CAMPBELL v THE CHIEF EXECUTIVE OF THE MINISTRY OF SOCIAL DEVELOPMENT [2016] NZHC 975

CAMPBELL v THE CHIEF EXECUTIVE OF THE MINISTRY OF SOCIAL DEVELOPMENT [2016] NZHC 975 [16 May 2016]IN THE HIGH COURT OF NEW ZEALANDWELLINGTON REGISTRYCIV 2015-485-964[2016] NZHC 975IN THE MATTER OF an appeal by way of case stated from thedetermination of the Social SecurityAppeal Authority at Wellington unders 12Q of the Social Security Act 1964BETWEEN TRACY CAMPBELLAppellantAND THE CHIEF EXECUTIVE OF THEMINISTRY OF SOCIALDEVELOPMENTRespondentHearing: 23 March 2016Appearances: Appellant appearing in person, assisted by G HowellN Bailey and L Kean for the RespondentJudgment: 16 May 2016JUDGMENT OF MALLON JIntroduction ....................................................................................................................................... [1]Statutory framework ........................................................................................................................ [3]Factual background .......................................................................................................................... [6]Authority's decision ........................................................................................................................ [21]Question one .................................................................................................................................... [26]Question two .................................................................................................................................... [32]Question three .................................................................................................................................. [36]Result ................................................................................................................................................ [40]Permanent name suppression......................................................................................................... [42]Introduction[1] The appellant received an overpayment of $98,883.58 (later recalculated to be $102,754.73) from the Ministry of Social Development (the Ministry) because she claimed the Domestic Purposes Benefit (DPB) at a time when she was living in a relationship in the nature of marriage, and other allowances to which she was not entitled. She appeals from a decision of the Social Security Appeal Authority (the Authority) upholding a decision to recover the overpayment from her. Her contention is that only half the overpayment should be recovered from her as she was not the sole party to benefit from the overpayment.[2] The appeal is brought by way of case stated. The questions stated by the Authority are:(a) Did the Authority err in law in failing to direct the Chief Executive to recover part of the debt from Mr Goldsworthy (the appellant's partnerat the relevant time)?(b) Did the Authority err in law by taking into account an irrelevant consideration, namely the existence of a relationship property agreement between the appellant and Mr Goldsworthy?(c) As a matter of law was it open to the Authority to conclude in the exercise of its discretion that it was not satisfied that no steps should be taken to recover the debt?Statutory framework[3] The Social Security Act 1964 sets out a person's eligibility to receive benefitpayments and the rates at which those benefits are to be paid. In the present case the overpayment was principally in respect of the DPB. To be eligible for this benefit at the relevant time a woman needed to be the mother of one or more children and not living with a husband or a person in a relationship in the nature of marriage.1 The1 Social Security Act 1964, s 27B. Prior to 2007 this section referred only to "husband" but thechief executive had a discretion to regard an unmarried couple as a man and wife where they were in a relationship in the nature of marriage. From 2007 amendments were made to include such relationships in the section.overpayments also included an accommodation supplement, training incentive allowance and disability allowance payments. The training incentive allowance was dependent on being eligible for the DPB. The accommodation supplement anddisability allowance depended on the person's financial position.[4] A sum paid under the Act "to or for the credit of a person" that is in excess ofthe amount to which the person is entitled is a debt due to the Crown.2 The ChiefExecutive "may" bring proceedings to recover the debt.3 However the ChiefExecutive "may not" recover any amount of the debt that was caused wholly or partly by an error to which the debtor did not intentionally contribute, where the debtor received the sum in good faith, altered his or her position in the belief that they were entitled to the sum and would not have to repay it, and it would be inequitable to permit recovery.4 There are no other express considerations as to when the Chief Executive should bring proceedings to recover the debt.[5] Under the legislative framework the Chief Executive makes a decision on whether to bring proceedings to recover the debt. The beneficiary may seek review of that decision from a benefits review committee.5 The beneficiary may then appeal this decision to the Authority.6 Any party dissatisfied with the Authority's decision as being wrong on a point of law can appeal to the High Court by way of case stated.7Factual background[6] The appellant received the DPB in the periods 26 October 1995 to 20 October 1996, and 2 June 1997 to 6 April 2006. At various times over that period she also received an accommodation supplement, a training incentive allowance and a disability allowance.2 Section 85A(f)(i).3 Section 86(1)(a).4 Section 86(9A). From 2002 when s 86(9B) was inserted, the definition of "error" required anelement of fault by the Ministry.5 Section 10A.6 Section 12J.7 Section 12Q.[7] On 24 July 2009 the Family Court issued a decision finding that the appellant and Mr Goldsworthy were living in a de facto relationship from either 1994 or 1995 until April 2006. This decision was made in the context of Mr Goldsworthy applying for orders under the Property (Relationships) Act 1976. On 21 October 2009 orders under the Property (Relationships) Act were made by consent. The orders included that Mr Goldsworthy retained a property in Wanganui and the appellant retained a property in Wellington. They further provided:Tracy indemnifies Stephen for any claim against her from WINZ for overpayment of a benefit during the relationship and Stephen indemnifies Tracy for overpayment to him during the relationship. Each party shall be liable for the debt, if any, for their own overpayment.[8] In 2009 the Ministry commenced an investigation. It determined the appellant was in a relationship in the nature of marriage with Mr Goldsworthy during the period for which she was claiming the DPB. The Ministry conducted a review ofthe appellant's benefit entitlement during this period. It determined that theappellant was not entitled to the DPB and that the supplementary benefits had been paid at an incorrect rate. The Ministry established an overpayment of $98,883.58. The appellant was advised over the overpayment on 10 June 2010.[9] The appellant sought a review of the Ministry's decision. The Benefits Review Committee upheld the decision.[10] The appellant appealed to the Authority. In that appeal she contended she had separated from Mr Goldsworthy on 2 June 1997 and did not live with him at the same address again. She contended that Mr Goldsworthy had assaulted her at that time and thereafter the relationship was violent and should not be treated as in the nature of marriage. The Authority issued its decision on that appeal on 16 October 2012.8[11] In reaching its conclusion that the appellant and Mr Goldsworthy were living in a relationship in the nature of marriage:8 Re Campbell [2012] NZSSAA 77.(a) The Authority reviewed evidence from a number of sources, that it considered to be reliable, which established that the appellant had continued to live with Mr Goldsworthy after 2 June 1997.(b) The Authority also considered the evidence of the financial interdependence of the appellant and Mr Goldsworthy, and concluded it was substantial. The evidence established that the appellant was the primary earner through her business which she described as massageservice work. Mr Goldsworthy's evidence was that the deposits forthe properties which were purchased during the relationship, mortgagepayments and other outgoings were funded by the appellant's business. The appellant's evidence that she obtained the funds for the properties from a trust fund from her father was not accepted by the Authority.(c) The Authority also considered evidence concerning the emotional commitment of the appellant and Mr Goldsworthy to each other. In that context the Authority noted the appellant's claim that therelationship was abusive and they were not living together was inconsistent with evidence that they attended a range of family events together including spending Christmas day with the Goldsworthy family. The Authority also noted the evidence that the appellant, Mr Goldsworthy and the children went on a holiday together in theUnited States and it rejected the appellant's explanation that MrGoldsworthy accompanied them on this trip because she felt it would be safer for her.[12] In support of the submission that the relationship was not in the nature of marriage because it was a violent relationship, the appellant claimed there were 60 instances of violence. The Authority noted there had been six police reports for the period between February 1995 and June 1997. The third of these led to Mr Goldsworthy being charged with assault. He pleaded guilty and was required to attend a course on Living without Violence. There were two further police reports, one in January 1999 and the other in May 1999, which involved threats and verbalabuse. There were then no further police reports until 2 April 2006, when Mr Goldsworthy threw a Marmite jar at the appellant. Mr Goldsworthy was convicted of breaching a protection order in respect of this matter. Mr Goldsworthy's evidencewas that this incident lead to their separation.[13] The Authority then said:9Whereas Mr Goldsworthy had estimated that the Police were called half a dozen times during the course of their relationship, the appellant estimated that the Police had been called a dozen times and that there had been countless incidents when she had not bothered to call the Police. She agreedwith her advocate's suggestion that on average there would be an incidentevery couple of months. None of these incidents were described in any detail. Indeed the appellant did not explain whether these incidents were verbal altercations or physical violence.None of the incidents that the Police were called to appear to have involved the type of severe violence referred to in Ruka. The gap in Police reports between 1999 and 2006 suggests, as Mr Goldsworthy himself suggested, that he had learned something from the Living Without Violence course that he attended and that the incidents in 1999 and 2006 centred around major breaks in the relationship. The relationship may have been a volatile one but the evidence falls far short of any suggestion that the appellant suffered fromBattered Woman's Syndrome stemming from the unremitting type of violence referred to in Ruka. Moreover the appellant is a person who has established her own business, purchased houses and organised travel to the United States of America. This suggests that she is not a person suffering from "learned helplessness". She also appears to have been able to enter into new relationships apparently without fear of any physical consequence from Mr Goldsworthy. She claims to have invited Mr Goldsworthy to accompany her to the United States of America to provide safety for her. This is inconsistent with any suggestion she was in fear of Mr Goldsworthyor suffering from Battered Women's Syndrome.We reject any suggestion that violence in this relationship negated any proposition that the appellant and Mr Goldsworthy were not in a relationship in the nature of marriage.[14] The Authority concluded the appellant and Mr Goldsworthy were in a relationship in the nature of marriage throughout the period of overpayment, except for a three month period during 1999. This meant the appellant was not entitled to the DPB as the Ministry had determined. The Authority expressed doubt that the appellant was entitled to the DPB during the three month period when the appellant and Mr Goldsworthy did not live together. This was because the appellant had not disclosed to the Authority that she received rental income from a property during that9 At [57]-[59].period and she did not disclose income from her business, which was largely a cash business and enabled her to accumulate significant amounts of cash without it going through her bank accounts. The Authority considered the appellant should have the opportunity to demonstrate she had an ongoing entitlement to the DPB during this three month period of separation.[15] The Ministry had determined an overpayment of the Accommodation Supplement on the basis that the appellant was a non-beneficiary. However, because the appellant owned properties in Wainuiomata and Wanganui, the Authority considered she would not in any event have been eligible for this payment. The appellant was not entitled to the Training Incentive Allowance because that depended on her being eligible for the DPB. Overpayment of the Disability Allowance was established on the basis that during the time the appellant received this she had income above the eligibility level.[16] The Authority noted the Chief Executive's discretion to consider whether anysteps should be taken to recover the overpayment. The Authority adjourned to provide the appellant with the opportunity to make submissions, provide full details of her current financial circumstances, and to address what impact any repayment might have on her dependent children.[17] Following this opportunity, the Authority considered the information before it and issued its decision on 11 December 2012.10 The Authority noted that the response from the appellant in respect of the three month period of separation from Mr Goldsworthy was inadequate and did not address the income she received from rental properties and her employment as a masseur. For the sake of bringing the matter to a conclusion it nevertheless directed the Chief Executive to reduce the overpayment sum by three months in the 1999 year. In relation to the ChiefExecutive's discretion the appellant submitted she had used the benefit payments to meet her living costs for herself and her children and that the funds for property purchases came from an inheritance. In determining that the overpayments were to be recovered the Authority said:1110 Re Campbell [2012] NZSSAA 101.11 At [25].Not only was the appellant living in a relationship in the nature of marriage throughout the period of the overpayment but she was also a significant earner for the household. The precise extent of her income is unknown. She was however able to purchase rental properties and to finance a trip to the United States of America for herself and her children suggesting that her income was not insignificant. In effect her dishonesty has enabled her to accumulate assets.[18] Following this decision, the debt was recalculated as amounting to $102,754.73.[19] The appellant then appealed the Authority's decision to the High Court.12There were two questions of law for the Court's determination. The first waswhether there was any evidence on which the Authority could reach its conclusion that the appellant and Mr Goldsworthy were in a relationship in the nature of marriage. The Court concluded that there was.[20] The second question was whether there was evidence on which the Authority could reach its conclusion that it was appropriate for the Chief Executive to exercise his discretion to recover the overpayment. The Court considered that there was. However, because the appellant had advised the Authority of her difficulties in obtaining full information when it made its decision which may have adversely affected her, counsel for the Chief Executive invited the Court to remit this issue back to the Authority. The Court did so on that invitation.Authority's decision[21] The appellant provided further information to the Authority although she did not provide a comprehensive budget. The Authority reviewed the financial information provided.13 It concluded there was nothing to persuade it that she could not afford to repay the debt, or that her ability to pay child support or to have the care of her youngest child would be compromised if she were required to repay the debt. The Authority noted that:(a) the appellant's declared taxable income was $34,000 per annumwhich was more than a beneficiary with one child would receive;12 Campbell v The Chief Executive of the Ministry of Social Development [2013] NZHC 3381.13 Re Campbell [2015] NZSSAA 001.(b) the appellant's youngest child no longer lived with her. Although she had the care of this child for a weekend each fortnight, she did not explain the costs associated with this or how it impacted on her budget;(c) she did not have unusual expenses;(d) she had accumulated assets during the period that she was both working and receiving a benefit, she had retained ownership of a house as part of a relationship property agreement, and made a deliberate choice to divest this property to a trust and this was"possibly in part an attempt to avoid repayment of this debt".14[22] A submission was made on behalf of the appellant that, in exercising the discretion to recover the debt, the Authority should have regard to the evidence of violence in the relationship. The Authority noted that the nature of the violent relationship had been considered in it its original decision of 16 October 2012. At that time the Authority was not persuaded that the appellant suffered from batteredwoman's syndrome or "learned helplessness". The appellant was a person who usedthe money available to her to establish her own business, purchase houses and organise travel to the United States of America using both the funds she earned from her business and the benefits she wrongly received from the state.[23] After reviewing its earlier decision the Authority said:15 The full extent of the income she earned is unknown. It is difficult to seeon what basis the few instances of violence about which there was evidence should be considered as a reason for the appellant being excused from repaying the debt. The appellant appears to have been the main income earner in the relationship; she had no need for state assistance. She was apparently skilful in using her financial resources and increasing her assets.[24] The Authority went on to consider whether it should seek recovery from Mr Goldsworthy. It said:1614 At [23].15 At [19].16 At [20].We have also had regard to whether the Ministry should be seeking recovery from Mr Goldsworthy. The appellant and Mr Goldsworthy indemnified each other against any claim against each of them by Work and Income New Zealand for overpayments in the consent orders made in the District Court under the Relationship Property Act. Having specifically dealt with that issue in the Relationship Property settlement, that is the end of the matter. If the appellant wishes to rescind the indemnity she has given Mr Goldsworthy she would need to apply to have the consent orders overturned. We do not consider that there is any basis on which the Ministry should seek reimbursement from Mr Goldsworthy for the appellant's Work and Income debt. In terms of the consent orders it would be open to him to seek reimbursement from the appellant if the Ministry were to pursue him.[25] The Authority concluded:17Taking into account all of the circumstances of this case the Authority is not satisfied that there is anything, either in relation to the circumstances inwhich the debt was incurred or the appellant's financial circumstances or herfamily circumstances, which would persuade it that the discretion in either s 86A or s 86(1) should be exercised to take no steps to recover the debt from the appellant.Question one[26] Question one of the case stated asks whether the Authority erred in failing to direct the Chief Executive to recover part of the overpayment from Mr Goldsworthy. The appellant submits the answer to this question is "no". That is because she doesnot want the Chief Executive to recover part of the debt from Mr Goldsworthy because she is concerned of reprisals from him if this were to occur.[27] The appellant says the question should be amended because it does not address the issue she wishes to raise. She says the relevant question is whether the Authority failed in the exercise of its discretion because the Chief Executive could have decided to recover only half the debt from her; and if it was appropriate to recover only half the debt from her then it was entirely open to the Chief Executive as to whether he recovered anything from Mr Goldsworthy.[28] The appellant submits that as Mr Goldsworthy equally benefited from the overpayments it is not fair that she bears the full debt. The appellant submits that since her case was considered Parliament has recognised that when an overpayment17 At [24].has been established against one person it can be split between the recipient and their partner.[29] The appellant refers to s 83(1) and (2) and s 83AA in support of this submission. Section 83 relates to the apportionment of a benefit between partners at the time the benefit is paid. Section 83AA sets out the consequences when that apportionment has been based on fraud. These provisions would not apply to theappellant's case even if they had been in force at the time she received theoverpayment.[30] Irrespective of these sections, I understand the appellant's point that it mightseem unfair to seek recovery of the full debt from one person where it is clear that she was not the only person to benefit from the overpayments. This may seem particularly unfair where the person has been in a violent relationship which gives rise to her being fearful of her safety if she were to seek recovery of part of the debt from her former partner.[31] Here, however, there are a number of reasons why no such unfairness arises. First, it was the appellant who wrongly claimed the benefit. There is no evidence that she only did so at Mr Goldsworthy's request or under threat of violence from him. Secondly, the appellant's claims about the extent of the violence did not matchthe evidence as reviewed by the Authority. The appellant claims she is still fearful of Mr Goldsworthy and continues to receive texts from him but this is not supported by any evidence. Thirdly, the appellant agreed to indemnify Mr Goldsworthy for any overpayment of a benefit during the relationship. She therefore accepted liability for the whole of the debt.Question two[32] Question two of the case stated asks whether the Authority erred by taking into account an irrelevant consideration, namely the existence of a relationship property agreement between the appellant and Mr Goldsworthy. The appellant submits the answer to this question is yes. She says that agreements under one piece of legislation (the Property (Relationships) Act) should not create a barrier to theChief Executive's duty under another (the Social Security Act). She says the ChiefExecutive had a duty to consider whether it was appropriate to recover only part of the debt from her given that she received only part of the benefit of the overpayment.[33] I am satisfied the Authority did not err in this respect. The relationship property agreement did not create a barrier to the proper exercise of the ChiefExecutive's discretion. The Authority considered whether the Chief Executiveshould recover all of the overpayment from the appellant. Relevant to that consideration was that the appellant and Mr Goldsworthy had agreed that she would indemnify him if a claim were made for the overpayment.[34] The appellant also says that the question should be amended to ask whether it was open to the Authority to suggest that Mr Goldsworthy could sue the appellant should the Ministry choose to seek reimbursement from him. She says the Authority should not be providing advice to Mr Goldsworthy when he was not a party to the proceedings before the Authority and the advice concerned a relationship property agreement. However the Authority was not providing advice to Mr Goldsworthy. It was taking into account the consequences of seeking partial recovery from the appellant. Partial recovery from the appellant meant considering whether the Chief Executive should seek recovery of the balance from Mr Goldsworthy. The Authority was entitled to take into account that this was unlikely to result in any different outcome for the appellant, because Mr Goldsworthy could rely on the indemnity the appellant provided to recover any amount the Chief Executive sought from him.[35] The appellant also submits that the question should be amended to ask whether the relationship property agreement was an irrelevant consideration in relation to the Chief Executive claiming the full amount of the debt. This is effectively the same question as that posed in the case stated. The effect of the agreement was relevant as I have already discussed.Question three[36] Question three of the case stated asks whether as a matter of law it was open to the Authority to conclude in the exercise of its discretion that it was not satisfied that no steps should be taken to recover the debt. The appellant submits it was opento the Authority to decide whether to recover all or part of the debt from her and the Authority did not use this discretion.[37] I consider the Authority did consider whether it was open to the Chief Executive to recover all or part of the debt from the appellant. It decided it was appropriate to recover all of the debt from the appellant, rather than part of the debt from her, because the evidence of violence was not at the level where it would excuse her from repaying the debt, the appellant had the benefit of the money during the relationship, the appellant had agreed to indemnify Mr Goldsworthy in respect of the debt and if the Chief Executive sought to recover part of the debt from Mr Goldsworthy he could in turn seek recovery from the appellant.[38] The appellant submits the proper question is whether the Authority failed to take into account evidence of assaults by Mr Goldsworthy on her during and after the relationship as an indication of unusual, extraordinary or rare circumstances when considering whether proceedings should be brought against her for recovery of the debt. However, as discussed above, the Authority reviewed the evidence of violence in its first decision and considered the issue again when the proceedings were remitted back to it. It was open to the Authority to form the conclusion it did in this respect. No error of law is established.[39] Lastly the appellant submits the Authority failed in its understanding of the impact of her divesting property to a trust of which her children are the beneficiaries. She submits the Authority considered she was richer in effect than in reality as she was not a beneficiary under the trust. However this was not what the Authority was saying. Rather the Authority was correctly taking into account that her resources during the relationship enabled her to acquire property, she had retained a property under the relationship property settlement and it was her choice to divest the property to a trust. There was no error in this respect.Result[40] The answer to question one is "no". The answer to question two is "no". The answer to question three is "yes". In answering each of these questions, thealternative questions posed by the appellant have been considered. They do not lead to any different outcome. The appeal is accordingly dismissed.[41] The respondent does not seek an order for costs. Accordingly no costs order is made.Permanent name suppression[42] The appellant presently has interim name suppression. She seeks permanent name suppression on the basis of her fear that she will suffer violence if her ex- partner learns of this appeal. The evidence does not support this. Moreover, the appellant has, on this appeal, made it plain that she was not seeking any finding that the Chief Executive should recover part of the overpayment from Mr Goldsworthy. Rather she was seeking only that the Chief Executive decide to recover part of the debt from her. I am not satisfied that permanent name suppression is appropriate. Interim name suppression is now at an end.Mallon J