The Court of Appeal dismissed the appeal of Shane Vincent Owen against the decision of the Social Security Commissioners that his claim for income support had been rightly refused.
The appellant was diagnosed as suffering from a terminal illness and was advised not to return to work. His employment was terminated on 31 October 1996, when he was paid his last month's contractual and statutory sick pay, which amounted to half his normal wages, in arrears. On the following day he claimed income support for the period 1 to 27 November 1996.
On 14 November the Adjudication Officer rejected his claim on the ground that the Income Support (General) Regulations 1987 required the sick pay received by the appellant to be taken into account for the first four weeks less one day of his claim for income support, even though the sick pay had been paid in arrears. Benefit was, in consequence, only awarded to the appellant with effect from 28 November.
The appellant's appeal to the Social Security Appeal Tribunal was dismissed. The tribunal held that the Adjudication Officer had correctly applied the 1987 Regulations, and rejected the appellant's contention that regulation 29 was ultra vires section 136 of the Social Security Contributions and Benefits Act 1992.
The appellant's appeal to the Social Security Commissioners was dismissed on the ground that the tribunal's decision was not wrong in law, since the effect of the Regulations was that the appellant was treated as having a continuous income for another four weeks after 31 October 1996, and those Regulations fell squarely within the empowering provisions of section 136(5) of the 1992 Act.
The appellant appealed to the Court of Appeal on the grounds (i) that regulation 29 was ultra vires the Act; and (ii) that even if regulation 29 was intra vires, the closing words of regulation 29(2) should be struck down as being irrational.
P. Stagg (Andrew Buchanan-Smith, Speakeasy Advice Centre, Cardiff) for the appellant; Richard McManus (Solicitor to the Department of Social Security) for the respondent.
Lord Justice Mummery said that regulation 29(2) of the1987 Regulations was intra vires section 136(5)(a) of the Social Security Contributions and Benefits Act 1992: it was a deeming provision prescribing circumstances in which a person was treated as possessing income he did not possess. A person might be treated as possessing income in a later period even though it had been paid in respect of an earlier period and even though he had already spent all the income that he had in fact possessed at the earlier period.
Section 136(5) permitted deeming provisions to be made in respect of the possessing of income. Deeming provisions by their very nature had the effect of treating a fact or a state of affairs as existing for a stated purpose when that fact or state of affairs did not in truth exist. Those enabling terms were framed widely enough to authorise a provision spreading or apportioning income possessed by a claimant over a stated period by treating it as possessed by the claimant in a period in which he did not in fact possess it.
The fact that a regulation produced a hard case or an anomaly did not necessarily make it irrational. Rules apportioning income received over a period were not intrinsically irrational or unfair. It had to be shown that no reasonable Secretary of State, properly directing himself, could have made such a regulation giving different treatment to earnings and to sick pay, and that had not been demonstrated. The situation would, however, appear to unsatisfactory and would justify a review of the Regulations by the Secretary of State.