Cullen v Accident Compensation Corporation

IN THE DISTRICT COURT AT AUCKLAND [2012] NZACC 306 AI 151/07 UNDER THE ACCIDENT COMPENSATION ACT 2001 IN THE MATTER OF OF AN APPEAL FOR LEAVE TO APPEAL UNDER SECTION 162 OF THE ACT BETWEEN TREVOR CULLEN Appellant AND ACCIDENT COMPENSATION CORPORATION Respondent Hearing: Decided on the papers at Auckland Appearances: Mr D Tui for the Corporation Mr P Schmidt for Mr Cullen Judgment: 13 September 2012 JUDGMENT OF JUDGE RODERICK JOYCE QC TREVOR CULLEN V ACCIDENT COMPENSATION CORPORATION DC AK [2012] NZACC AT 151/07 [21 September 2012] Application [1] This was an application for leave to appeal to the High Court on a point of law. [2] In a judgment dated 1 August 2011 Judge Beattie held that Mr Cullen had no right to the payment of interest on that portion of his backdated weekly compensation entitlement which the Corporation was required to refund to WINZ. The area of contest [3] Through counsel Mr Cullen submits that there is a question of law capable of serious and bona fide argument as to whether Judge Beattie was right so to hold, [4] The Corporation through Mr Tui accepts that the issue so identified constitutes one of law but submits that there is no reasonable prospect of Mr Cullen succeeding upon the point raised so that leave should be denied, Background [5] The following is not in contest: On 27 April 1988 Mr Cullen was injured in a motor accident. He was then aged 40. He got cover for his injuries and, being unfit for work on account of those, began receiving earnings related compensation under the 1982 Act. Some five or so months later, with Mr Cullen having been certified fit to return to work, such payments ceased. By 1989 Mr Cullen's permanent disability had been assessed and he received lump sum payments in accordance with ss 78 and 79 of the 1982 Act. Early in 2006 Mr Cullen enquired about his entitlement to weekly compensation for the period subsequent to its cesser in 1988 and on the strength of a certification of incapacity from Mr Cullen's GP - an incapacity extending over the whole period by then in question - the Corporation accepted that Mr Cullen had in fact been entitled to weekly compensation for the entire period from the date when payments had ceased in 1988, During that same period Mr Cullen had been in receipt of a WINZ benefit and on 30 October 2006 the Corporation, having received details from WINZ of the amount to be reimbursed to it, met that obligation with the requisite reimbursement payment, Arrears of weekly compensation of $12,789.45 were also paid to Mr Cullen on 28 November 2006. This sum represented the difference between the backdated weekly compensation accepted as payable and the obligation recognised by the Corporation to WINZ. When Mr Cullen revisited the question of entitlement to weekly compensation he, through his solicitor, sought interest and on 22 December 2006 the Corporation determined to pay interest on the $12,789.45 paid to Mr Cullen in the preceding month for the period 1 July 1992 to 28 November 2006 and in the amount of $13,822.55. Case sought to be pursued by Mr Cullen [6] Neither in his original submissions, nor in his response to those for the Corporation by Mr Tui, does Mr Cullen's counsel Mr Schmidt frame the case he would seek to argue with any particular precision. This was the date upon which the 1992 accident compensation legislation came into effect vision for interest not eretofore included in the pertinent legislation. Although there was an argument in this quarter before Judge Beattie, which the Judge resolved in the way just indicated, that is not rehearsed as part of the present application. [7] He appears to assert that (vide Miller) the High Court has supported the contention that the Corporation's obligation to reimburse WINZ does not affect its liability to pay interest. [What is common ground is that Miller extended reasoning applied by the Court of Appeal in Kearney' to cover interest in cases where the Corporation had acted without fault.] [8] Essentially, Mr Schmidt simply suggests that the questions for consideration should be: Do the decisions of Kearney and Miller require that the Corporation pay interest on the backdated payment of weekly compensation made to Mr Cullen? More generally , does the requirement in the Act to refund benefit payments where appropriate destroy the Corporation's obligation to pay interest on late payments of weekly compensation? Response of Corporation [9] Referring to Miller (and indeed Kearney) Mr Tui submits that they have no relevance - no application whatsoever - to the issue at hand. [10] Mr Tui submits that the finding in Miller (to the extent it went beyond Kearney) was confined to whether interest was payable and for what period and did not bear upon how WINZ payments were to be treated in interest relevant terms [11] He points to s 252 of the Act (the current Act that is) and adds that it is surely a matter of common sense that there can be no basis for the proposition that interest Miller v ACC CIV 2011-485-1702, High Court Wellington, Simon France J, 16 December 2011. This judgment is now subject to appeal. ACC v Kearney [2010] NZCA 327 A generally framed question that ignores the fact that interest has already been paid on the amount paid to Mr Cullen, Presumably meant to have been 'specifically'. He could have added that both Kearney and Miller are examples of the Courts recognising, implicitly at least, that's 114 was designed to put a claimant back in the position he or she should have been; a recognition consonant with general principles (see [15] below) governing interest awards. is payable on the entire amount of backdated compensation when Mr Cullen has only been out of pocket as to the difference between that and the WINZ benefit he received throughout. The statutory provisions [12] As has already been indicated it was the 1992 Act which brought in for the first time a requirement that the Corporation pay interest on unpaid weekly compensation. The position is currently governed by s 114' of the 2001 Act providing: 114 Payment of interest when Corporation makes late payment of weekly compensation (1) The Corporation is liable to pay interest on any payment of weekly compensation to which the claimant is entitled, if the Corporation has not made the payment within 1 month after the Corporation has received all information necessary to enable the Corporation to calculate and make the payment, (2) The Corporation is liable to pay the interest - (a) At the rate for the time being prescribed by, or for the purposes of, s 87 of the Judicature Act 1908; and (b) From the date on which payment should have been made to the date on which it is made. [13] Of equal relevance, obviously, is s 252 which provides: 252 Relationship with Social Security Benefits: Reimbursement by Corporation (1) This section applies if a person - (a) Receives a payment of income-tested benefit under the Social Security Act 1964 in respect of a period; (b) Establishes a claim to entitlement from the Corporation in respect of all or part of the same period, (2) An excess benefit payment is regarded as having been paid in respect of that entitlement. Its precursors are to like effect. (3) An excess benefit payment is the part of the benefit payment up to the amount of the entitlement) that is in excess of the amount of benefit properly payable, having regard to the entitlement under this Act. (4) The Corporation must refund the excess benefit payment to the department responsible for the administration of the Social Security Act 1964 - (a) If the Corporation knows that this section applies; or (b) If requested to do so by that department. (5) For the purposes of this section, an excess benefit payment includes a payment of any part of a married rate of benefit that is paid to the spouse or partner of the person who established the claim to the benefit. (b) Any amount that is treated under this section as having been paid in respect of any treatment, service, rehabilitation, related transport, compensation, grant, or allowance is deemed for all purposes to have been so paid, Discussion [14] I count it useful first of all to draw attention to the general response of the courts to the question "why should interest be awarded?", 15] In Andrew Burroughs - Remedies for Tort and Breach of Contracts that question gets this response; The answer to this is typified by Robert Goff J's statement in BP Exploration (Libya) Lid v Hunt (No 2) : "The fundamental principle is that interest is not awarded as punishment but simply because the plaintiff has been deprived of the use of the money which was due to him.' The money due to the claimant comprises either the money that the claimant would have had but for the defendant's wrong, or, where the wrongful loss was not of money, the damages themselves which it is felt the defendant should have paid to compensate the loss as soon as it occurred. In commercial cases it is then generally assumed that as a result of being deprived of that money the claimant has had to borrow it, whereas in non-commercial cases the assumption is simply that the claimant has lost the interest from investing that money. [16] Although Mr Schmidt has proposed that the issue in this proceeding is somehow interlocked with those that arose in Kearney and Miller, I do not see that to 3rd Edn, Oxford University Press. [1982] ! ALL ER 925 at 974 be so. It seems to me that Mr Tui is perfectly right when he says that these cases are not relevant to how WINZ payments are to be treated in the calculation of interest. [17] I have already observed that the application and the brief submission supporting it do not make particularly clear just what argument (as might highlight some legal reason for an interest liability in a 'no-loss' situation) could sensibly be taken to the High Court. [18] I have already set out ss 114 and 252 of the Act. The former refers in subcl (1) to a liability to pay interest on any payment of weekly compensation "to which the claimant is entitled". Section 252 (and it must be beyond argument that it has relevance in this case) obliges the Corporation to refund "the excess benefit payment" (subs (4)) and that is a reference to the part of the benefit payment "that is in excess of the amount of benefit properly payable having regard to the entitlement under this Act" (subs (3)). [19] It seems to me clear that it is beyond any room for argument that the effect of s 252 is that, to the extent a late recognised entitlement is also an "excess benefit payment", it cannot be identified as a payment to which the claimant is entitled. [20] I do not recognise in the provisions just mentioned any kind of grey area. Even if there were, a purposive construction of the provisions in question must surely go against the construction for which Mr Cullen appears to contend. [21] I say that because I cannot see how fault could be found with Mr Tui's ultimate submissions that: 2.16 Finally, as a matter of common sense there is no basis to support the proposition that interest is payable on the entire amount of weekly compensation. 2.17 The appellant was only out of pocket in respect to the difference between the amount of the WINZ benefit received (which is required under section 252 to be treated as payments of weekly compensation) and weekly compensation payable; namely the net payment. He can only, as a matter of fact, be entitled to interest on this amount. .. 22] In net effect, those submissions sensibly accord with the general object of imposing a liability for interest as discussed by Robert Goff J in BP Exploration. Result [23] In this state of affairs I am unable to discern any sound basis for Mr Cullen's contention that his application identifies a question of law capable of serious and bona fide argument, let alone the existence of any public interest element. 24] Thus the application is dismissed. Roderick Joyce de District Court Judge At 151-07.doc (aw)