R (Steele) v Birmingham City Council and Secretary of State for Work and Pensions, Gibbs J, 19.4.05

Gibbs J today ruled that where a local authority or the DWP is recovering certain overpayments by deductions from ongoing entitlement, it loses the right to do so where the claimant is discharged from bankruptcy.

Four categories of overpayment were identified:

(1) Benefits which were awarded and paid to the claimant prior to the date of the bankruptcy order and in respect of which a decision that they were recoverable was issued prior to that date.

(2) Benefits which were awarded and paid to the claimant prior to the date of the bankruptcy order and in respect of which a decision that they were recoverable was issued after that date.

(3) Benefits which were awarded prior to the date of the bankruptcy order but which were paid, and in respect of which a decision that they were recoverable was issued, after that date.

(4) Benefits which were awarded, paid and in respect of which a decision that they were recoverable was issued, after the date of the bankruptcy order.

The case concerned overpayments in categories (2) and (3). The effect of the judge's ruling is that overpayments in category (2) cannot be recovered by deduction from ongoing entitlement (or, by implication, by other means) once a claimant is discharged from bankruptcy. The judge, however, rejected the claimant's contention that the same applied to category (3) overpayments. Those remain recoverable by deduction.

The judge did not give a ruling in relation to category (1) overpayments, but it follows inevitably from the terms of his ruling that they will also not be recoverable following discharge. It was agreed by the parties that discharge does not affect category (4) overpayments.

It remains the case that recovery can continue between the date of the bankruptcy order and the date of discharge: R v Secretary of State for Social Security ex p Taylor, Mulvey v Secretary of State for Social Security.

The defendants applied for and were given permission to appeal to the Court of Appeal.

No transcript will be available for a while because the judgment was given orally.

cheers paul ... have also published something in news, in case people miss it here ....

see

http://www.rightsnet.org.uk/cgi-bin/forwardsql/search.cgi?template2=user_details2.htm&output_number=1&news.ID=41913375501

Paul

Have you any views on whether this decision will also apply to recovery of overpaid tax credits, which are dealt with under different legislation?

Since this decision is under appeal, I can't comment on its implications (as distinct from drawing attention to its existence) at this stage. But the position with tax credits is certainly worthy of consideration.

I am however having difficulty with the implications for this decision in relation to CTB overpayments, as perhaps CTB overpayments have a unique recovery procedure in relation to Social Security Benefit overpayments…

CTB O/P's are posted to Ctax accounts 'lump sum' on/or around the date they are decided… They are deemed by HB sections to be 'recovered' (in addition to being recoverable), the moment the debit is taken from the Ctax account.... Ctax law for it’s part requires that the oldest outstanding debt, (however it is arrived at), is recovered first, (so any payments made are 'automatically' credited to the oldest outstanding debt, regardless of whether the payment is made this year or not)...

However, I am now not too sure therefore what the position would be in light of this judgement, if after discharge, a CTB claimant with an O/P, was to say that the payments made he/she has made, were in respect of the current (or more recent), liability, rather than any historic liability regarding excess CTB...

Would this mean that HB overpayments that remain outstanding at the date of discharge are not recoverable, whereas theoretically, as there is no CTB overpayment outstanding there would not be anything to then write off after discharge…. ???

Or am I just reading too much into this?

For information, the Secretary of State has issued an Appellant's Notice, indicating an intention to appeal to the Court of Appeal.

Is there any news on whether SofS has actually appealled in this case, or on when the Court of Appeal might decide it?

in november/december issue of the adviser ... it says that the dwp's appeal was due to be heard in december 2005 ... not seen the judgment yet though

summary of court of appeal judgement available here .......

http://www.rightsnet.org.uk/pdfs/Steele_summ_Feb_2006.doc