Mauga v Accident Rehabilitation and Compensation Insurance Corporation

IN THE DISTRICT COURT HELD AT WELLINGTON Decision No. 105 /99 DCA No. 419/98 UNDER The Accident Rehabilitation and Compensation Insurance Act 1992 ("the Act") AND IN THE MATTER of an appeal under the above Act BETWEEN I MAUGA Appellant AND ACCIDENT REHABILITATION AND COMPENSATION INSURANCE CORPORATION Respondent HEARING at WELLINGTON on the 16th day of February 1999 DATE OF DECISION: 30 April 1999 COUNSEL E P Peters for appellant A D Barnett for respondent DECISION OF JUDGE P F BARBER The Issue This is an appeal against a decision of the Corporation, upheld on review, declining the appellant's entitlement to weekly compensation as the result of a spinal injury on 14 October 1996. The broad issue is whether the appellant is entitled to weekly compensation. The more immediate focus is on whether the appellant was an "earner" immediately before the commencement of her incapacity and, hence, someone to whom s.40 (calculation of weekly earnings where earner had earnings solely as an employee during the 12 months before commencement of incapacity) of the Act applies; although Mr Peters focussed on s.39 (compensation for loss of earnings payable to earners for incapacity generally). 2 The Essential Facts There is no dispute regarding the essential facts. The appellant is aged 30 and is married with one dependant. The appellant was at all material times employed by Tisco Services Ltd. On 30 June 1996 she went on unpaid maternity leave. On 14 October 1996 she suffered a spinal injury while delivering a child and has been incapacitated from that date. She did not return to work after the accident/ incapacity. Her employment with Tisco Services Ltd was terminated on 26 November 1996. She had held that employment since 4 December 1995 and prior to that had various jobs for some three years. The appellant made application to the Corporation for weekly payments as a result of her incapacity. The Corporation treated that application as falling under s.44 of the Act and on 18 January 1998 declined the application on the grounds that the appellant was "not in paid employment before the commencement of the incapacity" A review took place on 7 September 1998 and review decisions were issued by the Review Officer, Mr P Barker, on 7 September and 2 October 1998 and those two decisions are, in essence, separate parts of the one decision. The review decisions both conclude that the appellant was not an "earner" at the time of the incapacity so that she is not entitled to weekly compensation. The two decisions of the Review Officer are carefully made and clear. Their content is covered by the submissions made to me, so that it is not necessary for me to analyse them. My reasons below confirm them. The grounds of appeal are that the Review Officer misapplied the law in determining that the appellant was neither an "earner" nor an "employee" and that at all material times she was an "earner" and/ or an "employee". A Summary of the Submissions for the Appellant Mr Peters put the issue as whether a claimant, who is on unpaid leave and becomes incapacitated, is an "earner" in terms of the Act. He referred to s.39(1) of the Act which reads:- "39. Compensation for loss of earnings payable to earners for incapacity generally - (1) The weekly compensation for loss of earnings payable to an earner who is incapacitated as a result of personal injury in respect of any period to which section 38 of this Act does not apply is 80 percent of the earner's weekly earnings." He then referred to "earner" being defined in s.3 as "means any natural person who engages in employment, whether or not as an employee; and includes any person to whom section 44 of this Act applies." Mr Peters submitted that the appellant is a person who engages in employment and referred to the definition of "employment", also under s.3, as "means work engaged in or carried out for the purposes of pecuniary gain or profit; 3 and, in the case of an employee, includes any period of paid leave other than paid leave on the termination of employment." Mr Peters submitted that the question is whether the appellant is someone who "engages" in employment and he submitted that the words "engaged in" widen the definition of "employment" to include those people who may not be in employment but are engaged in employment. He referred to the Concise Oxford Dictionary (8th Edition) defining "engage" as including "2 tr.a (usu. in passive) employ busily; occupy (are you engaged tomorrow?)." He submitted that the continuous employment record of the appellant is such that she is a person who "engages in employment". Mr Peters then submitted that the Act is a remedial Act and that the appellant is entitled that its provisions be read in terms of the Acts Interpretation Act 1924 and that a fair large and liberal meaning be given to the provisions of the Act. Mr Peters also submitted that the Corporation's decision in this case would mean that all employees who happen to be in employment, but on unpaid leave, are not covered for loss of earnings compensation should they become incapacitated during such leave. He suggested that would include a person taking a day of unpaid leave, such as bereavement leave. In further written submissions made at the hearing, Mr Peters analysed Vasquez v ARCIC (Decision No. 146/96 of 29 November 1996 - Judge Lovell-Smith). He then submitted that Vasquez is of limited assistance in this case. He referred to Vasquez focussing on s.40 rather than on s.39 of the Act, whereas the present issue is whether the appellant is an "earner" in terms of the Act which involves a careful consideration of s.3. Mr Peters submitted that for a person to engage in employment it is not necessary that that person be actually working in paid employment at the relevant time, and that whether a person is someone who engages in employment is a matter of fact and degree. He suggested that there are four possible categories of employment: first, people who are actually attending work pursuant to contract for services or of services; second, people such as (he submitted) the appellant, who are employed and have a long employment history and are on leave from that employment with a view to returning to it; third, those who are not employed but have a record of being in employment from time to time; and fourth, people with no record of employment such as some beneficiaries or students. Mr Peters considers that the Corporation regards only the first class of people as "earners"; and he submits that those in the second category, and possibly even the third, are persons who engage in employment, and that the Corporation's attitude on this issue is harsh. He also submitted that s.44 of the Act provides only a limited extension of entitlement to compensation for loss of earnings. Essentially, Mr Peters submitted that a claimant whose employment subsists but is on unpaid leave, does not cease to be in employment. He further submitted that in any case, the appellant would still be a person who "engages in employment" and therefore would be an "earner" as defined in s.3. 4 A Summary of the Submissions for the Respondent Mr Barnett referred to the Act providing that weekly compensation is payable to an "earner" at the rate of 80% of the "earner's weekly earnings" in terms of s.39; and to "weekly earnings" having the meaning ascribed in ss.40-43 (and in the case of an employee, s.40); and that s.40 "applies only to earners who are earners immediately before the commencement of the incapacity" - refer s.40(1). Mr Barnett submits for the Corporation that the appellant was not an "earner" "immediately before the commencement of the incapacity". He submitted that Vasquez is Authority for that principle and that Vasquez is indistinguishable on its facts from the present case. Mr Barnett referred to Mr Peters' submission that as one who was employed, albeit on maternity leave at the time of the accident/ incapacity, the appellant is a person who "engages in employment" in accordance with the definition of "earner". He referred to Mr Peters' further submission that the appellant is a person who engages in employment as distinct from a person who does not such as an unemployed person, a student or a retired person. Mr Barnett submits that to give the word "earner" such a broad meaning ignores its context and, in particular, the meaning of "employment" and, to a lesser extent, ignores the requirement of s.40 that the person must be an earner "immediately" prior to the incapacity. Mr Barnett referred to the definition of "employment" in s.3 and submitted that on the appellant's construction of "earner" the second limb of the definition of "employment" would be redundant because it would always be the case that "employment" would include the period of paid leave; or, put another way, if a person was on paid leave then such a person would always be someone who "engages in employment". Mr Barnett submitted that the definition of "earner" read together with the definition of "employment" shows that an earner is one who is in employment and being paid at the material time and is not someone who is in employment in a broad sense but is not being paid at the material time. He referred to that construction of the Act having been applied by Judge Lovell-Smith in Vasquez where the appellant was employed but, at the time of her accident (a sprained wrist) on 10 October 1994, was on a one year period of maternity leave which had commenced on 5 August 1994; and Judge Lovell-Smith concluded at page 9 of her decision:- "I agree with Counsel for the Respondent's submissions. The Appellant was not an employee in 'employment' or an 'earner' during the period of her unpaid leave and neither was the Appellant an earner 'immediately before the commencement of the incapacity'. Thus the Appellant is not eligible to receive compensation for loss of earnings under section 40 of the Act." I add that earlier she had said:- ' Counsel for the Respondent argued that the Appellant does not fall within the definition of "employment" for the purposes of the 1992 Act. In the case of employees this includes any period of paid leave. However the Appellant was not 5 engaged in work for the purposes of pecuniary gain. She was on unpaid leave and received no income from it at the time of her accident. Therefore at the time of her incapacity the Appellant was not engaged in work or carried out work for the purposes of pecuniary gain or profit ... In my view, the word "immediate" as it appears in section 40 must be strictly construed. In this case "immediately" before the accident on 10 October 1994 the Appellant was not an earner and nor was she an earner "immediately" before her planned return to work on 5 August 1995." Further Relevant Sections of the Act Section 40(1) reads:- "40. Calculation of weekly earnings where earner had earnings solely as an employee during the 12 months before commencement of incapacity- (1) This section applies only to earners who are earners immediately before the commencement of the incapacity and who, during the 12 months immediately preceding the commencement of the period of incapacity, had earnings as an employee and who did not also have earnings other than as an employee ..... " Section 44(1) reads:- "44. Extension of entitlement to compensation for loss of earnings--- (1) Where a person has ceased to be an employee, the person shall be deemed to continue to be an employee for the purposes of this Part of this Act if--- (a) The person had been an employee within 14 days before the commencement of the incapacity; and b) The person had been an employee for a continuous period of not less than 12 months immediately before that 14-day period; and (c) But for the incapacity, the person would have been an employee within 3 months after the commencement of the incapacity. 'Employee' is defined in s.3 as:- "'Employee' means a natural person who receives or is entitled to receive any amount that is treated as income from employment, as defined in paragraph (a) of the definition of 'employee' in section OB 1 of the Income Tax Act 1994, and any salary, wages or other income to which section OB 2(2) or section OB 2(3) of the Income Tact Act 1994 applies." Reasons for Decision Mr Peters has focused on the applicability of s.39 of the Act. In order for the appellant to be entitled to weekly compensation under that section she must, inter alia, have been an "earner" as defined in s.3. (That criterion is also required for s.40 to apply). For present purposes, this means she must have been a person "who engages in employment". "Employment" is also defined under s.3 of the Act and its meaning is 6 set out above. For present purposes, in terms of that meaning of "employment", the appellant must have been engaged in paid work and, in her case as an employee, that would include any period of paid leave other than paid leave on the termination of her employment. For s.44 to apply, the appellant needed to be an employee at material times i.e. in receipt of income from "employment" As a matter of fact, there is no dispute that, at material times, the appellant was on unpaid leave, being maternity leave. Accordingly, while perhaps technically she was still engaged in employment in that she could return to her job at the end of her maternity leave, she was not engaged in or carrying out work for pecuniary gain or profit in terms of the definition of "employment" i.e. she was not an employee who would receive wages for work engaged in or carried out around the time of her accident. The dictionary meaning of "engage", referred to by Mr Peters, as "employ busily, occupy" seems to me to show that the appellant was not at work at material times. The question is one of fact, not of degree as Mr Peters seemed to submit. I do not think that the effect of the said definitions can be interpreted, particularly in terms of the meaning of the word "engage", to provide compensation for persons who are not, at the particular time of the accident, working for wages but can, perhaps, be regarded as engaged in employment because they have taken leave temporarily on an unpaid basis. Presumably, they need to purchase cover under .45. I consider that the said provisions of the Act need to be given their ordinary and natural meaning, and that clearly leads to my conclusion that s.39 (and s.40) only applies to a person who is, at the material times, earning wages or profit from that person's job. If that situation does not appertain, then cover is not available under the Act. In any case, I do not think that a fair large and liberal meaning could create the extended interpretation of the definitions sought by Mr Peters. I note his submissions as to possible consequences of this (my) interpretative approach, which he considers to be rather narrow, but the consequences are not absurd and any change is a matter for the Legislature. The compelling inference of the second limb of the definition of "employment" is that only paid leave in the continuance of a job is part of employment and that unpaid leave in the continuance of a job is not part of employment. One would hope that bereavement leave would not normally be unpaid. Also, in terms of s.40, the requirement is that the claimant be an earner "immediately" prior to incapacity. An earner is a person in employment who is being paid at the material time and does not include someone who can be regarded as in employment at material times, but is not then being paid. I agree with Judge Lovell-Smith in Vasquez that "immediately", as used in s.40, must be strictly construed. The present appellant was not an earner immediately before her accident or incapacity. It seems to me that I am only re-echoing the approach taken by Judge Lovell-Smith in Vasquez; although that case seemed to focus more on s.40 of the Act rather than on s.39. However, following the same steps I have taken above, she concluded that her appellant was not earning immediately before the commencement of the incapacity. Indeed, she had also concluded that the appellant was not in "employment" nor an 7 'earner" during her period of unpaid leave. Most of Mr Peters' submissions to me were put to Judge Lovell-Smith in Vasquez and rejected. I respectfully agree with and adopt the reasoning in Vasquez. For the above reasons, I find that the appellant is not eligible to receive compensation for loss of earnings under the Act, and this appeal fails. There will be no order for costs. Judge P F Barber District Court Judge WELLINGTON dca41998-2.doc(nl)