Chief Executive of the Ministry of Social Development v Thompson and Saunders HC WN CIV 2009-485-1281

[2010] NZHC 77

IN THE HIGH COURT OF NEW ZEALAND

WELLINGTON REGISTRY

CIV-2009-485-1281

IN THE MATTER OF     an appeal by way of case stated from a

determination of the Social Security Appeal Authority at Wellington under s 12Q of the Social Security Act 1964

BETWEEN  THE CHIEF EXECUTIVE OF THE MINISTRY OF SOCIAL DEVELOPMENT

Appellant

ANDPATRICIA THOMPSON and BRYAN SAUNDERS

Respondents

Hearing:         10 December 2009

Appearances:  E Child for the appellant

No appearance for the respondents
P McKenzie QC and K McKenzie-Bridle as amici curiae

Judgment:      11 February 2010

JUDGMENT OF CLIFFORD J

Introduction

[1]      This   is   an   appeal   by   the   Chief   Executive   of   the   Ministry   of   Social Development (“the Chief Executive”) against a determination of the Social Security Appeal Authority (“the Authority”) dated 27 May 2008.

[2]      In that determination, the Authority concluded – amongst other things – that

s 86(9A) of the Social Security  Act  1964  precluded  the  Chief  Executive  from recovering certain benefit overpayments from the respondents, Mrs Thompson and

Mr Saunders.  The Chief Executive says that decision was wrong in law.

THE CHIEF EXECUTIVE OF THE MINISTRY OF SOCIAL DEVELOPMENT V THOMPSON AND

SAUNDERS HC WN CIV-2009-485-1281  11 February 2010

Background

[3]      Prior  to  October  2003  the  respondents  had,  for  some  time,  separately been recipients of benefits at the single rate under the  Social Security Act and  the New Zealand Superannuation and Retirement Income Act 2001.

[4]      On  or  about  16  October  2003  the  respondents  purchased  a  house  together. From then on they have lived in that house together.  They each continued to receive benefits at the single rate.

[5]      In  2005  the  Chief  Executive  received  an  anonymous  allegation  that  the respondents were living in a relationship in the nature of marriage.  If that allegation was true, the respondents should have been receiving benefits at the lesser combined (married) rate.  The Chief Executive investigated that allegation by interviewing the respondents.       Based   on   the   results   of   those   interviews,   the   Chief   Executive concluded  that  the  respondents  were  not  living  in  a  relationship  in  the  nature  of marriage.   That decision was communicated to the respondents by letters dated 25 November 2005.

[6]      In  early  2006  the  Chief  Executive  received  a  second  allegation  that  the respondents  were  living  in  a  relationship  in  the  nature  of  marriage. The  Chief Executive  conducted  a  further  investigation.   As  a  result  of  that  investigation  the Chief Executive concluded that the respondents were living in a relationship in the nature of marriage, and had been doing so since they had purchased, and moved into, their house on or about 16 October 2003.  That conclusion was communicated to the respondents  on  1  June  2006. The  Chief  Executive  sought  recovery  of  overpaid benefits,  for  the  period  16  October  2003  to  30  May  2006,  of  $5,286.49  and $4,684.06 from Mrs Thompson and Mr Saunders respectively.

[7]      In   a  decision  of   24   November  2006,  the   Benefits  Review   Committee dismissed  the  respondents’  challenge  to  the  Chief  Executive’s  decision  they  were living  together  in  a  relationship  in  the  nature  of  marriage. The  Benefits  Review Committee reached that decision after extensive analysis of the underlying facts and circumstances.   The Benefits Review Committee also upheld the Chief Executive’s decision to recover overpayments.

[8]      The respondents then appealed to the Authority.

[9]       The Authority agreed with the Chief Executive that the respondents had been living  in  a  relationship  in  the  nature  of  marriage  since  16  October  2003.   To  that extent, it dismissed the respondents’ appeal.

[10]     The Authority went on to determine, as regards repayment, that:

a)        The Chief Executive was entitled to seek  repayment  of  the  benefit overpayments  for  the  period  between  16  October  2003,  when  the respondents commenced to live together in a relationship in the nature of  marriage,  until  25  November  2005, when  following  the  first investigation the Chief Executive concluded that they were not.

b)The Chief Executive was not, however, entitled to seek repayment for the period between that decision and 30 May 2006 when he advised the  respondents,  following  the  second  investigation,  that  they  were living  in  a  relationship  in  the  nature  of  marriage. In  reaching  that decision the Authority concluded that the 25 November 2005 decision was an error for the purposes of s 86(9A) of the Social Security Act, that  the  respondents  had  not  intentionally  contributed  to  that  error, that they had thereafter received overpayments in good faith and that it  would  be  inequitable  to  permit  recovery. Therefore,  s 86(9A) precluded the Chief Executive from seeking to recover that portion of the benefit overpayments the respondents had received.

This appeal

[11]     This is an appeal by way of case stated on a point of law under s 12Q of the

Act.

[12]     The  points  of  law  raised  by  this  appeal  relate  to  s  86(9A)  of  the  Social Security Act, which provides:

The chief executive may not recover any sum comprising that part of a debt that  was  caused  wholly  or  partly  by  an  error  to  which  the  debtor  did  not intentionally contribute if—

(a)   the debtor—

(i)    received that sum in good faith; and

(ii)   changed his or her position in the belief that he or she was entitled

to  that  sum  and  would  not  have  to  pay  or  repay  that  sum  to  the chief executive; and

(b)   it would be inequitable in all the circumstances, including the debtor's financial circumstances, to permit recovery.

[13]     Section 86(9B) goes on to provide:

In subsection (9A), error— (a)    means—

(i)     the  provision  of  incorrect  information  by  an  officer  of  the department:

(ii)     any erroneous  act or omission of an officer of the  department that occurs during an investigation under section 12:

(iii)    any  other  erroneous  act  or  omission  of  an  officer   of  the department; but

(b)     does  not  include  the  simple  act  of  making  a  payment  to  which  the recipient  is  not  entitled  if  that  act  is  not  caused,  wholly  or  partly,  by  any erroneous act or omission of an officer of the department.

[14]     As relevant for the purposes of this appeal, the Authority’s reasoning was as follows:

[35]     Whilst  Mr  Thompson  [Mrs  Thompson’s  son  who  represented  the respondents before the Authority] did not identify with precision the nature of the error which he maintained had been made by the Ministry in this case it seems to the Authority that the only possible error within the terms of the section which could be contended has been made is the determination by the Ministry’s investigating officer conveyed to the appellants on 25 November 2005 that having completed enquiries into the appellants’ benefit entitlement the   enquiries   had   not   resulted   in   any   changes   to   the   benefit. This communication  followed  the  investigating  officer’s  enquiries  initiated  by anonymous   information   received   on   26   July   2005   which   had   led   to interviews with both appellants whose written statements were obtained.

[36]     In light of the Authority’s finding that the appellants were since 16

October 2003 living in a relationship in the nature of marriage the Ministry was in the Authority’s opinion in error in reaching the conclusion as at 25

November 2005 that this was not the case.

[37]     The Ministry has not pointed to any acts or omissions on the part of the  appellants  which  it  relies  on  in  constituting  intentional  steps  by  the appellants to cause the Ministry to reach a wrong conclusion apart from the proposition   that   the   appellants   failed   to   advise   the   Ministry   of   their circumstances.     But  those  circumstances  had  been  investigated  by  the Ministry.   The impression the Authority has is that the investigating officer conducted an enquiry confined largely to quite detailed interviews with the appellants  in  which  they  answered  the  questions  put  to  them.   Whilst  the Authority has some reservations about some of the answers that were given at that time there is no cogent evidence of an intention to contribute to the Ministry  deciding  in  error  that  no  relationship  in  the  nature  of  a  marriage existed.

[38]     The Authority considers that the appellants from 23 November 2005 when  an  error  was  made  received  the  full  benefits  in  good  faith  and proceeded to change their position by spending the benefits they received in the  belief  that  following  the  Ministry’s  advice  they  were  entitled  to  those benefits  and  would  not  have  to  repay  them.    In  these  circumstances  it  is considered inequitable that recovery of the benefit overpayments between 25 November 2005 and 30 May 2006 be permitted.

[15]     It is against those aspects of the Authority’s decision that the Chief Executive now appeals.

[16]     The Authority has stated the following points on appeal:

[i]     Did  the  Authority  err  in  law  in  finding  that  the  Chief  Executive’s conclusion  as  at  25  November  2005  as  to  the  nature  of  the  relationship between  Mr  Saunders and Mrs Thompson  was an error for  the  purpose  of s 86(9A) of the Social Security Act 1964?

[ii]     Did  the  Authority  err  in  law  in  finding  that  Mr  Saunders  and  Mrs Thompson did not intentionally contribute to the error, that error being the conclusion  formed  in  November  2005  by  the  Chief  Executive  that  Mr Saunders and Mrs Thompson were not living in a relationship in the nature of a marriage?

[iii]    Did the Authority err in law in finding that it would be inequitable to permit recovery of the overpayment between the period 25 November 2005

to 30 May 2006?

[17]     I consider each point in turn.

Discussion

Chief Executive’s conclusion as to error for purpose of s 86(9A) wrong in law?

[18]     It  is  helpful,  if  only  to  me,  to  place  s 89(9A)  in  its  immediate  statutory context.

[19]     Pursuant  to  s 85A(f)  of  the  Social  Security  Act,  where  a  benefit  is  paid  in excess  of  the  amount  to  which  a  beneficiary  is  by  law  entitled,  the  resulting overpayment is a debt due to the Crown.  Section 85A(f) is, therefore, to be seen as creating a statutory right to recover a payment that the Chief Executive has made by way of  what  would,  in  legal  terms,  be  described  as  a  mistake.   In  the  absence  of s 85A(f),  the  Crown  would  have  to  rely  on  the  general  law  relating  to  rights  of recovery for payments  made or  received  by way of mistake in order to  be  able to recover such amounts.

[20]     Pursuant to s 86, the Chief Executive may bring proceedings in his name to recover  such  a  debt  owed  to  the  Crown,  or  may do  so  by way of  deduction  from amounts otherwise payable as benefits, student loans or grants of special assistance. It is such recoveries that s 86(9A) precludes.

[21]     In  Cowley  v  Chief  Executive  of  the  Ministry  of  Social  Development  HC Wellington CIV-2008-485-381, 1 September 2008 I had occasion to consider s 86, and in particular the relationship between what was there accepted as the “residual” discretion  as  to  recovery  reflected  in  the  terms  of  s 86(1)  and  the  prohibition  on recovery reflected in the terms of s 86(9A).  I commented:

[46]   Taken overall, therefore, the general presumption will be that the Chief Executive  will  take  recovery  action  as  regards  overpayments.  He  may  not take such steps where s 86(9A) applies. In terms of principles affecting the Crown’s  general  discretion  as  to  whether  or  not  to  recover  debts,  he  may also  not  take  such  action  [in  terms  of  the  so-called  “residual”  s 86(1) discretion]   where   considerations   of   “practicality”   lead   him   to   that conclusion. Finally, he may also not take such action where considerations

of   the   circumstances   of   an   individual   beneficiary   within   the   policy framework created by the Act lead to such a conclusion.

[22]     Section 86 has been amended on occasion over the years.   The most recent significant  amendments,  and  ones  of  particular  relevance  to  this  appeal,  were  in 2002.  Section 86(9A) then read:

Notwithstanding anything to the contrary in this section, the Chief Executive may, in the Chief Executive’s discretion, authorise the provisional writing- off  of  a  debt  which  arose  as  a  result  of  an  error,  made  by  an  officer  or employee of the department, not intentionally contributed to by the debtor.

If  the  Chief  Executive  is  satisfied that  the  person  receiving the  amount  so paid in error did so in good faith and has so altered his position in reliance of

the   validity   of   the   payment   that   it   would   be   inequitable   in   all   the circumstances, including his financial circumstances, to require repayment.

[23]     What was, therefore, prior to the 2002 amendments, a discretionary power to write-off a debt arising as a result of an error, became a statutory provision which precluded the Chief Executive from recovering such a debt.  On reflection, and with reference to my decision in Cowley, I now observe that when s 86(9A) provided a specific  discretion  not  to  recover,  the  terms  of  s 86(1)  could  more  easily  be understood as comprising a “residual” discretion than is perhaps the case now.

[24]     Be that as it may, in  September  2002,  and  as  relevant  for  these  purposes,

s 86(9A) was substituted by ss 86(9A) and 86(9B) as set out at [12] and [13].  At the same time, s 86(1B) was also added.  Section 86(1B) provides as follows:

86(1B)

Nothing in section 94B of the Judicature Act 1908 or any rule of law relating

to payment by or under mistake prevents recovery of a debt under subsection
(1).

[25]     Hansard, to which I was referred to by both Mr Child for the Chief Executive and  Mr  McKenzie  as  amicus,  records  the  following  remarks  being  made  by  the responsible   Minister   on   the   second   reading   of   the   bill   incorporating   those amendments:

The  bill  also  makes  changes  to  debt  policy.   It  makes  it  fairer  and  more transparent when the Ministry of Social Development can recover a debt if it has  made  a  mistake.  Following  recent  High  Court  decisions,  the  debt- recovery provisions in the Social Security Act will be extended to define the word “error”.   The new definition of error restores to those provisions the original policy intent established by the 1972 Royal Commission on Social Security in New Zealand about when a debt should not be recovered.  Recent High Court cases gave an  interpretation of error that was at odds with the original policy intent.   That intent was that where the department had made

an error to which the beneficiary had not contributed, and which resulted in the person being overpaid, then that should be addressed.

The bill does not reverse or overturn the recent High Court decisions, but it does restore the meaning of error to its original intent of an error made by the department.  In the light of the High Court decisions, the bill extends the scope  of  current  debt  provisions  by  explicitly  preventing  the  Ministry  of Social Development from recovering a debt when the ministry has not done the right thing.  I believe that the ministry, as a matter of course, should give beneficiaries correct information.   It should also, as obliged under the Act, investigate an application for a benefit and ensure that the person is given the correct entitlement.  Where the ministry is at fault by not doing that, the debt

should not be recovered.   Those two situations are now included under the definition of error.

[26]     In light of those comments, it is of some assistance in resolving the first point

of law raised by this appeal to consider the report of the 1972 Royal Commission on Social  Security  in  New  Zealand,  as  well  as  the  “recent  High  Court  decisions” counsel agreed were being referred to.

[27]     At the time of the report of the 1972 Royal Commission on Social Security,

s 86 provided for recovery of   an   overpayment   whatever   the   cause   of   the overpayment.  There was no equivalent of s 86(9A), either as it was in force in 2002 or  as  subsequently  amended. There  was,  in  other  words,  no  reference  in  the legislation to any discretion as regards the recovery of benefit overpayments.   The Ombudsman,  with  the  support  of  the  Salvation  Army,  proposed  that  a  specific statutory discretion not to recover overpayments in certain circumstances should be introduced.  The Social Security Department opposed that proposition.

[28]     The  Commission  approached  the  issue  on  the  basis  that  s 86  of  the  Act required recovery of an amount overpaid whatever the cause of the overpayment.  It noted, however, that there were general powers under the then Public Revenues Act and  the  Treasury  Regulations  and  Instructions  for  debts  to  be  written  off  by  the Audit Office and the Treasury.  It went on to comment that the question of whether an overpayment should be recovered was relatively clear-cut when it resulted from a failure  by  the  beneficiary  to  give  correct  or  complete  information  or  to  notify  a change in circumstances.  It did not consider it to be so clear-cut, however, when the overpayment  was  the  result  of  administrative  error  to  which  the  beneficiary  in  no way  contributed. Expressing  the  view  that  an  insistence  on  recovering  such payments  would  harm  the  department’s  public  image,  the  Royal  Commission recommended that the section be amended to

… provide the department with an explicit discretion to waive recovery of an overpayment of up to $100 which occurred as a result of an administrative error and to which the beneficiary in no way contributed.  (at 386)

[29]     Following that recommendation s 86  was  amended  by  the  introduction  of

s 86(9A) in the terms set out at [22].

[30]     In  those terms s 86(9A)  gave the  Director-General a discretion to  authorise the writing-off of a debt which arose under s 85A(f) where there had been an error

by an officer or employee of the department where the debtor had not intentionally contributed  to  that  error.  In  those  circumstances,  to  exercise  the  discretion  the Director-General was also required to be satisfied that the beneficiary had received the payment in good faith, and that it would be inequitable in all the circumstances to require repayment.

[31]     Over  time,  there  was  a  tendency  to  construe  the  provision  as  requiring  a “culpable error”, that is an error involving negligence or fault.  This tendency would appear to have arisen from the judgment of Tipping J in Southern District Review Committee v Baird [1993] NZAR 280. That case concerned a retrospective loss of benefit. Tipping J concluded that there had been no error on the part of a departmental officer because the beneficiary only lost his entitlement to be paid once he had been absent from New Zealand for longer than thirty weeks. In those circumstances, the only error had been committed by the debtor and therefore was not a qualifying error for the purpose of s 86(9A).

[32]     Both Mr Child and Mr McKenzie agreed that one of the High Court decisions that  was  seen,  in  terms  of  the  remarks  of  the  responsible  Minister  on  the  second reading,  as  one  which  “gave  an  interpretation  that  was  at  odds  with  the  original policy  intent”  of  s 86,  was  Moody  v  Chief  Executive  Department  of  Work  and Income [2001] NZAR 608.

[33]     In Moody the Court considered (at [28]) that the department’s entitlement to recover overpayments was analogous to the general right at common law to recover money paid under mistake of fact, and that s 86(9A) thus had the effect of permitting the provisional writing-off of a debt which would, in any event, not be able to be recovered due to s 94B of the Judicature Act 1908 and common law principles.

[34]     The Court further stated that there was uncertainty regarding the meaning of the word “error” in s 86(9A).  It noted the tendency to look for a “culpable error”.  In discussing  whether  the  word  “error”  should  be  construed  as  meaning  “culpable error”, the Court opined that:

[33] … [s]ection 86 as a whole will usually only apply to cases where the

Department has acted in error, at least in the sense of having made payments

to which the recipient was not entitled.  So it might be sensibly thought that the word “error” in s 86(9A) simply refers to the underlying error in making the payments in issue.   If so, the subsection could apply in any case where the  recipient  of  the  payment  had  not  “intentionally  contributed”  to  the departmental error as to his or her entitlement to the overpayment.

[35]     The Court then concluded that s 86(9A) applied irrespective of whether fault

or negligence on the part of the department had been shown, and that the section was

to be construed in a way which meant that it operated consistently with s 94B of the Judicature  Act  and  the  common  law.   For  these  reasons,  the  Court  found  that  the department acted in error when it made a payment to the appellant on the mistaken assumption that she was entitled to the Domestic Purposes Benefit.  By reference to those elements of the Court’s decision in Moody, as Duffy J observed in Osborne v Chief Executive of the Ministry of Social Development HC Auckland CIV-207-485-2579, 31 August 2009:

[59]   The strengthening of the language in s 86(9A) and s 86(9B), coupled with the express overriding of s 94B of the Judicature Act, and the rules of law relating to the recovery of money paid under mistake, in s 86(1B), can be understood as Parliament’s response to aspects of the decision in Moody, which acknowledged that the general law on recovering money paid under a mistake  was  applicable  to  decisions  under  s 86.   The  response  Parliament adopted suggests that Parliament was troubled by those aspects of Moody …

[36]     In  my judgment  those  amendments  to  s 86  –  the  exclusion  of  s 94B of  the Judicature  Act  and  any  rule  of  law  relating  to  payments  by  mistake,  and  the provision of a narrower or more specific definition of the term “error” – broadened the right of recovery by the Chief Executive relative to the position as indicated in Moody. Counterbalancing  those  changes,  the  Chief  Executive’s  discretion  not  to recover  overpayments  became  a  bar  on  the  recovery  of  overpayments. In  other words, while the Chief Executive previously had a choice whether or not to authorise the writing-off of a debt within subs (9A), he now “may not recover” any debt falling within that provision.

[37]     What then is “an error” to which s 86(9A) will apply?

[38]     The combined effect of the three definitions of the term “error” in para (a) of

s 86(9B), together with the exclusion found in para (b) of that section, mean that the

act  of  making  a  payment  to  which  a  recipient  is  not  entitled  (itself  an  error  in  a general  sense)  is  not  an  error  for  the  purposes  of  the  section  unless  it  is  caused wholly or partly by an “erroneous act or omission” of an officer of the department.

[39]     Further,   the   provision   of   incorrect   information   by   an   officer   of   the department can be a relevant error (where it has the necessary causative effect) as can, by reference to clauses (ii) and (iii) of that paragraph, any other “erroneous act or omission”.   Therefore, and for the mistake of an overpayment to be a qualifying error in terms of the definition contained in subsection (9B), the overall position, in my view,  is  that  it  is  necessary  to  identify some  erroneous  act  or  omission  by  an officer of the department that, wholly or partly, caused the payment to be made.

[40]     Some  guidance  on  what  would  constitute  a  situation  where  the  department has  made  an  error  “beyond  merely  making  an  overpayment”  is provided in the Explanatory Note to the Social Security (Working Towards Employment) Amendment Bill 2001 (178-1).  By reference to Moody, the Note raises the concern that the section as previously drafted was unclear about whether failing to investigate properly a claim for a benefit was an error.  It states that such a failure would amount to an error under the amended subsection (9A).

[41]     The issue here is whether the Authority erred in law in finding that:

…  the  [Chief  Executive’s]  conclusion  as  at  25  November  2005  as  to  the nature of the relationship between … Mr Saunders and Mrs Thompson was an error for the purpose of s 86(9A) of the Social Security Act 1964?

[42]     The appellant argued that the term “error” connotes some act or omission by one of its officers that was wrong or mistaken, and for which the appellant is in some way  responsible.        It  says  that  the  error  must  be  more  than  just  a  wrong  or  a “different” decision.  It submits that, in some way, an officer must be culpable for an erroneous  act  or  omission  for  an  error,  as  defined,  to  arise.   The  appellant  further argued that here there was no error as, based on the information that was or should reasonably  have  been  available  at  the  time,  there  was  nothing  wrong  with  the conclusion that the respondents were not in a relationship in the nature of marriage.

[43]     Mr McKenzie, as amicus curiae, first submitted that the Authority had found

an error that, by its assessment, did involve culpability on the Chief Executive’s part. Therefore, if the Chief Executive’s view of the law was correct, the Authority had not  erred.   Alternatively,  Mr  McKenzie  suggested  that  the  effect  of  ss 86(9A)  and (9B) was not, as the Chief Executive argued, to require “culpability”.  Rather, those sections – when enacted – did not go that far.  Therefore, the correct answer to the first question stated by the Authority was that it did not err in law.

[44]     I agree with the appellant’s submission that an error under subsection (9A) must  be  more  than  merely a  wrong  determination  or  conclusion  as  to  entitlement, just  as  “the  simple  act”  of  making  an  overpayment  cannot  amount  to  an  error. Instead, the section requires some “erroneous act or omission” of an officer of the department that leads to the conclusion that caused the payment to be  made.   The simple  act  of  making  an  overpayment  will,  it  seems  to  me,  always  reflect  some official decision to that effect.  Therefore a simple decision, just as a simple act, will not necessarily constitute an error.   Given that the Chief Executive has a statutory duty of inquiry when a benefit is granted (s 12 of the Social Security Act) it seems unlikely that the legislature – given the explicit definition of “error” now provided – intended that s 96(9A) could preclude recovery of overpayments where a subsequent investigation  showed  that  an  earlier  decision  to  grant  or  renew  a  benefit  had,  as  a matter of fact, resulted in benefit overpayments.   It follows that what the Authority was required to determine was whether an error, as statutorily defined, was made as part  of  the  first  investigation  that  wholly  or  partly  caused  the  Chief  Executive  to conclude  that  the  respondents  were  not  living  in  a  relationship  in  the  nature  of marriage.

[45]     In my judgment, the Authority erred  in  law  because  it  did  not  look  for  or identify such an error.  Rather, it concluded that by reason of the Authority’s finding

as  at  30  May 2006  that  Mr  Saunders  and  Mrs  Thompson  had  since  October  2003 lived in a relationship in the nature of marriage, the Ministry was necessarily in error when  –  after  the  first  investigation  –  it  reached  the  contrary  conclusion  as  at  25 November 2005.  That the earlier decision was shown to be wrong at the time it was made  because  of  the  later  decision  does  not,  in  my  judgment,  mean  that  it  was necessarily an error as defined.   To determine that it was such an error, a relevant

erroneous  act  or  omission  had  to  be  identified. This,  in  my  view,  the  Authority failed to do.

[46]     As noted, in his submissions the Chief Executive argued that the statutorily defined  concept  of  error  involves  the  concept  of  culpability. The  concept  of culpability  is  not  referred  to  in  the  statutory  definition.  The  legislature  chose  to adopt the words “erroneous act or omission” and I prefer to base my finding on those words.   I consider it sufficient, for these purposes, to leave open the possibility that as cases are argued before the Authority, and subsequently considered by the Courts, the Courts may in the future come to the view that the concept of an erroneous act or omission does involve some concept of culpability.  Given the manner in which this case was argued before me, and particularly as the respondents played no active part, I do not consider it is necessary for me to go that far in reaching my decision on this appeal.

[47]     Mr  McKenzie  alternatively  submitted  that  the  Authority  treated  the  Chief Executive’s  conclusion  as  being  made  in  error,  in  the  defined  sense,  because  its investigation was “flawed”.   He says that the Authority made findings to the effect that  the  Chief  Executive  ought  to  have  done  more  when  carrying  out  the  first investigation under s 12.

[48]     The   Authority,   in   considering   whether   or   not   the   respondents   had intentionally contributed  to  the  error,  did  comment  on  the  first  investigation  being “confined  largely  to  quite  detailed  interviews  with  the  appellants  in  which  they answered the questions put to them” (at [37]).  That is not, in my view, a sufficiently clear  finding  of  an  error,  as  now  statutorily  defined,  to  accept  Mr  McKenzie’s submission.

[49]     I therefore answer the first question of law in the affirmative.

Authority erred in law on question of intentional contribution

[50]     On the basis of its decision that a relevant error had been made, the Authority had  then  to  consider  whether  the  respondents  had  intentionally contributed  to  that error.  If they had, s 86(9A) would not preclude recovery actions.

[51]     Although  the  Authority  made  it  clear  that  it  had  “some  reservations  about some of the answers” provided during the first investigation, it considered that there was  no  cogent  evidence  “of  an  intention  to  contribute  to  the  Ministry  deciding  in error that no relationship in the nature of marriage existed” (at [37]).

[52]     The  appellant  argues  that  the  Authority’s  view  was  not  reasonably open  to the Authority on the evidence, and that the respondents’ failure to provide accurate and  candid  answers  invites  an  irresistible  inference  that  there  was  an  intention  to contribute.

[53]     It is clear that the interviews that were conducted as part of the investigation include  some  statements  by  both  respondents  which  raise  a  real  possibility  of  a finding of “intentional contribution”.  The issue, however, is whether the Authority’s finding that the respondents did not intentionally contribute to the error was wrong in law.  The concept of error of law extends to a finding that is so insupportable on the evidence as to be untenable: Bryson v Three Foot Six Ltd [2005] 3 NZLR 721. It must be emphasised however that this:

[26]  … will be the position only in the rare case in which there has been, in the well-known words of Lord Radcliffe in Edwards v Bairstow, a state of affairs “in which there is no evidence to support the determination” or “one in which the  evidence   is   inconsistent   with   and   contradictory   of   the determination”  or  “one  in  which  the  true  and  only  reasonable  conclusion contradicts the determination”.  (footnotes omitted)

[54]     The appellant focused on four of the answers given by the respondents in the interviews,  claiming  that  these  were  either  inaccurate  or  inconsistent  with  the circumstances  as  they  were  later  found  to  have  existed  at  the  time.  Given  those inaccuracies and inconsistencies and the very clear context of the Chief Executive’s inquiries  at  the  time,  the  Chief  Executive  in  effect  argued  that  the  necessary inference  is  that  the  respondents  did  intend  to  contribute  to  the  Chief  Executive’s error.

[55]     Considering the evidence as a whole, and having regard to the requirement that the Authority’s finding be inconsistent with and contradictory of the evidence, I am not able to conclude that the Authority made an error of law in finding that the respondents did not intentionally contribute to the Chief Executive’s error. While I

am of the opinion that the evidence might, viewed differently, suggest that there was such an intention, that does not mean that the Authority was not entitled – as a matter

of law – to take a different view of this matter.  The respondents offered explanations

as  to  why  the  interview  answers  were  seemingly  inconsistent  with  documentary records.   Moreover,  the  Authority  had  the  benefit  of  hearing  Mrs  Thompson  give evidence, and was therefore in a far better position than me to assess this issue of intentional contribution.

[56]     I therefore answer the second question of law in the negative.

Recovery inequitable?

[57]     I turn now to the third question.

[58]     Before  me,  Mr  Child  for  the  Chief  Executive  acknowledged  that  if  I answered the second question in the negative, it would follow that the third question should  be  answered  similarly.  That  is,  if  the  respondents  did  not  “intentionally contribute”,  then  –  even  if  there  had  been  an  error  –  to  permit  recovery  would  in these circumstances be inequitable.   I agree, and so answer the third question in the negative also.

Relief

[59]     On  the  basis  of  my  answer  to  the  first  question,  the  traditional  response would be to remit this matter to the Authority for consideration by the Authority of the question of “error” in terms of this judgment.

[60]     The issue I now raise is whether there is any purpose in so doing.

[61]     On the one hand if the Authority, following such reconsideration, concluded that no error had occurred, then s 86(9A) would not come into play. The Chief Executive would have his “residual” discretion under s 86(1). My understanding is that, in terms of fiscal considerations, the Chief Executive does not consider it practicable to pursue recovery now, either by way of proceedings or deductions. If

that  understanding is  correct,  then  there  is  no  utility in  remitting the  matter  to  the Authority.

[62]     On  the  other  hand,  if  the  Authority  were  to  conclude  that  an  error  had occurred, recovery would be precluded in any event under s 86(9A) on the basis of the Authority’s findings – which I have upheld – as to “intentional contribution” and “inequitable”.

[63]         I do not therefore propose at this stage to order that the matter be remitted to the  Authority  for  further  consideration.  I  invite  a  memorandum  from  the  Chief Executive  advising  whether  or  not  he  considers  such  relief  to  be  of  benefit  in  the circumstances.  Given the time that has passed, the age as I understand it now of the respondents,  the  fact  that  the  respondents  did  not  participate  in  any  way  in  this hearing and, as acknowledged by the Chief Executive, the relatively small amounts of money involved, I would hope that the legal finding in this judgment in favour of the Chief Executive is sufficient for his purposes.

“Clifford J”

Solicitors:            Crown Law Office, Wellington for the appellant.

P McKenzie QC, Wellington as amicus curiae.