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Child Poverty Action group wins appeal on common law overpayment recovery
Child Poverty Action Group (CPAG) have succeeded in overturning a decision allowing the Department for Work and Pensions to issue letters requesting repayment, at common law, of money paid by mistake where Section 71 of the Social Security Administration Act 1992 is intended to be used as a means of recovery.
Child Poverty Action Group (CPAG) applied for judicial review regarding the practice of the Secretary of State for Work and Pensions (DWP), of seeking to recover overpaid Social Security benefit by methods other than under Section 71 of the Social Security Administration Act 1992.
Section 71 of the 1992 Act gives the DWP powers to recover, subject to specified conditions, a payment of any relevant benefit from any person who has misrepresented or failed to disclose any relevant fact.
The DWP argued that Section 71 did not prevent it from claiming repayment, at common law, of money paid by mistake. In response the CPAG contended that this practice was unlawful where the original payment was made "pursuant to and in accordance with a valid determination" and where the pre-conditions for recovery under Section 71 are not met.
What this meant in practice was that the DWP wrote standard letters to claimants who were considered to have been overpaid benefit, but who had not misrepresented or failed to disclose any relevant fact.
These letters claimed that the DWP had a right to recover an overpayment under common law. Between March 2006 and February 2007 65,000 common law recovery letters were sent.
The case went to the High Court as "R on the application of Child Poverty Action Group v Secretary of State for Work and Pensions 2009".
Michael Supperstone Q.C. (Sitting as Deputy High Court Judge) dismissed CPAG's claim, thus allowing the DWP to continue to issue common law overpayment recovery letters should it choose to do so.
"In my judgment a common law power to recover the overpayment of benefit paid by mistake of fact or law exists. Accordingly in such cases the Defendant is entitled to ask for money back on the basis that the recipient was not entitled to receive it. So understood the practice of sending the standard form letter is not unlawful."
Child Poverty Action Group then appealed the decision to the Court of Appeal. The DWP suspended the issue of "common law recovery" letters pending the outcome of the new decision.
The Court of Appeal allowed CPAG's appeal, upholding Section 71 of the Social Security Administration Act 1992 as the only legal avenue by which the DWP can recover overpayments. Unless the law is changed the DWP should stop issuing 'common law recovery' letters in section 71 cases.
The judgment applies to all cases where section 71 is used as a means of recovery. This includes all social security benefits except for housing benefit and council tax benefit. Tax credit overpayments are also not covered by the decision.
For the ruling to apply the overpayment must have been made 'in pursuance of a benefit award'. It does not apply to the recovery of overpayments resulting from other errors such as those in relation to duplicate payments of benefit or interim payments. Common law recovery letters can still be issued in these cases.
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