Matthews v Accident Rehabilitation and Compensation Insurance Corporation

IN THE DISTRICT COURT HELD AT WELLINGTON Decision No. 104 / 97 UNDER The Accident Rehabilitation and Compensation Insurance Act 1992 AND IN THE MATTER of an appeal pursuant to section 91 of the Act BETWEEN CHRISTINE FAITH MATTHEWS of Foxton Appellant (Appeal No. DCA 334/96) AND ACCIDENT REHABILITATION AND COMPENSATION INSURANCE CORPORATION a body corporate duly constituted under the provisions of the said Act Respondent DECISION OF JUDGE A W MIDDLETON ON THE PAPERS I have received submissions from A R V Rowlett, advocate for the appellant and from D K Tui, counsel for the respondent with the request that I issue a decision on the papers. The issue before me is whether the appellant is entitled to an exercise of the discretion under section 77(2) of the Accident Rehabilitation and Compensation Insurance Act 1992 in respect of an overpayment of earnings related compensation. The appellant suffered a neck injury in June 1987 for which the respondent accepted cover in February 1990. The appellant received lump sum awards under sections 78 and 79 of the Accident Compensation Act 1982 and was provided with home help. In May 1991 the respondent assessed the appellant's entitlement to earnings related compensation at the rate of $264.02 gross per week. The earnings related compensation was subsequently increased by various Orders in Council with the result that in January 1996 the quantum was assessed at $277.14 gross per week. On 19 February 1996 the respondent advised the appellant that it had paid her double 2 earnings related compensation between the period 11 November 1995 and 19 January 1996, the overpayment amounting to $2,216.70 net. The respondent requested repayment of the overpayment. On 21 February 1996 the appellant and the respondent agreed that she would make repayments of $30 per week out of her earnings related compensation. On 18 June 1996 the appellant's then advocate requested remission of the overpayment under section 77(2). On 25 June 1996 the respondent notified the appellant's advocate that the application was declined but as the appellant was having financial difficulties the rate of repayment was reduced to $10 per week. The appellant applied for a review of that decision. The Review Officer was satisfied that the appellant had not altered her position in reliance on the overpayment and considered that she was in a position to repay the overpayment. In her evidence and before the Review Officer the appellant said that when she received the assessment in the mail she had not gone to her bank to ascertain what amount had been paid in. She said that as it had been paid in she simply rang an employee at the respondent's office who notified her that there had been an increase in it and told her that she was receiving the correct amount. The employee described it as "a top up" but apparently assured the appellant that the amount was correct and that she had no reason to query it. In answer to a question from the Review Officer as to whether there was a reason why she was in doubt, the appellant said "well no that's why I rang them. I couldn't understand it myself and Nicky asked me, she said 'are you working' and I said no I'm in the process of looking for work and she said to me that it was correct but she called it a top up". The appellant said that that was the first payment that she had received from the respondent. The appellant then corrected that statement and said that it was in fact the first increased payment she had received. In response to a further question she said that there was only that one increase payment in the period. That again was subsequently corrected by the respondent's officer at the review hearing who noted that while the appellant was entitled to $184.57 prior to the error, it increased by reason of the error to $206.24 to the period 19 June 1996. The Review Officer held that she was not satisfied that the appellant had altered her position in reliance on the money because she had not provided proof of ongoing payments which she had entered into on receiving the payments and that she had been repaying overpayments since February 1996, originally at $30 per week but later at $10 per week. Furthermore, he held that the appellant had become entitled as from 22 July 1996 to an independence allowance of $16.12 per week which would have provided additional funds to meet the payments of $10 per week. He therefore declined the application. Mr Rowlett submitted: 1. That when the increased payment was received, the appellant queried the amount with a member of the staff and was satisfied that it was correct. 3 2. That when the matter came before the Review Officer, he was satisfied that the appellant had not contributed to the error and had received the money in good faith. 3. That while the Review Officer had to be satisfied that the appellant had altered her position in good faith on the basis of the money received, he did not accept that the appellant had in fact changed her position and made purchases which she would not been able to afford had she not had the money. Mr Tui submitted: 1. That it was conceded that the appellant had not intentionally contributed to the error. 2. That the appellant appeared to rely on the query made to the respondent's officer 'Nicky" who confirmed that the payments were correct and amounted to a 'top up' . 3. That at the review hearing the respondent's officer representing the respondent at that hearing explained to the Review Officer that the employee "Nicky" did not recall any conversation with the appellant and no file note was made by Nicky which would normally be the practice in the office. 4. That there is no evidence that the appellant had entered into binding financial commitments on the strength of the money she was overpaid. 5. That while Mr Rowlett submitted that the appellant had altered her position by generally spending more money on groceries, family visits, clothing and social excursions, that did not constitute an alteration in her position which would constitute an irreversible financial decision which would otherwise not have been made. 6. That the Review Officer was correct in finding that with the additional payment of the independence allowance, the appellant would be in a position to repay the overpayment having regard to the fact that she had already been paying $10 per week. The issue in this appeal is governed by section 77(2) of the Act which states: "77. Recovery of overpayments and unpaid premiums by Corporation-- (2) The Corporation shall remit in whole or in part a debt which arose as a result of an error not intentionally contributed to by the debtor if the Corporation is satisfied that the person receiving the amount so paid in error did so in good faith and has so altered his or her position in reliance on the validity of the payment that it would be inequitable to require repayment." 4 The appellant was obviously doubtful when she received a substantially higher payment than had been normal because she claims to have rung a member of the staff of the respondent who assured her that the payment was merely a top up. The only evidence of this is the appellant's own statement because it appears to have been denied by the staff member concerned and had such a query been received the staff member had failed to comply with her instructions which would have been to place a memo of the conversation on the file. I accept that the overpayment was not intentionally contributed to by the appellant. The Review Officer accepted that the appellant had received the money in good faith but I consider that there must be some doubt as to her good faith having regard to the query she made immediately upon receiving the payment and the subsequent evidence that has been given on that. However, the principle hurdle which the appellant must satisfy in order to seek the benefit of the discretion is whether or not she relied on the validity of the overpayments and altered her position on the basis of that. While she had spent the money on clothing, and outings and perhaps additional food, I do not consider that that is of a nature contemplated by the Act. In the case of Reinders (33/96) that appellant had purchased a house on the basis of the compensation she received and had entered into mortgage payments on that basis. The appellant held that she had altered her position in reliance on the validity of the payments. I agree with Mr Tui's submission in this case that there is no evidence that this appellant has altered her position by entering into binding commitments on the strength of the overpayments. In regard to the fourth requirement of the section as to whether or not it is inequitable to require repayment, I am satisfied that it is not. This appellant has been able to pay $10 per week prior to receiving the independence allowance of $16.12 per week so that the requirement to continue to repay at $10 per week is not inequitable. The appeal is dismissed. DATED at WELLINGTON this 23 day of May 1997 A W Middleton District Court Judge dc334-96.doc (nr)