Fraser v Accident Rehabilitation and Compensation Insurance Corporation

IN THE DISTRICT COURT HELD AT WELLINGTON Decision No. 137 /98 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 LORRAINE MONICA FRASER DCA 81/98 Appellant AND ACCIDENT REHABILITATION AND COMPENSATION INSURANCE CORPORATION a body corporate duly constituted under the provisions of the said Act Respondent HEARD on the 15th day of June 1998 APPEARANCES: Mr N D King for appellant Ms S Scott for respondent DECISION OF JUDGE M J BEATTIE The issue in this appeal is whether the respondent was correct to decline to remit an overpayment of weekly compensation made to the appellant. 2 MATERIAL FACTS In September 1991 the appellant suffered a whiplash injury in a motor vehicle accident. At the time of this accident the appellant was employed as a shop assistant at a Patisserie in Wellington and after an initial period of convalescence she was able to return her employment on a part time basis working 4 hours a day 5 days for the week. She has continued to receive weekly compensation on an abated basis since resuming work and has always supplied full details of her income to the Corporation for the calculation of weekly compensation. Despite that fact, it now transpires that for the period 1 July 1992 to 29 May 1996 the appellant has, to varying extents, received an overpayment of her entitlement to weekly compensation and the amount overpaid is agreed as being $4,028.26. The amount of overpayment was not necessarily the same amount each week, but on average amounts to some $19.78 per week. There is also no dispute that the appellant did not contribute in any way to the error which the Corporation made in the calculation of her weekly compensation entitlement and she has acted in good faith throughout. The appellant requested that this overpayment be remitted pursuant to s.77(2) of the Act but the Corporation declined to agree to any remission. It did offer to receive repayment on a weekly rate which would be agreed as being an amount the appellant could afford. 3 In his submissions to this Court Mr King, for the appellant, placed emphasis on the fact that the appellant's financial position was somewhat precarious and her weekly budget was extremely tight, made more so by the fact that she was now receiving a lesser sum per week since the overpayment had been detected. It was this fact which he submitted was a basis for the Court to consider it inequitable for her to have to repay the money. His submission gained further weight, he contended, from the fact that the appellant's husband had recently died and his superannuateon which had been part of the family's finances was no longer being received. Mr King further submitted that the appellant's disposable income, when receiving the overpayment, was applied for her husband's and her living expenses. He stated that the overpayments were at such a low level and that the appellant's "benefit" was so insignificant that no major financial undertaking or arrangements were possible, but that nevertheless she did unknowingly alter her position as the payments were received by spending them in good faith. Mr King placed great reliance on the High Court decision of National Bank of New Zealand v Waitaki International Processing (NZ) Limited 1997 1 NZLR 724. This was a claim involving several causes of action by a bank seeking to recover overpayments made by it as a result of foreign currency transactions made by its customer Borthwicks, which had subsequently been acquired by Waitaki. One of the several causes of action pleaded was unjust enrichment and in the course of its decision the Court had to consider the defence to a claim of unjust enrichment as well as the defence provided by s.94B of the Judicature Act 1908. 4 The passage of the decision of Justice Gallen relied upon by counsel is that on p 732: "Counsel submitted that developments in the common law with regard to the law of unjust enrichment, have now gone beyond the comparatively limited jurisdiction conferred by s 94B and contended that the situation is now that in any case where a claim is brought on the basis of unjust enrichment, any equitable defence may be prayed in aid. The approach to such claims was considered by the House of Lords in Lipkin Gorman (a firm) v Karpnale Ltd [1991] 2 AC 548. Lord Goff of Chieveley expressly recognised that the defence of change of position was available to a person against whom such a claim was made. He expressed the view at p 579 that it will be unjust to allow restitution where an innocent defendant's position has so changed that he will suffer an injustice if called upon to repay or repay in full and the injustice of requiring him to so replay, outweighs the injustice of denying the plaintiff restitution. It is not unimportant to note the test is formulated in terms of the position being changed which a wider concept than the positive alteration of position required by s.94B . This emphasis may also perhaps be drawn from the reference by Lord Templeman at p560 to the necessity to show that the defendant "remained unjustly enriched". Lord Goff of Chieveley was at pains to point out at p 580, that a mere expenditure of money would not be regarded as a change of position, a view which is in accordance with the decision in New Zealand of K J Davies (1976) Ltd v Bank of New South Wales (supra). In the most recent case of Martin v Pont [1993] 3 NZLR 25, the Court of Appeal quoted with approval the comments in Lipkin Gorman (supra). A change of position was not relied upon in that case and the Court noted also that there were special considerations which related to a claim for money had and received. It is perhaps enough to point out that in cases where money was made available for a specific purpose, there may be considerations, which have a bearing on 5 the equities and reflect the specific quasi-contractual considerations which arise in such cases." Counsel submitted that this case establishes that "It will be unjust to allow restitution where an innocent defendant's position has so changed that he will suffer an injustice if called upon to repay and the injustice of requiring him to so repay out weighs the injustice of denying the plaintiff restitution". Counsel for the respondent submits that for the appellant to have altered her position requires more than that she simply spent the money on day to day living expenses, she refers to the decision of K J Davies (1976) Ltd v Bank of New South Wales [1981] 1 NZLR 262, which decision was adopted and approved in the Waitaki International decision. There is also the previous decision of this Court in Mathews (104/97) on the same point. Counsel submits that there is no evidence that the appellant has in fact altered her position and therefore the requirement of repayment could not be regarded as inequitable. In a previous decision of this Court in Hurley (49/98) I stated: "The provisions of s.77(2) call upon this Court to make a value judgment as to whether or not it would be an equitable to require the appellant to repay. The mere fact of receipt of monies in good faith does not make it inequitable to be required to repay. There has been no alteration of the appellant's position to his detriment as a direct consequence of receiving a greater sum then he was entitled to and therefore there is no basis on which to consider any inequity as I find that any inequity can only arise in the circumstances of an altered position. If there is no altered position there can be no inequity in requiring repayment". 6 - In considering that statement of principle in the light of the statements made in the Waitaki International case, I find that this statement is still declaratory of the principles applicable to s.77(2) of the ARCI Act. The passage relied on by the appellant's advocate in the Waitaki case is a statement of the developing jurisprudence in the law of unjust in enrichment, and the defence to a claim for same. His Honour expressly took the view that considerations for a defence to a claim for unjust enrichment is something which could be considered in wider terms than the considerations for s.94B of the Judicature Act 1908. The provisions of s.77(2) are in many respects the same as those in s.94B of the Judicature Act 1908 and in adopting the decision of the High Court in the Davies decision referred to above, I find there must be an altering of position in reliance on the validity of the payment. The mere spending of the money received is not of itself an altering of position. In summary then I find that in order for considerations of equity to be raised it must be established that the recipient has so altered his or her position in reliance on the validity of the payment that it would be inequitable to require repayment. I agree with the decision of His Honour Judge Middleton in Mathews, following as it does the principle enunciated in the High Court in K J Davies 1976 Ltd v Bank of New South Wales (supra), that the spending of money received in the ordinary course of business or of daily living is not an altering of position. It therefore must follow that if there is no altering of position there cannot be a finding of it being inequitable to require repayment. 7. The appellant has not so altered her position other than to have spent the money on daily living as it was received. Her present financial and personal circumstances cannot be a consideration for the purposes of s.77(2) unless the case can reach the stage of considering the equities. This Court has the greatest of sympathy for the appellant, particularly in the light of the recent death of her husband, but the clear legal position is that she cannot bring herself within the requirements of s.77(2) and therefore the Corporation was correct when it determined that there be no remission of the overpayment. For the foregoing reasons this appeal is dismissed. DATED at WELLINGTON this 29 day of June 1998 death MJ Beattie District Court Judge Fraser.doc(gm)