Mollgaard v Accident Rehabilitation and Compensation Insurance Corporation

IN THE DISTRICT COURT Decision No. 172 /97 HELD AT WELLINGTON IN THE MATTER of The Accident Rehabilitation and Compensation Insurance Act 1992 AND IN THE MATTER of an Appeal pursuant to Section 91 of the Act BETWEEN DAVID MOLLGAARD Appellant (Appeal No. DCA 43/97) AND ACCIDENT REHABILITATION AND COMPENSATION INSURANCE CORPORATION a body corporate duly constituted under the provisions of the said Act Respondent HEARD on the 30th day of July 1997 APPEARANCES John Miller for appellant Pauline Zumbach for respondent DECISION OF JUDGE D A ONGLEY This appeal concerns the construction of reg 17(b) of the Accident Rehabilitation and Compensation Insurance (Complex Personal Injury) Interim Regulations 1994. The question concerns backdated payments for care provided to the appellant by his mother between the date of commencement of the regulations and the date when the Corporation agreed to a social rehabilitation programme The appellant sustained severe head injuries in March 1993 and suffered brain damage through anoxia. He received payments for attendant care during the period until commencement of the Complex Personal Injury Regulations on 1 July 1994, when his mother, Mrs Kelleher, applied on his behalf for assessment of entitlement under the new regulations. The assessment was completed in about November 1994 - 2- and the case manager met with Mrs Kelleher to offer attendant care for nineteen hours per day. That was revised in December 1995 when a community occupational therapist recommended 24 hours per day attendant care assistance. The payments were not increased until September 1996 when approval was given for attendant care based on 22 hours per day. That award was confirmed in a review decision given on 11 February 1997. The present appeal concerned the question of increasing the basis of attendant care from 22 hours to 24 hours per day, and increasing the rate to $14 per hour. Those questions were resolved before the hearing of the appeal, leaving only the question of backdating of payments to 1 July 1994. It is unnecessary to consider the calculations concerned in the backdating claim. If the claim was to be granted, that matter would be referred back to the review officer. The review officer applied reg 17(b) of the Complex Personal Injury Regulations which is as follows: 17. Effect of agreement to social rehabilitation programme - Where a social rehabilitation programme for a claimant has, pursuant to these regulations, been agreed to by the Corporation and the claimant, - (a) The Corporation shall implement the social rehabilitation programme; and (b) The claimant shall be entitled to receive payments provided for in the social rehabilitation programme in respect of expenses actually incurred between the date of the receipt by the Corporation of a request for an evaluation under regulation 6 of these regulations and the date of agreement to the programme; and The review officer considered that "expenses actually incurred" referred to actual financial loss. That is the question that has been argued on this appeal. The facts are not in dispute. Mrs Kelleher engaged students from Waikato University to care for her son. She arranged rostering and payments. Where there was a shortfall, she provided the care. She did not have to give up any other activity thus incurring cost or sacrificing income. The sole question is whether the care which the appellant obtained from his mother can be regarded as expenses actually incurred. The respondent referred to a number of decisions under the Income Tax Act. In CIR v Mitsubishi Motors NZ Limited [1995] 3 NZLR 513 the Privy Council considered the phrase "expenditure or loss incurred in production of assessable income" as that phrase is used in s 104 of the Income Tax Act 1976. Amongst other things, it was said there that the meaning of "losses and outgoings ... incurred" has been held to mean that the taxpayer must have either paid or become "definitely committed" to the expenditure. Each item, to be deductible, must satisfy the test of being an "existing obligation". In TRA Decision No. 20/96 Judge Barber considered a claimed deduction by an objector for his loss of time in representing himself at tax dispute hearings. In deciding a question under s 165(2)(c) of the Income Tax Act 1976, Judge Barber said: "... In my view, the words "expenditure incurred" must relate to monies or some type of cost actually paid out or handed over by the objector. If no expenditure has been made or committed to, then it has not been incurred ..." - 3. In case E 48 (1982) 5 NZTC 59, 285 at 59, 289 Judge Barber said: "... The word expenditure seems to me to be a very wide word which simply means ... the laying out of money.' Those modes of interpretation follow the literal meaning of the words in question. The purposes of the Accident Rehabilitation and Compensation Insurance Act 1992 is different from the purposes of taxation statutes but it is difficult to see that there can be any ambiguity of meaning that invites a purposive approach. Mr Miller submits that there is. He submitted that Mrs Kelleher expected to be paid. That is said to be a matter for inference from the evidence, the point being that she applied for 24 hour care and that she had a legitimate expectation that when the application was granted it would be backdated. In reality, no doubt, she provided the care out of natural love and affection, but it is fair to consider that there would have been an expectation of payment from the Corporation if it could be obtained under the relevant regulations. Mr Miller referred to common law authorities recognising that damages for personal injury included the unpaid care given by a spouse or family member. Hunt v Severs [1994] 2 AC 350 was an appeal concerning damages for personal injuries. The House of Lords held that a plaintiff was entitled to recover the reasonable value of services rendered to him gratuitously by a member of his family in the provision of nursing case or domestic assistance rendered necessary by the plaintiff's injuries. At p 359 Lord Bridge referred to the judgment of Megaw J in Wattson v Port of London Authority [1969] 1 Lloyd's Rep 95. In that case the defendant had tried to resist paying for the wife's gratuitous services in looking after her injured husband. Referring to the fact that there was no contract between the husband and wife with respect to her services in caring for him, Megaw J said at p102. "That is not how human beings work and it would, in my judgment - and I say this because I think it ought to be said - be a blot on the law if the law were to be such that a wife who in these circumstances had held her husband to make a contract to repay her he should recover damages for that amount; but if she behaves like an ordinary human being and does not put that construction upon the act of that service, there is a financial disadvantage to the plaintiff as a result' In Cunningham v Harrison [1973] QB 942. Lord Denning MR considered the inclusion in a claim for damages of care provided by voluntary organisations. He said at pages 951-952 "... it has been said in some cases that a plaintiff can only recover for services rendered to him when he was legally liable to pay for them ... But, I think that view is much too narrow. It seems to me that when a husband is grievously injured - and is entitled to damages - then it is only right and just that, if his wife renders services to him, instead of a nurse, he should recover compensation for the value of the services that his wife has rendered. It should not be necessary to draw up a legal agreement for them. On recovering such an amount the husband should hold it in trust for her and pay it over to her ... Even though she had not been doing paid work but only domestic duties in the house, nevertheless all extra attendance on him certainly calls for compensation" - 4 - Those cases illustrate the purpose that may be grafted upon a statute dealing with damages or compensation as distinct from a tax statute. Mr Miller submitted that a liberal interpretation would discourage the Corporation from self serving delay in reaching assessments and agreements. If the Corporation can benefit from backdating provided by family caregivers then there is little incentive for it to reach timely agreement for payment of full and proper attendant care under the regulations. At the same time it is undesirable to compel families to enter into fictitious contracts or to engage the expense of outside agencies and actually pay out considerable sums of money in the hope that the Corporation will later reimburse the expenses when an assessment has been completed. Those are compelling reasons, but the Court is powerless to intervene where the wording of the regulations is plain. The expression "expenses actually incurred" in my view leaves no room at all for ambiguity. The word "actually" denotes something different from notional expenses or contingent expenses. The word "expenses" is itself more specific than the word "liability". During argument reference was made to Regulation 11(2)(b) of the Social Rehabilitation - Attendant Care Regulations containing the phrase "has paid or incurred a liability to pay for attendant care". That is an example of a wider and more flexible expression which might be sufficiently broad to include the concept of a moral obligation or a recognisably but legally unenforceable obligation. The expression "expenses actually incurred" is not so wide. It would be doing violence to the legislation to interpret it to include a liability for care provided by a family member in the expectation that payment would eventually be received once a rehabilitation programme was agreed True enough, the consequences of the application of reg 17(b) include the undesirable aspects that the Corporation is not constrained to achieve a speedy resolution, and the amount to be paid in arrears may depend on the resourcefulness of a family in setting up an agreement that creates a legal obligation, or in actually making payments that would afford a basis for application of reg 17(b). But even recognising the apparent injustice that may be produced by a literal interpretation, I am unable to find that there is such an absurdity or unreasonable result that it could be said that the regulation was not intended to be read in that way. The intention of the regulation must be given effect unless it is ultra vires the regulation making power in the statute, or so unreasonable that it could not have been intended by the statute. In this case it cannot be argued that the regulation is invalid For those reasons the appeal is dismissed. DATED at WELLINGTON this 1/TH day of AUGUST 1997 - 4 D A Ongley District Court Judge