Secretary of State for Work and Pensions v Payne and Another: SC 14 Dec 2011

The appellant sought to recover overpayments of benefits and Social Fund Loans, after the respondent had had a Debt relief order.
Held: The Secretary of State’s appeal failed. The ‘net entitlement principle’ argued for did not exist. The entitlement is a statutory one, and any liability to repay is separate and independent, being only a remedy in respect of a debt. There was no effective difference in this context between a Debt Relief Order and bankruptcy.
Lady Hale said: ‘the power to recover the debt by deduction from benefit is a ‘remedy in respect of the debt’. Moreover, if self-help remedies such as this were not included in the concept of a ‘remedy’, it is difficult to see why both section 251G(2)(b) and section 285(3)(b) specifically prohibit the use of court proceedings to enforce the debt. They would be otiose if the only remedies contemplated by the prohibition of any remedy were court proceedings. There is no sense in a scheme which prohibits recovery of the liability by one method but allows it by another.’

Lady Hale, Lord Brown, Lord Mance, Lord Kerr, Lord Wilson
[2012] PTSR 310, [2012] 2 WLR 1, [2012] BPIR 224, [2012] 2 AC 1, [2012] 2 All ER 46, UKSC 2011/0007, [2011] UKSC 60
Bailii Summary, SC Summary, SC, Bailii
Insolvency Act 1986 251G(2)(a), Social Security Administration Act 1992 71(1), Social Security Act 1998 9 10, Social Security (Payments on account, Overpayments and Recovery) Regulations 1988 15
England and Wales
At first InstancePayne and Another, Regina (on The Application of) v Secretary of State for Work and Pensions Admn 26-Jul-2010
The court was asked as to the lawfulness of the Secretary of State making deductions from ongoing social security benefit to recover the overpayment of incapacity benefit and the repayment of a social fund budgeting loan during the moratorium period . .
Appeal fromSecretary of State for Work and Pensions v Payne and Another CA 14-Dec-2010
Appeal by Secretary of State against judicial review finding unlawful the deductions made from the claimants’ social security benefit allowances after the claimants Debt Relief Order had come to an end.
Held: The appeal failed. . .
CitedBendall v McWhirter CA 1952
The trustee in the husband’s bankrupty, by virtue of his statutory position, was subject to the same special restriction as would prevent the husband himself from evicting his wife.
The deserted wife had a personal licence to occupy the former . .
CitedBradley-Hole v Cusen CA 1953
The creditor was a tenant of rent-controlled premises who had been charged too much rent by his landlord. The bankrupt landlord’s trustee argued that the claim in respect of overpaid rent had been converted into a right to prove the debt in the . .
ApprovedSecretary of State for Work and Pensions v Balding CA 13-Dec-2007
The Secretary of State appealed a decision that its reclaim of overpayments of benefit were no longer possible after the discharge from insolvency of the claimant. The overpayment had been reclaimed before bankruptcy.
Held: At the time of the . .
CitedMulvey v Secretary of State for Social Security HL 20-Mar-1997
The appellant had had repayable awards from the social fund and also income support benefit. Deductions were made from the benefit to repay the awards. Her estate was sequestrated. She argued that the awards should no longer be deducted.
Held: . .
CitedNational Provincial Bank v Ainsworth HL 13-May-1965
The respondent stayed on in the family home owned by her husband after he had left, and resisted a possession order sought by the chargee. The husband had charged the house as security for his business debts.
Lord Wilberforce described the . .
CitedRegina v Secretary of State for Social Security, Ex parte Taylor and Chapman ChD 5-Feb-1996
The applicants were in turn the recipient of a Social Fund loan and a claimant who had been overpaid benefit. Both were later declared bankrupt. The Secretary of State then began to recover the loan and overpayment by deduction from their current . .
CitedMulvey v Secretary of State for Social Security IHCS 24-Nov-1995
The claimant had first been granted a loan from the Social Fund. After her bankruptcy, the benefits loan was recoverable from benefits even after the bankruptcy if the loan was not proved in the bankruptcy. The right to recover by deduction was but . .

Lists of cited by and citing cases may be incomplete.

Benefits, Insolvency

Leading Case

Updated: 01 November 2021; Ref: scu.465940