[2007] UKSSCSC CIS_2365_2007 (05 December 2007)

CIS/2365/2007

DECISION OF THE SOCIAL SECURITY COMMISSIONER

1.	  This is an appeal with the leave of a tribunal chairman from a decision of the Newcastle upon Tyne Appeal Tribunal given on 26 March 2007 dismissing the appeal of the claimant and confirming the decision of a decision maker issued on 16 February 2006.  For the reasons given below, this appeal is allowed.  I set aside the decision of the tribunal and I substitute my own decision setting aside the overpayment decisions of the secretary of state issued on 16 February and 5 May 2006.  In doing so, I emphasise that there does appear to have been a failure to disclose over a lengthy period by the claimant, as a result of which there are grounds to revise or supersede decisions awarding income support, and to make overpayment decisions in respect of at least some of the sums which were paid by way of income support which should not have been paid.  In view of the problems referred to below, however, I consider that the best course is for the secretary of state in effect to start again both in ensuring that the right decisions to revise or supersede have been taken and in ensuring that any resulting overpayment decision is correctly calculated and covers the right period.

2.	  That decision of the decision maker issued on 16 February 2006 was that as a result of an earlier decision dated 25 June 2005 an overpayment of income support had been made from 17 April 2002 to 29 May 2005 (both dates included) amounting to £3173.86 as shown on an attached schedule as a result of the claimant’s failure to disclose that she had undeclared capital “under and over £8000”, and that that amount was recoverable from the claimant.  In fact that decision had subsequently been revised by a decision dated 5 May 2006 on the basis that the first decision maker had made a mistake as to a material fact, and the revised decision was that the amount overpaid was £4100, and that that sum was recoverable from the claimant.

3.	  The earlier decision dated 25 June 2005 revised two decisions dated 21 January 2002 and 26 September 2002 on the basis that they had been given in ignorance of a material fact, namely that the claimant held capital assets in excess of the prescribed limits.  That revised decision was that the claimant had no entitlement to income support “from and 17/04/02” [sic] because she holds capital assets the value of which exceeds the prescribed limits.

4.	  On this appeal at least, the claimant’s representative has contended that the original decision dated 25 June 2005 was never properly issued.  If notice of it was not given to the claimant, then it would not have had the characteristic of a decision with legal effect (see R(Anufrijeva) v Secretary of State, [2003] UHHL 36 and CJSA/0473/2003, para.14), and the claimant’s entitlement to income support would not have been determined.  Although that point has been clearly made on this appeal, I am not satisfied that it was properly before the tribunal.  Further, the only evidence that indicates that it was not issued is that the space for the date on which the decision was notified is not completed on the decision form.   There was no evidence from the claimant that she had not received the decision.

5.	  It is unnecessary for me to consider this question further on this appeal, as I am setting aside the decision and remitting the case to a new tribunal on other grounds.  The question of notification can be dealt with as a question of fact by the new tribunal.  I deal in this decision with the position both if notification is established, the onus being on the secretary of state to give some evidence of notification if the claimant contends that she did not receive the decision, and if it is not established.

6.	  If notification of the June 2005 decision is established, then, subject to two matters, I can find no grounds for questioning it.  It finds that two earlier decisions dated 21 January 2002 and 26 September 2002 awarding income support were made in ignorance of a material fact that the claimant had capital assets in excess of the prescribed limits.  It therefore identifies two material decisions and the error of fact.  What does not make sense is that there is then a revised decision that from 17 April 2002 the claimant had no entitlement to income support because of that capital.  If the capital was only held from 17 April 2002, then there were no grounds to revise the decision of 21 January 2002, although there were grounds to supersede it.  If the capital was already held on 21 January 2002, then the revision ought to have been from that date.

7.	  The second matter is that there is no proper evidence of either decision.  The submissions on behalf of the secretary of state to the tribunal were that a claim for income support had been made on some other date than 21 January 2002.  That other date is not accurately stated in the submissions.  The claimant is said to have made the claim as a lone parent.  Entitlement on that basis is said to have ceased on 9 September 2002 and a new claim is said to have been made by the claimant as the carer for her mother.  There is no copy of the September 2002 decision on the file.  I do not regard the submissions on behalf of the secretary of state as constituting evidence, and I note that where it is possible to check allegations of fact in the representations, that in paragraph 5.4 can be seen to misstate the date from which the June 2005 decision found that the claimant was not entitled to income support – the date is given in paragraph 5.4 as 14 February 2002 instead of the date of 17 April 2002 in the actual decision.

8.	  It seems to me that the secretary of state may wish to consider revising the June 2005 decision.  A re-revised decision should correctly identify the date of any award of income support and the date from which it is considered that the claimant had relevant capital of which a decision maker was unaware.  If the first such date was after the decision awarding income support to the claimant as a lone parent, then there can be no ground to revise that decision, although there may well be grounds to supersede it on the ground of non-disclosure.

9.	  Turning to the overpayment decisions of 16 February 2006 and 5 May 2006, they appear to me to have been flawed in a number of respects.  Firstly, they limit the amount of the overpaid income support to the amounts which are said to be recoverable from the claimant.  That is to confuse the amount overpaid (the whole of the income support paid in accordance with the two alleged decisions in 2002) with the amount recoverable from the claimant, which is reduced in accordance with regulation 14 of the Social Security (Payments on Account, Overpayments and Recovery) Regulations 1988 (the Overpayment Regulations).

10.	Secondly, bearing in mind that the claimant appears, from the submissions of the secretary of state to the tribunal, to have been in receipt of income support from a date well before January 2002, there is no copy of the alleged January 2002 decision in evidence, so that it could be seen what award was made to her by that decision and whether any sum may have been payable under some other decision that had never, even purportedly, been revised or superseded.

11.	Thirdly, it is apparent from the calculations with the two repayment decisions that regulation 14 of the Overpayment Regulations has been misapplied.  Regulation 14(1) provides for the notional reduction of capital “at the end of each quarter from the start of the overpayment period.”   Regulation 14(3) defines overpayment period as a period during which income support is overpaid in consequence of a misrepresentation as to capital or a failure to disclose its existence.”  

12.	The overpayments made in respect of the claim as a lone parent were made as a result of a failure to disclose capital in the context of that award.  Payments as a result of that failure came to an end when the award came to an end.  There was then a fresh claim as a carer, with a fresh failure to disclose or misrepresentation as to capital in the context of that claim, and payment under that new award following that new claim was made in consequence of that new failure or misrepresentation, and not any earlier one.

13.	The decision maker’s calculations simply allowed for diminution of capital under regulation 14 from 17 April 2002 without regard to the fact that the original award had ended and a new one had been made with a new failure to disclose or misrepresentation.  In fact, notional reductions in capital allowed for in respect of the first claim should not have been continued into the second claim.  The whole of the claimant’s capital ought to have been taken into account from the start of the new award, and diminished under regulation 14 only from the end of the first quarter after the start of the new overpayment period.

14.	Fourthly, the decision maker’s calculations show an actual diminution in the claimant’s capital during the first quarter of 2003 and an actual small increase a year later.  Both these changes have been ignored in calculating the claimant’s notional capital for the purposes of the overpayment recovery decision.  In my judgment, that is wrong.  Both should have been taken into account.  In CIS/2570/2007, at paragraphs 18- 21, I stated as follows:

“18. Regulation 14(1) provides, so far as relevant, that where income support has been overpaid in consequence of a misrepresentation as to the capital a claimant possesses or a failure to disclose its existence, “the adjudicating authority shall treat that capital as having been reduced at the end of each quarter from the start of the overpayment period by the amount overpaid by way of income support within that quarter.”

19. Regulation 14(2) goes on to provide that “Capital shall not be treated as reduced over any period other than a quarter or in circumstances other than those for which paragraph (1) provides”.  This appears to be intended to refer to the law as it was before the regulation was introduced, where commissioners’ decisions meant that a notional reduction occurred each week.

20. It follows that the amount of capital which the claimant is determined to have at the date from which income support is first paid is to be reduced at the end of each period of 13 weeks starting with the first day on which the overpayment period began by the amount overpaid by way of income support.

21. Regulation 14 deals with the question of when capital is to be treated as reduced.  It does not deal with any increase in capital, nor does it deal with actual reductions in capital.  Thus, it is clear in my judgment that if, for example, the claimant had owed a credit card company £5000, and that company had been pressing for payment, as a result of which the claimant had used part of the proceeds of the policy to pay off the credit card company, then the capital would actually be reduced by the amount so paid.  Unless that payment was shown also to have been made for the purpose of securing or increasing entitlement to benefit within regulation 51 of the Income Support (General) Regulations 1987, the claimant’s capital would in fact be reduced by that amount in addition to the notional reduction under regulation 14 of the Overpayment Regulations.  This was the case, for example when the claimant’s overdraft of £248.55 was discharged when the insurance company’s cheque was credited to his account.”

15.	The calculations are therefore incorrect, insofar as they neglect the actual changes in the claimant’s capital during the period the calculations deal with.  An example of this is to be found in the entries for 1 April 2003, where the actual capital is shown as £8191.81, or more than £1500 less than previously, and the reductions are stated to be £2243.25.  Yet in the notional capital column the figure of £7484.85 is arrived at by deducting the reduction from the original capital and not the reduced amount of capital.

16.	Fifthly, in relation to the overpayment decisions, it appears to me that if the June 2005 decision was notified to the claimant, then an overpayment decision could properly be made in relation to payments made under those awards.  If it was not notified, then the subsequent decisions, which are purportedly based on it, must also fall.  They are expressly based on the June 2005 decision and do not themselves identify any decision awarding benefit which is revised or superseded.  They are not effective themselves to revise or supersede any earlier decision both because they do not purport to do so and also because no such decision is identified (see CIS/764/2004).

17.	Sixthly, even if the June 2005 decision was notified, it only supersedes two decisions, one relating to income support as a lone parent and the other relating to income support as a carer.  In each case the amount awarded will presumably have been a regular weekly amount, which will have been increased periodically as a matter of course.  An examination of the weekly amounts said to have been paid in the schedules showing the overpayment calculations shows identical weekly payments under the first award apart from a small increase of 80p per week at the end of August 2002.  However, the weekly figures allegedly paid under the award made in September 2002 show major fluctuations in amount, starting at £53.95 per week, then reducing to around £36, then increasing to £81.20 and reducing to around £56.

18.	There is no explanation for these fluctuating sums, and I do not see how it is possible to conclude, without further evidence, that all payments are solely under the award made in September 2002.  This is a matter which should have been investigated further by the tribunal, by directing the secretary of state to provide details of the amounts awarded in September 2002 and an explanation of how, apart from automatic increases, the fluctuations in figures came about.  Insofar as any part of the sums paid in respect of the period from September 2002 was not shown to be under the September 2002 award, no overpayment decision could be made in respect of them, as no decision awarding the additional benefits had been identified as having been revised.

19.	Regardless of the other matters raised by the claimant, it appears to me that the tribunal was in error of law in failing to deal with these flaws in the overpayment decisions.

20.	A further matter raised on this appeal is the question of the date to which any overpayment should be calculated.  Non-disclosure is relied on, yet by the end of 2004 the Counter Fraud Investigation Service had full information as to the amount of capital of the claimant at 30 December 2004.  For some unknown reason, it took nearly 6 months for the DWP to act on this information.  This did not relieve the claimant of the duty of disclosure, but it does raise a question of causation.  The investigation appears to have been instigated in relation to the claimant’s entitlement to income support, and one would expect the results to have been promptly reported to the office dealing with that award.  If there was actual knowledge of the capital at that office, but no action was taken to initiate a review, then there would be a break in the chain of causation, and from the time that the knowledge ought to have been used to review, or even to supersede or suspend payment under, the September 2002 award, then it would be open to the tribunal to find that any overpayment was not caused by the non-disclosure of relevant information, but by the failure of the relevant office to use the information properly once it had it.  In order for this to be the case, the tribunal would have to find that on the balance of probabilities even if the claimant had made disclosure at that stage, the relevant office would not have acted on it, but that may not be too burdensome to establish if it neglected to act on the written information from Legal & General given to it in relation to the fraud inquiry.

21.	In all the circumstances, I must set aside the decision of the tribunal.  Rather than remitting the matter to a new tribunal, the sensible course is to set aside also the overpayment decisions made in February and May 2006.  This will leave the secretary of state free to ensure that 

(1)	The June 2005 decision is further revised if necessary, and the further revision is notified to the claimant (the June 2005 decision has by now clearly been notified to the claimant, so that the objection on the ground of non-notification cannot apply in respect of any future overpayment decision);
(2)	Any further decisions that may require revision can be identified and revised; and 
(3)	A new overpayment decision can be taken in accordance with the directions given in this decision.

22.	The secretary of state may wish to consider how it came about that it took nearly 6 months from the information as to the claimant’s capital at 30 December 2004 being provided before the income support payments were stopped, and in the light of the information which he is able to obtain as to those circumstances, whether he wishes to make an overpayment decision covering all or any part of that period.  In the event of an appeal on that issue to a tribunal, the secretary of state should be prepared to give disclosure of documents explaining what happened in that period, and how the delay occurred.

23.	The appeal is allowed and I make the order set out in paragraph 1 above.

	(signed on the original)	Michael Mark
		Deputy Commissioner
		5 December 2007