Luckman v Chief Executive of Ministry of Social Development
[2017] NZHC 629
•4 April 2017
IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY
CIV-2016-485-000086 [2017] NZHC 629
UNDER the Social Security Act 1984, s 12Q(9) IN THE MATTER
of an application for leave for an extension of time in which to appeal a decision of
the Social Security Appeal Authority
BETWEEN
MICHELLE LINDY LUCKMAN Applicant
AND
CHIEF EXECUTIVE OF MINISTRY OF SOCIAL DEVELOPMENT
Respondent
Hearing: 29 March 2017 Appearances:
Applicant in person
M Conway for RespondentJudgment:
4 April 2017
JUDGMENT OF DOWNS J
This judgment was delivered by me on Tuesday, 4 April 2017 at 3 pm pursuant to r 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Solicitors/Counsel: Crown Law, Wellington.
Copy to: Applicant
LUCKMAN v CHIEF EXECUTIVE OF MINISTRY OF SOCIAL DEVELOPMENT [2017] NZHC 629 [4 April
2017]
The issue in context
[1] The applicant seeks leave to appeal, out of time, on a question of law in relation to the Ministry’s decision to recover benefit overpayments. The applicant had been in receipt of the domestic purposes benefit since 2004. Earnings of more than $100 per week affected her entitlement. And, a person in receipt of a benefit has a duty to advise the Ministry of Social Development of a change of
circumstances affecting their rate of benefit.1
[2] In 2013, the Ministry twice discovered the applicant was earning more than
$100 per week. It sought repayment. After an unsuccessful appeal to the Benefits Review Committee, the applicant appealed to the Social Security Appeal Authority. The Authority dismissed that appeal in February 2015. In February 2016, the applicant filed an application for leave to appeal out of time. Appeals in this context require a question of law. The applicant contends her case raises a question of law in relation to the Authority’s factual determinations, and another vis-à-vis the Ministry’s exercise of its discretion to recover the debt. This pleading is mine rather than the applicant’s—she is self-represented.
Background
[3] On 22 January 2012 the applicant completed a domestic purposes benefit yearly review form. The applicant recorded weekly earnings of $100 from Hauraki Safety Network. This figure was treated as income against her benefit pursuant to s 64 of the Social Security Act 1964.
[4] The applicant completed another yearly review on 5 March 2013. She declared weekly income between $100 and $200. The applicant provided verification. On 24 April 2013 the Ministry completed an annual review for the period ending 20 January 2013. It considered the applicant had been overpaid
$5,710.98 between 19 March 2012 and 17 March 2013. On 24 April 2013, the
Ministry informed the applicant of this debt (by letter).
1 Social Security Act 1964, s 80A.
[5] By May 2013 the applicant had begun working for a new employer, Pathways Health Limited. On 9 August 2013 she provided the Ministry with verification of her income. The Ministry concluded the applicant had been overpaid
$3,097.76 for the period between 13 May 2013 and 4 August 2013. On 9 August, the Ministry informed the applicant of the second debt (again by letter).
[6] On 20 August 2013 the applicant’s benefit was cancelled at her request.
[7] On 4 October 2013 the applicant sought an internal review of the Ministry’s decision. The Ministry concluded the correct overpayment figure for the second period was $3,038.90 (not $3,097.76) but otherwise affirmed its decision. The applicant then appealed to the Benefits Review Committee. On 20 November 2013, the Committee dismissed that appeal.
[8] The applicant appealed to the Social Security Appeal Authority. There were two issues for it:
(a) Was recovery precluded by s 86(9A) of the Act?
(b)If not, was the Ministry wrong in exercising its discretion to pursue recovery pursuant to s 86(1) of the Act?
[9] In order for recovery to be precluded under s 86(9A), the overpayments had to be caused wholly or partly by Ministry error, to which the applicant could not have intentionally contributed. And, she must have received the sum in good faith and changed her position in the belief she was entitled to it. Finally, recovery had to be inequitable in all the circumstances, including the applicant’s financial circumstances.
[10] The applicant said on 16 March 2012 she received a phone call from her local Work and Income office asking her to increase her work hours to 15 hours per week. She said she was told this was a new legislative requirement for all solo mothers
with children over six years of age. Following the call, the applicant approached her employer for additional time. She was given it.
[11] The Authority accepted this version of events as plausible. However, it attributed the overpayments to a failure on the applicant’s part to report her increased income. The Authority was satisfied the applicant was aware her increased earnings could affect her benefit entitlement. She had been reminded of that on 30 April
2008. And, the applicant had been on a benefit for many years. The Authority concluded the first overpayment period was not attributable to Ministry error.
[12] The Authority reached the opposite conclusion in relation to the second overpayment period because the Ministry knew the applicant was earning more than
$100 per week, and yet on or about 6 April 2013, assessed the applicant’s income as “nil” and advised her she would receive the full entitlement. The Ministry had submitted it could be assumed the applicant had declared nil income. However, the Authority gave the applicant “the benefit of the doubt” on this point and concluded the overpayments were caused by Ministry error.
[13] The Authority then considered whether the applicant intentionally contributed to that error. She commenced work for Pathways Health in May 2013 but did not report related income until August 2013. Again, the Authority was satisfied the applicant was aware of her obligation to report a change of circumstance. It found the applicant had intentionally contributed to the error which resulted in the overpayment. Moreover, the Authority was not satisfied the applicant received the payments in good faith knowing she was entitled to them. That debt was also recoverable.
[14] The Authority was not persuaded recovery was wrong. It placed weight on a variety of factors, including an assumption the applicant remained on a benefit. More about this later.
Legal principles governing appeals to the High Court under the Act
[15] Appeals to the High Court from decisions of the Authority are made under s 12Q of the Act. Appeals are confined to questions of law.2 An appellant must lodge a notice of appeal with the Secretary of the Authority within 14 days after the date of the determination.3 However, the High Court has a discretion to extend time.4 Attendant principle is three-fold. First, the overarching inquiry is whether the justice of the case requires the individual be given the opportunity to appeal.5
Second, important considerations are the reasons for a failure to bring a timely appeal and prejudice, if any, to the Ministry.6 Third, time should be extended only if the applicant can identify an arguable question of law. As to the third, Harrison J in McFarlane v Chief Executive of the Department of Work and Income observed:7
In my judgment the appropriate inquiry is whether the question of law is arguable. It is a shorthand expression of the test of a possible or discernible question which could give rise to a successful appeal. If the default is one of delay not causing prejudice, the threshold should not be set too high; Mr McFarlane should not be required to prove, for example, that he is likely to succeed on a particular question or questions. Nevertheless, there is no use in allowing an application for leave to appeal out of time on the basis that the applicant has identified, in a vacuum, a possible or discernible error of law unless the Court is satisfied prospectively that it may succeed. In this sense the point must have substance as one justifying more detailed consideration.
The applicant’s case
[16] The applicant is self-represented. She has filed two affidavits. Neither was filed with the application for leave to appeal (as required by r 7.20 of the High Court Rules) but responsibly, the Ministry does not oppose reception of either. In essence, these say:
(a) The applicant initially thought the Authority had found in her favour.
She eventually called the Ministry of Justice on 4 May 2015 and was informed the judgment was against her. This came as a surprise. The
2 Social Security Act, s 12Q(1).
3 Section 12Q(3).
4 Section 12Q(9).
5 Bramwell v Director-General of Social Welfare HC Hamilton A56/97, 25 March 1998 at 5.
6 At 5.
7 McFarlane v Chief Executive of the Department of Work and Income HC Auckland AP17-PL02,
22 July 2007 at [9].
applicant emailed the Ministry of Justice on 5 May 2015 to request a further review.
(b)While working for Hauraki Safety Network over a five-year period, the applicant “intermittently and always” supplied her income. She attended Work and Income in Paeroa every month. She regularly reported her income to the Ministry over the phone, or in person.
(c) The applicant’s case manager (at the Paeroa office of Work and Income) told her all solo parents with a child six years or over had to work 15 hours a week because of legislation enacted in 2012. So, the first period of overpayment was Ministry error.
(d)The Authority accepted the overpayments in the second period were caused by Ministry error. Some of the overpayments in the second period occurred during “a sporadic time frame of induction for Pathways Health Ltd”. The applicant produced four time sheets and informed the Ministry she was in the process of securing a contract.
(e) The applicant had and still has financial difficulties. Her benefit was insufficient to cover mortgage expenses, insurance costs—even the cost of food.
(f) Contrary to the decision of the Authority, the applicant was not receiving a benefit at the time the Authority issued its decision.
(g) The case had been very stressful. It had affected her mental health
and family’s welfare.
(h)The applicant is paying back Ministry debt at $10 per week. (At the hearing, the applicant clarified this debt is unrelated to benefit overpayment.)
Analysis
[17] The Ministry accepts it has not suffered prejudice through delay. Consequently, the reasons for the delay and whether the applicant has an arguable case will largely inform whether the justice of the case merits an extension of time.
Why the delay?
[18] The Ministry questions why, having identified the Authority’s decision was not in her favour on 4 May 2015, the applicant did not seek an extension of time until 19 February 2016. In the Ministry’s submission, the applicant has not adequately explained the delay.
[19] The record implies the applicant genuinely misinterpreted the Authority’s decision, at least for a time. She contacted the Authority immediately after discovering the decision was not in her favour. And, she asked for a further review at that point. Counsel for the Ministry advises the applicant sent an email to the Authority on 25 June 2015, essentially asking for help. It follows the applicant might not then have been aware of her appeal rights. However, there is little to explain the delay beyond 25 June.
[20] In oral submission, the applicant said she went into “panic mode” when she
appreciated the decision had gone against her, and then approached not fewer than
17 people asking for help (lawyers, officials and so on). The applicant said she was told she needed to identify a question of law for the High Court, and that would be difficult. So, the delay appears to be attributable to the applicant’s lack of familiarity with the legal system, albeit she learned, at some stage, what was required to pursue an appeal.
[21] Greater delays can be imagined. But the period is not inconsequential either. Appeal periods are important because they promote certainty and finality, notwithstanding the law’s more recent appetite for merits-based adjudication— however late. I treat the period of delay from the end of June 2015 to the filing of the application as material but indecisive, particularly in the absence of prejudice to the Ministry.
An arguable question of law?
[22] The Ministry submits time should not be extended for an appeal because the applicant has not identified an arguable question of law. More particularly, it submits the proposed grounds of appeal reduce to challenges to the Authority’s factual determinations.
[23] A factual determination can constitute an error of law. But the test is high. There must be no evidence to support the determination; or, the evidence must be inconsistent with and contradictory of the determination; or, “the true and only reasonable conclusion” must contradict the determination.8 The Ministry contends there is little prospect this threshold could be crossed.
[24] In respect of the first period, the Authority found the debt did not arise through Ministry error because the applicant had failed to report her increased hours or related income. It submits the Authority’s decision was open to it on the evidence. I agree.
[25] Before the Authority, there was no suggestion the applicant had told the Ministry she was working more or earning more. The Authority specifically asked the applicant for information on this point. She was to provide that by 21 January
2015. The applicant did not respond. Moreover, in oral submissions, the applicant accepted she had not informed the Ministry of her increased hours, but stressed that was because she believed the Ministry required her to work more. Against this background, no arguable question of law arises.
[26] In respect of the second period, the Authority accepted the overpayments were caused by Ministry error but found the applicant had intentionally contributed to them. As the Ministry submits:
(a) The applicant provided verification of her income on 9 August 2013.
It revealed she commenced work for Pathways Health in May 2013.
8 Bryson v Three Foot Six Ltd [2005] NZSC 34, [2005] 3 NZLR 721 at [26].
But, the applicant did not provide any evidence she had informed the
Ministry about related income until 9 August 2013.
(b)The applicant must have known her income affected her benefit entitlement, for by then, the applicant had been told the Ministry would seek to recover her debt in connection with the first overpayment period.
[27] It follows the intentional contribution finding was open to the Authority. This conclusion is underscored by the applicant’s oral submission she did not inform the Ministry of her changed circumstances because she was not sure her employment (with Pathways Health) would become permanent.
[28] This leaves the second issue decided by the Authority: whether the Ministry was wrong to pursue recovery under s 86(1) of the Act? At that time, recovery was discretionary. Since then, the Chief Executive of the Ministry is “under a duty imposed … to take all reasonably practicable steps to recover a debt”9 subject only to confined exceptions.
[29] A decision not to recover a debt in this context is “rare and unusual”.10 The exercise is otherwise multi-factorial. Considerations include:
(a) Whether recovery is appropriate, economic or practical;11
(b) Whether the beneficiary is at fault;12
(c) The beneficiary’s ability to pay;13
9 Section 86(1) of the Act was replaced, on 7 July 2014, by s 10(1) of the Social Security (Fraud
Measures and Debt Recovery) Amendment Act 2014 (2014 No 21).
10 See for example Osborne v Chief Executive of the Ministry of Social Development [2010]
1 NZLR 559 (HC) at [63].
11 Harlen v Ministry of Social Development [2012] NZHC 669 at [35].
12 Owens v Chief Executive of the Ministry of Social Development [2007] NZAR 185 (CA) at [30].
13 At [38].
(d)Public finance considerations (the responsible and efficient use of public money);14
(e) The purposes articulated in s 1A of the Act.15
[30] The applicant contends the Authority erred in assessing her financial circumstances. She emphasises her weekly expenses exceeded her benefit, and submits the Authority erred in finding she was still receiving a benefit at the time it issued its decision.
[31] As Kós J observed in Beer v Ministry of Social Development in the same context, when an appeal is brought against the exercise of a discretion, the appellate body normally adopts a conservative approach. Transposed to this case, the applicant must demonstrate the Authority “acted on a wrong principle, … failed to take into account some relevant matter, … took account of some irrelevant matter or
… was plainly wrong”.16
[32] The Authority erred in assuming the applicant continued to receive a benefit. And, at first blush, that error appears to have been a component of the Authority’s reasoning debt recovery was an available response. So, it is possible a question of law could be identified. More is required, however. The proposed question must be arguable in the sense identified by Harrison J in McFarlane. I am satisfied this error could not be material for three reasons.
[33] First, the error was not a link in a chain of reasoning; rather, it was more in the nature of an aside. Context is illustrative:17
We are satisfied on the balance of probabilities that given the length of time that the appellant has been on benefit, she was aware of her obligation to advise the Ministry when her income changed and that such income would affect her entitlement to benefit. We understand the appellant continues to receive a benefit. She has a dependent child in her care. She owns her own home subject to a mortgage. The outgoings on her home take up much of her income. At least in part her mortgage is a result of previous losses on a
14 Osborne v Chief Executive of the Ministry of Social Development [2010] 1 NZLR 559 (HC)
at [63].
15 Van Kleef v Chief Executive of the Ministry of Social Development [2013] NZHC 387 at [24].
16 Beer v Ministry of Social Development [2012] NZHC 205, [2012] NZAR 264 (HC) at [57].
17 Re Luckman [2015] NZSSAA 002 at [23] (emphasis added).
business. The appellant has shown that she has the ability to earn income over and above benefits. We are not satisfied that the appellant’s financial circumstances or the needs of her family or the circumstances in which the debt arose are such that we should direct that no steps be taken to recover the debt pursuant to s 86(1) or s 86A of the Act.
Another aspect of the Authority’s decision supports this view, for, at [7], the decision recorded the applicant had cancelled her benefit on 20 August 2013.
[34] Second, the assumption the applicant was on a benefit necessarily presupposed benefit eligibility. So, the Authority must have assumed the applicant’s earnings were sufficiently modest to warrant a benefit, in turn meeting any concern the Authority misapprehended the applicant’s limited means. The record supports this view, because the applicant’s submissions to the Authority put financial hardship at the forefront of her case, as did her earlier submissions to the Benefits Review Committee.
[35] Third, as observed, a decision pursuant to s 86(1) not to recover a debt is rare and unusual. The factors identified at [29] largely favoured recovery, albeit the applicant’s ability to pay was not beyond argument. However, it was open to the Authority to conclude the applicant is capable of earning material income beyond a benefit: she had done so. And as the Ministry observes, the Authority’s decision does not determine the rate of repayment. Pursuant to s 86(1BA), the Chief Executive is required to “determine from time to time the rate of recovery”, and may also temporarily defer recovery of the debt. The applicant’s ability to repay the debt will be relevant to the Chief Executive’s determination, as required by the Ministerial Direction on Debt Recovery.
[36] In light of all this, the proposed question of law has little prospect of success.
Does the justice of the case justify an appeal out of time?
[37] Standing back, I am not persuaded time should be extended. Only one potential point of law arises. It relates to the exercise of discretion. The prospect of success on that point is low. The delay is not inconsiderable given the statutory appeal period—and unexplained beyond (lay) unfamiliarity with applicable law.
[38] I acknowledge this decision will disappoint the applicant, who argued her case carefully and respectfully. However, an appeal is impermissible unless the statutory criteria are met. Financial hardship alone is insufficient. The application to extend time to bring an appeal (on a question of law) is dismissed.
……………………………..
Downs J
1