IN THE UPPER TRIBUNAL
ADMINISTRATIVE APPEALS CHAMBER
	Appeal No.  CDLA/2696/2014	

Before Upper Tribunal Judge Perez

Decision

1.	The claimant’s appeal against the tribunal’s recoverable overpayment decision is allowed.

2.	The decision of the First-tier Tribunal dated 21 January 2014 (heard under reference SC204/11/01355) is set aside.  The case is remitted to the Social Entitlement Chamber of the First-tier Tribunal for rehearing afresh by a completely differently constituted panel in accordance with the directions at paragraph 63 below.

Background

3.	The claimant appeals with my permission against the decision of the First-tier Tribunal that a £16,326.40 overpayment of Disability Living Allowance (“DLA”) for the period 28/02/05 to 9/03/10 inclusive is recoverable from the appellant on the ground that he failed to disclose the material fact that his circumstances had changed following his 16 October 2004 hip surgery.

4.	The tribunal at the same hearing dismissed an appeal against the underlying decision that the appellant was not entitled to DLA for that period (tribunal reference number SC204/10/04055).  I refused permission to appeal against the tribunal’s decision on entitlement.  So this appeal is against only the tribunal’s recoverable overpayment decision.

5.	Section 71 of the Social Security Administration Act 1992 (c.5), as it applies in this case, requires that, for the overpayment to be recoverable, it has to have been made “in consequence of” the failure to disclose the material fact.

6.	A previous recoverable overpayment tribunal decision for the same period had been successfully appealed to the Upper Tribunal (CDLA/757/2012).  Upper Tribunal Judge Ovey allowed that appeal on the ground, among others, that the tribunal had not addressed causation in view of two investigations, one in 2005 and one in 2007.  She thought they might have broken causation.  She said (paragraphs 11 and 15 of decision)—

“there was evidence before the tribunal that the claimant had already been the subject of two investigations, in 2005 and 2007, because of his golf-playing activities.  This was not disputed by the Department…On any view, the Department was aware that the claimant’s condition enabled him to play golf.  It is therefore far from clear why the non-disclosure found initially to have occurred continued to cause the Department to make payments of disability living allowance to the claimant. The tribunal did not grapple with that issue”.

Judge Ovey remitted for the tribunal to deal with whether causation had been broken.

7.	The tribunal decision of 21 January 2014 on that remitted appeal is the subject of the present appeal before me.

8.	The appellant had given evidence that he had received two visits from fraud investigation officers.  One visit he said had taken place shortly after his hip operation of 16 October 2004, either in 2004 or early 2005.   The second he said had taken place in 2007.  There was also before the tribunal a record of an interview under caution of the appellant.  This took place on 10 December 2009 (pages 54 to 71).  That was some three months before the last day of the period of the overpayment, 9 March 2010.

9.	The tribunal hearing the remitted appeal found that there was an incapacity benefit investigation and a pension credit investigation.  It found that neither related to DLA.  It said nothing more than this about causation.

10.	In granting permission to appeal to the Upper Tribunal, I said—

“1. The Secretary of State said that there were investigations by DWP in 2005 and 2007 (page 213 of the overpayment bundle). This statement was before the tribunal sitting on 21 January 2014.  There was also a record of an interview under caution held on 10 December 2009 (in which the claimant told the interviewers about his hip operation and that he could walk a bit further).  

2. It is arguable that the tribunal should have considered whether the overpayment ceased to be caused by the failure to disclose at any point during the period of the overpayment (28/2/05 to 9/3/10), as a result of DWP’s investigations in 2005 or 2007.

3. It is also arguable that the tribunal should have considered whether the overpayment ceased to be caused by the failure to disclose at any point during the period of the overpayment as a result of the disclosure in the interview under caution.  It may be that the tribunal considered that the three months from the interview under caution to the end of the period of the overpayment was a reasonable time to allow the Secretary of State to decide to end entitlement.  But it is arguable that, if the tribunal did take that view, it should have said so expressly in the statement of reasons.

4. At paragraph 9 of the statement of reasons, the tribunal refers to the investigation related to the decision under appeal, but does not make a finding as to when that was or say why that did not affect causation.”.

Secretary of State’s submissions to Upper Tribunal

11.	The Secretary of State opposes the appeal.  I am grateful to his representative, Mr Wayne Spencer, for a clear, well-argued submission.

12.	The Secretary of State submits that a DWP fraud investigator gave evidence to the tribunal of 21 January 2014 to the effect that there had been investigations concerning the appellant’s incapacity benefit and pension credit.  He says the investigator also gave evidence to the effect that there had been no investigation of the appellant’s DLA in 2005.  The Secretary of State says the tribunal was entitled to accept that evidence.  He submits that the tribunal was entitled on that evidence to make its finding that “there were two unrelated investigations regarding entitlement to Incapacity Benefit and Pension Credit and no investigations regarding his DLA entitlement before that related to the decision under appeal”.

13.	The Secretary of State further submits that the tribunal’s finding that the investigations were unrelated to the appellant’s DLA disposed of any contention that the appellant’s comments during those investigations may have broken the causal connection between his failure to disclose and the overpayment.  He submits that the incapacity benefit investigation took place before the appellant’s 16 October 2004 hip operation and so is beside the point.  He submits that any comments the appellant had made about his mobility during the pension credit investigations would have been purely incidental to the benefit entitlement questions at issue in those investigations since an ability to walk plays no part in entitlement to state pension credit.  He submits that, if that information did not reach the DLA unit, that was primarily the fault of the appellant.  He submits that it was not the role of the fraud investigator to realise that an aside by the appellant may have some relevance to a benefit the investigator was not investigating and then communicate it to the relevant office. 

14.	The Secretary of State submits that, if the appellant had something to say about his DLA, he should have said it to the DLA office.  He submits that it was the appellant’s unbroken failure to do this that caused the overpayment throughout the period of the overpayment.

15.	He submits that, even if the appellant said something that the fraud investigator should have realised was relevant to DLA, with the result that some of the responsibility for the overpayment attaches to the Secretary of State, the preponderant cause of the overpayment was the appellant’s failure to disclose.  The Secretary of State relies on CJSA/294/2003 to argue that this means the appeal must fail.

16.	The Secretary of State submits that causation was not broken by the interview under caution either.  He says there was no disclosure of the material fact during that interview.   He says the appellant admitted in that interview that the operation had eased the pain but insisted that his restricted movement persisted (pages 58, 60 and 61).  The Secretary of State submits that this was not a disclosure that the appellant’s ability to walk had substantively improved.  The Secretary of State submits that it was, on the contrary, a systematic denial that any such change had occurred.

17.	My grant of permission had also said that the tribunal refers to the investigation related to the decision under appeal, but does not make a finding as to when that was or say why that did not affect causation.    The Secretary of State seems to assume that the interview under caution was part of, or the start of, the investigation in question.  He submits that the fact that the medical report was not requested until some two and a half months after the interview under caution did not break the causal connection.  He submits that it was not a grotesque delay, especially given that the Christmas and New Year breaks intervened.  He also submits that the need for additional evidence arose from the appellant’s refusal to admit the truth.

18.	Finally, the Secretary of State submits that, although the tribunal’s findings and reasons were not as full as they could have been, the decision should nevertheless survive.  He relies on Lord Neuberger’s comments at paragraph 51 of Homes-Moorhouse v London Borough of Richmond upon Thames [2009] UKHL 7; [2009] 1 WLR 413.

Appellant’s submissions to Upper Tribunal

19.	The appellant argues that his evidence that he had received two fraud investigation officer visits had not been a reference to the incapacity benefit investigation and the pension credit investigation.  He submits that, by referring only to those two investigations, the tribunal erred in law by failing to make findings of fact as to the appellant’s evidence that he had received two visits after the incapacity investigation and before the pension credit investigation.

20.	The appellant submits that the tribunal also erred in law in accepting too readily the presenting officer’s speculation (which is all it amounted to says the appellant) as to the nature of the two investigations; the speculation being that the first fraud investigation officer visit which the appellant had mentioned related to incapacity benefit, and the second to pension credit.  The appellant points out that the presenting officer relied on an alleged inability to obtain other relevant DWP records and sought to construct a narrative which was speculative and not evidence-based.  He points out too that the appeal bundle contained no documentary evidence of the investigations and that, although fraud officer Mr Keith Thomas  and another investigator attended the hearing, their evidence was not offered to the tribunal and no questions were put to them.

21.	The appellant submits that he “is crystal clear in that the first of the investigations arose after his hip operation which post-dated the timeline in relation to IB”.  He submits that the second fraud investigation officer visit of which he had given evidence, the 2007 visit, cannot have been part of the pension credit investigation because the pension credit investigation related to a period to 2012, so must have taken place later than 2007.  

22.	I am grateful to the appellant’s representatives for their forensic analysis and their detailed pointers for navigating the papers.

Findings and reasons

23.	I agree with the appellant that the tribunal accepted too readily what the presenting officer said about the investigations.

24.	In doing so, the tribunal materially erred in law in the following ways—

(1)	The tribunal failed adequately to investigate whether the post-16-October-2004/early 2005 fraud officer visit alleged by the appellant did take place in the course of the incapacity benefit investigation and whether the 2007 visit alleged by him did take place in the course of the pension credit investigation, or whether the two visits he alleged were, as he said, separate from those two investigations.

(2)	In consequence of that failure, the tribunal failed to make findings as to what, if those two alleged visits did take place, the appellant told investigators in those visits and whether what the appellant said in either visit broke the chain of causation by virtue of reporting procedures and/or other information-sharing systems between the officers who made those visits and those responsible for administering DLA.

(3)	The tribunal failed in any event to enquire and make a finding as to what the appellant told investigating officers in the two investigations which the tribunal did find took place and as to the reporting procedures and/or other information-sharing systems between the officers conducting those investigations and those responsible for administering DLA.

25.	I say this for the following reasons.

Appellant’s evidence to the First-tier Tribunal

26.	The appellant had more than once asserted that there were two fraud investigation service visits to him.

27.	The transcript of the interview under caution of 10 December 2009 records that the appellant told the interviewer about a visit which took place, after his hip operation of October 2004, in 2004 or early 2005.  The appellant says in the interview that “I told one of your colleagues that I’d had an [sic] hip operation in 2004” (page 55).  He goes on to explain that it was a visit “from the fraud people”.  His description of the visit continues to page 57.  The description includes a statement that his solicitor had asked “your solicitor” to get proof that the appellant owed £5,000 and that “your solicitor” “came back with a figure of two thousand and something pound”.  That transcript was before the tribunal.

28.	The appellant swore an affidavit dated 4 May 2011.  In it he said that he had received visits in 2005 and 2007.  He said that the 2005 visit was by somebody from the DWP Investigation Team.  He referred to a letter received following the 2007 visit.  The way he referred to the letter suggested he believed the visiting officer to have been a fraud officer or investigating officer.  This affidavit was before the tribunal at page 161 of the entitlement bundle.  As the tribunal heard both the entitlement appeal and the overpayment appeal at the same hearing, it had that affidavit before it. 

29.	In his witness statement dated 14 January 2014 (page 541 onwards), the appellant again mentioned that 2004/early 2005 visit (paragraph 10, page 543).  In that statement he also mentioned the second visit, which he said took place in 2007 (paragraph 13 of the statement).  He said that the second visit followed a letter he received which said he was to receive a visit “from an Officer of FIS”.  This witness statement was before the tribunal.

Evidence to the First-tier Tribunal on behalf of the Secretary of State

30.	The evidence before the tribunal for the Secretary of State as to the nature of those two visits was unclear.

31.	The Secretary of State’s submission dated 31 May 2012 on the appellant’s previous Upper Tribunal appeal about the same overpayment had said (page 213)—

“Following investigations undertaken by the Department for Work and Pensions in 2005 and 2007 the claimant’s award for DLA was terminated from 28/2/2005”.

32.	That submission did not say that the termination was “as a result of” those two investigations.  But it did appear to relate a 2005 and a 2007 investigation to the termination of DLA.

33.	In light of Upper Tribunal Judge Ovey’s remittal of the case, a First-tier Tribunal judge issued directions on 5 March 2013 (page 229).  The directions required, among other things—

“A supplementary response [from the Secretary of State] describing the previous investigations undertaken, whether any material has been retained and what the policy is for the retention or destruction of evidence relating to fraud investigations”.

34.	The Secretary of State’s response dated 9 July 2013 (page 391) said, in response to that direction—

“No documentation following a fraud investigation is disposed of under the departmental policy for document retention”.

The rest of the Secretary of State’s response dealt with other parts of the directions, but did not deal further with that particular direction of 5 March.

35.	The remitted appeal came before the tribunal on 8 October 2013 (page 478).  The Record of Proceedings records that the presenting officer told the tribunal at that hearing—

“P.O. > re fraud issue. 
p. 57.  Asked Fraud Officer to check system – nothing there.  I’ve checked with Debt Recovery.
7/01/01 – 20/6/02 £5,262.70 Incap. Ben. o/p.
3/9/07 – 18/11/12 Pension Credit o/p. for £8,391.82.
Being repaid @ £10.80 pw.
Recovery amount is linked to a mistake as opposed to fraud which would be £18.  No other cases for DLA.”.

36.	At that 8 October hearing, the tribunal adjourned the appeal with directions that the Secretary of State provide, among other things—

“copies of any available information regarding the overpayment cases of Incapacity Benefit and Pension Credit for this Appellant” (page 482).

In response, the Secretary of State submitted that—

“Information relating to the overpayment of Incapacity Benefit and Pension Credit is not available as these benefits are not administered by the Disability Living Allowance unit” (submission 11 October 2013, page 477).

37.	The Secretary of State’s further submission dated 16 October 2013 (page 529) told the tribunal that the tape recording of the interview under caution had been destroyed and referred the tribunal to a witness statement of a Mr David Keith Thomas, a fraud investigator with DWP.  That statement said (page 530)—

“I am employed by the Department of [sic] Work and Pensions as a Fraud Investigator.  My responsibilities include the investigation of benefit fraud allegations.  I am able to confirm that I carried out an investigation into [appellant’s name and national insurance number] and interviewed him under caution on 10/12/2009.  Due to the Data Protection Act Regulations I no longer have a copy (or original) of tape recording of IUC – destroyed as per regulations.
I also have no IT system or clerical records of this case (destroyed as per regulations)
The only records available are what PDCS already hold.  I have a limited recollection of this investigation.
I am prepared for this statement to be used in criminal proceedings.  I am prepared to attend court if necessary.”.

This, incidentally, appears at odds with the Secretary of State’s statement (paragraph 34 above) that “No documentation following a fraud investigation is disposed of under the departmental policy for document retention”.

38.	The Secretary of State put in a further submission dated 22 October 2013 (page 531).  All that submission did was to enclose system printouts of decisions relating to the appellant’s DLA and list those printouts.

The First-tier Tribunal hearing

39.	The remitted appeal finally came to be heard by the First-tier Tribunal on 21 January 2014.  The appellant did not attend due to, according to his representatives, ill health.  But he had provided the witness statement I have mentioned above.  The tribunal also had the interview transcript and the affidavit.  The appellant’s representatives did not attend either because they were not funded to do so.  But they had put in written submissions.  The Secretary of State was represented by the same presenting officer as had appeared at the original tribunal hearing whose decision had been overturned by Judge Ovey.  Also in attendance were Mr Keith Thomas listed as “investigator” and Mr Adrian Griffiths, listed as “investigating officer”.  

40.	Mr Thomas and Mr Griffiths gave oral evidence to the tribunal of 21 January 2014.  Their oral evidence addressed matters including golf, the interview under caution and surveillance.  But their oral evidence said nothing about the visits that the appellant had said took place.  Their oral evidence also said nothing about the nature of the investigations which the tribunal went on to find were related to incapacity benefit and pension credit.  They had not put in written evidence about those visits or those investigations either.  These two officers were released before the end of the hearing.

The First-tier Tribunal’s decision

41.	The tribunal dismissed the appeal against the recoverable overpayment decision (as well as dismissing the appeal against the entitlement decision).  The tribunal dealt in its statement of reasons with the issues of failure to disclose, change of circumstances and materiality of the change of circumstances.

42.	The tribunal’s only reference to causation, which it had been told by Judge Ovey to deal with, was to say—

“As set out in the statement on the entitlement decision, there were two unrelated investigations regarding entitlement to Incapacity Benefit and Pension Credit and no investigations had been initiated regarding his DLA entitlement before that related to the decision under appeal” (paragraph 9 of statement of reasons, page 584).

43.	The tribunal’s statement of reasons on the entitlement decision, which it had incorporated by reference into its reasons on its overpayment decision, said—

“The respondent made it clear at the hearing that there have been two investigations into the appellant’s entitlement to benefit but neither of these related to DLA.  The first related to an overpayment of Incapacity Benefit caused by the appellant claiming this benefit whilst working.  This was for the period 7/1/01 – 20/6/02.  The appellant pleaded guilty to the charges brought against him and was duly sentenced.  A second investigation surrounded an overpayment of Pension Credit for the period 3/9/07 to 18/11/12.  The question of the appellant’s mobility or entitlement to DLA were not explored in these investigations.  The appellant may have assumed that they were related because they may also have referred to his ability to play golf.  We are satisfied that these investigations have no bearing on the decision under appeal as the appellant’s ability to mobilise was not the focus of the investigations and no assurances could or would have been given about his entitlement to DLA.”.

44.	The tribunal’s reference to the respondent having “made clear” at the hearing that there were two investigations but that neither related to DLA appears to refer to the following part of the hearing (record of proceedings, pages 573 to 575)—

“P.O.:

[…]

Prev. investigs 7/1/01 - 20/6/02 IB
3/9/07 – 18/11/12 Pension Credit.
No access to further info. on this.  He must have agreed these cos paying back.
DWP docs not destroyed whilst something ongoing.
Fraud rules diff – retain if pros. pending.  If pros. not going ahead then destroyed within compliance rules.   This case, have copy of IUC – content not disagreed with previously.  There was no pros. so tape destroyed under Data Protection rules.  They send evid. to DWP so IUC transcript available.
No prev. investig re DLA.  No reviews of DLA – would have come up on system.  Ref his statement – unlikely to have been a Fraud Officer visiting.  Not really done.  Compliance Officers attend from Job Centre so more likely the attendance was re IB.
Not on combined payments so his duty was to report to DWP re changes re DLA.
The prev. investig was re IB cos allegs re working.”.

Notably, this extract is recorded as having been said by the presenting officer rather than, as submitted by the Secretary of State, by either of the investigating officers who attended the hearing.

Discussion

45.	The extract at paragraph 44 above is all that the Record of Proceedings says about the previous investigations.  It appears, by virtue of the tribunal’s incorporation by reference, to be the basis for its finding that “there were two unrelated investigations regarding entitlement to Incapacity Benefit and Pension Credit and no investigations had been initiated regarding his DLA entitlement before that related to the decision under appeal”.

46.	I accept that that extract from the record of proceedings did not suffice to found that finding.  The presenting officer said only that it was “unlikely” to have been a fraud officer visiting.  This was not evidence but a submission.  And it was not from an investigating officer but from the presenting officer, as the appellant points out. 

47.	Moreover, there were mismatches and confusion in the evidence that made it unreasonable in my judgment for the tribunal simply to accept the presenting officer’s submission as to the nature of the investigations.

Factors which should have caused tribunal to enquire further into the first visit alleged by the appellant

48.	As to the first visit alleged by the appellant, there were in my judgment at least four factors which meant the tribunal should have enquired further.

49.	First, the appellant’s evidence was that the first visit post-dated his hip operation.  It was not disputed that the operation took place on 16 October 2004.  That post-dated by over two years the period of the incapacity benefit overpayment (7/01/01 to 20/6/02).  So it was not necessarily to be taken as relating to incapacity benefit.

50.	Second, the apparent similarity between the incapacity benefit overpayment (£5,262.70) and the amount mentioned in the interview under caution (£5,000) did not justify the tribunal’s failure to enquire further as to what the first visit related to.  The appellant went on to say in that interview that the solicitor “came back with a figure of two thousand and something pound” (page 56). This removed the prima facie similarity between the figures.

51.	The third factor which should have caused the tribunal to enquire further into the first alleged visit is that the Secretary of State had previously accepted that there was a 2005 investigation (paragraph 31 above).  That acceptance was potentially at odds with the presenting officer’s submission at the tribunal hearing of 21 January 2014.

52.	The fourth factor which should have caused the tribunal to enquire further into the first alleged visit is that the presenting officer had submitted that “Compliance officers attend from Job Centre so more likely the attendance [that is, the visit the appellant had given evidence of] was re IB”.  However, as the appellant points out, the appellant’s evidence had been that he had told fraud officers, rather than Job Centre Staff, about his operation:  In the interview under caution, he told the interviewer that he “told one of your colleagues” that he had had a hip operation in 2004.  The interviewer to whom he said this in the interview under caution was Mr Keith Thomas, a fraud investigator.  In addition, the appellant went on in that interview to refute the suggestion that it was Job Centre staff—

Q: “Jobcentre staff you mean or?”

A: “No from the fraud people”.

The appellant had given similar evidence in his affidavit. That evidence in the interview and affidavit was in direct contradiction of the presenting officer’s submission that it had likely been Job Centre staff who had visited the appellant.  The contradiction indirectly tended to undermine the presenting officer’s submission that the visit was therefore “more likely” to relate to incapacity benefit.  That contradiction should have caused the tribunal to investigate more thoroughly than it did as to the nature of the first visit alleged by the appellant.

Factors which should have caused tribunal to enquire further into the second visit alleged by the appellant

53.	As to the second visit alleged by the appellant, there was an apparent mismatch between the year in which it had on his evidence occurred – 2007 – and the period covered by the pension credit investigation (3/9/07 to 18/11/12).  In view of that mismatch, the tribunal should not in my judgment have accepted without enquiry the presenting officer’s speculation that the second visit the appellant had mentioned related to the pension credit overpayment.

Proceeding without the evidence that had been directed

54.	It was clear from the tribunal’s previous directions that it considered it appropriate that evidence of the investigations should be given to the tribunal.  The Secretary of State had consistently failed to submit such evidence.  Although the tribunal of 21 January 2014 was not bound by those directions, it needed good reason to do without the evidence that the directions had sought.  This is especially so given that the directions had been given in light of the Upper Tribunal’s previous decision in this case that causation needed to be considered in relation to the alleged visits of 2005 and 2007.

55.	The presenting officer’s speculation was not in my judgment a good reason for the tribunal to do without the evidence that the directions had sought.  First, the tribunal had the benefit of the attendance of two investigating officers.  The tribunal is not recorded as even having attempted to ask them about the nature of any of the investigations or about reporting procedures and information-sharing.  Second, the Secretary of State had at one point said something which suggested that evidence did exist relating to the incapacity benefit and pension credit investigations, but that the Secretary of State was not going to produce it (paragraph 36 above).

Secretary of State’s submission that causation not broken in any event

56.	The Secretary of State submits that causation is not broken even if some responsibility attaches to the Secretary of State, because the preponderant cause was the appellant’s failure to disclose.  I am not sure I would be persuaded by that submission.  It may well be arguable, depending on the facts, that the initial failure to disclose ceased at some point to be a cause of the overpayment and/or that there was a disclosure at some point during the period of the overpayment.  But it is in any event too soon for the Secretary of State to submit that causation is not broken even if some responsibility attaches to him.  Properly reasoned findings, based on evidence, need to be made as to what the appellant said, when and to whom he said it, and as to what the reporting or other information-sharing systems were between those to whom he said it and the DLA unit (if he did not say it to that unit).

57.	For these reasons, the appeal must go back to the First-tier Tribunal for further investigation.

58.	Given my above findings, I need make no finding as to whether the tribunal also erred in law in failing to address whether causation was broken by the interview under caution or by the investigation leading to the termination of DLA (if that was different from the 2005 and 2007 investigations which the Secretary of State accepted at page 213 had taken place).  However, the tribunal on the remitted appeal will need to consider these questions.

Approach to evidence at the remitted hearing

59.	At the remitted hearing, the Secretary of State should not readily be excused from producing evidence which is in his control, just because it is within the control of a unit that does not administer the benefit in question.

60.	If the Secretary of State does not provide a satisfactory response to my directions, the tribunal should not simply accept the presenting officer’s conjecture and decide the case against the appellant.  That is not to say however that the tribunal must necessarily decide the case against the Secretary of State either.  The tribunal will need to consider carefully what approach to take.  In doing so, it must take account of the following.

61.	The Secretary of State might be the only person to have been in control of evidence that would corroborate what the appellant says about the visits he said he received and about what he said and when and to whom he said it.  If that is so, then it may not be right to hold the lack of corroboration against the appellant if the Secretary of State does not produce the evidence in question.  The Secretary of State is clearly the person in control of evidence about reporting procedures and other information-sharing procedures.  If the Secretary of State does not provide the evidence he is directed to provide (whether as to visits or as to information-sharing), and especially if that evidence still exists, the tribunal will need to consider whether he has failed to discharge his burden regarding causation for any of the period of the overpayment.

62.	In considering that question, the tribunal will need to consider whether to apply the principle that, where the truth of a party’s allegation lies peculiarly within the knowledge of his opponent, the burden of disproving the allegation often lies upon the opponent (R v Edwards [1975] QB 27, [1974] 2 All ER 1085, CA).  This was applied in a different context in Wood and another v Inspector of Taxes  [2006] EWCA Civ 26 (see paragraphs 30 to 33 which I have set out at Annex A to this decision). The question of drawing presumptions in relation to evidence that has been destroyed (which may or may not be so in the present case) was considered in SSWP  v TJ (JSA) [2015] UKUT 0056 (AAC) (see paragraphs 213 to 218, at Annex B to this decision).  The three-judge panel in that case qualified R(IS) 11/92.

Directions

63.	It is directed as follows—

(1)	The Secretary of State must provide to the First-tier Tribunal written or  (subject to direction (2)) oral evidence of—

(a)	when the incapacity benefit investigation took place, what visits to the appellant were made during that investigation, when and by whom those visits were made, and what the appellant said during that investigation about his ability to walk and playing golf;

(b)	when the pension credit investigation took place, what visits to the appellant were made during that investigation, when and by whom those visits were made, and what the appellant said during that investigation about his ability to walk and playing golf;

(c)	whether any visit was made by officers by or on behalf of the Secretary of State to the appellant in the period from 17 October 2004 to the end of 2004 and in the first six months of 2005, and if so when and by whom that visit was made, to what that visit related, and what the appellant said during that visit about his ability to walk and playing golf;

(d)	whether any visit was made by officers by or on behalf of the Secretary of State to the appellant in 2007, and if so when and by whom that visit was made, to what that visit related, and what the appellant said during that visit about his ability to walk and playing golf; and

(e)	the reporting procedures and any other information-sharing procedures that existed throughout the period of the overpayment between investigating officers and the unit administering the appellant’s DLA and, in particular, those which existed, at the time of any visits the tribunal finds pursuant to (a) to (d) above were made, between those who made those visits to the appellant and the unit administering his DLA.

(2)	The appellant’s representatives may apply to the First-tier Tribunal for a direction that the evidence required by direction (1) above must be provided in advance of the tribunal hearing (and specifying how long in advance) and in writing.  They may for example wish to apply for this if they are unable to attend the remitted First-tier Tribunal hearing, and so are unable to cross-examine the Secretary of State’s witnesses.

(3)	If the appellant is able to give any more detail of the two visits that he says he received, in particular the dates of those visits and whether he recalls to what benefit the visiting officers said the visits related, he must provide that further evidence to the tribunal orally or in writing.

(4)	The First-tier Tribunal must—

(a)	ensure that it has adequate evidence of, and makes findings on, the matters mentioned in direction (1) above;

(b)	consider and make a finding as to what the appellant said in any visit to him by or on behalf of an officer of the Secretary of State; and

(c)	consider and make a finding as to whether, as a result of what the appellant said in any such visit and in light of reporting or other information-sharing procedures, causation was broken at any point in the period of the overpayment.

(5)	The issue of an initial failure to disclose a material change of circumstances is open for re-hearing by the First-tier Tribunal.  It may however become irrelevant if what was said during a 2005 visit undid any initial failure to disclose before that initial failure could cause the overpayment.

(6)	The issue of entitlement is not open for re-hearing because I granted permission only on the overpayment appeal.

Rachel Perez
Judge of the Upper Tribunal
27 April 2015

Annex A

Wood and another v Inspector of Taxes [2006] EWCA Civ 26

Extract from Court of Appeal judgment

“30. […] The judge accepted that the Special Commissioners had been correct, in principle, to approach the matter on the basis that it was for Mr and Mrs Wood to show that the amendments made to their self assessments in October 2001 had been wrongly made [in view of section 50(6) of the Taxes Management Act 1970]…But he went on:
‘However, there plainly comes a point where the taxpayer has produced evidence which, as matters stand then, appears to show that the assessment is wrong.  At that point the evidential basis must pass to the Revenue.’
The judge’s conclusions at para [63] must be read with those observations in mind.
31.  At para [63] of his judgment the judge said this:
‘[63] … in so far as the Commissioners decided this appeal against Mr and Mrs Wood on grounds relating to the burden of proof (and the opening part of para SC145 suggests that those were the critical grounds for the decision), I consider that they were in error.’
He could not have been intending to suggest, in that paragraph, that the Special Commissioners had been wrong in principle to approach the matter on the basis that it was for Mr and Mrs Wood to show that the adjustments to their self-assessments had been wrongly made.  Rather, I think, he was stating his conclusion that the Special Commissioners had been wrong in failing to appreciate that the evidential burden had passed to the Revenue in the present case.  He had set out his view of the position at para [60]…
32. As the judge pointed out, the Revenue had produced no positive material to show where the central control and management of Eulalia was.  It was not enough (as the judge thought) for the Revenue to criticise the lack of evidence from some of those at Price Waterhouse and ABN AMRO who had been involved in the transaction in 1996…
33.  In Rhesa Shipping Co SA v Edmunds, The Popi M [1985] 1 WLR 948 at 955-956 Lord Brandon of Oakbrook pointed out that a judge is not bound, always, to make a finding one way or the other with regard to facts averred by the parties: ‘He has open to him the third alternative of saying that the party on whom the burden of proof lies in relation to any averment made by him has failed to discharge that burden’.  But that is not a course which should be adopted unless ‘owing to the unsatisfactory state of the evidence or otherwise, deciding on the burden of proof is the only just course for him to take’.  It is a feature of tax litigation—not least where the litigation arises from a tax avoidance scheme—that, in the first instance, the facts are likely to be known only to the taxpayer and his advisers.  The Revenue will not have been party to the transaction; and will know only those facts which have been disclosed by the taxpayer or others; following, perhaps, the exercise of the Revenue’s investigatory powers.  I have no doubt that there are cases in which the evidence before the Special Commissioners is so unsatisfactory that the only just course for them to take is to hold that the taxpayer has not discharged the burden of proof which s 50(6) TMA 1970 has placed upon him.  But, equally, I have no doubt that the judge was correct, for the reasons which he gave, to hold that the present case was not one of those cases.  There was no reason to think that the material facts had not been disclosed; and the commissioners did not hold that it was for that reason that they were unable to decide the question of residence.  I agree with the judge that, in the present case, the ‘third alternative’ to which Lord Brandon referred in Rhesa Shipping was not one which was properly open to the Special Commissioners.”
_____________________________________
Annex B

SSWP  v TJ (JSA) [2015] UKUT 0056 (AAC)

Extract from decision of Upper Tribunal three-judge panel

“213. […] In the present case, these considerations are both linked to the question whether, if DB were allowed to argue that he did not receive a WP05, the issue would be decided on a presumption against the Secretary of State that would cause unfairness. 

214.  In support of his argument that the Secretary of State’s benign explanation as to why the WP05 record does not now exist could and should properly lead to it being presumed or inferred against him that a WP05 was not given or sent to DB, Mr Richards relied on Infabrics Ltd –v- Jaytex Ltd [1985] FSR 75.  As he submitted, that decision appears not to have been cited to Mr Commissioner Mitchell when he was deciding R(IS) 11/92 and held in Appendix 3 of his decision –
“(3)	The strong presumptions which are to be drawn against a party who destroys documents only fall to be drawn where the documents were destroyed with the intention to destroy evidence. (The intention to destroy evidence will, of course, be almost impossible to establish where the destroying party is aware of copies of the destroyed documents.) Where there is no such intention, the only detriment to which the destroying party lays himself open is the loss of the corroboration which the documents might have afforded him.
(4)	Accordingly, in the social security jurisdiction no presumptions fall to be drawn where the Department of Social Security has destroyed documents with the intention of clearing storage space or simply because no point can be seen in retaining such documents.”

215. Infabrics, was an inquiry into damages for the infringing of a copyright and the defendants had, during the course of the proceedings, managed to lose stock records which would have shown, in particular, how many of the relevant items had been sold after the defendants had become aware of the infringement.  Unsurprisingly, the court was not prepared to allow the defendants to benefit from any doubt that the missing documents would have resolved and, in particular, it presumed that all the items not otherwise accounted for had been sold after the relevant date.   Thus we accept that an intention to destroy evidence is not essential for the drawing of an adverse inference against a spoliator and indeed the destruction itself need not be deliberate.  What is said in R(IS) 11/92 needs to be qualified to that extent, although it remains a legitimate distinction between that case and Infabrics that the destruction of the documents in R(IS) 11/92 occurred long before the relevant application for review out of which the appeal before the Commissioner arose and so we do not doubt the correctness of the decision on its facts.

216. The facts of this case perhaps lie between those two cases.  Here, the destruction of the documents did occur while these proceedings were on foot, although clearly without a deliberate intention to influence the outcome of these proceedings.  To that extent, this case is similar to Infabrics.  But there are also important differences.  The plaintiffs in that case could never have known what the true position was, whereas here DB would once have known what documents he was given on or after 8 December 2011 and he is now unable to say that he did not have a WP05.  Moreover, the evidence is that DWP could still have provided clear evidence as to whether DB had had a WP05 had DB raised the issue before the First-tier Tribunal.  It is understandable that an unrepresented claimant should not have raised that issue then but it remains the fact that his delay in raising the issue is a reason that it is now impossible to be certain as to whether or not he ever had the relevant document.  There is also a competing presumption in this case: the presumption of regularity under which, in the absence of contrary evidence, it is presumed that something that has been done has been done properly.  It was obvious from the undisputed facts that DB had been required to attend specific appointments on several occasions that he had in fact been referred to the scheme so that the only question could be whether the manner of the referral was lawful.

217. Rules of evidence derived from case law are not irrelevant to proceedings before tribunals – they are usually based on common sense and reflect a desire to do justice between parties – but regard must be had first to those underlying principles and so the rules must not be applied inflexibly.

218. In the present case, we are quite satisfied that the balance of fairness would require that the question whether DB received a WP05 should be decided without relying on any presumptions.  Moreover, on the balance of probabilities, we are satisfied that the only conclusion that could properly be reached on the evidence is that he did receive a WP05.  There is clear evidence that he was in fact referred to the Work Programme and there is also clear evidence that the usual practice when making such a referral was to provide the claimant with a WP05.  In the absence of any evidence to the contrary, it is therefore more likely than not that DB was given or sent a WP05.  Taken with the appointment letter, that document constituted valid notice complying with regulation 4 of the 2011 Regs as read with the 2013 Act.”

_____________________________________