Prasad v Chief Executive of the Ministry of Social Development [2014] NZHC 3156 (10 December 2014)

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IN THE MATTER	of an appeal by way of case stated from the determination of the Social Security Appeal Authority at Wellington under s 12Q of the Social Security Act 1965
BETWEEN	FIONA PRASAD Appellant
AND	THE CHIEF EXECUTIVE OF THE MINISTRY OF SOCIAL DEVELOPMENT _Respondent

Hearing:	(On the papers)
_Judgment:	_{10 December 2014}

This judgment was delivered by me on 10 December 2014 at 4.45 pm, pursuant to Rule 11.5 of the

Security Appeal Authority (the Authority) under s 12Q of the Social Security Act

[2] The following question of law has been stated for the opinion of this Court:

Did the Authority err in law in finding that the Chief Executive was correct to exclude the $50 claimed by the appellant in respect of tree planting costs from the appellant’s disability costs, for the purpose of assessing the appellant’s Special Benefit?

[1] The appellant appealed to the Authority in respect of a decision of the Chief Executive upheld by a Benefits Review Committee declining to include certain gardening costs in the assessment of her disability costs.

[2] The appellant’s disability costs are assessed each year for the purpose of paying her Disability Allowance and for inclusion as allowable costs in the assessment of Special Benefit. The appellant receives the maximum Disability Allowance payable. The full amount of her disability costs are then included in the calculation of her entitlement to Special Benefit.

[3] The issue considered by the Authority in this decision was whether or not certain gardening costs could be regarded as allowable disability costs in the assessment of Special Benefit.

[4] The Authority issued a decision on 13 November 2012 dismissing the appellant’s appeal as it related to the inclusion of tree planting costs as allowable costs in the assessment of Special Benefit.

[5] The appellant is paid the maximum Disability Allowance. Her total disability costs are included in the assessment of Special Benefit.

[6] On 13 August 2012 a further review of the appellant’s disability costs was carried out. This resulted in the appellant’s disability costs for the period prior to 11 July 2010 being increased to $109.73 per week. The assessment included $2,216.25 per annum in respect of gardening costs.

Lawnmowing $300.00 per annum Tree trimming $310.00 per annum Gardening $1,706.25 per annum

[8] The only amount claimed by the appellant in respect of gardening costs which was excluded was the sum of $50 in respect of tree planting costs. This cost was excluded on the basis that it could not be seen as essential and not reasonably avoidable.

[9] The Ministerial Directive relating to the payment of Special Benefit requires that all costs included in the assessment of Special Benefit be essential and not reasonably avoidable.

[10] The costs which have not been included in the assessment of gardening costs relate to the cost of planting fruit trees. While it may be desirable for the appellant to have her own fruit trees the Authority did not consider that any costs relating to the planting of fruit trees could be regarded as essential and not reasonably avoidable. The Authority concluded that the Chief Executive was correct to exclude these costs from the assessment of the appellant’s disability costs.

[4] The appeal was set down for hearing on 10 December 2014. Counsel for the respondent prepared a joint memorandum which the appellant has signed confirming that the respondent concedes the Authority (and the respondent before it) erred in excluding the $50 claimed by the appellant in respect of fruit tree planting costs from the appellant’s disability costs, for the purposes of assessing the appellant’s special benefit.

[5] Despite that agreement it is still necessary for the Court to consider the matter on the merits.

[6] The Special Benefit is a discretionary benefit that was formerly provided for in s 61G of the Act. From 1 April 2006 the Special Benefit was replaced by temporary additional support. However the transitional provisions provide that the Special Benefit continues to be payable to people such as the appellant who are receiving it or have applied for it before 1 April 2006.

February 1999 (pursuant to s 5 of the Act). It was amended on various occasions prior to 10 August 2009 (the Direction).

[8] The Direction specifies the process to be followed when the Chief Executive is exercising his discretion as to whether to grant a Special Benefit. It envisages a two-stage process:

[9] In the context of the first stage, part of the formula assessment directs the Chief Executive to ascertain the applicant’s disposable income. That is calculated by deducting allowable costs from the applicant’s weekly chargeable income.

[10] The concept of allowable costs is significant for the purposes of this appeal. It is defined in cl 2.1 as follows by reference to allowable costs:

“Allowable costs”, in relation to an applicant and subject to section 68A of the Act, means any regular essential expenses reckoned on a weekly basis arising out of the special circumstances of the applicant and his or her spouse or partner (if any) which cannot readily be avoided or varied, and include–

(c) Disability related expenses, being expenses of a kind for which a disability allowance would be payable under section 69C of the Act, but not including any counselling costs in excess of the amount paid for that purpose by way of a disability allowance; and

[25] ... No doubt the Minister considered that such costs should be taken into account at the first stage of the special benefit assessment process, so they were specifically included as allowable costs even though they would not have met the general part of the definition. That is a drafting technique which is used on occasion.

[12] The respondent now concedes that the Authority erred by failing to determine whether the $50 claimed in the present case constituted allowable costs by failing to consider whether the costs claimed constituted any of the expenses specified to be included within the definition of allowable costs (in paras (a) to (h) of cl 2.1), or any

²Smith v Chief Executive of Work and Income New Zealand CA181/05, 23 October 2006, at [25].

[13] As the Court of Appeal confirmed, the costs specified to be included constitute allowable costs even if they would not meet the general definition at the beginning of the cl 2.1.

[14] The respondent concedes the Authority did not turn its mind to these matters. In short, the Authority determined the fruit tree planting costs claimed were not allowable costs without regard to the relevant legislative provisions that govern that decision and in doing so the Authority erred. The Authority effectively moved directly to the second stage of the consideration, namely whether the costs were essential and not reasonably avoidable.

[15] For those reasons the respondent concedes that the Court should answer the question of law “yes”. On a strictly legal analysis the Court accepts the concession by the respondent is appropriate.

[16] The issue then is the appropriate order. High Court Rule 21.14 provides that after hearing and determining the question of law the Court must do one or more of the following:

(a) in the case of an appeal, reverse, confirm, or amend the decision in respect of which the case was stated:

(b) in the case of an appeal, remit the matter to the tribunal for reconsideration and decision in accordance with the opinion of the court on the question of law or fact (or both):

[17] The respondent does not seek to have the matter referred back to the Authority. I understand from the joint memorandum that it is now conceded the $50 may be paid so that it is unnecessary to refer the matter back.

[18] Normally the Court would remit the matter back to the Authority for determination. However, given the very limited amount of money involved in this case and the lack of its precedential effect, as I apprehend it, I accept there is no need in this case to refer the matter back to the Authority. In coming to that conclusion I

make it clear that I do not necessarily accept that ultimately the decision to approve the $50 is correct. That however is not a matter that this Court needs to rule on to deal with this appeal.

High Court of New Zealand Decisions

Prasad v Chief Executive of the Ministry of Social Development [2014] NZHC 3156 (10 December 2014)