Robertson v Accident Rehabilitation and Compensation Insurance Corporation

IN THE DISTRICT COURT Decision No. 8 2 195 HELD AT WELLINGTON 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 65/ 95/0279. BETWEEN PAULINE ROBERTSON Appellant (Appeal No. DCA 34/95) AND ACCIDENT REHABILITATION AND COMPENSATION INSURANCE CORPORATION a body corporate duly constituted under the provisions of the said Act Respondent HEARD on the 6th day of June 1995 APPEARANCES Mr Rowlett for appellant Mr Cleary for respondent DECISION OF JUDGE D A ONGLEY This appeal concerns a question whether the Review Officer's decision went beyond the scope of the questions on appeal and dealt with other matters that should have been left for primary decision by the Corporation. The subject matter of this appeal was the cancellation of compensation by application of's 73(1) of the Accident Rehabilitation and Compensation Insurance Act 1992 on grounds that the Corporation was not satisfied on the basis of the information in its possession that the appellant was entitled to continue to receive earnings related compensation. - 2. The appellant suffered a neck ligament strain amounting to personal injury by accident while loading hay on 8 October 1987 and again when she sustained a back injury on 16 December 1987 when milking. The symptoms settled but incapacity occurred possibly in December 1991 but certainly by 1 June 1992. She applied for earnings related compensation and the Corporation obtained information from the Inland Revenue Department to assess her relevant earnings at the date of incapacity. The appellant was in a sharemilking partnership. The Corporation acted upon advice which it obtained from Business and Management Services indicating that the appellant's income was as follows: Year ended Income 31 March 1991 $16,962 31 March 1992 3,649 31 March 1993 23,549 31 March 1994 7, 174 The date of incapacity was taken as 1 June 1992, so that the information on which the Corporation acted indicated that for the previous income year she had received income of only $3,649. The decision to cancel earnings related compensation was set out in a letter to the appellant of 10 October 1994 as follows: "We have considered the claim in terms of both the 1982 & 1992 Acts. As you are probably aware, earnings related compensation was payable in terms of Section 59 of the 1982 Act. Self employed persons, at the expiry of 26 weeks worth of compensation, were required to confirm a financial loss as a result of the accident injuries. Subject to the proof, compensation would either continue or be terminated. At the time of re-incapacity on 01.06.1992, your clients tax return for 1992 was $3,649.00. As this was less than the minimum compensation of $10,400.00 per annum, compensation was paid based on this figure. On reviewing the financial statements and FLC16's supplied by the Inland Revenue Department, it had been confirmed that the 1993 tax return figure was $23, 549.00, in addition to Accident Compensation income. This is clearly well in excess of Mrs Robertson's pre-incapacity income and she is therefore no longer entitled to receive compensation." The appellant lodged an appeal from that decision to the Review Officer. The reasons for the application were expressed as follows: "1. Mrs Robertson is unable to do any work on the farm and replacement labour is being employed. Any continued earnings is due to investment and not personal exertions. 2. 1991 earnings should be used as pre-accident earnings as incapacity occurred before the end of the 1992 financial year - 30/6/92" The review application form contains a space for the appellant to nominate the result which is sought as a consequence of the review hearing. The appellant stated: "Restore weekly compensation. Re-assess based on financial Y/E 30/6/91" - 3 - The review application was directed at the fact of incapacity and at the base for pre- accident earnings assessment. The result sought was a restoration and re-assessment of compensation, but that was not necessarily sought from the Review Officer; it was an process that the appellant might have expected the Corporation to perform once the base for pre-accident earning was established. The argument the appellant advanced successfully on review was that the she used a June income year for income tax purposes, as is customary with sharemilkers, and so the incapacity, if it happened on 1 June 1992, occurred in the 1992 income year and not in the 1993 year. It followed that the year to be selected for assessment of pre-accident annual income was the 1991 income year not the 1992 year. The pre-accident income was $16,962 and not $3,649. If the review had been restricted to those consideration the appellant would have had no complaint. However the Review Officer went further and worked out the appellant's loss of earnings right up until August 1994, the month when the review was determined. On this appeal the appellant has argued that the process of calculation went beyond the scope of the appeal and that the decision on review should be set aside to that extent only. In order to consider whether the Review Officer wrongly enlarged the scope of the enquiry it is necessary to look also at the appellant's submissions on review and the transcript of the hearing. The appellant's written submissions on review went beyond the grounds stated for review and addressed factors affecting post-accident income. The submission stated 'We submit that pre-accident earnings be reassessed on the 1990/91 figures and this be backdated to 30/6/92. With regard to post-accident income this has been affected by factors other than Mrs Robertson's incapacity. Increased earnings since then have mainly been due to increased production resulting from that increase in stock numbers as well as improving returns. The corporation's approach to 'other factors affecting income' seems to be on the 'heads we win tails you lose' principle. If post-accident income is increased due to 'other factors' this is used to reduce or cease entitlement. If income is reduced by other factors, it is contended that loss of income is not due to the injury. However we consider account should be taken of the definition of 'Earnings other than as an employee' in the Earnings Definitions Regulations 1992/64. This described it as 'the amount of assessable income (if any) derived by the person in the income year for the purposes of the Income Tax Act 1976 which:- (a) Is dependent on the personal exertions of the person; and (b) If the person were to suffer any incapacity, the person would cease to derive as a consequence of such incapacity'. Mrs Robertson's income since 1/6/92 would not fall within this description. She has not worked on the farm since that time and the fact that this income has continued during this period of total incapacity indicates that she would not cease to derive it if incapacitated. It must therefore be regarded as due to her part ownership of the farm rather than earnings from personal effort. - 4 - We therefore submit that she has been unable to earn in the manner described since 1/6/92 and this situation continues. The decision to cease weekly compensation should therefore be overturned and compensation re-instated from the date of cessation." Those submissions invited the Review Officer to assess compensation because that could be the only purpose in enquiring into the appellant's income since 1992. The submissions were directed at establishing loss of earning capacity by discounting investment income and isolating income from personal exertion which could then be compared with pre-accident income in order to reach a conclusion about loss of earning capacity. The loss of income in 1992 was evident enough. The submissions asked for re-assessment backdated to 1992 and it is not surprising that the Review Officer embarked on that exercise. A good deal of the transcript of the review hearing also deals with assessment of income from personal exertion since 1992 and the Review Officer understanding of the scope of the appeal was reflected in the following passage: "Review Officer Now in view of the evidence that has come forward today, Mrs Robertson if you would just for the record confirm to me please that you have not worked for the partnership since 1 June 1992. Appellant No Review Officer (unintelligible). Those were the only things that I think I need to know. I can do the calculations. Advocate Yes Review Officer I would propose once I have got that information to proceed to a decision without referring further to either you or to the Corporation. The Corporation have asked me to take into account that report from Business, whatever they call themselves. Advocate Yes Review Officer Do you have any comment to make on that? Advocate Not really ... etc" On this appeal the appellant did not object to the Review Officer having calculated the 1992 entitlement. That was in favour of the appellant and the Review Officer had accepted the whole of the reduction in income between 1991 and 1992 as being caused by loss of earning capacity. In relation to periods after 30 June 1992 he decided that the calculation was governed by s 138(2) of the 1992 Act so that adjustments were to be made under the former Act. He then examined the period to 30 June 1993 and found that post-accident earnings exceeded pre-accident earnings and concluded that there was no loss of earning capacity in that year. That conclusion is most consistent with an assumption that all the 1993 income was dependent on personal exertions. In 1994 the parties changed their partnership sharing arrangement and the appellant's income fell to $7, 174. The Review Officer again impliedly accepted that the accounts reflected income from personal exertion. The notice of appeal to the District Court specified the grounds of appeal as follows: - 5 - "The rulings under s 138 can only be made as new decisions and not as part of a review against a decision under section 89." The appellant says that there has been no opportunity to have the calculations for 1993 onwards made at Corporation level. If they had been, then any alleged errors could be reviewed and, if necessary, appealed with the opportunity of examining the foundation of the assessments and preparing the appropriate evidence and argument to resolve them. With that in mind the appellant did not advance any alternative argument against the correctness of the Review Officer's determinations for the latter years. The Corporation argued on appeal that the application of s 138 was correct and that the Review Officer's method of calculation was correct. Involved in this there is however a possibly complex question of the application of the transitional provisions and ss 47 to 51 of the Act. The appellant has chosen not to argue those questions on the appeal. In my view the appellant had a right to confine the questions on review to the fact of incapacity and assessment of pre-accident income. The subject matter of an appeal or a review is generally confined to the decision appealed against. Although the Act it defines the power of the District Court on appeal in s 91(8) it does not state what a Review Officer may do in deciding a review. In this case the appellant appeared to acquiesce in allowing the Review Officer to determine the preliminary questions and then re-calculate compensation, but in fact the review was not in respect of calculation of compensation but in respect of cancellation of compensation. Jurisdiction can no doubt be conferred by agreement to extend the scope of an appeal or review beyond the limits of the question appealed against. In this case I consider that while the appellant's advocate appeared to acquiesce in the Review Officer working out the calculations the implications of such a course for the appellant may not then have been apparent and he did not go so far as to agree deliberately to enlarging the question on review and depriving the appellant of the benefit of a primary decision and further rights of review and appeal. That may be important to the appellant and she should not be deprived of it by an unintended course taken on the review. For those reasons the appeal is allowed. The Corporation did not cross appeal concerning the Review Officer's determination of the 1992 compensation. That was more closely connected with the subject matter of the decision appealed against and in the circumstances it would be unfair to disturb that finding when it has been accepted by both parties on this appeal. The decision of the Review Officer is therefore modified by setting aside that part of the decision relating to the application of the Act or calculations of compensation after 30 June 1992. The appellant will be entitled to costs fixed at $600. DATED at WELLINGTON this 27- day of July 1995 D A Ongley District Court Judge