CIS/1215/2008

DECISION OF THE SOCIAL SECURITY COMMISSIONER

1.	The claimant's appeal is dismissed.  The decision of the Sutton tribunal given on 12 February 2008 (the tribunal) is not erroneous in point of law.  There is only one point at issue in this appeal.  It was correctly identified by the tribunal.  The chairman's detailed and careful statement of reasons explains in clear terms why the claimant's appeal must fail.  The disputed payments were not a compensation payment made in consequence of personal injury.

2.	The claimant appeals with the leave of a district chairman from the tribunal's decision.  His appeal is not supported by the Secretary of State, whose submission correctly identifies that the real issue in dispute is not which provision of the NHS Pension Scheme  or Injury Benefit Regulations under which a payment derived from his NHS employment was paid to the claimant, but whether that payment could be disregarded as income for the purposes of the claimant's income support claim. 

3.	The claimant is a retired dental surgeon who has been in receipt of income support for some years.  He had been in a long running dispute with the Secretary of State for Health concerning entitlement to injury benefit from the appropriate NHS scheme.  His attempts to obtain payment under the NHS scheme continued over a period of years.  When this was eventually awarded, he then disputed its calculation.  By a judgment given on 10 December 2004 Mr Justice Wilkie dismissed the claimant's application for judicial review of the Department of Health's calculation of his NHS benefit entitlement: see pages 46 to 56 of the bundle, Neutral Citation Number: [2004] EWHC 2879 (Admin). His judgement sets out the basis on which payments to the claimant were to be made.  

4.	Payment advice notices which appear at pages 63 and 64 of the papers show monthly payments to the claimant made from the NHS pension scheme.  The amount payable from 17 April 2003 was £305.89 per month, and that paid for the period from 17 April 2007 was for £386.80.  As the tribunal correctly identified the payment advice notices show that the recipient of the payment was the claimant.  Following receipt of a benefit uprating letter issued on 2 April 2007, the claimant challenged the calculation of his income support entitlement arguing that the payments from the NHS pension scheme should be ignored as either (i) the income was not paid to him, or (ii) if it was paid to him, it was a payment falling within Schedule 9, paragraph 15(5A)(c) of the Income Support (General) Regulations (the IS Regulations).  The decision maker rejected this argument, finding that the payment did not fall to be disregarded as argued, because the income was paid to the claimant, and it was not a payment from a trust whose funds derived from a payment made in consequence of a personal injury.  The claimant appealed to the tribunal against that determination.

5.	Schedule 9 of the Income Support (General) Regulations sets out sums to be disregarded in the calculation of income other than earnings.  Paragraph 15 provides for certain payments, defined as "any relevant payment" made or due to be made at regular intervals to be disregarded.  Paragraph (5A) defines "relevant payment".  It means:

(a)	a charitable payment

(b)	a voluntary payment

(c)	a payment (not falling within sub-paragraph (a) or (b) above) from a trust whose funds are derived from a payment made in consequence of any personal injury to the claimant

(d)	a payment made under an annuity purchased –

(i)	pursuant to any agreement or court order to make payments to the claimant; or 

(ii)	from sums derived from a payment made

in consequence of any personal injury to the claimant; or 

(e)	a payment (not falling within sub-paragraph (a) to (d) above) received by virtue of any agreement or court order to make payments to the claimant in consequence of any personal injury to the claimant

6.	On 6 January 2003 the claimant wrote to the office making the NHS pension payments asking that the payment advice slips should in future show the payee to be a personal injury discretionary trust bearing the claimant's name.  I note that notwithstanding that instruction, all of the payment advice slips included in the tribunal bundle show the claimant himself as the recipient, though they do show that the payment was sent to the trust account designated by him at the Yorkshire Bank PLC. 

7.	The claimant's argument was that the injury benefit payment from the NHS was not paid to him but was paid to the personal injury trust, and therefore he was not the recipient of this income.  The letter of appeal refers to advice from the claimant's solicitors.  This advice from his solicitors, which appears at pages 20 to 23 of the papers starts off by considering disregarded capital.  I note that 'personal injury compensation' is capital, not income, and this applies even where a capital sum is paid by instalments:  regulation 41 and Schedule 10 paragraph 16 of the IS Regulations.  Regulation 48 of the IS Regulations allows certain income to be treated as capital, but none of those provisions are relevant here.  Income unspent at the end of the period to which the payment relates metamorphoses into capital.  Unless that capital is disregarded capital, the normal capital limits apply.  In the claimant's case, this is not disregarded capital under Schedule 10(12) of the Regulations because it does not represent the funds of a trust derived from a payment made in consequence of a personal injury to the claimant.  What is meant by 'a payment made in consequence of any personal injury' is the central issue in this appeal, and I deal with this in  paragraph (9) below.  But first I will consider the other points made in the solicitors' letter.  It goes on to state, entirely wrongly, that the trust is the body entitled to receive the NHS pension payments, and that the claimant is not.  This ignores the point, correctly identified by the tribunal, that the claimant was the recipient of the payments, and the payments were made payable to him.  That he then paid them over to a discretionary trust which he had established in his own favour does not change the nature of the payments nor the identity of the person entitled to receive those payments.  However, based on the false premise that it was not the claimant who was entitled to receive the payments, the solicitors go on to advise him that these payments are therefore "not relevant to your income support situation until they are paid out of the trust".  The solicitors further confuse the situation by referring to disregards of payments of income from an annuity.  There is no evidence that the claimant purchased such an annuity, let alone that if such an annuity had been purchased, it was in terms of the provisions of Schedule 9(15)(5A)(d) of the IS Regulations, i.e. pursuant to sums derived from a payment made in consequence of a personal injury to the claimant.  The solicitors suggest that the claimant is in a position analogous to a person in receipt of funds "as a result of an annuity resulting from a personal injury" (sic).  Regulations, I am afraid, mean what they say and one cannot improve upon them at will by suggesting an analogous situation (in the mind of the solicitor at least) which legislation might have provided for but did not.  The letter then moves on to consider provisions which disregard personal injury payments as income.  What is at no stage identified is why the solicitors believe that receipt of what amounts to an ill-health pension should be treated as a "personal injury payment".   

8.	The claimant's appeal was first considered by a tribunal sitting on 17 October 2007.  Though he had requested an oral hearing of his appeal, the claimant did not attend, and the tribunal, which refused his appeal, proceeded in his absence. The tribunal's decision was subsequently set aside under regulation 57 Decisions and Appeals Regulations because a postponement request had been overlooked.  I note that when the matter came before the tribunal on 12 February 2008, the claimant again did not attend but this time it does not seem an application for postponement was made.  Entirely properly, the tribunal proceeded in the absence of the claimant and his representative, setting out its reasons for so doing in the decision notice and statement of reasons for its decision.

9.	Despite the frequency with which the Income Support (General) Regulations mention 'personal injury compensation', there is no formal definition in the legislation of what amounts to such a payment.  There is a substantial body of case law defining what types of event will amount to 'personal injury'.  This largely derives from the Common Law, and in the context of Social Security legislation is most often encountered in claims for industrial injuries benefit made under Section 94 Social Security Contributions and Benefits Act 1992.  There is no doubt that the claimant here has suffered a 'personal injury'.  But is the payment he receives from the NHS, treatment of which is the only issue in this appeal, 'personal injury compensation'?  I, like the tribunal, am satisfied that it is not.  Throughout the regulations, all mention of 'personal injury compensation' refers to 'payment' in the singular.  Most lawyers would understand this to be a payment, whether as a single lump sum paid over at one point in time, or even a lump sum payable by instalments, made in pursuance either of a court finding in a negligence action, or an agreement in compromise of such an action or the threat of it.  Though some of the provisions in the regulations are qualified by reference to court orders or agreements, not every provision is so qualified.  However, in every case, mention is of a 'payment', not 'payments'.  In my view this must mean that payments, made on a regular basis, and without any reference to tortious liability, cannot be 'a payment made in consequence of personal injury'.  When such 'compensation' is paid, it is capital, not income.  While the legislation does not define when a receipt will be income or capital, the distinction is not usually difficult to make.  As Bridge J noted in R v Supplementary Benefit Commission ex p Singer [1973] 1 WLR 713: "the essential feature of receipts by way of income is that they display an element of periodic recurrence."  The situation here could not be clearer.  The injury benefit is paid each month as an NHS pension.  This means that the claimant's appeal must be determined on the basis that the injury benefit he receives is income, not capital.  

10.	Section 124 of the Social Security Contributions and Benefits Act 1992 provides, inter alia, that a person in Great Britain is entitled to income support if he has no income or his income does not exceed the applicable amount.  The disputed income in this case is 'income other than earnings'.  Regulations 29 and 32 of the IS Regulations provide that such income shall be taken into account over a period equal to the period for which it is payable.  Regulation 40 Income Support (General) Regulations provides that the amount of such income to be taken into account shall be its gross amount, less any sum which falls to be disregarded in accordance with Schedule 9.    The payments made to the claimant in this case are permanent injury benefits paid pursuant to the claimant's status as an NHS practitioner.  His employer accepted, albeit after protracted proceedings, that the claimant had sustained an injury in the course of his employment which was attributable to the duties of employment.  As such, he was entitled to, and eventually awarded, a permanent injury benefit payable under the National Health Service (Injury Benefit) Regulations.  This was a contractual entitlement, not dependent upon establishing any negligence or other liability against his employer.  While this payment would not have been made if the claimant had not suffered a personal injury, it was not 'compensation'.  It was simply a contractual pension entitlement and as such fell to be taken into account as income other than earnings in exactly the same way as would an award of incapacity benefit or industrial injuries disablement benefit.  The fact that benefit is paid in respect of injury or disease is not sufficient to transform it into 'compensation for personal injury'.  These payments are made from an NHS fund, not from a trust whose funds are derived from a payment made to the claimant in consequence of personal injury.  These payments do not satisfy any of the heads set out in Schedule 9(15)(5A) of the IS Regulations.

11.	The tribunal's analysis of the evidence before it, of the arguments made to it, and its application of the law to the facts found by it, cannot be faulted.  The chairman's statement of reasons is a model of clarity.  Though these were not supplied in the submission made by the claimant's representative, the tribunal chairman evidently accessed a copy of the Statutory Instrument 1995 No. 866, the National Health Service (Injury Benefits) Regulations 1995.  These Regulations themselves make it clear that the benefit when awarded is not 'compensation': regulation 17 requires the Secretary of State to take into account 'against the benefits provided in these Regulations any damages or compensation recovered by any person in respect of the injury or disease' to which the Regulations apply.  Regulation 4(6) emphasises the income nature of the benefit by providing that any injury benefit awarded forms a supplement to the pension to which the injured person would otherwise be entitled.

12.	For the reasons set out above the claimant's appeal is dismissed. 

(Signed on the Original)	Mrs A Ramsay
Deputy Commissioner

1 September 2008