Latimer v Chief Executive of the Ministry of Social Development
[2015] NZHC 2779
•10 November 2015
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2015-485-000250 [2015] NZHC 2779
IN THE MATTER OF an appeal by way of case stated from the
determination of the Social Security Appeal Authority at Wellington under s 12Q of the Social Security Act 1964
BETWEEN
ROBERT LATIMER Appellant
AND
THE CHIEF EXECUTIVE OF THE MINISTRY OF SOCIAL DEVELOPMENT
Respondent
Hearing: 22 September 2015 Appearances:
R Latimer (Self-represented Appellant) in Person, together with M Littlewood (Retirement Policy and Research Centre, University of Auckland) as McKenzie Friend
M Conway and A A Jacobs for the Respondent
Judgment:
10 November 2015
JUDGMENT OF EDWARDS J
This judgment was delivered by Justice Edwards on 10 November 2015 at 3.00 pm, pursuant to
r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Date:
Solicitors: Crown Law, Wellington
Copy To: R Latimer, Auckland
LATIMER v CHIEF EXECUTIVE OF THE MINISTRY OF SOCIAL DEVELOPMENT [2015] NZHC 2779 [10 November 2015]
Introduction
[1] Mr Latimer is currently entitled to claim a New Zealand Superannuation (NZS) benefit. Both Mr Latimer and his wife are also in receipt of a Canada Pension Plan (CPP) benefit. Both of those CPP benefits are converted into New Zealand dollars and deducted from Mr Latimer’s NZS.
[2] Mr Latimer appeals from the Social Security Appeal Authority’s (Authority) decision which confirmed that the CPP payments are deductible pursuant to s 70 of the Social Security Act 1964 (Act).1
[3] The key issue on appeal is whether the CPP meets the contingency and administration requirements of s 70 of the Act. There is also an issue about whether Mrs Latimer’s CPP is a “Government Occupational Pension” which is exempted from s 70.
Canada Pension Plan
[4] The CPP was established by the Canada Pension Plan Act RSC 1985 c C-8. It is a compulsory scheme for all people working in Canada outside the province of Quebec which has its own, similar plan. CPP is funded by worker and employer contributions based on earnings. Neither the Canadian Government, nor the Governments of the provinces of Canada, contribute to the CPP except in their roles as employers.
[5] Contributions to the CPP are collected by the Canada Revenue Agency, a Government department similar to New Zealand’s Inland Revenue Department. These funds are paid into the Canadian Consolidated Revenue Fund and credited to the Canadian Pension Plan Account.2 Any amounts that exceed the immediate obligations of the Account are transferred to the Canada Pension Plan
Investment Board, which manages the fund. The directors and chairperson of the
1 An appeal by Robert Latimer against a decision of the Benefits Review Committee [2014]
NZSSAA 83 (Authority’s decision)
2 Canadian Pension Plan Act RSC 1985 c C-8, s 108.
Canada Pension Plan Investment Board are appointed by, and accountable to, the
Canadian Government.
[6] Under ss 92 and 117 of the Canada Pension Plan Act, the Ministers of Social Development and National Revenue have “control and direction of the administration of the Act”, and must report to the Canadian Parliament on the administration of the Act. There is also provision for the Minister of Finance to review the financial state of the CPP and make recommendations on the benefits and contribution rates provided by it pursuant to s 113 of the Canada Pension Plan Act.
[7] Service Canada, a Canadian Government agency, administers the CPP. It is responsible for functions such as managing applications for CPP benefits.
[8] When Mr Latimer applied for his CPP pension, it was payable on retirement between the ages of 60 and 70. The legislation subsequently changed, and now people eligible for a CPP pension can apply to have it started any time on or after the age of 60. There is no longer a retirement requirement. The amount paid depends on how much the individual and the employer have contributed to the plan, the length of time over which the contributions have been made, and the age at which the pension started.
[9] The Canadian Government provides a Canadian old age security pension (OAS) which provides a monthly pension for all persons attaining the age of 65 years provided they meet certain residential requirements. Mr Latimer contends that the OAS, not the CPP, is similar to the NZS.
Questions of law
[10] The appeal proceeds by way of case stated. The questions of law stated by the Authority are as follows:
One: As a matter of law did the Authority err in determining that the Canada Pension Plan payments received by the appellant must be deducted from the appellant’s entitlement to New Zealand Superannuation pursuant to s 70 of the Social Security Act 1964?
Two: As a matter of law was the Authority correct in determining that the Canada Pension Plan payments received by the appellant’s wife could not be considered to be a Government Occupational Pension?
Three: As a matter of law did the Authority err in determining that the Canada Pension Plan payments received by the appellant’s wife must be deducted from the appellant’s entitlement to New Zealand Superannuation pursuant to s 70 of the Social Security Act 1964?
[11] Mr Latimer seeks to amend the questions of law as follows:
One: Did the Authority err as a question of law in determining that the
Canada Pension Plan meets the requirements of section 70 of the Act; and
Two: Did the Authority err as a question of law in determining that my wife’s Canada Pension Plan pension does not satisfy the definition of a Government Occupational Pension.
[12] Mr Latimer says he deliberately worded his questions this way because the issues affect more people than just him.
[13] Questions stated by the Authority may be amended pursuant to r 21.12(2) of the High Court Rules. I do not consider it necessary to do so in this case. As Mr Latimer accepts, his question one effectively combines questions one and three of the Authority’s case stated questions, and his question two is equivalent to the Authority’s question two. An amendment is therefore not necessary to determine the real controversy between the parties.
[14] I proceed to consider each of the questions of law posed by the Authority.
Question one – deductibility pursuant to s 70
[15] Question one concerns the deductibility of the CPP from the NZS pursuant to s 70 of the Act. The relevant part of s 70 provides:
70 Rate of benefits if overseas pension payable
(1) For the purposes of this Act, if—
(a) Any person qualified to receive a benefit under this Part of this Act … or Part 6 of the Veterans' Support Act 2014 or under the New Zealand Superannuation and Retirement Income Act 2001 is entitled to receive or receives, in respect of that person or of that person's spouse [or partner] or of
that person's dependants, or if that person's spouse [or partner] or any of that person's dependants is entitled to receive or receives, a benefit, pension, or periodical allowance granted elsewhere than in New Zealand; and
(b) The benefit, pension, or periodical allowance, or any part of it, is in the nature of a payment which, in the opinion of the chief executive, forms part of a programme providing benefits, pensions, or periodical allowances for any of the contingencies for which benefits, pensions, or allowances may be paid under this Act … or under the New Zealand Superannuation and Retirement Income Act 2001 or under the Veterans' Support Act 2014 which is administered by or on behalf of the Government of the country from which the benefit, pension, or periodical allowance is received—
the rate of the benefit or benefits that would otherwise be payable under this Act … or Part 6 of the Veterans' Support Act 2014 or under the New Zealand Superannuation and Retirement Income Act 2001 shall, subject to subsection (3) of this section, be reduced by the amount of such overseas benefit, pension, or periodical allowance, or part thereof, as the case may be, being an amount determined by the chief executive in accordance with regulations made under this Act:
…
[16] Therefore, in order for an overseas pension to be considered for the purposes of s 70 it must meet both the “contingency” and “administration” requirements set out in s 70(1)(b).
[17] The Authority found that the CPP met both the contingency and administration requirements and accordingly the deductions were properly made.3
[18] Mr Latimer challenges the findings of the Authority on a number of grounds. Each of those grounds is considered below.
Intent of legislation
[19] Mr Latimer contends that the conclusions reached by the Authority are not consistent with the intent of s 70. He submits that s 70 only relates to social security
pensions which are funded by the State and CPP is not such a pension.
3 Authority’s decision above n 1 at [11]-[26].
[20] Mr Latimer submits further that in terms of addressing the underlying purpose behind s 70 allowing both NZS and CPP payments to be received without deduction would not amount to “double dipping”. He argues that it would not be unfair for people who have lived all their lives in New Zealand to only receive the NZS benefit, and for someone coming from overseas to receive the full NZS benefit plus the CPP.
[21] This Court has consistently found that public funding of a programme is irrelevant to the s 70 enquiry. 4 The fact that the Canadian government does not fund the CPP does not take it outside of s 70. The CPP was previously considered by this Court in Hogan v The Chief Executive of the Department of Work and Income.5
Ellen France J considered and rejected the same argument now advanced by
Mr Latimer:
[26] Perhaps the strongest argument for the appellant that Roe is wrong as to the effect of the source of funds is in his submission as to the purpose of s 70. Namely, he says that the intention of s 70 is to prevent an individual from collecting twice from government funds, whereas under the CPP the appellant is simply recouping his/his employer's own contribution. In the end, however, I accept the respondent's submission that it is not necessary in terms of s 70 to conduct an inquiry as to how the relevant Government collects the funds and particularly whether they are from taxation or from another type of compulsory acquisition from a person's income which the Government chooses not to call taxation. True private savings schemes will not be caught by s 70 as a programme administered by the Government will not pay them.
[22] As made plain by this passage, it is not necessary under s 70 to conduct an inquiry into the source of the funds. I respectfully adopt Ellen France J’s findings by way of response to Mr Latimer’s submission on this ground.
[23] The underlying fairness arguments have also been addressed by this Court in previous cases. In Boljevic v Chief Executive of the Ministry of Social Development,
Kós J said:6
4 Malster v Chief Executive of the Ministry of Social Development [2014] NZHC 1368 at [17];
Hogan v The Chief Executive of the Department of Work and Income HC Wellington AP 49/02,
26 August 2002 at [26]; Dunn v Chief Executive of the Ministry of Social Development [2008] NZAR 267 (HC) at [39].
5 Hogan v The Chief Executive of the Department of Work and Income, above n 4.
6 Boljevic v Chief Executive of the Ministry of Social Development [2012] NZAR 280 (HC).
[34] Effectively, the Boljevics' arguments amount to a rerunning of those made in the earlier cases. These cases confirm that the source of the contribution is irrelevant to the inquiry. The focus is on the nature of the payment, and the contingency it is paid out upon. The Boljevics' arguments (and those of their counterparts in the earlier authorities) seek to engraft a third limb — state source — to the two identified in [17] above. But that limb is not there. And it is state administration, not state funding, that is relevant (limb 2 in [17]). That consideration is consistent with the intention of the provision, and the New Zealand Superannuation scheme. New Zealand has chosen to look after its residents via a flat rate superannuation scheme. As between those entitled to New Zealand Superannuation, no one should be financially advantaged by their receipt of state-administered benefits (from overseas or not) against another.
[35] It might be seen by some as an unhappy policy choice that a self- funded scheme administered by a foreign Government entity is treated one way, and a self-funded scheme administered by a private body is treated another. But for the reasons noted in the authorities discussed already, it is not an illogical approach. And whether happy or not, or logical or not, it is the policy choice Parliament has made. The Courts have reminded Parliament from time to time that this is what it has done. Parliament evidently has remained content with its choice.
(footnotes omitted)
[24] I respectfully agree with, and adopt the reasoning in that case also.
[25] I am satisfied that the Authority’s decision is consistent with the plain
meaning, purpose and intent of s 70 of the Act.
Is CPP part of a programme of support?
[26] Mr Latimer submits that the requirement that CPP be part of a programme that satisfies both the contingencies and administration tests means that CPP itself must satisfy that test, and it is not sufficient that it is part of a programme, together with the OAS, that satisfies that test. He says further that the Canadian Government does not consider OAS and CPP to be part of the same programme so that it is not up to the Authority or the MSD to decide that they are.
[27] Mr Latimer also objects to the characterisation of the CPP as a programme of income support. He submits that there is no “support” in the scheme at all. Rather, he compares the CPP to an insurance scheme where the contributions are “premiums” and the pensions are the “claims”.
[28] Whether the Canadian Government regards CPP to be part of the same programme as OAS is, with respect, irrelevant to the enquiry which is governed by the plain meaning of s 70.
[29] I do not consider that s 70 can be interpreted in the way which Mr Latimer contends. The clear words of s 70(b) require a programme providing benefits, pensions, or periodical allowances for any of the same contingencies provided for in the New Zealand legislation listed in the section. That requires a consideration of the overall package of income support in Canada, rather than a consideration of the individual terms of each benefit, pension or periodical allowance.
[30] But, in any respect, the Authority found that the CPP itself satisfied the administration and contingencies tests, as I discuss further below.
The contingencies test
[31] The Authority found that the CPP provided for the same contingency as the
NZS. It said:
[23] The provisions of s 70 do not require that the overseas benefit or pension received by a beneficiary be directly comparable to a benefit, pension or allowance provided for under the relevant New Zealand legislation. All that is required is that the payment be part of a programme of benefits paid to provide support for comparable reasons. It is not necessary for example for the circumstances in which a retirement pension paid by the Canada Pension Plan is paid, to be the same as those in which payments of New Zealand Superannuation are paid. We observe however that both types of payment are payable to the recipient in anticipation that their ability to continue working in their later years may be reduced or they cease working.
[24] We note in passing that Kiwisaver is not a compulsory retirement savings scheme and we do not think it has any relevance to the matters at issue in this case.
[25] The programmes for income support in Canada and New Zealand both include provision for the contingencies of old age, loss of employment, sickness and disability. We are satisfied that the programme for income support in Canada which includes the Canada Pension Plan provides for the contingencies which are provided for in the New Zealand Income Support programme.
(emphasis added)
[32] Mr Latimer submits that the CPP does not meet the “contingency” requirements in s 70. Mr Latimer takes issue with the respondent’s definition of the contingency as one of “old age”, which he says has no definite meaning and accordingly cannot operate as something that happens to trigger a benefit payment, which is Mr Latimer’s definition of a “contingency”.
[33] Mr Latimer submits that the contingency for NZS is “reaching age 65” and the contingency for CPP is “choosing to start the pension on or after age 60”. He contends that these are not the same contingency.
[34] Mr Latimer also submits that the Authority’s finding that both schemes are payable to the recipient in anticipation of their ability to work being reduced in later years is incorrect, at least so far as it relates to NZS, which he says has no relationship to working whatsoever.
[35] In Hogan, Ellen France J considered the CPP scheme as it then stood in light of the requirements in s 70. In relation to the contingency for which CPP was paid, her Honour found:7
[29] In my view, the Authority was correct in determining that the contingency in both cases was the same, namely, provision for the contributors in their old age or in the event of disability. That is clear from the relevant statute, the Canada Pension Plan Act RS 1985 cC-5. That Act is described as an Act to establish a comprehensive programme of “old age pensions and supplementary benefits in Canada payable to and in respect of contributors”. In terms of s 44 the benefits payable are a retirement pension payable to a contributor who has reached 60 years of age, or a disability pension payable to those persons who are disabled. (There are special rules for pensions payable before 1 January 1987.) A person may choose not to receive the pension at age 60 but must do so before age 70. There is provision for assigning the pension.
[30] I accept the argument for the respondent that the CPP is, in the end, a scheme to make provision for the fact that at a certain age the legislature has said it is reasonable for individuals not to have to work and so support should be provided at that age, be it 60 or 70.
[36] Despite subsequent amendments to the relevant legislative regime, I consider these passages remain an accurate description of the contingency for which CPP is
paid. I consider Mr Latimer’s formulation of the relevant contingencies is too
narrow and inconsistent with the broad purpose underpinning s 70 of the Act.
[37] It follows that I consider the Authority was right to find that the CPP met the contingency requirement under s 70 of the Act.
Administration test
[38] In respect of the second limb of the s 70 test, that of administration, the
Authority found as follows:8
[15] The provisions of the Canada Pension Plan legislation constitute the mechanism by which the Government of Canada has provided for the income support of a particular group of people in particular circumstances. The Board of the Canada Pension Plan is responsible for the investment of the Canada Pension Plan funds not required to pay benefits. It may well have contracted with government departments to provide it with administration services but it is a mistake to see the Canada Pension Plan Board as something other than part of the Government of Canada in the circumstances outlined.
[16] We are in no doubt that the Canada Pension Plan is administered on behalf of the Government of Canada. The High Court confirmed this to be the case in Hogan v the Chief Executive of the Department of Work and Income New Zealand. We are bound by the decision of the High Court.
(footnote omitted)
[39] Mr Latimer submits that the CPP does not satisfy the administration test because the Canadian Government’s role is limited to “clerical administration”. Mr Latimer says that the Minister has a supervisory role in respect of Service Canada to make sure it is performing its job correctly, but that does not mean that the Canadian Government controls the CPP in the same way as the New Zealand Government controls NZS.
[40] Finally, Mr Latimer submits that the collection of contributions by the Canada Revenue Agency and payment of pensions by Service Canada is not done on behalf of the Government of Canada, but on behalf of the CPP itself.
[41] The question of administration by a government was considered by Mallon J in Horn v Chief Executive of the Ministry of Social Development.9 The scheme at issue in that case was the Quebec equivalent of the CPP. In terms of what s 70 required in terms of administration, her Honour held:
[36] By using the words “administered by or on behalf of the Government of the country”, the Legislature must have had in mind that a payment would be regarded as comparable to NZS if it was paid from a state (ie government) scheme as opposed to a private scheme. It is here that the comparison the Authority made with the CPP is relevant. The CPP is administered by or on behalf of the federal government of Canada. All those who receive the NZS and who are also entitled to payments from the CPP would have their NZS payment reduced by the amount of their CPP payment (as has previously been decided in Hogan v The Chief Executive of the Department of Work and Income New Zealand and which is not challenged on this appeal). There is no logic for the Legislature to have intended that a CPP payment would be comparable to an NZS payment but a QPP payment would not be.
[37] For these reasons I consider that “administered by or on behalf of the Government of the country” means, in context and in light of its purpose, a programme administered by either the government of a Province or the federal government of Canada as they are both part of, and included within the term, the Government of Canada.
(footnote omitted)
[42] As noted in the above passage, Ellen France J found in Hogan that the CPP was one administered by the Canadian Government and therefore met both requirements of s 70.10
[43] I do not consider there is any basis to depart from the findings in those cases. I consider that the Authority’s conclusion that the CPP was administered by the Canadian Government was open to it on the evidence. As the annual report of the CPP records “the operating balance is managed by the Government of Canada”.11 In that financial year, the Canadian Government held $CAD4.1 billion to meet CPP financial needs. The fact that the investment of the fund is managed by an independent board does not change the fact that the payment of the benefits is
managed by the Government.
9 Horn v Chief Executive of the Ministry of Social Development HC Wellington CIV-2010-485-
1589, 15 November 2010.
10 Hogan v The Chief Executive of the Department of Work and Income New Zealand, above n 4 at
[32].
11 Annual Report of the Canada Pension Plan 2013-2014 at 11-12.
[44] It follows that the Authority was correct to find the administration requirements of s 70 are met in this case.
[45] As a result, I consider the answer to question one is “no”.
Question two – Government Occupational Pension
[46] The term “overseas pension” in s 70 excludes a “government occupational
pension” (GOP) as that term is defined in s 3 of the Act.
[47] Mr Latimer’s wife earned her CPP benefit whilst she was an employee of the Government of the Province of Saskatchewan. The Authority found that this was not sufficient to meet the definition of a GOP, and so s 70 still applied.
[48] GOP is defined as:
Government occupational pension—
(a) Means a benefit, pension, or periodical allowance paid by or on behalf of the Government of any country to a person by reason of—
(i) A period of employment, direct or indirect, by that Government of that person or that person's deceased spouse or partner or that person's deceased parent; or
(ii) A period of service to that Government (including, without limitation, service in the armed forces, service in the police, and service as a judicial officer or other person acting judicially) by that person or that person's deceased spouse or partner or that person's deceased parent; but
(b) Does not include any part of that benefit, pension, or periodical allowance that is paid by the Government of that country by reason of anything other than that period of employment or service; and
(c) Does not include any part of that benefit, pension, or periodical allowance to which the Government of that country contributes by reason of anything other than that period of employment or service; and
(d) Does not include a benefit, pension, or periodical allowance of the kind set out in paragraph (a) if the person would have been entitled to receive a similar benefit, pension, or periodical allowance paid by, or on behalf of, the Government of that country under a scheme or other arrangement in respect of persons who were not employees or in the service of that Government.
[49] The Authority determined that Mr Latimer’s wife did not satisfy subs (b) of the definition because she could have earned the same CPP benefit by working for a non-government employer. The Authority further found that subs (d) applied because all Canadian workers are required to belong to CPP, not just government workers.
[50] Mr Latimer says the Authority’s interpretation of subs (b) is incorrect, because what is required is a determination of whether any part of Mrs Latimer’s CPP pension was actually earned, not “could have been earned” when she was not employed by the overseas government.
[51] In respect of the Authority’s interpretation of subs (d), Mr Latimer says that it does not apply, following the decision of The Chief Executive of the Ministry of Social Development v Rai.12 In reliance on that case, Mr Latimer submits that subs (d) is not relevant because the Government of Canada does not pay CPP pensions, nor are they paid on behalf of the Government of Canada since the Government of Canada does not contribute to the CPP fund. Mr Latimer further says
that following the precedent in Rai, because the Government of Saskatchewan contributed to the CPP in respect of his wife solely in its capacity as her employer, subs (d) does not apply.
[52] The respondent says the Authority’s conclusion that Mr Latimer’s wife’s CPP was not a GOP is correct, but the reasoning is incorrect as the Authority should have relied on subs (a), rather than subss (b) and (d). The respondent says CPP is not a pension paid by or on behalf of the Canadian Government by reason of a period of employment by that Government as required by subs (a).
[53] The High Court in Rai held that the phrase “paid by or on behalf” of Government requires the scheme to be publicly funded.13 Whilst the phrase being considered in Rai concerned subs (d), the same phrase appears in (a) and accordingly
I find that to be the meaning of the phrase as it is used in (a) also.
12 The Chief Executive of the Ministry of Social Development v Rai HC Auckland CIV-2003-485-
2615, 2 September 2004.
13 At [45].
[54] I agree with the respondent that this question can be disposed of shortly under subs (a). What is intended to be covered by the definition of GOP is government funded or subsidised pensions. CPP is not a government funded or subsidised pension as Mr Latimer accepts. Neither does it fulfil the requirements of subs (a)(i) of the subsection. The CPP is not paid by reason of a period of employment, direct or indirect by that government of that person or that person’s deceased spouse or partner. It is just coincidence that the employer paying Mrs Latimer’s CPP is a government employer, but it is not because her employer is a government that she receives a CPP.
[55] The route by which the Authority dismissed Mr Latimer’s challenge on this head is different to the route which I have applied, but the result is nevertheless the same. The answer to question two is yes.
Question three
[56] It follows from my conclusions on questions one and two that I do not consider that the Authority erred in determining that the CPP payments received by Mrs Latimer should be deducted from Mr Latimer’s NZS entitlement pursuant to s 70 of the Social Security Act. There was no real contention that Mrs Latimer’s pension should not be deducted if I concluded that it was not a GOP. The answer to this question is no.
Result
[57] The answers to the questions of law stated by the Authority are therefore:
(a) As a matter of law, did the Authority err in determining that the Canada Pension Plan payments received by the appellant must be deducted from the appellant’s entitlement to New Zealand Superannuation pursuant to s 70 of the Social Security Act 1964?
No.
(b)As a matter of law, was the Authority correct in determining that the Canada Pension Plan payments received by the appellant’s wife could not be considered to be a Government Occupational Pension?
Yes.
(c) As a matter of law, did the Authority err in determining that the Canada Pension Plan payments received by the appellant’s wife must be deducted from the appellant’s entitlement to New Zealand Superannuation pursuant to s 70 of the Social Security Act?
No.
[58] The appeal is dismissed. The respondent does not seek costs and I
accordingly make no order as to costs.
Edwards J
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