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URL: http://www.bailii.org/uk/cases/UKUT/AAC/2015/109.html
Cite as: [2015] UKUT 109 (AAC)

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TM v Secretary of State for Work and Pensions (ESA) (Recovery of overpayments : failure to disclose) [2015] UKUT 109 (AAC) (04 March 2015)

IN THE UPPER TRIBUNAL                                                        Case No.  CE/2350/2014

ADMINISTRATIVE APPEALS CHAMBER

 

Before Upper Tribunal Judge Rowland

 

Decision:  The claimant’s appeal is allowed.  The decision of the First-tier Tribunal dated 6 March 2014 is set aside and the case is remitted to the First-tier Tribunal to be re-decided by a different judge in the light of the reasons for this decision set out below.

 

Direction:  Subject to any direction issued by the First-tier Tribunal, the Secretary of State is directed to consider whether the revised decision under appeal to the First-tier Tribunal should be further revised in respect of the period from 10 March 2012 to 19 October 2012 (so as not to include as recoverable the payments made under the award made on 20 July 2012) and either do so (in which case the appeal will lapse) or make a further written submission to the First-tier Tribunal within one month of the date this decision is sent to him explaining why he still considers that the whole overpayment is recoverable.

 

 

REASONS FOR DECISION

 

1.         This is an appeal, brought by the claimant with permission granted by the First-tier Tribunal, against a decision of the First-tier Tribunal dated 6 March 2014 whereby it dismissed the claimant’s appeal against a revised decision of the Secretary of State dated 21 December 2012 to the effect that income-related employment and support allowance amounting to £7,311.40 had been overpaid to the claimant from 8 October 2011 to 19 October 2012 and was recoverable from him under section 71(1) of the Social Security Administration Act 1992, which provides –

 

71.–(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 Secretary of State in connection with any such payment has not been recovered,

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

 

2.         The claimant was formerly in receipt of income support and that award was converted into an award of income-related employment and support allowance with effect from 8 October 2011.  However, the new award was made in ignorance of the fact that the claimant had capital exceeding £16,000, which had not been declared while he was in receipt of income support. 

 

3.         When the existence of at least some of the capital was discovered by the Department for Work and Pensions, a decision was given and a letter sent to the claimant on 17 March 2012 informing him that: “We cannot pay you an allowance from 10 March 2012”.  The claimant then appears to have either made a fresh claim for income-related employment and support allowance or applied for a revision of the decision notified on 17 March 2012.  On, 20 July 2012, his award of employment and support allowance was re-instated (albeit at a lower rate) with effect from 10 March 2012, either by way of a decision on the new claim or by way of a revision of the supersession decision notified to the claimant on 17 March 2012.  This appears to have been in consequence of a miscalculation of the claimant’s capital, although the cause of the miscalculation is not revealed in the documents before me.  The claimant appealed, presumably against whatever decisions regarding his entitlement to employment and support allowance had been made since March 2012.  On 5 October 2012, the decision notified on 17 March 2012 and the decision of 20 July 2012 were both revised (or, alternatively, the decision notified on 17 March 2012 was further revised) and it was decided that the claimant had not been entitled to employment and support allowance at any time since 8 October 2011, although that decision was too late to prevent payment being made up to 19 October 2012.  Because the revision was adverse to him, the claimant’s original appeal remained effective as an appeal against the decision(s) as revised.  This is the “entitlement appeal”.

 

4.         On 21 December 2012 it was decided that the claimant had been overpaid £3,536.40 from 10 March 2012 to 19 October 2012 and that that sum was recoverable form him.  The claimant appealed and the decision was then revised on 14 January 2013.  The new decision was to the effect that £7,311.40 had been overpaid to the claimant from 8 October 2011 to 19 October 2012 and that sum was recoverable from the claimant because he had both misrepresented and failed to disclose a material fact.  Because the revision was adverse to him, the claimant’s appeal against the decision of 21 December 2012 remained effective as an appeal against the decision as revised.  This is the “recoverability appeal”.

 

5.         Both of the claimant’s appeals were listed for hearing on 5 August 2013.  On that date, the First-tier Tribunal gave the claimant permission to withdraw his entitlement appeal and the recoverability appeal was adjourned with a direction that the Secretary of State reply to five arguments advanced by Mr Andy Malik of Luton Law Centre on the claimant’s behalf.  In a supplementary response, the Secretary of State conceded one of the arguments, accepting that there had been no misrepresentation in respect of the award of employment and support allowance, and therefore relying only on the failure to disclose limb of section 71(1) of the 1992 Act.  (How the Secretary of State came to assert in his submission to the First-tier Tribunal that no savings “were declared on the claim dated 08/10/2011” when, because this was a conversion case, there was no claim for employment and support allowance at that time, I do not know, but plainly that assertion ought not to have been made.)  However, the Secretary of State resisted the other arguments.  On 6 March 2014, the First-tier Tribunal dismissed the claimant’s appeal.  Subsequently, the judge granted permission to appeal to the Upper Tribunal.  The claimant’s grounds of appeal are to the effect that the First-tier Tribunal erred in dismissing, or failing to address, three of the arguments that Mr Malik had advanced before it.  The Secretary of State, in a helpful submission made by Ms Frances Gigg, supports one of the grounds of appeal.

 

6.         The first argument rejected by the First-tier Tribunal was that, as the alleged failures to disclose occurred while the claimant was entitled to income support, they cannot found recovery of employment and support allowance because, it is argued, the duty to disclose material facts imposed by regulation 32 of the Social Security (Claims and Payments) Regulations 1987 (SI 1987/1968) while he was entitled to income support only fell on him while he was entitled to that benefit.  I do not accept that argument, even if the premise is correct and there was no continuing duty of disclosure after the claimant first became entitled to employment and support allowance.

 

7.         Section 71(1) of the 1992 Act provides that an overpayment may be recovered from “any person” who has caused the overpayment through a failure to disclose a material fact.  I entirely accept that the claimant’s duty to disclose his capital while he was entitled to income support arose out of his being entitled to income support, but there is nothing in the legislation to suggest that an overpayment of employment and support allowance is not recoverable if the overpayment of that benefit can be shown to be the result of a breach of a duty of disclosure arising out of entitlement to a different benefit.  Here, if the claimant had not been entitled to income support, he would not have become entitled to income-related employment and support allowance and so a failure to disclose capital while entitled to income support could plainly cause an overpayment of employment and support allowance.  As long as there was a duty to make the disclosure and the failure to disclose the material facts has caused the overpayment, it does not matter that the duty of disclosure arose in respect of a different benefit from the one in respect of which it is submitted that the overpayment is recoverable.

 

8.         The second argument rejected by the First-tier Tribunal was that the Secretary of State had not proved that he had made a decision revising or superseding the award of employment and support allowance throughout the relevant period, as is required by section 71(5A) of the 1992 which provides –

 

“(5A) Except where regulations otherwise provide, an amount shall not be recoverable under subsection (1) or under regulations under subsection (4) above unless the determination in pursuance of which it was paid has been reversed or varied on an appeal or has been revised under section 9 or superseded under section 10 of the Social Security Act 1998.”

 

9.         The First-tier Tribunal rejected that argument because it found that the decision of 17 March 2012 was adequately notified to the claimant and, indeed, that he had appealed against it.  It also referred to a decision dated 14 March 2012 in the entitlement bundle of papers.  In this regard, Ms Gigg, and I are at a slight disadvantage by comparison with Mr Malik because the First-tier Tribunal had bundles of documents relating to both appeals but only the recoverability appeal bundle has been obtained from the First-tier Tribunal by the Upper Tribunal’s office.  It may be that the letter dated 17 March 2012 was intended to be notice of a decision actually given on 14 March 2012 but, in any event, there is no evidence before me that in March 2012 the Secretary of State made any decision in respect of entitlement before 10 March 2012.  Therefore, as Ms Gigg submits and as I think Mr Malik now accepts (although he earlier referred erroneously to the decision of 14 January 2013), it was the revision dated 5 October 2012, rather than the decision notified on 14 March 2012, that determined entitlement so as to show that there had been the overpayment that the Secretary of State now submits is recoverable.

 

10.       In any event, Mr Malik argues that there is no evidence that the decision of 5 October 2012 was properly promulgated and, indeed, the First-tier Tribunal said –

 

“Whilst there is evidence of poor administration and a failure to evidence the promulgation of the revising decisions the Tribunal is satisfied that section 71(5A) has been complied with.”

 

Ms Gigg accepts that, in the absence of the entitlement bundle and a copy of the decision of 5 October 2012, it is impossible to tell whether the First-tier Tribunal satisfied itself that that decision did in fact revise the earlier entitlement decision correctly so as to remove entitlement for the whole period from 8 October 2011, but she otherwise submits that there is no substance in this ground of appeal.

 

11.       I reject this ground of appeal, even though the First-tier Tribunal seems to have focused on the wrong decision.  The First-tier Tribunal plainly knew about the decision of 5 October 2012, because it mentioned it in paragraph 6 of the statement of reasons.  Moreover, it had been stated in the Secretary of State’s submission to the First-tier Tribunal in the recoverability appeal that: “On 05/10/2012 the decision maker decided that [the claimant] had a total amount of declared and undeclared capital of £27,805.60 and was not entitled to ESA IR from 08/10/2011 onwards.”  If any document in the entitlement appeal bundle had contradicted that assertion, I have no doubt that Mr Malik would have referred to it.

 

12.       As to promulgation, the decision of 5 October 2012 clearly had been conveyed to the claimant by the time the appeal was heard.  A decision may not be effective if it is not promulgated, but section 71(5A) of the 1992 Act does not require the promulgation of the relevant entitlement decision to take place before the recoverability decision is made; it merely requires that the entitlement decision should have been made before then.  To give proper effect to the purpose behind, among other provisions, section 71(5A) itself, promulgation of a decision needs to be in a form that gives the claimant an opportunity to challenge it and therefore often means that notice of the decision must inform the claimant of the reasons for the decision and his right of appeal against it in accordance with, for example, regulation 28(1) of the Social Security and Child Support (Decisions and Appeals) Regulations 1999 (SI 1999/991).  However, where a decision is revised adversely to the claimant while an appeal is pending, so that the appeal is treated under regulation 30(3) of the 1999 Regulations as though it had been brought against the decision as revised, it is likely to be sufficient if the decision is simply conveyed to the claimant in a response or further submission in that appeal.  That may have happened here, although Ms Gigg also refers to a computer printout that was before the First-tier Tribunal and which she submits shows that notice of the decision of 5 October 2012 was probably issued on 29 October 2012.  In any event, in whatever way that decision was in fact conveyed to the claimant, I have no doubt that it was sufficiently promulgated to make it clear that entitlement for the whole period from 8 October 2011 was in issue before the First-tier Tribunal in the entitlement appeal so that the claimant could have argued that the decision of 5 October 2012 was defective, and that he had therefore been entitled to employment and support allowance after 8 October 2011, had he thought he had a case and not decided to withdraw that appeal.

 

13.       It is the third ground of appeal that is supported by the Secretary of State.  It had been asserted in a supplementary submission in the recoverability appeal that the decision of 20 July 2012 to re-instate the award, but at a lower rate, was based on a miscalculation of the claimant’s capital but it is unclear from the documents before me whether the Secretary of State was then fully aware of the claimant’s capital and simply made a mistake for which he is entirely to blame or whether the decision of 5 October 2012 was made in the light of further evidence as to the claimant’s capital.  I agree with Ms Gigg that it is difficult to see how any overpayment arising under the award made on 20 July 2012 can be said to have been in consequence of the claimant’s failure to disclose his capital if the Secretary of State already knew about the capital then and the decision was based on a mistake for which only he was responsible, unless, perhaps, the claimant was aware that the award had been wrongly made.  Although this issue was clearly raised by Mr Malik in the hearing on 5 August 2013 and was even more clearly raised in the First-tier Tribunal’s directions on that date, the Secretary of State failed to address it in either of his supplementary submissions and so did the First-tier Tribunal in its statement of reasons for its decision of 6 March 2014.

 

14.       I allow the appeal on this third ground.  The Secretary of State must now consider whether further to revise the recoverability decision in respect of the period from 10 March 2012 to 19 October 2012 (so as not to include as recoverable the payments made under the decision of 20 July 2012) and either do so (in which case the appeal I am remitting to the First-tier Tribunal will lapse) or make a further submission to the First-tier Tribunal explaining why he has not done so.

 

 

 

 

 

 

Mark Rowland

4 March 2015


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