R (Balding) v Secretary of State for Work and Pensions

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeLORD JUSTICE MUMMERY,Lord Justice Thomas,Lord Justice Lloyd
Judgment Date13 Dec 2007
Neutral Citation[2007] EWCA Civ 1327
Docket NumberCase No: C1/2007/0820

[2007] EWCA Civ 1327








Lord Justice Mummery

Lord Justice Thomas and

Lord Justice Lloyd

Case No: C1/2007/0820

Secretary of State for Work and Pensions
Mr John Balding

Mr Daniel Kolinsky (instructed by Office of the Solicitor) for the Appellant

Mr Paul Stagg (instructed by Leicester Law Centre) for the Respondent

Hearing dates : 6 th November 2007

Judgment Approved by the court

for handing down


The issue on the appeal


This appeal is about the relationship between the provisions of the Insolvency Act 1986, as amended, (the 1986 Act) for the release of bankruptcy debts on the discharge of a bankrupt and the provisions of the Social Security Administration Act 1992 (the 1992 Act) empowering the Secretary of State for Work and Pensions to recover overpayment of social security benefits by deductions from prescribed benefits.


Mr John Balding, who brought these judicial review proceedings and is the respondent to this appeal, claimed and received income support over a number of years. Investigations revealed that he had failed to make disclosure of material facts about his residence at 32 Glencoe Avenue, Leicester and the mortgage interest payable in respect of it. He had been paid too much benefit. On 6 July 1994 an Adjudication Officer determined that the sum of £8680.45 was recoverable from him in respect of the period 19 March 1991 and 29 March 1993.


The calculation of the amount of the overpayment and obligation to pay it back was clearly explained to Mr Balding in the following letter from the Benefits Agency dated 17 October 1994:

“Income Support

We have paid you too much

Dear Mr Balding,

The Adjudication Officer has looked at your claim for Income Support. He has decided that we paid you £8680.45 too much income support from 19 March 1991 to 29 March 1993. This is because you failed to disclose that you were no longer liable to pay the mortgage on your former home. The Adjudication Officer has also decided that you have to pay this money back to us.

The table I have sent you with this letter shows you how the Adjudication Officer worked out this amount.

Adjudication Officers are people who decide whether the law says you are entitled to benefit or not. They also decide how much benefit the law says you are entitled to.

The Adjudication Officer's decision is written on the sheets Adjudication Officer's Decision in the words of the law.

If you think the decision is wrong.

You have the right to appeal. The sheet with the Adjudication Officer's decision on it also tells you how to appeal.

If you do not want to appeal against this decision

Please pay back the £8680.45 as soon as you can.”


Rather than comply with the request to pay the money back Mr Balding appealed. His appeal was unsuccessful, save that in its decision of 8 December 1995 the Leicester Social Security Tribunal re-calculated the amount of the overpayment as £8335.35.


While the appeal was pending Mr Balding had presented his own bankruptcy petition on 15 June 1995. On the following day he was declared bankrupt by order of the Leicester County Court. Three years later, on 16 June 1998, Mr Balding was discharged from his bankruptcy. In the meantime the Secretary of State began recovery by way of deductions from prescribed benefits payable to Mr Balding. The deductions from prescribed benefits continued at the rate of about £7 per week after his discharge from bankruptcy, though this was not continuous because for some time he was not in receipt of prescribed benefits from which a deduction could be made. The bulk of the overpayment had still not been recovered by the Secretary of State when Mr Balding asserted that his liability to make repayment to the Secretary of State had been wiped out as a “bankruptcy debt” on his discharge from bankruptcy under the 1986 Act. The outstanding balance was over £7,500. Mr Balding was declared bankrupt for a second time on 7 August 2003, but his second bankruptcy has no bearing on the issue in this appeal.


The Secretary of State disputed Mr Balding's claim that the right of recovery had ceased on his discharge from bankruptcy, contending that the determination of the Adjudication Officer under section 71(1) did not create a “bankruptcy debt.” There was a continuing right of recovery under section 71(8) of the 1992 Act by means of deductions from prescribed benefits. The Secretary of State argued that the effect of the authorised deductions was that he paid to Mr Balding his net entitlement to benefit under the statutory social security scheme.


On 12 September 2006 Mr Balding commenced his legal challenge by way of judicial review to the decision of the Secretary of State on this point. He succeeded in the Administrative Court, which quashed the Secretary of State's decision in letters dated 14 June and 18 July 2006 that he had a right to continue to recover overpayment of income support by deductions from Mr Balding's prescribed benefits. The court also made a mandatory order requiring the Secretary of State to pay to Mr Balding any sums that were withheld by way of purported recovery of the overpayment from 16 June 1998 onwards. It indicated that no interest was payable on such sums. The case is reported in [2007] 1 WLR 1805.


The Administrative Court granted permission to appeal, as the case raised an important question which the Court of Appeal should consider.

The Legislation


The relevant provisions of the 1986 Act and the 1992 Act are all fully cited by Davis J at paragraphs 13 to 23 of his judgment. Instead of unnecessary repetition, I shall summarise them, quoting the precise legislative language where relevant to the disputed questions of construction.


The judgment also contains a careful review of the authorities. They make it clear that the right of the Secretary of State to make deductions continues after the onset of bankruptcy but, as Davis J correctly observed in paragraph 40, they are not decisions on the effect of discharge from bankruptcy on the right to make deductions. The authorities do not answer, or help us to answer, that question.


In general, a “bankruptcy debt” is released when a bankrupt is discharged: section 281 of the 1986 Act. This does not apply if the debt was incurred in respect of any fraud or fraudulent breach of trust. No fraud was alleged against Mr Balding.


As a general rule and except in so far as the context otherwise requires, a “bankruptcy debt” means a liability to pay money, “including any liability under an enactment”: section 382(4) of the 1986 Act.


Under section 71 of the 1992 Act the Secretary of State is entitled to recover overpayments of income support benefits made as a result of misrepresentations or failure to disclose material facts. Recovery may be by deduction from prescribed benefits. This method of recovery is “without prejudice to any other method of recovery”: section 71(8). The determined overpayment is also recoverable by execution issued from the county court as if it were payable under an order of that court: section 71(9).

The judgment


For the reasons stated in his excellent judgment Davis J, with whom Laws LJ agreed, held that Mr Balding had been released from his liability to repay the overpayment. The Court quashed the decision of the Secretary of State that he had a continuing right to recover overpayment of income support by means of deduction from prescribed benefits after the discharge of Mr Balding's bankruptcy.


The court held as follows:

(1) As a result of the determination made by the Adjudication Officer under section 71(1) of the 1992 Act Mr Balding was under a liability to repay the overpayment of benefit. Davis J said “.the overpaid benefit was recoverable from Mr Balding just because, by reason of the determination, he...

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    • Court of Appeal (Civil Division)
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    ...analysis or to repeat in my own words the process of reasoning set out in his decision. As Mummery LJ stated in R (Balding) v Secretary of State for Work and Pensions [2007] EWCA Civ 1327 at [24], reported at [2008] 1 WLR 564, "there is no point in appeal court judges saying things a......
  • R (Cooper) v Secretary of State for Work and Pensions
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    • Supreme Court
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    ...held that the liability to repay the Secretary of State is also discharged: R (Balding) v Secretary of State for Work and Pensions [2007] EWCA Civ 1327, [2008] 1 WLR 2 The Secretary of State would like to introduce coherence into the scheme in two ways: firstly by assimilating the positio......
  • R (Cooper) v Secretary of State for Work and Pensions
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    • 26 July 2010
    ...would be particularly so where the bankrupt party had been fraudulent. 3427. R (Balding) v Secretary of State for Work and Pensions [2007] EWCA (Civ) 1327, [2008] 1 WLR 564, [2008] 3 All ER 217 is the last of the trilogy. In that case the claimant had been overpaid income support as a re......
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    • Court of Appeal (Civil Division)
    • 14 December 2010
    ...[1997] 1 WLR 1336 at 1343 E-G; and R(Balding) v. Secretary of State for Work and Pensions [2007] 1 WLR 1805 (DC); affirmed on appeal [2008] 1 WLR 564 (CA). 27 Finally, “the net entitlement principle” should be applied. The benefit claimant is only entitled to the net amount of the benefit ......
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1 books & journal articles

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