CIS_360_1991 [1992] UKSSCSC CIS_360_1991 (14 September 1992)

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[1992] UKSSCSC CIS_360_1991 (14 September 1992)

    R(IS) 5/93

    Mr. V. G. H. Hallett CIS/360/1991
    14.9.92

    Evidence - hearsay evidence - whether tribunal entitled to refuse to listen to hearsay evidence because it could not be tested by cross examination

    On 25 October 1989 the claimant, who had been in receipt of benefit since February 1980, declared that he and his wife owned two properties. The adjudication officer decided that he was not entitled to income support from 28 November 1989 because his capital exceeded £6,000. The tribunal confirmed the decision of the AO. The claimant appealed to the Commissioner.

    Held that:

  1. the tribunal's decision was erroneous in law. It was based on an adversarial approach to the case in that, when considering the facts, they failed to inquire into, and make findings on, the written evidence before them. The inquisitorial nature of the jurisdiction of the statutory authorities has been emphasised by the Commissioners in a number of reported decisions. Also R v. Deputy Industrial Injuries Commissioner ex parte Moore [1965] 1 QB 456 and Miller v. Minister of Housing and Local Government [1968] 1 WLR 992 [CA] applied (paras. 14 and 15);

  2. adjudicating authorities are required to observe the rules of natural justice which, in the absence of personal bias or mala fides, could be reduced to two, that is:

    3. (a) an obligation to base decisions on evidence, whether there is a hearing or not, and
    (b) where a hearing is requested, to listen fairly to the contentions of all persons entitled to be represented at the hearing (para. 17);
  3. the tribunal had refused to listen to hearsay evidence because it could not be tested by cross-examination. This was an error of law and it breached the second rule of natural justice (para. 19).

    4. The appeal was allowed.

    DECISION OF THE SOCIAL SECURITY COMMISSIONER

    Decision

  4. This claimant's appeal succeeds. My decision is that the decision of the social security appeal tribunal dated 6 December 1990 is erroneous in law. I set it aside and refer the case to another social security appeal tribunal for determination in accordance with my directions.

    5. Nature of the appeal

  5. This is an appeal by the claimant against the decision of the appeal tribunal (affirming that of an adjudication officer) that the claimant was not entitled to income support from 28 November 1989 as he was to be treated as possessing a capital asset exceeding £6,000, namely a house at 6 St. L's Road, Bradford which had a deemed value of not less than £11,700.

  6. The decision of the tribunal raises the question as to the nature of the fundamental distinction between the adversarial jurisdiction of the courts and the inquisitorial jurisdiction of social security appeal tribunals.

    7. The adjudication officer's decision

  7. The claimant, a married man aged 62 who lives with his wife in owner-occupied accommodation and has been continuously in receipt of supplementary benefit followed by income support since February 1980, called at the local office of the Department on 25 October 1989 and stated that he and his wife owned two properties, a house in Savile Town (No. 6 S. Grove) in his name and a house in Bradford (No. 6 St. L's Road) in his wife's name.

  8. The Bradford house, No. 6 St. L's Road, is registered in HM Land Registry under title number WYK 183459 with absolute freehold title. The claimant's wife (HJ) was registered as its proprietor on 9 August 1983. That entry was cancelled on 28 November 1989 when A.H. was registered as the proprietor. He is a son of the claimant and his wife.

  9. On 28 August 1990, an adjudication officer issued the following decision:

    10. "The claimant is not entitled to income support from 28 November 1989. This is because he is treated as possessing capital which exceeds the prescribed amount of £6,000."
  10. The claimant appealed to the social security appeal tribunal against that decision saying that he had transferred the property to his son because living conditions were overcrowded at 6 S. Grove and his son and his wife decided to move into 6 St. L's Road Bradford. The transfer was not done in order to receive income support.

    11. The appeal tribunal's decision

  11. The appeal tribunal heard the appeal on 16 November 1990. The chairman's note identified the issues before the tribunal as follows:

    12. "It was agreed at the outset that the issues for the tribunal to examine were first whether the house 6 St. L's Road, Bradford, was or was not beneficially owned by the claimant's wife H.J. at the time she transferred the legal estate in it to their son A.H. and secondly, if she was beneficially entitled to it, whether under the regulations the claimant was to be taken as having deprived himself of that asset for the purpose of securing continued entitlement to income support."
  12. The claimant, who gave evidence, was represented by Mr. West of the Kirklees Benefit Advice Centre. The chairman's note of evidence states:

    13. "In addressing us on behalf of Mr. S., Mr. West dealt not only with some matters which had been given in evidence but made reference to other information which he had gleaned from other people, primarily from Sian. The tribunal has disregarded the information put before it in this way, having indicated to Mr. West that it would deal with the issues on evidence given directly and therefore capable of questioning, rather than matters of hearsay which were not capable of being questioned and tested."
  13. The tribunal's decision was:

    14. "The appeal fails. The claimant is not entitled to income support from 28 November 1989 as he is treated as possessing a capital asset exceeding £6,000; namely the house at 6 St. L's Road which has a deemed value of not less than £11,700."
  14. The tribunal's recorded findings of fact and their recorded reasons for their decision are set out in the appendix to this decision.

  15. The claimant appeals against that decision and the adjudication officer now concerned supports the appeal on the ground that it was incumbent on the tribunal to evaluate any hearsay evidence before deciding whether or not to accept or reject it. Although they acknowledged that the claimant's representative had used hearsay evidence, the tribunal erred in law for failure to state what that evidence was and in rejecting it purely on the basis of its being hearsay.

    16. Was the appeal tribunal's decision erroneous in law?

  16. Yes, it was for two reasons.

  17. First, their decision was based on an approach to the case which was appropriate to an adversarial jurisdiction. But social security appeal tribunals are the successors of local tribunals and, like them, exercise an inquisitorial jurisdiction. They are exercising quasi-judicial functions and form part of the statutory machinery for investigating claims in order to ascertain whether the claimant satisfies the statutory requirements which entitle him to be paid benefit. Its investigatory function has as its object the ascertainment of the facts and the determination of the truth and is not restricted as in ordinary litigation where there are proceedings between parties, to accepting or rejecting the respective contentions of the claimant on the one hand and of the adjudication (formerly insurance) officer on the other. See Reg v. Medical Appeal Tribunal (North Midland Region) ex parte Hubble [1958] 2 QB 228 at page 240; R v. Deputy Industrial Injuries Commissioner ex parte Moore [1965] 1 QB 456 pages 486-7. The inquisitorial nature of the jurisdiction of the statutory authorities has been emphasised by the Commissioner in many cases. Examples of reported decisions to this effect are R(U) 5/77; R(I) 6/81; R(S) 4/82(T); R(F) 1/83; R(SB) 2/83(T); R(S) 1/87.

  18. The appeal tribunal in the present case failed to inquire into and make findings on the written evidence before them, when finding the facts. They simply accepted as a fact that the claimant had lived at 6 S. Grove from 1980 onwards: see the appendix to this decision where the tribunal's findings of fact are set out. But the claimant had completed his claim for income support on 9 October 1989. (It was received in the local office on 10 October 1989). On page 1 of the form he gave his address as 6 St. L's Road. On page 2, he stated that his last payment of benefit was made on 9 October 1989, that his address was then 6 S Grove and that he moved to his present address on 16 September 1989. In giving his reasons for his fresh claim he stated "I have just moved address" and when signing the form he declared:

    19. "(1) I understand that if I give information that is incorrect or incomplete action may be taken against me.
    (2) I declare that the information that I have given on this form is true and complete.
    (3) This is my claim for income support."

    Unless declarations (1) and (2) were false the probability is that his home was still at 6 St. L's Road at the date when the transfer of that property to his son (which must have been earlier than 28 November 1989, the date of its registration in the son's name, see para. 5 above) was actually executed. If it was, he cannot be disentitled to income support from 28 November 1989 for that reason. For the capital value of the home would have to be disregarded: see paragraph 1 of Schedule 10 of the Income Support (General) Regulations 1987.

  19. Secondly, the common law requires persons exercising quasi-judicial functions to observe the rules of natural justice, and accordingly these rules apply to social security appeal tribunals: see the judgment of Lord Justice Diplock in R v. Deputy Industrial Injuries Commissioner Ex parte Moore [1965] 1 QB 456 at page 486 et seq.

  20. In Moore's case, Lord Justice Diplock stated that the rules of natural justice applied to local tribunals (as they then were) and to the Commissioner and Deputy Commissioners (as they then were). The decision of a Deputy Commissioner was then in issue. Lord Justice Diplock stated that, in the absence of personal bias or mala fides, the rules of natural justice could be reduced to two, first, an obligation to base his decision on evidence, whether a hearing was requested or not; and secondly, where a hearing was requested, fairly to listen to the contentions of all persons who were entitled to be represented at the hearing. He continued (p. 488):

    21. "In the context of the first rule, "evidence" is not restricted to evidence which would be admissible in a court of law. For historical reasons, based on the fear that juries who might be illiterate would be incapable of differentiating between the probative values of different methods of proof, the practice of the common law courts has been to admit only what the judges then regarded as the best evidence of any disputed fact, and thereby to exclude much material which, as a matter of common sense, would assist a fact finding tribunal to reach a correct conclusion: cf. Myers v. Director of Public Prosecutions.

    These technical rules of evidence, however, form no part of the rules of natural justice. The requirement that a person exercising quasi-judicial functions must base his decision on evidence means no more than it must be based upon material which tends logically to show the existence or non existence of facts relevant to the issue to be determined, or to show the likelihood or unlikelihood of the occurrence of some future event the occurrence of which would be relevant. It means that he must not spin a coin or consult an astrologer, but he may take into account any material which, as a matter of reason, has some probative value in the sense mentioned above. If it is capable of having any probative value, the weight to be attached to it is a matter for the person to whom Parliament has entrusted the responsibility of deciding the issue. The supervisory jurisdiction of the High Court does not entitle it to usurp this responsibility and to substitute its own view for his."

  21. In Miller v. Minister of Housing and Local Government [1968] 1 WLR 992, [CA] Lord Denning said, at page 995:

    22. "Hearsay is clearly admissible before a tribunal. No doubt in admitting it, the tribunal must observe the rules of natural justice, but this does not mean that it must be tested by cross-examination. It only means that the tribunal must give the other side a fair opportunity of commenting on it and of contradicting it: see Board of Education v. Rice [1911] AC 179, 182; Reg v. Deputy Industrial Injuries Commissioner Ex parte Moore [1965] 1 QB 456."

    Moore's case was also quoted, and applied, in Reg v. Commission for Racial Equality [1980] 1 WLR 1580 (DC) and in Mahon v. Air New Zealand [1984] AC 808 at pp. 820-821 (PC). (See also R v. Secretary of State for Social Services Ex Child Poverty Action Group [1990] 2 QB 540).

  22. The appeal tribunal were accordingly wrong, in refusing to listen to hearsay because it could not be tested by cross-examination: see Miller's case, above. That was an error of law and was also a breach of the second rule of natural justice, which is to listen fairly to the contentions of all persons entitled to be represented at the hearing. Mr. West (acting for the claimant) was trying to put a case that, in some way, a trust for children could be inferred and that neither the claimant nor his wife had any beneficial interest in the Bradford property. By a refusal to listen to hearsay evidence on this point (or, if they did listen to it, to indicate what it was and what they made of it), one is left guessing as to what Mr. West's case was.

  23. For these reasons, I set aside the decision of the appeal tribunal as erroneous in law and refer the case to another appeal tribunal which should be entirely differently constituted.

    24. Directions to the fresh appeal tribunal

  24. The tribunal should decide, in the first instance, which was the claimant's home on 28 November 1989, 6 St. L's Road or 6 S. Grove. If 6 St. L's Road was his home at that date, the adjudication officer's decision under appeal was wrong, since the value of 6 St. L's Road fell to be disregarded: see paragraph 15 above. If on the other hand, the statements in the claim for income support were untrue, or there was some other reason for concluding that 6 S. Grove was the claimant's home during the period in issue, the appeal tribunal should go on to consider who was the beneficial owner of 6 St. L's Road prior to the execution of the transfer by the claimant's wife to his son.

  25. (1) Certified copies of the transfer to the claimant's wife and by the wife to the son should be provided by the claimant. If his solicitors do not retain copies of these documents, the originals of which are likely to be in the Land Registry (see rule 90, Land Registration Rules 1925) the Chief Land Registrar has a discretion to furnish copies: see section 112(2) of the Land Registration Act 1925, as amended. The form of these two transfers, if properly drawn, and notwithstanding that recitals are not in practice made in such documents, can often assist in determining the nature of the transaction. The claimant should also be asked to provide for inspection the originals or copies of any correspondence with the solicitors who acted in the purchase by the claimant's wife and in the transfer to the claimant's son. The transfers and correspondence would provide contemporaneous evidence of the nature of these transactions.

    26. (2) The tribunal should be furnished with a complete copy of the present tribunal's decision and of the chairman's notes of evidence and the parties should also have copies. See R(S) 1/87.
  26. If the wife was the beneficial owner of 6 St L.'s Road, and it was not the claimant's home, the tribunal should then go on to make findings as to the reason for the transfer to the son and as to whether it was for the purpose of obtaining income support: cf decisions R(SB) 38/85 and R(SB) 40/85 in this respect.

  27. The tribunal should make findings on all relevant points raised by or on behalf of the claimant or the adjudication officer, bearing in mind that theirs is an inquisitorial jurisdiction and that they must, as explained in this decision, consider all evidence, whether hearsay or not, and observe the rules of natural justice. The record of their decision should comply with regulation 25(2)(b) Social Security (Adjudication) Regulations 1986.

  28. My decision is set out in paragraph 1.

    29. Date: 14 September 1992 (signed) Mr. V. G. H. Hallett Commissioner


     

    APPENDIX

    SOCIAL SECURITY ACTS 1975 TO 1986
    (see para. 11)

    Part 1

    The appeal tribunal's recorded findings of fact were:

    "The claimant living in owner occupied property at 6 S. Grove, Dewsbury with his wife and children was unemployed and in receipt of benefit from December 1980 onwards. In 1983 a house in Bradford, 6 St. L.'s Road, was purchased for £13,000 cash there being no mortgage. The house was purchased out of funds in part owned by Mr. S. and in part borrowed from other sources. The intention was to provide an asset for his sons for when they were older. It was to have something to give them, and in this sense was in the nature of an investment for them for their future. That house remained occupied until some time in approximately 1988 when the eldest son Sian then aged about 22 got married and went to live there with his wife and brother Ashfaq who then would be around 18. Each of the brothers had started work on leaving school at 16. On the 17 October 1989 Mr. S.'s income support was suspended because the DSS became aware of the fact that this house as well as the Dewsbury house was owned by the family. Steps were then taken to have the house transferred from the name of the claimant's wife, and it was transferred into the name of the second son A.H. that transaction being registered on the 28 November 1989 and therefore having been completed some short time earlier. Steps to make this transfer effective had not begun prior to the time when the benefit was suspended.

    Part 2

    The appeal tribunal's recorded reasons for their decision were:

    "The tribunal accepts that it was Mr. S.'s intention when buying the Bradford house to acquire an asset which he would then pass on by way of gift to his sons when they were older. We accept that he was advised that the house could not be put into their names at that stage because they were under 18. It was therefore put into his wife's name although he had not explained why he did that rather than have the house in his own name. We are satisfied that the legal estate was vested in his wife in 1983 when the property was purchased, and that the beneficial estate was possessed either by her or by her and her husband as jointly providing the assets for its purchase one way or another. There was never any mortgage on the property and it was a cash purchase albeit in part with borrowed funds. This is clearly not a case in which the gift to the son or sons was to take place by custom or intention at a particular time, namely for instance, on their 18th birthday, because both sons had passed that age and the eldest son had passed 21 when the transfer in fact took place. We accept that it was a case in which at a time thought appropriate by the parents they would pass on the asset to their sons. We note that they did not choose to take this step at the time when both sons began to live in the house, but only at the later time some few weeks after the income support was suspended when news of the Bradford house reached the DSS.

    We are therefore satisfied that the house in question was owned either solely by the claimant's wife or by the pair of them jointly so far as the beneficial interest is concerned, and that she (or they) deprived themselves of that asset in order to secure continued entitlement to income support. Having seen Mr. S. and heard his conflicting evidence we have rejected his own explanation as to why the transfer took place when it did. Although accepting that it was always the intention that the house would be transferred to the sons at some time, we have no doubt that this particular time was chosen because for the first time Mr. S. was aware of the fact that continued possession of the house could affect his benefit situation. Therefore following the decision R(SB) 38/85 the purpose of securing continued entitlement to benefit was clearly a significant operative purpose in the claimant's passing on the legal estate to the house to his son."

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