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

The statutory scheme governing the recovery of social security benefits paid under an award is comprehensive and exclusive. Once an erroneous award has been corrected, the Secretary of State may recover an overpayment only under section 71 of the Social Security Administration Act 1992 or another specific statutory provision.

Section 71 permits recovery where the overpayment resulted from misrepresentation or failure to disclose a material fact. It excludes a parallel common law restitutionary claim for payments resulting from official error. Whether a statutory remedy displaces a common law remedy is a question of statutory construction. The court examines the scheme as a whole and asks whether coexistence would be incompatible with Parliament’s intention.

The Secretary of State sent benefit claimants letters asserting a common law right to recover sums overpaid under mistakenly inflated awards, including awards affected by official error. The Child Poverty Action Group sought declaratory relief on the ground that the only available power of recovery was the statutory power under section 71 of the Social Security Administration Act 1992.

A deputy High Court judge found for the Secretary of State: [2009] EWHC 341 (Admin). The Court of Appeal allowed the group’s appeal and declared that benefits within section 71(11), paid through the machinery of the Social Security Act 1998, could be reclaimed only under section 71 or another specific statutory provision: [2009] EWCA Civ 1058.

The central issue was whether section 71 constituted an exclusive recovery code or permitted a concurrent common law restitutionary claim for overpayments made pursuant to erroneous awards.

1. The appeal was dismissed unanimously. Section 71 of the Social Security Administration Act 1992 constitutes a comprehensive and exclusive scheme for overpayments made pursuant to benefit awards. The Court of Appeal’s declaration was endorsed. Lord Brown gave the principal judgment. Sir John Dyson gave concurring reasons, with which Lord Phillips and Lord Kerr agreed. Lord Rodger reached the same conclusion with some hesitation.

2. When section 71 and its predecessors were enacted, adjudication of benefit entitlement was separate from payment. The Secretary of State paid the sum awarded pursuant to a statutory duty and ordinarily made no relevant mistake about its calculation. Section 71 therefore created a power of recovery where none otherwise existed. Parliament carefully limited that power to overpayments caused by misrepresentation or failure to disclose a material fact. The transfer of adjudicative functions to the Secretary of State under the Social Security Act 1998 did not enlarge the recovery power.

3. An overpayment made in accordance with an award cannot be recovered until the award has been formally corrected. Section 71(5A) expressly imposes that requirement for statutory recovery. Once corrected, an overpayment arising from official error remains outside section 71(1). Parliament’s scheme makes those who caused overpayments through misrepresentation or non-disclosure liable, while leaving recipients who merely benefited from official error outside recovery proceedings.

4. A concurrent restitutionary action would be inconsistent with the statutory scheme. It would introduce ordinary court proceedings, the defence of change of position and potential parallel claims alongside the statute’s fact-finding, appeal, deduction and enforcement machinery. Parliament cannot have intended two overlapping systems with materially different substantive and procedural incidents.

5. Sir John Dyson held that displacement of an ordinary common law remedy is a question of statutory construction. The stringent necessary-implication standard associated with fundamental rights and the principle of legality did not apply. The court should consider the scheme as a whole and ask whether coexistence of the remedies would be incompatible with Parliament’s intention, while remaining slow to find displacement merely because some differences exist.

6. The tax-recovery authorities did not establish a contrary result. Section 33 of the Taxes Management Act 1970 addressed only tax paid under an assessment and left other payments outside its scope. Section 71, by contrast, comprehensively addressed benefit overpayments resulting from erroneous awards and the conditions governing their recovery.

1. United Kingdom Supreme Court: The Secretary of State’s appeal was dismissed unanimously. The Court of Appeal’s declaration was endorsed: [2010] UKSC 54.
2. Court of Appeal: The Child Poverty Action Group’s appeal was allowed. The court declared that a benefit within section 71(11) of the Social Security Administration Act 1992, paid through the machinery of the Social Security Act 1998, could be reclaimed only under section 71 or another specific statutory provision: [2009] EWCA Civ 1058.
3. High Court, Administrative Court: A deputy High Court judge found in favour of the Secretary of State: [2009] EWHC 341 (Admin).