Oates v Accident Rehabilitation and Compensation Insurance Corporation

IN THE DISTRICT COURT HELD AT WELLINGTON Decision No. 106 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 JENNIFER OATES of Palmerston North Appellant (Appeal No. DCA 194/96) AND ACCIDENT REHABILITATION AND COMPENSATION INSURANCE CORPORATION a body corporate duly constituted under the provisions of the said Ac 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 respondent with a request that I issue a decision on the papers. The issue in the appeal is whether the appellant is entitled to the exercise of the discretion under section 77(2) of the Accident Rehabilitation and Compensation Insurance Act 1992 to remit the debt incurred by way of an overpayment. The appellant injured her right shoulder and hand in a fall on 7 November 1985 and received earnings related compensation. She also received treatment expenses and home help. In April 1987 the appellant commenced part-time work and received top-up earnings related compensation. As her income from 2 employment fluctuated depending on the hours worked the respondent had to occasionally reassess the quantum of earnings related compensation. From time to time the appellant was therefore informed of the results of the reassessments. However, on some occasions between 1987 and 1994, the appellant received overpayments which were subsequently recovered. On 19 January 1994 the respondent made a reassessment of the appellant's quantum of earnings related compensation which resulted in an entitlement of $110.52 per week as from 21 January 1994. Between February 1994 and November 1995 the respondent did not obtain earnings details for the appellant from the employer who did not provide them until a request from the respondent in December 1995. The result was that the respondent wrote to the appellant on 16 April 1996 advising her that she had received an overpayment of $5,112.78 between 21 January 1994 and 18 March 1996 which the respondent wished to recover. The appellant applied for a review of that decision which was upheld by the Review Officer. It is against that decision which the appellant now appeals. The file indicates that in November 1987 the appellant had been overpaid $734.02 which was repaid. Thereafter reassessments were made in January 1993 which again showed an overpayment and after recovery was requested the appellant paid the debt. Similarly, in December 1993 an overpayment had occurred and again repayment was made. A further reassessment in January 1994 resulted in an overpayment which the appellant repaid. At the review hearing the appellant's advocate told the Review Officer that the appellant had altered her position in reliance on the validity of the payments. The Review Officer was told that the appellant's husband had been made redundant subsequently to the commencement of the overpayment and then became employed in a new business in the knowledge that it would not immediately produce income but he was aware he could rely on the appellant's income from employment plus the weekly compensation. In addition, the Review Officer was told that the appellant's daughter was a full-time nursing student but was being kept by the appellant. Mr Rowlett submitted: 1. That it was accepted by the Review Officer that the appellant did not contribute to the error which resulted in the overpayment. That the respondent was at all times aware that she was employed and had indicated that it would seek earnings information so that the failure to do so was not due to any action on the part of the appellant. 2 . That the appellant accepted the payments in good faith. That while the Review Officer considered the appellant should have expected her compensation to reduce as a result of her increase in earnings in employment he also considered that she was aware of the problem because she had 3 approached her Case Manager with the concern that the payment was too high. 3. That the Review Officer adopted the incorrect approach in that he should have considered whether or not the appellant believed that the level was incorrect rather than in hindsight that the appellant should have believed the level to be correct. 4. That the appellant had changed her decision in reliance on the validity of the payments in making decisions relating to her husband's business and her daughter's education. However, it was submitted that this was not the sole basis for the decision nevertheless the appellant had received a higher level of compensation than that to which she was entitled for a period of more than two years which would have influenced a number of her spending decisions. Mr Tui submitted: 1. That the respondent accepted that the appellant had received overpayment without fraud or deceit. 2. That it was not established that she had altered her position in reliance of the overpayment. That the fact that the husband and daughter had undertaken a business and a nursing course respectively did not indicate that the appellant had altered her decision because of the overpayment. 3. That the appellant could not have relied on the validity of the overpayment because she was aware, by reason of past history, that the payments had to be reassessed from time to time and that her fluctuating income had led to the position where she became overpaid. 4. That the appellant has not satisfied the requirements of section 77(2) to the extent that would justify the exercise of the discretion in her favour. The issue comes within the confines of section 77(2) which states: '(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." The evidence is clear that on at least four occasions between 1987 and 1994 reassessments were made and the overpayments acknowledged by the appellant and payment was made in respect of them. I agree that it was perhaps lax on the part of the respondent in delaying between January 1994 and December 1995 to obtain an update of the appellant's wages but that does not alter the appellant's 4 obligation. I consider that because of the history which predated the issue before me the appellant would have been well aware that her fluctuations in income would result in a reassessment as it had done in the past. The procedure which had been followed in the past should have served as a clear warning to the appellant that she could at any time expect a revision of the quantum of earnings related compensation which she received. I agree with the finding of the Review Officer that the appellant did not alter her position in reliance of the overpayments and she is in exactly the same position now as she was on the occasions when previous revisions were done. The appeal is dismissed. DATED at WELLINGTON this 6 day of June 1997 A W Middleton District Court Judge dc194-96.doc (nr)