IN THE COURT OF APPEAL OF NEW ZEALAND CA256/05. ANTHONY ARBUTHNOT Respondent. William Young P, Arnold and Ellen France JJ

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1 IN THE COURT OF APPEAL OF NEW ZEALAND CA256/05 BETWEEN AND THE CHIEF EXECUTIVE OF THE DEPARTMENT OF WORK AND INCOME Appellant ANTHONY ARBUTHNOT Respondent Hearing: 24 August 2006 Court: Counsel: William Young P, Arnold and Ellen France JJ U R Jagose and G A J Standish for Appellant T McGurk for Respondent Judgment: 3 October 2006 at 11 am JUDGMENT OF THE COURT A B The appeal is allowed. The judgment of the High Court is set aside and the decision of the Social Security Appeal Authority is reinstated. There is no order for costs. THE CHIEF EXECUTIVE OF THE DEPARTMENT OF WORK AND INCOME V ARBUTHNOT CA CA256/05 3 October 2006

2 REASONS OF THE COURT (Given by William Young P) Introduction [1] Between 1 June 1998 and 9 June 1999 the respondent, Mr Anthony Arbuthnot, was in receipt of two benefits paid to him by the Department of Work and Income New Zealand (WINZ), the community wage and the accommodation supplement. On 8 July 1998 Mr Arbuthnot moved into accommodation which he shared with a Ms Bell. He did not immediately notify WINZ of his change of address. Information as to his change in living arrangements came to the notice of WINZ on 24 February A delegate of the chief executive of WINZ later concluded that Mr Arbuthnot had not been entitled to either benefit and had thus been overpaid a total of $9, A debt in this sum was accordingly established. [2] Mr Arbuthnot sought a review by a benefits review committee which concluded that Mr Arbuthnot had not been living in a relationship in the nature of a marriage with Ms Bell but that he had failed to notify a change of address as required. The upshot was that the benefits review committee: (a) Revoked the delegate s decision in relation to the community wage; but (b) Upheld the decision as to the accommodation supplement in relation to the period between 8 July 1998 (when Mr Arbuthnot changed address) and 24 February 1999 (when WINZ received information about the change of address). [3] Mr Arbuthnot then appealed to the Social Security Appeal Authority. The chief executive sought to relitigate the decision as to the community wage and to defend before the Appeal Authority the decision on the accommodation supplement on the basis that, at the relevant time, Mr Arbuthnot was living in a relationship in

3 the nature of marriage with Ms Bell. The chief executive s entitlement to do so was challenged by Mr Arbuthnot. [4] In an interim decision, the Appeal Authority concluded that the chief executive could not challenge the community wage decision (a conclusion now accepted by the chief executive) but could nonetheless, on the hearing of Mr Arbuthnot s appeal, defend the decision of the benefits review committee as to the overpayment of the accommodation supplement on the basis of Mr Arbuthnot s alleged conjugal status. On Mr Arbuthnot s further appeal to the High Court, Goddard J held to the contrary. [5] The chief executive now appeals to this Court with leave. The legislative scheme [6] It is common ground that a beneficiary s conjugal status is relevant to eligibility for both community wage and accommodation supplement. For these purposes, s 63(b) of the Social Security Act 1964 permits the chief executive to regard: as husband and wife any man and woman who, not being legally married or in a civil union, have entered into a relationship in the nature of marriage. [7] The scheme of ss 10A and 12J of the Social Security Act is that specified decisions or determinations made directly by the chief executive are subject to an immediate right of appeal to the Appeal Authority whereas decisions or determinations made under delegation (as the relevant decisions in this case were) must first be the subject of review by a benefits review committee established under s 10A. In the latter case, there is a right of appeal against a decision or determination that has been confirmed or varied by a benefits review committee, see s 12J. [8] Section 10A(2)-(9) provides for the establishment of, and procedures to be adopted by, benefit review committees. They are established by the Minister and consist of one community representative and two officers of WINZ. It would not be

4 right to regard them as providing a purely internal review of disputed decisions but likewise they are certainly not fully independent tribunals either. [9] The chief executive has no right of appeal against a decision made by a benefits review committee. Presumably this is because such a right of appeal would be unnecessary given s 81 which provides: 81 Review of benefits (1) The chief executive may from time to time review any benefit in order to ascertain (a) (b) Whether the beneficiary remains entitled to receive it; or Whether the beneficiary may not be, or may not have been, entitled to receive that benefit or the rate of benefit that is or was payable to the beneficiary. (2) If, after reviewing a benefit under subsection (1) of this section, the chief executive is satisfied that the beneficiary is no longer or was not entitled to receive the benefit or is or was entitled to receive the benefit at a different rate, the chief executive may suspend, terminate, or vary the rate of the benefit from such date as the chief executive reasonably determines. The existence of an earlier decision by a benefits review committee does not exclude the chief executive s power of review under this section, although obviously the chief executive is not likely to go behind such a decision without good reason, for instance if more factual information becomes available. [10] Section 12M addresses the procedure to be followed by the Social Security Appeal Authority on appeal: 12M Hearing and determination of appeal (1) Subject to subsection (7) of section 12K of this Act, every appeal against a decision of the chief executive shall be by way of rehearing; but where any question of fact is involved in any appeal, the evidence taken before or received by the chief executive bearing on the subject shall, subject to any special order, be brought before the Authority as follows: (a) As to any evidence given orally, by the production of a copy of the notes of the chief executive or of such other material as the Authority thinks expedient:

5 (b) As to any evidence taken by affidavit and as to any exhibits, by the production of the affidavits and such of the exhibits as may have been forwarded to the Authority by the chief executive, and by the production by the parties to the appeal of such exhibits as are in their custody. (2) Notwithstanding anything in subsection (1) of this section, on any appeal against a decision or determination of the chief executive, the Authority may rehear the whole or any part of the evidence, and shall rehear the evidence of any witness if the Authority has reason to believe that any note of the evidence of that witness made by the chief executive is or may be incomplete in any material particular. (3) The Authority shall have full discretionary power to hear and receive evidence or further evidence on questions of fact, either by oral evidence or by affidavit. (4) The Authority shall also have regard to any report lodged by the chief executive under section 12K of this Act and to any matters referred to therein and to any evidence tendered thereon, whether or not such matters would be otherwise admissible in evidence. (5) In the exercise of its powers under this section the Authority may receive as evidence any statement, document, information, or matter which in the opinion of the Authority may assist it to deal with the matters before it, whether or not the same would be admissible in a Court of Law. (6) The Authority shall, within the scope of its jurisdiction, be deemed to be a Commission of Inquiry under the Commissions of Inquiry Act 1908, and subject to the provisions of this Act, all the provisions of the Act, except sections 2, 10, 11, and 12, shall apply accordingly. (7) Subject to subsection (2) of section 12I of this Act, in the determination of any appeal the Authority may confirm, modify, or reverse the decision or determination appealed against. (8) Notwithstanding the provisions of subsection (7) of this section, the Authority may refer to the chief executive for further consideration, the whole or any part of the matter to which an appeal relates, and where any matter is so referred the Authority shall advise the chief executive of its reasons for so doing and shall give such directions as it thinks just as to the rehearing or reconsideration or otherwise of the whole or any part of the matter that is so referred. The decision of the Appeal Authority [11] The key reasoning of the Appeal Authority appears in the following passage from its decision: [19] In our view the only issue to be determined by this appeal is the issue of the appellant s eligibility for Accommodation Supplement and

6 whether or not an overpayment should have been established against him in that regard. The period to be considered will be the full period covered by the Benefits Review Committee hearing. It is possible that the Chief Executive may wish to adduce evidence relating to the issue of whether or not the appellant was living in a relationship in the nature of marriage if that evidence is relevant to the appellant s eligibility for Accommodation Supplement. The Chief Executive will need to advise the appellant and the Authority no later than two weeks prior to the date of hearing if she intends calling such evidence. [20] We do not accept that the Authority is limited in its inquiry as to the appellant s eligibility for Accommodation Supplement to a consideration of the reasons given by the Chief Executive and the Benefits Review Committee for establishing an overpayment. As we have previously noted, appeals before the Authority are conducted by way of rehearing. The Authority conducts its own inquiries as to the merits of a particular case and does not simply review the findings of the Chief Executive or the Benefits Review Committee. We note moreover the comments of the High Court in Margison v The Chief Executive of the Department of Work and Income, High Court, AP 141-SW00 (Auckland Registry) 6 August 2001, Laurenson J, at paragraph 23: Given the inquisitorial nature of the function of the Commission of Inquiry, the express reference to the Authority having the same discretion as the Chief Executive in relation to the same matter, and the wide range of powers in relation to its determination, it seems to me that the Authority is not prevented from coming to a different conclusion regarding the original exercise of discretion and may indeed exercise that discretion differently. And at paragraph 27: On an appeal to an Authority I am satisfied that once the Authority is faced with an appeal it is empowered by the inquisitorial nature of its functions, its original power of decision and its full range of remedies, to seek out the issues raised by the appellant s case and determine these afresh and establish whether the appellant can provide the justification for doing so or not. The judgment of Goddard J [12] In the High Court, Goddard J reviewed the legislation and some authorities which had been cited to her. She then went on to say: [30] The effect of the Committee s interim decision on the s 63(b) issue was to revoke the Chief Executive s decision to establish an overpayment on the basis of that matter. The Chief Executive, having no right of appeal from that revocation, is bound by it. It must therefore be regarded as a final determination, whether or not a benefits review committee only has powers of internal review. To permit otherwise and allow the s 63(b) determination

7 to be revived on the back of Mr Arbuthnot s appeal would amount to an abuse of process. [31] It cannot be overlooked that if Mr Arbuthnot had not exercised his right of appeal from the Benefits Review Committee s decision, the Chief Executive could not now purport to seek a rehearing of the s 63(b) issue. Furthermore the decision to permit a rehearing on that issue carries the obvious potential for conflicting factual findings under s 63(b) in relation to two separate benefits. [32] If new information were to come to hand the Chief Executive could no doubt establish a new overpayment on the basis of that new information under s 81 of the Act and seek to recover the additional sum under s 86. In that event, Mr Arbuthnot would be entitled to another review by a benefits review committee and a fresh right of appeal. The Chief Executive cannot however seek to do this in the context of the present review and appeal process. Discussion An appeal by way of rehearing [13] The expression appeal by way of rehearing is applied to appeals from the District Court to the High Court under the Summary Proceedings Act 1957 and the District Courts Act 1947, and likewise appeals from the High Court to this Court under the Judicature Act As well, it appears in many other statutory contexts. What is envisaged was discussed by Somers J in Pratt v Wanganui Education Board [1977] 1 NZLR 476 at 490. A tribunal hearing such an appeal is required to consider for itself the issues which had to be determined at the original hearing. [14] It is important to recognise that Mr Arbuthnot s right of appeal is not against the decision of the benefits review committee but rather against the original decision made by the chief executive s delegate as varied by the benefits review committee (see s 12J) and that under s 12I, the Appeal Authority has all the powers, duties, functions and discretions of the chief executive in relation to the original decision. This suggests a rehearing in respect of the original decision made by the delegate rather than of the decision of the benefits review committee. [15] In any event, an appeal by way of rehearing is addressed to the substance of the decision appealed against - the end result and not steps in the reasoning. It is

8 that end result, which is the decision or determination, which is under appeal. To the extent that it is right to treat the appeal as being against the decision of the benefits review committee, the conclusion of the benefits review committee in favour of Mr Arbuthnot on his conjugal status was not in itself a decision (or a determination) rather the relevant decision was that he was not entitled to the accommodation supplement. And if ordinary appellate principles apply, the chief executive is entitled to defend that decision on grounds other than those relied on by the benefits review committee. Should the ordinary appellate approach be taken in this case? [16] Mr McGurk argued we should approach the review and appeal structure provided for by the Social Security Act not on the basis of normal appellate principles but rather by reference to the specialised nature of the jurisdiction involved. [17] We accept that there are logistical and resource implications for beneficiaries who become involved in disputes with WINZ. But when the legislature chose to use the well known phrase appeal by way of rehearing in respect of the jurisdiction of the Appeal Authority, we think it clear that the legislature used that expression in its normal meaning - a conclusion which is consistent with s 12I(1). Is the inconsistency between the chief executive s contentions as to conjugal status and the decision of the benefits review committee as to the community wage a critical consideration? [18] It would have been an odd result if the Appeal Authority concluded that Mr Arbuthnot s conjugal status disentitled him to the accommodation supplement but that he nonetheless retained his entitlement to the community wage on the basis of the benefits review committee s different approach to that status. [19] The arguments advanced by Mr McGurk around this consideration in substance came down to two interrelated propositions. First, that the decision of the benefits review committee created an estoppel. Secondly, that it was an abuse of

9 process for the chief executive to challenge the conjugal status determination on the accommodation supplement appeal when the chief executive had no right of appeal from the benefits review committee decision on the community wage in respect of which the same determination was relevant. [20] We accept that the chief executive does not have a right to appeal against decisions of the benefits review committee, but as indicated, this is because, on our appreciation, such a right of appeal is unnecessary. Of course we would expect the chief executive to act reasonably and in the ordinary course of events to respect decisions of a benefits review committee unless new material comes to light which warrants a different approach. But that view rests on principles of good administration rather than anything akin to an estoppel an estoppel which would not be in conformity with the scheme of the statute, particularly given the broad rights of review conferred on the chief executive under s 81. For the same reasons, we do not regard the chief executive s desire to rely on conjugal status considerations at the appeal as being an abuse of process. [21] So we accept that the odd result postulated in [18] is possible on our approach but we see it as a consequence of the legislative scheme and in any event subject to correction by the chief executive under s 81. We might add that if the chief executive were, prior to the hearing of the appeal before the Appeal Authority, to revisit the community wage entitlement (perhaps on the basis of new evidence), it would be odd if he or she could not relitigate the conjugal status issue at hearing of the appeal on the accommodation supplement. Mootness? [22] As long ago as December 2001 the chief executive disestablished the balance of the debt that arose from the overpayment of the accommodation supplement (which by then was approximately $2,000). This decision arguably rendered moot the appellant s then appeal to the High Court. The appeal to Goddard J was nonetheless prosecuted without objection by the chief executive.

10 [23] Likewise in this Court, Mr Arbuthnot has not sought to rely on mootness as a basis for resisting the chief executive s appeal. Although it is therefore unlikely in the extreme that the proposed appeal to the Appeal Authority will ever proceed, we have thought it right to determine the issue placed before us for consideration. Determination [24] The appeal is allowed. The judgment of the High Court is set aside and the decision of the Social Security Appeal Authority is reinstated. There is no order for costs. Solicitors: Crown Law Office, Wellington

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