Sanson v Accident Rehabilitation and Compensation Insurance Corporation

IN THE DISTRICT COURT HELD AT WELLINGTON Decision No. 156/99 UNDER The Accident Rehabilitation and Compensation Insurance Act 1992 AND IN THE MATTER of an appeal pursuant to section 91 of the Act BETWEEN MICHAEL PAUL SANSON of Whangarei Appellant (Appeal No. DCA 66/99) AND ACCIDENT REHABILITATION AND COMPENSATION INSURANCE CORPORATION a body corporate duly constituted under the provisions of the said Act Respondent HEARING at WHANGAREI on the 26th day of May 1999 APPEARANCE/COUNSEL CL Cook for appellant D Fotiades for respondent RESERVED JUDGMENT OF JUDGE A W MIDDLETON The issue in this appeal is whether the appellant is entitled to remission of a debt of $1865.85 due to the respondent. The issue falls to be decided under section 77 of the Accident Rehabilitation and Compensation Insurance Act 1992. The background to the appeal is that on 14 April 1993 when employed as a farmer, the appellant suffered a back injury. He was granted cover by the respondent and received weekly compensation. On 25 October 1994 he commenced part time work at the Settlers Tavern in Whangarei in which he continued until 5 March 1995. It appears that initially the appellant's payslips were submitted to the respondent so that it could consider the question of abatement if his hours of work changed. On 2 2 February 1995, as a result of correspondence from Whangarei Employment & Training Centre, the respondent learned that the appellant's hours of work had increased over the period he had been at Settlers Tavern. The letter also advised that Whangarei Employment & Training Centre had advised the appellant to take his payslips into the respondent's office. As a result, the appellant's Case Manager wrote to the appellant on 12 February 1995 requesting an urgent meeting to discuss his claim because of the lack of wage detail on the file since the previous November. Settlers Tavern supplied details of his earnings as a result of which it was demonstrated that there had been an overpayment to the appellant. As the appellant took no steps to reduce the debt the respondent obtained a default judgment in the Court in the total sum of $1865.85. On 10 July 1998 the respondent notified the appellant that it would not agree to remission of the debt. The appellant applied for a review of that decision and gave as his reason for the application "I did not intentionally contribute to the debt. I advised ACC (Neil Dennings) of my earnings until he told me to stop doing so. I accepted the money in good faith. I have spent the money in good faith and can not repay it." The Review Officer referred to the provisions of section 77(2) and in particular to the fact that the appellant stated on oath that his Case Manager had advised him that he had not needed to continue to produce payslips so he did not consider he had intentionally contributed to the debt. The Review Officer also recorded his statement that he believed his rate of pay had not changed and that therefore there was no need to produce payslips to the respondent. The Review Officer held that the appellant had contributed to the debt by failing to notify his increased hours of work and she stated that she was "somewhat sceptical" of the appellant's reasoning and held that on the evidence he had intentionally contributed to the debt. She then went on to consider the other requirements of section 77(2) and held that by applying the principles enunciated in Hurley v ARCIC (49/98) and Fraser v ARCIC (137/98) the spending of the money on the appellant's general living expenses did not amount to an alteration of his position which warranted remission of the debt. It is against that decision which the appellant now appeals. In her submission Ms Cook submitted: 1. That by a letter dated 9 March 1998 the respondent notified the appellant that the amount of the debt prior to entry of judgement was made up to the sum of $922.86 representing payments for the period between 25 October 1994 and March 1995 plus the sum of $514.82 being incorrect details used to calculate entitlements for the period 13 October 1997 to 26 October 1997. Ms Cook submitted that the figure of $514.82 was due to the fault of the respondent and not the appellant. 2. That the appellant had no formal school qualifications and accepted the advice of his Case Manager that he did not need to provide further payslips after originally providing them when he had commenced work at Settlers Tavern. He considered that because his "rate" of pay had not changed he was not required to provide payslips. 3 3. That irrespective of whether or not that advice was given there was clearly a failure of the respondent to follow up its requirements and request payslips for the intervening period between October 1994 and March 1995 which allowed the debt to accrue. 4. That the Review Officer erred in finding that the appellant did not receive the funds in good faith because no steps were taken to check the appellant's claim made on oath, that he had relied on the advice of his Case Manager that he did not need to provide further payslips. 5. That the appellant's evidence was that although his hours of work varied during each week he did not believe that that meant he was earning more. 6. That the appellant demonstrated a tight financial position which would warrant relief. Ms Fotiades submitted: 1. That there is little doubt that the appellant contributed to the error which resulted in the overpayment because of his failure to provide details of his ---- -= income. 2. That there is no evidence on the file that the appellant was advised by his Case Manager that he did not need to produce payslips and in particular each time he received his weekly earnings it was accompanied by the ARC64 form which set out the basis upon which he was being paid in relation to his additional earnings. 3. That after advice by the respondent on 12 February 1995 of the possibility of an overpayment, the receipt of further payments after that debt could not have been accepted in good faith. That this was reinforced by the Review Officer's finding that she was "somewhat sceptical of the applicant's reasoning.' 4. That on the basis of the decisions in Matthews (104/97), Satherly (150/96) and Fraser (137/98) the use of the overpayment on general living expenses did not amount to an alteration of his position. 5 . That the appellant has made no alteration in his position by virtue of the receipt of the overpayment which would now make it inequitable to require repayment. 6. That while the appellant has submitted that he cannot easily offer to repay the debt it is accepted that he is working fulltime and would be in a position to repay. Furthermore, having regard to the decision in Fraser, the appellant's financial position is not relevant to the inquiry as to inequity. 4 The issue falls to be decided under section 77(2) of the Act which enables remission provided the following criteria are met: 1. That the debt did not arise as a result of error intentionally contributed to by the appellant; and 2. That the respondent is satisfied that the appellant received the overpayment in good faith; and 3. That the appellant has so altered his position in reliance on the validity of the payment that it would be inequitable to require repayment. 1. Whether the appellant intentionally contributed to the overpayment The appellant gave evidence before the Review Officer that Mr Denney, his Case Manager, had told him after he had initially supplied payslips that there was no need for him to continue to do so. In his application for review he repeated that as the reason why he had failed to supply further payslips. I am concerned that no effort was made to check that claim although the Review Officer raised doubts as to the validity of the claim. However, as the onus is on the appellant to satisfy the Court on the balance of probabilities that his appeal should be allowed it does seem that there was some responsibility on him, prior to the review hearing, to have that checked with Mr Denney whether or not he would confirm that statement. While the appellant was not represented at the review hearing it was still open to counsel at the appeal stage to have obtained some form of confirmation or denial of that statement. I accept that a reading of the transcript demonstrates a naivety on the part of the appellant and a lack of full understanding of the requirements placed on him. At the same time I agree with the Review Officer that he must have been aware that the payments he was receiving by way of weekly compensation were based on the fact that he was working certain hours at the tavern and that his entitlement to weekly earnings were reduced by the amount of pay he received from that work. The Review Officer had the benefit of seeing and hearing the appellant and in the absence of any other evidence I have to accept her finding on the issue of the appellant's contribution to the overpayment. 2. Were the overpayments received in good faith Again the Review Officer had the benefit of seeing and hearing the appellant and questioned him at some length as appears in the transcript of evidence. She concluded that she doubted the appellant's reasoning and concluded that the payments were not received in good faith, a decision which I must accept. 3. Has the appellant so altered his position in reliance on the validity of the payment that it would be inequitable to require repayment In his decision in Fraser, His Honour Judge Beattie stated "the mere spending received is not of itself an altering of position". In my decision in Matthews I stated: "... the principal hurdle which the appellant must satisfy in order to seek the benefit of the discretion is whether or not she relied on the validity of the 5 overpayments and altered her position on the basis of that. While she had spent the money on clothing, and outgoings and perhaps additional food, I do not consider that is of a nature contemplated by the Act. In the case of Reinders (33/96) that appellant had purchased a house on the basis of the compensation she received and had entered into mortgage payments on that basis. The appellant held that she had altered her position in reliance on the validity of the payment. I agree with Mr Tui's [Counsel for the Corporation's] submission in this case that there is no evidence that this appellant has altered her position by entering into binding commitments on the strength of the overpayments." I adopt my findings in Matthews as being applicable in this appeal. I do not consider that the fact that the appellant spent the overpayment on his general living expenses amounts to an alteration in his position on reliance on the validity of the overpayment. 3. Whether it is inequitable to require repayment I adopt the reasoning of His Honour Judge Beattie in Hurley where he stated: " The mere fact of receipt of the 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 than he was entitled 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." I have been told that the appellant is now working and it would appear that the sum involved is not large and he should be in a position to come to some arrangement with the respondent for repayment. I do not consider that it is inequitable in the circumstances to require repayment particularly as I have already accepted the findings of the Review Officer that the appellant did contribute to the error and that he did not receive the payments in good faith. The appeal is dismissed. DATED at WELLINGTON this 18th day of June 1999 A W Middleton District Court Judge dca66-98.doc (nr)