DECISION OF THE UPPER TRIBUNAL

(ADMINISTRATIVE APPEALS CHAMBER)

 

The DECISION of the Upper Tribunal is to allow the appeal by the Appellant.

 

The decision of the Manchester First-tier Tribunal dated 27 February 2015 under file reference SC946/14/01034 involves an error on a point of law. The First-tier Tribunal’s decision is set aside.

 

The Upper Tribunal is able to re-make the decision under appeal. The decision that the First-tier Tribunal should have made is as follows:

 

“The Appellant’s appeal against the Secretary of State’s decision of 6 March 2014 is allowed. The overpayment of state pension credit is not (as yet) recoverable from the Appellant as the Secretary of State’s purported supersession of the award covering the period of the overpayment was fundamentally flawed to such a degree that it was wholly invalid, with the result that section 71(5A) of the Social Security Administration Act 1992 was not satisfied.”

 

This decision is given under section 12(2)(a) and (b)(ii) of the Tribunals, Courts and Enforcement Act 2007.

 

 

 

REASONS FOR DECISION

 

The Upper Tribunal’s decision in summary

1. The Appellant’s appeal to the Upper Tribunal is allowed. The decision of the First-tier Tribunal, dated 27 February 2015, involves an error on a point of law and is set aside. Its decision is of no effect.

 

2. The outcome for appeals that succeed before the Upper Tribunal is often that the claimant’s original appeal needs to be re-heard by a new First-tier Tribunal. However, a tribunal re-hearing is not necessary in the particular circumstances of this case. I therefore both (a) allow the Appellant’s appeal to the Upper Tribunal; and (b) re-make the decision that the First-tier Tribunal should have made.

 

3. The immediate result is that the alleged overpayment of state pension credit amounting to £26,025.37 covering a period from 2006 to 2014 is not recoverable under the Secretary of State’s decision taken on 6 March 2014.

 

4. However, that is not to say that the whole or part of that amount is not recoverable by the Secretary of State as a matter of principle and at some point in the future. In order to do so, the Secretary of State will need to make a valid decision that satisfies the requirements of section 71(5A) of the Social Security Administration Act 1992. Section 71(5A) provides that:

 

“(5A) Except where regulations otherwise provide, an amount shall not be recoverable under subsection (1) […] unless the determination in pursuance of which it was paid has been reversed or varied on an appeal or has been revised under section 9 or superseded under section 10 of the Social Security Act 1998”.

 

The background

5. The Appellant started receiving a local authority occupational pension at some point in the late 1970s, when he had to take ill-health retirement (at the early age of his mid-30s). In May 1979 he had reported the receipt of this pension to the local office of what was then the Department for Health and Social Security (DHSS), now the Department for Work and Pensions (DWP). Remarkably, he was able in 2014 to produce documentary evidence of this notification back in 1979. Unsurprisingly, the subsequent history of this case demonstrates that the DWP itself has not been as efficient in its own record-keeping.

 

6. Fast forward to October 2003 and the Appellant, who was now aged 60, was in receipt of income support and was transferred over (without the need for a formal claim) to state pension credit from the outset of that new benefit. It is clear that his brand new state pension credit (SPC) entitlement did not take account of the fact that he was in receipt of the occupational pension. It is unclear whether or not his income support award immediately prior to the change-over had regard to that extra income.

 

7. Fast forward again (because the records reveal nothing of note in the meantime) to September 2006, when the DWP asked the Appellant to complete a SPC review form. This review form included the question “Do you or your partner get a private pension, money from a place where you used to work or any other pension?” The Appellant answered “No”, as he did on a subsequent review form in October 2008. The Appellant’s explanation was that he thought the question only referred to private pensions, and not occupational pensions. The subsequent First-tier Tribunal, not surprisingly, did not think much of that excuse.

 

8. Again, the subsequent DWP records appear to be rather a blank canvass. But in 2014 a routine data-matching exercise suggested that the Appellant was in receipt of an occupational pension. A DWP official telephoned the Appellant; he confirmed he had indeed been in receipt of an occupational pension since 1979. He added (correctly) that he had told the then DHSS about this pension in May 1979.

 

The entitlement and overpayment recoverability decisions

9. According to the DWP submission-writer’s response to the First-tier Tribunal, on 4 March 2014 a decision was made to reassess the Appellant’s SPC entitlement in the light of the occupational pension payments received. The effect of the reassessment was to reduce the Appellant’s weekly SPC entitlement by about £60 a week as from 6 January 2006. This was described as a supersession decision. There is no copy of this actual decision on file, although the appeal bundle does include the arithmetical reassessment schedules for each year in question. It is said that the decision was communicated to the Appellant by letter dated 7 March 2014. However, the relevant letter only refers to his SPC entitlement being reduced as from 17 February 2014.

 

10. Meanwhile on 6 March 2014 an overpayment recoverability decision was taken. A copy of this decision is on file and its substance was communicated to the Appellant in a letter dated 17 March 2014. This decision was to the effect that on 6 October 2003 (the start-date for the SPC scheme) the Appellant had failed to disclose the material fact that he had an occupational pension in payment. As a result, it was said, there was a recoverable overpayment of SPC amounting to £26,025.37 covering a period from 13 April 2006 to 16 February 2014.

 

The First-tier Tribunal

11. The First-tier Tribunal heard the Appellant’s appeal on 27 February 2015. The Tribunal dismissed the appeal and confirmed the Secretary of State’s decision. The summary reasons on the Tribunal’s decision notice indicated that although the Appellant had disclosed his occupational pension income back in 1979, he had failed to refer to it when faced with subsequent enquiries as to his sources of income. The Tribunal later issued a full statement of reasons. In a nutshell its reasoning was that while there had been disclosure in 1979, the Appellant had “misled the Respondent about his income from this source consistently thereafter. [He] must have known that he was expected to declare his pension from [the local authority] but failed to do so” (reasons at [22]).

 

The proceedings before the Upper Tribunal

12. I gave the Appellant permission to appeal principally on two main grounds. The first was that while the DWP had put its case to the First-tier Tribunal on the basis of a failure to disclose a material fact, the Tribunal appeared to have proceeded on the basis of a misrepresentation. I suggested that the Tribunal’s finding about nature of the Appellant’s statement on the September 2006 review form was certainly one that was open to it. However, how did this misrepresentation explain the recoverability of the overpayment for the earlier period between April and September 2006? The second ground concerned the Department’s argument that the Appellant had been sent INF4 leaflets about notifying changes of circumstances, and whether that issue had been properly investigated by the Tribunal.

 

13. Mr Wayne Spencer, who now acts for the Secretary of State in these proceedings before the Upper Tribunal, supports this appeal on a rather different point. He proposes that I allow the Appellant’s appeal, set aside the First-tier Tribunal’s decision and re-make the decision under appeal.

 

14. Miss Jo Rees of Manchester CAB Service, for the Appellant, understandably supports that approach. In those circumstances I need not deal with every point that has been canvassed on this appeal. However, as this appeal may be relevant in other cases, some reasons are appropriate.

 

The Upper Tribunal’s analysis

15. In his helpful and typically comprehensive and enlightening submission, Mr Spencer raises a logically prior point, namely whether the Secretary of State had properly complied with section 71(5A) of the Social Security Administration Act 1992. In short, this requires a decision maker to take a valid revision or supersession decision on a claimant’s entitlement to benefit before an overpayment recoverability decision can be taken (see paragraph 4 above).

 

16. In the present case, as Mr Spencer frankly admits, the relevant entitlement decision is “something of a puzzle”. As noted above, the decision itself was not on file. The original submission writer had in effect tried to explain away this problem by referring to my decision in Secretary of State for Work and Pensions v AM (IS) [2010] UKUT 428 (AAC), where I held that technically there was no statutory duty to commit a decision to writing, although a claimant had to be sent written notice of the decision. So in some cases it will be perfectly possible to piece together the decision that had been taken by reference to other evidence.

 

17. Mr Spencer’s main submission is that in the present case that process is not possible. There are several problems with identifying the nature and basis of the purported entitlement decision of 4 March 2014.

 

18. First, that entitlement decision is described by the original DWP submission writer as a supersession decision to reflect a change of circumstances with effect from 6 January 2006. Yet the Appellant’s occupational pension had plainly been in payment since 1979 and certainly was already in payment at the outset of the SPC scheme in 2003. On that basis the obvious route was to revise on the ground that the original award was given in ignorance of the material fact that the occupational pension had then been in payment.

 

19. Second, it is a mystery as to why the date of 6 January 2006 has been selected. It is quite possible, as Mr Spencer speculates, that 6 January 2006 was chosen as it was the first day of the first complete benefit year for which records of actual payments of SPC exist (proof of those payments runs from 6 April 2006, although this does not explain why recovery of the overpayment was sought only from 13 April 2006). Certainly it is difficult to make any sense of the adjudication history other than on the basis that the decision maker thought there was a change in January 2006 that could justify a supersession. For example, the first reassessment schedule records 6 January 2006 as the “date of application or change”. But actual evidence of any such application or change is there none.

 

20. Mr Spencer argues that as a result the 4 March 2014 entitlement decision by the Secretary of State is “pragmatic but incoherent”. I agree, even without considering the separate issue as to whether that decision was ever properly communicated to the Appellant. Further, he suggests that the fact that the Appellant had been in receipt of his occupational pension in 1979, combined with the absence of official data about SPC payments before April 2006, “does not allow the Secretary of State to ignore this reality and in effect pretend that a change of circumstances occurred in 2006”. There was, accordingly, simply no basis on which to supersede the Appellant’s SPC award as from 6 January 2006.

 

21. As such, Mr Spencer concedes that the 4 March 2014 entitlement decision by the Secretary of State is one that has “so little coherence or connection to legal powers” that it does not amount to a valid decision under section 10 of the Social Security Act 1998 (see R(IB) 2/04 at paragraph 72). On that basis, the requirements of section 71(5A) of the Social Security Administration Act were not met. In the absence of a valid entitlement decision, the subsequent overpayment recoverability decision had to fall.

 

22. The First-tier Tribunal did not have the benefit of detailed argument on this point. It simply recorded that recovery under section 71(1) was conditional upon the entitlement decision having been “revised (superseded)” and that the Appellant had not appealed that decision (as opposed to the entitlement decision). However, even if that was the case, the section 71(5A) point was still a necessary precondition for recovery as regards the overpayment appeal.

 

23. I therefore conclude, as indeed both parties agree, that the First-tier Tribunal’s decision involves an error of law for the reason identified above. As such I both allow the appeal and set aside the Tribunal’s decision.

 

24. The decision that the First-tier Tribunal should have made, and which I now make, is therefore as follows:

 

“The Appellant’s appeal against the Secretary of State’s decision of 6 March 2014 is allowed. The overpayment of state pension credit is not (as yet) recoverable from the Appellant as the Secretary of State’s purported supersession of the award covering the period of the overpayment was fundamentally flawed to such a degree that it was wholly invalid, with the result that section 71(5A) of the Social Security Administration Act 1992 was not satisfied.”

 

25. It follows that I do not need to deal with the other issues raised by the appeal. I simply record my agreement with Mr Spencer’s further observation that the First-tier Tribunal appears to have conflated misrepresentation and failure to disclose. In particular, it is difficult to see how the Appellant’s incorrect statement on the September 2006 SPC review form could justify recovery of an overpayment before that date. As Mr Spencer wryly notes, “the world of social security may, from time to time, resemble a science fiction dystopia, but even here causes must precede their effects”.

 

26. There is one other matter I should mention. My decision is that the overpayment of state pension credit is not as yet recoverable from the Appellant. There is nothing to stop the Secretary of State going back to square one and starting the whole process afresh: see reported decision R(IS) 13/05 at paragraph 15 (Mr Commissioner Mesher) and AG v Secretary of State for Work and Pensions (IS) [2010] UKUT 291 (AAC) at paragraph 16 (Judge Parker)). If so, any new revision (or supersession) decision will attract fresh rights of appeal.

 

Conclusion

27. The decision of the First-tier Tribunal involved an error of law. I allow the appeal and set aside the decision of the tribunal (Tribunals, Courts and Enforcement Act 2007, section 12(2)(a)). I also re-make the tribunal’s decision (section 12(2)(b)(ii)) in the terms set out above. 

 

 

 

 

Signed on the original Nicholas Wikeley

on 14 September 2015 Judge of the Upper Tribunal