Goodman v Accident Compensation Corporation

IN THE DISTRICT COURT AT WELLINGTON DECISION NO. 115/2007 UNDER The Injury Prevention, Rehabilitation and Compensation Act 2001 IN THE MATTER OF an appeal pursuant to section 149 of the Act (Appeal No. AI 219/06) BETWEEN DALE PAUL GOODMAN Appellant AND ACCIDENT COMPENSATION CORPORATION Respondent Hearing: 19 February 2007 Appearances: Mr J P Mccarthy for appellant Mr H A Evans for respondent Judgment: 18 June 2007 RESERVED JUDGMENT OF JUDGE D A ONGLEY [1] This appeal concerns the respondent's liability for payment of interest on backdated weekly compensation, where the respondent has not recognised an entitlement but later acknowledges the entitlement claim and makes a payment of arrears. The appellant claims that the respondent should pay interest from the time that it should originally have accepted liability for weekly compensation. [2] Mr Mccarthy applied for an adjournment of the hearing in order to further an application for legal aid. The appeal had been set down in the usual way and it appeared that its success depended on a short point concerning the respondent's liability to pay interest where it could not make payment until calculating a deduction refundable to WINZ. Mr Mccarthy was able to argue that point, reserving DALE PAUL GOODMAN V ACCIDENT COMPENSATION CORPORATION DC WN DECISION NO. 115/2007 [18 June 2007] if necessary the more difficult question whether the Corporation had all necessary information concerning the appellant's incapacity and his relevant earnings before and after the incapacity occurred. I declined to adjourn the hearing and the appeal proceeded on the WINZ deduction argument alone. [3] Mr Goodman was involved in a motor bike accident on 17 July 1987 when he was 16 years of age. He suffered multiple fractures and a head injury. He has been physically able and has demonstrated athletic ability, in shotput and weightlifting. The incapacity question concerns his psychological and cognitive functioning. [4] Over the years he received weekly compensation and was assessed by a number of specialists. Some of those opinions stated that his symptomatology was no longer caused by his head injury and the Corporation stopped his weekly compensation. To the contrary, in a report of 21 August 1998, Dr Les Ding, Consultant Psychiatrist, gave his opinion that Mr Goodman had cognitive impairment and personality changes caused by the accident. He said that Mr Goodman had recovered from non- accident psychiatric illness. However the Corporation's decision was confirmed on review . [5] In January 2004, a Clinical and Neuro-Psychologist completed a full neuropsychological reassessment. She concluded that Mr Goodman's work capacity needed to be determined in a more structured way, given his problems with fatigue, and his ability to memorise and recall information. He was also assessed by a speech language therapist in March 2004, reporting recommendation for treatment. [6] In May 2004 Mr John Miller, as solicitor for Mr Goodman, filed an application for leave to appeal against the 1998 review decision on the basis that the Corporation was wrong to cease weekly compensation. Discussions followed between Mr Miller and the Corporation's legal representative resulting in settlement of the appeal, ACC agreeing to reinstate Mr Goodman's weekly compensation from the date of cessation. [7] The Corporation then had to calculate backdated weekly compensation, deducting payment made to the appellant by Work & Income New Zealand over the relevant period. [8] On 9 November 2004, WINZ provided the required information. On 15 November 2004, ACC wrote to Mr Goodman and set out the calculations of backdated weekly compensation. The relevant part of that letter is as follows: "ACC has become aware that you have not received your full weekly compensation entitlement for the period 14/4/1998 to 22/8/2004. We have calculated your backdated weekly compensation to be: Total (before tax): $181,354.43 Less the amount you owe Work & Income: $73,220.45 Total you are owed (before tax): $108,133.98 Less Supplementary WINZ deduction of $8,360.72" [9] On 18 November 2004 Mr Goodman completed an IRD form in order to obtain backdated weekly compensation at his normal tax rate and on 25 November 2004, ACC paid backdated weekly compensation of $47,716.43 to his account after various deductions, including PAYE and Mr Goodman's student loan. [10] Section 114 of the Injury Prevention, Rehabilitation, and Compensation Act 2001 provides: 114 Payment of interest when Corporation makes late payment of weekly compensation (1) The Corporation is liable to pay interest on any payment of weekly compensation to which the claimant is entitled, if the Corporation has not made the payment within 1 month after the Corporation has received all information necessary to enable the Corporation to calculate and make the payment. (2) The Corporation is liable to pay the interest - (a) at the rate for the time being prescribed by, or for the purposes of, section 37 of the Judicature Act 1908; and (b) from the date on which payment should have been made to the date on which it is made. [11] The legislation to be applied is that which is current when the claim for interest was to be determined; see Reckin (265/06) following Robinson v ACC (CA 15/05, 13 October 2006). In this case, when liability for arrears of weekly compensation was established in 2004 the Corporation's liability was governed by the 2001 Act. The Corporation's obligation to refund money to WINZ out of the arrears of weekly compensation is stated in s252, which is in similar terms to s373 of the 1998 Act: 252 Relationship with social security benefits: reimbursement by Corporation (1) This section applies if a person - (a) receives a payment of an income-tested benefit under the Social Security Act 1964 in respect of a period; and b) establishes a claim to an entitlement from the Corporation in respect of all or part of the same period. (2) An excess benefit payment is regarded as having been paid in respect of that entitlement. (3) An excess benefit payment is the part of the benefit payment (up to the amount of the entitlement) that is in excess of the amount of benefit properly payable, having regard to the entitlement under this Act. (4) The Corporation must refund the excess benefit payment to the department responsible for the administration of the Social Security Act 1964 - a) if the Corporation knows that this section applies; or (b) if requested to do so by that department. (5) For the purposes of this section, an excess benefit payment includes a payment of any part of a married rate of benefit that is paid to the spouse of the person who established the claim to the benefit. (6) Any amount that is treated under this section as having been paid in respect of any treatment, service, rehabilitation, related transport, compensation, grant, or allowance is deemed for all purposes to have been so paid. [12] The Corporation is therefore required to refund the excess benefit. In applying s114, the amount of excess benefit to be repaid to WINZ is part of the necessary information required to calculate and make the payment to the claimant. That has been held repeatedly in a line of cases following Wardle v ACC (AP 134/02, Wellington High Court, 18 October 2002, Gendall J). [13] Mr Mccarthy's argument was based on unfairness and arbitrariness resulting from the generally accepted application of sl14. He gave as an example a comparison between two claimants, one married with no benefit and no income and another single and on a benefit. One would get interest and one would not. [14] Depending on other circumstances that is a possible outcome and could lead to an apparently unfair difference in treatment. In some cases a fortunate claimant will be able to show that the Corporation has had all necessary information for many years, and will be entitled to interest for an extended period. But in most cases, the Corporation is likely to need more information than it has had on its files since the entitlement was originally declined. Mr Mccarthy also pointed out that the Corporation's own wrong decision may be the reason why it has not received the necessary information, particularly in cases where the claimant stops providing earnings information because the Corporation has declined to pay weekly compensation. [15] Some results will inevitably be unfair in terms of different outcomes between claimants and loss of use of money that claimants should have received, but the purpose of s1 14 clearly limits the Corporation's liability for interest to commence one month after the Corporation has received received all information necessary to enable it to calculate and make the payment. Decision [16] In this case the refund of excess benefit to WINZ was a mandatory requirement imposed on the Corporation by $252. Until the Corporation was notified of the amount required to repay it could not calculate the balance due to the claimant. The WINZ information was received on 9 November 2004 and the Corporation paid the appellant on 24 November 2004. Therefore it did not incur liability for payment of interest under $1 14. [17] That finding disposes of the appeal. Mr Mccarthy recognised that if the appellant did not succeed on this point, his argument that the Corporation had the necessary medical information would become redundant. Because of my decision concerning the WINZ information there is no need to reserve leave for the medical point to be argued. [18] The appeal is therefore dismissed. [19] Mr Mccarthy applied for costs, however I find no reason in this case to depart from the convention that costs are not awarded to an unsuccessful appellant. Judge D A Ongley District Court Judge