A V CHIEF EXECUTIVE OF THE MINISTRY OF SOCIAL DEVELOPMENT HC TIM CIV-2011-485-001556

A V CHIEF EXECUTIVE OF THE MINISTRY OF SOCIAL DEVELOPMENT HC TIM CIV-2011-485-001556 [11 May 2012]NOTE: PUBLICATION OF NAME(S) OR IDENTIFYING PARTICULARSOF APPELLANT PROHIBITED.IN THE HIGH COURT OF NEW ZEALANDTIMARU REGISTRYCIV-2011-485-001556[2012] NZHC 1036IN THE MATTER OF an appeal by way of case stated from thedetermination of the Social Security AppealAuthority at Wellington under s 12Q of theSocial Security Act 1964BETWEEN AAppellantAND CHIEF EXECUTIVE OF THE MINISTRYOF SOCIAL DEVELOPMENTRespondentHearing: 20 March 2012Appearances: Q Hix and P Pati for AppellantD Harris for RespondentJudgment: 11 May 2012RESERVED DECISION OF HON JUSTICE FRENCHIntroduction[1] The appellant and a female friend (Ms X) live together in the same house. They are not married. However, the Social Security Appeal Authority has ruled that they are in a de facto relationship, and therefore the appellant's New Zealand superannuation is to be paid at the married rate.[2] The appellant contends that the payment should be at the higher single "not living alone" rate, and has appealed the Authority's decision.[3] Under s 12Q of the Social Security Act 1964, the appellant's right of appeal is limited to questions of law.[4] I have been asked to determine the following questions:a) Did the Authority apply the correct test in determining whether the appellant was living in a relationship in the nature of marriage?b) Was there any evidence on which the Authority could base its conclusion that the appellant was living in a de facto relationship?Statutory framework[5] Section 12 of Part 1 of the New Zealand Superannuation and Retirement Income Act 2001 provides that New Zealand superannuation is payable at the rate prescribed in Schedule 1.[6] Schedule 1 distinguishes between the rates payable to a single person living alone, a single person not living alone, and "a person who is married or in a civil union or in a de facto relationship".[7] The New Zealand Superannuation and Retirement Income Act does notdefine what is meant by a "de facto relationship".[8] The term is, however, defined in the Interpretation Act 1999, as a result of an amendment to that Act in 2005.[9] The amendment, s 29A, states:29A Meaning of de facto relationship(1) In an enactment, de facto relationship means a relationship between 2 people (whether a man and a woman, a man and a man, or a woman and a woman) who—(a) live together as a couple in a relationship in the nature of marriage or civil union; and(b) are not married to, or in a civil union with, each other; and(c) are both aged 16 years or older.(3) In determining whether 2 people live together as a couple in a relationship in the nature of marriage or civil union, the court or person required to determine the question must have regard to—(a) the context, or the purpose of the law, in which the question is to be determined; and(b) all the circumstances of the relationship.Factual background[10] The appellant and Ms X have lived in the same residence for many years.[11] In January 2004, they signed a relationship property agreement which recorded that they had been living in a de facto relationship since July 1989.[12] The agreement also recorded that they were joint owners of all the furniture, fittings and chattels located in a property, a 1995 Nissan Terrano and Fordson Major Tractor, and that the appellant was the owner of two house properties, one of which was mortgaged to the National Bank.[13] The effect of the relationship property agreement was to declare all of the above assets relationship property under the Property (Relationships) Act 1976, to beheld as tenants in common in equal shares.[14] In April 2004, the appellant duly transferred a half-share in the two residential properties to Ms X, pursuant to the relationship property agreement. One of the properties was the house in which they lived.[15] Later, each of them then transferred their respective half-shares in the two properties to a family trust which the appellant had established. Ms X is a trustee of the trust, and a beneficiary.[16] Ms X also has signing authority over the appellant's cheque account, signing with "Mrs" and the appellant's surname. A loan agreement is in joint names.[17] In 2009, the appellant applied for New Zealand superannuation. It was granted on the date of his 65th birthday. It was granted at the married rate. Ms X, who was already in receipt of New Zealand Superannuation, was reassessed and her rate changed from the single sharing rate to the married rate.[18] The appellant applied for a review of the decision. The Benefits ReviewCommittee, however, upheld the Ministry's decision. Dissatisfied with thatoutcome, the appellant then appealed to the Social Security Appeal Authority.[19] The basis of the appellant's appeal was that he and Ms X were not in a de facto relationship, because they did not have any romantic commitment. They were just platonic friends or glorified flatmates. The appellant claimed not to have read the relationship property agreement carefully.The decision of the Social Security Appeal Authority[20] In its decision, the Authority summarised the arguments that had been presented, referred to the relevant legislation, including s 29A of the Interpretation Act, and also referred to the decisions of Ruka and Thompson.1[21] The Authority then went on to make the following findings:The appellant and Ms X have a commitment to each other which goes well beyond being glorified flatmates. They share their day-to-day life in the same way a married couple of their respective ages would be expected to do.1 Ruka v Department of Social Welfare [1997] 1 NZLR 154 (CA); Thompson v Department ofSocial Welfare [1994] 2 NZLR 369 (HC).No sexual relationship is involved, but such is not required to constitute a relationship in the nature of marriage, particularly for an older couple.The 2004 transfers show a degree of financial commitment on the part of the appellant towards Ms X.The solicitor who prepared the relationship property agreement assumed they were in a de facto relationship, an assumption which could equally be made by other persons with whom they come in contact.There is a significant degree of financial interdependence between the appellant and Ms X.Ms X is plainly reliant on the appellant in her day-to-day living.Ms X regards the appellant as good and kind and caring.The appellant is concerned for Ms X's somewhat frail condition.[22] Having made those findings, the Authority then continued:[25] The Authority has to carefully consider whether in upholding theappellant's argument that he be treated as a single person for benefit purposes the objective of the Act, to ensure that unmarried couples whoenter into a de facto relationship are not treated more favourably for benefitpurposes that those who are legally married, would be met. On this issue weare satisfied that [the appellant and Ms X] have a relationship in the natureof marriage and that they should not be treated more favourably than amarried couple of the same age group living next door. [The appellant]frankly described the comparison between such a couple and his ownrelationship with [Ms X] as being distinguished only by the fact that themarried couple would have "a piece of paper". We do not overlook MrPati's attractive submissions contending that the couple were simply anolder, lonely couple with no immediate family who had got together becauseit suited them and had a bond more in the nature of that of flatmates. But theAuthority considers that the relationship extends much further than this,involving a significant degree of emotional commitment and financialinterdependence.[26] The Authority has concluded that for the purposes of the rates assessment in the relevant schedule to the Act [the appellant and Ms X] are in a relationship in the nature of marriage.Grounds of appeal[23] On appeal, there is no challenge to the finding that as a matter of general principle a de facto relationship can exist despite there being no sexual relationship.[24] Rather, what is contended is that contrary to s 29A of the Interpretation Act, the Authority failed to have regard to the context or the purpose of the legislation in which the question of whether there was a de facto relationship arose.[25] Mr Hix points out that under the Superannuation Act, eligibility for New Zealand Superannuation is dependent solely on age and residency. It is neither income nor asset tested. As for the existence of different rates, he submits that the primary differentiating factor between the three categories must be the relative expenses incurred by each category as a result of the individual's particular livingarrangements. It follows, in his submission, that the Authority's primary focusshould have been on the appellant's daily expenditure, and the question asked whether his relationship with Ms X had resulted in savings to the extent that his financial needs had been reduced as a result of the relationship. Instead, the Authority wrongly relied on cases decided in the different context of eligibility for the Domestic Purposes Benefit, and so wrongly focused on the couple's respectivecapital positions, their emotional attachment and the length of time they had lived together. At one point of his submissions, Mr Hix suggested that these matters were completely irrelevant and should not have been taken into account at all. He later softened this by submitting that while they may have been relevant, they should not have been the primary focus.[26] Mr Hix further argued that not only had the Authority applied the wrong test, but in the absence of the transcript there was no way of knowing whether there was evidence to support the finding if the correct test had been applied. Accordingly, he contended that the appropriate course of action was for me to order a re-hearing with"a direction that the Authority is to give particular consideration to the purpose of the Social Security Act 1964 and the overall scheme of the New Zealand Superannuation system, being the provision of financial support from a dailyexpenditure perspective rather than a capital position perspective, and further to consider evidence relating to that particular issue."Discussion[27] I accept that what constitutes a de facto relationship for one legislative purpose may not for another purpose. The same point was made before the enactment of s 29A by the Court of Appeal in Ruka itself.2[28] I also accept that the underlying rationale or justification for having different rates of superannuation based on partnership status are the economies that can be achieved by a couple living together in a common household and sharing expenses, and to a lesser degree by a single person sharing living arrangements.3[29] To put it another way, the distinctions are based on a belief that married/partnered couples have a greater ability to economise on some of their livingexpenses than two or more non-partnered people who are sharing accommodation.As between the two single rates, it is generally more expensive to maintain a singlehousehold. The higher rates for single persons, particularly for single persons livingalone, are designed to ensure that superannuitants with no other income have accessto equivalent living standards, irrespective of their living arrangements.[30] However, that does not mean s 29A required the Authority to embark on a detailed cost/benefit analysis of the expenditure of the household, identifying what savings were being achieved from the sharing of what expenses and distinguishing between types of shared expenses, ie identifying what was an expense that only a partnered couple could share – for example savings achieved by sharing one bedroom – as opposed to expenses flatmates might commonly share, such as the power account.2 At [162].3 Retirement Commission 2010 Review of Retirement Income Policy (Wellington, 2010) at 78;Ministry of Social Development Description of New Zealand's Current Retirement IncomePolicies, Periodic Report Group Background Paper (July 2003) at 5-6.[31] Yet, that is the effect of Mr Hix's submission. It is a result which defiescommon sense and could never have been intended by Parliament.[32] It also ignores the existence of s 29A(3)(b), which requires the Authority to have regard to all the circumstances of the relationship. Of necessity, that means the leading decisions of Ruka and Thompson must continue to provide a useful framework for the analysis of any particular fact situation, involving as they do a comprehensive discussion of the various indicia of a relationship in the nature of marriage. Section 29A(3)(a) means that the significance to be attached to the various indicia may vary depending on the particular context, but that, as I have already mentioned, was a point made in Ruka itself.[33] In my view, the broad brush approach adopted by the Authority in this case was correct. It was alive to the need to be aware of the legislative purpose, expressly stating:[25] The Authority has to carefully consider whether in upholding theappellant's argument that he be treated as a single person for benefitpurposes the objective of the Act, to ensure that unmarried couples who enter into a de facto relationship are not treated more favourably for benefit purposes than those who are legally married, would be met. On this issue we are satisfied that [the appellant and Ms X] have a relationship in the nature of marriage and that they should not be treated more favourably thana married couple of the same age group living next door[26] The Authority has concluded that for the purposes of the rates assessment in the relevant schedule to the Act [the appellant and Ms X] are in a relationship in the nature of marriage.[emphasis added][34] The Authority was also clearly alive to the need to take all of the circumstances of the relationship into account, including not only the degree of financial interdependence which it held was significant, but also the emotional commitment. The latter was an issue which the Authority had to traverse in greater detail than it might otherwise have done because of the way the appellant chose to run his case.Outcome[35] It follows from all of the above that my answer to the first question 'Did theAuthority apply the correct test in determining whether the appellant was living in arelationship in the nature of marriage?', is Yes.[36] I am also satisfied, notwithstanding the absence of a transcript, that the second question must be answered in the affirmative. The uncontested factsrecorded in the decision itself constitute sufficient evidence on which the Authoritycould base its conclusion that the appellant was living in a de facto relationship.Costs[37] It is my expectation that counsel will resolve the issue of costs by agreement. If, however, agreement is not able to be reached and I am required to make an award,then I would ask the Crown to file submissions within 10 working days, followed bysubmissions on behalf of the appellant within five working days thereafter.Name suppression[38] In its decision, the Social Security Appeal Authority made an order under s 12N(4) of the Social Security Act prohibiting disclosure of the appellant's name.There is no equivalent provision in respect of appeals to this Court.[39] However, the appellant's counsel has applied for name suppression on the grounds that this was an administrative appeal arising from a hearing that had been conducted in a closed Court and which concerned personal and financial details.[40] Counsel for the respondent did not oppose the application for name suppression.[41] I accept that in all the circumstances the purpose of open justice can still beserved without the need to publish the appellant's name and identifying details. Inso far as counsel's application appears to extend to suppression of the appellant'sfinancial and property arrangements, that goes too far. The order is limited to theappellant's name and identifying features.Solicitors:Quentin Hix Legal, TimaruCrown Law, Wellington