Northern Ireland - Social Security and Child Support Commissioners' Decisions

BMcE-v-Department for Communities (PC) [2017] NICom 34

 

Decision No:  C2/17-18(PC)

 

 

 

 

SOCIAL SECURITY ADMINISTRATION (NORTHERN IRELAND) ACT 1992

 

SOCIAL SECURITY (NORTHERN IRELAND) ORDER 1998

 

 

PENSIONS CREDIT

 

 

Application by the claimant for leave to appeal

and appeal to a Social Security Commissioner

on a question of law from a Tribunal’s decision

dated 27 May 2016

 

 

DECISION OF THE SOCIAL SECURITY COMMISSIONER

 

 

1.     This is an application by the Department for Communities (the Department) for leave to appeal from the decision of an appeal tribunal sitting at Limavady on 27 May 2016.

 

2.     For the reasons I give below, I grant leave to appeal.  However, I disallow the appeal.

 

         REASONS

 

         Background

 

3.     The respondent claimed state pension credit (PC) from the Department from 31 May 2013 as a single claimant, following his partner’s death, and was paid PC from 6 June 2013.  The Department held a record of the respondent’s telephone claim to PC in which he had stated that he was due to receive a non-state pension from 21 October 2013 – his 65^th birthday.  It was recorded that the respondent had been told that a “case control” had been set.  A review of the respondent’s claim was conducted by an “accuracy officer” on 21 June 2013.  That officer was similarly told and recorded that the respondent was due to receive a pension from his previous employer at age 65.  A review of the respondent’s claim was scheduled after the respondent’s 65^th birthday.  It appears that on 5 December 2013, a PC2 review form was issued to the respondent. However, the Department held no record of this form being returned.  It also appears that no follow-up action was initiated.

 

4.     On 3 June 2014 the Department realised that the review of the respondent’s claim was outstanding.  He was contacted by telephone on 17 June 2014 and stated that he was receiving a non-state pension.  It was subsequently ascertained that he had been paid the non-state pension from 24 November 2013 – the first payment including an element of arrears for October 2013.  He was subsequently paid his private pension monthly in arrears on the 24^th day of each month.

 

5.     On 13 December 2015 the Department decided that an overpayment of PC had been made to the respondent for the period from 21 November 2013 to 18 June 2014 amounting to £2,517.80 and that this was recoverable from him.  The respondent appealed. The appeal was considered by a tribunal consisting of a legally qualified member (LQM) sitting alone on 27 May 2016.  The tribunal allowed the appeal. The Department then requested a statement of reasons for the tribunal’s decision and this was issued on 31 August 2016.  On 10 October 2016 the Department applied to the LQM for leave to appeal from the decisions of the appeal tribunal.  The application was late and the LQM declined to admit the late application.  The application for leave to appeal was rejected by a determination issued on 14 November 2016.  On 5 December 2016 the Department applied for leave to appeal from a Social Security Commissioner.

 

6.     A separate appeal proceeded against a decision in relation to the period from 24 October to 20 November 2013, but that is not part of the proceedings before me.

 

         Grounds

 

7.     The Department submits that the tribunal has erred in law on the basis that the advance notification of the prospective occupational pension did not discharge the responsibility to disclose the fact that pension payments had started.

 

8.     The respondent was invited to make observations on the Department’s grounds.  The respondent did not reply.  He has not subsequently taken any part in these proceedings.

 

         The tribunal’s decision

 

9.     The tribunal has prepared a statement of reasons for its decision. From this, I can see that the appeal proceeded by way of an oral hearing which neither of the parties attended.  The tribunal had a Departmental submission setting out the argument of the Department and the evidence in the case.  It is evident that the decision on entitlement to PC was not disputed but that the decision on recoverability of the overpayment was in dispute.  In his letter of appeal, the respondent made the case that he had notified the Department of all his relevant circumstances.

 

10.   The tribunal found that the respondent had informed the Department on 17 June 2013 that he would be receiving an occupational pension from his 65^th birthday.  The tribunal further found that, in the course of an accuracy check of his claim on 21 June 2013, it was confirmed that the respondent would receive a non-state pension from his 65^th birthday.  The tribunal found that the respondent had been awarded PC from 6 June 2013 and had been given an INF(PC) form which instructed him to tell the Department if he started to receive any work-related pension.  The tribunal found that a review was carried out after the respondent’s 65^th birthday, but that it was not clear whether he had returned the review form issued to him at the time.  The tribunal found that in the course of a telephone call on 17 June 2014 the respondent had confirmed that he was receiving a non-state pension.  

 

11.   The tribunal identified the issue before it as whether the respondent had failed to disclose his non-state pension contrary to the obligation on him under section 69(1) of the Social Security Administration (NI) Act 1992 (the 1992 Act).  The tribunal reasoned that the respondent had notified the Department on two occasions that he would receive a pension from a specific date.  It found that the Department knew in advance of the advent of the non-state pension, and that there cannot be a failure to disclose something that is already known.  On this basis it allowed the appeal.

 

         Relevant legislation

 

12.   The legislation governing recoverability of overpaid benefit appears principally at section 69(1) of the 1992 Act, which provides:

 

69.—(1) Where it is determined that, whether fraudulently or otherwise, any person has misrepresented, or failed to disclose, any material fact and in consequence of the misrepresentation or failure—

 

      (a) a payment has been made in respect of a benefit to which this section applies; or

 

      (b) any sum recoverable by or on behalf of the Department in connection with any such payment has not been recovered,

 

the Department shall be entitled to recover the amount of any payment which the Department would not have made or any sum which the Department would have received but for the misrepresentation or failure to disclose.

 

13.   The requirement to disclose is connected to regulation 32 of the Social Security (Claims and Payments) Regulations (NI) 1987 (the Claims and Payments Regulations).  In so far as relevant, this provides:

 

32.—(1) Except in the case of a jobseeker’s allowance, every beneficiary and every person by whom, or on whose behalf, sums by way of benefit are receivable shall furnish in such manner as the Department may determine and within the period applicable under regulation 17(4) of the Decisions and Appeals Regulations such information or evidence as it may require for determining whether a decision on the award of benefit should be revised under Article 10 of the 1998 Order or superseded under Article 11 of that Order.

 

(1A) Every beneficiary and every person by whom, or on whose behalf, sums by way of benefit are receivable shall furnish in such manner and at such times as the Department may determine such information or evidence as it may require in connection with payment of the benefit claimed or awarded.

 

(1B) Except in the case of a jobseeker’s allowance, every beneficiary and every person by whom, or on whose behalf, sums by way of benefit are receivable shall notify the Department of any change of circumstances which he might reasonably be expected to know might affect—

 

(a) the continuance of entitlement to benefit; or

 

(b) the payment of the benefit,

 

as soon as reasonably practicable after the change occurs by giving notice of the change to the appropriate office—

 

(i) in writing or by telephone (unless the Department determines in any particular case that notice must be in writing or may be given otherwise than in writing or by telephone); or

 

(ii) in writing if in any class of case it requires written notice (unless it determines in any particular case to accept notice given otherwise than in writing).

 

         Hearing

 

14.   I held an oral hearing of the application.  The Department was represented by Mr Smith of DMS. The respondent did not attend and was not represented.

 

15.   The submission of Mr Smith centred on the obligations arising under regulation 32 of the Claims and Payments Regulations.  He submitted that it was incumbent on the respondent, who had received an INF4(PC) booklet setting out his obligations, to comply with his duty to provide information.  The fact that the non-state pension was in fact in payment was a matter that required separate disclosure by the respondent.

 

16.   He relied in particular on BR v Department for Social Development [2012] NI Com 315 - a case which I had decided.  That case had involved a fire fighter who had become unfit for work, claiming incapacity benefit (IB). In his claim he had enclosed a notice of termination of his employment, which indicated the procedure for applying for an occupational pension. The Department had been aware that the claimant had requested the relevant application form.  He was awarded IB. Around a month later, his employment was terminated on health grounds, leading to receipt of an occupational pension.  It was only when the claimant informed the Department of a change in the rate of his occupational pension that the Department took notice of the fact that he was receiving the pension.  I held that while the claimant had made partial disclosure, he did not make the full disclosure of the matters which he was required to disclose by regulation 32 of the Claims and Payments Regulations. 

 

17.   Mr Smith submitted that the present respondent had similarly indicated that he anticipated payment of a non-state pension. However, his obligation was to inform the Department when it was actually paid and the rate of payment.  The respondent’s award of PC had been made without an assessed income period. Mr Smith submitted that the instructions at page 8 of the INF4(PC) booklet stated:

 

“If we have not given you an assessed income period

…

 

Pensions and Annuities

 

Tell us if you or your partner start to receive any

·         personal or work related pensions

·         income from an annuity.

If you or your partner are already getting these you must also tell us if they change.”

 

18.   Mr Smith submitted that the crux of the case was whether the notification by the respondent on 17 June 2013 and 21 June 2013 of the pending award of a non-state pension constituted full disclosure.  By failing to notify the Department when the pension actually went into payment, and failing to notify the entitlement rate and the frequency of the payments, the respondent had not provided the evidence which the Department required in order to supersede the award of PC.

 

         Assessment

 

19.   In Hinchy v Secretary of State for Work and Pensions [2005] UKHL 16, Lord Hoffmann and Baroness Hale held that the source of the duty to disclose a material fact (for the purposes of the Great Britain equivalent of section 69 of the 1992 Act) arose from regulation 32 of the Claims and Payments Regulations.  At paragraph 54, Baroness Hale said:

 

 “54. What is the source and content of that duty? One obvious source (although there may be others to which our attention has not been drawn) are the regulations under which claimants and others may be required to furnish information to the Secretary of State.  The vires for such regulations are contained in section 5 of the 1992 Act (quoted by my noble and learned friend, Lord Hoffmann, in paragraph 17 earlier).  The relevant regulation at the time was regulation 32(1) of the Social Security (Claims and Payments) Regulations 1987 (quoted by Lord Hoffmann, in paragraph 19).  The beneficiary "shall furnish in such manner and at such times as the Secretary of State…may determine such certificates and other documents and such information or facts affecting the right to benefit or to its receipt as the Secretary of State…may require…, and in particular shall notify the Secretary of State…of any change of circumstances which he might reasonably be expected to know might affect the right to benefit, . . ."”.

 

20.   This principle has been applied in this jurisdiction in relation to the direct equivalent of the GB regulations.  Thus, most recently in TT v DSD [2016] NI Com 38, I said:

 

“17. It is settled law that the question of failure to disclose, for the purpose of section 69 of the 1992 Act, is linked to the obligations placed on a claimant by regulation 32 of the Claims and Payments Regulations.  These include an obligation to furnish information or evidence which the Department might require for determining whether a decision should be revised or superseded (arising from regulation 32(1)), an obligation to furnish information or evidence as the Department may require in connection with payment of the benefit claimed or awarded (arising from regulation 32(1A)) and a distinct obligation to notify the Department of any change of circumstances which the claimant might reasonably be expected to know might affect the continuance of entitlement to benefit (arising from regulation 32(1B)) (see Hinchy v Secretary of State for Work and Pensions [2005] UKHL 16 at paragraphs 32, 40 and 54). In terms of how disclosure should be made, a Tribunal of Great Britain Social Security Commissioners in R(SB)15/87 at paragraph 28 has said that a claimant's duty is "best fulfilled by disclosure to the local office where his claim is being handled. In Hinchy, it was said by Lord Hoffman at paragraph 23:

 

"Disclosure, then, must be made to the relevant official and not to the Secretary of State as an abstract entity. What assumptions can be made about what the relevant official already knows?  The Commissioners have on the whole resisted arguments that the relevant official must be assumed to know, or that the claimant is entitled to assume that he knows, anything about his other benefit entitlements which cannot be described as common knowledge.  It is not for the claimant to form views about what may go on behind the scenes in the Social Security or other benefit offices.  His duty is to comply with the instructions in the Order Book.  A disclosure which would be thought necessary only by a literal-minded pedant (see, for example, CSB/1246/1986) need not be made, but the safest course is to resolve doubts in favour of disclosure".

 

21.   Hinchy dealt with the specific problem of whether information known to, or conveyed to, one administrative branch of the Department could be deemed to be known to another completely separate branch administering a different benefit.  In Hinchy, an award of disability living allowance (DLA) had stopped, and with it an entitlement to certain allowances in income support (IS).  The claimant had not notified the Departmental staff administering IS that her DLA had stopped, submitting that this was a fact already known to the Department.  The House of Lords did not accept that it could be assumed by the claimant that information was known to the relevant officials and found that by failing to notify the relevant officials of the change in her circumstances, the claimant had failed to comply with her duty to disclose.

 

22.   Hinchy emphasised the link between the duty to disclose and the instructions given to claimants by the Department.  Mr Smith relies on that duty in his submissions to me. In Hinchy, of course, there had been no disclosure by the claimant of the fact that her DLA had stopped.  In the present case, there had been disclosure.  However, whereas the tribunal was satisfied that, by this disclosure, the respondent had given the Department advance notice of the advent of his non-state pension, Mr Smith submits that this was insufficient. He emphasised that the instruction to the respondent was to “tell us if you start to receive any personal or work related pensions”.  As the respondent had not communicated to the Department that payment of his non-state pension had started, he had not complied with the relevant instruction.  This is an arguable point and I grant leave to appeal.

 

23.   Hinchy, while of course a binding precedent, is an unsatisfactory decision in many ways, leading to the situation where the Department - which has significant investigatory powers to access private information held by third parties - is deemed not to know the information it holds on its own computer systems.  The House of Lords in Hinchy, with the honourable exception of Lord Scott, turned a blind eye to the consequences of maladministration and deficient operational practices on the part of the Department.  As a result, there has been little evident change in the Department’s approach to avoiding overpayments of benefit in the intervening years.  This has understandably led tribunals to take a sympathetic view of honest claimants who strive to make full disclosure of their circumstances against a background of complex benefit rules which they do not understand.

 

24.   Thus, in the present case, the tribunal observed that the respondent had given advance notice of the start of his pension from his 65^th birthday on two separate occasions and had been told that case controls had been set for taking action on this information.  The Department’s operational system then failed to take the appropriate action between October 2013 and June 2014. In this context the tribunal stated that “it is clear the Department already knew of the advent of the Appellant’s non-State pension, and there can be no question of subsequent failure to disclose to someone something that – plainly – is already known”.  The latter statement by the tribunal is a reference to the decision of the Tribunal of Great Britain Social Security Commissioners in R(SB)15/87, where it was accepted at paragraph 25 that "it is not possible to "disclose" to a person a fact of which he is, to the knowledge of the person making the statement as to the fact, already aware" (approving the statement of Latham CJ in the Australian case of Foster v Federal Commissioner of Taxation (1951) 82 CLR 606).

 

25.   In BR v DSD, the appellant made a similar submission.  However, in that case at paragraph 44, I said that:

 

“the appellant in the present case has not been required to "disclose" a fact which, to his knowledge, the Department already knows.  The Department did not know whether he had in fact made a claim for his occupational pension, the Department did not know when payments in fact commenced under the pension and the Department did not know how much he was receiving by way of a pension.  The appellant could not reasonably claim that, to his knowledge, the Department was aware of these facts”.

 

26.   It seems to me that the position in that case was somewhat different to the present case. In the case of BR v DSD, the award of an occupational pension would have been conditional on the appellant making a claim and being found permanently incapable of performing the duties of his employment.  In the present case, the letter at Tab 8 shows that the respondent had already retired and received a lump sum element of his pension on 1 March 2000, commuting his initial pension.  It appears to me that there was no conditionality to his receiving the pension after his 65^th birthday.  The tribunal had sufficient basis to say that the applicant had already disclosed the fact that he would receive a pension, and could not fail to disclose it in these circumstances.

 

27.   However, the essence of the submission of Mr Smith is that, regardless of the fact of the respondent’s disclosure of his prospective non-state pension, the order book instructions remained paramount.  There is some force in his submission that, whereas the respondent had disclosed to the Department that he had a non-state pension in prospect, the instructions he had been given in the INF4(PC) were to tell the Department once payment of the non-state pension had started.  The question which remains is whether, in the circumstances, the respondent had failed to disclose a material fact, or whether in the terms employed by Lord Hoffmann in Hinchy this was a case where disclosure would be thought necessary only by a literal-minded pedant.

 

28.   In the particular case the respondent had notified the Department on two separate occasions that he would be receiving a non-state pension and the date on which this would begin.  He had been told that a case control would be set to action this information.  This was not a case, such as Hinchy, where the claimant had failed to make disclosure.  I consider that in these circumstances, the claimant was entitled to assume that he had made sufficient disclosure.  It seems to me that, in circumstances where the respondent had already conveyed the information twice, and had been told that action would be taken in response, contacting the Department again with the same information is something which would be thought necessary only by a literal-minded pedant.

 

29.   I do not consider that the tribunal has materially erred in law by its approach in this case and I disallow the appeal.

 

 

O Stockman

 

Commissioner

 

 

 

9 August 2017