MJG/MF/1/W/SAR

			Commissioner’s File:  CCR/8023/1995	

SOCIAL SECURITY ADMINISTRATION ACT 1992

APPEAL FROM DECISION OF SOCIAL SECURITY APPEAL TRIBUNAL ON A QUESTION OF LAW

DECISION OF THE SOCIAL SECURITY COMMISSIONER

1.	I dismiss the appeal of “the victim” against the decision of the social security appeal tribunal dated 4 October 1994 as that decision is not erroneous in law:  Social Security Administration Act 1992, section 23.

2.	This is an appeal to the Commissioner by, “the victim”, a man born on 20 February 1940.  The appeal is against the unanimous decision of a social security appeal tribunal dated 4 October 1994 which dismissed the claimant’s appeal against a Certificate of Total Benefit issued by the Secretary of State and dated 17 October 1993.  It certified that on 29 October 1993 (when net compensation was paid by the claimant’s employers insurers to the victim) the sum of £10,351.63 could be recouped from that compensation by the Secretary of State.  That sum had in fact been deducted from the employer’s insurers from the compensation, without prejudice to the issue under appeal (see below).  The social security benefits etc. in question were; reduced earnings allowance paid to the claimant from 8 November 1989 to 29 October 1993 and continuing;  invalidity benefit paid to the claimant from 3 February 1990 to 15 October 1990;  sickness benefit paid to the claimant from 25 November 1989 to 2 February 1990 and statutory sick pay paid to the claimant from 25 July 1989 to 24 November 1989.  Disablement benefit being paid to the claimant was not recoupable since it was thought by the Department that the only reason that the claimant was entitled to a weekly disablement pension was that he already had an assessment of 15% (rounded up to 20%) disablement from a previous industrial accident on 24 July 1989.   However, by letters of 2 August 1996 and 16 September 1996, the Solicitor to the Department has stated that this was a mistake and that there was no previous industrial accident or award of disablement benefit.  Nevertheless, the Solicitor states that it is not intended to seek recoupment of the disablement pension.  

3.	On my Direction (dated 7 March 1996) an oral hearing of this appeal took place before me on 9 July 1996.  The claimant was present and was represented by Mr D James of the legal branch of his trade union.  The Secretary of State was represented by Ms J Talbot of the office of the Solicitor to the Department of Health & Social Security.  I am indebted to all those persons for their assistance to me at the hearing.

4.	The issue between the parties in this case arises from the fact that in terms of settlement which led to the compensation payment it was agreed that the element of the compensation that represented loss of earnings should be for only 18 months from the date of the injury to the victim’s knee, because there had been only an 18 months exacerbation to a knee injury.  It was therefore submitted on behalf of the victim that the period from which the social securities benefits etc. should be recoupable should also be limited to 18 months from the date of the accident i.e. to  24 January 1991.  On that basis the victim and the compensator (the employer’s insurer) agreed that in their view, the amount recoupable by the Secretary of State was not £10,321.63 but £4,970.34.  The difference of course arises from the fact that the Certificate of Total Benefit took into account reduced earnings allowance (at the maximum statutory rate), not merely for the 18 months period but continuing right up to the date of payment of compensation i.e. 29 October 1993. 

5.	In the grounds of appeal put forward on the victim’s behalf by his Solicitor it is said (letter dated 20 December 1994),

“ In  [the victim’s] case the injury to his knee has exacerbated a pre-existing condition.  As a result of this liability in tort was restricted to the period of 18 months duration between the date of the injury and the date on which medical experts agreed the pre-existing condition would have manifested itself.  Despite this, however, [the victim] has been required to pay back benefits received over a much longer period and in order to do so the compensator has effectively had to pay to the Compensation Recovery Unit money intended as the pain and suffering element (i.e. general damages).”

6.	In a written submission dated 15 November 1995, the Solicitor to the Department of Health and Social Security on behalf of the Secretary of State submits that there is no opportunity for a more liberal approach to the construction of the statutory provisions (now to be found in Part IV of the Social Security Administration Act 1992 - sections 81-104) and adds,

“There cannot be any dispute that there has been an accident giving rise to an injury and a claim for damages and that the relevant period for recoupment under the Act is up to the settlement date of the action as set out in section 81(1) of the Act and not up to some date as agreed between the parties and/or their medical advisors.  The relevant period is therefore from 25.7.89 (the date of the accident) to 28.10.93 (the date on which the compensation claim was settled).”

The above arguments were amplified by the representatives at the hearing before me and I have taken into account their oral submissions also. 

7.	The issue here is simply whether the reduced earnings allowance, paid to the victim on account of his industrial accident on 24 July 1989 paid to him from 8 November 1989 right through to the date of payment of compensation (29 October 1993) (and continuing) is recoupable from the amount of compensation or whether it should be limited (as was the claim for loss of earnings in the common law claim for damages) to a period of 18 months from the date of the accident i.e. expiring on 24 January 1991. 
 
8.	I hold that there is no justification in the legislation for a limitation to the 18 months period or for any limitation of recoupment from that element of compensation (damages) which relates to loss of future earnings.  Section 82(1)(a) of the Social Security Administration Act 1992 provides that the recoupable amount shall be “determined in accordance with the Certificate of Total Benefit” and shall be “equal to the gross amount of any relevant benefits paid or likely to be paid to or for the victim during the relevant period in respect of that accident, injury or disease;”.  “Benefit” includes reduced earnings allowance (section 81(1)) and “the relevant period” is defined by section 81(1) as the period beginning with the date of the accident and ending on the date on which compensation is paid with an overall limit of 5 years from the date of the accident.

9.	Moreover, section 98(1) of the 1992 Act provides as follows,

“98(1) An appeal shall lie in accordance with this section against any Certificate of Total Benefit at the instance of the compensator, the victim or the intended recipient, on the ground - 

(a)	that any amount, rate or period specified in the certificate is incorrect, or

(b)	that benefit paid or payable otherwise than in consequence of the accident, injury or disease in question has been brought into account”.

As I understand the victim’s appeal, he contends that both those matters are wrong in the Certificate of Total Benefit in this case i.e. that the period is incorrect and moreover that payment of reduced earnings allowance after 24 January 1991 is not “in consequence of the accident”.  

10.	In my judgment, neither of those contentions can be sustained.  The period is simply defined (see above) as the period with a maximum of 5 years ending “on the date on which [the compensation payment] is made”.  There is no provision for an earlier termination date.  The contention that the reduced earnings allowance after 24 January 1991 is not “in respect of that accident” (section 81(1)(a)) or “in consequence of the accident” (section 98 (1) (b)) cannot be sustained either.  The only reason the victim has received reduced earnings allowance is because he had an underlying assessment of disablement in respect of the accident in question i.e. the accident on 24 July 1989, in pursuance of a claim for reduced earnings allowance made by him after that accident. The payment of reduced earnings allowance is referable to the industrial accident with which I am concerned i.e. the one occurring on 24 July 1989.  It does not matter for this purpose that the claimant’s injuries may not have been entirely referable to the July 1989 accident since the words in the legislation “in respect of that accident” and “in consequence of the accident” require only that there shall be some contribution by the accident in question to the incapacity for regular employment etc. which gives rise to title to reduced earnings allowance (see also the definition of “the relevant accident” in section 122(1) of the Social Security Contributions and Benefits Act 1992).  It follows that I must reject this contention also.

11.	So far as concerns the general arguments on the alleged unfairness and injustice caused by the operation of the recoupment provisions in this case, I can only refer to the decision of the Court of Appeal in Hassall and Pether v.Secretary of State for Social Security [1995] 1.W.L.R.812.  In that case the Court of Appeal was considering an appeal from two decisions of another Social Security Commissioner (on files CCR/1/93 and CCR/2/93).  The facts of these cases were not the same as these but there were contentions before the Court of Appeal that the operation of the legislation caused unfairness and injustice.  Giving the judgment of the Court of Appeal Henry L.J. said (page 816B),
 
“First it was pointed out that under the law as it was until the passing of the Social Security Act 1989 [now re-enacted in Part IV of the Social Security Administration Act 1992], the .. benefits would not have been deducted from the general damages for pain, suffering and loss of amenity.   .. as such a deduction could only be made by way of set-off against ‘any loss of earnings or profit’ ..Law Reform Personal Injury Act (1948) Section 2(1) .. but the relevance of the old law is limited by the fact that the new statutory scheme represents a complete and radical change.  There is no room for any general presumption of continuity.”

12.	At page 187 paragraphs B and C, Lord Justice Henry said,

“If in the new scheme recoupment were to be limited to recoupment against any loss of earnings component in the compensatory payment - as in the old [scheme] - then not only would the words used have to make that plain but such recoupment could easily be avoided, and the scheme thus frustrated, by the victim and compensator doing a deal to their mutual advantage whereby the award for pain, suffering and loss of amenity was artificially increased, and the claim for loss of earnings reduced or abandoned.  It is quite clear as a matter of construction that the recoupment of benefit is to be made from the whole compensation payment and is not limited to one component of that payment.”

I do not of course suggest that there has been any “deal” in this case but nevertheless the general words of Lord Justice Henry clearly refute any contention here that there should be no recoupment against damages for pain, suffering etc. but only against damages for loss of earnings etc.

13.	It follows that I uphold the careful decision of the social security appeal tribunal who completed their record of decision (on Form AT3) in commendable detail.  I confirm their decision which is based on an interpretation of the legislation that is similar to mine, I also confirm their decision that no discretion to reduce the amount recoupable arises from the use of the expression “an amount .. equal to the gross amount of any relevant benefit” (my underlining) in section 82(1)(a).  To quote the tribunal’s own words, the use of the expression “equal to” merely “reflects the draftsman’s awareness that [Certificates of Total Benefit] would give figures over a period of some weeks and not just one figure.”

					(Signed)	
							M.J. GOODMAN
							Commissioner

					(Date)		7 November 1996