Hennessy v Chief Executive of the Ministry of Social Development

[2012] NZHC 3104

IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY

CIV 2012-485-877 [2012] NZHC 3104

BETWEEN  MAREE HENNESSY Appellant

ANDTHE CHIEF EXECUTIVE OF THE MINISTRY OF SOCIAL DEVELOPMENT

Respondent

Hearing:         4 October 2012

Counsel:         M Hennessey, Appellant in person

T I Hallett-Hook for Respondent

Judgment:      21 November 2012

JUDGMENT OF HEATH J

This judgment was delivered by me on 21 November 2012 at 3.00pm pursuant to

Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors:
Crown Law, PO Box 2858, Wellington
Copy to:

M Hennessy, Appellant in person

HENNESSY V THE CHIEF EXECUTIVE OF THE MINISTRY OF SOCIAL DEVELOPMENT HC TAU CIV

2012-485-877 [21 November 2012]

Introduction

[1]      Ms Hennessy appeals, by way of Case Stated, from a determination of the Social Security Appeal Authority (the Authority) made on 14 November 2011.1   The Authority declined to interfere with a decision of the Chief Executive of the Ministry of Social Development (the Chief Executive) “to establish overpayments [of various income-tested benefits] in respect of the period [from] 5 April 2002 to 29 August

2009”,2    following   confirmation   that   Ms   Hennessy   was   entitled   to   weekly

compensation for that period, under the Accident Compensation Act 2001 (the 2001

Act).  As a result of that decision, the sum of $76,735.36 was paid to the Ministry of Social Development (the Ministry) by the Accident Compensation Corporation (the Corporation), under s 252 of the 2001 Act.

[2]      Put at its broadest, Ms Hennessy’s fundamental complaint is that the decision discriminates against people who elect to work part-time when otherwise eligible to receive an income-tested benefit.  She asserts (and the Ministry does not dispute this) that if she had received a benefit at the level to which she was entitled during the period that she was working, she would now be better off.  Ms Hennessy contends that the approach taken by the Authority provides a disincentive for a citizen to undertake part-time work when employment is available to an income-tested beneficiary.

[3]      The Authority has posed four questions for this Court’s consideration:

(a)      Did  the Authority err  in  law  in  finding  that  s  71A of  the  Social Security Act 1964 (the 1964 Act) required the rate of any income- tested benefit payments made to Ms Hennessy to be reduced by the

amount of any weekly compensation paid to her by the Corporation?

1      Re Hennessy [2011] NZSSA 92 (Ms M Wallace, Mrs Te Hira and Mr K Williams).

2 Ibid, at para [1].

(b)Did the Authority err in law in declining to direct, pursuant to the provisions of s 86(9A) of the 1964 Act, that the overpayment not be recovered?

(c)      Did the Authority err in law in determining that the Chief Executive had no discretion, under either s 86(1) or s 86A of the 1964 Act, to consider whether to decline to recover the overpayment?

(d)Did the Authority err in law in determining that the Chief Executive had  no  power,  under  s 252  of  the  2001  Act,  to  refund  monies reimbursed by the Corporation?

[4]      The various statutory provisions to which the questions refer form part of an overall statutory scheme against which the appeal must be considered.  The answer to each question will necessarily flow from an analysis of that scheme.   For that reason, I approach the appeal by outlining the relevant facts, analysing the statutory scheme and then answering the specific questions posed.

Background facts

[5]      Before 2000, Ms Hennessy was engaged in part-time employment as a ticket writer.   During the time of her employment she was in receipt of a sole parent domestic purposes benefit.  From 12 March 1991 until 16 July 2007, that benefit was paid on a two weekly basis. After 16 July 2007, it became a weekly benefit.

[6]      During 2000, Ms Hennessy suffered a workplace accident, in the form of an injury to her lumbar spine.  She remained in employment for two further years, until she had no option but to give up working, because of her injury.  As the injury was suffered at work, Ms Hennessy made a claim for compensation, under the 2001 Act.

[7]      On 22 August 2007, Ms Hennessy was granted an invalid’s benefit.  She was transferred to a sickness benefit on 23 September 2007, when it was discovered that she no longer qualified, medically, for an invalid’s benefit.

[8]      Despite  Ms  Hennessy’s  best  endeavours,  the  Corporation  did  not  accept liability to pay compensation until August 2010.  When that decision was made, the Corporation wrote to the Ministry advising that Ms Hennessy was to receive a back- dated payment of compensation for the period 5 April 2002 to 29 August 2010.  In that letter, the Corporation sought advice from the Ministry as to whether it was

required to pay any money to it, under s 252 of the 2001 Act.3

[9]      Inquiries were undertaken by Ministry staff to determine the amount paid to Ms Hennessy under domestic purposes, invalid’s, and sickness benefits during the relevant period.   Payments totalling $76,735.36 were identified.   The Ministry requested that the Corporation pay that sum.  Accordingly, all but $664 of the back- dated compensation payment due under the 201 Act was paid by the Corporation to the Ministry.    Subsequent, inquiries by Ministry staff revealed that the “overpayment”  was  higher  than  first  thought.     While,  based  on  those  new calculations, the whole of the entitlement would have been extinguished through payment  of  those  moneys  to  the  Ministry,  the Authority’s  decision  enabled  Ms

Hennessy to retain the benefit of that part of the compensation.4

[10]     On 16 September 2010, the Ministry wrote to Ms Hennessy to advise that the weekly compensation to which she had become entitled had been applied to meet the overpayments it had identified. Through Work & Income, the Ministry wrote:

ACC has told us that you qualify for weekly compensation for the period 5

April 2002 to 29 August 2010.

The weekly compensation you are due from ACC means that your benefit must be reduced over this period.  Because of this, a debt for $76,735.28 has been established on your the [sic] benefits you received for this period.  ACC will repay this debt from the weekly compensation they owe you for the same period.

Your accommodation supplement and disability allowance entitlements have not been affected by this review.

ACC have also provided us with employment earnings from 6 April 2002 to

19 April 2002.   I have established a debt of $36.52 net this is your responsibility to repay.

3      Section 252 is set out at para [18] below.

4      Re Hennessy [2011] NZSSA 92 at paras [33]–[35]. See para [12] below.

....

(emphasis added)

[11]     The letter also advised Ms Hennessy of her right to seek a review of the Ministry’s decision.   Ms Hennessy exercised that right.   A Benefits Review Committee upheld the Chief Executive’s decision.5

[12]     Ms Hennessy appealed to the Authority.  The Authority allowed the appeal in part, to reflect incorrect calculations made by Ministry staff at the time of reimbursement.  The Authority took the view that Ms Hennessy’s circumstances and the minimal benefit she had received meant that the Chief Executive should exercise

a discretion to take no steps to recover that portion of the overpayment.6   In all other

respects, the appeal was dismissed.

The statutory scheme

[13]     The object of the statutory scheme is clear.   It is designed to ensure that a person in receipt of an income-tested benefit does not obtain a windfall by receiving accident compensation payments for a period during which he or she was in receipt of a social security benefit.   As the Court of Appeal observed, in Goh v Chief Executive of the Ministry of Social Development, if a beneficiary were to retain both the full amount of the benefits received and accident compensation, calculated on a weekly basis in respect of exactly the same period, it would result “in an unjustified

windfall” and be “a preposterous result”.7

[14]     To similar effect, in M v Chief Executive of the Department of Work and Income, Goddard J observed that the principle at work was that a beneficiary “should have access to only one stream of “state insurance” and [could not] expect to receive

both benefit and period earnings related compensation for the same period of time”.8

5      Report of Benefits Review Committee dated 20 December 2010.

6      Re Hennessy [2011] NZSSA 92 at para [35].

7      Goh v chief Executive of the Ministry of Social Development [2010] NZCA 110 at para [15].

8      M v Chief Executive of the Department of Work and Income HC Wellington AP 335/01, 27

August 2002, at para [29].

[15]     Until an amendment to s 71A of the 1964 Act in 1998, compensation for loss of earnings (or loss of potential earning capacity) was taken into account as relevant income when assessing a benefit.  During the whole of the period in issue in this case (5 April 2002 until 29 August 2009) an amended version of s 71A applied a different regime.  It excluded compensation for loss of earnings or loss of potential earning

capacity from the relevant income calculation.9

[16]     In its applicable (and present) form, s 71A of the 1964 Act provides:

71A  Deduction of weekly compensation from income-tested benefits

(1)       Subject to subsection (4), this section applies to a person who is qualified to receive an income-tested benefit (other than New Zealand superannuation or a veteran's pension unless the veteran's pension would be subject to abatement under section 74D of  the War Pensions Act 1954) where—

(a)      The person is entitled to receive or receives weekly compensation in respect of the person or his or her spouse or partner or a dependent child; or

(b)     The  person's  spouse  or  partner  receives  weekly compensation.

(2)       Where this section applies, the rate of the benefit payable to the person must be reduced by the amount of weekly compensation payable to the person.

(3)       In this section, weekly compensation means weekly compensation for loss of earnings or loss of potential earning capacity payable to the person by the Corporation under the Accident Compensation Act 2001.

(4)       Subsection (2) does not apply where the person—

(a)      Was receiving the income-tested benefit immediately before

1 July 1999 and continues to receive that benefit; and

(b)       Was receiving compensation for loss of earnings or loss of potential earning capacity under the Accident Rehabilitation Compensation and Insurance Act 1992 immediately before that date; and

(c)       Section 71A(2) of this Act (as it was before it was repealed and   substituted   by   the  Accident   Insurance  Act  1998)

9      Although some beneficiaries in receipt of an income-tested benefit immediately before 1 July

1999 were excluded from the new regime, Ms Hennessy does not fall within that category. Although then in part-time employment, Ms Hennessy was not receiving equivalent compensation immediately before that date.  Social Security Act 1964, s 71A(4)(a) and (b) and the definition of “income” in s 3, in particular, (f)(ix).

required the compensation payments to be brought to charge

as income in the assessment of the person’s benefit.

[17]     Section 252 of the 2001 Act, is a companion provision to s 71A. While s 71A focuses on those persons who are in receipt of a benefit, s 252 sets out the Corporation’s duties to pay certain compensation sums to the Ministry, rather than the beneficiary.  Section 252 deals with cases in which a person is in receipt of an income-tested benefit and establishes a claim to an entitlement under the 2001 Act

“in respect of all or part of the same period”.10    In such cases, the Corporation is

under a statutory obligation to “refund the excess benefit payment” to the Ministry if it knows that s 252 applies or is requested to do so by the Ministry.11    The term “excess benefit payment” is defined by s 252(3).

[18]     Section 252 of the 2001 Act provides:

252      Relationship  with  social  security  benefits:  reimbursement  by

Corporation

(1)  This section applies if a person—

(a)      receives a payment of an income-tested benefit under the

Social Security Act 1964 in respect of a period; and

(b)      establishes a claim to an entitlement from the Corporation in respect of all or part of the same period.

(2)  An excess benefit payment is regarded as having been paid in respect of that entitlement.

(3)   An excess benefit payment is the part of the benefit payment (up to the amount of the entitlement) that is in excess of the amount of benefit properly payable, having regard to the entitlement under this Act.

(4)     The Corporation must refund the excess benefit payment to the department responsible for the administration of the Social Security Act

1964—

(a)      if the Corporation knows that this section applies; or

(b)      if requested to do so by that department.

(5)    For the purposes of this section, an excess benefit payment includes a payment of any part of a married rate of benefit that is paid to the spouse or partner of the person who established the claim to the benefit.

10     Accident Compensation Act 2001, s 252(1).

11     Ibid, s 252(4).

(6)    Any amount that is treated under this section as having been paid in respect of any treatment, service, rehabilitation, related transport, compensation, grant, or allowance is deemed for all purposes to have been so paid.

[19]     At any time, the Chief Executive may review a benefit to ascertain whether the beneficiary may not have been entitled to it at a particular time.12   In the present context, exercise of that power enabled the Chief Executive to consider whether any overpayment  had  been  made  during  the  period  for  which  the  Corporation  now accepts that Ms Hennessy was entitled to cover under the 2001 Act.

[20]     While the Ministry accepts that s 86(1) confers a discretion on the Chief Executive not to recover an overpayment,13  it contends that s 86(1A) operates to apply s 86(9A) and (9B), thereby limiting the circumstances in which the discretion may be exercised. The operative parts of s 86 state:

86   Recovery of payments made in excess of authorised rates

(1)       The chief executive, in order to recover a debt referred to in section

85A, may—

(a)      bring proceedings in the name of the chief executive; or

(b)       deduct all or part of that debt from any amount payable to that person by the department as a benefit or a student allowance; or

(c)       in the case of a debt referred to in section 85A(d), deduct all or part of that debt from any payment of a grant of special assistance  under  a  welfare  programme  approved  under section 124(1)(d).

(1A)     Subsection (1) is subject to subsections (9A) and (9B), and to any regulations made under section 132G.

...

(9A)   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

12     Social Security Act 1964, s 81(1)(b).

13     For example, see Owens v Chief Executive of the Ministry of Social Development [2007] NZAR

185 (CA) at para [8]; leave to appeal to the Supreme Court was refused: (2007) 18 PRNZ 422 (SC) at para [1].

(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.

(9B)     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.

[21]     Section 86 applies only to debts to which s 85A refer.  Section 85A(f) of the

1964 Act provides:

85A  Payments that are debts due to the Crown

The following payments or other sums are debts due to the Crown:

...

(f)       a sum (an overpayment), paid or advanced under this Act or the Social Welfare (Transitional Provisions) Act 1990 or Part 6 of the War   Pensions   Act   1954   or   Part   1   of   the   New   Zealand Superannuation and Retirement Income Act 2001 to or for the credit of a person—

(i)        that  is  in  excess  of  the  amount  to  which  the  person  is entitled; or

(ii)      to which the person has no entitlement.

[22]     Section 86A, to which the Authority makes reference in question 3 of the

Case Stated14 is no more than a machinery provision, indicating the way in which a deduction notice may be issued, for the purposes of s 86(1)(b) and (c).

14     See para [3](c) above.

The competing contentions

[23]     For the Chief Executive, Mr Hallett-Hook submitted that no error had been made  by  the  Authority.     The  questions  posed,  he  contends,  turned  on  the interpretation of ss 71A, 81, 85A and 86 of the 1964 Act and s 252 of the 2001 Act. Mr Hallett-Hook submitted that those provisions, when read together, required the Chief  Executive  to  recover  payments  to  which  s 71A and  s 252  referred.    He contends that there was no residual discretion available for the Chief Executive to exercise in favour of Ms Hennessy.

[24]     Ms Hennessy’s argument was somewhat more intricate.  She contends that, in assessing  the  amount  to  be  repaid  under  s 71A(2)  of  the  1964 Act,  the  Chief Executive was required to assess objectively the rate of benefit that ought to have been paid over the time in question, by reference to the four definitions of “Income Test” in s 3 of that Act, including the statutory abatement regime that applies to beneficiaries who elect to undertake part-time employment.15

[25]     As  foreshadowed  earlier,16   Ms  Hennessy’s  primary complaint  is  that  her backdated compensation payments were deducted from her benefit entitlements on a dollar for dollar basis.  If the compensation moneys had been treated as income, to which the abatement regime set out in the 1964 Act applied, the amount payable by the Corporation to the Ministry would have been less.  On that basis, she submitted that the legislation unfairly discriminates against those in receipt of an income-tested benefit who are in part-time employment when a relevant injury is suffered.

Analysis

[26]     In its decision, the Authority considered Ms Hennessy’s submission that it was “unfair and discriminatory” that she be required to repay the benefits received during the period between April 2002 and August 2010.  Ms Hennessy had submitted

that her inability to receive the compensation due to her was “very unfair” because it

15     In particular, the definition of “Income Test 1”. The benefits that Ms Hennessy received over the

relevant period all come within the definition of “income-tested benefit”, set out in s 3.

16     See para [2] above.

discriminated against part-time employed beneficiaries.  During this time, she was working to supplement her income, she was receiving earnings of $100–$200 per week in addition to her benefit entitlement.

[27]     Responding to those submissions, the Authority said:

[20]     We appreciate that the appellant must feel aggrieved that having battled to obtain ACC over a period of approximately eight years, she is no better off financially than if she had not sought ACC.  We accept that the income that she says she lost as a result of her accident has not been replaced by ACC payments.  However in 1998 Parliament specifically amended s.71A of the Social Security Act 1964 to provide that weekly compensation be directly  deducted  from  entitlement  to  benefit  rather  than  be  treated  as income.  Persons in receipt of income tested benefits immediately before 1

July 1999 were not affected but anyone receiving an income tested benefit and becoming entitled to receive ACC payments after that date is affected by

the change.   The Chief Executive has no discretion in the matter.   He is

obliged to apply the law.  Moreover the Accident Compensation Corporation is  obliged  to  comply  with  the  provisions  of  s.252  of  the  Accident

Compensation Act 2001 which require it to refund any excess income tested

benefits  to  the  Ministry  of  Social  Development  from  arrears  of  ACC

payments.

[21]     The policy behind the law change is that a person should not be entitled to receive two streams of state assistance.

[28]     In my view, s 71A is designed to ensure that the rate of benefit payable to a person is reduced by the amount of weekly compensation payable to him or her.17

Mr Hallett-Hook submitted that s 71A was the critical provision and that the phrase “the rate of the benefit payable to the person” must refer to the actual rate paid, not some other sum calculated by reference to the type of notional abatement that Ms Hennessy seeks to reflect her part-time work.18   The need for the rate of benefit to be reduced by the amount of weekly compensation, makes it clear that any amount of compensation received is not treated as income for the purpose of assessing an entitlement to an “income tested benefit”.19   It is also consistent with the notion that one arm of the State should be compensated by another when it has payments made

for which the latter had legal liability throughout.20

17     Social Security Act 1964, s 71A(2). Section 71A is set out at para [16] above.

18     See para [24]above.

19     Social Security Act 1964, s 71A(2) and (3).

20     See also paras [29] and [30] below.

[29]     Section 71A of the 1964 Act and s 252 of the 2001 Act were considered by the  Court  of  Appeal  in  Goh  v  Chief  Executive  of  the  Ministry  of  Social Development21  and Goh v Commissioner of Inland Revenue.22    However, in neither case did the Court of Appeal embark on a detailed consideration of the interrelationship between s 71A and s 252.  In the latter, the Court paraphrased the two sections in its reasons for judgment.   Keane J, delivering the judgment of the Court of Appeal, said:

[34]     Where,  as  here,  a  beneficiary  receives  a  retrospective  grant  of accident compensation, s 252 of the Accident Compensation Act 2001 prevents any double payment. Section 252 requires ACC to refund to the Ministry what it describes as any “excess benefit payment”.23  That is “the part of the benefit payment (up to the amount of the entitlement) that is in excess of the amount of benefit properly payable, having regard to the entitlement under this Act.”24

[35]      Section 252 is complemented by s 71A of the Social Security Act

1964.  Section  71A  requires  that  any  income  tested  benefit  payable  be reduced by any “weekly compensation” entitlement. Subsection (2) says “Where this section applies, the rate of the benefit payable to the person must be reduced by the amount of weekly compensation payable to the person.”

[30]     In both of the Goh cases, the Court of Appeal has held that the companion provisions of s 71A of the 1964 Act and s 252 of the 2001 Act are designed to prevent a beneficiary from receiving more than the benefit he or she would have received, had cover not been available under the 2002 Act.25 While the application of those provisions (to the facts of this case) might create the type of perverse disincentive to which Ms Hennessy has referred (namely, a disincentive for

beneficiaries to undertake part-time work) the words of the sections are clear and I

am bound by the Court of Appeal decisions.

[31]     In my view, there is no room, on the basis of an exercise conducted under s 6 of the New Zealand Bill of Rights Act 1990, as explained by the Supreme Court in

21     Goh v Chief Executive of the Ministry of Social Development [2010] NZCA 110. See also para

[13] above.

22     Goh v Commissioner of Inland Revenue [2011] NZCA 344; (2011) 25 NZTC 20-066.

23     Tax Administration Act 1994, s 252(2).

24     Section 252(3).

25     Goh v Chief Executive of the Ministry of Social Development [2010] NZCA 110 and Goh v Commissioner of Inland Revenue [2011] NZCA 344; (2011) 25 NZTC 20-066 at paras [34] and [35].

Hansen  v  R,26   to  interpret  ss 71A  and  252  in  a  manner  that  would  meet  Ms Hennessy’s complaint.   In effect, Ms Hennessy’s challenge is to the nature of the existing statutory scheme, as opposed to the way in which the sections should be interpreted.   Any change in policy is for Parliament.   The points raised by Ms Hennessy cannot be remedied by a decision of this Court.

[32]     Once the Chief Executive reached a decision that Ms Hennessy had received an “overpayment”,27  s 252 of the 2001 Act provided the mechanism by which that debt would be repaid.   Section 252 does no more than to create an efficient administrative mechanism for the overpayment to be made directly from the Corporation to the Ministry.   One public benefit of the statutory scheme is that it avoids the possibility that the Corporation will make a payment to an errant beneficiary who will then use the money for his or her own purposes and avoid payment of the debt owed to the Ministry.

[33]     The Corporation, in making the payment, is acting as a statutory agent for the beneficiary.   That is so because the beneficiary’s entitlement to the money arises from  acceptance  of  cover  by  the  Corporation.    The  Corporation  is  under  no obligation to pay money to the Ministry if it discharges its obligation to pay the beneficiary directly and without knowledge that the case is one to which s 252 applies or it has not been requested to make a payment by the Ministry.28

[34]     The next question is whether the Chief Executive has a discretion not to require repayment.  Before the Authority, s 86 of the 1964 Act was identified as a potential basis on which such a discretion might have been exercised.  Neither Mr Hallett-Hook nor Ms Hennessy identified any other relevant provisions.

[35]     The  starting  point  is  that  the  type  of  overpayment  in  issue  is  one contemplated by s 86(1).29   The purpose of s 86(1) is to identify means by which the

26     Hansen v R [2007] NZSC 7; [2007] 3 NZLR 1.

27     Social Security Act 1964, s 85A(f).

28     Accident Compensation Act 2001, s 252(4).

29     See s 85A(f) of the 1964 Act, to which s 86(1) refers.

Chief Executive may recover an overpayment from the beneficiary, not from any other person.30

[36]     The Chief Executive’s obligation to recover the debt in one or more of the ways set out in s 86(1) is subject to the restrictions contained in s 86(9A) and (9B).31

The strictness with which Parliament expects the Chief Executive to recover overpayments is highlighted by s 86(1B), which provides:

86   Recovery of payments made in excess of authorised rates

...

(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).

[37]     Section 86(9A) and (9B) make it clear that the Chief Executive “may not recover” any part of an overpayment caused “wholly or partly by an error to which [the beneficiary] did not intentionally contribute”. There are four qualifiers to that:32

(a)      The beneficiary must have received the money in good faith.

(b)The beneficiary must have changed his or her position in the belief that he or she was entitled to that sum and would not be under any obligation to pay or repay it to the Chief Executive.

(c)      It  would  be  inequitable  in  all  the  circumstances,  including  the

beneficiary’s financial circumstances, to permit recover.

(d)      The relevant “error” must be of a type to which s 86(9B) refers.33

[38]     On  the  evidence,  I  can  discern  no  relevant  “error”  for  the  purposes  of s 86(9A).  The sum required to be paid to the Ministry is not in dispute.  I have held that the effect of s 71A of the 1964 Act and s 252 of the 2001 Act requires the

Corporation, as agent for the beneficiary, to pay the money to the Ministry.   That

30     Section 86(1) is set out at para [21] above.

31     Social Security Act 1964, s 86(1A).

32     Ibid, s 86(9A)(a) and (b) and (9B). These provisions are set out at para [21] above.

33     Section 86(9B) is set out at para [21] above.

being so, no error on the part of an officer of the Ministry exists.  It follows that the discretion conferred by s 86(1) is not available.

Answering the questions in the Case Stated34

[39]     The Authority concluded  that  s 71A of the 1964 Act  had  been  amended specifically to enable recovery of benefits paid in cases such as this.   In effect, it regarded s 252 of the 2001 Act as complementing s 71A.35     That approach was unimpeachable  and  conformed  fully  with  the  views  expressed  by  the  Court  of Appeal in Goh v Commissioner of Inland Revenue.36   In my judgment, the Authority was correct in its interpretation of s 71A.

[40]     The second question was whether the Authority was wrong to decline to direct the Chief Executive not to recover the overpayment, through the exercise of the s 86(1) discretion.  That question is linked to the one posed in question 3, namely whether the Authority was wrong to determine that the Chief Executive had no discretion to recover the overpayment.

[41]     The Authority’s views on those two issues are captured in its reasons:37

[25]    As has previously been noted Parliament has specified the circumstances in which a debt should not be recovered in s.86(9A).   The occasions therefore that the Chief Executive should exercise his discretion not to take steps to recover a debt or debts which do not meet the criteria of s.86(9A)  must  therefore  be  limited (see  The Director  General of Social Welfare v Attrill and Ors [1988] NZAR 368).

[26]     In McConkey v The Director General of Work and Income New Zealand  AP  277/00  (Wellington  Registry)  20  August  2002  Goddard J described the circumstances in which the discretion might be exercised as “extraordinary”.   In Cowley v The Ministry of Social Development CIV

2008485/381 (Wellington Registry) 1 September 2008 they were described by Clifford J as “unusual”.

[27]     The discretion in s.86(1) relates to certain specific steps the Chief Executive may choose to recover a debt.  Thus the Chief Executive has a discretion to bring proceedings, deduct the debt from the benefit payable or

34     The four questions are set out at para [3] above.

35     Re Hennessy [2011] NZSSA 92 at paras [20] and [21], set out at para [27] above.

36     Goh v Commissioner of Inland Revenue [2011] NZCA 344; (2011) 25 NZTC 20-066 at paras

[34] and [35], set out at para [29] above.

37     Re Hennessy [2011] NZSSA 92 at paras [25]–[29].

deduct the debt from assistance granted under a welfare programme.  Under s.86A the Chief Executive has a discretion to issue a Deduction Notice.

[28]     In this case in relation to the overpayment of Domestic Purposes Benefit, Sickness Benefit and Invalid’s Benefit the Chief Executive is not required to take any of these actions to recover the debt.  Rather s.252 of the Accident Compensation Act 2001 requires the Corporation to refund the excess benefit payment to the department responsible for administration of the Social Security Act 1964.  The Corporation does not have any discretion in this regard.  Once the payment is made to the Ministry the debt has been recovered.  The Chief Executive is not required to exercise any discretion under  ss.86(1)  or  86A to  take  steps  to  recover  the  debt  and  the  Chief Executive does not have power under the Social Security Act 1964 to refund the money recovered to the appellant.

[29]      In respect of the benefits recovered to date the Chief Executive has no ability to consider the individual circumstances of the appellant.  There is no basis on which we can direct that the Chief Executive take no steps to recover the payments of income tested benefit recovered to date.

[42]     Although the Authority did not consider the issue based upon the agency view that I have taken, its conclusion that the s 86(1) discretion was not available was sound.  Because there was no “error” of the type to which s 86(9B) refers, the discretion conferred by s 86(1) was unavailable.38   I uphold the Authority’s decision on the issues arising out of both questions 2 and 3.

[43]     The fourth question was whether the Chief Executive had power to refund moneys paid by the Corporation under s 252 of the 2001 Act.  That question was not specifically addressed in the Authority’s determination.   I interpret the question as asking whether, on receipt of moneys from the Corporation under s 252, the Chief Executive had a discretion to pay some or all of them directly to the beneficiary.

[44]     The Case Stated described the s 252 issue in these terms:39

[18]      The  definition  of  “Income-tested  benefits”  in  s 3  of  the  Social Security Act 1964 includes Sickness Benefit, Domestic Purposes Benefit and Invalid’s Benefit.

[19]      Section 252 of the Accident Compensation 2001 provides that where a  person  who  has  received  an  income-tested  benefit  under  the  Social Security Act 1964 establishes a claim to entitlement for ACC in respect of the same period and it is determined that an excess benefit payment has been paid in respect of that period then the Corporation must refund the excess

38     See paras [36]–[38] above.

39     Case Stated by Social Security Appeal Authority, dated 9 May 2012. Compare with Re

Hennessy [2011] NZSSA 92 at paras [17], [20] and [28].

benefit payment to the Ministry of Social Development.   This provision applies only in respect of income-tested benefits.  The Chief Executive must recover overpayments of supplementary benefits such as Accommodation Supplement directly from the recipient.

[20]      The Authority accepted that the income the appellant lost as a result of her accident has not been replaced by ACC repayments.

[21]      In  1998  Parliament  specifically  amended  s 71A  of  the  Social Security Act 1964 to provide that weekly compensation be directly deducted from entitlement to benefit rather than be treated as income.

[22]      Anyone receiving an income-tested benefit and becoming entitled to receive ACC payments after 1 July 1999 is affected by the change.

[23]      The Chief Executive has no discretion in the matter.  He is obliged to apply the law.

[24]      Moreover,  the Accident  Compensation  Corporation  is  obliged  to comply with  the provisions  of s 252 of the Accident  Compensation Act which require it to refund any excess income-tested benefits to the Ministry of Social Development from arrears of ACC payments.

[25]     The policy behind the law change is that a person should not be entitled to receive two steams of state assistance.

[45]     In  my view,  the  policy  of  the  legislative  provisions  plainly required  the compensation moneys to be paid to the Chief Executive.   The policy required reimbursement of one arm of the State for payments that, during the period in issue, ought to have been made by another.  Accordingly, the Authority was correct to hold that once s 252 became applicable, there was no basis on which the Chief Executive could decide to pay some or all of the moneys received from the Corporation to Ms Hennessy.

Result

[46]     For those reasons, the appeal is dismissed.  All four questions posed by the

Authority are answered “No”.

[47]     Given Ms Hennessy’s financial position, I make no order as to costs.

P R Heath J

Delivered at 3.00pm on 21 November 2012