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[2009] UKUT 52 (AAC) (10 March 2009)

DECISION OF THE UPPER TRIBUNAL

(ADMINISTRATIVE APPEALS CHAMBER)

The DECISION of the Upper Tribunal is to allow the appeal by the appellant.

The decision of the Leeds appeal tribunal dated 7 August 2008 under file reference 013/07/02623 involves an error on a point of law. That tribunal decision is set aside. The Upper Tribunal re-makes the decision as follows:

The appellant's appeal against the entitlement and overpayment decisions succeeds.

I allow the appellant's appeal against the Secretary of State's entitlement decision dated 23 March 2006. I agree that the appellant's entitlement to income support as a lone parent ceased on 23 September 2003. However, I find that her entitlement continued on the basis of her incapacity of work and without any break as from 24 September 2003.

I also allow the appellant's appeal against the Secretary of State's overpayment decision dated 27 March 2006. The appellant made an effective telephone disclosure of the change in her circumstances at the material time to the right office. Thereafter she was under no continuing duty to disclose the material fact which she had already disclosed. I therefore find that there are no grounds under section 71 of the Social Security Administration Act 1992 to justify the recovery of any overpayment of income support.

I revise both decisions of the Secretary of State accordingly.

This decision is given under section 12(2)(b)(ii) of the Tribunals, Courts and Enforcement Act 2007.

REASONS FOR DECISION

The decision in summary

1. The appellant's appeal to the Upper Tribunal succeeds. The decision of the Leeds appeal tribunal dated 7 August 2008 under file reference 013/07/02623 involves an error on a point of law. Its decision is therefore set aside.
2. The Upper Tribunal re-makes the decision in the terms set out above. The appellant continued to be entitled to income support, on the grounds of her incapacity for work, even after she ceased to be a lone parent (by virtue of her losing entitlement to child benefit). In any event, any overpayment of income support is not recoverable from her as she made an effective disclosure of the relevant change in her circumstances at the material time.

T

The background to this appeal

3. The factual background to this appeal need only be summarised here. The appellant is a woman who is now aged 38. She has clearly had a troubled past, which resulted in her abusing alcohol from her early teens. She had a son in 1991, who she raised by herself following the father's disappearance. She claimed income support as a lone parent in January 2002, although that claim form has since been destroyed in accordance with normal departmental procedures.
4. At some point social services became involved, owing to concerns about the appellant's lifestyle, her alcoholism and its effect on her son. As a result of that intervention, the appellant states that she "lost custody" of him. Presumably this is a reference to social services taking care proceedings and the child's residence being changed. The appellant's son went to live with his grandmother, the appellant's mother. The grandmother was paid child benefit for the boy from 22 September 2003.
5. On 7 December 2005 the appellant made a statement to the Jobcentre Plus office to the effect that her son stayed some of the time with her and some of the time with his grandmother. She admitted that the grandmother had been the child benefit recipient for some time.
6. Two days later the Department "closed" the appellant's claim, on the basis that she did not satisfy any condition of entitlement to income support as she was not (by law) a lone parent (as she was not the child benefit recipient).
7. On 23 March 2006 a decision maker made an "entitlement decision", in effect revising (although the term "superseding" was used) a series of decisions from September 2003 through to June 2005 (none of which was before the tribunal). The entitlement decision ruled that the appellant was not entitled to income support from 22 September 2003 to 29 November 2005 "as she did not have a condition of entitlement due to child benefit now in payment to her only child's grandmother".
8. A few days later, on 27 March 2006, a decision maker created a computer generated "overpayment decision" to the effect that the appellant had been overpaid £11,017.33 in income support for the period in question and that this sum was recoverable from her because of her failure to disclose a material fact (namely that her child benefit had stopped).
9. The appellant appealed against the Secretary of State's decisions. Following correspondence between the Department and the local CAB, acting for the appellant, and after several adjournments for various reasons, her appeal was heard by the Leeds appeal tribunal on 7 August 2008. The tribunal consisted of a legally qualified panel member sitting alone. The appellant attended, with a friend (her representative being unavailable), as did a presenting officer.
10. The tribunal dismissed the appeal, evidently with some regret, and confirmed the Secretary of State's decision that the overpayment of £11,017.33 was recoverable. The tribunal also properly recognised that the actual decision on whether or not to seek recovery of the overpayment was a matter for the Secretary of State. However, on its Decision Notice (which acted as its Statement of Reasons) the tribunal set out a series of mitigating factors for the Secretary of State to consider, and which in the tribunal's view "would make recovery unjust".

Did the tribunal's decision involve an error of law?

11. The answer to this question is yes. Most of the correspondence between the CAB and the Department before the hearing, and much of the discussion at the hearing, was about whether or not it was appropriate to offset against the overpayment an amount representing the amount of income support which the appellant may have been entitled to on other grounds (e.g. incapacity for work). This involved consideration of regulation 13 of the Social Security (Payments on account, Overpayments and Recovery) Regulations 1988 (SI 1988/664).
12. It seems that this focus on the intricacies of regulation 13 and the associated case law in decisions of the Social Security Commissioners caused the tribunal chairman to take her eye off the ball. There was a much more fundamental issue for her to address, namely whether there had been a failure to disclose on the appellant's part and indeed whether the appellant had lost entitlement to income support at all. Obviously, if there was no failure to disclose a material fact, and no misrepresentation, then any overpayment could not be recoverable, given the terms of section 71 of the Social Security Administration Act 1992.
13. The appellant's signed statement to Jobcentre Plus in December 2005 declared that "I informed income support that [her son's] grandma was claiming child benefit for him. I understand if I have been overpaid benefit, I will need to repay it back to the Department".
14. At the tribunal hearing, the appellant's oral evidence, as noted in the Record of Proceedings, was a little more detailed:

"I made a phone call to tell Dept – that mother had taken son – and that I needed to change my benefit – [they] said that couldn't deal with it because computer system was down – [they] would get back in touch, but never did, I was drinking heavily, didn't think to follow it up."

15. The presenting officer's evidence was noted as follows:

"It is possible that this happened because there were frequent problems with the system at that time – but would probably have been a request to put c in c [change in circumstances] in writing. But there is also a continuing obligation to [disclose]."

16. The tribunal, in its list of mitigating circumstances, found as follows:

"The Tribunal accepted [the appellant's] evidence that she had telephoned the department in 2003 to inform them that her benefit would need to be changed because her son was no longer with her. This was not recorded because the systems were down, and nobody contacted [the appellant] after that, although she had been assured that they would. The Tribunal finds that [the appellant] did not discharge her continuing duty to notify a material change in circumstances, but that there was initial disclosure."

17. The appellant's representative now challenges that finding on the basis that the tribunal should have made a further finding as to the point at which the appellant had to make a further disclosure.
18. However, as I indicated when granting permission to appeal, the appellant's case is in fact much stronger than that. The continuing duty to disclose only applies where disclosure is made by a claimant to a different office than the one dealing with her benefit and in circumstances where it is reasonable to expect that the information disclosed will be passed on to the correct person in the right office: see the Tribunal of Commissioners' decision R(SB) 15/87 at paragraphs 26-29.
19. It follows that the continuing duty to disclose does not apply where the disclosure was to the correct office in the first place. The tribunal's acceptance of the presenting officer's assertion that there was a continuing duty to disclose represents an error of law which means its decision must be set aside.
20. The Secretary of State's representative now acting in these proceedings, Mr Wayne Spencer, notes that the Department's standard written instructions to claimants on form INF4 are to report changes by telephone, in writing or in person. He suggests (rather faintly) that those instructions might have been modified by an oral instruction to report changes in writing when the computer system was down. This was essentially the presenting officer's submission at the tribunal.
21. However, Mr Spencer very properly observes that this argument is doomed on two grounds. The first is that the tribunal found as a fact that the appellant was told that someone would contact her, and not the other way round. The second is that any instruction to confirm the information in writing could not alter the fact that there had already been an effective disclosure by telephone.
22. In his written submission, Mr Spencer makes the point forcefully in terms on which I cannot improve:

"The Secretary of State knew about those facts and the claimant knew that he knew because she herself had told him. If the Secretary of State did not act on the information he had been given because he was fearful that if the matter was not put in writing he may later forget about the disclosure or lack a record of it, so much the worse for him. This was not a case where the Secretary of State needed additional facts or comments from the claimant before he could properly supersede the claimant's award of income support (or suspend payments to her). He evidently had all that he in principle needed; he was merely requesting that the claimant repeat those facts for his administrative benefit. Nothing the claimant could say would materially add to his knowledge and therefore there was no 'disclosure' she could fail to carry out. Moreover, given that the prompt repetition of the disclosure would make no difference to the Secretary of State's knowledge, it cannot properly be said that the failure to make that repetition caused the overpayment of benefit. If an outcome would be the same whether or not an event occurred, the event in question cannot be a cause of that outcome."

23. On the facts as found by the tribunal there was an effective disclosure by the appellant of the material facts to the right office at the relevant time. It follows that she cannot be said to have failed to disclose the facts in question. There has been no suggestion of any misrepresentation on her part.
24. Thus the tribunal's failure to follow through the logic of its finding that there had been an "initial disclosure" to the (right) office means that its decision involves an error of law. The tribunal should have allowed the appellant's appeal against the overpayment decision of 27 March 2006. The tribunal should have decided that there were no grounds under section 71 of the Social Security Administration Act 1992 for the recovery of any overpayment of income support. I accordingly set aside and re-make the tribunal's decision under section 12(2) of the Tribunals, Courts and Enforcement Act 2007.

Was the issue of entitlement to income support handled in the right way?

25. In one sense the Secretary of State's failure to make out a case under section 71 is the end of the matter. There are no grounds for the Secretary of State to recover any overpayment of income support. However, this still leaves one matter unresolved: was the issue of entitlement to income support handled in the right way?
26. The fact that the appellant lost her status, in social security law, as a lone parent in 2003 does not of itself preclude continued entitlement to income support on some other ground (see the decision of Mr Deputy Commissioner Poynter in R(IS) 10/05). After her son moved to live with his grandmother, the appellant might have continued to be entitled to income support but on the basis of her incapacity for work.
27. The tribunal certainly had evidence before it of the appellant's struggle with alcoholism from an early age. It had the appellant's written statement and her evidence at the hearing. In her letter of appeal the appellant stated that she wanted to appeal against the entitlement and overpayment decisions "because during the period of that overpayment I would have been entitled to benefit in my own right".
28. The tribunal also had a computer print-out of her GP's notes, albeit only for the three-year period from December 2004 until November 2007. These notes contained several references to treatment for alcoholism, which indicated that the condition was of long standing. For example, on 7 December 2005, coincidentally the same date that the appellant made her written statement to Jobcentre Plus, her GP recorded "alcohol dependence syndrome – binge [drinking] – 2 years [ago] lost son through alcohol".
29. The tribunal, in the mitigating factors which it drew to the attention of the Secretary of State, found as follows:

"There is much evidence of [the appellant's] alcoholism. Her inability to look after her child led directly to the award of his care to her mother, following court proceedings. The Tribunal finds, on the balance of probabilities, she would have qualified for income support on the basis of incapacity for work throughout the period of the overpayment."

30. The tribunal also noted that the original claim form for income support from 2002, which might also have included reference to the appellant's health problems, was no longer available. However, as Mr Spencer now submits for the Secretary of State, the tribunal's failure to consider whether the decision on entitlement had been properly superseded is itself an additional error of law.

What happens next?

31. Mr Spencer, in his helpful submission on behalf of the Secretary of State, suggests that there are two options on the way forward.
32. The first possibility would only apply if the appellant abandons her argument about incapacity for work. In that event the Upper Tribunal might simply leave undisturbed the Secretary of State's decision that the appellant was no longer entitled to income support as from 24 September 2003 as she no longer fell within a prescribed category of person. Obviously the decision that the appellant was not liable to repay any consequential overpayment would be unaffected.
33. The second option, if the appellant declines to concede the incapacity point, is for the Upper Tribunal to decide the overpayment recovery issue in the appellant's favour but to send the supersession question back to a new tribunal for it to decide. The new tribunal could then determine whether the appellant could properly be held to be a person who was or treated as incapable of work as at 24 September 2003.
34. I am not attracted by the first of these options. It is inconsistent with the clear finding of fact by the tribunal, which was fully justified on the evidence before it. Moreover, leaving matters unresolved in this way may have unfortunate ramifications in other respects for the period in issue (e.g. as to issues of possible housing benefit disentitlement).
35. I am also not attracted by the second option. That course of action would prolong these proceedings still further, and the new tribunal will be in no better position as regards the evidence than the first tribunal previously (or indeed the Upper Tribunal now). No new evidence is going to emerge at this stage. Any new tribunal will be sitting to consider the appellant's circumstances over five years ago.
36. The appellant's representative invites the Upper Tribunal to substitute its own decision in full for the decision that the tribunal made. The CAB representative also draws attention to the possibility of accepting evidence of incapacity in a form other than a GP's sick note (see Social Security (Medical Evidence) Regulations 1976 (SI 1976/615), reg. 2. Certainly, the possibility of using such alternative evidence on a retrospective basis was demonstrated in Commissioner's decision R(IS) 8/93. The question then is whether this can be done without the need for a further tribunal hearing.

Does there have to be another tribunal hearing to decide whether the appellant was incapable of work in September 2003?

37. As explained above, even though the appellant lost entitlement to income support as a lone parent, she may have continued to be entitled to that benefit as a person who was incapable of work. The relevant prescribed category is defined as follows by paragraph 7 of Schedule 1B of the Income Support (General) Regulations 1987 (SI 1987/1967), as amended in 1996:

"Persons incapable of work


    7.    A person who—

(a) is incapable of work in accordance with the provisions of Part XIIA of the Contributions and Benefits Act and the regulations made thereunder (incapacity for work); or

(b) is treated as incapable of work by virtue of regulations made under section 171D of that Act (persons to be treated as incapable or capable of work); or

(c) is treated as capable of work by virtue of regulations made under section 171E(1) of that Act (disqualification etc.); or

(d) is entitled to statutory sick pay."

38. There is no evidence in the present case that the appellant had actually been found incapable of work under the personal capability assessment, and so paragraph 7(a) would seem not to apply to her. There is certainly no evidence at all that either paragraph 7(c) or (d) applied.
39. Could it be arguable, however, that during the relevant period the appellant should have been treated as incapable of work within paragraph 7(b)? The relevant regulations made under section 171D of the Social Security Contributions and Benefits Act 1992 include regulations 10 and 27 of the Social Security (Incapacity for Work) General Regulations 1995 (SI 1995/311).
40. In particular, under regulation 10(2)(e)(viii), a person is exempt from the personal capability assessment if he suffers from:

"(viii) a severe mental illness, involving the presence of mental disease, which severely and adversely affects a person's mood or behaviour, and which severely restricts his social functioning, or his awareness of his immediate environment."

41. There is no doubt that this sets a high threshold, as shown by the decision of Mr Commissioner Mesher in R(IS) 1/08 (at paragraph 23) and more recently by Upper Tribunal Judge Lane in CIB/3598/2008 ([2009] UKUT 36 (AAC), at paragraphs 6 and 7). However, there is evidence in the current case that might have justified such a conclusion. The very fact that the appellant's chronic alcoholism had resulted in her inability to care properly for her son, and his compulsory removal to live with his grandmother, is in my view sufficient testimony of a severe restriction in her social functioning.
42. A further possibility, if regulation 10 was inapplicable, was that regulation 27(b) applied on the basis that the effect of the appellant's alcoholism was such that "there would be a substantial risk to the mental or physical health of any person" if she were found capable of work.
43. But can a tribunal comprising a lawyer member (now a tribunal judge) sitting alone, and without a doctor, decide such issues? In CIS/3781/2002 the claimant's entitlement to income support stopped when he ceased being a carer. The claimant appealed, arguing that he was in any event incapable of work. A tribunal, consisting of a lawyer member sitting alone, dismissed his appeal.
44. Mr Commissioner Rowland, allowing the claimant's appeal, remitted the case to a two-person tribunal comprising a lawyer and a medical member and also directed the Secretary of State to arrange for a medical examination:

"Once the claimant had raised the question of incapacity as a ground for challenging the removal of his income support (which he did in his notice of appeal to the tribunal), it was necessary for the tribunal to determine whether he fell within the scope of paragraph 7 of Schedule 1B to the Income Support (General) Regulations 1987 as amended. In practical terms that meant deciding whether the personal capability assessment was satisfied (see the Schedule to the 1995 Regulations) which required the case to be adjourned to a tribunal consisting of a legally qualified panel member and a medically qualified panel member (see regulation 36(2)(a)(i) of the Social Security and Child Support (Decisions and Appeals) Regulations 1999)" (paragraph 4).

45. However, regulation 36(2)(a)(i) of the Social Security and Child Support (Decisions and Appeals) Regulations 1999 only requires a two-person tribunal to be so composed where "the issue, or one of the issues, raised on the appeal is whether the personal capability assessment is satisfied".
46. Regulation 36(7) defines the expression "personal capability assessment" by reference to regulation 2(1) of the Social Security (Incapacity for Work) General Regulations 1995. This in turn defines the expression as meaning "the assessment defined in Part III of these Regulations", being the 1995 Regulations. Part III of the 1995 Regulations covers regulations 23-28 and the accompanying Schedule.
47. It follows that if regulation 27 was to be a live issue, the matter would have to be determined by a two-person tribunal comprising a tribunal judge and a medical member. In my view, however, there was sufficient evidence in this case to justify a finding that regulation 10(2)(e)(viii) applied, notwithstanding the high threshold. This was accordingly a matter that the original tribunal could have determined. It follows that the Upper Tribunal may re-make the decision without the need for yet another hearing before the First-tier Tribunal.
48. So what decision should the tribunal have made on this point? Did the appellant fall within one of the other prescribed categories for the purposes of entitlement to income support? Mr Deputy Commissioner Poynter in R(IS) 10/05 (at paragraph 16) explained as follows:

"As there are 24 prescribed categories at present, the fact that a claimant no longer falls within one category will not usually be a ground for superseding a decision awarding income support unless, on a balance of probabilities, he or she does not fall within any other prescribed category. There will be occasions when the Secretary of State has to make further enquiries before he can be satisfied that that is the case (see, for example, CIS/3781/2002 in which Mr Commissioner Rowland directed the Secretary of State to conduct a personal capability assessment of a claimant who had previously qualified for income support as a carer but also claimed to be incapable of work). The only circumstance in which a claimant's ceasing to fall within one of the prescribed categories will, of itself, justify supersession is where that change necessarily entails a change in the rate at which benefit is paid (for example, when a person who is in receipt of the disability premium ceases to be incapable of work)."

49. In the particular and materially different circumstances of this appeal, I do not regard the approach adopted in CIS/3781/2002 as either suitable or necessary in the present case, for the reasons already explained. However, the change in circumstances in the present case would undoubtedly have resulted in a change in the rate at which benefit was paid, justifying a supersession. This is because the appellant's personal allowance for her child would have been withdrawn – although at some point she would have become entitled to the disability premium based on her incapacity for work.
50. I would therefore re-make the decision on entitlement to income support. My decision is that although the appellant ceased to be entitled to income support in her capacity as a lone parent on 23 September 2003, she continued to be entitled to that benefit with effect from 24 September 2003 because of her incapacity for work. This is because she was, at that time, exempt from the personal capability assessment by virtue of regulation 10(2)(e)(viii).
51. There still may in theory have been an overpayment of income support, because the appellant's entitlement as a lone parent may well have exceeded her entitlement as a person who is incapable of work, although any offset under regulation 13 would need to be considered if that were a live issue. However, the issue of entitlement for this past period is unlikely to have any material effect on the appellant now. This is because even if there had been an overpayment of income support for the period in question, there are no grounds for recovery under section 71 of the Social Security Administration Act 1992 for the reasons set out above.

Conclusion

52. For the reasons explained above, the decision of the tribunal involves an error of law in two respects. The tribunal erred in its conclusion that the appellant was subject to a continuing duty to disclose, despite her initial and effective disclosure to the right office. It also erred in its treatment of the entitlement issue. I allow the appeal and set aside the tribunal's decision under section 12(2)(a) of the Tribunals, Courts and Enforcement Act 2007. I re-make that decision under section 12(2)(b)(ii) in the terms set out at the start of this decision.

Signed on the original Nicholas Wikeley

on 10 March 2009 Judge of the Upper Tribunal