Overpayments: legitimate expectation, human rights

Introduction

We now know that, depending on the facts, a claimant’s ‘legitimate expectation’ that they were entitled to the benefit paid may be a defence against overpayment recovery. In Bulletin 293 (pp7–9), the decision of the High Court in R (on the application of K) v SSWP [2023] EWHC 233 (Admin) was considered. In that case, the facts were that K had attempted to check with the DWP on repeated occasions whether it was right she was getting amounts of universal credit (UC) for her 17-year-old son who was undertaking an apprenticeship and been reassured that this was correct (when it was not). The court in K placed reliance on the fact that K had made these repeated checks in determining that she had a legitimate expectation, which meant it would not be fair to allow the DWP to recover the resultant overpayment.

Claimants who have similarly checked whether payments were correct and been assured they were will, as explained in that article, be in a strong position to assert a legitimate expectation. However, for claimants who have not made such enquiries, then the approach of the European Court of Human Rights in Čakarević v Croatia – Application No.48921/13 (ECtHR, 26 April 2018)1 indicates that a human rights-based version of legitimate expectation could still arise.

Facts

The applicant (Čakarević) had been granted a Croation unemployment benefit in 1996. This was initially granted for a time-limited period, but in 1997 an indefinite award was made. The award continued to be paid until 2001.

However, that was a mistake because the applicant was incapable on work and the relevant Croatian law provided that the benefit in question should only be paid in such circumstances for a 12-month period.

Croatia’s attempts to recover the overpaid amount were eventually challenged before the court, where the applicant argued this was a violation of her rights in Article 1 of Protocol 1 to the European Convention on Human Rights (the right to the peaceful enjoyment of possessions with no deprivation except in the public interest and subject to the conditions provided for by law – ‘A1P1’).

Judgment

The court reminded itself that the concept of ‘possession’ in A1P1 had an independent human rights law content. It referred to its caselaw on the circumstances in which a ‘legitimate expectation’ of obtaining an asset could be a possession entitled to the protection of A1P1. The court ruled that:

‘an individual should in principle be entitled to rely on the validity of a final (or otherwise enforceable) administrative decision in his or her favour, […], provided that […] the beneficiary [has not] contributed to such a decision having been wrongly made or wrongly implemented. Thus, while an administrative decision may be subject to revocation for the future (ex nunc), an expectation that it should not be called into question retrospectively (ex tunc) should usually be recognised as being legitimate, at least unless there are weighty reasons to the contrary in the general interest or in the interest of third parties.’

The court found there was a legitimate expectation in this case, having regard to the following.

• The applicant had not contributed to the overpayment.
• The applicant had received the benefit in good faith.
• The applicant had not been told of the time limit rule for those incapable of work in decision notice awarding the benefit.
• The overpayment had gone on for years before being corrected.

Additionally, the court found it important that the benefits were intended for basic subsistence needs.

Having established there was a legitimate expectation, the next phase in an A1P1 case is to determine whether allowing recovery would be an unlawful interference with that possession. It was accepted that the decision to recover was an interference but was according to law and in pursuit of a legitimate aim. The test therefore came down to whether the interference was proportionate in the sense of whether it ‘struck the requisite fair balance between the demands of the general interest of the public and the requirements of the protection of the applicant’s right to the peaceful enjoyment of her possessions, and whether it imposed a disproportionate and excessive burden on the applicant’.

The court, under this test, considered a range of factors (see paragraphs 81–88).

These included:

• again, no contribution to the overpayment by the applicant;
• the applicant’s entitlement to assume the payments were legally correct – taking account of the formal decision and also that it failed to notify her of the rule on incapacity;
• the failure of the benefit authority to correct its error quickly;
• the fact the applicant was asked to pay interest on the overpaid amount;
• the fact the overpaid amount was used to satisfy her basic living expenses;
• the appellant’s health and poverty.

Relevance in other cases

Čakarević shows that sometimes recovery of overpaid amounts can be prevented by relying on A1P1 rights. The factual matrix in Čakarević differed from K in that, in the former case, there had been no checking (and rechecking) that the amount being paid was correct. It was enough that the applicant had received a formal decision and no notice of the rule which she did not satisfy.

Advisers assisting claimants with UC overpayments may wish to rely on Čakarević where the factual background is more similar to that case than to that in K. Careful attention would need to be paid to what information about the rules was given to the claimant at the time the award was made (the issue appears similar to the statutory test for housing benefit overpayment recovery where what the claimant could reasonably be expected to realise about whether they were being overpaid at the time is important).

Section 2(1) of the Human Rights Act 1998 requires the courts in the UK to take account of the decision of the Strasbourg Court in appropriate cases.