Wednesday, 11 August 2010

R (Payne & Cooper) v Secretary of State for Work and Pensions (CO/3793/2010 and CO/4048/2010) - Deductions from benefit during a DRO declared unlawful.

One Garden Court's Mr Desmond Rutledge has drafted an interesting case note advertising a recent DRO related victory. He notes that Mr Justice Cranston's judgment in 
R (Payne & Cooper) v Secretary of State for Work and Pensions (CO/3793/2010 and CO/4048/2010)
 declares that deductions from benefit during a DRO are unlawful. Rutledge continues:

"The Court rejected the argument advanced on behalf of the Department for Work and Pensions, namely that insolvency legislation does not affect the Secretary of State's right to recover a debt by deductions from benefit given previous case law on bankruptcy orders such as R v Secretary of State for Social Security ex p Taylor and Chapman (1997) BPIR 505. The Court held that the wording used in the provisions governing Debt Relief Orders was significantly different and, as a matter of construction, deductions from benefit amounted to a "remedy" and therefore fell within the prohibition in section 251G of the Insolvency Act 1986. The DWP's decision to continue to make deductions from both of the Claimants, notwithstanding the making of a Debt Relief Order, was therefore quashed.

Following the judgment the DWP has issued new guidance to local authority housing benefit departments in relation to the recovery of benefit overpayments and social fund loans where the claimant is subject to a debt relief order - HB/CTB Urgent Bulletin U4/2010. The Bulletin states that in the meantime, both the DWP and local authorities must cease making deductions on cases where the overpayment was included in a debt relief order, and must not commence deductions on any further overpayments which are included in a debt relief order."

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