Murphy v Chief Executive of the Ministry of Social Development
[2016] NZHC 1951
•19 August 2016
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CIV-2016-485-85 [2016] NZHC 1951
BETWEEN JOHN MURPHY
Appellant
AND
THE CHIEF EXECUTIVE OF THE MINISTRY OF SOCIAL DEVELOPMENT
Respondent
Hearing: 10 August 2016 Appearances:
Appellant in person
E Chapple & T M Bromwich for RespondentJudgment:
19 August 2016
JUDGMENT OF PAUL DAVISON J
This judgment was delivered by me on 19 August 2016 at 4.30pm pursuant to r 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Solicitors:
Crown Law Office, Wellington
MURPHY v THE CHIEF EXECUTIVE OF THE MINISTRY OF SOCIAL DEVELOPMENT [2016] NZHC
1951 [19 August 2016]
Background
[1] The appellant contends that, as a result of various loan payments he is required to meet, he has been and remains unable to meet his food costs on a regular basis. He suffers from epilepsy and not eating properly puts him at a higher risk of having seizures.
[2] He applied to the Ministry of Social Development for temporary additional support under the Social Security Act 1964. Following an assessment by the Chief Executive, his application was declined because it was determined that the appellant had a surplus of $13.30 of chargeable income, and thus fell outside the eligibility criteria. It was noted:
Accommodation costs of $135 and disability costs of $25.70 were included in the assessment. Not included in the assessment were a number of weekly payments made by the appellant relating to three personal loans, a Sky account and a loan for bedding. The appellant’s repayments in respect of these loans were approximately $85 per week.
[3] Following a request by the appellant, the Chief Executive’s decision was
reviewed and confirmed by a Benefits Review Committee.
[4] The appellant then appealed to the Social Security Appeal Authority, which
upheld the Chief Executive’s decision. In its decision, the Authority observed:
Following the appellant’s appeal being lodged [to the Authority], a review of his disability costs were carried out. Further allowance for disability-related travel was included in his disability costs, in addition to a cost in relation to his mobile phone. His Disability Allowance was increased from $25.70 to
$47.05 per week. A further assessment of his entitlement to Temporary
Additional Support was carried out. This resulted in a surplus of income over expenditure of $14.21.
[5] The Authority was not satisfied that the Chief Executive was wrong to decline temporary additional support, noting that the appellant’s temporary loans did not fall within the definition of “essential expenses”. The Authority said that the Social Security (Temporary Additional Support) Regulations 2005 (the Regulations) do not allow for non-essential items or items not specifically provided for in sch 2 of the Regulations to be included in the assessment of entitlement.
[6] The appellant now appeals the Authority’s decision by way of case stated on the following question of law:
Did the Authority err in law in its interpretation of the application of s 61G of the Social Security Act 1964 and Schedule 2 of the Social Security (Temporary Additional Support) Regulations 2005?
[7] The appellant is self-represented. His case is that he should have been granted temporary additional support to meet his food costs, because food is essential. Further, these payments should be backdated pursuant to s 80AA of the Act.
The scheme of s 61G and the Regulations
[8] The purpose of temporary additional support is:1
… to provide temporary financial assistance within the prescribed limits as a last resort to alleviate the financial hardship of people whose essential costs cannot be met from their chargeable income and other resources, while ensuring that people seeking or granted that assistance take reasonable steps to reduce their costs or increase their chargeable incomes.
[9] The eligibility criteria for temporary additional support are:2
(a) the chargeable income is less than the essential costs; and
(b) cash assets are not more than the prescribed amount; and
(c) any prescribed criteria and any other requirements set out in the regulations made under s 132AB, are met.
[10] The term “chargeable income” means the net rate of any benefit payable to the person under the Act, together with any income and other specified types of payments received by the person.3
[11] “Essential costs” means the combined sum of standard costs and allowable
costs.
1 Social Security Act 1964, s 61G(1).
2 Section 61G(2).
3 Social Security (Temporary Additional Support) Regulations 2005, sch 1.
(a) Standard living costs vary and depend on:4
(i) whether the applicant or the applicant’s spouse or partner, or both of them, is or are receiving a benefit or tax credit:
(ii) the kind and amount of benefit or benefits or tax credit or credits received by the applicant or his or her spouse or partner:
(iii) whether the applicant has a spouse or partner or dependent children:
(iv) whether the applicant’s spouse or partner is lawfully or unlawfully in New Zealand:
(iv) the number and ages of the applicant’s dependent children:
(b)Allowable costs are the regular “essential expenses” of the applicant and his or her family, reckoned on a weekly basis. “Essential expenses” are expenses of a kind and within the relevant limits specified in cl 3 of sch 2 of the Regulations (appended to this decision) and which in the chief executive’s opinion:5
(a) is essential for a person to pay or incur in order to meet the daily living needs of the person, of members of the person’s family, or of both; and
(b) could not, when the expense or the liability for the expense was incurred, readily be avoided or varied.
[12] I accept the respondent’s submission that the provisions of the Regulations are both narrow and prescriptive. The Chief Executive does not have any discretion to take into account extraneous factors that are relevant to the individual circumstances of an applicant and which fall outside the eligibility criteria.
Did the Authority err in law in its interpretation of s 61G and the Regulations?
[13] The appellant is obviously right to point out that food is an essential expense. But this is a cost which is within the prescribed amount allowed for standard living
costs (“standard costs”).
4 Section 132AB.
5 Schedule 2.
[14] The real issue is whether Mr Murphy’s allowable costs include the costs necessary for him to meet his loan payments, such that they form part of his “essential costs” and are to be accounted for. As identified by the Authority, his loans comprise the following:
(i) A loan of $1,000 from the BNZ Bank for bike repairs. This loan was taken out at a time when the appellant’s bike was needed so that he could carry out his paper round. At the hearing of this matter we requested the appellant provide us with an invoice relating to his bicycle repairs. To date he has not done so.
(ii) A loan from Avanti Finance of $1,000. The appellant explained that he had been the guarantor of his sister’s Sky subscription. When she stopped paying he was obliged to repay the balance. He borrowed
$1,000 from Avanti Finance to pay off the balance of the Sky bill. The balance of the loan was used to purchase items such as a dinner
set, cutlery and other household items.
(iii) Money owed to Vickers Marketing for bedding. The repayments on this bedding were $10 to $15 per week. The appellant was unable to recall the original amount owing.
(iv) A loan from KiwiOwn for a tablet computer. The appellant said this computer was purchased as a result of high pressure sales.
[15] There are two categories under cl 3 of sch 1 of the Regulations that focus on regular payments under a consumer credit contract or other arrangement. They are:
(a) “agreed period payments” that do not exceed the maximum weekly amount specified in column 3, and made in connection with the acquisition of any of the items listed in column 1 (within the maximum number of column 2);
(b)“revolving credit payments” (used to acquire the items in cl (3)(c) and (i) and 10) within the maximum numbers, and not exceeding the maximum weekly payment.
[16] I agree with the respondent’s submission that Mr Murphy’s loan payments are not agreed period payments or revolving credit payments within the meaning of the Act.
[17] An “agreed period payment” must be evidenced in writing to the satisfaction of the Chief Executive.6 As was recorded in the Authority’s decision, the appellant did not provide documentary evidence of the loan agreements, nor of invoices for the items that were acquired by means of the loans.
[18] Notwithstanding the appellant’s failure to provide the requested documentation relating to the loans and items to which they relate, I agree with the respondent’s submission that the items financed by these loans (a Sky subscription; and tablet computer) do not fall within cls 3(b) and 9 of sch 2 of the Regulations.
[19] As to bicycle repair costs, bearing in mind the Act’s purpose and the Chief Executive’s limited powers when granting temporary additional support, I agree with the Authority’s comment that:
Revolving credit payments or agreed period payments made in relation to the acquisition of a bicycle can be included in certain circumstances, but there is no provision for payments relating to the costs of repairs.
[20] In the course of presenting his argument on the appeal, the appellant explained the that bike “repairs” included the supply of special racks that he needed to hold the newspapers he delivered, so that not all of the cost incurred was for actual repair or maintenance of the bike. However, in the absence of any documentation and further detail, the conclusion reached by the Authority cannot be said to be incorrect.
[21] Nor are the loans “revolving credit contracts” because they do not cover the
items referred to in cl 3(c) and (i) and 10 of sch 2 of the Regulations. [22] Section 80AA does not apply.
Conclusion
[23] While the Court has sympathy for the appellant, having regard to his health and financial situation, the Authority cannot be criticised for its proper and correct
6 Cl 6(a)
interpretation and application of the relevant statutory provisions in determining his eligibility to temporary additional support.
[24] It appears from the explanation given by the appellant at the hearing, that he incurred the loan to pay for his bike repairs at a time when he expected that he would be able to continue to earn income from his newspaper delivery round. However, having incurred this expense and borrowing in order to pay for it, he then relocated to another district and his income from this source ceased. He is now left in the unfortunate situation of repaying this debt, without any income to make the required repayments, other than by using funds that would otherwise be applied to meeting his living expenses. The appellant explained a similar situation as regards his purchase of the tablet computer, which he said he purchased after being subjected to what he described as pressure marketing, leaving him indebted to pay for it.
[25] These transactions and loans have put pressure on the appellant’s finances, leaving only a small surplus available to meet his day to day food and living expenses. While he submits that he should be entitled to temporary additional support to pay for food, he fails to recognise that his existing standard costs already include an allowance for that expense, and that his financial situation arises because the loan repayments cannot be included in the assessment of his allowable costs. Hopefully some improvement in his financial position is near, as I note that the appellant advised the Court that two of his loans are expected to be paid off by the end of August 2016, which will relieve him of their monthly payments.
[26] While the appellant’s financial situation is dire, and a matter of concern because of its potential to impact upon his health and welfare, the answer to the question posed by the case stated is nevertheless: “No”, the Authority did not err in law in its interpretation of the application of s 61G of the Social Security Act and sch
2 of the Regulations.
[27] Accordingly, the Authority’s decision stands and the appeal is dismissed.
Paul Davison J
Schedule 2
Allowable costs
1 For the purposes of these regulations and of section 61G of the
Act, allowable costs—
(a) means the regular essential expenses (as defined in clause 2) (if any) of the applicant and his or her family reckoned on a weekly basis; and therefore
(b) does not include an expense that is not an essential expense
(as so defined).
2In clause 1, essential expense means an expense of a kind, and within the relevant limits (if any), specified in clause 3, and that (unless the expense is one referred to in clause 3(b), (c), (e)(i), (h), or (i) and is in respect of an item acquired in accordance with clause 4), in the chief executive’s opinion,—
(a) is essential for a person to pay or incur in order to meet the daily living needs of the person, of members of the person’s family, or of both; and
(b) could not, when the expense or the liability for the expense was incurred, readily be avoided or varied.
3The kinds of expenses and limits referred to in clause 2 are as follows: (a) the person’s accommodation costs (as defined in clause 5) less
$25.42:
(b) agreed period payments (as defined in clause 6), not exceeding the maximum weekly amount in column 3 of the following table, and made in connection with the acquisition of any of the items in column 1 of that table (within the maximum number of those items in column 2 of that table):
Payments for essential household items
Column 1 Column 2 Column 3 Essential household item
Maximum number of items
Maximum weekly amount
($)
Beds (including mattresses)
29.93
Combined refrigerator-
1
23.68
Column 1 Column 2 Column 3
Essential household item Maximum number of items
Maximum
weekly amount ($)
freezer or or
or
Separate refrigerator and separate freezer
1 of each if separate
items
23.68 in total if separate items
Dining suite
1
29.93
Lounge suite
1
29.93
Portable heaters
16.20
Washing machine
1
23.68
Stove
1
23.68
Television set
1
22.43
(c) revolving credit payments (as defined in clause 7) for any of the items in column 1 of the table in paragraph (b) (being items acquired in accordance with clause 4 and within the maximum numbers in column 2 of that table) and not exceeding (in terms of the rate of the payments, and either on a monthly or a weekly basis) the lesser of the maximum monthly payment (as defined in clause 8) and the maximum weekly payment in column 3 of that table:
(d) costs for laundry or laundrette services, being costs incurred instead of regular payments for a washing machine or within a period during which the applicant could reasonably arrange to have repaired a washing machine available to the applicant, and not exceeding $23.68 per week:
(e) disability costs (as defined in regulation 4),—
(i) including any disability costs that are payments to which clause 9 or clause 10 applies; but
(ii) excluding in all cases any costs of residential care services in respect of which temporary additional support must not be granted under section 61G(4) of the Act:
(f) for a person who is eligible for assistance under the Telephone Costs Payment Programme approved by the Minister under section 124(1)(d) of the Act, and if paragraph (m) of this clause does not apply, the weekly amount of telephone rental costs (as defined in clause 11) that were, immediately before 1 April 1999,—
(i) claimed by the person; and
(ii) treated by the chief executive as an additional expense under section 69C(2A)(a) of the Act:
(g) running costs, at a per kilometre rate set by the chief executive, for a motor vehicle where no suitable public transport is available for the purpose of transporting the applicant and his or her spouse or partner to and from their places of employment and where the vehicle is essential for that purpose:
(h) agreed period payments (as defined in clause 6) not exceeding
$64.01 a week made in connection with the acquisition of a motor vehicle or other vehicle (for example, a bicycle)—
(i) for the applicant and his or her spouse or partner (if any) (whether or not either or both of them are beneficiaries), where no suitable public transport is available for the relevant purpose and the vehicle is essential—
(A) for the purpose of transporting the applicant and his or her spouse or partner to and from their places of employment; or
(B) for the purpose of transporting the applicant or a member of his or her family who is chronically ill or has a disability; or
(ii) for an applicant who is a beneficiary where—
(A) there is no public transport reasonably available to the applicant; and
(B) the contract or arrangement to acquire the vehicle was entered into before the applicant became a beneficiary:
(i) revolving credit payments (as defined in clause 7) for a motor vehicle or other vehicle (for example, a bicycle) acquired in accordance with clause 4 and where paragraph (h)(i) or paragraph (h)(ii)(A) applies to the applicant and vehicle, and not exceeding (in terms of the rate of the payments, and either on a monthly or a weekly basis) the lesser of the maximum monthly payment (as defined in clause 8) and $64.01 per week:
(j) the costs of public transport of the applicant and his or her spouse or partner to and from their places of employment:
(k) the net costs of essential childcare (that is, the gross costs of essential childcare, as defined in clause 12, minus any childcare assistance payable under section 61GA of the Act or by way of special assistance under section 124(1)(d) of the Act):
(l) essential expenses in respect of a child in the care of the applicant or his or her spouse or partner for whom an orphan’s benefit or an unsupported child’s benefit is paid that are not able to be met from the total of that benefit and any disability allowance payable in respect of the child:
(m) telephone rental costs (as defined in clause 11) for an applicant for whom, in the opinion of the chief executive, a telephone is a necessity—
(i) because of his or her special family circumstances (for example, to enable an applicant living in a rural location to be contacted by the school that his or her children attend); or
(ii) to help to ensure his or her personal safety or security (for example, a frail person living on his or her own, or a separated person with a protection order against a spouse or partner); or
(iii) because of his or her employment conditions (for example, an electrical worker on call 24 hours per day).
4An item is acquired in accordance with this clause for the purposes of clauses 2, 3(c) and (i), and 10 if,—
(a) when the item was acquired, neither the applicant, nor his or her spouse or partner (if any), was a beneficiary (whether or not either of them was a beneficiary, or both of them were beneficiaries, at any time before the item was acquired); and
(b) at the time of the application for temporary additional support, the applicant or his or her spouse or partner (if any) is a beneficiary, or both of them are beneficiaries, or neither of them is a beneficiary at that time but one or both of them became a beneficiary after the item was acquired.
5 For the purposes of clause 3(a), a person’s accommodation costs are
that person’s accommodation costs as defined in regulation 4 but—
(a) do not include the following costs:
(i) any costs of residential care services in respect of which temporary additional support must not be granted under section 61G(4) of the Act; and
(ii) any Canterbury earthquake-related temporary accommodation costs (as defined in regulation 4) of the person if he or she is eligible for, and he or she and any members of his or her family who usually reside with him or her are granted (or the chief executive has not yet declined to grant them), assistance under the Canterbury Earthquake TAA Programme (as so defined), even if those costs exceed the rate of, or are paid or incurred after the ending of, or are otherwise not met or not to be met by, assistance of that kind; and
(iii) any Canterbury earthquake-related temporary accommodation costs (as defined in regulation 4) of the person if he or she and any members of his or her family who usually reside with him or her are not granted assistance under the Canterbury Earthquake TAA Programme (as so defined) because he or she is not eligible for, or the chief executive has in his or her discretion declined to grant them, assistance of that kind; and
(b) include arrears except any that were incurred while the person or his or her spouse or partner was in receipt of—
(i) an accommodation benefit under the Student Allowances
Regulations 1998; or
(ii) an accommodation supplement, a rent rebate allowance, or a tenure protection allowance under the Act; or
(iii) an income-related rent (as defined in section 42(1) of the Housing Restructuring and Tenancy Matters Act
1992).
6Agreed period payments, in relation to an item referred to in any of clauses 3(b) and (h) and 9, means payments, during the agreed period, under a consumer credit contract or other arrangement that—
(a) is evidenced in writing to the satisfaction of the chief executive; and
(b) requires regular payments over an agreed period; and
(c) was entered into to acquire the item or to repay debt incurred in acquiring the item; and
(d) is not a revolving credit contract, an arrangement relating to an advance payment of a benefit under section 82(6)of the Act, or an arrangement relating to a recoverable grant of assistance under section 124(1)(d) of the Act.
7Revolving credit payments, in relation to an item referred to in any of clauses 3(c) and (i) and 10, means payments—
(a) under a revolving credit contract (for example, a credit card contract) that requires regular payments and that was used to acquire the item; and
(b) not exceeding (in total) the lesser of the cash price of the item and the amount owing under the contract at the time of the application for temporary additional support; and
(c) for the period of 20 months after the acquisition of the item, if the amount owing under the contract at the time of the application for temporary additional support is equal to or greater than the cash price of the item; and
(d) for whichever of the following periods ends first, if the amount owing under the contract at the time of the application for temporary additional support is less than the cash price of the item:
(i) the period of 20 months after the acquisition of the item; and
(ii) the period in whole months that the chief executive estimates is necessary for that amount owing to be repaid fully at a rate of payment that is the maximum monthly payment (as defined in clause 8).
8 The maximum monthly payment, in relation to an item to which clause
3(c) or (i) or clause 10 applies, means 5% of the cash price of the item.
9The payments (referred to in clause 3(e)(i)) to which this clause applies are agreed period payments (as defined in clause 6) not exceeding $23.68 per week made in connection with the acquisition of
1 clothes dryer for a person for whom the costs of acquiring a clothes
dryer are additional costs arising from the person’s disability.
10The payments (referred to in clause 3(e)(i)) to which this clause applies are revolving credit payments (as defined in clause 7) for 1 clothes dryer, acquired in accordance with clause 4, for a person for whom the costs of acquiring a clothes dryer are additional costs arising from the person’s disability, and not exceeding (in terms of the rate of the payments, and either on a monthly or a weekly basis) the lesser of the maximum monthly payment (as defined in clause 8) and
$23.68 per week.
11 In clause 3(f) and (m), telephone rental costs—
(a) means the regular and ongoing costs of renting a basic telephone, or of telephone line rental, or of both, as well as any wiring maintenance charges paid; and therefore
(b) does not include toll charges.
12In clause 3(k), gross costs of essential childcare, in relation to an applicant for temporary additional support, means the costs, up to a maximum of $6 per child per hour, of childcare—
(a) that enables the applicant, or his or her spouse or partner, or both, to take part in employment; or
(b) that is required because the applicant is, or his or her spouse or partner is, or both of them are, seriously disabled or seriously ill.
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