Help! This is very vague - I hope someone with a clearer memory than me can help! I recently read a post on one of the forums which referred to a Commissioners or Court decision but I cannot recall the subject. Through the link, I went to the report of the decision and - near the start of it - it referred to bankruptcy and said it was accepted that the debt concerned (which was a benefit debt) was provable in the bankruptcy. However, the judgment then went on to other issues and concluded that the bankruptcy aspect was not relevant. Unfortunately, I omitted to make a note and now need to find this because the bankruptcy reference is probably relevant to a client. I now can't find the case by searching the site. Can anyone direct me to it please?

I think the case you want is Steele v Birmingham City Council and Secretary of State

Thread is here:

http://www.rightsnet.org.uk/dc/dcboard.php?az=show_topic&forum=108&topic_id=983&mode=full

The High Court held that the overpayment ceased to be recoverable when bankruptcy was discharged. Court of Appeal held that o/p was not a bankruptcy debt and declined to decide whether discharge would have made it non-recoverable.

Key point was that o/p decision was not made until after claimant went bankrupt - therefore not a liability or contingent liability at time of bankruptcy - therefore not a bankruptcy debt.

High Court decision here:

http://www.bailii.org/cgi-bin/markup.cgi?doc=/ew/cases/EWHC/Admin/2005/783.html&query=steele&method=all

Court of Appeal decision here:

http://www.bailii.org/cgi-bin/markup.cgi?doc=/ew/cases/EWCA/Civ/2005/1824.html&query=steele&method=all

So if the O/P decision was made first and then the claimant became bankrupt the implication is that the o/p will be wiped clean after the bankruptcy is discharged?

What if the o/p was as a result of fraud?
The reason I seek clarification is that according to our debt advise book, o/p of benefit/fraud doesn't get cleared following discharge, similar to student loan.

Keith - thanks for that but no, the case I was thinking of was more recent than Steele (or, at any rate, the post in the forum about it was more recent). As far as I can see, Steele left unclarified the question of whether - if a benefit debt is determined (under S. 71 SSAA1992) before the bankruptcy - it is included in the bankruptcy and therefore wiped out (other than any contribution received via the Official Receiver). The implication of the case seems to be that this is what would happen, but it is not spelt out because it was not necessary to determine it (because the S. 71 determination did not take place until after the bankruptcy). The case I recollect clearly had the judge saying the overpayment was provable in the bankruptcy (the determination having taken place first).

Mouster - debts incurred by fraud do not get written off by bankruptcy, and I can't see how a benefit debt incurred by fraud would be dealt with more generously than any other.

I agree that Steele left open the position of an o/p decided before the bankruptcy. I think the High Court in Steele implied that such a debt would be included, but it's not clear and the CofA specifically declined to say anything.

I also agree that fraud would mean that the bankruptcy had no effect, the same as for any other debt incurred by fraud.

I don't remember anything since Steele on the forum, and I can't find anything by searching either - every thread seems to refer to Steele.

I'd really like to see the case you're referring to if you find it. I've just sent a letter before action to DWP, theatening JR if they continue to recover an o/p from a discharged bankrupt. O/p and decision before he went bankrupt.

Keith - Despite a lot more searching I still can't find the case. I'm now alternately wondering whether I dreamt it, and kicking myself for not noting it at the time!

As regards your case, did DWP stop recovery while client was bankrupt? If so, surely by doing so they have accepted that the debt was provable in the bankruptcy? If that is the case should it not have been written off on discharge just like any other provable debt? What legislation are they using to justify recovery now? Would it be worth querying with the Official Receiver who dealt with the bankruptcy the legality of DWP's actions? I would be very interested in the outcome and would appreciate it if you could post it.

Not sure whether they stopped recovery during bankruptcy. The o/p was in 1991-93 and the decision in 1993, he went bankrupt in 1995 and was discharged in 1998. He's been on and off benefit many times since they found the overpayment, and they have only ever recovered when he was on benefit and not always then. There's been various bits of correspondence between him, his previous reps and the DWP over the years, but nothing has ever been followed through - probably because he finds work and loses interest when they stop recovery.

They did suspend recovery while Steele was going through, but have now decided to start recovery again. I'll let you know what happens.

The case you were looking for wasn't this one was it:

http://www.bailii.org/ew/cases/EWCA/Civ/2006/156.html

I can't see any reference to an o/p - it talks about rent arrears and bankruptcy - but I think it has been mentioned elsewhere on the site recently (its main significance is what it says about suspended possession orders). I doubt if it's what you're looking for, but thought I'd point it out just in case.

Keith - brief extract from article in Quarterly Account Spring 2005 "Debts that remain payable when bankruptcy is discharged are: ......The DWP hold that benefit overpayments remain payable and will proceed with deductions from ongoing entitlement accordingly. Case law appears to support this." (Note: No cases quoted.) Also, I now recall being told sometime that DWP argument is along the line that benefits don't belong to the claimant until actually paid so they can reduce them to pay off the overpayment. Your JR (if it gets to that) should be very interesting.

Yes, the case you have found is the one I recall (although I only saw a summarised version). My brain obviously scrambled my debt advice hat with my benefits hat and came up with complete nonsense! Sorry about that.

We have just come across a very similar case here and wonder what the outcome was of your case last year. The DWP are saying they are entitled to recover the full amount of overpayment irrespective of discharge, but quote no specific case law apart from Steele.

What is the general view? Do we still believe that recovering overpayments after discharge is unlawful because the liability for the debt has been removed?

rvcab:

In your case, are they recovering by deduction from ongoing benefit, or are they demanding payment even though no benefits are in payment?

If the former, I suspect they will continue. I have read elsewhere that this is thought of in some quarters as a grey area, that DWP maintain they are entitled to recover and that the Insolvency Service are unwilling to take action to challenge them.

However, if the latter I cannot see how they can justify it and the Official Receiver really ought to take it up.

It would be useful to know the outcome of Keith's case, if it has been decided yet.

It was heard 15 March 2007, judgement due to be handed down on Tuesday. I will let you know the result when we get it.

They are recovering the overpayment of various benefits from ongoing benefit (pension credit) and say they intend to continue until the full sum is paid off. The letter from DWP refers to Steele and separately to a HL decision but does not specify which case.
CPAG Debt Advice Handbook endnote 94 on page 389 says "..both the DWP and the Revenue have agreed that, where both overpayment and recoverability decisions are made before the date of the bankruptcy order, the overpayment will be treated as a bankruptcy debt". This doesn't fit with what is happening here.
Looking forward to hearing the decision in Keith's case soon.

Just wondering if Keith has heard the decision on this case - BR V DWP debts.... Something we have a lot of interest in, as many of our clients go BR whilst owing HB o/p and DWP detbs...

Keith...?

Please see this thread ....

http://www.rightsnet.org.uk/dc/dcboard.php?az=show_topic&forum=108&topic_id=2610&mesg_id=2610&page=