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	Upper Tribunal (Administrative Appeals Chamber)
You are here: BAILII >> Databases >> Upper Tribunal (Administrative Appeals Chamber) >> DG v Secretary of State for Work and Pensions [2009] UKUT 120 (AAC) (29 June 2009) URL: http://www.bailii.org/uk/cases/UKUT/AAC/2009/120.html Cite as: [2009] UKUT 120 (AAC)

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IN THE UPPER TRIBUNAL Appeal No. CIB/3823/2008

ADMINISTRATIVE APPEALS CHAMBER

Before Judge S M Lane

Decision: The decision of the Peterborough appeal tribunal heal on 26 June 2008 under reference 148/08/00340 involved the making of an error on a point of law.

The decision is SET ASIDE under section 12(2)(a) of the Tribunals, Courts and Enforcement Act 2007 and REMITTED to a First-tier Tribunal (Social Entitlement Chamber) for a complete rehearing of all relevant issues.

REASONS FOR DECISION

1. As from 3 November 2008, cases that were previously dealt with by the Social Security Appeals Tribunals and Social Security Commissioners are dealt with by the Upper Tribunal (Administrative Appeals Chamber).
2. This appeal concerns an overpayment of Incapacity Benefit. It arose because the appellant, who returned to work on a graduated basis while receiving Incapacity Benefit, failed to disclose this change of circumstance to the Secretary of State at the correct time. The appellant recommenced work on 3 May 2006, but did not get in touch with the Department to tell it about this change of circumstance until approximately mid-August 2006, when it is thought that she requested a permitted work form. She was sent form PW1 (the relevant form for 'permitted work') on 29 August 2006, which she returned on 11 September 2006. On it, she reported that she was working 22 ½ hours per week and earning £145 per week. Her employer reported that the appellant was entitled to sick pay during the period of graduated return to work, which covered the period from 3 May 2006 to the end of the week of 23 July 2007. This meant that during the weeks of her graduated return to work, her pay was topped up by company sickness pay so that she received her full wages. Thereafter she worked the full 22 ½ hours per week (more or less) receiving her full wages. At any rate, her hours never fell below 16 per week.
3. It is not disputed that the work did not fall to be disregarded under regulation 16(3) or 17 (exempt work, also known as permitted work) of the Social Security (Incapacity for Work)(General) Regulations 1995, although in giving permission to appeal I noted that regulation 16(5) of the Social Security (Incapacity for Work)(General) Regulations 1995 might provide some relief to the appellant. This provision ensures that a person who works while on Incapacity Benefit is to be treated as capable of work only on the days on which he actually works during the first week and last week in which he becomes, or is, entitled to the benefit.
4. I do not consider that regulation 16(5)(a) would apply to the week of 3/5/06 when the appellant went back to work, though the Secretary of State was prepared to accept it after I drew it to his attention. The provision only applies to assist a claimant in the first week in which he becomes entitled to a benefit; and the payment print-outs indicate that the appellant became entitled to benefit approximately 2 months before she went back to work. In the last week of entitlement, however, regulation 16(5)(b) might provide some small degree of assistance. The Secretary of State should provide further information on this to the tribunal, as the relevant weeks affected, and any resulting change in the overpayment, may be difficult for the tribunal to work out. This is because the appellant's benefit week ran from Friday to Thursday whereas regulation 16(6) judges a week by reference to a period of 7 days beginning with a Sunday.
5. The decision maker applied his mind to terminating entitlement to Incapacity Benefit, as evidenced in the decision at page 7. He did not, however, identify whether this was a revision or supersession. From the print-outs, it would appear that this must have been a supersession, though this is something the Secretary of State should confirm, along with the date of the award(s) that were superseded. This must be done to ensure that section 71(5A) of the Social Security Administration Act 1992 is satisfied.
6. The overpayment was originally calculated as £1499.54 for the period 3/5/06 to 31/8/06. On 12 November 2007 the overpayment was revised to £1326.04 for the period 3/5/06 to 17/08/06 on the basis of an official error. Though the decision does not explain what that error was, the revision probably reflects an element of disclosure by the appellant that she was working, when she asked for the PW1. There is no evidence bundle giving the date on which the appellant is said to have requested the form or record what (if anything) was reported to the Department at that time. This evidence should be provided to the tribunal or an explanation of its absence given.
7. The appellant appealed against the Secretary of State's decision because she had only gradually returned to work, starting with two to three days per week, four hours per day, and only building up to 22 ½ hours per week in September 2006. In her appeal to the Upper Tribunal, she says she has had fallen ill again since the decision was given, that that the Department made mistakes and made false statements and errors against her, though I note that she does not state what these are. She says she was too ill to attend the appeal, and mentions several other difficulties, apparently with other social security issues, and feels the tribunal did not take these into consideration.
8. I did not find errors of law in these submissions. The actual state of the appellant's health was not material to the issue before the tribunal, and any deterioration in her health since the date of decision could not, in any event, be taken into consideration by virtue of section 12(8)(b) of the Social Security Act 1998. Other social security disputes to which the appellant alludes are not encompassed by the instant appeal, so that neither the tribunal nor the Upper Tribunal have jurisdiction over them. If she has appealed those other matters, they will be dealt with under the appeals system separately. It should be added that, in her appeal against the tribunal's decision, the appellant says that the Department told her she could work 16 hours per week without it affecting her benefit. This was not mentioned in the papers before the tribunal, which could not have known or anticipated that this would be an issue. The appellant had requested a paper hearing and there was nothing to suggest that her presence was required for a fair hearing.
9. Under regulation 16(1) of the Social Security (Incapacity for Work)(General) Regulations 1995, a claimant is treated as capable of work for the whole of a week if she works on at least one day in that week, unless that work falls into any of the categories of exempt work and is done within the prescribed limits. The documentary evidence from the appellant's employer shows, and the appellant does not dispute, that she worked in each of the weeks set out in the overpayment decision.
10. The only form of exempt work potentially applicable to the appellant arose under regulation 17(4) of the Social Security (Incapacity for Work)(General) Regulations 1995 which applies, subject to certain requirements which need not be discussed here, where the claimant works for less than 16 hours per week with earnings in any week which do not exceed a set maximum. The weekly maximum at the relevant time was £81. On the undisputed evidence relating to her earnings, even in the weeks of her graduated return to work, when her hours were less than 16 per week, her earnings exceeded the set maximum because they were 'topped up' to her normal weekly wage. This top-up counted as earnings under regulation 9(1)(j) of the Social Security Benefit (Computation of Earnings) Regulations 1996. The entitlement to Incapacity Benefit was accordingly correctly superseded.
11. The tribunal accepted the facts as set out by the decision maker in the Submission. It therefore accepted that the appellant did not inform the Department of her return to work before August 2006, when they sent her the official form for reporting permitted work (PW1). The tribunal emphasised that the appellant did not assert that she had told the department that she had begun work earlier than in August 2006.
12. It was in establishing the basis of the appellant's failure to disclose a material fact for the purposes of section 71 of the Social Security Administration Act 1992 that the tribunal made errors of law.
13. Section 71(1) of the Social Security Administration Act 1992 clearly entitles the Secretary of State to recover an overpayment which arises as a consequence of a failure to disclose a material fact, however innocent. The appellant's return to work was undoubtedly a material fact.
14. In R(IS)9/06 a Tribunal of Commissioners reconfirmed the established principle that the failure to disclose a material fact under section 71(1) presupposed the existence of a duty to disclose. However, it rejected the proposition laid down in previous cases, including R(SB)21/82 and R(SB)54/83, that the duty derived from section 71(1) and its breach established by showing that the claimant failed to disclose a material fact where such disclosure was reasonably to be expected.
15. The Tribunal of Commissioners held instead that the source of the duty was regulation 32(1) of the Social Security (Claims and Payments) Regulations 1987, as then formulated, which imposed various obligations to furnish information and notify changes of circumstances. Regulation 32(1) was amended into its current form from 5 May 2003 by the Social Security and Child Support (Miscellaneous Amendments) Regulations 2003 (SI 2003/1050). Though the regulation is now laid out in three paragraphs, 32(1), (1A) and (1B), the duties remain essentially similar to those in the previous formulation. Unsurprisingly, the Tribunal of Commissioners confirmed that their reasoning was equally applicable to the amended form of the regulation. The reasoning of the Tribunal of Commissioners in R(IS)9/06 was upheld in full by the Court of Appeal in B v Secretary of State for Work and Pensions [2005] EWCA Civ 929. Paragraphs ('§') 23, 27, 29 and 42; and also §11 of B v Secretary of State) refer.
16. It is clear from R(IS)9/06 (§54) and B v Secretary of State for Work and Pensions (§ 36 and 40) that section 71(1) does not include a test that a claimant must reasonably be expected to disclose a material fact ('the reasonable expectation' test) before the Secretary of State can recover an overpayment. The Court of Appeal went so far as to refer to the importation of that test into section 71(1) as incoherent. R(SB) 21/82 and subsequent cases purporting to impose this test, including R(SB)54/83 upon which decision makers frequently rely, were considered to be wrong.
17. Although the Tribunal of Commissioners and Court of Appeal in R(IS)9/06 and B v Secretary of State for Work and Pensions were dealing specifically with the scope of what is now regulation 32(1)/(1A), their reasoning is equally applicable to the relationship between section 71(1) and regulation 32(1B). The test of reasonable expectation is as legally incoherent for regulation 32(1B) as it is for regulations 32(1) and (1A). Indeed, the implication of this test into section 71(1) overpayments by reference to a breach of the duty in regulation 32(1B) would, in effect, impose a double hurdle on the Secretary of State, who would first have to establish what the claimant might reasonably be expected to know might affect his benefit, and then whether he could reasonably be expected to make a disclosure. I note that the learned authors of Sweet and Maxwell's Volume III, Administration, Adjudication and the European Dimension of Social Security Legislation 2008/09 still refer to the reasonable expectation test in their commentary on regulation 32(1B) (§2.187), but they may have overlooked the need consequent on the change in relation to section 71(1) when amending the commentary for regulation 32 of the Claims and Payments Regulations.
18. I therefore conclude that the gateway duties to recovery are as defined in regulation 32, and it is to those duties that the tribunal must look when deciding if a case for recovery is made out.
19. The Secretary of State agrees with this approach to the interpretation of regulation 32(1B) in his Submission to the Upper Tribunal. He accepts that the decision maker's Submission to the tribunal was made on the basis of regulation 32(1B) and that the test to be applied is a duty to notify changes of circumstances that the person might reasonably be expected to know to be relevant to continuing entitlement to benefit. It is a matter of some concern, however, that while the Secretary of State correctly states the relevant duty in his Submission to the Upper Tribunal, his decision makers continue to refer to the discredited reasonable expectation test. This is misleading not only to appellants, but also to tribunals.
20. To summarise the interaction of section 71(1) and the duties in regulation 32(1), (1A) and (1B): Where the Secretary of State makes an unambiguous request to be informed of a particular matter, a claimant will be in breach of the duty in regulation 32(1) or (1A) if he is aware of the particular matter to be disclosed, but does not disclose it, even if he does not understand the materiality or relevance of the matter he is directed to disclose; (ii) Where the claimant fails to notify a change of circumstance which he might reasonably be expected to know might affect his entitlement to, or payment of benefit, he will be in breach of his duty under regulation 32(1B). If that change of circumstance contains a material fact which has not (but should have) been disclosed, and in consequence of that failure, an overpayment occurs, the ground for recovery under section 71(1) is made out.
21. Requests may be made in information leaflets, such as the an INF4 or BF1014, which are supplied to claimants at the outset of their claims or on annual up-rating. These usually set out at length (but not necessarily with clarity) the kinds of changes the Secretary of State needs to know about. The Secretary of State may, of course, request further information on an individual basis, as well.
22. In CDLA/2328/2006 Commissioner Jacobs explored some of the ways in which notes and instructions (of which the revised fact sheets would be a variety) issued to claimants would affect the application of regulation 32(1B):

28. '…I accept that the notes issued by the Secretary of State are relevant under paragraph (1B). The instructions they contain may inform what is reasonable to expect a claimant to know. It would usually be reasonable for a claimant to know the contents of those instructions. (I do not exclude the possibility that it may not be reasonable for the claimant to know everything that is in the Secretary of State's notes. For example, this may, perhaps, not be reasonable on account of the claimant's mental state.) And the notes may be so comprehensive that, in a particular case, there is no need to consider anything else. But the duty under paragraph (1B) is defined by the terms of that paragraph. The instructions given to claimants do not define that duty. They are merely evidence of what it was reasonable to expect the claimant to know. And the duty to report may be wider than any instructions given by the Secretary of State. For example, it may be reasonable for the claimant to realise from questions in a claim pack that a particular matter is relevant to entitlement, even if the notes issued by the Secretary of State do not specifically refer to them.

29. For completeness, I will mention that the focus under paragraph (1B) is different from that under paragraph (1A). There the duty refers to entitlement, but only whether the claimant might reasonably be expected to know a change of circumstances might affect entitlement. It is not necessary for the claimant to understand the actual impact that a change will have, but the focus is different from that appropriate to the duty imposed under paragraph (1A). …'

The threshold to be reached by the Secretary of State under 32(1B) is not high.

23. The tribunal did not advert to either of the duties under regulation 32, though it may have tried to have it both ways by, on the one hand, stating that 'the law and reasons for the decision were fully set out in the Submission'; and on the other, that '[the appellant] had an obligation to tell the Department of a change of circumstances and specifically if she returned to any sort of work'. The former suggests reliance on regulation 32(1B), while the latter suggests reliance on a strict duty. In some cases, it may be obvious which duty a tribunal is relying on, even though it is left unstated. That was not the case here. If the tribunal intended to base itself on regulation 32(1A), the tribunal should have indicated in its Statement of Reasons the unambiguous instructions to the claimant upon which it relied. If the basis of its decision was a change of circumstance under regulation 32(1B), it was under an obligation to explain why the appellant might reasonably be expected to know that the change might affect her entitlement.
24. The central problem in the appeal, which the tribunal did not get to grips with, was that there was a change in the permitted work scheme right before the appellant resumed work. The Secretary of State explained the new scheme, but relied on BF1014 – Notes 2003 to show that the appellant could reasonably be expected to disclose her change of circumstance. These notes do state unambiguously that claimants must inform the department if they start work or even think about starting any work, but they relate to the previous scheme. They do not, however, reflect the new scheme under which it is not necessary for a claimant to inform the Department if he starts work. The Secretary of State did not supply the fact sheet informing claimants about the new scheme and their duties in relation to it.
25. I cannot rectify the difficulties which arise from this failure because, even assuming that the Secretary of State sent a revised fact sheet, I do not know what it said. The wording of the fact sheet could materially affect what a claimant might reasonably be expected to know might affect her benefit. The revised fact sheet may have been as ambiguously worded, for example, as the previous fact sheet which formed the subject matter of Hooper v Secretary of State for Work and Pensions [2007] EWCA Civ 495 and R(IB)4/05. If that were so, it would have been difficult to find a breach of regulation 32(1B) based on the fact sheet. Moreover, the INF4 current at the time of the claim or most recent up-rating was not produced to the tribunal. The contents of the INF4 would need to be considered in relation to the revised fact sheet in determining what a claimant might reasonably be expected to know might affect her benefit.
26. The tribunal's analysis of the issue was, therefore, flawed. I do not consider it right to uphold the tribunal's decision, which was made without the benefit of the revised fact sheet issued to claimants when the permitted work scheme changed and the relevant INF4. The appeal is accordingly remitted.
27. I have bullet-pointed below a number of items which it would be helpful for the tribunal to have before the next hearing. In the event that the next tribunal finds itself without further evidence, particularly the revised fact sheet and INF4, it seems to me that it will need to make findings on what the reasonable claimant in the appellant's circumstances might reasonably be expected to know about the nature of Incapacity Benefit and how going to work while on that benefit might affect her benefit, as a matter of generally available knowledge, in order to decide whether a breach of regulation 32(1B) has occurred. They will need to consider the appellant's post-hearing evidence that someone in the Department told her that she could work for 16 hours per week without it affecting her benefit
28. In relation to that issue, there is an important difference between being permitted to work for 16 hours per week as opposed to being permitted to work for less than 16 hours per week. It is a distinction of which one might expect an officer of the DWP to be aware, but the subtlety of which might escape a claimant, particularly one who was given the information orally and who might have had language difficulties (as mentioned by the appellant). If the next tribunal accepts that the appellant was told she could work 16 hours per week without affecting her benefit, it would have to go on to assess how this interacted with any requirement notified to her to inform the Department of this particular change of circumstance (even though she did not have to report it in terms of obtaining any permission to work). If they found that the oral instructions were of such strength that they overrode explicit instructions to report taking up work as a change of circumstance as soon as possible, their might be a reduction in the overpayment for the weeks in which she worked less than 16 hours. This is a matter upon which the Secretary of State may wish to comment further in a Submission to the First-tier Tribunal (Social Entitlement Chamber).
29. For convenience only, I summarise the matters upon which it seems to me that the Secretary of State should provide a further submission or evidence. A district tribunal judge may take a different view in making further directions, as may the tribunal judge who rehears the appeal.

•    What was the date of the award of Incapacity Benefit and from what date was it payable?

•    What decision(s) was/were superseded for the purposes of section 71(5A) of the Social Security Administration Act 1992?

•    Does the application of regulation 16(5) to the appellant's last week of entitlement to Incapacity Benefit result in any reduction in the calculation of the overpayment? Which benefit week is affected?

•    When did the appellant request the PW1; is there a record of what the appellant said (if anything) when making the request?

•    Does the Secretary of State wish to make a further submission on whether the appellant was told she could work 16 hours per week, and how would this interact with any requirement notified to the appellant to inform the Department if she actually did go back to work.

•    It would be helpful if the Secretary of State could indicate how the overpayment would be affected during the weeks the appellant worked less than 16 hours per week, if the tribunal were to find in the appellant's favour that there was no breach of duty while she was working less than 16 hours per week because of advice given to her by the department.

30. I would only add that the appellant would probably find it in her interests to attend.

[Signed on original]

S M Lane

Judge of the Upper Tribunal

Date 27 July 2009