CIS/627/1995

Social Security and Child Support Commissioners
APPLICATION FOR THE SETTING ASIDE OF DECISION OF SOCIAL SECURITY COMMISSIONER/MEDICAL APPEAL TRIBUNAL/DISABILITY APPEAL TRIBUNAL DETERMINATION OF THE SOCIAL SECURITY COMMISSIONER 
 
MR COMMISSIONER D G RICE
Tribunal :
Tribunal Case No : 
 
1. My decision is that the decision of the social security appeal tribunal given on 8 November 1994 is erroneous in point of law, and accordingly I set it aside. As it is convenient that I give the decision the tribunal should have given, I further decide that the overpayment of income support covering the inclusive period from 7 September 1992 to 5 September 1993 is not repayable.

2. This is an appeal by the claimant, brought with the leave of a Commissioner, against the decision of the social security appeal tribunal of 8 November 1994. In view of the novel points arising in this case, I directed an oral hearing. At that hearing the claimant, who was not present, was represented by Ms K Francis from the Citizens Advice Bureau in Skipton, whilst the adjudication officer appeared by Miss J Hartridge of the Solicitor's Office of the Department of Social Security.

3. On 24 August 1992 the claimant, a widow then aged 84, claimed income support. Although advanced in age, she had no appointee, but conducted her own financial affairs. Her capital had fallen below the statutory limit for claiming income support. Her income consisted of a Canadian pension of $340 per calendar month. In her application form, she pointed out that the sterling equivalent of that sum fluctuated with variations in the exchange rate. The local office enquired of her what was her last monthly payment in sterling, and she informed them that it was £244.97. Income support was therefore awarded from 24 August 1992 on the basis of this figure.

4. On 24 August 1993 as part of the normal review process, the claimant was asked whether her Canadian pension had increased and, if so, to give details. In answer, she gave details of the monthly sums paid into her bank account between 3 September 1992 and 4 October 1993. This revealed that the claimant had received different sums each month, depending upon the currency exchange rate at the time, but that the amount each month had exceeded £244.97. The adjudication officer calculated that there had been an overpayment amounting to £386.59 in respect of the inclusive period from 8 February 1993 to 24 October 1993. Moreover, she went on to decide that the same was recoverable from the claimant by reason of her failure to disclose the material fact that her pension had increased. In due course, the claimant appealed to the tribunal, and the adjudication officer took the opportunity of revising his calculation, showing that the overpayment was in fact £416.52, and that it related to the inclusive period from 7 September 1992 to 5 September 1993. In the event, the tribunal revised the amount of the overpayment in the manner suggested, and upholding the adjudication officer, decided that such overpayment was recoverable from the claimant.

5. I am not sure that the adjudication officer correctly calculated the amount of the overpayment. She would appear to have proceeded on the basis that the claimant received, in respect of her Canadian pension, the amount paid in sterling into her bank account. Presumably, that amount was arrived at after deduction of the costs of converting Canadian dollars into sterling, but this would not appear to be, for income support purposes, an allowable deduction from the claimant's income. The relevant statutory provisions are regulation 40 of the Income Support (General) Regulations 1987 [SI 1987 No 1967] and paragraph 24 of Schedule 9 thereto. Regulation 40, so far as is relevant reads as follows:-
"40. - (1) For the purposes of regulation 29 (calculation of income other than earnings) the income of a claimant which does not consist of earnings to be taken into account shall, subject to paragraphs (2) to (3A), be his gross income ...
(2) There shall be disregarded from the calculation of a claimant's gross income under paragraph (1), any sum, where applicable, specified in Schedule 9."
Paragraph 24 of Schedule 9 read as follows:-
"24. Where a payment of income is made in a currency other than sterling, any banking charge or commission payable in converting that payment into sterling.".
Manifestly, the cost of converting Canadian dollars into sterling fell to be disregarded, so that for the purpose of calculating the claimant's income it was the gross sterling equivalent of the Canadian dollars which had to be taken into account, and not the net sum after deduction of conversion costs. Normally in this jurisdiction, where a disregard operates, it bites on a claimant's income, so that it operates as an advantage. In this instance, the disregard applies to a cost, so that it operates to the claimant's disadvantage. Now, presumably in the present case, the payments made into the claimant's bank account were after the deduction of currency conversion costs, so that the claimant must be deemed to have received more money than was in fact credited to her banking account. If this is right, then the overpayment must have been greater than that calculated by the adjudication officer. In practice, nothing turns on the point in this instance because, for the reasons set out below, the overpayment is in any event not recoverable.

6. There is a further complication in this case as regards the amount of the overpayment. It would appear that, quite apart from the increase in the sterling value of the pension by reason of currency fluctuations, the claimant also received an increase in the dollar worth of her pension. In her letter dated 27 August 1993 she referred to quarterly increases. It is far from clear exactly what these were, nor was Miss Hartington or Miss Francis able to enlighten me. But they would appear to be very small, and would presumably have been incorporated into the claimant's monthly banking receipts (subject to the omission of the cost of the dollar conversion). Although it could be said that the claimant failed to disclose the increase of the dollar amount of her pension and that the overpayment involved was in consequence recoverable, it is not clear what that amount was, and, as Miss Hartington submitted, the cost of ascertaining it would probably far exceed any recoverable sum. A sensible balance has to be kept in these matters. No point of principle is involved - the rules of recoverability are well established - and there is no advantage to the State in incurring costs that would exceed any recoverable amount. Accordingly I propose to ignore the possibility that a minute increase in the claimant's dollar pension might in theory be recoverable.

7. It follows that, ignoring the question of any increase in the amount of the claimant's pension in dollars, the real question here is whether in failing to bring to the attention of the local office the monthly variation in her sterling receipts, the claimant was guilty of a failure to disclose a material fact, with the result that pursuant to section 71 of the Social Security Administration Act 1992 the overpayment was recoverable from her. The tribunal took the simple view that the amounts the claimant had received from month to month had altered, and that she had failed to disclose this fact, which was a material consideration in determining her entitlement to income support. But was this the right approach? What had the claimant failed to disclose that was material? She had disclosed that she was in receipt of $340 a month, and that the sterling equivalent would vary with fluctuations in the exchange rate. What else was she supposed to disclose? She was asked to produce evidence of the sum actually paid into her account in sterling at the beginning of the period, and she provided this information. She was not requested to provide any further monthly figures, and the Department knew or ought to have known that the figure they had initially taken as the basis for calculating the claimant's entitlement to income support would, in view of currency fluctuations be unlikely to remain true for subsequent months. They could have asked the claimant each month for a statement of her receipts, but they chose not to do so. They could alternatively have made their own calculation by determining each month the sterling equivalent of the $340. In the event, they did neither. But was the claimant herself, who incidentally was of advanced age, expected to take the initiative and herself put the Department right month by month, or for that matter week by week or day by day, as the currency fluctuated? I think not. The claimant disclosed all that was material, namely that she had a pension of $340 per month and that the sterling equivalent was variable. If the Department wanted her to do more, they should have asked.

8. It follows from what has been said above that in so far as the tribunal decided that the claimant failed to disclose a material fact they erred in point of law, and I must set aside their decision. However, it is unnecessary for me to remit the matter to a new tribunal for rehearing. I can conveniently substitute my own decision and dispose of the appeal finally, which, as the claimant is 88, is highly desirable. For the reasons given above, I do not consider that the overpayment is recoverable.

9. My decision is as set out in paragraph 1.
 
D.G. Rice
Commissioner
07 June 1996