Royal v Accident Rehabilitation and Compensation Insurance Corporation

IN THE DISTRICT COURT HELD AT WELLINGTON Decision No. | 4| 198 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 BETWEEN SUSAN ROYAL DCA 374/97 Appellant AND ACCIDENT REHABILITATION AND COMPENSATION INSURANCE CORPORATION a body corporate duly constituted under the provisions of the said Act Respondent HEARD on the 17th day of June 1998 APPEARANCES: Mr R Newell for appellant Mr A R Davie for respondent DECISION OF JUDGE M J BEATTIE The issue in this appeal is whether the decision of the respondent not to remit a debt of $16,235.45 owed to it by the appellant as a result of an overpayment, was correct. 2 BACKGROUND FACTS On the 4th June 1992 the appellant lodged a claim, which was accepted, in respect of a back injury sustained by her while shifting furniture at work. That back injury continued to prevent her from returning to the workforce full time and she has been in receipt of varying amounts of weekly compensation over the years, the amounts of such compensation being dependent upon the level of part time work that she was able to do. In addition to weekly compensation the appellant received a lump sum under the provisions of the 1982 Act of $8500 in respect of her disability. In May 1997 the appellant was still receiving weekly compensation and as a result of what has been described as an administrative error, the sum of $16,235.45 was paid into her ANZ Bank account on the 28th of May 1997. It seems that this sum represented the net amount of what was in fact one year's compensation in advance at the rate that she was then currently entitled. This error was not detected by the Corporation until 20th June 1997 when the appellant's case manager was auditing her file and noticed the overpayment. The appellant's case manager contacted her by telephone and the upshot of that conversation is that it was discovered that the appellant had spent the entire amount that had been incorrectly deposited. It is clear that the error giving rise to the overpayment was entirely that of the Corporation and was not contributed to in any way by the appellant. The appellant seeks that the Corporation remit the whole of the amount so overpaid pursuant to section 77(2) of the Act. That provision states: 3 "The Corporation shall remit in whole or in part a debt which arose as a result of an error not intentionally contributed to by the debtor if the Corporation is satisfied that the person receiving the amount so paid in error did so in good faith and has so altered his or her position in reliance on the validity of the payment that it would be inequitable to require repayment." This provision requires consideration of three factors all of which must be present before a person could become entitled to be considered for the exercise of the Corporation's discretion in his or her favour. Those three factors are: i. That the error was not intentionally contributed to by the recipient. ii. That the amount was received in good faith. ifi. That the person has so altered his or her position in reliance on the validity of the payment that it would be inequitable to require repayment. In the case of this appellant the first factor is present and it requires a consideration of the evidence relating to the other two factors before a decision can be made. RELEVANT EVIDENCE The appellant had been receiving benefits of various types from the Corporation for the previous five years including treatment expenses, lump sum payment and weekly compensation. At or about the time of this overpayment she was in contact with her case manager over her imminent return to work after a period off work. In her evidence at the review hearing the appellant acknowledged that she understood the circumstances of her receipt of her lump sum payment. Her evidence on this point was "Yes I applied for a lump sum in that case. It was just before the law change I think - unless you filed an application before a certain date then you could no longer apply after that date." 4 Her evidence was that she learnt of the payment when she received a bank statement. That statement showed that it had been paid in by ACC and she said "I assumed it was a lump sum payment because it was just about five years to the day since my previous lump sum payment. " Her evidence was that she became aware of the payment on or about the1 1th or 12th of June when she received a bank statement. She said that she found that the money had been there for about three weeks. On the assumption that it was a further lump sum she said she went out and paid her bills. She did not make any enquiry of ACC as to what the payment was intended to be. The appellant said that she paid a lump sum of $10,000 to a Credit Union which repaid the finance she had borrowed for her car and also for some home appliances. She also paid money off her Visa and Mastercards and another loan from Adelphi Finance. She also repaid a personal loan from a friend. The whole amount of the money paid in was applied in payment of these debts. The appellant stated that she has no ability to raise a further loan to repay the money and she has not got the financial resources to repay from any other source. She lives in rented accommodation and supports a 14 year old daughter and still has outstanding debts. The appellant was asked "Why didn't you ring the Corporation and ask them what it was?" Her reply was "Well the fact that it had been in my account for just over three weeks and I saw ACC was written on my Bank statement next to it. That's why I assumed it was lump sum. And I just assumed if anything was wrong they would have been in touch with me." From the Corporation's file the following matters are noted: i. On the 21st of May 1997 the Corporation wrote to the appellant pointing out to her that she had received lump sum compensation, and received weekly compensation in total amounting to $71,623, had health care professionals involved in her rehabilitation and the total cost of her claim to date was $96,755.03 and that ACC considered that her entitlements in future needed to be reassessed. The tone of that 5 letter was explicitly indicating that it was time for her dependency on ACC to come to an end. ii. It is further noted that on the 13th of June the appellant telephoned her case manager to advise that she had returned to work on 10th of June for the same pay but in a different job than that which she had had previously. iii. On 20th June 1997 the appellant's case manager faxed the ANZ Bank for the attention of Don Styles - Manager Fraud, requesting information about the money deposited in the appellant's bank account. Mr Styles advised that the appellant withdrew $16,000 on the 3rd of June 1997 and that at present her bank balance was $346.14. iv. The Corporation's file also discloses that the assessment by an orthopaedic surgeon for lump sum purposes was not undertaken until 1994. In his report of 11 May 1994, Alan Morgan, surgeon, assessed her impairment under section 78 of the 1982 Act as being 9%. It was on the basis of that report that the lump sum payment was made. SUBMISSIONS Mr Newell, counsel for the appellant, submits that the appellant received the money in good faith, assuming that it was a further lump sum payment, and that in paying the debts which she did she has so altered her position that it would now be inequitable for her to be required to make repayment. Mr Davie, counsel for the respondent, submits that the evidence points against a finding of good faith and that her explanation that she thought the money was legitimately paid into her account as some sort of "anniversary payment" of lump sum compensation stretched credulity: especially as she had not applied for such payment and had not received any communication from the respondent that such a payment was to be made or had been made. Counsel further submitted that the Review Officer had had the opportunity to see and hear the appellant's oral evidence and was in a good position to make the finding which he did, namely, that the appellant did not accept the payment in good faith. The Review Officer's decision on this is as follows: "It is clear that the error was caused by the Corporation and not contributed to by Ms Royal. It is not so clear whether Ms Royal received the money in good faith. She stated she thought the money was a lump sum payment from the Corporation which she did not apply for. She did not contact the Corporation and in particular her case manager to ask or tell them about the payment. The first contact was initiated by her case manager after she had spent the money. I find it difficult to grasp why a person who unexpectedly receives $16,000 in their bank account-does not ask the donor why. Rather, within a very short period Ms Royal went and spent it. Ms Royal received a lump sum payment some 5 years ago. To accept the reasoning that this was a new lump sum when she had not applied for another lump sum and when lump sum payments have been replaced by an Independence Allowance begs credibility. Furthermore, there was no covering letter or note to suggest this was a lump sum. The conclusion I come to is that Ms Royal did not accept the payment in good faith and therefore she is not entitled to have the payment remitted. I therefore find this case distinguished from the Reinders case. " DECISION In accordance with the provisions of section 92 of the Act an appeal to this Court is by way of re-hearing but the evidence taken before the Review Officer will be considered together with any other evidence, including the production of such exhibits as are in either party's custody. In this latter category I consider the contents of the Corporation's file, containing as it does a contemporaneous record of matters pertaining to the appellant, are admissible for the purposes of considering the issues which are at large in this appeal. This Court has not had the benefit of hearing or seeing the witnesses, in particular the appellant, and therefore in large measure it must be guided by the assessments and findings made by the Review Officer on matters pertaining to credibility. Whilst the Review Officer did not say in so many words that he did not believe the appellant, the clear finding that he made was that she had not received the money in good faith. On reviewing the evidence I find that such a finding was well-founded. I find that the Review Officer's decision is reinforced by further matters which have come to light and which have a bearing on the issue of good faith. The first of these is the statement by the appellant in her evidence that she did not become aware of the overpayment until she received a bank statement on or about the 12th of June, she noticed that the money had been in her account for some three weeks, that nobody had contacted her about it so therefore it must be alright. The evidence from the ANZ Bank is that she withdrew the $16,000 on the 3rd of June, a matter of days after its deposit and spent it within a matter of a day or so of withdrawal. Furthermore her assumption that it was a further lump sum "because it was just about five years to the day since my previous lump sum payment" does not sit with the fact that she did not receive her lump sum until some time in 1994. The only thing that can be said was that the accident occurred in June five years earlier. In the circumstances of this case I find it not beyond the realms of speculation that the appellant seized the opportunity and with unseemly haste repaid all her creditors so that the money could not be recalled or repaid. Accordingly then I endorse the finding of the Review Officer that this appellant did not receive the money in good faith. This finding is sufficient to dispose of this appeal but in any event I find that the factual circumstances of her dealing with the money do not amount 8 to an alteration of her position in reliance on the validity of the payment so that it would be inequitable to require repayment. The appellant did not enter into any financial transactions in reliance on the payment. At the time she received the overpayment the various debts to the finance companies were in existence and at the time of incurring those debts she had no expectation of receiving any payment which might be used to repay same. The mere fact that she received a windfall with which she repaid debt does not amount to an altering of position. All it has done is possibly transferred an indebtedness from one party to another. If she had not received the overpayment she would still have an indebtedness, that position has not changed. In the circumstances I find that the appellant's personal financial circumstances are not relevant when considering the equities as those circumstances only come into consideration when there is a finding of an altering of position. For the foregoing reasons I rule that the Corporation's decision not to remit the overpayment was correct. Accordingly this appeal is dismissed. DATED at WELLINGTON on this 3 day of July 1998 Death M J Beattie District Court Judge Royal.doc KD