DECISION OF THE SOCIAL SECURITY COMMISSIONER
- The claimant's appeal to the Commissioner is allowed. The decision of the Hull appeal tribunal dated 22 September 2001 is erroneous in point of law, for the reasons given below, and I set it aside. The case is referred to a differently constituted appeal tribunal for determination in accordance with the directions given in paragraphs 28 to 31 below (Social Security Act 1998, section 14(8)(b)).
The background
- This is an overpayments case. The case as presented to the appeal tribunal was as follows. The claimant was awarded income support from and including 3 September 1992 by a decision dated 8 September 1992. That was on the basis that the claimant was unemployed and available for work. At the beginning of September 1994 income support was in payment at the weekly rate of £71.70, the amount of the personal allowance for a married couple. From 3 October 1994 income support was paid on the basis that the claimant was incapable of work, but remained at the same rate. As from 24 February 1995, the rate of income support was reduced to £1.35 to take account of his income from sickness benefit of £70.35 per week. As from 7 April 1995, the rate altered to £1.10 on the uprating of the personal allowance to £73.00 and the introduction of short-term incapacity benefit at £71.90. As from 23 June 1995, the claimant ceased to be entitled to income support, it seems because his wife become entitled to incapacity benefit in her own right. The claimant later became entitled to income support again, but the case about that period is not before me.
- In September 2000 a generalised matching service operation threw up the information that the claimant, who had then just turned 65, was probably in receipt of an occupational pension as well as his state retirement pension. When he was interviewed on 27 October 2000 he disclosed not only a pension in payment from 1 September 2000, but also a pension from TSB Insurance, which he said he had received since 30 September 1994. He said that it was £39.16 per quarter and had never increased. A letter dated 16 February 2001 from Lloyds TSB identified this as an annuity under a personal pension plan and said that "between the dates of 20/09/94 and 20/09/95 [the claimant] received £146.85". He also said that he had not declared the TSB pension for this reason. As his income support order book said that he could earn £10 and the pension was from his work, he did not think that he had to declare it. A calculation appears to have been made by an officer of the Benefits Agency, dividing £146.85 by 52 to reach a weekly figure of £2.82.
- On 26 March 2001 the following decision was given:
"We have looked again at the decision dated 08 September 1992 awarding Income Support from and including 03 September 1992. There has been a relevant change of circumstances since the decision was given.
Our decision is that for the period 21/09/94 to 22/06/95 (both dates included) [the claimant] is not entitled to, or is entitled to a reduced rate of Income Support on the grounds that he was in receipt of an Occupation Pension.
Of 1618.09 already paid to [the claimant] as Income Support from 21 September 1994 to 22 June 1995 (both dates included) £1535.04 is to be offset against the arrears of Income Support now due from 21 September 1994 to 23 February 1995 (both dates included).
As a result, an overpayment of Income Support has been made from 21 September 1994 to 22 June 1995 (both dates included) amounting to £83.05 as shown on the schedule.
On 21 September 1994, or as soon as possible afterwards, [the claimant] failed to disclose the material fact that he was receiving an Occupational Pension.
As a consequence, Income Support amounting to £83.05 from 21 September 1994 to 22 June 1995 (both dates included), as detailed on the schedule, was paid which would not have been paid but for the failure to disclose.
Accordingly, that amount is recoverable from [the claimant]."
The schedule of overpayment showed an overpayment of £2.82 per week down to 23 February 1995 and then an overpayment of the amount of income support paid each week down to 22 June 1995.
The appeal tribunal's decision
- The claimant appealed, repeating his case on what was printed in the order book. He opted for a "paper hearing". The appeal tribunal dismissed the appeal. It upheld the supersession and the amount of income support found to have been properly payable. It found that, having regard to the instructions on form INF4, the claimant had failed to disclose the receipt of the new income from the TSB pension and that the overpayment of £83.85 was recoverable.
The appeal to the Commissioner
- The claimant was granted leave to appeal by Mr Commissioner Levenson. He was by this stage represented by Mr Ian Miller, a welfare rights officer employed by Hull Social Services, who had made a detailed submission. The appeal was not supported by the Secretary of State in the submission dated 15 April 2002, and the Commissioner directed an oral hearing. The hearing took place at Doncaster County Court. The claimant was not present, but was represented by Mr Miller. The Secretary of State was represented by Miss Deborah Haywood of the Office of the Solicitor to the Department for Work and Pensions. I am grateful to both representatives for their submissions. Time was given after the hearing for Miss Haywood to produce a copy of a Commissioner's decision on which she particularly relied and for Mr Miller to comment.
- I have rejected some of Mr Miller's main submissions, but it remains clear that the appeal tribunal did err in law, and that the facts are not sufficiently clear for me to be able to substitute a decision.
(a) Supersession of the decisions under which benefit was paid?
- Mr Miller submitted that the Secretary of State's decision of 26 March 2001 was defective and that the condition in section 71(5A) of the Social Security Administration Act 1992 was not met - that an amount is not to be recoverable under section 71(1) unless the determination in pursuance of which it was paid has been reversed or varied on appeal or revised under section 9 of the Social Security Act 1998 or superseded under section 10. He pointed out that the decision, which combined the superseding decision and the overpayment decision, purported only to supersede the decision of 8 September 1992, initially awarding income support. He also pointed out that, within the period of the alleged overpayment there must have been a review decision altering the rate of income support entitlement as from 24 February 1995, to take account of sickness benefit as income. That was shown by the Department's own documents. He further submitted that there would have been a review decision when the basis of the claim was changed from signing on as unemployed to being incapable of work in October 1994. Mr Miller submitted that, as there was not a valid supersession decision covering the whole period of the alleged overpayment, there could not be a valid overpayment decision. Then, he said, the appeal tribunal could not in law correct the deficiencies in the supersession decision, so that the only decision which it could properly have given was that the Secretary of State's decision as to the recoverability of the overpayment was of no force or effect (relying in particular on Commissioners' decisions R(SB) 7/91 and R(IS) 2/96). His opinion was that if such a decision was given, the Secretary of State could not later give a decision that the same overpayment was recoverable.
- I accept the first half of that submission, but not the second. The Secretary of State's written submission had been that there was a supersession of the last operative decision (ie that of 8 September 1992), but I think that in the course of the oral hearing Miss Haywood accepted that the decision of 26 March 2001 had not purported to revise or supersede any decisions made during the period of the alleged overpayment. Often there will not have been any review decisions for long periods after an initial decision awarding income support, as changes in the rates of income support or of other benefits already counting as income were given effect automatically without a review. But where a new source of income arose, reducing the amount of income support entitlement, there would have to have been a review and revision to give effect to the new entitlement from the effective date. On general principle, as confirmed by the Court of Appeal in Chief Adjudication Officer v Eggleton, reported as R(IS) 23/95, while the previous decision would remain effective down to the day before the revised decision took effect, from that date the revised decision would be effective. It would be that decision which authorised the payment to the claimant of the new amount of income support. Therefore, in the present case, before the overpayment for the period from 24 February 1995 onwards could be determined to be recoverable under section 71(1), the review and revision decision which must have been given would have to be revised or superseded. The decision of 26 March 2001 did not purport to do that, so that to that extent section 71(5A) was not complied with. I am not at all sure that the same would follow in relation to a decision that on a change of circumstances (eg becoming incapable of work) there was to be no change in the amount of the claimant's entitlement to income support, but I do not have to reach a conclusion on that.
- Where I part company from Mr Miller is on the question of what the appeal tribunal could have done on identifying that defect in the Secretary of State's decision. It is in my view important that the decision under appeal was one which combined a supersession decision with an overpayment decision. That distinguishes the circumstances from those in R(IS) 2/96 and in R(SB) 7/91. On this question I find the approach of Mrs Commissioner Parker in decisions CSIB/1266/2000 and CSIB/905/2001, with their common appendix, and CSIS/399/2001 and CSIS/400/2001 particularly helpful. Copies of those decisions were attached to the Secretary of State's written submission dated 1 August 2002. I agree with and adopt that approach.
- The result is as follows. In a supersession case not involving overpayment recoverability an appeal tribunal may, if the relevant evidence is available, conduct or perfect a defective decision taken by the Secretary of State, providing that the defects in the Secretary of State's decision are not so great that it must be said that the decision is invalid, rather than merely defective. In my judgment that is the line to be drawn, not a line between defects of substance and defects of form. That is what I said recently in paragraph 12 of decision CIS/362/2002 was consistent with the Tribunal of Commissioners' decision R(IS) 2/97. I did not say there, as Mr Miller suggested in his written submission dated 20 August 2002, that no defects of substance could be corrected. I referred to "defects of substance which rendered the purported review invalid" and to a decision being "so defective in substance as to be invalid as a supersession". Defects merely of form may always be corrected by an appeal tribunal. Defects of substance may be corrected, providing that they are not so great as to render the decision invalid. In a case where the decision under appeal combines an overpayment recoverability decision with a supersession decision, that general approach is not displaced, for the reasons given in paragraph 41 of decision CSIS/399/2001 and CSIS/400/2001. It may be different if the overpayment recoverability decision is taken separately from the supersession decision and is appealed on its own.
- Mr Miller submitted that Mrs Commissioner Parker's approach to the correction of defects by an appeal tribunal, relying on the principle that "an appeal to a tribunal puts the matter as open as it was formerly before the adjudication officer" (R(IS) 2/96, paragraph 14), was undermined by the repeal of section 36 of the Social Security Administration Act 1992 (power for appeal tribunals to deal with questions first arising in the course of an appeal). In fact, the Commissioner explained in paragraph 32 of decision CSIS/399/2001 and CSIS/400/2002 why the repeal of section 36 did not affect her ruling. Any question arising on the case before the original decision-maker is not a "question first arising" and is within the scope of an appeal to an appeal tribunal. It is an issue "raised by the appeal" (Social Security Act 1998, section 12(8)(b)).
- For the same reason, a submission particularly related to the present case must also be rejected. Mr Miller suggested that there could not be a supersession of the review decision reducing the amount of entitlement to income support from 24 February 1995, because revision under section 9 would be available. That was because the ground relating to the receipt of the personal pension would be ignorance of material fact and the decision in 1995 was more favourable to the claimant than if the material fact had been known, which is a ground for revision under regulation 3(5)(b) of the Social Security and Child Support (Decisions and Appeals) Regulations 1999. Mr Miller submitted that on an appeal from a supersession decision an appeal tribunal, which has no independent powers to revise or supersede, could not carry out a revision. I disagree, because the question of whether there should be a revision was one which was open to the Secretary of State when considering supersession (see regulation 3(10)).
- Applying those conclusions to the present case, the appeal tribunal erred in law in failing to identify that there had not been a supersession or revision of all the decisions operative during the period of the alleged overpayment. However, that was not a matter which required a decision that there was no valid supersession and no valid overpayment decision. The defect could have been corrected, and can be corrected by a new appeal tribunal on a rehearing.
(b) Entitlement to sickness benefit during the period of the overpayment?
- There was a second error of law arising from a failure to investigate the course of the decisions within the period of the alleged overpayment. Mr Miller pointed to the payment card printout on page 5, which showed a change of benefit week on 3 October 1994 on changing from signing as unemployed to sick. However, according to the printout, payment of sickness benefit did not start until 24 February 1995 and down to that date the claimant was paid only income support, with no other benefit in payment. Mr Miller submitted that that was a very odd situation, in that there was no apparent explanation why, if the claimant was accepted as incapable of work from 3 October 1994 and was paid sickness benefit from 24 February 1995, the entitlement to sickness benefit should not have started on 3 October 1994. He submitted that the appeal tribunal should have investigated whether there was a delayed award of sickness benefit with effect from 3 October 1994 and an abatement under section 74 of the Social Security Administration Act 1992 of the arrears due from that date, to take account of the income support which would not have been paid if payment of sickness benefit had started on time. He supported that submission by a letter dated 29 April 2002 from the Incapacity Benefit Section of the local Social Security Office, which confirmed that the claimant was entitled to sickness benefit from 4 October 1994.
- That letter was of course not before the appeal tribunal on 24 September 2001. I must look at the evidence as it was at that date. However, it seems to me that the printout on page 5 did raise real doubts about the date from which an award of sickness benefit was made effective. It was an error of law not to investigate those doubts as there might be important consequences from a finding that the award was effective from 4 October 1994, both on the amount of any recoverable overpayment and on the claimant's qualification for the disability premium. I need to add a brief explanation on both those matters.
- Taking the disability premium first, there was an important change in the qualification for the disability premium in April 1995. Before then, one of the conditions on which a person could qualify was through being entitled to sickness benefit or invalidity pension for a continuous period of at least 28 weeks (Income Support (General) Regulations 1987, Schedule 2, paragraph 12(1)(b) and Schedule 1, paragraph 5). Under the amendment made by regulation 17 of the Disability Working Allowance and Income Support (General) Amendment Regulations 1995 (the Amendment Regulations), that condition was changed to being incapable of work in accordance with the provisions on incapacity benefit for a continuous period of at least 364 days (subject to a linking rule). By regulation 1(4), regulation 17 was brought into effect in relation to any particular claimant at the beginning of the first benefit week to commence for that claimant on or after 13 April 1995. There are transitional provisions in regulation 19, coming into effect on the same day. Regulation 19(2) provides:
"(2) Where the disability premium was applicable to a claimant on 12th April 1995 by virtue of paragraph 12(1)(b) of Schedule 2 to the Income Support Regulations as in force on that date, the disability premium shall continue to be applicable to him for so long as paragraph 12(1)(b)(i) of that Schedule applies to him."
Under regulation 19(4), if the disability premium was not applicable to a claimant on 12 April 1995, periods of incapacity for work under the old system could count towards the 364 days under the new system.
- Mr Miller submitted that, if the claimant was entitled to sickness benefit from 4 October 1994, then allowing for the three waiting days he must have been accepted as incapable of work from 1 October 1994. He said that 28 weeks would take the claimant to 15 April 1995 (the first day after the expiry of 28 weeks starting with 1 October 1994). He submitted that, if the claimant's income support benefit week ran from Monday to Sunday, then the first benefit for him on or after 13 April 1995 would have begun on 17 April 1995. Therefore, he said, the claimant would have completed 28 weeks' qualification under the old system and should continue to qualify for the disability premium from 17 April 1995. At the oral hearing, Miss Haywood did not challenge that result.
- However, on reflection there seem to be two problems. I merely note them as problems, which will need to be investigated before the rehearing. The first is that the assumption that the claimant's income support benefit week ran from Monday to Sunday is not consistent with the dates shown on the printout on page 5. Those dates are consistent with a benefit week running from Friday to Thursday, so that the first benefit week for the claimant on or after 13 April 1995 would have begun on 14 April 1995. I am not sure if payment of sickness benefit on a Monday, as stated in the letter of 29 April 2002, necessarily entails that the sickness benefit benefit week ran from Monday to Sunday. The second problem is that regulation 19(2) of the Amendment Regulations specifically refers to the position as at 12 April 1995, rather than in the benefit week in which 12 April 1995 fell. As at 12 April 1995, there had not yet, on Mr Miller's calculation, been a period of 28 weeks of incapacity for work. It may therefore be arguable that regulation 19(2) did not apply to the claimant and that he was left, as from the first benefit week beginning on or after 13 April 1995 having to satisfy the new 364 day condition, merely with the assistance of regulation 19(4). Those matters will need to be fully argued out before the new appeal tribunal.
- In relation to the point about a possible abatement of arrears of sickness benefit, I agree with the result of Mr Miller's submission on the effect this would have on the amount which is recoverable under section 71 of the Social Security Administration Act 1992. If sickness benefit was awarded after a delay for a period starting on 4 October 1994, and the rate was below the amount of income support which had already been paid for that period, then the entire amount of the arrears of sickness benefit could be abated under section 74(2) of the Social Security Administration Act 1992. That would simply have meant that no arrears were actually paid to the claimant and presumably there would have been some sort of accounting process within the Department. But there was no need under section 74(2) for there to be any review of the decision under which the income support had been paid. Mr Miller submitted that the amount of income support effectively recovered through abatement had to be treated under regulation 5 of the Social Security (Payments on account, Overpayments and Recovery) Regulations 1988 as having been paid as sickness benefit, so that a decision on recoverability of income support under section 71 could not touch that amount (regulation 13(a)). I must confess to always having found regulation 5 thoroughly baffling. I am not at all sure that it applies to circumstances like the present. But even if it does not, I have no doubt that when there has been an effective recovery of an amount of income support through abatement under section 74(2), any subsequent decision under section 71 on recoverability of income support for the same period cannot treat the relevant amount as part of what the Secretary of State paid as a result of any misrepresentation or failure to disclose.
- Once again, at the oral hearing Miss Haywood did not dissent from that result. An argument might possibly be made, and I have seen it made for the Secretary of State in other cases, that the procedures under sections 71 and 74 are separate and that, in relation to matters within the scope of appeals to appeal tribunals, an earlier recovery under section 74 is irrelevant to the amount recoverable under section 71. The argument would be that section 71(1) focuses on what the Secretary of State paid in consequence of a misrepresentation or failure to disclose. In a case like the present, the Secretary of State in fact paid the unreduced amount of income support to the claimant down to 23 February 1995 and an abatement of arrears of sickness benefit for part of that period does not alter that conclusion. If the payment resulted from a misrepresentation or a failure to disclose it is legally recoverable under section 71, and that is what is within the jurisdiction of decision-makers, appeal tribunals and Commissioner. It would then be submitted that it was a matter for the Secretary of State, when considering the actual recovery of the overpayment (a matter outside the jurisdiction of those other bodies), to take account of an effective recovery through abatement under section 74(2). It is sometimes admitted that general principles of law would prevent the Secretary of State from making any double recovery.
- It would be very unfortunate if decision-makers, appeal tribunals and Commissioners were required to identify as recoverable under section 71 amounts which were not recoverable under the general law. I do not think that is the case. I conclude in the present case (although the issue may need eventually to be argued out in some other case) that when there has been an abatement under section 74(2) of the Social Security Administration Act 1992, the relevant amount of income support is to be treated as if had not been paid as income support. Therefore it cannot be touched by a subsequent decision about the recoverability of an overpayment of income support under section 71. I rest that on the overall context of sections 71 and 74, if the conclusion is not required by regulations 5 and 13(a) of the Payments Regulations.
(c) Was the claimant reasonably to have been expected to disclose?
- Mr Miller submitted that the appeal tribunal did not deal properly with the claimant's case that, because of what was stated in his income support order book, he reasonably concluded that he did need to declare income under £10 per week derived from his past employment. Miss Haywood disagreed. It seems to me that the appeal tribunal probably did not adequately explain why the claimant's case failed. It said that he should not have relied on his own interpretation of the information contained in the order book, but did not make findings on exactly what information was given at the time in the yellow pages of the order book or, as the claimant has now clarified, in information printed or typed on the front pages of the book. However, I do not need to reach a definite conclusion as I have already identified other errors of law. The issue will have to be considered at the rehearing, on whatever evidence becomes available about the information put on order books at the time. It may be relevant that the amount of £10 was not at the time a standard amount of disregard applied to earnings (except if both members of a couple had earnings) or to other sources of income (apart from war pensions and the like).
(d) Was there adequate evidence of the pension received?
- This point was not raised in any of the submissions, but I have concluded that I should mention it briefly. It works potentially both for and against the claimant. The claimant on 27 October 2000 said that the payment from Lloyds TSB was £39.16 per quarter and had been the same amount from the outset. That works out at a fraction over £3 per week. The letter of 16 February 2001 from Lloyds TSB said rather vaguely (and we do not know what question had been asked) that between the dates of 20 September 1994 to 20 September 1995 the claimant had received £146.85. That was worked out as £2.82 per week and it was that figure which was used in calculating the effect on income support entitlement. The disparity in the weekly figures suggests that a decision was taken on inadequate information.
- In order to work out the effect on income support entitlement precisely, it is necessary to know the date on which the first payment of the annuity under the personal pension plan was due to be paid, the date on which it was actually paid and the period in respect of which it was paid. The same needs to be known about subsequent payments. In cases of payment in arrears, it is the date on which a payment is due to be paid which is crucial for income support purposes, not the date of the beginning of the period to which the payment relates. I take an example which may or may not be borne out by further evidence. Say that the annuity under the claimant's personal pension plan was payable quarterly in arrears, on the 20th of March, June, September and December. Say that the claimant opted to take payment of the annuity on some date after 20 June 1994, but before 20 September 1994. The first payment would be due on 20 September 1994, but would not cover a full quarter. Subsequent payments of £39.16 would be due on 20 December 1994, 20 March 1994 and so on and would each cover a full quarter. The total for the payments made, at least from 20 September 1994 to 20 June 1995 (but excluding that made on 20 September 1995) might be £146.85. The payment made on 20 September 1994, whatever it was, would then only be taken into account as income for income support purposes for a period of equal length to the period in respect of which the payment was made, so that there would be a gap before 20 December 1994 in which the claimant had no income from the annuity for income support purposes.
- Thus, before the proper amount of the claimant's income support entitlement from 21 September 1994 onwards, and the amount of any overpayment, could be worked out, further evidence was required from Lloyds TSB. Was the annuity payable in arrears or in advance? Was 20 September 1994 the date of the first payment of the annuity, or was it the date on which the claimant opted to start his entitlement?. If the former, what was the amount of the payment made on 20 September 1994 and what period was it paid in respect of? If the latter, when was the first payment of the annuity due to be paid, what was its amount and what period was it in respect of? In both cases, when were subsequent payments made, what were their amounts and what periods were they in respect of? I have said that this point might work for and against the claimant. One result might be that for some weeks there was no income to be taken into account. But another result might be that for other weeks the income to be taken into account was £3.01, rather than £2.82. The failure of the appeal tribunal to seek further evidence was an error of law.
Conclusion
- For the reasons given above, the appeal tribunal's decision must be set aside as erroneous in point of law. The claimant's appeal against the decision dated 26 March 2001 is referred to a differently constituted appeal tribunal for determination in accordance with the directions given below.
Directions to the new appeal tribunal
- There must, subject to paragraph 30 below, be a complete rehearing of the claimant's appeal on the submissions made and evidence presented to the new appeal tribunal, which will not be bound by any findings made or conclusions expressed by the appeal tribunal of 24 September 2001. The claimant should be asked again whether he wants to have an oral hearing of his appeal. I am sure that any new appeal tribunal would be assisted if the claimant could attend to give evidence and to answer questions in person.
- Before the rehearing the Secretary of State must produce a fresh written submission taking into account the errors of law identified and points made above. In particular, the submission must deal with the following.
(a) The Secretary of State must set out the decision which it is submitted that the new appeal tribunal should give, having corrected the defects in the superseding decision of 26 March 2001. That will involve identifying the decisions which were operative during the period of the alleged overpayment and putting forward the grounds of revision or supersession which are said to apply to each decision.
(b) The submission must provide information, with supporting original documents where available, of the period for which sickness benefit was awarded (was it from 4 October 1994?), the date on which the award was made, whether the arrears were abated under section 74(2) of the Social Security Administration Act 1992, and what effect the award of sickness benefit has on the amount of the claimant's entitlement to income support throughout the period in question and as to any possible underpayments for other periods because of the effect on qualification for the disability premium.
(c) The Secretary of State must also seek the further evidence from Lloyds TSB mentioned in paragraph 25 above (plus any other information considered relevant) and make a submission about the effect of that evidence on the decision which it is said that the new appeal tribunal should make.
(d) The Secretary of State must also put forward whatever information can be discovered about what might have been written at the relevant time in income support order books about disregards of earnings or other income (see paragraph 22 above).
- If, in the light of all that, the Secretary of State were to decide that it was not worth pursuing the overpayment for the period in issue in this case (I do not know quite what the relationship is with the case relating to the period from 1 September 1995 to 3 September 2000) I am sure that a mechanism could be found, possibly in consultation with Mr Miller, to reach a conclusion without the need for a rehearing of this appeal.
- I direct any new appeal tribunal to apply the legal approach set out above to the issues (a) of whether the relevant decisions fall to be revised or superseded and, if so, how; (b) whether as a result there has been an overpayment of income support within the period from 21 September 1994 to 22 June 1995 and, if so, of what amount; and (c) if there is such an overpayment, whether all or part of it is recoverable from the claimant under section 71 of the Social Security Administration Act 1992. Otherwise, the new appeal tribunal must evaluate the fresh submissions made on behalf of the Secretary of State, with the additional evidence presented, together with any submission and evidence presented in reply on behalf of the claimant.
(Signed) J Mesher
Commissioner
Date: 26 September 2002
