CIS/2540/2004

DECISION OF THE SOCIAL SECURITY COMMISSIONER

1.	This is an appeal by the Claimant, brought with my permission, against a decision of the Swindon Appeal Tribunal made on 20 April 2004. For the reasons set out below that decision was in my judgment erroneous in law. I allow the appeal, set aside the Tribunal’s decision and remit the matter for redetermination by a differently constituted appeal tribunal. The new tribunal will not be bound by the finding which must have been made by the appeal tribunal on 21 June 2002 that the Claimant had deprived herself of capital for the purpose of securing entitlement to income support. I draw the Secretary of State’s attention to my Direction in paragraph 18 below.

2.	The Claimant was in receipt of income support from 1998. On 12 October 2001 she became entitled to the sum of £58,993.96 in respect of the net proceeds of sale of her house, but on her instructions the cheque for that sum was made payable to her son. 

3.	On 19 December 2001 a decision was made terminating her entitlement to income support, probably from that date, on the ground that she had deprived herself of the net proceeds of sale for the purpose of securing entitlement to income support and therefore was to be treated under reg. 51 of the Income Support (General) Regulations 1987 as possessing notional capital. The Claimant appealed to an appeal tribunal which, however, dismissed the appeal on 21 June 2002. 

4.	On 1 April 2003 the Claimant made a new claim for minimum income guarantee. On 14 May 2003 a decision was made disallowing the claim on the ground that, as the Claimant had been held to have notional capital of £58,993.96 as at 12 October 2001, she still (after performing a diminishing notional capital calculation as required by reg. 51A of the 1987 Regulations) had notional capital of £57,524.96. 

5.	The Claimant appealed. Her Appeal Form stated simply that it was apparent from her savings book and pensions book that she had savings of much less than £12,000. The Secretary of State’s submission to the Tribunal stated that the Claimant had explained that the money received from the sale of the house had in fact belonged to her son because he had lent it to her to buy the house, he having inherited the money under a will. The submission continued: “[The Claimant] and her son have both been unable to put their hands on a copy of the will, and [the Claimant] has explained that due to the fact that the loan was between mother and son they never felt there was any necessity to draw up a contract. Although it is unfortunate, it would appear at this stage there is no proof that the debt existed other than the word of [the Claimant] and her son.” It is not clear when the Claimant had given that explanation. I infer that it must have been in connection with the supersession of her previous award.

6.	The Tribunal dismissed the appeal. The chairman held that, by virtue of the doctrine of issue estoppel, he was bound by the decision of the previous appeal tribunal that the Claimant had deprived herself of the proceeds of sale for the purpose of securing entitlement to income support. 

7.	The Claimant submits in this appeal to me, and is supported by the Secretary of State in so submitting, that the Tribunal was wrong to take that view. 

8.	Section 17 of the Social Security Act 1998 provides as follows:

“(1)	Subject to the provisions of this Chapter, any decision made in accordance with the foregoing provisions of this Chapter shall be final; and subject to the provisions of any regulations under section 11 above, any decision made in accordance with those regulations shall be final.
		
(2)	If and to the extent that regulations so provide, any finding of fact or other determination embodied in or necessary to such a decision, or on which such a decision is based, shall be conclusive for the purpose of – 
			(a)	further such decisions; 
			(b)	decisions made under the Child Support Act; and 
			(c)	decisions made under the Vaccine Damage Payments Act.”

9.	Section 17 draws a distinction between the decision itself, which by s.17(1) is made “final”, and “any finding of fact or other determination embodied in or necessary to” the decision, which by s.17(2) is conclusive for the purpose of further decisions only if regulations so provide.

10.	The doctrine of res judicata, as it applies in ordinary civil litigation, is substantially modified in relation to the decisions of appeal tribunals in at least two important respects. First, in relation to the branch of the doctrine known as “cause of action” estoppel, as the words “subject to the provisions of this Chapter” in s.17(1) recognise, there is the possibility of superseding an appeal tribunal’s decision for ignorance of or mistake as to a material fact: reg. 6(2)(c) of the Social Security and Child Support (Decisions and Appeals) Regulations 1999.

11.	Secondly, as Mr. Commissioner Howell said in para. 17 of R(I) 5/04:

“As section 17(2) shows, the normal principle of “issue estoppel” that applies in civil litigation to prevent parties re-litigating factual issues already judicially decided in proceedings between them is of no application to the social security decision and appeal machinery unless there is some specific regulation that makes it so.”

12.	In that case it was held that the fact that it had been decided on 10 January 2002 that the claimant was not entitled to disablement benefit in respect of a prescribed disease because he was not suffering from it did not prevent a decision maker or tribunal finding, on a subsequent claim for industrial injuries benefit in respect of the same disease, that the date of onset of the disease was before 10 January 2002. For the purpose of s.17 the previous finding that the claimant did not by 10 January 2002 have the disease was not a decision which was made “final”, but merely a finding of fact or other determination embodied in or necessary to the decision that the claimant was not entitled to disablement benefit on his previous claim. 

13.	Another recent illustration of the effect of s.17(2) is to be found in CIS/1330/2002. A claimant’s award of income support was superseded with effect from a date about a year earlier on the ground that she had had capital in excess of £8,000, and her appeal against that decision failed. It was held by Mr. Commissioner Jacobs that the claimant was not prevented, in her appeal against a subsequent decision that the income support paid during that year was recoverable, from relitigating the issue whether she had had capital in excess of £8,000. Again, the finding in the first appeal that the claimant had had capital in excess of £8,000 was merely a finding of fact embodied in the decision that her income support award had been properly superseded, and so was not conclusive in relation to the decision whether the overpaid income support was recoverable. 

14.	In the present case the “decision” which (subject to the provisions of Chapter II of Part I of the Act) was made final by s.17(1) was the decision, made on 19 December 2001 and upheld by the appeal tribunal on 21 June 2002, that the original decision awarding income support should be superseded with effect from 19 December 2001. The effect of s.17(1) was therefore merely that, once the time for seeking leave to appeal to a Commissioner against that appeal tribunal’s decision had expired, the Claimant could not seek to have it changed or altered, save by an application for supersession (there being no provision in Part II for revision of an appeal tribunal’s decision). 

15.	However, the decision maker’s finding, upheld by the appeal tribunal, that the Claimant had deprived herself of the proceeds of sale for the purpose of securing entitlement to income support was not a “decision” which was made “final”, but a finding of fact necessary to the decision superseding the award of income support. By s.17(2) that finding was therefore only conclusive for the purpose of further decisions if and to the extent that regulations so provide, and there are no regulations providing for any such conclusive effect in the present case 

16.	Put perhaps more simply, the 2002 appeal tribunal upheld the decision that the Claimant was not from 19 December 2001 entitled to income support. In making her fresh claim on 1 April 2003 the Claimant was not seeking, in contravention of s.17(1), to change that decision by a means not provided for in the 1998 Act and the regulations made thereunder. In order for her fresh claim to succeed she had to persuade a decision maker or (on appeal) an appeal tribunal to make a different finding from that made by the 2002 appeal tribunal on the issue of deprivation of capital, but section 17(2) (and the absence of any relevant regulation made thereunder) in effect permits her to seek to do so. 

17.	This is a result which might be thought surprising. A claimant who is treated as having  substantial notional capital under reg. 51 will not be entitled to income support until such time as, by application of the diminishing notional capital provisions in reg. 51A, the notional capital is reduced to below the relevant limit. The finding that a claimant has notional capital is therefore one which, by its very nature, will have continuing effect. In those circumstances it might be thought (as the Tribunal thought in this case) that a decision of an appeal tribunal on the notional capital issue should not be capable of being relitigated if a fresh claim is made. However, I see no escape from the conclusion that s.17(2) does have the effect of permitting it to be relitigated. If that were thought to be an undesirable result, the answer would seem to lie in the making of regulations under s.17(2). I observe, however, that there would still remain the possibility of superseding that appeal tribunal’s decision on the ground that it was made in ignorance of or under a mistake as to a material fact.

18.	The Secretary of State further accepts, and I agree, that the Tribunal erred in law in upholding the decision maker’ diminishing notional capital calculation. That calculation deducted only the amount of income support referred to in reg. 51A(3)(a), and not the amounts in respect of housing benefit and council tax benefit referred to in (b) and (d). I DIRECT the Secretary of State, within 28 days of the date when this decision is issued, to prepare and send to the Appeals Service a revised calculation. 

	(signed on the original)	Charles Turnbull
		Commissioner
		18 November 2004