Upper Tribunal (Administrative Appeals Chamber)

1. This appeal raises a number of complex legal issues concerning the payability of disability living allowance (“DLA”) to a claimant who is resident in a care home. In particular, it concerns the position where the claimant was at the outset accommodated at public expense but at some later date reimbursed the local authority for the fees for a past period (“retrospective self-funding”).  In such a case entitlement to DLA is not in issue. The question is whether DLA is payable and, if so, how far back it can be reinstated. This involves some exceptionally opaque statutory provisions governing both the payability of DLA and the revision, supersession and suspension of earlier benefit decisions.  Although this appeal concerns DLA the same issues arise in the context of awards of attendance allowance (“AA”).

The parties

2. This is the Secretary of State’s appeal against the decision of the First-tier Tribunal.  The claimant is the Respondent to this appeal. To avoid confusion we call him “the claimant”.  He is an elderly gentleman who suffers from schizo-affective disorder.  His daughters have an enduring joint power of attorney over his affairs; one of them also acts as his appointee for social security purposes.  The facts of the case span more than 10 years and the changes in the law over that period are of some complexity; for that reason we include a time-line of relevant events at Appendix 1.

This appeal

3. The appeal was heard by a three-judge panel of the Administrative Appeals Chamber of the Upper Tribunal.  We held two oral hearings on separate aspects of the case (on 11 May 2010 and 8 December 2010).  The Secretary of State was represented by Mr Jeremy Heath of the Solicitor’s Office at the first hearing and by Mr Jason Coppel of Counsel at the second hearing.  Mr Tim Samuel of Counsel represented the claimant on both occasions (and indeed appeared before the First-tier Tribunal).  We are indebted to all three advocates for their detailed and helpful oral and written submissions which have assisted us in charting our way through a dense thicket of primary and secondary legislation.

4. We add that the complexity of this case has been recognised by the Ministry of Justice, acting on behalf of the Lord Chancellor, which has exceptionally authorised the Legal Services Commission to grant the claimant funding for legal representation before the Upper Tribunal.  This application has been approved under section 6(8)(b) of the Access to Justice Act 1999.  We put on record that we find it extremely difficult to see how the case could have been argued so effectively on the claimant’s behalf in the absence of such funding.

The original award of DLA

5. On 5 March 1998 the claimant, then aged 64 and living at home with his wife, applied for DLA.  On 1 July 1998 an adjudication officer made an award of the highest rate of the care component and the lower rate of the mobility component of DLA, both with effect from 5 March 1998 and for an indefinite period. We have not seen a copy of that decision but there is no dispute that it was made in those terms. There appears to have been no other formal decision on either the claimant’s entitlement to DLA or the payability of his DLA until a supersession decision was taken more than eight years later on 22 November 2006.

6. The claimant became entitled to the state retirement pension as from 31 December 1998.  The local social security office (which administered retirement pension payments) assumed responsibility for paying that pension together with DLA (which is administered by a separate office of the Department for Work and Pensions (“DWP”) in Blackpool (“the DLA Unit”)).

The events of 2000

7. A series of events took place in the course of 2000:

on 20 January 2000 the claimant was admitted to hospital;

on 20 February 2000 the local social security office, by administrative action,

“de-combined” the payments of retirement pension and DLA;

on 22 February 2000 the claimant was discharged from hospital to a nursing home, the local authority meeting the cost;

on 3 March 2000 the claimant was re-admitted to hospital;

on 5 June 2000 the claimant was discharged from hospital to a different nursing home, where again the fees were met by the local authority;

on 9 August 2000 payment of income support to the claimant commenced;

on 5 October 2000 the claimant was divorced.

8. We emphasise two further factual matters that are not in dispute. First, the administrative action taken on 20 February 2000 to “de-combine” payments of retirement pension and DLA was just that – an administrative action. It was not accompanied by any substantive decision on either entitlement to, or payability of, DLA. The circumstances surrounding this “de-combining” are at best murky. There is no contemporary paperwork on file to explain what happened. Payability of DLA continues as normal for the first 28 days of a claimant’s stay as a hospital in-patient. So the most likely explanation is that the claimant, his wife or another family member informed the local social security office of his admission to hospital and the office then “de-combined” payments so that retirement pension could continue in payment.  At that point responsibility for the DLA claim should have reverted to the DLA Unit in Blackpool.  However, the DLA Unit was either not informed, or was informed but took no action.  The former seems more likely but we do not need to make any specific finding on that issue.  What is clear is that payments of DLA ceased after 20 February 2000, whether the claimant was in hospital or a nursing home.

9. The second undisputed matter is that, whatever the position as regards the initial hospital admission, the DLA Unit was not informed about the claimant’s subsequent moves between hospital and nursing home (or back) on 22 February, 3 March and lastly 5 June 2000.  Mr Heath accordingly emphasised that this was a case where the claimant had failed, contrary to his statutory obligations, to notify the DLA Unit of material changes in his personal circumstances. However, we accept that the claimant was plainly seriously unwell and it is unclear who (if anyone) was attending to his financial matters at this time.  Moreover, Mr Heath’s point carries much less force on the particular facts of this case.  Leaving aside the claimant’s ill-health, it is understandable why in June 2000 there was no notification to the DWP of his nursing home re-admission when his payments of DLA had stopped some months previously. 

10. Indeed, there is no evidence that either the DLA Unit or the claimant (or his family) took any further action in relation to his DLA claim between 2000 and 2006.  The operative decision remained the award of 1 July 1998 (an indefinite award of the highest rate care component and the lower rate mobility component).  Yet no DLA was actually paid.  Meanwhile the claimant lived in the nursing home with the fees being met by the local authority.

The matrimonial home and the role of the local authority

11. As is evident from the sequence of events outlined above, the claimant was still married in June 2000 when he was admitted to the residential care home.  He and his wife jointly owned the matrimonial home.  The local authority paying for his accommodation carried out a financial assessment in July 2000 which disregarded the value of that property as the claimant’s wife was living there (National Assistance Act (Assessment of Resources) Regulations 1992 (SI 1992/2977), regulation 21 and Schedule 4, paragraph 2) (“Assessment of Resources Regulations”).  In October 2000 the couple divorced. The claimant’s beneficial interest in the matrimonial home changed from being that of a joint tenant with his wife to that of a tenant in common with his former wife.  The statutory disregard above accordingly ceased to apply. However, the local authority remained unaware of this change of circumstances.

12. The claimant’s former wife continued to live in the matrimonial home for some years.  There was no deferred payment arrangement under section 55 of the Health and Social Care Act 2001 or other charge placed on the property by the local authority. The claimant’s former wife died on 23 April 2007. The family informed the local authority. It promptly undertook a new assessment and asked for reimbursement of the care home fees for the period from June 2000 through to 2007. 

13. On 3 July 2007 the local authority provided a schedule that showed that although the claimant had paid a contribution towards the fees throughout the seven-year period, the bulk of the cost had been met by the local authority. This new assessment was apparently calculated on the premise that the claimant was liable for the full cost of the fees from the date of the divorce, as the basis for the original disregard had ceased to apply.  This may have overlooked the possibility of a different provision applying, namely that governing jointly held capital (see regulation 27 of the Assessment of Resources Regulations). It is possible that, after October 2000, the true value on the open market of the claimant’s beneficial interest in the matrimonial home was much less than half the value of the equity in the property (especially as we do not know whether any property adjustment order was made on the claimant’s divorce). If so, it may be either that the value of the claimant’s interest would have been below the level at which he was liable to make any contribution to the care home fees or that the property could have continued to be disregarded under the discretion in paragraph 18 of Schedule 4 to those Regulations until the claimant’s former wife died. The capital realised on the subsequent sale might have enabled the claimant to self-fund his care for about six years until 2013.

14. Be that as it may, the claimant’s family took legal advice (not from their current solicitors). On 21 August 2007, after the house was sold to realise some £116,000 for the claimant, the claimant’s daughter settled the local authority’s invoice for £90,151.72 for the period from 5 October 2000 (the date of the claimant’s divorce) to 21 July 2007.  Accordingly the claimant was retrospectively self-funding for the period from 5 October 2000 to 21 July 2007. He was self-funding “in real time” with effect from 22 July 2007.  We stress that, whatever doubts we may harbour, the correctness or otherwise of the local authority’s revised financial assessment is not a matter for us.

The DLA decision-making history from 2006

The supersession decision of 22 November 2006

15. In September 2006 a claim for attendance allowance (“AA”) was submitted on behalf of the claimant, then over retirement age. On 22 November 2006 this claim was disallowed, unsurprisingly, because there was a current award of the care component of DLA in place (see section 64(1) of the Social Security Contributions and Benefits Act (SSCBA) 1992).  This AA claim appears to have prompted one of the Secretary of State’s staff at the DLA Unit to telephone the care home where the claimant was living, presumably to establish his current status.  She was informed that the claimant had been living at the registered residential care home since 5 June 2000 and had been funded by the local authority from the start.  This conversation took place about six months before the claimant’s former wife died.

16. On the same day the DLA Unit official made a supersession decision, superseding the decision of 1 July 1998.  Her decision was in two parts.  First, she decided that the claimant was entitled to an indefinite award of the highest rate care component and of the lower rate mobility component with effect from 5 July 2000.  Second, she decided that the care component of DLA was not payable from the same date. She gave as her reason a change of circumstances, namely that the claimant had been living in a registered care home since 5 June 2000 and that therefore the care component was not payable after the first 28 days.  There was no decision to the effect that the mobility component was not payable (in fact, of course, it was not actually being paid).

17. On 4 June 2007 one of the claimant’s daughters telephoned the DLA Unit to inform them that her mother had recently died and that they would be selling the house and reimbursing the local authority for the fees for her father’s accommodation so that he would be self-funding. It appears that it was only then that the breakdown in communication between the local social security office and the DLA Unit back in February 2000 came to light.  On 13 June 2007 the local social security office informed (or re-informed) the DLA Unit that payments had been “de-combined” over seven years earlier on 20 February 2000. 

18. On 18 June 2007 the claimant’s daughter and appointee, who had just acquired enduring power of attorney status, wrote to the DLA Unit about his entitlement to the mobility component of DLA.  She pointed out that she had been told by a member of the DLA Unit staff that “as you appeared not to have been informed that Dad was discharged from a hospital stay in 2000, he has not been receiving this due benefit in the period since then”. 

19. On 6 July 2007 the DLA Unit duly sent the claimant a cheque for a lump sum payment representing his arrears of the lower rate of the mobility component of DLA for the previous seven years.  A few days later an official in the DLA Unit telephoned the local authority and confirmed the dates of the claimant’s various moves in 2000.  It was noted that the local authority had funded the short-term stay in the first care home and the longer term stay since 5 June 2000 in the second care home, but that the claimant’s own property was now for sale.

The purported supersession decision of 28 June 2007

20. On 28 June 2007 a DWP decision maker made a decision that purported to be a supersession of the decision of 22 November 2006.  It made an indefinite award of the highest rate care component and of the lower rate mobility component of DLA with effect from 23 February 2000.  It stated that the care component was not payable throughout the entire period from 23 February 2000 and that the mobility component was not payable for the limited period from 8 March 2000 to 6 June 2000 (effectively the period during which the claimant was re-admitted to hospital).  The decision was said to be a supersession based on ignorance of a material fact, namely the claimant’s various moves in the course of 2000. 

21. We interpose here two observations about the decision of 28 June 2007. In the first place it is agreed that, properly analysed, this was not a supersession decision but a revision decision.  The decision of 28 June 2007 revised the decision of 22 November 2006 as it was flawed from the outset because of the decision maker’s ignorance, when making it, of the material fact about the claimant’s moves in 2000.  The second point is that the decision was correct to make a distinction between payability of the care component and mobility component respectively of DLA as regards stays in hospital or a care home.  As the law currently stands, the general rule is that neither component of DLA is payable after a stay of more than 28 days in hospital, but that only the care component stops being payable after 28 days in a care home.

22. The claimant’s daughter then asked the DLA Unit to look at her father’s DLA claim again. On 31 August 2007 the DLA Unit wrote to the claimant’s daughter in rather confusing terms, stating that he was entitled to the lower rate mobility component and the highest rate care component, both with effect from 5 March 1998.  However, the letter said nothing about payability as opposed to entitlement.  On 26 September 2007 the claimant’s daughter telephoned the DLA Unit to confirm that her father was now self-funding, asking for appropriate action to be taken.  The claimant’s daughters followed this up with a letter asking about the care component, stating that they had not realised he had been awarded the care component until they had received the letter of 31 August 2007.

The supersession decision of 3 December 2007

23. On 3 December 2007 a further decision was taken.  The new decision was that the claimant was entitled to both the lower rate mobility component and the highest rate care component of DLA with effect from 25 July 2007 and that the care component was also payable from that same date (the mobility component by now already being back in payment).  This was described as a supersession decision based on a change of circumstances. The reasons given were as follows:

“[The claimant] is now self-funding in residential accommodation.  Although [he] has repaid the local authority [LA] back to 05/10/2000 benefit is only payable again from 25/08/2007. This is because there was no formal agreement in place with the LA that following the sale of the property [the claimant] would repay all the costs. Therefore [he] can only be regarded as self-funding once he had actually repaid the money to the LA and was paying his own fees.  [He] repaid the LA on 21/08/2007, therefore benefit cannot be reinstated before this date.”

24. The claimant’s daughters lodged an appeal on his behalf.  They argued, in summary, that their father had been awarded DLA indefinitely, his personal circumstances had not changed and as he had become retrospectively self-funding he should be paid the outstanding arrears of the care component, in the same way as had been done for the mobility component.

The First-tier Tribunal’s decision

25. Following a wise adjournment for the claimant’s daughters to seek expert legal advice, the First-tier Tribunal heard the claimant’s appeal on 12 November 2008.  Mr Samuel appeared for the claimant and an experienced presenting officer, Mr Rob Priest, appeared for the Department.

26. The First-tier Tribunal allowed the claimant’s appeal.  The District Tribunal Judge’s decision, according to the Decision Notice, was that the lower rate mobility component and the middle rate care component were both payable (original emphasis) to the claimant for the following periods:

7 June 2000 to 8 August 2000;

6 October 2006 to 23 July 2007;

from and including 24 July 2007.

The Decision Notice concluded by stating that the lower rate mobility component, but not the care component of DLA, was payable to the claimant for the period from 9 August 2000 to 5 October 2003, when the claimant had been in receipt of income support.  The District Tribunal Judge subsequently issued a statement of reasons in which he understandably described it as “a very difficult appeal”.  For the most part, however, the statement of reasons adopted the analysis advanced by Mr Samuel on behalf of the claimant.

27. The Regional Tribunal Judge then gave the Secretary of State permission to appeal to the Upper Tribunal.

Why the Tribunal’s decision involves an error of law

28. The original grounds of appeal advanced on behalf of the Secretary of State by his representative have been modified and refined by Mr Heath and Mr Coppel in the course of these proceedings.  We deal with their submissions later.

29. However, at an early stage in these proceedings the Upper Tribunal identified three problems with the First-tier Tribunal’s decision.  First, the First-tier Tribunal ruled that the claimant was entitled to be paid the middle rate of the care component, but gave no reasons for “downgrading” his entitlement from the highest rate care component.  Second, the tribunal’s Decision Notice recorded that the claimant was entitled to be paid the care component from 6 October 2006 to 23 July 2007. Presumably it meant that period of payability to run from 6 October 2003, which would then tie in with the immediately preceding period of non-payability running from 9 August 2000 to 5 October 2003.  Third, the Decision Notice stated that the claimant was entitled to be paid the care component for the period from 7 June 2000 to 8 August 2000. This was a period which went beyond the first 28 days in the care home and when he was plainly being funded at the time by the local authority, but which was not covered by the retrospective self-funding lump sum payment (which took effect from the claimant’s divorce in October 2000).

30. The first two of these errors were to the claimant’s disadvantage, the last one worked slightly in his favour. One of these errors may simply have been a typographical mistake, but taken together they suggest that the First-tier Tribunal did not adequately address the issues relating to payability of DLA at the various dates. We did not understand Mr Samuel seriously to question the proposition that the tribunal’s decision involved errors of law which required it to be set aside.

31. Our formal decision is that the First-tier Tribunal decision under appeal involves three errors of law for the reasons set out at paragraph 29 above.  We accordingly allow the Secretary of State’s appeal and set aside the tribunal’s decision.

32. There is no point remitting this case to a new First-tier Tribunal as no new evidence is likely to emerge.  We have also had the benefit of detailed submissions from experienced advocates across two separate oral hearings on the highly complex law governing the inter-locking issues relating to DLA entitlement and payability on the one hand, and revisions, supersessions and suspensions on the other.  It is therefore appropriate for us to re-make the First-tier Tribunal’s decision. This means we need to examine the chain of Secretary of State’s decisions in 2006 and 2007 with some care.  Before doing so, we set out our reasoning and conclusions on the relevant legal framework within which these decisions must be considered. 

Discussion of the legal framework

33. We deal with the following seven issues in this discussion:

(1) The distinction between entitlement to DLA and payability of DLA;

(2) Restrictions on the payability of the DLA care component;

(3) Principles to be applied in cases of retrospective self-funding: Creighton

(4) Decision making under the SSA 1998;

(5) Decisions to suspend payment of benefit  ;

(6) The effective date of supersession decisions;

(7) Retrospectivity in supersession decisions.

(1) The distinction between entitlement to DLA and payability of DLA

34. The law distinguishes between a claimant’s right to DLA and his or her right to be paid DLA: thus the distinction is made between entitlement to DLA and payability of that allowance.  This distinction is made in the legislation and has been confirmed by the case law.  For example, the current version of section 72(8) of the Social Security Contributions and Benefits Act 1992 (“SSCBA”) reads as follows:

“(8) Regulations may provide that no amount in respect of a disability living allowance which is attributable to entitlement to the care component shall be payable in respect of a person for a period when he is a resident of a care home in circumstances in which any of the costs of any qualifying services provided for him are borne out of public or local funds under a specified enactment.”

35. Similarly, regulation 9(1) of the Social Security (Disability Living Allowance) Regulations 1991 (SI 1991/2890) (“DLA Regulations”), which deals with persons in care homes, provides that “a person shall not be paid any amount in respect of a disability living allowance” in certain circumstances (see (2) below).  This important distinction between entitlement and payability is recognised in the case law either by implication (as in Chief Adjudication Officer v Creighton and Others, Northern Ireland Court of Appeal, December 15, 1999, also reported as Commissioner’s Decision R1/00(AA)) or expressly (R(A) 1/02 at paragraph 11 and CA/3800/2006 at paragraph 7). 

36. As Mr Heath noted, the same distinction between entitlement and payability lay at the heart of the House of Lords’ decision in Insurance Officer v McCaffrey [1984] 1 WLR 1353, which led in turn to the enactment of what is now section 1 of the Social Security Administration Act 1992.  Accordingly, the critical question in the present appeal concerns payability, not entitlement.  It will, of course, be cold comfort to the claimant and his family if the law says he is entitled to DLA but not to payment of that same DLA.  Payability, in turn, depends in part on the appropriate formal decision having been made (see further the discussion in (4) – (6) below).

(2) Restrictions on the payability of the DLA care component

37. As noted in [34] above, section 72(8) of SSCBA contains the power to make regulations restricting the payability of awards of the care component of DLA.  The current version of section 72(8) was amended by section 60(2) of the Welfare Reform Act 2007 (“WRA 2007”).  For present purposes there is no material difference in the scope of the enabling powers before or after the 2007 amendments.  The same cannot be said of the relevant secondary legislation.  Regulations 8 and 9 of the DLA Regulations make provision for disqualifying claimants from payment of the DLA care component where they are resident in hospitals or care homes respectively.  Those provisions are in turn subject to various exemptions set out in regulation 10.  So, for example, there is no restriction on payability for the first 28 days of any such stay (regulation 10(1)). 

Regulation 10(8)

38. Regulation 10(8) provides an exemption from disqualification for periods during which the person is self-funding. However, regulation 10(8) has been amended on a number of occasions, so much so that the facts of the present case straddled five different versions of regulation 10(8).  The full text of each of the five versions of regulation 10(8) is included in Appendix 2 to this decision, but the principal changes are summarised in [39] to [43] below. 

39. The first relevant version of regulation 10(8) (in force from before the date of the award in the present case until 18 June 2000) allowed an exemption from the usual disqualification rule in regulation 9 if the claimant was (1) residing in a care home, other than one owned or managed, or owned and managed, by a local authority, and (2) was not entitled to income support (or certain other income-related benefits) and (3) met the whole cost of the accommodation (or a third party or charity was paying on the claimant’s behalf).

40. The second version (in force from 19 June 2000 to 28 February 2002) involved the repeal of the limitation in the preceding version to non-local authority homes. It therefore allowed an exemption from the disqualification rule simply if the claimant was not entitled to income support (or certain other income-related benefits) and, additionally, the whole cost of the accommodation was met by or for the claimant.

41. The third version (in force between 1 March 2002 and 5 October 2003) reflected an amendment to regulation 9 of the Regulations to exclude national health service costs from the costs of accommodation relevant to that regulation. The amendment to regulation 10(8) was a drafting change to ensure consistency with regulation 9.

42. The fourth version (in force from 6 October 2003 to 28 October 2007) is a compilation of two amendments to the regulation coming into effect on the same day. The first was to leave the regulation in the same form as the third version but with the addition of state pension credit to the list of prescribed income-related benefits, receipt of which denied access to this exemption from disqualification from payability. However, the second involved the revocation of the exclusionary rule based on the receipt of any of various benefits (including therefore the immediate revocation of the reference to state pension credit).

43. The fifth version (in force from 29 October 2007 and still in force today) is essentially a reformulation of the fourth variant of regulation 10(8) but to similar effect.  Instead of providing for regulation 9 not to apply where “the whole of the cost of the accommodation is met” by or for the claimant, the current version provides for an exception to regulation 9 “for any period during which the whole costs of all of the qualifying services are met” by or for the claimant.  There is no indication from the drafting that the October 2007 amendments were intended to alter the substantive scope of the exemption – rather, the intention appears to have been to provide greater clarity as to which types of costs were covered.  This was achieved by adjusting the balance of the relevant definitions as between the primary and secondary legislation in the light of the amendments to SSCBA made by the WRA 2007 (see [37] above).

(3) Principles to be applied in cases of retrospective self-funding: Creighton

44. The leading case on the principles to be applied in cases of retrospective self-funding is the decision of the Northern Ireland Court of Appeal in Creighton (see [35] above).  The appeal concerned the interpretation of regulations 7 and 8(6) of the Social Security (Attendance Allowance) Regulations (Northern Ireland) 1992 (SR 1992/20).  These provisions are identical in all material respects to the equivalent rules in Great Britain (see regulations 9 and 10(8) of the DLA Regulations and the discussion in (2) above).  In that context it is incumbent upon us to follow both the ratio decidendi of the decision of the Northern Ireland Court of Appeal (see R(SB) 1/90(T) at paragraph 15) and any obiter dicta, unless there are “quite exceptional circumstances” (R(IB) 4/04 at paragraph 30).  There are no such circumstances in this case.

45. In Creighton the Court concluded as follows (at p.15 of its judgment, as reported as R1/00(AA)):

“We are of opinion that the word ‘met’ in that provision is intended to refer to the person who ultimately meets the costs, not the person or body who makes the actual payment at the time when the fees are paid over to the provider of the accommodation... We accordingly hold that in cases where a health board or trust enters into an arrangement with the provider of accommodation and pays the costs, but is ultimately reimbursed by or on behalf of the claimant, the case falls within Regulation 8(6) and the claimant does not lose his or her entitlement to payment of attendance allowance. The cost is borne out of public funds in the first instance when the board or trust makes the payments, bringing Regulation 7 into play; but when the refund is made that cost is met out of the claimant’s own resources and Regulation 8(6) operates to make Regulation 7 inapplicable. We do not consider that it makes a difference whether reimbursement is agreed in advance between the board or trust and the claimant or his representatives or whether it is subsequently arranged, if it is in fact made.”

46. The reasoning of the Court in Creighton was subsequently adopted in Great Britain by Mr Commissioner Howell QC (as he then was) in R(A) 1/02 (at paragraphs 41 – 43).  Although Mr Commissioner Howell did not deal expressly with whether or not reimbursement had to be agreed in advance (“the prior agreement issue”), there is no suggestion that the Commissioner did otherwise than adopt the Court’s reasoning in its entirety, not least as it was “the only sensible way of reading the legislation and the only answer consistent with any rational intention behind it” (paragraph 43).  Moreover, according to Mr Commissioner Howell:

47. In the course of the first oral hearing before us, Mr Heath conceded that the Department was not contesting the prior agreement issue as determined by Creighton.  As he candidly admitted, “we lost that argument in R(A) 1/02”.  It is right to record that this concession was followed by an important caveat, namely Mr Heath’s submission, later developed by Mr Coppel, that the principle in Creighton is subject to the normal rules governing time limits for revisions and supersessions under the regime established by the Social Security Act 1998.  We return to that point later (see (5) below).

49. We discuss some of these “formidable technical problems” in (5) and (6) below.  However, it is important not to lose sight of the overall goal in cases of retrospective self-funding.  As Judge Mesher concluded in Secretary of State for Work and Pensions v DA (at paragraph 26):

“One must first accept the clear directions of principle from a court whose decisions Commissioners and the Upper Tribunal follow except in quite exceptional circumstances (R(IB) 4/04) and from a reported Commissioner's decision accepted as correct by at least a majority of Commissioners.  Those directions require that an acceptable technical means be found to allow claimants in circumstances like those of the present case to be paid AA and DLA for a past ‘bridging’ period once reimbursement is made to a local authority.”

50. Judge Mesher went on to observe that this requirement was strengthened by the fact that the Secretary of State had not seen fit to amend the Social Security and Child Support (Decisions and Appeals) Regulations 1999 (SI 1999/991) (“the Decisions and Appeals Regulations”) to make specific provision for such cases “where there appears to be a consensus about the only right and proper outcome in practice” (at paragraph 26).  In addition, as Mr Samuel submits, it is noteworthy that, since the decision in Creighton, Parliament has overseen a series of four amendments to regulation 10(8) of the DLA Regulations (three of those amending regulations also post-date R(A) 1/02), yet none of these changes undermines the essential reasoning of the decision of the North Ireland Court of Appeal as regards retrospective self-funding.  Parliament’s and the Secretary of State’s inaction on both fronts to our minds give added force to the reasoning underpinning the Creighton principle.

(4) Decision making under the SSA 1998

51. The question whether the DLA care component is actually payable for a past period is not simply a question of formal payability in cases of retrospective self-funding.  Rather, the question is how the substantive law governing the payability of the DLA care component (see (2) above) and the principle of retrospective self-funding (see (3) above) interacts with the decision-making and appeals regime.  As Mr Samuel put it in his written submissions, the DWP “is a creature of statute and it cannot just award benefit without regard to the rules regulating it”. Those rules are laid down in the Social Security Act 1998 (“the SSA 1998”) and the Decisions and Appeals Regulations.

52. The benefits system, as Mr Commissioner Powell (as he then was) explained in CA/1020/2007 (at paragraph 12), is a “decision based” system:

“What is meant by this is that the system proceeds, or is based, on formal decisions being given.  If a benefit is awarded it must be awarded by a formal and identifiable decision.  If that decision is to be altered by, for example, increasing or decreasing the amount involved, it can only be done by another formal and identifiable decision.  Likewise a decision is required if the period of the award is to be terminated, shortened or extended.  If a payment of benefit is to be suspended, leaving the underlying entitlement in being, a formal decision is again required.”

53. Thus a decision to award benefit (made under section 8 of the SSA 1998) may be altered later by a revision decision (under section 9), which typically replaces the original decision from the outset, or a supersession decision (under section 10), which usually replaces the original decision from some later date e.g. because of a subsequent change of circumstances.  Revision and supersession decisions may affect entitlement to and/or payability of benefit and carry rights of appeal to the First-tier Tribunal.  Alternatively, as Mr Commissioner Powell noted, the Secretary of State may decide to suspend the payment of benefit. Such a decision only affects the administrative process of payment and carries no right of appeal.  In the present case there has been no suggestion that the original decision awarding DLA was other than correctly made at the time (in July 1998).  We therefore need only consider supersession and suspension decisions in relation to that original decision (see (5) and (6) below).

(5) Decisions to suspend payment of benefit

The power to suspend

54. Mr Samuel’s principal submission was that rather than resorting to supersession in 2006, the DWP should have suspended payment of benefit.  Regulation 16(1) of the Decisions and Appeals Regulations provides that the Secretary of State “may suspend payment of a relevant benefit, in whole or in part, in the circumstances prescribed in paragraph (3)”.  Regulation 16(3) falls into two parts; sub-paragraph (b) applies to pending appeals and so is of no relevance to the present proceedings.  However, regulation 16(3)(a) provides that:

“(3) The prescribed circumstances are that—

(a) it appears to the Secretary of State or the Board that—

(i) an issue arises whether the conditions for entitlement to a relevant benefit are or were fulfilled;

(ii) an issue arises whether a decision as to an award of a relevant benefit should be revised under section 9 or superseded under section 10;

(iii) an issue arises whether any amount paid or payable to a person by way of, or in connection with a claim for, a relevant benefit is recoverable under section 71 (overpayments), 71A (recovery of jobseeker’s allowance: severe hardship cases) or 74 (income support and other payments) of the Administration Act or regulations made under any of those sections; or

(iv) the last address notified to him or them of a person who is in receipt of a relevant benefit is not the address at which that person is residing.”

CA/3800/2006 and CA/1687/2008

55. The application of regulation 16 to cases of retrospective self-funding has been considered in two decisions of the Social Security Commissioners, CA/3800/2006 and CA/1687/2008.

56. In CA/3800/2006 the local authority had stepped in to pay for the claimant's accommodation when her capital ran out; a supersession decision was then made that AA was not payable. Later, the claimant received lump sum compensation for poor investment advice following a ruling by the Financial Services Ombudsman and the local authority required reimbursement for the full costs of her care that they had met in the meantime. Mr Commissioner Jacobs (as he then was) accepted the Secretary of State’s suggestion that, instead of terminating payment by way of supersession, the decision maker should have simply suspended making payments of AA, applying regulation 16, and that the failure to do so was an official error that could then be corrected by revision.  As Judge Mesher explained in Secretary of State for Work and Pensions v DA (at paragraph 25):

“CA/3800/2006 therefore fills in what might otherwise have been a gap left by R(A) 1/02, in explaining what sort of decision the Secretary of State ought to give at the beginning of a period covered by the Creighton principle. However, it did not seek to define exactly when the circumstances would be such as to require the consideration of mere suspension of payment rather than a supersession decision making benefit not payable.”

57. We accept that the facts of CA/3800/2006 are not on all fours with the present case.  However, the guiding principle underlying Mr Commissioner Jacobs’s decision is plain.  It is that Creighton and R(A) 1/02 require that “an acceptable technical means be found to allow claimants in circumstances like those of the present case to be paid AA and DLA for a past ‘bridging’ period once reimbursement is made to a local authority”, as Judge Mesher put it in Secretary of State for Work and Pensions v DA (at paragraph 26).  In appropriate cases that will involve consideration of the option of suspension of payment of benefit as an alternative to supersession.

58. Mr Heath, however, relied for support on CA/1687/2008. This was not referred to in Secretary of State for Work and Pensions v DA.  In CA/1687/2008 the facts were undoubtedly closer to those of the present case.  The claimant, who had previously been entitled to AA, was admitted to residential care in 2004, funded by the local authority because her husband remained resident in the family home.  The capital value of her interest in the property was therefore disregarded in the assessment of her ability to refund the local authority’s payments to the home.  The Deputy Commissioner assumed that there had then been a supersession decision removing payability of AA, although there was no documentary support for that. The claimant’s husband died in 2005, so that the disregard no longer applied. But the local authority and DWP were not informed until 2007, when the claimant reached agreement with the local authority and became retrospectively self-funding (as from 2005).  The Secretary of State decided (as in the present case) that payment of AA could only be reinstated with effect from 25 June 2007, the date of the formal agreement to refund the local authority. The appeal tribunal ruled that payment of benefit should be reinstated from 26 May 2006, being 13 months before the date of the agreement (purportedly on the basis of regulation 8 of the Decisions and Appeals Regulations 1999).

59. On appeal, the Deputy Commissioner, Sir Crispin Agnew of Lochnaw Bt QC, held that the appeal tribunal had erred in law.  He ruled that the correct date for the reinstatement of payment of AA was 18 April 2007, being the date that the DWP was informed of the fact that the claimant had become self-funding, and going back to 2005.  This conclusion was based on the standard rule in section 10(5) of the SSA 1998 governing the effective date for such a supersession decision (see (6) below). Applying that analysis to the present case, the effective date for the reinstatement of payment of DLA here would have been 4 June 2007, if the decision of 22 November 2006 had been correct in superseding the original awarding decision with effect from 5 July 2000.

60. We are not persuaded that the Deputy Commissioner’s decision in CA/1687/2008 can carry the weight that Mr Heath seeks to place on it.  The first ground of appeal in CA/1687/2008 was that there had been a breach of natural justice in a failure to offer an adjournment to consider a new point.  To that extent the Deputy Commissioner’s further observations may be regarded as obiter.  In addition, the Deputy Commissioner’s decision proceeded on the assumption that there had in fact been a valid supersession decision when the claimant first went into residential care (unlike in the instant case).  Furthermore, the Deputy Commissioner appeared to conflate the separate issues of entitlement and payability (at paragraph 10) as well as suspension and supersession (at paragraph 14).  The focus of the decision appears correctly to have been on whether or not suspension of the administrative process of payment would have been appropriate as at the date of admission to care (see paragraph 15), as opposed to supersession. Having concluded that it would not have been, it followed that there was no scope for change from 2005 through the process of supersession when the issue of retrospective self-funding was raised in 2007.  However, whilst the decision in CA/1687/2008 acknowledges that a prior agreement for self-funding is not a prerequisite of reinstating payability of benefit, it does not address the broader point about Creighton made in Secretary of State for Work and Pensions v DA (see [57] above) or the approach in CA/3800/2006 (which had been cited by the claimant’s representative under the wrong reference of CA/3899/2006) when considering the appropriateness or otherwise of suspension of the administrative process of payment.

61. Thus to the extent that there is a conflict between CA/3800/2006 and CA/1687/2008 we prefer the former decision.  Mr Commissioner Jacobs’s decision in CA/3800/2006 is both consistent with the broader Creighton point and fits better with the approach of Mr Commissioner Howell QC in R(A) 1/02 at paragraph 51, where the Commissioner observed that:

63. The question remains as to what should happen when a claimant has the benefit of a decision carrying the right to payment of DLA or AA but has been resident in a care home for longer than the allowed period.  There is a real difficulty in identifying principles by which it can be decided whether at any particular time that decision should be superseded to remove payability or whether the administrative process of payment under the authority of that decision should merely be suspended. On the facts of CA/3800/2006 Mr Commissioner Jacobs appears to have come close to approving an outcome that could only be justified under a principle that in all such circumstances there should be suspension, not supersession for change of circumstances. At the date of the decision that he held arose from official error (in carrying out a supersession, rather than merely suspending payment) all that was apparently known was that the claimant’s investments, made on advice, had done badly enough that she could no longer pay the care home fees. It was not until some 18 months later that she received the compensation awarded by the Financial Services Ombudsman and was required by the local authority to reimburse it the full costs of her care in the period down to the date when she restarted meeting the fees herself.

64. The case for a much more restricted approach to suspension of payment was stated by Mr Deputy Commissioner Agnew in paragraph 15 of CA/1687/2008:

“Regulation 16 [of the Decisions and Appeals Regulations] provides for ‘prescribed circumstances’ under which payment of benefit can be suspended. The prescribed circumstances are all circumstances where there is uncertainty, at the time, as to the entitlement to benefit for a variety of reasons, and benefit may be suspended during the period of uncertainty. In the present case, at the time the claimant moved into the care home, there was no uncertainty as to her right to payment of AA, because the local authority were paying her care costs at that time. There was then no obligation to repay the costs. There was just the potential that the situation might change, depending on whether or not she predeceased or outlived her husband; it was not an uncertainty as to entitlement to be paid AA.”

65. In relation to CA/3800/2006, account must in our view be taken of the self-evident facts that awards do not emerge from the Financial Services Ombudsman in a matter of weeks rather than months, and that the Ombudsman’s process must be preceded by an attempt to get the complaint resolved by the financial institution or adviser concerned. It can therefore be assumed that, at the date of the crucial decision, the complaint process that was capable of yielding a payment of compensation had been put in motion and that information could have been obtained by the Secretary of State if questions had been asked about it.  There was sufficient uncertainty in those circumstances to justify the conclusion on the basis that the case was presented to Mr Commissioner Jacobs that there ought only to have been a suspension of payment. 

66. However, we have grave doubt whether the local authority was entitled to require the claimant in CA/3800/2006 to make a retrospective refund of the care home costs for the 18 months before she received the award of compensation. There would, of course, be no difficulty in the local authority taking account of the amount of the compensation as capital in the financial assessment for the period from its receipt onwards.  But for the previous 18 months, the claimant did not have capital of an amount to affect the financial assessment.  She did not, in our view, have a chose in action that had a market value.  She merely had a hope or expectation that the Financial Services Ombudsman would award her compensation.

67. It follows that we cannot see how the local authority under its powers in section 26 of the National Assistance Act 1948 could require the claimant to make a refund in respect of that period. The claimant’s position in that period was in essence the same as that of the claimant in this case prior to the divorce from his wife and of the claimant in CA/1687/2008 prior to the death of her husband.  In both, the local authority properly only enforced the retrospective refund of the care home fees from the date on which the capital disregard ceased to operate.  If the law were otherwise, a local authority would be able to require a retrospective refund of many years of payments of fees if a person who had never previously had any capital had, say, a large win on the National Lottery, rather than that just affecting the position for the future.  That could not be right.

68. Accordingly, although we are satisfied both that the result of CA/3800/2006 was to achieve substantial justice in the case as it was presented and that its general approach on that basis was correct, we doubt whether, if the same circumstances came up again, the same result should follow.  There would have been no substantial retrospective self-funding problem if the local authority had simply required the refund of fees from the date of receipt of the compensation onwards. There could, however, have been a short-term problem if an initial supersession decision removing payability of DLA required then to be superseded to the claimant’s advantage on a change of circumstances.  We call this a “transitional problem” below.  That could arise if, say, it took some weeks from the receipt of the compensation for the local authority to carry out a further financial assessment to determine that the claimant was liable to make a refund from a date a couple of months earlier. (This might have occurred in CA/3800/2006 from the dates given in the decision)

69. There would then be a difficulty under regulation 7(2) or (9)(c) of the Decisions and Appeals Regulations in making the superseding decision to restore payability of DLA take effect from any date earlier than that of the local authority’s new assessment. This is because that would constitute the relevant change of circumstances.  The circumstances would then be akin to those in some of the cases considered in Creighton, where the local authority had met care home fees in full while carrying out an assessment and then required a retrospective refund. See C3/96 (AA) and C4/95 (AA), where periods of six months and two months respectively were in issue.  That transitional problem would not have existed if the initial decision had been to suspend the administrative process of payment rather than to remove payability by a supersession decision.

70. Some of the more detailed reasoning of Mr Commissioner Jacobs in CA/3800/2006 would then come into play. He said at paragraph 12 that if the claimant’s lack of funds was, or might be, only temporary, then it would be premature (when her capital first dipped below the crucial level) to supersede until the position became clear.  That point is as valid where there might a transitional problem as described above as where there might be substantial retrospective self-funding for all or most of the period of non-payability of DLA.  If so, there was enough in the circumstances as they must have existed at that time to support the conclusion that supersession was premature.  There may also be a wider category of cases where a claimant’s capital has just dipped below the crucial level and might be expected to fluctuate. In those cases also supersession might be premature and suspension of payment more appropriate. 

71. The situation where a supersession decision is premature and therefore arises from official error encompasses the absence of an adequate investigation of the circumstances before the supersession decision was made.  We suggest below that the DLA authorities, who would not ordinarily need any information as to a claimant’s income and capital to determine entitlement to DLA, should routinely seek detailed information on all capital resources from a claimant or representative when payability is put in question by the claimant’s residence in a care home. 

72. However, if the ground of revision for official error is made out by reason of an inadequate investigation, that does not necessarily mean that the supersession decision should be revised.  There is a discretion to be exercised. This will be dependent on what would have been revealed by an adequate investigation.  If, say, what would have resulted was the information that a claimant had no capital at all, with no sufficiently specific prospects (e.g. an expectation of an inheritance), it is difficult to see how it could properly be concluded that a decision as to payability made as part of the initial decision on a claim or on a supersession of that decision was premature.  By the same token, if a claimant had been concealing capital resources from the local authority, so that it could not be assumed that the resources would have been revealed by an adequate investigation, there may be a difficulty in showing that it was premature to make such a decision, rather than just suspend payment of DLA.  However, such not very meritorious cases will have to be decided on their particular circumstances if and when they arise.

73. That brings us to the position where, some time after a decision that DLA is not payable, the claimant or a third party (such as a relative or a charity) makes a refund of care home fees to the local authority for a retrospective period when there was no obligation to do so or there was some question about the existence of the obligation.  Some variant of those situations might have occurred in CDLA/3800/2006 or possibly here.  Alternatively, the claimant or other payer might simply think that it is the right thing to do.

74. The formulation of the conclusions of the Northern Ireland Court of Appeal in Creighton, in terms that

“whenever [the authority] is ultimately reimbursed by or on behalf of the claimant, the case falls within regulation [10(8)(b)] and the claimant does not lose his or her entitlement to payment of attendance allowance”

suggests strongly that it is the making of the payment by way of reimbursement or refund that matters, rather than the existence of a liability to make reimbursement.  That is reinforced by the terms of the further conclusion that it made no difference whether reimbursement was agreed in advance with the claimant or was subsequently arranged, if it was in fact made.  On the other hand, the Court had earlier in the same paragraph said that the use of the word “met” in the equivalent of regulation 10(8)(b) demonstrated a focus on “the person upon whom the liability for the payments eventually falls”.  The cases it was considering were: where the authority made payments while a financial assessment was carried out which led to a determination of liability on capital grounds; where payments are made pending the sale of a property that counted as capital (so that there was a liability); or where payments were made under an express agreement that there would later be reimbursement out of capital.  In our view the assumption was that in all such cases the claimants were liable under the relevant legislation to make reimbursement to the authority for the retrospective period in issue.

75. It is therefore necessary to distinguish between cases in which the local authority has made a financial assessment under section 26 of the National Assistance Act 1948 for the period in question that the claimant is liable to make a full refund and cases in which it has not made such an assessment. 

76. In the former category, for the purposes of DLA payability it must be accepted that the claimant was under a liability and the principle of Creighton applies undiluted.  If the financial assessment was wrong in law or was based on some mistake or ignorance of fact, the challenge has to be made to the assessment itself.  Unless and until such a challenge is successful the statutory liability created by the financial assessment must be accepted.  In the great majority of cases, where it was the local authority’s initial financial assessment in issue, there would have been something in the circumstances at the time to make a decision that DLA was not payable premature under the principles discussed above (at [66] and ff).

77. In relation to the latter category, we do not in the present case have to decide what the position would be if there is a voluntary reimbursement to the local authority. That would at the least reduce the strength of the Creighton imperative to find a way of treating a claimant as self-funding for a retrospective period during which there was no liability to the local authority.  Any such cases would again have to be decided on their particular circumstances if and when they arise, after the parties have had the opportunity to make specific submissions about the problems involved.

Application to this appeal

78. We now turn to the principles as they affect the particular circumstances of this case.  In some respects, those circumstances are an example of a very common situation: the possession by the claimant of an interest in a property that is not yielding any income, where the capital value is for a time disregarded under Schedule 4 to the Assessment of Resources Regulations.  In other respects, they are unusual.  In particular, the pattern is not of a decision having been given by the Secretary of State that DLA is not payable and the claimant later seeking to restore payability retrospectively.  As explained above, prior to 22 November 2006 the operative decision was that of 1 July 1998 awarding the claimant DLA from and including 5 March 1998, an award that carried with it the right to be paid the appropriate amount of benefit.  Yet the claimant was not actually being paid his DLA because no action was taken the DLA Unit to implement that following the “de-combining’ of the payment of DLA and retirement pension.

79. The key issue is whether the decision of 22 November 2006 was caused by official error in so far as it superseded the decision of 1 July 1998 on the ground of relevant change of circumstances and made the care component of DLA not payable with effect from 5 July 2000. 

80. In addition, there is the complication that the period from 5 July 2000 to 22 November 2006 includes a substantial period (to 5 October 2003) during which claimants could not be exempted from the non-payability of the care component of DLA under regulation 10(8)(b) of the DLA Regulations, by meeting the whole cost of their accommodation in the care home, if they were entitled to income support.  Accordingly, from the earliest date from which the local authority eventually required a refund of the payments it had made to the care home (5 October 2000) to 5 October 2003 it is common ground that the claimant’s receipt of income support meant that the care component of DLA could not be payable.  For reasons that we explain when setting out our substituted decision below, the care component also could not be payable for the period from 23 February 2000 to 4 October 2000 either.

81. It therefore follows that as at 22 November 2006 it could not possibly have been premature to supersede the decision of 1 July 1998 in respect of the period from 23 February 2000 to 5 October 2003, rather then merely to suspend payment of benefit. So we have to return below to the powers of supersession, including in particular the rules as to effective dates, that were available on 22 November 2006 in respect of that period.  There could only be a question about premature supersession in respect of the period from 6 October 2003.

82. Mr Heath submitted that suspension is essentially prospective in nature, and so was inappropriate in respect of past periods as at 22 November 2006. We reject that submission. It focused unduly on the practical consequences rather than on the statutory criteria for a suspension.  Suspension is used in everyday DWP practice to put current and future payments of benefit into abeyance until the doubts in question are resolved.  However, the statutory criteria under which suspension may be operated refer to the past as much as the present.  So regulation 16(3)(a)(i) of the Decisions and Appeals Regulations refers to whether “the conditions for entitlement to a relevant benefit are or were fulfilled” (emphasis added). (Regulation 16 deals with suspension of benefit payment in prescribed cases). In the present case, of course, suspension under this subparagraph would not have been appropriate, as the issue related to payability and not entitlement.  However, the reference in regulation 16(3)(a)(ii) to the possibility of revision or supersession is necessarily backward looking.  Likewise, the issue of a possible recoverable overpayment as a ground for suspension under regulation 16(3(a)(iii) involves looking to the past.  In this context it will be recalled that as at 22 November 2006 the DLA Unit was apparently under the mistaken impression that DLA was still in payment to the claimant via the local office.  The circumstances of the present case were also, on the face of it, covered by regulation 16(3)(a)(iv) (last known address not the address at which the person is residing) as regards the accuracy of details of the claimant’s last recorded address.  There was, therefore, no obstacle to the exercise of the power of suspension over a past period for which payment had not yet in fact been made.

83. On the assumption (to which we return below) that the question has to be considered as at 22 November 2006, what would an adequate investigation have revealed?  The DWP officer seems only to have enquired of the care home about the position.  If further inquiry had been made to the local authority (as ought to have been done given that the home could only be expected to know of the outcome of the financial assessment, not of its workings) that could have produced significant further information. At that point the local authority apparently knew about the claimant’s interest in the matrimonial home, but did not know about his divorce.  And a specific inquiry to whoever in the claimant’s family was looking after his financial affairs about any capital assets would in our judgment have produced that information.  It is true that neither the claimant nor the family had informed the DLA Unit of his moves to and from hospital and into the care home, as ought to have been done.  Nor had the local authority been informed of the claimant’s divorce, although this was crucial to the continuing application of the capital disregard under paragraph 2 of Schedule 4 to the Assessment of Resources Regulations.  However, no DLA had actually been paid to the claimant after February 2000. Nor is it clear who in 2000 was responsible for dealing with the local authority.  In our view no inference can be drawn that the family would not in November 2006 have responded honestly to specific inquiries to the best of their knowledge, as they have subsequently.

84. So the DWP officer could have discovered that the claimant had an interest in the matrimonial home as a tenant in common with his former wife, that they had divorced on 5 October 2000 and that she was still living in the property.  The officer can also be assumed to have been able to discover that the claimant had been in receipt of income support from 9 August 2000. That would have been sufficient to make it premature to supersede the awarding decision for the period from 6 October 2003 onwards. This is because it then became irrelevant to the issue of payability that the claimant was entitled to income support or pension credit.  There was a plain possibility, if not a probability, that a new retrospective financial assessment by the local authority would leave the claimant liable to meet the full costs of his accommodation from that date.  Even though there was the possibility of the application of the discretionary disregard in paragraph 18 of Schedule 4 to the Assessment of Resources Regulations or a valuation of the claimant’s interest at a low amount, it would still have been premature to supersede, rather than suspend payment, until a new assessment had been carried out.

85. That conclusion is subject to two particular factors, the existence of which was relevant to the appointment of a three-judge panel in the present case. The first was that, as at 22 November 2006, the then operative financial assessment of the local authority was not a full assessment of the claimant’s liability. The second, linked, factor is that, because the local authority’s new financial assessment was not made until May or June 2007, the consequent reimbursement to the local authority of the balance of the full costs for the period from 5 October 2000 to 21 July 2007 was not made until 21 August 2007.

86. We have no doubt that the first factor does not affect the conclusion. Although we say in [76] above that the financial assessment made by a local authority has to be accepted, that is only in the context of an enquiry whether a reimbursement or refund of care home costs to a local authority for a retrospective period was in pursuance of a liability under section 26 of the 1948 Act or was voluntary.  The present context is different.  It often takes time for local authorities to catch up with changes of circumstances. That being so, we consider that the Secretary of State is required to consider whether the actual circumstances at the relevant time give rise either to a possibility of a future change in the financial assessment with retrospective effect or to a transitional problem such that it is right merely to suspend payment of benefit.

87. We also, after close analysis, have no doubt that the second factor does not affect the conclusion either. This is despite the heavy emphasis in the judgment of the Northern Ireland Court of Appeal in Creighton on the centrality of a reimbursement having been made to the conclusion that the full costs of accommodation had then been met by or on behalf of the claimant.  That emphasis, which reflected the circumstances of the cases before the Court, does not in itself exclude giving effect to the broad principle laid down in Creighton in other circumstances.  It is of importance that the Court was not concerned with the precise procedures by which that principle was to be put into operation.  In the present case, as in others before the British Social Security Commissioners and the Upper Tribunal, the concern is with what could be anticipated as at the date of a particular decision as a change of circumstances probably or possibly to take place in the future. 

88. That follows from the solution found in CA/3800/2006, which we have endorsed, of asking whether a decision superseding payability was premature, and therefore a result of official error, when it was made.  That inevitably involves looking to the future.  At the date of the supersession decision in CA/3800/2006 the local authority’s current financial assessment must have been that there was no – or only a limited – liability to refund to the authority the care home costs.  Mr Commissioner Jacobs’s decision must be based on there having then been a sufficient possibility of the financial assessment being changed in the future for supersession to be premature. In that case, by the time of the decision under appeal (superseding the supersession decision but only prospectively), the claimant had reimbursed the local authority, which must have revised its financial assessment.  But the fact that that had happened prior to the latest date that the tribunal could take into account in accordance with section 12(8)(b) of the SSA 1998 could not have been relevant to the question of what should have been done at the date of the first supersession decision. This is because that could not have been known at the time.  Only what could have been anticipated then was relevant.  That is the logic of the CA/3800/2006 solution: a solution that the Court in Creighton did not consider and which cannot be regarded as qualified in any way by anything said in that case.

89. Accordingly, it does not matter in the present case that as at 22 November 2006 there had been no revised financial assessment by the local authority and no reimbursement by or on behalf of the claimant.  We do not need to become entangled in the question of whether or not those matters can be taken into account consistently with section 12(8)(b) of the SSA 1998 simply by reason of having happened prior to the date of the decision directly under appeal (3 December 2007).  However, we return in explaining our substituted decision to the consequences of tracing back the chain of decisions in this case.

(6) The effective date of supersession decisions

90. Since it cannot be in dispute that in principle there was nothing premature in making a supersession on 22 November 2006 in relation to the period prior to 6 October 2003, it is necessary to consider the rules about the effective dates of supersessions for changes of circumstances adverse to the claimant that could be applied in November 2006.  As a result, the form of the relevant regulations before and after a crucial amendment with effect from 10 April 2006 must be considered.

The position before the amendment

91. The Secretary of State may make a supersession decision on his own initiative or following an application by the claimant.  The basic rule is that such a decision takes effect from the date it is made or “where applicable, the date on which the application was made” (SSA 1998, section 10(5)).  However, regulations may provide differently (section 10(6)).  The relevant rules are contained in regulation 7 of the Decisions and Appeals Regulations.  In the context of DLA (and AA), the rules governing the effective date for a supersession decision following a change of circumstances differ according to whether the new decision is favourable to, or adverse to, the claimant.  In the remainder of this section we refer to DLA as encompassing AA also.

92. Regulation 7(9) of the Decisions and Appeals Regulations governs the effective date for a supersession of a DLA award, made on the basis of a change of circumstances, where the new decision “is advantageous to the claimant”.  In particular, regulation 7(9)(c) provides that where the change in question “is relevant to the question of whether benefit is payable”, then the supersession decision takes effect from the date of the change if, but only if, the change is notified within one month.  That is subject to an extension of that period for up to 13 months in certain circumstances (under regulation 8).  However, “in any other case” the effective date is “the date of the application for the superseding decision”.  The onus, accordingly, is on the claimant to notify any change of circumstances promptly.  That would apply in many cases of retrospective self-funding where, if a claimant cannot rely on a previous decision on non-payability of DLA falling to be revised for official error, he or she has to request supersession of that decision for change of circumstances.  However, in the unusual circumstances of the present case it does not apply. This is because supersession of the awarding decision would not be to the advantage of the claimant.

93. Regulation 7(2)(c) of the Decisions and Appeals Regulations governs the effective date for a supersession of a DLA award, made on the basis of a change of circumstances, where the new decision “is not advantageous to the claimant”.  Here the position is more complex.  In particular, the scope of regulation 7(2)(c) has varied over time.  Between 5 July 1999 (when amendments made by the Social Security and Child Support (Decisions and Appeals) Amendment (No. 2) Regulations 1999 (SI 1999/1623) came into force) and 9 April 2006, there were two possible outcomes.

94. First, regulation 7(2)(c)(ii) dealt with the situation where the Secretary of State made an adverse DLA supersession decision on the basis of a change of circumstances which was “in relation to a disability determination embodied in or necessary to the disability benefit decision” and there had been a failure by the claimant to notify such a change.  In such a case the superseding decision was effective “from the date on which the claimant... ought to have notified the change of circumstances”. (Regulation 7A(1) defined the expressions “disability benefit decision” and “disability determination” by reference to the core medical criteria for entitlement to DLA.)

95. Second, regulation 7(2)(c)(iii) provided for an adverse supersession decision to have effect “in any other case, except in the case of a decision which supersedes a disability benefit decision... from the date of the change.”

96. In CIB/763/2004, signed on 6 September 2004, Mr Commissioner Turnbull (as he then was) identified a problem with the drafting of regulation 7(2)(c).  (Although that case concerned incapacity benefit decisions, the same reasoning applied to disability benefit decisions.)  The Commissioner observed that although supersessions on the grounds of medical changes of circumstances were covered by regulation 7(2)(c)(ii), and took effect from the date on which the change should have been notified, the same principle did not apply to non-medical changes of circumstances where there had been a failure by the claimant to notify the DWP at the appropriate time.  Such changes were also not caught by regulation 7(2)(c)(iii) because of the proviso to that sub-paragraph. It followed that a supersession of a disability benefit decision for a non-medical reason was subject to the standard rule in section 10(5) of the 1998 Act, and so took effect from the date of the supersession decision or a relevant application, rather than from the date of the change. 

98. The Secretary of State’s response was to bring forward amendments to regulation 7(2)(c) of the Decisions and Appeals Regulations.  These were contained in regulation 5(3)(a) of the Social Security (Miscellaneous Amendments) (No. 2) Regulations 2006 (SI 2006/832; “the 2006 Regulations”).

99. A copy of a letter dated 17 February 2006 from a DWP official to the Secretary to the Social Security Advisory Committee (“SSAC”) has been produced to us with a further submission on behalf of the Secretary of State following a direction given after the second oral hearing.  The letter enclosed draft regulations and an annex that have not been produced to us.  The provision that became regulation 5(3) was said in the letter to clarify the effective date of a change of circumstances in relation to incapacity.  The problem in the existing form of regulation 7(2)(c) of the Decisions and Appeals Regulations was described only in relation to incapacity benefit. So, the examples given of “non-medical” changes of circumstances did not include becoming a hospital in-patient or a resident in a residential care home.  There was a reference to the decision in CIB/763/2004 with the conclusion that the result put customers who were subject to non-medical changes of circumstances that the Secretary of State was not told about at the time “in a more favourable position than non-IB customers”.  That was, in particular, because there would be no overpayment for a period during which some condition of entitlement or payability was not met.  The letter argued that claimants would have been required under regulation 32 of the Social Security (Claims and Payments) Regulations 1987 to inform the Secretary of State of all the types of changes of circumstances mentioned and concluded:

“Thus, in seeking to close this gap in the effective date provisions we will not be putting an added and unexpected burden on these customers.”

The SSAC agreed that the proposals did not need to be referred to it, as recorded in the preamble to the 2006 Regulations as laid before Parliament.

100.  The Explanatory Memorandum to the 2006 Regulations prepared for the House of Commons and House of Lords Joint Committee on Statutory Instruments referred to the lacuna identified by CIB/763/2004 and argued that the application of the default rule in section 10(5) in such cases “means there is no overpayment and such customers are placed in a more favourable position than their non-IB/DLA counterparts” (at paragraph 7.8.2).  Furthermore, according to paragraph 7.8.6:

“The policy intention of regulation 7(2)(c) of the Decision and Appeals Regulations is that it should provide the effective date for disadvantageous changes for both medical and non-medical changes of circumstance. A Social Security Commissioner confirmed that it does not cover the latter in all circumstances. The amendment in Regulation 3(3) restores the policy intention.”

The general description of the scope of the Regulations stated in paragraph 2.2 that there was one amendment that affected the substance of an individual’s benefit, i.e. an increase in the personal expenses allowance for care home residents. The other amendments were described as procedural and administrative, including clarifying the effective date for a change of circumstances for incapacity benefit, DLA, attendance allowance and pension credit.

101.  The explanatory note printed with the 2006 Regulations themselves merely stated that regulation 5(3) removed the exception from the general rule for determining the effective date of a change of circumstances which is not advantageous.

102.  The amending regulation, which came into effect on 10 April 2006 by the ordinary commencement provision from that date, left regulation 7(2)(c)(ii) intact, repealed regulation 7(2)(c)(iii) and added new sub-paragraphs (c)(iv) and (v).  These provided that adverse supersession decisions took effect:

“(iv) in the case of a disability benefit decision, where the change of circumstances is not in relation to the disability determination embodied in or necessary to the disability benefit decision, from the date of the change; or

(v) in any other case, except in the case of a decision which supersedes a disability benefit decision, from the date of the change.”

103.  It must be noted that there was a corresponding lacuna in regulation 3(5) of the Decisions and Appeals Regulations on revision of a decision to the disadvantage of a claimant on the ground of ignorance or mistake of material fact that was not removed until 24 September 2007.  Prior to that date, regulation 3(5)(b) excluded disability and incapacity benefit decisions from the ordinary rule allowing revision on that ground if to the disadvantage of the claimant from the effective date of the decision revised, but regulation 3(5)(c) was limited to cases of ignorance or mistake of a material fact related to the determination of disability or incapacity.  Thus, immediately following the amendments made by the 2006 Regulations, it remained the case that if a DLA decision not excluding payability of the care component was made by the Secretary of State at a time when payability should have been excluded, the decision could not be revised unless action was taken within the month allowed by regulation 3(1)(a).  It could only be superseded for ignorance or mistake of material fact under regulation 6(2)(b).  There was then nothing in regulation 7 to take the case out of the default rule in section 10(5) of the SSA 1998 that the superseding decision took effect from the date of that decision.  It was recognised in the Explanatory Memorandum to the Social Security (Miscellaneous Amendments) (No 4) Regulations 2007 (SI 2007/2470) prepared for the Joint Committee on Statutory Instruments that regulation 3 should have been amended in April 2006 (paragraphs 7.8.1 -7.8.3), but was not.

104.  In the present appeal, the Secretary of State’s position was to acknowledge that under the legislation in place from 5 July 1999 until 9 April 2006 a supersession decision taken on the grounds that the claimant had been a hospital in-patient or a care home resident could only take effect from the date on which it was made. This was so even though that date might be years after the relevant change took place.  But Mr Heath and Mr Coppel submitted that the new regulation 7(2)(c)(iv), in force as from 10 April 2006, enabled the Secretary of State to make such a supersession decision effective from the date of the relevant change of circumstances, whenever that change had occurred (i.e. whether before or after 10 April 2006). Mr Samuel argued that such a construction offended against the principle of non-retrospectivity.

(6) Retrospectivity in supersession decisions

107. The judge decided that it could.  In doing so he based himself firmly on the approach of the House of Lords in Plewa v Chief Adjudication Officer [1995] 1 AC 249, R(P) 2/95, to ask if the retrospective effect of the provision was so unfair that it was not permissible to attribute to Parliament the intention that it should so operate.  We add that Lord Woolf, in the only substantive speech, endorsed the principle that it is a matter of degree, rather than simply classifying an enactment as retrospective or not retrospective, so that the greater the unfairness, the more it is to be expected that Parliament will make it clear if that is intended.  Judge Jacobs rejected the submission on behalf of the Secretary of State, put by Mr Coppel, that the amendment was not retrospective in any material sense. He held that a change in the liability in respect of past events was retrospective, on an analogy with the loss of the defence of due care and diligence in Plewa.  However, he concluded that that retrospective effect was not unfair. This was because there was no significant difference in practice resulting from the amendment when account was taken of the claimant’s liability to pay the landlord the rent due if the latter had been pursued by the local authority and required to repay the housing benefit for a past period.  Among the issues discussed by Judge Jacobs that he did not need to resolve in the light of his conclusion on fairness was his strong suggestion that it was not permissible to consider the overall fairness of the overpayment recoverability provisions after the amendment.

108.  Mr Coppel’s central submissions in the present case may be summarised as follows:

(i) the natural and ordinary meaning of regulation 7(2)(c)(iv) is that it applies to cases where the supersession decision is made on or after the date on which it came into force, including those where the relevant change of circumstances occurred before that date;

(ii) this interpretation is consistent with the legislative intent; and

(iii) the clear language and legislative intent mean that the presumption against retrospective effect is displaced. 

He further submitted that before 10 April 2006 a claimant had no accrued right to a particular procedural regime, including the procedure for superseding the payability of benefit. The most that could be said was that a claimant had an expectation that his benefit award would be treated in accordance with the procedural regime (including provisions relating to the effective date of a supersession) as it applied from time to time.  Mr Coppel also relied on Lord Woolf MR’s dictum in Nargis Chowdry that “If Parliament makes it clear that its intention is to produce a result which it may or may not acknowledge is unfair, then courts have to give effect to that intention.” However, if fairness was in issue, he advanced a number of arguments as to why supersession from the date of the relevant change, rather than from the date of the superseding decision, was not unfair.

109. Mr Samuel’s main submissions in response may be summarised thus:

(i) whilst the intention of the 2006 Regulations may have been to close the lacuna identified by CIB/763/2004, the language of regulation 7(2)(c)(iv) did not clearly have retrospective effect;

(ii) a claimant with an award of DLA in place for a period before 10 April 2006 had an accrued right which was protected by section 16(1)(c) of the Interpretation Act 1978;

(iii) the ultimate test, under both section 16(1)(c) and the common law rule against retrospective operation, was one of the intrinsic fairness of the legislative measure, taking a composite view of all the circumstances (see the speech of Lord Mustill in L’Office Cherifien des Phosphates v Yamashita-Shinnihon Steamship Co Ltd [1994] 1 AC 486 at page 525);

(iv) regulation 7(2)(c)(iv) should not be allowed to operate retrospectively as to do so would frustrate the goal identified by the Northern Ireland Court of Appeal in Creighton and so be “repugnant to common sense and elementary fairness”.

110.  We have found this issue far from easy to determine.  Mr Coppel posed the question in the following terms:

“The issue for determination by this Tribunal is whether the 2006 Regulations were effective in relation to changes of circumstances which occurred before they came into force, such as those in the present case, or only in relation to change of circumstances which occurred on or after 10 April 2006.”

111. In our judgment that does not pose the issue in an entirely accurate way. It reflects a failure to distinguish clearly between the specific amendments made to regulation 7(2) of the Decisions and Appeals Regulations by the 2006 Regulations and the state of the law as it was in the absence of those amendments.  The Decisions and Appeals Regulations had plainly provided from the outset in regulation 6(2)(a) that any decision of the Secretary of State may be superseded on the ground that there has been a relevant change of circumstances since the decision had effect. There was therefore a certain element of retrospectivity built in to the system, in that any past decision must be vulnerable to supersession on that ground, in order to up-date decisions to take account of new circumstances.  (Transitional provisions brought in most pre-1999 decisions made by other adjudicating authorities). Further, that supersession could by definition rely on any relevant change of circumstances subsequent to the date the original decision took effect.  The CIB/763/2004 lacuna related only to the date from which a supersession on that ground could prior to 10 April 2006 take effect. In a case like the present it was the date of the superseding decision, in accordance with the default rule in section 10(5) of the SSA 1998.  The amendment to regulation 7(2) merely amended the rules as to the effective date. It did not bring any decisions or any changes of circumstances within the scope of supersession for relevant change of circumstances that were not already within that scope.

112. Thus, the amendments to regulation 7(2) in the 2006 Regulations must in principle apply to DLA decisions made and to changes of circumstances prior to 10 April 2006.  That would be the ordinary meaning of the general and unqualified words used if they are looked at in isolation, thus raising an issue about retrospectivity (see paragraph 37 of AH v Mendip District Council).  There could plainly be no objection on the basis of any presumption against retrospective legislation to the making of a decision on 22 November 2006, say, superseding a 1998 awarding decision to the disadvantage of the claimant on the ground of a relevant non-medical change of circumstances occurring on or after 10 April 2006, to take effect from the date of the change.  We consider that there could also be no such objection to the making of such a decision on 22 November 2006 on the ground of a relevant non-medical change of circumstances occurring before 10 April 2006 in so far as it could otherwise properly be determined to take effect on or after that date.  Thus, if the ordinary meanings of the amendments and their commencement provision have to yield to the presumption against retrospectivity, that cannot affect the question of payability (or entitlement in other cases) for dates from 10 April 2006 onwards.

113.  That leaves two possible outcomes in principle.  The first is that regulation 7(2)(c)(iv) applies to any period following any change of circumstances, whenever it occurred, and enables a supersession decision to take effect from the date of any pre-10 April 2006 change. The second is that regulation 7(2)(c)(iv) applies to all changes of circumstances, whenever they occurred, but only enables a supersession decision to take effect from the date when the 2006 Regulations came into force.

114. The starting point, of course, must be the language of the regulations.  Mr Coppel submitted that the language was clear. Regulation 7(2)(c)(iv) and (v) are both expressed in general terms with no suggestion that a distinction is being drawn as to when the relevant change of circumstances occurred. There was no room for any consideration of whether it would be unfair to give those provisions retrospective effect.  That submission cannot be accepted.  It would allow the legislator - by the mere use of general language making no reference to the difficulties of the temporal effect of the legislation - to pre-empt any consideration of the fairness or unfairness of its retrospective effects. That would be contrary to the fundamental modern approach to such legislation authoritatively established by the House of Lords in Plewa.  In our judgment only the very plainest language, setting out either in express terms or by compelling implication the retrospective effect of a provision, would have the pre-emptive force put forward on behalf of the Secretary of State. 

115.  The language used does plainly raise a question about retrospective effect. In addressing that question it is necessary to examine with care the legal situation of the claimant, and other claimants in a similar situation, as it was immediately before 10 April 2006.  In this exercise we think it right to consider other DLA claimants who had the benefit of a decision awarding them benefit from a date prior to 10 April 2006 under which they had a right to payment of the benefit, whether they had actually been paid or not, when either at the date of the decision or later they did not in fact satisfy some non-medical condition of entitlement or payability.

116.  The claimant in the present case had on 9 April 2006 a decision in his favour giving him the right to payment of DLA. He had not in fact received any payment after 20 February 2000, but he could have taken action, for instance in the County Court, to enforce the right to payment. As at 9 April 2006 the Secretary of State could have had no answer to such an action.  If in response to a claim for payment, the Secretary of State had on that date sought to supersede the awarding decision on the ground of relevant change of circumstances in respect of the period prior to 6 October 2003 (in respect of which we have concluded above that supersession would not in principle have been premature), the decision could not have taken effect for any date prior to 9 April 2006. Accordingly, the claimant’s right to payment could not have been taken away for any past period.  The position would have been the same if, on the facts as they were at the date of the awarding decision, they would, if known, have meant that the care component should not have been payable. As explained above, no ground of revision under regulation 3 of the Decisions and Appeals Regulations as they were until 24 September 2007 would have existed. Further, a supersession on the ground of ignorance or mistake of material fact could only have taken effect from the date of the superseding decision.  So there was a consistency of approach between regulations 3, 6 and 7.  It is admittedly hard to see why the Secretary of State would have wanted the Regulations to compel those results (and indeed it is plain from our experience that his decision-makers routinely assumed the law to be otherwise), but there can be no getting away from that having been the structure created by the Regulations made by the Secretary of State and approved by Parliament.  The outcome may have been anomalous but it was not absurd.

117.  Until 10 April 2006 the claimant had an accrued right of a kind within the scope of section 16(1)(c) of the Interpretation Act 1978 to payability of the DLA to which he was entitled.  Whether or not the inability of the Secretary of State to take away that right can also be regarded as a right accrued under regulation 7 of the Decisions and Appeals, it is in our judgment an important practical part of the description of the claimant’s legal position prior to 10 April 2006. If the existence of the defence of due care and diligence to the Secretary of State’s right to recover overpayments of means-tested benefits was important enough to give rise to an unfairness on its being taken away in Plewa, so potentially is the taking away of the immunity from losing entitlement to or payability of DLA for non-satisfaction of non-medical conditions.  Where claimants have been paid benefit, that might seem to add strength to their position, especially as they would then also have the protection of the limit on recoverability of any overpayment under section 71 of the Social Security Administration Act 1992 that misrepresentation of or failure to disclose a material fact would have to be proved by the Secretary of State.  However, in our judgment, no significant distinction can be drawn in the present context between a case where payment of benefit was made in accordance with an award and a case where payment was not made purely as a result of administrative error on the part of the DWP.

118.  Would the retrospective removal of the immunity identified above be sufficiently unfair as to give rise to a need for a particular degree of clarity in the 2006 Regulations that that effect was intended?  In our judgment it would.  We agree with the approach of Judge Jacobs in AH v Mendip District Council that it is not permissible to consider the overall fairness of the scheme of the Decisions and Appeals Regulations from 10 April 2006 onwards, as had been urged on us by Mr Coppel.  It is irrelevant to the particular question before us that it could be argued to be fair in a situation where, almost by definition, a claimant or those acting for a claimant have failed to provide relevant information that they were instructed to give either in a claim or subsequently to be able to supersede a decision adversely to the claimant with effect from the date of a subsequent relevant change of circumstances relating to non-medical conditions.  Before 10 April 2006 there was the built-in retrospectivity discussed above in any Secretary of State’s decision being liable to supersession on any such subsequent relevant change of circumstances. Even so, claimants had an important immunity in the case of changes relating to non-medical conditions for any dates before that of the superseding decision itself.  It is the removal of that immunity and its replacement by the new form of regulation 7(2)(c) that must be considered.

119.  We include in the consideration of unfairness that as at 22 November 2006 there had been no corresponding amendment to regulation 3(5) of the Decisions and Appeals Regulations on revision.  Thus the 2006 Regulations created an anomalous distinction.  In a case where the material facts at the date of the awarding decision, if accurately known by the decision-maker, would have led either to a determination that there was no entitlement to DLA or to a decision that, although there was entitlement, DLA or a particular component was not payable, the immunity identified above remained in being.  If it was a case where that state of facts only came into being subsequently, so that supersession for relevant change of circumstances was appropriate, the immunity was removed.  What we do not include is the distinction between medical conditions (where regulation 7(2)(c) both before and after 10 April 2006 contained an immunity where the claimant did not know or could not reasonably have been expected to know that the change of circumstances should have been notified to the Secretary of State under regulation 32 of the Claims and Payments Regulations) and non-medical conditions.

120. Are the 2006 Regulations sufficiently clear to show that that unfair result was intended?  In our judgment the words of the particular amendment to regulation 7(2) of the Decisions and Appeals Regulations and the commencement provision are insufficient on their own.  Although the general and unqualified words on their face extend to all past periods, decisions and changes of circumstances, that cannot on its own be enough in the face of the presumption against unfair retrospective effect.  The intention of the legislation must be judged on the basis that it was drafted in the knowledge of the effect of that presumption.  On that basis, the words used are equally consistent with an effect only in relation to days on or after 10 April 2006.

122. Nor do we gain any assistance from what was said to the SSAC that resulted in the agreement that the proposals did not need to be referred to it (see [99] above)).  Apart from the oddity that the letter of 17 February 2006 referred only to incapacity benefit, it contained similar elements of ambiguity to those in the Explanatory Memorandum.  Neither of those documents can be regarded as showing an intention in the 2006 Regulations to produce the unfair retrospective effect identified above.

123. We reject Mr Coppel’s submission that it is pertinent to take account of how the Secretary of State now considers that the 2006 Regulations should be interpreted.  That would be an entirely impermissible consideration.

124. Accordingly, we conclude that the 2006 Regulations are not sufficiently clear to show that the retrospective effect identified above was intended.  The amendments to regulation 7(2) of the Decisions and Appeals Regulations must be interpreted as applying only in respect of days falling on or after 10 April 2006, although the provision can apply to changes of circumstances that occurred before that date.

The decision to be made 

Introduction

125. We have already set aside the decision of the First-tier Tribunal.  We now proceed to re-make that decision in the light of the legal framework analysed above.  We do so bearing in mind two particular features of this case. The first is that the claimant has clearly been seriously disabled for several years. Throughout the period in question, starting with the date of the original award in 1998, he has met the core conditions of entitlement to the highest rate of the care component of DLA (see section 72(1)(b), (c) and (4)(a) of the SSCBA 1992) and the lower rate mobility component respectively (section 73(1)(d) and (11)(b) of the SSCBA 1992).

126. The second is that the Secretary of State’s supersession decision of 22 November 2006 was the first effective formal decision made in relation to the payability of the claimant’s DLA since the original awarding decision of 1 July 1998.  On this analysis, the local office action to “de-combine” retirement pension and DLA in February 2000 left the claimant’s DLA award thereafter in an administrative limbo. Moreover, the Department’s failure to make a formal decision in 2000 had the effect of denying the claimant a right of appeal at that time.  So, although payment of DLA was in limbo, the formal legal position was clear.  The claimant had a decision from 1998 that he was both entitled to, and entitled to be paid, the highest rate care component and the lower rate mobility component of DLA for an indefinite period.  It follows that we need to consider the chain of three decisions taken by the Secretary of State’s decision makers in the course of 2006 and 2007 to see how they affected this underlying position.  We start, of course, with the decision that was actually under appeal to the First-tier Tribunal.

The decision of 3 December 2007

127. The claimant’s appeal to the First-tier Tribunal was against the Secretary of State’s supersession decision dated 3 December 2007.  The express terms of that decision were that the claimant was entitled to DLA, and DLA was payable, from 25 July 2007 (see [23] above). The reason was that although the claimant had refunded the local authority in respect of fees back to 5 October 2000, DLA was not payable for the intervening period because “there was no formal agreement in place with the local authority” to that effect.  The letter of appeal drafted by the claimant’s daughters made it plain that they were contesting the issue of the Department’s decision not to pay the care component of DLA for the previous seven years.

128. The Secretary of State’s decision of 3 December 2007 was both confused on the facts and wrong in law.

129. It was confused on the facts because the start date for the recommencement of the payability of the DLA care component was unclear.  The decision itself recorded that “DLA care component is now payable from and including 25/07/2007”.  The reasons for the same decision recorded that “benefit is only payable again from 25/08/2007”.  To compound the confusion the Department’s submission to the First-tier Tribunal described the decision as being that DLA “is not payable to [the claimant] from 07/06/2000 to 24/08/2007”, while a subsequent submission to the tribunal sought to argue that payment was “correctly reinstated from 22/08/2007”.

130. It was wrong in law because the decision of 3 December 2007 was premised on the assumption that because there has been no prior agreement in place for refunding the local authority, it therefore followed that retrospective self-funding could not unlock payability of DLA for the relevant past period.  This assumption was inconsistent with the approach taken in Creighton and subsequent Commissioners’ decisions discussed in Part (3) above.

131. Re-making the First-tier Tribunal’s decision, we therefore allow the claimant’s appeal against the Secretary of State’s decision of 3 December 2007.  What was the decision that the Secretary of State should have made on that date? To determine that question, we need to examine the preceding chain of decisions. The decision of 3 December 2007 was a supersession of the earlier decision dated 28 June 2007 (the only material change being the reinstatement of payability of DLA from July or August 2007, depending on which version of the December 2007 decision was adopted).  Although the decision of 28 June 2007 was itself also described as a supersession of the decision of 22 November 2006, it was on a proper analysis a revision of that earlier decision (see [21] above), not least as it went back to an earlier date in 2000 as regards to the non-payability of the DLA care component.  On that basis it seems to us that, having found the Secretary of State’s decision of 3 December 2007 to be defective, our task in re-making the First-tier Tribunal’s decision is to examine the Secretary of State’s earlier decision of 22 November 2006.

The Secretary of State’s decision of 22 November 2006

132. The substance of the Secretary of State’s decision of 22 November 2006, as subsequently revised on 28 June 2007, was that the care component of DLA was not payable as from 23 February 2000, that date being 28 days after the start of the first period of hospitalisation.  This decision was a supersession of the original awarding decision of 1 July 1998. 

133. In our view, taking into account what was known as at 3 December 2007, the decision maker should have revised the supersession decision of 22 November 2006.  There were two reasons for doing so, each of which would have been sufficient to ground a revision in its own right.

134. The first was that the supersession decision of 22 November 2006 was made in ignorance of a material fact, namely the fact that the claimant moved from hospital to the first nursing home, then back into hospital, and then finally to the second nursing home in June 2000.  This ignorance made the decision of 22 November 2006 more advantageous to the claimant in terms of the period covered than it should have been.  This was also, of course, the basis for the Secretary of State’s intervening revising decision of 28 June 2007.  On this analysis the statutory basis for the revision decision was regulation 3(5)(d) of the Decisions and Appeals Regulations as amended with effect from 24 September 2007.

135. The second reason was that that the supersession decision of 22 November 2006 “arose from an official error” within regulation 3(5)(a) of the Decisions and Appeals Regulations, in that on the basis explained in (5) (in particular at [82] to [89]) above the appropriate course of action as at 22 November 2006 in relation to the period from 6 October 2003 onwards was suspension of payment under regulation 16 of the Decisions and Appeals Regulations rather than supersession under section 10 of the Social Security Act 1998.

136. In relation to the period prior to 6 October 2003, although supersession was not in principle premature and on supersession the conclusions would have been (i) that the care component of DLA was not payable for the period from 23 February 2000 to 5 October 2003 and (ii) that the mobility component was not payable for the period from 8 March 2000 to 6 June 2000 (when the claimant was in hospital), the superseding decision could not, for the reasons explained in (7) above, take effect from any day prior to 10 April 2006.  Accordingly there could be no supersession on 22 November 2006 to remove the payability of either component of DLA for either of those periods.

137. What was the decision that the Secretary of State should have taken on 3 December 2007?  Mr Heath’s and Mr Coppel’s submissions on behalf of the Secretary of State were that we should treat that as a decision made on the claimant’s request for a supersession and accordingly limit the date from which payment of the DLA care component can be reinstated to 4 June 2007, being the date on which the claimant’s daughter informed the DLA Unit that the claimant’s former home would be sold and the fees owed to the local authority would be reimbursed.  That cannot be accepted.  It disregards the impact of the chain of earlier decisions.  The decision of 3 December 2007 should have been to revise the decision of 22 November 2006, but then to decline to supersede the decision of 1 July 1998 in relation to the period from 6 October 2003 (instead, merely suspending payment of the care component) and in exercise of the power of supersession to make no amendment to the decision in terms of the payability of the care component and the mobility component for any period.  In relation to the period prior to 6 October 2003, the power to supersede could be exercised, but could not result in changing the effect of the decision of 1 July 1998 as to payability for that period.  Since the Upper Tribunal has no power itself to suspend payment under regulation 16 of the Decisions and Appeals Regulations, our substituted decision in relation to the whole period in question is merely in terms of leaving intact the awarding decision of 1 July 1998 with the associated right for the claimant to receive payment under the award.

138.  That decision is set out more fully in formal terms at the head of these reasons.

139. The Secretary of State could now consider whether the decision of 1 July 1998 should be superseded as to payability of the care component in relation to the period from 10 April 2006 to 24 August 2007. But in the light of the full reimbursement of the care home fees on behalf of the claimant following a revised financial assessment by the local authority and of the Creighton principle it is difficult to see how a proper basis for supersession could be found.

Postscript

140. There are two final points we add by way of a postscript.

A further supersession decision

141. Although it post-dates the effective date of the decision under appeal, we note for the record that the claimant began to receive local authority funding again for his care with effect from 24 April 2008.  There has therefore been a further supersession decision, dated 28 July 2008, to the effect that the care component of DLA is not payable from and including 28 May 2008 (i.e. after allowing for the first 28 days of local authority-funded care).

The guidance in the Decision Makers Guide

142. We record that we heard some argument as to the Secretary of State’s official guidance to decision makers as set out in the Decision Makers Guide (DMG) which had been relied on in the submissions to the First-tier Tribunal.  Paragraph 61742 in volume 6 of the DMG states that for the purposes of local authority [LA] assessments in paragraph 61740, “conditions for payment of benefit will be satisfied if written evidence exists of an agreement to repay the LA from the sale proceeds or release of funds.”  This passage was relied on by the DWP in the submissions to the First-tier Tribunal.  Mr Samuel took exception to this guidance as being inconsistent with the decisions in both Creighton and R(A) 1/02.  Mr Heath pointed out that the DMG was simply guidance, not law, and was not the subject of the present proceedings before the Upper Tribunal, although the DMG’s guidance could be challenged by way of judicial review in the Administrative Court (or, on transfer, this Chamber). 

143. We note that the terms of paragraphs 61740 and 61742 of the DMG are not directly concerned with the issue of retrospective self-funding.  However, as the example of this case demonstrates, the DMG guidance is open to misinterpretation. In particular, there is a risk that (as here) busy decision makers read paragraph 61742 as if it read that the “conditions for payment of benefit will only be satisfied if written evidence exists of an agreement to repay the LA from the sale proceeds or release of funds”.  That reading cannot be right, given the import of Creighton and R(A) 1/02.

144. The Secretary of State may wish to revisit and clarify the DMG guidance so as to avoid such misunderstandings in the future.  Such revised guidance might usefully take on board Mr Samuel’s observation that, from the point of view of community care law, there is no need for a prior agreement to repay fees to the local authority.  In summary, those persons with sufficient means immediately to hand will contract directly with the care home; those who lack access to ready capital will rely on the local authority to contract on their behalf, and will have a statutory liability to repay the local authority under either section 22 or 26 of the National Assistance Act 1948, irrespective of whether or not (and, if so, when) they enter into any formal written agreement to do so.  It should also be considered what instructions should be given in the DMG and elsewhere to ensure the routine collection of evidence as to all of a claimant’s capital resources and income on taking up residence in a care home, as suggested in [71] above.

Conclusion

145. For the reasons explained above, the decision of the First-tier Tribunal involves an error on a point of law and is set aside.  The Secretary of State’s appeal is therefore allowed.  We re-make the decision in the terms set out above at the head of these reasons.

Signed on the original John Mesher

on 15 July 2011 Judge of the Upper Tribunal

David Williams

Judge of the Upper Tribunal

Nicholas Wikeley

Judge of the Upper Tribunal

APPENDIX 1 to JL v SSWP

TIMELINE

APPENDIX 2 to JL v SSWP

REGULATION 10(8)

The five relevant versions of regulation 10(8) of the Social Security (Disability Living Allowance) Regulations 1991 (SI 1991/2890) in force during period of award of DLA to claimant:

FIRST RELEVANT VERSION (7 October 1996 – 18 June 2000)

Regulation 10(8) and (9) of the 1991 Regulations as amended by regulation 7(2)(b) of the Social Security Benefits (Amendments Consequential Upon the Introduction of Community Care) Regulations 1992 (SI 1992/3147, in force 1 April 1993), regulation 3(3) of the Social Security Benefits (Miscellaneous Amendments) Regulations 1993 (SI 1993/518, in force 1 April 1993) and regulation 17 of the Social Security and Child Support (Jobseeker’s Allowance) (Consequential Amendments) Regulations 1996 (SI 1996/1345, in force 7 October 1996):

“(8) Regulation 9 shall not apply except in a case to which paragraph (9) applies in any particular case for any period during which—

(a) the person for whom the accommodation is provided—

(i) is not entitled to income support or income-based jobseeker’s allowance,

(ii) is not entitled to housing benefit, or

(iii) is not a member of a married or unmarried couple for whom an amount is included for income support or income-based jobseeker’s allowance purposes in the weekly applicable amount of the other member, and

(b) the whole of the cost of that accommodation is met—

(i) out of the person’s own resources, or partly out of his own resources and partly with assistance from another person or a charity; or

(ii) on his behalf by another person or a charity.

(9) This paragraph applies in the case of a person who is residing in a home owned or managed, or owned and managed, by a local authority.”

SECOND RELEVANT VERSION (19 June 2000 – 28 February 2002)

Regulation 10(8) of the 1991 Regulations as amended by regulation 3(4) of the Social Security (Attendance Allowance and Disability Living Allowance) (Amendment) Regulations 2000 (SI 2000/1401, in force 19 June 2000):

“(8) Regulation 9 shall not apply in any particular case for any period during which—

(a) the person for whom the accommodation is provided—

(i) is not entitled to income support or income-based jobseeker’s allowance,

(ii) is not entitled to housing benefit, or

(iii) is not a member of a married or unmarried couple for whom an amount is included for income support or income-based jobseeker’s allowance purposes in the weekly applicable amount of the other member, and

(b) the whole of the cost of that accommodation is met—

(i) out of the person’s own resources, or partly out of his own resources and partly with assistance from another person or a charity; or

(ii) on his behalf by another person or a charity.”

THIRD RELEVANT VERSION (1 March 2002 – 5 October 2003)

Regulation 10(8) of the 1991 Regulations as amended by regulation 3(3) of the Social Security (Attendance Allowance and Disability Living Allowance) (Amendment) Regulations 2002 (SI 2002/208, in force 1 March 2002):

“(8) Regulation 9 shall not apply in any particular case for any period during which—

(a) the person for whom the accommodation is provided—

(i) is not entitled to income support or income-based jobseeker’s allowance,

(ii) is not entitled to housing benefit, or

(iii) is not a member of a married or unmarried couple for whom an amount is included for income support or income-based jobseeker’s allowance purposes in the weekly applicable amount of the other member, and

(b) the whole of the cost of the accommodation is met—

(i) out of the person’s own resources, or partly out of his own resources and partly with assistance from another person or a charity; or

(ii) on his behalf by another person or a charity.”

FOURTH RELEVANT VERSION (6 October 2003 – 28 October 2007)

Regulation 10(8) of the 1991 Regulations as amended by regulation 28 of the State Pension Credit (Consequential, Transitional and Miscellaneous Provisions) Regulations 2002 (SI 2002/3019, in force 6 October 2003) and regulation 3(3) of the Social Security (Attendance Allowance and Disability Living Allowance) (Amendment) Regulations 2003 (SI 2003/2259, in force 6 October 2003):

“(8) Regulation 9 shall not apply in any particular case for any period during which—

(a) ...

(b) the whole of the cost of the accommodation is met—

(i) out of the resources of the person for whom it is provided, or partly out of his own resources and partly with assistance from another person or a charity; or

(ii) on his behalf by another person or a charity.”

FIFTH RELEVANT VERSION (29 October 2007 – to present day)

Regulation 10(8) of the 1991 Regulations as amended by regulation 3(3) of the Social Security (Attendance Allowance and Disability Living Allowance) (Amendment) Regulations 2007 (SI 2007/2875, in force 29 October 2007):

“(8) Regulation 9 shall not apply in any particular case for any period during which the whole costs of all of the qualifying services are met—

(a) out of the resources of the person for whom the qualifying services are provided, or partly out of his own resources and partly with the assistance from another person or a charity, or

(b) on his behalf by another person or a charity.”