Fairgray v Accident Rehabilitation and Compensation Insurance Corporation

IN THE DISTRICT COURT HELD AT WELLINGTON Decision No. 63 /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 KIM MICHELLE FAIRGRAY of Manukau City Appellant (Appeal No. DCA 328/97) AND ACCIDENT REHABILITATION AND COMPENSATION INSURANCE CORPORATION a body corporate duly constituted under the provisions of the said Act Respondent HEARING at AUCKLAND on the 16th day of February 1999 APPEARANCES S J Callanan for appellant D K Tui for respondent RESERVED JUDGMENT OF JUDGE A W MIDDLETON The issue in this appeal is whether the appellant is entitled to the payment of lump sum compensation. The appellant has undergone a long and difficult relationship with the respondent which commenced on 2 March 1990 when she lodged a claim for medical misadventure in respect of the loss of her baby as the result of a prolapsed cord. That event occurred on 2 March 1989. The claim was initially declined but as a result of a 2 review on 10 December 1990, the Review Officer decided that the death of the appellant's baby constituted medical misadventure. The respondent then requested the appellant to provide details of the effect the death had upon her to enable it to consider her application for a lump sum award under section 79 of the 1982 Act. The appellant provided those details by letter dated 3 March 1991. On 19 March 1991 the respondent notified the appellant that as her claim was for mental suffering, as a consequence of the accident, it was necessary for her to be examined by a Psychiatrist and an appointment was made for that purpose. In a report of 20 April 1991 the Psychiatrist concluded that the appellant had suffered a mental disturbance which was directly attributable to the accident. Notwithstanding that report the respondent notified the appellant on 13 May 1991 that her claim was declined because in addition to suffering mental consequences, it was also necessary to establish that she had suffered a physical injury as a result of the accident. On 21 May 1991 the appellant, through her mother, indicated that she wished to appeal that decision. Notwithstanding that letter, the respondent took no further steps and on 23 December 1991 closed the file and it was archived. On 26 October 1995 the appellant's solicitors requested that the file be obtained so that the lump sum award could be made and paid out. On 20 November 1995 the appellant lodged an application for review of the decision of 13 May 1991. On 8 December 1995 the respondent declined to revise the decision of 13 May 1991 by administrative review. The appellant then applied for a review of that decision and following a review hearing the Review Officer issued a decision on 24 January 1997 which established that the appellant was entitled to cover for personal injury for the mental consequences as a result of the accident. The file was then returned to the respondent to assess the appellant's entitlement. On 27 March 1997 the respondent declined the application for lump sum payment on the grounds that no written application for a lump sum had been made prior to 1 April 1993, as required by section 147(1) of the 1992 Act. The appellant then applied for a review of that decision. In a decision issued on 23 December 1997, the Review Officer found that the appellant had made an application for a lump sum award under section 147(1) but found also that the appellant's application had to be declined because the appellant had failed to make an election to receive either a lump sum or an independence allowance. It is against that decision which the appellant has now appealed. Ms Callanan submitted that as early as its decision of 13 May 1991 the appellant had misinterpreted the requirements of the Act in relation to a claim for mental consequences by stating that it was also necessary that the appellant should suffer a physical injury as a result of the accident. She submitted that at that time the respondent must have been fully aware of the then existing decision of the Appeal Authority in ACC v E which had been confirmed by the High Court. That decision was then the subject of the respondent's own appeal to the Court of Appeal which was heard on 19 November 1991 and a decision issued on 20 December 1991 and reported as ACC v E [1992] 2 NZLR 182. Ms Callanan submitted that at the time it 3 closed this appellant's file on 23 December 1991, the respondent must have been fully aware that the issue was awaiting the decision of the Court of Appeal on an issue on which there had been two previous findings that there could be mental consequences which were compensatable without a physical injury. Ms Callanan submitted that the actions of the respondent amounted to wrongful actions because it misinterpreted the law and had failed to deal expeditiously with the appellant's claim in the first place with the result that the Court should overrule the respondent's decision. She submitted that the Court had power to exercise the discretion available to the Corporation under section 156(2) of the Act. Mr Tui submitted that by virtue of a number of decisions of this Court, it has been established that section 147(2) requires an election to be made in writing not later than 31 March 1993 to accept either a lump sum payment or an independence allowance but not both. He submitted that while the Review Officer had found that the appellant had made an application to receive a lump sum there was no written election to receive either a lump sum or the independence allowance made prior to 1 April 1993. He submitted that both requirements of section 147 must be met in order for the appellant to be eligible to receive a lump sum. Mr Tui submitted that while the appellant's case was that because of its wrongful action, the respondent was estopped from now taking the stand that the appellant was not entitled to a lump sum payment this was not a valid argument. He submitted that the respondent's position is clearly supported by the decision of Laurenson J in Wong- Kam v ARCIC, a decision issued on 15 December 1998 in Auckland Registry of the High Court under HC 97/97. In that case Laurenson J held that there was no power available to the respondent whereby it could waive the strict requirements of section 147. The Court has held in numerous appeals relating to section 147 that in order to qualify for the payment of lump sum compensation under the 1982 Act the appellant must complete an election in writing not later than 31 day of May 1993 which specifies the election to accept either the lump sum payment or an independence allowance but not both. I have related the history of this appellant's relationship with the respondent in some detail because it does indicate that there was a clear lapse on the part of the respondent to provide a proper and adequate service to this appellant. I agree with Ms Callanan's criticism that at the time the respondent closed and archived its file in December 1991 it must have been fully aware that whatever the decision of the Court of Appeal in E it would make an impact on this appellant's position one way or the other. The respondent archived this appellant's file with the result that until the appellant sought legal advice in 1995 she was not aware that she had lost her entitlement to a lump sum payment. She had assumed that having undergone the necessary assessments, payment was to be made to her. While the Review Officer was satisfied that the appellant had elected prior to 31 March 1993 to accept a lump sum payment, she had to decline the application because of the requirements of section 147 in that the written election had not been made by 31 March 1993. 4 I consider that the history of this claim demonstrates a very severe injustice to this appellant. I am placed in the same position as the Review Officer and must uphold Mr Tui's submission that without strict compliance with the requirements of section 147, the appellant is not entitled to a lump sum payment. As I explained to Ms Callanan at the hearing, I do not consider that the Court can exercise any discretionary powers which may be conferred upon the respondent by section 156(2). However, I do consider that in the circumstances of this case, it is open to me to make a very strong recommendation to the respondent that it exercise its power of discretion under section 156(2) and make an "ex gratia" payment to the appellant. In my view there is a very clear presumption from all the steps which she took that the appellant intended to claim a lump sum award prior to the 1992 Act coming into force. It was only through the inefficiency of the respondent that she has now been denied the benefit of that intention. If the respondent accepts my recommendation, I also ask it to take notice that the appellant has been put to considerable expense by way of payment of legal fees in achieving this situation. The appeal is dismissed. DATED at WELLINGTON this 15th day of March 1999 A W Middleton District Court Judge dca328-97.doc (nr)