McKenzie v Accident Rehabilitation and Compensation Insurance Corporation

IN THE DISTRICT COURT HELD AT CHRISTCHURCH Decision No. 123 199 UNDER The Accident Rehabilitation and Compensation Insurance Act 1992 AND IN THE MATTER of an appeal pursuant to section 91 of the Act BETWEEN COLLEEN MAUREEN MCKENZIE of Christchurch Appellant (Appeal No. DCA 368/98) AND ACCIDENT REHABILITATION AND COMPENSATION INSURANCE CORPORATION a body corporate duly constituted under the provisions of the said Act Respondent HEARING at CHRISTCHURCH on the 18th day of March 1999 APPEARANCE/COUNSEL Mr I JD Hall and Ms K South for appellant Mr C Richards for respondent RESERVED JUDGMENT OF JUDGE MJ BEATTIE The issue in this appeal is whether the respondent was correct to require the appellant to repay an overpayment of weekly compensation rather than remit the same, whether in whole or in part, pursuant to the provisions of s. 77(2) of the Act. Background 2 The facts in this matter are not in dispute. The appellant now aged 60 suffered personal injury by accident in 1987. She suffered an injury to her back and from the date of that injury was not able to return to her pre-accident employment as a nurse aide. The appellant commenced receiving weekly compensation. It is common ground that the amount of weekly compensation the appellant received between 3 April 1992 and 9 April 1998, when the error was discovered, was greater than the weekly amount to which she was entitled and the net amount overpaid during that period amounted to $2,107.71. It is that sum which the respondent now seeks to recover pursuant to s.77(1) of the Act. It is common ground that in terms of s. 77(2) of the Act that the overpayment was as a result of an error not contributed to by the appellant and that she received the payment in good faith. It is also common ground that the amount overpaid was approximately $6 per week and that in evidence to the review officer the appellant advised that her weekly compensation as received, including the small overpayment, was used and spent on day to day expenditure. Although it is not relevant to the issue for determination in this appeal, it is noted that the respondent was not requiring the appellant to repay the amount in one sum, but simply by way of small weekly deduction from her future weekly compensation entitlement. The appellant, through her counsel, contends that she is entitled to have the full amount of that overpayment remitted pursuant to the provisions of s. 77(2) of the Act. Section 77 of the Act states as follows: "77. Recovery of overpayments and unpaid premiums by Corporation - (1) If any person receives any sum of money from the Corporation - (a) Which is in excess of the amount to which he or she is entitled under this Act; or (b) To which he or she is not entitled - the sum of money shall, except to the extent that it is recovered under subsection (3) of this section, be a debt due to the Corporation and may be recovered by way of 3 proceedings or deducted from any amount thereafter payable to that person (whether or not in respect of the same personal injury). (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. " In his decision the review officer found that the appellant had spent the overpayment on daily living and that there had not been any altering of position in reliance on the payment made. On that basis he ruled that the criteria of s.77(2) had not been satisfied and therefore the respondent was entitled to require repayment. Counsel for the appellant produced extensive written submissions in support of the appeal. Those submissions seeking to persuade this Court that the review officer had failed to consider the appropriate law relating to equitable relief in this case. Mr Hall submitted that the provisions of s.77 of the Act are simply a restatement of the general law of restitution. He thereupon submitted that the law of restitution is founded on the principle of unjust enrichment. He cited the decision of Portman Building Society v Hamlyn Limited (1998) 4 All ER 202,206. In furtherance of that he submitted that the appellant was entitled to rely on the validity of the weekly payment and to spend it as she thought fit. Counsel submitted that it could not be contended that the appellant had been unjustly enriched. He submitted that the question was to look at whether there had been unjust enrichment rather than whether or not a person had changed his or her position. In any event he submitted that the appellant had changed her position by spending the money as she received it and to require her to repay would be to substantially alter her position. He considered it was that question which must be looked at from the point of view of competing equities. Counsel further submitted that the law was wrong if it contended that spending on normal day to day living was not a changing of position. 4 Finally, counsel for the appellant submitted that the appellant was entitled to plead the defence of estoppel and he cited the Authorities of Holt v Markham [1923] 1 KB 504, Avon County Council v Howlett (1983) (1) All ER 1073 and Lipkin Gorman v Karpnale Limited [1992] 4 All ER 512. Mr Richards, counsel for the respondent, submitted that this was not a claim for recovery of monies had and received or monies paid under mistake at common law, rather it was a claim pursuant to a statutory entitlement under s.77 of the Act. He submitted that the word "inequitable " as contained in s.77(2) carries its ordinary meaning and that its presence in that statute does not give rise to equitable defences recognised in a Court of Chancery. Counsel submitted that the law as enunciated by this Court in its decisions in Matthews (104/97) and Fraser (137/98) correctly state the law and that as the facts established that the appellant has not altered her position in reliance on the payment, it cannot be regarded as being inequitable to require her to repay. Decision Counsel for the appellant has submitted that various principles applicable to the Law of Restitution in claims for recovery of money paid, or monies had and received, as have evolved by the Courts, in the United Kingdom, and in particular equitable defences, are applicable when considering the right of this respondent to obtain recovery from the appellant of monies overpaid. Counsel submits that the word "inequitable" referred to in s.77(2) thereby brings in the whole raft of equitable remedies and equitable defences to actions at common law. I find that this can not be the case as s.77 of the Act lays down a statutory regime for the recovery of monies overpaid and for the relief from the requirement to so repay in certain circumstances. Whilst it has as its basis certain notions and principles which have evolved in the common law or at equity, nevertheless it remains a statutory regime and whilst equitable principles of fairness and justness are to apply, that is the extent of either equitable or common law considerations and included in that category must be the law relating to estoppel. 5 It is evident that the provisions of s.77, particularly subsection (2) are similar to the provisions of s.94B of the Judicature Act 1908 and this Court has previously indicated that decisions made under that statutory provision are relevant and of great assistance and precedent value when considering claims under s.77 of the ARCIC Act. The provisions of ss.94A and 94B of the Judicature Act 1908 and s.77 of the ARCIC Act create statutory rights of action and supplant principles of common law and equity which may have hitherto applied, in particular s.94A of the Judicature Act gives a right of recovery of payments made under a mistake of law whereas the common law to this day denies relief and payments under mistake of law are generally not recoverable. Similarly, the notions contained in s.94B and s.77(2) are codified defences to an action for money paid whereas in the United Kingdom notions which are embodied in those two respective subsections are still being developed incrementally. See the decision of Lord Goff in Lipkin Gorman v Karpnale Limited (supra) at page 533. It follows from that basic tennet that the right of the respondent to recover overpayment and the right of the appellant to seek relief as provided in s.77, is as has previously been determined by this Court in its previous decisions, particularly those of Matthews, Fraser, and also Hurley (49/98). Insofar as the facts of this case are concerned, there is no dispute that the appellant did nothing more than simply spend the additional $6 per week as and when it was received, such a modest sum would hardly enable the appellant to enter into any financial transactions of any magnitude. In those circumstances this Court must hold that the mere spending of money on day to day living cannot amount to an altering of her position and again this Court relies on the decision of the High Court in K J Davies (1976) Limited v Bank of New South Wales (1981) 1 NZLR 262 which was cited with approval in the later decision of National Bank of New Zealand v Waitaki International Processing (NZ) Limited (1997) 1 NZLR 724. So it is in this case then that the appellant cannot bring herself within one of the prerequisites for the consideration of relief from the provisions of s.77(1). As has previously been noted by this Court in Hurley and Fraser, if there has been no altering of the appellant's position to her detriment as a consequence of receiving the payment, then there cannot be said to be any 6 inequity arising in requiring the repayment. If there is no altered position there can be no inequity in requiring repayment . The balancing of equities only arises when the Court is required to consider a recipient's altered position and from which he/she would suffer an injustice if called upon to repay and the injustice of requiring he/she to so repay outweighs the injustice of denying the claimant the money to which it is entitled - see Lipkin Gorman at page 533. For the foregoing therefore I find that the majority of the submissions advanced by counsel for the appellant are not applicable to considerations under s.77 and that the principles applicable to the law of restitution, actions for money had and received, monies paid under mistake of fact and estoppel are not applicable to claims under s.77 of the ARCIC Act. So far as estoppel is concerned, being estoppel by representation, the High Court has already determined that notions of estoppel are not applicable when considering rights or entitlements under the statutory regime which is the ARCIC Act. I refer to the decision of His Honour Justice Laurenson in Wong-kam, Auckland High Court (97/97) Judgment 15 December 1998. The respondent is only able to pay, and a claimant is only entitled to receive, that to which each is authorised to pay or receive pursuant to the provisions of the Act and as entitlements are wholly statutory any payment in excess cannot be considered a sum to which the respondent Corporation is estopped from recovering. For the foregoing reasons, the decision of the respondent that the appellant is not entitled to remission of the overpayment was correct and this appeal is dismissed. DATED at AUCKLAND this 18th day of May 1999 MJ Beattie District Court Judge dca36898.doc(rd)