Wilson v Chief Executive of the Ministry of Social Development [2014] NZHC 386 (6 March 2014)

Last Updated: 16 April 2014

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV 2013-485-2759 [2014] NZHC 386

BETWEEN	RONALD WILSON Appellant
AND	THE CHIEF EXECUTIVE OF THE MINISTRY OF SOCIAL DEVELOPMENT Respondent

Hearing:	28 February 2014
Appearances:	Appellant (In Person) J C Holden for Respondent
Judgment:	6 March 2014

_{JUDGMENT OF WHATA J}

[1] Mr Wilson seeks to have recalled or set aside orders of this Court, granted by consent, remitting his appeal back to the Social Security Appeal Authority. He says that, in short, he was played false by the respondent into believing that he would have a genuine opportunity to ventilate his complaint about the methodology used by the Ministry to calculate his superannuation. But that opportunity has been rendered redundant, because without telling him, the Ministry promulgated new regulations that adopt the flawed methodology. He says that he never would have settled his appeal had he known that the Ministry would go behind his back and seek to adopt the flawed methodology by regulation.

[2] I must resolve whether there is a proper basis for recall or setting aside the consent orders.

WILSON v MINISTRY OF SOCIAL DEVELOPMENT [2014] NZHC 386 [6 March 2014]

Background

[3] Mr Wilson appealed to this Court by way of case stated against a decision of the Social Security Appeal Authority rejecting his claim that the Ministry failed to correctly apply the Social Security (Overseas Pension Deduction) Regulations 1996. He complains that the Ministry has been using an erroneous methodology to calculate overseas payment deductions by using an exchange rate on one day to calculate an average cross rate. The average cross rate is the transacted rates at which the overseas bank transferred overseas pensions to the New Zealand bank

during what is referred to as the cross rate calculation period.¹

[4] It transpires that the parties agreed to settle that appeal, as recorded in a joint memorandum of parties dated 25 October 2013. The resolution is recorded in that memorandum in these terms:

21. The Ministry and the appellant have agreed on an amount to be paid by the Ministry to resolve the alleged underpayment, including up to

31 October 2013, such agreement being without prejudice to the

parties’ respective views on the correct method to be adopted by the respondent to assess the rate of NZS payable to the appellant.

22. The parties agree that the issue may need to be reconsidered by the authority if the parties remain in disagreement as to the methodology and as to whether future deductions made to the appellant’s NZS payments are correct.

[5] There is then a subsequent memorandum dated 22 November, recording that the parties are agreed that the Social Security Appeal Authority reached its decision on the basis of incorrect and/or incomplete information. The parties then sought an order from this Court:

Remitting the matter back to the Authority for it to receive further evidence from the parties and then to reconsider the appellant’s appeal in light of that evidence.

[6] Orders were made accordingly. The orders were sealed on 19 December

_{2013. Relevantly, the sealed order records:}

1. Refer regs 2, 3 and 5 of the Social Security (Overseas Pension Deduction) Regulations 1996 and paragraph 21 of the case stated.

After reading the joint memoranda of the parties dated 25 October 2013 and

22 November 2013, this court orders by consent that this matter be remitted back to the Social Security Appeal Authority for it to receive further

evidence from the parties and then to reconsider the appellant’s appeal in

light of that evidence.

[7] A memorandum was then received from Mr Wilson dated 23 December 2013, seeking that the Court consider not sealing the order of the Court or that it be vacated so that the appeal could be properly considered.

[8] Mr Wilson complains that since the agreement the respondent has gazetted new regulations, the Social Security (Overseas Pension Deduction) Regulations 2013 (“2013 Regulations”) which came into effect on 16 December 2013, replacing the Social Security (Overseas Pension Deduction) Regulations 1996 (“1996

Regulations”). Mr Wilson identifies the issue of principal concern is that definition and use of “average cross rate” has been redefined by stating that a one day rate can be considered an average for the purpose of deduction calculations. More specifically “average” has now been defined as:

3 Interpretation

In these regulations, unless the context otherwise requires,-

...

average, in relation to a calculation period, includes (but is not limited to) the case in which there is only 1 exchange rate (in which case the average is that exchange rate)

[9] Mr Wilson considers that the Ministry has been acting in bad faith in relation to his appeal by failing to bring to his attention this impending change, and that the settlement was a device to avoid having this Court scrutinise the interpretation of the previous regulations and their meaning as to average cross rates.

[10] Mr Wilson then essays various communications which indicate, in his submission, that he was led to believe that the Ministry would in good faith resolve the definition of average cross rate as it affected him for the purposes of properly resolving his appeal, and that he would have the opportunity to ventilate his position in the High Court. Indeed Mr Wilson elaborated in oral submissions that he thought the consent order envisaged that his appeal would be considered by the High Court.

Assessment

[11] It is difficult not to empathise with Mr Wilson. He has a genuine concern about the use of a single reference point to establish an “average”. The Ministry did not tell him about the proposed changes to the regulations. His submissions (if accepted at face value) highlighted that use of a single reference point to establish an average could mean that superannuitants are short changed by $15m a year.

[12] But I do not consider that there is a proper basis for recall or for setting aside the consent orders (assuming in either case jurisdiction to do so). My reasons are:

(a) The consent memorandum, signed by Mr Wilson, is clear. He agreed to refer his appeal back to the Authority for reconsideration. I accept that Mr Wilson thought that the matter was to be considered by the High Court after all relevant information was tabled. But approaching the memorandum objectively and in context, it is clear that the agreement reached envisaged that the Authority would “reconsider” the Appeal. As this Court had not considered the appeal previously, it could not possibly “reconsider” it.

(b) The failure of the Ministry to highlight the impending changes to the regulations was unfortunate but was not an act of bad faith. The Ministry was and is not trying to prevent Mr Wilson from ventilating his basic claim that the methodology was flawed. At most it could be said that the Ministry has seen a problem and sought to rectify it by changing the regulations. But it has otherwise affirmed that the settlement was without prejudice to Mr Wilson’s claim that the single reference point methodology used was and is flawed. My position would have been different had the Ministry said that this fundamental issue was now moot.

(c) As to the new regulations, they do not appear to have retrospective effect, so Mr Wilson is not in fact prejudiced in terms of his appeal.

(d) As to Mr Wilson’s underlying concern that he has been deprived of the opportunity to have this Court express an opinion on the methodology in advance of the new regulations, a decision of this Court, in the context of a judicial review, has binding effect in terms of the decision under review and in terms of the law as it existed at the time of the decision. It does not have prospective effect in this context. It may be that a declaration as to existing rights and obligations may have normative value for the purpose of legislative and regulatory processes. But this Court cannot ordinarily purport to

bind those processes to an outcome.² The effect of the settlement on

Mr Wilson is therefore not sufficient to overcome the otherwise binding effect of the consent orders.

(e) Finally, if as Mr Wilson says the methodology is fundamentally flawed as illogical and unreasonable, then there may be a reviewable issue in relation to the new regulation. I express no view on this, but at first blush it does not appear that Mr Wilson is without a remedy if he is correct.

[13] Accordingly, given the above, I refuse to recall or set aside the consent orders.

Solicitors:

Crown Law, Wellington

² New Zealand Maori Council v Attorney-General [2008] 1 NZLR 318 at [46]; cf: New Zealand

Maori Council v Attorney-General [2013] 3 NZLR 31.