The Child Poverty Action Group v Secretary of State for Work and Pensions


The issue in the appeal was regarding the Secretary of State’s right to recover certain social security benefits. Entitlement in such cases requires first a claim and then an award. Inevitably occasion arise when overpayment occur. Sometimes more is paid than the sum awarded. Then the Secretary of State is entitled to recover any overpayment resulting from misrepresentation or the non-disclosure of a material fact. It is expressly provided for by section 71 of the Social Security Administration Act 1992 (the 1992 Act). The Secretary of State adopted a practice of writing letters to benefit claimants who he considered had been overpaid, but where there had been no misrepresentation or non-disclosure, indicating that the Department had a common law right of action to recover the overpayment.

 The Child Poverty Action Group thought the letters were based on a false legal premise and so brought this challenge to seek appropriate declaratory relief.

What is in issue in this appeal is whether in other cases of mistakenly inflated awards – most obviously in cases arising from “official error”  – the Secretary of State is entitled to recover the sums overpaid. for example, where a claimant has notified a change of circumstances (such as that he has begun fulltime work or that his child has left the household) and by mistake the Department overlooks (or delays actioning) the notification and continues making benefit payments at the same rate; or, indeed, where there is simply an erroneous calculation of the award. In cases like that is the Secretary of State permitted to seek recovery of such overpaid benefits at common law or is the exclusive route to recovery that provided by section 71 of the 1992 Act?

The judge at first instance found in favour of the Secretary of State. The Court of Appeal [2009] EWCA Civ 1058, [2010] 1 WLR 1886 – allowed the Child Poverty Action Group’s appeal.

The  Court of Appeal reached the following conclusions: The statutory scheme provides for the revision of awards of benefit ab initio and once an award has been revised it is final in its revised form. Downward revision shows that the claimant was not, in fact, entitled to the whole of the payments received. It is rational for the legislature to make provision for the consequences and it is by section 71 alone that it has done so. Under section 71 no amount is recoverable unless the relevant determination has been successfully appealed, revised under section 9 or superseded under section 10. Section 71(1) then sets out the (sole) circumstances in which the Secretary of State is entitled to recover an overpayment made pursuant to an award. These include only cases where the original award was obtained by misrepresentation or non-disclosure, and exclude cases of receipt – even knowing receipt – of an overpayment due to a mistaken award. When section 71 was enacted, adjudication was separate from administration. The established statutory scheme had always been understood to be exhaustive of the rights, obligations and remedies of both the individual and the state, and both then and since, awards have been conclusive of the obligation to pay and of the right to receive payment. In such a context it is unsurprising that the power of recovery when an award is modified should be prescribed by Parliament and not at large. Section 71 has not excluded any power of recovery that was previously available but has created a power of recovery where otherwise there is none.

When section 71 was enacted, there was a division of functions between the adjudication of awards and their payment. Since the Secretary of State paid the benefit awarded pursuant to a statutory duty, there could be no question of his having made a mistake of fact or law in making the payment. Thus section 71 and its predecessor sections created a power of recovery when otherwise there would have been none. This explains too why section 71 contains no express exclusion of any common law right of recovery: there simply was none and it is hardly surprising that no such exclusion was inserted in 1998 when the adjudicatory and payment functions merged. What, in short, is striking about section 71 is not its omission of an express exclusion of common law rights but rather its omission of any provision recognising or giving effect to any such rights.

It is  inconceivable that Parliament would have contemplated leaving the suggested common law restitutionary route to the recovery of overpayments available to the Secretary of State to be pursued by way of ordinary court proceedings alongside the carefully prescribed scheme of recovery set out in the statute. Such an arrangement, moreover, would create well-nigh insoluble problems. Then there might be parallel recovery proceedings against the maker of the misrepresentation under section 71(3) and against the recipient of the benefit at common law in the courts