From The Times October 21, 2009

From The Times October 21, 2009

No common-law right to recover overpayments Court of Appeal Regina (Child Poverty Action Group) v Secretary of State for Work and Pensions Before Lord Justice Sedley, Lord Justice Lloyd and Lord Justice Wilson Judgment October 14, 2009 Where the cause of an overpayment of social security benefits was neither misrepresentation nor non-disclosure, the Secretary of State for Work and Pensions was not entitled to resort to common law to recover the money paid. The Court of Appeal so held in a reserved judgment in allowing an appeal brought by the Child Poverty Action Group (CPAG) against the refusal by Mr Michael Supperstone, QC, sitting as a deputy judge of the Queen’s Bench Division, ([2009] EWHC 341 (Admin)) to grant declaratory relief that section 71(1) of the Social Security Administration Act 1992 was the only means by which the secretary of state could recover overpayments. Section 71 provides: “(1) Where it is determined that, whether fraudulently or otherwise, any person has misrepresented, or failed to disclose, any material fact ... the secretary of state shall be entitled to recover the amount of any payment...” Mr Richard Drabble, QC, for CPAG; Mr Andrew Henshaw for the secretary of state. LORD JUSTICE SEDLEY said that from time to time, inevitably, accidental overpayments were made to individuals entitled to social security benefits. Until recently the Department of Work and Pensions enforced recovery either under section 71 or not at all. For overpayments not covered by the section it would ask claimants for repayment but would take no further steps. However, the adoption of a new practice of asserting a right to take legal action outside section 71 based on the law of restitution had prompted the present proceedings. Although more than 65,000 such letters had been sent out, their Lordships had been told that no claim had yet been initiated in the courts. In that situation, stressful for claimants and problematical for the department, CPAG’s application for judicial review of the claimed entitlement was an appropriate use of the administrative court’s jurisdiction. In his Lordship’s judgment the only right of recovery available to the secretary of state was through section 71. It was introduced into an established statutory scheme which had always been understood to be exhaustive of the rights, obligations and remedies of both the individual and the state. It was introduced at a time when adjudication was separate from administration. Both then and since, awards had been conclusive of the obligation to pay and of the right to receive payment. In such a context, it was unsurprising that the power of recovery when an award was modified should be prescribed by Parliament and not at large. Lord Justice Lloyd delivered a concurring judgment and Lord Justice Wilson agreed. Solicitors: Ms Sarah Clarke, Islington; Solicitor, Department of Work and Pensions. http://business.timesonline.co.uk/tol/business/law/reports/article6882454.ece