Residential-Care Subsidy Update - Eligibility Improved

Thursday, July 20, 2017

The High Court, in Broadbent v The Chief Executive of the Ministry of Social Development [2017] NZHC 1499 (a test case), has told the Ministry of Social Development that it is not correctly applying the means testing assessment for income when determining someone's eligibility for a residential-care subsidy.

On Mrs Broadbent's application for a rest home subsidy the Ministry accepted that her "permissible" gifting to her trust of $27,000.00 per annum prior to the period commencing on the date five years before the date on which she applied for a subsidy, did not disqualify her for a subsidy at the first asset test stage of the means assessment.  However when it conducted the second stage of the means test concerning income the Ministry's policy or practice of deeming that the applicant had deprived herself of the income streams associated with the earlier gifted assets was applied.  Accordingly it quantified the amount and then treated it as her income for the purposes of the income assessment process.  As a result it put her income above the income threshold necessary for her to qualify for a residential care subsidy and it was declined.   Mrs Broadbent therefore had to pay the maximum sum towards her rest home care.

The Ministry was held by the Court to be wrong in treating this so called deprived income as Mrs Broadbent's own.  In saying this the Court applied basic common law principles concerning the nature of gifts.  The Judge, Justice Katz, noted that whilst the Ministry's practice may well be consistent with its policy objectives that people should use the resources available to them before seeking financial support from the state, it did not accord with the statutory scheme of the Social Security Act 1964 and the Social Security (Long-Term Residential-Care) Regulations 2005.  Rather the statutory scheme had to be aligned with the longstanding principles of common law of what is an unconditional gift of an asset to another person, namely that it includes all the rights, benefits and entitlements associated with the gifted asset including any right or entitlement to future income.  The Judge said that "there is nothing to suggest that Parliament envisaged that either allowable gifting (in the sum of $6,000.00 per annum) or permissible gifting (in the sum of $27,000.00 per annum) was intended to be conditional in nature.  In the absence of some clear indication to the contrary, such gifting must be considered to be unconditional".  In Mrs  Broadbent's case her gifting was no different to the standard unconditional gifting settlors make to a trust which did not retain the right to the income which the asset might in the future generate.  Accordingly the Ministry was wrong to factor that income actual or notional back into the means assessment process when assessing her eligibility for a residential-care subsidy.

This judgment was issued on 30 June 2017.  The Ministry has a right to appeal it within 20 working days.  It will be interesting to see if that occurs and if any legislative amendment ends up happening.

If you have any questions or concerns about this topic please contact Peter Fuscic on (09) 306 6746 ( from our Auckland City Office.


This article is published for general information purposes only.  Legal content in this article is necessarily of a general nature and should not be relied upon as legal advice.  If you require specific legal advice in respect of any legal issue, you should always engage a lawyer to provide that advice.   


Recent Posts


Limitation Act 2010 KiwiSaver Broadbent v Ministry of Social Development Personal Properties and Securities Act 1999 Administrators duty Family Trusts Consumer credit contracts Contract and Commercial Law Act 2017 Marriage Part payment Commercial Law Domestic Violence Act 1995 Wills Act 2007 Section 11 Employment Deceased's wishes Ministry of Social Development Section 15 Compensation Ship Registration Loss of income Re Estate of Campbell Family Protection Act 1955 Re Estate of Feron Asset Protection Subsidies Trusts Testamentary capacity Gifts Physical abuse Character requirements Valid wills Tenant Resident Property (Relationships) Act 1976 Maritime Law Twelve years Albany Office SMC Legislation update Protector SN v MN [2017] NZCA 289 Changes Protection Order Executors duty Section 182 Family Proceedings Act 1980 Limitation Act 1950 Zero Hour Contracts Immigration New Zealand Recovery of money Constructive trusts Ilott v Mitson 2017 UKSC 17 Break up Shareholders' Agreement Interpretation Act 1999 Section 29 Principal Mortgagor Terms of Trade Expression of interest Business Erceg v Erceg Validity of Wills Sale of Goods Financial services Lease Titles Amundson v Raos Economic disadvantage Interpretation of documents Partnership based work visa Section 15A Duress Trust Confidentiality Eviction ''Best Endeavours'' Maritime Lien Acknowledgment Six years Privacy Act 1993 Claims against estates Violence Rest Home Subsidies Personal Will that do Mortgagee Trusts Bill Undue influence Psychological abuse Wills Act 2007 Division of Functions Tenants Due Diligence Health and Safety Reform Bill Limitation defence Financial Markets Conduct Act 2013 (FMCA) Estate Administration WINZ Income Vessel surveyor Property Landlord Creating Trusts Charities Mortgage Hawkes Bay Trustee Company Limited v Judd Financial services provider (FSP) Seperation Ship Will White v White Testamentary Promises Elder Law Wilson v Donnellan Invalid wills Blackwell v Hollings Fair Trading Act 1986 Interpretation Act 1999 Visa application Verbal abuse Civil union De facto Ship's Mortgage Trust Check Up Testamentary writing Tamarapa v Byerley Financial products Commercial Resident Visa Wills Act 2007 Section 14 Credit Contracts and Consumer Finance Act 2003 (CCCFA) Auckland Office Lease Contract Law Residential Immigration Document Disclosure Wills Act 2007 Section 8 Work and Income Temper Trustee Duties Limitation period Body Corporate Case Study Reckless Trading Trust busting Directors' Duties Anti-money laundering (AML) Skilled migrant Abuse Ministry Gifting Insurance Partner of resident Testamentary freedom Charity Living standards Intellectual Property Repayment Pattern of offending Commercial Property Beneficiary Rights Litigation Grey Power Unfair contract terms Lankow v Rose Fair share Interest Offending Skilled migrant points Company Law Acknowledgment of Debt Clayton case Financial Advisers Act 2008 Companies Act 1993 Charity begins at home Murrell v Hamilton Frustration Lump sum Relationship Property Vessel Sale and Purchase Vessel survey Domestic violence Wills