Mr Murdoch had issued a claim for damages against the Department for Work & Pensions [‘DWP’] following a decision by them in April 2002 to stop his benefits because he had failed to attend a medical appointment without good cause. The DWP had conceded that the decision to stop his benefits was wrong, given that the letters requesting he attend the medical had been sent to the wrong address. The DWP had agreed in July 2002 to reinstate his benefits and repay money he was owed for the period that payment was not made. However there was a substantial delay in reinstating the benefits and repaying the monies owed such that he did not regular payments for some time and the arrears owed for a considerably period (arrears of incapacity benefit were only paid in March 2003, the arrears for income support were paid in June 2004 and for housing costs in November 2004). Mr Murdoch was compensated in accordance with the extra-statutory scheme the Financial Redress for Maladministration Guide to the tune of £799.34 for the delay in payment of the arrears but he claimed that these payments were grossly insufficient to cover the substantial losses caused to him by the negligence of the DWP in sending the letters to the correct address and then subsequently failing, within a reasonable time, to give effect to the July 2002 decision. He explained that as a result of the non payment of benefits he had found it necessary to resort to an unregulated lender from whom he borrowed £7,260 and to whom he was obliged to repay not only that sum but also a large amount of compound interest, such that by November 2006 he was required to pay back a sum of £60,000.
His original application had been summarily struck out by the Court on the basis that there was no duty of care in relation to the matters complained of. The DWP argued that a duty of care would be inconsistent with the statutory scheme for social security benefits. Mr Murdoch sought to challenge this decision on the basis that it had been wrong for the court to entertain a strike-out application and to decide issues of law on assumed facts.
The Court, in line with the decision in Rowley v Secretary of State for Work and Pensions (2007), held that a common law duty of care could only arise if this was consistent with the statutory scheme. It was accepted by Mr Murdoch that s17(1) of the Social Security Scheme 1998 was “simply a continuation of a series of provisions in predecessor statutes, among them s 117(1) of the 1975 Act”. Therefore what was said in Jones v Department of Employment (1989) about s 117(1) of the 1975 Act must be applicable to s 17(1) of the 1998 Act, namely that negligence in the taking of decisions within s 17(1) cannot be actionable on the basis of a common law duty of care. The Judge adopted the term “protected decisions” to distinguish those that could not give rise to a common law duty of care, because the statute intended that they could only be examine by way of statutory appeal, judicial review or action for misfeasance. He determined that the DWP’s decision to stop Mr Murdoch’s payments and the decision to pay the arrears were both ‘protected decisions’ and that consequentially it had to follow that Mr Murdoch’s claim was incompatible with the statutory scheme.
During the course of the proceedings the parties agreed that regulation 20 of the Claims and Payments Regulations imposed a statutory obligation on the Secretary of State to pay benefit. Neither those regulations nor any other statutory provision provides an express remedy for the recovery of unpaid benefit, but it follows that a claimant who can prove that there is an award of benefit in his favour which is unpaid is entitled to sue for the unpaid amount in the County Court. Mr Murcoch’s counsel made the point that such a remedy was likely to prove impracticable for many cases and particularly so for this one, on the basis that the rates of benefits changed depending on need, and a claimant may not be aware that the DWP had taken the decision to award benefits. In this case the decision to restore his separate benefits were taken separately and so would have required two separate actions in the county court. As such, Mr Murdoch argued that it was unrealistic to suggest that the average social security claimant will be in a position to calculate benefit accurately, even with assistance from a CAB. In rejecting these points the Judge commented that it would be “incompatible with the scheme to complicate matters by adding a right of action for negligence.” And that whilst a claimant needs to know of the decision before proceedings can be commenced, in most cases this would be a matter of record and readily identifiable. He did not accept there would be great difficulty in calculating the amount owed and in any event the County Court was well suited to resolve any issue as to calculation. The 1998 Act provided clear financial protection in relation to financial matters and a clear delineation of the role of the DWP, statutory appellate bodies and the courts. In relation to those key features, the scheme in the 1998 Act was similar to that in the Child Support Act 1991, and they, along with the fact that the Financial Redress for Maladministration Guide was in place prior to the enactment of the 1998 Act, provided further reason for concluding that the duties asserted by M would be incompatible with the statutory scheme.
The Judge went on to comment that even if the duty of care alleged by Mr Murdoch was compatible with the statutory scheme, the earlier judge who had struck out his claim had been right to conclude that the factors set out in the Barclays Bank case had not been satisfied. Whilst the decision to call Mr Murdoch was a matter of discretion rather than a duty, the exercise of discretion did not involve a voluntary assumption of responsibility and so the first test of a common law duty of care was not made out. Secondly, the Judge found that it was correct on the facts to distinguish R (on the application of A) v Secretary of State for the Home Department (2004) because that case involved the statutory scheme for immigration and therefore very different from a scheme whose purpose was to provide funds rather than any particular status. Thirdly, whilst it was foreseeable that Mr Murdoch would suffer damages as a result of the mistakes made by the DWP there was no relationship of sufficient proximity between the parties, because he was in no different position from any other member of the public applying for social security benefit.
The Judge rejected the argument put forward by Mr Murdoch that his particular vulnerability should be considered to determine that it would be fair, just or reasonable to impose a duty of care on the basis that Mr Murdoch was no more vulnerable that any other applicant for the benefit and that Parliament had addressed their vulnerability by putting in place the provision in the first place. That being so, the Judge concluded that it did not appear “ fair, just and reasonable to add another extra-statutory legal entitlement on to the provision already contemplated by Parliament”. Caparo Industries Plc v Dickman (1990) 2 AC 605 HL and Barclays Bank followed.
Finally the Judge held that the court had been correct to entertain the strike-out application given that even if it was assumed that all the facts alleged by Mr Murdoch were true, his claim had to fail because there was no duty of care, Rowley followed.