Social Development is forcing recovery of overpaid covid-19 wage subsidies through the simple expedient of taking legal action for breach of contract. Bay of Plenty agricultural contractor Papa Robs was ordered to return $445,000 overpaid.
Wage subsidy applications were made online through a web-based application on a Work and Income website. It was a high-trust model. Payments were made quickly. Audits to confirm eligibility came later.
The High Court was told Papa Robs Contractors Ltd received in total $447,400 for covid-19 wage subsidies between March 2020 and September 2021.
A later audit of Papa Robs’ GST returns identified the company did not in fact suffer the required percentage decline in revenue necessary to qualify. For one period, revenue increased, rather than decreased.
Papa Robs agreed it should not have received a payout.
At various times over the last four years, the company’s sole director as listed on the Companies Register has been Amihihaera Fraser, giving an Opotiki address, and Joel Taylor Fraser, with a Rotorua address.
Evidence was given of an initial agreement to repay by instalments. Only $2000 was repaid. A later offer to settle the full debt with part-payment was rejected.
Papa Robs said it doesn’t have the cash to make full payment.
Social Development sued.
Associate judge Taylor ruled Papa Robs was in breach of contract. Social Development’s website amounted to an offer, promising payment of a wage subsidy in return for promises from the applicant as to eligibility.
Papa Robs was not eligible.
It was a term of the website contract that all ineligible payments must be repaid.
Attorney- General v. Papa Robs Contractors Ltd – High Court (22.05.24)
24.129