Commissioner's file: CG 1195 2002
DECISION OF THE SOCIAL SECURITY COMMISSIONER
- I dismiss the appeal. For the reasons below, the decision of the tribunal is not wrong in law.
- The Secretary of State for Work and Pensions is appealing with permission of the chairman from the decision of the Cardiff appeal tribunal on 26 June 2001 under reference U 03 188 2000 06791.
- I held an oral hearing of this appeal at Cardiff Civil Justice Centre on 17
September 2002. The appellant was represented by Mr V Lewis of the Office of the Solicitor to the Department for Work and Pensions. The claimant and respondent (whom I call Mrs W) attended and was represented by Ms E Davies of Jones Mordey Davies, solicitors, Cardiff.
Background to the appeal
- Mrs W was awarded invalid care allowance from 24 August 1998. She had given up a long-term job to look after her mother during her last illness and also her father when he came home from hospital in May 1998 after a stroke. Her evidence was that she claimed on the advice of a social worker. The social worker had helped her make the claim. Some time later she was also asked to help care for a friend of many years (whom I call Mrs J) who had lost a leg through diabetes. Mrs J had been offered help through the Independent Living Scheme. Mrs Wand her husband met a local organiser for the Scheme (whom I call M) at Mrs J's house. Having discussed her position with M, Mrs W started working for Mrs J. She earned, at first, about £54 a week. She did not know that there was an earnings limit of £50 (at that time) for invalid care allowance. She did not tell the Department about her earnings or that she was working.
- The Department carried out a review of Mrs W's entitlement to invalid care allowance in August 2000. When asked, she told the relevant office of the Department about her work and earnings over the telephone. The Department stopped the invalid care allowance. Mrs W promptly reduced her earnings below the earnings limit and reclaimed. But the Department sought a supersession of the previous entitlement. A formal decision was taken that she was not entitled to invalid care allowance from and including 6. 9. 1999 until payment was stopped from 20. 8. 2000. The formal decision stated that her failure to tell the Department that she was working had resulted in an overpayment of £2006.05, and that "you have to repay this overpayment". Mrs W appealed.
The tribunal decision
- The tribunal confirmed that there had been an overpayment of the amount stated. But it accepted Mrs W's evidence about what happened and decided that the overpayment was not repayable.
- It is relevant to note that the Secretary of State was not represented by anyone at the oral hearing by the tribunal. The burden of proof in this case is on the Secretary of State. It therefore had to be satisfied by the papers put before the tribunal. As he was not represented at the tribunal, he could not offer any further evidence or representations about the case, nor was he in a position to ask any questions of the claimant or witnesses. That is important because the record of proceedings shows that the tribunal heard relevant evidence from Mrs W, Mr W, Mrs J and Mr J and because, as I note below, the written submission to the tribunal was based on a number of assertions for which the Secretary of State provided no specific evidence. As Commissioners have said repeatedly, if a party does not attend a hearing, he or she cannot complain if the tribunal bases its decision on the evidence that is produced by those that do attend. Tribunals have an investigate jurisdiction. But they must exercise it independently and impartially. It is not their task to make good omissions occasioned by the non-attendance of the Secretary of State or any other party.
- The tribunal prepared a full statement of material facts and reasons for its decision. The statement produced to me is recorded as being the second statement as a first statement appears to have been lost. Neither party has at any time seen or heard of a first statement, so I accept this statement as the proper statement of the tribunal.
The relevant part of the tribunal's statement is as follows:
"I confirm the decision that [Mrs W] was not entitled to benefit and that there was an overpayment of benefit. In order for me to decide that the overpayment was recoverable I had to be satisfied on 2 counts. One was that, in the circumstances of the case, disclosure was reasonably to be expected, and the other was that the overpayment resulted from the non-disclosure. I find the latter proved. In relation to the former, the Secretary of State relied on the information given to Mrs W and normally that would be enough to ensure that it was reasonable for disclosure to be made. In this case, however, Mrs W was not working at all when she started to receive invalid care allowance and, prior to receiving any earnings as a carer, she attended a meeting with M of the Cardiff and Vale Coalition of Disabled People under the Independent Living Scheme. Without, for the moment, commenting further on what was said at that meeting, it is clear the Mrs W regards M as an authorised official whose advice could be relied on. The titles "Independent Living Scheme" and "Cardiff and Vale Coalition of Disabled People" are such as to go a long way to justify that belief. Whether or not M said anything in such a way as to indicate that Mrs W's earnings would not affect her invalid care allowance is not crucial. Certain it is that this was the understanding that Mrs W formed at the time and M's position as an official arranging for care for which such allowances are payable makes it reasonable for her views to be regarded as authoritative. Mr and Mrs J were not able to help me greatly at to what was said at the meeting in relation to invalid care allowance, but that is perhaps not surprising since their centre of interest would relate principally to the arrangements for Mrs J's care.
Having regard to the fact that it is reasonable to expect the provisions of a scheme such as the "Independent Living Scheme" might have its own rules and exceptions from more general provisions and having regard to all the circumstances, I conclude that disclosure was not reasonably to be expected of Mrs W and the overpayment is not recoverable. This decision extends to the period after earnings increased - the understanding (or, more aptly, the misunderstanding) continued and the money was being paid by an official agency which would be expected to know and understand the official rules."
Grounds of appeal
- The Secretary of State sought and was granted permission to appeal on the grounds that the tribunal had applied the wrong test to whether disclosure was reasonably to be expected. The application cited CSB 957 1987, CF 26 1990 and CIS 14839 1996 in support of its approach. The application also asserted the Secretary of State had provided evidence of the instructions given to the claimant, and that a reasonable person would have read those instructions. There is also a point about a technical defect in the formal decision stopping benefit. I return to that later.
The leaflet
- I deal with the leaflet first. The secretary of state's representative, in the submission to the tribunal, asserted that Mrs W had received a leaflet about reporting changes of circumstances with her award of invalid care allowance (documents 1e and 1f). No evidence is offered in that submission that this was so. The assertion was made again in the grounds of appeal to the Commissioner, and by Mr Lewis in his submission to me. On each occasion these were assertions that a particular form of leaflet would have been provided not evidence that it was provided. That is important because the tribunal heard clear evidence that Mrs W had not seen the leaflet. It was accompanied by evidence of how Mrs W and her husband dealt with post. There was no equivalent evidence from the Department. On that basis, the only conclusion for which the tribunal had evidence was that she did not see the leaflet. Its contents were therefore irrelevant to the decision.
- Nonetheless, I add a further comment as arguments based on the contents of the leaflet were pressed. It is that nowhere in the leaflet does it state that Mrs W or any other claimant should report earnings exceeding £50 (or any other figure). She would not have had specific notice of the earnings limit even if she had received and read the leaflet. Instead, the leaflet starts as follows:
Important changes you must tell us about
You must write and tell us straight away if anything changes about yourself or the disabled person you are looking after.
That cannot mean literally what it says - anything. Otherwise there would be an endless stream of irrelevant information deluging the Department. For example, does a claimant have to report that a relative is coming to stay with the disabled person for the weekend or the death of a pet budgerigar? That is patently too wide, and any reasonable person reading it would, in my view, be fully justified in not taking it literally. But if "anything" does not mean anything, what does it mean? The leaflet goes on more usefully to set out a long list of things, under the heading "In particular, you must tell us about any of these changes". Nowhere in the list of "these changes" does it mention that the claimant must report the fact that her earnings exceed the weekly limit. Instead, it requires the claimant to report :
"In particular, you must tell us about any of these changes:
...
You start work as an employed or self-employed persons, either full time or part time / temporary or casual, whatever your earnings.
..."
It was this failure to report on which the Secretary of State based the repayment decision and on which the case was argued before the tribunal and me.
The test of failure to disclose
- For the Secretary of State to establish that Mrs W is liable to repay the overpaid invalid care allowance, it must be shown that (in the words of section 71 of the Social Security Administration Act 1992) she "failed to disclose ... any material fact". If that is shown, then it is conceded that any overpayment could be recoverable. The tribunal found and decided that the overpayment was not recoverable on this ground, and Ms Davies sought to confirm that decision. I add that this is not a case where the Secretary of State can rely on misrepresentation in the alternative. The invalid care allowance was paid direct, so Mrs W had not signed the usual counterfoils.
- The leading analysis of the requirements of section 71 on a claimant is that in R(SB) 54/83, paragraph 13. This is rightly noted in the submission to the tribunal. Two of the six factors identified by the Commissioner in that decision are relevant here: was the failure to disclose "related to a material fact" and was the disclosure of that fact by Mrs W "reasonably to be expected"? It was common ground between the parties in the submissions to me that the approach to be taken to the application of the second of those tests is an objective test. The test was set out in CF 26 1990 in the following terms:
"It must be asked whether, given the claimant's knowledge of the receipt of income support, a reasonable man or woman would have considered that it was material. If so, then there would be a duty to disclose even on the part of the claimant who, considered subjectively, might not have the necessary education or literacy to realise that disclosure should be made."
The reference to "knowledge of" is somewhat ambiguous, but it was not disputed by Ms Davies that, in the words of the secretary of state's representative in the written submission, the test is what a reasonable person, knowing the particular circumstances of the claimant, would have expected her to have disclosed.
What was the material fact?
- The formal decision under appeal was that Mrs W had not told the Secretary of State that she had started work. The assumption in the decision of the Secretary of State is that this is "related to the material fact" which caused the overpayment. This was the fact that she had failed to disclose and which it was said was the material fact.
- As I pointed out to Mr Lewis, that is not the reason for the invalid care allowance being overpaid. The reason for the overpayment is that Mrs W earned sums over the weekly limit (then £50) from her work. The formal decision therefore appears to be relying on the wrong fact as material. It is quite clear from the submission of the secretary of state's representative that the material fact in this case was that Mrs W earned more than the weekly earnings limit to qualify for invalid care allowance. That was why her benefit was stopped. But the decision on recoverability was based on another fact - the fact that she started work.
- The question whether a fact is material is a question of law. That is the approach taken by the Court of Appeal in Saker v Secretary of State for Social Services (reported in Appendix to RI 2/88). The test (as given by Nicholls LJ in that case) is that a fact is material if:
"it was one which, had it been known, would have called for serious consideration … and might well have affected the decision."
That decision was not about section 71 and has been criticised as too wide for that section (see Stagg, Overpayments and Recovery of SocialSecurity Benefits, p 99). But I accept it as the approach to be adopted here, at least in marginal cases. The decision was whether Mrs W was entitled to invalid care allowance. The relevant conditions for that benefit are laid down in section 70 of the Social Security Contributions and Benefits Act 1992 and in the Social Security (Invalid Care Allowance) Regulations 1976. On this approach, a fact is material for the purposes of an invalid care allowance award if it is one which, had it been known, would have called for serious consideration of one or more of the conditions in that section and those Regulations such that it might have affected the award. The relevant condition in this case is in regulation 8 of those regulations. A claimant is treated as gainfully employed, and therefore not entitled to the allowance, in any week if her earnings exceed the lower earnings limit for contributions in the previous week. If they do not exceed that amount, then she is treated as not being in gainful employment. Identifying the relevant fact is therefore relatively straightforward, and does not involve opinions or secondary issues. The material fact is whether she had earned more than the set amount in any previous week, not whether she was working at all. There will be cases where there may be doubt about the level of earnings until after the event, so making the fact of earnings relevant in the Saker sense even if not definitely in excess of the limit. But the fact that the claimant is working is not of itself material. The decision of the Secretary of State is therefore wrong in law because it is based on the disclosure of a fact that was not material to the decision.
- Separately from this, there is the point that the Secretary of State made a recovery decision where he should have made a recoverability decision. That was also wrong in law. As the decision of the Secretary of State was wrong in law in any event, I do not pursue this.
The duty on the tribunal
- It follows that the tribunal was right as a matter of law in its conclusion, whether or not it was right in its reasoning, to conclude that the decision of the Secretary of State could not stand. As the Secretary of State was not represented at the tribunal, it could have stopped there and merely allowed the appeal. Instead, it went on to consider whether disclosure could reasonably have been expected. In doing so, it focused on the duty to disclose earnings in excess of the permitted amount, rather than the fact of a job itself. So it looked at the evidence about the claimant's disclosing something that was a material fact, and decided it.
- I have set the decision of the tribunal out in full above. It has two key elements: the particular circumstances in which Mrs W sought and relied on advice about disclosure of her new job, and whether it was reasonably to be expected in those circumstances that she should disclose the earnings from her new job to the Department once she had earned over the limit in a week.
The submissions of the Secretary of State
- The approach of the Secretary of State to these questions was linked closely to the leaflet that she was supposed to have received and also to a proposition put as a proposition of law that she should rely only on oral advice of the Department. I have already rejected the argument based on the leaflet. I add, for the avoidance of doubt, that I also do not accept that a fact can be made a material fact by putting in a leaflet such as this. It is or is not material by reference to the decision to be made.
- I also reject the second approach, namely that she should have asked the Department. The starting point is that Mrs W did not know about the earnings limit. The Secretary of State has never disputed that, or her honesty. The second point is that she did know how much she was earnings, so she knew the material fact, but she did not know it was material. The key question was therefore whether it was or was not reasonable for her not to disclose the fact to the Department. That is, both sides agreed, to be judged objectively in all the circumstances. There were no past dealing that were relevant. Indeed, Mrs W did not know of the allowance at all until the social worker told her. When she first claimed she had no other job or earnings. But she was under a continuing duty to disclose excess earnings from the beginning of the second week of those earnings. This follows from the combination of the Invalid Care Allowance Regulations and the Social Security (Claims and Payments) Regulations 1987.
Did Mrs W act reasonably getting and following M's advice?
- Mrs W was under a duty to do something. Had she done nothing, she would have failed in her duty. In the view of the Secretary of State, the "something" had to be to ask the Department whether she needed to disclose her new job. The Secretary of State could then decide if there was a relevant fact. That was the basis for the decision on recovery. I reject that approach. The Secretary of State does not have unlimited powers to demand information. The Human Rights Act 1998 now affirms that there are limits to the extent to which private information can be demanded by public authorities. As in any other area of law, an individual is not under an unlimited duty to disclose to the Department. He or she is entitled to ask other experts instead, and to rely on those experts. In this case, Mrs W was asked to undertake the new job by M. She asked M for advice, and she relied on that advice. Was that "reasonable in the circumstances"? The tribunal heard evidence from four people at the relevant meeting, and had written evidence from M. It decided in all the circumstances that it was reasonable for Mrs W to rely on M's advice. Its decision on that was clear and based on full consideration of the evidence on that point.
- Was M an expert on whose advice it was reasonable to rely? That must be evaluated in individual circumstances in a case like this. On the general approach, I agree with the view of Stagg (Overpayments, etc, p 87):
"Given the widespread reliance by claimants on lay advisers in relation to benefit matters, firm indication from such an adviser that disclosure was not necessary ought to come into the principle."
Commissioners, appeal tribunals, and the Appeals Service routinely advise claimants and appellants to seek advice from a Citizen's Advice Bureau, a welfare rights office, a trade union, or other expert sources in addition to seeking advice from a lawyer. And the Community Legal Service funding of these agencies is now based on the assumption that they will be used by claimants for advice. If M was an appropriate expert, then it was reasonable for Mrs W to rely on M's advice. If CIS 14839 1996 decides that issue differently, then with respect I disagree with it.
- The tribunal specifically considered this. It took the view that the particular agency of which M was part and the Independent Living Scheme with which the agency was operating were such as to give them assumed expertise about invalid care allowance. That is a question of fact. I see no reason to challenge it in law or, in so far as it is relevant, to doubt it. The tribunal was entitled to take judicial knowledge of the national adoption of Independent Living Schemes by local authorities and the links of that scheme with several government departments. I reject the submission of the Secretary of State that the tribunal was speculating about such schemes as if they were of no significance. They form a central part of both national and local provision of services to people like Mrs J, and the Independent Living Funds set up by the Secretary of State are part of that machinery. I reject that argument by the Secretary of State as well.
- The final attack on the tribunal's decision was that it was inadequate. In the view of the Secretary of State the tribunal failed to note in adequate detail exactly what M told Mrs W. This was linked to a submission based on CIS 6582 1999 that it was what the claimant was told that was relevant, not how the claimant interpreted it. I reject that also (and, if this disagrees with CIS 6582 1999 – and I am not sure it does – then I respectfully disagree). In my view the tribunal dealt with this adequately. It heard several witnesses about that conversation, and it considered in detail how the advice was given and received. In my view, these are questions of fact, not law. The issues about who said what to whom and how are issues to be balanced in deciding the overall issue of the reasonableness of the claimant's actions. In this case the tribunal had adequate evidence for its conclusion. By default, perhaps, in the absence of the Secretary of State, that evidence was not challenged and no contrary evidence was offered. The tribunal has stated clearly what it decided and why it decided it.
My conclusion
- In conclusion, the decision of the tribunal on these issues is largely a matter of fact, taking into account all the evidence. When the evidence - as against assertions - is weighed, I cannot see how it can be said that this tribunal acted without evidence, or perversely. It heard from Mrs W and three witnesses. There is written evidence from M. There is little or no actual evidence from the Secretary of State. Nor did the Secretary of State challenge the evidence produced. Nor can I see how it can be said that the tribunal decision was inadequate. The decision of the Secretary of State was wrong in law as it was based on the failure to disclose something that was not material. The tribunal nonetheless looked at whether the case could be established against the claimant by reference to the right test and the right material fact. It reached a clear conclusion both on the issue of overpayment and on the issue of recoverability. It stated its decision clearly. I do not consider that it has erred in law on either count. I dismiss the appeal.
David Williams
Commissioner
03 October 2002
[Signed on the original on the date shown]
