Hinchy (Respondent) v. Secretary of State for Work and Pensions (Appellant)

Recovery of an overpaid social security benefit under section 71 of the Social Security Administration Act 1992 requires a misrepresentation or breach of a duty to disclose a material fact which caused the overpayment.

A claimant must disclose required information to the person or office identified as responsible for the relevant benefit decision. Knowledge held elsewhere within the department is not attributed to that decision-maker. The claimant cannot assume that departmental offices will communicate information between themselves.

An instruction to report when another benefit goes up or down includes its reduction to zero when a fixed-term award ends.

The respondent received income support which included a premium arising from her entitlement to disability living allowance. Her fixed-term disability living allowance award expired, but the local income support office continued paying the premium for almost two years. The Secretary of State sought to recover the resulting overpayment under section 71(1) of the Social Security Administration Act 1992.

An Appeal Tribunal found that the respondent had neither informed the relevant office nor shown that disclosure could not reasonably have been expected. The Social Security Commissioner dismissed her appeal. The Court of Appeal, [2003] EWCA Civ 138, reversed that decision because it considered that the relevant information was already known within the department or could reasonably be expected to reach the income support decision-makers.

The central issue was whether knowledge held by another departmental office displaced the claimant's duty to disclose the cessation of disability living allowance to the office administering income support.

1. Appeal allowed by a majority of four to one. Lord Hoffmann delivered the leading speech. Lord Hope and Lord Walker agreed with it, and Baroness Hale concurred in the result. Lord Scott dissented. The decision of the Social Security Commissioner was restored.

2. Per Lord Hoffmann, section 71 of the Social Security Administration Act 1992 does not impose an absolute right to recover every overpayment. A failure to disclose connotes breach of a disclosure obligation. That obligation arose under regulation 32(1) of the Social Security (Claims and Payments) Regulations 1987 or was implicit in section 71 itself. Baroness Hale agreed that section 71 presupposed a legal duty; a merely moral obligation could not suffice.

3. Per Lord Hoffmann, disclosure had to be made to the person or office identified to the claimant as responsible for the relevant benefit decision. It was insufficient that the information was known to another office or to the Secretary of State viewed as an abstract constitutional entity. The relevant decision-maker was not deemed to possess information which that person did not actually know. The principles developed in R(SB) 15/87 and CG/4494/99 were approved.

4. Per Lord Hoffmann, a claimant is neither concerned with nor entitled to make assumptions about the department's internal administrative arrangements. In particular, the claimant cannot assume that infallible channels of communication exist between offices. The legislative scheme places the primary responsibility for keeping the appropriate office informed upon the claimant. The courts could not transfer that responsibility to the department as a means of encouraging better administration.

5. Per Lord Hoffmann, the order-book instruction requiring notification if another benefit went up or down covered the cessation of the disability living allowance. Its reduction to zero was a change in the amount of money received and therefore a notifiable change of circumstances.

6. Baroness Hale emphasised that disclosure requirements must reflect the claimant's limited knowledge of a complex benefits system. She had serious reservations about the clarity of the order-book instruction, but accepted that the Tribunal's factual conclusion was not open to appellate interference. Lord Scott dissented because, in his view, the instructions did not clearly require notification that a fixed-term award had expired and the Tribunal had not found that the respondent ought to have known that expiry would affect income support.

7. The House expressed no view on whether the reasonable-expectation inquiry under regulation 32(1) employs an objective standard or permits consideration of a claimant's personal characteristics.

1. House of Lords: By a majority of four to one, allowed the Secretary of State's appeal and restored the Commissioner's decision: [2005] UKHL 16.
2. Court of Appeal: Allowed the claimant's appeal and reversed the Commissioner: [2003] EWCA Civ 138.
3. Social Security Commissioner: Dismissed the claimant's appeal and granted leave to appeal to the Court of Appeal.
4. Appeal Tribunal: Rejected the claimant's case that she had disclosed the change or could not reasonably have been expected to disclose it.