Amanda Vera Ellen Craigie v Secretary of State for Social Security

Recovery of overpaid mortgage-interest benefit through set-off is permissible only where the statutory conditions for recovery are satisfied and the claimant’s position is not adversely affected by the accounting treatment. The claimant bears the burden of establishing relevant disadvantage. A temporary withholding of current payments does not establish disadvantage where it merely postpones mortgage indebtedness which would otherwise have accrued earlier. The court left open the proper construction of the recovery provision in the context of a deferred-interest mortgage, but assumed in the claimant’s favour that the provision did not apply. The appeal was nevertheless dismissed because no damage or disadvantage had been shown and no appropriate relief was sought.

The appellant received income support including a mortgage-interest element payable directly to her lender. Because she had a deferred-interest mortgage, the Secretary of State mistakenly paid at the charging rate rather than the lower payment rate between 1992 and 1995, creating an overpayment of more than £3,000.

The Secretary of State later withheld mortgage-interest payments for a period and used the sums otherwise payable to recoup the overpayment. Elias J held that the appellant had not been disadvantaged and dismissed her claim for judicial review. The appeal concerned whether the recovery was lawful and whether the appellant had suffered disadvantage.

1. Appeal dismissed. The appellant failed to establish that the Secretary of State’s recovery arrangements had left her worse off than she would have been had the correct payment rate been used from the outset.
2. The relevant comparison was between the appellant’s actual financial position and the position that would have resulted from proper payments at the payment rate. Under a deferred-interest mortgage, the difference between the charging rate and payment rate would ordinarily have increased the mortgage indebtedness gradually. The withholding of later payments merely postponed that increase and did not itself establish disadvantage.
3. The burden lay on the appellant to show relevant disadvantage. The evidence did not demonstrate either that the recovery method was inherently likely to disadvantage her or that the lender’s treatment of the account had in fact done so.
4. The court raised, but did not finally determine, whether paragraph 11 of Schedule 9A to the Social Security (Claims and Payments) Regulations 1987 applied. Lord Justice Schiemann considered that “the rate at which the borrower pays interest” naturally referred to the payment rate, not the charging rate. The court assumed in the appellant’s favour that the statutory conditions were not fulfilled.
5. Lord Justice Buxton agreed with the disposal and considered that a deferred-interest mortgage originally entered into would ordinarily fall outside paragraph 11(2)(a)(i), although a later introduction of deferred-interest terms might satisfy that provision. He also cautioned that R v Adjudication Officer and Secretary of State for Social Security, ex parte Michael Golding should not automatically be read as establishing a general duty never to act to the claimant’s disadvantage.
6. Because no damage was shown, the new statutory point was raised late, the mortgagees were not parties, and no specific appropriate relief was formulated, the court declined to exercise its discretion in the appellant’s favour. The appeal was dismissed with costs, subject to leave before enforcement, with detailed assessment of the funded client’s costs.

1. Court of Appeal (Civil Division): appeal from the judgment of Elias J dismissed with costs.