payments and Consequential Amendments) Regulations 1996 to mean:-

 

“…any payment of towards the maintenance of a child or young person, including payments made –

(i)              under a court order;

(ii)             under a maintenance calculation made under the Child Support Act 1991;

(iii)            under an agreement for maintenance; or

(iv)           voluntarily,

and for this purpose a “young person” is a person referred to in regulation 3 of these regulations [i.e. for income support purposes a young person as referred to in paragraph 17 of the ISGR]

 

 

35.   The 2000 Regulations were amended to the form in force during the material period by the Social Security (Child Maintenance Premium) Amendment Regulations 2004 (S.I. 2004 98) (“the 2004 Regulations”) . Mr Brown told me at the hearing that before these Regulations were made a memorandum had been provided to the Social Security Advisory Committee to explain why the amendments to the 2000 Regulations were required. The material parts of the memorandum were as follows:

 

“ Introduction

 

2. Part of the new scheme is the Child Maintenance Premium (CMP) which replaces the Child Maintenance Bonus. Ministers have made clear, including during the passage of the Bill that became the Child Support, Pensions and Social Security Act 2000, customers receiving child maintenance and Income Support or income-based Jobs Seekers Allowance (JSB (IB)) will be able to keep up to the first £10 of maintenance paid for their child, without it affecting their benefit. For the first time, theses families will be able to see a direct advantage from receiving maintenance, as under the old child support scheme maintenance paid reduced the family’s entitlement to benefit £ for £.

 

3. The premium is created is legislative terms by the Social Security (Child Maintenance Premium and Miscellaneous Amendments) Regulations 2000, which amend [the ISGR]… This provides for up to £10 of child maintenance that has been paid, to be disregarded, when assessing benefit entitlement. The child maintenance premium is not a payment; it is an income disregard. ….

 

Policy

 

4. The policy is that entitlement to the CMP disregard should result from any payment of child maintenance, and so could be any of :

(a) a payment of child support maintenance as calculated under the Child Support Act 1991 (by the Child Support Agency); or

(b) under a court order; or

(c) as a result of an agreement; or

(d) voluntarily……

 

6 The policy that entitlement to the CMP disregards only arises when the non-resident parent has actually made payments of child maintenance is to ensure that the Premium gives non-resident parents an incentive to provide for their children. They will be able to see that their children directly benefit from the maintenance they are paying……

 

Other problems with the 2000 Regulations

 

9. Examination of the 2000 regulations has revealed that they are capable of an interpretation that restricts the operation of the disregard in a way contrary both to the policy intention and to Ministerial statements. Ministerial policy is that the CMP disregard applies to all payments of child maintenance on a “weekly equivalent” basis where those payments are made otherwise than weekly but are intended to cover more than one week. Hence if a non- resident parent has a liability to pay child support maintenance of £20 a week to a parent with care on Income Support, but pays that liability monthly at a rate of £86.66 per month (the monthly equivalent of £20 per week), then the policy is that the parent with care gets the premium at the monthly equivalent of £10 a week, i.e. £43.33.

 

10. Unfortunately, there is doubt that the relevant part of the current text of the 2000 Regulations (paragraph 73(3) of Schedule 9 to the [ISGR], as inserted by regulation 2(1) (b)…..) carries through this policy intention. Our legal advice is that this text supports an interpretation that the amount of the disregard can never exceed the sum of £10, no matter what the period covered by the maintenance payment.

 

11. In the light of that advice, the regulations have been redrafted to put the matter beyond doubt, by an explicit reference to the attribution of income rules in the [ISGR]……….

 

Regulation 2

 

17. Regulation 2 amends the [ISGR] by replacing paragraph 73 with this text... It provides that the first £10 of income received by the parent with care from child maintenance in a week will be disregarded in the calculation of Income Support…..Paragraph 73(3) ensures that, when payments of child maintenance are made weekly, the disregard is applied to each weekly amount of child maintenance paid….”

 

36.   The explanatory note attached to Statutory Instrument 2004 98 (to which Mr Brown also drew attention) stated that the material amendments to paragraph 73(3) of the ISGR were

 

“To ensure that when payments of child maintenance are made otherwise than weekly the child maintenance premium disregard is applied to each weekly equivalent amount of child maintenance paid…”

 

37.   The version of paragraph 73 material to this case has subsequently been amended twice. In the first amendment effected by The Social Security (Child Maintenance Amendments) Regulations 2008 with effect (so far as material) from 27 October 2008 paragraph 73 was amended as follows:

 

“ (1) Subject to paragraph (3), any payment of child maintenance where the child or young person in respect of whom the payment is made is a member of the claimant’s family except where the person making the payment is the claimant or the claimant’s partner…..

 

(3) No more than £20 shall be disregarded in respect of each week to which any payment of child maintenance is attributed in accordance with regulations 55 to 59 (child maintenance and liable relatives).

 

(4) In this paragraph, “child maintenance” shall have the same meaning as in regulation 54.”

 

38.   It is to be noted that these amendments were made in a similar statutory context to that of the material provisions in this case save that the separate regime for calculating child maintenance under the Child Support Act 1991 was amalgamated with the liable relative provisions and that regulations 54 and 55 were amended in respects which made express reference to paragraph 73 of Schedule 9. Regulation 54 was amended, in amongst other ways, to add a definition of child maintenance, which included voluntary payments, payments under the CSA and the similar legislation in Northern Ireland and Scotland, and payments under court or consent orders. Regulation 55, the heading to which was amended to read child maintenance and liable relative payments, was amended as follows:

 

“Subject to regulation 55A and paragraph 73 of Schedule 9 (sums to be disregarded in the calculation of income other than earnings) a payment shall-

(a)  to the extent that it is not a payment of income , be treated as income;

(b)  be taken into account in accordance with the following provision of this Chapter.”

 

39.   A memorandum presented to Parliament in relation to these amendments explained that they were consequential on the enactment of the Child Maintenance and Other Payments Act 2008 which established a new Child Maintenance and Enforcement Agency to replace the Child Support Agency and removed the compulsion on benefit claimants to apply to the Agency for child maintenance, leaving them free to make their own arrangements. It further explained that the 2008 Regulations were required to ensure that the treatment of maintenance in the IGSR was consistent with other income related benefits, and to encourage parents to make their own arrangements whilst ensuring that they are not financially disadvantaged by their decision because of benefit rules.

 

40.   The ISGR were further amended by The Social Security (Miscellaneous Amendments) (No. 4) Regulations 2009 with effect from 12 April 2010 with the intention of providing for any payment of child maintenance to be disregarded fully. Under these amendments the separate regime for calculating liable relative payments was maintained, but the definition of payment in regulation 54 was amended so as not to include within it a further category of payment defined as a payment

 

“(i) to which paragraph 73 of schedule 9 (sums to be disregarded in the calculation of income other than earnings) applies.”

 

41.   Paragraph 73 was amended as follows:

 

“(1) Any payment of child maintenance made or derived from a liable relative where the child or young person in respect of whom the payment is made is a member of the claimant’s family, except where the person making the payment is the claimant or claimant’s partner.

(2) in paragraph (1)-

“child maintenance” means any payment towards the maintenance of a child or young person, including any payment made voluntarily and payments made under-

(a) the Child Support Act 1991

(b) the Child Support (northern Ireland) Order 1991;

(c) a court order;

(d) a consent order;

(e) a maintenance agreement registered for execution in the Books of Council and Session or sheriff court books

“liable relative” means a person listed in regulation 54 (interpretation) other than a person falling within sub-paragraph (d) of that definition.”

 

(iii) Recovery of overpayments

 

42.   Section 71 (1) of the Social Security Administration Act 1992 (“SSAA””) provides:

 

“Where it is determined that, whether fraudulently or otherwise, any person has misrepresented, or failed to disclose, any material fact and in consequence of the misrepresentation or failure –

(a)  a payment has been made in respect of payment to which this section applies; or

(b)  any sum recoverable by or on behalf of the Secretary of State in connection with any such payment has not been recovered,

the Secretary of State shall be entitled to recover the amount of any payment which he would not have made …. but for the misrepresentation or failure to disclose”.

 

43.   It has been established by Re B [2005] EWCA Civ 929 reported as R (IS) 9/06 that section 71 (1) presupposes a legal duty to disclose and that this duty is now set out in Regulation 32 of the Social Security (Claims and Payments) Regulations 1987 as amended which provides:-

 

“(1) Except in the case of a jobseeker’s allowance, every beneficiary and every person by whom, or on whose behalf, sums by way of benefit are receivable shall 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 under section 9 of the Social Security Act 1998 or superseded under section 10 of that Act.

 

(1A) Every beneficiary and every person by whom, or on whose behalf, sums by way of benefit are receivable shall 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 in connection with payment of the benefit claimed or awarded.

 

(1B) Except in the case of a jobseeker’s allowance, every beneficiary and every person by whom or on whose behalf sums by way of benefit are receivable shall notify the Secretary of State of any change of circumstances which he might reasonable be expected to know might affect –

(a) the continuance of entitlement to benefit; or

(b) the payment of benefit,

 

as soon as reasonably practicable after the change occurs by giving notice in writing (unless the Secretary of State determines in any particular case to accept notice otherwise than in writing) of any such change to an appropriate office.”

 

44.   Three additional points were also established by Re B. First, the duty under regulation 32 (1) to furnish information and evidence pursuant to a request (unlike the duty under regulation 32 (1B)) was not subject to the qualification that the claimant might reasonably be expected to know that the information or evidence requested might affect his right to benefit. Second, there is no duty under section 71 or otherwise restricting the duty to disclose to circumstances in which the claimant could reasonably have been expected to disclose it: see also [2009] UKUT 120 (AAC) where this reasoning was applied specifically to cases of disclosure arising under regulation 32 (1B). Third a breach of regulation 32 (1) would not arise unless the request for the information was clear and unambiguous. This requirement was re-emphasised by the Court of Appeal in Hooper v Secretary of State [2007] EWCA Civ 495 R (IB) 4/07) where Dyson LJ in paragraph 56 (with whom Ward and Thomas LJJ expressly agreed) held that if the Secretary of State wishes to impose a requirements on claimants within the meaning of regulation 32 (1), it is incumbent on him to make it absolutely clear that he is doing so.

 

The issues

 

45.   In the light of my powers under section 12 of the Tribunals, Courts and Enforcement Act 2007 (“the 2007 Act”) the first overall issue I have to determine is whether the tribunal erred in law in a material respect (in the sense that the error may have affected the outcome of the appeal) such that the tribunal’s decision should be set aside. If it is set aside, I must then determine whether I should remit the case to the first-tier tribunal for reconsideration or remake the decision myself.

 

46.   On the first issue and in the light of the grounds of appeal, the directions given by Judge Mesher, the additional point I raised with the parties and their submissions, three main questions fall to be decided. First, did the tribunal, in finding that there was an overpayment of £5543.38, correctly apply the law relating to the disregard of payments of child maintenance? Second, did the tribunal deal properly with the question as to whether the claimant in the circumstances of this case was under a duty to disclose the payments of child maintenance? Third, did the tribunal adequately explain its finding that the claimant had not disclosed the payments?

 

First issue: did the tribunal correctly apply the law in finding that there had an overpayment?

 

47.   This issue arose initially from the directions given by Judge Mesher. As the parties focussed their subsequent submissions on the analysis within these directions, it is convenient to set out the relevant parts of the directions which were as follows:

 

“2. The first issue which arises from reliance in the [respondent’s] written submission to the tribunal … on regulation 60B and paragraph 73 of Schedule 9 to the [1987 Regulations] as in force during the period of the alleged overpayment… Regulation 60B required all ‘payments of child support maintenance’ to be taken into account as income, subject to the £10 per week disregard in paragraph 73. However, ‘child support maintenance’ was defined in regulation 60A as ‘such periodical payments as are referred to in section 3 (6) of the Child Support Act 1991’ Section 3(6) provides:

 

‘(6) Periodical payments which are required to be paid in accordance with a maintenance calculation are referred to in this Act as ‘child support maintenance.’

 

A ‘maintenance calculation’ means a calculation made under the Child Support Act 1991 (section 54). Thus it is absolutely clear that regulation 60B can only apply to payments made under a liability imposed through the operation of the Child Support Act 1991. In the present case, neither the voluntary payments made by the claimant’s then husband nor the payments made by him under the court order of 10 July 23006 were made under such liability. No calculation under the Child Support Act 1991 could have been made because the claimant’s husband was not habitually resident in the United Kingdom (section44 (1)).

 

3. How then should the payments made by the claimant’s husband have been taken into account under the income support legislation? I leave aside for the moment any issues about how far the voluntary payments were in fact made to the claimant specifically for the benefit of the children and concentrate on the payments under the court order. The husband’s obligations under that order were, apart from payment of 5p per year to the claimant, to pay periodical payments ‘to [her] for the benefit of’ the three children at the rate of £300 per month each. Regulation 23(2) of the [1987 General Regulations] provides:

 

‘Subject to the following provisions of this part, the income paid to, or in respect of, and capital of, a child or young person who is a member of the claimant’s family shall not be treated as the income or capital of the claimant.’

 

If the payments under the court order were not to the three children (being for their specific benefit), they certainly appear to have been made in respect of them. If so, the general principle established by regulation 23(2) is that they would not have formed part of the claimant’s income for income support purposes. That general principle is consistent with the removal of children and young persons from eligibility for income support personal allowances, so that support for children can only be by way of child tax credits and child benefit. If no amounts for children can be included in the calculation of the head of household’s income support, one would expect the amount of that income support to be unaffected by the children’s income.

 

4. However, regulation 23 (2) is subject to the later provisions of Part V of the [ISGR] on income and capital. It has already been established that regulations 60A to 60E on child support maintenance could not have been relied on as taking the case outside the general principle. The payments would, though, appear to have fallen within the scope of the provisions in regulations 54 to 60 (still within Part V). The claimant’s husband (including when he became her ex-husband) was within the definition of a ‘liable relative ‘and the periodical payments appear to have been within the definition in regulation 54. Payments to or in respect of children or young persons are only excluded under paragraph (g) of the definition of ‘payment’ if the child or young person is not a member of the claimant’s household. Here, although the claimant could not get an income support personal allowance for the children they were still members of her household. Therefore, the payments would be required to be treated as income under regulation 55 and taken into account in accordance with regulations 56 to 60.

 

5. The disregard in paragraph 73 of Schedule 9 would then need close attention. It provides that any payment of ‘child maintenance’ where the child or young person in respect of whom the payment is made is a member of the claimant’s household is to be disregarded as income of the claimant. For this purpose 'child maintenance’ means a payment prescribed for the purposes of section 74A of the Social Security Administration Act 1992 (paragraph73 (5) which is done in regulation 2 of the Social Security Benefits (Maintenance Payments and Consequential Amendments) Regulations 1996. The definition includes any payments towards the maintenance of a child or young persons under a court order, a child support maintenance calculation, a maintenance agreement or voluntarily. That would therefore have covered the payments in the present case under the court order and the voluntary payments in so far as they could be shown to be for the maintenance of the children. But that is subject to this limit:

 

‘(3) No more than £10 shall be disregarded in respect of each week to which any payment of child maintenance is attributed in accordance with regulations 28, 29, 31, and 32 (calculation of income) or regulation 60B to 60D (treatment of child support maintenance)’

 

It will be immediately noted that the £10 weekly limit on the disregard is not general, but applies only in the cases specified. The provisions on child support maintenance are already out of play. By virtue of regulation 25, regulations 29 to 42 do not apply to any payment to be calculated in accordance with the liable relative provisions. That leaves only regulation 28, which is only of a very general introductory nature. Thus the £10 limit appears not to apply and the disregard in paragraph 73 appears to apply without limit to liable relative payments that are constituted by payments of ‘child maintenance’ as defined above.

 

6. If the analysis above is correct, that would suggest that the receipt by the claimant of the payments of £300 per month for each child under the court order should not have affected the amount of her income support entitlement and that there was at least an argument that some proportion of the previous voluntary payments should also have been disregarded as income.

 

48.   As I have already explained, I subsequently raised with the parties the further question as to whether, given that regulation 25 dis-applies regulation 40, paragraph (2) of which authorises the disregards set out in schedule 9, there was any statutory basis for disregarding any amounts of child maintenance payments which fall within the ambit of liable relative payments. It is logical to address this question first.

 

Submissions on the first question: the statutory basis for child maintenance disregards

 

49.   It is common ground between the parties that all the maintenance payments made in this case constituted liable relative payments, that regulation 25 dis-applies regulation 40, including the provision in paragraph (2) which authorises the disregards in schedule 9, to payments which constitute liable relative payments, and that there is no other explicit statutory provision which authorises disregards in relation to liable relative payments. However, both Mr Blundell and Mr Mant submit that the ISGR should not be interpreted literally because this interpretation results from a clear drafting error which would lead to absurdity in that it would render otiose the purpose of the 2000 and 2004 amendments to the ISGR to provide for a disregard in respect of all payments of child maintenance. Both further submit that in these circumstances there is well established and high authority for interpreting legislation in a way which corrects inadvertent drafting mistakes and gives effect to the clear purpose of the legislation.

 

50.   In developing these submissions, Mr Blundell makes the following points. First, it is clear from the explanatory note to the 2000 Regulation (cited in paragraph 32 above) that the intention of the amendments to paragraph 73 of Schedule 9 to the ISGR was that a recipient of a child maintenance payment should be entitled to keep the first £10 of such payment without this being taken into account in calculating entitlement to income support, and that this was to be achieved by an amendment to Schedule 9, adding the new paragraph 73. Second, that intention would be defeated entirely by a literal interpretation of regulation 25 dis-applying the statutory authority for making such disregards. Third, bearing in mind the above, the draftsman clearly made an error in dis-applying regulation 40 in its entirety without a proviso retaining its application to the extent needed to give effect to the amendment to schedule 9. Fourth, there is well established authority (which I set out in paragraphs 51 to 53 below) for adopting a rectifying construction so as to rectify an inadvertent error in the drafting of an enactment where such an approach is required to give effect to the legislator’s intention. Fifth, that approach has been applied to secondary legislation in cases concerning the liberty of the subject, and in the social security context by Mr. Commissioner Rowland, as he then was, in CIB/4051/2001. Sixth, the tests (set out in the leading authority on the application of a rectifying construction) which need to be met before adopting this approach are met, and a purposive approach should be adopted to give effect to the clear legislative intent.

 

51.   The main authorities cited by Mr Blundell in support of his fourth point (as summarized above) are these. First, in the fifth edition of Bennion, statutory interpretation (2008), it is stated:

 

“Section 287: Presumption that rectifying construction to be given

It is presumed that the legislator intends the court to apply a construction which rectifies any error in the drafting of the enactment, where it is required in order to give effect to the legislator’s intention. This may be referred to as a rectifying construction.”

 

52.   Second, Parke B in Miller v Salomans (1852) 7 Exch 475, at 553 stated:

 

“This is an instance in which the language of the legislature must be modified, in order to avoid absurdity and inconsistency with its manifest intentions.”

 

53.   Third, in the leading case in the House of Lords in Inco Europe Ltd v First Choice Distribution (a firm) [2000] 1 WLR 586 at 592 C-H Lord Nicholls, with whose speech Lords Jauncey, Steyn, Clyde and Millett agreed, in upholding a construction of a statutory provision which involved reading words into the provision, stated:

 

“It has long been established that the role of the courts in construing legislation is not confined to resolving ambiguities in statutory language. The court must be able to correct obvious drafting errors. In suitable cases, in discharging its interpretative function the court will add words, or omit words or substitute words. Some notable instances are given in Professor Sir Rupert Cross’s admirable opuscule, Statutory Interpretation, 3^rd ed. (1995) pp 93-105. He comments, at p. 103

“In omitting or inserting words the judge is not really engaged in a hypothetical reconstruction of the intentions of the drafter or the legislature, but is simply making as much sense as he can of the text of the statutory provision read in its appropriate context and within the limits of the judicial role.”

This power is confined to plain cases of drafting mistakes. The courts are ever mindful that their constitutional role in this field is interpretative. They must abstain from any course which might have the appearance of judicial legislation. A statute is expressed in language approved and enacted by the legislature. So the courts exercise considerable caution before adding or omitting or substituting words. Before interpreting a statute in this way the court must be abundantly sure of three matters: (1) the intended purpose of the statute or provision in question; (2) that by inadvertence the draftsman and parliament failed to give effect to that purpose in the provision in question; and (3) the substance of the provision Parliament would have made, although not necessarily the precise words, Parliament would have used, had the error in the Bill been noticed. The third of these conditions is of crucial importance. Otherwise any attempt to determine the meaning of the enactment would cross the boundary between construction and legislation: ser per Lord Diplock in Jones v Wrotham Park Settled estates [1980] ac 74, 105 -106. In the present case these three conditions are fulfilled.

 

Sometimes, even when these conditions are met, the court may find itself inhibited from interpreting the statutory provision in accordance with what it is satisfied was the underlying intention of Parliament. The alteration in the language may be too far-reaching. In Western Bank Ltd. v Schindler [1977] Ch1, 18 Scarman LJ observed that the insertion must not be too big, or too much at variance with the language used by the legislature. Or the subject matter may call for a strict interpretation of the statutory language, as in penal legislation.”

 

 

Conclusions on the first question of construction

 

54.   I agree with Judge Mesher, and accept the submissions of both parties, that the relevant payments fell within the ambit of liable relative payments as defined in regulation 54 for the reasons set out in paragraph 4 of Judge Mesher’s direction. It is plain from regulations 25 and 55 (cited in paragraphs 25 and 27 above) that liable relative payments are not subject to the general regime for calculating income, set out in chapters II to V and regulations 29 to 42, but are subject to the provisions of Chapter VII and regulations 55 to 60.

 

55.   The only provision in the ISGR which authorises income to be disregarded in calculating income other than earnings is regulation 40 (2) which provides that “there shall be disregarded from the calculation of a claimant’s gross income under paragraph (1) any sum, where applicable, specified in Schedule 9”. Regulation 25 expressly dis-applies regulation 40 to liable relative payments, and there is no comparable provision in Chapter VII authorising disregards. Equally, regulation 25A dis-applies regulation 40 (2) in relation to child support maintenance, and there is also no comparable provision in Chapter VIIA authorising disregards. It follows that on a literal interpretation of the ISGR as in force during the material period there is no statutory basis for disregarding any amount of child maintenance payments which fall within the ambit of liable relative payments, or of child support maintenance. The great majority of payments of child maintenance would be likely to fall within the ambit of these two categories, and thus on a literal interpretation there would be no disregards in relation to most payments of child maintenance.

 

56.   I accept the submissions of Mr Blundell and Mr Mant that there is well established and high authority, binding me, for interpreting statutory provisions in appropriate cases in a way which rectifies a clear drafting error. I also accept that it is appropriate in principle to apply that approach to the interpretation of secondary legislation, and I note that Mr Commissioner Rowland in CIB/4051/2001 applied a rectifying construction to secondary legislation in the context of social security law. I also note that the Court of Appeal in the recent case of Wilkinson v Secretary of State for Work and Pensions [2009] EWCA Civ 1111, [2010 AACR 7] (on appeal from Upper Tribunal Judge Rowland, as he had become) did not doubt that a rectifying construction could be applied to secondary social security legislation where the tests in the Inco Europe case were met.

 

57.   I accept the submissions that the tests in Inco Europe are met in this case, and that the ISGR as in force during the relevant period should be construed to give effect to the legislative intention that the first £10 of all payments of child maintenance should be disregarded in calculating entitlement to income support. As to the first test in Inco Europe, I am abundantly sure on the evidence before me that the intended purpose of the amendments first made in the 2000 regulations and carried forward into the 2004 regulations was that any payment of child maintenance up to a limit of £10 per week, including payments which constituted liable relative payments and child support maintenance awarded under the CSA, should be disregarded in calculating entitlement to income support. I reach this conclusion not only on the basis of the explanatory note to the 2000 regulations on which Mr Blundell expressly relied, but also in the light of the explanatory memorandum (cited in my paragraph 35 above) provided by the respondent to the Social Security Advisory Committee, the principal statutory consultee, to explain the then proposed 2004 Regulations. Paragraphs 2, 3, 4 and 6 of this memorandum makes it clear that during the passage of the bill that became the Child Support, Pensions and Social Security Act 2000, when the 200 Regulations were made, and when what became the 2004 Regulations were being proposed the policy of the respondent and the intention of the Regulations was that the disregard should apply to any payment of child maintenance, whether paid under the CSA, a court order, an agreement, or voluntarily.

 

58.   As to the second test, I am abundantly sure that by inadvertence the draftsman and Parliament failed to give effect to that purpose in both the 200 and 2004 Regulations. In my judgement the failure to amend both regulations 25 (relating to liable relative payments) and regulation 25 (A) (relating to child maintenance support under the CSA) so as to limit the extent of the dis-application of regulation 40 must have been inadvertent because that failure largely defeated the clear legislative intention of providing a limited disregard for any payment of child maintenance in that the great majority of such payments would have been payments by liable relatives or payments of child support maintenance.

 

59.   As to the third test, I am abundantly sure that the substance of the provision the draftsman and Parliament would have made would be to limit the dis-application of regulation 40 so as to provide statutory authority for the disregards to apply to payments of child maintenance by liable relatives or in the form of child support maintenance.

 

60.   In the light of the last paragraph of Lord Nicholl’s speech in Inco Europe (as cited in paragraph 53) I add that I do not find myself inhibited from adopting a rectifying construction because the alteration in language is too great or too much at variance with the amending regulations or for any other reason.

 

61.   On the basis of this rectifying construction, I now turn to the second question of construction as to the effect of 2004 amendment to paragraph 73 (3)

 

Submissions on the construction of paragraph 73 (3)

 

62.   Mr Mant in his oral submissions in effect, adopted the analysis in paragraph 5 of Judge Mesher’s direction, and submitted that sub-paragraph (3) if interpreted, as it should be, in accordance with the plain and ordinary meaning of the words, did not apply to liable relative payments. The fact that the respondent may have intended the provision to be interpreted differently did not warrant a different interpretation in the absence of ambiguity, citing the dictum of Lord Diplock in Duport Steels v Sirs [1980] 1 All ER 529 at 541. He made the following further points. The limit in sub paragraph (3) applied only to child maintenance “attributed in accordance with regulations 28, 29 31 and 32 (calculation of income) or regulations 60B to 60D (treatment of child maintenance).” The relevant payments fell to be attributed not in accordance with any of these provisions, but in accordance with regulations 56 to 60. Although regulation 28 did apply, it was in its nature a general introductory provision which applied to the whole of Part V. If, as the respondent argued, it was sufficient to bring liable relative payments within the ambit of sub-paragraph (3), it would have been unnecessary to refer to regulations 29, 31 and 32 and to regulations 60B to 60D. It is to be noted that the sub-paragraph refers to regulations 28, 29, 30 and 31 described together as “calculation of income”. If regulation 28 had been intended to be a stand alone provision the word “or” would have been used instead of “and”. The word “and” the collective description in brackets indicates that the provisions were intended to apply collectively and not individually. Attention was also drawn to the references to regulation 60B to 60D and their collective description. If the sub-paragraph had been intended to apply to liable relative payments, there was no logical reason to refer expressly to regulation 60B to 60D, and not to refer to regulations 56 to 60. Further, the respondent’s submission that reference to regulation 28 to 31 was not intended to limit the operation of the disregard, but to identify the period to which it would apply, does not stand up to scrutiny because, amongst other things, regulations 56 to 59 deal with that period in relation to liable relative payments, and regulations 60 B to 60 D (which expressly referred to) dealt with that period in relation to child support maintenance. The references to the legislative history of the disregard did not support the respondent’s case, and the nature of the 2008 amendments indicated that the material version of the sub-paragraph did not cover liable relative payments.

 

63.   Mr Brown in his oral submissions, whilst accepting that the wording of sub-paragraph (3) could have been clearer, submitted the limit on the disregard applied to liable relative payments for two main reasons. First, regulation 28 was sufficiently wide to impose the limit on liable relative payments. Second, the intention of the draftsman in referring to regulations 28 to 31 was to identify possible periods to which the disregard may apply, the starting point being that liable relative payments are to be taken into account as income under regulations 54 and 55. By way of example, regulation 29 was referred to because it helps to identify the period over which a payment is to be taken into account, and that interpretation is supported by paragraph (2) (b) which requires disregards under schedule 9 to be taken into account in calculating the appropriate period. Mr Brown recognised that the fact that the draftsman referred to regulation 60B to D presented a difficulty for his case, but submitted that it was consistent with the purpose of identifying the period to which the limit on the disregard should relate. He also recognised that regulation 25 in dis-applying regulations 29 to 42 appeared to be inconsistent with his submission, but submitted that whilst he accepted that those provisions did not apply to a payment which fell to calculated under Part VII, they did apply to the extent that they assisted in the task of attributing a payment to a particular period. Mr Brown further submitted that the explanatory memorandum presented to Parliament in relation to the 2004 amendments, and the explanatory note in the statutory instrument (which effected the amendments) were consistent with his submission that paragraph 73 (3) is concerned with how money should be attributed. He also referred to the subsequent amendments and submitted that they reflected the policy of the respondent which was to provide for gradual increase in the amount of the disregard, ending in a full disregard with effect from 12 April 2010. Regard should be had to that policy in construing the sub-paragraph because, as the arguments demonstrated, its interpretation was unclear and ambiguous.

 

64.   It is to be noted that the oral submissions of both Mr Mant and Mr Brown were made on the assumption that regulation 25 on its proper construction dis-applied regulation 40 in its entirety. Mr Blundell in his subsequent written submissions, having submitted that regulation 25 should be interpreted in the way set out above, then submitted that the appeal should be dismissed on the basis of the respondent’s skeleton argument as developed by Mr Brown at the oral hearing. Subject to this general submission, Mr Blundell did not specifically address further the construction of sub-paragraph (3).

 

65.   Mr Mant, however, in his additional written submissions in response to Mr Blundell’s submissions on the first question of construction submitted that the existence of a clear drafting error in respect of the application of paragraph 73 as a whole should not be taken as a reason for adopting a purposive approach to the interpretation of sub-paragraph (3). In support of this submission, he made the following further points. First, he drew attention to Lord Nicholls’s qualifications on the power to adopt a rectifying construction, namely that it should be confined to plain cases of drafting mistakes and that considerable caution should be exercised before adding, omitting or substituting words. Second, the respondent’s construction could be achieved only by substituting the words “regulations 56 to 60” for the words “regulations 28, 29, 31 and 32” in paragraph 73 (3) for which there was no justification. Third, although on a literal interpretation paragraph 73 in the form it took in the 2000 Regulations would have been otiose if it did not apply to liable relative payments, paragraph 73 as amended by the 2004 Regulations applied to “any payment of child maintenance” , and not just to payments by a parent. Thus, as amended, paragraph 73 applied to (a) all liable relative payments (not just those from a parent), (b) child support maintenance payments, and (c) payments from persons other than liable relatives. Fourth, in these circumstances the limit on the disregard in sub-paragraph (3) applied to category (b) (attributed in accordance with regulations 60B to 60D) and to category (c) (attributed in accordance with regulations 28, 29, 31 and 32), but not to liable relative payments in accordance with other provisions. Fifth, there was no absurdity in such a construction and none of the words are otiose.

 

Conclusions on the construction of sub-paragraph (3)

 

66.   In my judgement, sub-paragraph (3) should not be construed, as Mr Mant contends, so as to provide that payments of child maintenance by liable relative should be disregarded in their entirety in calculating a claimant’s entitlement to income support, but should be construed, as Mr Brown contends, so that all payments of child maintenance are subject to a limit of up to £10 for each relevant week. I reject the thrust of the submissions by Mr Mant that the sub-paragraph should be interpreted solely by reference to the words used, and consider that it is appropriate in the light of the evidence to apply a rectifying construction in accordance with the guidance in Inco Europe. It follows that, although I accept Mr Brown’s construction, I do not accept the arguments he put forward to support that construction, save in so far as he placed reliance on the evidence as to the purpose of the amendment.

 

67.   I accept, as Mr Mant submits, that the power to adopt a rectifying construction is confined to clear drafting errors and must be exercised with great caution. However, I am abundantly sure that there three test in Inco Europe are met in this case. As to the first test, for the reasons I explained in paragraph 57 above it is clear that the overall purpose of paragraph 73 in both the form it took in the 2000 Regulations and in the 2004 Regulations was to provide that payments of child maintenance of up to £10 each week should be disregarded. It is equally clear from paragraphs 10, 11 and 17 of the explanatory memorandum to the Social Security Advisory Committee in relation to the 2004 Regulations (cited in my paragraph 35 above) , which it should be noted was not before Judge Mesher when he made his directions, that sub-paragraph (3) was amended in the 2004 Regulations for the specific and limited purpose of clarifying, in the light of legal advice received by the respondent, that the disregard is applied to each weekly amount of child maintenance paid, and was not subject to an absolute and overall limit of £10 no matter to what the period the maintenance payments. There was nothing in the memorandum to indicate an intention to change the overall policy from one which sought to provide a universal disregard of up to £10 per week in respect of all payments of child maintenance to a policy where payments by liable relatives would be disregarded in full but all other payments of child maintenance would be subject to the £10 limit.

 

68.   As to the second test, I am satisfied that the draftsman by inadvertence not only failed to give effect to that limited purpose in relation to a very large category of payments – i.e. payments by liable relatives – but also unintentionally exempted from the clear policy objective of providing a universal limit of up to £10 per week the same very large category of payments. Whilst I accept Mr Mant’s point that the amendment did not render the whole sub-paragraph otiose, it nonetheless defeated its limited purpose in substantial part, and altered its policy intent in a major respect.

 

69.   As to the third test, I satisfied that the substance of the amendment that the draftsman would have made but for the error would be to add after the reference to regulations 28,29, 31 and 32 the words “or regulations 55 to 59”.

 

70.   Returning to the need for caution which Lord Nicholls emphasised in Inco Europe I do not consider that the alteration in language involved in the construction I adopt is too far reaching or too much at variance with the provision.

 

Overall conclusion on the first issue: whether the tribunal correctly applied the law as to disregards of payments of child maintenance

 

71.   In the light of my conclusions on the two questions of construction, it follows that the respondent’s submission to the tribunal (cited in paragraph 13 above) was erroneous in law, and the tribunal, in so far as it adopted this submission, also erred in law. However, the error was not material because it follows from my conclusions that, had the tribunal had applied the correct law as to the extent of disregards in determining whether and to what extent an overpayment had occurred, it would have reached the same conclusion as it did. In these circumstances and in the exercise of my discretion under section 12 (2) of the 2007 Act I would not have set aside the tribunal’s decision because of this error.

 

Second issue: did the tribunal deal properly with the duty to disclose?

 

 

72.   The second issue derives from the further questions raised by Judge Mesher in paragraph 7 of his directions which were as follows:

 

“If not, how did that affect the existence of a duty to furnish information under regulation 32 of the Social Security (Claims and Payments) Regulations 1987? There is a further question whether it was sufficient for it to be asserted to the tribunal that forms INF 4 “would have been’ issued to the claimant or whether some evidence of actual sending or at least of standard practice was necessary? It may be relevant that there appears to have no argument on behalf of the claimant that no INF 4 had been received.”

 

Submissions of parties

 

73.   In response to the questions raised in this direction Mr Mant made the following submissions. First, the questions raised in the direction form part of the broader issue of whether the claimant could be reasonably expected to know that the maintenance payments might affect her benefits within the meaning of regulation 32. Second, the wording in all the documents relied on by the respondents (form INF 4, the declarations in the original claim form and in the review form A2) are materially the same and ask whether you (i.e. the claimant) or anyone “you are claiming for” is in receipt of maintenance, but these questions do not apply to persons who receive maintenance for their children, but who are not claiming benefits on behalf of their children. Third, he was instructed that the claimant had not received form INF4, and submitted that there was no evidence before the tribunal on this matter, and that the tribunal made no finding as to whether she received it. Fourth, in the circumstances it cannot be said that the claimant reasonably should have known that the payments would affect her entitlement to income support. Fifth, although the claimant’s case was that she had reported the receipt of the payments, it does not follow that she knew the payments affected her entitlement, to income support. By contrast her case was that she did not know because she was told that the payments did not affect her claim. Sixth, the tribunal’s failure to construe the requirements of the claim form correctly must have coloured its approach to her evidence, and undermined its approach to regulation 32 and its decision on the facts.

 

74.   The respondent in written submissions in response to the direction provided a further copy of form INF4 which was similar to that which was before the first-tier tribunal, albeit that the layout appears to be slightly different. It was also submitted that in the light of INF 4, whilst it did not specifically instruct a claimant to report receipt of payments made under a court order specifically for the benefit of children for whom she was not claiming, it did require reporting any money in respect of maintenance for children. It was further submitted that although no specific evidence could be adduced to show that the form INF 4 was issued in this case, the decision of the Upper Tribunal in [2009] UKUT 27 (AAC) (paragraphs 7, 8, 9 and 10) is authority for the proposition that the written submission to the tribunal is itself evidence of some probative value. Reliance was also placed on the fact that it was not suggested before the tribunal that INF 4 had not been provided.

 

75.   Mr Brown in his skeleton argument briefly submitted that, on the basis of form INF4, the claim form and the review form, the claimant had been clearly instructed to provide information about the material payments; that this point was not in issue before the tribunal, where the only issue was whether in fact the claimant had disclosed the payments; and that the submissions now made on behalf of the claimant amounted to her changing her case.

 

Conclusion on the second issue

 

76.   The submissions of the parties to a large extent address the factual issue as to what conclusion should have been reached had the right question been posed, rather than the first question which I need to determine – namely, whether the tribunal erred materially in law.

 

77.   Although it is true, as Mr Brown pointed out, that the claimant did not raise the question as to whether she was under a duty to disclose, the issue clearly arose from the respondent’s submissions to the tribunal which relied specifically on the duty under regulation 32 (1) arising from the requests made in form INF4. In these circumstances, it was, in my judgement, incumbent on the tribunal to deal adequately with the question of whether she was under a duty, and it erred in law by failing to do so in three respects.

 

78.   First, in so far as the tribunal briefly adverted to the question in paragraph 11 of its statement of reasons when it stated that the tribunal was satisfied that the claimant “was aware of her duty to disclose as the claim form specifically requests details of other income”, it ought to have explained, but failed to explain, why it relied on requests in the claim form in circumstances where (a) it was common ground between the parties that at the time the claim form was completed the claimant was not in receipt of any maintenance payments for the children, and (b) the respondent’s case was that the relevant request was made in INF4. The need for the tribunal to explain this is reinforced by the fact, which is now common ground between the parties, that it is clear from paragraph 6 of the statement of reasons that the tribunal wrongly understood that the claimant’s case was that she had had declared the payments at an interview before she signed the declarations in the claim form. Secondly, in so far as the tribunal relied on a request in the claim form, it should have identified the specific request it relied on, and considered and made a finding as to whether that request clearly and unambiguously instructed the claimant to report in the future receipt of voluntary payments or payments under a court order for the benefit of the children for whom she was not claiming. Third, it should have addressed the respondent’s case, which was founded on INF 4, and made findings as to whether the claimant had been given this form and, if so, whether the request in that form relied on clearly and unambiguously required the claimant to report receipt of payments, made voluntarily or under a court order, for the benefit of the children for whom she was not claiming.

 

79.   These errors of law were material in that had the correct questions been considered and answered, the tribunal might have reached a different conclusion as to whether a duty to disclose had arisen under regulation 32 (1)or (1A). Depending on the conclusion reached, it might then have been necessary to consider whether a duty arose under regulation 32 (1B), which in turn would raised other issues, and in particular whether in all the circumstances, including any oral advice given, the claimant might reasonably be expected to know that the relevant payments might affect her right to benefit. I add in passing that Mr Mant in his submissions did not distinguish between the different consideration established in Re B relating to one the one hand any duties arising under paragraphs (1) and (1A) , and on the other hand any duty arising under paragraph (1B).

 

80.   I do not express a view as to what conclusions should be reached on the facts if the right questions are posed because for reasons explained in paragraph 90 below I consider that this case has to be remitted to the fist-tier tribunal for reconsideration, and in those circumstances I should not usurp any part of its fact finding role.

 

 

 

 

Third issue: did the tribunal adequately explain its finding that the claimant did not disclose the maintenance payments?

 

The submissions of the parties

 

81.   The overall submission of Mr Mant on behalf of the claimant was that the tribunal’s reasons for preferring the evidence of the respondent to that of the claimant was irrational and unsupported by evidence. In support of that submission Mr Mant made three particular points.

 

82.   First, he submitted that in the light of paragraph 10 of the statement of reasons one of the tribunal’s central reasons for preferring the evidence of the respondent was that it was highly unlikely that an experienced information collector would have given the advice which the claimant says she was given. He submitted that this was an assumption unsupported by evidence, and sought an adjournment of the hearing to enable additional evidence to be admitted pursuant to Rule 15 (2) of the Tribunal Procedure (Upper Tribunal Rules) 2008. The adjournment was sought because Mr Mant was not in a position to adduce the additional evidence at the oral hearing before me. Mr Mant told me that he had not seen the evidence himself, but had been instructed by the claimant that it had been obtained, and used, for the purposes of her successful defence to a criminal charge arising out of her alleged failure to disclose the relevant payments of child maintenance. He further told me that the evidence comprised tape recordings, made apparently on dates after the events material to the case before me, of staff at the Belle Vale Jobcentre Plus giving similar advice to that which the claimant says she was given.

 

83.   Second, Mr Mant submitted that the tribunal had based a large part of its decision on its finding that the claimant had not disclosed the maintenance payments when interviewed in June 2005 in connection with her original claim for income support. In so doing the tribunal wrongly understood her case in three respects: she did not make any declarations in June; she did not make any declarations to her interviewer; and she had no relevant opportunity to check or correct her claim form. The tribunal failed to consider, and make findings in relation to, her actual case which was that she informed an official in the Belle Vale Jobcentre Plus later after she had received the review form A2.

 

84.   Third, Mr Mant submitted that the tribunal’s reliance on the proposition that it was common sense to expect that the receipt of the substantial sum of £300 in respect of each child would have an impact on her claim for state benefit was irrational. It could just as easily be asserted that it would be common sense that payments specifically for a claimant’s children should not affect a claimant’s personal entitlement, as is now the case under the 2009 amendments.

 

85.   The respondent in written submissions prior to the oral hearing and in Mr Brown’s oral submissions accepts that the tribunal made an error of fact in paragraph 6 of its statement of reasons by recording that the claimant’s case was that she had declared the maintenance payments when interviewed in June in connection with her original claim, but submits, in summary, that the error did not vitiate the tribunal’s reasoning. The respondent also in written submissions on this appeal (paragraph 8) appeared to contend that the error was of no consequence because the overpayment related only to the period from August 2005 when the first payments were received, and not from June 2005. At the hearing Mr Brown did not pursue this point, but submitted that in the light of the evidence before it the tribunal was entitled to make the findings that it did, and reading the statement of reasons as a whole the tribunal gave adequate reasons for rejecting the claimant’s case, including the reasons given in paragraph 9 of the statement.

 

Conclusion on the third issue

 

86.   I accept the thrust of Mr Mant’s second main point on the adequacy of the tribunal’s reasoning and conclude that the tribunal erred in law by failing to give adequate reasons for its decision. It is plain from paragraphs 6 to 10 of the tribunal’s statement of reasons that the tribunal’s findings on the particular issue as to whether the claimant had informed the local benefits office that she was in receipt of maintenance payments for the children, and its decision overall, rested on its view that the claimant’s evidence was not credible. It is equally plain, as Mr Mant submitted, that an important part, albeit not the only part, of the tribunal’s reasons for finding her evidence not to be credible was founded on the tribunal’s mistaken understanding that her case was that she had told the interviewer from the Jobcentre, when she was interviewed in June 2005 in connection with her claim for income support, that she was in receipt of payments of child maintenance. The tribunal rejected that account principally because it preferred the evidence of the interviewer to the effect that, if anything of this nature had been declared by the claimant, it would have been recorded. As an important part of the tribunal’s reasons for rejecting the claimant’s case was based on a significant misunderstanding of her case and evidence, the tribunal’s reasons, in my judgement, for rejecting her case were materially undermined and amounted to an error of law.

 

87.   I note that the respondent agrees that the tribunal misunderstood the evidence, but I cannot accept the respondent’s submissions that the mistake did not affect the outcome because the overpayment claimed only relates to the period from which the claimant was in receipt of maintenance, or that read as whole the reasoning was adequate. For the reasons given above, the tribunal’s mistake was an important element of its reasons for not believing the claimant’s evidence and thereby impugned its overall reasoning for rejecting her case.

 

88.   I add for completeness that I am not persuaded that the tribunal’s reliance on “common sense” in the way that it did in this case was unreasonable or that in itself it rendered the reasons open to challenge.

 

89.   In the light of the conclusion which I have reached on this issue, and bearing in mind the overriding objective of the procedural rules of the Upper Tribunal and my intention to remit this case to a freshly constituted tribunal for re-hearing, there would have been no purpose in adjourning the hearing to enable consideration to be given to whether additional evidence should be admitted. The claimant will be able, if so advised, to adduce further evidence at the fresh hearing before the first-tier tribunal.

 

 

Disposal and directions

 

90.   I set aside the decision of the tribunal decision because the decision involved the making of the material errors of law I have explained above. I consider it appropriate to remit the case to the first-tier tribunal for reconsideration because some of the factual issues which arise for decision depend in substantial part on whether the claimant’s evidence should be accepted which I am not in a position to judge. As the reasons given by the tribunal for not accepting her evidence were flawed, the case should be reheard by a differently constituted tribunal.

 

 

91.In the light of my conclusions as to the proper construction of the provisions relating to disregards of child maintenance payments, it follows that the amount of the overpayment which was calculated on the basis that a disregard of the relevant child maintenance payments up to £10 per week should be made was calculated on the correct basis. Further, as both parties told me at the oral hearing that the amount of the overpayment (as set out in paragraph 1 above) was agreed, the fact of, and the amount of, the overpayment will not be in issue before the new tribunal.

 

92.In order to assist the tribunal’s reconsideration, the respondent is directed to make a further submission within 4 weeks of the date of this decision. The submission should identify on which part or parts of regulation 32 the respondent relies to establish a duty of disclose and precisely on what documents or other evidence the respondent relies to show that the claimant was under a duty. If reliance is placed on form INF4, the respondent should specify the evidence on which it relies to establish that the claimant was given that form. If the claimant seeks to adduce tape recordings of conversations with the respondent’s officials, the claimant is directed to make a further submission within 4 weeks of the date of this decision, identifying precisely who were the parties to the conversations, when they took place, how and by whom they were recorded and whether the respondent’s officials were informed that the tape recordings were being made. Transcripts of the conversations relied on should be attached to the submission. A date for the hearing should not be fixed until the respondent has had at least 4 weeks from the receipt of any further submission from the claimant to enable consider its position in the light of that submission and/or carry out any further investigations.

 

93.The tribunal will need to consider all the factual issues entirely afresh. The tribunal will need to consider and make a finding as to whether the claimant was under a duty to disclose the relevant payments by virtue of regulation 32 (1) or (1A) or 1(B), specifying which paragraph gave rise to the duty. In considering the application of paragraphs (1) or (1A0, the question to be answered is whether the request relied on was clear and unambiguous, and no consideration of what the claimant was reasonable expected to know arises. If reliance is placed on paragraph 1 (B) the tribunal must consider and determine what in all circumstances the claimant might reasonably have been expected to know. Some general advice as to what may be relevant in this regard was given by the Commissioner in CDLA/2328/2003 in paragraph 28, and would include any notes or other documentation given to the claimant. It would also be relevant to take into account any oral advice that the tribunal find the claimant was given.

 

94.If the tribunal find that in the circumstances the claimant was under a duty to disclose the relevant payments, it will need to make and explain findings as to whether the claimant disclosed the payments.

 

 

 

 

 

 

Signed

Christopher Whybrow QC

Judge of the Upper Tribunal

 

Dated 12 August 2010