Court of Appeal upholds ruling that DWP acted unlawfully by failing to seek representations from claimants before applying third party deductions for utility debts
Timson, R (On the Application Of) v Secretary of State for Work and Pensions
[2023] EWCA Civ 656
Background
The claimant received income-related employment and support allowance (ESA) and had been subject to third party deductions (TPDs) in respect of arrears and ongoing usage of water and fuel on several occasions.
NB – decision makers have discretion under regulation 35 of and schedule 9 to the Social Security (Claims and Payments) Regulations 1987 (SI.No.1968/1987) (the 1987 Regulations) to make deductions from a claimant's legacy benefits if a third party, such as a utility company, applies for a TPD in order to repay debt they say is owed and to meet ongoing usage costs, and it is in the interests of the claimant’s family to do so.
The claimant challenged the DWP’s TPD policy and its guidance to decision makers on TPDs in relation to legacy benefits including ESA – as set out in chapter 46 of the Decision maker’s guide and in an Overview document that provided further advice on how to operate the scheme – and in September 2022, the High Court ruled that the TPD guidance was unlawful (in the way identified in the third category described in R(A) v Secretary of State for the Home Department [2021] UKSC 37) in not making it clear that claimants should be offered the opportunity to make representations and/or provide relevant information to the decision-maker before a TPD decision is taken.
However, the Secretary of State for Work and Pensions (SSWP) appealed to the Court of Appeal on grounds including that –
- two findings of fact by the judge in the court below were perverse –
- he had made a finding that 'a TPD may result in a reduction of up to 25 per cent of [a claimant's] benefits', whereas in fact it was only the specified benefit that was at risk and not any other benefits; and
- the judge found that the only material before the decision maker would be that contained in a spreadsheet supplied by the utility company, whereas they would have also been able to access the claimant's benefit records which might be a source of significant personal or medical information;
- the judge misread the guidance and consequently erred in finding that it was unlawful in the way identified in R(A);
- the judge misdirected himself by applying the law as stated by Lord Neuberger in Bank Mellat v HM Treasury [2013] UKSC 38, [2013] UKSC 39 (and relied on by the Court of Appeal in R. (oao Balajigari) v. Home Secretary [2019] EWCA Civ 673), when he should have followed Lord Sumption and the majority in Bank Mellat; and
- the judge should not have found that the guidance was unlawful because it was unfair or involved a breach of the duty in Tameside [1976] UKHL 6 – the requirement on decision-makers to search out relevant information that they need to make their decision – as the system taken as a whole was fair because it allowed for de novo review and appeal, and enabled a claimant to make representations at any stage.
Issue before the Court of Appeal
Whether the High Court was right to hold that the SSWP had issued unlawful guidance which allowed decision makers to a make an order for a TPD without first giving the claimant an opportunity to make representations.
Decision
Lord Justice Edis, with whom Lord Justice Phillips and Lord Justice Warby agree, dismisses the appeal.
Reasons
Were the judge's findings of fact perverse?
Lord Justice Edis highlights that the judge said that 'a TPD may result in a reduction of up to 25 percent of their benefits', and he finds –
'For the purposes of the real issue in this appeal, whether claimants generally should be given an opportunity to make representations before a TPD direction is made, it was reasonable for the judge to approach the question on the basis that a direction may result in a 'significant sum' ceasing to be available because these claimants are on low incomes. That is the basis on which he approached the question and there is nothing perverse about that.' (paragraph 43)
In addition, in respect of the finding with regard to the spreadsheets, Lord Justice Edis rules –
'The judge was actually right to approach the case on the basis that decision makers would depend upon the information supplied by the utility providers in their spreadsheets. It is true that, if they chose to access it, the decision makers could also access the benefit records of the claimant whose case they were considering. However, there was no evidence to suggest that they ever, in fact, did this or, if they did, how frequently they did it…
On this state of the evidence it was clearly not perverse for the judge to approach the case on the basis that in almost all, if not actually all, cases the decision maker had only the information on the spreadsheet before them when making the decision.' (paragraphs 44 and 45)
Was the guidance unlawful in the way identified in R(A)?
Dismissing the argument, Lord Justice Edis highlights that the Overview document confirms that the judge was correct in his reading of the guidance.
Did the judge misdirect himself when applying the law in respect of Bank Mellat and Balajigari?
Considering whether the judge should have followed Lord Sumption when referencing Bank Mellat, Lord Edis highlights that the part of the decision which has relevance for the current appeal was the consideration of the scope of the common law duty to give advance notice and an opportunity to make representations to an individual against whom it was proposed to exercise a draconian statutory power and, although Lord Neuberger used his own words to describe the duty, his view was not materially different from that of Lord Sumption.
Going on to address the construction of the 1987 Regulations, Lord Justice Edis adds –
'The limited nature of the power to make a TPD direction conferred by the Regulations provides strong support for the conclusion that, as a matter of law, fairness requires a claimant to be given an opportunity to make representations before that power is exercised. The terms of the provisions … require that the Secretary of State must either form an 'opinion' or be 'satisfied' that the TPD would be 'in the interests of the family'. This makes it clear that the TPD is only available following a consideration of the interests of the claimant and, if there are any, other members of the claimant's family. I find it impossible to see how such a consideration can take place fairly without the claimant and other members of the family being able to say what they think is in their interests, and why. It may include matters which are uniquely within the knowledge of the claimant. Even in Bank Mellat, where the question concerned the national interest of the United Kingdom, the Supreme Court held that a prior opportunity to make representations was required as a matter of fairness. The submission of the Secretary of State … comes down to the proposition that because only in very few cases can the personal circumstances of the claimant or their family make any difference, there is no point finding out what they are. This is very close to saying that the interests of the claimant are irrelevant, which is precisely the opposite of what the Regulations say. The Secretary of State can only make a TPD direction after forming an opinion or being satisfied about the interests of the particular claimant and family under consideration. The Regulations therefore require that their interests are assessed in the light of all relevant information which must include anything they wish to say on the subject. After forming that judgment the Secretary of State may make a TPD direction. That involves a discretion.
In my judgment, the Regulations, by framing the decision-making as they do, require a consideration of the interests of the individual claimant and their family. Under the guidance, however, the decision-maker has the option of contacting them, or of investigating their benefit records, but the guidance allows a decision to be made where the claimant or their family has been given no opportunity to supply information beyond what the utility company puts in the spreadsheet. This appears to me to be obviously unfair.' (paragraphs 65 and 66)
Did the guidance involve a breach of the Tameside duty?
Lord Justice Edis concludes –
'[The judge] held that no reasonable decision maker could conclude that they had enough information on which to take a rational decision about the interests of the claimant without asking her what she thought about her interests. Although this is a different legal route to an answer from the common law duty of fairness I find it hard to see how the judge could have come to a different conclusion on the two issues on the facts of this case. Since I would uphold him on common law fairness I would also agree with him on the Tameside duty claim. This is not to conflate the two duties. In this case they both lead to the same result.' (paragraph 76)