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Accident Compensation Cases

Priest v Accident Rehabilitation and Compensation Insurance Corporation (DC, 02/04/97)

Judgment Text

Judge A W Middleton
The issue in this appeal is whether the respondent correctly applied s 47 of the Accident Rehabilitation and Compensation Insurance Act 1992 to the assessment of the appellant's entitlement to weekly earnings. 
The facts which gave rise to the appeal are that the appellant suffered an injury to his right arm on 23 June 1993 for which he received weekly compensation and other entitlements. In June 1994 the appellant applied for approval of private hospital costs for an operation and found that the approval did not cover the full costs of the proposed treatment. The appellant considered that he could meet the shortfall by drawing his holiday pay from his employer. The appellant was still then under a contract of employment but was not working or receiving wages while he was on weekly compensation from the respondent. When the appellant inquired from the respondent at that time how his election to take his holiday pay to fund the shortfall would affect his payment of weekly compensation the respondent advised him that “in your situation is that you cannot be paid by Coromandel Meat Processors more than you are receiving weekly compensation in any given week i.e. if your holiday pay of approx $2,000 was paid in one lump sum whilst receiving weekly compensation your compensation could not be paid for that week”
When he received that letter the appellant elected to fund the operation by means of a loan rather than draw his holiday pay. The record shows that he terminated his employment on 16 December 1994 as a result of his physical inability to continue with his duties. He was subsequently requested by the employer to withdraw his holiday pay before the end of March 1995, that being the end of the employer's financial year. On 31 March 1995 he received his holiday pay of $2,315.03 gross. The appellant notified the respondent that he had received the payment as a result of which the respondent invoked the provisions of s 47 and notified the appellant that as a result of the abatement required to be made under that section he had incurred an overpayment of weekly compensation. On 15 May 1995 the appellant wrote to the respondent stating that he was not happy with that decision and on 19 May 1995 the respondent confirmed its decision and advised the appellant of his review rights. 
The review hearing took place on 23 August 1995 and the review officer confirmed the respondent's application of s 47. The appellant filed a notice of appeal on 2 September 1996. 
In submissions on the appeal the appellant has asked the Court to rely on this Court's decision in Bernstone v ARCIC (39/95) in which this Court had held that where the worker Bernstone was receiving only weekly earnings from the respondent, he therefore had no earnings “immediately” prior to his termination and that therefore the holiday pay could not be subject to abatement. That decision was however reversed on appeal in the High Court at Napier in a decision issued on 29 November 1996 under No. AP 70/95 in which the Court held that in order to give meaning to the section the use of the word “immediately” must of necessity refer to the last wages earned. Mr Heperi submitted that the facts of this case are distinguishable from Bernstone in that the appellant's holiday pay was available some 6 months before the termination of his contract, but he had not chosen to collect it then and in fact did not receive it until 3 months after the termination of his employment. He submitted that the holiday pay received by the appellant was in fact earnings which in his submission had been derived in the 52 weeks prior to his incapacity. He submitted that since the date of his incapacity the appellant had accumulated no further entitlement to holiday pay. 
The second ground of the appellant's appeal was that the respondent had failed in its responsibility to properly inform the appellant of his entitlements, particularly when he made the inquiries as to the effect of his accepting payment of his holiday pay in order to fund the full cost of private hospital treatment. 
Mr Cleary submitted that as the notice of appeal was filed more than 12 months after the issue of the review officer's decision, the appeal required to be considered on the basis that the appellant required leave to give notice of his appeal out of time. In that regard the issue of jurisdiction was considered in McDougall (4 NZAR 85) in which the issue was whether it is just to grant leave to bring the appeal out of time and the principles under which such an application are to be considered are: 
The length of the delay in filing the appeal. 
The reasons for the delay. 
The strengths of merits of the case. 
Prejudice to the respondent. 
Mr Cleary conceded that there was no prejudice caused to the respondent by the delay and that the principle issue is the merits of the appellant's case. He submitted that the decision of this Court in Bernstone had now been overturned by the High Court and that the facts in each case are very similar. He referred me to the statement by Gallen J in his decision in Bernstone where he said: 
“There is in the end no answer which does not lead to some degree of inconsistency. The purpose of this Section, however, is clear. It is designed to ensure as counsel submitted, that when earnings are taken into account, a person does not receive a greater sum by way of compensation than he or she is entitled to. 
Although I accept that there are difficulties in construing the term ‘immediately’ as referring to the last wages earned, that seems to me to do much less violence to the Section and also to have a reasonably intelligible and sensible meaning. The earnings are to be assessed on the last earnings which the person receiving compensation received, as distinct from any other earnings. ”
(Emphasis added)
The section involved in this appeal is s 47 of the Act as it was prior to amendment and which states: 
In determining the weekly compensation for loss of earnings or loss of potential earning capacity payable in respect of the incapacity of a person, the weekly earnings of the person shall be reduced by 30 cents for every $1 of earnings in excess of $50 a week, but not in excess of $80 a week and by 70 cents for every $1 of earnings in excess of $80 a week. 
For the purposes of this section, earnings include any payment made on the termination of employment (other than as redundancy or superannuation); and those earnings shall be deemed to be being derived at the same rate after the termination of employment as the earner received earnings immediately before that termination. For the purposes of this section, earnings do not include compensation for loss of earnings or loss of potential earning capacity or any other compensation payable under this Act …  ”
While the appellant elected to delay receipt of his entitlement to holiday pay until after the termination of his employment the payment clearly comes within the definition of his earnings and were earnings which the section requires to be included in the abatement provisions. I consider that while the appellant had not been in receipt of earnings from his employment for some time, the holiday pay which he subsequently received must be deemed to have been derived at the same rate as the last earnings he had received prior to his incapacity. In these circumstances the receipt of the holiday pay after the termination of his employment clearly brings the appellant within the scope of the findings of the High Court in Bernstone from which I must hold that the respondent correctly applied the abatement provisions. 
While the appellant also raises the issue that the respondent failed in an obligation to properly inform him as to the nature of different policies relating to the abatement of holiday pay it seems clear that at the time the original advice was given to the appellant it was correct. However, the appellant elected not to follow that course and the subsequent situation arose in which the respondent correctly applied the abatement provisions. As the court has noted in many appeals there is no obligation on the respondent to inform every particular claimant of every particular situation which can arise in relation to his claim. The respondent does its best to notify claimants of their entitlements but cannot be held bound to provide information as to every particular eventuality which might arise. There is certainly no requirement in the Act under which the respondent is bound to provide specific information unless a specific request is made. Even in those circumstances, and if an incorrect answer is given, if it becomes aware that a mistake has been made in information it has given the respondent has the power under s 67A to revise any decision made by reason of mistake. 
Accordingly the appeal is dismissed. 

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