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PLH Commissioner's File: CIB 920/07
1. SOCIAL SECURITY ACTS 1992-1998
APPEAL FROM DECISION OF APPEAL TRIBUNAL
ON A QUESTION OF LAW
DECISION OF THE SOCIAL SECURITY COMMISSIONER
In this case which was before me as an application by the claimant for leave to appeal against the decision of the Bristol appeal tribunal (Mrs M Street, chairman, sitting alone) on 11 October 2006 it is conceded by the Secretary of State that leave to appeal has to be granted and the tribunal decision set aside as erroneous in point of law. It was an incapacity benefit case where the claimant had been working at the same time as continuing to draw benefit, and the first question was whether he had exceeded the permitted limits for “exempt work”. The chairman’s decision unfortunately embodies a material misdirection in that she held there could be no question of averaging his weekly earnings for this purpose, following the authority of an earlier Commissioner’s decision though that had been overruled by the decision of the Court of Appeal in R(IB) 1/06 Secretary of State v. Doyle  EWCA Civ. 466 on 27 April 2006, where it was held that the Social Security Benefit (Computation of Earnings) Regulations 1996 SI. No. 2745 (which do include a provision for averaging in some circumstances) apply.
I held an oral hearing which had been directed by another Commissioner. The claimant appeared in person and the Secretary of State was represented by Henry Hendron, an employed barrister with the solicitor’s office, Department for Work and Pensions. Both sides consented under rule 11(3) of the Social Security Commissioners Procedure Regulations 1999 SI No. 1495 to my treating and determining the application as a full appeal on the footing that it was appropriate for leave to be granted.
The claimant is a man now aged 57 who had been claiming and receiving incapacity benefit for many years since its introduction in 1995, having been on sickness and invalidity benefit before then on the ground that he was incapable of work because of depression. In 1996 he obtained advice from his local social security office about beginning to do a small amount of work for therapeutic purposes and what effect this might have on his incapacity benefit. At the end of August that year he gave notice that he wished to undertake a very small amount of therapeutic work consisting of giving sedentary conversation classes to mature students on two evenings a week only, for two hours each evening, both the hours and the earnings of this very limited employment being under the permitted limits for “therapeutic work” at that time. A decision was given on 17 October 1996 on the basis of this information, accepting the specified work as “exempt” so that it did not affect his continuing entitlement to incapacity benefit.
He continued to draw this benefit uninterruptedly for a further period of some eight and a half years, until a fraud investigation revealed that he had in fact been working and earning on a consistent basis for extended periods at far higher levels in terms of both hours and earnings than he had ever disclosed to the department, and that on more than one occasion the answers he had given in response to enquiries about whether he was working were untrue. His benefit was stopped and, on the basis of his still having been found “incapable of work” at all material times by examinations for what is now the personal capability assessment, entitlement was recalculated retrospectively to 7 December 1997 applying regulations 16 and 17 Social Security (Incapacity for Work) (General) Regulations 1995 SI No. 311 as from time to time in force, by which a person who actually does work in any day of a week for which he claims incapacity benefit is to be treated as capable (and so disqualified) unless the work, and in particular the hours and earnings, fall within strictly defined limits.
Applying this provision the claimant was found disentitled to a large part of the benefit he had previously been awarded and paid; and a total of over £32,000 was determined to be recoverable from him as an overpayment of benefit caused by his failure to disclose to the department the true facts about the work he was doing and the earnings he was receiving. The revised form of the departmental decision dated 12 July 2006 (pages 229 to 241) dealt with both entitlement and overpayment questions, set out the relevant amounts, dates and reasoning in great detail, and was the decision that came under appeal before the tribunal on 11 October 2006.
After an extended hearing at which the claimant gave evidence and was given a full opportunity to challenge both the principle and the detail of the decisions made and the evidence against him, the substance of the departmental decisions was confirmed, with only relatively minor modifications to the calculations in respect of the work and earnings for particular weeks. The chairman found in essence that despite the answers he had given to departmental enquiries the claimant had in fact been working regularly, repeatedly and frequently for a number of employers during the years being considered; and both his hours and his earnings over extended periods of time had been far in excess of anything he had disclosed in connection with his incapacity benefit. Moreover he had been well aware of the limits, and the terms on which permission had originally been granted to him to undertake therapeutic work without it affecting his benefit, yet from 1997 onwards had failed to report the fact that he was working and had knowingly given misleading answers to enquiries subsequently.
Accordingly subject to the recalculation of the total amount involved the full amount of overpaid benefit was recoverable from him by reason of failure to disclose and misrepresentation: see the chairman’s very full and clear decision notice and statement of reasons at pages 286 to 299, issued respectively on 25 October 2006 and 4 January 2007.
As Mr Hendron for the Secretary of State was right to concede, that decision however unfortunately embodies a material error of law in that the method of calculation used embodied an assessment of the claimant’s actual earnings (which fluctuated) on a week-by-week basis over the whole period at issue, in order to identify those weeks in which he had been over the limits for “permitted work” under regulations 16 and 17. As both the departmental officer giving the original decision on behalf of the Secretary of State and the tribunal then understood it, that was the correct way of carrying out the calculation and, in contrast to the parallel calculation of the number of hours worked where regulation 17 permits averaging over longer than a single week in some circumstances, there was no provision permitting weekly earnings to be averaged: see the express statement to this effect in the chairman’s statement of reasons at page 295.
However this view of the matter has now been held incorrect by the decision of the Court of Appeal in Secretary of State v. Doyle above, which holds that “earnings” for all incapacity benefit purposes are to be construed in accordance with the Computation of Earnings regulations already cited. Since those regulations do contain at paragraph 8 a provision for the calculation of the weekly amount of an employed earner’s earnings which permits a limited amount of averaging in some circumstances, and the weeks to which earnings are attributed may differ, it must follow in my judgment that the tribunal’s decision must be set aside as unsafe, and the calculations of the claimant’s entitlement and of any resultant overpayment will have to be done all over again in accordance with the Court of Appeal’s decision; though what actual practical difference it will all make is impossible to tell at this stage before the recalculations have actually been carried out.
In those circumstances I grant the application for leave and allow the claimant’s appeal against the decision of the tribunal to the extent of setting that decision aside as erroneous in point of law for the reason already explained, and remitting the case in accordance with section 14(8)(b) Social Security Act 1998 for the questions of the claimant’s entitlement to incapacity benefit over the relevant period, and the amount of any consequent overpayment of benefit recoverable from him, to be redetermined with the calculations reworked on the basis of the Court of Appeal’s decision.
I direct that the redetermination is to be carried out by the same tribunal as dealt with the case on 11 October 2006 unless for any reason that is impracticable to arrange within a reasonable time, in which case it will be for the Regional Chairman to give apppropriate procedural directions. I consider it right in this instance for the case to be referred back to the same tribunal as before, since the error of law identified on behalf of the Secretary of State in relation to the Computation of Earnings regulations appears to me the only ground on which the chairman’s decision, given after the comprehensive hearing that took place before her on 11 October 2006, can properly be challenged.
In particular, despite the arguments advanced to me both in writing and orally by the claimant in which he sought to dispute her findings because of what he said were inaccuracies either on her part, or on the part of departmental officers at earlier stages of the proceedings or in correspondence, I was left wholly unpersuaded that there was any arguable ground in law for challenging the very careful and detailed findings of fact embodied in the decision and reasons issued after the hearing of 11 October 2006; and in my judgment the findings of dishonest misrepresentation and failure to make proper disclosure were entirely justified by the evidence and unassailable as a matter of law.
I therefore further direct that on the rehearing and redetermination that will now have to take place the findings embodied in that decision may quite properly be taken by the tribunal as its starting point, unless and except to the extent that the claimant is able to demonstrate by specific evidence that there is good reason for varying or departing from them, which of course he must be given an opportunity to do. He must also be given an appropriate opportunity to demonstrate, by reference to specific documents, a point which he sought to make throughout the appeal hearing before me but I found myself unable to accept as having any validity from what he was then able to produce, that a separate appeal hearing to which he referred as having taken place on 7 February 2007 in other proceedings involving himself and the Weston super Mare District Council (possibly involving housing benefit) were of some potential relevance on the questions of entitlement and recoverability of incapacity benefit at issue in these present proceedings.
Finally I direct the tribunal which will now rehear and redetermine the claimant's appeal against the revised departmental decision of 12 July 2006 that its function is to determine the claimant’s true entitlement to incapacity benefit over the relevant period and the amount (if any) of any overpayments of that benefit which ought in consequence to be legally recoverable from him. Consequently the question of whether the work found to have been undertaken by the claimant actually met the conditions in force from time to time for exempt or therapeutic work at all, quite apart from the question of the number of hours or the amount of earnings involved, is a matter for consideration by the tribunal; and it is not bound on the appeal by what the previous statement of reasons described as a “generous” acceptance of the work done after 1997 as having been properly authorised and “therapeutic”.
The claimant must not therefore assume that this question will again effectively be “taken as read” in his favour at the rehearing, and should be prepared to deal with the question of whether the type of work he undertook after 1997, and the circumstances including the reasons for which he actually undertook it, met the prescribed conditions for exempt or therapeutic work as from time to time in force (the relevant conditions and limits being, according to his own express written and oral submissions to me, matters of which he was throughout well aware).
The Secretary of State needs also to address this issue in the further written submission he will have to make in any event to the tribunal incorporating his re‑working of the entitlement and overpayment calculations, in advance of the rehearing and in time for these to be adequately considered both by the tribunal and by the claimant himself. On the extent to which any averaging of earnings paid in respect of particular periods of work is actually called for or appropriate under regulation 8 of the Computation of Earnings regulations, I direct the tribunal that any averaging under regulation 8(3) is permissive rather than mandatory or universal. Any use of it in the context of incapacity benefit must be for the relatively short‑term purpose of determining on a week-by-week basis whether the true level at which the claimant is then currently working and earning takes him over the permitted limits for that week so as to disqualify him: cf. CG 4941/03 paragraphs 18 to 20, where I had to consider the same provision in the context of another weekly benefit (invalid care allowance).
The application and appeal are allowed and the case remitted to the tribunal for redetermination accordingly. The claimant’s three sets of written observations dated respectively 15 August 2006 at pages 315 to 317, 11 April 2007 at pages 329 to 330, and 19 June 2007 with annexure at pages 331 to 335, submitted to me for the purposes of this appeal are all to be copied to the tribunal and included for its information in the papers before it for the rehearing.
P L Howell
17 July 2007