The Supreme Court handed down judgment in the case of The Child Poverty Action Group v Secretary of State for Work and Pensions [2010] UKSC 54 on the 8th December 2010. The case concerned the overpayment of social security benefit awards due to an official error of calculation. Whilst in other circumstances it is established that both common law and section 71 of the Social Security Administration Act 1992 (the Act) can be used to recover overpaid sums, the present appeal concerned the question of whether section 71 was the exclusive means of recovery.

Section 71 allows for payment recovery where a misrepresentation or non-disclosure of a material fact by a claimant has occurred. Prior to the entry into force of the Social Security Act 1998 (the 1998 Act), calculation was undertaken by the adjudicators; the secretary of state only being responsible for payment of awards.

The respondent had brought the test case challenging the legal basis of letters sent by the appellant indicating a legal right in common law to recover overpayment and seeking declaratory relief. No common law claim had been brought before the courts by the appellant, but approximately £4m was recovered in 2007/8.

Before the High Court, the appellant’s claim was upheld. Allowing the respondent’s appeal, the Court of Appeal found that a benefit falling within section 71(11) of the Act can only be reclaimed under section 71 of that Act.

The Supreme Court considered the statutory scheme. Finding that the scheme under section 71 was carefully conceived, the court determined that it necessarily excluded a claim at common law.

Considering whether the section could be construed as prospectively excluding a right of recovery in common law under a differently framed decision-making scheme, the court dismissed this argument. Changing the identity of the person determining the award, from an adjudicator to the secretary of state in the 1998 Act, but not altering the statutory criteria could not be interpreted as an intention to widen the mechanisms of recovery.

Examining the appellant’s argument that a common law right of recovery existed under restitutionary principles and had not been displaced expressly or by necessary implication by statute, the court reviewed relevant authorities. Decisions including Deutsche Morgan Grenfell Group plc v Inland Revenue Commissioners [2006] UKHL 49 and Revenue and Customs Commissioners v Total Network SL [2008] UKHL 19 were found to demonstrate the test was not one of necessary implication but one of statutory interpretation. Considering the statute, the court found that the existence of a common law right would be incompatible with a statutory regime and the scheme established by section 71 was intended to be exhaustive.

Dismissing the appeal, the Supreme Court upheld the declaratory relief granted by the Court of Appeal.