Parahi v Accident Rehabilitation and Compensation Insurance Corporation

IN THE DISTRICT COURT HELD AT NAPIER Decision No. 137/95. UNDER The Accident Rehabilitation and Compensation Insurance Act 1992 AND IN THE MATTER of an appeal pursuant to section 91 of the Act 64 / 95 / 0130 BETWEEN THERESA PARAHI of Hastings Appellant (Appeal No. DCA 41/95) AND ACCIDENT REHABILITATION AND COMPENSATION INSURANCE CORPORATION a body corporate duly constituted under the provisions of the said Act Respondent HEARD on the 8th day of November 1995 APPEARANCES D Johnson advocate for appellant P J Zumbach for respondent DECISION OF JUDGE A W MIDDLETON The issue in this appeal is the assessment of earnings related compensation. The facts which give rise to the appeal are that the appellant sustained serious injuries in a motor vehicle accident on 16 March 1985. Immediately prior to the accident she had been employed as a Secretary but lost her job because of the injuries she sustained. The appellant subsequently obtained full time employment in October 1985 but had to leave that job because of her injuries. In April 1986 she obtained a new position but as she required a further operation again lost her job in 1987. In 1988 she obtained part-time employment but in August 1989 was again put off work because of her injury. Earnings related compensation ceased in November 1990 when the appellant had become pregnant. On 16 August 1994 the appellant applied to the respondent for entitlement for loss of earnings. She stated 2 that she was again incapacited while working as a barmaid and gave details of her earnings for the four weeks immediately prior to 12 August 1994 when she had been certified as unfit for work because of the original injuries. The respondent made an assessment of earnings related compensation based on the appellant's earnings for the 12 months immediately preceding the accident of 12 March 1985. In her decision the review officer referred to s.38 of the Accident Rehabilitation and Compensation Insurance Act 1992 and the fact that that section made reference to the fact that compensation payable in the first week begins with the day on which the "incapacity resulting from that work injury first commenced" Adopting that approach she held that the respondent was correct in applying s.40(2)(b) of the 1992 Act and that by doing so the reference to the period of incapacity in that section referred to the initial period of incapacity following the accident in March 1985. The appellant has appealed against that decision and Mr Johnson submitted that the review officer was wrong to make reference to s.38 which applies only to employees who have suffered incapacity as a result of a work injury. He submitted that the proper approach was that required by s.40(2)(a) which applies to an earner who had earnings solely as an employee during the 12 months before commencement of incapacity. He submitted that the approach adopted by the respondent that the words "immediately before the commencement of the incapacity" meant the initial incapacity following the accident in 1985 was wrong and that s.40(2)(a) referred solely to the current period of incapacity for which the claim for weekly earnings was made. Ms Zumbach submitted that regard must be had to ss.38, 39 and 40(2) and that s.38 only applied to compensation payable in the first week for incapacity resulting from a work injury. She submitted that s.39 then applied to any period to which s.38 did not apply. She submitted that the words in s.40(2)(a) having regard to the use of the words "first week" in s.38(2) must lead to the conclusion that the date on which "the incapacity first commenced" relates to the original accident. She submitted that while this appellant had suffered a non-work injury, the same principle must apply and that the words "first commenced" in s.40(2)(a) must refer to the time when the incapacity in respect of that particular personal injury by accident first commenced. She submitted further that s.40(2)(b) must refer back to the original period of incapacity when discussing later and further periods of incapacity. Sections 38 and 39 provide as follows: "38. Compensation for loss of earnings payable to employees in respect of first week of incapacity -- (1) Compensation for loss of earnings is payable under this section to an incapacitated employee where the incapacity results from a work injury. 3 (2) If, during the period beginning on the day on which the incapacity resulting from that work injury first commenced and ending with the close of the sixth day after that day, the employee loses, as a result of the incapacity, any earnings, the compensation payable to the employee is 80 percent of the amount of earnings lost by the employee. ... (5) Any compensation payable under this section shall be paid by - - (a) The employer in whose employment the work injury was suffered in respect of earnings lost from that employment; and (b) The Corporation in respect of earnings lost from any other employment. ... 39. Compensation for loss of earnings payable to earners for incapacity generally - - (1) The weekly compensation for loss of earnings payable to an earner who is incapacitated as a result of personal injury in respect of any period to which section 38 of this Act does not apply is 80 percent of the earner's weekly earnings. (2) The compensation for loss of earnings payable under this section shall be paid by the Corporation except to the extent that it is payable by an exempt employer under section 106 of this Act." Insofar as it applies to s.40(2) as it now stands reads: "(2) The weekly earnings of any person to whom this section applies shall be - (a) In respect of each of the 4 weeks next following the sixth day after the day on which the incapacity first commenced, the earnings as an employee during the 4 weeks immediately before the commencement of the incapacity divided by the number of full or part weeks of remunerated employment as an employee during that period: (b) In respect of any weekly period of incapacity after the period referred to in paragraph (a) of this subsection, 1/52nd of the earnings of that person as an employee during the 52 weeks immediately before the commencement of the incapacity." (emphasis added). I accept Ms Zumbach's submission that it is not necessary in the context of this appeal to refer to s.38 because that deals with compensation for persons who suffer a work injury. Section 39 merely confirms that a person who has not suffered a work injury under s.38 is entitled to receive 80 percent of his or her weekly earnings by way of weekly compensation. Section 40(2) then covers the position of a person who is an earner immediately prior to a "period of incapacity" 4 and who has earnings as an employee only. Such a person is then entitled under s.40(2)(a) to have his or her weekly earnings assessed on the basis of earnings for the period of four weeks "immediately before the commencement of the incapacity". I agree with Mr Johnson that those words mean the period of incapacity for which the claim for weekly compensation is made and can in no way refer back to the earnings for the four weeks immediately prior to the accident. In my view, s.40(2)(a) contemplates the very situation in which this appellant has become involved in that she has had various periods of incapacity dating back to the accident which occurred in 1985. I do not consider that the legislature had it in mind that after 9 years during which there have been various periods of earning and various periods of incapacity that a person's weekly earnings of some 9 years previously should be used in the calculation when immediately prior to the period of incapacity for which the claim is made the appellant has been receiving income at quite a different rate. I consider that the words of the section are quite clear and must be applied in their natural meaning Accordingly, I consider that the submission made by Mr Johnson should be upheld. The appeal is allowed and weekly earnings are to be assessed on the appellant's earnings for the four weeks immediately prior to the commencement of the incapacity in August 1994. There will be costs of $700. DATED at WELLINGTON this 27* day of November 1995 A W Middleton District Court Judge dc41-95.doc(rd)