B v Secretary of State for Work & Pensions

For recovery under section 71(1), read with regulation 32(1), a claimant fails to disclose a material fact if she knows a fact which an unambiguous requirement obliges her to report, can communicate it, and does not do so. The provision contains no further requirement that she understand the fact’s materiality or appreciate her reporting obligation. Recovery may therefore follow an innocent omission, although a person cannot fail to disclose a fact of which she has no knowledge.

The recovery of an overpayment does not engage the protection of possessions under Article 1 of the First Protocol. Executive discretion to forgo recovery cannot alter the statutory construction, though it must be governed by a lawful and accessible policy.

The appellant, who had severe learning disabilities, received income support including child-related premiums. After her children were removed from her home and taken into care, she did not tell the Benefits Agency. The resulting net overpayment was £4,626.74.

The Hounslow Appeal Tribunal overturned the Secretary of State’s recovery decision. A full Tribunal of Social Security Commissioners allowed the Secretary of State’s appeal in CIS/4348/2003, holding that the overpayment was recoverable in principle.

The appellant appealed to the Court of Appeal. The central issue was whether a claimant who knows a reportable fact but lacks the mental capacity to understand that it must be reported has failed to disclose it for the purposes of Social Security Administration Act 1992, section 71(1).

Appeal dismissed unanimously. The court upheld the Tribunal of Commissioners’ conclusion that the Secretary of State was entitled in principle to recover the overpayment.

1. Section 71(1) of the Social Security Administration Act 1992 required a failure to disclose a material fact. The relevant legal obligation to disclose arose from regulation 32(1) of the Social Security (Claims and Payments) Regulations 1987. The reporting requests were unambiguous. The appellant knew that her children had been removed from her home and could communicate that fact. Her non-reporting was therefore a breach of the regulation.

2. The statutory phrase did not import a further test of personal fault, moral obligation, reasonable expectation, or capacity to appreciate the need to report. A person cannot disclose an unknown fact, but the materiality of a known fact is objective. The words “fraudulently or otherwise” also contemplated recovery following innocent failures. The court rejected the contrary line originating in R(SB) 21/82.

3. The court declined to treat the Secretary of State’s discretion not to enforce recovery as an aid to construing the statute. Discretion could not determine the extent of a statutory entitlement.

4. The Article 14 argument, read with Article 1 of the First Protocol, failed. Recovery sought the return of money which ought not to have been paid. It did not interfere with possessions. The court therefore did not decide whether a distinction based on mental capacity would otherwise have been justified.

5. Although enforcement discretion did not affect liability, Sedley LJ observed that it became important after the statutory entitlement had been established. A lawful policy was needed for consistent but adaptable decisions, and should be accessible to claimants and advice bodies. This was guidance rather than a qualification on recovery under section 71(1).

• Court of Appeal (Civil Division): dismissed the appellant’s appeal in [2005] EWCA Civ 929.
• Tribunal of Social Security Commissioners: allowed the Secretary of State’s appeal in CIS/4348/2003 and held that the overpayment was recoverable in principle.
• Hounslow Appeal Tribunal: on 7 July 2003, overturned the Secretary of State’s recovery decision.