R(CR) 1/02
Judge K. Machin QC CCR/6524/1999
Mr. W. M. Walker QC CCR/2539/2000
Mr. M. Rowland CCR/3012/2000
15.5.01
Recovery from compensation payments – industrial injuries benefits – whether necessarily "paid … in respect of" the relevant accident
In each case, compensation was paid to a claimant following an industrial accident. The Secretary of State issued certificates of recoverable benefits under the Social Security (Recovery of Benefits) Act 1997 and recovered from the compensators benefits paid to the claimants following the accidents. The compensators appealed against the certificates, under section 11(1)(b) of the 1997 Act, contending in each case that benefits listed in the certificates, including industrial injuries benefits, had been "paid otherwise than in respect of" the industrial accident. All three appeals were allowed by tribunals. The Secretary of State appealed to the Commissioners on the ground that the industrial injuries benefits had been expressly awarded on the basis that the claimants had suffered personal injury caused by the industrial accidents and that the benefits had therefore necessarily been paid in respect of the accidents, even if evidence showed that they ought not to have been paid at all.
Held, dismissing the appeals, that:
- in the context of the 1997 Act, benefits that had been paid but ought not to have been paid could not be said to have been "paid … in respect of" a relevant accident, injury or disease because it had not been the intention of Parliament that a compensator should be obliged to reimburse the Secretary of State for benefits mistakenly paid;
- therefore, the tribunals had been entitled to reach conclusions that were inconsistent with the awards of benefit and implied that benefit ought not to have been paid.
[Note: This case was determined at the same time as the case reported as R(CR) 2/02.]
DECISION OF A TRIBUNAL OF SOCIAL SECURITY COMMISSIONERS
Mr. Richard Drabble QC (instructed by the Solicitor to the Departments of Social Security and Health) appeared for the Secretary of State for Social Security.
Mr. Mark Turner QC and Mr. Peter Burns (instructed by Berrymans Lace Mawer of Manchester) appeared for Oldham Metropolitan Borough Council.
Mr. Jeremy Stuart-Smith QC and Mr. Christopher Kennedy (instructed by Keoghs of Bolton) appeared for Tarmac Roadstone Northwest.
Mr. Anthony Goldstaub QC (instructed by Whitfield Hallam Goodall of Batley) appeared for Trefoil Steel Co. Ltd.
The injured persons neither appeared nor were represented.
Decision
- We heard these three appeals together (with a fourth case, CCR/2312/2000, in which we give a separate decision) because each raises the question whether, on an appeal under section 11 of the Social Security (Recovery of Benefits) Act 1997, a tribunal is entitled to reach a decision that implies that benefit was wrongly awarded to the victim of the relevant accident, injury or disease.
- In these three cases, the benefits in issue are industrial injuries benefits expressly awarded on the basis that the claimants had each suffered personal injury caused by an industrial accident. The Secretary of State submits that the benefits were therefore necessarily "paid … in respect of" the accident or injury and, insofar as they were paid during the relevant period, they are recoverable under the 1997 Act even if evidence shows that they ought not to have been paid.
The facts and preliminary issues
Secretary of State for Social Security v. Oldham Metropolitan Borough Council
- In this case, the compensator's insurers, Zurich Municipal Insurance, settled in November 1997 a claim arising out of an industrial accident on 10 December 1990. The injured person had fallen down a sump hole about 51/2 feet deep, striking his back against a protruding valve casing and landing on a concrete floor. He claimed and was paid benefits in respect of incapacity for work throughout the relevant period of five years after the accident, being paid statutory sick pay, followed by invalidity benefit and then incapacity benefit. He was also paid disablement pension from 27 March 1991 and mobility allowance from 22 January 1992, followed by the mobility component of disability living allowance. The total amount of those benefits paid up to the end of the relevant period was £33,904.24 as shown on a certificate of recoverable benefits issued on 30 October 1997, although this figure was subsequently reduced by £840 and a new certificate was issued in the sum of £33,064.24.
- The compensator, through its insurers, appealed against the certificate on the ground that the disability arising out of the accident would not have lasted longer than a year. The Manchester medical appeal tribunal allowed the appeal on 24 June 1999. It was not in issue that the injured person had remained disabled throughout the relevant period and that he was suffering from depression. However, the tribunal found that he had not suffered a fracture in the accident as at one time suspected and that a subsequent disc hernia was constitutional and, by implication, unrelated to the accident. They accepted that the accident had not been the cause of physical disability after a year and, to the extent that the depression arose out of his physical disabilities, they also concluded that the continuing depression could not be attributed to the accident after that period. The consequence was that the parties agreed that the amount of benefit recoverable from the compensator was only £4,569.54. That sum represented the statutory sick pay, invalidity benefit and disablement benefit paid up to 10 December 1991 and was less than the £5,478.43 deducted under section 8 of the 1997 Act from the damages payable to the injured person (who was therefore entitled to just over £900 out of almost £28,500 to be repaid to the compensator by the Secretary of State). The Secretary of State appeals on the ground that the tribunal erred in reaching a decision that implied that disablement pension had been improperly paid from 11 December 1991. Mr. Drabble did not pursue a second ground of appeal challenging the tribunal's findings of fact.
- Mr. Turner, for the compensator took a preliminary point arising out of the form of the tribunal's decision, which was recorded on a standard form of decision notice that appears to have been designed without any regard to the legislation governing appeals. The form invites the tribunal to decide only whether the victim suffered "injury, sickness or disease" as a result of "the occurrence", what the injury, sickness or disease was and for what period the victim suffered "any injury, sickness or disease" (our emphasis). In this case, the tribunal recorded that the injured person had suffered a soft tissue injury to the spine for one year "as a result of this accident". It appears that, having obtained that ruling, the parties agreed that the amount of compensation recoverable on that basis was £4,569.54. The tribunal recorded that agreement on the decision notice in the space reserved for their summary of grounds. Mr. Turner argued that the conclusion as to the amount of benefits that was recoverable was one reached by the parties and not by the tribunal and that the Secretary of State was not in fact challenging the tribunal's decision and was not entitled to challenge the parties' agreement. He submitted that the agreement involved a review by the Secretary of State under section 10 of the 1997 Act, made in the light of the tribunal's ruling on the preliminary point.
- After he had made that submission, it became apparent that in fact, following the tribunal's decision, the Compensation Recovery Unit had sent a revised certificate in the sum of only £4,288.94. This was because the parties' representatives at the hearing had omitted one day's invalidity benefit from their calculation and had forgotten that only 80% of the statutory sick pay was recoverable. The compensator naturally did not object to that variation of the agreement reached at the hearing. The covering letter began:
"Our previous correspondence refers.
"The Certificate of Recoverable Benefits dated 30.10.97 has been revised in accordance with the decision of the Medical Appeal Tribunal dated 24.06.99. A revised copy is enclosed for your retention.
"As a result of the review a refund amounting to £28,775.30 is due and a cheque to that value will be issued to your office within 14 days of this letter."
As this was not a case where a certificate was being confirmed or revoked, it was the duty of the tribunal under section 12(4)(b) of the 1997 Act to "specify any variations which are to be made on the issue of a fresh certificate under subsection (5)" and it was the duty of the Secretary of State to issue a fresh certificate under subsection (5)(b). This certificate was plainly issued under section 12(5)(b), rather than under section 10(2)(b), because the second paragraph of the Compensation Recovery Unit's letter says so. The Unit had correctly construed the tribunal's decision as a decision that the certificate was to be varied to include all listed benefits paid before 11 December 1991. That was implicit in the decision and had the tribunal said less than that they would have been in breach of the duty imposed by section 12(4). The letter was drafted with section 14 in mind and we consider that the use of the word "review" in the third paragraph of the letter was simply a mistake and that the word "appeal" should have been used. Section 14, we note, applies where any fresh certificate is issued following either a review or an appeal.
- Accordingly, we reject Mr. Turner's preliminary point. The Secretary of State's appeal is a proper challenge to the tribunal's decision, it being submitted that the tribunal erred in implicitly finding that disablement benefit paid after 10 December 1991 had been wrongly paid. The Appeal Service may wish to consider redesigning the standard decision notice for decisions under the 1997 Act.
- One consequence of investigating Mr. Turner's preliminary point was that it transpired that fresh certificates and refunds had also been issued in the other two cases before us where the Secretary of State had appealed. We do not wish to encourage the Secretary of State to defer the issue of a fresh certificate or refund pending an appeal but there does arise the interesting question whether, in the event of being successful on an appeal, he is entitled to recover any refund from a compensator or, in a case where the fresh certificate leads to a refund of a section 8 deduction, an injured person. Happily, it is not necessary for us to decide that question. Mr. Drabble, Mr. Stuart-Smith and Mr. Goldstaub all urged us to decide the point of principle arising in these cases even if the Secretary of State had no right to recover the refunds and we consider that we are entitled to do so, adopting the approach taken by the House of Lords in public law cases as explained in Regina v. Secretary of State for the Home Department, Ex parte Salem [1999] 1 AC 450.
Secretary of State for Social Security v. Tarmac Roadstone Northwest
- In this case, the compensator's insurers, Eagle Star Insurance (now Zurich Commercial Insurance), settled in May 1998 a claim arising out of an industrial accident on 20 November 1993. The injured person was hit by the bucket of an excavating machine and knocked against a crash barrier. He sustained injuries to his right shoulder, right chest, right arm, left knee and leg. Statutory sick pay was paid up to 14 February 1994 after which he returned to work. He ceased work again in June of that year and presumably claimed statutory sick pay again, although that is not relevant to this case, because statutory sick pay paid after 5 April 1994 is not recoverable. From 14 January 1995 he was paid invalidity benefit followed by incapacity benefit. He was also paid disablement pension from 9 March 1994. The total amount of benefits paid during the relevant period was, according to the certificate of recoverable benefits, £21,662.09.
- The compensator, through its insurers, appealed against that certificate, arguing, on the basis of an orthopaedic surgeon's report, that the claimant was fit for work six weeks after the accident and that all effects of the accident would have passed entirely after a period of 12 to 15 months from the date of the accident. The Manchester appeal tribunal accepted that submission in a most unsatisfactory decision which did not include any clear findings or reasoning and did not even identify clearly the recoverable benefits, although it was recorded that counsel for the compensator had conceded that "the payments in respect of statutory sick pay were recoverable".
- The Secretary of State originally appealed on the ground that the tribunal erred in taking account of medical evidence suggesting that the injured person had not been suffering from the effects of an industrial accident at the time benefit was paid to him and on the ground that the tribunal had given inadequate reasons for their decision. It appears that the certificate of recoverable benefits issued after the hearing required recovery of 80% of the statutory sick pay paid to 14 February 1994 and the disablement benefit paid to 31 January 1995. Mr. Stuart-Smith accepted that that sum was recoverable and Mr. Drabble was content to accept that the new certificate did reflect the tribunal's decision. Mr. Drabble was also content not to pursue the challenge to the adequacy of the tribunal's reasoning. He submitted that the tribunal had erred in holding that the disablement benefit paid after 31 January 1995 was not recoverable. He also submitted that the tribunal had erred in deciding that the claimant was capable of work and that invalidity benefit was for that reason not recoverable. However, he accepted that, in respect of the period from 1 February 1995, the tribunal's finding that the claimant's disability had ceased to be due to the accident was sufficient to show that invalidity benefit was not paid in respect of the accident so that, even if the tribunal had not been entitled to decide that the claimant had not been incapable of work, the invalidity benefit would not have been recoverable. For the purposes of the appeal, he was also prepared to accept that, even if the claimant was incapable of work for the short period from 14 January 1995 to 31 January 1995, the relevant accident was not a contributory factor. On the facts of this case, that is arguably inconsistent with the finding that the claimant was still suffering from some disablement due to the accident during that period but it could have been argued that the disability was so slight by then as not to have been a significant cause of the incapacity and it is on that basis that we decide the case. Accordingly, all that was in issue before us was the disablement benefit paid after 31 January 1995.
Secretary of State for Social Security v. Trefoil Steel Co. Ltd.
- In this case, the compensator's insurers, the Iron Trades Insurance Co. Ltd., settled on 20 July 1998 a claim arising from an industrial accident on 14 September 1994. The injured person was hit on the top of his head by a roof panel and suffered a head injury and strain to his neck. He was absent from work for ten days and then returned to work on or about 26 September 1994. In October 1994, he left to work for other employers. When a temporary contract expired, he claimed incapacity benefit from 22 July 1995 and this continued in payment until the end of the relevant period. He was incapable of work because he had lost his sight. He had claimed and been paid disablement benefit, including constant attendance allowance, from 28 December 1994, disability living allowance, consisting of both components, from 31 May 1995 and incapacity benefit from 22 July 1995. The total amount of those benefits paid during the relevant period was, according to a revised certificate of recoverable benefits, £45,309.67.
- The compensator, through its insurers, appealed against the revised certificate. The Leeds appeal tribunal noted that the injured person's loss of sight had at first been attributed to the relevant accident. However, they accepted powerful medical evidence, following further investigations, to the effect that the loss of vision was coincidental and could not be attributed to the relevant accident. Accordingly, in a particularly well-reasoned decision, they held that nothing was recoverable by the Secretary of State. The Secretary of State originally appealed on the ground that the tribunal had effectively reviewed the decision in respect of disability living allowance and had implied that the disablement pension had been wrongly paid. It was also submitted that the tribunal wrongly had regard to the European Convention on Human Rights. Mr. Drabble conceded that the tribunal were entitled to reach the decision they did in relation to disability living allowance and incapacity benefit because the tribunal's decision as to causation did not impugn the awards. He also conceded that the tribunal were entitled to have regard to the Convention as an aid to construction even though section 3 of the Human Rights Act 1998 had not been brought into force. However, he submitted that the tribunal had nonetheless erred in holding that the disablement benefit was not recoverable. The compensator replies that the tribunal were entitled to reach the decision they did and that they were entitled to consider the Convention although it was unnecessary to do so.
- Mr. Drabble conceded that, on any footing, the care component of disability living allowance ought not to have been paid to the claimant without adjustment while he was in receipt of constant attendance allowance (regulation 6 of, and paragraph 5 of Schedule 1 to, the Social Security (Overlapping Benefits) Regulations 1979). It also appears that, in respect of the year 1996-97, the rates of the care component and mobility component of disability living allowance were transposed in the certificate.
The background to the 1997 Act
- Until 1989, there was no provision allowing the Secretary of State to recover benefits paid to a victim in consequence of a tort. When computing the amount of special damages payable by a tortfeasor, the victim might, depending on the benefit in question, have to give credit against special damages for loss of earnings for all or one half of the benefits received to the tortfeasor. Other benefits were ignored in the computation of damages. The result was that the payment of benefit either left the victim better off financially than he or she would have been but for the accident or else reduced the amount of damages payable by the tortfeasor, or both.
- Section 22 of, and Schedule 4 to, the Social Security Act 1989 (later consolidated as Part IV of the Social Security Administration Act 1992) provided for the first time a scheme for the recovery by the Secretary of State of benefits paid during the relevant period, which, as now, was the period beginning on the date the accident or injury occurred or the claimant first claimed benefit in respect of the disease and ending five years later or on the date the compensation was paid, whichever was the earlier. Under this scheme, the Secretary of State issued a "certificate of total benefit" listing the "relevant benefits paid or likely to be paid to or for the victim during the relevant period in respect of [the] accident, injury or disease" and the compensator was then obliged to deduct that sum from the total amount of compensation due to the victim and pay it to the Secretary of State. The victim received only the balance. Both the compensator and the victim had a right of appeal against a certificate but it is not surprising that the majority of appeals were brought by victims. Compensators had no real interest in the amount of deduction as the total amount payable by them was the same however great the deduction.
- We were referred to a number of cases decided under the 1989 and 1992 Acts. In Hassall v. Secretary of State for Social Security [1995] 1 W.L.R. 812 (also reported as R(CR) 1/95), the claimants had been in receipt of benefits including income support before the relevant accidents on the basis that they were available for work. After the accident, they received income support on the basis that they had become incapable of work. The Court of Appeal held that the post-accident benefits were paid as a direct consequence of the accidents and were therefore recoverable. However, the Court recognised that it was unfair that the benefits should be recoverable out of general damages for pain and suffering in a case where there could be no claim for loss of earnings. The remedy, they held, was for the injured person to claim special damages for loss of the non-recoupable benefits. That, however, was not a complete solution in a case where the rate at which the post-accident benefits was paid was greater than the rate at which the pre-accident benefits had been paid.
- In CCR/8023/1995, the injured person's compensation claim was settled on the basis that he had lost earnings only for 18 months after the relevant accident because the exacerbation of a previous knee injury had lasted only for that period. However, he had been awarded reduced earnings allowance in respect of the relevant accident up to the date when the compensation was paid. He challenged the certificate of total benefit, arguing that reduced earnings allowance should have been included only in respect of the period covered by the special damages for loss of earnings. The Commissioner rejected that argument, holding that the reduced earnings allowance had been paid only because there was an assessment of disablement in respect of the relevant accident and it did not matter that the injuries were not wholly referable to the relevant accident. It is to be noted that the injured person did not argue that he had not been entitled to the reduced earnings allowance throughout the period in respect of which it was awarded. His case had, however, been settled on a basis that was inconsistent with the award of benefit.
- In CCR/5336/1995, the claimant had been in receipt of invalidity benefit following an accident but challenged the certificate of total benefit on the ground that, after a period of time, his incapacity for work was due not to the remaining effects of the relevant accident, which gave rise only to minor disablement, but to an unrelated stomach disorder developed since the accident. It was held that such a challenge was permissible. Similarly, in R(CR) 1/01, it was held to be permissible to challenge a certificate of total benefit on the ground that, after a period of aggravation due to the relevant accident, the condition causing the claimant's incapacity for work was due solely to the worsening effects of an injury suffered before the relevant accident. In both cases, the question was whether the relevant accident had, during the material period, been an effective cause of the claimant's incapacity for work.
- The 1989 scheme was widely criticised because benefits were recoverable from injured persons not only against special damages but also against general damages for pain and suffering or, in Scotland, solatium. However, it is important to observe that that situation arose through two distinct causes. It could arise because the recoverable benefits exceeded the amount of any possible claim for special damages or, in Scotland, financial loss, notwithstanding the suggestion made in Hassall, or because a case was compromised on a basis that was different from the basis on which benefits were claimed and paid (as in CCR/8023/1995).
The 1997 Act
- The 1997 Act was a response to the perceived unfairness of the earlier scheme. Section 1(1)(b) and (4)(c) provides that "recoverable benefit" consists of "listed benefits [that] have been, or are likely to be, paid to or for [an injured person] during the relevant period in respect of the accident, injury or disease". Under section 4, a "certificate of recoverable benefits" is issued by the Secretary of State before any compensation is paid to the injured person. The compensator is liable under section 6 to pay to the Secretary of State the whole sum specified in the certificate. Under section 8, the compensator is entitled to reduce the compensation payable to the injured person by setting the amount of certain benefits against appropriate heads of special damage or financial loss. However, the balance of the cost of recoverable benefit is borne by the compensator. Section 11(1)(b) provides that an appeal may be brought on the ground "that listed benefits which have been, or are likely to be, paid otherwise than in respect of the accident, injury or disease in question have been brought into account".
- One crucial practical difference between the 1997 Act and its predecessors is that, under the 1997 Act, it is the compensator, rather than the injured person, who has the interest in challenging recovery when compensation has been paid on a basis that is inconsistent with the basis on which benefits were awarded. That has major practical implications for the way in which challenges are made. Compensators are not inhibited in the way that claimants are from suggesting that benefits ought not to have been awarded.
The arguments on the appeals
- Mr. Drabble submitted that benefit is "paid …. in respect of the accident, injury or disease" for the purposes of sections 1(1)(b) and 11(1)(b) in every case where an adjudicating authority has validly awarded benefit and has attributed the condition giving rise to the entitlement to the relevant accident, injury or disease. He accepted that, in relation to non-industrial incapacity benefits, the approach taken in CCR/5336/1995 and R(CR) 1/01 remains good law and that a compensator may allege that the claimant's incapacity was not caused by the relevant accident, injury or disease. However, he submitted that, in a case where entitlement to benefit is dependent on the claimant being incapable of work, it is irrelevant in determining whether the benefit was paid in respect of the relevant accident, injury or disease whether the claimant was actually incapable of work as long as the disablement giving rise to the finding of incapacity was attributable to the accident, injury or disease. He further submitted that it was irrelevant whether, in relation to industrial injuries benefits, it was shown after the award that the claimant was not in fact suffering disablement as a result of the relevant accident.
- In the Secretary of State's grounds of appeal in each of these cases, reliance was placed on the decision of the Court of Appeal in Secretary of State for Social Security v. Harmon and others [1999] 1 WLR 163 (also reported as R(CS) 4/99) in which it was held that "paid" in section 6(1) of the Child Support Act 1991 meant "actually paid" rather than "lawfully paid". It was submitted that the tribunals in the present cases had erred in considering whether benefit had been "properly paid". Mr. Drabble, however, did not place Harmon at the centre of his argument. He pointed out that Millett LJ, with whom the other members of the Court agreed, said at page 171E:
"In my judgement, the primary meaning of the word 'paid' is 'actually paid'. But I acknowledge that this primary meaning will readily yield to the context."
Mr. Drabble therefore accepted that, while in his submission the primary meaning of the phrase "paid …. in respect of" was the meaning for which the Secretary of State contended, it was necessary for us to consider the context in which that phrase appears in the 1997 Act, although he submitted that the context still suggested that the Secretary of State's construction was correct. Mr. Goldstaub and Mr. Stuart-Smith, whose submissions were adopted by Mr. Turner, both submitted that the phrase was ambiguous and that the context indicated that the meaning was the one for which the compensators contended. All parties were agreed that the context in which Harmon was decided was wholly different from the context with which we are concerned and that the factors influencing the Court of Appeal's decision are not present in the cases before us. We agree that Harmon is of little assistance in the present case and we do not consider it is necessary to decide whether the phrase "paid …. in respect of" has a primary meaning that may yield to the context or whether it is simply ambiguous. Our task is to give the phrase the meaning that we consider Parliament intended it to have and, on any view, it is necessary for us to look at the context in order to ascertain that meaning.
- The notices of appeal also referred to the decision of Mrs. Commissioner Brown in C6/99(CRS). However, that decision has recently been reversed by the Court of Appeal in Northern Ireland in Eagle Star Insurance v. Department for Social Development (February 12, 2001). The case arose out of a road traffic accident on 17 October 1996. The injured person was driving his own lorry at the time of the accident but he had been in receipt of income support on the basis that he was available for and capable of work and he made no claim for loss of earnings when he sued the other driver. His case went to trial and he was awarded £3,000 general damages in respect of his injuries and £3,735 special damages in respect of the recovery and repair of his lorry. After the accident, the injured person submitted medical certificates and was paid income support on the basis that he was incapable of work. Following a medical examination, an adjudication officer decided that he was capable of work from 22 December 1997. Less than a week earlier, a certificate of recoverable benefits had been issued under the Social Security (Recovery of Benefits) (Northern Ireland) Order 1997, which is indistinguishable from the 1997 Act, including all the income support paid and expected to be paid to the injured person. The injured person appealed against the adjudication officer's decision and, on 6 March 1998, a social security appeal tribunal allowed the appeal and held that he was incapable of work from 22 December 1997. The compensator had, meanwhile, applied unsuccessfully for a review of the certificate of recoverable benefits and appealed to a medical appeal tribunal. When the case came before the medical appeal tribunal on 9 July 1998, they held that they were bound by the finding of the social security appeal tribunal to find that the injured person was incapable of work and they dismissed the appeal. Mrs. Commissioner Brown dismissed the compensator's insurers' appeal, holding that the medical appeal tribunal could not go behind the finding of the social security appeal tribunal. In the Court of Appeal in Northern Ireland, leading counsel for the Department for Social Development accepted that the procedure for determining entitlement to benefit was separate from the procedure for determining the liability of a compensator to make payments under the 1997 Order and therefore no attempt was made to defend the Commissioner's decision on the issue that arises before us. It was consequently held that a tribunal deciding a case under the 1997 Order was entitled to reach a decision that was inconsistent with a decision awarding benefit.
- Mr. Drabble made it clear that the concession made in that case is not made in the cases before us. He pointed out that the Court had not had to grapple with industrial injuries benefits which are necessarily linked to a particular accident, although he accepted that, as there had been no other potential cause of the injured person's disablement in that case, it necessarily followed that, if the injured person had not been incapable of work due to the relevant accident, he had not been incapable of work at all. Although Mr. Drabble did not positively assert that the decision of the Court of Appeal in Northern Ireland was wrong, it seems to us that his submissions are plainly inconsistent with the decision of the Court. While decisions of the Court of Appeal in Northern Ireland are not binding on us, it would be unsatisfactory if identical legislation were to be held to have different meanings in Great Britain and in Northern Ireland.
- Mr. Drabble placed much weight on section 60(1) and (2) of the Social Security Administration Act 1992, which was in force at the time the relevant awards were made but has since been replaced by section 17 of the Social Security Act 1998. Section 60(1) and (2) provided:
"(1) Subject to the provisions of this Part of this Act, the decision of any claim or question in accordance with the foregoing provisions of this Part of this Act shall be final; and subject to the provisions of any regulations under section 58 above, the decision of any claim or question in accordance with those regulations shall be final.
"(2) Subsection (1) above shall not make any finding of fact or other determination embodied in or necessary to a decision, or on which it is based, conclusive for the purposes of any further decision."
Mr. Drabble submitted that the effect of section 60 was that the decision of a competent adjudicating authority was final as to the correctness of an award and that, subject to any review or appeal, the award was conclusive. We accept that the award is final as regards the claimant's entitlement. However, Part II of the Act is concerned only with the determination of a claimant's entitlement. As Mr. Stuart-Smith submitted, finality and conclusiveness are different. The distinction is expressly made by subsection (2) which provides that the fact that a decision is final does not make any finding embodied in it, or necessary to it, conclusive, even as between the claimant and the Secretary of State. In our view, section 60 does not advance Mr. Drabble's case.
- Mr. Stuart-Smith and Mr. Goldstaub both submitted that it was manifestly unfair to bind a compensator by a decision as to entitlement to benefit to which he was not a party. They pointed to section 12(3) of the 1997 Act and submitted that the reason why a tribunal was required only to "take account of" a decision of the court and not necessarily to follow it was that it would be unfair to bind the Secretary of State to a decision to which the compensator and the injured person were parties but he was not. They referred to the Parliamentary debate (HL, vol. 577, col. 114) in which the Minister expressly relied on the maxim res inter alios acta alteri nocere non debet when defending the provision. Mr. Stuart-Smith argued that what is sauce for the goose is sauce for the gander and Parliament would have used clear words if, in the same Act, it was intended to bind the compensator by a decision to which the Secretary of State and the injured person were parties and the compensator was not. That is a powerful argument to which Mr. Drabble had no effective response.
- Mr. Goldstaub submitted that section 12(3) was wholly unnecessary if Mr. Drabble's contention were right and that section 11(1)(b) would give no effective right of appeal. However, we do not accept those submissions because, even if Mr. Drabble's submission were accepted, those provisions would have value in cases of dual causation relating to benefits other than industrial injuries benefits (as in CCR/5336/95 and R(CR) 1/01).
Conclusion
- Much of the argument has revolved around the scope of appeals under section 11(1)(b) but we accept Mr. Drabble's submission that the scope of the appeal is dependent on the scope of the Secretary of State's power to include benefits in a certificate. If the Secretary of State is entitled to include in the certificate all benefits that have been a paid, even if they ought not to have been paid, then the scope of any appeal is correspondingly narrow. The real issue is whether Parliament intended to impose on compensators a liability, that they had not previously had, to recompense the Secretary of State for benefits that ought not to have been paid because either the relevant accident or disease had not caused the relevant disablement or because the claimant had not been as disabled or incapable as the adjudicating authority had found.
- We have already mentioned that the 1997 Act was passed in response to criticisms of the scheme under the 1989 and 1992 Acts which had the effect that benefits could be recovered from an injured person's general damages for pain and suffering or, in Scotland, solatium. We have also said that that had two causes. The first was that the amount of benefits might exceed any possible claim for special damages or financial loss. In those cases it seems to us that the unfairness is obvious and it is equally obvious from the scheme of the 1997 Act that that Act was intended to provide a remedy by putting the burden of reimbursing the Secretary of State on the tortfeasor, instead of the victim, to the extent that the amount of recoverable benefits exceeded the amount of relevant special damages. That was a new burden placed on compensators in addition to the burden of paying damages to the victim.
- However, the other cause of benefits being recoverable out of a victim's general damages or solatium – inconsistency between the basis on which benefits were paid and the basis on which compensation was paid – did not in our view produce substantive unfairness at all. It was the natural, and no doubt intended, consequence of the Secretary of State not being bound by the result of proceedings between the victim and the tortfeasor to which he was not a party. Section 12(3) of the 1997 Act makes it plain that the Secretary of State is still not to be bound by the result of proceedings between the victim and the tortfeasor. There was therefore nothing in the scheme under the 1989 and 1992 Acts that might have suggested to Parliament that it was necessary to impose upon compensators a further burden by enabling the Secretary of State to recover from them benefits that ought not to have been paid. Had Parliament intended to impose that new burden on compensators, they would, in our view, have used clear words.
- Instead, there are indications in the Act that they had no such intention. Firstly, the practical effect of imposing such a burden would have been to bind the compensator by the result of a decision of the Secretary of State himself in respect of which the compensator had no right to make representations or the result of a decision of a tribunal or Commissioner in proceedings between the Secretary of State and the victim to which the compensator was not a party. Just as it would prima facie be unjust for the Secretary of State to be bound by a decision in proceedings between a compensator and a victim to which he was not a party, so prima facie it is unjust for a compensator to be bound by a decision to which he is not a party. In the absence of clear words to the contrary, it must be presumed that Parliament did not intend that result.
- Second, if Parliament had intended to require compensators to reimburse the Secretary of State for benefits mistakenly paid, we would have expected some limits to be placed on the Secretary of State's right of recovery. It would be surprising enough if Parliament had legislated to enable the Secretary of State to recover payments of benefits awarded under a mistake of fact to a genuine claimant in circumstances such as those in the Trefoil Steel case before us. It would be more surprising if the Secretary of State were entitled to recover from a compensator benefits that were recoverable from a claimant under section 71 of the 1992 Act because they had been paid in consequence of fraud or any other misrepresentation as to, or failure to disclose, a material fact. It would also be surprising if there could be recovery against a compensator in a case where it was clear on the face of the certificate of recoverable benefits that benefit had been wrongly awarded, as in the case of the overlapping benefits in respect of which recovery was originally sought in the Trefoil Steel case, or if there could be recovery when benefit had been awarded under an error of law, whether patent or latent. We would also expect there to be some provision enabling those being sued for compensation at least to make representations as to claimants' entitlement to benefits once they knew they might be affected by the awards. Not only is there no such provision in the legislation but Mr. Drabble told us that the Compensation Recovery Unit does not have a settled practice of passing on to those responsible for adjudicating on claimants' entitlement to benefits information received from compensators, even where the information suggests that the claim is fraudulent. None of these practical issues is addressed in the legislation.
- All these considerations persuade us that, in the context of this legislation, benefits that ought not to have been paid at all cannot be said to have been "paid …. in respect of" a relevant accident, injury or disease. It follows that, in considering whether payments were made "otherwise than in respect of the accident, injury or disease in question", a tribunal is entitled to reach a conclusion that is inconsistent with the award of benefit. Such a decision does not actually affect the award of benefit but it is plainly open to the Secretary of State to consider in the light of it whether an award should be superseded or revised and whether any overpayment is recoverable under section 71 of the 1992 Act.
- We dismiss the Secretary of State's appeals.
Date: 15 May 2001 (signed) Judge K. MACHIN QC
Chief Commissioner
(signed) Mr. W. M. WALKER QC
Commissioner
(signed) Mr. M. ROWLAND
Commissioner
