PLH                                                                          Commissioner's File:  CIS 2042/04

	SOCIAL SECURITY ACTS 1992-1998

APPEAL FROM DECISION OF APPEAL TRIBUNAL
ON A QUESTION OF LAW

DECISION OF THE SOCIAL SECURITY COMMISSIONER

Claim for:  	Income Support
Appeal Tribunal: 	Manchester 
Tribunal Case Ref:  	
Tribunal date:	13 February 2004
Reasons issued:	23 March 2004

     1.     	This appeal by the Secretary of State must be allowed, as in my judgment the Manchester appeal tribunal consisting of a chairman sitting alone on 13 February 2004 plainly misdirected itself in holding that the sum of £6,360.90 income support overpaid to the claimant for the period 19 June 2002 to 1 July 2003 (part of a much larger total overpayment of £13,185.62 he received) was not recoverable from him despite having been paid in consequence of an incorrect representation by him to the department that he and his wife had only £250 of capital, when in truth she possessed a substantial sum by reason of which he had no entitlement to income support for that period at all.  
     2.     	I set aside the chairman’s decision and exercise the power under section 14(8)(a) Social Security Act 1998 to give instead the decision I am satisfied has to be given on the undisputed facts found by the tribunal, confirmed by the claim form itself at pages 69-101 which contains the claimant's express and unqualified representation that his and his wife's capital was only £250: namely to confirm as correct the Secretary of State’s decision of 31 July 2003 that the £6,360.90 overpaid to him in consequence of that incorrect information was legally recoverable from him under section 71 Social Security Administration Act 1992.  The tribunal chairman's apparent assumption that recovery under section 71 applies only to cases of misrepresentation of a material fact where the representation is known by the person making it to be untrue was simply and obviously incorrect as a matter of law: it is contrary to section 71 itself which applies in terms to all cases of misrepresentation, whether fraudulent or otherwise, and to the long established law in this area which is that even a wholly innocent misrepresentation entitles the Secretary of State to recover benefit mistakenly overpaid out of public funds in reliance on the representation being correct.  
     3.     	The claimant is a man now aged 58, who claimed income support continuously from 1 July 2001 to 12 August 2003.  There is no dispute that over this period he received a total of £13,185.62 benefit, to which he was never entitled because throughout that time his wife had capital in excess of the prescribed limit of £8,000; he did not tell the department of the existence of this capital, and instead claimed and drew income support on the basis that he and his wife had £250 or less between them.
     4.     	There are several unusual features of this case.  The first is that, as apparently accepted by the officers investigating it on behalf of the Secretary of State, the claimant was at all material times unaware of the existence of his wife’s capital, which represented a compensation payment she had received following a serious accident. According to him she had kept this entirely from him and retained it in a separate bank account, despite the fact that the two of them were getting into debt and he was claiming income support and her own mental condition made it impossible for her to do such things as answering the phone or dealing with strangers.  
     5.     	Although it defies normal belief that a person in the condition described would have been able to deal with the compensation claim and squirrel away the money without her husband having any knowledge of it, these were conceded to be the facts by the Secretary of State.  He accordingly accepted that he was not able to recover the entire overpaid benefit on the ground of the claimant’s failure to disclose material facts since he was unaware of them.  The recovery claim was instead limited to less than half the total, identified as that for the period 19 June 2002 to 1 July 2003, paid out on the faith of express representations by the claimant in a review claim form completed and signed on 18 June 2002, that he and his partner had capital of only £250 and this information was true and complete.  It is not disputed that those statements were factually incorrect: the claimant’s wife had over £8,000 in a high interest bearing account then and at all material times.  The Secretary of State’s decision of 31 July 2003, which was the decision under appeal to the tribunal, accordingly determined that the income support of £6,360.90 admittedly overpaid to the claimant for that period was recoverable from him  under section 71 by reason of his factual misrepresentation.
     6.     	The second unusual feature was that the most direct and obvious evidence to establish the case for recovery on that basis, namely the signed form containing the representation itself, was not among the appeal papers submitted by the Secretary of State to the tribunal as it should have been.  The written submission made on his behalf  did however set out (accurately, as can now be seen) the terms of the statements made on the review claim form and recorded that although the department had at that time failed to retrieve the file containing the form itself, the claimant did not dispute having signed the declaration and statement that the capital of himself and his partner was £250 only: his ground of appeal was not that he had said anything different, but that it was wrong to make him liable for the overpayment when he was unaware of the money in his wife’s bank account.  The Secretary of State’s answer to that was that a statement can be a misrepresentation even if the maker is not aware of the true position, and the declaration signed in this case that the information given was true had been an unqualified one: pages 1B to 1C, in particular paragraphs 5.2, 5.6 to 5.7, and 6.5 to 6.10.
     7.     	The third unusual feature is that the chairman before whom the appeal came for full hearing on 13 February 2004 was unfortunately not adequately prepared to deal with it, as he seems not to have had access to the authorities cited in the Secretary of State’s written submission and to have been left under the fairly fundamental misapprehension that some element of culpability or knowledge of the true facts must be shown before an incorrect statement of fact can be a misrepresentation for the purposes of section 71.  That basic mistake on the law formed the basis of his decision and unhappily the presenting officer who attended the hearing on the Secretary of State’s behalf failed adequately to help him by correcting it, as the following extract from the statement of reasons later issued to the parties on 23 March 2004 at pages 14 to 16 shows: 
“…The decision maker makes reference to a case of Jones and Sharples v Chief Adjudication Officer.  No summary or copy of this case is appended to the submissions…
The Tribunal had already intimated that it found it surprising that somebody could be accused of misrepresenting a fact of which they were unaware.  There was some discussion with the Presenting Officer on this point and in particular the Tribunal indicated that on the facts of the case as outlined by the decision maker, it was of the view that [the claimant] clearly had no idea at all that his wife had any savings over and above the £250 he declared…
The Tribunal having indicated their view on this point, the Presenting Officer agreed that this was very much a one off case and conceded that the facts were as stated and that he was prepared to acknowledge that the Appellant was genuinely unaware of his wife’s capital when making the declaration form A2.  The Presenting Officer having acknowledged the Tribunal’s view on this point did not seek an adjournment to argue the case of Jones and Sharples but indeed indicated that for the case of Jones and Sharples to be of any benefit to them, the Appellant must be aware of the material facts he sought to represent.  He did not therefore proceed with the argument under Jones and Sharples and on that basis the hearing of the appeal concluded. 
The Tribunal concluded that in the light of all the circumstances aired in the appeal and the concessions made by the Presenting Officer, that the Secretary of State had not discharged the burden upon him on the balance of probabilities.  Firstly the Department had not produced the declaration on form A2 duly signed by the Appellant nor had it even exhibited to the papers an unsigned standard copy of form A2.  In addition as the Presenting Officer did not pursue the argument under Jones and Sharples the Tribunal allowed the appeal.”
     8.     	The fourth unusual feature is that although the chairman’s statement of facts and reasons produced some weeks after the date of hearing thus records at more than one point that the department had been unable to produce the claim form itself containing the representations made by the claimant, his contemporaneous note of the proceedings at pages 11 to 12 explicitly records the department's presenting officer as having done just that at the hearing itself.  The note in its entirety reads:
“Documents handed in pre-/at the hearing and retained after the hearing numbered:  None.  Appellant did not attend.  Tribunal waited until 11.30 a.m. - appeal listed for 11.20 a.m.  
Tribunal read the papers and submissions.  P[resenting] Officer attended.  Appellant did not.  P Officer produced original A2 form completed by [the claimant].  P Officer accepted that even for Jones & Sharples to assist, the appellant must be aware of the fact it is alleged he has misrepresented.  No further submissions.”
     9.     	In order to assist me on the present appeal the chairman has been asked for his comments on this apparent discrepancy and has stated that while he is (understandably) unable to be sure given the lapse of time, he considers it unlikely that the form was produced despite what he appears to have noted at the hearing, since no copy was retained on the tribunal file: pages 50-51.  However that may be, it is apparent both from the note he made at the time and from what he afterwards said in the statement of reasons that the chairman regarded the claimant’s unawareness of the true facts as a complete answer to any claim for misrepresentation, on which footing the exact terms of the representations made in the form would not have been crucial.  
     10.     	In fact, the signed claim form itself when finally produced at the legal officer’s direction in this appeal shows that the facts as stated in the Secretary of State’s original written submissions to the tribunal about the representations made by the claimant were all correct.  On the form he signed on 18 June 2002 the claimant stated expressly that he and his partner together had £250 in the bank and no more, and that the information given on the form was correct and complete (pages 74, 100); and he did not qualify those statements in any way.   At no point either before the tribunal or before me has he in any way questioned the accuracy of what the Secretary of State’s original written submission told the tribunal namely that he “does not dispute that he signed the declaration on the form and that the information on that form was that he had capital of £250”.   His case throughout,  as also accurately stated by the Secretary of State to the tribunal, has been that he ought not to be made liable to repay when he was not aware that the statements he made were factually untrue.  In answer to the Secretary of State’s appeal against the tribunal chairman’s decision he says simply that he opposes it as “there must be many partners who know nothing about their other half’s financial situation”: page 102.
     11.     	In my judgment the tribunal chairman plainly misdirected himself on what constituted a misrepresentation in this context, and on that ground alone the Secretary of State’s appeal must be allowed.  The misapprehension that a wholly innocent misstatement of material fact cannot amount to a misrepresentation for the purposes of section 71 and that something further must be shown to found recovery, such as a knowledge of the true facts and therefore the untruth of the representation, is plain on the face of the record of the tribunal’s reasons from which I have already quoted.  Equally plainly it formed the basis for the decision reached that no “misrepresentation” in this case could be shown despite the tribunal’s own express finding of fact recorded in paragraph 3 of that statement (page 14) that on 18 June 2002 the claimant had indeed declared on the review claim form A2 that he and his partner had capital of £250, which at that time he believed to be true.  
     12.     	There can be no doubt in my judgment that the chairman thereby fundamentally misdirected himself in law.  The restitutionary remedy under section 71 is available to the Secretary of State whenever a misrepresentation of material fact has led to the mistaken overpayment of benefit: as section 71 itself makes clear there is no additional element of fraud or culpability required.  A lot is taken on trust from claimants in the interests of getting benefit quickly to those in need and the principle (which is less harsh than the general common law rule that all money paid by mistake is recoverable) is that they are legally liable to pay back any benefit that turns out to have been mistakenly overpaid in consequence of their having misstated material facts, even if the misstatement was innocent.  That is a principle so well established that a presenting officer may be forgiven for some surprise at having it questioned at the tribunal, even if not for apparently failing to answer the point adequately when it was.  
     13.     	I therefore set the tribunal chairman’s decision aside as erroneous in law, though I agree with him that it was unsatisfactory if the case really was presented to him without production of the actual terms of the representation on which it was based.  If that was what happened it may be that in the circumstances of this case he ought to have taken more account of the clear statements in the written material as to the express and unqualified representations made, and the lack of any challenge on those factual points by the claimant himself; but in any case the correctness of those statements is now confirmed beyond doubt by the evidence of the claim form now produced to me.  In those circumstances I can properly proceed to give the decision I am satisfied ought to have been given by the tribunal on its own findings and the undisputed facts.  This is that the £6,360.90 is legally recoverable from the claimant under section 71 as there can be no doubt that he did make incorrect statements of fact to the Secretary of State about the extent of his own and his wife’s capital, and this was what led directly to his receiving the continued payments of income support to which he was never in fact entitled.
     14.     	The Secretary of State’s appeal is accordingly allowed and my decision in the above terms substituted.

(Signed)

P L Howell
Commissioner
28 January 2005

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