BD v Secretary of State for Work and Pensions (SPC)

For recovery under section 71(1) of the Social Security Administration Act 1992, the Secretary of State must establish both that the overpayment would have been avoided but for the claimant’s non-disclosure and that, as a matter of common sense, the non-disclosure remained an effective cause.

A claimant who has been clearly instructed to report changes fails to disclose a material fact by relying only on an assumption that another departmental office already knows it. The exception applies where the claimant knows with sufficient certainty that the authority is already aware of the fact.

Departmental neglect may break the chain of causation for later payments where a new, erroneous decision becomes the operative cause of the continuing overpayment.

The claimant received state pension credit calculated with a severe disability premium. His attendance allowance ended on 13 August 2013, which removed his entitlement to that premium and to guarantee credit. The Pension Service did not act on computer-generated reports recording that the attendance allowance had been disallowed.

The Secretary of State later superseded the pension-credit award and decided that £2,896.73 had been overpaid, of which £2,845.06 was recoverable for failure to disclose the cessation of attendance allowance. The First-tier Tribunal dismissed the claimant’s appeal.

On appeal, the Upper Tribunal considered whether the First-tier Tribunal had misunderstood the departmental information process and whether the claimant’s non-disclosure caused the overpayment for the purposes of section 71(1) of the Social Security Administration Act 1992.

1. Appeal allowed in part. The First-tier Tribunal had been materially misled about the computer interface and the information available to the Pension Service. Its decision was therefore erroneous in law and was set aside.

2. The claimant had received clear written instructions to report changes to benefits and allowances. The cessation of attendance allowance was a material change which he was required to disclose under regulation 32(1A) of the Social Security (Claims and Payments) Regulations 1987. His belief that the Pension Service would already know was an assumption, not knowledge with sufficient certainty to exclude a failure to disclose.

3. Section 71(1) of the Social Security Administration Act 1992 imposes a two-stage causation inquiry. The Secretary of State must show, first, that the overpayment would have been avoided but for the non-disclosure and, secondly, that the causal chain has not been broken when assessed by common sense in all the circumstances. The burden is on the Secretary of State.

4. The first stage was satisfied. On the balance of probabilities, a specific notification from the claimant shortly after the attendance-allowance award ended would have led the Pension Service to remove the severe disability premium.

5. The Pension Service’s earlier failure to act on its reports did not by itself break the chain, because the claimant’s non-disclosure remained a contributing cause. However, on 17 February 2014 the Service made an erroneous supersession decision which incorrectly retained a single-person severe disability premium. That error broke the chain for the final three payments. The recoverable overpayment was therefore reduced to £2,741.72.

6. Using section 12 of the Tribunals, Courts and Enforcement Act 2007, the Upper Tribunal remade the decision accordingly.

• Upper Tribunal (Administrative Appeals Chamber): allowed the claimant’s appeal in part, set aside the First-tier Tribunal’s decision for error of law, and remade it.

• First-tier Tribunal: sitting at Chesterfield on 26 January 2015, dismissed the claimant’s appeal against the recoverability decision.