B – The end of a long and winding road
In this article, Sarah Clarke looks at the B case and its history, together with the related case of Hinchy v Secretary of State for Work and Pensions  UKHL 16, which ran alongside it.
The decision of the European Court of Human Rights (ECtHR) in B brings to a conclusion a long-running case about whether the ‘failure to disclose’ test for overpayment recovery in s71(1) of the Social Security Administration Act 1992 is subject to reasonableness.
S 71(1) provides as follows:
‘Where it is determined that, whether fraud-ulently 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.’
The issues that have arisen about this test include:
1. Is there a failure to disclose where a claimant has not told the DWP about something it already knows – for instance, where the DWP has ended entitlement to one benefit and that affects another benefit the claimant is getting? Claimants often do not understand the complex, interlocking nature of the benefit system, and may not know what effect receipt of one benefit has on another. Claimants also usually do not know about the DWP’s internal administrative arrangements. They may reasonably assume that the DWP is aware of its own actions, and that they do not need to tell the DWP something it already knows.
2. Is the failure to disclose test subject to a general principle of reasonableness? A claimant may fail to disclose something for a very good reason, or may actually be unable to disclose something – eg, where s/he is sectioned under the Mental Health Act and is not allowed contact with anyone. Can s/he fairly be said to have failed to disclose in these circumstances?
Advisers should note that the caselaw in this area is very extensive, and that there are many other cases which have added glosses and nuances to the principles in B and Hinchy. For a full explanation of these, see the commentary to s71 in Social Security Legislation 2011/12 Vol III. There are also a number of articles charting the progress of these cases in Bulletins 161, 173, 185, 187, and 191.
The story begins with Hinchy v Secretary of State for Work and Pensions, a case where the claimant was overpaid income support when a disability premium continued to be paid although her fixed-term award of DLA had ended. It was accepted she had not told her local income support office that her DLA award had ended. In February 2003, the Court of Appeal held in her case that she had not failed to disclose the fact that her DLA award had stopped because it was not possible to fail to disclose a fact that the Secretary of State already knew. The DWP appealed.
In B’s case, in the meantime, the claimant had a severe learning disability and was overpaid the child amounts in her income support when she failed to advise the DWP that her children had been taken into care. On the facts, she was in an extremely distressed state. Her appeal against recovery of an overpayment was allowed before a First-tier tribunal, on the basis of long-established caselaw to the effect that it was not reasonable to expect her to disclose the material fact that her children had gone into care. The DWP appealed.
In October 2004 in B’s case, reported as R(IS) 9/06, overturning decades of caselaw, the then Commissioners held that ‘failure to disclose’ does not mean simply ‘non-disclosure’. It imports a breach of some obligation to disclose. That obligation is found in regulation 32(1) of the Social Security (Claims and Payments) Regulations 1987, now supplemented by regulation 32(1A) which requires a claimant to provide information the DWP has asked her/him to provide in connection with a revision, supersession or payment of an award. In B’s case, the notes in the claimant’s order book clearly told her to report the fact that her children were no longer living with her. The duty was not subject to reasonableness. Claimants who lacked capacity had two sources of protection; they could have an ap-pointee to act on their behalf and the Secretary of State had discretion not to recover an overpayment from them. It is only in relation to the duty under regulation 32(1B) to notify any changes the DWP has not specifically told them to report but that affect their entitlement to benefit, that the reasonableness test applies. B appealed to the Court of Appeal.
In March 2005 in Hinchy, the House of Lords, clearly influenced by the Commissioners in R(IS) 9/06, overturned the Court of Appeal’s decision, and held that the claimant’s duty is to make a disclosure to the office handling the benefit claim. On that basis, therefore, Mrs Hinchy had failed to disclose to the income support office that her DLA had stopped. This restored the caselaw to its former state in R(SB) 15/87.
In July 2005, the Court of Appeal upheld the decision of the Upper Tribunal in B. Permission to appeal to the Supreme Court was refused. The Court of Appeal commented that the DWP’s policy on the exercise of its discretion should be made public: ‘...it is the antithesis of good government to keep it in a departmental drawer.’ This has not stopped the DWP from keeping its policy close to its chest. It is not publicly available but has been disclosed to CPAG and some other advice organisations.
In B the Courts had radically departed from established caselaw, in Hinchy, by contrast, they had retrenched their position – in both cases to the detriment of vulnerable claimants who were overpaid benefits. Hinchy left open the situation where it could be shown that the Secretary of State actually knew the material fact in question; that point was never clear on the facts in Hinchy. There has been conflicting caselaw on this issue.1 B left open the issue of reasonableness where the claimant had not clearly been told what information s/he needed to give the DWP. Arguments may remain on this issue where the DWP has not provided information in an accessible format.
But that was not the end of the story. B took her case to the European Court of Human Rights. Six years later, it has given its decision.
B argued before the ECtHR that the basis on which the Secretary of State could recover overpayments from her discriminated against her unlawfully, contrary to Article 14 (prohibition of discrimination) taken together with Article 1P (the protection of property) of the European Convention on Human Rights.
The Court of Appeal had held that an overpayment of social security benefit could not come within the ambit of Article 1P. The ECtHR has held that it does, recognising that it carries with it a right for the Secretary of State to recover from future benefit entitlements, which in themselves fall within the scope of Article 1P. This is important, because the right not to be discriminated against under Article 14 only has effect in relation to the enjoyment of other Convention rights. If a person wants to argue that s/he has been discriminated against contrary to Article 14, s/he can only do so if another Convention Article is engaged. There does not have to be a breach of another Article; it is enough that the facts of the case fall ‘within the ambit’ of one or more Convention Articles. The fact that the court has held that an overpayment can engage Article 1P, therefore means that if in future the government introduces an overpayment recovery policy which discriminates against any group, there will be a potential argument under Article 14.
The claimant’s discrimination argument was that:
1. As a claimant who could not reasonably be expected to report a material fact because she was unaware of the requirement to report it, she had been treated differently from someone who could not reasonably be expected to report a material fact because s/he did not know that fact.
2. As a claimant who was incapable of understanding a material fact, she was treated the same as someone who was capable of understanding the requirement to report.The capacity or incapacity to report a fact was a ‘status’ for the purposes of Article 14.
The court dismissed the first argument, agreeing with the Court of Appeal that the two groups could not be said to be in relevantly similar situations, because ‘the proposition that you cannot report something that you do not know is a simple proposition of logic, whereas the proposition that you cannot report something you do not appreciate you have to report depends on difficult questions of cognitive capacity and moral sensitivity which vary from person to person.’
However, it accepted that the failure to make a distinction between those who do and do not have the capacity to understand what is required of them required a justification. The court accepted it was justified. However, it said it would not be justified if the individual concerned had to bear an excessive burden. In this case, B did not have to bear an excessive burden as there was no evidence the reduction in benefit would have a detrimental effect on B’s health and welfare as she had not asked the Secretary of State to waive his right to recover the benefit.2This is also helpful, as it suggests that the Secretary of State cannot justify recovery where the level is such as to be detrimental to an individual’s health or welfare if there is a reason for treating that individual differently based on some other status, such as mental capacity.3
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- 1. See for instance GK v SSWP  UKUT 98 (AAC) which disapproves CG/5631/1999
- 2. The court was mistaken about this. The claimant in fact had asked the Secretary of State to exercise his discretion not to recover.
- 3. Note that universal credit will have a completely different test of recovery of overpayments, as may other means-tested benefits from October 2013.