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B v Secretary of State for Work and Pensions [2005]This court of appeal decision upholds the decision of a tribunal of commissioners (CIS/4348/2003) allowing the Secretary of State to recover overpaid benefit where a claimant failed to disclose a material fact whether or not that disclosure was reasonably to be expected. The decision has now been reported as R(IS)9/06.
The case concerned a mother with a learning disability who did not inform the Department for Work & Pensions (DWP) until December 2001 that her children had been taken into care in October 2000 causing an overpayment of £4,626.74.
At her appeal the tribunal found that the claimant..
“did not understand that the placing of her children in care was a material fact that she needed to disclose to the [Department]. Her mental problems prevented her from realising the significance of this event.”
It accepted that the claimant did not have the mental capacity to “appreciate the significance or materiality of the change in her circumstances, namely her children being taken into care and leaving her house”. Furthermore although the instructions in her order book, telling her to notify the DWP of any change of circumstances, were clear and unambiguous she would not have understood their meaning.
The tribunal followed commissioner’s decision R(SB)21/82 which allows that a “failure to disclose” could occur only in circumstances in which, on moral or legal grounds, disclosure by the person was reasonably to be expected.
R(A)1/95, following Joel v. Law Union and Crown and Insurance Company 1908 states that the duty to disclose can only exist when someone is in possession of a material fact – “you cannot disclose what you do not know”. The mental state of a claimant is only relevant to whether he or she is aware of a material fact.
“mental capacity of a claimant must be considered by a tribunal if it is relevant to the question whether or not the claimant knew the material fact; however, once knowledge has been established, the claimant’s mental capacity ceases to be relevant."
The tribunal of commissioners, in CIS/4348/2003 rejected the appeal tribunal's decision, particularly in relation to the “reasonably to be expected” argument outlined in R(SB)21/82.
They held, as summarised in paragraph 46, that:
Paragraph 61 of the decision follows R(A)1/95 in part in the consideration of a claimant’s mental capacity but only insofar that “mental capacity is relevant to whether the claimant knew of the matter not disclosed, capacity is not relevant to the issue of whether there was a failure to disclose.”
The court of appeal upheld the arguments in CIS/4348/2003. Attempts to use Article 1 and Article 14 of the European convention also failed. Article 1, concerning the protection of property failed because the property in question was an overpayment that did not belong to the claimant in the first place. Because Article 1 fell, Article 14 was not considered.
As a result of this decision, providing the DWP clearly inform a claimant of the requirement to report information that might affect his or her benefit the claimant will have failed to disclose if he or she does not do this. The only exception to this would appear to be in cases where someone is unable to act for themselves, in which case the duty would fall onto the agent or appointee.
The court was, however, mindful of the hardship that this decision might cause.
“The conclusion I have reached means that his [the Secretary of State’s] officials will have in a variety of cases to decide whether it is right to take advantage of his entitlement to recover overpaid sums which in all probability will have been spent, in cases like the present, by people who did not realise that they were being overpaid.”
It was stated on behalf of the DWP that there is a written policy used to decide whether it is fair to recover overpayments in certain cases. Paragraph 43 of the decision recommends that details of this policy be made available.
“It is axiomatic in modern government that a lawful policy is necessary if an executive discretion of the significance of the one now under consideration is to be exercised, as public law requires it to be exercised, consistently from case to case but adaptably to the facts of individual cases. If – as seems to be the situation here – such a policy has been formulated and is regularly used by officials, it is the antithesis of good government to keep it in a departmental drawer. Among its first recipients (indeed, among the prior consultees, I would have thought) should be bodies such as the Child Poverty Action Group and the Citizens Advice Bureaux. Their clients are fully as entitled as departmental officials to know the terms of the policy on recovery of overpayments, so that they can either claim to be within it or put forward reasons for disapplying it, and so that the conformity of the policy and its application with principles of public law can be appraised, although two such policies were evidently described or shown to Newman J in R (Larusai) v Secretary of State for Work and Pensions [2003] EWHC 371 Admin: see §15 and 19.”
The guidance in question appears to be the Overpayment Recovery Guide that has now been made available on the Rightsnet website.
Interestingly enough paragraph 1.42 of this guidance which refers to Non-recoverable overpayment appears to follow the “reasonably to be expected” argument outlined in R(SB)21/82
“1.42 The underlying policy applied to this type of overpayment is that any customer, who could reasonably be expected to have known that they have been overpaid, should be asked for repayment.”
Appeal to the House of Lords has been refused and so this decision now stands.
The claimant has petitioned the European Court of Human Rights regarding refusal of leave to appeal by House of Lords.
