Upper Tribunal (Administrative Appeals Chamber)

IN THE UPPER TRIBUNAL Appeal No.  CIS/671/2010

ADMINISTRATIVE APPEALS CHAMBER

Before Judge S M Lane

DECISION:  The appeal is dismissed.  The decision of the First-tier Judge did not involve the making of an error of law.

REASONS FOR DECISION

1       This appeal by the appellant, with my permission, from the decision of a First-tier Tribunal that he was liable for a recoverable overpayment of Income Support of £10,158.20 for the period 5 February 2001 to 7 March 2007 inclusive.  The appeal was heard on 7/12/09 in Wakefield under reference 008/09/00374.  It is the final appeal in a series which began when the DWP discovered that the appellant had capital in excess of the amount prescribed for entitlement to benefit under regulation 45 of the Income Support (General) Regulations 1987. 

2       In granting permission to appeal, I limited the appellant’s grounds to whether the tribunal applied the rules on causation incorrectly in considering an overpayment of Income Support from 7 February to 27 February 2007.  The specific submission was that the chain of causation between the appellant’s failure to disclose his savings and the overpayment was broken by the Department’s receipt of information from the General Matching Service (GMS) on 7 February 2007 which indicated that the appellant had capital in excess of the prescribed amount.  The further grounds put forward had been dealt with adequately by the tribunal and raised no arguable errors of law. 

3       The facts:  The appellant was awarded Income Support on his claim of 3 August 2001.  His stated circumstances were that he was living with his elderly, disabled cousin in her home, acting as her carer.  His own home had been destroyed in a gas explosion about a year earlier.  Some time after the award, his circumstances changed.  He received an insurance payout of £18,898.74 in respect of the destruction of the house on 5 February 2002 (excluding the value of the land, which he continued to own) and then a further payment of £10,000 in respect of the sale of the land on which it had stood in or around December 2003.  He was not entitled to have the payments of capital disregarded under paragraph 8(a) of Schedule 10 of the Income Support (General) Regulations 1987, as I decided in JM v Secretary of State for Work and Pensions [2009] UKUT 97 (AAC).

4       Recovery of an overpayment:  The Secretary of State’s power to recover an overpayment arises from s. 71(1) of the Social Security Administration Act 1992: 

71. (1) 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 a benefit 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 or any sum which he would have received but for the misrepresentation or failure to disclose.

5       The Secretary of State’s case is that the appellant failed to disclose his savings (capital).  This involved a breach of the appellant’s duty to provide information under regulation 32(1A) of the Social Security (Claims and Payments) Regulations 1987.

32(1A):  Every beneficiary…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.

6       The tribunal found that the Secretary of State had specifically required the appellant to report if he savings of more than £3000 in information sheets (Form INF4) which the appellant admitted he had received.  He did not do so.  The Department only discovered that the appellant held capital which appeared to be incompatible with his claim when it received data from the GMS on 7 February 2007.

7       The appellant was interviewed by the Department on 6 March 2007.  During the interview he gave evidence that was told by an officer when claiming that money he received as a result of an insurance payment for the damage or loss of his home would be disregarded.  This was, of course, some time before he received the payments.  The tribunal dealt with this issue satisfactorily in its decision, and I refused to grant permission to appeal in relation to a submission that insufficient reasons had been given for its conclusion.  The tribunal found, quite rightly, that even if he was given this unalloyed advice, it did not qualify the clear instructions in the INF4 that a claimant must report if his savings were more than £3000.  He failed to supply information required of him by regulation 32[1A] of the Social Security (Claims and Payments) Regulations 1987. 

8       There is no contradiction between the rule which entitles a claimant to Income Support in some circumstances where he has excess capital and the requirement that he furnishes information on matters relevant to his entitlement from time to time.  A claimant is not entitled to a means-tested benefit if he has capital above a prescribed limit (s. 134(1), Social Security (Contributions and Benefits) Act 1992) and even lower amounts of capital lower than the maximum in regulation 45 may have consequences for the amount of an award.  This is why the Department requires a claimant to notify the amount of his capital when it reaches a certain point. 

9       Did the receipt of information from the GMS break the chain of causation between the failure to disclose and the overpayment?  There are several strands of argument that need to be addressed.  The first depends on what is meant by having capital for the purposes of regulation 45.  A person who holds capital – in this case money - in his own name is assumed to be its legal owner.  But a person may hold money in his own name on behalf of someone else.  The other person may then be entitled to the benefit of that money even though the holder has legal title to it.  It is only where the legal and beneficial right reside in the same person that he owns it fully for the purpose of this benefit.  Once it is shown that the claimant is the legal owner of property, it is up to the claimant to show that someone else is beneficially entitled to it (CIS/30/1993) or that it is to be disregarded under Schedule 10 (CIS/240/1992). 

10. The information supplied by the GMS provides some evidence that the claimant is the legal owner of the capital to which the information relates, but it does not necessarily mean that the appellant is the beneficial owner of the money.  While the Secretary of State could act on the basis that a person holding the legal title to money (and, indeed, other property) is also entitled to it beneficially and proceed to suspend, revise or supersede an award, that could be a disproportionate response to a situation for which there might be an innocent explanation. 

11. In my view, the mere receipt of information from the GMS is not, in general, sufficient knowledge to justify the revision or supersession of benefit without further investigation.  Even where he contemplates suspension of benefit (which is not appealable), the Secretary of State acts on the basis of cautious guidelines.  It is important for the Secretary of State to satisfy himself that he has a reasonable case for taking action by presenting the evidence to the claimant and getting his reply (insofar as that is possible) before taking the drastic step of interfering with his benefit.  Until the Secretary of State has investigated and put the problem to the claimant, there will ordinarily be no break in the link between the overpayment and the claimant’s breach of duty under regulation 32(1A).  In this, I respectfully agree with Judge Mesher’s decision in CDLA/1708/2001 at [8]. 

12. There is a second reason why the chain of causation is not broken.  Contrary to the assumptions inherent in the representative’s submission, there may be more than one cause of an overpayment:  Morrell v Secretary of State for Work and Pensions [2003] EWCA Civ 526 at [45] – [47] (reported as R(IS)6/03).  Causation is largely a matter of common sense.  The question posed by the Court of Appeal at [45], as adapted to this appeal, is ‘did the claimant’s failure to disclose the fact that he had capital in excess of £3000 have, as at least one of its consequences, the overpayment of benefit?’ The only reasonable answer is ‘yes’.  Had the appellant told the Department about his savings as he should have done, it is likely that the overpayment would not have occurred. 

13. The appellant is not assisted by the principle that there can be no failure to disclose information to someone who already knows it.  Even assuming that I am wrong and the Department had sufficient knowledge of the material fact at the time in question, the principle does not operate unless the prospective discloser knows that the information is already known by the proposed disclosee.  I consider Judge Ward’s analysis in GK v Secretary of State for Work and Pensions [2009] UKUT 98 (AAC) at [29] and [30] to be correct. 

14. The appeal is accordingly dismissed.

[Signed on original] S M Lane

Judge of the Upper Tribunal

[Date] 10 January 2011