Sheed v Accident Compensation Corporation

IN THE DISTRICT COURT AT AUCKLAND [2015] NZACC 16 ACR 670/12 UNDER THE ACCIDENT COMPENSATION ACT 2001 IN THE MATTER OF AN APPEAL UNDER SECTION 151 OF THE ACT BETWEEN NIGEL SHEED Appellant AND ACCIDENT COMPENSATION CORPORATION Respondent Hearing: 29 October 2014 Appearances: P Schmidt for the Appellant D Tuigeregere for the Respondent Judgment: 27 January 2015 RESERVED JUDGMENT OF JUDGE NICOLA MATHERS [1] This is an appeal from a Review decision of 24 October 2012 declining interest on backdated weekly payments awarded by an earlier Review decision of 5 January 2012. [2] Mr Sheed was originally granted cover for a "sensitive claim" arising from events on 18 July 2006 on the basis that he was a non-permanent employee. However the Review decision of 5 January 2012 resulted in a finding that Mr Sheed had been incorrectly assessed, and was in fact a "permanent" employee as at 18 July 2006. [3] ACC then set about calculating the weekly compensation that should have been payable to him from July 2006. The investigation included a calculation as to rebating income received by Mr Sheed while working, during the relevant period, in a coffee roasting business. An enquiry to WINZ confirmed that the original reimbursement payment to WINZ in 2007 need not be changed due to the backdating of the increased weekly compensation. [4] ACC paid the arrears of $147,878.63 gross on 8 May 2012, a period of almost exactly four months from the Review decision. The second Review of 24 October dealing with the interest claim concluded, after distinguishing the Court of Appeal decisions of ACC v Kearney [2010] NZCA 327 and ACC v Miller [2013] NZCA, "on the facts of this case": I am satisfied that ACC received details of Mr Sheed's income on or around 30 April 2012. Subsequently, ACC received information from WINZ on 2 May 2012. ACC made the arrears payment on 8 May 2012, within the one month period stipulated in s 114. [5] Mr Sheed claims however that: Interest should then run from one month after ACC received the earnings details from the recruitment agency because at that time ACC knew Mr Sheed's earnings and he had explained his employment situation. In response to a question from me Mr Schmidt, for Mr Sheed, fixed that date at 14 March 2007. ACC does not dispute the date per se. [6] There the battle lines are drawn. Both sides urge me to interpret the Kearney and Miller decisions differently! Of course the facts in this case are very different to either Kearney or Miller, although in Kearney there was a misinterpretation of a statute as against in this case an alleged mistake in categorisation of employment status. I note in this case I am not dealing with medical reports because the claim had been accepted. Everything turns upon a financial enquiry as to the correct weekly compensation relating to Mr Sheed's permanent employment, rather than the original calculation based upon non-permanent employee and any resultant interest. [7] I note also that in making the necessary financial calculation relating to pre- incapacity earnings for the 52 weeks prior to the incapacity, ACC obtained details from WINZ as to reimbursement of any benefits received. It was also necessary to ascertain any pre-incapacity earnings for the 52 weeks prior to the incapacity. Then it was also necessary to consider any post-incapacity earnings. These enquiries were part of proper investigations required to be made by ACC. These were all completed on 14 march 2007 and payments commenced on 13 April 2007 [8] Mr Sheed's injury incapacity had already been assessed back in the period in 2006 following his initial claim. [9] Neither party has addressed how interest would actually be calculated because a back payment to July 2006 does not mean that interest should be payable, if at all, from that time because the weekly payments accrue on a weekly basis over the ensuing period, and not at all at the start. I suppose an actuarial calculation would be carried out. [10] I now turn to consider Kearney and Miller so that I may properly apply the principles to the facts in this case. For completeness I record that I heard oral evidence on oath relating to what was, and what was not known, or should have been investigated by ACC, and evidence from Mr Sheed as to what he told ACC at the time. [11] The first Review decision dealt with this issue and I note there was no appeal by ACC as to the finding based upon Mr Sheed's evidence being preferred, and the decision that he should have been assessed as a permanent employee. [12] As I have said, the parties chose to call evidence before me which was similar to that before the Reviewer. Mr Sheed was firm in his evidence that in effect ACC had made a mistake as to his employment status even though he had made it clear. For ACC Ms Symons very fairly said she could not after 8 years recall the conversation. However, she said she was renowned as a careful and accurate note taker and that there was nothing in her notes confirming Mr Sheed's evidence about permanent employment. [13] Like the Reviewer, I was impressed with Mr Sheed's evidence and accept it. I do not doubt Ms Symons note taking but I suspect she did not pick up on the significance of Mr Sheed's status at the time or failed to make any reasonable investigation of it, so that her notes would not record the true position. Put another way, having had the benefit of seeing and hearing oral evidence, I prefer that of Mr Sheed. [14] I therefore find that ACC made a mistake as to Mr Sheed's employment status either by misinterpreting his statements and documents or by failing to properly investigate what would have been a fairly simple job. [15] The Court of Appeal in Miller at paragraph 45 said of Kearney "The central focus of Kearney is the principle that the Corporation cannot rely on its own error in failing to request information as a reason for declining to make interest payments. That is clear from [32] of that judgment. We consider this is an important principle that was not clearly enunciated in prior authorities." [16] There is then the latter part of paragraph 46 where they said "We are satisfied that this Court in Kearney was not purporting to address the circumstances raised by this appeal; namely, the situation where all the medical evidence supports the Corporation's decision to cancel or suspend payments of weekly compensation." [17] It is therefore clear that the ratio in Kearney still applies and it is equally clear that the Court in Miller was considering a very different factual situation from either Kearney or in the present case. [18] I have found on the facts that ACC made a mistake as to whether Mr Sheed was a permanent employee and/or failed to carry out what would have been a simple investigation. This case did not involve a dispute as to medical opinions and did not involve the need for further necessary medical advice, following the original decision to grant cover for a non permanent employee rather than for a permanent employee as it should have done. [19] In Miller the Court held that "all necessary information" could include "further medical or financial information". No further financial information was needed, however, when the original mistaken decision was taken. It is true that further necessary financial information was necessary after the first Review decision but as Chambers J held in Kearney "But who was to blame for that state of affairs? Solely the Corporation because it had in effect wrongly removed Mr Kearney from its books back in 1991." [20] Also as held in Miller at paragraph 41 " It is now well established that interest will run from the first date on which it can be said that the Corporation holds all information necessary. The focus is not on the date of review or appeal, but rather on the date when it can be said that the Corporation is first in possession of the necessary information to make the same decision as that eventually reached on review or appeal. Hence the Corporation's liability to pay interest on any payment of weekly compensation arises if such payment is not made one month after the Corporation has received all the necessary information." [21] So in my view the ACC's submission to me as to timing after the first Review and up to payment is not relevant. It is the timing of payment from receiving all financial and medical information at the time of the original decision to agree and make payment on the basis of the faulty categorisation of Mr Sheed as a non permanent employee that is important on the basis of Kearney and Miller. [22] Furthermore any delay on the part of Mr Sheed that is subsequently excused by the exercise of ACC's decision for late filing of a Review appeal is not relevant. [23] Voluminous submissions were made to me regarding what constituted all "necessary information" and particularly focussed upon the WINZ statutory rebate. However ACC concedes that such argument only applies in category 4 of the Miller categories at paragraph 47 of the decision. I am of the view that whatever category this present case falls into it is not category 4. [24] Therefore based upon the factual findings I have made, which coincide with the first Review's factual findings and based upon the principles enunciated in Kearney and Miller as they apply to those factual findings, I am of the view, on the balance of probabilities that the appellant, Mr Sheed, must succeed in his claim for interest. [25] In my view interest should run from one month after 14 March 2007 being the date ACC was in possession of all necessary financial information to establish that Mr Sheed was entitled to weekly payments, albeit on a non permanent employee basis but not to include the period from 26 February when he was attending university, as conceded by Mr Schmidt to be not payable. [26] The appeal is therefore allowed. Mr Sheed is entitled to costs and disbursements, which I hope counsel will be able to agree resolve between them. If not I will receive memoranda. Nicola Mathers District Court Judge