THE UPPER TRIBUNAL

 

ADMINISTRATIVE APPEALS CHAMBER

 

DECISION OF THE UPPER TRIBUNAL JUDGE

 

Before:  A J  GAMBLE

 

Attendances:

 

For the Appellant: (Secretary of State): Mr A Webster, Advocate, instructed by Ms C Marshall, Solicitor, of the Office of the Solicitor to the Advocate General for Scotland.

 

For the Respondent: (Compensator): Mr P Reid, Advocate,  instructed by  Miss K Ritchie,           Solicitor, of the Central Legal Office of the National Health Service, Scotland.

 

The Secretary of State’s appeal is allowed.

 

The decision of the Edinburgh First-tier Tribunal of 3 August 2012 is set aside.

 

The case is remitted to the First-tier Tribunal (Social Entitlement Chamber) for redetermination by a freshly constituted tribunal consisting of a Tribunal Judge and a Specialist Medical Member, in accordance with the directions contained in paragraph 24  of the Reasons.

 

 

REASONS FOR DECISION

 

 

The background to the First-tier Tribunal decision.

 

1.         The claimant (who is not a party to these proceedings) presented at the Accident and Emergency Department of Monklands Hospital which is administered by the compensator on 13 August 2003 with abdominal pain.  It was decided that he needed an operation.  It was carried out on the following day, 14 August 2003.  In the course of it the claimant’s mid sigmoid colon was found to be infected with diverticular disease.  Over the following few days the claimant’s condition deteriorated and it was decided that he required a further operation.  That operation was carried out on 20 August 2003.  It involved a surgical procedure known as Hartmann’s procedure. The claimant was left with an end stoma.   Serious complications also developed after the second operation. 

 

2.         In May 2007 the claimant raised an action of damages against the compensator in Airdrie Sheriff Court.  The sum sued for was £50,000.  His pleadings alleged medical negligence on the part of the surgeons responsible for the operation of 14 August 2003.  In particular, he asserted that a perforation in his bowel should have been spotted in the course of that operation but was not. 

 

3.         The claimant’s civil case was listed for proof on 11 October 2011.  On 10 October 2011 it  was settled when he accepted an offer from the compensator of £10,000 without any admission of liability.  The proof was discharged and did not take place.

4.         On 6 October 2011, a Certificate of Recoverable Benefits was issued to the compensator on behalf of the Secretary of State in response to a request from them for such a certificate made on 30 September 2011.  In that certificate the recoverable benefits were calculated at £21,753.50.   That sum related to the period between 19 November 2003 and 12 August 2008.  It consisted of £10,912.70 paid in respect of the care component of disability living allowance and £10,660.80 paid in respect of the mobility component of that allowance.   Its expiry date was stated as 25 January 2012.

 

5.         On 9 December 2011 the compensator discharged their liability under the Social Security (Recovery of Benefits) Act 1997, the Act, by paying £21,753.50 to the department.

 

6.         Meanwhile, on 17 November 2011, the compensator had appealed to the First-tier Tribunal against the Certificate of Recoverable Benefits dated 6 October 2011.   In their appeal form they stated two grounds for their challenge to that certificate: firstly “the certificate shows benefit which was not paid as a result of the accident, injury or disease” and secondly, “the compensation payment made was not as a consequence of the accident, injury or disease”.  In more formal terms, the first stated ground of appeal was based on section 11(1)(b) of the Act and the second on section 11(1)(d).

 

7.         It is now accepted by both parties that the Certificate of Recoverable Benefits dated 6 October 2011 was the fifth Certificate of Recoverable Benefit (C.R.B.) issued on behalf of the Secretary of State to the compensator.  It had been preceded by four earlier certificates.  The details of those certificates are laid out in the table below: 

 

 

Date of the CRB	Amount of  Recoverable Benefits	Expiry Date of The C.R.B.
10 August 2007	Nil	7 February 2008
9 April 2008	Nil	11 December 2008
23 June 2009	£21,573.50	12 October 2009
8 November 2010	£21,573.50	27 February 2011

 

The existence of the certificates dated 23 June 2009 and 8 November 2010 was unknown to the First-tier Tribunal.  They have been produced on behalf of the Secretary of State in 

the appeal to the Upper Tribunal.   Copies of the certificates dated 10 August 2007 and 9 April 2008 were, however, on file before the First-tier Tribunal. 

 

 

 

 

 

The First-tier Tribunal hearing and decision

 

8.         The compensator’s appeal proceeded to an oral hearing on 3 August 2012 before a tribunal consisting of a District Tribunal Judge and a Specialist Medical Member.  Mr Reid appeared at that hearing for the compensator.  A presenting officer represented the interests of the Secretary of State.  Mr Reid put forward two arguments.  Firstly, he relied on the doctrine of legitimate expectation in public law, and secondly, he relied on issues relating to the claimant’s civil action.

 

9.         The tribunal allowed the appeal.  It appears from their Decision Notice that they accepted both of Mr Reid’s arguments.  So far as material that Notice reads as follows:

 

 

            “1.        The appeal is allowed.

 

2.         In terms of section 12(4)(b) the Tribunal directs that the Secretary of State should substitute the certificate of recoverable benefit dated 06/10/2011 with a NIL certificate.

 

3.         The Tribunal accepted the primary submission made by counsel for the appellant to the effect that Secretary of State had issued 2 previous nil certificates dated 10/08/07 and 09/04/2008 and was not now entitled to adopt a different position.

 

4.         We were also not persuaded that there was conclusive evidence of medical negligence having given rise to (the claimant’s) care and mobility needs.”

 

 

Post Tribunal action by the District Tribunal Judge

 

10.       On 15  August 2012 the department requested a Statement of Reasons. That request led to the series of events narrated in paragraph 11 below.  The District Tribunal Judge revealed in them that she had second thoughts about the correctness of the Tribunal’s decision and wished, if possible, to renege from it. 

 

11.       The procedural steps taken by the District Tribunal Judge were as follows:

 

(a)     On 29 August 2012 she purported to treat the department’s request for a Statement of Reasons as an application by them for permission to appeal to the Upper Tribunal.  The procedural rule on which she relied, rule 41 of the First-tier Tribunal (Social Entitlement Chamber) Rules 2008, gave her no authority to do so.  However, she went on to review and set aside the tribunal’s decision for error of law and to remit the case for a rehearing before a new tribunal. 

 

(b)     Unsurprisingly, the compensator’s solicitor strenuously objected to the District Tribunal Judge’s decision of 29 August 2012 given that it had deprived them of the success  achieved before the tribunal of 3 August 2012.  In response, on 3 October 2012, the District Tribunal Judge once again reviewed the Tribunal decision as being based on an error of law.  She then stated that she was “inclined to set aside the decision of 3 August 2012” and to remit it to a new tribunal.  She described that statement of her inclination as “this proposal”.

              (c)     The compensator’s solicitor then made representations that the tribunal decision of 3 August 2012 should not be set aside but should be upheld.  In response, the District Tribunal Judge, on 23 November 2012, once again reviewed and set aside that decision on the basis of an error in law.  However, on this occasion, she purported to refer the case to the Upper Tribunal under section 9(5)(b) of the Tribunals, Courts and Enforcement Act 2007.  On 17 December 2012, Upper Tribunal Judge May QC described the purported reference as being “a wholly inappropriate attempt to refer the matter to the Upper Tribunal”.  He went on to hold that it was “incompetent and inept”.  He remitted the case to the First-tier Tribunal so that the District Tribunal Judge could action the request made by the department on 15 August 2012 for a Statement of Reasons.  On 18 January 2013, the District Tribunal Judge accordingly signed a Statement of Reasons.  That statement was issued to the parties on 30 January 2013. 

 

              (d)     Strangely, on 14 March 2013, the District Tribunal Judge once again proposed to set aside the Tribunal decision of 3 August 2012 and to remit the appeal to the Upper Tribunal, giving no statutory authority for that course of action.

 

(e)     Eventually, on 21 May 2013, she granted permission to appeal to the Upper Tribunal. 

 

 

12.       In the Tribunal’s Statement of Reasons, referred to in paragraph 11(c) above, the tribunal express their doubts as to the correctness of the decision which they had reached on 3 August 2012.  They put matters thus in paragraph 10 of that statement:

 

 

            “10.      In coming to its decision the Tribunal did not have regard to the terms of Section 4(4) of the Social Security (Recovery of Benefit) Act 1997 which stipulates “The certificate is to remain in force until the date specified in it for that purpose.”   Had they had regard to that sub-section it is likely that they would have concluded that the certificates expired on the end dates specified within them and were of no effect thereafter leaving it open to the Secretary of State to issue the final certificate which he did on the eve of the Proof.  It is likely that they would not have accepted Counsel’s primary submission and would have proceeded to make detailed findings in fact as to whether or not medical negligence had been established and whether or not the benefits paid to Mr Findlay were paid as a result of injury sustained as a result of medical negligence.”

 

 

The hearing before the Upper Tribunal

 

13.       The Secretary of State’s appeal to this tribunal proceeded on the basis of the permission granted by the District Tribunal Judge on 21 May 2013.  On 16 July 2013 the Registrar directed an oral hearing. 

 

14.       That hearing took place before me on 5 February 2014 when representation was as stated above.  I am grateful to Mr Webster and Mr Reid for their well-presented and highly focused submissions.

 

 

The submissions of the parties

 

15.       At the commencement of the oral hearing, Mr Reid stated that he intended to abandon the argument based upon the doctrine of legitimate expectation which he had presented before the First-tier Tribunal.  That abandonment was based on the  production on behalf of the Secretary of State to this tribunal of the Certificates of Recoverable Benefit dated 23 June 2009 and 8 November 2010, included in the table in paragraph 7 above.  However, he presented in substitution for that argument one to much the same effect based not on a general common law doctrine but rather on a specific construction of several sections of the Act.

 

16.       The matter at issue between the parties and arising for my decision came into sharp focus during the course of the hearing.  It can be stated shortly and simply:

 

 

            “Could the Secretary of State have lawfully issued the Certificate of Recoverable  Benefits dated 6 October 2011 or, alternatively, was he precluded from doing so by his earlier issue of a certificate calculating the recoverable benefits at nil on 9 April 2008?  Mr Webster answered “Yes” to the first question and “No” to the second.   Mr Reid answered these questions to exactly the opposite effect with the qualification that the position might have been different had the Secretary of State issued an explanation of the radical change in calculation between the certificates of 9 April 2008 and 6 October 2011.  That, however, was purely academic as it was common ground that no such explanation had been attached to the certificate of 6 October 2011.”

 

 

17.       Mr Webster’s submissions can be summarised as follows:

 

 

            (a)        Section 4(4) of the Act provides:       

 

                                    the certificate (of recoverable benefits) is to remain in force until the date specified in it for that purpose. 

 

                        That subsection necessarily implies that Certificates of Recoverable Benefits are time limited.  They cease to have any legal force on the date stated in them for their expiry.  Thus when the certificate of 9 April 2008 expired on 11 December 2008 it ceased to have effect.

 

 

            (b)        Section 4(5) of the Act goes on to provide:

 

                                    “The compensator may apply for fresh certificates from time to time”.

 

                                    The compensator had exercised the right conferred by that sub-section.  The certificate of 6 October 2011 was issued at their request. A “fresh certificate” issued in response to a request under that sub-section by the Secretary of State replaces its predecessors entirely if they have expired under the provisions of section 4(4).  Therefore, a “fresh certificate”  issued in answer to a section 4(5) request can specify an entirely different amount of recoverable benefits, whether higher or lower, than any of its predecessors which have expired under section 4(4).  Additionally, the Secretary of State is empowered

                                    by section 4(6) of the Act to issue “a fresh certificate without an application for  one being made.”  A certificate issued in the exercise of that power has exactly the same effect as one issued in response to a request from a compensator under section 4(5).   Such a certificate also entirely replaces any earlier certificate which had expired and ceased to have effect.

 

           

            (c)        That the position submitted to be the case in sub-paragraphs (a) – (b) above  represented Parliament’s intention in enacting the Act was also supported by the power conferred on the Secretary of State to issue a certificate based upon an estimate of recoverable benefits by section 5(4) of the Act.  On the expiry of a certificate issued on such a basis it can be replaced by one calculating the exact amount of such benefits.  That effect is secured by the operation of section 4(5) - (6).

 

 

            (d)        The Secretary of State’s power of review under section 10 of the Act only applies to certificates which are extant and are still running their course at the date of the review.  The certificate issued on 6 October 2011 was a “fresh certificate” made in  response to a section 4(5) request.  It was not  “a fresh certificate containing such variations as (the Secretary of State) considers appropriate under section 10(2)(b) of the Act.   Therefore the restrictions on variation contained in section 10(3) did not apply to the making of the certificate of 6 October 2011.  That certificate was not issued under the variation powers of Section 10 at all.  That the interpretation of section 10 being advanced was the correct one was borne out by a passage from the commentary on section 10(3) in Social Security Legislation 2013/14, volume 3 Administration, Adjudication and the European Dimension, page 196.  That passage reads as follows:

 

 

“If lack of information or an inaccurate estimate results in a calculation that turns out to be unfavourable to the Secretary of State, he is nevertheless bound by it until the certificates expires under section 4(4).  However, any new certificate issued in respect of a later period may list the benefit omitted from the earlier one”.

 

 

(e)        There is no provision conferring any degree of finality on a Certificate of Recoverable Benefits.

 

 

(f)        Finally, the above submissions are supported by the terms of section 6(1) of the Act which imposes a liability on a compensator “to pay to the Secretary of State an amount equal to the total amount of the recoverable benefits.”  The compensator’s duty is not to pay the amount specified in any particular certificate of recoverable benefits but rather is that laid down in the above sub-section.

 

 

 

 

 

18.       On the basis of the above submissions, Mr Webster invited me to hold that the tribunal’s decision was erroneous in law and should be set aside.

 

19.       Mr Reid’s submissions were as follows:

 

 

(a)        Under section 3(2) of the Act “the relevant period” in respect of which benefits could be recovered from the compensator was five years running from the date when “the accident or injury in question occurred.”  Thus  “the relevant period” expired on 13 August 2008, five years after 14 August 2003 when the claimant had his first operation.

 

 

(b)        The certificate dated 9 April 2008 related to a period which included the key date of 13 August 2008.  It ran from 9 April 2008 to 11 December 2008.Further that certificate calculated (and did not merely estimate) the amount of recoverable benefits at nil.

 

 

(c)        The compensator was entitled to expect finality on the calculation of his     statutory liability under section 6(1) at the close of the five year period because the five year period was an important part of the statutory scheme.  Such finality was granted by the operation of the certificate dated 9 April 2008.

 

 

            (d)        Section 4(5) - (6) referred to a “fresh certificate” not “new” one.

 

 

(e)        Section 5(1) placed a duty on the Secretary of State to specify the amount of recoverable benefits in a certificate of recoverable benefits.  The purpose of that provision was so that the compensator could know where he stood in terms of his liability under section 6(1).  The compensator is entitled to rely on the Secretary of State having carried out his duty under section 5(1).  This is so especially as  the knowledge of what benefits had been received by  a  claimant in the five year period was peculiarly within the knowledge of the Secretary of State and not at all within the knowledge of the compensator. 

 

 

(f)        Section 10(3) did apply to the present case so as to preclude the Secretary of State from increasing the amount specified in the certificate dated 9 April 2008 to that specified in the later certificates, especially that dated 6 October 2011.

 

 

20.       On the basis of the above submissions Mr Reid invited me to set aside the tribunal’s decision as being in error of law in that it was based on the doctrine of legitimate expectation which he conceded was inapplicable to the case.  However, he went on to submit that that I should substitute for that decision one to the same effect based on the construction of the Act for which he contended, summarised in paragraph 19 above.

 

 

 

 

 

Decision on the point of law

 

21.       I am persuaded by Mr Webster’s argument.  I found it to be more convincing than that advanced by Mr Reid.  I consider that section 4(4) – (6) do have the effect for which Mr Webster contended.  That effect is the result of a literal reading of those sub-sections.  Further, such  a reading, in my view, does not produce an absurdity in the sense of any unfairness or injustice to the compensator.  That is because he has the right to appeal against a certificate as happened in this case.  Further, in relation to above sub-sections, I do not accept Mr Reid’s submission that the ordinary English word “fresh” has the connotation for which he argued i.e. merely permitting a reaffirmation of the contents of an earlier certificate, at least in a case like the present in which that certificate had covered the date on which the five year period ended.  I take the view that the word “fresh”, has, if anything, a slightly stronger force than the word “new” in this context.  Thus the above subsections enable the Secretary of State to issue a certificate which contains an entirely different amount of recoverable benefits from that contained in a earlier one which had expired even an earlier one which covered the date on which the five year period came to an end.  The certificate dated 9 April 2008 had expired on 16 December 2008.  The certificate under appeal was issued on 6 October 2011.  I agree with Mr Webster that the construction which he submitted was correct is supported both by the absence of any finality provision in the Act and by the power conferred on the Secretary of State by section 5(4) to estimate the amount of recoverable benefits.  Such an estimate can be replaced by an exact calculation of the amount of such benefits by the Secretary of State in “fresh” certificates issued under section 4(5) or (6).  I also agree with Mr Webster in regard to the effect of section 10.  I reject the submission by Mr Reid that section 10 and, in particular, section 10(3) applied in the present case.  In my view, that section only applies in respect of an extant certificate  i.e. one which is still running when it is brought under review not one which had expired by that point.  In this case a “fresh” certificate was issued in response to a section 4(5) request on 6 October 2011.   The issue of such a certificate was not affected by the provisions in section 10.   I agree with the comments made extrajudicially by Upper Tribunal Judge Rowland and Upper Tribunal Judge White to that effect in the passage in their text book referred to by Mr Webster and cited by me in paragraph 17(d) above.

 

22.       For the reasons laid out in paragraph 21 above, I hold that the tribunal’s decision is affected by an error of Law.   I exercise my discretion in the Secretary of State’s favour by setting it aside.

 

 

Disposal of the appeal

 

23.       Both Counsel concurred in submitting that if I were to set aside the tribunal’s decision I should remit it for redetermination by a new First-tier Tribunal including a Specialist Medical Member rather than deciding the issues relating to causation which still remain open myself.  I accede to that joint submission and remit the case for redetermination by a freshly constituted tribunal consisting of a Tribunal Judge and a Specialist Medical Member in accordance with the directions in paragraph 24 below. 

 

 

 

 

 

 

 

 

24.       My directions for the rehearing are as follows:

 

 

(a)        The new tribunal should accept that the Certificate of Recoverable Benefits dated 6 October 2011 was validly issued.

 

 

(b)        Their task is to determine the two questions of causation detailed in sub-paragraphs (c) and (d) below.  In regard to both of them the compensator bears the legal onus of proof.  The applicable standard of proof is balance of probabilities.  There is no need to seek “conclusive evidence”, as the last tribunal appeared to think.

 

 

(c)        The first issue of causation is whether the payment of £10,000 made to the claimant by the compensator under the settlement of 10 October 2011 was paid in consequence of any accident or injury.  In deciding that question, the new tribunal should follow R(CR) 4/03, especially paragraphs 7 and 10.  If they decide this question in favour of the compensator that will be sufficient to determine the case.

 

 

(d)        The second issue of causation which will arise if the new tribunal do not hold in the compensator’s favour in regard to the first one is whether any accident or injury sustained by the claimant was the effective cause of the payment to him of the benefits listed in the Certificate of Recoverable Benefits dated 6 October 2011.  In deciding that question they are not bound in whole or in part by the basis on which those benefits were awarded to the claimant.  In that regard they should follow and apply the decision of the Court of Appeal in Northern Ireland in Eagle Star Insurance v Department for Social Development, R 1/01(CRS), the decision of the Tribunal of Commissioners in R(CR) 1/02 and that of Upper Tribunal Judge Rowland in R(CR) 1/03.

 

 

(e)        The new tribunal have no jurisdiction to decide whether there was any breach of a duty of care owed to the claimant by any doctor for whom the compensator was vicariously liable.   Thus should not purport to decide that question.

 

 

25.       The appeal by the Secretary of State is allowed. The case is remitted to a freshly constituted First-tier Tribunal for determination in accordance with the directions given in paragraph 24 above.

 

                                                                     (Signed)

                                                                     A J GAMBLE

                                                                     Judge of the Upper Tribunal

                                                         Date: 21 March 2014