ES-v-Department for Social Development (JSA) [2015] NICom 5

Decision No:  C9/14-15(JSA)

SOCIAL SECURITY ADMINISTRATION (NORTHERN IRELAND) ACT 1992

SOCIAL SECURITY (NORTHERN IRELAND) ORDER 1998

JOBSEEKERS ALLOWANCE

Appeal to a Social Security Commissioner
on a question of law from a Tribunal's decision
dated 17 September 2013

DECISION OF THE SOCIAL SECURITY COMMISSIONER

1.	This is an appeal from the decision of an appeal tribunal sitting at Craigavon on 17 September 2013.

2.	For the reasons I give below, I dismiss the appeal.

REASONS

	Background

3.	The appellant claimed jobseeker’s allowance (JSA) from the Department for Social Development (the Department) on 7 December 2008.  In his claim form he declared that he had capital of £3,600 and that he was not holding capital on behalf of anyone else.  On 7 February 2009 the Department awarded him contribution-based JSA from 9 December 2008 to 8 June 2009 and, when the period of entitlement to contribution-based JSA ceased, income-based JSA from and including 9 June 2009.

4.	On 6 April 2011 the Department decided that, from 5 December 2008 to 27 August 2009, the appellant had undisclosed capital below the prescribed limit of £16,000 and that, from 29 August 2009 to 21 October 2010, he had undisclosed capital in excess of the prescribed limit.  The Department made decisions superseding the appellant’s entitlement to JSA for the relevant periods.  The appellant did not appeal these decisions.

5.	On 9 January 2012, the Department decided that the appellant had been overpaid JSA, amounting to £3,162.37 for the period from 9 June 2009 to 21 October 2010, and that this was recoverable from him.  He appealed.  Following a revision by the Department, a new decision was made on 14 May 2012, to the effect that a recoverable overpayment of £3,201.70 had been made to the appellant between 9 June 2009 and 21 October 2010.  The appeal continued against the revised overpayment amount.

6.	The appeal was determined on 17 September 2013 by an appeal tribunal consisting of a legally qualified member (LQM) sitting alone.  The tribunal disallowed the appeal.  The appellant requested a statement of reasons for the tribunal’s decision.  This was issued on 20 December 2013.  On 21 January 2014 the appellant, through his representative at Law Centre (NI), applied to the LQM for leave to appeal to the Social Security Commissioner.  The late application was admitted by the LQM, but she refused leave to appeal by a determination issued on 31 January 2014.  On 5 February 2014, the appellant applied to a Social Security Commissioner for leave to appeal.

	Grounds

7.	The appellant submits that the tribunal has erred in law on the basis that:

	(a)	it made no reference to evidence in the form of a business plan submitted by the appellant;

	(b)	it had failed to refer to correspondence dated 9 September 2008 regarding interest in purchase of business equipment;

	(c)	it had failed to refer to correspondence dated 9 September 2013 from the appellant’s sister;

	(d)	it had failed to refer to correspondence dated 19 December 2012 regarding attendance at a business start-up course.

8.	The Department was invited to make observations on the appellant’s grounds.  Mr Smith of Decision Making Services (DMS) responded on behalf of the Department.  He submitted that the tribunal had not erred in law as alleged and indicated that the Department did not support the application.

	The issue before the tribunal and the tribunal’s decision

9.	The implication of holding capital in excess of the limit of £6,000 would be that it would result in a tariff income reduction from the appellant’s weekly income-based JSA entitlement of £1 for each £250 of capital between £6,000 and £16,000.  The implication of holding capital in excess of £16,000 would be that the appellant’s entitlement to income-based JSA would cease altogether.

10.	The tribunal found that the appellant had undeclared capital which affected his entitlement to JSA.  The tribunal rejected the appellant’s account that he was holding this money as a loan from his sister to set up a sunbed business in Northern Ireland.  It rejected the validity of certain documents placed before it by the appellant to explain his possession of the money – describing these as fictitious.  It held that the appellant had failed to disclose the capital held, that JSA had been overpaid to him in consequence and that it was recoverable from him.

	The background circumstances in more detail

11.	The appellant claimed JSA from 6 December 2008, stating that he had been made redundant from his previous occupation.  He stated that he had £3,600 in bank accounts.  He indicated that he was due a redundancy payment that had not been received yet.  He stated that he was not receiving any tax credits.

12.	Evidence before the tribunal showed that the appellant held four bank accounts with the Northern Bank.  One of these was a “Northern Choice” current account, with account number ending in “189”.  At the date of claim, 6 December 2008, this held the sum of £300.28.  At the date when the appellant’s entitlement to contributory JSA stopped and his claim became a claim for income-based JSA, 9 June 2009, this account held £5.94.  These figures are relatively insignificant and the account has no particular relevance to the calculation of capital held by the appellant, except in relation to three transactions.  On 28 June 2009 a cash deposit of £4,100 was lodged to this account.  Two days later on 30 June 2009 the sum of £4,600 was withdrawn from the account under a description “FOR CAR”.  On 3 September 2009, a cash deposit of £3,550 was lodged to this account and transferred out on the same day.  On 23 December 2009 a cash sum of £3,000 was lodged to this account and a sum of £2,400 was transferred out on 29 December 2009.

13.	Bank statements from Northern Bank showed that on 6 December 2008 the appellant had a Mini Cash ISA account, with an account number ending in “066”, holding £3,201.08.  The balance of this account increased to £3,351.33 following payment of interest on 1 January 2009.  A further £3,600 was credited to this ISA on 18 February 2009.  At 9 June 2009 this account held £6,951.33.  By 16 February 2010, the sum of £6,993.54 was held in this account, of which £6,992 was transferred to the Northern Choice account ending in “189”.  After this the balance was negligible.

14.	Bank statements from Northern Bank showed that on 6 December 2008 the appellant had a Savings Account Plus, with an account number ending in “673”, holding £10,600.67.  This account had been opened on 12 January 2007 with a deposit of £2,800.  The sum of £3,600 was debited from account “673” on 18 February 2009 under the reference “tfr isa”, and I understand this to have been the sum transferred to the Mini Cash ISA with account number ending in “066” on that date.  On 9 June 2009 this account held £7,300.67.  On 3 September 2009 a sum of £3,550 was credited to this account, corresponding to the withdrawal of £3,550 from account “189” on the same date.  A withdrawal of £9,000 was made on 2 December 2009, after which time the balance was negligible.

15.	Bank statements from Northern Bank showed that on 12 December 2009, the appellant opened a Northern eSaver account, with account number ending in “042”, lodging £9,000 on that date.  This most probably corresponds to the withdrawal of £9,000 from “673” on 2 December 2009.  The sum of £2,400 was lodged on 29 December 2009 with a heading “FOR THE CAR”.  This corresponds with the withdrawal of the same amount from “189” on 29 December 2009.  The balance on 4 January 2010 was £12,400, whereupon the sum of £3,200 was transferred out.  The same amount is credited to account “189” on the same day.  On 16 February 2010 the appellant lodged a further £7,200 into this account, taking the balance to £16,400.

16.	Bank statements from HSBC showed that the appellant held a bank account with account reference ending in “432”, which had a balance of £133.66 on 9 December 2008.  This account was overdrawn to the sum of £26.09 on 9 June 2009.  The appellant’s JSA was paid into this account.  He was also paid working tax credit to this account until 24 September 2009.

17.	As indicated the appellant was interviewed by a Compliance Officer on 21 October 2010.  He revealed the existence of accounts “432”, “066”, “189” and “673”.  He did not refer to account “042”.  The sum of £15,000 was withdrawn from the “042” account between 22 and 25 October 2010 and this account was closed on 26 October 2010.  These sums were transferred to the appellant’s Northern Bank “Northern Choice” account, with account number ending in “189”, from which they were withdrawn in cash.

18.	The Department obtained copies of the appellant’s bank statements.  On 14 February 2011 the appellant’s JSA was suspended.  He was asked to explain certain transactions.  On 22 February 2011 he wrote to state that he had planned to start up a sunbed business, borrowing money from his sister in three cash instalments of £12,000.  He produced witnessed but undated promissory notes for three loans of £5,000 on 28 June 2008, £4,000 on 3 September 2009 and £3,000 on 23 December 2009.  He produced a promissory note release dated 1 November 2010 indicating repayment of £12,000 plus interest, amounting to £13,835.  He provided an undated business plan for a sunbed business, including an estimate of total start-up costs as £19,500, and a letter from a supplier of sun-tanning equipment dated 12 September 2008.

19.	The appellant’s account was that he had borrowed three sums of money from his sister.  These were loans to enable him to start a business – a loan of £5000 made on 28 June 2008, a further loan of £4,000 made on 3 September 2009 and a third loan of £3,000 made on 23 December 2009.  He was to contribute £2,000 himself and to apply for a grant of £1,500 and a loan of £4,000 from the Prince’s Trust.

20.	Later evidence from the appellant’s sister in the form of a letter dated 5 September 2013 was provided to the tribunal.  This indicated that she had given money to him to start up a business on her behalf and that he would be an employee of the company.  An undated letter dated from Craigavon Cultural Programme alluded to general language barriers causing problems for Lithuanians completing benefit forms. A letter of 19 December 2012 from a project officer of Craigavon Industrial Development Organisation confirmed that the appellant had completed a business start-up course in 2009-10.

	Hearing

21.	I held an oral hearing of the appeal.  The appellant was not present but was represented by Ms Carla Rogers of Law Centre (NI).  The Department was represented by Mr Brian Smith of DMS.

22.	Ms Rogers submitted that the tribunal had failed to deal adequately in its findings and reasons with some of the documentary evidence before it – namely, the business plan, the letter from the sun supplier, the letter of the appellant’s sister and the letter from Craigavon Industrial Development Organisation.

23.	She accepted that the appellant had possession of the money in question at the relevant dates.  She accepted that he had not disclosed the existence of the accounts holding the money.  However, she submitted that the money was either held on trust by the appellant for his sister – or was a business loan for a specific purpose subject to the Quistclose principle.  Therefore it did not fall to be taken into account as capital for JSA purposes.

24.	Mr Smith submitted that the tribunal clearly declined to believe the appellant.  It rejected the credibility of the promissory notes, and the credibility of the appellant’s account.  Although it had taken a different view of events to the Department, it was entitled to do so, on the basis of the evidence before it.  It did not have to refer to every piece of evidence before it.  Even if the money was borrowed by the appellant from his sister, it fell to be taken into account as capital.

	Assessment

25.	The appellant does not assert that he disclosed the fact of possessing capital in excess of the relevant prescribed limits of £6,000 and £16,000 at the relevant times.  The sole issue is whether he possessed the capital in his bank accounts.

26.	He did not appeal the decisions made in relation to his entitlement to JSA.  Those decisions were made by the Department on the basis of accepting his account that he had borrowed money from his sister and later repaid it with interest.  As far as the question of entitlement is concerned, that matter was not before the tribunal and it is not before me.  The reason is that the principle of finality set out in Article 17(1) of the Social Security (NI) Order 1998 applies to the decisions on entitlement.

27.	Mr Smith submitted, in my view correctly, that the principle of finality did not prevent the tribunal forming its own view of the facts for the purposes of the overpayment appeal.  He referred me to the decisions of Commissioner May QC in CIS/4423/2006 and the different approach taken by Commissioner Jacobs in CIS/1330/2002.  In the latter decision Judge Jacobs held that the finality principle applied to decisions but did not apply to questions of fact.  More recently, Upper Tribunal Judge Wikeley said in Secretary of State for Work and Pensions v AM [2010] UKUT 428 (AAC), at paragraph 49, “.. the general principle remains as before, namely that while decisions are final (see section 17(1)) a person or tribunal making a subsequent decision is entitled to rely on an earlier finding of fact but is not bound to do so”.  The same point has been expressed by Chief Commissioner Mullan in AF v Department for Social Development [2011] NI Com 24 at paragraph 51.  I consider that this is a correct statement of the law.  In other words, where there is an entitlement decision which has not been appealed, and a tribunal is hearing an appeal from a related overpayment decision, the tribunal has no jurisdiction to change the decision on entitlement; however, in assessing the recoverability of an overpayment, it is entitled to take a different view of the facts to the decision-maker deciding the entitlement issue, even if the logic of that view of the facts is that the entitlement decision is wrong.

28.	The tribunal here took a different view of the facts to the Department.  Whereas the Department accepted that the claimed loans were genuine, the tribunal did not.  Ms Rogers submits that the tribunal should have referred to all the evidence in reaching this conclusion and that its failure to do so rendered its decision erroneous in law.  I disagree with this.  It is plain that the tribunal disbelieved the promissory notes, which were at the core of the appellant’s case.  It is implicit from this that the remaining evidence was not considered probative in his favour.  Indeed, the letter from the appellant’s sister puts forward an alternative case to his own and contradicts his whole account.

29.	However, even if Ms Rogers was making valid criticisms of the tribunal and the money was borrowed from the appellant’s sister as he had claimed, I asked at hearing what material significance this might have. Whatever the source of the money in the appellant’s bank accounts, it was still capital in excess of the prescribed amounts.

30.	Ms Rogers’ submission was that the loan was actually money held on trust by the appellant for his sister.  She referred me to R(SB)53/83, where a father had been given money by his son to take a holiday to India, but died before he could do that.  The Commissioner held that it was not an asset of the deceased, since he had no power over it save to discharge the cost of a holiday to India.  He held that the money was held on a resulting trust in favour of the son.

31.	In this case the three promissory notes, setting out interest rate and repayment date, are of a purely commercial character.  There is nothing to suggest that the loan is for a specific purpose connected only to the business.

32.	Ms Rogers further submits that the Quistclose principle applies.  In that case, Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567, the bank made a loan to the company for the specific purpose of paying a dividend.  When the company became insolvent without paying the dividend, the question was whether the loan belonged to the general body of creditors or was reclaimable by the lender.  It was held that the fact that the loan was made for the specific purpose meant that the lender retained equity in the sum loaned.

33.	However, again there was no evidence to suggest that the loan was for any particular purpose and that purpose alone.  The evidence of the financial transactions did not correspond fully with the sums said to be borrowed.  Thus the appellant appears to have banked only £4,100 of the £5,000 loan from June 2008, £3,550 of the £4,000 from September 2009 and £2,600 of the £3,000 from December 2009.  The balance of £1,850 appears to have been used in ways which are not explained.  This does not sit well with the submission that the loan was somehow ring-fenced for a particular purpose.

34.	Even if the tribunal had taken the wrong view of the facts, or an irrational view of the facts, the issue remains that the appellant held capital in his bank accounts while claiming JSA.  At the height of the appellant’s case, he had borrowed money from his sister.  I do not accept that there is any evidence to suggest that this was held on trust for the sister and I also do not accept that the appellant’s sister retained any interest in the capital loaned to the appellant.  Nothing in the evidence suggests that there was such a purpose.  The letter from the sister in fact suggests a different arrangement altogether.

35.	I consider that the tribunal was entitled to take the view that it did of the evidence, that it has made adequate findings of fact and that the reasons for its decision are clear.

36.	Accordingly, I dismiss the appeal.

(signed):  O Stockman

Commissioner

28 January 2015