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CIB/4174/2003

 

This decision has been reproduced in plain text only. If you wish to submit a copy of a decision as part of an appeal, please download a Word copy from the link below.


http://www.osscsc.gov.uk/aspx/view.aspx?id=2132

CIB/4174/2003

DECISION OF THE SOCIAL SECURITY COMMISSIONER

1. The decision of the Incapacity Benefit Appeal Tribunal dated 3 July 2003 is erroneous in law. I set that decision aside and, as empowered by section 14(8)(a)(ii) of the Social Security Act 1998, I give my own decision which is:-

The claimant is not to be treated as capable of work from and including 1 February 2002 because although she was working the work was exempt work within the meaning of regulation 17 of the Social Security (Incapacity for Work) (General) Regulations 1995.

2. The claimant appeals, with my leave and the support of the Secretary of State’s representative, against the tribunal’s decision that the claimant is to be treated as capable of work from 1 February 2002 because she was working and the work was not in an exempt category.

History of the Appeal

3. This is an appeal which has been remitted to me for redetermination by the Court of Appeal. When the appeal was last before me it was supported by the Secretary of State’s representative and the only issue which had not been resolved in the claimant’s favour before I made my decision was the calculation of her earnings for the purposes of paragraph (2)(a) of regulation 17 of the Social Security (Incapacity for Work) (General) Regulations 1995. The Secretary of State’s representative’s view was that the calculation of the claimant’s earnings was governed by the Social Security Benefit (Computation of Earnings) Regulations 1996. I decided on 3 March 2005 that the Computation of Earnings Regulations were not relevant. My decision was erroneous in law and was set aside by the Court of Appeal (the Secretary of State for Work and Pensions v. Doyle [2006] EWCA Civ 466). A copy of the Court of Appeal’s decision is Appendix I to this decision. The history of the case up to 3 March 2005 and the factual basis of my decision of that date is apparent from the copy of the decision which is Appendix II.

4. The claimant’s solicitors and the Secretary of State’s representative have, in submissions directed by a Legal Officer in the Office of the Social Security Commissioners, attempted to reach agreement as to the claimant’s net weekly earnings. They are in substantial agreement about the claimant’s gross receipts although the representative thinks that the solicitors’ figure is rather too high. The representative thinks that the calculation of the claimant’s outgoings is still not sufficiently accurate to enable the claimant’s net profit in the relevant period to be ascertained. However, for the reasons given below I think that there is now enough information for me to make my own decision.

The Point of Law

5. When I made my decision of 3 March 2005 I did not have to deal with a point as to the interpretation of regulation 13(2) and (4)(a) of the Computation of Earnings Regulations which the Secretary of State’s representative raised in his submission of 1 October 2004. In paragraph 7 of that submission the representative said:-

“I should also like to mention that there is one key point of law the Commissioner may need to decide in connection with the claimant’s earnings. Regulation 13(2) of, and paragraph 3 of Schedule 1 to, the Computation of Earnings Regulations provides for a fixed rate deduction to be made from earnings from board and lodging accommodation. The question that arises is whether this deduction is in addition to the disregard for expenses in regulation 13(4)(a). In my submission the deduction in paragraph 3 of Schedule 1, being based on the number of residents and whether heating is provided, has to do with the claimant’s expenses. As it cannot have been contemplated that a claimant would in effect have the same expense deducted once under regulation 13(4)(a) and then a second time under paragraph 3 of Schedule 1, I submit that to the extent that a deduction can be made under regulation 13(4)(a), a further deduction would not be ‘appropriate’ under regulation 13(2) and hence would not fall to be made under paragraph 3 of Schedule 1. Alternatively, I would submit that expenses that can be deducted under paragraph 3 of Schedule 1 are thereby wholly removed from the calculation of the claimant’s earnings and hence are not to be available to be disregarded under regulation 13(4)(a). In effect, the only sums to be disregarded under regulation 13(4)(a) are those incurred in addition to the amounts deductible under paragraph 3 of Schedule 1.”.

As the Computation of Earnings Regulations do apply I now have to deal with that point.

6. Following the Court of Appeal’s decision the claimant’s solicitors, in a letter of 14 July 2006 in response to a direction of 25 May 2006 by the Legal Officer, said that they agree with the submission which I have quoted above. In a further letter of 21 September 2006 the solicitors said that in their view the claimant’s earnings should be calculated by applying regulation 13(4)(a) and agreed with the Secretary of State’s representative that to apply also the disregard specified in paragraph 3 of Schedule 1 would result in unfair double counting.

The Legislation

7. Regulation 16(1)(a) of the Social Security (Incapacity for Work) (General) Regulations 1995 provides that a person who works shall be treated as capable of work (notwithstanding that she has been determined to be incapable of work under regulations 10 to 15 or 27) unless the work she does is exempt work under regulation 17(1) and done within the limits specified in regulation 17(2).

8. Regulation 17 as in force at the times relevant to this appeal and insofar as relevant to the appeal provides:-

“(1) The categories of exempt work referred to in regulation 16(1)(a) are –

(a) Work undertaken on the advice of a doctor which –

(i) helps to improve, or to prevent or delay deterioration in, the disease or bodily or mental disablement which causes that person’s incapacity for work; - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -.

(2) The weekly limits in relation to exempt work are –

(a) that earnings from work referred to in paragraph (1)(a) do not exceed £60.50;

(b) that, subject to paragraph (3), the combined total of the number of hours spent doing work referred to in paragraph (1)(a)(i) is less than 16;

(c) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -.

9. Regulation 2(1) of the Computation of Earnings Regulations enacts certain definitions for the purposes of those regulations. Those, in so far as relevant to this appeal, are:-

““Board and lodging accommodation” means –

(a) Accommodation provided to a person … for a charge which is inclusive of the provision of that accommodation and at least some cooked or prepared meals which both are cooked or prepared (by a person other than the person to whom the accommodation is provided …) and are consumed in that accommodation or associated premises;

- - - - - - - ;”,

““Earnings” has the meaning prescribed in regulation 9 or, as the case may be, 12 …;”,

““Employment” includes any trade, business, profession, office or vocation;”,

““Net profit” means such profit as is calculated in accordance with regulation 13(4);”

and

““Self-employed earner” means a person who is in gainful employment in Great Britain otherwise than as an employed earner …;”.

10. Regulation 3(1) provides, in effect, that for the purposes of the Contributions and Benefits Act and regulations made thereunder the earnings of the claimant shall be calculated by determining in accordance with the Computation of Earnings Regulations the weekly amount of her earnings. Regulation 11(1) provides that in the case of a self employed earner the weekly amount of earnings will be calculated by averaging over a year or, in certain other circumstances, such other period as gives a more accurate weekly figure.

11. Regulation 12, insofar as relevant, provides:-

“ (1) Subject to paragraph (2), ‘earnings’, in the case of employment as a self employed earner, means the gross receipts of the employment …

(2) “Earnings” shall not include –

(a) The payments to be disregarded in the calculation of earnings as referred to at paragraphs 1, 2 and 3 of Schedule 1;

(b) …”.


12. Regulation 13, insofar as relevant, provides:-

“(1) For the purposes of regulation … 11 (calculation of earnings of self employed earners), the earnings of the claimant to be taken into account shall be –

(a) in the case of a self employed earner who is engaged in employment on his own account, the net profit derived from that employment;

- - - - - - - -.

(2) …, there shall be disregarded or deducted as appropriate from a claimant’s net profit –

(a) any sum, where applicable, specified in Schedule 1; … and

(b) any relevant child care charges to which Schedule 2 applies
- - - - - - -.

(3) - - - - - - - -.

(4) For the purposes of paragraph (1)(a), the net profit of the employment shall, except where paragraph (10) applies, be calculated by taking into account the earnings of the employment over the period determined under regulation 11 (calculation of earnings of self employed earners) less –

(a) …, any expenses wholly and exclusively defrayed in that period for the purposes of that employment;

(b) …

(c) …

…”.

13. The heading and the relevant paragraphs of Schedule 1 to the Regulations are:-

“Sums to be Disregarded in the Calculation of Earnings

1. Any payment made to the claimant by a person who normally resides with the claimant, which is a contribution towards that person’s living and accommodation costs, except where that person is residing with the claimant in circumstances to which paragraph 2 or 3 refers.

2. Where the claimant occupies a dwelling as his home and the dwelling is also occupied by another person and there is a contractual liability to make payments to the claimant in respect of the occupation of the dwelling by that person or a member of his family –

(a) £4 of the aggregate of any payments made in respect of any one week in respect of the occupation of the dwelling by that person or a member of his family, or by that person and a member of his family; and

(b) a further £9.25, where the aggregate of any such payments is inclusive of an amount for heating.

3. Where the claimant occupies a dwelling as his home and he provides in that dwelling board and lodging accommodation, an amount, in respect of each person for whom such accommodation is provided for the whole or any part of a week, equal to –

(a) where the aggregate of any payments made in respect of any one week in respect of such accommodation provided to such person does not exceed £20, 100% of such payments; or

(b) where the aggregate of any such payments exceeds £20, £20 and 50% of the excess over £20.”.

The heading to Schedule 2 is:-

“Child Care Charges to be Deducted in the Calculation of Earnings”.

Consideration

14. There are three points on which I disagree with the Secretary of State’s representative’s interpretation of those somewhat elliptical provisions. The first point is that I think that he has overlooked the effect of regulation 2(1) as read with regulation 12. Together they provide that the earnings of a self employed claimant are the gross receipts of her self employment excluding the payments specified in paragraphs 1, 2 and 3 of Schedule 1. The second point is the assumption that the disregard specified in paragraph 3 of Schedule 1 applies only where heating is provided and is, therefore, in respect of the claimant’s expenses. There is nothing in paragraph 3 itself to warrant that assumption and I do not think that the reference to heating in paragraph 2 carries any implication for paragraph 3. It seems to me that paragraphs 1, 2 and 3 refer to payments for three distinct forms of shared occupation of a home. These are, respectively:

(1) Any payment of a contribution towards the payer’s living and accommodation costs under a non contractual arrangement which does not come within the regulation 2 definition of board and lodging

(2) payment under a contractual obligation to pay for the occupation or accommodation or to pay for the occupation and the provision of heat

and

(3) payment for board and lodging accommodation provided by the householder but with no specification as to what is provided other than as specified in the definition of such accommodation in regulation 2.

There is, therefore, nothing in regulation 13(4) or schedule 1 to warrant the calculation of net profit other than by the deduction of the outgoings of the business from the earnings.

15. The third point on which I disagree with the Secretary of State’s representative is the significance of the word “appropriate” in 13(2). The appropriateness in question is not that of applying or not applying the schedule 1 disregards to the net profit as calculated under paragraph (4). “Appropriate” has to be read with schedules 1 and 2 which provide for disregards and deductions respectively. It is appropriate to disregard schedule 1 sums under head (a) of paragraph (2), but not appropriate to deduct them, and it is appropriate to deduct schedule 2 charges under head (b), but not appropriate to disregard them. There is, therefore, nothing in the wording of paragraphs (2) and (4) of regulation 13 read by themselves to imply that the paragraph (4) defrayals and the schedule 1 disregards are not both to be taken into account.

16. Where the regulations do provide for what is plainly double counting is in the joint effect of regulations 12(2) and 13(2). 12(2) provides that the income side of the claimant’s profit and loss calculation under regulation 13(4) does not include the schedule 1 disregards but 13(2) provides that the same disregards will be deducted from the net profit as calculated under 13(4). That may be anomalous and neither that double counting nor the inclusion of the regulation 13(4) calculation in the assessment of earnings is compatible with the corresponding provisions in the Income Support (General) Regulations. In those regulations the effect of regulations 37(2), 38 as read with schedule 8 and 40 as read with paragraph 20 of schedule 9 is that, for the purposes of assessing entitlement, board and lodging payments are not taken into account as earnings but are taken into account as income other than earnings. There is applied to that income a disregard similar to that specified in para 3 of schedule 1 to the Computation of Earnings Regulations. There is no provision for the claimant’s outgoings in the provision of board and lodging accommodation to be taken into account in the calculation of net profit which calculation is in any case irrelevant to the calculation of earnings other than income. That could suggest that in the Computation Regulations the double counting of the schedule 1 disregards as between regulations 12(2) and 13(2) and the counting of both the regulation 13(4) defrayals and the schedule 1 disregards are not intended.

17. On the other hand it is not totally improbable that it is intended that claimants for non-means tested benefits are to be treated more generously than those claiming means tested benefits and that regulations 12(2), 13(4) and 13(2) constitute a three stage progressive test at any stage of which earnings can be found to be below the relevant statutory limit, the last stage being a second application of the schedule 1 disregard. The effect would be that a claimant would require to earn substantial amounts from board and lodging to exceed the earnings limit prescribed in regulation 17(2)(a) of the Incapacity for Work (General) Regulations: but a claimant who was earning such amounts would probably be caught by the 16 hours work limit.

18. Whatever may or may not be the legislative intention, the regulations say in black and white that the schedule 1 disregards have to be applied to gross receipts to arrive at earnings and also to the net profit which constitutes the earnings to be taken into account. They also say that the net profit is to be calculated by deducting defrayals from earnings. The purposive approach to the interpretation of legislation is now wholly accepted but I do not think that that method of interpretation can be used to override the plain words of a provision. The claimant is entitled to rely on the text of the regulations rather than anything which I might deduce from an examination of background papers or from the consideration of seeming anomalies in or suspected unintended consequences of the provisions. If the regulations as enacted do not reflect the legislative intention they can be amended or revoked and replaced.

Application of the Regulations in the claimant’s case

19. However, in the claimant’s case the proper interpretation of regulations 12(2) and 13(2) and (4)(a) as read together is not significant because, as I shall show below, when the paragraph 3 of Schedule 1 disregards are applied to the gross receipts in terms of regulation 12(2) the weekly earnings are less than the weekly earnings allowed by regulation 17(2)(a) of the Incapacity for Work (General) Regulations. There is therefore no need for a regulation 13(4) calculation and no scope for the application of 13(2).

20. In paragraph 5 of his submission of 1 October 2004 the Secretary of State’s representative explains that if at the date of claim in February 2001 the fact of the claimant’s board and lodging business had been known to the Department for Work and Pensions her entitlement to benefit would have been assessed by averaging her earnings over the period from the commencement of the business in May 2001 until the date of claim in accordance with regulation 11(1)(b) of the Computation of Earnings Regulations. He argues, therefore, that to calculate the claimant’s entitlement accurately throughout the period relevant to her appeal it is necessary to do both that calculation under head (b) and the calculation under head (a) of the same provision in respect of the claimant’s first complete year in business. The claimant’s solicitors have supplied weekly figures for the gross receipts in the 35 weeks from the week beginning on 3 June 2001 to the week beginning on 27 January 2002 inclusive and the gross receipts for the 52 weeks of the claimant’s first financial year.

21. As regards the 35 week period the Secretary of State’s representative remarks that, assuming that all the invoices for those weeks have been produced, the total of the gross receipts is £4,516.43 and not the £4,775.72 calculated by the claimant’s solicitors. In applying regulation 12(2) to those gross receipts I have erred on the side of non entitlement by taking the solicitors’ figure. From that I have deducted the £12.14 received in the week beginning 30 December 2001 leaving £4,763.58. To simplify the rest of the calculation, and because there is plenty of margin for error, I have treated the claimant as having had only 1 boarder, rather than 1.2, in the week beginning 23 September 2001. On that basis there were 60 boarders in the 35 weeks which represents 60 disregards of £20 per week totalling £1,200 to be deducted from the £4,763.58, leaving £3,563.58. 50% of that last figure is £1,781.79. The total disregard applicable in the 35 week period is therefore £2,981.79 which when deducted from the £4,763.58 leaves £1,781.79. Thus for the 35 week period £1,781.79 would be the income side of the net profit calculation in terms of regulation 13(4)(a). However, it is unnecessary to calculate the net profit because £1,781.79 over 35 weeks represents £50.90 per week. That is well below the weekly limit on earnings from therapeutic work prescribed in regulation 17(2)(a) of the Incapacity for Work (General) Regulations which was £60.50 with effect from 9 April 2001 and which has been substantially uprated in the years since then.

22. I have adopted the same method to average the claimant’s earnings over the 52 week period from the commencement of her business. The total of the receipts is £7,567.86 from which is to be deducted the £12.14 received in the week beginning 30 December 2001. That reduces the gross receipts to £7,555.72. The week beginning 23 September 2001 is again treated as being a week with one boarder and the last two weeks of the 52 week period are treated as being weeks with two boarders each. The total number of boarders was, therefore 92 and the £20 disregards total £1,840 which subtracted from £7, 555.72 leaves £5,715.72. 50% of that is £2,857.86. The total disregard is, therefore, £4,697.86 which subtracted from £7,555.72 leaves £2,857.86. That would be the income side of the regulation 13(4) calculation. Divided by 52 it produces a weekly average of £54.95 which again is well below the limit prescribed by regulation 17(2)(a) and renders the regulation 13(4) calculation pointless.

23. On the basis of the foregoing calculations I conclude that at the relevant times the claimant’s earnings have always been less than the weekly limit prescribed by regulation 17(2)(a) of the Incapacity for Work (General) Regulations. It is not disputed that the claimant satisfies regulation 17(1)(i) and (2)(b). She is not, therefore, treated as capable of work from and including 1 February 2002.

24. For the foregoing reasons the claimant’s appeal succeeds and my decision is in paragraph 1 above.



(Signed) R J C Angus
Commissioner

(Date) 26 January 2007



Appendix I


Neutral Citation Number: [2006] EWCA Civ 466
Case No: C3/2005/1275
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE SOCIAL SECURITY COMMISSIONER
Mr Commissioner Angus
(CIB/4174/2003)
Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 27/04/2006
Before :

LORD JUSTICE WALLER
LORD JUSTICE SEDLEY
and
SIR CHRISTOPHER STAUGHTON
- - - - - - - - - - - - - - - - - - - - -
Between:

THE SECRETARY OF STATE FOR WORK AND PENSIONS Appellant
- and -
DOYLE Respondent

- - - - - - - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - - - - - - -

Mr M Chamberlain (instructed by the Solicitor, Department of Work and Pensions) for the Appellant
Mr D Rutledge (instructed by Pierce Glynn) for the Respondent

Hearing date: 10 April 2006
- - - - - - - - - - - - - - - - - - - - -
Judgment
Lord Justice Sedley :

1. The purpose of this appeal, brought by the Secretary of State, is to secure a ruling on the correct method of computing earnings when deciding entitlement to invalidity benefit (`IB'). The Secretary of State contends that the method is dictated by the Social Security Benefit (Computation of Earnings) Regulations 1996 (SI 1996/2745) ('the Computation Regulations').
2. On Mrs Doyle's appeal against the decision of an Appeal Tribunal that her earnings from self-employment were such that she was legally capable of work, the Commissioner (Mr R.J.C.Angus) held that neither the Computation Regulations nor any other statutory regime governed the calculation. The form his decision took was that Mrs Doyle's appeal succeeded to the extent that his own decision was to be substituted for that of the Tribunal. Its substance was that she was disentitled to IB for eight weeks of 2002, with the implication that she was entitled to it for the remainder of the period from February to December 2002. On the footing that it was therefore the Secretary of State who had lost, the Commissioner granted him permission to appeal to this court.
3. A person who, like Mrs Doyle, is otherwise entitled to IB becomes disqualified if she is capable of work. The Social Security (Incapacity for Work) Act 1994 ('the 1994 Act')

(a) inserted into Part II of the Social Security Contributions and Benefits Act 1992 ('the 1992 Act') sections 30A to 30E, which make the gateway provision that only a person who is incapable of work is entitled to IB, and

(b) inserted into the same Act ss.171 A-G, forming a new Part XIIA, which governs the determination of incapacity for work and empowers the Secretary of State to make regulations for the purpose.
4. The regulations made pursuant to this power — the Social Security Incapacity for Work) (General) Regulations 1995 (SI 1995/311) ('the IFW Regs') - set out detailed provisions which include an exemption of earnings up to a fixed amount from work done "on the advice of a doctor". The Secretary of State had supported Mrs Doyle's appeal to the Commissioner against the Tribunal's finding that her doctor's subsequent approval did not amount to such advice. The Commissioner accepted that it did.
5. This left the question of Mrs Doyle's earnings. The weekly limit beyond which IB was lost was £60:50 at the material time; it is now £81:00. It is common ground that the limit is not a penalty for working while drawing IB: it is designed to encourage people on IB, acting on medical advice, to return to the world of work. It follows that claimants need so far as practicable to know in any working week whether their earnings are going to render them ineligible for IB.
6. Mrs Doyle had an income from student lodgers for whom she shopped, cooked and cleaned. The Tribunal had made only a perfunctory finding about it because they considered that the claim fell at the `doctor's advice' hurdle. But it was an adverse finding, and the Commissioner had granted Mrs Doyle leave to appeal against it on the ground of inadequate reasons, a ground which again the Secretary of State supported and the Commissioner upheld. Accordingly, having decided that there was no obstacle in relation to medical advice, the Commissioner went on to make his own computation of Mrs Doyle's earnings. He concluded, first, that the Computation Regulations, which required an average to be taken, did not apply; and secondly, that Mrs Doyle's net weekly earnings had been such that she was to be treated as capable of work only in the eight weeks of 2002 in which her net earnings had exceeded the limit set by reg. 17 of the IFW Regs.
7. We do not know what entitlement, if any, the Secretary of State's computation would have produced, but the Commissioner's calculation was permissible only if he was at liberty to compute Mrs Doyle's net earnings week by week. The Secretary of State's case is that he was not, because the calculation is governed by the Computation Regulations, which by reg.11 require the net weekly earnings of self-employed claimants to be averaged over a one-year period or such shorter period as circumstances may dictate. There is no need for this court to embark upon the regime in any more detail. What matters is whether it applied.
8. The Commissioner put his reasons for holding that it did not apply in a single closely-reasoned paragraph:
12. I do not agree that the Computations of Earnings Regulations are relevant although, in fairness to the Secretary of State’s representative, I have to admit that it took me longer to arrive at that conclusion than it takes to state it or explain it. Regulation 3 of the Computation Regulations provides that those regulations are for the calculation of earnings for the purposes of Parts II to V of the Social Security Contributions and Benefits Act and the regulations made under those parts of that Act: but the Incapacity for Work (General) Regulations are made under and for the purposes of Part XIIA of the 1992 Act. The preamble to the Computation Regulations invokes none of the regulation making powers enacted in Part XIIA of the Act. Moreover the averaging of earnings as required by the Computation Regulations is inconsistent with the purpose of regulation 17(2) of the Incapacity for Work (General) Regulations which is to enact a number of hours of work and a level of actual earnings which if exceeded in any particular week excludes the work done by the claimant in that week from provisos (a) and (b) to regulation 16(1) with the result that in that week the claimant, by virtue of having worked, is not incapable of work even although the work is medically approved. As was explained in CIB/4090/1999 the question of whether or not a claimant satisfies the regulation 17(2) (a) and (b) conditions for exemption from the regulation 16(1) rule that a claimant is not incapable of work in any week in which he does not work must be decided on the basis of the amount earned in each week in question and not by averaging his earnings over a period within which week that falls. It seems to me that averaging as required by the Computation Regulations could produce the result that a claimant whose earnings from otherwise exempt work exceeded the regulation 17(2) (a) limit in several weeks of the year would still be entitled to Benefit in those weeks while another claimant whose earnings in a few untypical weeks substantially exceeded the limit would be disqualified throughout the year. There are, therefore, in my view no enacted rules for the calculation of earnings for the purposes of regulation 17(2) (a) of the Incapacity for Work (General) Regulations. CIB/502/2000 was concerned with a claimant’s entitlement to an increase in Incapacity Benefit in respect of his dependant spouse which is legislated for in Part IV of the 1992 Act.
9. The contrary case put by Martin Chamberlain on behalf of the Secretary of State not only accepts but takes its stand on the consequences which drove the Commissioner in the opposite direction. It is precisely because someone who is earning steadily above the limit would be able, on the Commissioner's approach, to draw IB in any week in which his earnings happened to fall below it that averaging, he argues, is a proper solution. But it is also inescapable that, as the Commissioner says, averaging can give a claimant a windfall of IB for weeks when his earnings are above the limit, or deprive him altogether of benefit for weeks in which he earns nothing. Neither system is in my judgment so odd or unreasonable that the court needs to strain against it. Each has a measure of fairness in its favour and a measure of anomaly against it. The single question is whether, as a matter of statutory construction, the Computation Regulations determine the choice between them.
10. As to this, Mr Chamberlain's case is that the Computation Regulations are to be treated as made for the purposes of the IB regime notwithstanding that their rubric does not invoke Part XIIA of the 1992 Act, the part which actually provides for regulations to be made concerning the capacity of IB claimants for work and under which the IFW Regs are made. What he founds upon is the fact that reg.3 of the Computation Regulations provides (with emphasis added):
"For the purposes of Parts II to V ... of the [1992] Act ... the earnings of a claimant shall be calculated by determining in accordance with these Regulations the weekly amount of his earnings."
11. It is Part II of the 1992 Act, as amended by the 1994 Act, which by s.30A sets out the essential ground of entitlement to IB — incapacity for work. Part XIIA simply makes, or rather provides for the making of, provision ancillary to Part II. It follows, submits Mr Chamberlain, that reg.3 answers the question: the purpose of determining whether a claimant is entitled to IB is a purpose prescribed by Part II, and reg.3 says that that purpose is to be carried out, where it involves computation, in accordance with the Computation Regulations.
12. This seems to me Mr Chamberlain's single point of anchorage. His argument from anomaly is, as I have said, no stronger than the opposing argument from equal and opposite anomalies. His submission that the Secretary of State cannot have left a void of the kind that the Commissioner took himself to be filling assumes the very thing that it remains to prove. His submission that Mr Commissioner Levenson in CIB/4090/1999 was following, not departing from, the Computation Regulations in adopting a weekly calculation may well be right but does not advance his case. Lastly, recognizing an element of desperation in his fallback argument that even if the Computation Regulations do not on their face apply, the decision in Inco Europe Ltd v First Choice Distribution [2002] 1 WLR 586, 592 requires or enables the court to treat them as if they did apply, Mr Chamberlain has wisely abandoned it.
13. Desmond Rutledge, coming into the case at a late stage for Mrs Doyle, has been handicapped by uncertainty as to whether she will do better by averaging than by the week. The same is probably true of a good many IB claimants. It has meant that Mr Rutledge’s argument has been limited, not unhelpfully, to pointing out some of the potential anomalies which attend the Secretary of State’s interpretation of the scheme. He has also drawn attention to the arguably onerous detail about income and outgoings which the Department demands in order to compute average earnings from self-employment.
14. None of these things, however, affects the bald question of law which we have to answer. The need for a reasonable degree of certainty, on which both parties agree, may affect it. But on the claimant’s side there is the inescapable fact that, at least for the self-employed, even a week-by-week calculation may be fraught with uncertainties, for example about the apportionment of overheads. And on the Secretary of State’s side there is the uncomfortable fact that reg. 13(11) of his own Computation Regulations permits him, in the interests of accuracy, to assess any chosen item on a different periodic basis from that prescribed by reg. 11. The reality is that certainty is going to be elusive on either interpretation.
15. In this situation there is, in my judgment, nothing to controvert Mr Chamberlain’s short submission that the entitlement to IB is found in Part II of the Social Security Contributions and Benefits Act 1992, and that reg. 3 of the Computation Regulations requires any calculation of earnings for the purposes of that entitlement to be calculated in accordance with those regulations, which expressly require averaging. The reasons given by Mr Commissioner Angus for taking a contrary view mistakenly, in my respectful judgment, relate the Computation Regulations to the IFW Regulations: the latter are, as he says, made largely for the purposes of Part X11A of the 1992 Act, but the express purpose of the former is to give effect not to them but to Parts II to V of the Act. Once this point is reached, neither the policy considerations nor the anomalies which influenced the Commissioner (though I do not happen to share all his misgivings about them) have any bearing.
16. I would accordingly allow this appeal and remit Mrs Doyle’s appeal from the Appeal Tribunal to the Commissioner to be determined in accordance with the judgment of this court.

Sir Christopher Staughton:
17. I agree.

Lord Justice Waller:
18. I also agree.







Appendix II

CIB/4174/2003

DECISION OF THE SOCIAL SECURITY COMMISSIONER


1. The decision of the Incapacity Benefit Appeal Tribunal dated 3 July 2003 on case No. U/45/177/2003/00210 is erroneous in law. I set that decision aside and, as empowered by section 14(8)(a)(ii) of the Social Security Act 1998, I give my own decision which is:-

The claimant was not incapable of work in the weeks beginning 8 July 2002, 5 August 2002, 12 August 2002, 19 August 2002, 26 August 2002, 7 October 2002, 14 October 2002 and 21 October 2002 because in those weeks she was in remunerative employment in which her net earnings exceeded the earnings limits specified in regulation 17(2)(a) of the Social Security (Incapacity for Work) (General) Regulations 1995.

2. The claimant appeals, with my leave and the support of the Secretary of State’s representative, against the tribunal’s decision that the claimant was not incapable of work from and including 1 February 2002 by reasons of her having been working from that date.

3. The claimant was in receipt of Incapacity Benefit from 1 February 2002 on account of incapacity for work certified by her general practitioner as being due to stress, hypertension and psoriasis. On 23 August 2002 the claimant underwent a medical examination as part of the Personal Capability Assessment prescribed for the purposes of section 171C of the Social Security Contributions and Benefits Act 1992 by regulation 24 of the Social Security (Incapacity for Work) (General) Regulations 1995 and the schedule to those regulations. In the course of the examination the claimant told the examining medical officer about her activities in providing bed and board for language students boarded with her by a local language school. The Secretary of State’s decision maker, having obtained further information about those activities and the remuneration received by the claimant from the language school, decided that as the claimant was working in work not undertaken on the advice of her doctor she was, by virtue of regulation 16 of the Incapacity for Work (General) Regulations, not incapable of work from and including 1 February 2002. The claimant appealed.

4. The tribunal’s reasons for dismissing the claimant’s appeal are explained thus. –

“Facts

1. [The claimant] claimed Incapacity Benefit from 01.02.02. Her claim form stated that she had been a part-time Secretary and was currently not working.

2. On 23/08/02 [the claimant] had a medical examination for the purposes of the Personal Capability Assessment.

3. At that examination she told the Examining Medical Officer that she had students living with her for whom she provided bed, breakfast and an evening meal. She shopped and prepared food for those meals and washed the student’s bedding.

4. As a result of a request for further information, it was ascertained that [the claimant] had been a host family for students for a local language school since May 2001. She has between 2 and 4 students at a time. She spends 14 – 15 hours a week shopping, cleaning their rooms, doing washing and ironing and preparing meals. She receives £65 per week for bed and breakfast and £85 per week for half-board.

5. On 16/12/02 it was determined by an Incapacity Decision-Maker that [the claimant] was not entitled to Incapacity Benefit from 01/02/02 because she was working as a host family for [the language school]

6. Legislation provides that work cannot be treated as exempt unless undertaken on the advice of a doctor and it must help to improve, or prevent or delay deterioration – her disease or disablement. [The claimant’s] work was not exempt because it was not undertaken on medical advice. I have seen letters from [the claimant’s] GP supporting the work which [the claimant] carries out but those letters are dated 09/05/03 and 02/06/03, more than 2 years after the work commenced.

Evidence

1. I have considered notes taken by the Examining medical Officer on 23/08/02 setting out what [the claimant] told them about the work she carries out in connection with the students.

2. Also [the claimant’s] letter to the Social Security Office of 09/12/02 giving further information about the number of students, what they pay and what she does for them.

Summary of Reasons.

From [the claimant’s] own evidence it is apparent that she is working in connection with the students who she has to stay in her house for 14 – 15 hours per week. She is paid for this work.

This work cannot be considered exempt under the regulations as it was not undertaken on the advice of a doctor.

In any event, [the claimant] has between 2 and 4 students staying with her each week. Each student pays a minimum of £65 per week. This means that the weekly limit for earnings from exempt work (£66 from 1/10/01) is exceeded. [The claimant’s] work does not fall within any of the exempt categories because it was not undertaken on the advice of a doctor.

Her work cannot be treated as exempt, therefore [the claimant] is not incapable of work and is not entitled to Incapacity Benefit from 01/02/02.”.

5. Before I would determine the claimant’s application for leave to appeal the tribunal’s decision to a Commissioner I directed the Secretary of State’s representative to make a submission on the following:-

1. Has the tribunal made adequate investigation to establish the claimant’s earnings which would be the sum received from her boarder’s net of her outgoings on food, electricity, cleaning materials and maintenance of stocks of bedding, napery, crockery and utensils?

2. Has the tribunal given adequate explanation of how it applied CIB/4090/1999?

3. What relevance has CSIB/08/97 had since the current regulation 17(1)(a) came into force on 5 October 1998?

6. At the relevant time regulations 16 and 17 of the Social Security (Incapacity for Work) (General) Regulations 1995 were, insofar as relevant to this appeal, in the following terms:-

16(1) - - - - - - - - - - A person shall be treated as capable of work on each day of any week commencing on Sunday during which he does work to which this regulation applies (notwithstanding that it has been determined that he is, or is to be treated under any of regulations 10 to 15 or 27 as, incapable of work or that he meets the conditions set out in regulation 28(2) for treating the all work test as satisfied until assessment unless that work –

(a) falls into any of the categories of exempt work set out in regulation
17(1); and

(b) is done within the limits set out in regulation 17(2).

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17(1) The categories of exempt work referred to in regulation 16(1)(a) are –

(a) Work undertaken on the advice of a doctor which –

(i) Helps to improve, or prevent or delay deterioration in, the disease or
bodily or mental disablement which causes that person’s incapacity for work;-
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(ii) The weekly limits in relation to exempt work are –

(a) that earnings from work referred to in paragraph (1)(a) do not exceed
[£66 until 1 October 2002 and £67.50 thereafter];






(b) that, subject to paragraph (3), the combined total of the number of hours spent doing work referred to in paragraph (1)(a)(i) -------------- is less than 16.

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--------------.”.

7. In a written submission of 19 February 2004 the Secretary of State’s representative supported the application for leave to appeal. She argued that in CIB/4090/1999 the Commissioner decided that the only days on which a claimant is to be treated as not incapable of work by virtue of regulation 16(1) are days on which she does work. In this case the tribunal decided that the claimant was not exempt from the regulation 16(1) provision because the work she had been doing was not done on the advice of her doctor. However, argued the representative, according to the evidence before the tribunal, the work was done with the approval of the doctor and there is no requirement that the doctor’s advice should be in writing. The tribunal’s decision that the work was not exempt from regulation 16(1) because it had not been undertaken with the approval of a doctor was, therefore, erroneous in law.

8. The submission then goes on to answer in the negative my question as to the adequacy of the tribunal’s findings as to the amount earned by the claimant. The work, argued the representative, was less than 16 hours per week. What was not known from the evidence so far available was whether or not the net earnings in any week exceeded the £66 limit for exemption enacted in regulation 17(2).

9. I agreed with the submission for the Secretary of State and granted leave to appeal. As I wished to make my own decision on the appeal if possible rather than remit the case to a new tribunal for rehearing I directed the claimant to produce as much documentary evidence as possible to establish her gross earnings from boarding students and her outgoings on heating, lighting, food, laundry, napery, crockery and cutlery etc.

10. The claimant produced invoices from the language school for the sums paid in respect of student boarders from January to December 2002, electricity bills, a council tax bill and a record of the claimant’s payments of rent. She also stated laundry costs were about £15 per week and that she spent £50 - £60 per week on food. I issued a direction asking the Secretary of State’s representative if the claimant’s net earnings in the relevant week could be calculated from that information.

11. In a written submission of 1 October 2004 the Secretary of State’s representative says that the claimant’s net earnings cannot be calculated from the information provided so far. Earnings have to be calculated in accordance with the Social Security (Computation of Earnings) Regulations 1996 as those regulations are explained in Commissioner’s decision CIB/502/00. To enable that calculation to be made the claimant would need to provide details of her income and expenditure during (a) the period starting with the first day of her employment and ending on 31 January 2002 and (b) the year starting with the first day of her employment. The representative suggests that it would be helpful if the claimant could produce her tax return.

12. I do not agree that the Computations of Earnings Regulations are relevant although, in fairness to the Secretary of State’s representative, I have to admit that it took me longer to arrive at that conclusion than it takes to state it or explain it. Regulation 3 of the Computation Regulations provides that those regulations are for the calculation of earnings for the purposes of Parts II to V of the Social Security Contributions and Benefits Act and the regulations made under those parts of that Act: but the Incapacity for Work (General) Regulations are made under and for the purposes of Part X11A of the 1992 Act. The preamble to the Computation Regulations invokes none of the regulation making powers enacted in Part X11A of the Act. Moreover the averaging of earnings as required by the Computation Regulations is inconsistent with the purpose of regulation 17(2) of the Incapacity for Work (General) Regulations which is to enact a number of hours of work and a level of actual earnings which if exceeded in any particular week excludes the work done by the claimant in that week from provisos (a) and (b) to regulation 16(1) with the result that in that week the claimant, by virtue of having worked, is not incapable of work even although the work is medically approved. As was explained in CIB/4090/1999 the question of whether or not a claimant satisfies the regulation 17(2)(a) and (b) conditions for exemption from the regulation 16(1) rule that a claimant is not incapable of work in any week in which he does work must be decided on the basis of the amount earned in each week in question and not by averaging his earnings over a period within which that week falls. It seems to me that averaging as required by the Computation Regulations could produce the result that a claimant whose earnings from otherwise exempt work exceeded the regulation 17(2)(a) limit in several weeks of the year would still be entitled to Benefit in those weeks while another claimant whose earnings in a few untypical weeks substantially exceeded the limit would be disqualified throughout the year. There are, therefore, in my view no enacted rules for the calculation of earnings for the purposes of regulation 17(2)(a) of the Incapacity for Work (General) Regulations. CIB/502/2000 was concerned with a claimant’s entitlement to an increase in Incapacity Benefit in respect of his dependant spouse which is legislated for in Part IV of the 1992 Act.

13. In order to dispose of the case without further delay I have made my own calculation of the claimant’s earnings in the weeks between 1 February 2002, the date from which the Secretary of State has disallowed benefit, to the date of his disallowance decision, 16 December 2002, on the basis of the information provided by the claimant. In the period from 1 February 2002 to 30 September 2002 the regulation 17(2)(a) limit was £66. From 1 October 2002 for the rest of the period under consideration it was £67.50. I have used the language school’s fortnightly payment advice notes to calculate the claimant’s gross earnings in each relevant week.

14. To calculate the claimant’s outgoings in the relevant period it is necessary to deal in approximations because exact calculation is not possible. The claimant’s annual rent and council tax I have divided by 52 which produces weekly figures of £95.76 and £10.35 and I have assumed that in the weeks in which the claimant has students staying with her (a maximum of 4 and a minimum of 1 but on average 2) at least half of those figures are attributable to the cost of accommodating the students, £48 in respect of rent and £6 in respect of council tax. Electricity bills for the period from 21 November 2001 to 25 November 2002 amounted to £423.50 which is roughly £8.13 per week. Again I have taken the view that in the weeks when students were in residence a conservative estimate of the cost of electricity attributable to their presence would be rather more than half which I have put at £5 per week. The cost of food I have taken as being the minimum of £50 stated by the claimant and for laundry I have accepted the claimant’s figure of £15 per week. Those costs would vary according to the number of students resident in any one week and according to whether they were on half board or bed and breakfast but the variations would not be significant.

15. On the foregoing basis my estimate of the claimant’s total outgoings in any week in which she had students boarding with her is £124. There were weeks in the relevant period when there was only one student in residence and the £124 estimated on the basis of the norm of 2 or 3 might seem excessive but the most which the claimant ever grossed per week for any one student was £85 and if outgoings in that week were taken to be a third of £124, £42 rounded up, the claimant’s net earnings would be only £43. On the basis that her outgoings are £124 per week to exceed the regulation 17(2)(a) limit in any one week before 1 October 2002 the claimant would have needed to have grossed in excess of £190, and in any week after that date £191.50. The college’s accounting weeks with the claimant began on Mondays. The week for the purposes of regulation 16 begins on a Sunday. Therefore, any payment to the claimant by the language school in respect of any particular accounting week was, for the purposes of regulation 16(1), earnings in the benefit week beginning on the immediately preceding Sunday. The only benefit weeks before 1 October 2002 in which the claimant grossed more than £190 were those beginning on 8 July and on 5, 12, 19 and 26 August. The only weeks after 1 October 2002 in which she grossed more than £191.50 were those beginning on 7, 14 and 21 October. Therefore those were the only weeks in the period from 1 February 2002 to 26 December 2002 in which the claimant was, by virtue of regulation 16(1), not incapable of work.

16. For the foregoing reasons the claimant’s appeal succeeds and my decision is in paragraph 1 above.




(Signed) R J C Angus
Commissioner

(Date) 3 March 2005