FIPPARD v THE MINISTRY OF SOCIAL DEVELOPMENT [2017] NZHC 3295

FIPPARD v THE MINISTRY OF SOCIAL DEVELOPMENT [2017] NZHC 3295 [22 December 2017]IN THE HIGH COURT OF NEW ZEALANDWELLINGTON REGISTRYCIV 2016-485-840[2017] NZHC 3295IN THE MATTER of an appeal by way of case stated fromthe determination of the Social SecurityAppeal Authority at Wellington undersection 12Q of the Social Security Act1964BETWEEN CLAYTON FIPPARDAppellantAND THE CHIEF EXECUTIVE OF THEMINISTRY OF SOCIALDEVELOPMENTRespondentHearing: On PapersCounsel: Appellant in PersonS Leslie and T Burgess for RespondentJudgment: 22 December 2017JUDGMENT OF ELLIS J[1] Mr Fippard, is a beneficiary who failed to attend two mandatory interviewswith the respondent Ministry of Social Development (Ministry). Attending interviewsis one of the obligations Parliament requires of work-tested beneficiaries in s 102A ofthe Social Security Act 1964 (Act). As a consequence of these failures Mr Fippard'sbenefit was suspended, purportedly in accordance with ss 116B and 117 of the Act.He unsuccessfully applied for a review of the suspension decision and then appealedto the Social Security Appeal Authority (the Authority).[2] The Authority denied his appeal but subsequently stated a case for this Court,posing two questions of law which I set out later, below.1[3] On 7 July 2017, Williams J directed that the appeal be determined on thepapers. Mr Fippard was directed to file his written submissions in support of theappeal by 4 August 2017. He did not do so. Counsel for the Ministry of SocialDevelopment (MSD) filed written submissions on 18 August, in which one of thegrounds of appeal was conceded. On 28 August, counsel filed a memorandumconsenting to an extension of time to Mr Fippard to 8 September. On 1 September,Mr Fippard filed submissions.[4] Then, on 5 September 2017, Mr Fippard filed a memorandum in which hesought a four month adjournment, on the grounds that he was awaiting furtherdocuments from MSD that he had requested under the Official Information Act 1982and the Privacy Act 1993. He said that the purpose of his information requests was sothat he can "go after MSD staff" for what he says are their lies and flouting ofprocedure. He nonetheless acknowledged, that he didn't mind "leaving things as theystand" and would wait for the decision.[5] In light of the outcome of the case stated appeal I do not consider Mr Fippardwill be prejudiced by proceeding to judgment. Nor do I consider that his reasons forwishing to wait for the information he has sought could have any bearing on theappeal.Legislative background[6] The Act imposes sanctions on beneficiaries who fail to comply with certainspecified "obligations". The sanctions regime can be found in ss 113 to 121. Moreparticularly, s 116B requires the sanctions set out in s 117 to be imposed onbeneficiaries who fail to meet certain obligations and s 116B(1) sets out the types offailures that attract sanction. These includes, at (e), where:the person is a work-tested beneficiary and the Chief Executive considers thatthe person has, without "a good sufficient reason", failure to comply with anyof the work test obligations as set out in s 102A."1 [2016] NZSSAA 053; Case Stated on Appeal (27 October 2016).[7] And s 102A(1)(d) provides that one such obligation is:when required by the chief executive, to attend and participate in anyinterview with an officer of the department or other person on behalf of thechief executive.[8] Section 116C provides examples of a "good and sufficient reason" for failingto comply with such obligations and s 117(1) sets out the sanctions that must beimposed when a failure has occurred, and their prerequisite circumstances:(1) The sanctions that the chief executive must apply in respect of failuresunder section 116B are,—(a) for a first failure,—(i) the person's benefit (unless it is not a main benefitunder this Act) must be reduced by 50% until theperson recomplies; and(ii) if the person has not recomplied within 4 weeks afterthe date on which the reduction took effect, theperson's benefit (unless it is not a main benefit underthis Act) must be reduced by a further 50% (so thatthe total reduction is 100%) until the personrecomplies:(b) for a second failure (being a failure that occurs after theperson has recomplied following a first failure), suspension ofthe person's benefit (unless it is not a main benefit under thisAct) until the person recomplies:(c) for a third failure (being a failure that occurs after the personhas recomplied following a second failure), cancellation ofthe person's benefit (unless it is not a main benefit under thisAct).[9] Accordingly, there are two preconditions for applying any sanction unders 117(1):(a) an obligation failure as described in s 116B must have occurred; and(b) the failure must have occurred the number of times specified in relationto the particular sanction being imposed.[10] Section 113 provides that before any sanction is imposed, written notice mustbe provided, specifying certain matters including the fact of the obligation failure, theconsequent sanction, the date on which the sanction is to take effect and its duration,the ability of the beneficiary to dispute the sanction within five working days, aninvitation for the beneficiary to contact MSD to discuss or dispute the sanction, andthe beneficiary's right to review the sanction and relevant procedure.Mr Fippard's case[11] On 27 August 2014 Mr Fippard failed to attend an interview with the Ministryto discuss his work search activities and related matters. This followed several othermissed appointments.[12] On 28 August 2014 the Ministry wrote to Mr Fippard advising him that,consequently, his benefit would be reduced by 50 per cent. This is the relevantsanction for a first obligation failure.[13] Mr Fippard then contacted the Ministry. He said he had not received the letteradvising him of the interview. The Ministry accepted this explanation and did notimpose the sanction. The Ministry then sent Mr Fippard another letter scheduling aninterview for 20 October 2014.[14] On 20 October 2014 Mr Fippard again failed to attend the scheduled interview.The same day the Ministry sent Mr Fippard a letter advising him of a furtherappointment scheduled for 24 November 2014.14 The letter stated that failure toattend the interview or to contact the Ministry may result in Mr Fippard's benefit beingreduced or stopped.[15] The following day, 21 October 2014, the Ministry wrote again to Mr Fippardin respect of his failure to attend the scheduled appointment. This letter advisedMr Fippard his benefit would "stop" on 30 October 2014 because he had failed toattend the appointment. This is the relevant sanction for a second obligation failure.The letter advised Mr Fippard he had a period of five working days to dispute thedecision.[16] Mr Fippard did not dispute the decision and, on 31 October 2014, Mr Fippard'sbenefit payments were suspended.[17] On 12 November 2014, Mr Fippard contacted the Ministry to complain aboutthe suspension - he said he understood the letter of 20 October 2014 (advising him ofthe further appointment) to mean his benefit would not be suspended. Mr Fippard wasunwilling to attend an interview with the Ministry to have his benefit reinstated: hewanted to apply for the suspension to be reviewed.[18] On 24 November 2014 Mr Fippard attended the interview scheduled in the20 October 2014 letter. However, for reasons that are not entirely clear his benefitwas not reinstated at this time.2[19] On 22 December 2014 Mr Fippard had applied to the Benefits ReviewCommittee to review the decision to suspend his benefit. His principal focus was onthe making of the new appointment in the letter dated 20 October which, he contended,created a legitimate expectation that no suspension action would be taken as a resultof his failure to attend the meeting that day (ie on 20 October).[20] On 19 February 2015 the Committee issued a decision finding the Ministry'sdecision to suspend Mr Fippard's benefit payments was correct. Mr Fippard thenappealed the Committee's decision to the Authority.The Authority's decision[21] By the time the matter came before the Authority, the Ministry had realised thatit had overlooked its earlier decision that Mr Fippard's failure to attend the 27 August2014 appointment was not an obligation failure when it decided to suspend MrFippard's benefit. It conceded this error before the Authority. But Mr Fippard's focusremained on the 20 October letter and the asserted legitimate expectation.[22] On 16 June 2016 the Authority issued a decision dismissing Mr Fippard'sappeal.2 Mr Fippard's benefit was cancelled on 23 January 2015. He reapplied for a benefit on 5 March2015, which was granted to him from 26 February 2015.[23] As regards the legitimate expectation claim the Authority found:(a) no "express representation" to the effect contended for had beensuggested;(b) such an expectation could not be reasonably inferred because advisingMr Fippard of a further appointment would not preclude the Ministryfrom considering whether a sanction notice should be issued andproceeding to issue such a notice the following day.[24] The Authority then considered the second issue raised by the appeal, which itarticulated as being "that the letter of 21 October 2014 does not correctly state thesanction that could be applied".[25] The Authority's view was that the purpose of the notice requirement in the Actis to advise the beneficiary that a sanction is to be imposed and to give the beneficiarytime to remedy the failure and so avoid the sanction. The Authority had previouslyheld "strict compliance with s 113 is required".[26] In Mr Fippard's case, however, the Authority found the written notice of21 October 2014 set out all of the required matters, including the sanction to beimposed. The only error was that it incorrectly stated the sanction would be completesuspension of the benefit payment, rather than reduction by 50 per cent.[27] The Authority found that the notice met the "key requirements" of s 113, notingthat: "The appellant was given notice that a sanction involving the suspension of hisbenefit was about to occur".3 The "overstatement of the Sanction" did not invalidatethe notice as it did not "adversely affect" Mr Fippard.4 The Authority said:5It is difficult to conclude that the misstatement of the sanction by advising ofa greater sanction than the one to be imposed would have any impact on theappellant or his actions following receipt of the notice. This would not be soif the notice understated the sanction (presumably because in such a situationthe beneficiary would be less likely to dispute it).3 At [28].4 At [28].5 At [27].[28] The Authority accordingly found that the Ministry was entitled to reduceMr Fippard's benefit by 50 per cent on 30 October 2014 (although in fact it hadreduced it by 100 per cent). The Authority noted the Ministry's offer to payMr Fippard 50 per cent of the benefit he ought to have received during the period ofsuspension. It commented that such a payment had not been made as Mr Fippard hadmentioned having had employment during the period but had not providedconfirmation of earnings. The remedy for that was said to be in Mr Fippard's hands.The case stated questions[29] The two questions subsequently stated by the Authority for answer by thisCourt are:Did the Authority err in law in concluding that the letter sent to the appellantdated 20 October 2014 did not give rise to a legitimate expectation that noaction resulting from his failure to attend the meeting on 20 October would betaken against him and he would be entitled to retain his full benefit until theappointment made for 24 November?andDid the Authority err in law in finding that the sanction imposed on theappellant was valid despite the fact that the written notice of the sanctionincorrectly stated the extent of the sanction?Approach to case stated appeals[30] In a case stated appeal, this Court's jurisdiction is limited to answering thequestions of law posed by the Authority. A case stated appeal is a "form ofconsultation" with the Court, to obtain an answer to a specific point of law. It is notan appeal by way of rehearing; the Court does not review the case "from scratch". Normay the Court review the merits of the decision.The first question[31] I agree with counsel for the Ministry that this question should be answered"no". At best, the Ministry's letter of 20 October 2014 was ambiguous as to whetheraction resulting from Mr Fippard's failure to attend the interview would be takenagainst him. In any event, any expectation held by Mr Flippard would have ended asa result of the letter dated 21 October 2014, which clearly advised that a sanctionwould be imposed. It is not reasonable to suggest that a letter with a later date wouldnot displace the earlier. As well, s 116B of the Act requires the Ministry impose asanction when a failure stipulated in that section has occurred. Given that, in theabsence of a "good and sufficient reason" for the failure, an obligation failure had, infact, occurred, the Ministry had no power to simply ignore his non-attendance. TheAct required a sanction be imposed.[32] In these circumstances, it was unreasonable for Mr Fippard to have relied onthe expectation he purports to have held.The second question[33] Again, I agree with the Ministry submits the answer to the second questionshould be "yes". The Authority misdirected itself by focusing on the noticerequirements in s 113 of the Act rather than the validity of the substantive sanctionimposed on Mr Fippard.[34] Put briefly, the Ministry is only empowered to impose a sanction in accordancewith the terms of ss 116B and 117. In Mr Fippard's case, the prerequisite conditionfor the sanction of complete suspension (a first failure) did not, as a matter of fact,exist. The Ministry was not authorised to impose that sanction, irrespective of whetherthe written notice for it met the "key Requirements" of s 113. The sanction imposedwas invalid and the Authority was wrong to hold that it was not.Conclusion[35] The case stated questions are therefore to be answered as follows:(a) No, the Authority did not err in finding the Ministry's letter dated20 October 2014 did not give rise to a legitimate expectation that noaction resulting from Mr Fippard's failure to attend the meeting on20 October 2014 would be taken against him; and(b) Yes, the Authority did err in finding the sanction imposed onMr Fippard was valid. The Ministry imposed the sanction for a secondfailure when, under s 117 of the Act, it only had authority to impose thesanction for a first failure.[36] I record that the Ministry has already taken the necessary remedial action. Ithas agreed to provide Mr Fippard a formal apology and to pay Mr Fippard the fullamount of Jobseeker Support benefit that he would have received for the period of 31October 2014 to 26 February 2015. As I understand it, this payment will, by now,have been processed.____________________________Rebecca Ellis J