Graham (Estate of Graham) v Accident Rehabilitation and Compensation Insurance Corporation

IN THE DISTRICT COURT Decision No. 142 / 96 AT WELLINGTON UNDER THE Accident Rehabilitation and Compensation Insurance Act 1992 AND IN THE MATTER of an appeal pursuant to Section 91 of the Act BETWEEN M GRAHAM (ESTATE OF BRENDA GRAHAM) APPELLANT (DCA NO. 4/96) AND ACCIDENT REHABILITATION AND COMPENSATION INSURANCE CORPORATION a body corporate duly constituted under the provisions of the said Act RESPONDENT Date of Hearing: 20 June 1996 Date of Decision: 27 . November 1996 Counsel for Appellant: R.E. Lawn Counsel for Respondent: S.J. Simms DECISION OF JUDGE J.H. LOVELL-SMITH The issue in this appeal is whether the appellant and his daughter are entitled to weekly compensation under sections 58 and 59 of the Accident Rehabilitation and Compensation Insurance Act 1992 ("the Act"). Mrs Brenda Graham tragically died of meningococcal meningitis/meningoccal septicaemia on 29 October 1994. The Respondent accepted a claim based on medical misadventure suffered by the late Mrs Graham and her estate received compensation under sections 55 and 56 of the Act. In 1995, counsel for the Appellant also raised the question of compensation under sections 58 and 59 of the Act. The Respondent replied in a letter dated 30 May 1995 as follows: "With regard to section 58 and 59 of the 1992 Act, we must determine whether both Mr Graham and Ranella are eligible to receive weekly compensation. In order to do this, we need to confirm that Mrs Graham was an earner prior to this accident because this is what the weekly compensation is based on. It is my understanding that Mrs Graham was not working prior to the accident. Regretfully, there is no entitlement to pay compensation under these sections". Mrs Graham had previously been employed by the ANZ Bank, Wellington from 1 April 1990 to 31 March 1991 and with DEKA New Zealand Limited from 20 July 1992 until 1 1 June 1994. She was not in paid employment immediately prior to being diagnosed as suffering from meningococcal meningitis in 1994. On that basis the Respondent declined cover under section 58 and 59 of the Act. 3 In a decision dated 14 November 1995. the Review Officer held that entitlement to weekly compensation for a surviving spouse and child is based on a percentage of the compensation for loss of earnings or loss of potential earnings capacity to which the deceased person who have been entitled at the expiry of five weeks of incapacity or six months of incapacity respectively had he or she remained alive and totally incapacitated. Given that the deceased person was not an earner at the material time, the Review Officer held that had she survived and been incapacitated she would not have been entitled to weekly payments as provided for in Part (IV) of the 1992 Act. The relevant provisions of the 1992 Act are section 58(1) and (4) and section 59(1) and (2). These provisions provide as follows: "58. Weekly compensation to surviving spouse - (1) Weekly compensation shall be payable to a surviving spouse of a person who dies as a result of personal injury covered by this act... (4 ) Subject to section 61 of this Act, the compensation payable under subsection (1) of this section shall be payable from the date of death at the rate of 60 percent of the compensation for loss of earnings or loss of potential earning capacity to which the deceased person would have been entitled at the expiry of 5 weeks of incapacity or 6 months of incapacity, respectively, had he or she remained alive but been totally incapacitated." "59. Weekly compensation payable to children - (1) Weekly compensation shall be payable to any child of a person who dies as a result of personal injury covered by this Act... (2) Subject to section 61 of this Act. the compensation payable under subsection (1) of this section shall be payable from the date of death at the rate of 20 percent of the compensation for loss of earnings or loss of potential earning capacity to which the deceased person would have been entitled at the expiry of 5 weeks of incapacity or 6 months of incapacity, respectively, had that person remained alive but been totally incapacitated." Counsel for the Appellant submitted as follows: "1. The Review Officer has found as a matter of law that had the deceased Brenda Graham remained alive but totally incapacitated five weeks or six months respectively after the date of death and being incapacitated she was not entitled to earnings related compensation as she was not an earner, nor was she entitled to compensation for loss of potential earning capacity as Brenda Graham would not have qualified under s.46 of the Act had she remained alive. 2. This construction of S.58 and 59 ignores the statutory injunction that "weekly compensation shall be payable to a surviving spouse of a person who dies as a result of personal injury covered by this Act." 3. The requirement in calculating compensation pursuant to this injunction of assuming that the deceased remained alive but totally incapacitated does not remove the requirement in interpreting that compensation provision that the deceased person is deemed to have cover where they have suffered personal injury. 4. The effect of the Review Officer's decision is to find that the deceased did not have cover under the Act when the Act specifically says that the deceased does have cover. 5. As a matter of law the Review officer should have asked the question: 5 "where there is a legal fiction directing that the deceased be assessed as if they had remained alive but incapacitated, does the person have cover under the Act at the time they suffered personal injury covered by the Act?". The answer to this question is, "yes" the deceased person does have cover under the Act by virtue of s.s.58 and 59. 6. The question then is, where there is cover from the time of suffering the personal injury by accident, what is the compensation payable whether a person is assumed to be alive but totally incapacitated with cover provided under the Act? 7 . The answer here is to be found in s.45 of the Act which provides that a person is deemed to have loss of potential income earning capacity where they have taken out the appropriate insurance to obtain the cover. 8. On the facts of this case it is unnecessary for the deceased to have taken out the appropriate cover under s.45 to obtain the cover under s.45 because s.s. 1 of s.s. 58 and 59 deem there to be cover at the date personal injury occurs under the Act. That was the time in this case when Dr Stritharan and Dr So failed to diagnose meningococcal meningitis/meningococcal septicaemia in their medical surgeries as being suffered by the late Brenda Graham and failing to provide appropriate treatment for such a condition thereafter. The loss of potential income earning capacity was therefore covered by reference to s.45 as being deemed cover as opposed to the taking out of actual cover for the loss of potential income earning capacity suffered by Brenda Graham as a result of the personal injury suffered." Counsel for the Appellant submitted that the use of the word "shall" of subsection of sections 58 and 59 renders it mandatory for the corporation to pay weekly compensation irrespective of whether the deceased would have been entitled to such compensation. Counsel for the Respondent submitted that this submission requires that section 58(1) and section 59(1) be applied without regard to the later identical subsections (4) and (2) which qualify for the interpretation of the earlier provisions. Counsel for the Respondent further submitted that for weekly compensation to be payable under sections 58(1) or 59(1) entitlement to such compensation must have been determined by the provisions in the Act specifically relating to compensation for loss of earnings or loss of potential earning capacity. Subsections 58(4) and 59(2) refer to the requirement of such entitlement. Sections 58 and 59 do not provide an independent mechanism of calculating "weekly compensation". Such a calculation has to be done under the earlier provisions relating to this specific type of compensation concerned. Counsel for the Respondent further submitted that the "weekly compensation" provided for in section 58 and 59 is limited to either compensation for loss of earnings; or compensation for loss of potential earning capacity. She argued that section 58 and 59 provide that where the deceased would have been entitled to such compensation had they survived then that compensation, in the event of their death, ought to be paid to their surviving spouse and children. It is not disputed that Mrs Graham was not an earner immediately prior to her death and I agree with counsel for the Appellant that she would not have been entitled to compensation for loss of earnings had she survived but been incapacitated. Counsel for the Appellant submitted that the Appellant ought to receive compensation for Mrs Graham loss of potential income earning capacity. Under section 45 of the Act Mrs Graham's loss of potential earning capacity was deemed to be covered and that it was not necessary for her to have taken out actual cover under section 45 for such loss. Counsel for the Respondent submitted however that Mrs Graham cannot be deemed to have cover for loss of potential earning capacity. The Act provides for compensation for such loss but only in very limited circumstances in sections 45 or 46. "45. Purchase of weekly compensation by non-earners - (1) Any person who is or has been an earner may elect on the prescribed form to purchase from the Corporation the right to receive compensation for loss of potential earning capacity in accordance with this section. (2) An election under this section may be made only by a person who - (a) Has had at least 12 months continuous employment; and (b) Makes the election while still in such employment or within 1 month after ceasing that employment; and (C ) Pays the premium when required to do so." "46. Compensation for loss of potential earning capacity payable to person in respect of incapacity resulting from personal injury suffered before attaining 18 years of age or while studying - (1) Compensation for loss of potential earning capacity shall be payable in respect of a person who - 8 (a) Suffered personal injury before attaining the age of 18 years or while engaged in full-time study or training which has been continuous since before the person attained the age of 18 years; and (6) Has attained the age of 18 years and is incapacitated by that personal injury; and ( c) Has a capacity for work of less than 85 percent as determined in accordance with the scales prescribed by regulations made under this Act; and (d) Does not have weekly earnings in excess of $245 or, in the case of a person who has not attained the age of 20 years; does not have weekly earnings in excess of $196; and (e) Is not engaged in full-time study or training; and Has been incapacitated for more than 6 months." Counsel for the Respondent submitted that had Mrs Graham survived but been incapacitated she would not have been entitled to compensation for loss of potential earning capacity by virtue of either section 45 or 46. Thus no weekly compensation is payable by virtue of sections 58 or 59. Subsections (4) and (2) of sections 58 and 59 both state that weekly compensation is payable for "loss of earnings or loss of potential earning capacity to which the deceased person would have been entitled." I accept the Respondent's submission that the deceased would not have been entitled to either compensation for loss of earnings or compensation for loss of potential earning capacity. I also accept the Respondent's submission that subsections (4) and (2) of sections 58 and 59 respectively clearly indicate that sections 58 and 59. as a whole. must be interpreted to mean that only compensation to which the deceased would have been entitled to had she survived can be payable to the deceased's spouse and child. The appeal is dismissed. or.. .. . . ....................... Jane H. Lovell-Smith District Court Judge