Upper Tribunal (Administrative Appeals Chamber)

 

 

 

IN THE UPPER TRIBUNAL Appeal No. CIS/2091/2014

(ADMINISTRATIVE APPEALS CHAMBER) CIS/2093/2014

 

BEFORE JUDGE WEST

 

 

DECISION

 

 

The decision of the appeal tribunal sitting at Bolton dated 14 November 2013 under file reference SC123/13/03114 & SC123/13/01769 does not involve an error on a point of law. The appeal against that decision is dismissed.

 

This decision is made under section 11 of the Tribunals, Courts and Enforcement Act 2007.

 

REASONS

 

1. This is an appeal, with the permission of Judge Lane, against the decision of the appeal tribunal sitting at Bolton on 14 November 2013.

 

2. I shall refer to the appellant hereafter as “the claimant”. The respondent is the Secretary of State for Work and Pensions. I shall refer to him hereafter as “the Secretary of State”. I shall refer to the tribunal which sat on 14 November 2013 as “the appeal tribunal”. For ease of reference and to minimise duplication, I shall only refer to page number in file CIS/2091/2014 save where it is material to refer to pages in CIS/2093/2014.

 

The Facts

3.  The claimant, who was born on 24 February 1970, claimed income support from 10 January 1994. She married on 2 July 2005 and her husband was added to her claim from that date. On 8 February 2008 she reported that her husband had left the household, but allegations were received that they were nevertheless maintaining a common household after that date and a fraud investigation was carried out. On 14 November 2011 the decision maker decided that husband and wife were maintaining a common household from 8 February 2008. As a result he superseded the decision dated 10 January 1994 and all subsequent decisions as a change of circumstances had occurred since that decision had been made. Accordingly he decided that the claimant was not entitled to income support from 10 March 2008 to 3 August 2010 and from 9 December 2010 to 27 March 2011 and from 1 June 2011 to 18 September 2011 because she was maintaining a common household with her husband who was in remunerative work (pages 119 to 122 of 2091). A decision letter to that effect was sent to her on 23 November 2011 (pages 123 to 124 of 2091).

 

4. As a result of that decision an overpayment of £45,756.58 had occurred from the period from 10 March 2008 to 18 September 2011 (both dates inclusive) and on 7 December 2011 the decision maker determined that, as a result of the claimant’s failure to disclose that she was living with her husband, that sum was recoverable from her (pages 10 to 12 of 2093). A letter informing her of that decision was sent  to her on the same day (pages 13 to 14 of 2093)  The benefit outcome decision of 14 November 2011 and the overpayment decision of 7 December 2011 were both reconsidered, but not revised, on 8 August 2013 (pages 131 of 2091 and 15 of 2093).

 

5.  The claimant lodged an appeal on 22 March 2013 (pages 1 to 2 of 2091), through her representative, Mr Jeremy Frain of Holt & Longworth solicitors, more than 13 months after both the communication to her of the benefit outcome decision and the overpayment decision. She stated that she owed only £12,245.82 because, although she had been charged with benefit fraud in the sum of £50,899.80, there had been a formal admission that the unlawful payment was only the smaller sum of £12,245.82 because she was notionally entitled to tax credits amounting to £38,654.01 and that both counsel at the Crown Court trial had signed a formal admission to that effect on 5 November 2012 (pages 4 to 5 of 2091). She also stated that the appeal was late as she had been waiting after the outcome of the Crown Court proceedings for a statement of the revised amount from the Secretary of State which she had only recently received. On 23 July 2013 District Tribunal Judge Neary admitted her appeal as valid, notwithstanding that the 13 month absolute time limit for appeal had passed, on the basis of the decision in LS v. Lambeth LBC (HB) [2010] UKUT 461 (AAC) (page 9 of 2091) Her appeal came before the appeal tribunal on 14 November 2013. The claimant was not present at the hearing, but the appeal tribunal determined that it was in the interests of justice for it to proceed in her absence. The appeals were dismissed and the decisions made on 14 November and 7 December 2011 were confirmed. The overpayment was accordingly recoverable from the claimant. The decision notice appears at page 132. The appeal tribunal’s statement of reasons appears at pages 135 to 137.

 

6. The claimant then sought permission to appeal from the Tribunal Judge (page 138), which was refused on 12 March 2014 (at page 140). She applied to the Upper Tribunal for permission to appeal on 16 April 2014 (pages 141 to 148).

 

7. Judge Lane gave permission to appeal on 29 July 2014 (at pages 156 to 157). She directed the Secretary of State to provide a response to the appeal within one month of the date on which the notification of the grant of permission was sent to the parties, providing any note by counsel for the Department of Work and Pensions regarding the content of the formal admission, the source of the figure for income support payments and the context in which the question of offsetting tax credits arose. The claimant was given the opportunity to reply within one month thereafter,

 

8.  On 15 October 2015 the Secretary of State provided his submissions (pages 158 to 159). At that stage the Secretary of State had not yet retrieved the departmental records relating to the criminal proceedings and asked for permission to make a further submission when they were received, but as a preliminary matter he raised the question of whether the appeal tribunal had jurisdiction to hear the appeals in the first place given that more than 13 months had passed before the appeals were lodged. When the files from the criminal proceedings had been located the Secretary of State made a further submission on 18 December 2014 (pages 160 to 161 with enclosures at pages 162 to 187). The claimant provided a further copy of the formal admission on 26 February 2015, but did not make any further submission (pages 188 to 190).

 

9. Neither party has indicated that an oral hearing is necessary and I do not consider that it is necessary to hold one in order to resolve the matter.

 

 

 

The Formal Admission

10.  The formal admission was to the effect that the claimant had received overpayments  in the sum of income support £39,429.53, housing benefit £8,828.18 and council tax benefit £2,642.12 (a sum which equals £50,899.83), but that she would have been notionally entitled to tax credits amounting to £38,654.01 and “Consequently the total unlawful overpayment is £12,245.82”. It was signed by both counsel for the Secretary of State and counsel for claimant and dated 5 November 2012.

 

The Statement of Reasons

11. The appeal tribunal referred to the terms of the formal admission, but continued

 

“12. However, I cannot find that this document assists the appellant in the present case. The Formal Admission document that she relies on was produced in response to the criminal proceedings that were brought against her by the DWP. I am obliged to consider the relevant aspects of the social security legislation when reaching my decision. The appellant has admitted to receiving income support to which she was not entitled. I am satisfied from her admission that she accepts that she was maintaining a common household with her husband and she failed to disclose that fact to the respondent as she was obliged to do. In these circumstances, the overpayment of income support is recoverable from the appellant.

 

13. It follows that the single issue remaining for my determination is the amount of the recoverable overpayment.

 

14. I have seen the submission made by the respondent and set out in the appeal papers. The respondent relied on Regulation 13 of the Social Security (Payments on Account etc) Regulations 1988. Regulation 13 makes it clear that if a claimant has been overpaid income support the respondent should deduct from the overpayment any of that benefit to which the applicant would have been entitled if a correct award had been made. However, Regulation 13 only applies to specified benefits. Tax credits are not included in the definition of specific benefits. Regulation 13 (IC) states that no other deduction is to be made in respect of any other entitlement to benefit which may be, or might have been, determined to exist.

 

15. No attempt has been made by the appellant or her representative to engage with Regulation 13 and its application to the present case. I consider that ample time has been given for this matter to be addressed and the appellant has simply failed to respond to it.

 

16. In the case of Larusai v. Secretary of State for Work and Pensions [2003] EWHC 371 (Admin) the court was not prepared to accept that it was irrational for the respondent to treat tax credits as different from benefits administered by the Department of Work and Pensions. Instead, the court held that since the policy in Regulation 13 was to secure full recovery, subject to specified offsets, and since the notional amount of tax credit did not constitute a debt by the Department it followed that the respondent had not acted unlawfully in failing to deduct the notional amount of working tax credit from the overpayment.”

 

The Lateness of the Appeal

12. On 14 May 2013 the file was referred to District Tribunal Judge Neary by a clerk to the tribunal on the grounds that the appeal did not contain sufficient grounds. The judge considered that the appeal was valid and should be admitted for hearing. A further interlocutory referral of the file was then made to on 4 July 2013 by another clerk to the tribunal with the note “Please see attached appeal which was accepted as valid on 17/05/2013”, to which he replied “Having been accepted, the appeal should proceed on the merits” and then referred to the decision in LS.

 

Regulation 13

13. Under the version of regulation 13 of the Social Security (Payments on Account etc) Regulations 1988 then in force it was provided that:

 

 “… in calculating the amounts recoverable under section 53(1) of the Act [SSAA, s.71(1)] or regulation 11, where there has been an overpayment of benefit, the adjudicating authority shall deduct—

 

…

 

(b) any additional amount of income support or state pension credit, or income-based jobseeker’s allowance, or an income-related employment and support allowance which was not payable under the original, or any other, determination, but which should have been determined to be payable—

 

(i) on the basis of the claim as presented to the adjudicating authority, or

 

(ii) on the basis of the claim as it would have appeared had the misrepresentation or non-disclosure been remedied before the determination;

 

but no other deduction shall be made in respect of any other entitlement to benefit which may be, or might have been, determined to exist”.

 

The Figures

14. It is apparent from the Secretary of State’s latest submissions that it is not now possible to ascertain exactly how the figure of £39,429.53 was calculated for the purposes of the formal admission, but for the reasons which are set out below I am satisfied that it is not necessary for the purposes of this appeal to consider the correctness of the figure which was used as the basis of the admission. The claimant does not seek to challenge the correctness of the agreed figure of £12,246.82; instead what she says is that that is the limit of her liability.

 

15. From the note on page 162 from the Crown Prosecution Service it appears that at the hearing on 2 October 2012 a guilty plea was accepted on the basis that the overpayment had started on 1 August 2008 (rather than on 10 March 2008); the defence had raised the issue of notional entitlement to tax credits in an expert report and claimed that the notional entitlement from 8 February 2008 to 1 September 2011 was £45,757.00. When the date of 1 August 2008 was accepted as the starting date that figure was revised down and the figure of £38,654.01 was calculated on the basis that the falsely claimed periods of income support were 10 March 2008 to 3 August 2010 and from 9 December 2010 to 27 March 2011 and from 1 June 2011 to 1 September 2011 (which should have been 18 September 2011). On that basis the figure of £38,654.01 was reached on 23 October 2013 (pages 163 to 164). The prosecutor’s email of 4 October 2012 explained that at the hearing counts 1 – 3 of the indictment were amended to show a start date of 1 August 2008, reducing the overall overpayment period by some 6 months, as a result of which the claimant pleaded guilty to all 9 counts of fraud. It would appear, although there is no calculation to this effect in the papers, that the figure of £39,429.523 is the rateable reduction in the figure for income support of £45,756.58 on the assumption that there was no overpayment until 1 August 2008. There is nothing in the papers to explain why the start date of 1 August 2008 was agreed or the circumstances which led to the formal admission on the agreed figure. 

 

The Ground of Appeal

16. The claimant does not deal with the issue of regulation 13, but instead makes the more fundamental point that the Secretary of State is bound by the formal admission signed by counsel acting on his behalf at the Crown Court trial. She says that the Secretary of State is estopped from recovering more than the amount in the formal admission. She relied on that signed document and the court proceeded to sentence her on the basis that the amount of the overpayment was only £12,245.82.

 

The Decision on the Appeal

(i) The Lateness of the Appeal

17. In view of the conclusion which I have reached on the essential ground of the appeal, viz. estoppel, I do not need to reach any concluded view as to whether the appeals should have been entertained at all and the claimant has made no submissions at all in that respect. In the absence of any such submissions I shall therefore state my conclusions shortly.

 

18. By virtue of rule 23(5) of the Tribunal Procedure (First-tier Tribunal) (Social Entitlement Chamber) Rules 2008 no appeal is to be made more than 12 months after the time specified in Schedule 1. The time specified in Schedule 1 in the circumstances of this case was 1 month after the date on which notice of the decision being challenged was sent to the claimant. By rule 23(8), notwithstanding rule 5(3)(a) or (aa) (case management powers) and rule 7(2) (failure to comply with rules etc.), the Tribunal must not extend the time limit in paragraph (5). The appeals in this case against the entitlement and the repayment decisions were thus out of time by some margin.

 

19.  In RS v. SSD [2008] UKUT 1 (AAC), Judge Levenson (following Mr Commissioner Jacobs (as he then was) in CAF/1133/2007 and Stanley Burnton J in R (Secretary of State for Defence) v. PAT (Lockyer-Evis and others, interested parties) [2008] 1 All ER 287) held that the fact that a Pensions Appeal Tribunal had erroneously admitted an appeal which ought not to have been admitted because it was too late did not oblige it to determine the appeal, on the basis that to decide otherwise would have been to subvert the very clearly expressed intention of Parliament. Instead, it was obliged to decline jurisdiction which, under the 2008 Rules, would have required it to strike out the appeal under rule 8(2).

 

20. It seems to me that nothing in LS v. Lambeth LBC impacts on the correctness of that decision or that the decision in LS was applicable in this case. In LS the germane point for present purposes arose under regulation 18 of the Housing Benefit and Council Tax Benefit (Decisions and Appeals) Regulations 2001 (SI 2001/1002) (the 2001 Regulations) which provided:

 

“(4) Where a dispute arises as to whether an appeal was brought within the time limit specified in this regulation, the dispute shall be referred to, and be determined by, a legally qualified panel member”.

 

21. A “dispute” had arisen as to whether the appeals were within time. Regulation 18(4) gave the legally qualified member power to determine that dispute. It was for her to decide whether the appeals were “brought within the time limit specified in this regulation”. Another judge or tribunal might consider that she was wrong, but that did not mean that she lacked the power to decide the dispute in the way that she did. Regulation 18(4) plainly contemplated that that determination would resolve the question whether the appeal tribunal had jurisdiction to entertain the appeals (see paragraph 137 of the decision). Thus the three–judge panel concluded that

 

“141. We can see nothing in regulation 18(4) – or elsewhere in the Regulations – to lead to any different conclusion as regards the power conferred by regulation 18(4) upon a legally qualified panel member. It was a power to determine jurisdiction – rightly or wrongly. Accordingly we are driven to the conclusion that Judge Poynter erred in law in holding that Mrs Griew made a decision which she had no power to make.”

 

22. By contrast there was no such question in this case. What had happened was that on 14 May 2013 the file was referred to the District Tribunal Judge by a clerk to the tribunal on the grounds that the appeal did not contain sufficient grounds. The judge considered on 17 May 2013 that the appeal was valid and should be admitted for hearing. A further interlocutory referral of the file was then made to the judge on 4 July 2103 by another clerk to the tribunal with the note “Please see attached appeal which was accepted as valid on 17/05/2013”. What was then decided on 23 July 2013 was that, having already been admitted, the appeals should proceed and be adjudicated upon on their merits.

 

23. In my judgment the District Tribunal Judge should have followed the approach RS v. SSD, CAF/1133/2007 and Lockyer-Evis and struck out the appeals as being irretrievably out of time.

 

24. However, on the assumption that the decision of the appeal tribunal to entertain and determine the appeals was an error of law, under section 12(2) of the Tribunals, Courts and Enforcement Act 2007 the Upper Tribunal is not obliged to set the decision aside. I would not set it aside because I consider that the decision was in fact wholly right as to the recoverability of the entirety of the overpayment from the claimant and that that no point would be served be setting it aside. only to remake it in exactly the same form.

 

(ii) Regulation 13

25. I am satisfied that the appeal tribunal was correct in its treatment of regulation 13 and that it provided no defence to the claimant when faced with the Secretary of State’s claim for repayment.

 

26. Regulation 13 makes it clear that if a claimant has been overpaid income support the Secretary of State should deduct from the overpayment any of that benefit to which the applicant would have been entitled if a correct award had been made. However, Regulation 13 only applies to the specified benefits which are set out therein, namely (at the time) (i) income support, (ii) state pension credit, (iii) income-based jobseeker’s allowance or (iv) an income-related employment and support allowance (universal credit has subsequently been added to the list). Tax credits are not included in the definition of specific benefits. The regulation goes on to provide that no other deduction is to be made in respect of any other entitlement to benefit which may be, or might have been, determined to exist. (The only cavil one might have with the decision of the appeal tribunal is that the no-deduction provision was at the material time in the main body of regulation 13 and did not appear in a separate subsection 1C until 8 April 2013, but nothing turns on that.)

 

27. Any attempt by the claimant to outflank regulation 13 by a sidewind would be defeated by the decision of Newman J in Larusai v. Secretary of State for Work and Pensions [2003] EWHC 371 (Admin). In his judgment he rejected an argument against the underlying policy of recovery which underpins regulation 13 and continued

 

 

“29. I turn, therefore, to ground 2; penalising the claimant. The short submission is that there are other penal sanctions which could have been adopted and brought into play, and the course which has been taken, namely determining that the whole amount of overpayment should be recovered, is penal. In my judgment, the fact that other courses could have been adopted, perhaps by way of prosecution for fraud, hardly supports the argument that what the Secretary of State has done can be categorised as penal. One might say that the course he has taken, in the face of what appears to the court to be a clear admission of fraud on the part of the claimant, has been to avert and withhold penal sanctions and consequences. He is entitled to recover the amount of the overpayment. The attack on the basis that he is acting as a coercive agent of the State, in my judgment, really reflects but another way of expressing Mr De Mello's fundamental submission, which is, put in its simplest terms, that he is acting oppressively and without taking account of hardship to this claimant. So far as it goes to hardship, I will come back to it. But I would observe that the momentum for the argument derives from a misconception as to the true legal position. As I have said, the recoverable amount is an overpayment to which this department of state is entitled. A notional entitlement to WFTC does not, as a matter of law, constitute a debt owed by the department to the claimant. At common law it can provide the claimant with no relief or defence at all. It should not be regarded, and it cannot be regarded, as an entitlement. That being its true character, the position falls to be determined in accordance with the discretion given to the Secretary of State to decide how far he considers it is just and fair in the circumstances to pursue its recovery.

 

30. The third head is windfall for the State. This, again, covers some of the ground I have already covered under the previous heading. The proposition is that, had the claimant made a claim for WFTC, she would have been entitled to receive £2,000 from, as it happens, the Inland Revenue, by way of tax credit. She has not received that sum because she did not claim it, and therefore the Treasury chest has not been reduced by that amount. Against that the Secretary of State is recovering the full amount she has obtained by way of overpayment without regard to the fact that it will be a windfall to the State. It is, in my judgment, turning the law on its head, for the reason I have given in the previous paragraph. Yet again, it really seems to me to be another way of seeking to advance the policy argument, which I have already rejected under the previous part of this judgment. The policy argument can be seen as directing and encouraging full recovery, and it is supported by regulation 13, which specifically envisages that no deduction will be made in respect of those benefits, other than the benefits which are stipulated. Further, one should not lose sight of the fact that government departments exist as independent departments. They have their own responsibilities, obligations and duties to perform, which are subject to accountability, but, more than that, are subject to budget. This is common knowledge. In my judgment, it misrepresents the structural position, as well as the law, to describe this as "a windfall to the State".

 

31. Now I come to hardship. The position taken by the Secretary of State is that any form of claim to recover an overpayment is likely to give rise to hardship. That seems to this court to recognise a reality. One is dealing with those who are at the lower end, if not the bottom, of the pay scale. We are concerned, though, with benefit. It will be people who are on benefit who are the recipients of an overpayment. It cannot be right that just because they are the recipients of benefit and are in receipt of an overpayment, they can escape the requirement to make repayment. For the proper and effective maintenance of a benefit system which requires rules to be followed and obligations and duties to be discharged, there must be recognised consequences which can follow in the event that people secure more than they are entitled to from the system. That is not just because of the existence of the legal obligations owed to the State, but because of what one might regard as wider fairness and justice to the population who supply the public funds to fund the benefit.

 

32. It is inevitably a sensitive area for the operation of discretion. In this particular instance the Secretary of State has been provided with details of the precise financial position of the claimant. They have been weighed. That is what this legislation and this particular part of the legislation requires of the Secretary of State and his department. It is not for this court, unless it is satisfied that there has been an unlawful exercise of discretion, to form a view about the financial margins with which this case, or any case, might give rise to.”

 

 

(iii) Estoppel

 

28.  The question of estoppel was not raised in Larusai, but it is raised by the claimant in this case. I am satisfied, however, that the Secretary of State is not estopped in this case from recovering the full amount of the overpayment calculated by him on 7 December 2011.

 

29. Although this is not a case where the claimant is seeking to mount a collateral attack on her conviction, but rather to assert that the basis on which she pleaded guilty to criminal charges precludes the Secretary of State in recovery proceedings from recovering more than the amount which was the basis of the formal admission on which she pleaded guilty, the remarks of Judge Mark in AM v. Secretary of State for Work and Pensions [2013] UKUT 94 (AAC) are directly apposite. At paragraphs 31 to 32 and 35 and 36 he said:

 

“31. Further, it is necessary to analyse with care the findings of fact and law made by the criminal court insofar as a charge has been contested, and to consider the evidence before that court on which the conviction was based, which was not necessarily the whole of the evidence before it.  If a party has pleaded guilty to a charge, it is necessary to consider both the charge, including how specific it is, and the plea, to see what was alleged, and whether what was alleged has been admitted by the plea, or only certain aspects of it.

 

32.  Insofar as the party is only seeking to explain the circumstances of the conviction and the facts on which it was based, without seeking to challenge those facts, there can be no possible objection to his doing so.

 

…

 

35. On the other hand, the assessment of benefit entitlement is entrusted by statute to the Secretary of State with an appeal to the First-tier Tribunal.  Special provision is made for that tribunal to consist of a judge with specialist knowledge of that area of the law and, in appropriate cases for there to be included on the tribunal a registered medical practitioner and a member with a disability qualification.  The judge, or the jury, in a criminal case will not normally have such expertise.

 

36. Given that benefits are by statute to be determined by a specialist tribunal, it appears to me that there should be an exception to the general rule of public policy to the extent that the specialist tribunal should be able, in appropriate cases, to substitute its own findings as to social security law for that of the criminal court, and should be able to make its own findings as to the inferences and conclusions to be drawn from the primary facts found by, or admitted to, the criminal court, as to the abilities or otherwise of the claimant and his entitlement to benefit.”

 

30. There is therefore no objection in this case to the claimant adducing the formal admission, since she is not using it to undermine or attack her conviction (on her own guilty plea), but what she cannot do is to argue that its terms preclude the appeal tribunal, which is the proper forum for the determination of the issue, from adjudicating on the actual extent of her liability under the social security legislation applicable to the circumstances of her case.

 

31. There is, in addition, the point made by Judge Mark in Newcastle City Council v. LW [2013] UKUT 123 (AAC) at paragraph 127 where he said

 

“17. In the present case, it would appear that the claimant pleaded guilty to one of the offences charged because to contest the charges would, or may, have involved admitting to lying on the mortgage application form, and possibly in exercising the right to buy, and laid her open to more serious charges.  It appears to me to be wrong that the claimant should be able to take that course, and then seek to avoid the consequences by arguing that it was the mortgagee that she misled all along when faced with the consequences of her admission.”

 

 

32.  Whilst there is no evidence that that is what happened in the present case, it would be wrong in principle if a claimant were to be able to plead guilty to a lesser charge in order to avoid the risk of being convicted on a more serious charge and nevertheless thereby reduce her liability to repayment of sums to which she was not in the first place entitled without actually having challenged that liability in the correct forum where she ought to have mounted any such challenge.

 

33. The claimant did not successfully challenge the dates of the cohabitation in the appeal tribunal nor did she successfully challenge the amount of the overpayment found by the decision maker on 7 December 2011. The only exculpation offered in the criminal court was her notional entitlement to tax credits, but whilst that may have been the partial exculpation offered to criminal liability, that was no defence in law insofar as it sought to reduce her liability to payment of the sum of £45,756.58 and appears to have been agreed without reference to regulation 13. She may have pleaded guilty and may have been sentenced on the basis of a liability of £12,245.82, but the Secretary of State was not thereby precluded from asserting in repayment proceedings that the correct figure which fell to be repaid in full was £45,756.58.

 

Conclusion

 

34. I therefore dismiss the appeal.

 

 

 

 

Signed Mark West

Judge of the Upper Tribunal

 

 

 

Dated 21 May 2015