DWP Guidance re recovery of Overpayments following R(Murphy Joseph) v LB Newham (News 21 Oct 10)

The DWP quite correctly say they were not party to the case, but Thornton J held at paragraph 26 :

“A deduction made from a payment otherwise payable is not, on the face of it, subject to a time limit imposed for actions for sums recoverable by statute. However, it is to be noted that what may be deducted pursuant to section 75(4) is “any amount recoverable under this section”. The relevant sum to be deducted is “any amount of housing benefit paid in excess of entitlement [that] may be recovered” in the prescribed manner (subsection (1)). The overpaid HB that is being recovered is being recovered by virtue of this statutory provision so it is only recoverable within six years from the date of the cause of action accruing (section 9 of the LA 1980). Thus, once overpayment ceases to be recoverable under subsection (1), it is no longer recoverable under “this section” and is, therefore, no longer capable of being recovered by deduction from HB. The same situation arises under the current Housing Benefit Regulations 2006 because the power to deduct only arises in relation to recoverable overpayment (Regulation 102(1)). This construction of section 75 is supported by the reasoning of Mummery LJ in the analogous decision of the Court of Appeal in Regina (Balding) v SS for W & P) [2007] EWCA Civ 1327, particularly at paragraphs 27 – 29.”

The DWP were of course party to the case in Balding and for what its worth Mummery LJ said at paragraphs 27-29:

“27. As for recovery by deduction from the prescribed benefits, this method also requires a prior determination of the amount of the overpayment which Mr Balding is liable to repay. If Mr Balding were under no liability to repay the amount in question, it would be futile to arm the Secretary of State with the means of recovery from him.

28. Further, there is no rhyme or reason in the proposition that, in the case of one method of recovery (the county court), there is a liability to pay money under an enactment, but in the case of the other method (deduction) there is no such liability. In both cases there is a liability to pay money under the 1992 Act. Neither the existence of the right to recover money nor the existence of a liability on the recipient to repay money is dependent on or determined by the available methods of recovery. The Benefits Agency’s letter quoted in paragraph 3 is consistent with this position, in demanding payment of the whole sum.

29. In my judgment, on the natural and ordinary meaning of section 71, a determination under subsection (1) creates a liability on the recipient to repay the amount overpaid, which is accurately described as a liability to pay money under an enactment (i.e. under the 1992 Act). Liability in this form did not arise under any contract or under any general legal liability to make restitution. This liability has arisen from the statutory determination. It is available as the basis of all methods of recovery. There are no grounds for holding that it is irrelevant for certain other purposes, such as those of the 1986 Act.”