Erwood v Accident Rehabilitation and Compensation Insurance Corporation

Decision No 66/ 96 IN THE DISTRICT COURT DCA No. 16/96 AT WELLINGTON UNDER THE Accident Rehabilitation and Compensation Insurance Act 1992 22 / 95/ 0183 AND IN THE MATTER of an appeal pursuant to Section 91 of the Act BETWEEN R. ERWOOD APPELLANT AND ACCIDENT REHABILITATION AND COMPENSATION INSURANCE CORPORATION RESPONDENT Heard at Auckland: 14 May 1996 Date of Decision: 30 August 1996 D. Dolbel as Counsel for appellant V.J. Hammond as Counsel for respondent RESERVED DECISION OF JUDGE J.H. LOVELL-SMITH The issue is whether the appellant is entitled to an independence allowance pursuant to s.54 of the Accident Rehabilitation and Compensation Insurance Act 1992, in circumstances, where he has previously received a lump payment under the Accident Compensation Act 1972. The appellant had previously been paid a lump sum in relation to a claim arising out of false imprisonment in August 1977 when the appellant was held on remand at Nelson Prison, and was assaulted by a police officer. The 2. appellant accepted the claim as an accident as a result of a review decision dated 14 January 1993. The appellant received compensation under ss. 119 and 120 of the Accident Compensation Act 1972. Medical opinions were obtained in respect of this claim from Dr Bergin, a neurologist, and Dr Sarfati and Dr Williams, psychiatrists. In his report dated 24 August 1993, Dr Harvey said:- "Regarding loss of function, there have been losses amounting to a mental disorder and major effects on personality functioning. To use the DSM3R classification Post Traumatic Stress Disorder with major depression episodes. The percentage effect is in the moderate to severe range (55%-75%). Regarding pain and suffering and loss of enjoyment. It is difficult to fully equate and quantify financially the past fourteen years of harrowing experience, incarceration, traumatic events and life devastation that Mr Erwood has endured. I have no doubt that it has been 'exceptional mental suffering'. I would recommend that the ACC grant 100% (and I am sure under the circumstances ACC would want to award the maximum for that part of the Act in relation to lump sum entitlement). Further Recommendation. Considering the amount of time, fourteen years, which has had many tortured effects on Mr Erwood's life I would recommend that the ACC consider an enhancement factor, and therefore I would recommend 100% for both sections." Under the Accident Compensation Act 1972, the Corporation awarded Mr Erwood 100% of the maximum $7,000 under s. 199, and the maximum $10,000 under s. 120, in respect of the false imprisonment accident in August 1977. 3. The appellant suffered a further accident on 22 January 1995 when he was attacked in an Auckland street resulting in neck strains and a laceration behind the ear. His doctor completed an M46 claim form the following day, and the Corporation accepted the attack as an accident. The appellant applied for the independence allowance in an application for entitlement dated 31 January 1995. There was then a five month delay between lodging his claim and completing the required questionnaire for the independence allowance, the functional limitations profile on 19 June 1994. The Review Officer's decision records that Mr Erwood was in Christchurch, the Corporation having received a dental claim from him through a Christchurch branch at the time and this accounted for the delay. The functional limitations profile resulted in a disability score of 59.4, which gives a percentage degree of disability of 100% according to the First Part of the Second Schedule of the Accident Rehabilitation and Compensation Insurance (Independence Allowance Assessment) Regulations 1993. The Corporation deducted the 100% lump sum that was awarded under s. 119, from the 100% result from the functional limitations profile pursuant to s.54(14) of the 1992 Act. The result was a nil entitlement to an independence allowance. Submissions: Section 54(14) of the 1992 Act provides:- "Where any person who has received a payment under s. 119 of the Accident Compensation Act 1972 or s.78 of the Accident Compensation Act 1982 is assessed for the purposes of establishing an entitlement to an independence allowance, the person's disability assessed under subsection (5) of this section shall be reduced by the percentage or percentages of permanent 4. loss or impairment of bodily function upon which any payment or payments under s. 119 of the Accident Compensation Act 1972 or s.78 of the Accident Compensation Act 1982 were based." Counsel for the appellant submitted that as Mr Erwood was assessed under s. 119 as having a 55-75% disability, there is still 45-25% available under the independence allowance provisions of the 1992 Act. She submitted that s.54(14) related only to s. 119 and not to s. 120. Dr Williams' report, she argued, is clearly divided into two paragraphs. The first paragraph referring to loss of function relates to s. 119, and refers to 55 to 75% disability. The second paragraph relates to pain and suffering and loss of enjoyment and refers to s. 120. Counsel for the appellant further submitted that s. 120(2) and (3) are the only references in the 1972 Act to enhancement factors. Section 120(3) of the 1972 Act provides:- "In any case where compensation in a lump sum or lump sums is payable to any person under this section in respect of the injury, if there is an enhancement factor the Commission, having regard to the medical and other evidence available to it, may include in any such lump sum such additional amount as it considers appropriate on account of the enhancement factor." Counsel for the appellant's submission was that enhancement factors can only be applied to s. 120 assessments and it was not open to the Corporation to imply the enhancement factor in respect of a permanent disability percentage under s. 119 of the 1972 Act. She argues that the Corporation, in effect, used s. 120(6) of the 1972 Act to give him his full $17,000. 5. Counsel for the appellant further submitted that under s.54(14), the appellant's disability in relation to the independence allowance should be reduced by the percentage of permanent loss or impairment of bodily function upon which the payment under s. 119 was based. This left a figure of between 25% and 45% available to be applied to the independence allowance. As a matter of fairness it was submitted on behalf of the appellant that he should have the benefit of the lower of the two limits of the range assessed by Dr Williams. For the Corporation, it was submitted that s.54(1) of the 1992 Act is clear in meaning leaving no discretion to the Corporation to use an assessment procedure or questionnaire other than that set out in the Regulations. The wording of the Regulations is mandatory. For the respondent, it was submitted that the principle behind s.54(14) is that the claimant should not be doubly compensated in respect of permanent disability if they have already received a lump sum award under previous legislation. A claimant may be entitled however, to receive a top up by way of independence allowance if their percentage degree of disability has increased because of a worsening condition or they have suffered a further accident. In Dr Williams' report, he stated that the percentage loss of function was in the range of 55% to 75% although he further recommended that the Corporation should award 100% for both sections. It was the appellant's argument that the percentage upon which payment was "based" is the actual percentage of physical disability being in this case in the range of 55% to 75%. 6. For the respondent, it was submitted that the Corporation clearly made an award under s. 119 based on 100%, the appellant having received 100% of the maximum payable under that section being a lump sum of $7,000. It is apparent from the form of calculation used in making the award that 100% was the percentage used. I agree with Counsel for the respondent that it is difficult to see how it could be said that the payment was not "based on" 100%, despite the appellant's actual percentage of disability. being more in the range of 55% to 75%. I agree that on a plain reading of s.54(14) it is not the actual percentage disability of the person at the time which is relevant. Section 54(14) refers to the percentage disability upon which "payment" was based or actually made. I accept Counsel for the respondent's submission that the policy behind s.54(14) is that the percentage actually used in the Corporation's calculation is the extent to which a claimant can be said to have been already compensated for permanent disability. In this case the correct percentage to use for the award under s. 119 is 100% because that is the percentage upon which the Corporation actually "based" its payment pursuant to s.54(14). The appeal is dismissed and there is no order for costs. (Jane H. Lovell-Smith) District Court Judge