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Once the claimant has disclosed a material fact, it is for the Department to make the necessary enquires to determine how the disclosure affects benefit entitlement.

31st March, 2022

ML v. Department for Communities (ESA) [2021] NI Com 47

Background

The claimant was awarded contribution-based ESA from November 2013 while on sick leave. In 2014, he retired on ill health and received an occupational pension from March 2014.

In September 2018, the Department superseded its decision to award ESA on the basis that the claimant was receiving an occupational pension. The Department decided that the claimant had been overpaid £15,159.20 from March 2014 until September 2018.

The Department decided that £8,657.64 was recoverable from the claimant due to his failure to disclose the material fact that he was in receipt of an occupational pension. This decision was subsequently revised to a recoverable overpayment of £15,025.96. The claimant appealed, but his appeal was refused. He appealed to the Social Security Commissioner.

The claimant claimed that his wife contacted the Department on his behalf in February 2014 to disclose the occupational pension. He argued that his obligation to make a disclosure to the Department was fulfilled by his wife’s telephone call.

The Department had no record of the claimant’s wife’s call. The Department agreed that the tribunal had erred in law, but on the ground that the overpayment sum was mis-calculated. The Department argued that the claimant and his wife, having been civil servants should have been prompted by lack of contact from the Department to make further enquiries. Moreover, the Department argued that the fact that the pension was in actual payment should have been disclosed to the Department.

Legal issue

This decision concerns the recoverability of overpaid benefit and the effect of disclosure of a material fact where the Department declined to accept more detailed information from the claimant.

The relevant legislation is section 69 Social Security Administration (NI) Act 1992 and regulation 32 Social Security (Claims and Payments) Regulations (NI) 1987.

Section 69 states:

69.—(1) Where it is determined that, whether fraudulently or otherwise, any person has misrepresented, or failed to disclose, any material fact and in consequence of the misrepresentation or failure—

(a) a payment has been made in respect of a benefit to which this section applies; or

(b) any sum recoverable by or on behalf of the Department in connection with any such payment has not been recovered,

the Department shall be entitled to recover the amount of any payment which the Department would not have made or any sum which the Department would have received but for the misrepresentation or failure to disclose.



(5A) Except where regulations otherwise provide, an amount shall not be recoverable under subsection (1) above … unless the determination in pursuance of which it was paid has been reversed or varied on an appeal or has been revised under article 10 or superseded under article 11 of the Social Security (NI) Order 1998.’

Regulation 32 states:

32.—(1) Except in the case of a jobseeker’s allowance, every beneficiary and every person by whom, or on whose behalf, sums by way of benefit are receivable shall furnish in such manner as the Department may determine and within the period applicable under regulation 17(4) of the Decisions and Appeals Regulations such information or evidence as it may require for determining whether a decision on the award of benefit should be revised under Article 10 of the 1998 Order or superseded under Article 11 of that Order.

(1A) Every beneficiary and every person by whom, or on whose behalf, sums by way of benefit are receivable shall furnish in such manner and at such times as the Department may determine such information or evidence as it may require in connection with payment of the benefit claimed or awarded.

(1B) Except in the case of a jobseeker’s allowance, every beneficiary and every person by whom, or on whose behalf, sums by way of benefit are receivable shall notify the Department of any change of circumstances which he might reasonably be expected to know might affect—

(a) the continuance of entitlement to benefit; or

(b) the payment of the benefit,

as soon as reasonably practicable after the change occurs by giving notice of the change to the appropriate office—

(i) in writing or by telephone (unless the Department determines in any particular case that notice must be in writing or may be given otherwise than in writing or by telephone); or

(ii) in writing if in any class of case it requires written notice (unless it determines in any particular case to accept notice given otherwise than in writing).’

Decision

Before deciding the claimant’s appeal, the Commissioner directed a series of questions to the Department. The Department’s response is summarised below:

  • The Department accepted that on the balance of probabilities it was likely that the claimant’s wife had called the Department in February 2014. The Department further accepted that during the call, the claimant’s wife notified the ESA department that he would be receiving an occupational pension.
  • The Commissioner asked the Department whether it had any administrative or legal basis for declining the disclosure offered by the claimant’s wife. The Department replied that there was no legal or acceptable administrative basis to decline the claimant’s wife’s disclosure. It was not a breach of data protection for the Department to receive information about a claimant from a third party without the claimant being present.
  • The Commissioner asked what the Department should have done with the information disclosed by the claimant’s wife. The Department replied that the officer receiving the call should have made a note on the appropriate computer based system that an ESA officer should contact the claimant to verify information and obtain further relevant details.
  • The Commissioner asked what ongoing duty to disclose remained on the claimant after the telephone call. The Department argued that there was an ongoing duty of disclosure on the claimant created by statements in the ESA 40(NI) Form, including ‘tell us if you or your partner…get a pension’ and ‘Changes you must tell us about’…’Any changes to do with pension income’.
  • The Department accepted that the personal experience of the claimant as a civil servant did not give rise to an additional duty to disclose.
  • The Commissioner asked if disclosure had been made under regulation 32(1A), what additional duty to disclose, if any, might arise under regulation 32(1B) and what was the relevant change of circumstances. The Department accepted that there was no additional duty to disclose under regulation 32(1B) as under regulation 32(1A).
  • The Commissioner asked whether the actual payment of the occupational pension gave rise to any new duty to disclose, bearing in mind the inquisitorial nature of social security adjudication as discussed in Kerr v. Department for Social Development (2004) UKHL 23. The Department argued that actual payment of the pension was a change of circumstances that the claimant should have disclosed.

Having obtained the Department’s replies, the Commissioner went on to decide the claimant’s appeal. The Commissioner identified the main issue as whether the claimant’s wife’s telephone call to the Department amounted to sufficient disclosure as a matter of law or whether the tribunal was correct in finding that it did not.

This raised the question of whether a claimant could meet their statutory obligation to disclose to the Department by way of a disclosure by a third party. The Department referred to R(SB) 15/87 - a decision of the GB Social Security Tribunal of Commissioners. R(SB) provided that the claimant may meet their obligation to disclose by authorising a third party to make disclosure their behalf. However, all of the following conditions must be met:

‘(a) the information is given in connection with the claimant’s benefit entitlement and in compliance with any instructions given by the Department

(b) the claimant is aware that the information has been provided and

(c) in the circumstances, it is reasonable for the claimant to believe it is unnecessary to take further action.’

The Commissioner qualified the applicability of R(SB), stating at paragraphs 71 and 72:

‘I consider that the general principle that [the Department] draws from this case does not apply in the present context. It seems to me that the qualifications at (a), (b) and (c) only apply in cases where information is conveyed indirectly in the cause of a separate transaction, such as an independent claim for benefits by a third party, as opposed to being communicated directly at the request of the claimant. Where disclosure was made directly at the request of the claimant, as here, the qualifications do not appear to be relevant. It seems to me that, having asked his wife directly to disclose the material fact of the occupational pension, it cannot be disputed that the disclosure was properly made on behalf of [the claimant]’.

The Commissioner considered whether the limited disclosure made by the claimant’s wife fully met the statutory duty on the claimant. On the evidence, he considered that the claimant’s wife was ready to disclose further details, but was rebuffed by the Department.

The Commissioner considered the implications of Kerr v. DSD [2004] UKHL 23 at paragraphs 78-80:

‘78. In Kerr v. Department for Social Development Baroness Hale stated, at paragraph 61-62, that the process of benefits adjudication is inquisitorial rather than adversarial. In determining entitlement to benefit, both the claimant and the Department must play their part. The Department is the one which knows what questions it needs to ask and what information it needs to have in order to determine whether the conditions of entitlement have been met. The claimant is the one who generally speaking can and must supply that information. Lord Hope had said at paragraph 15:

“in this situation there is no formal burden of proof on either side. The process is essentially a fact-gathering exercise, conducted largely if not entirely on paper, to which both the claimant and the Department must contribute”.

79.In the context of claims, facts which may reasonably be supposed to within the claimant’s own knowledge are for the claimant to supply at each stage of the appeal. However, the claimant must be given a reasonable opportunity to supply them.

80.Benefit rules are complex and sometimes counterintuitive and cases such as Hinchy and Kerr are founded on the premise that claimants cannot be expected to know them. That is why the duty on the claimant is to respond to the instructions given by the Department and to complete forms in the manner required by the Department. However, as in Kerr v Department for Social Development, the claimant is entitled to expect the Department to play its part, particularly where those instructions have been complied with.’

Applying Kerr v. DSD to the claimant’s case, the Commissioner decided that it is for the Department, once the claimant has disclosed the material fact that a pension is to commence, to enquire about the details of the pension that it requires in order to assess how entitlement may be affected.

On the question of whether there is an ongoing duty on the claimant to disclose, the Commissioner states at paragraph 89:

‘I would characterise the Department’s submission as construing the ESA40(NI) instructions as a series of duties…However, it seems to me that it is really only one duty. Thus, once the fact of the imminent commencement of the pension had been disclosed, the commencement of the payments was not sufficiently distinct to give rise to a new duty of disclosure. I am reinforced in that interpretation by the principles of Kerr v. DSD. I am satisfied that the telephone call from [the claimant’s] wife met [the claimant’s] duty to disclose a material fact that he was shortly to receive an occupational pension. What the Department chose to do with that information - or rather not do - does not alter the fact that disclosure had been made.’

The Commissioner noted that the tribunal decided against the claimant on the basis of regulation 32(1B). This is a general duty to notify the Department of any change of circumstances that might affect entitlement to or the payment of benefit as soon as reasonably practicable after the change occurs. Rejecting the tribunal’s approach, the Commissioner states at paragraph 94:

‘While the tribunal articulated its decision in terms of regulation 32(1B), I do not consider that any different duty arises under that provision than the duty discussed in terms of regulation 32(1B)…Once disclosure had been made in compliance with regulation 32(1A), no new duty could arise under regulation 32(1B).’

And at paragraph 95:

‘I consider that the tribunal erred, once it accepted that the fact of the occupational pension had been disclosed, by effectively placing a new duty of disclosure on the claimant in the absence of administrative action by the Department.’

The Commissioner decided that the tribunal had erred in law. On the basis of the evidence before the tribunal, the claimant had made a disclosure of a material fact sufficient to comply with his statutory duty. The ESA overpaid to the claimant was not recoverable.

For a copy of the judgment, click here.