PF-v-Department for Social Development (CRS) [2012] NICom 349

Decision No:  C1/12-13(CRS)

SOCIAL SECURITY ADMINISTRATION (NORTHERN IRELAND) ACT 1992

SOCIAL SECURITY (NORTHERN IRELAND) ORDER 1998

COMPENSATION RECOVERY SCHEME

Application by the Department for leave to appeal
and appeal to a Social Security Commissioner
on a question of law from a Tribunal’s decision
dated 18 April 2011

DECISION OF THE SOCIAL SECURITY COMMISSIONER

1.	The Department for Social Development applied for leave to appeal from the decision of an appeal tribunal which sat at Belfast on 18 April 2011.  I grant leave to appeal.

2.	I allow the Department’s appeal and I set aside the decision of the appeal tribunal.

3.	Under Article 15(3) of the Social Security (Recovery of Benefits) (NI) Order 1997 and Article 15(8)(a)(i) of the Social Security (NI) Order 1998, I substitute the decision which I consider the tribunal should have given, without making further findings of fact.  I confirm the amounts, rates and period specified in the certificate of recoverable benefits.

REASONS

	Background

4.	The parties to the application are the Department, the injured party (IP) and Groupama Insurance (“the compensator”).  However, the IP has no vested interest in the outcome of the proceedings, and unsurprisingly has taken no part in them.  The proceedings concern the question of whether the appeal tribunal was correct to reduce the amount due to the Department from the compensator on the basis that some of the benefits paid to the IP were attributable to his own contributory conduct.

5.	The IP was employed as a plasterer.  He sustained an accident at work on 18 February 2003, involving a cement mixer, as a result of which he fractured the scaphoid bone of his right wrist.  He attended hospital and his wrist was put in a plaster cast.  After eight weeks he returned to work, having removed his own plaster cast, and having failed to attend hospital follow-up appointments.  He experienced on-going wrist pain and because of this he attended hospital on 27 November 2003, where he was told that the bone had not united.  He required surgery to graft and fix the bone.  He was unable to work again until 2006.

6.	The IP had claimed incapacity benefit (IB), but did not satisfy the contribution conditions for IB.  Instead, he was awarded income support (IS) on the basis of incapacity for work from 20 February 2003 to 14 April 2003 and later for the period of 28 November 2003 to 27 July 2006.

7.	The IP made a claim for compensation against his employer and a third party, who had sub-contracted work on the building project to the employer.  His employer had insurance against such claims with the compensator.  A settlement of the IP’s claim was agreed between the legal advisers of the compensator, the third party, and the solicitor acting for the IP.  A gross compensation figure of £15,000 plus costs was to be paid in 50 per cent shares by the compensator and the third party.

8.	A certificate of recoverable benefit was issued by the Compensation Recovery Unit of the Department.  This quantified the amount of money due to the Department in respect of recoverable benefits as £10,282.43.  The compensator and the third party were each liable to pay the Department £5,141.22.  A breakdown of the figures shows that it represented the full amount of IS paid to the IP from 20 February 2003 to 14 April 2003 and subsequently from 28 November 2003 to 27 July 2006.  The solicitor for the third party paid the amount to the Department.  The solicitor for the compensator also paid the appropriate sum and, having done so, lodged an appeal against the certificate of recoverable benefit.

9.	The appeal was heard by a tribunal consisting of a legally qualified member (LQM) and a medically qualified member on 18 April 2011.  The compensator’s appeal was validly made and relied on the ground that the benefits shown on the certificate of total benefit “were not all paid as a result of the subject incident giving rise to this action”.

10.	The compensator’s appeal letter asserted that the injured party had contributed to the duration of his benefit claim by his own conduct in delaying or hindering his recovery and specifically by:

(i)	removing his plaster cast too soon;
(ii)	missing follow-up hospital appointments;
(iii)	being a smoker, which reduced the likelihood of the fractured bone healing;
(iv)	being diagnosed with cancer in September 2007.

11.	A number of medical reports were submitted in support of the arguments in the appeal including four reports from Dr Swain and two from Dr Calderwood.

12.	The Department’s responding submission was essentially to the effect that but for the accident, the IP would have remained fit and able to continue working without recourse to claiming benefit.

13.	The IP’s smoking and his early removal of his plaster cast caused the tribunal to conclude that not all the benefits shown on the certificate of recoverable benefit were paid as a result of the incident of 18 February 2003.  The tribunal considered that a 25 per cent reduction was appropriate in all the circumstances.  The tribunal allowed the appeal, holding that the Department should issue an amended certificate with the amount of recoverable benefit reduced by 25 per cent.

14.	The Department requested a statement of reasons for the tribunal’s decision.  This was issued on 15 September 2011.  On 10 October 2011 the Department made an application for leave to appeal to the Social Security Commissioner from the tribunal decision.  On 12 October 2011 the LQM of the appeal tribunal refused the application.  His determination was issued to the Department on 26 October 2011.  On 11 November 2011 the Department made an application to a Social Security Commissioner for leave to appeal.

	Submissions

15.	The grounds on which the Department submits that the tribunal has erred in law are as follows:

(i)	there was no evidence that the problems with the IP’s wrist would have materialised but for the accident – consequently he only claimed IS on the basis of that injury and the tribunal erred in ordering that the certificate should be varied under Article 14(4)(b) of the Social Security (Recovery of Benefits) (NI) Order 1997;

(ii)	the tribunal had failed to follow the binding authority of R1/06(CRS);

(iii)	the tribunal had made perverse or irrational findings as the removal of the plaster cast and the IP’s history as a smoker were irrelevant to the reason he claimed IS.

16.	On 24 January 2012, the compensator’s solicitor was given the opportunity to make observations on the Department’s application for leave to appeal.  The solicitor made no formal response save to indicate that the compensator relied on the grounds raised before the appeal tribunal.

17.	I directed a hearing of the application and directed the parties to provide written summaries of the case they intended to present at the hearing.  The Department submitted a case summary.  Subsequently, the solicitor for the compensator and the solicitor for the IP indicated that they would not be taking part in the hearing on the basis that it would not be economically rational to do so.

	The relevant legislation and the basic statutory scheme

18.	The Social Security (Recovery of Benefits) (NI) Order 1997 (“the Order”) provides the legal framework for the Department to recover the amount of specified benefits paid to a claimant arising from an accident, injury or disease, from any compensation payments made to the claimant in respect of the same accident, injury or disease.

19.	Article 3 of the Order provides:

‘3.—(1) This Order applies in cases where—
(a) a person makes a payment (whether on his own behalf or not) to or in respect of any other person in consequence of any accident, injury or disease suffered by the other, and
(b) any listed benefits have been, or are likely to be, paid to or for the other during the relevant period in respect of the accident, injury or disease.
(2) The reference in paragraph (1)(a) to a payment in consequence of any accident, injury or disease is to a payment made—
(a) by or on behalf of a person who is, or is alleged to be, liable to any extent in respect of the accident, injury or disease, …’

20.	By Article 6, the Order makes provision for the relevant amount of benefit to be certified in a certificate of recoverable benefit and makes provision for such a certificate to be issued.

‘6.—(1) Before a person (“the compensator”) makes a compensation payment he shall apply to the Department for a certificate of recoverable benefits.
(2) Where the compensator applies for a certificate of recoverable benefits, the Department shall—
(a) send to him a written acknowledgement of receipt of his application, and
(b) subject to paragraph (7), issue the certificate before the end of the following period.
(3) The period is—
(a) the prescribed period, or
(b) if there is no prescribed period, the period of four weeks, which begins with the day on which the application is received.
	…’

21.	By Articles 7 and 8 of the Order, the certificate is required to contain information regarding the amount of the recoverable benefit and the compensator is made liable to pay the Department an amount equal to the total amount of the recoverable benefits.

‘7.—(1) A certificate of recoverable benefits shall specify, for each recoverable benefit—
(a) the amount which has been or is likely to have been paid on or before a specified date, and
(b) if the benefit is paid or likely to be paid after the specified date, the rate and period for which, and the intervals at which, it is or is likely to be so paid.
…
8.—(1) A person who makes a compensation payment in any case is liable to pay to the Department an amount equal to the total amount of the recoverable benefits.
…’

22.	By Article 13, the Order makes further provision for a right of appeal against a certificate on certain grounds. 

‘13.—(1) An appeal against a certificate of recoverable benefits may be made on the
ground—
(a) that any amount, rate or period specified in the certificate is incorrect, 
(b) that listed benefits which have been, or are likely to be, paid otherwise than in respect of the accident, injury or disease in question have been brought into account,
(c) that listed benefits which have not been, and are not likely to be, paid to the injured person during the relevant period have been brought into account, or
(d) that the payment on the basis of which the certificate was issued is not a payment within Article 3(1)(a).…’

	The hearing

23.	I held an oral hearing of the application.  The Department was represented by Mr Donnan.  No other party attended, as had been anticipated.  I am grateful to Mr Donnan for his submissions.

24.	Mr Donnan’s main submission was to the effect that there was no evidence that the IP’s problems with his wrist would have materialised if he had not had the accident on 18 February 2003, and therefore that he was paid IS for reasons other than in respect of the injury at work.

25.	He relied on R1/06(CRS) a decision of Commissioner Brown, where she held that an accident or injury does not have to be the sole cause, but merely an effective cause of the payment of benefit.  She stated that for a compensator to succeed, the benefit must be paid “other than in respect of” the relevant accident or injury.  She said that “while incapacity due to that accident or injury remains an effective cause of the payment it cannot be paid “other than in respect of” that accident or injury”.

26.	He further relied upon the decision of the Court of Appeal in England and Wales in Hassall v Secretary of State for Social Security [1995] 3 All ER 909, and upon the decision of the Upper Tribunal in AW v Secretary of State for Work and Pensions [2011] UKUT 223 (AAC).  He submitted that the proper question was whether there was evidence to show that there would have been entitlement to benefits irrespective of the accident.  Mr Donnan accepted that the IP’s conduct may well have contributed to the duration of his benefits claim, but that since the problems with the IP’s wrist would not have materialised but for the accident, these were not relevant.

27.	Mr Donnan further submitted that, if he was wrong on that issue, the evidence before the tribunal was not sufficient as to enable the tribunal to reach the conclusion it did that a 25 per cent reduction in the amount of recoverable benefit was appropriate.

	Assessment

28.	This was an appeal under Article 13(1)(b) of the Order.  The basic question in whether benefits which have been paid otherwise than in respect of the accident, injury or disease in question have been brought into account.  The matter which I have to consider is whether actions by the IP, which might have contributed to prolonging his claim for IS, had the consequence that a proportion of the IS which he was paid can be treated as benefit paid otherwise than in respect of the accident or injury in question.

29.	The issue of the IP’s treatment for cancer on or after September 2007 is raised in the compensator’s letter of appeal.  However, this issue post-dated the period covered by the certificate.  It did not feature in the reasons for the tribunal’s decision and I consider that it is not a matter which has relevance to the issues to be decided in this case.  The compensator relies upon the actions of the IP in prematurely removing his plaster cast, his failure to attend hospital follow-up appointments and his history of smoking.

30.	The Department submits that these matters were also not relevant.  The IP’s entitlement to IS was in respect of the injury to his wrist.  There was no evidence of any intervening cause for the wrist injury and nothing to suggest that the problems with the IP’s wrist would have materialised but for the accident.  Consequently he only claimed IS on the basis of that injury.

31.	The authorities relied upon by the Department included Hassall v Secretary of State.  In Hassall, the claimant was receiving IS due to unemployment, on the basis that he was not working but actively seeking work.  After an accident he received IS on the basis of incapacity for work.  The Court of Appeal in England and Wales held that the entitlement to benefit after the accident was due to the medical certificate of incapacity to work.  No other construction was possible but to hold that the IS paid after the accident was paid as a consequence of the accident, as opposed to the claimant’s continuing unemployment.

32.	The Department further relied upon AW v SSWP.  In that case, the IP had been injured in the course of army service, having been assessed as 40 per cent disabled for the purposes of the Armed Forces Compensation Scheme.  He was then involved in a motorcycle accident, leading to a head injury requiring insertion of a shunt and causing a lack of co-ordination, damage to his dominant right hand and widespread burns.  In the course of hospital treatment he was infected with MRSA, leading to the amputation of a leg above the knee.  He was awarded disability living allowance (DLA) at the high rate of each of the mobility and care components.  He then claimed compensation for medical negligence and received an award of compensation from which the DLA was deducted.

33.	Judge Levenson, hearing the appeal in the Upper Tribunal, held that the tribunal should have considered whether there might have been entitlement to DLA on the basis of the injuries in army service and the motorcycle accident alone, before determining that the DLA award was attributable to the amputation of the leg.  In other words he decided that the pre-existing injuries should have been separated from those resulting from the medical negligence alone.  It appears to me that the approach of Judge Levenson is consistent with that of Commissioner Rowland in R(CR)3/03.

34.	None of these authorities is of conclusive assistance in resolving the question which I have to consider.  However, I found R1/06(CRS), the decision principally relied upon by Mr Donnan, to be of more assistance.  In that case an IP, who was receiving IS following an injury at work, entered into a relationship.  This resulted in an increase in his IS due to the allowance made in applicable amounts for dependants.  Commissioner Brown was considering the question of whether the increase of IS for dependants was otherwise than in respect of the relevant accident or injury.  She held, at paragraph 35, that the IP in that case was awarded IS on the basis of his incapacity for work.  This would have equally been the case if he had no dependants.  However, no matter how many dependants he had, he would not have been entitled to IS had he not been incapable of work.  His IS was not paid otherwise than in respect of the accident or injury.

35.	In the present case the IP was receiving IS by reason of his incapacity for work, resulting from the injury to his wrist.  In order for the compensator to succeed in an appeal the IS would need to have been paid “otherwise than in respect of the … injury”.  Commissioner Brown concludes that the accident or injury does not have to be the sole cause, merely the effective cause, of the payment of the benefit.  The wrist fracture was the effective cause of the payment of the IP’s benefit, albeit that his own subsequent conduct may have prolonged the duration of his incapacity.  The circumstance of being a smoker, of removing a plaster cast or of missing hospital appointments could not amount to an effective cause of payment of benefit in its own right.  As this was the case, the wrist injury remains the only effective cause of the payment of IS to the IP.

36.	The approach taken by the tribunal was to seek to attribute a percentage of contributory fault to the IP for his conduct, which may or may not have delayed his recovery.  Contributory negligence or a failure to mitigate loss on the part of a plaintiff may well affect the amount of compensation awarded by a court or agreed between the parties in the settlement of proceedings.  However, it has no part to play in the question of entitlement to IS on the basis of incapacity.  It cannot therefore be relied upon in order to determine that a payment of benefit has been made otherwise than in respect of the relevant injury.

37.	I conclude therefore that the tribunal has erred in law by taking this factor into account.  Having reached this conclusion I do not need to deal with the further submission of Mr Donnan that, in any event, the evidence did not justify the conclusion arrived at by the tribunal and its assessment that there should be a 25 per cent reduction in the amount on the certificate of recoverable benefit.

38.	I allow the appeal and I set aside the decision of the appeal tribunal.  As there is no dispute as to the facts, I am in as good a position as the tribunal to make a decision in the appeal.  Without making further findings of fact, I confirm the amounts, rates and period specified in the certificate of recoverable benefits.

(signed):  Odhrán Stockman

Commissioner

11 December 2012