Robinson v Accident Rehabilitation and Compensation Insurance Corporation

IN THE DISTRICT COURT HELD AT AUCKLAND Decision No. 183 /99 UNDER The Accident Rehabilitation and Compensation Insurance Act 1992 AND IN THE MATTER of an appeal pursuant to section 91 of the Act BETWEEN JOAN PATRICIA ROBINSON of Tauranga Appellant (Appeal No. DCA 522/98) AND ACCIDENT REHABILITATION AND COMPENSATION INSURANCE CORPORATION a body corporate duly constituted under the provisions of the said Act Respondent HEARD at TAURANGA on the 18th day of May 1999 APPEARANCES Ms M Williamson for appellant Mr M B Mccarthy for respondent RESERVED JUDGMENT OF JUDGE M J BEATTIE The issue in this appeal is whether the appellant is entitled to have an overpayment of weekly compensation amounting to $4,418.27 remitted pursuant to the provisions of section 77(2) of the Act. 2 Background On 17 August 1996 the appellant, then aged 73 years, suffered a fracture of her right wrist when she tripped and fell whilst out shopping. The appellant sought cover under the Act for her injury and in addition to payment of medical expenses she sought weekly compensation. At the time of her injury she stated that she was self employed operating her own beauty therapy business from her residence. In an earnings questionnaire, the appellant indicated that she had commenced her business in November 1995. The respondent commenced making payments of weekly compensation to the appellant at the minimum rate pursuant to the provisions of s.43 of the Act and payments commenced on 24 August 1996. The appellant continued to receive weekly compensation during the period of her incapacity until 14 February 1997 when her incapacity ceased. In May 1997 the respondent sought details of the appellant's business for audit purposes, and in particular it sought advice as to the number of hours that the appellant worked in her business each week prior to the accident. The appellant responded to that request by letter of 2 June 1997 and stated as follows: From the commencement of my business until my accident on 17th August 1996, was a very busy time, trying to advertise and present my business to the women of Tauranga. I spent many hours contacting people, personal letters, phoning, speaking to prospective clients, explaining my product, preparing to give free mini facials and treatments. Preparation for treatments is exacting, also explaining the use of free samples and exactly how to use them for home treatments. Therefore hopefully gaining a customer for treatments and sale of home use products to back up the salon treatments. I had high hopes, knowing that this was the vest way to promote my small business, as working from home has many, many drawbacks. It was necessary, no essential, to advertise in every way possible. This was doing before I broke the scaffold bone in my wrist. 3 I worked seven days a week, as requested, over this period, approximately three hours a day. Perhaps even more, when asked I worked with the client as requested. I unfortunately kept no record of my time employed in what I was sure would be the best way to encourage future clients. I am now trying to start all over again. The months I lost have been disastrous to my business. I do hope this will be useful to you in clearing up your inquiries. That letter was considered by the respondent and in a letter of 1 August 1997, the appellant's case manager wrote to her advising that weekly compensation had been paid to her on an assumption, which was incorrect, that the appellant had been working full-time whereas in her letter of 2 June she advised that she was only working about 21 hours per week. The letter advised that her entitlement was being reassessed, that the matter was being looked at by Inland Revenue to determine her self-employed taxable income and thereafter a reassessment of her entitlement to weekly compensation would be made. In a further letter of 4 September 1997 the appellant's case manager advised the appellant that it considered that the appellant was not entitled to weekly compensation as she was not in full-time employment and that the weekly compensation that had been paid to her had been paid in error. The letter advised that she would be notified shortly regarding the amount of the actual overpayment. That letter was described as a decision letter and gave rights of review. The appellant filed an application for review and a review hearing took place on 4 March 1998. At that review hearing the appellant gave evidence of having started up her business and of the effort that she had put into it and how a separate part of the home had been set aside for her business premises. In the decision the review officer notes: I asked Mrs Robinson about the hours she worked. She confirmed her previous evidence that she was available 7 days a week and at any time 4 for clients to call her and make a consultation. She confirmed that she would have worked 21 hours per week and stated that it could have been more and may have been in excess of 30 hours per week. Mrs Robinson had no records in respect of the hours which she worked. Mr Robinson pointed out that if his wife had opened her business in town she would have been available at the business prepared to see clients for more than 30 hours per week. He felt that Mrs Robinson was being discriminated against because her business was based at home and the fact that Mrs Robinson was always available for work had not been taken into account. In her decision the review officer said there was no conclusive evidence that the appellant was working more than 30 hours per week. She said it was a possibility but not more than that. The review officer accepted the observation about being available at business premises from 9 to 5 each day but considered this was only a hypothetical possibility. The review officer found on the balance of probabilities that the appellant did not work fulltime within the meaning of the Act. For whatever the reason the appellant did not seek to take that decision on appeal to this Court. Following the delivery of that review decision, the respondent did by decision letter dated 12 May 1998 advise of the amount of the overpayment of weekly compensation and of the fact that such overpayment would need to be repaid. The letter did indicate that an application to have the debt written off could be made and in that regard the appellant did make such an application but she did not concede that she did in fact owe the sum of $4,418. She did as requested complete a statement of her financial position. The next step in the chronology was the respondent's letter of 27 July 1998 advising that her request for remission under section 77(2) of the Act had been considered but that it advised that because she had some savings and that there was no evidence of an altered position, the remission of the debt had been declined. It is against that decision which the appellant again sought a review. At the review hearing on 22 October 1998 the appellant gave evidence of the setting up of her beauty therapy business. She advised that she was registered as a member of the Association of New Zealand Beauty Therapists and that through that association she could not fail to do well. She further stated that from the time of her accident she did not operate the business whilst she was in receipt of weekly compensation. In his decision the review officer found that the debt had not arisen from any error contributed to by the appellant and that the payments had been received by her in good faith. However, he found that there had been no alteration of the appellant's position to her detriment as a consequence of receiving payment. In reliance on the decision of this Court in Hurley (Decision 233/97) he found that because there was no altered position there could be no inequity in requiring repayment. He therefore confirmed the Corporation's decision to require repayment. It is against that decision that the appellant appeals to this Court. It is to be noted that up until that decision was given the appellant had not sought or obtained any legal advice regarding her position but did so for the purposes of appeal to this Court. Leave was granted to the appellant to produce further evidence by affidavit on the question of alteration of position and the appellant appeared at the hearing and confirmed the contents of her affidavit and made herself available for cross-examination. In her affidavit the appellant stated as follows: Until very recently, I have not taken legal advice in respect of the Corporation's decision to decline remission of a debt of $4,418.27 resulting from the repayment of a minimum benefit made in error by the Corporation. I did not seek legal advice because of the cost of doing so. The legal basis for the Corporation to consider remission of the debt has now been explained to me and I now realise that I did not explain and nor 6 did anybody request detail of the alteration of my financial affairs resulting from receipt of the ACC benefit. The fact is that if I had not received weekly compensation (albeit in error), I would have tried to continue my business so that today I would have a continued income. Developing a business takes time and prior to my accident I had spent a considerable amount of time building up contacts and explaining my product. If I had not had my accident and then received compensation, then without a doubt I would have continued my business and my financial situation would now be significantly improved. Following my accident, my arm was in plaster however my fingers were free of the plaster and although it would have been difficult, I could have managed to keep some of my business operating by carrying out some treatments such as eye brow shaping, tinting, eye lash tinting, make up advice, body waxing, manicure, pedicure and I could have continued to sell my cosmetic range. Although I would not have been able to do body massage, I would most certainly have continued in my operations had I ---- -- not received the entitlement to the ACC benefit. From my ACC benefit, I paid outstanding accounts associated with the running of my business and I also purchased pre-prepared meals as my husband cannot cook. I live in a very traditional marriage and my husband is very much in control of finances. I am solely responsible for keeping the house and all that goes with it. I was dependent on developing my business so that I could have some financial independence. Because of the payment of the benefit and the demands on me at home I allowed my business opportunities to disappear. I am now faced with repaying a debt which has caused considerable stress to me and within my marriage because the only savings my husband and I have set aside is $7,000 which is our funeral account. Throughout my dealings with the Corporation, I have always acted in good faith. I altered my position in reliance of receipt of the benefit paid to me and I believe it would be inequitable to require repayment given that I have lost my business and suffered considerable mental anxiety as a result of an error made by the Corporation. Relevant Statutory Provisions Section 77(2) of the Act states: The Corporation shall remit in whole or in part a debt which arose as a result of an error not internationally contributed to by the debtor if the Corporation is satisfied that the person receiving the amount so paid in 7 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. Submissions Counsel for the appellant submitted that it was not in dispute that the appellant had not intentionally contributed to the error which gave rise to the overpayment and that the payment of weekly compensation had been received by her in good faith. Therefore, the only issue for determination by the Court was whether the appellant had altered her position in reliance on the overpayment such that it would be inequitable to require repayment. It was counsel's submission that the appellant had altered her position in reliance on the validity of the payment by in fact accepting the payment of weekly compensation rather than attempting to carry on her business venture, albeit with the significant disability of her left arm in plaster. Counsel submitted that had the appellant not been given weekly compensation she would have made the commitment to keep her business operating as best she could and that her election not to do so was a direct result of her receiving weekly compensation. Counsel submitted that the appellant had lost her opportunity to successfully maintain her business. Counsel submitted that the inequity in requiring the payment would be because of the fact of the loss of her business, the stress associated with the error made by the respondent and her comparatively modest financial position. Counsel for the respondent submitted that there was no altering of position in reliance on the validity of the payment. Counsel submits that during the period of her incapacity she had been certified as unfit for work by her GP and that this was incompatible with a suggestion that she had a choice as to whether or not she continued to work in her business. Counsel submitted that the fact that the appellant's business may have suffered as a result of her incapacity does not amount to an altering of position in reliance on the receipt of weekly compensation to which she was not entitled. 8 Counsel submitted that her business suffered as a consequence of her injury rather than reliance on the validity of the payment of weekly compensation. Decision The particular issue of altering a position in reliance on the validity of payment I find requires a degree of subjective assessment as well as an objective assessment. In the case of this appellant she was in the first stages of setting up a business and had been operating as such for about six months. As she had stated in her evidence, she had incurred expenditure in a number of areas in order to set the business up and as she further noted, the fact of her injury was a severe blow to her. The respondent accepted the bone fides of her business, accepted the medical advice that she could not carry on her business with her broken wrist and thereupon commenced to make payment of weekly compensation. The appellant says she was advised not to continue with her business by a person named Catherine at ACC and she therefore did not continue with her business in any way . If the respondent had not made an error and had advised her in fact that she was not eligible for weekly compensation because she could not have been regarded as being in full-time employment, the appellant would have endeavoured to carry on her business, albeit in a limited fashion. She gave evidence of the fact that she could have carried on the business in all aspects save for that involved any physical massaging or therapy or the like. The Court observes that it cannot be known precisely what would have been the outcome for the appellant's business if she had elected to take this course. I find that the fact there can be no answer to that question does not mean that it is not a legitimate question to pose. 9 It is a fact that the granting and payment of weekly compensation to the appellant allowed her not to have to make the decision to soldier on in the business during the period of having her arm in plaster and the only income that she did receive during that period was the weekly compensation paid to her. I find that the submission of counsel for the respondent that it was the injury to the appellant which caused the incapacity to work, not the payment of weekly compensation, to be too simplistic. Whilst the medical certificates verified her entitlement to weekly compensation and she therefore did not have to work, it would have been a different situation if there had been no eligibility for weekly compensation and she had been left to her own resources to carry on her business as best she could under the particular circumstances of her injury. I find it as a fact that the appellant did not continue to try and keep her business running because she was receiving weekly compensation and because she was advised by the respondent not to continue operating her business. By so doing I find that she has altered her position because she has thereby denied herself some opportunity of keeping her business going, even if it only be largely the maintenance of goodwill which she had said she had been actively developing up to the time of her accident. I do not find it necessary to consider what may have been the financial advantages to the appellant of keeping her business going, whether indeed any specific financial advantage would have accrued. Suffice is to say that she did not pursue her business venture and any financial advantages that may have arisen therefrom because of the fact that she was granted and received weekly compensation. In those circumstances, I find that the appellant has so altered her position in reliance on the validity of the payment to her of weekly compensation. 10 I turn now to look at the equities and to determine whether the appellant would suffer an injustice if she were to be called upon to repay and the injustice of requiring her to repay outweighs the injustice of denying the respondent the money to which it is entitled. Equity and justice and inequity and injustice are two respectively synonymous notions. In considering whether there would be an injustice to this appellant I find that all relevant circumstance surrounding the establishment of the overpayment can be relevant. In this particular case, the overpayment is said to arise because of the respondent's decision that the appellant could not be regarded as being in full-time employment, thereby qualifying for the payment pursuant to section 43 of the Act. I have noted earlier in this decision that this matter was considered by a review officer when the respondent's decision was questioned by the appellant. I find that the reasoning of the review officer in coming to the decision she did to be somewhat questionable. The submission that had been made by the appellant's husband as to the amount of hours she worked I found had merit, and that if her evidence was accepted, as indeed it seemed to be, the appellant was operating a full-time business in that she was working at her business between normal business hours. It seems only that she may have had clients for so many hours per day that may have at that early stage of its development amounted to less than 30 hours per week. I consider that the test applied by the review officer is questionable. The review officer seemed to require conclusive evidence that the appellant was working more than 30 hours per week. She noted that despite the fact that the appellant had said that she worked more than 30 hours per week she could not substantiate this and that is was her insubstantiation of her testimony that seems to have been the basis of the adverse ruling by the review officer. In considering the justice of this case, I find that there could well be said to be some injustice in the decision which brought about the state of affairs that there was an overpayment. Without deciding so I find that there are elements of that decision which, when considered with the other circumstances, namely the 11 appellant's modest means and her total inability to repay other than from her small amount of savings, I find does tip the equities in favour of this appellant as opposed to the lesser injustice of the respondent not receiving its due. I say that because I find that there must be some doubt as to whether the respondent would be entitled to receive its due if that primary decision had been pursued by the appellant to an appeal. For the foregoing reasons therefore I find that the appellant has made out a case for remission of the overpayment and therefore the decision of the respondent to decline to remit the amount of the overpayment is hereby revoked. The appellant is entitled to costs which I fix at $700. DATED at WELLINGTON this 7day of July 1999 M J Beattie District Court Judge 522.98Robinson