Home | Databases | WorldLII | Search | Feedback Human Rights Review Tribunal of New Zealand

Idea Services Limited v Attorney-General on behalf of the Ministry of Health [2011] NZHRRT 11 (11 April 2011)

Last Updated: 15 April 2011

[2011] NZHRRT 11

Reference No. HRRT 43/09

BETWEEN IDEA SERVICES LIMITED

Plaintiff

AND ATTORNEY-GENERAL

ON BEHALF OF THE MINISTRY OF HEALTH

Defendant

BEFORE THE HUMAN RIGHTS REVIEW TRIBUNAL

Mr R D C Hindle Chairperson
Ms M Sinclair Member
Dr A D Trlin Member

HEARING: 13 to 17 & 22 September 2010; 28 October 2010 (Wellington)

APPEARANCES:

Mr A S Butler, Ms S P Jerebine & Mr O C Gascoigne for plaintiff (September 2010)
Mr A S Butler, Mr O C Gascoigne & Mr P N Smith for plaintiff (28 October 2010)
Mr C Linkhorn & Mr G Robins for defendant

DATE OF DECISION: 11 April 2011

DECISION

CONTENTS

A INTRODUCTION

[1] This case concerns the funding of community participation activities for people who have intellectual disabilities, and are over 65 years of age.[1] In its most basic form, Idea Services’ claim is that a decision made by the Ministry of Health[2] in March 2005 to stop funding in respect of a subset of that group amounts to discrimination on the basis of age, and is therefore prohibited by Part 1A of the Human Rights Act 1993.[3] Idea Services asks for declaratory relief, and damages.

[2] The MoH does not accept that there has been any discrimination. In the alternative it says that, even if prima facie discrimination is found, it is of a kind that is justified under s.5 of the New Zealand Bill of Rights Act 1990.[4]

[3] It was agreed before the hearing that all questions relating to the relief that might be granted if Idea Services were to succeed in its primary claim would be left to be dealt with at a later stage. The focus of this decision, therefore, is as to whether any unlawful and unjustified discrimination has been established on the evidence that we heard.

B SOME PRELIMINARY MATTERS

[4] There are no issues about our jursidiction to deal with this case.[5] In particular, there was no contest about Idea Services’ standing to bring the claim - although the details of the relationships between the MoH, Idea Services, those who use the services that were funded via the MoH before March 2005, and possibly others[6], may become relevant if the question of damages has to be assessed in due course. For the present it is enough to say that the MoH has accepted Idea Services’ right to bring this matter to this Tribunal.[7]

[5] The assessment of discrimination always depends on the relevant context.[8] It is therefore necessary to begin by setting out the background in some detail. That done, however, there was a considerable measure of common ground between the parties as to the methodology we should follow in assessing the evidence. Our discussion about the applicable legal principles is therefore confined to relatively few points. The significant issues we have to decide relate to the way in which the test for discrimination, and/or what might be regarded as justifying any prima facie discrimination found, should be applied to the facts.

[6] We begin by introducing the parties in the matter in more detail.

C THE PARTIES

Idea Services

[7] The plaintiff is Idea Services Limited. Idea Services is a subsidiary of IHC New Zealand Incorporated.[9]

[8] IHC is an organisation that has been committed to advocating for the rights, inclusion and welfare of all people with intellectual disabilities in New Zealand since its establishment in 1949.[10] Amongst other activities, it manages a range of volunteer services to support people with intellectual disabilities to lead satisfying lives in the general community. IHC is the largest provider in New Zealand of services to people who have an intellectual disability.

[9] IHC has received government funding for the services that it delivers since 1959. Today, most of its services are delivered through its subsidiary Idea Services. Idea Services has specific responsibilities to support individuals who have intellectual disabilities and their families in respect of residential support; supported independent living; day support services, and including vocational support services; respite care; home support; contract board arrangements; shared care; and foster care services.

[10] Funding for these services comes through contracts that Idea Services has with various government agencies. These include the Accident Compensation Corporation, Child Youth and Family, and (of most direct relevance in this case) the MoH.

[11] We will need to set out the details of the arrangements for funding of community participation activities in more detail below. Before doing so, however, we note that between the hearing of the evidence and Crown submissions in this case in September 2010, and the final day of the hearing on 28 October 2010, Idea Services was placed into statutory management. It is agreed, however, that this development makes no difference to anything that we have to decide at this stage of this litigation.

The Ministry of Health and the Ministry of Social Development

[12] On the Crown side, there are two Ministries most directly connected with the matters we have to determine. These are the MoH and the Ministry of Social Development.[11]

[13] Broadly speaking[12], the MSD provides the funding that allows intellectually disabled people under 65 years of age to engage in community participation activities[13]. When people in that group reach 65 of age they are sometimes described as ‘retiring’ from the MSD, or as being ‘ex-MSD’, reflecting the fact that the MSD no longer funds community participation activities for them after age 65. Although there may be room for some debate about the semantics, these are convenient ways of identifying the group of people most directly affected by the MoH decision which is at issue in this case.

[14] Before March 2005, when a service user retired from the MSD the MoH would take over the responsibility for funding community participation activities for that person.

[15] This litigation is the result of a decision that was made by a Senior Management Team (often referred to simply as ‘the SMT’) of the MoH on 21 March 2005, essentially to the effect that the MoH would no longer fund community participation activities for intellectually disabled people after they retire from the MSD.[14]

[16] As will be described, since the SMT made its decision there has been dialogue between the MoH, the MSD and relevant Ministers on the question of which of the two Ministries should have future responsibility for funding community participation activities for those who might qualify but, having turned 65, have retired from the MSD.[15] It is clear that there have been differences of view, and that the discussion between the two Government agencies has not yet reached a conclusion. At the date of the hearing in this Tribunal questions about whether, when, and how the MoH and the MSD might allocate responsibility for providing the relevant funding were unresolved.

[17] The MoH did not, however, hesitate to accept that as long as the debate is unresolved there is what was somewhat euphemitically described as a ‘funding gap’. The MoH agrees that intellectually disabled people who are over 65[16] should still be able to access appropriate community participation activities. But the MoH does not want to pay for them and – despite past practices - it no longer accepts that it has any responsibility to do so. Since it has declined to pay for the services, and the MSD is not paying for them either, there is an acknowledged shortfall or ‘gap’ in the funding.[17]

[18] Rather than have to face the possibility that some service users under its care might be denied access to community participation activities while the debate between the MoH and the MSD unfolds, Idea Services has been paying the costs involved in the interim. All service users in its care have in fact been able to continue to engage in community participation activities notwithstanding the SMT decision. But Idea Services says that, to date, this has given rise to an unrecovered financial burden in the order of $3 million. The costs will continue, and increase as more and more MSD service users retire from the MSD. From Idea Services’ point of view, the position is untenable.

[19] It is important to note that the MSD was not a party to this litigation, and was not separately represented[18]. Documents produced in evidence (including Cabinet Minutes and other official papers) give an indication as to the approach and attitude of the MSD to these questions, but we have not had the benefit of any direct evidence or other input from the MSD. We do not make the point as a criticism, but only to explain that we have a more limited understanding of the MSD’s position on these issues than we do of the MoH’s position. It is at least clear, however, that whatever views it may have the MSD has not stepped in to fill the ‘funding gap’ created by the unilateral decision made by the SMT.

The ‘ ... executive branch of the Government of New Zealand ... ’

[20] The claim has been brought under Part 1A of the HRA. The Part applies to the persons and bodies referred to in s.3 of the New Zealand Bill of Rights Act 1990 namely “ ...the legislative, executive and judicial branches of the Government of New Zealand, and every person or body in the performance of a public function, power, or duty that is imposed on that person or body by or pursuant to law.”[19]

[21] When the SMT made its decision it was acting as a body exercising a public function, and Part 1A applied to it for that reason. However when one looks at the question of funding of community participation activities for people with intellectual disability generally, there is also a wider perspective, in which the problem can be seen as relating to acts or omissions of the executive branch of the Government of New Zealand – that is, without distinction between the MoH and the MSD. Of course the delivery of government funding will always be through specific Ministries and Departments, but when all is said and done the anti-discrimination standard set by NZBORA and Part 1A of the HRA applies to the executive branch of ‘the Government of New Zealand’.

[22] The MoH has not suggested that the Government should not be funding the activities in issue in this case at all. Rather the MoH’s objection is that it does not consider that the funding should have to come out of its budget. It considers that the funding ought to be coming from the MSD budget. And, although we have not heard directly from the MSD, we cannot find anything in the papers that we have seen to suggest that the MSD would say that the Government ought not to be funding the activities in issue either. Rather, it seems that the MSD has been reluctant to agree to the particular outcomes the MoH has proposed.

[23] The result is unfortunate. There is no dispute that the services are needed. As far as we can see, all involved agree that they ought ultimately to be be funded by Government. But funding has nonetheless been cut off while these two agencies of Government argue out what is in effect a boundary dispute between them as to where their respective responsibilities lie. In the meantime the MoH, the MSD and the Government have been shielded from any potentially adverse consequences of the decision not to fund community participation activities for intellectually disabled people who have retired from the MSD. That is because Idea Services has been carrying the cost.

[24] The papers that we have seen do not convey any sense that the Government agencies involved regard the issue as requiring urgent action, or even as deserving any very prompt attention at all. To the contrary, it is now over six years since the SMT made its decision, but no resolution as between the MSD and the MoH has been achieved. Were it not for Idea Services’ commitment to keep the service users in appropriate community participation activities in the interim, the issue would almost certainly have had to be resolved by the Government much sooner.

[25] We return to the matter below, but we will say at the outset that there must be a limit on the extent to which ‘ ... the executive branch of the Government of New Zealand ...’ can escape responsibility for an act or omission that is in contravention of Part 1A of the HRA just because one of its agencies considers that another of its agencies should be meeting the obligation in question.

[26] In any event, when we refer to ‘Government’ (with a capital ‘G’) in this decision, we are doing so deliberately, in order to identify responsibilities under the HRA that are wider than simply those of the MoH and/or the MSD.

The service users

[27] Last, but by no means least, we mention the service users themselves.

[28] As it happens, the particular group of service users with whom we are concerned is reasonably small at present.[20] For reasons which follow, however, the group will grow to become more sizeable in future.

[29] The people ultimately affected by the SMT decision all have intellectual disabilities. To a greater or lesser extent, they need support in order to be able to engage in activities in their communities, and so as to lead satisfying and fulfilling lives.

[30] An expert gave evidence for Idea Services about what it means to say that a person is ‘intellectually disabled’. She proposed that three criteria need be met. First, the person must have an IQ of 70 (+/-5) or below, thus being at or below the second percentile of the population as assessed on culturally and age appropriate standardised intelligence tests. Secondly, the disability must have first occurred before the age of 28 years. The third criterion is that the person will have deficits in two or more of nine ‘adaptive function domains’ – namely: communication; self-care; home living; social skills; community use; self-direction; health and safety; functional academics; and work. A person with intellectual disability will typically be different from his or her non-intellectually disabled peers in a number of different ways relating to things like: cognitive functioning; communication; social interaction and development. Challenges arising out of intellectual disability include problems with: self-motivation; inability to be independent; restrictions to mobility; and every-day activities such as reading, writing, toileting, socialising and so on can be very difficult.[21]

[31] The evidence for Idea Services also explained that older people with intellectual disability are less likely to have ‘natural supports’, because many do not have children of their own and so cannot hope that a younger generation will support them in their later years. At the same time, those who might have supported them when they were younger (for example, their parents and siblings) are more likely to have passed away, or themselves find it more and more difficult with increasing age to provide the support needed.[22]

[32] The debate in this case relates to intellectually disabled people who are over 65 years of age and who live in a ‘group home’ setting, in a contracted boarding arrangement, or in a supported independent living situation. All of these options are designed to enable disabled persons (including those with intellectual disabilities) to live in the wider community. Those who live in those kinds of settings receive residential support funding to do so.[23] The central focus of this case has to do with the funding that is required to provide intellectually disabled people living in a group home, under contract board, or in a supported independent living situation with opportunities to leave their homes, and engage in activities in the community.

[33] We were given information about the circumstances of a small number of people having different intellectual disabilities. We think these were given to illustrate the kinds of obstacles that people with intellectual disability encounter in carrying out even the most basic daily routines, rather than to try to define the group under consideration. Even so, the small number of examples given did lead to some discussion in the submissions as to whether or not the information about the particular service users gave a representative picture of relevant circumstances, and whether the sample was a sufficient basis from which to make reliable generalisations.

[34] Of course great care needs to be taken in extrapolating general propositions from small samples. But there is unarguably a group of people in New Zealand who suffer from intellectual disability of one kind and another. The abilities of individuals in that group to function in society varies depending on the nature of their particular disability or disabilities, their economic and social circumstances, the availability of natural or other supports, and no doubt many other factors as well. While the precise boundaries may be difficult to draw, there cannot be any doubt that there is a group of intellectually disabled people in New Zealand (including some who are over 65 years of age) who need to have support if they are to take part in activities in their communities in any meaningful way.

[35] In any event, and notwithstanding that there was some debate about the particular examples in the evidence, as already noted the MoH witnesses we heard from accepted that there is what they called a funding ‘gap’[24] for the provision of community participation activities for intellectually disabled people over the age of 65. That acknowledgement necessarily includes acceptance that there is a group of people for whom the SMT decision created the gap[25]. It has not been suggested at any point that intellectually disabled people over the age of 65 who can benefit from community participation activities, should simply be left without them altogether.

[36] As a result this is not really a case about whether or not there is a group of intellectually disabled people for whom community participation activities are needed and should be provided. There is no doubt that there is such a group of people, and that the services at issue should be available to all in the group who need and will benefit from them. Nor is it a case about whether or not the Government should fund the activities in issue. At the risk of repetition, no-one has suggested that it ought not.[26]

[37] Within the broad group of intellectually disabled people who are over 65 years of age, however, there are some qualifications to be noted:

• [a] Some in the group were at one time held in various psychiatric institutions. When the insitutions were dis-established, the MoH was given responsibility to fund their involvement in community participation activities. These people were referred to in evidence as ‘de-institutionalised’ service users. The MoH accepts that its responsibility to de-institutionalised service users is ongoing, and funding of community participation activities for people in that group has continued[27];
  
• [b] Others in the group have funding for community participation activities through the Accident Compensation Corporation, no doubt because their disabilities are ultimately accident-related. This group is unaffected by the SMT decision;
  
• [c] The MoH also funds (and has continued to fund) community participation services for people who are subject to the Intellectual Disability (Compulsory Care and Rehabilitation) Act 2003, and also for what were decsribed as ‘civil clients’ who are not under any Court order but who require the same kind of intensive services. The MoH responsibilities here are based in statute, and people in these groups are not affected by the SMT decision either;
  
• [d] As with the population generally, some in the group develop illnesses including those associated with old age (for example, such as dementia). Responsibility for the care of people with age-related disabilities lies with the relevant District Health Board. Again, funding for their involvement in such community participation activities as may be appropriate in individual cases in that group is not at issue in this litigation;
  

[38] There are at least two more factors that further complicate the picture:

• [a] When the SMT made its decision it recognised an ongoing obligation to those intellectually disabled people who (although not in any of the groups at [a] to [d] above) had retired from the MSD but had prior to March 2005 (i.e., before the SMT decision) enjoyed funding from the MoH for community participation activities. The SMT decided not to withdraw funding from this group, but to continue to let them have the funding for as long as they could continue to take part in such activities. Access to funding for people in this group was described as having been ‘grand-parented’;
  
• [b] It seems that even after the SMT made its decision, it was not implemented with complete success throughout New Zealand. Although contrary to the decision, there are instances of the MoH paying for some intellectually disabled people who retired from the MSD after March 2005 to attend community participation activities. It has to be said, however, that this is at odds with the SMT decision and is probably best regarded anomalous.[28]
  

[39] Despite all these qualifications and complications, we accept Mr Linkhorn’s nicely phrased submission that we ought not let the ‘messy reality’ obscure the underlying picture. Even taking all the people who fall into any of these exceptions together, they are still a minority of the overall group of people with an intellectual disability who have reached 65 years of age. Furthermore, the passage of time will inevitably have the effect of reducing the numbers of de-institutionalised and ‘grand-parented’ people in the group year by year, eventually to zero.

[40] In fact the number of service users whose eligibility to be considered for funding for community participation activities has been affected by the SMT decision is relatively small. At the time of the hearing in the Tribunal there had been 105 people who, but for the SMT decision, would have been funded by the MoH notwithstanding having ‘retired’ from the MSD (although we note that of these 15 had ‘exited’[29] the group, so that the number of people affected by the SMT decision at the date of the Tribunal hearing was presumably 90). The data we were given was as follows:

[41] The MoH expressed particular concern, however, for what the future will hold. We heard expert evidence about both the MoH’s and Idea Services’ expectations for the long run financial consequences of any decision which leaves the MoH responsible for funding community participation activities for intellectually disabled people after retirement from the MSD. That included some significant debate between the experts about the assumptions that should be made in the analysis: exactly who should or should not be included; what ought reasonably to be expected in terms of attrition rates from the group; what future recruitment to the group might yield; discounting to reflect future values in present day terms; and so on.

[42] For present purposes, however, it is enough to note:

• [a] It will take some years before the financial situation ‘matures’; in other words, before a long run pattern of demand for the services settles out. In the short term the analysis is influenced by (for example) attrition from the group of those whose funding has been protected by the MoH’s commitment to de-institutionalised service users, and those for whom the funding has been grand-parented;
  
• [b] On any view, however, over the next 20 years the number of people in the group[32] will almost certainly increase;
  
• [c] Looking at the anticipated picture in 20 years’ time (and again focussing on people with intellectual disabilities) the MoH evidence suggests that the per annum cost of funding the community participation services at issue in this case will be in the region of $8 to $15 million[33], and most likely around $12.5 million. The same analysis by Idea Service’s expert (but using the different inputs he regarded as appropriate) yielded a range between $7.4 and $8.8 million, although he went on to say that as much as $4.3 million of that will be faced in any event, so that he would have put the additional cost to the MoH at something closer to $4 million[34] in all.
  

[43] We do not find it necessary to resolve the detail of the issues between the experts. For our purposes it is enough to know that in the medium to long run (particularly when the de-institutionalised and grand-parented service users are no longer a factor) the annual cost of providing the community participation activties that we are concerned with in this case is likely to fall somewhere between about $4 million to maybe as much as $15 million (but more likely less than $12.5 million). We agree with the succinct conclusion of the expert who was called for the MoH, who said that:

“ ... I think there’s so many imponderables, ... what is important here is to get a sense of the order of magnitude, so we’re not talking about hundreds of millions of dollars[35], we’re talking somewhere in this region, I’ve put it at $12 million, perhaps it’s 8, perhaps its 15, who knows, it’s in that region, not hundreds of millions of dollars; I think that’s the useful part of this.”[36]

[44] In order to put these figures into perspective:

• [a] In the 2009/2010 financial year the total budget available to the MoH for purchase of disability support services from District Health Boards and all third party providers was $970 million;
  
• [b] The evidence was that in that financial year the MoH in fact spent $38.9 million funding community participation activities;[37]
  
• [c] 2,167 service users accessed the services thus funded (although not all of them were Idea Services-related referrals);
  
• [d] Of the total $38.9 million, $4.3 million was spent on:
  
  • [i] Services users who either had high and complex needs or were subject to a complusory care order under the Intellectual Disability(Compulsory Care and Rehabilitation Act 2003)[38];
    
  • [ii] De-institutionalised service users;
    
  • [iii] Service users referred by a Needs Assessment and Service Co-ordination agency “ ... in keeping with historic practice in some regions ...”[39]
    
  • [iv] Service users who retired from MSD-funded community participation activities at age 65 before the SMT decision[40];
    
• [e] We were given several different figures for the average cost of providing community participation activities per service user per annum, ranging from $16,170.00 to $17,150.00 (although because the system is needs based and individually assessed, the actual cost of providing the funds to individual users will vary user by user).[41]
  

[45] Before leaving this section, it is convenient to say a little more about the services that are in issue. Services that we have referred to under the general label ‘community participation activities’[42] include programmes that support service users in areas such as recreation and leisure activities; socialisation; daily living skills; education and learning; exercise and fitness and in the areas of vocational and work experience. So, to give just one illustrative example, something as simple as going to the local swimming pool for a swim, or to the library, may be well beyond the capacity of a service user to do on his or her own (and even dangerous). However, with support such a trip is not only possible, but can be a very important part of the service users’ routine.

[46] In fact the kinds of activities that are usually funded tend to be group activities (for cost efficiency), and they are typically provided in two sessions a day, morning and afternoon. There is, however, some fexibility in the case of specifc programmes and/or outings, or for service users who are unable, or do not need or want, to take part in all ten sessions every week. The providers of these kinds of activities are usually responsible for establishing and working within an appropriate programme of services for each individual service user.

[47] Again, there was no dispute between the MoH and Idea Services that these kinds of activities ought to be avialable to those who need them; and there was no dispute between the MoH and Idea Services that the activities ought to be funded by Government.

[48] There is one final nuance to note here. It is this. A person who has a disability is not entitled to access any or all community participation activities (or indeed most disability supports) simply by virtue of having a disability. The system is needs-based, depending on individual circumstances. Asessment of needs in any given case is typically carried out by one of around 16 Needs Assessment and Service Co-ordination agencies (or ‘NASC’s) which are contracted by the MoH to carry out such assessments. But the NASC’s apply eligibility criteria that are, ultimately, set by the MoH. The point is that in this context, the idea of ‘eligibility’ really means a right to be considered for publicly funded disability support services (rather than having a direct right to any given service).

[49] Against this background, we turn to the essential question that we have to decide; namely, whether the MoH’s refusal since March 2005 to fund community participation activities for intellectually disabled people who have turned 65 (and have thus been ‘retired’ from MSD funding) amounts to unlawful and unjustified discrimination.

[50] We think the next logical step in the analysis is to consider the funding arrangements that are at the heart of the case.

D FUNDING ARRANGEMENTS

Context

[51] Both parties were anxious to put the SMT’s decision into its context, having regard to the history of the relevant funding arrangements.
[52] In their submissions, counsel for the MoH began by looking at the relevant statutory framework within which the decision was made by the SMT. We were referred, for example, to relevant provisions in the State Sector Act 1988,[43] the Public Finance Act 1989[44] and the New Zealand Public Health and Disability Act 2000.[45] The burden of these references was to establish that the MoH is required to work within defined financial parameters.
[53] We were also shown materials relevant to the appropriation of funding for Vote: Health in and for the year in which the SMT decision was made. The essential point was that, at the time the SMT decision was made, the MoH was required to address what had been a $30 million overspend on disability services in the previous fiscal year. It was under significant pressure not only to bring spending back within the appropriated sum for the current fiscal year, but even (as we understood the evidence) to do something towards recovering the previous years’ overspends.
[54] From the MoH perspective, another fundamental element in the context has to do with the practical way in which disability support services – specifically, funding for community participation activities – is made available to the general population of service users. Typically, for intellectually disabled people who are under 65 and have not historically had funding for community participation activities via the MoH[46], the responsibility for funding community participation activities has fallen on Vote: Social Welfare. The MoH position is that the MSD is or should be responsible for funding vocational services, including community participation activities, for all service users where no other agency has a clear responsibility to fund the activities; in other words, it considers that the MSD should be the ‘default’ funder of these activities. In a nutshell, the MoH considers that this is a social welfare-related responsibility, not a health-related responsibility.
[55] In his very comprehensive submissions, Mr Linkhorn also spent some time discussing practicalities of the ways in which MoH funding of disability services is ultimately delivered. Of particular significance to his argument is the role played by the NASC’s.
[56] Although NASC’s are obliged to comply with MoH policy and directives, and are contracted to the MoH to provide the assessment/service co-ordination function, they are independent organisations. Their role is to assess individual cases according to eligibility criteria that are (ultimately) specified by the MoH. NASC’s are then responsible for co-ordinating service delivery on a case by case basis. The argument for the MoH gave a detailed analysis of each of the steps that are undertaken in the process of getting from an initial eligibility decision[47] right through to payment and auditing of the services ultimately provided.
[57] We accept that in any given case it will be a NASC (not the MoH) that will see whether a particular person meets relevant eligibility criteria, and which will then look at what resources are available (including from any ‘natural supports’[48] and elsewhere) before co-ordinating the delivery of a package of services from Government and non-Government sources to meet the needs of the particular case. And of course Mr Linkhorn is right to say that, for disability services that are funded by the MoH, the actual level of funding in any particular case will depend upon a host of variables, and the NASC organisations play a critical role in the assessment and delivery of services on an individualised basis.
[58] We do not mean any disrespect to the argument, but even so we agree with Mr Butler’s submisson for Idea Services that, ultimately, the details of the way in which the NASC system works are not of critical importance. That is because it is the MoH that sets the eligibility criteria that NASC’s apply, including in particular the eligibility rules we are being asked to evaluate. The SMT’s decision to stop funding community participation activities for ex-MSD service users over 65 was one made by the MoH, not any NASC. For the same reason, we also respectfully disagree with Mr Linkhorn’s submission that it is the NASC system of needs assessment and service co-ordination (rather than any contract between the MoH and Idea Services) that is the key to evaluating whether or not there has been age discrimination against service users aged 65 and over. This is not a case about the details of how services are assessed in any individual situation. It is a case about the rules imposed by the MoH for access to the relevant services.[49]

The contract

[59] We therefore turn to deal with the contract at issue.
[60] The bundles of documents presented at the hearing contain an array of contracts and related schedules. Within these there is an element of duplication and overlap, but counsel agreed that the contract with which we are primarily concerned comprises a Head Agreement and five regional service schedules. The Head Agreement took effect on 1 July 2002, and it has since been extended to 30 June 2011. It is convenient to refer to it and its schedules simply as ‘the contract’ in the balance of this decision.[50]
[61] It is necessary to consider relevant provisions of the contract in some detail. This is not just because the contract is a significant part of the context within which the discrimination claim has come to us, but because there is also a dispute between the parties as to whether or not the decision by the SMT amounted to a breach of the contract by the MoH.
[62] In another case, the question of whether or not challenged conduct amounts to a breach of a contract as well as unlawful and/or unjustified discrimination might not be significant. In this case, however, the relief sought by Idea Services includes relief under sections 92I(3)(a), (b), (c) and (e) of the HRA. There is also an issue that we need to deal with later in this decision as to whether the conduct complained of was or was not ‘prescribed by law’ in the sense intended by s.5 of NZBORA. The contractual issues also have at least the potential to inform our attitude on the issue of deference (that is, whether and to what extent we should defer to the SMT’s assessment of the MoH position in March 2005 when we evaluate the issue of justification under s.5 NZBORA). We do not think that we can deal with those issues without making an assessment of the contractual issues that have been raised.
[63] To this point in this decision we have referred to the kinds of activities that are in issue broadly as ‘community participation activities’. We have used that deliberately general and neutral language to encompass all kinds of the services at issue, and whether or not they are funded by the MoH under the contract, or by some other agency under a different arrangement.[51] In the contract, however, the relevant services are referred to as ‘day activity programmes’ and as ‘day activity programme services’. These labels were often shortened by the witnesses and by counsel simply to ‘day services’. We will use the same label in the balance of this decision, when referring specifically to the services that are the subject of the contract.
[64] A detailed description of day services is set out in a schedule of service specifications that is attached to the contract. The relevant part of the schedule begins by setting out the philosophy of the MoH’s Disability Services Directorate, as follows:

“The aim of the Disability Services Directorate is to build on the vision contained in the New Zealand Disability Strategy (NZDS) of a fully inclusive society. New Zealand will be inclusive when people with impairments can say that they live in:

‘a society that highly values our lives and continually enhances our full participation’

With this vision in mind, disability support services aim to promote a person’s quality of life and enable community participation and maximum independence. Services should create linkages that allow a person’s needs to be addressed holistically, in an environment most appropriate to the person with a disability.

Disability support services should ensure that people with impairments have control over their own lives. Support options must be flexible, responsive and are needs based. They must focus on the person and where relevant, their family and whanau, and enable people to make real decisions about their own lives.” [52]

[65] To state the obvious, there is nothing in or about that statement of philosophy to suggest that people over 65 years of age can or should be treated any differently from those who are younger. The objective is a fully inclusive society. An aim of the services is to promote community participation irrespective of age.
[66] Immediately after the statement of philosophy the following appears:

“The MoH wishes to purchase community day activity services for people with an intellectual disability.

The following service principles will be incorporated into the provision of support services by the Provider[53] under this service specification:

• Service users are individuals who have the inherent right to respect for their human worth and dignity.
• Service users have the right to live in and be part of the community.
  • Service users have the right to realise their individual capacities for physical, social, emotional and intellectual development.
  • Service users have the same rights as other members of society to services, which support their attaining a reasonable quality of life.
  • Service users have the right to make choices affecting their lives and to have access to information and services in a manner appropriate to their ability and culture.
  • Service users have the same rights as other members of society to participate in decisions which affect their lives.
  • Service users have the same rights as other members of society to receive services in a manner which results in the least restriction of their lives and opportunities.
    • Service users have the right to pursue any grievance in relation to services without fear of the services being discontinued or any form of recrimination.”

[67] To state the obvious again, nothing in these principles begins to suggest that people who are older than 65 are to be treated any differently from those who are younger than 65.
[68] The service schedule then goes on to say:

“Day activity programmes will assist integration of service users into the community, enable service users to have regular meaninful social contact and improve their personal skills through provision of stimulating activities.”

[69] Service users in this context are defined as ‘people with intellectual disabilities who have been referred to the Provider for service by a Needs Assessment Service Co-ordination service (NASC) provider contracted by the MoH’. Once again, nothing in these provisions suggests that age is to be a factor in eligibility.
[70] The service schedule sets out the basis on which day services are to be delivered: for example, that the referring NASC will specify a number of half days per week for provision of the services in any case; but there is to be some flexibility on a week by week basis in the way in which the services are provided; which days of the week day services are to be provided on; and so on. There are also provisions dealing with the settings in which day services can be provided; the facilities to be used; appropriateness; security and privacy; quality requirements; and staffing and safety.
[71] Importantly, clause 4 of the service specification deals with who will be able to have access to day services:

“4. Access

4.1 Inclusions

Access to the day services described is by referral from the NASC Service following a formal needs assessment process. This specification relates particularly to the purchase of Day Activity programme services for people living in community settings.

4.2 Exclusions

Excluded from services under this specification will be any individual whose primary need for support is not as a result of an intellectual disability or an individual who has a claim accepted by ACC or funded by Department of Work and Income NZ[54] for vocational services.”

[72] The purpose of the inclusions and exclusions is clear. Every intellectually disabled person who is referred by a NASC after needs assessment is to be eligible for funding for day services. Age makes no difference. Only intellectually disabled people who have funding through the ACC or the MSD are excluded. That is not because they are not entitled to day services at all, but because their needs are being met through another Government agency: exclusion from this contract does not mean that they are left without day services.
[73] No-one is funded for vocational services by the MSD after they have reached their 65th birthday. It follows that at that point in their lives intellectually disabled people no longer come within the exclusion of clause 4.2. In our view, reference to the philosophy and principles stated in the service schedule demands that clause 4 must be interpreted as then including such services users under the MoH umbrella: if the services are not thereafter funded by the MoH, they will not be funded at all. That is not an outcome that can possibly be said to fall within the philosophy that governs the MoH’s commitment to funding these services.
[74] As noted, there were extensive submissions relating to the history of the contract, referring to correspondence between the parties and other expressions of opinion and approach by those who have been involved in the administration of these contracts, both before and after the SMT decision. In our view, however, the contract is clear. By entering into the contract the MoH undertook to fund Idea Services to provide day services[55], subject only to the exclusions identified. Service users over the age of 65 who, by virtue of turning 65, are no longer eligible for vocational services paid under the MSD are not excluded. They must therefore be included.
[75] We conclude that the effect of the contract between the MoH and Idea Services as it applied in March 2005 was such that the MoH had a contractual responsibility to fund Idea Services to provide day services for intellectually disabled people over 65, and notwithstanding that individual service users had, before turning 65, been funded for those kinds of programmes through the MSD.
[76] We add that our conclusion on this point seems to us to be consistent with the understanding of most of those who were involved in these matters at the time. That is not to say that the possibility of tranferring funding responsibility from the MoH to the MSD had not been mooted, but that is, of course, a very different question.
[77] The MoH’s practical answer to these points – both in submissions, and in the evidence that was given by the witnesses called for the MoH - was to suggest that Idea Services should in some unspecified way be able to provide activities of the kind contemplated from an entirely separate ledger of funding that is dealt with elsewhere in the contract. Specifically, the MoH position was that service users who are in residential care have their essential needs met by funding for community residential support services. Although this is a different schedule for payments under the contract, the MoH contended that the residential service specification requires a provider (such as Idea Services) to provide meaningful day activities, including activities outside of the home.
[78] In this respect we were referred to the service schedule governing ‘community residential support services’. The relevant part of that schedule begins by quoting the same philosophy set out in the schedule relating to day services. It goes on to define the services being purchased by the MoH under that part of the contract as:

“ ... community residential services, for people with an intellectual disability aged 16 years or over. This service provides 24 hour support at the level necessary for people to have a safe and satisfying home life. This includes having 24 hour duty of care if a service user has to remain home from vocational or day services for any reason. The level of support can be provided through a combination of services determined at the time of needs assessment for each individual service user.”[56]

[79] The definition of services is followed by a series of principles that are to apply. We do not set them out in detail, but amongst other things they include recognition that service users have the right to live in and be part of the community (including their participation in the local community, as maximised through physical and social integration), that service users have the same rights as other members of society[57] which support their attaining a reasonable quality of life; and that service users are to have the same rights as other members of society to receive services in a manner which results in the least restriction of their lives and opportunities.
[80] As noted, the label in the schedule for provision of ‘day services’ is in fact ‘day activity programme services’. Applying the same abbreviation technique to the label ‘community residential support services’, we refer to these as ‘residential services’.
[81] The service specification for day services is about getting service users out of the home and into the community during the day, to participate in activities with a view to achieving the philosophy and the objectives set out in the specification for day services. By contrast, the specification for residential services is about providing support to allow service users to live in homes in the community. It is obvious from the way that the contract is set out that these two areas of endeavour – i.e, residential services, and day services – were and are separate items, each having their own objectives, and each having their own distinct funding obligations.
[82] Notwithstanding that, the MoH position is that the specification for day services does not include home-based day-time activities for service users. It says that Idea Services should be able to provide service users with some level of day time activity (including activites that facilitate contact with and access to the wider community) out of the funding provided for residential services. We do not think it unfair to say, however, that the MoH evidence was very vague about what it was really suggesting Idea Services ought to be able to do in this way. There was certainly no detailed analysis of any figures, nor anything much more than the most general of assertions by the MoH witnesses that Ideas Services should be able to go some way to making some kind of community participation activities available to ex-MSD service users - notwithstanding the withdrawal of funding for day services.
[83] We will return to the point below, but before doing so we consider the SMT decision in more detail.

The SMT decision

[84] It is convenient at this point to look at exactly what it was that the SMT decided on 21 March 2005.
[85] We begin this section of our decision by repeating that, at least up until March 2005, there does not seem to have been any serious suggestion that the MoH was not then responsible to fund Idea Services for day services delivered to service users over the age of 65, even if they had been receiving such support out of MSD funding before turning 65.[58] To the contrary, and as we have explained, we think the MoH/Idea Services contract made it clear that ex-MSD service users over 65 years of age were eligible for MoH funding for day services under the relevant service specification.
[86] Be that as it may, research and experience by late 2004 suggested that there were variations in the practices of different NASC’s in their referral of service users for vocational/day services.[59] The issue of MoH funding of day services for intellectually disabled people over 65 became an item of discussion between the MoH and IHC. In a meeting on 15 December 2004, for example, it seems that mention was made of at least one NASC being unaware that funding responsibility for day programmes was with Vote: Health when a person is over 65 years. The MoH representatives were tasked to “ ... clarify the policy and notify NASC of their obligations and inform IHC”.[60] The point was repeated at a meeting on 9 February 2005[61], and IHC representatives noted that a number of people were ‘unfunded’ because the NASC did not know that MoH had the funding responsibility. There is no suggestion in the records of these meetings that the MoH representatives disagreed with the IHC point of view, namely that the MoH had funding responsibility for over 65-year olds.
[87] The bundles of documents produced at the hearing included several internal MoH communications at about this time. We do not set them all out, but they are all broadly consistent with an email by a senior locality manager for the MoH who had written on 31 March 2002 that:

“In the case of a client in IHC care who turns age 65 and has been funded by DWI[62] in a day programme – the DWI funding ceases at age 65, and it is therefore necessary for MoH to pick up funding for these clients at that point. If we do not do so there will be a gap in their services for the day time hours Monday to Friday.”

[88] When MoH and IHC representatives met on 16 March 2005, the MoH representatives reported that “... MoH do not have a formal policy on this despite email correspondence between MoH and IHC in the past on this. It is acknowledged that a practice has been established which places funding responsibility with MoH, and will continue to expand with the ageing population.” The minute went on to talk about an interim policy being established, but information for back payment in respect of some clients was to be obtained (by inference, suggesting that the MoH would be paying).
[89] Overall, the tenor of the documents and evidence establish that at all times prior to the SMT decision the common understanding of all involved – including the relevant MoH representatives – was that the MoH was responsible for funding day services for intellectually disabled people over 65 years of age who had retired from the MSD. As it happens, we think that view was consistent with the contract too.
[90] In any event, it is clear that when the SMT made its decision it was making a decision to change something. The change was to reject future responsibility for funding day services for intellectually disabled people after they had turned 65. For the reasons we have given, however, we regard it as clear that the status quo before March 2005 was that the MoH had that responsibility.[63]
[91] What then lead the SMT to makes its decision on 21 March 2005?
[92] The Tribunal heard evidence from Ms Geraldine Woods. At the time of the SMT decision she was responsible for management of the MoH’s Disability Services Directorate. She had come into that role early in 2005. Her previous experience included several senior advisory and management roles within the public sector. From about 1997 to early 2005 (when she moved to the MoH) Ms Woods had been responsible for establishing a social services contracing unit with the MSD. She may have been new to the MoH in 2005, but she was obviously no stranger to the topic of funding of support services.
[93] In her evidence Ms Woods described the historical picture for funding of day services-type activities across both the Vote: Health and Vote: Social Welfare agencies of Government. She explained, for example, how the MoH had taken over funding responsibilities from the former Health Funding Authority (which had itself replaced the Regional Health Authorities), and how that had given rise to various different regional practices of funding within different approaches to eligibility assessment by NASCs. She added that the MoH had been concerned for some time to “ ... iron out inherited regional differences in access to services, and to introduce nationally consistent eligibility polices and practices.” She said that the main area where this had not been able to be completed was (and is) in the funding of day services.
[94] Ms Woods’ evidence as a whole makes it clear that it was her view that the MoH ought not to be funding day services for ex-MSD service users over the age of 65. For example, she described the MSD’s practice of retiring its service users when they turned 65 as a ‘barrier’ to resolving what she considered to be a ‘consistency problem’.
[95] Ms Woods had come into the MoH in early 2005 at a time when a ‘Back on Budget’ programme of work was being undertaken. Mr Powell explained that in the 2003/2004 financial year the MoH significantly overspent its allocated funding for disability support services. There was a need to make ‘tough decisions’ in working with the NASC’s to reduce expenditure. Another consequence was a refocussing on what the MoH had responsibility for, and what it did not.
[96] The question was dealt with at the meeting of the MoH’s SMT on 21 March 2005. Ms Woods took part, along with seven other MoH officials. The meeting was conducted by telephone conference. The minute in respect of day services for over 65-year olds reads:

“Vocational Services for People in IHC over 65 years

Note: Further work needed to be carried out about this issue as DSD does not have an up-to-date policy on this matter.

Agreed: No new referrals to be accepted. Only services already in place to continue[64] until our position is confirmed.”

[97] Although there was reference to a need for further work, in fact the decision that no new referrals would be accepted has applied at all times since then.
[98] Ms Woods told us that budget pressures had ‘informed’ the decision, although she asserted it was not a new policy or change in responsibility for the MoH. We are not able to reconcile that suggestion with the way in which the matter is discussed in MoH documents before 21 March 2005, or the contract. However, the essential reason given by Ms Woods for what was decided was that:

“The MoH was not then, and is not now, in a position where it can assume responsibility for providing day services to people who exit MSD services when MSD ceases funding for those people at age 65.”

[99] Although he was not present at the meeting, in his evidence Mr Powell explained[65]:

“The decision to stop funding this group was not driven by age. The rationale behind the decision was that Health should not fund something that it is not responsible for. In hindsight the wording of the SMT decision should have been clearer and the age should not have been stated. The ‘over 65’ term was a convenient way to describe the group that has been retired from MSD funded vocational services.”

[100] The MoH witnesses did not put it quite so bluntly, but we take the underlying idea to be that people do not generally fall ill or otherwise become become a responsibility of Vote: Health just because they turn 65. The MoH position is that it is no different for people with intellectual disabilities; and that simply by turning 65 they do not (or ought not) thereby become a Vote: Health responsibility. That was the organising idea behind the SMT’s decision. It underlies all that the MoH has done and said since to defend its position since March 2005. It is also what the MoH really means when it says that it is not the ‘default’ funder of community participation services for people over 65 years of age who have enjoyed funding for those activities under Vote: Social Welfare before they turned 65.
[101] These comments can be made:

• [a] It is not clear how this MoH approach is to be reconciled with the philosophy of the (then) Disability Services Directorate, as included (more than once) in the contract between the MoH and Idea Services: see para [64] above; or within wider responsibilities and aspirations for health and disability generally[66];
• [b] The apparently factual assertion made by the MoH witnesses that the MoH was not the ‘default funder’ of day services for service users over 65 turns out to be an assertion of a policy that the MoH would like to have seen implemented. It is not a statement of the reality; certainly not as it stood on 21 March 2005. The MoH was the default funder of those services[67], at least in the case of the service users for whom Idea Services was responsible. Whether the MoH regarded that as appropriate or not was at most an unresloved policy issue, not a state of affairs.
• [c] On any view, peremptory implementation of the MoH’s new attitude towards funding (more accurately, not funding) the services in question represented a considerable change in practice and approach.

[102] Having regard to the evidence we heard and the documents produced, we accept Mr Butler’s submissions that before the SMT made its decison:

• [a] There does not appear to have been any review or consideration of the impact of the decision on services users over 65[68];
• [b] No financial or cost benefit analysis appears to have been undertaken, as one would expect in the case of a significant change such as this was;
• [c] Ms Woods had no recollection that any contract review was undertaken at the time; to the contrary, she was not aware of the specifics of the MoH/Idea Services contract when the decision was made. In fact there is no evidence that the SMT gave any thought at all to the question of what the MoH’s contractual obligations might be before making its decision[69];
• [d] Ms Woods’ understanding of the situation at the time was cleary influenced more by her background with the MSD than it was by any familiarity with the MoH’s obligations and/or what it and its predecessors had been doing;
• [e] There was no ‘heads up’ or other consultation with potentially affected stakeholders (not the least being Idea Services) before the SMT decision was made. The SMT decision was made unilaterally and without any apparent consideration as to how Government would or should fund access to the relevant services in the future, or what might become of the services users in respect of whom funding was being summarily withdrawn;
• [f] No briefing papers of any kind were prepared;
• [g] No-one involved in the SMT decision appears to have recognised that it might raise age-related discrimination issues under the Human Rights Act and/or the New Zealand Bill of Rights Act; there is no evidence that the possibility even occurred to any of the senior managers present.

[103] To this list we add that there is no evidence that the SMT made any attempt to measure the idea that it ought no longer to be responsible for funding community participation services for people retiring from the MSD, against the MoH’s other responsibilities and aims in respect of people with disabilities generally (and as set out, for example, in the Disability Support Directorate’s philosophy). Given that Ms Woods was manager of the MoH’s Disability Services Directorate at the time, we think that was surprising.

[104] In any event, we regard it as clear that the SMT decision was a cost-cutting measure, no more and no less.

Subsequent events

[105] We do not need to discuss the events after 21 March 2005 in the same detail, although we will note:

• [a] There has been some policy and other work done within Government dealing with the possibility that responsibility for funding day services for intellectually disabled people over 65 should be transferred to the MSD from the MoH. We were shown a number of policy documents and Cabinet papers dealing with the topic. Evidently one problematic issue is that the rates at which days services are funded by the MSD and by the MoH differ. That has made it difficult to achieve a transfer that is fiscally neutral to the MSD; a point which is of importance to the MSD. Even so, consultation with stakeholders has taken place and by September 2008 the Government had agreed to transfer the funding responsibility and contracts to the MSD. But by October 2009 the initiative was described as being ‘on hold’: a briefing paper for the Minister of Health recorded that MoH and the MSD officials had tried to develop a joint paper identifying the most appropriate option for implementing the transfer but “[a]s the work progressed, MSD officials became increasingly concerned about the risks for MSD associated with the transfer.” Other concerns have been that transferring the funding responsibility might effectively dilute the funds generally available for such services across the board;
• [b] All in all, no transfer has occurred. The position is effectively as it was immediately after the SMT decision;
• [c] In the meantime the MoH has not been funding the provision of day services for ex-MSD service users for whom Idea Services has responsibility;
• [d] Rather than leave those service users without access to day services, Idea Sevices has been meeting the cost of continuing to make the services available. In this respect, it was and is of particular concern to Idea Services to avoid the profound unfairness of a situation in which some services users in a group home are able to go out during the day, while others must effectively stay at the home without being able to access the kinds of activities being enjoyed by the others they live with (and which, before turning 65, they had been able to access and enjoy as well);
• [e] Idea Services has taken issue with the SMT’s decision, including on the basis now advanced in this litigation - namely that it amounts to unlawful discrimination by reason of the age of the service users for whom funding is being denied after they turn 65.

Notes

[106] It is convenient to note the following points by way of summary, before we deal with the issues raised by application of the HRA and NZBORA to the facts:

• [a] We do not accept the assertion by the MoH that in March 2005 it was not the default funder of day services for service users after their retirement from MSD funding programmes. Certainly when it comes to the relationship between the MoH and Idea Services it is our conclusion that the MoH was (and still is) obliged by the contract to fund day services for ex-MSD service users under the care of Idea Services;
  
• [b] It follows that we have been unable to reconcile the decision made by the SMT with the obligations that the MoH owed Idea Services under the contract. To be clear: it is our view that the SMT decision was a breach of that contract. It had the effect of adopting an interpretation of the service specification for day services that had not hitherto been held by anyone. In fact, as noted, it does not seem that the SMT gave any thought at all to the question of what the MoH’s contractual obligations might be;
  
• [c] Nor do we see that there is any merit in the suggestion that Idea Services should be providing the same kind of activities from within the funding allocated for residential services. Day services and residential services are separate line items in the contract, and the funding under each schedule is ear-marked in each case for different things. Furthermore, the evidence we heard fell a very long way short of establishing just how the MoH expected Idea Services to manage its budgets so to deliver anything like a comparable level of day services while at the same time maintaining the expected level of residential services, but all out of the funding for residential services only. Instead it seems obvious that removing funding for day services for those turning 65 after 21 March 2005 reduced the revenue to Idea Services, leaving it with less to money to provide previous service levels. And, when viewed from the perspective of the service users, it must follow as a matter of logic that a person who can access funding for day services and residential services separately is in a preferable position to someone who can access funding for residential services only.[70]
  

[107] We think it important to make these points clear, because they do form part of the overall matrix against which the issue of discrimination has to be assessed in this case. At the same time, they are no more than that. Of itself a finding that a contract has not been honoured falls a very long way short of establishing that there has been any discrimination, much less any discrimination that is unlawful and/or unjustified.

[108] We therefore turn to deal with those issues.

E FRAMEWORK FOR APPLYING PART 1A.

[109] An act or omission of a body that falls within the scope of s.3 NZBORA is in breach of Part 1A of the HRA if it is an unjustified limit on the right to be free from discriminination[71], where the discrimination is of a kind that falls within the grounds listed in s.21 of the HRA. Age is a prohibited ground of discrimination.[72]

[110] There have now been a number of cases under Part 1A in New Zealand.[73] There was still some debate between counsel about different elements in the approach to dealing with the evidence, but in broad terms both accepted that the methodology articulated by the Tribunal in CPAG[74] should be followed in this case too. Although delivered after the submissions in this case had been presented, the same broad approach has also since been employed by the High Court in Atkinson & Ors v Ministry of Health.[75] Some of the Tribunal’s observations in CPAG about the comparison exercise in particular now also have the support of the reasoning in the Supreme Court in McAlister v Air New Zealand[76] and the Court of Appeal in Smith v Air New Zealand.[77] In addition, the approach to determination of the justification issue is spelled out in cases like Hansen[78] (again, as applied by the Tribunal in CPAG and by the High Court in the Atkinson case).

[111] As we have said, there are some issues between the parties about aspects of the analysis, and we will need to deal with those. At a general level, however, the way forward is now reasonably clear. For that reason we do not think it is necesssary to refer to or discuss the authorites governing the general approach to dealing with Part 1A cases in any detail.

[112] The action that is under scrutiny in this case is the SMT’s decision. Mr Butler also put the case for Idea Services in terms of an omission; the alleged omission essentially being the failure of the MoH to revoke the SMT decision and return to funding day services for intellectually disabled people over 65 years of age upon their retirement from the MSD. For the purposes of our analysis, however - and with perhaps one proviso - it makes little difference whether one describes the problem in terms of the SMT’s action to end the funding, or in terms of a failure to restore it.

[113] The proviso is this: all things being equal, it would not matter to Idea Services whether the funding flowed to it from the MoH, the MSD or indeed some other agency of Government altogether.[79] So addressing the issue in terms of an ‘omission’ does draw one back to the point noted at the outset of this decision, namely that s.3 NZBORA applies to the Government, not just the MoH.

[114] As long as that nuance is not overlooked, we do not think that either Idea Services or the MoH would take issue with the following broad framework for analysing the evidence:

• [a] A two-stage inquiry is required;
  
• [b] At the first stage, Idea Services has the burden of establishing that there has been a breach of s.19 NZBORA; in this case, the right to be free from discrimination on the grounds of age;
  
• [c] The questions the Tribunal must answer at this stage are:
  
  • [i] Does the SMT decision result in two comparable groups being treated differently? This question has two interwoven elements: First, who is properly to be compared with whom? Secondly, are the two groups being treated differently in some relevant way?[80]
    
  • [ii] Is any difference of treatment ‘... on the grounds of discrimination in the [HRA]’ [81]: in this case, the age of the service users at issue?
    
  • [iii] If so, has the difference in treatment resulted in relevant disadvantage to the group that is over 65 years of age?
    
• [d] If these questions are answered in favour of Idea Services, then the onus will shift to the MoH to establish that the SMT decision should be seen as a justified limit under s.5 NZBORA on the right to be free from discrimination. At this second stage, the questions that the Tribunal will have to answer are:
  
  • [i] Should the SMT decision be regarded as one that was ‘prescribed by law’ (within the meaning of those words in s.5 NZBORA) or not?
    
  • [ii] If not, did the SMT decision serve a purpose that was sufficiently important to justify curtailment of the right of the dis-favoured group to be free from discrimination?
    
  • [iii] If so:
    
    • (i) Was the SMT decision rationally connected to its purpose?
      
    • (ii) Did the SMT decision impair the right the group that is older than 65 to be free from discrimination no more than was reasonably necessary for sufficient achievement of its purpose?
      
    • (iii) Was the SMT decision in due proportion to the importance of its objective?
      
• [e] If the answers to these questions are against the MoH, then there will be grounds for a finding that there has been a breach of Part 1A of the HRA. At that point the issue of what remedies (if any) should be awarded will be opened.
  

[115] It remains only to apply that analytical framework to the evidence. We will deal with the areas of disagreement between the parties in respect of particular legal issues as we come to them.

F APPLYING THE FRAMEWORK: DISCRIMINATION?

Does the SMT decision result in two comparable groups being treated differently?

[116] The first question relates to the comparisons that need to be made. We think it proper to acknowledge that the topic is the engine room for our decisions in this case. If our conclusion on the comparator group question is not accepted, then it will follow that our reasoning in respect of other elements of the case would likely need to be re-visited as well.

[117] The significance of a conclusion on the comparator group question was very well understood on both sides. Mr Linkhorn and Mr Butler have provided the most thoughtful and comprehensive submissions, canvassing legal issues and the facts in very considerable detail. There is a temptation to delve into all that has been said, both because the subject matter is interesting, and to try to acknowledge and in some modest way reflect the scholarship of the work that been done by counsel. But at the same time this is a first instance decision. Our primary responsibilities are to identify the approach we have taken, and state the conclusions we have come to, as clearly and succinctly as we can. With that in mind, we trust that counsel will forgive us if what follows does not respond to each and every point made in their arguments.

[118] If one thing is clear it is that comparison is an essential element in the analysis of discrimination[82]:

“The essence of discrimination lies in difference of treatment in comparable circumstances. For discrimination to occur one person or group of persons must be treated differently from another person or group of persons. Of course difference of treatment will not necessarily in itself amount to discrimination; and not all discrimination will be unlawful.”[83]

[119] There was some debate in the submissions as to how precise the comparison ought to be, before it can be said that group A is sufficiently comparable to group B to be a proper foundation for the analysis.

[120] Mr Linkhorn submitted that a claim of discrimination must be based on a comparator group that is alike in all material respects except for the prohibited ground alleged. He drew attention to dicta which emphasise the need for a high degree of similarity between the affected group and any comparator group chosen, such as in Miron v Trudel[84] and McAlister v Air New Zealand”[85] We were also referred to cases like Claymore Management Ltd v Anderson[86], Talleys Fisheries Ltd v Lewis[87], Northern Regional Health Authority v Human Rights Commission[88], and Auton (Guardian ad litem of) v British Columbia (Attorney General).[89]

[121] For his part, Mr Butler referred us to cases and dicta cautioning against too strict an approach to the comparator group issue – see, for example, the Tribunal’s discussion of the problem in CPAG at para’s [128] to [137] leading to the conclusion that “... in the analysis of discrimination a search for precise exactness of circumstances before one group can be regarded as a proper comparator for another, carries a risk of injustice.”[90]

[122] After the hearing in this case was over, but before this decision was issued, Mr Linkhorn helpfully referred us to a very recent discussion of the same kinds of issues by the Supreme Court of Canada in Withler v Attorney General of Canada.[91] Some care always needs to be taken when comparing cases under s.15 of the Canadian Charter of Rights and Freedoms and those under s.19 NZBORA, not least because (unlike the Canadian Charter) NZBORA does not contain a broad equality right, nor anything quite like the ‘analagous grounds’ limb of the Canadian Charter. There are also differences in the approach to assessment of disadvantage, which we discuss below. But on this issue of comparator groups, we think it is appropriate to note that the Canadian Supreme Court has identified several concerns about the use of what are called ‘mirror comparator groups’, including that the exercise can”:

“ ... determine the analysis and the outcome (Peter Hogg, Constitutional Law of Canada (5th ed. Supp.),vol. 2, at p55-34). As a result, factors going to discrimination – whether the distinction creates a disadvanatge or perpetuates prejudice or stereotyping – may be eliminated or marginalised.”

And

“Another concern is that the focus on a precisely corresponding, or ‘like’ comparator group, becomes a search for sameness, rather than a search for disadvantage, again occluding the real issue – whether the law disadvantages the claimant or perpetuates a stigmatized view of the claimant.”

[123] In this case, it does not seem to us that the category of services users whom the MoH will continue to support in the long run (i.e., notwithstanding the SMT decision) are material to the comparison that needs to be made. Specifically, we set aside service users where the funding comes from another agency (e.g., those entitled to funding under the ACC legslation, or through a DHB), or where there is an explicit statutory obligation on the MoH to fund in any event (e.g., under the Intellectual Disability (Compulsory Care and Rehabilitation) Act 2003 and/or service users requiring full 1:1 support). These categories were not affected by the SMT decision[92], because the SMT either did not need to include them in its cost-cutting, or had no choice but to continue funding anyway. As a result we do not think that these categories really inform the comparison that needs to be made (in fairness, Mr Linkhorn did not place any emphasis on them for that purpose in his argument either).[93]

[124] Beyond that, the plaintiff says that the group that has been the victim of discrimination is made up of service users who receive MoH-funded disability support services[94] from Idea Services, and who up to the age of 65 needed and were eligible for ‘Crown-funded’[95] day services but who, after turning 65, have been denied funding for those servces because of the SMT decision. The affected group is thus made up of people who:

• [a] Have intellectual disability;
  
• [b] Need day services;
  
• [c] Live in an Idea Services group home, contract board or supported independent living situation, and
  
• [d] Are 65 and over.[96]
  

[125] The comparator group suggested by Idea Services has all of these characteristics, save that they are younger than 65. On that approach the difference between the affected group and the comparator group is that those in the affected group are not eligible to be considered for Government funding for day services, whereas those in the comparator group are.

[126] The MoH rejects this comparison. It submits that, ultimately, it is the question of eligibility for MoH-funded day services that is most important. The essential idea is that the MoH has never had any ‘across the board’ responsibility to fund day services for intellectually disabled people living in a group home, contract board or supported independent living situation. The MoH does acknowledge ongoing responsibilities to fund service users who are the subjects of a formal de-institutionalisation plan, and will also fund those who were ‘grand-parented’ by the SMT decision. However it says that its obligations go no further than that. On this view it follows that, since the MoH has never had any general obligation to provide funding for intellectually disabled people to attend day services no matter what their age, it does not treat those who are over 65 any differently than it does those who are under 65. Neither had any right to expect funding from the MoH for day services before March 2005, and neither have had any such right since. The SMT decision makes no difference to the underlying question of eligibility which, in turn, has nothing to do with the age of service users.

[127] These ideas came together in the submission that, if there is any comparison to be made at all, then it ought to be as between the affected group[97] and the de-institutionalised services users whom the MoH still funds for day services irrespective of age (but, as ever, depending on individual need). The difference asserted is that the former group are not, and have never been, eligible for funding from the MoH, while the latter group have eligibility as a result of agreements reached at the point of de-institutionalisation. In the alternative (although reluctantly) Mr Linkhorn also addressed the possibility that there might be a comparsion as between the same affected group on the one hand, and de-institutionalised service users and those who were grand-parented by the SMT’s decision as well, on the other. (Mr Linkhorn described the practice of accepting people who are not eligible for funding for day services as ‘over-referral’; the idea being that referral and acceptance was outside any obligation the MoH had). In either case, the point was that it is underlying eligibility, not age, that differentiates the groups.

[128] We have already set out our view in relation to the contractual issues. We disagree with the MoH position, in the sense that we think the MoH did have, and continues to have, an obligation under the contract to provide the funding in question. We do not therefore accept that there have been any ‘over-referrals’.

[129] Of far more importance in the analysis of discrimination, however, is the reality that the contract reflects the historical pattern of Government funding for day services. Whether the MoH likes it or not, it has been the conduit through which Government funding for the affected group has flowed.[98] Indeed, to an extent, even the MoH clearly recognises that the history of day services funding has imposed some obligations on it. Despite the position taken in this litigation, there is really no other explanation for the fact that the SMT did not simply cut funding for everyone older than 65 on and after 21 March 2005 altogether, but instead decided that at least those then having access to the funding should continue to have it.

[130] Also as already noted, the SMT decision was a decision to change the status quo. It created what the MoH accepted to be a policy and funding ‘gap’. The gap was created precisely because – there being no prior arrangements with the MSD or some other Government agency to fill the void – removal of MoH funding for day service users over 65 meant that they would not be funded.

[131] Even if the MoH is right to say that it does not have an explicit statutory or regulatory obligation to fund day services for those over 65, the funding nonetheless falls squarely within the philosophy of the Disability Services Directorate and the MoH’s wider obligations in respect of disability issues. It could hardly be suggested that the MoH had been doing anything wrong, or that it was somehow acting outside its mandate, when it paid for service users over 65 years of age before March 2005, or when it decided to ‘grand-parent’ funding for those who were already 65 or over at the time of the SMT decision. Again, we reject the idea that service users who were over 65 and being funded by the MoH for day services - either before or after 21 March 2005 - can properly be described as having been ‘over-referred’.

[132] In the end, we think that the MoH argument about de-institutionalised and grand-parented services users only serves to underscore our concern about the realities, and even counts against the comparisons that Mr Linkhorn proposed. The SMT was willing to treat de-institutionalised and grand-parented services users as exceptions to the general rule that was brought into effect by its decision – that is, no more funding for service users who were over 65. But we think the general rule was what was important, not the exceptions the MoH allowed. After all, the underlying concern was for the longer run fiscal consequences of continuing the funding. But by definition, the numbers of those who were to be treated as excepted from the general rule (whether on the basis of a de-institutionalisation agreement, or simply by the good grace of the MoH) will fall away year by year to zero. The comparator group that is suggested by the MoH will therefore disappear in time. At that point the impact of what the SMT decided will no longer be obscured by the fact that there are some ex-MSD service users who are over 65 and still get MoH funding. No-one who is over 65 will then be funded by the MoH and (assuming nothing changes) the fact that there is an age-related cut-off for Government funding of day services will become patently obvious.

[133] As a matter of past practice and the MoH’s wider obligations in respect of the delivery of disability services,[99] we think the MoH did have responsibility as the conduit for Government funding for day service users after they turned 65. To invite a comparison based on the proposition that no day service users[100] were eligble to be considered for MoH funding for day services is to suggest a comparison that is, in our view, at best theoretical. We do not accept that it reflects the realities of the situation.

[134] We therefore agree with the comparison proposed by Mr Bulter for Idea Services. Putting aside day service users for whom funding comes from another Government agency, and those who the MoH will continue to fund anyway, the affected group are day service users over 65 years of age. The comparator group are day service users who are under 65 years of age.

[135] The groups are treated differently:

• [a] Since March 2005 the affected group has had no Government funding for day services;
  
• [b] In the same period the comparator group has had Government funding for day services (albeit that the funding comes via the MSD).
  

[136] We conclude this section of our decision by observing that the outcome is consistent with the approach for which Mr Linkhorn argued - in the sense that, once the question of eligibility is removed from the equation, then the two groups that we have compared do share all of the same characteristics save only for their age, which is the ground upon which discrimination is alleged.

Is any difference of treatment ‘on the grounds of’ the age of the service users?

[137] Again, there were detailed submissions on the issue of causation. In essence, however, it was the MoH’s position that age has not been the reason for any different teatment in this case; and that while the wording of the SMT’s decision (in particular, that there were to be no new referrals of “ ... [p]eople in IHC over 65 years”) was unfortunate, it ought not to be regarded as determinative.

[138] The reality, however, is that the SMT decided that day service users reaching 65 years of age after 21 March 2005 were no longer to be considered for referral for day services. That was the expressly stated intention of the SMT; it is exactly what the minute of its 21 March 2005 decision said it was going to do. Putting aside some aberrations, it is also the rule that has been applied ever since. Furthermore, as Mr Butler observed in his submissions, when the SMT decision was later communicated to NASC’s it was in terms that there were to be no new referrals for day services “... for people in IHC over 65 years.”

[139] We do not accept the submission that this was just an unfortunate way of expressing the idea that people over 65 had never been eligible for MoH funding for day services, and that the eligibility point was going to be implemented in future. There is no satisfactory basis to conclude that the SMT’s decision was not recorded in a way that was faithful to what was discussed and resolved by the SMT when it met.

[140] The SMT decided to stop future Government funding for day services for people in the care of the IHC/Ideas Services who were over 65. We have no doubt that age is the ground on which service users who can access Government funding for day services, and those who cannot, are treated differently by the SMT’s decision.

Has the difference in treatment resulted in qualifying disadvantage?

[141] This brings us to the question of disadvantage.

[142] Counsel on both sides presented detailed arguments on the question of what kinds of disadvantage should be regarded as being required before any finding of prima facie discrimination is made. The first question is whether it needs to be shown that the difference in treatment in some way perpetuates prejudice, or legal, social or political disadvantages of the affected group and/or takes the form of negative stereotyping: see, to give just a few examples, Miron v Trudel[101], R v Kapp[102], Nova Scotia (Workers’ Compensation Board) v Martin[103] and, most recently, Withler v Attorney General of Canada[104].

[143] The idea that there needs to be an element of prejudice or stereotyping in the disadvantage is one that comes from the Canadian jurisprudence under the Charter. It has not taken hold in New Zealand. No doubt one reason is that the legislative provisions are different.

[144] In the end, and as Mr Butler observed in his submissions, the debate here is really no different from that which took place on the very same issue in the CPAG case. We have considered the detail of the submissions, but ultimately we do not need to to say more than that we stand by the decision made by the Tribunal in CPAG[105]. We do not agree that it is necessary to esablish disadvantage in the form of the perpetuation of prejudice, or of legal social or political disadvantage, or stereoptyping before a finding of prima facie discrimination can be made under Part 1A. It is enough to show that the difference of treatment results in some real disadvantage.

[145] This discussion about the impact of difference in treatment lead us down another alley as well.

[146] The MoH submits that, by its nature, age is a ‘less suspect’ ground of discrimination than, say, sex, race or sexual orientation – in the sense that differentiation on grounds of age is less likely to result in discriminatory impact than differentiation on those other grounds. We were invited to see this as an important part of the context within which to approach the issues in this case – i.e., that grounds such as age and family status do not have the same kind of association with historical disadvantage and marginalisation, and so do not evoke the same concerns, as other grounds.

[147] For its part, Idea Services submitted that there is no reason to approach age as a ground on which discrimination is prohibited any differently from any of the other grounds.

[148] Our view is that if the specific ground on which discrimination is prohibited in a particular case is relevant to the context at all, then it is better dealt with under the s.5 NZBORA justification analysis. For the reasons given, we think that it is wrong to import Canadian jurisprudence on the issue of discriminatory impact at the first ‘prima facie discrimination’ stage of the enquiry. On that basis it is difficult to see how the specific ground on which discrimination is alleged should make a difference to the outcome of the first stage enquiry.

[149] In any event, as Mr Bulter submitted, even if one accepts that age is not a particularly invidious ground of discrimination there are other factors at work in the context here. Not the least of these is that the affected group under consideration comprises people with intellectual disablility, to the extent that they require accommodation in a group home, contract board or independent suported living situation. In any view they form part of a very vulnerable sector of society. This may not be a case about discrimination on the grounds of disability, but the fact that the affected group is made up of people with disabilities is part of the context that matters when considering this issue of impact.

[150] The MoH also advanced an argument on the evidence as well - to the effect that there need be no disadvantage to day service users over 65 in any event, if only Idea Services would somehow re-position funding provided for residential services in order to provide day services out of that allocation. We deal with that argument below but, putting it aside at this stage, our conclusion is that the disadvantages for day service users over 65 years of age which flow from the SMT’s decision are real and obvious. Before the SMT decision they would have expected to be able to continue to take part in day services after turning 65. Although Government funding via the MSD would end on turning 65, Government funding would continue to flow via the MoH. But after the SMT decision no Government funding for day services has been available for them. Were it not for the fact that Idea Services has carried the costs in the interim, they would be left at home, without any opportunities to engage in and with their communities. That is the impact of the SMT decision. It cannot sensibly be suggested that it does not leave the affected group in a disadvantaged position vis-à-vis the comparator group, who are still able to engage in community participation activities as a result of Government funding which flows through the MSD.

[151] With respect to the suggestion that in some unspecified way Idea Services ought to be able to recover the situation by finding resources from the funds allocated to residential services in order to meet the ongoing need for day services, we repeat what we have said at paragraph [106][c] above. The evidence did not establish just how the MoH expected Idea Services to manage its budgets to deliver a comparable level of day services while at the same time maintaining the expected level of residential services, all out of the funding for residential services only. Removing separate funding for day services for those turning 65 after 21 March 2005 reduced the revenue available to Idea Services, leaving it with less to money from which to provide previous service levels. And, when viewed from the perspective of the service users, it must follow as a matter of logic that a person who can only access funding for residential services is in a less favourable position than someone who can access funding for day services and residential services separately.

[152] We add that, even if we are wrong in our approach to the assessment of what kind of disadvantage should or should not qualify in the assessment of prima facie discrimination, and in our assessment that it makes no difference at this stage of the inquiry that age is the ground of discrimination at issue, we would still have found qualifying disadvantage in this case.

[153] The SMT decision was to stop accepting referrals for day services in the case of ex-MSD service users (i.e., those reaching the age of 65) forthwith. Even if it hoped that at some future time the funding gap thus created might be bridged by another Government agency, the SMT must have appreciated that the immediate impact of its decision would be to leave affected users without any funding to access day services. There is no evidence that the SMT had any concern about the possibility that, before summarily ending the funding stream, it might first see that some satisfactory substitute funding would be available, so that the service users would not be impacted. It really was a decision to cut the relevant day service users off in order to save money, irrespective of what that might mean for them.

[154] Leaving intellectually disabled people at home without any meaningful interraction with their community is exactly what the philosophy behind the MoH’s provision of funding for disability support services aimed to avoid. Denying access to funding for day services can only have had the effect of further marginalising the affected group.

[155] We agree with Mr Butler that the SMT decision stigmatises the affected group by conveying a message that after reaching 65 they are no longer worthy of the opportunities for social interraction, mental stimulation and access to the community that come with day services – or, at the very least, that their need for day services was no longer as important as the MoH’s need to cut costs. In our view, the SMT decision embodies (and in its execution perpetuates) prejudice and stereotyping of senior members of the intellectually disabled community as being people in respect of whom it is no longer necessary to invest the cost of providing day services, and from whom day services can be taken without consequence. In this context the fact that age is the ground of discrimination at issue cannot possibly save the SMT decision.

Prima facie discrimination: conclusion

[156] In our assessment, the SMT’s decision to stop funding for intellectually disabled people requiring access to day services after their retirement from MSD funding amounted to prima facie discrimination.

As a result we go on to consider whether the SMT decision should be seen as a justified limit on the right to be free from discrimination under s.5 NZBORA. In this part of the analysis the onus shifts to the MoH.

G APPLYING THE FRAMEWORK: JUSTIFICATION?

A preliminary point about deference

[157] Before embarking on our analysis of the facts under s.5 NZBORA, there is a preliminary point about deference to be dealt with.

[158] In CPAG the Tribunal was dealing with a challenge under Part 1A of the HRA to legislative provisions in the Tax Acts of 2004 and 2007. The Tribunal’s decision in CPAG contains a discussion about the proper role of deference in Part 1A cases, importantly including reference to what Tipping J had to say on the matter in Hansen[106].

[159] The present case is very different from CPAG.

[160] Of course the Tribunal bears in mind that the challenged decision was made by a group of senior MoH officials, who were dealing with a pressing need to save costs in order to stay within the MoH’s funding appropriations. But it is not as if the SMT came to its decision after having made due policy inquiries.[107] In making its decision, the SMT did not consider the question of whether what they were doing might be regulated by the contract between MoH and Idea Services. Perhaps most importantly for present purposes, there is no evidence that it gave any thought to the possibility that its decision might raise issues of discrimination with a potential to bring Part 1A of the HRA into play. Nor does the SMT decision disclose any concern by the MoH managers for what might happen to ex-MSD service users without Government funding to attend day services. Again, the suggestion that such activities might somehow be funded out of the money allocated to Idea Services under the label ‘residential services’ was not one that emerged until after the SMT decision had been made.

[161] In these circumstances we agree with Mr Butler that, when it comes to applying s.5 NZBORA and examining questions of justification, any deference the Tribunal owes to the SMT decision is at the lower end of the spectrum. Indeed, insofar as our consideration involves an analysis of the human rights implications of the SMT’s decision, we think little deference is warranted, if any. That is because the SMT does not appear to have recognised that there were potential human rights issues involved.

[162] Finally under this heading, as Mr Linkhorn submitted (and Mr Butler acknowledged) there are cases in which the Government needs to be able to allocate resources on the basis of ‘bright line’ rules, for example when dealing with very large numbers wher separate consideration of individual cases would simply be unworkable.[108] We agree with him, however, that no such concern is present in this case. That is because the delivery of day services to service users is already individualised; even if the SMT’s decision had never been made, no service users would get more day services than they each needed. Specific needs are always assessed by a NASC before any package of services is proposed, much less delivered. This is a case about who the MoH will let be considered for funding, not about whether or not the result in the case of any given service user might be over generous or under generous.

Was the SMT decision ‘prescribed by law’?

[163] Section 5 NZBORA provides:

“Subject to Section 4 of this Bill of Rights, the rights and freedoms contained in this Bill of Rights may be subject only to such reasonable limits prescribed by law as can be demonstrably justified in a free and democratic society.”[109]

[164] Idea Services submits that the SMT decision was not authorised by statute, or by the contract, or by the MoH’s long-standing policy of providing funding for ex-MSD clients in respect of day services. All in all, it is Idea Services’ position that the SMT’s decision was not one that was ‘prescribed by law’, so that it is not protected by s.5 NZBORA at all.

[165] The MoH’s position is that what the SMT decided fell within the ambit of the broad discretionary powers that an organisation such as the MoH must have in order to be able to carry out its responsibilities, including but not limited to the responsibility of managing funding that is allocated to the Ministry in a proper way.

[166] Both counsel took an observation of McGrath J in Hansen[110] as the starting point for this part of the discussion. Referring to the 1981 White Paper ‘A Bill of Rights for New Zealand’, the Judge said:

“To be prescribed by law, limits must be identifiable and expressed with sufficient precision in an Act of Parliament, subordinate legislation, or the common law. The limits must be neither ad hoc nor arbitrary and their nature and consequences must be clear, although the consequences need not be foreseeable with absolute certainty.”

[167] The first question, then, is whether the SMT’s decision should be regarded as falling within the scope of some limit on the anti-discrimination right which can be said to have been expressed with sufficient precision in an Act of Parliament, subordinate legislation or the common law.

[168] Mr Linkhorn did not suggest that the SMT’s decision might have been ‘prescribed’ by any subordinate legislation or by the common law. Instead Mr Linkhorn referred us to cases such as Federated Farmers of New Zealand Inc v New Zealand Post Limited [111]; Lawson v Housing New Zealand[112] and Christchurch International Airport Limited v Christchurch City Council.[113] Reliance was also placed on Canadian cases such as Slaight Communications Inc v Davidson[114], Multani v Marguerite-Bourgeoys (Commission Scolaire)[115] and Wynberg v Ontario (2006) 269 DLR (4th) 435[116].

[169] The point of these cases for the MoH’s argument is that much governmental action is undertaken by means other than by statute or regulation, with a consequence that significant difficulties will arise if the precise choice of instrument by which the government acts in any given case was to determine whether or not the governmental action in question could be said to be ‘prescribed by law’. As Mr Linkhorn observed, to hold that a policy that is adopted under a broad statutory discretion is not ‘prescribed by law’ has the potential to impede efficient government by forcing governments to enshrine all initiatives in legislation or regulation in some way. On that basis, it is the MoH’s submission that as long as a discretion is exercised consistently with the statute that authorised it, then the exercise of the discretion should be regarded as being ‘prescribed by law’. Applying that idea to this case, the MoH says that the SMT’s decision was the exercise of a discretion that the SMT properly had as a result of powers ultimately derived from the NZPHDA.

[170] In answer, Mr Butler examined the provisions of the NZPHDA in some detail. He referred particularly to the purpose provision in s.3(1) which, amongst other things, makes it clear that the purpose of that Act is to provide for the public funding and provision of personal health services and disability support services to achieve “...the best care or support for those in need of services ...” for all New Zealanders. He made the point that the SMT’s decision effectively ignored the needs of ex-MSD service users. His argument was cross-referenced to international standards including comment No. 14 of the United Nations Committee on Economic, Social and Cultural Rights. The Committee’s comment refers to core obligations of member states including the obligation to ensure rights of access to health facilities, goods and services, on a non-discriminatory basis, especially for the vulnerable or marginalised. The comment goes on to say:

“If resource constraints render it impossible for a state to comply fully with its covenant obligations, it has the burden of justifying that every effort has nevertheless been made to use all available resources at its disposal in order to satisfy, as a matter of priority, the obligations outlined above. It should be stressed, however, that a state party cannot, under any circumstances whatsoever, justify its non-compliance with the core obligations set out ...above, which are nonderogable.”

[171] Mr Butler submits that the SMT decision cannot be described as having been prescribed under the NZPHDA because it disregards the needs of the service users whose funding was discontinued. Nor does Idea Services accept that the SMT decision fell within s.10 of the NZPHDA, which provision enables the Minister of Health, on behalf of the Crown, to negotiate and enter into funding agreements with organisations such as Idea Services. Even accepting that s.10(2) of the NZPHDA is a broad provision, he observed that it entitles the Minister to negotiate and enter into Crown funding agreements, to negotiate and enter into agreements to amend a Crown funding agreement, and to monitor performance under a Crown funding agreement. It does not, he submits, entitle the Minister (or by delegation in this case, the SMT) to unilaterally impose an exclusionary provision in relation to people who had, prior to the SMT decision, been accepted as being entitled to funding under the contract.

[172] We have found this a difficult part of this case. We say that because the argument draws the Tribunal into what is in effect a judicial review of the SMT decision, at least on the grounds of whether or not it has a secure legislative underpinning and/or whether the decision under challenge took proper account of the purposes for which the powers under the NZPHDA were to be exercised. Judicial review is not a natural function of this Tribunal. Furthermore, we do have considerable sympathy for Mr Linkhorn’s general proposition that a decision to the effect that discretions exercised under the umbrella of a broad statutory power are not ‘prescribed by law’ could create significant practical difficulties for the business of government.

[173] There are, however, two features of the SMT decision which we regard as significant:

• [a] The first is that, for reasons we have given, we do not accept that the SMT’s decision was consistent with the MoH’s contractual obligations to Idea Services. Given that the MoH had entered into a contract with Idea Services which obliged it to fund day services for ex-MSD service users - and that the decision to summarily discontinue that funding was made despite ongoing need for the services and acknowledgement that Government should still be funding such services - we do not accept that the SMT decision was authorised by s.10 of the NZPHDA. Self-evidently, the NZPHDA does not provide the MoH with a statutory power to ignore or dishonour the very funding arrangements that s.10 permits it to enter into. That is particularly so when an express purpose for which the power to enter into crown funding arrangements is given is “ ... to provide for the public funding and provision of ... disability support services ...” with an objective being “... the promotion of the inclusion and participation in society and independence of people with disabilities”: see s.3(1) of the NZPHDA. The decision to stop funding forthwith, despite the funding and policy gap that was thus opened up, cannot possibly be reconciled with that purpose;
  
• [b] Our second reservation derives from our conclusion that the decision was at least prima facie discriminatory towards the service users affected. We cannot find anything in the NZPHDA that might permit the MoH to discriminate against those who need disability support services. It is clear from the way s.5 NZBORA is set out that the question of whether an act or omission is justified is separate from the question of whether or not a limit on the right to freedom from discrimination has been ‘prescribed by law’. A defendant cannot meet the ‘prescribed by law’ test simply by arguing the limiting measure is justified.[117]
  

[174] Putting aside the question of what ‘law’ (i.e., Act of Parliament; subordinate legislation; the common law) might have underpinned the SMT decision, the second element of the approach suggested by McGrath J in Hansen looks at the question of whether the limit is ‘ad hoc’ or ‘arbitrary’, and whether the nature and consequences of the limit are clear.

[175] The nature and consequences of the SMT’s decision were clear enough. As a result of the SMT decision, the MoH stopped funding day services for ex-MSD service users forthwith. Although very few service users were affected in the short term, the number is growing. If nothing changes, it will follow that in the medium to longer run, intellectually disabled people who are over 65 years of age will not be able to take part in day services activities.[118] It is that very consequence which gives rise to the discrimination alleged in this case.

[176] We leave aside the question of whether or not the SMT decision ought to be described as ‘arbitrary’. We do so because it seems to us to be clear that it was an ad hoc decision. As described in paragraph [102] above, it was made as a cost cutting measure without any underlying policy work; it was at odds with the MoH’s contractual obligations; and there is no evidence that the possibility that there might be human rights issues involved was even recognised. Nor is there any evidence that the SMT took any steps before the decision was made to check that its decision[119], would be an appropriate exercise of its statutory powers under, for example, the NZPHDA.

[177] We are not satisfied that the SMT decision meets the test identified by McGrath J in Hansen for compliance with the ‘prescribed by law’ element of s.5 NZBORA.

[178] That being so, we agree with Mr Butler that s.5 NZBORA will not protect the SMT’s decision even if, putting the ‘prescribed by law’ issue aside, the decision might be found to be justified.

[179] Although we would dispose of the case on the basis that the SMT decision does not fall within any limit on the right to freedom from discrimination that is ‘prescribed by law’, we think it appropriate to go on to deal with the question of justification in any event.

Did the SMT decision serve a purpose sufficiently important to justify curtailment of the right to be free from discrimination?

[180] The first step of the ‘reasonable limits’ test in s.5 NZBORA requires that the rights limiting measure must serve a purpose that is sufficiently important to justify curtailing a protected right. To be sufficiently important, the limit must relate to concerns that are ‘pressing and substantial’ in a free and democratic society[120]

[181] The MoH submits that the important objective at work in this case was to ensure the fiscal sustainability of this part of the MoH’s funding of Disability Support Services. The SMT decision was necessary, it is submitted, to ensure that expenditure on separately funded day services did not become disproportionate to the MoH’s scope of responsibility for that kind of support, and in respect of other important disability support services that the MoH funds. At paragraph [104] above, we characterised the SMT’s position as being a cost-cutting measure, no more and no less. It should not, however, be assumed that that is a pejorative description. It is not. It is no doubt a very real fact of life that an agency such as the MoH must constantly look for ways of reducing costs.

[182] The evidence makes it clear, however, that in this case the SMT’s decision was one made with an eye to the future. The short term impact of the decision was on just a handful of service users, but the real concern was for the financial burden that would be represented by service users 15 or 20 years in the future. It is also clear that at the time the decision was made, there was a view within the SMT that the MoH should not be funding ex-MSD service users just because they had turned 65. It was understood that if funding for those service users via the MoH was discontinued, then there would be a gap in funding until something changed and some other governmental decision was made. The MoH clearly hoped that the MSD would pick up the cost. So, apart from cost-cutting, another purpose of the SMT’s decision was to stimulate or accelerate debate about what the source of funding for day services should be generally, specifically with a view to the possibility that responsibility would be transferred to the MSD.

[183] We do not accept that either of those objectives served purposes sufficiently important to justify curtailment of the right to be free from discrimination:

• [a] In this case, the MoH was not looking to cut a cost on the basis that the Government should not be meeting the cost at all. What it was looking to do was to shift the cost burden to some other agency of Government (most likely, the MSD);
  
• [b] In financial terms, the immediate impact of the SMT’s decision cannot have been material to the MoH. In the year after the SMT decision (2005-2006) the cost was saved for just 6 service users; and in the next year (2006-2007) only 18 more were affected. In fact during that period one left the group, so that by the end of 2007 there were a total of 23 service users affected. In our view the short run costs of continuing to fund day services for ex-MSD service users in the first year or two after the SMT decision was made cannot have had any real fiscal significance to the MoH when considered in light of the MoH’s overall annual appropriations for disability services;
  
• [c] It is true that the picture will change over time, as more ex-MSD service users join those who are already affected by the SMT decision. But instead of simply cutting off the funding as it did, the SMT could have continued to fund the service users concerned whilst signalling and promoting the need for a policy change and decsion-making within Government;
  
• [d] As we have noted above, there has been a slow discussion since March 2005 at a policy level about what the funding for day services generally should be, and whether and to what extent it should be shared (or completely transferred) between the MoH and the MSD. There is no reason we can see why the policy work and discussion needs to have taken what is now six years, with the issue still effectively unresolved;
  
• [e] The point is that the MoH could have accelerated the policy discussion if it had wanted to, and the debate could have been completed, within a time frame during which the actual additional cost to the MoH of continuing to fund ex-MSD service users was negligible;
  
• [f] Of course, if the outcome of that debate were to leave funding responsibility with the MoH, then our conclusion (i.e., that the MoH’s decision to summarily stop paying for day services for ex-MSD service users does not justify curtailment of the right of those service users to be free from age-related discrimination) would be all the more obvious. On the other hand, if the result of the policy work were to see responsibility transferred to the MSD, then that could have been done without having to leave any service users without funding in the interim.
  

[184] We agree with Mr Butler that these points echo some of the observations in Nova Scotia (Workers Compensation Board) v Martin; Nova Scotia (Workers Compensation Board) v Laseur.[121] We do not need to go so far as to say that budgetary pressures can never provide reasons sufficiently important to justify curtailment of the right to freedom from discrimination, but we are quite clear that the financial pressures at work in this case did not justify the discrimination that took place here.

[185] We therefore answer this question in the negative. We are not satisfied that the SMT’s decision served a purpose that was sufficiently important to justify curtailment of the rights of ex-MSD service users to be free from discrimination on the grounds of their age.

[186] This first question in the justification analysis is a threshold question, in the sense that the answer ‘no’ at this point disposes of the justification issue without more. It is not necessary to go on to consider the remaining issues.[122] Again, however, we think that in view of the detailed submissions that have been received it is proper for us to go on to consider the remaining questions.

Was the SMT decision rationally connected to its purpose?

[187] The SMT’s purpose in making its decision was to cut costs. There was also a related purpose of moving funding responsibility out from the MoH to another Government agency, most likely the MSD. As a matter of logic, we accept that the decision was rationally connected to those purposes.

[188] On this limb of the inquiry, however, Mr Butler invited us to consider whether a measure can be said to be rationally connected to its purpose in circumstances where there is doubt as to whether the measure would ever achieve the outcome(s) proposed. The idea is that it is not enough for the MoH to say that the SMT decision was made to ensure fiscal sustainability, having regard not only to the services at issue but to all of the MoH’s wider obligations for funding disability services as well, when there is no adequate evidence that the decision might actually have given rise to the kind of fiscal sustainability issues that were proffered as the reason for it.

[189] We can certainly see the point, which has some merit - particularly given that it is the MoH that has the onus of establishing that the measure is justified under s.5 NZBORA. In the end, however, we would not decide the case against the MoH on this issue. The purpose of the SMT decision was to cut costs and stimulate a discussion about where the funding responsibility should lie within Government. Whatever other criticisms there may be, we are not willing to hold that there was no rational connection between the SMT’s decision and those purposes.

Did the SMT decision impair the right to be free from age-related discrimination no more than reasonably necessary for its purpose?

[190] In our view the SMT decision impaired the right of ex-MSD service users to be free from age-related discrimination very much more than was reasonably necessary for its purpose. Our reasons are effectively set out at [183] and [184] above. There was no demonstrable need for the MoH to cut the funding, and then try to have the discussion about where responsibility for providing it should lie within Government. The cost to the MoH of seeing that the policy decision was addressed before any funding was cut would have been insignificant in the overall context of things.

[191] There was no need that we can see for the MoH to act in the peremptory way that it did.

Was the SMT decision in due proportion to the importance of its objective?

[192] Our answer to this question is also in the negative. Once again, we cannot see that there was any reason for the MoH to cut funding to ex-MSD service users in the peremptory way that it did. Not only was that a step that was inconsistent with its contractual obligations, but the amounts involved in the short run were for all intents and purposes immaterial to the MoH. The decision to cut the funding did not need to be made before the internal debate between the MoH and the MSD had been concluded.

Justification: Conclusion

[193] With respect to the issues of justification, we have concluded:

• [a] The SMT’s decision was not ‘prescribed by law’, and therefore fails the s.5 NZBORA justification test for that reason;
  
• [b] Even if the justification analysis is undertaken:
  
  • [i] The SMT’s decision did not serve a purpose that was sufficiently important to justify curtailment of the right of ex-MSD service users to be free from age-related discrimination. Again, the SMT’s decision fails the justification analysis for this reason as well;
    
  • [ii] Although the SMT’s decision may have been rationally connected to its purposes, it has impaired the right to be free from age-related discrimination more than reasonably necessary for those purposes, and it was not in due proportion to the importance of its objectives. Once again, in our view the SMT’s decision fails the justification analysis required by s.5 NZBORA.
    

[194] In our view, the SMT’s decision comprehensively fails the justification analysis required by s.5 of the NZBORA.

H CONCLUSIONS

[195] Overall, we have concluded:

• [a] The SMT’s decision to stop funding for intellectually disabled people requiring access to day services after their retirement from the MSD amounted to prima facie discrimination;
  
• [b] The SMT’s decision is not justified under s.5 of the NZBORA.
  

[196] In our view the SMT decision was a breach of Part 1A of the HRA.

I NEXT STEPS

[197] As noted at the outset, it was agreed that all questions of remedy should be left to be determined at a later stage. We therefore make no final orders; not even a declaration.

[198] We recognise the possibility that the parties may want to seek a further opinion in respect of the conclusions we have reached at this stage. In that case there may be an issue as to whether this decision should be regarded as a final decision, or an interlocutory one only.[123] Judicial review may be considered. Alternatively the parties may want the Tribunal to deal with the issues of remedy.

[199] In any case, it seems appropriate to leave the matter for 30 days after this decision is issued, and for there to be a case management conference with the Chairperson of the Tribunal after that. We ask the Secretary of the Tribunal to arrange that in due course.

[200] In the meantime, costs are reserved.

J ACKNOWLEDGMENT

[201] We would like to end by acknowledging the work that has been done by counsel on both sides. We have greatly appreciated their courteous and constructive professionalism which has been a hallmark of this litigation.

_______________ _______________ ________________
Mr R D C Hindle Ms M Sinclair Dr A D Trlin
Chairperson Member Member

[1] The subset most directly in issue comprises people who have intellectual disabilities, are over 65 years in age, and for whom such activities had before their 65th birthday been funded by the Ministry of Social Development. We deal with the details below.
[2] In this decision, ‘the MoH’.
[3] In this decision, ‘the HRA’.
[4] Referred to in this decision as ‘NZBORA”.
[5] There was no suggestion, for example, that the statutory pre-requisites in ss.92B and 76(2)(a) of the HRA have not been met.
[6] Such as, for example, the Ministry of Social Development.
[7] C/f Child Poverty Action Group Inc v Attorney General [2006] NZHC 1661; (2006) 18 PRNZ 295.
[8] See, e.g., Quilter v Attorney-General [1997] NZCA 207; [1998] 1 NZLR 523 at p. 532 (Thomas J), and at p.557 (Keith J); Child Poverty Action Group Inc v Attorney General [2008] NZHRRT 31 at para [7] – in this decision, ‘CPAG’.
[9] In this decision, ‘IHC’.
[10] IHC was first called the Intellectually Handicapped Children’s Parents’ Association. In 1962 it became the Intellectually Handicapped Children Society, then in 1975 its name changed again to the New Zealand Society for the Intellectually Handicapped. It has operated under its present name, i.e. the IHC, since 1994.
[11] In this decision, ‘the MSD’
[12] The MSD does not, for example, fund people with intellectual disability because of an accident, or people who for health-related reasons are funded through the District Health Boards, or persons who come under the Intellectual Disability (Compulsory Care and Rehabilitation) Act 2003.
[13] Those who can take part in these kinds of activities are often referred to as ‘service users’.
[14] Although those who were in that group at the time of the decision would continue to be funded by the MoH – their entitlement was described as having been ‘grand-parented’: see below for more detail.
[15] This is not to suggest that the idea of moving the funding responsibility from the MoH to the MSD had never been mooted before March 2005; but if it was, then the discussion was just that –discussion. Nothing had been done to effect such a transfer.
[16] Even if, prior to turning 65, they were funded to access community participation activities by the MSD.
[17] The description of the situation in terms of a funding ‘gap’ (rather than as being, say, an example of over-funding, or as unnecessary funding) is significant. In fact the MoH accepts that there is a policy and service gap as well. Speaking in terms of a ‘gap’ emphasises the fact that the MoH is not saying that Government should not be funding community participation activities for the affected services users. At the same time it reflects the reality that, until responsibility for funding the activities has been resolved at an inter-Ministry level, in fact there is no Government funding available for the services at issue in this case.
[18] Furthermore, as Mr Linkhorn submitted, the fact that people are ‘retired’ from MSD funding for community participation services at age 65 is not in issue in this case; there is no discrimination-related challenge to the MSD rules in that regard. This is a case about the decision made by the MoH’s SMT in March 2005, not about the MSD’s application of a cut-off for funding at age 65.
[19] See s.21A(2) of the HRA. The emphasis is, of course, ours.
[20] See the data in the table at para [40] below.
[21] The MoH referred us to the definitions of ‘disabled person’ and ‘person with a disability’ as they appear in the funding agreement with Idea Services: i.e., someone “ ... who has been identified as having a physical, intellectual, sensory disability (or a combination of these) which is likely to continue for a minimum of six months and result in a reduction of independent function to the extent that ongoing support is required .”
[22] Assuming, that is, that they are willing to provide support at all.
[23] Mr Powell was the Manager, Service Access in the MoH’s Disability Support Services Group at the relevant time. He gave evidence that although there are some people with intellectual disability over 65 years of age who live in their own homes, and are supported by family and friends, about 90% of people with intellectual disability over 65 years receive residential support. We discuss residential support in greater detail below.
[24] That is to say, after the SMT decision of March 2005.
[25] In fairness, the MoH would say that the SMT decision did not create the gap so much as draw attention to a gap in funding that it (the MoH) considered – at least, after March 2005 - should be coming from the MSD funds or annual budget.
[26] As Mr Powell put it: “The [MoH] is concerned for individuals who want to continue attending their service but are unable to do so. Our concern is that disabled people will be left at home without any kind of meaningful activity. People’s well-being will be affected, and this may lead to the development of challenging behaviour. This will not be good for the people using our services and will obviously be difficult for whoever supports these people. There would be likely to be flow on costs for the provider.” Mr Powell went to say, however, that of greater concern than all of these things to the MoH is “ ... the impact on the quality and sustainability of all services that the [MoH] is responsible for if it was obliged to divide its funding for day services across a larger population if the [MoH] provided funding to people who exit MSD-funded day services.” He also reassured us that the MoH will ‘continue to work’ on resolving the policy gap for community day services for people 65 years and over.
[27] Strictly speaking, the subset is made up of persons who were de-institutionalised as part of an agreed de-institutionalisation plan. Mr Powell’s evidence was that it is a small number of people. Over time, of course, the number of ‘de-institutionalised’ service users will diminish to zero.
[28] We accept the submission for the MoH that the fact that there are examples in which it has paid for community participation services – even after March 2005, and contrary to the SMT decision – does not of itself change the evaluation of what the MoH is or is not responsible for under the contract it has with Idea Services.
[29] For example, because they passed away, or perhaps moved to DHB-funding.
[30] These are financial years under the MoH/IHC contract, which we understand to be 1 July to 30 June years. We refer to the contract in detail below.