Beer v Ministry of Social Development [2012] NZHC 205; [2012] NZAR 264 (1 March 2012)

Last Updated: 6 March 2012

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2011-485-1977 [2012] NZHC 205

BETWEEN GARY GORDON BEER & GLORIA PATRICIA WALTERS

Appellants

AND MINISTRY OF SOCIAL DEVELOPMENT Respondent

Hearing: 20 February 2012

Counsel: Mr Beer in person

N Gray for Respondent

Judgment: 1 March 2012

_{JUDGMENT OF THE HON JUSTICE KÓS}

Introduction

[1] In the autumn of their life, Mr Gary Beer and Ms Gloria Walters decided to spend the winters of their years exploring Europe. In April 2009 they sold their home, boarded a plane for France, and there bought a canal boat. They spent the summer months voyaging the canals of the Rhone and Saone valleys. Idyllic as their new life was, the plan was always to return 5 months later, in September 2009. But one thing led to another. Their boat did not sell until October. A fellow boatman fell ill and needed medical treatment in America. Would Mr Beer and Ms Walters take care of his boat over winter for him? They would. In the end Mr Beer and Ms Walters did not return to New Zealand until April 2010. A twelve month absence.

[2] Mr Beer knew that his New Zealand Superannuation entitlement would be suspended after 26 weeks overseas. What he did not appreciate was that an Act of

_{Parliament provided for the retrospective strip-back of New Zealand Superannuation}

BEER & WALTERS v MINISTRY OF SOCIAL DEVELOPMENT HC WN CIV-2011-485-1977 [1 March 2012]

payments where the recipient was away for more than 30 weeks. In January 2010

Mr Beer‘s superannuation was suspended. In July 2010 he (and Ms Walters, who then received part of Mr Beer‘s entitlement as a non-qualifying spouse) were required to repay the superannuation they had received after they left for France. In all some $14,723. The Ministry‘s decision was later upheld by a Benefits Review Committee, and by the Social Security Appeal Authority (“the Authority”).

[3] The appellants appeal to the High Court. In essence their argument is that their continued absence after September 2009 was due to circumstances beyond their control (so that a statutory exception to the strip-back applies), or that the Ministry was wrong not to exercise its discretion to waive recovery.1

Appeal

[4] This is an appeal on questions of law only. Section 12Q of the Social Security Act 1964 provides for appeals on questions of law to the High Court from the Authority. They proceed by way of “case stated”. As I noted in Boljevic v Chief Executive of the Ministry of Social Development,2 such a procedure seems to have first been devised in England in the mid-nineteenth century.3 A case stated is not an

appeal by way of rehearing, in which the Court reviews the whole of the case from scratch. It was said by Lord Widgery CJ to be “a form of consultation” with the Court to obtain an answer to specific points of law.4 The Court states its opinion on the case stated by the tribunal below. If it agrees with the conclusions of law reached by the tribunal, the appeal must be dismissed. But if not, the appeal may be allowed.

[5] Four questions of law have been stated for this Court to answer:

Question 1

Was the Authority correct in determining that if a person is absent from New Zealand for more than 30 weeks there is no entitlement to payment of New Zealand superannuation for the first 26 weeks of their absence unless they

1 _{That said, they do accept that the payments received by Ms Walters should be repaid.}

2 Boljevic v Chief Executive of the Ministry of Social Development HC Wellington CIV-2010-485-

_{000206, 10 November 2011, at [22].}

3 _{Holdsworth A History of English Law, vol 16, (London, Sweet & Maxwell, 1965) at 162.}

4 Harris Simon & Co Ltd v Manchester City Council [1975] 1 WLR 100.

are absent from New Zealand for longer than 30 weeks as a result of circumstances beyond their control?

Question 2

As a matter of law was there any evidence on which the Authority could base its conclusion that it was not satisfied that the appellants‘ absence from New Zealand for more than 30 weeks was not as a result of circumstances beyond their control?

Question 3

As a matter of law was there any evidence on which the Authority could base its conclusion that there was no error by an officer of the Ministry, which would permit it to direct that the debt not be recovered pursuant to s 86(9A) of the Social Security Act 1964?

Question 4

As a matter of law was the Authority entitled to conclude that this was not a case where the Chief Executive should be directed not to recover the debt pursuant to the provisions of s 86(1) of the Social Security Act 1964?

Statutory Framework

[6] New Zealand Superannuation provides a retirement income for all qualified citizens or permanent residents of New Zealand. The qualifications are age (65 years or older) and residency.5 The legislative basis for payment of New Zealand Superannuation can be found in both the New Zealand Superannuation and Retirement Income Act 2001 and the Social Security Act 1964.

[7] Section 21 of the New Zealand Superannuation and Retirement Income Act

2001 provides a person is not entitled to New Zealand Superannuation while they are absent from New Zealand, except as provided in s 22 to 35 or in any agreement or convention adopted under s 19 of the Social Welfare (Transitional Provisions) Act

1990.

[8] Section 22 of the Act, the provision in question, provides:

First 26 weeks of certain temporary absences

New Zealand superannuation that would otherwise be payable to a person

_{[(other than a person who is receiving New Zealand superannuation overseas}

5 See New Zealand Superannuation and Retirement Income Act 2001, ss 7, 8.

under section 26)] is payable in respect of the first 26 weeks of any absence from New Zealand if—

(a) the person's absence does not exceed 30 weeks; or

(b) the person's absence exceeds 30 weeks and the chief executive is satisfied that the absence beyond 30 weeks is due to circumstances beyond that person's control that he or she could not reasonably have foreseen before departure.

[9] The way this works is this:

(a) If the recipient is away for just 26 weeks, his or her full entitlement will be paid;

(b) If the recipient is away more than 26 weeks, but not more than 30, he or she will receive 26 weeks‘ payments, but there will be no strip- back;

(c) If the recipient is away more than 26 weeks, the strip-back applies.

The 26 weeks already paid, and then suspended as at week 27, must be repaid. A legislative change has since ameliorated this rule, but it does not apply to the appellants.

[10] Overpayments of the benefit are treated as debts due to the Crown and must be recovered.6 Once a debt has been established the Chief Executive has options available to recover the debt under s 86 of the Social Security Act. Section 86(1) provides:

The chief executive, in order to recover a debt referred to in section 85A, may –

(a) bring proceedings in the name of the chief executive; or

(b) deduct all or part of that debt from any amount payable to that person by the department as a benefit or a student allowance; or

(c) in the case of a debt referred to in section 85A(d), deduct all or part of that debt from any payment of a grant of special assistance under a welfare programme approved under section 124(1)(d).

6 Social Security Act 1964, s 85A(f).

[11] Section 86(1) is subject to an exception found in s 86(9A) of the Social

Security Act 1964. It provides:

The chief executive may not recover any sum comprising that part of a debt that was caused wholly or partly by an error to which the debtor did not intentionally contribute if—

(a) the debtor—

(i) received that sum in good faith; and

(ii) changed his or her position in the belief that he or she was entitled to that sum and would not have to pay or repay that sum to the chief executive; and

(iii) it would be inequitable in all the circumstances, including the debtor's financial circumstances, to permit recovery.

[12] Section 86(9B) provides an ‗error‘ in section 86(9A) means:

(a) means—

(i) the provision of incorrect information by an officer of the department:

(ii) any erroneous act or omission of an officer of the department that occurs during an investigation under section 12:

(iii) any other erroneous act or omission of an officer of the department; but

(b) does not include the simple act of making a payment to which the recipient is not entitled if that act is not caused, wholly or partly, by any erroneous act or omission of an officer of the department.

[13] If s 86(9A) does not apply, there is a discretion available to the Chief Executive to direct that an overpayment established as a debt to the Crown not be recovered. This discretion is not prescribed in statute but s 86(1) is viewed as a reflection of it.7

Background facts

_{[14] I now set the facts out in rather more detail.}

7 Cowley v Ministry of Social Development HC Wellington, CIV-2008-485-381,

1 September 2008.

[15] The appellants were both in receipt of New Zealand Superannuation. Mr Beer became eligible on 2 December 2006. Ms Walters was included in Mr Beer‘s superannuation at that time as a non-qualifying spouse.

[16] For a number of years the appellants have been travelling overseas in the New Zealand winter. They first did so in 2007. In 2006 or 2007 Mr Beer took time to understand how travel would affect his entitlement to New Zealand Superannuation. The source of his understanding of the law at that time is not clear. It is too long ago for him to remember now. But the problem is that he learned about the first part of s 22 (entitlement limited to first 26 weeks away) without learning about the second part (strip-back of payments after 30 weeks away).

[17] In early 2009 the appellants sold their home in New Zealand. They left New Zealand to live in France and to cruise its inland waterways during the Northern Hemisphere summer. They did not however, intend to remain overseas permanently. They left New Zealand on 16 April 2009, with a plan to return on 18 September

2009. The 26 week period would expire on 15 October 2009. More importantly, but unknown to them, the 30 week period would expire on 12 November 2009.

[18] It is unclear what information was publicly available about the effect of s 22 when the appellants went overseas in April 2009. Certainly the legislation had not changed since enactment in 2001. (It has since been amended with effect from

5 January 2010 to enable payment to continue past 26 weeks in some cases. The amendment does not assist the appellants here: it took effect too late in time for them, and they do not meet its preconditions in any case). One would however hope that whatever was publicly available was better than the page from what appears to be an internal manual sent to the appellants in March 2010. So far as material it says:

Absence from New Zealand

Clients (and partners) receiving New Zealand Superannuation can be absent from New Zealand and continue to receive payment for up to 26 weeks.

If the client is overseas for 30 weeks or more there is no qualification from when the client left New Zealand, unless the client‘s return to New Zealand is delayed due to circumstances beyond the client‘s control, that could not have been foreseen before departure.

This apparently is supposed to convey that the 26 weeks paid will be stripped back. It is less than successful in doing so. However there is no suggestion in this case that the appellants relied on this document – or any other statement by the Ministry – in deciding to stay in France beyond the 30 week limit.

[19] The appellants cruised the canals of France, from the Rhone valley through to Paris, across the summer of 2009. On reaching Paris in late summer, the appellants set about trying to sell their canal boat. This was undertaken on their behalf by a broker. It took longer than planned. They had to put back their September flight. The boat was sold on 20 October 2009. Settlement did not occur for another month,

20 November 2009. That was a little over a week after expiry of the (to them unknown) 30 week period which triggered the strip-back. The appellants did not need to be present for settlement, but decided to stay in France until the sale proceeds were remitted to their account. They were able to remain on the boat until settlement. At about this point a fellow boatman needed to return to the United States for medical treatment. He asked the appellants to care for his canal boat during the winter period. Desirably, such boats should be kept warm over winter. The appellants would have the friend‘s boat rent-free, and they could remain in Paris over winter. Winter on a Parisian canal might not, as Mr Beer put it, be much of a holiday. But they decided it would be more financially viable for them to do this, given they no longer owned a home in New Zealand.

[20] On 15 October 2009 the 26 week period expired. The appellants knew this. They thought that all that would happen was the cutting off of New Zealand Superannuation payments. They had weighed that up in deciding it was more sensible economically for them to remain in France. What they had not factored in was the s 22 strip-back, triggered on 12 November 2009. On this the appellants‘ evidence was unequivocal: had they known about this aspect of s 22, they would have cut short their trip and made sure they were back in New Zealand before the strip-back took effect.

[21] However, ignorant of the strip-back, the appellants remained in Paris. Mr Beer had access to the internet during this period. He read the National Business Review on line. In its 22 October 2009 edition he noted that Parliament had

amended the law to enable New Zealanders living overseas to claim more than 50 per cent of their New Zealand Superannuation entitlements. It was unclear from the article exactly what the change made was, and how it would help the appellants, if at all. Mr Beer regarded it as generally encouraging, but made no further enquiry.8

[22] On 3 November 2009, as a result of a data match with New Zealand Customs the Ministry noted that the appellants had left New Zealand. On 15 December 2009 the Ministry sent a letter to the appellants regarding their absence from New Zealand. The Ministry also issued an annual review form to the appellant regarding their superannuation. The appellants encountered some difficulty in receiving their mail overseas. They did not receive these letters until 30 December 2009, at which point they responded. I am satisfied that none of that was the fault of the Ministry. In any case, all this occurred after the die was cast.

[23] As a result of the receipt of this information the appellants‘ superannuation was suspended on 6 January 2009. The appellants finally returned to New Zealand on April 16 2010. On 14 July 2010 the Ministry established an overpayment of superannuation for the period 17 April 2009 to 5 January 2010. This totalled

$7,361.83 each.

[24] The appellants applied for a review of this decision. The Benefits Review Committee reviewed the matter internally. On 30 September 2010 it upheld the decision of the Chief Executive. The appellants then lodged an appeal with the Authority.

The Authority’s Findings

[25] The Authority considered that the effect of section 22 was clear. It was common ground that the appellants had been overseas for more than 30 weeks. Section 22 applied, unless the appellants could show their absence was due to

_{circumstances beyond their control. Otherwise the strip-back would apply.}

8 The law change took effect on 5 January 2010. It enables superannuation payments to be made to persons residing overseas or travelling for more than 26 weeks. But application must be made before departure: s 26B of the New Zealand Superannuation and Retirement Act 2001. The new law does not avail the appellants.

[26] The Authority was not satisfied that the appellants‘ absence was a result of circumstances beyond their control. It was not an unexpected event such as an illness, injury or bereavement. It was not an event which left the appellants no choice but to abandon their intention to return to New Zealand within the 30 week period. It was also unclear why both needed to remain in France to oversee settlement of the boat sale. The Authority therefore considered the overpayment decision was correct.

[27] The Authority then moved on to consider whether they could direct the overpayment not be recovered pursuant to s 86(9A) of the Social Security Act 1964. It did not consider that the debt arose as the result of any error by an officer of the Ministry, to which the appellant did not intentionally contribute. It said:

In our view the debt in this case arose as the result of the failure of the appellants to contact the Ministry and advise of their travel plans, both in April and in October 2009. We particularly note the appellants knew that their New Zealand Superannuation would continue to be paid in error when they had not returned after 26 weeks. They did nothing to prevent this error arising until after the Ministry contacted them regarding their annual review and the data match.

[28] Finally, the Authority considered whether the Chief Executive should be directed to take no steps to recover the debt pursuant to the discretions in ss 86(1) and 86A of the Social Security Act 1964. Given Parliament had specified in s86(9A) the circumstances in which a debt should not be recovered, the occasions on which the discretion should be exercised must be limited. It noted decisions of the High Court describing the circumstances in which the discretion would be exercised as

“extraordinary”9, “unusual”10, and “rare and unusual”.11

[29] The Authority considered the appellants were entitled to take the steps they considered financially prudent. But it must have always been anticipated by them that, having bought the canal boat, it might take some time to sell it. Likewise that it might be appropriate to remain in France to ensure the proceeds were remitted to

_{their account. The decision to remain on another boat was a free choice made by the}

9 McConkey v The Director General of Work and Income New Zealand HC Wellington AP 277/00

_{20 August 2002.}

10 _{Cowley v Ministry of Social Development HC Wellington CIV-2008-485-381 1 September 2008.}

11 Osborne v Ministry of Social Development HC Auckland CIV-2007-485-002579 31 August

2009.

appellants. Ultimately the appellants‘ failure to meet their obligation to advise the Ministry of their absence caused the overpayment. There was nothing extraordinary or unusual about these circumstances. It would not be appropriate to direct the Chief Executive not take steps to recover the debt.

[30] I turn now to the questions asked of this Court.

Question 1

Was the Authority correct in determining that if a person is absent from New Zealand for more than 30 weeks there is no entitlement to payment of New Zealand superannuation for the first 26 weeks of their absence unless they are absent from New Zealand for longer than 30 weeks as a result of circumstances beyond their control?

Submissions

[31] The appellants in effect offered no argument under this question. They were aware of the statutory provision, in a general sense, but misunderstood it. They were unaware of the strip-back aspect, triggered at 30 weeks. They thought they remained entitled to New Zealand Superannuation whilst overseas for the first 26 weeks, regardless of when they returned.

[32] The respondent submits the Authority was correct. The exception in s 22 is highly prescriptive: at the relevant time New Zealand Superannuation could only be received by a person absent from New Zealand for 26 weeks if they are not absent for more than 30 weeks in total, or if their absence exceeds 30 weeks due to circumstances beyond their control.

Analysis

[33] There is no doubt the Authority were correct on this point. The statutory wording is perfectly clear.

Question 2

As a matter of law was there any evidence on which the Authority could base its conclusion that it was not satisfied that the appellants’ absence from New Zealand for more than 30 weeks was not as a result of circumstances beyond their control?

Submissions

[34] The appellants assert there were many unusual and unintended circumstances that presented in nearly every relevant aspect of their travels. Essentially they argue they originally did not intend to stay overseas for the extended period. They were reluctant to leave the boat in the hands of the boat broker. This was all due to the language barrier, distance from New Zealand and some concerns about the boat broker. That is why they had no other option but to change their return tickets.

[35] The respondent submits there was a sound evidential basis for the Authority‘s view that the appellants‘ extended absence was not due to circumstances beyond their control. The appellants intended to use a boat whilst overseas, and chose to remain overseas to oversee the settlement of the boat and then to further remain on to boat-sit for their friend. The appellants were aware their decision to remain overseas for this extended period meant they would not receive superannuation, but were satisfied this was financially preferable to paying for rent in New Zealand. The respondent submits no circumstances beyond the appellants‘ control existed. Circumstances beyond one‘s control would include illness or injury, industrial disputes or bereavement.

Analysis

[36] The Authority‘s decision may be appealed to the extent that the Authority has misapplied the law (i.e. misunderstood the statutory language or misapplied the law) or made factual findings unsupported by evidence (i.e. where the findings of fact are such that no person acting judicially and properly instructed as to the relevant law

could have come to the determination).12 The latter is potentially applicable here. But care must be taken to ensure challenges to factual findings are not disguised as questions of law.

[37] In Bryson v Three Foot Six Ltd,13 and again in Vodafone NZ Ltd v Telecom NZ Ltd,14 the Supreme Court considered the circumstances in which a fact-finding body‘s conclusions can be examined as questions of law. It noted that an ultimate conclusion of a fact-finding body may sometimes be so insupportable – so clearly

untenable – as to amount to an error of law that proper application of the law requires a different answer. That will be the position only in the rare case, described in Edwards v Bairstow, where:

(a) there is no evidence to support the determination; or

(b) the evidence is inconsistent with and contradictory of the determination; or

(c) the true and only reasonable conclusion contradicts the determination.

[38] The Supreme Court emphasised that the appellant advancing the first proposition above – that there was no evidence to support a factual finding - faces a very high hurdle. The Court also cautioned that when assessing whether the decision-maker has reached an untenable conclusion on the facts, “it does not matter whether, with whatever degree of certainty, the appellate court considers it would have reached a different conclusion. What matters is whether the decision under

appeal was a permissible option.”15 The High Court has applied Bryson in appeals

_{under s 12Q.}16

12 _{Edwards v Bairstow [1955] 3 All ER 48.}

13 _{Bryson v Three Foot Six Ltd [2005] NZSC 34.}

14 _{Vodafone NZ Ltd v Telecom NZ Ltd [2011] NZSC 138.}

15 _{Quoting Lord Donaldson MR in Piggot Brothers & Co Ltd v Jackson [1992] ICR 85 at 92.}

16 Patel v The Chief Executive of Ministry of Social Development HC Auckland CIV-2008-485-

1124, 1 October 2008; Chief Executive of the Ministry of Social Development v Thompson & Saunders HC Wellington CIV-2009-485-1281 11 February 2010; Hikaka v Social Security Appeal Authority HC Wellington CIV-2007-485-330 22 June 2007.

[39] In my view, it cannot be said there was no evidence on which the Authority could conclude it was not satisfied the appellants‘ absence from New Zealand for more than 30 weeks was not a result of circumstances beyond their control.

[40] First, as a matter of law, for an event to be “due to circumstances beyond that person's control that he or she could not reasonably have foreseen before departure”, it would need to be the result of “an intervention of an unexpected event such as illness, accident, unavailability of transport or the like”.17 The Authority correctly addressed itself to that test in evaluating the evidence before it.

[41] Secondly, the Authority had before it oral submissions from the appellants at the hearing; a s 12K report and exhibits (including correspondence between the appellants and the Ministry regarding their superannuation); the appellants‘ completed annual review questionnaires; a Ministry internal review of the decision; reports to and of the Benefits Review Committee; and a copy of the appellants‘ submissions to the Benefits Review Committee. The appellants have not shown any material deficiency in the information available to the Authority on which to assess causation of their extended travel arrangements, for the purposes of s 22(b).

[42] Thirdly, there was ample evidence to support a finding that the appellants‘ decision to remain in France after 12 November 2009 was a voluntary choice made on the basis of convenience and financial preference. The prospect of a delay in sale, or other complexities associated with the ownership of the canal boat could not be said to be a circumstance that could not reasonably be foreseen before departure. In April 2009 Europe and much of the rest of the world was in the grip of a financial crisis that had accelerated in September 2008. Even so, with the boat sold on 20

October (with settlement to follow a month later), departure then was clearly feasible. The desire to supervise the final arrangements, remain on the boat rent- free, and then likewise enjoy rent-free accommodation on their friend‘s boat after

_{that are the proximate causes of the appellants‘ belated return.}

17 Appeal against decision of Benefits Review Committee [2009] NZ SSAA 42 (14 July 2009) at

[15].

[43] Fourthly, the unfortunate fact here is simply that the appellants did not appreciate the true effect of s 22, and its embedded strip-back if they stayed away more than 30 weeks. Their ignorance of the true legal situation is not attributable to any third party. It does not enable a finding that their remaining in Europe after

12 November 2009 was due to circumstances beyond their control.

[44] This is not, therefore, a case where the Authority‘s conclusion is so insupportable and untenable as to amount to an error of law. The conclusion was a

“permissible option”. Indeed, it was always the probable outcome.

Question 3

As a matter of law was there any evidence on which the Authority could base its conclusion that there was no error by an officer of the Ministry, which would permit it to direct that the debt not be recovered pursuant to s 86(9A) of the Social Security Act 1964?

Submissions

[45] In their written submissions the appellants submitted that the Ministry, having identified on 3 November 2009 that the appellants had left New Zealand more than

28 weeks earlier, failed to communicate with them as to the risk of their entitlements being stripped back if they stayed away another 9 days. However, when the matter was called before me they advanced that submission no further. Rather they said that they “agreed that the department and their officers had made no error which would permit them not to recover the debt” (sic).

[46] The respondent submits there was a sound basis of evidence on which the Authority could conclude there was no error on the part of the Ministry in establishing an overpayment, and therefore it could not direct the overpayment not be recovered under s 86(9A).

Analysis

[47] The principles summarised in [36] – [38] apply here also. It cannot be said the Authority lacked an evidential foundation for its finding that there was no error on the part of the Ministry. No error by the Ministry was shown in the evidence. The simple act of making a payment to the appellants, to which they were not entitled, is not such an error if that act is not caused, wholly or partly, by an erroneous act or omission by an officer of the department.

[48] Nor do I consider the Ministry can be criticised for not warning the appellants of the 30 week strip-back when, on 3 November, it discovered the appellants had been overseas for over 28 weeks. The duty was that of the appellants under s 80A of the Social Security Act 1964 to inform the Ministry that they had reached the end of

their entitlement to payment at the end of the 26th week. Had they done so then, as

the Authority noted, the Ministry likely would have informed them of the consequences of staying overseas past 30 weeks. But the appellants did nothing to inform the Ministry of their absence, with the result that that conversation did not occur.

[49] The appellants were right to concede this issue.

Question 4

As a matter of law was the Authority entitled to conclude that this was not a case where the Chief Executive should be directed not to recover the debt pursuant to the provisions of s 86(1) of the Social Security Act 1964?

Submissions

[50] Mr Beer submits that the unusual circumstances of the case justified the Chief Executive exercising his discretion not to recover the debt. Principal among the mitigating circumstances was the fact that the appellants misunderstood the legal position. They originally were due to return home within the 30 week period. They

had no idea that they would have to pay back the superannuation for the first 26 weeks, if they did not return within 30 weeks. They were aware they would need to pay back any payment after 26 weeks. They submit that not being aware of this requirement before leaving New Zealand should be a discretionary reason for not recovering the debt. They say this was a pure case of mistake. There was nothing malicious or fraudulent about what they did. They refer also to communications difficulties, including the mail forwarding problem at their New Zealand Post Shop, referred to in [22].

[51] The respondent submits this discretion is a residual one which exists against a general presumption that overpayments will be recovered. It emphasises the exercise of the discretion as being in ‗unusual‘ circumstances and submit relevant considerations which should be regarded when exercising the discretion are the individual circumstances of the case. It points out that the Authority considered the appellants‘ financial situation, their ability to repay the overpayment, and the consideration underlying the decision to stay overseas and boat-sit, enabling them to avoid paying rent in New Zealand. (Mr Beer re-emphasised at the hearing the importance of this consideration.) The respondent contends the appellants‘ evidence falls well short of meeting the criteria for unusual circumstances which would justify the Authority directing the Chief Executive not to recover the overpayment in this case.

Analysis

[52] The decision of Clifford J in Cowley v Ministry of Social Development18 confirms while there is a general presumption that the Chief Executive will recover overpayments, there remains a lawful discretion as to whether and to what extent he or she will do so.19 The discretion was held to be a residual one rather than a statutory discretion conferred directly. Section 86(1) reflects the existence of that discretion, but is not the independent source of that discretion. As a matter of fact

_{circumstances where it is appropriate for the Chief Executive to take no steps to}

18 _{Cowley v Ministry of Social Development HC Wellington CIV-2008-485-381 1 September 2008.}

19 At [24] and [46].

recover will be unusual.20 Not unsurprisingly, Clifford J declined to set out any overarching criteria.

[53] In Osborne v Ministry of Social Development21 Duffy J was minded to disagree with the description of the discretion as a “residual” one.22 While respecting the legislative analysis that produces that reservation, it seems to me little turns on the particular adjective chosen. The practical fact is that where the Ministry

establishes an overpayment of superannuation that is contested, the primary questions will then be whether the s 22(b)23 “no choice” exception applies (so there is no overpayment at all), or the s 86(9A)24 “your fault” exception applies (so that there is an overpayment, but it is irrecoverable). After that, as here, the recipient‘s remaining resort is to the s 86(1) discretion. For that reason, and because regard is had first to the respective conduct of the recipient and the Ministry within the

foregoing provisions, the discretion may reasonably be described as “residual”.

[54] In the same decision Duffy J made the following observation with which I

agree entirely:25

The proper application of any discretionary power that authorises recovery of public money, which has been wrongly obtained, is likely to result in decisions not to recover being limited to rare and unusual circumstances. Since the considerations for the Chief Executive to take into account when exercising the authority in s 86(1) are not prescribed, he or she is free to consider anything that is reasonable and relevant to the decision to be made.

[55] Two further points can usefully be made.

[56] First, the discretion is not fettered, but remains subject to the conventional fetters imposed by public law on the exercise of a general discretion: it must be

_{exercised lawfully, reasonably and in accordance with procedural fairness.}26

20 _{At [46].}

21 Osborne v Ministry of Social Development HC Auckland CIV-2007-485-002579 31 August

_2009.

22 _{At [66] – [67].}

23 _{New Zealand Superannuation and Retirement Income Act 2001.}

24 _{Social Security Act 1964.}

25 _{At [63].}

26 Ibid at [66].

[57] Secondly, where an appeal is brought against the exercise of a discretion, an appellate body will normally take a more conservative approach than where the issue is a determination of right. In the former case, the usual rule is that an appellant must show that the decision-maker “acted on a wrong principle, ... failed to take into account some relevant matter, ... took account of some irrelevant matter or ... was

plainly wrong”.27 Such constraint should be shown both by the Authority and by the

Court on appeal from it.

[58] In the present case it cannot be said that the Ministry erred, in the way just described, in the exercise of its discretion. Or indeed at all. First, there is no suggestion that the Ministry or the Authority misdirected itself in principle, or made a relevancy error. The Authority‘s approach in principle cannot be criticised.

[59] Secondly, as to substance, the circumstances here could not possibly justify the exercise of discretion not to recover the overpayments. An omission to appreciate the legal position is, without more, insufficient. The appellants should have informed the Ministry of their absence overseas. They should have done so either at the outset of their travels (as they had on an earlier occasion) or at the point where their entitlement to New Zealand Superannuation ceased on 15 October

2009.28 They had of course planned to return before then. But when they changed

their plans, they simply allowed things to run on. In the end payments continued to them until 6 January 2010.

[60] It is a matter of concern to the appellants that the decision of the Ministry is perceived by them to implicitly condemn them for acting improperly. I should therefore say that there is no evidence of deceitful conduct in this case. Nonetheless the fact remains that they allowed the overpayment to continue past 15 October 2009 without correction. And they took no steps to notify the Ministry of their absence, or that they should no longer receive payment. Nor did they seek to clarify the legal

_{position, despite having internet access. Had they done any one of these things, they}

27 _{May v May} (1982) 1 NZFLR 165 (_{CA) at 170.}

28. There is a statutory duty to inform the Ministry of changes of circumstances affecting entitlement to benefits (including New Zealand Superannuation): s 80A, Social Security Act

1964.

would likely have learned of the strip-back provision.29 There would still have been time at that point to return to New Zealand before 12 November 2009.

[61] Finally, the communication issues confronted by the appellants30 (which they rely on in support of their case under Question 4) were all after the event, and of short duration.

[62] There was no error by the Ministry or Authority in their assessment of the s

86(1) discretion.

Answers to Case Stated

[63] Accordingly, the questions stated are answered as follows:

1. Was the Authority correct in determining that if a person is absent from New Zealand for more than 30 weeks there is no entitlement to payment of New Zealand superannuation for the first 26 weeks of their absence unless they are absent from New Zealand for longer than

30 weeks as a result of circumstances beyond their control?

Answer: Yes.

2. As a matter of law was there any evidence on which the Authority could base its conclusion that it was not satisfied that the appellants‘ absence from New Zealand for more than 30 weeks was not as a result of circumstances beyond their control?

_{Answer: Yes.}

29 _{Assuming the information supplied was clearer than that set out in [18] above.}

30 See [22] and [50] above.

3. As a matter of law was there any evidence on which the Authority could base its conclusion that there was no error by an officer of the Ministry, which would permit it to direct that the debt not be recovered pursuant to s 86(9A) of the Social Security Act 1964?

Answer: Yes.

4. As a matter of law was the Authority entitled to conclude that this was not a case where the Chief Executive should be directed not to recover the debt pursuant to the provisions of s 86(1) of the Social Security Act 1964?

Answer: Yes.

Disposition

[64] The appeal is dismissed.

[65] Costs were not sought by the respondent, and no order therefore is made.

Stephen Kós J

Solicitors:

Crown Law, Wellington for Respondent