My Case before the High Court
This case is reported as Broadbent v Ministry of Social Development 2017 NZHC 1499

Some Quotes from the Judge in Broadbent v Ministry of Social Development 

[3] The key issue in this appeal (which is essentially a test case) is how any gifting that falls within the gifting threshold of $27,000 per annum permitted under the relevant social security legislation is to be treated when a person subsequently applies for a residential care subsidy. Eligibility for such subsidies is subject to a two stage means testing regime set out in the Social Security Act 1964 (“Act”).

[24] The Ministry may also look back, indefinitely, to what has happened in the years prior to the gifting period. In those years a person is permitted to make larger gifts, up to $27,000 per annum. (I refer to these as “permissible gifts”, in order to distinguish them from “allowable gifts”). If a person gifts more than $27,000 per annum, however, then they have deprived themselves of any excess sum. In that event the Ministry may conduct the means assessment process as if that deprivation had not occurred, pursuant to s 147A of the Act. It is not required to do so, however. 

[33] On appeal, Mr Upperton submitted that the Authority was correct in this conclusion. He summarised the Ministry’s argument as follows: When a person gifts something worth $27,000.00 or less, they do not deprive themselves of that asset. However, when a person makes a gift of an asset of any value, they deprive themselves of any income associated with that asset, and the Ministry has discretion whether to conduct the person’s income assessment as if the deprivation had not occurred. 

[35] Mr Upperton submitted that the sub-clauses in reg 9B can be split into two categories: those relating to “deprivation of assets” and those relating to “deprivation of income”. Sub-clauses (a), (b) and (c) are said to relate to deprivation of assets. Sub-clauses (d), (e) and (f), on the other hand, relate to deprivation of income. It is apparent from the Authority’s decision that it agreed with this submission.26 

[37] Mr Broadbent, on the other hand, submitted that the distinction that the Ministry seeks to draw is entirely artificial. He submitted that, properly construed, reg 9B(a) relates to both assets and income. As such, once a gift is transferred, that is the end of the matter. The income associated with that asset cannot be factored back in when calculating an applicant’s income. The logic is simple: when one gifts an asset they gift any income associated with that asset, because they no longer hold it. Mr Broadbent submitted that if reg 9B(a) was intended only to apply to the asset assessment process then the words “or income” would have been left out of the first sentence of reg 9B.

[42] The absolute or unconditional gift of an asset to another person necessarily includes all the rights, benefits and entitlements associated with that asset, including any right or entitlement to future income. Hence, as Mr Broadbent noted, on a normal property conveyance the parties’ lawyers will apportion the rents between the vendor and the purchaser, based on who owns the property when the rents are derived. As soon as the property has been sold, the vendor is no longer entitled to receive income from it. The vendor has not, however, “deprived” themselves of income by selling the property. They have simply realised capital, which they may reinvest elsewhere, or simply spend. The income from the property is linked absolutely to ownership of the property.

[44] The statutory scheme (including reg 9B(a)) must be interpreted consistently with these longstanding principles of the common law. There is nothing to suggest that Parliament envisaged that either allowable gifting (in the sum of $6,000 per annum) or permissible gifting (in the sum of $27,000 per annum) were intended to be conditional in nature. In the absence of some clear indication to the contrary, such gifting must be considered to be unconditional. As I have outlined, the unconditional gift of an asset necessarily involves the relinquishment of all future income streams from that asset. Included within the gift of an asset is a gift of all the rights, benefits and entitlements associated with that asset. 

[46] I do not accept the Ministry’s submission that such an interpretation is inconsistent with the purposes of the Act, which include that, where appropriate, people should use the resources available to them before seeking financial support from the state. The specific purposes of Part 4 are also relevant here. They include that the purpose of Part 4 is to specify the circumstances in which older people are required to pay for their long-term residential care.40 Part 4 provides specific guidance as to those circumstances, including provisions that determine precisely what resources should be considered as being properly available to a person to fund their own care. Part 4 excludes from consideration gifts of up to $6,000 per annum during the gifting period and gifts of up to $27,000 per annum in any year prior to that. As the Court of Appeal observed in B v Chief Executive of the Ministry of Social Development, people are not allowed to preserve their resources for the use of their families or themselves by gifting beyond a permitted limit.41 In this case that “permitted limit” has not been exceeded 

[47] There are obvious practical or policy reasons why Parliament would choose to specify permissible gifting thresholds, rather than simply leave the matter entirely to the discretion of the Ministry. As Mr Broadbent put it in his submissions: According to the Ministry's contention and the Authority's decision any gift no matter how small constitutes deprivation of income. This means that to apply a fair welfare system every New Zealander needs to be asked about every gift they've ever made and be assessed on the income they have deprived themselves of, by doing so. 

[51] Whether the current regime is unduly generous or not is ultimately a matter for Parliament. I have found that the interpretation advanced by the Ministry, while it may meet the Ministry’s policy objectives, does not accord with the statutory scheme, properly construed.

 [55] For the reasons outlined, I find that the Authority did err in law in determining that Mrs Broadbent and her late husband had deprived themselves of income.

 
 

 

 

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