Hinchy v Secretary of State for Work and Pensions
| Jurisdiction | England & Wales |
| Judge | LORD WALKER OF GESTINGTHORPE,LORD SCOTT OF FOSCOTE,LORD HOPE OF CRAIGHEAD,BARONESS HALE OF RICHMOND,LORD HOFFMANN |
| Judgment Date | 03 March 2005 |
| Neutral Citation | [2005] UKHL 16 |
| Date | 03 March 2005 |
| Court | House of Lords |
[2005] UKHL 16
HOUSE OF LORDS
The Appellate Committee comprised:
Lord Hoffmann
Lord Hope of Craighead
Lord Scott of Foscote
Lord Walker of Gestingthorpe
Baroness Hale of Richmond
My Lords,
Miss Maureen Hinchy lives in Islington. For many years she has been paid income support, a benefit payable under Part VII of the Social Security Contributions and Benefits Act 1992 ("the Benefits Act") and the Income Support (General) Regulations 1987 (SI 1987 No 1967). Her entitlement, which is governed by regulation 17 and Schedule 2, depends upon a variety of factors, including her entitlement to certain other benefits. In some cases, entitlement to another benefit, such as child benefit, results in a reduction in income support. In other cases, it results in being paid a premium. In the latter category is disability living allowance ("DLA"), payable under Part III of the Benefits Act to people who are in need of care in various degrees because they are severely disabled. A person who is awarded DLA for care appropriate to the highest or middle category of disablement will also be entitled to a premium on his or her income support.
In 1993 Miss Hinchy, who suffers from irritable bowel syndrome, was awarded DLA in the middle category. Such awards may be indefinite or for a fixed period. Miss Hinchy's was for 5 years and expired on 13 October 1998. She applied for a renewal but was refused. She appealed but the appeal was dismissed. When the award expired, she ceased also to be entitled to the premium payments on her income support. Her weekly payments should have gone down from £96.15 to £57.65.
Unfortunately, the person responsible for determining Miss Hinchy's entitlement to income support at her local Social Security Office in Hackney did not realise that her DLA award had expired. For nearly two years the office went on sending her order books, containing weekly orders to present at a Post Office for payment, in amounts which included the premium. Eventually a spot check revealed the mistake and her payments were reduced to the correct amount from 3 July 2000. By that time, she had been overpaid £3555.40.
The question in this appeal is whether the Secretary of State can claim the money back. He has a statutory right of recovery under section 71 of the Social Security Administration Act 1992 ("the Administration Act"):
"(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 Secretary of State in connection with any such payment has not been recovered,
the Secretary of State shall be entitled to recover the amount of any payment which he would not have made or any sum which he would have received but for the misrepresentation or failure to disclose…
(3) An amount recoverable under subsection (1) above is in all cases recoverable from the person who misrepresented the facts or failed to disclose it."
The Hackney Social Security Office claimed that the requirements of this section were satisfied because Miss Hinchy had failed to disclose a material fact, namely that her DLA had expired. In consequence of that failure, she had been paid £3555.40 which she would not otherwise have received. Miss Hinchy appealed to an Appeal Tribunal. She accepted that she knew that her DLA award had expired. Nor was it disputed that this was a material fact; the person who made the decision, if he had known about it, "would have wished to supersede and reduce the amount of [the income support] award." Likewise, it was conceded that if Miss Hinchy had told the office about the expiry of the award, then, on a balance of probability, the overpayment would not have occurred.
There were two grounds of appeal. The first was that Miss Hinchy had made disclosure. She said she thought she had mentioned it on the telephone. But the Tribunal said that the absence of any record of such a communication at the Social Security Office made it more likely that she had not done so. The second ground was that in all the circumstances disclosure could not reasonably have been expected of her. The reasons she gave were that she was not in good health and did not understand the benefit system. The Tribunal rejected these excuses. In so doing, it relied upon the instructions printed on the standard order books issued to Miss Hinchy. They have yellow pages at the back with notes headed: "These notes are important, please read them carefully." In addition, each order contains a declaration which the claimant must sign when he or she presents it for payment:
"I declare that I have read and understand all the instructions in this order book. That I have correctly reported any facts which could affect the amount of my payment and that I am entitled to the above sum."
The instructions included the following paragraphs:
" 9 Remember
The amount of money that you are entitled to is based on what you told us when you claimed. If things change and you do not tell us, you might get the wrong amount of money and you could be breaking the law.
10 How to tell us about changes
You must get in touch with the Social Security Office as soon as you can. The address is on the front cover of this order book.
Send them a letter or give details on the Form A9 that we have sent you…. Explain what has happened….
orTake your order book along to the Social Security Office and explain what has happened.
There is information on the next pages about the following changes:…
13 Any benefit goes up or down
You must send us a letter or form A9 if this happens to your money…If you have already told us that your benefit is going up or down and the amounts on the orders in this book change to take account of this, you do not need to tell us again."
Form A9, which is issued to everyone on income support, is headed "Telling us about changes". It lists the various changes which have to be notified. Under the heading "Changes to do with other money coming in" it says "Tell us if you…start to get a different amount of benefit…Remember to include things like social security benefits."
The Tribunal said that the direction in paragraph 13 of the notes, to tell the office if any benefit goes up or down, was a "simple instruction" and, in the absence of medical evidence about Miss Hinchy's mental state, the Tribunal did not accept that she was incapable of understanding it or taking appropriate action. If, as she claimed, she had not read the notes, it would be reasonable to expect her to have done so. This finding of fact is, I think, inconsistent with a submission that Miss Hinchy did not have to make disclosure because she could not be expected to realise that a change in her DLA position would affect her entitlement to income support.
The two questions which were in issue before the Tribunal – whether Miss Hinchy had told the office and whether she could reasonably be expected to have done so – were questions of fact against which there is no appeal. Miss Hinchy's advisers conceded that, as the law then stood, there was no other ground on which she could resist having to repay the money. The relevant principles had been laid down in a well-known decision of the Tribunal of Commissioners in 1986 (R(SB) 15/87), reaffirmed by another Tribunal in CG/4494/99. But Miss Hinchy applied to the Commissioner (Mr P L Howell QC) for permission to appeal and the Commissioner gave permission in order to enable her to test the correctness of the Tribunal decisions in the Court of Appeal. He dismissed the appeal without giving further reasons and gave leave to appeal to the Court of Appeal.
Before I come to the decision of the Court of Appeal, I shall summarise the effect of the earlier jurisprudence created by the decisions of the Commissioners. They have had to deal with various forms of the argument that a failure by a claimant to make disclosure to the official responsible for making an overpayment did not matter because that official already knew, or should have known, or was deemed to know, the relevant facts. It is seldom if ever possible to show that the relevant official actually knew (otherwise why should he have made the overpayment?), but it was said either that, as a matter of good administration, the necessary systems of communication to provide him with the information should have been in place, or that, as a matter of law, the information as to decisions made by other officials about other benefits was deemed to be known to the Secretary of State or the relevant decision maker. The argument does not appear to have been carried to the extent of asking for the Secretary of State to be deemed to have knowledge of all decisions made on behalf of the Crown in other departments, although it is hard to see why not, because the office of Secretary of State is in theory one and indivisible: see Harrison v Bush (1855) 5 E & B 344, 352 and Halsbury's Laws of England, 4th ed (1996), Vol 8(2), para 355.
This argument was advanced in relation to various elements of the claim under section 71 and its predecessors. In its purest form, it was said that "disclosure" to a person who already knew or was deemed to know was conceptually impossible: see Foster v Federal Commissioner of Taxation (1951) 82 CLR 606; Condon v Commissioner of Taxation [2000] FCA 1291 (Federal Court of Australia). Secondly, it was said that "failed to disclose" implies that there had been an obligation to disclose. Such an obligation exists only when it would be...
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